Reports Strong Revenue and Record Net
Income
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 the first quarter of 2018. The Company's management
will conduct a conference call later today at 8:30 a.m. Eastern
Time to discuss these results.
Mahmud Haq, Executive Chairman said, "First
quarter 2018 was an important milestone, with positive GAAP net
income for our first time since we've been a public company. We
have dramatically reduced costs, are generating positive cash flow,
and our balance sheet has never been stronger, with virtually no
debt, $13 million of cash and an untapped credit line of $5
million."
"2017 was a record year for MTBC, and we're
pleased to report a strong start to 2018," said Stephen Snyder,
Chief Executive Officer. "As a management team, we're committed to
eclipsing last year's 30% revenue growth rate during 2018 and we
believe we're well positioned to achieve this objective."
"Our industry leading platform, processes, and
team are continuing to drive our record revenue and earnings
growth," said A. Hadi Chaudhry, President. "During 2018, our
proprietary platform will continue to lead the way as we leverage
AI, blockchain and other leading technology to further
differentiate our offering and enhance the user experience."
First quarter 2018 financial
results
"First quarter 2018 was a remarkable quarter for
MTBC," said Bill Korn, Chief Financial Officer. "We are reporting
quarter over quarter revenue growth, even though across our
industry the first quarter is typically materially lower than other
quarters due to seasonality. We are very pleased to report our
first quarter of positive GAAP net income since the IPO, an
increase of $2.8 million from Q1 2017, together with adjusted
EBITDA for the first quarter of almost $1 million."
Revenues for first quarter 2018 were $8.3
million, compared to $8.2 million in the same period last year.
Bill Korn further explained, "First quarter
revenue is typically at its seasonal lowest for companies like
MTBC, where revenues are a percentage of the payments received by
our clients, which are generally cyclically low due to annual
deductibles. First quarter 2018 revenue compares favorably to $8.2
million in the same period last year. MTBC's revenue growth
includes revenue from clients who signed contracts with MTBC during
fourth quarter 2017 and began generating revenue during the first
quarter of 2018."
Revenue for 2018 is based on the new ASC 606
revenue recognition standard, which did not have a material impact
on reported revenue. MTBC adopted the new revenue recognition
standard on January 1, 2018. Under the old standard, revenue could
not be recognized until it was fixed and determinable, which meant
that MTBC recognized revenue at the same time insurance agreed upon
payments to our health care provider clients. Under the new
standard, revenue is recognized as value is created for clients,
which means a portion of the revenue is recognized over a period of
weeks after each patient visit, as work is performed, and the final
amount of revenue, based on the ultimate payments by insurers and
patients, is trued up each quarter.
During first quarter 2018, MTBC recognized
$47,000 of additional revenue due to the new revenue standard. We
have included a reconciliation of our statement of operations
showing the impact of the new standard on our entire statement of
operations, which was not material to any line item.
The first quarter 2018 GAAP net income was
$75,000, or 0.9% of revenue, an improvement of $2.8 million
compared to a net loss of $2.7 million in the first quarter of
2017. This was MTBC's first quarter with positive GAAP net income
since our IPO and the purchase of three companies in 2014. First
quarter GAAP net income includes 591,000 of non-cash amortization
and depreciation expenses.
"The dramatic turnaround from a GAAP net loss of
$2.7 million to GAAP net income of $75,000 was due to four factors:
a reduction of $739,000 or 14% in direct operating costs, a
$385,000 or 13% reduction in general & administrative expenses,
a $929,000 reduction in depreciation & amortization expenses,
and elimination of $276,000 of restructuring charges, all compared
with first quarter 2017," said Bill Korn. "First quarter 2017
included restructuring charges, as we closed offices in Poland and
Bangalore, India obtained during prior acquisitions and shifted the
work to our teams in Pakistan and Sri Lanka, to gain operating
efficiencies. The impact of the new revenue standard on our net
income was $51,000, so our net income would have been positive even
without the new revenue recognition standard."
The GAAP net loss for first quarter 2018 was
($0.06) per share, calculated using the net loss attributable to
common shareholders divided by the weighted average number of
common shares outstanding. Bill Korn explained that "GAAP net
income is always calculated before the effects of any dividends,
and GAAP net income or loss per share is based on the net income or
loss attributable to common shareholders, which subtracts the value
of dividends paid to our preferred shareholders. That's why there
is a GAAP net loss per share even though GAAP net income is
positive."
Adjusted EBITDA for first quarter 2018 was
$974,000, or 11.7% of revenue, compared to adjusted EBITDA of
($313,000), or (3.8%) of revenue, in the same period last year.
"The first quarter 2018 adjusted EBITDA represents an improvement
of $1.3 million from the same period last year, reflecting the
significant cost savings we have achieved," continued Bill Korn.
"This is our third consecutive quarter of positive adjusted EBITDA,
which has totaled $3.1 million over the last nine months."
"The difference of $899,000 between adjusted
EBITDA and the GAAP net income in the first quarter of 2018
reflects $591,000 of non-cash amortization and depreciation
expenses, $69,000 of net interest expense, $128,000 of stock-based
compensation, $179,000 of integration and transaction costs
associated with prior acquisitions, and a $47,000 provision for
income taxes," said Bill Korn.
Non-GAAP adjusted net income for first quarter
2018 was $666,000, an improvement of $1.5 million compared to the
adjusted net income of ($852,000) in the same period last year.
Non-GAAP adjusted net income per share is $0.06, calculated using
the end-of-period common shares outstanding.
The first quarter 2018 GAAP operating income was
$39,000, which represents an improvement of $2.4 million from the
operating loss in first quarter of 2017. GAAP operating income
excludes the provision for income taxes, net interest expense and
other income and expenses, which are included in the GAAP net loss.
This is the Company's first quarter with positive GAAP operating
income since the IPO in 2014.
Non-GAAP adjusted operating income for first
quarter 2018 was $739,000, or 8.9% of revenue. "The first quarter
2018 adjusted operating income represents an improvement of $1.3
million from first quarter 2017," continued Bill Korn. "This is our
fourth consecutive quarter of positive non-GAAP adjusted operating
income, which excludes non-cash expenses such as the amortization
of purchased intangible assets, stock-based compensation and
integration and transaction costs."
In first quarter 2018, cash flow from operations
was $673,000. Management finds that non-GAAP financial measures,
such as adjusted operating income and adjusted EBTIDA, are a good
proxy for measuring the cash actually generated by the
business.
Cash Balance and Capital
As of March 31, 2018, the Company had $3.5
million in cash and positive working capital of approximately $5.4
million. The Company has a $5 million secured revolving credit
facility with Silicon Valley Bank ("SVB"), where borrowings are
based on 200% of repeatable revenue adjusted by an annualized
attrition rate as defined in the agreement. While we have not drawn
on the SVB credit facility at any time during 2018, the SVB line
can be used for future growth initiatives, including acquisitions
with SVB's approval.
The Company raised net proceeds of $9.4 million
from the sale of 420,000 additional shares of its non-convertible
Series A Preferred Stock via a public offering during the first
week of April. 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. 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. By the end of April, after this round was closed,
the Company had approximately $13 million of cash in the bank and
virtually no debt.
According to Bill Korn, "Raising additional
capital in early April has further positioned us to take advantage
of the opportunities we see for consolidation in the market. For
example, we intend to use a portion of our available cash if we
close the Orion acquisition opportunity. Our highly scalable
proprietary technology and processes, experienced team, and strong
balance sheet have made us the leading consolidator in our space.
We are uniquely equipped to succeed with opportunities such as
Orion, having successfully integrated MediGain's business, which
faced a similar situation before we purchased their assets 20
months ago. That transaction allowed MTBC to grow revenues by 30%
in 2017 and achieve record profitability, and after successful
integration of Orion, we expect to be able to grow our annualized
revenues by another 50%, to achieve a scale which will allow us to
further expand our profit margins."
Conference Call Information
MTBC management will host a conference call
today at 8:30 a.m. Eastern Time to discuss the first quarter 2018
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 First Quarter 2018 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 10119442.
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.
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 make successful
acquisitions and 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.
CONDENSED CONSOLIDATED BALANCE
SHEETS
|
|
March 31, 2018 |
|
|
December 31, 2017 |
|
|
|
(Unaudited) |
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
CURRENT ASSETS: |
|
|
|
|
|
|
|
|
Cash |
|
$ |
3,541,070 |
|
|
$ |
4,362,232 |
|
Accounts
receivable - net of allowance for doubtful accounts of $206,000 and
$185,000 at March 31, 2018 and December 31, 2017, respectively |
|
|
3,776,959 |
|
|
|
3,879,463 |
|
Contract
asset |
|
|
1,389,763 |
|
|
|
- |
|
Current
assets - related party |
|
|
25,203 |
|
|
|
25,203 |
|
Prepaid
expenses and other current assets |
|
|
721,390 |
|
|
|
662,822 |
|
Total
current assets |
|
|
9,454,385 |
|
|
|
8,929,720 |
|
Property and equipment
- net |
|
|
1,339,675 |
|
|
|
1,385,743 |
|
Intangible assets -
net |
|
|
2,091,878 |
|
|
|
2,509,544 |
|
Goodwill |
|
|
12,263,943 |
|
|
|
12,263,943 |
|
Other assets |
|
|
469,916 |
|
|
|
436,713 |
|
TOTAL ASSETS |
|
$ |
25,619,797 |
|
|
$ |
25,525,663 |
|
LIABILITIES AND
SHAREHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES: |
|
|
|
|
|
|
|
|
Accounts
payable |
|
$ |
730,239 |
|
|
$ |
991,859 |
|
Accrued
compensation |
|
|
960,720 |
|
|
|
1,137,351 |
|
Accrued
expenses |
|
|
828,581 |
|
|
|
616,778 |
|
Deferred
rent (current portion) |
|
|
85,791 |
|
|
|
81,826 |
|
Deferred
revenue (current portion) |
|
|
41,191 |
|
|
|
62,104 |
|
Accrued
liability to related party |
|
|
10,663 |
|
|
|
10,675 |
|
Notes
payable - other (current portion) |
|
|
89,635 |
|
|
|
168,718 |
|
Contingent consideration (current portion) |
|
|
503,066 |
|
|
|
505,557 |
|
Dividend
payable |
|
|
767,463 |
|
|
|
747,147 |
|
Total
current liabilities |
|
|
4,017,349 |
|
|
|
4,322,015 |
|
Notes payable -
other |
|
|
106,908 |
|
|
|
120,899 |
|
Deferred rent |
|
|
295,907 |
|
|
|
333,788 |
|
Deferred revenue |
|
|
27,639 |
|
|
|
28,615 |
|
Contingent
consideration |
|
|
84,983 |
|
|
|
97,854 |
|
Deferred tax
liability |
|
|
410,072 |
|
|
|
372,072 |
|
Total
liabilities |
|
|
4,942,858 |
|
|
|
5,275,243 |
|
COMMITMENTS AND
CONTINGENCIES |
|
|
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY: |
|
|
|
|
|
|
|
|
Preferred
stock, par value $0.001 per share - authorized 2,000,000 shares;
issued and outstanding 1,116,289 and 1,086,739 shares at March 31,
2018 and December 31, 2017, respectively |
|
|
1,116 |
|
|
|
1,087 |
|
Common
stock, $0.001 par value - authorized 19,000,000 shares; issued
12,405,973 and 12,271,390 shares at March 31, 2018 and December 31,
2017, respectively; outstanding, 11,665,174 and 11,530,591 shares
at March 31, 2018 and December 31, 2017, respectively |
|
|
12,406 |
|
|
|
12,272 |
|
Additional paid-in capital |
|
|
44,239,862 |
|
|
|
45,129,517 |
|
Accumulated deficit |
|
|
(21,990,229 |
) |
|
|
(23,509,386 |
) |
Accumulated other comprehensive loss |
|
|
(924,216 |
) |
|
|
(721,070 |
) |
Less:
740,799 common shares held in treasury, at cost at March 31, 2018
and December 31, 2017 |
|
|
(662,000 |
) |
|
|
(662,000 |
) |
Total
shareholders' equity |
|
|
20,676,939 |
|
|
|
20,250,420 |
|
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY |
|
$ |
25,619,797 |
|
|
$ |
25,525,663 |
|
MEDICAL TRANSCRIPTION BILLING,
CORP.
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (UNAUDITED)
|
|
Three Months Ended |
|
|
|
March 31, |
|
|
|
2018 |
|
|
2017 |
|
NET REVENUE |
|
$ |
8,307,325 |
|
|
$ |
8,220,074 |
|
OPERATING
EXPENSES: |
|
|
|
|
|
|
|
|
Direct
operating costs |
|
|
4,484,055 |
|
|
|
5,222,736 |
|
Selling
and marketing |
|
|
305,014 |
|
|
|
355,511 |
|
General
and administrative |
|
|
2,600,734 |
|
|
|
2,986,663 |
|
Research
and development |
|
|
255,880 |
|
|
|
280,849 |
|
Change in
contingent consideration |
|
|
31,749 |
|
|
|
(11,188 |
) |
Depreciation and amortization |
|
|
590,771 |
|
|
|
1,519,545 |
|
Restructuring charges |
|
|
- |
|
|
|
275,628 |
|
Total
operating expenses |
|
|
8,268,203 |
|
|
|
10,629,744 |
|
OPERATING INCOME
(LOSS) |
|
|
39,122 |
|
|
|
(2,409,670 |
) |
OTHER: |
|
|
|
|
|
|
|
|
Interest
income |
|
|
5,285 |
|
|
|
3,421 |
|
Interest
expense |
|
|
(74,081 |
) |
|
|
(279,425 |
) |
Other
income - net |
|
|
151,374 |
|
|
|
38,031 |
|
INCOME (LOSS) BEFORE
INCOME TAXES |
|
|
121,700 |
|
|
|
(2,647,643 |
) |
Income tax
provision |
|
|
46,664 |
|
|
|
60,302 |
|
NET INCOME (LOSS) |
|
$ |
75,036 |
|
|
$ |
(2,707,945 |
) |
|
|
|
|
|
|
|
|
|
Preferred stock
dividend |
|
|
775,332 |
|
|
|
202,579 |
|
NET LOSS ATTRIBUTABLE
TO COMMON SHAREHOLDERS |
|
$ |
(700,296 |
) |
|
$ |
(2,910,524 |
) |
Loss per common
share: |
|
|
|
|
|
|
|
|
Basic and diluted loss
per share |
|
$ |
(0.06 |
) |
|
$ |
(0.29 |
) |
Weighted-average basic and diluted shares outstanding |
|
|
11,616,938 |
|
|
|
10,172,108 |
|
MEDICAL TRANSCRIPTION BILLING,
CORP.CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2018
AND 2017
|
|
2018 |
|
|
2017 |
|
OPERATING
ACTIVITIES: |
|
|
|
|
|
|
|
|
Net
income (loss) |
|
$ |
75,036 |
|
|
$ |
(2,707,945 |
) |
Adjustments to reconcile net income (loss) to net cash provided by
(used in) operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
590,771 |
|
|
|
1,519,545 |
|
Amortization of sales commissions |
|
|
12,065 |
|
|
|
- |
|
Deferred
rent |
|
|
(16,736 |
) |
|
|
(12,556 |
) |
Deferred
revenue |
|
|
(21,889 |
) |
|
|
(15,105 |
) |
Provision
for doubtful accounts |
|
|
78,556 |
|
|
|
164,745 |
|
Provision
for deferred income taxes |
|
|
38,000 |
|
|
|
54,000 |
|
Foreign
exchange gain |
|
|
(146,939 |
) |
|
|
(30,646 |
) |
Interest
accretion |
|
|
48,712 |
|
|
|
55,819 |
|
Non-cash
restructuring charges |
|
|
- |
|
|
|
17,001 |
|
Stock-based compensation expense |
|
|
127,691 |
|
|
|
129,347 |
|
Change in
contingent consideration |
|
|
31,749 |
|
|
|
(11,188 |
) |
Changes
in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts
receivable |
|
|
23,948 |
|
|
|
248,383 |
|
Other
assets |
|
|
44,683 |
|
|
|
86,883 |
|
Accounts
payable and other liabilities |
|
|
(212,266 |
) |
|
|
(365,732 |
) |
Net cash
provided by (used in) operating activities |
|
|
673,381 |
|
|
|
(867,449 |
) |
INVESTING
ACTIVITIES: |
|
|
|
|
|
|
|
|
Capital
expenditures |
|
|
(174,242 |
) |
|
|
(212,117 |
) |
Net cash
used in investing activities |
|
|
(174,242 |
) |
|
|
(212,117 |
) |
FINANCING
ACTIVITIES: |
|
|
|
|
|
|
|
|
Preferred
stock dividends paid |
|
|
(755,016 |
) |
|
|
(202,579 |
) |
Settlement of tax withholding obligations on stock issued to
employees |
|
|
(213,675 |
) |
|
|
- |
|
Repayments of debt obligations |
|
|
(92,561 |
) |
|
|
(764,791 |
) |
Contingent consideration payments |
|
|
(47,111 |
) |
|
|
(23,650 |
) |
Other
financing activities |
|
|
(5,674 |
) |
|
|
(126,217 |
) |
Net cash
used in financing activities |
|
|
(1,114,037 |
) |
|
|
(1,117,237 |
) |
EFFECT OF
EXCHANGE RATE CHANGES ON CASH |
|
|
(206,264 |
) |
|
|
(30,227 |
) |
NET
DECREASE IN CASH |
|
|
(821,162 |
) |
|
|
(2,227,030 |
) |
CASH -
Beginning of the period |
|
|
4,362,232 |
|
|
|
3,476,880 |
|
CASH -
End of period |
|
$ |
3,541,070 |
|
|
$ |
1,249,850 |
|
SUPPLEMENTAL NONCASH INVESTING AND FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
Dividends
declared, not paid |
|
$ |
767,463 |
|
|
$ |
202,579 |
|
SUPPLEMENTAL INFORMATION - Cash paid during the period for: |
|
|
|
|
|
|
|
|
Income
taxes |
|
$ |
20,153 |
|
|
$ |
8,017 |
|
Interest |
|
$ |
9,741 |
|
|
$ |
129,549 |
|
RECONCILIATION OF CHANGES IN REVENUE
STANDARD (UNAUDITED)
The following table provides a bridge between
the Statement of Operations as presented under the new revenue
recognition standard required for the three months ended March 31,
2018 to the results recorded under the previous revenue recognition
standard used for the three months ended March 31, 2017. Total
revenue as presented for the three months ended March 31, 2018
varies from revenue that would have been reported under the
previous revenue recognition standard for the same period, as the
new standard changes the timing and recognition pattern for the
majority of our revenue, as well as for a portion of our sales
commission expense. The change for each item in our Statement of
Operations is calculated as if the three months ended March 31,
2018 were reported under the previous revenue recognition standard
for the same period, to separate the impact of the change in the
revenue recognition standard from the results of operations.
|
|
Three Months Ended March 31, |
|
|
Change |
|
|
|
2018 |
|
|
2017 |
|
|
Amount |
|
|
Percent |
|
|
|
As Presented |
|
|
Impact of New Revenue Standard |
|
|
Previous Revenue Standard |
|
|
|
($ in thousands) |
|
Revenue |
|
$ |
8,307.3 |
|
|
$ |
47.1 |
|
|
$ |
8,260.2 |
|
|
$ |
8,220.1 |
|
|
$ |
40.1 |
|
|
|
0 |
% |
OPERATING
EXPENSES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct
operating costs |
|
|
4,484.1 |
|
|
|
- |
|
|
|
4,484.1 |
|
|
|
5,222.7 |
|
|
|
(738.6 |
) |
|
|
(14 |
%) |
Selling
and marketing |
|
|
305.0 |
|
|
|
(3.5 |
) |
|
|
308.5 |
|
|
|
355.5 |
|
|
|
(47.0 |
) |
|
|
(13 |
%) |
General
and administrative |
|
|
2,600.7 |
|
|
|
- |
|
|
|
2,600.7 |
|
|
|
2,986.7 |
|
|
|
(386.0 |
) |
|
|
(13 |
%) |
Research
and development |
|
|
255.9 |
|
|
|
- |
|
|
|
255.9 |
|
|
|
280.8 |
|
|
|
(24.9 |
) |
|
|
(9 |
%) |
Change in
contingent consideration |
|
|
31.7 |
|
|
|
- |
|
|
|
31.7 |
|
|
|
(11.2 |
) |
|
|
42.9 |
|
|
|
(383 |
%) |
Depreciation and amortization |
|
|
590.8 |
|
|
|
- |
|
|
|
590.8 |
|
|
|
1,519.7 |
|
|
|
(928.9 |
) |
|
|
(61 |
%) |
Restructuring charges |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
275.6 |
|
|
|
(275.6 |
) |
|
|
(100 |
%) |
Total
operating expenses |
|
|
8,268.2 |
|
|
|
(3.5 |
) |
|
|
8,271.7 |
|
|
|
10,629.8 |
|
|
|
(2,358.1 |
) |
|
|
(22 |
%) |
OPERATING INCOME
(LOSS) |
|
|
39.1 |
|
|
|
50.6 |
|
|
|
(11.5 |
) |
|
|
(2,409.7 |
) |
|
|
2,398.2 |
|
|
|
(100 |
%) |
OTHER: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
interest expense |
|
|
(68.8 |
) |
|
|
- |
|
|
|
(68.8 |
) |
|
|
(275.9 |
) |
|
|
207.1 |
|
|
|
(75 |
%) |
Other
income - net |
|
|
151.4 |
|
|
|
- |
|
|
|
151.4 |
|
|
|
38.0 |
|
|
|
113.4 |
|
|
|
298 |
% |
INCOME (LOSS) BEFORE
INCOME TAXES |
|
|
121.7 |
|
|
|
50.6 |
|
|
|
71.1 |
|
|
|
(2,647.6 |
) |
|
|
2,718.7 |
|
|
|
(103 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
provision |
|
|
46.7 |
|
|
|
- |
|
|
|
46.7 |
|
|
|
60.3 |
|
|
|
(13.6 |
) |
|
|
(23 |
%) |
NET INCOME (LOSS) |
|
$ |
75.0 |
|
|
$ |
50.6 |
|
|
$ |
24.4 |
|
|
$ |
(2,707.9 |
) |
|
$ |
2,733.0 |
|
|
|
(101 |
%) |
RECONCILIATION OF NON-GAAP FINANCIAL MEASURESTO
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 income (loss).
|
|
Three Months Ended March 31, |
|
|
|
2018 |
|
|
2017 |
|
|
|
($ in thousands) |
|
Net revenue |
|
$ |
8,307 |
|
|
$ |
8,220 |
|
|
|
|
|
|
|
|
|
|
GAAP net income
(loss) |
|
$ |
75 |
|
|
$ |
(2,708 |
) |
|
|
|
|
|
|
|
|
|
Provision
for income taxes |
|
|
47 |
|
|
|
60 |
|
Net
interest expense |
|
|
69 |
|
|
|
276 |
|
Foreign
exchange / other expense |
|
|
(147 |
) |
|
|
(38 |
) |
Stock-based compensation expense |
|
|
128 |
|
|
|
129 |
|
Depreciation and amortization |
|
|
591 |
|
|
|
1,520 |
|
Integration, transaction and restructuring costs |
|
|
179 |
|
|
|
459 |
|
Change in
contingent consideration |
|
|
32 |
|
|
|
(11 |
) |
Adjusted EBITDA |
|
$ |
974 |
|
|
$ |
(313 |
) |
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 income (loss) and GAAP
operating margin.
|
|
Three Months EndedMarch
31, |
|
|
|
2018 |
|
|
2017 |
|
|
|
($ in thousands) |
|
Net revenue |
|
$ |
8,307 |
|
|
$ |
8,220 |
|
|
|
|
|
|
|
|
|
|
GAAP net income
(loss) |
|
$ |
75 |
|
|
$ |
(2,708 |
) |
Provision
for income taxes |
|
|
47 |
|
|
|
60 |
|
Net
interest expense |
|
|
69 |
|
|
|
276 |
|
Other
income - net |
|
|
(152 |
) |
|
|
(38 |
) |
GAAP operating income
(loss) |
|
|
39 |
|
|
|
(2,410 |
) |
GAAP
operating margin |
|
|
0.5 |
% |
|
|
(29.3 |
%) |
|
|
|
|
|
|
|
|
|
Stock-based compensation expense |
|
|
128 |
|
|
|
129 |
|
Amortization of purchased intangible assets |
|
|
361 |
|
|
|
1,263 |
|
Integration, transaction and restructuring costs |
|
|
179 |
|
|
|
459 |
|
Change in
contingent consideration |
|
|
32 |
|
|
|
(11 |
) |
Non-GAAP adjusted
operating income |
|
$ |
739 |
|
|
$ |
(570 |
) |
Non-GAAP
adjusted operating margin |
|
|
8.9 |
% |
|
|
(6.9 |
%) |
Non-GAAP Adjusted Net
Income
Set forth below is a reconciliation of our
non-GAAP "adjusted net income" to our GAAP net income (loss).
|
|
Three Months Ended March 31, |
|
|
|
2018 |
|
|
2017 |
|
|
|
($ in thousands) |
|
GAAP net income
(loss) |
|
$ |
75 |
|
|
$ |
(2,708 |
) |
|
|
|
|
|
|
|
|
|
Foreign
exchange / other expense |
|
|
(147 |
) |
|
|
(38 |
) |
Stock-based compensation expense |
|
|
128 |
|
|
|
129 |
|
Amortization of purchased intangible assets |
|
|
361 |
|
|
|
1,263 |
|
Integration, transaction and restructuring costs |
|
|
179 |
|
|
|
459 |
|
Change in
contingent consideration |
|
|
32 |
|
|
|
(11 |
) |
Income
tax expense related to goodwill |
|
|
38 |
|
|
|
54 |
|
Non-GAAP adjusted net
income |
|
$ |
666 |
|
|
$ |
(852 |
) |
For purposes of determining non-GAAP adjusted
net income per share, we use the number of common shares
outstanding at the end of the period on March 31, 2018 and 2017.
Non-GAAP adjusted net income per share does not take into account
dividends paid on our preferred stock.
Set forth below is a reconciliation of our
non-GAAP "adjusted net income per share" to our GAAP net loss
attributable to common shareholders, per share.
|
|
Three Months Ended March 31, |
|
|
|
2018 |
|
|
2017 |
|
GAAP net loss
attributable to common shareholders, per share |
|
$ |
(0.06 |
) |
|
$ |
(0.29 |
) |
Impact of
preferred stock dividend |
|
|
0.07 |
|
|
|
0.03 |
|
Net income (loss) per
end-of-period share |
|
|
0.01 |
|
|
|
(0.26 |
) |
|
|
|
|
|
|
|
|
|
Foreign
exchange / other expense |
|
|
(0.01 |
) |
|
|
0.00 |
|
Stock-based compensation expense |
|
|
0.01 |
|
|
|
0.01 |
|
Amortization of purchased intangible assets |
|
|
0.03 |
|
|
|
0.12 |
|
Integration, transaction and restructuring costs |
|
|
0.02 |
|
|
|
0.04 |
|
Change in
contingent consideration |
|
|
0.00 |
|
|
|
0.00 |
|
Income
tax expense related to goodwill |
|
|
0.00 |
|
|
|
0.01 |
|
Non-GAAP adjusted net
income per share |
|
$ |
0.06 |
|
|
$ |
(0.08 |
) |
|
|
|
|
|
|
|
|
|
End-of-period
shares |
|
|
11,665,174 |
|
|
|
10,423,511 |
|
|
|
Three Months Ended March 31, |
|
|
|
2018 |
|
|
2017 |
|
Basic shares
outstanding |
|
|
11,665,174 |
|
|
|
10,174,886 |
|
Shares recorded as
contingent consideration |
|
|
- |
|
|
|
248,625 |
|
End-of-period
shares |
|
|
11,665,174 |
|
|
|
10,423,511 |
|
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. Non-GAAP adjusted net income per share does not take
into account dividends paid on our preferred stock.
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
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 Korn
Chief Financial Officer
MTBC
bkorn@mtbc.com
732-873-5133
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