BioTelemetry, Inc. (Nasdaq:BEAT), the leading wireless medical
technology company focused on the delivery of health information to
improve quality of life and reduce cost of care, today reported
results for the second quarter ended June 30, 2014.
Company Highlights
- Revenue increased 33% to $42.7 million, the highest quarterly
revenue in the Company's history
- Serviced over 135,000 patients in the quarter, doubling our
prior year volume
- Generated positive adjusted EBITDA of $5.1 million
- Completed the acquisition of the cardiac patient services
business of Biomedical Systems, Corp. ("BMS")
- Completed the acquisition of the assets of Radcore Lab, LLC, an
imaging core lab
- Reached an agreement in principle for a potential settlement
with the Department of Justice
President and CEO Commentary
Joseph Capper, President and Chief Executive Officer of
BioTelemetry, Inc., commented: "We are pleased to report our
successful second quarter results in which we recognized $42.7
million of revenue and we serviced over 135,000 patients, which is
more than twice the volume of the second quarter of 2013 and the
highest quarterly volume and revenue in the history of the Company.
These results were attributable to strong organic volume growth of
16% and our acquisitions of BMS and Mednet, which provide us
broader access to established physician relationships. We also
continue to make progress with our product development, highlighted
by the expected launch of our new low-cost Holter device in the
fourth quarter of this year and our cutting edge next generation
MCOTTM device in 2015. Our Research Services business continues to
gain momentum with the recent addition of two of the largest
studies in the Company's history and significant growth in the
Company's backlog. The acquisition of Radcore Lab, an imaging core
lab, allows us to offer our clinical research customers access to
an expanded range of services.
"We also reached an agreement in principle for a settlement of
$6.4 million with the U.S. Department of Justice in connection with
the Civil Investigative Demand that we received in 2011, subject to
negotiation of a final agreement. We are looking forward to having
this matter resolved.
"Our positive second quarter was the direct result of our
ability to deliver on our three core strategic objectives: to
solidify our leadership position in cardiac monitoring, establish a
leading research services business and leverage our existing
infrastructure in new markets. As a result, we were able to deliver
solid revenue growth and an improved operating margin, while
continuing to foster new growth opportunities. We are excited about
our future prospects and look forward to delivering strong
results."
Second Quarter Financial Results
Revenue for the second quarter 2014 was $42.7 million, an
increase of 32.8% compared to $32.1 million in the second quarter
2013. Total revenue increased $10.5 million due to an increase in
patient services revenue of $9.3 million and an increase in product
sales of $1.3 million. Approximately $8.4 million of the total
increase was related to acquisitions. The remaining increase was
due to organic volume growth which was partially offset by the
previously announced price reduction from Medicare, and related
contracts. For the three months ended June 30, 2014, patient
revenue was comprised of 40% Medicare and 60% commercial.
Gross profit for the second quarter 2014 increased to $23.6
million, or 55.4% of revenue, compared to $19.5 million, or 60.7%
of revenue, in the second quarter of 2013. Gross profit for the
second quarter 2014 on an adjusted basis was $23.9 million, or
56.1% of revenue, excluding $0.3 million related to restructuring
and other charges. This compares to gross profit for the second
quarter 2013 on an adjusted basis of $19.8 million, or 61.5% of
revenue, excluding $0.3 million related to restructuring and other
charges. The decrease in the gross profit percentage was related to
the acquisitions, including the impact of a lower margin patient
mix of 350 basis points and the impact of integration related
activities of 130 basis points that will not reoccur. The benefit
from the organic patient growth was substantially offset by the
reduction in reimbursement rates.
On a GAAP basis, operating expenses for the second quarter 2014
were $24.0 million, an increase of 10.5% compared to $21.7 million
in the second quarter 2013. On an adjusted basis, operating
expenses for the second quarter were $23.0 million, a 20.3%
increase compared to $19.1 million for the prior year quarter.
These adjusted operating expenses exclude $1.0 million in the
second quarter 2014 primarily due to integration activities, patent
litigation and legal fees related to the Civil Investigative Demand
and $2.5 million in the second quarter 2013 primarily related to
patent litigation and integration activities. The increase in
adjusted operating expense was driven by the addition of Mednet and
BMS. Adjusted operating expense in the base business was
essentially flat.
On a GAAP basis, interest and other loss, net for the second
quarter 2014 was $3.6 million, compared to $0.1 million in the
second quarter of 2013. During the first quarter 2014, the Company
began negotiations for a potential settlement with the Department
of Justice regarding the outstanding Civil Investigative Demand
issued in August 2011. As a result, the Company recorded an
estimated reserve of $3.3 million as a non-operating charge in the
second quarter 2014. This is in addition to the $3.1 million
reserve recorded for this matter in the first quarter 2014.
Excluding this reserve, interest and other loss, net for the second
quarter was $0.3 million, a slight increase compared to the prior
year due to the addition of debt and capital leases.
On a GAAP basis, net loss for the second quarter 2014 was $4.0
million, or a loss of $0.15 per diluted share, compared to a net
loss of $2.3 million, or a loss of $0.09 per diluted share, for the
second quarter 2013. Excluding expenses related to restructuring
and other charges, including the $3.3 million reserve for the
potential settlement with the Department of Justice, adjusted net
income for the second quarter 2014 was $0.6 million, or income of
$0.02 per diluted share. This compares to adjusted net income of
$0.6 million, or income of $0.02 per diluted share, for the second
quarter 2013, which excludes the impact of restructuring and other
charges.
Liquidity
As of June 30, 2014, total cash was $13.5 million, a decrease of
$8.6 million compared to December 31, 2013. The significant uses of
cash during the second quarter 2014 included $3.8 million for
capital expenditures, primarily for medical devices and the
development of a new Patient Services operating system.
Consolidated days sales outstanding were 50 days, in-line with
year-end 2013.
Conference Call
BioTelemetry, Inc. will host an earnings conference call on
Thursday, July 31, 2014, at 5:00 PM Eastern Time. The call will be
simultaneously webcast on the investor information page of our
website, www.biotelinc.com. The call will be archived on our
website for two weeks.
About BioTelemetry
BioTelemetry, Inc., formerly known as CardioNet, Inc., is the
leading wireless medical technology company focused on the delivery
of health information to improve quality of life and reduce cost of
care. The Company currently provides cardiac monitoring services,
original equipment manufacturing with a primary focus on cardiac
monitoring devices and centralized cardiac core laboratory
services. More information can be found at www.biotelinc.com.
Cautionary Statement Regarding Forward-Looking
Statements
This document includes certain forward-looking statements within
the meaning of the "Safe Harbor" provisions of the Private
Securities Litigation Reform Act of 1995. These statements may be
identified by words such as "expect," "anticipate," "estimate,"
"intend," "plan," "believe," "promises" and other words and terms
of similar meaning. Such forward-looking statements are based on
current expectations and involve inherent risks and uncertainties,
including important factors that could delay, divert, or change any
of these expectations, and could cause actual outcomes and results
to differ materially from current expectations. These factors
include, among other things, our ability to successfully integrate
the Mednet, Biomedical Systems and Radcore businesses into our
business and the effect such acquisitions will have on our results
of operation, our ability to successfully negotiate a settlement to
the Department of Justice investigation prior to any judicial
action, effectiveness of our cost savings initiatives,
relationships with our government and commercial payors, changes to
insurance coverage and reimbursement levels for our products, the
success of our sales and marketing initiatives, our ability to
attract and retain talented executive management and sales
personnel, our ability to identify acquisition candidates, acquire
them on attractive terms and integrate their operations into our
business, the commercialization of new products, market factors,
internal research and development initiatives, partnered research
and development initiatives, competitive product development,
changes in governmental regulations and legislation, the continued
consolidation of payors, acceptance of our new products and
services, patent protection, adverse regulatory action, and
litigation success. For further details and a discussion of these
and other risks and uncertainties, please see our public filings
with the Securities and Exchange Commission, including our latest
periodic reports on Form 10-K and 10-Q. We undertake no obligation
to publicly update any forward-looking statement, whether as a
result of new information, future events, or otherwise.
|
|
|
|
|
Three Months
Ended |
Consolidated Statements of
Operations |
(unaudited) |
(In Thousands, Except Per Share
Amounts) |
|
|
|
|
|
|
June 30, 2014 |
June 30, 2013 |
|
|
|
Revenue |
$42,650 |
$32,104 |
Cost of revenue |
19,037 |
12,608 |
Gross profit |
23,613 |
19,496 |
Gross profit % |
55.4% |
60.7% |
|
|
|
Operating expenses: |
|
|
General and administrative
expense |
11,139 |
9,077 |
Sales and marketing
expense |
7,172 |
6,267 |
Bad debt expense |
2,745 |
1,967 |
Research and development
expense |
1,958 |
1,882 |
Integration, restructuring and
other charges |
1,000 |
2,541 |
Total operating expenses |
24,014 |
21,734 |
|
|
|
Loss from operations |
(401) |
(2,238) |
Interest and other (loss), net |
(3,587) |
(61) |
|
|
|
Loss before income taxes |
(3,988) |
(2,299) |
Benefit from income taxes |
-- |
-- |
Net loss |
$ (3,988) |
$ (2,299) |
|
|
|
|
|
|
Loss per Share: |
|
|
Basic |
$ (0.15) |
$ (0.09) |
Diluted |
$ (0.15) |
$ (0.09) |
|
|
|
Weighted Average Shares Outstanding: |
|
|
Basic |
26,434 |
25,537 |
Diluted |
26,434 |
25,537 |
|
|
|
|
|
Six Months
Ended |
Consolidated Statements of
Operations |
(unaudited) |
(In Thousands, Except Per Share
Amounts) |
|
|
|
|
|
|
June 30, 2014 |
June 30, 2013 |
|
|
|
Revenue |
$79,812 |
$64,522 |
Cost of revenue |
34,555 |
25,481 |
Gross profit |
45,257 |
39,041 |
Gross profit % |
56.7% |
60.5% |
|
|
|
Operating expenses: |
|
|
General and administrative
expense |
21,911 |
18,605 |
Sales and marketing
expense |
14,612 |
13,029 |
Bad debt expense |
5,104 |
4,434 |
Research and development
expense |
3,747 |
3,502 |
Integration, restructuring and
other charges |
3,980 |
3,743 |
Total operating expenses |
49,354 |
43,313 |
|
|
|
Loss from operations |
(4,097) |
(4,272) |
Interest and other (loss), net |
(6,858) |
(114) |
|
|
|
Loss before income taxes |
(10,955) |
(4,386) |
Benefit from income taxes |
2,845 |
-- |
Net loss |
$ (8,110) |
$ (4,386) |
|
|
|
|
|
|
Loss per Share: |
|
|
Basic |
$ (0.31) |
$ (0.17) |
Diluted |
$ (0.31) |
$ (0.17) |
|
|
|
Weighted Average Shares Outstanding: |
|
|
Basic |
26,272 |
25,370 |
Diluted |
26,272 |
25,370 |
|
Summary Financial Data |
|
|
(In Thousands) |
|
|
|
June 30, 2014 |
December 31, 2013 |
|
(unaudited) |
(unaudited) |
|
|
|
Cash and investments |
$ 13,546 |
$ 22,151 |
Patient accounts receivable, net |
15,702 |
11,437 |
Other accounts receivable, net |
7,877 |
5,680 |
Days sales outstanding |
50 |
47 |
Working capital |
5,941 |
25,215 |
Total assets |
118,409 |
87,546 |
Total debt |
17,636 |
-- |
Total shareholders' equity |
62,700 |
66,829 |
|
|
|
Reconciliation of Non-GAAP
Financial Measures |
(In Thousands, Except Per Share
Amounts) |
|
|
|
In accordance with Regulation G
of the Securities and Exchange Commission, the table set forth
below reconciles certain financial measures used in this press
release that were not calculated in accordance with generally
accepted accounting principles, or GAAP, with the most directly
comparable financial measure calculated in accordance with
GAAP. |
|
|
|
|
Three Months
Ended |
|
(unaudited) |
|
June 30, 2014 |
June 30, 2013 |
Operating loss – GAAP |
$ (401) |
$ (2,238) |
Nonrecurring charges (a) |
1,320 |
2,859 |
Adjusted operating income
(loss) |
$ 919 |
$ 621 |
|
|
|
Net loss – GAAP |
$ (3,988) |
$ (2,299) |
Nonrecurring charges (b) |
4,626 |
2,859 |
Adjusted net income
(loss) |
$ 638 |
$ 560 |
|
|
|
Loss per diluted share – GAAP |
$ (0.15) |
$ (0.09) |
Nonrecurring charges per share (b) |
0.17 |
0.11 |
Adjusted earnings (loss) per diluted
share |
$ 0.02 |
$ 0.02 |
|
|
|
(a) In the second quarter
of 2014, the Company incurred $1.0 million of integration,
restructuring and other charges primarily related to the
integration of the Company's recent acquisitions and legal fees for
patent litigation and the Civil Investigative Demand. The
Company also incurred $0.3 million of other expense for duplicative
labor due to the planned relocation of certain business
functions. In the second quarter of 2013, the Company incurred
$2.5 million related to integration, restructuring and other
charges primarily related to patent litigation, $0.3 million of
other expense for duplicative labor due to the relocation of
certain business functions and $0.1 million for the forfeiture and
acceleration of certain options. |
(b) In addition to the $1.3
million of nonrecurring charges incurred in the second quarter
2014, the Company recorded a non-operating charge of $3.3 million
for the potential settlement with the Department of Justice |
|
|
|
|
Three Months Ended |
|
(unaudited) |
|
June 30, 2014 |
June 30, 2013 |
|
|
|
Cash provided (used) by operating
activities |
$ 5,929 |
$ 2,505 |
Capital expenditures |
(3,751) |
(1,586) |
Free cash flow |
$ 2,178 |
$ 919 |
|
|
|
|
|
|
|
Three Months Ended |
|
(unaudited) |
|
June 30, 2014 |
June 30, 2013 |
|
|
|
Operating loss – GAAP |
$ (401) |
$ (2,238) |
Nonrecurring charges |
1,320 |
2,859 |
Depreciation and amortization expense |
3,242 |
2,736 |
Stock compensation expense |
965 |
957 |
Adjusted EBITDA |
$ 5,126 |
$ 4,314 |
|
|
|
Reconciliation of Non-GAAP
Financial Measures |
(In Thousands, Except Per Share
Amounts) |
|
|
|
In accordance with Regulation G
of the Securities and Exchange Commission, the table set forth
below reconciles certain financial measures used in this press
release that were not calculated in accordance with generally
accepted accounting principles, or GAAP, with the most directly
comparable financial measure calculated in accordance with
GAAP. |
|
|
|
|
Six Months
Ended |
|
(unaudited) |
|
June 30, 2014 |
June 30, 2013 |
Operating loss – GAAP |
$ (4,097) |
$ (4,272) |
Nonrecurring charges (a) |
4,300 |
4,235 |
Adjusted operating income
(loss) |
$ 203 |
$ (37) |
|
|
|
Net loss – GAAP |
$ (8,110) |
$ (4,386) |
Nonrecurring charges (b) |
7,830 |
4,235 |
Adjusted net loss |
$ (280) |
$ (151) |
|
|
|
Loss per diluted share – GAAP |
$ (0.31) |
$ (0.17) |
Nonrecurring charges per share (b) |
0.30 |
0.16 |
Adjusted loss per diluted
share |
$ (0.01) |
$ (0.01) |
|
|
|
(a) In the first six months
of 2014, the Company incurred $4.0 million of integration,
restructuring and other charges primarily due to legal fees related
to patent litigation and the Civil Investigative Demand, as well as
acquisition and integration related charges for Mednet and
BMS. The Company also incurred $0.3 million of other expense
for duplicative labor due to the planned relocation of certain
business functions. In the first six months of 2013, the
Company incurred $3.7 million related to integration, restructuring
and other charges primarily due to patent litigation, integration
costs and costs associated with the creation of the Company's
holding company structure. The Company also incurred $0.3
million of other expense for duplicative labor due to the
relocation of certain business functions and $0.1 million for the
forfeiture and acceleration of certain options. |
(b) In addition to the $4.3
million of nonrecurring charges incurred in the second quarter
2014, the Company recorded a non-operating charge of $3.3 million
for the potential settlement with the Department of
Justice. |
|
|
|
|
Six Months Ended |
|
(unaudited) |
|
June 30, 2014 |
June 30, 2013 |
|
|
|
Cash provided (used) by operating
activities |
$ 3,869 |
$ 4,162 |
Capital expenditures |
(7,610) |
(3,425) |
Free cash flow |
$ (3,741) |
$ 737 |
|
|
|
|
|
|
|
Six Months Ended |
|
(unaudited) |
|
June 30, 2014 |
June 30, 2013 |
|
|
|
Operating loss – GAAP |
$ (4,097) |
$ (4,272) |
Nonrecurring charges |
4,300 |
4,235 |
Depreciation and amortization expense |
5,995 |
5,744 |
Stock compensation expense |
1,968 |
1,574 |
Adjusted EBITDA |
$ 8,166 |
$ 7,281 |
CONTACT: BioTelemetry, Inc.
Heather C. Getz
Investor Relations
800-908-7103
investorrelations@biotelinc.com
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