Company Posts Strong Growth with
Integration Ahead of Schedule Reports Record
Quarterly Revenue and Adjusted EBITDA
BioTelemetry, Inc. (NASDAQ:BEAT), the leading mobile and wireless
medical technology company focused on the delivery of health
information to improve quality of life and reduce cost of care,
today reported results for the third quarter ended September 30,
2017.
Company Highlights
- Recognized highest quarterly revenue in Company’s history of
$81.0 million, a 52.7% increase over the prior year driven by the
acquisition of LifeWatch AG and increased patient volumes
- Achieved 21st consecutive quarter of year over year revenue
growth
- Recorded GAAP net loss attributable to BioTelemetry of $2.3
million, impacted by deal and integration related expenses, and
adjusted net income of $5.8 million
- Realized quarterly adjusted EBITDA of $17.5 million, or 21.6%
of revenue
- Implemented comprehensive integration plan for LifeWatch
acquisition, expected to result in $30.0 million of annualized
synergies
- Signed record quarterly and year to date bookings in Research
segment
President and CEO Commentary
Joseph H. Capper, President and Chief Executive Officer of
BioTelemetry, Inc., commented: “We are pleased to report another
successful quarter, with record revenue and adjusted EBITDA driven
by our recent acquisition of LifeWatch AG and 9% proforma MCT
patient volume growth. These results are impressive when one
considers the amount of resources that we have focused on the
integration of LifeWatch as well as the impact of the hurricanes in
two of our largest markets, Florida and Texas. Our strong
adjusted EBITDA also reflects the acceleration of synergies related
to LifeWatch. Due to the successful execution of our
integration plan and the strength of the combined teams, we have
been able to realize approximately $3.5 million of savings during
the third quarter while retaining all key customers. We have
now taken steps to execute on substantially all of the synergies
identified, which we expect will result in annualized savings of
approximately $30.0 million.
“We exited the third quarter with strong volume momentum, the
most comprehensive product portfolio in the industry as well as a
highly energized sales force. We believe these factors,
combined with the increasing impact of synergies, will have a
positive impact on our fourth quarter results. Looking
forward, we are excited about the Company’s outlook as we continue
to reap the benefits from the combination of the BioTelemetry and
the LifeWatch teams. With new product launches on the horizon
and the completion of the integration of LifeWatch, we expect 2018
to be a resounding success.”
Third Quarter Financial Results
Revenue for the third quarter 2017 was $81.0 million compared to
$53.1 million for the third quarter 2016, an increase of $27.9
million, or 52.7%. Healthcare revenue increased $29.1 million
driven by the acquisition of LifeWatch in July, which contributed
$27.4 million of revenue, as well as increased patient volumes and
a favorable product mix. These increases were partially
offset by a reduction in MCT Medicare pricing effective January 1,
2017. Research revenue declined $1.1 million due to lower
cardiac study revenue partially offset by higher imaging
revenue. Technology revenue was consistent with the prior
year quarter.
On a GAAP basis, net loss attributable to BioTelemetry, Inc. for
the third quarter 2017 was $2.3 million, or a loss attributable to
BioTelemetry, Inc. of $0.07 per share, compared to net income of
$4.2 million, or $0.14 per diluted share, for the third quarter
2016. The decline in GAAP net income is driven primarily by
the impact of LifeWatch with $5.8 million of additional other
charges for deal, integration and restructuring costs, $2.3 million
of additional amortization of intangibles and $1.3 million of
additional interest expense related to the Company’s new credit
agreement. The Company also incurred an additional $1.0
million of expense for investments made in the selling organization
and $0.8 million of expense for the addition of the Telcare
acquisition. These expenses were offset by the $3.5 million
of synergies realized in the quarter as well as $1.3 million of
other non-operating income related to a settlement with the former
owner of the Mednet entities. While the Company realized a
tax benefit in the quarter, the Company expects its full year 2017
actual cash tax payments to be approximately $1.0 million.
On an adjusted basis1, net income attributable to BioTelemetry,
Inc. for the third quarter 2017 was $5.8 million, or $0.16 per
diluted share. This compares to adjusted net income of $6.6
million, or $0.21 per diluted share, for the third quarter
2016. Adjusted net income attributable to BioTelemetry, Inc.
for the third quarter 2017 excludes $8.2 million of other charges
related to the acquisition of LifeWatch AG, ongoing patent
litigation and other restructuring activities partially offset by a
reduction in the contingent consideration related to the Telcare
acquisition. Adjusted net income attributable to
BioTelemetry, Inc. for the third quarter 2017 also excludes a $1.3
million gain from a legal settlement, a $0.5 million loss on the
extinguishment of the Company’s previous debt as well as $0.4
million of expense for a foreign currency option related to the
acquisition of LifeWatch AG included in total other income
(expense). Adjusted net income for the third quarter 2016
excludes $2.4 million related to patent litigation and costs
associated with the Company’s 2016 acquisitions.
Conference
Call
BioTelemetry, Inc. will host an earnings conference call on
Tuesday, November 7, at 5:00 PM Eastern Time. The call will
be simultaneously webcast on the investor information page of our
website, www.gobio.com. The call will be archived on our
website for two weeks.
1 The Company believes that providing non-GAAP financial
measures offers a meaningful representation of the Company’s
performance as they exclude expenses that are not necessary to
support the Company’s ongoing business. Please refer to the
Company’s “Reconciliation of Non-GAAP Financial Measures” and “Use
of Non-GAAP Financial Measures” in this release for additional
information.
About BioTelemetryBioTelemetry, Inc. is the
leading mobile and wireless medical technology company focused on
delivery of health information to save and improve lives while
reducing the cost of care. The Company provides cardiac
monitoring, mobile blood glucose monitoring, centralized medical
imaging, and original equipment manufacturing that serve both the
Healthcare and Clinical Research industries. More information
can be found at www.gobio.com.
Cautionary Statement Regarding Forward-Looking
Statements This document includes certain forward-looking
statements within the meaning of the “Safe Harbor” provisions of
the Private Securities Litigation Reform Act of 1995. These
statements may be identified by words such as “expect,”
“anticipate,” “estimate,” “intend,” “plan,” “believe,” “promises”
and other words and terms of similar meaning. Such
forward-looking statements are based on current expectations and
involve inherent risks and uncertainties, including important
factors that could delay, divert, or change any of these
expectations, and could cause actual outcomes and results to differ
materially from current expectations. These factors include,
among other things, BioTelemetry’s ability to realize the
anticipated benefits of the LifeWatch acquisition, our ability to
successfully integrate acquisitions into our business and the
effect such acquisitions will have on our results of operation,
effectiveness of our cost savings initiatives, relationships with
our government and commercial payors, changes to insurance coverage
and reimbursement levels for our products, the success of our sales
and marketing initiatives, our ability to attract and retain
talented executive management and sales personnel, our ability to
identify acquisition candidates, acquire them on attractive terms
and integrate their operations into our business, the
commercialization of new products, market factors, internal
research and development initiatives, partnered research and
development initiatives, competitive product development, changes
in governmental regulations and legislation, the continued
consolidation of payors, acceptance of our new products and
services, patent protection, adverse regulatory action, and
litigation success. For further details and a discussion of
these and other risks and uncertainties, please see our public
filings with the Securities and Exchange Commission, including our
latest periodic report on Form 10-K. Readers are
cautioned not to put undue reliance on forward-looking statements,
which reflect only opinions as of the date of this press
release. We do not undertake, and specifically disclaim, any
obligation to publicly update or amend any forward-looking
statement, whether as a result of new information, future events,
or otherwise.
|
|
(unaudited) |
Consolidated
Statements of Operations |
|
Three Months Ended |
(In Thousands, Except Per Share Amounts) |
|
September 30, |
|
|
|
2017 |
|
|
|
2016 |
|
Revenues |
|
|
81,023 |
|
|
|
53,055 |
|
Cost of revenues |
|
|
31,954 |
|
|
|
20,189 |
|
Gross profit |
|
|
49,069 |
|
|
|
32,866 |
|
Gross profit % |
|
|
60.6% |
|
|
|
61.9% |
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
General
and administrative |
|
|
25,320 |
|
|
|
13,853 |
|
Sales and
marketing |
|
|
9,719 |
|
|
|
7,018 |
|
Bad debt
expense |
|
|
3,768 |
|
|
|
2,495 |
|
Research
and development |
|
|
3,277 |
|
|
|
2,137 |
|
Other
charges |
|
|
8,152 |
|
|
|
2,397 |
|
Total operating
expenses |
|
|
50,236 |
|
|
|
27,900 |
|
|
|
|
|
|
Income (loss) from
operations |
|
|
(1,167 |
) |
|
|
4,966 |
|
|
|
|
|
|
Other income
(expense): |
|
|
|
|
Interest
expense |
|
|
(1,841 |
) |
|
|
(544 |
) |
Loss on
extinguishment of debt |
|
|
(543 |
) |
|
|
- |
|
Loss on
equity method investment |
|
|
(106 |
) |
|
|
(69 |
) |
Other
non-operating income (expense), net |
|
|
658 |
|
|
|
(17 |
) |
Total other income
(expense) |
|
|
(1,832 |
) |
|
|
(630 |
) |
|
|
|
|
|
Income (loss) before
income taxes |
|
|
(2,999 |
) |
|
|
4,336 |
|
(Provision for) benefit
from income taxes |
|
|
435 |
|
|
|
(141 |
) |
Net income (loss) |
|
|
(2,564 |
) |
|
|
4,195 |
|
|
|
|
|
|
Net loss attributable
to noncontrolling interests |
|
|
(279 |
) |
|
|
- |
|
|
|
|
|
|
Net income (loss)
attributable to BioTelemetry, Inc. |
|
$ |
(2,285 |
) |
|
$ |
4,195 |
|
|
|
|
|
|
Net income (loss) per
share attributable to BioTelemetry, Inc.: |
|
|
|
|
Basic |
|
$ |
(0.07 |
) |
|
$ |
0.15 |
|
Diluted |
|
$ |
(0.07 |
) |
|
$ |
0.14 |
|
|
|
|
|
|
Weighted average number
of common shares outstanding (a): |
|
|
|
|
|
|
Basic |
|
|
31,897 |
|
|
|
28,102 |
|
Diluted |
|
|
31,897 |
|
|
|
30,881 |
|
(a) Basic net income (loss) per share is computed by dividing
net income (loss) by the weighted average number of common shares
outstanding during the period. Diluted net income (loss) per
share is computed by giving effect to all potential dilutive common
shares, including stock options and restricted stock units
(“RSUs”). If the outstanding options or RSUs were exercised
or converted into common stock, the result would be anti‑dilutive
for the quarter ended September 30, 2017. Accordingly, basic
and diluted net loss per share is the same for the quarter ended
September 30, 2017. Please refer to the reconciliation of
Non-GAAP Financial Measures for diluted share count information for
the quarter ended September 30, 2017
|
|
(unaudited) |
Consolidated
Statements of Operations |
|
Nine Months Ended |
(In Thousands, Except Per Share Amounts) |
|
September 30, |
|
|
|
2017 |
|
|
|
2016 |
|
Revenues |
|
|
195,033 |
|
|
|
154,375 |
|
Cost of revenues |
|
|
77,088 |
|
|
|
57,961 |
|
Gross profit |
|
|
117,945 |
|
|
|
96,414 |
|
Gross profit % |
|
|
60.5% |
|
|
|
62.5% |
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
General
and administrative |
|
|
55,603 |
|
|
|
40,577 |
|
Sales and
marketing |
|
|
25,051 |
|
|
|
21,687 |
|
Bad debt
expense |
|
|
8,975 |
|
|
|
7,797 |
|
Research
and development |
|
|
8,225 |
|
|
|
5,888 |
|
Other
charges |
|
|
14,542 |
|
|
|
5,844 |
|
Total operating
expenses |
|
|
112,396 |
|
|
|
81,793 |
|
|
|
|
|
|
Income from
operations |
|
|
5,549 |
|
|
|
14,621 |
|
|
|
|
|
|
Other income
(expense): |
|
|
|
|
Interest
expense |
|
|
(2,622 |
) |
|
|
(1,402 |
) |
Loss on
extinguishment of debt |
|
|
(543 |
) |
|
|
- |
|
Loss on
equity method investment |
|
|
(302 |
) |
|
|
(184 |
) |
Other
non-operating income (expense), net |
|
|
(2,755 |
) |
|
|
(100 |
) |
Total other income
(expense) |
|
|
(6,222 |
) |
|
|
(1,686 |
) |
|
|
|
|
|
Income (loss) before
income taxes |
|
|
(673 |
) |
|
|
12,935 |
|
Benefit from income
taxes |
|
|
31 |
|
|
|
54 |
|
Net income (loss) |
|
|
(642 |
) |
|
|
12,989 |
|
|
|
|
|
|
Net loss attributable
to noncontrolling interests |
|
|
(279 |
) |
|
|
- |
|
|
|
|
|
|
Net income (loss)
attributable to BioTelemetry, Inc. |
|
$ |
(363 |
) |
|
$ |
12,989 |
|
|
|
|
|
|
Net income (loss) per
share attributable to BioTelemetry, Inc.: |
|
|
|
|
Basic |
|
$ |
(0.01 |
) |
|
$ |
0.47 |
|
Diluted |
|
$ |
(0.01 |
) |
|
$ |
0.43 |
|
|
|
|
|
|
Weighted average number
of common shares outstanding (a): |
|
|
|
|
|
|
Basic |
|
|
29,682 |
|
|
|
27,811 |
|
Diluted |
|
|
29,682 |
|
|
|
30,306 |
|
(a) Basic net income (loss) per share is computed by
dividing net income (loss) by the weighted average number of common
shares outstanding during the period. Diluted net income
(loss) per share is computed by giving effect to all potential
dilutive common shares, including stock options, and restricted
stock units (“RSUs”). If the outstanding options or RSUs were
exercised or converted into common stock, the result would be
anti‑dilutive for the nine months ended September 30, 2017.
Accordingly, basic and diluted net loss per share is the same for
the nine months ended September 30, 2017. Please refer to the
reconciliation of Non-GAAP Financial Measures for diluted share
count information for the nine months ended September 30, 2017.
Summary Financial Data |
|
|
|
|
|
(In Thousands, except days sales
outstanding) |
|
|
|
|
|
|
September 30, |
|
December 31, |
|
|
|
|
|
2017 |
|
2016 |
|
|
|
|
|
(unaudited) |
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents |
$ |
26,242 |
|
|
$ |
23,052 |
|
|
|
|
|
Healthcare accounts
receivable, net |
|
23,651 |
|
|
|
14,594 |
|
|
|
|
|
Other accounts
receivable, net |
|
13,109 |
|
|
|
12,261 |
|
|
|
|
|
Days sales
outstanding |
|
45 |
|
|
|
45 |
|
|
|
|
|
Working capital |
|
29,523 |
|
|
|
28,053 |
|
|
|
|
|
Total assets |
|
520,711 |
|
|
|
198,984 |
|
|
|
|
|
Total indebtedness |
|
206,569 |
|
|
|
25,449 |
|
|
|
|
|
Total equity |
|
268,314 |
|
|
|
138,914 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Summary Cash
Flow Data |
|
|
|
|
|
|
|
(In
Thousands) |
|
|
|
|
|
|
|
|
(unaudited) |
|
Three Months Ended |
|
Nine Months Ended |
|
September 30, |
|
September 30, |
|
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
2016 |
|
Cash provided by
operating activities |
$ |
(72 |
) |
|
$ |
8,879 |
|
|
$ |
10,661 |
|
|
$ |
26,405 |
|
Capital
expenditures |
|
(5,743 |
) |
|
|
(2,815 |
) |
|
|
(11,940 |
) |
|
|
(8,507 |
) |
|
|
|
|
|
|
|
|
Reconciliation of Non-GAAP Financial Measures(In
Thousands, Except Per Share Amounts)
|
|
|
|
|
|
|
|
|
|
|
2017 |
Three Months Ended September 30,
2017 |
|
(unaudited) |
|
|
|
Income (loss) from operations |
|
Income (loss) before income taxes |
|
Net income (loss) attributable to BioTelemetry,
Inc. |
|
Net income (loss)per share attributable to
BioTelemetry, Inc. |
|
GAAP |
$ |
(1,167 |
) |
|
$ |
(2,999 |
) |
|
$ |
(2,285 |
) |
|
$ |
(0.07 |
) |
|
Non-GAAP
Adjustments: |
|
|
|
|
|
|
|
|
|
Other charges (a) |
|
8,152 |
|
|
|
8,152 |
|
|
|
8,152 |
|
|
|
0.23 |
|
|
|
Foreign currency option
related to LifeWatch acquisition (b) |
|
- |
|
|
|
424 |
|
|
|
424 |
|
|
|
0.01 |
|
|
|
Loss on extinguishment
of debt (c) |
|
- |
|
|
|
543 |
|
|
|
543 |
|
|
|
0.02 |
|
|
|
Gain on legal
settlement (d) |
|
- |
|
|
|
(1,333 |
) |
|
|
(1,333 |
) |
|
|
(0.04 |
) |
|
|
Income tax effect of
adjustments (e) |
|
- |
|
|
|
- |
|
|
|
(2,725 |
) |
|
|
(0.08 |
) |
|
|
NOL utilization
(f) |
|
- |
|
|
|
- |
|
|
|
2,978 |
|
|
|
0.09 |
|
|
Adjusted |
$ |
6,985 |
|
|
$ |
4,787 |
|
|
$ |
5,754 |
|
|
$ |
0.16 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding -
diluted |
|
|
34,982 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016 |
Three Months Ended September 30,
2016 |
|
(unaudited) |
|
|
|
Income from operations |
|
Income before income taxes |
|
Net income |
|
Net income per share |
|
GAAP |
$ |
4,966 |
|
|
$ |
4,336 |
|
|
$ |
4,195 |
|
|
$ |
0.14 |
|
|
Non-GAAP
Adjustments: |
|
|
|
|
|
|
|
|
|
Other charges (a) |
|
2,397 |
|
|
|
2,397 |
|
|
|
2,397 |
|
|
|
0.07 |
|
|
Adjusted |
$ |
7,363 |
|
|
$ |
6,733 |
|
|
$ |
6,592 |
|
|
$ |
0.21 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
|
|
|
|
|
|
(unaudited) |
|
|
|
|
|
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
|
|
Net income
(loss) attributable to BioTelemetry – GAAP |
$ |
(2,285 |
) |
|
$ |
4,195 |
|
|
|
|
|
|
|
Net loss attributable
to noncontrolling interest |
|
(279 |
) |
|
|
- |
|
|
|
|
|
|
|
Provision for (benefit
from) income taxes |
|
(435 |
) |
|
|
141 |
|
|
|
|
|
|
|
Total other (income)
expense |
|
1,832 |
|
|
|
630 |
|
|
|
|
|
|
|
Other charges (a) |
|
8,152 |
|
|
|
2,397 |
|
|
|
|
|
|
|
Depreciation and
amortization expense |
|
9,019 |
|
|
|
3,689 |
|
|
|
|
|
|
|
Stock compensation
expense |
|
1,485 |
|
|
|
1,138 |
|
|
|
|
|
|
|
Adjusted
EBITDA |
$ |
17,489 |
|
|
$ |
12,190 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
a) In the third quarter 2017, the Company incurred $8.2 million
of other charges related to the acquisition LifeWatch AG, ongoing
patent litigation and other restructuring activities partially
offset by a reduction in contingent consideration related to the
Telcare acquisition. In the third quarter 2016, the Company
incurred $2.4 million of other charges primarily due to patent
litigation and the acquisitions completed in 2016.
b) In the third quarter 2017, the Company incurred $0.4
million of expense for a foreign currency option related to the
acquisition of LifeWatch AG which is included in Other
non-operating income (expense), net.
c) In the third quarter 2017, in connection with the
acquisition of LifeWatch AG, the Company entered into a credit
agreement with SunTrust Bank, as a lender and an agent for the
lenders. This credit agreement provided the Company a term
loan for $205.0 million and a $50.0 million revolving credit
facility which remains undrawn. A portion of the proceeds
from the term loan were used to pay off the Company’s existing
credit agreement with Healthcare Financial Solutions LLC, formerly
General Electric Capital Corporation. As a result, the
Company had a loss of $0.5 million on the extinguishment of the
debt.
d) In the third quarter 2017, the Company reached a
settlement with the seller of Mednet Healthcare Technologies, Inc.
and related companies, which the Company acquired in early
2014. The Company sought indemnification for alleged breaches
of certain representations and warranties. As part of the
settlement, common stock with a fair value of $2.7 million was
returned to the Company. The value of the stock exceeded the
indemnification asset of $1.4 million previously recorded by the
Company, resulting in a gain of $1.3 million which is included in
Other non-operating income (expense), net.
e) Represents the tax effect of the non-GAAP adjustments
based on the estimated annual effective tax rate of 35%.
f) During the fourth quarter 2016, the Company released the
tax valuation allowance on its net deferred tax assets. The
benefit from this release was excluded from the Company’s 2016
adjusted results. Without a valuation allowance in place and
due to the timing of discrete items, for GAAP financial reporting
purposes the Company is reporting a tax benefit of 14.5% for the
third quarter 2017. After giving effect to taxes at the
estimated annual effective tax rate of 35% on the other
adjustments, the utilization of net operating loss carryforwards
had a $3.0 million positive impact on the third quarter 2017.
Reconciliation of Non-GAAP Financial Measures(In
Thousands, Except Per Share Amounts)
|
|
|
|
|
|
|
|
|
|
|
2017 |
Nine Months Ended September 30,
2017 |
|
(unaudited) |
|
|
|
Income from operations |
|
Income (loss) before income taxes |
|
Net income (loss) attributable to BioTelemetry,
Inc. |
|
Net income (loss) per shareattributable to
BioTelemetry, Inc. |
|
GAAP |
$ |
5,549 |
|
|
$ |
(673 |
) |
|
$ |
(363 |
) |
|
$ |
(0.01 |
) |
|
Non-GAAP
Adjustments: |
|
|
|
|
|
|
|
|
|
Other charges (a) |
|
14,542 |
|
|
|
14,542 |
|
|
|
14,542 |
|
|
|
0.45 |
|
|
|
Performance bonus
(stock-based comp) (b) |
|
1,533 |
|
|
|
1,533 |
|
|
|
1,533 |
|
|
|
0.05 |
|
|
|
Dept. of Health and
Human Services settlement (c) |
|
- |
|
|
|
2,500 |
|
|
|
2,500 |
|
|
|
0.08 |
|
|
|
Foreign currency option
related to LifeWatch acquisition (d) |
|
- |
|
|
|
1,322 |
|
|
|
1,322 |
|
|
|
0.04 |
|
|
|
Loss on extinguishment
of debt (e) |
|
- |
|
|
|
543 |
|
|
|
543 |
|
|
|
0.02 |
|
|
|
Gain on legal
settlement (f) |
|
- |
|
|
|
(1,333 |
) |
|
|
(1,333 |
) |
|
|
(0.04 |
) |
|
|
Income tax effect of
adjustments (g) |
|
- |
|
|
|
- |
|
|
|
(6,687 |
) |
|
|
(0.20 |
) |
|
|
NOL utilization
(h) |
|
- |
|
|
|
- |
|
|
|
6,047 |
|
|
|
0.19 |
|
|
Adjusted |
$ |
21,624 |
|
|
$ |
18,434 |
|
|
$ |
18,104 |
|
|
$ |
0.55 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding -
diluted |
|
|
32,667 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016 |
Nine Months Ended September 30,
2016 |
|
(unaudited) |
|
|
|
Income from operations |
|
Income before income taxes |
|
Net income |
|
Net income per share |
|
GAAP |
$ |
14,621 |
|
|
$ |
12,935 |
|
|
$ |
12,989 |
|
|
$ |
0.43 |
|
|
Non-GAAP
Adjustments: |
|
|
|
|
|
|
|
|
|
Other charges (a) |
|
5,844 |
|
|
|
5,844 |
|
|
|
5,844 |
|
|
|
0.19 |
|
|
Adjusted |
$ |
20,465 |
|
|
$ |
18,779 |
|
|
$ |
18,833 |
|
|
$ |
0.62 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, |
|
|
|
|
|
|
|
(unaudited) |
|
|
|
|
|
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
|
|
Net income
(loss) attributable to BioTelemetry – GAAP |
$ |
(363 |
) |
|
$ |
12,989 |
|
|
|
|
|
|
|
Net loss attributable
to noncontrolling interest |
|
(279 |
) |
|
|
- |
|
|
|
|
|
|
|
Provision for (benefit
from) income taxes |
|
(31 |
) |
|
|
(54 |
) |
|
|
|
|
|
|
Total other (income)
expense |
|
6,222 |
|
|
|
1,686 |
|
|
|
|
|
|
|
Other charges (a) |
|
14,542 |
|
|
|
5,844 |
|
|
|
|
|
|
|
Depreciation and
amortization expense |
|
16,559 |
|
|
|
10,619 |
|
|
|
|
|
|
|
Stock compensation
expense |
|
5,685 |
|
|
|
3,757 |
|
|
|
|
|
|
|
Adjusted
EBITDA |
$ |
42,335 |
|
|
$ |
34,841 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
a) For the nine months ended September 30, 2017, the
Company incurred $14.5 million of other charges primarily related
to the acquisition of LifeWatch AG as well as ongoing patent
litigation and other restructuring activities. For the nine
months ended September 30, 2016, the Company incurred $5.8 million
related to patent litigation and costs associated with the
Company’s 2016 acquisitions.
b) For the nine months ended September 30, 2017, the
Company incurred $1.5 million for the second half of a one-time
performance bonus paid to a third party in the form of stock-based
compensation. The first of two performance measures was
achieved in the fourth quarter 2016, resulting in $1.3 million of
expense at that time. The second performance measure was
achieved in the first quarter 2017, resulting in $1.5 million of
expense. This is a nonrecurring expense for the Company and
is the only time in the Company’s history when such a bonus was
awarded. There are no additional agreements outstanding of
this nature. This was recorded in General & Administrative
expense.
c) For the nine months ended September 30, 2017, the
Company reached a $2.5 million settlement with the United States
Department of Health and Human Services. This was related to
the conclusion of an investigation into the theft of two
unencrypted laptop computers that occurred in 2011. This was
recorded in Other non-operating income (expense), net.
d) For the nine months ended September 30, 2017, the
Company incurred $1.3 million of expense for a foreign currency
option related to the acquisition of LifeWatch AG which is included
in Other non-operating income (expense), net.
e) In the third quarter 2017, in connection with the
acquisition of LifeWatch AG, the Company entered into a credit
agreement with SunTrust Bank, as a lender and an agent for the
lenders. This credit agreement provided the Company a term
loan for $205.0 million and a $50.0 million revolving credit
facility which remains undrawn. A portion of the proceeds
from the term loan were used to pay off the Company’s existing
credit agreement with Healthcare Financial Solutions LLC, formerly
General Electric Capital Corporation. As a result, the
Company had a loss of $0.5 million on the extinguishment of the
debt.
f) In the third quarter 2017, the Company reached a
settlement with the seller of Mednet Healthcare Technologies, Inc.
and related companies, which the Company acquired in early
2014. The Company sought indemnification for alleged breaches
of certain representations and warranties. As part of the
settlement, common stock with a fair value of $2.7 million was
returned to the Company. The value of the stock exceeded the
indemnification asset of $1.4 million previously recorded by the
Company, resulting in a gain of $1.3 million which is included in
Other non-operating income (expense), net.
g) Represents the tax effect of the non-GAAP adjustments
based on the estimated annual effective tax rate of 35%.
h) During the fourth quarter 2016, the Company released the
tax valuation allowance on its net deferred tax assets. The
benefit from this release was excluded from the Company’s 2016
adjusted results. Without a valuation allowance in place and
due to the timing of discrete items, for GAAP financial reporting
purposes the Company is reporting a nominal tax benefit for the
nine months ended September 30, 2017. After giving effect to
taxes at the estimated annual effective tax rate of 35% on the
other adjustments, the utilization of net operating loss
carryforwards had a $6.0 million positive impact on the nine months
ended September 30, 2017.
Use of Non-GAAP Financial
Measures In
addition to the results prepared in accordance with generally
accepted accounting principles in the United States, or GAAP,
this press release also includes certain financial measures which
have been adjusted and are not in accordance with generally
accepted accounting principles (“Non-GAAP financial
measures”). These Non-GAAP financial measures include
adjusted income from operations, adjusted net income, adjusted net
income per diluted share and adjusted EBITDA. In accordance
with Regulation G of the Securities and Exchange Commission, the
Company has provided a reconciliation of these Non-GAAP financial
measures with the most directly comparable financial measure
calculated in accordance with GAAP.
These Non-GAAP financial measures are not intended to replace
GAAP financial measures. They are presented as supplemental
measures of our performance in an effort to provide our
stakeholders better visibility into the Company’s ongoing operating
results and to allow for comparability to prior periods as well as
to other companies’ results. Management uses these Non-GAAP
financial measures to assess the financial health of the Company’s
ongoing operating performance. Management encourages our
stakeholders to consider all of our financial measures and to not
rely on any single financial measure to evaluate our
performance.
Adjusted net income attributable to BioTelemetry, Inc. for the
third quarter 2017 excludes Other charges of $8.2 million related
to the acquisition of LifeWatch AG, ongoing patent litigation and
other restructuring activities partially offset by a reduction in
the contingent consideration related to the Telcare acquisition, a
$0.5 million loss on the extinguishment of the Company’s previous
debt, $0.4 million of expense for a foreign currency option also
related to the acquisition of LifeWatch AG as well as a $1.3
million gain from a legal settlement, the tax effect of these
adjustments and the impact from the utilization of our net
operating loss carryforwards. By excluding expenses that are
considered not necessary to support the ongoing business or which
are nonrecurring in nature, the Company believes that these
Non-GAAP financial measures offer a meaningful representation of
the Company’s ongoing operating performance. Included in
these excluded items are transaction related expenses, primarily
legal and professional fees, legal fees related to patent
litigation, costs related to restructuring programs aimed at
streamlining operations and reducing future expense as well as
other one-time items. These excluded charges are not part of
the ongoing operations, and therefore, not reflective of the
Company’s core operations. The Company views patent
litigation as an extreme measure not typically required in our
industry to protect a company’s intellectual property and which has
not been common practice for the Company. The Company
commenced patent litigation proceedings after the Company uncovered
specific evidence of four distinct cases of misappropriation and
infringement. The Company can choose to resolve the
outstanding matters and terminate the expense at any time.
The Company also included the income tax effect of these
adjustments based on the Company’s estimated annual effective tax
rate of 35%. During the fourth quarter 2016, the Company
released the tax valuation allowance on its net deferred tax
assets. The benefit from this release was excluded from the
Company’s 2016 adjusted results. Without a valuation
allowance in place and due to the timing of discrete items, for
GAAP financial reporting purposes the Company is reporting a tax
benefit of 14.5% for the third quarter 2017. After giving
effect to taxes at the estimated annual effective tax rate of 35%
on the other adjustments, the utilization of net operating loss
carryforwards had a $3.0 million positive impact on the third
quarter 2017.
Adjusted net income for the third quarter 2016 excludes $2.4
million related to patent litigation and costs associated with the
Company’s 2016 acquisitions.
Adjusted net income attributable to BioTelemetry, Inc. for the
nine months ended September 30, 2017 excludes Other charges of
$14.5 million related to the acquisition of LifeWatch AG, ongoing
patent litigation and other restructuring activities partially
offset by a reduction in the contingent consideration related to
the Telcare acquisition, a $1.5 million one-time performance bonus
paid to a third party in the form of stock-based compensation, a
$2.5 million non-operating charge recorded for a settlement with
the Department of Health and Human Services related to the theft of
two unencrypted laptops in 2011, $1.3 million of expense for a
foreign currency option related to the acquisition of LifeWatch AG,
a $1.3 million gain on a legal settlement, a $0.5 million loss on
the extinguishment of the Company’s previous debt, the tax effect
of these adjustments, as well as the impact from the utilization of
our net operating loss carryforwards. By excluding expenses
that are considered not necessary to support the ongoing business
or which are nonrecurring in nature, the Company believes that
these Non-GAAP financial measures offer a meaningful representation
of the Company’s ongoing operating performance. Included in
these excluded items are transaction related expenses, primarily
legal and professional fees, legal fees related to patent
litigation, costs related to restructuring programs aimed at
streamlining operations and reducing future expense as well as
other one-time items. These excluded charges are not part of
the ongoing operations, and therefore, not reflective of the
Company’s core operations. The Company views patent
litigation as an extreme measure not typically required in our
industry to protect a company’s intellectual property and which has
not been common practice for the Company. The Company
commenced patent litigation proceedings after the Company uncovered
specific evidence of four distinct cases of misappropriation and
infringement. The Company can choose to resolve the
outstanding matters and terminate the expense at any time.
The Company also excluded the second half of a one-time performance
bonus paid to a third party in the form of stock-based
compensation. The first of two performance measures was
achieved in the fourth quarter 2016, resulting in $1.3 million of
expense at that time. The second performance measure was
achieved in the first quarter 2017, resulting in $1.5 million of
expense. This is the first time in the Company’s history that
such a bonus was offered and issued and the expense is
nonrecurring. There are no additional agreements outstanding
of this nature. The Company also included the income tax
effect of these adjustments based on the Company’s estimated annual
effective tax rate of 35%. During the fourth quarter 2016,
the Company released the tax valuation allowance on its net
deferred tax assets. The benefit from this release was
excluded from the Company’s 2016 adjusted results. Without a
valuation allowance in place and due to the timing of discrete
items, for GAAP financial reporting purposes the Company is
reporting a nominal tax benefit for the nine months ended September
30, 2017. After giving effect to taxes at the estimated
annual effective tax rate of 35% on the other adjustments, the
utilization of net operating loss carryforwards had a $6.0 million
positive impact on the nine months ended September 30,
2017.
Adjusted net income for the first half of 2016 excludes $5.8
million related to patent litigation and costs associated with the
Company’s 2016 acquisitions.
In addition to adjusted income from operations, adjusted net
income and adjusted net income per diluted share, we also present
adjusted EBITDA. This Non-GAAP financial measure excludes
income taxes, interest, noncontrolling interest, Other charges,
other excluded items included in total other income (expense),
depreciation and amortization and stock compensation expense.
EBITDA is a widely accepted financial measure which we believe our
stakeholders use to compare our ongoing financial performance to
that of other companies. Adjusting our EBITDA for Other
charges and other one-time items is a meaningful financial measure
as we believe it is an indication of our ongoing operations.
In addition, we also add back stock compensation expense because it
is non-cash in nature. Other companies in our industry may
calculate adjusted EBITDA in a different manner.
Contact:
BioTelemetry, Inc.
Heather C. Getz
Investor Relations
800-908-7103
investorrelations@biotelinc.com
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