DH Definitive Healthcare Corporation

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

 

Current Report

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):

August 5, 2024

 

Definitive Healthcare Corp.

(Exact name of Registrant as Specified in Its Charter)

Commission File Number 001-40815
Delaware		86-3988281
(State of Incorporation)		(IRS Employer Identification No.)
	492 Old Connecticut Path, Suite 401
	Framingham, Massachusetts 01701
	(Address of Principal Executive Offices)

508 720-4224

Registrant’s telephone number, including area code

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class		Trading Symbol		Name of Each Exchange on Which Registered
Class A Common Stock, $0.001 par value		DH		The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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Item 2.02 Results of Operations and Financial Condition.

On August 5, 2024, Definitive Healthcare Corp. (the “Company”) issued a press release announcing its financial results for the second quarter ended June 30, 2024. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated by reference herein.

The information furnished in this Item 2.02 on this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, regardless of any general incorporation language in such filing.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

99.1	Press Release Dated August 5, 2024 (furnished herewith pursuant to Item 2.02)
104	Cover Page Interactive Data File (embedded within the Inline XBRL document).

 

 

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

DEFINITIVE HEALTHCARE CORP.
By:	/s/ Richard Booth
Name:	Richard Booth
Title:	Chief Financial Officer
Date: August 5, 2024

 

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Definitive Healthcare Reports Financial Results for Second Quarter Fiscal Year 2024

Second quarter revenue grew 5% year-over-year to $63.7 million

Framingham, MA (August 5, 2024) – 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:

 

 

 

 

 

 

“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.”

 

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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:

 

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Business Outlook

Based on information as of August 5, 2024, the Company is issuing the following financial guidance.

Third Quarter 2024:

Full Year 2024:

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.

 

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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.

 

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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

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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.

 

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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/.

 

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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.

 

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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.

 

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Investor Contact:

Brian Denyeau

ICR for Definitive Healthcare

brian.denyeau@icrinc.com

646-277-1251

Media Contact:

Bethany Swackhamer
bswackhamer@definitivehc.com

 

 

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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

 

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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

 

 

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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

 

 

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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.

 

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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

 

 

 

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(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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v3.24.2.u1

Document and Entity Information	Aug. 05, 2024
Cover [Abstract]
Amendment Flag	false
Entity Central Index Key	0001861795
Document Type	8-K
Document Period End Date	Aug. 05, 2024
Entity Registrant Name	Definitive Healthcare Corp.
Entity File Number	1-40815
Entity Incorporation State Country Code	DE
Entity Tax Identification Number	86-3988281
Entity Address, Address Line One	492 Old Connecticut Path, Suite 401
Entity Address, City or Town	Framingham
Entity Address, State or Province	MA
Entity Address, Postal Zip Code	01701
City Area Code	508
Local Phone Number	720-4224
Written Communications	false
Soliciting Material	false
Pre Commencement Tender Offer	false
Pre Commencement Issuer Tender Offer	false
Security 12b Title	Class A Common Stock, $0.001 par value
Trading Symbol	DH
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	false

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