Company reports 59% revenue growth and
improved profitability,
MTBC, Inc. (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 full year ended December 31, 2018. The
Company’s management will conduct a conference call with related
slides today at 8:30 a.m. Eastern Time to discuss these results and
management’s outlook.
2018 Full Year Highlights
|
● |
Record full-year revenue of $50.5 million, 59% growth over 2017 and
exceeding guidance |
|
● |
GAAP
net loss of $2.1 million, an improvement of $3.4 million from 2017,
including $2.9 million in non-cash depreciation and amortization
expense and $2.5 million in stock based compensation expense |
|
● |
Record adjusted EBITDA of $4.8 million, 110% growth over 2017 and
at the high end of the guidance range, with record cash from
operations of $6.8 million |
|
● |
Record adjusted net income of $3.5 million, or $0.29 per share |
2018 Fourth Quarter
Highlights
|
● |
Revenue of $16.5
million |
|
● |
GAAP net loss of
$576,000 |
|
● |
Adjusted EBITDA of $1.4
million |
|
● |
Adjusted net income of
$1.0 million, or $0.09 per share |
“We are thrilled to report record full year 2018
results, including a 59% increase in our revenue to $50.5 million,
while growing our adjusted EBITDA by 110% to $4.8 million and
generating $6.8 million in cash from operations. Revenue and
adjusted EBITDA were both at-or-above the high end of our guidance
range as we delivered our seventh consecutive quarter of positive
adjusted EBITDA,” said Stephen Snyder, MTBC’s Chief Executive
Officer.
“We ended 2018 with $14.5 million of cash and an
untapped $10 million line of credit, providing maximum flexibility
as we continue to consolidate our segment of the market,” said
Snyder. “Even excluding any additional material acquisitions, we
expect to grow our revenues by approximately 25% or more during
2019, while increasing our adjusted EBITDA by more than 65% — and
with our proven and repeatable acquisition model, available growth
capital, and proprietary platform, we believe that we are well
positioned to exceed these baselines.”
Full Year 2018 Financial
Results
Revenue for the full year 2018 was a record
$50.5 million, an increase of 59% compared to $31.8 million in
2017. The increase was primarily due to the Orion acquisition.
Revenue exceeded the guidance range of $49 to $50 million.
For the full year 2018, the GAAP net loss was
$2.1 million, or $0.59 per share, which was largely a result of
non-cash amortization and depreciation expense of $2.9 million and
stock-based compensation expense of $2.5 million. This reflected an
improvement of $3.4 million compared to the prior year net loss.
The GAAP net loss per share is based on net loss attributable to
common shareholders, which takes into account the preferred stock
dividends declared during the year.
Adjusted EBITDA for the full year of 2018
increased 110% to a record $4.8 million, as compared to $2.3
million in 2017. Adjusted EBITDA was at the high end of the $4.0 to
$5.0 million guidance range.
During 2018, MTBC generated a record $6.8
million in cash from operations, which was 42% greater than our
adjusted EBITDA.
Bill Korn, MTBC’s Chief Financial Officer
remarked, “Orion was similar to our previous acquisitions, from an
accounting perspective, in that a large portion of the purchase
price was attributed to intangible assets, most of which will be
amortized over the next few years. This means that our non-cash
amortization expense has increased. This does not impact our cash
flow and is excluded from our non-GAAP financial measures. GAAP net
income was a positive $270,000 during the first half of 2018, prior
to the Orion acquisition and the resulting increase in non-cash
amortization expense. We expect to report a GAAP net loss for the
next few quarters as we continue to amortize this non-cash expense,
although we expect to continue generating positive cash from
operations, as we did during each of the four quarters of
2018.”
“As we continue to scale our business, through
both organic and strategic means such as the Orion acquisition, we
are able to spread our fixed expenses over a larger revenue base
and generate larger adjusted EBITDA than we ever have before,” said
Bill Korn.
The difference of $6.9 million between adjusted
EBITDA and the GAAP net loss in 2018 reflects $2.9 million of
non-cash amortization and depreciation expense, $2.5 million of
stock-based compensation, $1.9 million of integration, transaction
and restructuring costs related to recent acquisitions, $250,000 of
net interest expense and a $73,000 of change in contingent
consideration, offset by a $157,000 benefit for income taxes and
$435,000 of foreign exchange gains.
Non-GAAP adjusted net income for 2018 was $3.5
million, or $0.29 per share, an improvement of $3.4 million
compared to last year and a new record. Non-GAAP adjusted net
income per share is calculated using the end-of-period common
shares outstanding. “Since non-GAAP adjusted net income excludes
non-cash amortization of purchased intangible assets, stock-based
compensation, and integration, transaction and restructuring costs,
management finds that it better reflects our overall performance
without some of the required non-cash GAAP expenses,” said Bill
Korn.
The 2018 GAAP operating loss was $2.5 million,
which represents an improvement of $2.0 million or 44% over the
operating loss recorded in 2017. GAAP operating loss includes
non-cash amortization and depreciation expense of $2.9 million, but
excludes the benefit 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 $3.7 million, or 7% of
revenue, which represents an improvement of $2.4 million from 2017
and a new record.
During full year 2018, MTBC generated $6.8
million in cash from operations, which exceeded adjusted EBITDA by
42%. Management utilizes non-GAAP measures of profitability, such
as adjusted EBITDA, adjusted operating income and adjusted net
income, in part because they better approximate the cash impact of
the Company’s operations.
Fourth Quarter 2018 Financial
Results
Revenue for the fourth quarter 2018 was $16.5
million, growth of 99% year-over-year, compared to $8.3 million in
the same period last year, primarily as a result of the Orion
acquisition which occurred on July 1, 2018. With the acquisition of
Orion, MTBC now operates a practice management business as well as
a healthcare IT business, and will begin reporting revenue by
segment in its annual report on Form 10-K. Approximately $6.5
million of MTBC’s 2018 revenue came from the practice management
segment.
The fourth quarter 2018 GAAP net loss was
$576,000, or $0.20 per share, as compared to a net loss of $184,000
in the same period last year. The 2018 net loss includes $881,000
of non-cash depreciation and amortization expenses, an increase of
$218,000 due to amortization of intangible assets purchased from
Orion, as well as $940,000 of stock-based compensation.
Adjusted EBITDA for fourth quarter 2017 was $1.4
million, or 9% of revenue, down slightly from EBITDA of $1.5
million in the same period last year as we continued to integrate
the Orion acquisition and reduce expenses.
Non-GAAP adjusted net income for fourth quarter
2018 was $1.0 million, or $0.09 per share.
The fourth quarter 2018 GAAP operating loss was
$867,000. This includes $881,000 of depreciation & amortization
expenses.
Non-GAAP adjusted operating income for fourth
quarter 2018 was $1.1 million, or 7% of revenue.
“The fourth quarter 2018 adjusted operating
income represents an improvement of $489,000 from the adjusted
operating income in third quarter 2018,” said Bill Korn. “This is
our seventh consecutive quarter of positive non-GAAP adjusted
operating income, and reflects the fact that our business is now at
a scale where our revenues consistently exceed our cash operating
expenses quarter after quarter.”
In fourth quarter 2018, cash flow provided by
operations was $2.1 million.
Cash Balance and Capital
As of December 31, 2018, the Company had
approximately $14.5 million in cash and positive working capital
(current assets less current liabilities) of approximately $17.9
million, a $13.3 million improvement from the working capital
surplus of approximately $4.6 million reported at the end of the
year 2017.During 2018, the Company raised net proceeds $22.8
million via two public offerings of its non-convertible Series A
Preferred Stock. The Series A Preferred Stock is perpetual, trades
on the Nasdaq Capital Market under the ticker MTBCP, pays monthly
cash dividends at the rate of 11% per annum and can be redeemed at
the Company’s option at $25.00 per share starting in November
2020.
Bill Korn continued, “Our Series A Preferred
Stock has proven to be a great competitive advantage, allowing us
to execute acquisitions quickly and on very favorable terms. We
became aware of the opportunity to purchase Orion out of bankruptcy
after we raised approximately $10 million in April 2018. We were
able to make an all-cash offer with no contingencies for a business
that allowed us to nearly double our size without assuming any debt
or issuing additional common stock. We now have more capital
available 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, “Our Series A Preferred
Stock has enabled us to raise capital on favorable terms to support
our growth. We have the option of redeeming these shares any time
we choose after November 2020. The small annual premium we pay in
the monthly dividend gives us the freedom to decouple the timing of
equity raises and investing our capital for growth. We don’t know
of others in the industry with similar flexibility.”
2019 Full Year Guidance
MTBC is providing the following forward-looking
guidance for the fiscal year ending December 31, 2019:
For the Fiscal Year Ending December 31, 2019
Forward-Looking Guidance
Revenue |
|
$ |
63 –
$65 million |
|
Adjusted EBITDA |
|
$ |
8 – $10
million |
|
The Company anticipates full year 2019 revenue
of approximately $63 to $65 million, which represents growth of 24%
to 29% over 2018 revenue. Revenue guidance is based on management’s
expectations regarding revenues from existing clients and new
clients acquired through organic growth and/or tuck-ins, but
excludes the effects of any additional, material acquisitions.
Adjusted EBITDA is expected to be $8 to $10
million for full year 2019, growth of 67% to 108% over 2018
adjusted EBITDA, as the Company continues to integrate the Orion
acquisition which occurred during 2018.
According to Bill Korn, “MTBC’s financial
position is its strongest ever. Our 2018 adjusted EBITDA was double
2017’s adjusted EBITDA. Our 2018 cash flow from operations was 42%
greater than our adjusted EBITDA and 41% greater than the dividends
on our preferred stock. This gives us the freedom to pursue
multiple paths for continued growth, including organic growth,
partnership opportunities, and the potential for material accretive
acquisitions. Since we can’t predict the timing and magnitude of
significant acquisitions, our forward-looking guidance does not
take these into account.”Conference Call
Information
MTBC management will host a conference call
today at 8:30 a.m. Eastern Time to discuss the 2018 results. The
live webcast of the conference call and related
presentation slides can be accessed under Events &
Presentations at ir.mtbc.com/events. An audio-only option is
available by dialing 412-317-5131 and referencing “MTBC Full Year
2018 Earnings Call.” Investors who opt for audio only will need to
download the related slides at ir.mtbc.com/events.
A replay of the conference call with slides 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 10128782.
About MTBC
MTBC, Inc. 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. To view MTBC’s latest investor
presentation, read recent articles, and listen to interviews with
management, please visit ir.mtbc.com/events.
Follow MTBC on LinkedIn, Twitter and
Facebook.
Use of Non-GAAP Financial
Measures
In our earnings releases, prepared remarks,
conference calls, slide presentations, and webcasts, we use and
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, potential acquisitions,
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.
MTBC, INC.CONSOLIDATED
BALANCE SHEETSAS OF DECEMBER 31, 2018 AND
2017
|
|
2018 |
|
|
2017 |
|
ASSETS |
|
|
|
|
|
|
|
|
CURRENT ASSETS: |
|
|
|
|
|
|
|
|
Cash |
|
$ |
14,472,483 |
|
|
$ |
4,362,232 |
|
Accounts
receivable - net of allowance for doubtful accounts of $189,000 and
$185,000 at December 31, 2018 and December 31, 2017,
respectively |
|
|
7,331,474 |
|
|
|
3,879,463 |
|
Contract
asset |
|
|
2,608,631 |
|
|
|
- |
|
Inventory |
|
|
444,437 |
|
|
|
- |
|
Current
assets - related party |
|
|
25,203 |
|
|
|
25,203 |
|
Prepaid
expenses and other current assets |
|
|
1,191,445 |
|
|
|
662,822 |
|
Total
current assets |
|
|
26,073,673 |
|
|
|
8,929,720 |
|
Property and equipment
- net |
|
|
1,832,187 |
|
|
|
1,385,743 |
|
Intangible assets -
net |
|
|
6,634,003 |
|
|
|
2,509,544 |
|
Goodwill |
|
|
12,593,795 |
|
|
|
12,263,943 |
|
Other assets |
|
|
489,703 |
|
|
|
436,713 |
|
TOTAL ASSETS |
|
$ |
47,623,361 |
|
|
$ |
25,525,663 |
|
LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES: |
|
|
|
|
|
|
|
|
Accounts
payable |
|
$ |
2,438,267 |
|
|
$ |
991,859 |
|
Accrued
compensation |
|
|
1,731,063 |
|
|
|
1,137,351 |
|
Accrued
expenses |
|
|
1,589,009 |
|
|
|
616,778 |
|
Deferred
rent (current portion) |
|
|
90,657 |
|
|
|
81,826 |
|
Deferred
revenue (current portion) |
|
|
25,355 |
|
|
|
62,104 |
|
Accrued
liability to related party |
|
|
10,663 |
|
|
|
10,675 |
|
Notes
payable - (current portion) |
|
|
277,776 |
|
|
|
168,718 |
|
Contingent consideration (current portion) |
|
|
526,432 |
|
|
|
505,557 |
|
Dividend
payable |
|
|
1,468,724 |
|
|
|
747,147 |
|
Total
current liabilities |
|
|
8,157,946 |
|
|
|
4,322,015 |
|
Notes payable |
|
|
222,400 |
|
|
|
120,899 |
|
Deferred rent |
|
|
189,366 |
|
|
|
333,788 |
|
Deferred revenue |
|
|
18,949 |
|
|
|
28,615 |
|
Contingent
consideration |
|
|
- |
|
|
|
97,854 |
|
Deferred tax
liability |
|
|
164,346 |
|
|
|
372,072 |
|
Total
liabilities |
|
|
8,753,007 |
|
|
|
5,275,243 |
|
COMMITMENTS AND
CONTINGENCIES |
|
|
|
|
|
|
|
|
SHAREHOLDERS’
EQUITY: |
|
|
|
|
|
|
|
|
Preferred
stock, par value $0.001 per share - authorized 4,000,000 shares;
issued and outstanding 2,136,289 and 1,086,739 shares at December
31, 2018 and December 31, 2017, respectively |
|
|
2,136 |
|
|
|
1,087 |
|
Common
stock, $0.001 par value - authorized 19,000,000 shares; issued
12,570,557 and 12,271,390 shares at December 31, 2018 and December
31, 2017, respectively; outstanding, 11,829,758 and 11,530,591
shares at December 31, 2018 and December 31, 2017,
respectively |
|
|
12,571 |
|
|
|
12,272 |
|
Additional paid-in capital |
|
|
65,142,460 |
|
|
|
45,129,517 |
|
Accumulated deficit |
|
|
(24,203,745 |
) |
|
|
(23,509,386 |
) |
Accumulated other comprehensive loss |
|
|
(1,421,068 |
) |
|
|
(721,070 |
) |
Less:
740,799 common shares held in treasury, at cost at December 31,
2018 and December 31, 2017 |
|
|
(662,000 |
) |
|
|
(662,000 |
) |
Total
shareholders’ equity |
|
|
38,870,354 |
|
|
|
20,250,420 |
|
TOTAL LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
$ |
47,623,361 |
|
|
$ |
25,525,663 |
|
MTBC, INC.CONSOLIDATED
STATEMENTS OF OPERATIONSFOR THE YEARS ENDED
DECEMBER 31, 2018 AND 2017
|
|
2018 |
|
|
2017 |
|
NET REVENUE |
|
$ |
50,545,781 |
|
|
$ |
31,810,635 |
|
OPERATING
EXPENSES: |
|
|
|
|
|
|
|
|
Direct
operating costs |
|
|
31,252,535 |
|
|
|
17,679,070 |
|
Selling
and marketing |
|
|
1,611,982 |
|
|
|
1,106,698 |
|
General
and administrative |
|
|
16,264,473 |
|
|
|
11,738,201 |
|
Research
and development |
|
|
1,029,510 |
|
|
|
1,081,832 |
|
Change in
contingent consideration |
|
|
73,271 |
|
|
|
151,423 |
|
Depreciation and amortization |
|
|
2,853,827 |
|
|
|
4,299,943 |
|
Restructuring charges |
|
|
- |
|
|
|
275,628 |
|
Total
operating expenses |
|
|
53,085,598 |
|
|
|
36,332,795 |
|
OPERATING LOSS |
|
|
(2,539,817 |
) |
|
|
(4,522,160 |
) |
OTHER: |
|
|
|
|
|
|
|
|
Interest
income |
|
|
100,788 |
|
|
|
16,944 |
|
Interest
expense |
|
|
(351,168 |
) |
|
|
(1,324,219 |
) |
Other
income - net |
|
|
494,332 |
|
|
|
332,084 |
|
LOSS BEFORE INCOME
TAXES |
|
|
(2,295,865 |
) |
|
|
(5,497,351 |
) |
Income tax (benefit)
provision |
|
|
(157,385 |
) |
|
|
67,805 |
|
NET LOSS |
|
$ |
(2,138,480 |
) |
|
$ |
(5,565,156 |
) |
|
|
|
|
|
|
|
|
|
Preferred stock
dividend |
|
|
4,823,987 |
|
|
|
2,030,295 |
|
NET LOSS ATTRIBUTABLE
TO COMMON SHAREHOLDERS |
|
$ |
(6,962,467 |
) |
|
$ |
(7,595,451 |
) |
|
|
|
|
|
|
|
|
|
Net loss per common
share: basic and diluted |
|
$ |
(0.59 |
) |
|
$ |
(0.69 |
) |
Weighted-average common shares used to compute basic and diluted
loss per share |
|
|
11,721,232 |
|
|
|
11,010,432 |
|
MTBC, INC.CONSOLIDATED
STATEMENTS OF CASH FLOWSFOR THE YEARS ENDED
DECEMBER 31, 2018 AND 2017
|
|
2018 |
|
|
2017 |
|
OPERATING
ACTIVITIES: |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(2,138,480 |
) |
|
$ |
(5,565,156 |
) |
Adjustments to
reconcile net loss to net cash provided by operating
activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
2,913,866 |
|
|
|
4,299,943 |
|
Deferred
rent |
|
|
(61,058 |
) |
|
|
(53,263 |
) |
Deferred
revenue |
|
|
(46,415 |
) |
|
|
22,380 |
|
Provision
for doubtful accounts |
|
|
723,611 |
|
|
|
409,693 |
|
(Benefit)
provision for deferred income taxes |
|
|
(207,726 |
) |
|
|
26,542 |
|
Foreign
exchange gain |
|
|
(434,806 |
) |
|
|
(248,518 |
) |
Interest
accretion |
|
|
191,065 |
|
|
|
722,070 |
|
Non-cash
restructuring charges |
|
|
- |
|
|
|
17,001 |
|
Stock-based compensation expense |
|
|
2,463,599 |
|
|
|
1,487,295 |
|
Change in
contingent consideration |
|
|
73,271 |
|
|
|
151,423 |
|
Changes
in operating assets and liabilities, net of businesses
acquired: |
|
|
|
|
|
|
|
|
Accounts
receivable |
|
|
1,479,297 |
|
|
|
41,745 |
|
Contract
asset |
|
|
(404,598 |
) |
|
|
- |
|
Inventory |
|
|
(137,159 |
) |
|
|
- |
|
Other
assets |
|
|
248,347 |
|
|
|
511,917 |
|
Accounts
payable and other liabilities |
|
|
2,149,660 |
|
|
|
(1,541,430 |
) |
Net cash
provided by operating activities |
|
|
6,812,474 |
|
|
|
281,642 |
|
INVESTING
ACTIVITIES: |
|
|
|
|
|
|
|
|
Capital
expenditures |
|
|
(1,028,249 |
) |
|
|
(697,211 |
) |
Cash paid
for acquisition |
|
|
(12,600,000 |
) |
|
|
(205,000 |
) |
Net cash
used in investing activities |
|
|
(13,628,249 |
) |
|
|
(902,211 |
) |
FINANCING
ACTIVITIES: |
|
|
|
|
|
|
|
|
Proceeds
from issuance of common stock, net of fees and expenses |
|
|
- |
|
|
|
1,972,065 |
|
Proceeds
from issuance of preferred stock, net of fees and expenses |
|
|
22,817,566 |
|
|
|
16,535,656 |
|
Preferred
stock dividends paid |
|
|
(4,102,410 |
) |
|
|
(1,485,727 |
) |
Settlement of tax withholding obligations on stock issued to
employees |
|
|
(333,007 |
) |
|
|
(195,912 |
) |
Repayments of notes payable |
|
|
(464,167 |
) |
|
|
(12,719,520 |
) |
Proceeds
from line of credit |
|
|
11,276,862 |
|
|
|
9,197,863 |
|
Repayments of line of credit |
|
|
(11,276,862 |
) |
|
|
(11,197,863 |
) |
Contingent consideration payments |
|
|
(150,250 |
) |
|
|
(145,885 |
) |
Other
financing activities |
|
|
(111,195 |
) |
|
|
(116,698 |
) |
Net cash
provided by financing activities |
|
|
17,656,537 |
|
|
|
1,843,979 |
|
EFFECT OF EXCHANGE RATE
CHANGES ON CASH |
|
|
(730,511 |
) |
|
|
(338,058 |
) |
NET INCREASE IN
CASH |
|
|
10,110,251 |
|
|
|
885,352 |
|
CASH - beginning of the
period |
|
|
4,362,232 |
|
|
|
3,476,880 |
|
CASH - end of the
period |
|
$ |
14,472,483 |
|
|
$ |
4,362,232 |
|
SUPPLEMENTAL NONCASH
INVESTING AND FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
Vehicle
financing obtained |
|
$ |
90,284 |
|
|
$ |
26,746 |
|
Dividends
declared, not paid |
|
$ |
1,468,724 |
|
|
$ |
747,147 |
|
Purchase
of prepaid insurance through assumption of note |
|
$ |
271,248 |
|
|
$ |
222,634 |
|
Value of
warrants issued |
|
$ |
101,989 |
|
|
$ |
390,479 |
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
INFORMATION - Cash paid during the period for: |
|
|
|
|
|
|
|
|
Income
taxes |
|
$ |
42,057 |
|
|
$ |
9,304 |
|
Interest |
|
$ |
64,669 |
|
|
$ |
612,285 |
|
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.
|
|
Year Ended December 31, |
|
|
|
2018 |
|
|
2017 |
|
|
|
($ in thousands) |
|
Net revenue |
|
$ |
50,546 |
|
|
$ |
31,811 |
|
|
|
|
|
|
|
|
|
|
GAAP net loss |
|
$ |
(2,138 |
) |
|
$ |
(5,565 |
) |
|
|
|
|
|
|
|
|
|
(Benefit)
provision for income taxes |
|
|
(157 |
) |
|
|
68 |
|
Net
interest expense |
|
|
250 |
|
|
|
1,307 |
|
Foreign
exchange / other expense |
|
|
(435 |
) |
|
|
(249 |
) |
Stock-based compensation expense |
|
|
2,464 |
|
|
|
1,487 |
|
Depreciation and amortization |
|
|
2,854 |
|
|
|
4,300 |
|
Integration, transaction and restructuring costs |
|
|
1,891 |
|
|
|
791 |
|
Change in
contingent consideration |
|
|
73 |
|
|
|
152 |
|
Adjusted EBITDA |
|
$ |
4,802 |
|
|
$ |
2,291 |
|
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.
|
|
Year Ended December 31, |
|
|
|
2018 |
|
|
2017 |
|
|
|
($ in thousands) |
|
Net revenue |
|
$ |
50,546 |
|
|
$ |
31,811 |
|
|
|
|
|
|
|
|
|
|
GAAP net loss |
|
$ |
(2,138 |
) |
|
$ |
(5,565 |
) |
(Benefit)
provision for income taxes |
|
|
(157 |
) |
|
|
68 |
|
Net
interest expense |
|
|
250 |
|
|
|
1,307 |
|
Other
income - net |
|
|
(494 |
) |
|
|
(332 |
) |
GAAP operating
loss |
|
|
(2,539 |
) |
|
|
(4,522 |
) |
GAAP
operating margin |
|
|
(5.0 |
%) |
|
|
(14.2 |
%) |
|
|
|
|
|
|
|
|
|
Stock-based compensation expense |
|
|
2,464 |
|
|
|
1,487 |
|
Amortization of purchased intangible assets |
|
|
1,828 |
|
|
|
3,393 |
|
Integration, transaction and restructuring costs |
|
|
1,891 |
|
|
|
791 |
|
Change in
contingent consideration |
|
|
73 |
|
|
|
152 |
|
Non-GAAP adjusted
operating income |
|
$ |
3,717 |
|
|
$ |
1,301 |
|
Non-GAAP
adjusted operating margin |
|
|
7.4 |
% |
|
|
4.1 |
% |
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.
|
|
Year Ended December 31, |
|
|
|
2018 |
|
|
2017 |
|
|
|
($ in thousands) |
|
GAAP net loss |
|
$ |
(2,138 |
) |
|
$ |
(5,565 |
) |
|
|
|
|
|
|
|
|
|
Foreign
exchange / other expense |
|
|
(435 |
) |
|
|
(249 |
) |
Stock-based compensation expense |
|
|
2,464 |
|
|
|
1,487 |
|
Amortization of purchased intangible assets |
|
|
1,828 |
|
|
|
3,393 |
|
Integration, transaction and restructuring costs |
|
|
1,891 |
|
|
|
791 |
|
Change in
contingent consideration |
|
|
73 |
|
|
|
152 |
|
Income
tax (benefit) expense related to goodwill |
|
|
(208 |
) |
|
|
27 |
|
Non-GAAP adjusted net
income |
|
$ |
3,475 |
|
|
$ |
36 |
|
|
|
|
|
|
|
|
|
|
End-of-period
shares |
|
|
11,829,758 |
|
|
|
11,530,591 |
|
|
|
|
|
|
|
|
|
|
Non-GAAP adjusted net
income per share |
|
$ |
0.29 |
|
|
$ |
- |
|
For purposes of determining non-GAAP adjusted
net income per share, we used the number of common shares
outstanding as of December 31, 2018 and 2017.
|
|
Year Ended December 31, |
|
|
|
2018 |
|
|
2017 |
|
GAAP net loss
attributable to common shareholders, per share |
|
$ |
(0.59 |
) |
|
$ |
(0.69 |
) |
Impact of
preferred stock dividend |
|
|
0.41 |
|
|
|
0.21 |
|
Net loss per
end-of-period share |
|
|
(0.18 |
) |
|
|
(0.48 |
) |
|
|
|
|
|
|
|
|
|
Foreign
exchange / other expense |
|
|
(0.04 |
) |
|
|
(0.02 |
) |
Stock-based compensation expense |
|
|
0.21 |
|
|
|
0.13 |
|
Amortization of purchased intangible assets |
|
|
0.15 |
|
|
|
0.29 |
|
Integration, transaction and restructuring costs |
|
|
0.16 |
|
|
|
0.07 |
|
Change in
contingent consideration |
|
|
0.01 |
|
|
|
0.01 |
|
Income
tax (benefit) expense related to goodwill |
|
|
(0.02 |
) |
|
|
0.00 |
|
Non-GAAP adjusted net
income per share |
|
$ |
0.29 |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
End-of-period
shares |
|
|
11,829,758 |
|
|
|
11,530,591 |
|
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, 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:
Foreign exchange / other expense. 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
recorded.
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 discontinued facilities and
operations. 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 the
forecasted revenues of the acquired businesses.
Tax (benefit) expense related to goodwill.
Income tax (benefit) expense resulting from the amortization of
goodwill related to our acquisitions represents a (benefit) charge
to record the tax effect 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.
SOURCE MTBC
Company Contact:Bill KornChief
Financial OfficerMTBC, Inc.bkorn@mtbc.com(732) 873-5133
Investor Contact:Matt Kreps,
Managing DirectorDarrow Associates Investor
Relationsmkreps@darrowir.com(214) 597-8200
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