Definitive Healthcare Corp. (“Definitive Healthcare” or the
“Company”) (Nasdaq: DH), an industry leader in healthcare
commercial intelligence, today announced financial results for the
quarter ended June 30, 2024.
Second Quarter 2024 Financial
Highlights:
-
Revenue was $63.7 million, an increase of 5% from
$61.0 million in Q2 2023.
-
Net Loss, inclusive of goodwill impairment charges
of $363.6 million, was $(306.2) million, or (480%)
of revenue, up 2,538% compared to $(11.6) million, or (19%) of
revenue in Q2 2023.
-
Adjusted Net Income was $14.2 million, compared to
$12.4 million in Q2 2023.
-
Adjusted EBITDA was $20.9 million, up 21% from Q2
2023, and 33% of revenue, compared to $17.2 million, or 28% of
revenue in Q2 2023.
-
Cash Flow from Operations was $14.0 million in the
quarter.
-
Unlevered Free Cash Flow was $21.5 million in the
quarter.
“Financial performance in the quarter
underscored our commitment to operational efficiency and
profitability,” said Kevin Coop, CEO of Definitive Healthcare. “In
my first month as CEO, I’m even more confident that this is a
business with strong fundamentals. We have a great team with deep
domain expertise and a differentiated set of data and technology
assets that deliver great value to our customers.”
Recent Business and Operating
Highlights:
Customer Wins
In the second quarter, Definitive Healthcare
grew its enterprise customer base by 32, or 6% year-over-year,
ending the quarter with 537 enterprise customers, defined as those
customers with more than $100,000 in annual recurring revenue.
Customer wins included:
- An AI-software
provider of personalized screening and early detection of breast
cancer needed to understand complex network relationships, clinical
volume by provider and place of service, and executive contact
hierarchies. Through integration of our claims data, and
proprietary reference and affiliation data, Definitive Healthcare
will serve as the foundation for their market intelligence and
commercial strategy planning functions.
- One of the
largest U.S. providers of electronic medical records systems
recently expanded their relationship with Definitive Healthcare.
Since 2017, their sales organization has relied on Definitive
Healthcare’s View Suite of products for competitive intelligence,
hospital technology install analysis, and whitespace
identification. After they were acquired by a larger multinational
software company, their newly formed Go-To-Market organization has
expanded their use of our data for their marketing programs in
addition to sales. Their marketing team selected Definitive
Healthcare for our in-depth affiliation data, account data
granularity and ease of use of our online portal.
- The
cardiovascular division of one of the largest providers of
diagnostics, medical devices, and pharmaceuticals recently selected
our Carevoyance platform for their marketing and field sales teams
to understand patient movement for cardiovascular procedures within
specific territories, and to support their competitive displacement
initiatives focused on the beginning stages of the physician
referral funnel.
- A large health
system on the West coast selected Definitive Healthcare to provide
insights into their market opportunity at the service line level,
including Neurology, Cardiology, Oncology, Orthopedic, and Maternal
Child Health. This analysis will allow to them allocate resources
more efficiently, increase referrals, and to reduce
outmigration.
- The healthcare
and life sciences field sales teams of one of the world’s largest
software companies will be leveraging our HospitalView and
ImagingView data to target hospitals, health systems and imaging
centers that utilize Epic Systems EHR platforms. After the initial
roll-out to their field teams, they plan to expand their use into
additional facility types.
Business Outlook
Based on information as of August 5, 2024, the
Company is issuing the following financial
guidance.
Third Quarter
2024:
-
Revenue is expected to be in the range of $61.0 –
$62.5 million.
-
Adjusted Operating Income is expected to be in the
range of $16.0 – $17.5 million.
-
Adjusted EBITDA is expected to be in the range of
$17.5 – $19.0 million, and 28-31% adjusted EBITDA
margin.
- Adjusted Net
Income is expected to be $12.0 – $13.0 million.
- Adjusted Net
Income Per Diluted Share is expected to be $0.07 –
$0.08 per share on approximately 156.5 million weighted-average
shares outstanding.
Full Year 2024:
-
Revenue is expected to be in the range of $247 –
$251 million.
-
Adjusted Operating Income is expected to be in the
range of $67 – $71 million.
-
Adjusted EBITDA is expected to be in the range of
$74 – $77 million, for a full-year adjusted EBITDA margin of
30-31%.
- Adjusted Net
Income is expected to be $50 – $53 million.
- Adjusted Net
Income Per Diluted Share is expected to be $0.32 –
$0.34 per share on approximately 156.8 million weighted-average
shares outstanding.
We do not provide a quantitative reconciliation
of the forward-looking non-GAAP financial measures included in this
press release to the most directly comparable GAAP measures due to
the high variability and difficulty to predict certain items
excluded from these non-GAAP financial measures; in particular, the
effects of equity-based compensation expense, taxes and amounts
under the tax receivable agreement, deferred tax assets and
deferred tax liabilities, and transaction, integration, and
restructuring expenses. We expect the variability of these excluded
items may have a significant, and potentially unpredictable, impact
on our future GAAP financial results.
Conference Call Information
Definitive Healthcare will host a conference
call today August 5, 2024, at 5:00 p.m. (Eastern Time) to discuss
the Company's full financial results and current business outlook.
Participants may access the call at 1-877-358-7298 or
1-848-488-9244. Shortly after the conclusion of the call, a replay
of this conference call will be available through September 4,
2024, at 1-800-645-7964 or 1-757-849-6722. The replay passcode is
1765#. A live audio webcast of the event will be available on
Definitive Healthcare’s Investor Relations website at
https://ir.definitivehc.com/.
About Definitive Healthcare
At Definitive Healthcare, our passion is to
transform data, analytics and expertise into healthcare commercial
intelligence. We help clients uncover the right markets,
opportunities and people, so they can shape tomorrow’s healthcare
industry. Learn more at definitivehc.com.
Forward-Looking
Statements
This press release includes forward-looking statements that
reflect our current views with respect to future events and
financial performance. Such statements are provided under the “safe
harbor” protection of the Private Securities Litigation Reform Act
of 1995. Forward-looking statements include all statements that do
not relate solely to historical or current facts, and can generally
be identified by words or phrases written in the future tense
and/or preceded by words such as “likely,” “will,” “should,” “may,”
“anticipates,” “intends,” “plans,” “seeks,” “believes,”
“estimates,” “expects,” “continues,” “assumes,” “would,”
“potentially” or similar words or variations thereof, or the
negative thereof, references to future periods, or by the inclusion
of forecasts or projections, but these terms are not the exclusive
means of identifying such statements. Examples of forward-looking
statements include, but are not limited to, statements we make
regarding our outlook, financial guidance, the benefits of our
healthcare commercial intelligence solutions, our competitive
position, customer behaviors and use of our solutions, the market,
industry and macroeconomic environment, our plans to improve our
operational and financial performance, our business, growth
strategies, go-to-market and product development efforts and future
expenses, customer growth and statements reflecting our
expectations about our ability to execute on our strategic plans,
achieve future growth and profitability and achieve our financial
goals.
Forward-looking statements in this press release are based on
our current expectations and assumptions regarding our business,
the economy and other future conditions. Because forward-looking
statements relate to the future, by their nature, they are subject
to inherent uncertainties, risks and changes in circumstances that
are difficult to predict. As a result, our actual results may
differ materially from those contemplated by the forward-looking
statements. Important factors that could cause actual results to
differ materially from those in the forward-looking statements
include the following: our inability to realize expected business
or financial benefits from acquisitions and the risk that our
acquisitions or investments could prove difficult to integrate,
disrupt our business, dilute stockholder value and adversely affect
our business, financial condition and results of operations; our
inability to achieve the anticipated cost savings, operating
efficiencies or other benefits of our internal restructuring
activities; global geopolitical tension and difficult macroeconomic
conditions; actual or potential changes in international, national,
regional and local economic, business and financial conditions,
including recessions, inflation, high interest rates, volatility in
the capital markets and related market uncertainty; the impact of
challenging macroeconomic conditions on our new and existing
customers; our inability to acquire new customers and generate
additional revenue from existing customers; our inability to
generate sales of subscriptions to our platform or any decline in
demand for our platform and the data we offer; the competitiveness
of the market in which we operate and our ability to compete
effectively; the failure to maintain and improve our platform, or
develop new modules or insights for healthcare commercial
intelligence; the inability to obtain and maintain accurate,
comprehensive or reliable data, which could result in reduced
demand for our platform; the risk that our recent growth rates may
not be indicative of our future growth; the inability to achieve or
sustain GAAP or non-GAAP profitability in the future as we increase
investments in our business; the loss of our access to our data
providers; the failure to respond to advances in healthcare
commercial intelligence; an inability to attract new customers and
expand subscriptions of current customers; our ability to
successfully transition executive leadership; the risk of
cyber-attacks and security vulnerabilities; litigation,
investigations or other legal, governmental or regulatory actions;
the possibility that our security measures are breached or
unauthorized access to data is otherwise obtained; the risk that
additional material weaknesses or significant deficiencies that
will occur in the future; and the risks of being required to
collect sales or other related taxes for subscriptions to our
platform in jurisdictions where we have not historically done
so.
Additional factors or events that could cause our actual
performance to differ from these forward-looking statements may
emerge from time to time, and it is not possible for us to predict
all of them. Should one or more of these risks or uncertainties
materialize, or should any of our assumptions prove incorrect, our
actual financial condition, results of operations, future
performance and business may vary in material respects from the
performance projected in these forward-looking
statements.
For additional discussion of factors that could impact our
operational and financial results, refer to our Quarterly Report on
Form 10-Q for the three months ended June 30, 2024 that will be
filed following this earnings release, as well as our Current
Reports on Form 8-K and other subsequent SEC filings, which are or
will be available on the Investor Relations page of our website at
ir.definitivehc.com and on the SEC website at
www.sec.gov.
All information in this press release speaks only as of the date
on which it is made. We undertake no obligation to publicly update
this information, whether as a result of new information, future
developments or otherwise, except as may be required by
law.
Website
Definitive Healthcare intends to use its website as a
distribution channel of material company information. Financial and
other important information regarding the Company is routinely
posted on and accessible through the Company’s website at
https://www.definitivehc.com/. Accordingly, you should monitor the
investor relations portion of our website at
https://ir.definitivehc.com/ in addition to following our press
releases, SEC filings, and public conference calls and webcasts. In
addition, you may automatically receive email alerts and other
information about the Company when you enroll your email address by
visiting the “Email Alerts” section of our investor relations page
at https://ir.definitivehc.com/.
Non-GAAP Financial
Measures
We have presented supplemental non-GAAP
financial measures as part of this earnings release. We believe
that these supplemental non-GAAP financial measures are useful to
investors because they allow for an evaluation of the Company with
a focus on the performance of its core operations, including
providing meaningful comparisons of financial results to historical
periods and to the financial results of peer and competitor
companies. Our use of these non-GAAP terms may vary from the use of
similar terms by other companies in our industry and accordingly
may not be comparable to similarly titled measures used by other
companies and are not measures of performance calculated in
accordance with GAAP. Our presentation of these non-GAAP financial
measures are intended as supplemental measures of our performance
that are not required by, or presented in accordance with, GAAP.
These non-GAAP financial measures should not be considered as
alternatives to loss from operations, net loss, earnings per share,
or any other performance measures derived in accordance with GAAP
or as measures of operating cash flows or liquidity. A
reconciliation of GAAP to non-GAAP results has been provided in the
financial statement tables included at the end of this press
release. In evaluating our non-GAAP financial measures, you should
be aware that in the future, we may incur expenses similar to those
eliminated in these presentations.
We refer to Unlevered Free Cash Flow, Adjusted
EBITDA, Adjusted EBITDA Margin, Adjusted Gross Profit, Adjusted
Gross Margin, Adjusted Operating Income, Adjusted Net Income and
Adjusted Net Income Per Diluted Share as non-GAAP financial
measures. These non-GAAP financial measures are not required by or
prepared in accordance with generally accepted accounting
principles in the U.S. (“GAAP”). These are supplemental financial
measures of our performance and should not be considered
substitutes for cash provided by (used in) operating activities,
loss from operations, net (loss) income, net (loss) income margin,
gross profit, gross margin, or any other measure derived in
accordance with GAAP.
We define Unlevered Free Cash Flow as net cash
provided by (used in) operating activities less purchases of
property, equipment and other assets, plus cash interest expense,
and cash payments related to transaction, integration, and
restructuring related expenses, earnouts, and other non-core items.
Unlevered Free Cash Flow does not represent residual cash flow
available for discretionary expenditures since, among other things,
we have mandatory debt service requirements.
We define EBITDA as earnings before debt-related
costs, including interest expense (income), income taxes and
depreciation and amortization. Adjusted EBITDA is defined as EBITDA
adjusted to exclude certain items of a significant or unusual
nature, including other income and expense, equity-based
compensation, goodwill impairments, transaction, integration, and
restructuring expenses and other non-core expenses. Adjusted EBITDA
Margin is defined as Adjusted EBITDA as a percentage of revenue.
Adjusted EBITDA and Adjusted EBITDA Margin are key metrics used by
management and our board of directors to assess the profitability
of our operations. We believe that Adjusted EBITDA and Adjusted
EBITDA Margin provide useful information to help investors to
assess our operating performance because these metrics eliminate
non-core and unusual items and non-cash expenses, which we do not
consider indicative of ongoing operational performance. We believe
that these metrics are helpful to investors in measuring the
profitability of our operations on a consolidated
level.
We define Adjusted Gross Profit as gross profit
excluding acquisition-related depreciation and amortization and
equity-based compensation costs and Adjusted Gross Margin is
defined as Adjusted Gross Profit as a percentage of revenue.
Adjusted Gross Profit and Adjusted Gross Margin are key metrics
used by management and our board of directors to assess our
operations. We exclude acquisition-related depreciation and
amortization expenses as they have no direct correlation to the
cost of operating our business on an ongoing basis. A small portion
of equity-based compensation is included in cost of revenue in
accordance with GAAP but is excluded from our Adjusted Gross Profit
calculations due to its non-cash nature.
We define Adjusted Operating Income as loss from
operations plus acquisition related amortization, equity-based
compensation, goodwill impairments, transaction, integration, and
restructuring expenses and other non-core expenses.
We define Adjusted Net Income as Adjusted
Operating Income less interest expense, net, recurring income tax
benefit, foreign currency (loss) gain, and tax effects of
adjustments. We define Adjusted Net Income Per Diluted Share as
Adjusted Net Income divided by diluted outstanding
shares.
In evaluating our non-GAAP financial measures,
you should be aware that in the future we may incur expenses
similar to those eliminated in these presentations.
Investor Contact: Brian Denyeau ICR
for Definitive
Healthcare brian.denyeau@icrinc.com646-277-1251
Media Contact: Bethany
Swackhamerbswackhamer@definitivehc.com
|
|
Definitive Healthcare Corp. |
Condensed Consolidated Balance Sheets |
(in thousands, except number of shares and par value;
unaudited) |
|
|
|
|
|
June 30, 2024 |
|
December 31, 2023 |
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
120,901 |
|
|
$ |
130,976 |
|
Short-term investments |
|
175,612 |
|
|
|
177,092 |
|
Accounts receivable, net |
|
44,180 |
|
|
|
59,249 |
|
Prepaid expenses and other assets |
|
13,927 |
|
|
|
13,120 |
|
Deferred contract costs |
|
13,701 |
|
|
|
13,490 |
|
Total current assets |
|
368,321 |
|
|
|
393,927 |
|
Property and equipment, net |
|
3,526 |
|
|
|
4,471 |
|
Operating lease right-of-use assets, net |
|
7,840 |
|
|
|
9,594 |
|
Other assets |
|
1,946 |
|
|
|
2,388 |
|
Deferred contract costs |
|
15,268 |
|
|
|
17,320 |
|
Intangible assets, net |
|
307,023 |
|
|
|
323,121 |
|
Goodwill |
|
718,496 |
|
|
|
1,075,080 |
|
Total assets |
$ |
1,422,420 |
|
|
$ |
1,825,901 |
|
Liabilities and Equity |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
|
6,078 |
|
|
|
5,787 |
|
Accrued expenses and other liabilities |
|
34,229 |
|
|
|
51,529 |
|
Deferred revenue |
|
97,062 |
|
|
|
97,377 |
|
Term loan |
|
13,750 |
|
|
|
13,750 |
|
Operating lease liabilities |
|
2,361 |
|
|
|
2,239 |
|
Total current liabilities |
|
153,480 |
|
|
|
170,682 |
|
Long term liabilities: |
|
|
|
Deferred revenue |
|
4 |
|
|
|
9 |
|
Term loan |
|
235,968 |
|
|
|
242,567 |
|
Operating lease liabilities |
|
8,120 |
|
|
|
9,372 |
|
Tax receivable agreements liability |
|
83,391 |
|
|
|
127,000 |
|
Deferred tax liabilities |
|
44,625 |
|
|
|
67,163 |
|
Other liabilities |
|
10,544 |
|
|
|
9,934 |
|
Total liabilities |
|
536,132 |
|
|
|
626,727 |
|
|
|
|
|
Equity: |
|
|
|
Class A Common Stock, par value $0.001, 600,000,000 shares
authorized, 117,053,339 and 116,562,252 shares issued and
outstanding at June 30, 2024 and December 31, 2023,
respectively |
|
117 |
|
|
|
117 |
|
Class B Common Stock, par value $0.00001, 65,000,000 shares
authorized, 39,489,246 and 39,082,591 shares issued and
outstanding, respectively, at June 30, 2024, and 39,762,700 and
39,168,047 shares issued and outstanding, respectively, at December
31, 2023 |
|
— |
|
|
|
— |
|
Additional paid-in capital |
|
1,094,217 |
|
|
|
1,086,581 |
|
Accumulated other comprehensive income |
|
1,057 |
|
|
|
2,109 |
|
Accumulated deficit |
|
(450,603 |
) |
|
|
(227,450 |
) |
Noncontrolling interests |
|
241,500 |
|
|
|
337,817 |
|
Total equity |
|
886,288 |
|
|
|
1,199,174 |
|
Total liabilities and equity |
$ |
1,422,420 |
|
|
$ |
1,825,901 |
|
|
|
|
|
Definitive Healthcare Corp. |
Condensed Consolidated Statements of
Operations |
(in thousands, except share amounts and per share data;
unaudited) |
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
2023 |
|
Revenue |
$ |
63,737 |
|
|
$ |
60,957 |
|
|
$ |
127,217 |
|
$ |
120,158 |
|
Cost of revenue: |
|
|
|
|
|
|
Cost of revenue exclusive of amortization (1) |
|
9,904 |
|
|
|
8,078 |
|
|
|
19,640 |
|
|
16,630 |
|
Amortization |
|
3,379 |
|
|
|
3,090 |
|
|
|
6,741 |
|
|
6,444 |
|
Gross profit |
|
50,454 |
|
|
|
49,789 |
|
|
|
100,836 |
|
|
97,084 |
|
Operating expenses: |
|
|
|
|
|
|
Sales and marketing (1) |
|
21,545 |
|
|
|
24,702 |
|
|
|
43,305 |
|
|
48,125 |
|
Product development (1) |
|
10,122 |
|
|
|
10,229 |
|
|
|
20,254 |
|
|
20,113 |
|
General and administrative (1) |
|
12,527 |
|
|
|
13,670 |
|
|
|
29,410 |
|
|
27,749 |
|
Depreciation and amortization |
|
9,409 |
|
|
|
9,688 |
|
|
|
18,731 |
|
|
19,278 |
|
Transaction, integration, and restructuring expenses |
|
2,851 |
|
|
|
3,571 |
|
|
|
11,385 |
|
|
6,161 |
|
Goodwill impairment |
|
363,641 |
|
|
|
- |
|
|
|
363,641 |
|
|
- |
|
Total operating expenses |
|
420,095 |
|
|
|
61,860 |
|
|
|
486,726 |
|
|
121,426 |
|
Loss from operations |
|
(369,641 |
) |
|
|
(12,071 |
) |
|
|
(385,890 |
) |
|
(24,342 |
) |
Other (expense) income, net |
|
|
|
|
|
|
Interest (expense) income, net |
|
(46 |
) |
|
|
(221 |
) |
|
|
65 |
|
|
(1,001 |
) |
Other income (expense), net |
|
41,600 |
|
|
|
(797 |
) |
|
|
44,240 |
|
|
(4,428 |
) |
Total other income (expense), net |
|
41,554 |
|
|
|
(1,018 |
) |
|
|
44,305 |
|
|
(5,429 |
) |
Net loss before income taxes |
|
(328,087 |
) |
|
|
(13,089 |
) |
|
|
(341,585 |
) |
|
(29,771 |
) |
Benefit from income taxes |
|
21,900 |
|
|
|
1,484 |
|
|
|
22,680 |
|
|
2,194 |
|
Net loss |
|
(306,187 |
) |
|
|
(11,605 |
) |
|
|
(318,905 |
) |
|
(27,577 |
) |
Less: Net loss attributable to noncontrolling interests |
|
(92,552 |
) |
|
|
(3,039 |
) |
|
|
(95,752 |
) |
|
(6,948 |
) |
Net loss attributable to Definitive Healthcare Corp. |
$ |
(213,635 |
) |
|
$ |
(8,566 |
) |
|
$ |
(223,153 |
) |
$ |
(20,629 |
) |
Net loss per share of Class A Common Stock: |
|
|
|
|
|
|
Basic and diluted |
$ |
(1.81 |
) |
|
$ |
(0.08 |
) |
|
$ |
(1.90 |
) |
$ |
(0.19 |
) |
Weighted average Class A Common Stock outstanding: |
|
|
|
|
|
|
Basic and diluted |
|
117,750,392 |
|
|
|
111,768,782 |
|
|
|
117,591,956 |
|
|
110,011,177 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Amounts include equity-based compensation expense as
follows: |
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
2023 |
|
Cost of revenue |
$ |
309 |
|
|
$ |
296 |
|
|
$ |
580 |
|
$ |
554 |
|
Sales and marketing |
|
1,686 |
|
|
|
2,920 |
|
|
|
3,957 |
|
|
5,569 |
|
Product development |
|
2,949 |
|
|
|
3,319 |
|
|
|
5,710 |
|
|
6,330 |
|
General and administrative |
|
3,898 |
|
|
|
5,828 |
|
|
|
14,177 |
|
|
11,038 |
|
Total equity-based compensation expense |
$ |
8,842 |
|
|
$ |
12,363 |
|
|
$ |
24,424 |
|
$ |
23,491 |
|
|
|
|
|
|
|
|
Definitive Healthcare Corp. |
Condensed Consolidated Statements of Cash
Flows |
(in thousands; unaudited) |
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
Cash flows provided by (used in) operating
activities: |
|
|
|
|
|
|
|
Net loss |
$ |
(306,187 |
) |
|
$ |
(11,605 |
) |
|
$ |
(318,905 |
) |
|
$ |
(27,577 |
) |
Adjustments to reconcile net loss to net cash provided by operating
activities: |
|
|
|
|
|
|
|
Depreciation and amortization |
|
603 |
|
|
|
446 |
|
|
|
1,157 |
|
|
|
959 |
|
Amortization of intangible assets |
|
12,185 |
|
|
|
12,332 |
|
|
|
24,315 |
|
|
|
24,763 |
|
Amortization of deferred contract costs |
|
3,828 |
|
|
|
3,170 |
|
|
|
7,520 |
|
|
|
6,030 |
|
Equity-based compensation |
|
8,842 |
|
|
|
12,363 |
|
|
|
24,424 |
|
|
|
23,491 |
|
Amortization of debt issuance costs |
|
175 |
|
|
|
175 |
|
|
|
351 |
|
|
|
351 |
|
Provision for doubtful accounts receivable |
|
317 |
|
|
|
444 |
|
|
|
528 |
|
|
|
466 |
|
Non-cash impairment charges related to office leases |
|
1,047 |
|
|
|
141 |
|
|
|
1,047 |
|
|
|
298 |
|
Goodwill impairment charge |
|
363,641 |
|
|
|
— |
|
|
|
363,641 |
|
|
|
— |
|
Tax receivable agreement remeasurement |
|
(41,701 |
) |
|
|
1,146 |
|
|
|
(43,968 |
) |
|
|
4,698 |
|
Changes in fair value of contingent consideration |
|
— |
|
|
|
— |
|
|
|
270 |
|
|
|
— |
|
Deferred income taxes |
|
(21,988 |
) |
|
|
(1,651 |
) |
|
|
(22,835 |
) |
|
|
(2,424 |
) |
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable |
|
12,201 |
|
|
|
6,918 |
|
|
|
15,200 |
|
|
|
13,884 |
|
Prepaid expenses and other assets |
|
(2,859 |
) |
|
|
225 |
|
|
|
(4,258 |
) |
|
|
(3,571 |
) |
Deferred contract costs |
|
(2,980 |
) |
|
|
(5,086 |
) |
|
|
(5,679 |
) |
|
|
(9,107 |
) |
Contingent consideration |
|
— |
|
|
|
— |
|
|
|
(602 |
) |
|
|
— |
|
Accounts payable, accrued expenses, and other liabilities |
|
(2,058 |
) |
|
|
832 |
|
|
|
(10,289 |
) |
|
|
(3,023 |
) |
Deferred revenue |
|
(11,026 |
) |
|
|
(7,813 |
) |
|
|
(1,288 |
) |
|
|
(2,244 |
) |
Net cash provided by operating activities |
|
14,040 |
|
|
|
12,037 |
|
|
|
30,629 |
|
|
|
26,994 |
|
Cash flows (used in) provided by investing
activities: |
|
|
|
|
|
|
|
Purchases of property, equipment, and other assets |
|
(410 |
) |
|
|
(740 |
) |
|
|
(676 |
) |
|
|
(2,078 |
) |
Purchases of short-term investments |
|
(40,120 |
) |
|
|
(42,547 |
) |
|
|
(123,946 |
) |
|
|
(132,799 |
) |
Maturities of short-term investments |
|
55,464 |
|
|
|
44,627 |
|
|
|
129,052 |
|
|
|
102,747 |
|
Cash paid for acquisitions, net of cash acquired |
|
— |
|
|
|
— |
|
|
|
(13,530 |
) |
|
|
— |
|
Net cash provided by (used in) investing activities |
|
14,934 |
|
|
|
1,340 |
|
|
|
(9,100 |
) |
|
|
(32,130 |
) |
Cash flows used in financing activities: |
|
|
|
|
|
|
|
Repayments of term loans |
|
(3,437 |
) |
|
|
(1,719 |
) |
|
|
(6,875 |
) |
|
|
(3,438 |
) |
Taxes paid related to net share settlement of equity awards |
|
(969 |
) |
|
|
(1,085 |
) |
|
|
(6,775 |
) |
|
|
(2,615 |
) |
Repurchases of Class A Common Stock |
|
(7,003 |
) |
|
|
— |
|
|
|
(7,003 |
) |
|
|
— |
|
Payments of contingent consideration |
|
— |
|
|
|
— |
|
|
|
(1,000 |
) |
|
|
— |
|
Payments under tax receivable agreement |
|
— |
|
|
|
— |
|
|
|
(6,950 |
) |
|
|
(246 |
) |
Payments of equity offering issuance costs |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(30 |
) |
Member distributions |
|
(2,713 |
) |
|
|
(2,827 |
) |
|
|
(2,713 |
) |
|
|
(2,827 |
) |
Net cash used in financing activities |
|
(14,122 |
) |
|
|
(5,631 |
) |
|
|
(31,316 |
) |
|
|
(9,156 |
) |
Net increase (decrease) in cash and cash equivalents |
|
14,852 |
|
|
|
7,746 |
|
|
|
(9,787 |
) |
|
|
(14,292 |
) |
Effect of exchange rate changes on cash and cash equivalents |
|
55 |
|
|
|
(322 |
) |
|
|
(288 |
) |
|
|
(257 |
) |
Cash and cash equivalents, beginning of period |
|
105,994 |
|
|
|
124,961 |
|
|
|
130,976 |
|
|
|
146,934 |
|
Cash and cash equivalents, end of period |
$ |
120,901 |
|
|
$ |
132,385 |
|
|
$ |
120,901 |
|
|
$ |
132,385 |
|
Supplemental cash flow disclosures: |
|
|
|
|
|
|
|
Cash paid during the period for: |
|
|
|
|
|
|
|
Interest |
$ |
3,590 |
|
|
$ |
3,616 |
|
|
$ |
7,232 |
|
|
$ |
7,091 |
|
Income taxes |
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
136 |
|
Acquisitions: |
|
|
|
|
|
|
|
Net assets acquired, net of cash acquired |
$ |
— |
|
|
$ |
— |
|
|
$ |
13,675 |
|
|
$ |
— |
|
Working capital adjustment receivable |
|
— |
|
|
|
— |
|
|
|
(145 |
) |
|
|
— |
|
Net cash paid for acquisitions |
$ |
— |
|
|
$ |
— |
|
|
$ |
13,530 |
|
|
$ |
— |
|
Supplemental disclosure of non-cash investing
activities: |
|
|
|
|
|
|
|
Capital expenditures included in accounts payable and accrued
expenses and other liabilities |
$ |
1,091 |
|
|
$ |
60 |
|
|
$ |
1,091 |
|
|
$ |
60 |
|
|
|
|
|
|
|
|
|
Definitive Healthcare Corp. |
Reconciliations of Non-GAAP Financial Measures to Closest
GAAP Equivalent |
|
|
|
|
|
|
|
|
Reconciliation of GAAP Operating Cash Flow to Unlevered Free
Cash Flow |
(in thousands; unaudited) |
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
Net cash provided by operating activities |
$ |
14,040 |
|
|
$ |
12,037 |
|
|
$ |
30,629 |
|
|
$ |
26,994 |
|
Purchases of property, equipment, and other assets |
|
(410 |
) |
|
|
(740 |
) |
|
|
(676 |
) |
|
|
(2,078 |
) |
Interest paid in cash |
|
3,590 |
|
|
|
3,616 |
|
|
|
7,232 |
|
|
|
7,091 |
|
Transaction, integration, and restructuring expenses paid in cash
(a) |
|
1,804 |
|
|
|
3,430 |
|
|
|
10,068 |
|
|
|
5,863 |
|
Earnout payment (b) |
|
— |
|
|
|
— |
|
|
|
602 |
|
|
|
— |
|
Other non-core items (c) |
|
2,438 |
|
|
|
600 |
|
|
|
1,910 |
|
|
|
1,876 |
|
Unlevered Free Cash Flow |
$ |
21,462 |
|
|
$ |
18,943 |
|
|
$ |
49,765 |
|
|
$ |
39,746 |
|
(a) |
Transaction and integration expenses paid in cash primarily
represent legal, accounting, and consulting expenses related to our
acquisitions. Restructuring expenses paid in cash relate to our
restructuring plans. |
(b) |
Earnout payment represents final settlement of contingent
consideration included in cash flow from operations. |
(c) |
Non-core items represent expenses driven by events that are
typically by nature one-time, non-operational, and unrelated to our
core operations. |
|
|
Reconciliation of GAAP Net Loss to Adjusted Net Income and |
GAAP Operating Loss to Adjusted Operating Income |
(in thousands, except share and per share amounts; unaudited) |
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
Net loss |
$ |
(306,187 |
) |
|
$ |
(11,605 |
) |
|
$ |
(318,905 |
) |
|
$ |
(27,577 |
) |
Add: Income tax benefit |
|
(21,900 |
) |
|
|
(1,484 |
) |
|
|
(22,680 |
) |
|
|
(2,194 |
) |
Add: Interest expense (income), net |
|
46 |
|
|
|
221 |
|
|
|
(65 |
) |
|
|
1,001 |
|
Add: Other (income) expense, net |
|
(41,600 |
) |
|
|
797 |
|
|
|
(44,240 |
) |
|
|
4,428 |
|
Loss from operations |
|
(369,641 |
) |
|
|
(12,071 |
) |
|
|
(385,890 |
) |
|
|
(24,342 |
) |
Add: Amortization of intangible assets acquired through business
combinations |
|
11,173 |
|
|
|
11,556 |
|
|
|
22,384 |
|
|
|
22,923 |
|
Add: Equity-based compensation |
|
8,842 |
|
|
|
12,363 |
|
|
|
24,424 |
|
|
|
23,491 |
|
Add: Transaction, integration, and restructuring expenses |
|
2,851 |
|
|
|
3,571 |
|
|
|
11,385 |
|
|
|
6,161 |
|
Add: Goodwill impairment charge |
|
363,641 |
|
|
|
— |
|
|
|
363,641 |
|
|
|
— |
|
Add: Other non-core items |
|
2,438 |
|
|
|
600 |
|
|
|
1,910 |
|
|
|
1,876 |
|
Adjusted Operating Income |
|
19,304 |
|
|
|
16,019 |
|
|
|
37,854 |
|
|
|
30,109 |
|
Less: Interest (expense) income, net |
|
(46 |
) |
|
|
(221 |
) |
|
|
65 |
|
|
|
(1,001 |
) |
Less: Recurring income tax (provision) benefit |
|
(52 |
) |
|
|
1,484 |
|
|
|
728 |
|
|
|
2,194 |
|
Less: Foreign currency (loss) gain |
|
(101 |
) |
|
|
349 |
|
|
|
272 |
|
|
|
270 |
|
Less: Tax impacts of adjustments to net loss |
|
(4,950 |
) |
|
|
(5,246 |
) |
|
|
(11,722 |
) |
|
|
(10,104 |
) |
Adjusted Net Income |
$ |
14,155 |
|
|
$ |
12,385 |
|
|
$ |
27,197 |
|
|
$ |
21,468 |
|
Shares for Adjusted Net Income Per Diluted Share (a) |
|
156,874,506 |
|
|
|
155,599,967 |
|
|
|
156,754,602 |
|
|
|
155,352,114 |
|
Adjusted Net Income Per Share |
$ |
0.09 |
|
|
$ |
0.08 |
|
|
$ |
0.17 |
|
|
$ |
0.14 |
|
|
|
|
|
|
|
|
|
(a) Diluted Adjusted Net Income Per Share is computed by giving
effect to all potential weighted average Class A common stock and
any securities that are convertible into Class A common stock,
including Definitive OpCo units and restricted stock units. The
dilutive effect of outstanding awards and convertible securities is
reflected in diluted earnings per share by application of the
treasury stock method assuming proceeds from unrecognized
compensation as required by GAAP. Fully diluted shares are
165,731,986 and 161,996,676 as of June 30, 2024 and 2023,
respectively. |
|
|
|
|
|
|
|
|
Reconciliation of GAAP Gross Profit and Margin to Adjusted Gross
Profit and Margin |
(in thousands, except percentages; unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2024 |
|
2023 |
|
2024 |
|
2023 |
(in thousands) |
Amount |
|
% of Revenue |
|
Amount |
|
% of Revenue |
|
Amount |
|
% of Revenue |
|
Amount |
|
% of Revenue |
Reported gross profit and
margin |
$ |
50,454 |
|
|
79 |
% |
|
$ |
49,789 |
|
|
82 |
% |
|
$ |
100,836 |
|
|
79 |
% |
|
$ |
97,084 |
|
|
81 |
% |
Amortization of intangible assets acquired through business
combinations |
|
2,367 |
|
|
4 |
% |
|
|
2,314 |
|
|
4 |
% |
|
|
4,810 |
|
|
4 |
% |
|
|
4,604 |
|
|
4 |
% |
Equity compensation costs |
|
309 |
|
|
0 |
% |
|
|
296 |
|
|
0 |
% |
|
|
580 |
|
|
0 |
% |
|
|
554 |
|
|
0 |
% |
Adjusted gross profit and margin |
$ |
53,130 |
|
|
83 |
% |
|
$ |
52,399 |
|
|
86 |
% |
|
$ |
106,226 |
|
|
83 |
% |
|
$ |
102,242 |
|
|
85 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP Net Loss to Adjusted EBITDA |
(in thousands, except percentages; unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2024 |
|
2023 |
|
2024 |
|
2023 |
|
Amount |
|
% of Revenue |
|
Amount |
|
% of Revenue |
|
Amount |
|
% of Revenue |
|
Amount |
|
% of Revenue |
Net loss and margin |
$ |
(306,187 |
) |
|
|
(480 |
)% |
|
$ |
(11,605 |
) |
|
|
(19 |
)% |
|
$ |
(318,905 |
) |
|
(251 |
)% |
|
$ |
(27,577 |
) |
|
(23 |
)% |
Interest expense (income), net |
|
46 |
|
|
|
0 |
% |
|
|
221 |
|
|
|
0 |
% |
|
|
(65 |
) |
|
(0 |
)% |
|
|
1,001 |
|
|
1 |
% |
Benefit from income taxes |
|
(21,900 |
) |
|
|
(34 |
)% |
|
|
(1,484 |
) |
|
|
(2 |
)% |
|
|
(22,680 |
) |
|
(18 |
)% |
|
|
(2,194 |
) |
|
(2 |
)% |
Depreciation & amortization |
|
12,788 |
|
|
|
20 |
% |
|
|
12,778 |
|
|
|
21 |
% |
|
|
25,472 |
|
|
20 |
% |
|
|
25,722 |
|
|
21 |
% |
EBITDA and margin |
|
(315,253 |
) |
|
|
(495 |
)% |
|
|
(90 |
) |
|
|
(0 |
)% |
|
|
(316,178 |
) |
|
(249 |
)% |
|
|
(3,048 |
) |
|
(3 |
)% |
Other (income) expense, net (a) |
|
(41,600 |
) |
|
|
(65 |
)% |
|
|
797 |
|
|
|
1 |
% |
|
|
(44,240 |
) |
|
(35 |
)% |
|
|
4,428 |
|
|
4 |
% |
Equity-based compensation (b) |
|
8,842 |
|
|
|
14 |
% |
|
|
12,363 |
|
|
|
20 |
% |
|
|
24,424 |
|
|
19 |
% |
|
|
23,491 |
|
|
20 |
% |
Transaction, integration, and restructuring expenses (c) |
|
2,851 |
|
|
|
4 |
% |
|
|
3,571 |
|
|
|
6 |
% |
|
|
11,385 |
|
|
9 |
% |
|
|
6,161 |
|
|
5 |
% |
Goodwill impairment (d) |
|
363,641 |
|
|
|
571 |
% |
|
|
— |
|
|
|
0 |
% |
|
|
363,641 |
|
|
286 |
% |
|
|
— |
|
|
0 |
% |
Other non-core items (e) |
|
2,438 |
|
|
|
4 |
% |
|
|
600 |
|
|
|
1 |
% |
|
|
1,910 |
|
|
2 |
% |
|
|
1,876 |
|
|
2 |
% |
Adjusted EBITDA and margin |
$ |
20,919 |
|
|
|
33 |
% |
|
$ |
17,241 |
|
|
|
28 |
% |
|
$ |
40,942 |
|
|
32 |
% |
|
$ |
32,908 |
|
|
27 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Primarily represents foreign exchange and TRA liability
remeasurement gains and losses. (b) Equity-based compensation
represents non-cash compensation expense recognized in association
with equity awards made to employees and directors. (c) Transaction
and integration expenses primarily represent legal, accounting, and
consulting expenses and fair value adjustments for contingent
consideration related to our acquisitions. Restructuring expenses
relate to the 2024 Restructuring Plan and those we committed to
during the first and third quarters of 2023, as well as impairment
and restructuring charges related to office closures, relocations,
and consolidations. |
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
(in thousands) |
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
Merger and acquisition due diligence and transaction costs |
$ |
687 |
|
|
$ |
2,786 |
|
|
$ |
1,296 |
|
|
$ |
3,077 |
|
Integration costs |
|
294 |
|
|
|
311 |
|
|
|
728 |
|
|
|
331 |
|
Fair value adjustment for contingent consideration |
|
— |
|
|
|
— |
|
|
|
270 |
|
|
|
— |
|
Restructuring charges for severance and other separation costs |
|
598 |
|
|
|
333 |
|
|
|
7,819 |
|
|
|
2,455 |
|
Office closure and relocation restructuring charges and
impairments |
|
1,272 |
|
|
|
141 |
|
|
|
1,272 |
|
|
|
298 |
|
Total transaction, integration and restructuring expenses |
$ |
2,851 |
|
|
$ |
3,571 |
|
|
$ |
11,385 |
|
|
$ |
6,161 |
|
|
|
|
|
|
|
|
|
(d) Goodwill impairment represents a non-cash, pre-tax, goodwill
impairment charge of $363.6 million recorded during the three
months ended June 30, 2024. We experienced a decline in our market
capitalization as a result of a sustained decrease in our stock
price, which represented a triggering event requiring our
management to perform a quantitative goodwill impairment test as of
June 30, 2024. As a result of the impairment test, we determined
that the fair value of our single reporting unit was lower than its
carrying value and, accordingly, recorded this impairment
charge. |
|
(e) Other non-core items represent expenses driven by events that
are typically by nature one-time, non-operational, and/or unrelated
to our core operations. These expenses are comprised of non-core
legal and regulatory costs isolated to unique and extraordinary
litigation, legal and regulatory matters that are not considered
normal and recurring business activity, including sales tax accrual
adjustments inclusive of penalties and interest for sales taxes
that we may have been required to collect from customers in 2024
and in certain previous years, and other non-recurring legal and
regulatory matters. Other non-core items also include non-recurring
consulting fees and severance costs associated with strategic
transition initiatives, as well as professional fees related to
financing, capital structure changes, and other non-recurring
costs. |
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
(in thousands) |
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
Non-core legal and regulatory |
$ |
501 |
|
|
$ |
378 |
|
|
$ |
(364 |
) |
|
$ |
1,428 |
|
Consulting and severance costs for strategic transition
initiatives |
|
1,885 |
|
|
|
— |
|
|
|
2,215 |
|
|
|
— |
|
Other non-core expenses |
|
52 |
|
|
|
222 |
|
|
|
59 |
|
|
|
448 |
|
Total other non-core items |
$ |
2,438 |
|
|
$ |
600 |
|
|
$ |
1,910 |
|
|
$ |
1,876 |
|
|
|
|
|
|
|
|
|
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