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 first quarter ended March 31, 2017.
Company Highlights
- Recognized highest quarterly revenue in Company’s history of
$55.9 million, a 14.9% increase over the prior year
- Achieved 19th consecutive quarter of year over year revenue
growth
- Serviced the highest quarterly patient volume in the Company’s
history
- Recorded GAAP net income of $0.2 million and adjusted net
income of $4.9 million
- Realized quarterly adjusted EBITDA $10.8 million, a 19.4%
return and in line with expectations
- Announced $260 million offer to acquire LifeWatch AG
President and CEO Commentary
Joseph H. Capper, President and Chief Executive Officer of
BioTelemetry, Inc., commented: “The first quarter was a great start
to what we expect will be a very successful year for
BioTelemetry. We once again recognized record quarterly
revenue and patient volume, realizing our 19th consecutive quarter
of year over year revenue growth and achieving the high end of our
first quarter guidance. Additionally, we realized adjusted
EBITDA of $10.8 million, a 19.4% return, which is in line with our
expectations, and includes the impact of targeted investments we
are making aimed at driving future growth.
“Looking forward, we are excited about our recently announced
offer to acquire LifeWatch AG, a leading supplier of remote cardiac
monitoring solutions. Pending shareholder acceptance and
regulatory approval, we anticipate closing the transaction early in
the third quarter of 2017. This acquisition clearly
accelerates our strategic initiative to expand our leadership
position in the cardiac monitoring space, taking several years off
of our growth plan. While we await the necessary approvals,
we will continue to execute on all facets of our strategic plan,
including leveraging our recently acquired imaging capability to
build a leading research services business and developing a robust
digital population health management (“dPHM”) business through the
Telcare investment. We expect the dPHM business to play an
important role in the coming years.
“For the remainder of 2017, we expect continued growth across
the business and to finalize the integration of the 2016
acquisitions, helping to drive additional efficiencies.
Finally, we are focused on making strategic investments to
accelerate our long-term plan and sustain revenue growth. We
are extremely excited about the future prospects for BioTelemetry
and are confident our best days are
ahead.”
First Quarter
Financial Results
Revenue for the first quarter 2017 was $55.9 million compared to
$48.6 million for the first quarter 2016, an increase of $7.3
million, or 14.9%. Healthcare revenue increased $1.4 million
due to increased patient volumes and a favorable product mix,
partially offset by the impact of a reduction in the MCT Medicare
pricing. Research revenue increased $3.9 million due to the
acquisition of VirtualScopics which occurred during the second
quarter of 2016. Technology revenue increased $2.0 million
due to the acquisition of Telcare during the fourth quarter of
2016.
On a GAAP basis, net income for the first quarter 2017 was $0.2
million, or $0.01 per diluted share, compared to $4.1 million, or
$0.14 per diluted share, for the first quarter 2016. Without
the valuation allowance, which was released in 2016, the first
quarter 2017 effective tax rate is a benefit of 129.3%. This
benefit is partially a result of the adoption of ASU 2016-09:
Improvements to Employee Share‑Based Payment Accounting.
While the new standard creates rate variability between the
quarters, the Company expects its 2017 annual effective tax rate to
be approximately 38%. Due to the utilization of net operating
loss carryforwards, the Company expects its 2017 actual cash tax
payments to remain in the range of 3% to 4%.
On an adjusted basis1, net income for the first quarter 2017 was
$4.9 million, or $0.16 per diluted share. This compares to
adjusted net income of $5.9 million, or $0.20 per diluted share,
for the first quarter 2016. Adjusted net income for the first
quarter 2017 excludes $1.7 million of other charges primarily
related to deal costs associated with the current offer to acquire
LifeWatch AG, partially offset by a reduction in the fair value of
contingent consideration, $1.5 million for the second half of a
one-time performance bonus paid to a third party in the form of
stock-based compensation, a $2.5 million non-operating charge
recorded for a settlement with the Department of Health and Human
Services related to the theft of two unencrypted laptops in 2011,
as well as the tax effect of the aforementioned adjustments.
Adjusted net income for the first quarter 2017 also includes an
adjustment to reflect the utilization of our net operating loss
carryforwards. Adjusted net income for the first quarter 2016
excludes $1.8 million related to patent litigation and costs
associated with the Company’s 2016 acquisitions.
1 The Company believes that providing non-GAAP financial
measures offers a meaningful representation of the Company’s
performance as they exclude expenses that are not necessary to
support the Company’s ongoing business. Please refer to the
Company’s “Reconciliation of Non-GAAP Financial Measures” and “Use
of Non-GAAP Financial Measures” in this release for additional
information.
Conference
Call
BioTelemetry, Inc. will host an earnings conference call on
Wednesday, May 3, 2017 at 5:00 PM Eastern Time. The call will
be simultaneously webcast on the investor information page of our
website, www.gobio.com. The call will be archived on our
website for two weeks.
About BioTelemetryBioTelemetry, 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 core laboratory services. More information
can be found at www.gobio.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, BioTelemetry’s ability to successfully complete
the tender offer for LifeWatch’s shares or realize the anticipated
benefits of the transaction, the failure of any of the conditions
to BioTelemetry’s tender offer to be satisfied, our ability to
successfully integrate acquisitions into our business and the
effect such acquisitions will have on our results of operation,
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 report on Form 10-K. Readers are
cautioned not to put undue reliance on forward-looking statements,
which reflect only opinions as of the date of this press
release. We do not undertake, and specifically disclaim, any
obligation to publicly update or amend any forward-looking
statement, whether as a result of new information, future events,
or otherwise.
|
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(unaudited) |
Consolidated
Statements of Operations |
|
|
|
Three Months Ended |
(In Thousands, Except Per Share Amounts) |
|
|
|
March 31, |
|
|
|
|
|
2017 |
|
|
|
|
2016 |
|
Revenues |
|
|
|
$ |
55,881 |
|
|
|
$ |
48,640 |
|
Cost of revenues |
|
|
|
|
22,972 |
|
|
|
|
18,013 |
|
Gross profit |
|
|
|
|
32,909 |
|
|
|
|
30,627 |
|
Gross profit % |
|
|
|
|
58.9 |
% |
|
|
|
63.0 |
% |
|
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
|
General
and administrative |
|
|
|
|
15,917 |
|
|
|
|
12,336 |
|
Sales and
marketing |
|
|
|
|
7,701 |
|
|
|
|
7,545 |
|
Bad debt
expense |
|
|
|
|
2,791 |
|
|
|
|
2,638 |
|
Research
and development |
|
|
|
|
2,433 |
|
|
|
|
1,786 |
|
Other
charges |
|
|
|
|
1,739 |
|
|
|
|
1,788 |
|
Total operating
expenses |
|
|
|
|
30,581 |
|
|
|
|
26,093 |
|
|
|
|
|
|
|
|
|
Income from
operations |
|
|
|
|
2,328 |
|
|
|
|
4,534 |
|
Interest and other
loss, net |
|
|
|
|
(2,998 |
) |
|
|
|
(423 |
) |
|
|
|
|
|
|
|
|
(Loss) income before
income taxes |
|
|
|
|
(670 |
) |
|
|
|
4,111 |
|
Benefit from (provision
for) income taxes |
|
|
|
|
866 |
|
|
|
|
(14 |
) |
Net income |
|
|
|
$ |
196 |
|
|
|
$ |
4,097 |
|
|
|
|
|
|
|
|
|
Net income per
share: |
|
|
|
|
|
|
|
Basic |
|
|
|
$ |
0.01 |
|
|
|
$ |
0.15 |
|
Diluted |
|
|
|
$ |
0.01 |
|
|
|
$ |
0.14 |
|
|
|
|
|
|
|
|
|
Weighted
average number of common shares outstanding: |
|
|
|
Basic |
|
|
|
|
28,429 |
|
|
|
|
27,371 |
|
Diluted |
|
|
|
|
31,315 |
|
|
|
|
29,521 |
|
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|
|
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|
|
|
Summary
Financial Data |
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|
(In
Thousands, except days sales outstanding) |
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|
|
|
|
March 31, |
|
December 31, |
|
|
2017 |
|
|
|
2016 |
|
|
(unaudited) |
|
(unaudited) |
|
|
|
|
Cash and cash
equivalents |
$ |
25,098 |
|
|
$ |
23,052 |
|
Healthcare accounts
receivable, net |
|
17,717 |
|
|
|
14,594 |
|
Other accounts
receivable, net |
|
13,633 |
|
|
|
12,261 |
|
Days sales
outstanding |
|
50 |
|
|
|
45 |
|
Working capital |
|
30,188 |
|
|
|
28,053 |
|
Total assets |
|
204,575 |
|
|
|
198,984 |
|
Total indebtedness |
|
25,127 |
|
|
|
25,449 |
|
Total shareholders’
equity |
|
142,905 |
|
|
|
138,914 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Summary Cash
Flow Data |
|
|
|
(In
Thousands) |
|
|
|
|
(unaudited) |
|
Three Months Ended |
|
March 31, |
|
|
2017 |
|
|
|
2016 |
|
Cash provided by
operating activities |
$ |
4,653 |
|
|
$ |
8,182 |
|
Capital
expenditures |
|
(2,967 |
) |
|
|
(3,513 |
) |
|
|
|
|
|
|
|
|
|
|
Reconciliation of Non-GAAP Financial Measures(In
Thousands, Except Per Share Amounts) |
|
|
|
|
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|
|
|
|
|
|
2017 |
|
Three Months Ended March 31,
2017 |
|
|
(unaudited) |
|
|
|
Income fromOperations |
|
(Loss) Income beforeIncome Taxes |
|
Net Income |
|
Net income perdiluted share |
|
GAAP |
|
$ |
2,328 |
|
|
$ |
(670 |
) |
|
$ |
196 |
|
|
$ |
0.01 |
|
|
Non-GAAP
Adjustments: |
|
|
|
|
|
|
|
|
|
Other
charges (a) |
|
|
1,739 |
|
|
|
1,739 |
|
|
|
1,739 |
|
|
|
0.06 |
|
|
Performance bonus (stock-based comp) (b) |
|
|
1,533 |
|
|
|
1,533 |
|
|
|
1,533 |
|
|
|
0.05 |
|
|
Dept. of
Health and Human Services settlement (c) |
|
|
- |
|
|
|
2,500 |
|
|
|
2,500 |
|
|
|
0.08 |
|
|
Income
tax effect of adjustments (d) |
|
|
- |
|
|
|
- |
|
|
|
(2,193 |
) |
|
|
(0.07 |
) |
|
NOL
utilization (e) |
|
|
- |
|
|
|
- |
|
|
|
1,164 |
|
|
|
0.03 |
|
|
Adjusted |
|
$ |
5,600 |
|
|
$ |
5,102 |
|
|
$ |
4,939 |
|
|
$ |
0.16 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016 |
|
Three Months Ended March 31,
2016 |
|
|
(unaudited) |
|
|
|
Income fromOperations |
|
Income beforeIncome Taxes |
|
Net Income |
|
Net income perdiluted share |
|
GAAP |
|
$ |
4,534 |
|
|
$ |
4,111 |
|
|
$ |
4,097 |
|
|
$ |
0.14 |
|
|
Non-GAAP
Adjustments: |
|
|
|
|
|
|
|
|
|
Other
charges (a) |
|
|
1,788 |
|
|
|
1,788 |
|
|
|
1,788 |
|
|
|
0.06 |
|
|
Adjusted |
|
$ |
6,322 |
|
|
$ |
5,899 |
|
|
$ |
5,885 |
|
|
$ |
0.20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(unaudited) |
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
|
|
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
|
Net income –
GAAP |
|
$ |
196 |
|
|
$ |
4,097 |
|
|
|
|
|
|
(Benefit from)
provision for income taxes |
|
|
(866 |
) |
|
|
14 |
|
|
|
|
|
|
Interest other loss,
net (c) |
|
|
2,998 |
|
|
|
423 |
|
|
|
|
|
|
Other charges (a) |
|
|
1,739 |
|
|
|
1,788 |
|
|
|
|
|
|
Depreciation and
amortization expense |
|
|
3,715 |
|
|
|
3,266 |
|
|
|
|
|
|
Stock compensation
expense (b) |
|
|
3,058 |
|
|
|
1,178 |
|
|
|
|
|
|
Adjusted
EBITDA |
|
$ |
10,840 |
|
|
$ |
10,766 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
margin |
|
|
19.4 |
% |
|
|
22.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) In the first quarter 2017, the Company incurred $1.7 million
of other charges primarily related to deal costs associated with
the offer to acquire LifeWatch AG partially offset by a reduction
in the fair value of contingent consideration. In the first
quarter 2016, the Company incurred $1.8 million related to patent
litigation and costs associated with the Company’s 2016
acquisitions.
(b) In the first quarter 2017, the Company incurred $1.5 million
for the second half of a one-time performance bonus paid to a third
party in the form of stock-based compensation. The first of
two performance measures was achieved in the fourth quarter 2016,
resulting in $1.3 million of expense at that time. The second
performance measure was achieved in the first quarter 2017,
resulting in $1.5 million of expense. This is a nonrecurring
expense for the Company and is the only time in the Company’s
history when such a bonus was awarded. There are no
additional agreements outstanding of this nature.
(c) During the first quarter 2017, the Company reached a $2.5
million settlement with the United States Department of Health and
Human Services. This was related to the conclusion of an
investigation into the theft of two unencrypted laptop computers
that occurred in 2011. This was recorded as a non-operating
charge to Interest and other loss, net in the consolidated
statement of operations.
(d) Represents the tax effect of the non-GAAP adjustments based
on the estimated annual effective tax rate of 38%.
(e) During the fourth quarter 2016, the Company released the tax
valuation allowance on its net deferred tax assets. The
benefit from this release was excluded from the Company’s 2016
adjusted results. Without a valuation allowance in place and
due to the timing of discrete items, for GAAP financial reporting
purposes the Company is reporting a tax benefit of 129.3% for the
first quarter 2017. After giving effect to taxes at the
estimated annual effective tax rate of 38% on the other
adjustments, the utilization of net operating loss carryforwards
had a $1.2 million positive impact on the first quarter 2017.
Use of Non-GAAP Financial Measures
In addition to the results prepared in accordance with generally
accepted accounting principles in the United States, or GAAP,
this press release also includes certain financial measures which
have been adjusted and are not in accordance with generally
accepted accounting principles (“Non-GAAP financial
measures”). These Non-GAAP financial measures include
adjusted income from operations, adjusted net income, adjusted net
income per diluted share and adjusted EBITDA. In accordance
with Regulation G of the Securities and Exchange Commission, the
Company has provided a reconciliation of these Non-GAAP financial
measures with the most directly comparable financial measure
calculated in accordance with GAAP.
These Non-GAAP financial measures are not intended to replace
GAAP financial measures. They are presented as supplemental
measures of our performance in an effort to provide our
stakeholders better visibility into the Company’s ongoing operating
results and to allow for comparability to prior periods as well as
to other companies’ results. Management uses these Non-GAAP
financial measures to assess the financial health of the Company’s
ongoing operating performance. Management encourages our
stakeholders to consider all of our financial measures and to not
rely on any single financial measure to evaluate our
performance.
Adjusted net income for the first quarter 2017 excludes Other
charges, a one-time performance bonus paid to a third party in the
form of stock-based compensation, a $2.5 million non-operating
charge recorded for a settlement with the Department of Health and
Human Services related to the theft of two unencrypted laptops in
2011, the tax effect of these adjustments as well as the impact
from the utilization of our net operating loss carryforwards.
By excluding expenses that are considered not necessary to support
the ongoing business or which are nonrecurring in nature, the
Company believes that these Non-GAAP financial measures offer a
meaningful representation of the Company’s ongoing operating
performance. Included in Other charges are transaction
related expenses, primarily legal and professional fees, which are
being partially offset by a reduction in the fair value of
contingent consideration. These Other charges are not
part of the ongoing operations, and therefore, not reflective of
the Company’s core operations. The Company also excluded the
second half of a one-time performance bonus paid to a third party
in the form of stock-based compensation. The first of two
performance measures was achieved in the fourth quarter 2016,
resulting in $1.3 million of expense at that time. The second
performance measure was achieved in the first quarter 2017,
resulting in $1.5 million of expense. This is the first time
in the Company’s history that such a bonus was offered and issued
and the expense is nonrecurring. There are no additional
agreements outstanding of this nature. The Company also
included the income tax effect of these adjustments based on the
Company’s estimated annual effective tax rate of 38%. During
the fourth quarter 2016, the Company released the tax valuation
allowance on its net deferred tax assets. The benefit from
this release was excluded from the Company’s 2016 adjusted
results. Without a valuation allowance in place and due to
the timing of discrete items, for GAAP financial reporting purposes
the Company is reporting a tax benefit of 129.3% for the first
quarter 2017. After giving effect to taxes at the estimated
annual effective tax rate of 38% on the other adjustments, the
utilization of net operating loss carryforwards had a $1.2 million
positive impact on the first quarter 2017.
Adjusted net income for the first quarter 2016 excludes $1.8
million related to patent litigation and costs associated with the
Company’s 2016 acquisitions. Patent litigation expense is a
component of Other charges. We view patent litigation as an
extreme measure not typically required in our industry to protect a
company’s intellectual property and which has not been common
practice for the Company. The Company commenced patent
litigation proceedings after the Company uncovered specific
evidence of four distinct cases of misappropriation and
infringement. The Company can choose to resolve the
outstanding matters and terminate the expense at any time.
In addition to adjusted income from operations, adjusted net
income and adjusted net income per diluted share, we also present
adjusted EBITDA. This Non-GAAP financial measure excludes
income taxes, interest, Other charges, depreciation and
amortization and stock compensation expense. EBITDA is a
widely accepted financial measure which we believe our stakeholders
use to compare our ongoing financial performance to that of other
companies. Adjusting our EBITDA for Other charges and other
one-time items is a meaningful financial measure as we believe it
is an indication of our ongoing operations. In addition, we
also add back stock compensation expense because it is non-cash in
nature. Other companies in our industry may calculate
adjusted EBITDA in a different manner.
Contact:
BioTelemetry, Inc.
Heather C. Getz
Investor Relations
800-908-7103
investorrelations@biotelinc.com
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