Fourth Quarter 2017 Highlights
Inovalon (Nasdaq:INOV), a leading technology company providing
advanced, cloud-based platforms empowering a data-driven
transformation from volume-based to value-based models across the
healthcare ecosystem, today announced financial results for the
fourth quarter and full year of 2017.
“Significant progress was achieved in 2017 as
the Company brought the Inovalon ONE™ Platform to the marketplace,
advanced its transition to subscription-based cloud-based platform
offerings, materially expanded margins, and exited the year with
strong organic growth,” said Keith Dunleavy, M.D., Inovalon’s chief
executive officer and chairman of the board. “As we look forward we
see continued strong progression of our key agenda items to expand
the adoption of our cloud-based platform, the value we bring to the
healthcare ecosystem, and the financial performance we deliver to
our shareholders.”
Fourth Quarter 2017 Financial
Results
- Revenue for the fourth quarter of 2017 was $114.6 million, a
year-over-year increase of 19% compared with $96.1 million for the
fourth quarter of 2016. On an organic1 basis, revenue for the
fourth quarter of 2017 grew 14% year-over-year.
- Cost of revenue for the fourth quarter of 2017 was $37.1
million, or 32.4% of revenue, compared with $38.6 million, or 40.2%
of revenue, for the fourth quarter of 2016. This translates into
gross margin for the fourth quarter of 2017 of 67.6%, a
year-over-year increase of 780 basis points compared with 59.8% for
the fourth quarter of 2016, and a sequential increase of 80 basis
points compared with 66.8% for the third quarter of 2017.
- Net income for the fourth quarter of 2017 was $17.4 million,
resulting in diluted net income per share of $0.12, compared with
$0.7 million and $0.00 per share, respectively, for the fourth
quarter of 2016. Net income and diluted net income per share for
the fourth quarter of 2017 include a benefit of $15.5 million and
$0.11 per share, respectively, as a result of the Tax Cuts and Jobs
Act of 2017 (the “Tax Act”) enacted on December 22, 2017, which is
discussed in further detail below.
- Adjusted EBITDA for the fourth quarter of 2017 was $25.5
million, a year-over-year increase of 78% compared with $14.3
million for the fourth quarter of 2016. Adjusted EBITDA margin for
the fourth quarter of 2017 was 22.3%, a year-over-year increase of
740 basis points compared with 14.9% for the fourth quarter of
2016.
- Non-GAAP net income for the fourth quarter of 2017 was $7.8
million, resulting in Non-GAAP diluted net income per share of
$0.06, compared with $7.4 million and $0.05 per share,
respectively, for the fourth quarter of 2016.
Full Year 2017 Financial
Results
- Revenue for 2017 was $449.4 million, a year-over-year increase
of 5% compared with $427.6 million for 2016.
- Cost of revenue for 2017 was $151.0 million, or 33.6% of
revenue, compared with $159.2 million, or 37.2% of revenue for
2016. This translates into gross margin for 2017 of 66.4%, a
year-over-year increase of 360 basis points compared with 62.8% for
2016.
- Net income for 2017 was $34.8 million resulting in diluted net
income per share of $0.24, compared with $27.1 million and $0.18
per share, respectively, for 2016. Net income and diluted net
income per share for 2017 include a benefit of $15.5 million and
$0.11 per share, respectively, as a result of the Tax Act.
- Adjusted EBITDA for 2017 was $109.0 million, a year-over-year
increase of 9% compared with $99.9 million for 2016. Adjusted
EBITDA margin for 2017 was 24.3%, an increase of 90 basis points
compared with 23.4% for 2016.
- Non-GAAP net income for 2017 was $41.8 million, resulting in
Non-GAAP diluted net income per share of $0.29, compared with $51.0
million and $0.34 per share, respectively, for 2016.
- Net cash provided by operating activities was $97.7 million for
2017, a year-over-year increase of 5% compared with $92.8 million
for 2016, and representing 21.7% of revenue.
“We’re pleased with the transformations and
achievements of our financial goals in 2017, delivering revenue and
Adjusted EBITDA growth in-line with our guidance, expanding margins
on a year-over-year basis, and again generating strong operating
cash flow,” said Chris Greiner, chief financial officer and chief
operating officer of Inovalon.
Adjusted EBITDA, Adjusted EBITDA margin and
Non-GAAP net income are Non-GAAP measures. Net income is the GAAP
financial measure most directly comparable to Adjusted EBITDA and
Non-GAAP net income. Reconciliations of net income to Adjusted
EBITDA and Non-GAAP net income, identifying the differences between
net income and each of these Non-GAAP financial measures, are
included in this press release after the consolidated financial
statements.
Key Highlights
- Strong Financial Performance In-Line with Company
Expectations. Fourth quarter revenue of $114.6 million
grew 19% year-over-year as reported and 14% year-over-year
organically1, in-line with the Company’s preliminary expected
results announced on January 8, 2018 as well as with the guidance
previously provided in the Company’s Q3 2017 earnings report.
Fourth quarter gross margin of 67.6% improved 780 basis points
year-over-year and 80 basis points sequentially, demonstrating
continued operating leverage from higher-margin offering mix,
favorable pricing, and technology-enabled efficiencies that
Inovalon has realized throughout 2017. Adjusted EBITDA of $25.5
million was at the mid-point of the Company’s previously-stated
expectations, and Adjusted EBITDA margin of 22.3% was up 740 basis
points year-over-year, driven by higher gross margin. The Company's
strong financial performance continued to drive healthy cash flow,
with full-year 2017 net cash provided by operating activities of
$97.7 million, representing 21.7% of revenue and slightly ahead of
Company expectations.
- Underlying Growth and Transition to Subscription-Based
Platforms. Inovalon is successfully orchestrating a
transition from legacy enterprise solutions to subscription-based
cloud-based platform offerings. In 2016, the Company's revenue
consisted of 12%, 34%, and 54%, from services, legacy enterprise
solutions, and subscription-based cloud-based platform offerings,
respectively. In 2017, these contributions were 15%, 19%, and 66%,
respectively, reflecting a year-over-year growth of approximately
30% in subscription-based cloud-based platform offerings in 2017.
Driving the expansion in subscription-based cloud-based platform
offering adoption is an increase in the number of patients on the
Inovalon ONE™ Platform, a number that reached over 94 million at
the end of 2017, a year-over-year increase of over 450%. As clients
contract for an increasing scope of capabilities enabled through
the Inovalon ONE™ Platform, their realized value increases, as does
subscription-based revenue to Inovalon. As of the end of 2017, the
vast majority of clients represented by the more than 94 million
patients on the Inovalon ONE™ Platform utilized only a small
fraction of the Platform’s capabilities.
- Continued Strong Expansion of Connectivity and Deeper
Clinical Datasets. During 2017, Inovalon significantly
expanded its industry-leading datasets and healthcare ecosystem
connectivity, both key differentiators for the Company. At the end
of 2017, Inovalon had achieved direct electronic health record
(EHR) system connectivity with more than 126,000 physicians,
representing growth of 23% from 2016 levels, and expects
connectivity to continue to grow significantly in 2018. Data within
the Company’s proprietary MORE2 Registry® dataset also continued to
expand, ending 2017 with a unique patient count of more than 240
million and medical event count of nearly 38 billion, up 59% and
183%, respectively, from 2016. In addition to new engagements and
the expansion of existing engagements, dataset metric growth during
2017 was driven by the addition of clinical data for over 40
million patients from the Company’s EHR connectivity.
- Comments Regarding Overall Growth Dynamics in
2018. In 2017, the Company achieved a reacceleration of
growth. Strong market adoption of the Company’s cloud-based
platform offerings supported a 30% growth rate in the Company’s
subscription-based cloud-based platform offerings and an organic
revenue growth rate in the fourth quarter of 14% on a
year-over-year basis. The Company's strong underlying business
performance is expected to continue in 2018. Opposing these
positive and accelerating growth factors, however, are the
short-term effects of ACA-related decisions of certain health plans
within Inovalon’s client base. Decisions by a limited number of
clients to withdraw from ACA markets resulted in a decrease in
contract activity, and in one case a contract non-renewal, that is
expected to have an estimated combined negative impact of
approximately 8% on Inovalon’s growth rate in 2018, predominantly
seen in the first half of the year. The strong underlying organic
growth of the Company is seen as surpassing this factor by the
second half of the year, resulting in full year projected growth
(excluding any unannounced acquisitions) of approximately 5% at the
midpoint of guidance. Adjusting for the impact of these
client-specific ACA decisions, Inovalon's growth rate in 2018 would
be consistent with the Company's organic growth rate exiting the
fourth quarter of 2017.
Management Transition
Inovalon’s chief financial officer and chief
operating officer, Mr. Christopher Greiner, has accepted a new
opportunity outside of the Company that is relocating him closer to
his family in New York.
“The last five years with Inovalon have
been professionally invigorating and personally rewarding. Working
alongside so many mission-driven colleagues and clients focused on
transforming how technology can be the driving force to improving
healthcare has been an enriching and humbling experience,” said
Mr. Greiner.
In order to ensure a smooth transition, Mr.
Greiner will remain with the Company until March 16, 2018. Mr.
Jonathan Boldt, vice president of finance, has been named the
interim chief financial officer until such time as a permanent
replacement is named. Mr. Boldt joined the Company in 2012 and was
previously with Deloitte & Touche, LLP. Mr.
Greiner's operational responsibilities will report to Mr.
Robert Wychulis, president of Inovalon.
“The Company's capabilities in the areas of
Finance and Operations have materially advanced over the years. One
of the many key contributors enabling the Company's progress has
been Jonathan,” said Dr. Keith Dunleavy, chief executive officer
and chairman of Inovalon. “The Board, management team and I have a
very high degree of confidence in Jonathan and we are pleased to
see him take on another leadership role at Inovalon.”
Other Financial Data and Key
Metrics
The following constitute other financial and key
metrics which are presented quarterly.
- Growth of Datasets: At December 31, 2017, the MORE2
Registry® dataset contained more than 240 million unique patient
counts and nearly 38 billion medical event counts, increases of 59%
and 183%, respectively, compared with December 31, 2016.
- Investment in Innovation: For the quarter ended
December 31, 2017, Inovalon’s ongoing investment supporting
innovations in advanced, cloud-based platforms empowering a
data-driven transformation from volume-based to value-based models
was $26.4 million, or 23.0% of revenue. For the full year
2017, Inovalon’s Investment in Innovation was $85.8 million,
or 19.1% of revenue.
- Analytical Process Count Growth: Inovalon’s trailing 12-month
Patient Analytics Months (PAM) count, which the Company believes is
indicative of the Company’s overall level of analytical activity,
grew to more than 42 billion as of December 31, 2017, an
increase of 60% as compared with December 31, 2016.
Please see the Company’s filings with the
Securities and Exchange Commission (“SEC”) for further detail
regarding the preceding other financial data and key metrics.
Impact of Changes in Tax
Legislation
On December 22, 2017, the Tax Cuts and Jobs Act
of 2017 (the “Tax Act”) was signed into law. As a result of the Tax
Act, the Company remeasured its ending deferred tax assets and
liabilities at December 31, 2017 to reflect the decrease in the
federal corporate tax rate. As a result, the Company recognized a
$15.5 million tax benefit in the Company’s consolidated statement
of operations for the fourth quarter and full year ended December
31, 2017. The tax benefit recognized may be impacted if additional
guidance is released. Also, as a result of the Tax Act, the Company
expects its future effective tax rate to decrease, which is
discussed in more detail below with respect to the Company's
outlook for 2018.
Shares Outstanding
During the fourth quarter of 2017, Inovalon
continued to repurchase shares of its Class A common stock in the
open market, pursuant to its previously-announced share repurchase
program, repurchasing approximately 1.9 million shares of Class A
common stock for a total of $28.6 million. This brings the total
number of shares repurchased from the open market since the start
of the repurchase program to approximately 14.6 million shares. The
share repurchase program expired on December 31, 2017. As of
February 9, 2018, the Company had 63.4 million shares of Class
A common stock outstanding and 81.0 million shares of Class B
common stock outstanding.
2018 Financial Guidance
The combination of the above-referenced factors
yield the following guidance for 2018.
|
|
|
Financial Metric |
|
2018 Guidance |
Revenue |
|
$462 million to $482
million |
Net income |
|
$12 million to $16
million |
Adjusted EBITDA |
|
$113 million to $121
million |
Non-GAAP net
income |
|
$44 million to $49
million |
Diluted net income per
share |
|
$0.09 to $0.11 |
Non-GAAP diluted net
income per share |
|
$0.31 to $0.35 |
|
|
|
Inovalon’s 2018 guidance excludes the impact of
any additional acquisitions that have not yet been announced or
consummated.
Reconciliations of net income, the GAAP
financial measure most directly comparable to Adjusted EBITDA and
Non-GAAP net income, identifying the differences between each of
these Non-GAAP financial measures and net income, are included in
this press release after the consolidated financial statements.
While changes in the stock price could change
the fully diluted share count, under the treasury stock method, the
Company is assuming 140 million shares for the full year 2018.
Additionally, the Company’s guidance assumes an effective tax rate
of approximately 30% for the full year 2018.
Conference Call
Inovalon will host a conference call to discuss
its fourth quarter 2017 results at 5:00 p.m. Eastern Time today. To
participate in Inovalon’s conference call, please dial (855)
783-2604, conference ID 2753709; international callers should dial
(631) 485-4882 using the same conference ID. A replay will be
available on Inovalon’s investor relations website
(http://investors.inovalon.com).
Please refer to our Fourth Quarter & Full
Year 2017 Earnings Presentation Supplement available at
http://investors.inovalon.com for additional information,
including financial metrics, guidance details, and other
information that will be referenced during the Company’s conference
call.
About the Inovalon ONE™
Platform
The Inovalon ONE™ Platform is an integrated
cloud-based platform of more than 80 individual proprietary
technology toolsets able to be rapidly configured to empower the
operationalization of large-scale data-driven and value-based
healthcare initiatives. The Platform brings to the marketplace a
highly extensible, national-scale capability to interconnect with
the healthcare ecosystem, aggregate and analyze data in petabyte
volumes, arrive at sophisticated insights in real time, drive
meaningful impact wherever it is analytically identified best to
intervene, and intuitively visualize data and information to inform
business strategy and execution.
About Inovalon
Inovalon is a leading technology company
providing cloud-based platforms empowering a data-driven
transformation from volume-based to value-based models throughout
the healthcare industry. Through the Inovalon ONE™ Platform,
Inovalon brings to the marketplace a national-scale capability to
interconnect with the healthcare ecosystem on massive scale,
aggregate and analyze data in petabyte volumes to arrive at
sophisticated insights in real-time, drive impact wherever it is
analytically identified best to intervene, and intuitively
visualize data and information to inform business strategy and
execution. Leveraging its platform, unparalleled proprietary data
sets, and industry-leading subject matter expertise, Inovalon
enables the assessment and improvement of clinical and quality
outcomes and financial performance across the healthcare ecosystem.
From health plans and provider organizations, to pharmaceutical,
medical device, and diagnostics companies, Inovalon's unique
achievement of value is delivered through the effective progression
of “Turning Data into Insight, and Insight into Action®.” Providing
technology that supports a client base approaching 500 healthcare
organizations, Inovalon's platforms are informed by data pertaining
to more than 932,000 physicians, 455,000 clinical facilities, and
240 million individuals. For more information,
visit www.inovalon.com.
Forward Looking Statements
Certain statements contained in this press
release constitute forward-looking statements within the meaning
of, and are intended to be covered by the safe harbor provisions
of, Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as
amended. All statements contained in this press release other than
statements of historical fact, including but not limited to
statements regarding the roll-out of any product or capability, the
timing, performance characteristics and utility of any such product
or capability, and the impact of any such product or
capability on the healthcare industry, future results of operations
and financial position, business strategy and plans, market growth,
and objectives for future operations, are forward-looking
statements. The words “believe,” “may,” “see,” “will,” “estimate,”
“continue,” “anticipate,” “assume,” “intend,” “expect,” “project,”
“look forward,” and similar expressions are intended to identify
forward-looking statements. Forward-looking statements in this
press release include, but are not limited to, strategies and
business plans, expectations regarding future results, expectations
regarding the size of our datasets, and financial guidance for
2018. Inovalon has based these forward-looking statements largely
on current expectations and projections about future events and
trends that may affect financial condition, results of operations,
business strategy, short-term and long-term business operations and
objectives, and financial needs as of the date of this press
release. These forward-looking statements are subject to a number
of risks, uncertainties, and assumptions, which could cause the
future events and trends discussed in this press release not to
occur and could cause actual results to differ materially and
adversely from those anticipated or implied in the forward-looking
statements.
These risks, uncertainties, and assumptions
include, among others: the Company’s ability to continue and manage
growth; ability to grow the client base, retain and renew the
existing client base and maintain or increase the fees and activity
with existing clients; the effect of the concentration of revenue
among top clients; the ability to innovate new services and adapt
platforms and toolsets; the ability to successfully implement
growth strategies, including the ability to expand into adjacent
verticals, such as direct to consumer, growing channel
partnerships, expanding internationally and successfully pursuing
acquisitions; the ability to successfully integrate our
acquisitions and the ability of the acquired business to perform as
expected; the successful implementation and adoption of new
platforms and solutions, including the Inovalon ONE™
Platform, Data Diagnostics® and INDICES® Value-Based
Provider Platform; the possibility of technical, logistical or
planning issues in connection with the Company’s investment in and
successful deployment of the Company’s products, services and
technological advancements; the ability to enter into new
agreements with existing or new platforms, products and solutions
in the timeframes expected, or at all; the impact of pending
M&A activity in the managed care industry, including potential
positive or negative impact on existing contracts or the demand for
new contracts; the effects of and costs associated with compliance
with regulations applicable to the Company, including regulations
relating to data protection and data privacy; the effects of
changes in tax laws in the jurisdictions in which we operate,
including the Tax Act; the ability to protect the privacy of
clients’ data and prevent security breaches; the effect of
competition on the business; and the efficacy of the Company’s
platforms and toolsets. Additional information is also set forth in
the Company’s Annual Report on Form 10-K for the year ended
December 31, 2016, filed with the SEC on February 23,
2017, included under the heading Item 1A, “Risk Factors,” and in
subsequent filings with the SEC. The Company is under no duty to,
and disclaims any obligation to, update any of these
forward-looking statements after the date of this press release or
conform these statements to actual results or revised expectations,
except as required by law.
Use of Non-GAAP Financial
Measures
In the Company’s earnings releases, prepared
remarks, conference calls, slide presentations and webcasts, there
may be use or discussion of non-GAAP financial measures. The GAAP
financial measure most directly comparable to each non-GAAP
financial measure used or discussed, and a reconciliation of the
differences between the comparable GAAP financial measure and each
non-GAAP financial measure are included in this press release after
the consolidated financial statements.
1 Organic revenue growth is defined as growth excluding revenue
from businesses acquired within the last 12 months.
Inovalon
Holdings, Inc.Consolidated Statements of
Income (unaudited)
|
|
|
|
(In thousands,
except per-share amounts) |
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Revenue |
$ |
114,619 |
|
|
$ |
96,093 |
|
|
$ |
449,358 |
|
|
$ |
427,588 |
|
Expenses: |
|
|
|
|
|
|
|
Cost of
revenue(1) |
37,132 |
|
|
38,599 |
|
|
151,046 |
|
|
159,169 |
|
Sales and
marketing(1) |
9,738 |
|
|
7,366 |
|
|
34,103 |
|
|
27,078 |
|
Research
and development(1) |
6,533 |
|
|
8,101 |
|
|
27,383 |
|
|
29,148 |
|
General
and administrative(1) |
41,946 |
|
|
32,053 |
|
|
149,948 |
|
|
137,275 |
|
Depreciation and amortization |
14,575 |
|
|
11,490 |
|
|
53,089 |
|
|
37,284 |
|
Total
operating expenses |
109,924 |
|
|
97,609 |
|
|
415,569 |
|
|
389,954 |
|
Income from
operations |
4,695 |
|
|
(1,516 |
) |
|
33,789 |
|
|
37,634 |
|
Other income and
(expenses): |
|
|
|
|
|
|
|
Realized
gains on short-term investments |
— |
|
|
— |
|
|
— |
|
|
4 |
|
(Loss)
Gain on disposal of equipment |
(25 |
) |
|
— |
|
|
(406 |
) |
|
534 |
|
Interest
income |
1,384 |
|
|
1,368 |
|
|
5,429 |
|
|
5,792 |
|
Interest
expense |
(1,676 |
) |
|
(1,259 |
) |
|
(6,225 |
) |
|
(5,065 |
) |
Income before
taxes |
4,378 |
|
|
(1,407 |
) |
|
32,587 |
|
|
38,899 |
|
(Benefit from)
Provision for income taxes |
(13,071 |
) |
|
(2,088 |
) |
|
(2,231 |
) |
|
11,795 |
|
Net income |
$ |
17,449 |
|
|
$ |
681 |
|
|
$ |
34,818 |
|
|
$ |
27,104 |
|
Net income attributable
to common stockholders, basic and diluted |
$ |
16,864 |
|
|
$ |
674 |
|
|
$ |
33,828 |
|
|
$ |
26,943 |
|
Net income per share
attributable to common stockholders, basic and diluted: |
|
|
|
|
|
|
|
Basic net
income per share |
$ |
0.12 |
|
|
$ |
— |
|
|
$ |
0.24 |
|
|
$ |
0.18 |
|
Diluted
net income per share |
$ |
0.12 |
|
|
$ |
— |
|
|
$ |
0.24 |
|
|
$ |
0.18 |
|
Weighted average shares
of common stock outstanding: |
|
|
|
|
|
|
|
Basic |
140,338 |
|
|
146,495 |
|
|
142,225 |
|
|
150,048 |
|
Diluted |
140,928 |
|
|
147,103 |
|
|
142,737 |
|
|
150,955 |
|
_______________________________________________________ |
|
|
|
|
|
|
|
|
|
|
|
(1) Includes
stock-based compensation expense as follows: |
|
|
|
|
|
|
|
|
|
|
|
Cost of
revenue |
$ |
463 |
|
|
$ |
149 |
|
|
$ |
1,652 |
|
|
$ |
483 |
|
Sales and
marketing |
|
555 |
|
|
|
167 |
|
|
|
2,011 |
|
|
|
613 |
|
Research
and development |
|
364 |
|
|
|
257 |
|
|
|
1,293 |
|
|
|
1,184 |
|
General
and administrative |
|
3,611 |
|
|
|
3,129 |
|
|
|
12,362 |
|
|
|
7,774 |
|
Total
stock-based compensation expense |
$ |
4,993 |
|
|
$ |
3,702 |
|
|
$ |
17,318 |
|
|
$ |
10,054 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inovalon
Holdings, Inc.Consolidated Balance Sheets
(unaudited)
|
|
|
|
(In
thousands) |
December 31, 2017 |
|
December 31, 2016 |
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and
cash equivalents |
$ |
208,944 |
|
|
$ |
127,683 |
|
Short-term investments |
267,288 |
|
|
445,315 |
|
Accounts
receivable (net of allowances of $2,038 and $3,782 at
December 31, 2017 and 2016, respectively) |
90,054 |
|
|
85,591 |
|
Prepaid
expenses and other current assets |
10,441 |
|
|
12,100 |
|
Income
tax receivable |
11,987 |
|
|
15,165 |
|
Total
current assets |
588,714 |
|
|
685,854 |
|
Non-current
assets: |
|
|
|
Property,
equipment and capitalized software, net |
125,768 |
|
|
76,420 |
|
Goodwill |
184,932 |
|
|
184,557 |
|
Intangible assets, net |
89,326 |
|
|
103,549 |
|
Other
assets |
6,338 |
|
|
2,964 |
|
Total
assets |
$ |
995,078 |
|
|
$ |
1,053,344 |
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
Current
liabilities: |
|
|
|
Accounts
payable |
$ |
34,109 |
|
|
$ |
16,474 |
|
Accrued
compensation |
18,592 |
|
|
15,211 |
|
Other
current liabilities |
15,277 |
|
|
9,468 |
|
Deferred
revenue |
6,954 |
|
|
11,850 |
|
Deferred
rent |
1,818 |
|
|
1,016 |
|
Credit
facilities |
45,000 |
|
|
30,000 |
|
Capital
lease obligation |
336 |
|
|
115 |
|
Total
current liabilities |
122,086 |
|
|
84,134 |
|
Non-current
liabilities: |
|
|
|
Credit
facilities, less current portion |
191,250 |
|
|
236,250 |
|
Capital
lease obligation, less current portion |
12,109 |
|
|
215 |
|
Deferred
rent |
219 |
|
|
1,457 |
|
Other
liabilities |
— |
|
|
13,158 |
|
Deferred
income taxes |
26,642 |
|
|
34,553 |
|
Total
liabilities |
352,306 |
|
|
369,767 |
|
Commitments and
contingencies |
|
|
|
Stockholders'
equity: |
|
|
|
Common
stock, $0.000005 par value, 900,000,000 shares authorized, zero
shares issued and outstanding at each of December 31, 2017 and
2016, respectively |
— |
|
|
— |
|
Class A common stock, $0.000005 par value, 750,000,000 shares
authorized; 77,588,018 shares issued and 62,967,843 shares
outstanding at December 31, 2017; 72,271,298 shares issued and
64,786,705 shares outstanding at December 31, 2016 |
— |
|
|
— |
|
Class B common stock, $0.000005 par value, 150,000,000 shares
authorized; 80,957,495 shares issued and outstanding at
December 31, 2017; 83,303,628 shares issued and outstanding at
December 31, 2016 |
1 |
|
|
1 |
|
Preferred
stock, $0.0001 par value, 100,000,000 shares authorized, zero
shares issued and outstanding at December 31, 2017 and 2016,
respectively |
— |
|
|
— |
|
Additional paid-in-capital |
534,159 |
|
|
516,300 |
|
Retained
earnings |
308,905 |
|
|
274,087 |
|
Treasury
stock, at cost, 14,620,175 and 7,508,985 shares at
December 31, 2017 and 2016, respectively |
(199,817 |
) |
|
(106,231 |
) |
Other
comprehensive loss |
(476 |
) |
|
(580 |
) |
Total
stockholders' equity |
642,772 |
|
|
683,577 |
|
Total liabilities and
stockholders' equity |
$ |
995,078 |
|
|
$ |
1,053,344 |
|
|
|
|
|
|
|
|
|
Inovalon
Holdings, Inc.Consolidated Statements of Cash
Flows (unaudited)
|
|
|
Year Ended December 31, |
(in
thousands) |
2017 |
|
2016 |
Cash flows from
operating activities: |
|
|
|
Net
income |
$ |
34,818 |
|
|
$ |
27,104 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
Stock-based compensation expense |
17,318 |
|
|
10,054 |
|
Depreciation |
37,853 |
|
|
28,078 |
|
Amortization of intangibles |
15,236 |
|
|
9,206 |
|
Amortization of premiums or discounts on short-term
investments |
1,958 |
|
|
3,163 |
|
Realized
gains on short-term investments |
— |
|
|
(4 |
) |
Tax
payments for equity award issuances |
— |
|
|
127 |
|
Deferred
income taxes |
(6,665 |
) |
|
(1,740 |
) |
Loss
(Gain) on disposal of equipment and long-lived assets |
406 |
|
|
(534 |
) |
Change in
fair value of contingent consideration |
(5,200 |
) |
|
706 |
|
Bargain
purchase gain |
(1,434 |
) |
|
— |
|
Bad debt
expense |
— |
|
|
79 |
|
Changes
in assets and liabilities: |
|
|
|
Accounts
receivable |
(977 |
) |
|
4,683 |
|
Prepaid
expenses and other current assets |
3,346 |
|
|
(6,198 |
) |
Income
taxes receivable |
3,293 |
|
|
3,639 |
|
Other
assets |
(3,355 |
) |
|
4,071 |
|
Accounts
payable |
8,252 |
|
|
(3,463 |
) |
Accrued
compensation |
3,030 |
|
|
243 |
|
Other
liabilities |
(5,373 |
) |
|
10,479 |
|
Deferred
rent |
(440 |
) |
|
(770 |
) |
Deferred
revenue |
(4,360 |
) |
|
3,907 |
|
Net cash
provided by operating activities |
97,706 |
|
|
92,830 |
|
Cash flows from
investing activities: |
|
|
|
Acquisition, net of cash acquired of $1,535 and $861,
respectively |
(3,490 |
) |
|
(88,509 |
) |
Maturities of short-term investments |
174,416 |
|
|
300,524 |
|
Sales of
short-term investments |
1,175 |
|
|
31,549 |
|
Purchases
of short-term investments |
— |
|
|
(164,737 |
) |
Purchases
of property and equipment |
(32,565 |
) |
|
(19,360 |
) |
Investment in capitalized software |
(32,977 |
) |
|
(19,668 |
) |
Net cash
provided by investing activities |
106,559 |
|
|
39,799 |
|
Cash flows from
financing activities: |
|
|
|
Repurchase of common stock |
(93,586 |
) |
|
(106,231 |
) |
Repayment
of credit facility borrowings |
(30,000 |
) |
|
(15,000 |
) |
Acquisition-related contingent consideration |
— |
|
|
(2,300 |
) |
Proceeds
from exercise of stock options |
4,967 |
|
|
6,165 |
|
Capital
lease obligations paid |
(113 |
) |
|
(116 |
) |
Tax
payments for equity award issuances |
(4,272 |
) |
|
(1,498 |
) |
Net cash
used in financing activities |
(123,004 |
) |
|
(118,980 |
) |
Increase
in cash and cash equivalents |
81,261 |
|
|
13,649 |
|
Cash and
cash equivalents, beginning of period |
127,683 |
|
|
114,034 |
|
Cash and
cash equivalents, end of period |
$ |
208,944 |
|
|
$ |
127,683 |
|
Supplemental
cash flow disclosure: |
|
|
|
Cash paid during the year for: |
|
|
|
Income
taxes, net of refunds |
$ |
962 |
|
|
$ |
11,117 |
|
Interest |
5,972 |
|
|
4,835 |
|
Non-cash investing activities: |
|
|
|
Capital
lease obligations incurred |
12,231 |
|
|
— |
|
Accruals
of purchases of property, equipment |
7,924 |
|
|
816 |
|
Accruals
for investment in capitalized software |
2,711 |
|
|
913 |
|
|
|
|
|
|
|
Inovalon
Holdings, Inc.Adjusted Earnings Before
Interest, Taxes, Depreciation and Amortization
(unaudited)
Inovalon defines Adjusted Earnings Before
Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA) as
net income calculated in accordance with GAAP, adjusted for the
impact of depreciation and amortization, realized losses on
short-term investments, loss or gain on disposal of equipment,
interest income, interest expense, provision for income taxes,
stock-based compensation, acquisition costs, tax on equity
exercises, and other non-comparable items. Adjusted EBITDA margin
is defined as Adjusted EBITDA as a percentage of revenue. A
reconciliation of net income to Adjusted EBITDA follows:
|
|
|
|
(In thousands,
except percentages) |
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Reconciliation
of Net Income to Adjusted EBITDA: |
|
|
|
|
|
|
|
Net Income |
$ |
17,449 |
|
|
$ |
681 |
|
|
$ |
34,818 |
|
|
$ |
27,104 |
|
Depreciation and amortization |
14,575 |
|
|
11,490 |
|
|
53,089 |
|
|
37,284 |
|
Realized
gains on short-term investments |
— |
|
|
— |
|
|
— |
|
|
(4 |
) |
Loss
(Gain) on disposal of equipment |
25 |
|
|
— |
|
|
406 |
|
|
(534 |
) |
Interest
income |
(1,384 |
) |
|
(1,368 |
) |
|
(5,429 |
) |
|
(5,792 |
) |
Interest
expense |
1,676 |
|
|
1,259 |
|
|
6,225 |
|
|
5,065 |
|
(Benefit
from) Provision for income taxes |
(13,071 |
) |
|
(2,088 |
) |
|
(2,231 |
) |
|
11,795 |
|
EBITDA |
19,270 |
|
|
9,974 |
|
|
86,878 |
|
|
74,918 |
|
Stock-based compensation |
4,993 |
|
|
3,702 |
|
|
17,318 |
|
|
10,054 |
|
Acquisition costs: |
|
|
|
|
|
|
|
Transaction costs |
356 |
|
|
546 |
|
|
1,177 |
|
|
1,622 |
|
Integration costs |
289 |
|
|
— |
|
|
1,805 |
|
|
— |
|
Contingent consideration accretion |
(2,300 |
) |
|
— |
|
|
(5,200 |
) |
|
706 |
|
Compensatory contingent consideration |
558 |
|
|
(829 |
) |
|
1,966 |
|
|
10,258 |
|
Tax on
equity exercises |
— |
|
|
32 |
|
|
32 |
|
|
127 |
|
Other
non-comparable items(1) |
2,365 |
|
|
899 |
|
|
5,038 |
|
|
2,259 |
|
Adjusted EBITDA |
$ |
25,531 |
|
|
$ |
14,324 |
|
|
$ |
109,014 |
|
|
$ |
99,944 |
|
Adjusted EBITDA
margin |
22.3 |
% |
|
14.9 |
% |
|
24.3 |
% |
|
23.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
_______________________________________________________(1) Other
“non-comparable items” include items that are not comparable across
reporting periods or items that do not otherwise relate to the
Company’s ongoing financial results, such as certain employee
related expenses attributable to advancements in automation and
operational efficiencies. Non-comparable items are excluded from
Adjusted EBITDA in order to more effectively assess the Company’s
period over period and ongoing operating performance.
Inovalon
Holdings, Inc.Non-GAAP net income
(unaudited)
Inovalon defines Non-GAAP net income as net
income calculated in accordance with GAAP, adjusted to exclude
tax-affected stock-based compensation expense, acquisition costs,
amortization of acquired intangible assets, tax on equity
exercises, and other non-comparable items. A reconciliation of net
income to Non-GAAP net income follows:
|
|
|
|
(In thousands,
except per-share amounts) |
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Reconciliation
of Net Income to Non-GAAP net income: |
|
|
|
|
|
|
|
Net Income |
$ |
17,449 |
|
|
$ |
681 |
|
|
$ |
34,818 |
|
|
$ |
27,104 |
|
Stock-based compensation |
4,993 |
|
|
3,702 |
|
|
17,318 |
|
|
10,054 |
|
Acquisition costs: |
|
|
|
|
|
|
|
Transaction costs |
356 |
|
|
546 |
|
|
1,177 |
|
|
1,622 |
|
Integration costs |
289 |
|
|
— |
|
|
1,805 |
|
|
— |
|
Contingent consideration accretion |
(2,300 |
) |
|
— |
|
|
(5,200 |
) |
|
706 |
|
Compensatory contingent consideration |
558 |
|
|
(829 |
) |
|
1,966 |
|
|
10,258 |
|
Amortization of acquired intangible assets |
3,851 |
|
|
3,780 |
|
|
15,236 |
|
|
9,206 |
|
Tax on
equity exercises |
— |
|
|
32 |
|
|
32 |
|
|
127 |
|
Other
non-comparable items(1) |
2,365 |
|
|
899 |
|
|
5,038 |
|
|
2,259 |
|
Tax
impact of add-back items |
(4,328 |
) |
|
(1,392 |
) |
|
(14,949 |
) |
|
(10,383 |
) |
Tax Act
benefit |
(15,461 |
) |
|
— |
|
|
(15,461 |
) |
|
— |
|
Non-GAAP net
income |
$ |
7,772 |
|
|
$ |
7,419 |
|
|
$ |
41,780 |
|
|
$ |
50,953 |
|
|
|
|
|
|
|
|
|
GAAP basic net income
per share |
$ |
0.12 |
|
|
$ |
— |
|
|
$ |
0.24 |
|
|
$ |
0.18 |
|
GAAP diluted net income
per share |
$ |
0.12 |
|
|
$ |
— |
|
|
$ |
0.24 |
|
|
$ |
0.18 |
|
Non-GAAP basic net
income per share |
$ |
0.06 |
|
|
$ |
0.05 |
|
|
$ |
0.29 |
|
|
$ |
0.34 |
|
Non-GAAP diluted net
income per share |
$ |
0.06 |
|
|
$ |
0.05 |
|
|
$ |
0.29 |
|
|
$ |
0.34 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
_______________________________________________________(1) Other
“non-comparable items” include items that are not comparable across
reporting periods or items that do not otherwise relate to the
Company’s ongoing financial results, such as certain employee
related expenses attributable to advancements in automation and
operational efficiencies. Non-comparable items are excluded from
Non-GAAP Net Income in order to more effectively assess the
Company’s period over period and ongoing operating performance.
Inovalon
Holdings, Inc.Key
Metrics (unaudited)
The Company believes the key metrics illustrated
in the tables below are indicative of its overall level of
analytical activity and its underlying growth in the business.
|
|
|
December 31, |
(in
thousands) |
2017 |
|
2016 |
MORE2 Registry® dataset
metrics |
|
|
|
Unique
patient count(1) |
240,180 |
|
|
150,961 |
|
Medical
event count(2) |
37,813,583 |
|
|
13,345,220 |
|
Trailing 12 month
Patient Analytics Months (PAM)(3) |
42,156,422 |
|
|
26,401,946 |
|
|
|
|
|
|
|
_______________________________________________________(1) Unique
patient count is defined as each unique, longitudinally matched,
de-identified natural person represented in the
MORE2 Registry® as of the end of the period presented.(2)
Medical event count is defined as the total number of discrete
medical events as of the end of the period presented (for example,
a discrete medical event typically results from the presentation of
a patient to a physician for the diagnosis of diabetes and
congestive heart failure in a single visit, the presentation of a
patient to an emergency department for chest pain, etc.).(3)
Patient Analytics Months, or PAM, is defined as the sum of the
analytical processes performed on each respective patient within
patient populations covered by clients under contract. As used in
the metric, an “analytical process” is a distinct set of data
calculations undertaken by the Company which is initiated and
completed by the Company’s analytical platform to examine a
specific question such as whether a patient is believed to have a
condition such as diabetes, or worsening of the disease, during a
specific time period.
Inovalon
Holdings, Inc.Investment in
Innovation (unaudited)
The Company’s business model is based upon the
ability to deliver value to clients through the combination of
advanced, cloud-based data analytics and data-driven intervention
platforms focused on the achievement of meaningful and measurable
improvements in clinical quality outcomes and financial performance
in healthcare. The Company’s ability to deliver this value is
dependent in part on the ability to continue to innovate, design
new capabilities, and bring these capabilities to market in an
enterprise scale. The Company’s continued ability to innovate the
platform and bring differentiated capabilities to market is an
important aspect of the Company’s business success. The Company’s
investment in innovation includes costs for research and
development, capitalized software development, and expenditures
related to hardware and software platforms on which data analytics
and data-driven interventions capabilities are deployed as
summarized below.
|
|
|
|
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
(In thousands,
except percentages) |
2017 |
|
2016 |
|
2017 |
|
2016 |
Investment in
Innovation: |
|
|
|
|
|
|
|
Research
and development(1) |
$ |
6,533 |
|
|
$ |
8,101 |
|
|
$ |
27,383 |
|
|
$ |
29,148 |
|
Capitalized software development(2) |
10,219 |
|
|
5,214 |
|
|
34,789 |
|
|
21,994 |
|
Research
and development infrastructure investments(3) |
9,602 |
|
|
7,797 |
|
|
23,642 |
|
|
11,288 |
|
Total
investment in innovation |
$ |
26,354 |
|
|
$ |
21,112 |
|
|
$ |
85,814 |
|
|
$ |
62,430 |
|
As a percentage
of revenue |
|
|
|
|
|
|
|
Research
and development(1) |
6 |
% |
|
8 |
% |
|
6 |
% |
|
7 |
% |
Capitalized software development(2) |
9 |
% |
|
5 |
% |
|
8 |
% |
|
5 |
% |
Research
and development infrastructure investments(3) |
8 |
% |
|
9 |
% |
|
5 |
% |
|
3 |
% |
Total
investment in innovation |
23 |
% |
|
22 |
% |
|
19 |
% |
|
15 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
_______________________________________________________(1) Research
and development primarily includes employee costs related to the
development and enhancement of the Company’s service offerings.(2)
Capitalized software development includes capitalized costs
incurred to develop and enhance functionality for the Company’s
data analytics and data-driven intervention platforms.(3) Research
and development infrastructure investments include strategic
expenditures related to hardware and software platforms under
development or enhancement.
Inovalon
Holdings, Inc.Forward-Looking Guidance
Adjusted EBITDA (unaudited)
|
|
|
Guidance Range |
|
Year Ending December 31, 2018 |
(In
millions) |
Low |
|
High |
Reconciliation
of Forward-Looking Guidance Net Income to Adjusted
EBITDA: |
|
|
|
Net Income |
$ |
12 |
|
|
$ |
16 |
|
Depreciation and amortization |
65 |
|
|
65 |
|
Loss on
disposal of equipment |
— |
|
|
— |
|
Interest
expense |
6 |
|
|
6 |
|
Interest
income |
(6 |
) |
|
(5 |
) |
Provision
for income taxes(1) |
5 |
|
|
7 |
|
EBITDA |
82 |
|
|
89 |
|
Stock-based compensation |
18 |
|
|
18 |
|
Acquisition costs: |
|
|
|
Transaction costs |
— |
|
|
— |
|
Integration costs |
3 |
|
|
3 |
|
Contingent consideration accretion |
4 |
|
|
4 |
|
Compensatory contingent consideration |
2 |
|
|
2 |
|
Other
non-comparable items(2) |
4 |
|
|
5 |
|
Adjusted EBITDA |
$ |
113 |
|
|
$ |
121 |
|
Adjusted EBITDA
margin |
24.5 |
% |
|
25.1 |
% |
|
|
|
|
|
|
_______________________________________________________(1) A 30%
tax rate is assumed in order to approximate the Company’s effective
statutory corporate tax rate.(2) Other “non-comparable items”
include items that are not comparable across reporting periods or
items that do not otherwise relate to the Company’s ongoing
financial results, such as certain employee related expenses
attributable to advancements in automation and operational
efficiencies. Non-comparable items are excluded from Adjusted
EBITDA in order to more effectively assess the Company’s period
over period and ongoing operating performance.
|
Inovalon
Holdings, Inc. |
|
|
|
|
Forward-Looking Guidance Non-GAAP Net Income
(unaudited) |
|
|
|
|
|
|
|
|
|
|
Guidance
Range |
|
|
Year Ending December 31,
2018 |
|
|
|
|
|
|
(In millions,
except per share amounts) |
Low |
|
High |
|
Reconciliation
of Forward-Looking Guidance Net Income to Non-GAAP
Net Income: |
|
|
|
|
Net income |
$ |
12 |
|
|
$ |
16 |
|
|
Stock‑based compensation |
|
18 |
|
|
|
18 |
|
|
Acquisition costs: |
|
|
|
|
Transaction costs |
|
— |
|
|
|
— |
|
|
Integration costs |
|
3 |
|
|
|
3 |
|
|
Contingent consideration accretion |
|
4 |
|
|
|
4 |
|
|
Compensatory contingent consideration |
|
2 |
|
|
|
2 |
|
|
Amortization of acquired intangible assets |
|
15 |
|
|
|
15 |
|
|
Other
non-comparable items (1) |
|
4 |
|
|
|
5 |
|
|
Tax
impact of add-back items (2) |
|
(14 |
) |
|
|
(14 |
) |
|
Non-GAAP net
income |
$ |
44 |
|
|
$ |
49 |
|
|
|
|
|
|
|
GAAP diluted net income
per share |
$ |
0.09 |
|
|
$ |
0.11 |
|
|
Non-GAAP diluted net
income per share |
$ |
0.31 |
|
|
$ |
0.35 |
|
|
|
|
|
|
|
Weighted average shares
of common stock outstanding - diluted |
|
140 |
|
|
|
140 |
|
|
|
|
|
|
|
_______________________________________________________(1) Other
“non-comparable items” include items that are not comparable across
reporting periods or items that do not otherwise relate to the
Company’s ongoing financial results, such as certain employee
related expenses attributable to advancements in automation and
operational efficiencies. Non-comparable items are excluded from
non-GAAP net income in order to more effectively assess the
Company’s period over period and ongoing operating performance.
(2) A 30% tax rate is assumed in order to approximate the
Company's effective statutory corporate tax rate.
Non-GAAP Financial Measures
Inovalon provides the measures Adjusted EBITDA,
Adjusted EBITDA margin, and Non-GAAP net income as additional
information for evaluating the Company’s operating results. These
measures are not prepared in accordance with, or as an alternative
for, GAAP accounting and may be different from non-GAAP measures
used by other companies.
Investors frequently have requested information
from management regarding depreciation, amortization and other
non-cash charges, such as stock-based compensation, as well as the
impact of non-comparable items and management believes, based on
discussions with investors, that these non-GAAP measures enhance
investors’ ability to assess Inovalon’s historical and projected
future financial performance. While management believes these
non-GAAP financial measures provide useful supplemental information
to investors, there are limitations associated with the use of
non-GAAP financial measures. For example, one limitation of
Adjusted EBITDA is that it excludes depreciation and amortization,
which represents the periodic costs of certain capitalized tangible
and intangible assets used in generating revenues in our business.
Inovalon compensates for these limitations by using these non-GAAP
financial measures as supplements to GAAP financial measures and by
reconciling the non-GAAP financial measures to their most
comparable GAAP financial measures. Investors are encouraged to
review the reconciliations of these non-GAAP financial measures to
the comparable GAAP measures that are provided above.
These non-GAAP measures include financial
information that is prepared in accordance with GAAP and presented
in our consolidated financial statements and are used to evaluate
our business, measure our performance, develop financial forecasts
and make strategic decisions and are an important factor in
determining variable
compensation.
Adjusted EBITDA and Adjusted EBITDA
Margin
The Company defines Adjusted EBITDA as net
income calculated in accordance with GAAP, adjusted for the impact
of depreciation and amortization, realized losses on short-term
investments, loss or gain on disposal of equipment, interest
income, interest expense, provision for income taxes,
stock-based compensation, acquisition costs (including transaction
costs, integration costs, costs related to contingent consideration
accretion and compensatory contingent consideration), tax on equity
exercises, and other non-comparable items. A reconciliation of net
income, which is the most directly comparable GAAP financial
measure, to Adjusted EBITDA is provided above.
Adjusted EBITDA margin is the Company’s
calculation of Adjusted EBITDA, divided by revenue calculated in
accordance with GAAP.
The Company uses Adjusted EBITDA and Adjusted
EBITDA margin as supplemental measures of performance to gain
insight into operating effectiveness. The Company uses Adjusted
EBITDA and Adjusted EBITDA margin as key metrics to assess its
ability to increase revenues while controlling expense growth and
the scalability of the Company’s business model. The Company
believes that the exclusion of the expenses eliminated in
calculating Adjusted EBITDA and Adjusted EBITDA margin provides
management and investors a useful measure for period-to-period
comparisons of the Company’s core business and operating results by
excluding items that are not comparable across reporting periods or
that do not otherwise relate to the Company’s ongoing operating
results. Accordingly, the Company believes that Adjusted EBITDA and
Adjusted EBITDA margin provide useful information to investors and
others in understanding and evaluating the Company’s operating
results. However, use of Adjusted EBITDA and Adjusted EBITDA margin
as analytical tools has limitations, and investors and others
should not consider them in isolation or as substitutes for
analysis of our financial results as reported under GAAP. In
addition, other companies, including companies in Inovalon’s
industry, might calculate Adjusted EBITDA and Adjusted EBITDA
margin or similarly titled measures differently, which may reduce
their usefulness as comparative measures.
Non-GAAP net income
The Company defines Non-GAAP net income as net
income calculated in accordance with GAAP, adjusted to exclude
tax-affected stock-based compensation expense, acquisition costs
(including transaction costs, integration costs, costs related to
contingent consideration accretion and compensatory contingent
consideration), amortization of acquired intangible assets, tax on
equity exercises, and other non-comparable items.
The Company uses Non-GAAP net income as a
supplemental measure of performance to gain insight into financial
effectiveness. The Company uses Non-GAAP net income as a key metric
to assess its ability to increase revenues while controlling
expense growth and the scalability of its business model. The
Company believes that the exclusion of the expenses eliminated in
calculating Non-GAAP net income provides management and investors a
useful measure for period to period comparisons of the Company’s
core business and financial results by excluding items that are not
comparable across reporting periods or that do not otherwise relate
to its ongoing financial results. Accordingly, the Company believes
that Non-GAAP net income provides useful information to investors
and others in understanding and evaluating the Company’s
performance. However, use of Non-GAAP net income as an analytical
tool has limitations, and investors and others should not consider
this measure in isolation or as a substitute for analysis of the
Company’s financial results as reported under GAAP. In addition,
other companies, including companies in Inovalon’s industry, might
calculate Non-GAAP net income or similarly titled measures
differently, which may reduce their usefulness as comparative
measures.
Contacts:
InovalonGeorge Price (Investors)Phone:
301-809-4000 x1190gprice@inovalon.com
InovalonKim E. Collins (Communications)Phone:
301-809-4000 x1473kcollins@inovalon.com
Inovalon (NASDAQ:INOV)
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