Benefitfocus, Inc. (NASDAQ: BNFT), the technology platform driving
rapid innovation for employers and health plans, today announced
its first quarter 2020 financial results. Recent highlights
include:
- Grew net benefit eligible lives to
17.5 million at the end of the first quarter, up from 17.3 million
at the end of the prior quarter and 15.5 million at the end of the
first quarter of 2019;
- Announced in February that Optima
Health, Virginia’s largest health plan, selected Benefitfocus as
its partner to deliver its next generation consumer
experience;
- Introduced the Community Resource
Center in March to provide human resource leaders additional
insight and tools to help guide them through the COVID-19
pandemic;
- Launched benefitplace.com, a
lower-cost, direct-to-consumer benefits alternative to COBRA that
offers a greater breadth of benefit options, in April;
- Exceeded high-end of Q1 adjusted
EBITDA guidance by over 60%; GAAP net loss decreased compared to
prior-year period.
“Benefitfocus continues to make meaningful
progress on our mission to improve lives with benefits. We have
accelerated our innovation amid the pandemic by responding to the
shifting needs of our customers,” said Ray August, President and
Chief Executive Officer of Benefitfocus. August added, “We have a
durable business model and strong cash balance. We remain confident
that we have the resources, market leadership and technical
advantage to exit this experience stronger and better positioned to
transform the benefits industry.”
First Quarter 2020 Financial
Highlights
Revenue
- Total revenue was $66.2 million, a
decrease of 3% compared to the first quarter of 2019.
- Software services was $52.0
million, a decrease of 2% compared to the first quarter of 2019.
Software services is comprised of subscription and platform
revenue.• Subscription revenue was $46.0 million, a decrease
of 4% compared to the first quarter of 2019.• Platform
revenue was $6.0 million, an increase of 17% compared to the first
quarter of 2019.
- Professional services revenue was
$14.2 million, a decrease of 7% compared to the first quarter of
2019.
Net Loss
- GAAP net loss was ($11.1) million,
compared to ($14.2) million in the first quarter of 2019. GAAP net
loss per share was ($0.34), based on 32.6 million basic and diluted
weighted average common shares outstanding, compared to ($0.44) for
the first quarter of 2019, based on 32.1 million basic and diluted
weighted average common shares outstanding.
Non-GAAP Net Loss and Adjusted
EBITDA
- Non-GAAP net loss was ($6.7)
million, unchanged from the first quarter of 2019. Non-GAAP net
loss per share was ($0.21) for both the first quarter 2020 and
2019, based on 32.6 million and 32.1 million basic and fully
diluted weighted average common shares outstanding for the first
quarter of 2020 and 2019, respectively.
- Adjusted EBITDA was $4.1 million,
compared to $3.6 million in the first quarter of 2019.
See important disclosures about non-GAAP measures, and a
reconciliation of them to GAAP, below.
Balance Sheet
- Cash and cash equivalents at March
31, 2020 totaled $114.7 million, compared to $131.0 million at the
end of the fourth quarter of 2019.
- During the first quarter of 2020,
the company repurchased approximately 1.1 million shares at a total
cost of approximately $9.4 million.
Updated Business Outlook
Based on information available as of May 6,
2020, Benefitfocus is providing guidance for the second quarter and
full year 2020 as indicated below.
Second Quarter 2020:
- Total revenue is expected to be in
the range of $55.0 million to $58.0 million.
- Non-GAAP net loss is expected to be
in the range of ($9.0) million to ($7.0) million, or ($0.28) to
($0.22) per share, based on 32.1 million basic and diluted weighted
average common shares outstanding.
- Adjusted EBITDA is expected to be
in the range of $2.0 million to $4.0 million.
Full Year 2020:
- Total revenue is expected to be in
the range of $250.0 million to $270.0 million.
- Non-GAAP net loss is expected to be
in the range of ($18.0) million to ($8.0) million, or ($0.56) to
($0.25) per share, based on 32.3 million basic and diluted weighted
average common shares outstanding.
- Adjusted EBITDA is expected to be
in the range of $25.0 million to $35.0 million.
- Free cash flow usage is expected to
be in the range of $(10.0) million to $(20.0) million.
Adjusted EBITDA and Free Cash Flow guidance
excludes the impact of restructuring charges.
Management has not reconciled forward-looking
non-GAAP net loss, Adjusted EBITDA or Free Cash Flow to their most
directly comparable GAAP measures of GAAP net loss and GAAP
operating cash flows. This is because we cannot predict with
reasonable certainty the ultimate outcome of the various necessary
GAAP components of such reconciliations, including, for example,
those related to compensation, acquisition transactions and
integration, or others that may arise during the year, without
unreasonable effort. These components and other factors could
materially impact the amount of the future directly comparable GAAP
measures, which may differ significantly from their non-GAAP
counterparts. See below for additional important disclosures
regarding our non-GAAP financial measures.
Conference Call Details:
In conjunction with this announcement,
Benefitfocus will host a conference call to discuss the
company’s financial results and Q2 and Full Year 2020 business
outlook on May 6, 2020, at 5:00 p.m. ET. To access this
call, dial (877) 407-9208 (domestic) or (201) 493-6784
(international). A live webcast of the conference call will be
available on the Investor Relations page of the company’s website
at http://investor.benefitfocus.com/. After the conference
call, a replay will be available until May 13, 2020, and can
be accessed by dialing (844) 512-2921 (domestic) or (412) 317-6671
(international) with passcode 13703064.
About Benefitfocus
Benefitfocus (NASDAQ: BNFT) unifies the entire
U.S. benefits industry on a single technology platform to protect
consumers' health, wealth, property and lifestyle. Our powerful
cloud-based software, data-driven insights and
thoughtfully-designed services, enable employers, insurance
brokers, carriers and suppliers to simplify the complexity of
benefits administration and deliver a world-class benefits
experience. Learn more at www.benefitfocus.com, LinkedIn and
Twitter.
Non-GAAP Financial Measures
The company uses certain non-GAAP financial
measures in this release, including non-GAAP gross profit,
operating loss, net loss, net loss per common share, adjusted
EBITDA and Free Cash Flow. Generally, a non-GAAP financial measure
is a numerical measure of a company’s performance or financial
position that either excludes or includes amounts that are not
normally excluded or included in the most directly comparable
measure calculated and presented in accordance with GAAP.
Non-GAAP gross profit, operating loss, net loss
and net loss per common share exclude stock-based compensation
expenses, amortization of acquisition-related intangible assets,
transaction and acquisition-related costs expensed, if any, and
costs not core to our business, if any. We define adjusted EBITDA
as net loss before net interest, taxes, and depreciation and
amortization expense, adjusted to eliminate stock-based
compensation expense, expense related to the impairment of goodwill
and intangible assets, transaction and acquisition-related costs
expensed, restructuring charges and costs not core to our business.
We define Free Cash Flow as cash used in operating activities less
capital expenditures, adjusted to eliminate restructuring charges.
Beginning in the first quarter of 2020, we revised our definitions
of adjusted EBITDA and Free Cash Flow to also exclude restructuring
charges. The revisions to these definitions had no impact on
our reported adjusted EBITDA and Free Cash Flow for the three
months ended March 31, 2020 or prior periods. Please note that
other companies might define their non-GAAP financial measures
differently than we do.
Management presents these non-GAAP
financial measures in this release because it considers them to be
important supplemental measures of performance. Management uses
these non-GAAP financial measures for planning purposes, including
analysis of the company's performance against prior periods, the
preparation of operating budgets and to determine appropriate
levels of operating and capital investments. Management believes
that these non-GAAP financial measures provide additional insight
for analysts and investors in evaluating the company's financial
and operational performance. Management also intends to provide
these non-GAAP financial measures as part of the company’s future
earnings discussions and, therefore, their inclusion should provide
consistency in the company’s financial reporting.
Non-GAAP financial measures have limitations as
an analytical tool. Investors are encouraged to review the
reconciliation of the non-GAAP measures to their most directly
comparable GAAP measures provided in this release, including in the
accompanying tables.
Safe Harbor Statement
Except for historical information, all of the
statements, expectations, and assumptions contained in this press
release are forward-looking statements. Actual results might differ
materially from those explicit or implicit in the forward-looking
statements. Important factors that could cause actual results to
differ materially include: volatility and uncertainty in the global
economy and financial markets in light of the evolving COVID-19
pandemic; our continuing losses and need to achieve GAAP
profitability; fluctuations in our financial results; our ability
to maintain our culture, retain and motivate qualified personnel;
the immature and volatile market for our products and services;
risks related to changing healthcare and other applicable
regulations; risks associated with acquisitions; cyber-security
risks; the need to innovate and provide useful products and
services; our ability to compete effectively; privacy, security and
other risks associated with our business; and the other risk
factors set forth from time to time in our SEC filings,
copies of which are available free of charge within the Investor
Relations section of the Benefitfocus website
at http://investor.benefitfocus.com/sec-filings or upon
request from our Investor Relations
Department. Benefitfocus assumes no obligation and does
not intend to update these forward-looking statements, except as
required by law.
Source: Benefitfocus, Inc.
|
Benefitfocus, Inc.Unaudited Consolidated
Statements of Operations and Comprehensive Loss(in
thousands, except share and per share data) |
|
|
|
|
|
|
Three Months EndedMarch 31, |
|
|
|
2020 |
|
|
2019 |
|
Revenue |
|
$ |
66,154 |
|
|
$ |
68,299 |
|
Cost of revenue(1)(2)(3) |
|
|
33,912 |
|
|
|
32,852 |
|
Gross profit |
|
|
32,242 |
|
|
|
35,447 |
|
Operating expenses:(1)(2)(3) |
|
|
|
|
|
|
|
|
Sales and marketing |
|
|
15,630 |
|
|
|
19,619 |
|
Research and development |
|
|
11,768 |
|
|
|
13,090 |
|
General and administrative |
|
|
10,515 |
|
|
|
11,796 |
|
Total operating expenses |
|
|
37,913 |
|
|
|
44,505 |
|
Loss from operations |
|
|
(5,671 |
) |
|
|
(9,058 |
) |
Other income (expense): |
|
|
|
|
|
|
|
|
Interest income |
|
|
426 |
|
|
|
660 |
|
Interest expense |
|
|
(5,891 |
) |
|
|
(5,814 |
) |
Other (expense) income |
|
|
5 |
|
|
|
9 |
|
Total other expense, net |
|
|
(5,460 |
) |
|
|
(5,145 |
) |
Loss before income taxes |
|
|
(11,131 |
) |
|
|
(14,203 |
) |
Income tax expense |
|
|
5 |
|
|
|
6 |
|
Net loss |
|
$ |
(11,136 |
) |
|
$ |
(14,209 |
) |
Comprehensive loss |
|
$ |
(11,136 |
) |
|
$ |
(14,209 |
) |
|
|
|
|
|
|
|
|
|
Net loss per common share: |
|
|
|
|
|
|
|
|
Basic and diluted |
|
$ |
(0.34 |
) |
|
$ |
(0.44 |
) |
Weighted-average common shares
outstanding: |
|
|
|
|
|
|
|
|
Basic and diluted |
|
|
32,638,805 |
|
|
|
32,056,934 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Stock-based compensation
included in above line items: |
|
|
|
|
|
|
|
|
Cost of revenue |
|
$ |
667 |
|
|
$ |
899 |
|
Sales and marketing |
|
|
880 |
|
|
|
1,686 |
|
Research and development |
|
|
342 |
|
|
|
1,192 |
|
General and administrative |
|
|
1,788 |
|
|
|
2,590 |
|
|
|
|
|
|
|
|
|
|
(2) Amortization of acquired
intangible assets included in above line items: |
|
|
|
|
|
|
|
|
Cost of revenue |
|
$ |
317 |
|
|
$ |
99 |
|
Sales and marketing |
|
|
91 |
|
|
|
36 |
|
Research and development |
|
|
109 |
|
|
|
40 |
|
General and administrative |
|
|
52 |
|
|
|
15 |
|
|
|
|
|
|
|
|
|
|
(3) Transaction and
acquisition-related costs expensed included in above line
items: |
|
|
|
|
|
|
|
|
General and administrative |
|
$ |
192 |
|
|
$ |
642 |
|
|
|
|
|
|
|
|
|
|
|
Benefitfocus, Inc.Unaudited Consolidated
Balance Sheets(in thousands, except share and per share
data) |
|
|
|
|
|
|
|
|
|
As ofMarch
31,2020 |
|
|
As ofDecember
31,2019 |
|
Assets |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
114,714 |
|
|
$ |
130,976 |
|
Accounts receivable, net |
|
|
33,450 |
|
|
|
33,754 |
|
Contract, prepaid and other current assets |
|
|
21,271 |
|
|
|
21,523 |
|
Total current assets |
|
|
169,435 |
|
|
|
186,253 |
|
Property and equipment, net |
|
|
31,507 |
|
|
|
28,669 |
|
Financing lease right-of-use
assets |
|
|
75,687 |
|
|
|
78,520 |
|
Operating lease right-of-use
assets |
|
|
1,591 |
|
|
|
1,715 |
|
Intangible assets, net |
|
|
12,099 |
|
|
|
12,667 |
|
Goodwill |
|
|
12,857 |
|
|
|
12,857 |
|
Deferred contract costs and other
non-current assets |
|
|
10,445 |
|
|
|
11,002 |
|
Total assets |
|
$ |
313,621 |
|
|
$ |
331,683 |
|
Liabilities and
stockholders' deficit |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
6,300 |
|
|
$ |
9,563 |
|
Accrued expenses |
|
|
11,937 |
|
|
|
10,526 |
|
Accrued compensation and benefits |
|
|
11,245 |
|
|
|
15,246 |
|
Deferred revenue, current portion |
|
|
29,736 |
|
|
|
33,429 |
|
Lease liabilities and financing obligations, current portion |
|
|
8,240 |
|
|
|
6,871 |
|
Total current liabilities |
|
|
67,458 |
|
|
|
75,635 |
|
Deferred revenue, net of current
portion |
|
|
4,803 |
|
|
|
5,079 |
|
Convertible senior notes |
|
|
190,873 |
|
|
|
187,949 |
|
Revolving line of credit |
|
|
10,000 |
|
|
|
– |
|
Lease liabilities and financing
obligations, net current portion |
|
|
82,891 |
|
|
|
88,572 |
|
Other non-current
liabilities |
|
|
68 |
|
|
|
92 |
|
Total liabilities |
|
|
356,093 |
|
|
|
357,327 |
|
Commitments and
contingencies |
|
|
|
|
|
|
|
|
Stockholders' deficit: |
|
|
|
|
|
|
|
|
Preferred stock, par value $0.001, 5,000,000 shares authorized, no
shares issued and outstanding at March 31, 2020 and December
31, 2019 |
|
|
– |
|
|
|
– |
|
Common stock, par value $0.001, 50,000,000 shares
authorized, 31,778,075 and 32,788,980 shares issued and
31,775,214 and 32,788,980 shares outstanding at March 31, 2020
and December 31, 2019, respectively |
|
|
32 |
|
|
|
33 |
|
Additional paid-in capital |
|
|
420,393 |
|
|
|
426,025 |
|
Accumulated deficit |
|
|
(462,897 |
) |
|
|
(451,702 |
) |
Total stockholders' deficit |
|
|
(42,472 |
) |
|
|
(25,644 |
) |
Total liabilities and stockholders' deficit |
|
$ |
313,621 |
|
|
$ |
331,683 |
|
|
|
|
|
|
|
|
|
|
|
Benefitfocus, Inc.Unaudited Consolidated
Statements of Cash Flows(in thousands) |
|
|
|
|
|
|
Three Months EndedMarch 31, |
|
|
|
2020 |
|
|
2019 |
|
Cash flows from operating activities |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(11,136 |
) |
|
$ |
(14,209 |
) |
Adjustments to reconcile net loss to net cash and
cash equivalents used in operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
5,884 |
|
|
|
5,335 |
|
Stock-based compensation expense |
|
|
3,677 |
|
|
|
6,367 |
|
Accretion of interest on convertible senior notes |
|
|
2,924 |
|
|
|
2,749 |
|
Interest accrual on finance lease liabilities |
|
|
23 |
|
|
|
– |
|
Rent expense (less than) in excess of payments |
|
|
(9 |
) |
|
|
9 |
|
Provision for doubtful accounts |
|
|
55 |
|
|
|
265 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable, net |
|
|
189 |
|
|
|
(6,514 |
) |
Contract, prepaid and other current assets |
|
|
252 |
|
|
|
(2,495 |
) |
Deferred costs and other non-current assets |
|
|
557 |
|
|
|
1,568 |
|
Accounts payable and accrued expenses |
|
|
(1,593 |
) |
|
|
(4,867 |
) |
Accrued compensation and benefits |
|
|
(4,000 |
) |
|
|
(3,580 |
) |
Deferred revenue |
|
|
(3,969 |
) |
|
|
(5,089 |
) |
Other non-current liabilities |
|
|
(24 |
) |
|
|
(23 |
) |
Net cash and cash equivalents
used in operating activities |
|
|
(7,170 |
) |
|
|
(20,484 |
) |
Cash flows from investing
activities |
|
|
|
|
|
|
|
|
Business combination, net of cash acquired |
|
|
– |
|
|
|
(21,033 |
) |
Purchases of property and equipment |
|
|
(3,821 |
) |
|
|
(2,955 |
) |
Net cash and cash equivalents
used in investing activities |
|
|
(3,821 |
) |
|
|
(23,988 |
) |
Cash flows from financing
activities |
|
|
|
|
|
|
|
|
Draws on revolving line of credit |
|
|
10,000 |
|
|
|
– |
|
Payments of debt issuance costs |
|
|
(154 |
) |
|
|
(357 |
) |
Repurchase of common stock |
|
|
(9,383 |
) |
|
|
– |
|
Proceeds from exercises of stock options and ESPP |
|
|
73 |
|
|
|
89 |
|
Payments on financing obligations |
|
|
(207 |
) |
|
|
(655 |
) |
Payments of principal on finance lease liabilities |
|
|
(5,600 |
) |
|
|
(1,375 |
) |
Net cash and cash equivalents
used in financing activities |
|
|
(5,271 |
) |
|
|
(2,298 |
) |
Net decrease in cash and
cash equivalents |
|
|
(16,262 |
) |
|
|
(46,770 |
) |
Cash and cash equivalents,
beginning of period |
|
|
130,976 |
|
|
|
190,928 |
|
Cash and cash
equivalents, end of period |
|
$ |
114,714 |
|
|
$ |
144,158 |
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure
of non-cash investing and financing activities |
|
|
|
|
|
|
|
|
Property and equipment purchases in accounts payable and accrued
expenses |
|
$ |
31 |
|
|
$ |
382 |
|
|
|
|
|
|
|
|
|
|
|
Benefitfocus, Inc.Unaudited Reconciliation
of GAAP to Non-GAAP Measures(in thousands, except share
and per share data) |
|
|
|
|
|
|
Three Months EndedMarch 31, |
|
|
|
2020 |
|
|
2019 |
|
Reconciliation from Gross Profit to Non-GAAP Gross
Profit: |
|
|
|
|
|
|
|
|
Gross profit |
|
$ |
32,242 |
|
|
$ |
35,447 |
|
Amortization of acquired intangible assets |
|
|
317 |
|
|
|
99 |
|
Stock-based compensation expense |
|
|
667 |
|
|
|
899 |
|
Total net adjustments |
|
|
984 |
|
|
|
998 |
|
Non-GAAP gross profit |
|
$ |
33,226 |
|
|
$ |
36,445 |
|
|
|
|
|
|
|
|
|
|
Reconciliation from
Operating Loss to Non-GAAP Operating Loss: |
|
|
|
|
|
|
|
|
Operating loss |
|
$ |
(5,671 |
) |
|
$ |
(9,058 |
) |
Amortization of acquired intangible assets |
|
|
569 |
|
|
|
190 |
|
Stock-based compensation expense |
|
|
3,677 |
|
|
|
6,367 |
|
Transaction and acquisition-related costs expensed |
|
|
192 |
|
|
|
642 |
|
Costs not core to our business |
|
|
— |
|
|
|
320 |
|
Total net adjustments |
|
|
4,438 |
|
|
|
7,519 |
|
Non-GAAP operating loss |
|
$ |
(1,233 |
) |
|
$ |
(1,539 |
) |
|
|
|
|
|
|
|
|
|
Reconciliation from Net
Loss to Adjusted EBITDA: |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(11,136 |
) |
|
$ |
(14,209 |
) |
Depreciation |
|
|
3,796 |
|
|
|
3,967 |
|
Amortization of software development costs |
|
|
1,519 |
|
|
|
1,178 |
|
Amortization of acquired intangible assets |
|
|
569 |
|
|
|
190 |
|
Interest income |
|
|
(426 |
) |
|
|
(660 |
) |
Interest expense |
|
|
5,891 |
|
|
|
5,814 |
|
Income tax expense |
|
|
5 |
|
|
|
6 |
|
Stock-based compensation expense |
|
|
3,677 |
|
|
|
6,367 |
|
Transaction and acquisition-related costs expensed |
|
|
192 |
|
|
|
642 |
|
Costs not core to our business |
|
|
— |
|
|
|
320 |
|
Total net adjustments |
|
|
15,223 |
|
|
|
17,824 |
|
Adjusted EBITDA |
|
$ |
4,087 |
|
|
$ |
3,615 |
|
|
|
|
|
|
|
|
|
|
Reconciliation from Net
Loss to Non-GAAP Net Loss: |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(11,136 |
) |
|
$ |
(14,209 |
) |
Amortization of acquired intangible assets |
|
|
569 |
|
|
|
190 |
|
Stock-based compensation expense |
|
|
3,677 |
|
|
|
6,367 |
|
Transaction and acquisition-related costs expensed |
|
|
192 |
|
|
|
642 |
|
Costs not core to our business |
|
|
— |
|
|
|
320 |
|
Total net adjustments |
|
|
4,438 |
|
|
|
7,519 |
|
Non-GAAP net loss |
|
$ |
(6,698 |
) |
|
$ |
(6,690 |
) |
|
|
|
|
|
|
|
|
|
Calculation of Non-GAAP
Earnings Per Share: |
|
|
|
|
|
|
|
|
Non-GAAP net loss |
|
$ |
(6,698 |
) |
|
$ |
(6,690 |
) |
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding - basic and diluted |
|
|
32,638,805 |
|
|
|
32,056,934 |
|
Shares used in computing non-GAAP net loss per share - basic and
diluted |
|
|
32,638,805 |
|
|
|
32,056,934 |
|
Non-GAAP net loss per common share - basic and diluted |
|
$ |
(0.21 |
) |
|
$ |
(0.21 |
) |
|
|
|
|
|
|
|
|
|
Benefitfocus, Inc.843-981-8898pr@benefitfocus.com
Investor Relations:Patti
Leahy843-981-8899ir@benefitfocus.com
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