Company reports record revenue
and adjusted EBITDA at top end of guidance
range
MTBC (the “Company” or “MTBC”) (NASDAQ:MTBC) (NASDAQ:MTBCP), a
leading provider of proprietary, cloud-based healthcare IT
solutions and services, today announced financial and operational
results for year 2017. The Company’s management will conduct a
conference call later today at 8:30 a.m. Eastern Time to discuss
these results and management’s outlook for future financial and
operational performance.
“I am thrilled to report a strong finish to the
year, with revenue growth of 30% over 2016 and record adjusted
EBITDA of $2.3 million,” said Mahmud Haq, MTBC’s Executive
Chairman. “In addition to significant revenue growth and profit
improvement, our balance sheet has never been stronger,” he
continued. “We ended 2017 with $4.4 million of cash and virtually
no debt, having fully repaid our $10 million credit facility with
Opus Bank two years prior to the original maturity date, paid
Prudential the remaining purchase price of $5 million plus interest
related to the MediGain transaction, and secured a $5 million line
of credit from Silicon Valley Bank, which was untapped on December
31, 2017.
Stephen Snyder, MTBC’s Chief Executive Officer
said, “2017 was a landmark year for us, allowing us to dramatically
reduce costs and begin generating positive cash flow at the same
time we raised the capital which allowed us to end the year
virtually debt free.”
“During the year, we have seen more signs that
the industry is consolidating. EHR companies are finding it harder
to generate enough value for clients without an integrated revenue
cycle management offering, and RCM companies are finding it harder
to operate profitably without their own technology platform and
low-cost offshore teams,” said A. Hadi Chaudhry, MTBC’s President.
He continued, “these trends create a great opportunity for us to
partner with others in the industry, and with our strong capital
position, might provide an opportunity for significant acquisitions
at values that are accretive to shareholders.”
Full year 2017 financial
results
Revenues for full year 2017 were $31.8 million,
an increase of 30% compared to $24.5 million last year. The
increase was primarily due to the MediGain transaction. Revenue
exceeded the midpoint of our upward adjusted guidance, which was a
range of $31 to $32 million.
For the full year of 2017, the GAAP net loss was
$5.6 million, which was largely a result of non-cash amortization
and depreciation expense of $4.3 million. This reflected an
improvement of $3.2 million compared to the prior year. “We saw
steady improvement in our GAAP net loss for each of the last 4
quarters, as we reduced expenses which arose from our acquisition
of the assets of MediGain in October 2016,” said Bill Korn, Chief
Financial Officer. “The significant cost savings we have achieved
included reducing reliance on subcontractors, reducing fees paid to
third party software vendors, reducing U.S. facility and personnel
costs, closing offices in Poland and Bangalore, India, and
improving operating efficiencies.”
The GAAP net loss for 2017 was $0.69 per share,
calculated using the net loss attributable to common shareholders
divided by the weighted average number of common shares
outstanding.
Adjusted EBITDA for the full year of 2017 was
$2.3 million, or 7.2% of revenue, an improvement of $2.9 million
from compared to adjusted EBITDA of ($605,000) in 2016. Adjusted
EBITDA exceeded the midpoint of our guidance, which was a range of
$2.0 to $2.5 million, and represents the highest adjusted EBITDA
MTBC has achieved in its 15-year history. Bill Korn commented, “Our
business now has a higher scale than we did during most of 2016, so
we are able to spread our fixed expenses over a larger revenue base
and generate larger adjusted EBITDA than we ever have before.”
“The difference of $7.9 million between adjusted
EBITDA and the GAAP net loss in 2017 reflects $4.3 million of
non-cash amortization and depreciation expense, $1.3 million of net
interest expense, $1.5 million of stock-based compensation,
$791,000 of integration, transaction and restructuring costs
related to recent acquisitions, and a $68,000 provision for income
taxes,” said Bill Korn. Non-GAAP adjusted net income for 2017 was
$36,000, or $0.00 per share, an improvement of $2.0 million
compared to last year. Non-GAAP adjusted net income per share is
calculated using the end-of-period common shares outstanding.
“Non-GAAP adjusted net income excludes $3.4 million of non-cash
amortization of purchased intangible assets, $1.5 million of
stock-based compensation, $791,000 of integration, transaction and
restructuring costs and $249,000 of foreign exchange gains,” said
Bill Korn.
The 2017 GAAP operating loss was $4.5 million,
which represents an improvement of $3.4 million or 43% from the
operating loss in 2016. GAAP operating loss excludes the provision
for income taxes, net interest expense and other income and
expenses, which are included in the GAAP net loss.
Non-GAAP adjusted operating income was $1.3
million, or 4.1% of revenue, which represents an improvement of
$2.6 million from 2016. “This is our third consecutive quarter of
positive non-GAAP adjusted operating income, which excludes
non-cash expenses such as $3.4 million of purchased intangible
assets, $1.5 million of stock-based compensation and $791,000 of
integration, transaction and restructuring costs,” said Bill
Korn.
Fourth quarter 2017 financial
results
Revenues for fourth quarter 2017 were $8.3
million, compared to $8.8 million in the same period last year.
Fourth quarter 2016 revenue included residual revenue from certain
MediGain clients who we knew had decided not to continue prior to
the closing of our transaction in October 2016. We were able to
turn around MediGain’s largest client, who prior to our acquisition
had given indication that they were prepared to terminate services.
They are pleased with our performance and were our largest
revenue-generating client in 2017.
The fourth quarter 2017 GAAP net loss was
$184,000, or 2.2% of revenue, an improvement of $3.8 million
compared to a net loss of $4.0 million in fourth quarter of 2016.
“The dramatic reduction in our GAAP net loss was due to a $2.0
million or 33% reduction in direct operating costs, a $781,000 or
18% reduction in general & administrative expense and a
$908,000 reduction in depreciation & amortization expenses
compared with fourth quarter 2016,” said Bill Korn.
The GAAP net loss for fourth quarter 2017 was
$0.08 per share, calculated using the net loss attributable to
common shareholders divided by the weighted average number of
common shares outstanding.
Adjusted EBITDA for fourth quarter 2017 was $1.5
million, or 18% of revenue, compared to adjusted EBITDA of
($814,000), or (9.2%) of revenue, in the same period last year.
“The fourth quarter 2017 adjusted EBITDA represents an improvement
of $2.3 million from the same period last year, reflecting the
significant cost savings we have achieved,” continued Bill
Korn.
“The difference of $1.7 million between adjusted
EBITDA and the GAAP net loss in the fourth quarter of 2017 reflects
$663,000 of non-cash amortization and depreciation expense, $78,000
of net interest expense, $1.2 million of stock-based compensation,
$155,000 of integration and transaction costs, and $124,000 of
benefit for income taxes,” said Bill Korn.
Non-GAAP adjusted net income for fourth quarter
2017 was $1.3 million, or $0.13 per share, compared to the adjusted
net income of ($1.3 million) in the same period last year. Non-GAAP
adjusted net income per share is calculated using the end-of-period
common shares outstanding. This is the Company’s best quarter of
adjusted net income in our history.
The fourth quarter 2017 GAAP operating loss was
$454,000, which represents an improvement of $3.3 million from
fourth quarter of 2016.
Non-GAAP adjusted operating income for fourth
quarter 2017 was $1.4 million, or 16% of revenue. “The fourth
quarter 2017 adjusted operating income represents an improvement of
$1.0 million from the adjusted operating income in third quarter
2017 and an improvement of $2.4 million from fourth quarter 2016,”
continued Bill Korn. “This is our third consecutive quarter of
positive non-GAAP adjusted operating income, and reflects the fact
that our business is now at a scale where our revenues are
exceeding our cash operating expenses quarter after quarter.”
In fourth quarter 2017, cash flow from
operations was $1.6 million, and for the full year, cash flow from
operations was $282,000.
Cash Balance and Capital
As of December 31, 2017, the Company had $4.4
million in cash and positive working capital of approximately $4.6
million, a $12.0 million improvement from the working capital
deficiency of approximately $7.4 million reported at the end of the
year 2016.
The Company raised net proceeds of $16.5 million
from the sale of approximately 765,000 additional shares of its
non-convertible Series A Preferred Stock via six small public
offerings during 2017, as well as net proceeds of $2 million from a
registered direct sale of 1 million shares of common stock in May
2017. The preferred shares trade on the Nasdaq Capital Market under
the ticker MTBCP, and pay monthly cash dividends at the rate of 11%
per annum.
According to Bill Korn, “The cash cost of our
dividends is far less than what most businesses pay for term debt,
which is typically repaid over three or four years. Typically 25%
or 33% of the value of debt is spent annually to repay principal,
on top of the interest rate. Our Series A Preferred Stock is
perpetual, and has no mandatory redemption, although the Company
can choose to redeem shares at $25.00 per share starting in
November 2020, so our 11% cost is lower than the typical cash
outlay.”
The Company used a portion of the net proceeds
of these offerings to repay in full its term loans and line of
credit with Opus, which totaled approximately $9.3 million as of
December 31, 2016. In addition, the Company paid Prudential
approximately $5.3 million, which covered the remainder of the
purchase price related to the MediGain transaction, plus
interest.
During early October, the Company entered into a
new revolving credit facility with Silicon Valley Bank (“SVB”), and
repaid and terminated its previous revolving credit facility with
Opus. The SVB credit facility is a $5 million secured revolving
line of credit where borrowings are based on a formula of 200% of
repeatable revenue adjusted by an annualized attrition rate as
defined in the agreement. While there was nothing drawn on the SVB
credit facility at year-end 2017, and nothing as of today, the SVB
line can be used for future growth initiatives, including
acquisitions with SVB’s approval.
According to Bill Korn, “based on MTBC’s current
financial position, with net losses significantly lower than last
year, adjusted net income and adjusted EBITDA that are positive,
and cash flow from operations that is positive, the Company was
able to remove the ‘going concern’ disclosure included in last
year’s 10-K. We now have a solid financial foundation, which leaves
the Company well-positioned for growth. We have more capital
available now than at any time in the Company’s history, and see
exciting opportunities to profit from the continued consolidation
of the industry.”
Bill Korn continued, “In 2018, we have three
paths for continued growth, including organic growth, partnership
opportunities, and the potential for an accretive acquisition which
might be material. We are pursuing all three of these in parallel.
Unlike past years, today we can point to our recent results rather
than simply expectations for the future. We anticipate spending
more on sales and marketing in 2018 than the 3.5% of revenue we
spent in 2017, but we are confident that we will be able to report
significant growth in our adjusted EBITDA in 2018. Other metrics
may change, and the exact revenue and the quarterly numbers will
depending on the actual opportunities we close and the timing. As a
result, the Company has decided not to provide detailed
forward-looking guidance at this time.”
Conference Call Information
MTBC management will host a conference call
today at 8:30 a.m. Eastern Time to discuss the 2017 results. The
live webcast of the conference call can be accessed under Events
& Presentations at ir.mtbc.com or by dialing 412-317-5131
and referencing “MTBC Full Year and Fourth Quarter 2017 Earnings
Call.”
A replay of the conference call will be
available approximately one hour after conclusion of the call at
the same link. An audio replay can also be accessed by dialing
412-317-0088 and providing access code 10116612.
About MTBC
MTBC is a healthcare information technology
company that provides a fully integrated suite of proprietary
web-based solutions, together with related business services, to
healthcare providers practicing in ambulatory care settings. Our
integrated Software-as-a-Service (or SaaS) platform helps our
customers increase revenues, streamline workflows and make better
business and clinical decisions, while reducing administrative
burdens and operating costs. MTBC’s common stock trades on the
NASDAQ Capital Market under the ticker symbol “MTBC,” and its
Series A Preferred Stock trades on the NASDAQ Capital Market under
the ticker symbol “MTBCP.”
For additional information, please visit our
website at www.mtbc.com.
Follow MTBC on Twitter, LinkedIn and
Facebook.
PracticePro™, talkEHR™ and EnrollmentPlus™ are
trademarks of MTBC.
Use of Non-GAAP Financial
Measures
In our earnings releases, prepared remarks,
conference calls, slide presentations, and webcasts, we may use or
discuss non-GAAP financial measures, as defined by SEC Regulation
G. The GAAP financial measure most directly comparable to each
non-GAAP financial measure used or discussed, and a reconciliation
of the differences between each non-GAAP financial measure and the
comparable GAAP financial measure, are included in this press
release after the condensed consolidated financial statements. Our
earnings press releases containing such non-GAAP reconciliations
can be found in the Investor Relations section of our web site at
ir.mtbc.com.
Forward-Looking Statements
This press release contains various
forward-looking statements within the meaning of the federal
securities laws. These statements relate to anticipated future
events, future results of operations or future financial
performance. In some cases, you can identify forward-looking
statements by terminology such as “may,” “might,” “will,” “should,”
“intends,” “expects,” “plans,” “goals,” “projects,” “anticipates,”
“believes,” “estimates,” “predicts,” “potential,” or “continue” or
the negative of these terms or other comparable terminology.
Our operations involve risks and uncertainties,
many of which are outside our control, and any one of which, or a
combination of which, could materially affect our results of
operations and whether the forward-looking statements ultimately
prove to be correct. Forward-looking statements in this press
release include, without limitation, statements reflecting
management’s expectations for future financial performance and
operating expenditures, expected growth, profitability and business
outlook, increased sales and marketing expenses, and the expected
results from the integration of our acquisitions.
These forward-looking statements are only
predictions, are uncertain and involve substantial known and
unknown risks, uncertainties and other factors which may cause our
(or our industry’s) actual results, levels of activity or
performance to be materially different from any future results,
levels of activity or performance expressed or implied by these
forward-looking statements. New risks and uncertainties emerge from
time to time, and it is not possible for us to predict all of the
risks and uncertainties that could have an impact on the
forward-looking statements, including without limitation, risks and
uncertainties relating to the Company’s ability to manage growth,
migrate newly acquired customers and retain new and existing
customers, maintain cost-effective operations in Pakistan and Sri
Lanka, increase operational efficiency and reduce operating costs,
predict and properly adjust to changes in reimbursement and other
industry regulations and trends, retain the services of key
personnel, and other important risks and uncertainties referenced
and discussed under the heading titled “Risk Factors” in the
Company’s filings with the Securities and Exchange Commission.
The statements in this press release are made as
of the date of this press release, even if subsequently made
available by the Company on its website or otherwise. The Company
does not assume any obligations to update the forward-looking
statements provided to reflect events that occur or circumstances
that exist after the date on which they were made.
MEDICAL TRANSCRIPTION BILLING,
CORP.CONSOLIDATED BALANCE
SHEETSAS OF DECEMBER 31, 2017 AND
2016 |
|
|
|
2017 |
|
|
2016 |
|
ASSETS |
|
|
|
|
|
|
|
|
CURRENT ASSETS: |
|
|
|
|
|
|
|
|
Cash |
|
$ |
4,362,232 |
|
|
$ |
3,476,880 |
|
Accounts
receivable - net of allowance for doubtful accounts of $185,000 and
$156,000 at December 31, 2017 and December 31, 2016,
respectively |
|
|
3,879,463 |
|
|
|
4,330,901 |
|
Current
assets - related party |
|
|
25,203 |
|
|
|
13,200 |
|
Prepaid
expenses and other current assets |
|
|
662,822 |
|
|
|
618,501 |
|
Total
current assets |
|
|
8,929,720 |
|
|
|
8,439,482 |
|
Property and equipment
- net |
|
|
1,385,743 |
|
|
|
1,588,937 |
|
Intangible assets -
net |
|
|
2,509,544 |
|
|
|
5,833,706 |
|
Goodwill |
|
|
12,263,943 |
|
|
|
12,178,868 |
|
Other assets |
|
|
436,713 |
|
|
|
282,713 |
|
TOTAL ASSETS |
|
$ |
25,525,663 |
|
|
$ |
28,323,706 |
|
LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES: |
|
|
|
|
|
|
|
|
Accounts
payable |
|
$ |
991,859 |
|
|
$ |
1,905,131 |
|
Accrued
compensation |
|
|
1,137,351 |
|
|
|
2,009,911 |
|
Accrued
expenses |
|
|
616,778 |
|
|
|
1,236,609 |
|
Deferred
rent (current portion) |
|
|
81,826 |
|
|
|
61,437 |
|
Deferred
revenue (current portion) |
|
|
62,104 |
|
|
|
41,666 |
|
Accrued
liability to related party |
|
|
10,675 |
|
|
|
16,626 |
|
Borrowings under line of credit |
|
|
- |
|
|
|
2,000,000 |
|
Current
portion of long-term debt |
|
|
- |
|
|
|
2,666,667 |
|
Notes
payable - other (current portion) |
|
|
168,718 |
|
|
|
5,181,459 |
|
Contingent consideration (current portion) |
|
|
505,557 |
|
|
|
535,477 |
|
Dividend
payable |
|
|
747,147 |
|
|
|
202,579 |
|
Total
current liabilities |
|
|
4,322,015 |
|
|
|
15,857,562 |
|
Long - term debt, net
of discount and debt issuance costs |
|
|
- |
|
|
|
4,033,668 |
|
Notes payable -
other |
|
|
120,899 |
|
|
|
166,184 |
|
Deferred rent |
|
|
333,788 |
|
|
|
433,186 |
|
Deferred revenue |
|
|
28,615 |
|
|
|
26,673 |
|
Contingent
consideration |
|
|
97,854 |
|
|
|
394,072 |
|
Deferred tax
liability |
|
|
372,072 |
|
|
|
345,530 |
|
Total
liabilities |
|
|
5,275,243 |
|
|
|
21,256,875 |
|
COMMITMENTS AND
CONTINGENCIES |
|
|
|
|
|
|
|
|
SHAREHOLDERS’
EQUITY: |
|
|
|
|
|
|
|
|
Preferred
stock, par value $0.001 per share - authorized 2,000,000 shares;
issued and outstanding 1,086,739 and 294,656 shares at December 31,
2017 and December 31, 2016, respectively |
|
|
1,087 |
|
|
|
295 |
|
Common
stock, $0.001 par value - authorized 19,000,000 shares; issued
12,271,390 and 10,792,352 shares at December 31, 2017 and December
31, 2016, respectively; outstanding, 11,530,591 and 10,051,553
shares at December 31, 2017 and December 31, 2016,
respectively |
|
|
12,272 |
|
|
|
10,793 |
|
Additional paid-in capital |
|
|
45,129,517 |
|
|
|
26,038,063 |
|
Accumulated deficit |
|
|
(23,509,386 |
) |
|
|
(17,944,230 |
) |
Accumulated other comprehensive loss |
|
|
(721,070 |
) |
|
|
(376,090 |
) |
Less:
740,799 common shares held in treasury, at cost at December 31,
2017 and December 31, 2016 |
|
|
(662,000 |
) |
|
|
(662,000 |
) |
Total
shareholders’ equity |
|
|
20,250,420 |
|
|
|
7,066,831 |
|
TOTAL LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
$ |
25,525,663 |
|
|
$ |
28,323,706 |
|
MEDICAL TRANSCRIPTION BILLING,
CORP.CONSOLIDATED STATEMENTS OF
OPERATIONSFOR THE YEARS ENDED DECEMBER 31, 2017
AND 2016 |
|
|
|
2017 |
|
|
2016 |
|
NET REVENUE |
|
$ |
31,810,635 |
|
|
$ |
24,493,443 |
|
OPERATING
EXPENSES: |
|
|
|
|
|
|
|
|
Direct
operating costs |
|
|
17,679,070 |
|
|
|
13,416,627 |
|
Selling
and marketing |
|
|
1,106,698 |
|
|
|
1,224,243 |
|
General
and administrative |
|
|
11,738,201 |
|
|
|
12,458,820 |
|
Research
and development |
|
|
1,081,832 |
|
|
|
902,186 |
|
Change in
contingent consideration |
|
|
151,423 |
|
|
|
(715,495 |
) |
Depreciation and amortization |
|
|
4,299,943 |
|
|
|
5,108,035 |
|
Restructuring charges |
|
|
275,628 |
|
|
|
- |
|
Total
operating expenses |
|
|
36,332,795 |
|
|
|
32,394,416 |
|
OPERATING LOSS |
|
|
(4,522,160 |
) |
|
|
(7,900,973 |
) |
OTHER: |
|
|
|
|
|
|
|
|
Interest
income |
|
|
16,944 |
|
|
|
36,411 |
|
Interest
expense |
|
|
(1,324,219 |
) |
|
|
(682,083 |
) |
Other
income (expense) - net |
|
|
332,084 |
|
|
|
(53,276 |
) |
LOSS BEFORE INCOME
TAXES |
|
|
(5,497,351 |
) |
|
|
(8,599,921 |
) |
Income tax
provision |
|
|
67,805 |
|
|
|
196,802 |
|
NET LOSS |
|
$ |
(5,565,156 |
) |
|
$ |
(8,796,723 |
) |
|
|
|
|
|
|
|
|
|
Preferred stock
dividend |
|
|
2,030,295 |
|
|
|
752,525 |
|
NET LOSS ATTRIBUTABLE
TO COMMON SHAREHOLDERS |
|
$ |
(7,595,451 |
) |
|
$ |
(9,549,248 |
) |
Loss per common
share: |
|
|
|
|
|
|
|
|
Basic and diluted loss
per share |
|
$ |
(0.69 |
) |
|
$ |
(0.95 |
) |
Weighted-average basic and diluted shares outstanding |
|
|
11,010,432 |
|
|
|
10,036,988 |
|
MEDICAL TRANSCRIPTION BILLING,
CORP.CONSOLIDATED STATEMENTS OF CASH
FLOWSFOR THE YEARS ENDED DECEMBER
31, 2017 AND 2016 |
|
|
|
2017 |
|
|
2016 |
|
OPERATING
ACTIVITIES: |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(5,565,156 |
) |
|
$ |
(8,796,723 |
) |
Adjustments to
reconcile net loss to net cash provided by (used in) operating
activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
4,299,943 |
|
|
|
5,108,035 |
|
Deferred
rent |
|
|
(53,263 |
) |
|
|
(33,951 |
) |
Deferred
revenue |
|
|
22,380 |
|
|
|
(41,263 |
) |
Provision
for doubtful accounts |
|
|
409,693 |
|
|
|
291,465 |
|
Provision
for deferred income taxes |
|
|
26,542 |
|
|
|
174,261 |
|
Foreign
exchange (gain) loss |
|
|
(248,518 |
) |
|
|
92,160 |
|
Interest
accretion and write-off of deferred financing costs |
|
|
722,070 |
|
|
|
200,157 |
|
Non-cash
restructuring charges |
|
|
17,001 |
|
|
|
- |
|
Stock-based compensation expense |
|
|
1,487,295 |
|
|
|
1,877,815 |
|
Change in
contingent consideration |
|
|
151,423 |
|
|
|
(715,495 |
) |
Changes
in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts
receivable |
|
|
41,745 |
|
|
|
(456,468 |
) |
Other
assets |
|
|
511,917 |
|
|
|
323,117 |
|
Accounts
payable and other liabilities |
|
|
(1,541,430 |
) |
|
|
1,087,548 |
|
Net cash
provided by (used in) operating activities |
|
|
281,642 |
|
|
|
(889,342 |
) |
INVESTING
ACTIVITIES: |
|
|
|
|
|
|
|
|
Capital
expenditures |
|
|
(697,211 |
) |
|
|
(463,399 |
) |
Cash paid
for acquisitions |
|
|
(205,000 |
) |
|
|
(3,370,083 |
) |
Net cash
used in investing activities |
|
|
(902,211 |
) |
|
|
(3,833,482 |
) |
FINANCING
ACTIVITIES: |
|
|
|
|
|
|
|
|
Proceeds
from issuance of common stock, net of placement costs |
|
|
1,972,065 |
|
|
|
- |
|
Proceeds
from issuance of preferred stock, net of placement costs |
|
|
16,535,656 |
|
|
|
1,270,528 |
|
Preferred
stock dividends paid |
|
|
(1,485,727 |
) |
|
|
(709,182 |
) |
Purchase
of common shares |
|
|
- |
|
|
|
(546,145 |
) |
Settlement of tax withholding obligations on stock issued to
employees |
|
|
(195,912 |
) |
|
|
(8,500 |
) |
Proceeds
from long term debt, net of costs |
|
|
- |
|
|
|
1,908,141 |
|
Repayments of debt obligations |
|
|
(7,719,520 |
) |
|
|
(1,389,082 |
) |
Repayment
of Prudential obligation |
|
|
(5,000,000 |
) |
|
|
- |
|
Proceeds
from line of credit |
|
|
9,197,863 |
|
|
|
6,000,000 |
|
Repayments of line of credit |
|
|
(11,197,863 |
) |
|
|
(6,000,000 |
) |
Contingent consideration payments |
|
|
(145,885 |
) |
|
|
(190,831 |
) |
Other
financing activities |
|
|
(116,698 |
) |
|
|
(186,123 |
) |
Net cash
provided by financing activities |
|
|
1,843,979 |
|
|
|
148,806 |
|
EFFECT OF EXCHANGE RATE
CHANGES ON CASH |
|
|
(338,058 |
) |
|
|
11,336 |
|
NET INCREASE (DECREASE)
IN CASH |
|
|
885,352 |
|
|
|
(4,562,682 |
) |
CASH - Beginning of the
period |
|
|
3,476,880 |
|
|
|
8,039,562 |
|
CASH - End of
period |
|
$ |
4,362,232 |
|
|
$ |
3,476,880 |
|
SUPPLEMENTAL NONCASH
INVESTING AND FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
Vehicle
financing obtained |
|
$ |
26,746 |
|
|
$ |
222,214 |
|
Contingent consideration resulting from acquisitions |
|
$ |
- |
|
|
$ |
678,367 |
|
Dividends
declared, not paid |
|
$ |
747,147 |
|
|
$ |
202,579 |
|
Purchase
of prepaid insurance through assumption of note |
|
$ |
222,634 |
|
|
$ |
313,577 |
|
Warrants
issued |
|
$ |
390,479 |
|
|
$ |
52,015 |
|
SUPPLEMENTAL
INFORMATION - Cash paid during the period for: |
|
|
|
|
|
|
|
|
Income
taxes |
|
$ |
9,304 |
|
|
$ |
52,462 |
|
Interest |
|
$ |
612,285 |
|
|
$ |
451,526 |
|
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
TO COMPARABLE GAAP MEASURES (UNAUDITED)
The following is a reconciliation of the
non-GAAP financial measures used by us to describe our financial
results determined in accordance with accounting principles
generally accepted in the United States of America (“GAAP”). An
explanation of these measures is also included below under the
heading “Explanation of Non-GAAP Financial Measures.”
While management believes that these non-GAAP
financial measures provide useful supplemental information to
investors regarding the underlying performance of our business
operations, investors are reminded to consider these non-GAAP
measures in addition to, and not as a substitute for, financial
performance measures prepared in accordance with GAAP. In addition,
it should be noted that these non-GAAP financial measures may be
different from non-GAAP measures used by other companies, and
management may utilize other measures to illustrate performance in
the future. Non-GAAP measures have limitations in that they do not
reflect all of the amounts associated with our results of
operations as determined in accordance with GAAP.
Adjusted EBITDA
Set forth below is a reconciliation of our
“adjusted EBITDA” to our GAAP net loss.
|
|
Years Ended December 31, |
|
|
|
2017 |
|
|
2016 |
|
|
|
($ in thousands) |
|
Net revenue |
|
$ |
31,811 |
|
|
$ |
24,493 |
|
|
|
|
|
|
|
|
|
|
GAAP net loss |
|
$ |
(5,565 |
) |
|
$ |
(8,797 |
) |
|
|
|
|
|
|
|
|
|
Provision
for income taxes |
|
|
68 |
|
|
|
197 |
|
Net
interest expense |
|
|
1,307 |
|
|
|
646 |
|
Foreign
exchange / other expense |
|
|
(249 |
) |
|
|
53 |
|
Stock-based compensation expense |
|
|
1,487 |
|
|
|
1,928 |
|
Depreciation and amortization |
|
|
4,300 |
|
|
|
5,108 |
|
Integration, transaction and restructuring costs |
|
|
791 |
|
|
|
976 |
|
Change in
contingent consideration |
|
|
152 |
|
|
|
(716 |
) |
Adjusted EBITDA |
|
$ |
2,291 |
|
|
$ |
(605 |
) |
Non-GAAP Adjusted Operating
Income
Set forth below is a reconciliation of our
non-GAAP “adjusted operating income” and non-GAAP “adjusted
operating margin” to our GAAP operating loss and GAAP operating
margin.
|
|
Years Ended December 31, |
|
|
|
2017 |
|
|
2016 |
|
|
|
($ in thousands) |
|
Net revenue |
|
$ |
31,811 |
|
|
$ |
24,493 |
|
|
|
|
|
|
|
|
|
|
GAAP net loss |
|
$ |
(5,565 |
) |
|
$ |
(8,797 |
) |
Provision
for income taxes |
|
|
68 |
|
|
|
197 |
|
Net
interest expense |
|
|
1,307 |
|
|
|
646 |
|
Other
(income) expense - net |
|
|
(332 |
) |
|
|
53 |
|
GAAP operating
loss |
|
|
(4,522 |
) |
|
|
(7,901 |
) |
GAAP
operating margin |
|
|
(14.2 |
%) |
|
|
(32.3 |
%) |
|
|
|
|
|
|
|
|
|
Stock-based compensation expense |
|
|
1,487 |
|
|
|
1,928 |
|
Amortization of purchased intangible assets |
|
|
3,393 |
|
|
|
4,397 |
|
Integration, transaction and restructuring costs |
|
|
791 |
|
|
|
976 |
|
Change in
contingent consideration |
|
|
152 |
|
|
|
(715 |
) |
Non-GAAP adjusted
operating income |
|
$ |
1,301 |
|
|
$ |
(1,315 |
) |
Non-GAAP
adjusted operating margin |
|
|
4.1 |
% |
|
|
(5.4 |
%) |
Non-GAAP Adjusted Net
Income
Set forth below is a reconciliation of our
non-GAAP “adjusted net income” and non-GAAP “adjusted net income
per share” to our GAAP net loss and GAAP net loss per share.
|
|
Years Ended December 31, |
|
|
|
2017 |
|
|
2016 |
|
|
|
($ in thousands) |
|
GAAP net loss |
|
$ |
(5,565 |
) |
|
$ |
(8,797 |
) |
|
|
|
|
|
|
|
|
|
Foreign
exchange / other expense |
|
|
(249 |
) |
|
|
53 |
|
Stock-based compensation expense |
|
|
1,487 |
|
|
|
1,928 |
|
Amortization of purchased intangible assets |
|
|
3,393 |
|
|
|
4,397 |
|
Integration, transaction and restructuring costs |
|
|
791 |
|
|
|
976 |
|
Change in
contingent consideration |
|
|
152 |
|
|
|
(715 |
) |
Income
tax expense related to goodwill |
|
|
27 |
|
|
|
174 |
|
Non-GAAP adjusted net
income |
|
$ |
36 |
|
|
$ |
(1,984 |
) |
For purposes of determining non-GAAP adjusted
net income per share, we used the number of common shares
outstanding at the end of the period on December 31, 2017 and 2016
including the shares which were issued in 2016 but were considered
contingent consideration, in order to provide insight into results
considering the total number of shares which were issued at the
time of the acquisitions.
|
|
Years Ended December 31, |
|
|
|
2017 |
|
|
2016 |
|
GAAP net loss
attributable to common, per share |
|
$ |
(0.69 |
) |
|
$ |
(0.95 |
) |
|
|
|
|
|
|
|
|
|
GAAP net loss per
end-of-period share |
|
|
(0.48 |
) |
|
|
(0.85 |
) |
Foreign
exchange / other expense |
|
|
(0.02 |
) |
|
|
0.01 |
|
Stock-based compensation expense |
|
|
0.13 |
|
|
|
0.19 |
|
Amortization of purchased intangible assets |
|
|
0.29 |
|
|
|
0.42 |
|
Integration, transaction and restructuring costs |
|
|
0.07 |
|
|
|
0.09 |
|
Change in
contingent consideration |
|
|
0.01 |
|
|
|
(0.07 |
) |
Income
tax expense related to goodwill |
|
|
0.00 |
|
|
|
0.02 |
|
Non-GAAP adjusted net
income per share |
|
$ |
- |
|
|
$ |
(0.19 |
) |
|
|
|
|
|
|
|
|
|
End-of-period
shares |
|
|
11,530,591 |
|
|
|
10,300,178 |
|
|
|
|
Years Ended December 31, |
|
|
|
|
2017 |
|
|
|
2016 |
|
Basic shares
outstanding |
|
|
11,530,591 |
|
|
|
10,051,553 |
|
Shares recorded as
contingent consideration |
|
|
- |
|
|
|
248,625 |
|
End-of-period
shares |
|
|
11,530,591 |
|
|
|
10,300,178 |
|
Explanation of Non-GAAP Financial
Measures
We report our financial results in accordance
with accounting principles generally accepted in the United States
of America, or GAAP. However, management believes that, in order to
properly understand our short-term and long-term financial and
operational trends, investors may wish to consider the impact of
certain non-cash or non-recurring items, when used as a supplement
to financial performance measures in accordance with GAAP. These
items result from facts and circumstances that vary in frequency
and impact on continuing operations. Management also uses results
of operations before such items to evaluate the operating
performance of MTBC and compare it against past periods, make
operating decisions, and serve as a basis for strategic planning.
These non-GAAP financial measures provide management with
additional means to understand and evaluate the operating results
and trends in our ongoing business by eliminating certain non-cash
expenses and other items that management believes might otherwise
make comparisons of our ongoing business with prior periods more
difficult, obscure trends in ongoing operations, or reduce
management’s ability to make useful forecasts. Management believes
that these non-GAAP financial measures provide additional means of
evaluating period-over-period operating performance. In addition,
management understands that some investors and financial analysts
find this information helpful in analyzing our financial and
operational performance and comparing this performance to our peers
and competitors.
Management uses adjusted EBITDA, adjusted
operating income, adjusted operating margin, and non-GAAP adjusted
net income to provide an understanding of aspects of operating
results before the impact of investing and financing charges and
income taxes. Adjusted EBITDA may be useful to an investor in
evaluating our operating performance and liquidity because this
measure excludes non-cash expenses as well as expenses pertaining
to investing or financing transactions. Management defines
“adjusted EBITDA” as the sum of GAAP net income (loss) before
provision for (benefit from) income taxes, net interest expense,
other (income) expense, stock-based compensation expense,
depreciation and amortization, amortization of purchased intangible
assets, integration costs, transaction costs, restructuring costs
and changes in contingent consideration. Management defines
“non-GAAP adjusted operating income” as the sum of GAAP operating
income (loss) before stock-based compensation expense, amortization
of purchased intangible assets, integration costs, transaction
costs, restructuring costs and changes in contingent consideration,
and “non-GAAP adjusted operating margin” as non-GAAP adjusted
operating income divided by net revenue.
Management defines “non-GAAP adjusted net
income” as the sum of GAAP net income (loss) before stock-based
compensation expense, amortization of purchased intangible assets,
other (income) expense, integration costs, transaction costs,
restructuring costs changes in contingent consideration, any tax
impact related to these preceding items and income tax expense
related to goodwill, and “non-GAAP adjusted net income per share”
as non-GAAP adjusted net income divided by common shares
outstanding at the end of the period, including the shares which
were issued but are subject to forfeiture and considered contingent
consideration.
Management considers all of these non-GAAP
financial measures to be important indicators of our operational
strength and performance of our business and a good measure of our
historical operating trends, in particular the extent to which
ongoing operations impact our overall financial performance.
In addition to items routinely excluded from
non-GAAP EBITDA, management excludes or adjusts each of the items
identified below from the applicable non-GAAP financial measure
referenced above for the reasons set forth with respect to that
excluded item:
Other expense – net. Other expense is excluded
because foreign currency gains and losses and other non-operating
expenses are expenditures that management does not consider part of
ongoing operating results when assessing the performance of our
business, and also because the total amount of the expense is
partially outside of our control. Foreign currency gains and losses
are based on global market factors which are unrelated to our
performance during the period in which the gains and losses are
recorded.
Stock-based compensation expense. Stock-based
compensation expense is excluded because this is primarily a
non-cash expenditure that management does not consider part of
ongoing operating results when assessing the performance of our
business, and also because the total amount of the expenditure is
partially outside of our control because it is based on factors
such as stock price, volatility, and interest rates, which may be
unrelated to our performance during the period in which the
expenses are incurred. Stock-based compensation expense includes
customer incentives paid in stock and related fees, as well as
cash-settled awards based on changes in the stock price.
Amortization of purchased intangible assets.
Purchased intangible assets are amortized over their estimated
useful lives and generally cannot be changed or influenced by
management after the acquisition. Accordingly, this item is not
considered by management in making operating decisions. Management
does not believe such charges accurately reflect the performance of
our ongoing operations for the period in which such charges are
incurred. Transaction costs. Transaction costs are upfront costs
related to acquisitions and related transactions, such as brokerage
fees, pre-acquisition accounting costs and legal fees, and other
upfront costs related to specific transactions. Management believes
that such expenses do not have a direct correlation to future
business operations, and therefore, these costs are not considered
by management in making operating decisions. Management does not
believe such charges accurately reflect the performance of our
ongoing operations for the period in which such charges are
incurred.
Integration costs. Integration costs are
severance payments for certain employees relating to our
acquisitions and exit costs related to terminating leases and other
contractual agreements. Accordingly, management believes that such
expenses do not have a direct correlation to future business
operations, and therefore, these costs are not considered by
management in making operating decisions. Management does not
believe such charges accurately reflect the performance of our
ongoing operations for the period in which such charges are
incurred.
Restructuring costs. Restructuring charges
primarily represent employee severance costs, remaining lease and
termination fees, disposal of property and equipment and
professional fees associated with the closing of facilities.
Accordingly, management believes that such expenses do not have a
direct correlation to future business operations, and therefore,
these costs are not considered by management in making operating
decisions. Management does not believe such charges accurately
reflect the performance of our ongoing operations for the period in
which such charges are incurred.
Changes in contingent consideration. Contingent
consideration represents the amount payable to the sellers of
certain acquired businesses based on the achievement of defined
performance measures contained in the purchase agreements.
Contingent consideration is adjusted to fair value at the end of
each reporting period, and changes arise from changes in MTBC’s
stock price as well as changes in the forecasted revenues of the
acquired businesses.
Tax expense related to goodwill. Income tax
expense resulting from the amortization of goodwill related to our
acquisitions represents a charge to record the tax expense
resulting from amortizing goodwill over 15 years for tax purposes.
Goodwill is not amortized for GAAP reporting. This expense is not
anticipated to result in a cash payment.
Disclaimer:
This press release is for information purposes
only, and does not constitute an offer to sell or solicitation of
an offer to buy, nor shall there be any sale of these securities in
any state or other jurisdiction in which such offer, solicitation
or sale would be unlawful prior to the registration or
qualification under the securities laws of such state or
jurisdiction.
SOURCE MTBC
Company and Investor
Contact:Bill KornChief Financial
OfficerMTBC.bkorn@mtbc.com732-873-5133
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