Company Delivers Record Revenue and
Adjusted EBITDA Exceeds Expectations
BioTelemetry, Inc. (NASDAQ:BEAT), the leading mobile and 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 fourth quarter ended December 31,
2017.
Company Highlights
- Recognized highest quarterly revenue in Company’s history of
$91.7 million
- Achieved 10% organic revenue growth
- Achieved 22nd consecutive quarter of year over year revenue
growth
- Recorded GAAP net loss attributable to BioTelemetry, Inc. of
$15.6 million, impacted by tax reform and integration related
costs, and adjusted net income of $11.3 million
- Realized record quarterly adjusted EBITDA of $22.9 million, or
25.0% of revenue
- Realized approximately $5.0 million of synergies in the fourth
quarter from the integration of LifeWatch, on track to achieve
$30.0 million of annualized synergies
President and CEO Commentary
Joseph H. Capper, President and Chief Executive Officer of
BioTelemetry, Inc., commented: “2017 was an exceptional year for
the Company, having achieved new highs in revenue, adjusted EBITDA
and adjusted EBITDA margin in each successive quarter. Our
outstanding fourth quarter results were not driven just by the
addition of LifeWatch, but by the successful combination of the two
companies, as evidenced by our 10% organic revenue growth. I
am pleased to report that we have been able to grow our business in
our top 500 healthcare accounts, which is a major accomplishment
during any integration. This success enabled us to reach
$91.7 million of revenue and a 25.0% adjusted EBITDA margin in the
quarter, exceeding our expectations.
“As we enter 2018, we are very well-positioned for continued
success. We have the largest and most productive sales force
in the industry, selling the most comprehensive suite of cardiac
monitoring solutions with more products being introduced in
2018. We are experiencing accelerated growth in our Research
business, with double digit growth expected for the year.
Additionally, we have established strategic relationships in our
digital population health business, which have the potential to
drive significant future growth. Given these factors, we have
an abundance of opportunities on which to capitalize, and we expect
2018 to be another standout year for the Company, with
approximately $380 million of revenue and an adjusted EBITDA margin
percent in the mid-twenties.”
Fourth
Quarter Financial Results
Revenue for the fourth quarter 2017 was $91.7 million compared
to $54.0 million for the fourth quarter 2016, an increase of $37.7
million, or 70.0%.
Gross profit for the fourth quarter 2017 was $54.4 million, or
59.3% of revenue, compared to $33.0 million, or 61.2% of revenue,
for the fourth quarter 2016.
On a GAAP basis, net loss attributable to BioTelemetry, Inc. for
the fourth quarter 2017 was $15.6 million, or a loss attributable
to BioTelemetry, Inc. of $0.48 per diluted share, compared to net
income of $40.4 million, or $1.30 per diluted share, for the fourth
quarter 2016.
On an adjusted basis1, net income attributable to BioTelemetry,
Inc. for the fourth quarter 2017 was $11.3 million, or $0.32 per
diluted share. This compares to adjusted net income of $7.0
million, or $0.23 per diluted share, for the fourth quarter
2016. This increase was attributable to the LifeWatch
acquisition, the 10% organic revenue growth and the continued
impact of operational efficiencies in the existing business.
The details regarding the exclusions from adjusted net income are
included in the reconciliation tables included in this
release.
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
Thursday, February 22, 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. is the
leading mobile and wireless medical technology company focused on
delivery of health information to improve quality of life and
reduce cost of care. The Company provides cardiac monitoring,
mobile blood glucose monitoring, centralized medical imaging, and
original equipment manufacturing that serve both the Healthcare and
Clinical Research industries. 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 realize the
anticipated benefits of the LifeWatch acquisition, 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.
|
|
(unaudited) |
|
Consolidated
Statements of Operations |
|
Three Months Ended |
|
(In Thousands, Except Per Share Amounts) |
|
December 31, |
|
|
|
|
2017 |
|
|
|
2016 |
|
|
Revenues |
|
|
91,743 |
|
|
|
53,957 |
|
|
Cost of
revenues |
|
|
37,318 |
|
|
|
20,921 |
|
|
Gross profit |
|
|
54,425 |
|
|
|
33,036 |
|
|
Gross profit % |
|
|
59.3 |
% |
|
|
61.2 |
% |
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
General
and administrative |
|
|
27,380 |
|
|
|
15,300 |
|
|
Sales and
marketing |
|
|
10,271 |
|
|
|
6,949 |
|
|
Bad debt
expense |
|
|
4,316 |
|
|
|
2,134 |
|
|
Research
and development |
|
|
2,876 |
|
|
|
2,467 |
|
|
Other
charges |
|
|
16,894 |
|
|
|
2,795 |
|
|
Total operating
expenses |
|
|
61,737 |
|
|
|
29,645 |
|
|
|
|
|
|
|
|
Income (loss) from
operations |
|
|
(7,312 |
) |
|
|
3,391 |
|
|
|
|
|
|
|
|
Other income
(expense): |
|
|
|
|
|
Interest
expense |
|
|
(2,275 |
) |
|
|
(428 |
) |
|
Loss on
equity method investment |
|
|
(82 |
) |
|
|
(103 |
) |
|
Other
non-operating income (expense), net |
|
|
(54 |
) |
|
|
(25 |
) |
|
Total other income
(expense) |
|
|
(2,411 |
) |
|
|
(556 |
) |
|
|
|
|
|
|
|
Income (loss) before
income taxes |
|
|
(9,723 |
) |
|
|
2,835 |
|
|
(Provision for) benefit
from income taxes |
|
|
(6,778 |
) |
|
|
37,613 |
|
|
Net income (loss) |
|
|
(16,501 |
) |
|
|
40,448 |
|
|
|
|
|
|
|
|
Net loss attributable
to noncontrolling interests |
|
|
(908 |
) |
|
|
- |
|
|
|
|
|
|
|
|
Net income (loss)
attributable to BioTelemetry, Inc. |
|
$ |
(15,593 |
) |
|
$ |
40,448 |
|
|
|
|
|
|
|
|
Net income
(loss) per share attributable to BioTelemetry, Inc.: |
|
|
|
Basic |
|
$ |
(0.48 |
) |
|
$ |
1.43 |
|
|
Diluted |
|
$ |
(0.48 |
) |
|
$ |
1.30 |
|
|
|
|
|
|
|
|
Weighted
average number of common shares outstanding (a): |
|
|
|
Basic |
|
|
32,413 |
|
|
|
28,248 |
|
|
Diluted |
|
|
32,413 |
|
|
|
31,038 |
|
|
|
|
|
|
|
|
(a) Basic net income (loss) per share is computed by dividing
net income (loss) by the weighted average number of common shares
outstanding during the period. Diluted net income (loss) per
share is computed by giving effect to all potential dilutive common
shares, including stock options and restricted stock units
(“RSUs”). If the outstanding options or RSUs were exercised
or converted into common stock, the result would be anti‑dilutive
for the quarter ended December 31, 2017. Accordingly, basic
and diluted net loss per share is the same for the quarter ended
December 31, 2017. Please refer to the reconciliation of
Non-GAAP Financial Measures for diluted share count information for
the quarter ended December 31, 2017
|
|
|
|
Consolidated
Statements of Operations |
|
Twelve Months Ended |
|
(In Thousands, Except Per Share Amounts) |
|
December 31, |
|
|
|
|
2017 |
|
|
|
2016 |
|
|
Revenues |
|
|
286,776 |
|
|
|
208,332 |
|
|
Cost of
revenues |
|
|
114,406 |
|
|
|
78,882 |
|
|
Gross profit |
|
|
172,370 |
|
|
|
129,450 |
|
|
Gross profit % |
|
|
60.1 |
% |
|
|
62.1 |
% |
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
General
and administrative |
|
|
82,983 |
|
|
|
55,877 |
|
|
Sales and
marketing |
|
|
35,322 |
|
|
|
28,636 |
|
|
Bad debt
expense |
|
|
13,291 |
|
|
|
9,931 |
|
|
Research
and development |
|
|
11,101 |
|
|
|
8,355 |
|
|
Other
charges |
|
|
31,436 |
|
|
|
8,639 |
|
|
Total operating
expenses |
|
|
174,133 |
|
|
|
111,438 |
|
|
|
|
|
|
|
|
Income (loss) from
operations |
|
|
(1,763 |
) |
|
|
18,012 |
|
|
|
|
|
|
|
|
Other income
(expense): |
|
|
|
|
|
Interest
expense |
|
|
(4,897 |
) |
|
|
(1,830 |
) |
|
Loss on
extinguishment of debt |
|
|
(543 |
) |
|
|
- |
|
|
Loss on
equity method investment |
|
|
(384 |
) |
|
|
(287 |
) |
|
Other
non-operating income (expense), net |
|
|
(2,809 |
) |
|
|
(125 |
) |
|
Total other income
(expense) |
|
|
(8,633 |
) |
|
|
(2,242 |
) |
|
|
|
|
|
|
|
Income (loss) before
income taxes |
|
|
(10,396 |
) |
|
|
15,770 |
|
|
(Provision for) benefit
from income taxes |
|
|
(6,747 |
) |
|
|
37,667 |
|
|
Net income (loss) |
|
|
(17,143 |
) |
|
|
53,437 |
|
|
|
|
|
|
|
|
Net loss attributable
to noncontrolling interests |
|
|
(1,187 |
) |
|
|
- |
|
|
|
|
|
|
|
|
Net income
(loss) attributable to BioTelemetry, Inc. |
$ |
(15,956 |
) |
|
$ |
53,437 |
|
|
|
|
|
|
|
|
Net income
(loss) per share attributable to BioTelemetry, Inc.: |
|
|
|
Basic |
|
$ |
(0.53 |
) |
|
$ |
1.91 |
|
|
Diluted |
|
$ |
(0.53 |
) |
|
$ |
1.75 |
|
|
|
|
|
|
|
|
Weighted
average number of common shares outstanding (a): |
|
|
|
Basic |
|
|
30,386 |
|
|
|
27,920 |
|
|
Diluted |
|
|
30,386 |
|
|
|
30,489 |
|
|
|
|
|
|
|
|
(a) Basic net income (loss) per share is computed by dividing
net income (loss) by the weighted average number of common shares
outstanding during the period. Diluted net income (loss) per
share is computed by giving effect to all potential dilutive common
shares, including stock options, and restricted stock units
(“RSUs”). If the outstanding options or RSUs were exercised
or converted into common stock, the result would be anti‑dilutive
for the year ended December 31, 2017. Accordingly, basic and
diluted net loss per share is the same for the year ended December
31, 2017. Please refer to the reconciliation of Non-GAAP
Financial Measures for diluted share count information for the year
ended December 31, 2017.
Reconciliation of Non-GAAP Financial Measures(In
Thousands, Except Per Share Amounts)
|
|
|
|
|
|
|
|
|
|
|
|
2017 |
|
Three Months Ended December 31,
2017 |
|
|
|
|
(unaudited) |
|
|
|
|
Income (loss) from operations |
|
Income (loss) before income taxes |
|
Net income (loss) attributable to BioTelemetry,
Inc. |
|
Net income (loss) per share attributable to
BioTelemetry Inc. |
|
|
GAAP |
$ |
(7,312 |
) |
|
$ |
(9,723 |
) |
|
$ |
(15,593 |
) |
|
$ |
(0.48 |
) |
|
|
Non-GAAP
Adjustments: |
|
|
|
|
|
|
|
|
|
Other charges (a) |
|
16,894 |
|
|
|
16,894 |
|
|
|
16,894 |
|
|
|
|
|
LifeWatch amortization (b) |
|
3,263 |
|
|
|
3,263 |
|
|
|
3,263 |
|
|
|
|
|
Income tax effect of adjustments (c) |
|
- |
|
|
|
- |
|
|
|
(2,059 |
) |
|
|
|
|
Impact of tax reform (d) |
|
- |
|
|
|
- |
|
|
|
8,749 |
|
|
|
|
|
Adjusted |
$ |
12,845 |
|
|
$ |
10,434 |
|
|
$ |
11,254 |
|
|
$ |
0.32 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding -
diluted |
|
|
35,044 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016 |
|
Three Months Ended December 31,
2016 |
|
|
|
|
(unaudited) |
|
|
|
|
Income from operations |
|
Income before income taxes |
|
Net income |
|
Net income per share |
|
|
GAAP |
$ |
3,391 |
|
|
$ |
2,835 |
|
|
$ |
40,448 |
|
|
$ |
1.30 |
|
|
|
Non-GAAP
Adjustments: |
|
|
|
|
|
|
|
|
|
Other charges (a) |
|
2,795 |
|
|
|
2,795 |
|
|
|
2,795 |
|
|
|
|
|
Performance bonus (stock-based comp) (e) |
|
1,297 |
|
|
|
1,297 |
|
|
|
1,297 |
|
|
|
|
|
Release of valuation allowance (f) |
|
- |
|
|
|
- |
|
|
|
(37,554 |
) |
|
|
|
|
Adjusted |
$ |
7,483 |
|
|
$ |
6,927 |
|
|
$ |
6,986 |
|
|
$ |
0.23 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding -
diluted |
|
|
31,038 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31, |
|
|
|
|
|
|
|
|
(unaudited) |
|
|
|
|
|
|
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
|
|
|
Net income
(loss) attributable to BioTelemetry – GAAP |
$ |
(15,593 |
) |
|
$ |
40,448 |
|
|
|
|
|
|
|
|
Net loss attributable
to noncontrolling interest |
|
(908 |
) |
|
|
- |
|
|
|
|
|
|
|
|
Provision for (benefit
from) income taxes |
|
6,778 |
|
|
|
(37,613 |
) |
|
|
|
|
|
|
|
Total other (income)
expense |
|
2,411 |
|
|
|
556 |
|
|
|
|
|
|
|
|
Other charges (a) |
|
16,894 |
|
|
|
2,795 |
|
|
|
|
|
|
|
|
Depreciation and
amortization expense |
|
11,341 |
|
|
|
3,650 |
|
|
|
|
|
|
|
|
Stock compensation
expense |
|
1,995 |
|
|
|
2,745 |
|
|
|
|
|
|
|
|
Adjusted
EBITDA |
$ |
22,918 |
|
|
$ |
12,581 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
a) In the fourth quarter 2017, the Company incurred
$16.9 million of other charges due primarily to a $12.1 million
asset impairment charge resulting from the LifeWatch integration
related to certain trade names and internally developed software
that are no longer going to be used as a result of rebranding and
system rationalization efforts. The remaining $4.8 million of
other charges related to the integration of LifeWatch, the
implementation of the new revenue recognition standard, other
restructuring activities and ongoing patent litigation partially
offset by a reduction in contingent consideration related to the
Telcare acquisition. In the fourth quarter 2016, the Company
incurred $2.8 million of other charges related to patent litigation
and costs associated with the Company’s 2016 acquisitions.
b) In the fourth quarter 2017, the Company
recognized $3.3 million of expense related to the amortization of
intangibles as a result of the LifeWatch AG acquisition. The
Company has excluded the LifeWatch amortization of intangibles from
adjusted net income for year over year comparative purposes.
This was recorded in general and administrative expense.
c) Represents the tax effect of the non-GAAP
adjustments.
d) In December 2017, tax reform was enacted that
required the Company to revalue its deferred tax assets based on
the prospective lower tax rate of 21% instead of the current
federal tax rate of 35%. This resulted in a one-time tax
expense of $8.7 million.
e) In the fourth quarter 2016, the first of two
performance measures was achieved resulting in $1.3 million of
expense paid to a third party in the form of stock-based
compensation. This was 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. This was recorded in general and administrative
expense.
f) In the fourth quarter 2016, the Company released
the tax valuation allowance on its net deferred tax assets.
This reduction resulted in a one-time income tax benefit in the
fourth quarter 2016 in the amount of $37.6 million.
Reconciliation of Non-GAAP Financial Measures(In
Thousands, Except Per Share Amounts)
|
|
|
|
|
|
|
|
|
|
|
|
2017 |
|
Twelve Months Ended December 31,
2017 |
|
|
|
|
(unaudited) |
|
|
|
|
Income (loss) from operations |
|
Income (loss) before income taxes |
|
Net income (loss) attributable to BioTelemetry,
Inc. |
|
Net income (loss) per share attributable to
BioTelemetry Inc. |
|
|
GAAP |
$ |
(1,763 |
) |
|
$ |
(10,396 |
) |
|
$ |
(15,956 |
) |
|
$ |
(0.53 |
) |
|
|
Non-GAAP
Adjustments: |
|
|
|
|
|
|
|
|
|
Other charges (a) |
|
31,436 |
|
|
|
31,436 |
|
|
|
31,436 |
|
|
|
|
|
LifeWatch amortization (b) |
|
5,982 |
|
|
|
5,982 |
|
|
|
5,982 |
|
|
|
|
|
Performance bonus (stock-based comp) (c) |
|
1,533 |
|
|
|
1,533 |
|
|
|
1,533 |
|
|
|
|
|
Dept. of Health and Human Services settlement (d) |
|
- |
|
|
|
2,500 |
|
|
|
2,500 |
|
|
|
|
|
Foreign currency option related to LifeWatch acquisition
(e) |
|
- |
|
|
|
1,322 |
|
|
|
1,322 |
|
|
|
|
|
Loss on extinguishment of debt (f) |
|
- |
|
|
|
543 |
|
|
|
543 |
|
|
|
|
|
Gain on legal settlement (g) |
|
- |
|
|
|
(1,333 |
) |
|
|
(1,333 |
) |
|
|
|
|
Income tax effect of adjustments (h) |
|
- |
|
|
|
- |
|
|
|
(2,699 |
) |
|
|
|
|
Impact of tax reform (i) |
|
- |
|
|
|
- |
|
|
|
8,749 |
|
|
|
|
|
Adjusted |
$ |
37,188 |
|
|
$ |
31,587 |
|
|
$ |
32,077 |
|
|
$ |
0.97 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding -
diluted |
|
|
33,049 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016 |
|
Twelve Months Ended December 31,
2016 |
|
|
|
|
(unaudited) |
|
|
|
|
Income from operations |
|
Income before income taxes |
|
Net income |
|
Net income per share |
|
|
GAAP |
$ |
18,012 |
|
|
$ |
15,770 |
|
|
$ |
53,437 |
|
|
$ |
1.75 |
|
|
|
Non-GAAP
Adjustments: |
|
|
|
|
|
|
|
|
|
Other charges (a) |
|
8,639 |
|
|
|
8,639 |
|
|
|
8,639 |
|
|
|
|
|
Performance bonus (stock-based comp) (c) |
|
1,297 |
|
|
|
1,297 |
|
|
|
1,297 |
|
|
|
|
|
Release of valuation allowance (j) |
|
- |
|
|
|
- |
|
|
|
(37,554 |
) |
|
|
|
|
Adjusted |
$ |
27,948 |
|
|
$ |
25,706 |
|
|
$ |
25,819 |
|
|
$ |
0.85 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding -
diluted |
|
|
30,489 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended December 31, |
|
|
|
|
|
|
|
|
(unaudited) |
|
|
|
|
|
|
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
|
|
|
Net income
(loss) attributable to BioTelemetry – GAAP |
$ |
(15,956 |
) |
|
$ |
53,437 |
|
|
|
|
|
|
|
|
Net loss attributable
to noncontrolling interest |
|
(1,187 |
) |
|
|
- |
|
|
|
|
|
|
|
|
Provision for (benefit
from) income taxes |
|
6,747 |
|
|
|
(37,667 |
) |
|
|
|
|
|
|
|
Total other (income)
expense |
|
8,633 |
|
|
|
2,242 |
|
|
|
|
|
|
|
|
Other charges (a) |
|
31,436 |
|
|
|
8,639 |
|
|
|
|
|
|
|
|
Depreciation and
amortization expense |
|
27,900 |
|
|
|
14,269 |
|
|
|
|
|
|
|
|
Stock compensation
expense |
|
7,680 |
|
|
|
6,502 |
|
|
|
|
|
|
|
|
Adjusted
EBITDA |
$ |
65,253 |
|
|
$ |
47,422 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
a) For the twelve months ended December 31, 2017, the Company
incurred $31.4 million of other charges primarily due to a $12.1
million asset impairment charge resulting from the LifeWatch
integration related to certain trade names and internally developed
software that are no longer going to be used as a result of
rebranding and system rationalization efforts and $17.1 million
related to the acquisition and integration of LifeWatch AG.
The remaining $2.2 million of other charges resulted from other
restructuring activities, ongoing patent litigation and the
implementation of the new revenue recognition standard partially
offset by a reduction in contingent consideration related to the
Telcare acquisition. For the twelve months ended December 31,
2016, the Company incurred $8.6 million of other charges related to
patent litigation and costs associated with the Company’s 2016
acquisitions.
b) For the twelve months ended December 31, 2017, the Company
recognized $6.0 million of expense related to the amortization of
intangibles as a result of the LifeWatch AG acquisition. The
Company has excluded the LifeWatch amortization of intangibles from
adjusted net income for year over year comparative purposes.
This was recorded in general and administrative expense.
c) For the twelve months ended December 31, 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. This was recorded in general and administrative
expense.
d) 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 in other
non-operating income (expense), net.
e) For the twelve months ended December 31, 2017, the Company
incurred $1.3 million of expense for a foreign currency option
related to the acquisition of LifeWatch AG which is included in
other non-operating income (expense), net.
f) During the third quarter 2017, in connection with the
acquisition of LifeWatch AG, the Company entered into a credit
agreement with SunTrust Bank, as a lender and an agent for the
lenders. This credit agreement provided the Company a term
loan for $205.0 million and a $50.0 million revolving credit
facility which remains undrawn. A portion of the proceeds
from the term loan were used to pay off the Company’s existing
credit agreement with Healthcare Financial Solutions LLC, formerly
General Electric Capital Corporation. As a result, the
Company had a loss of $0.5 million on the extinguishment of the
debt which was recorded in loss on extinguishment of debt.
g) In the third quarter 2017, the Company reached a settlement
with the seller of Mednet Healthcare Technologies, Inc. and related
companies, which the Company acquired in early 2014. The
Company sought indemnification for alleged breaches of certain
representations and warranties. As part of the settlement,
common stock with a fair value of $2.7 million was returned to the
Company. The value of the stock exceeded the indemnification
asset of $1.4 million previously recorded by the Company, resulting
in a gain of $1.3 million which is included in other non-operating
income (expense), net.
h) Represents the tax effect of the non-GAAP adjustments.
i) In December 2017, tax reform was enacted that required the
Company to revalue its deferred tax assets based on the prospective
lower tax rate of 21% instead of the current federal tax rate of
35%. This resulted in a one-time tax expense of $8.7
million.
j) In the fourth quarter 2016, the Company released the tax
valuation allowance on its net deferred tax assets. This
reduction resulted in a one-time income tax benefit in the fourth
quarter 2016 in the amount of $37.6 million.
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 attributable to BioTelemetry, Inc. for the
fourth quarter 2017 excludes other charges of $16.9 million driven
by a $12.1 million asset impairment charge related to certain trade
names and internally developed software that are no longer going to
be used as a result of rebranding and system rationalization
efforts, $4.4 million related to the integration of LifeWatch, $1.0
million for other restructuring activities, ongoing patent
litigation and the implementation of the new revenue recognition
standard offset by a $0.6 million reduction in contingent
consideration related to the Telcare acquisition. Adjusted
net income attributable to BioTelemetry, Inc. for the fourth
quarter 2017 also excludes $3.3 million of amortization expense
related to LifeWatch intangibles, $8.7 million of tax expense
related to the one-time revaluation of the Company’s deferred tax
assets resulting from the reduction of the federal tax rate from
35% to 21% stemming from tax reform enacted in December 2017 and
the tax effect of these adjustments. By excluding expenses
that are considered not necessary to support the ongoing business,
are nonrecurring in nature or which limit year over year
comparability, the Company believes that these Non-GAAP financial
measures offer a meaningful representation of the Company’s ongoing
operating performance. Included in these excluded items are
transaction related expenses, primarily legal and professional
fees, legal fees related to patent litigation, costs related to
restructuring programs aimed at streamlining operations and
reducing future expense as well as other one-time items.
These excluded charges are not part of the ongoing operations, and
therefore, not reflective of the Company’s core operations.
The Company views 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. The Company also included the income
tax effect of these adjustments.
Adjusted net income for the fourth quarter 2016 excludes $2.8
million of other charges related to patent litigation and costs
associated with the Company’s 2016 acquisitions, $1.3 million of
expense paid to a third party in the form of stock-based
compensation, and a $37.6 million benefit related to the release of
the Company’s tax valuation allowance on its net deferred tax
assets.
Adjusted net income attributable to BioTelemetry, Inc. for the
twelve months ended December 31, 2017 excludes other charges of
$31.4 million driven by $17.1 million related to the acquisition of
LifeWatch, a $12.1 million asset impairment charge related to
certain trade names and internally developed software that are no
longer going to be used as a result of rebranding and system
rationalization efforts, $3.1 million for other restructuring
activities and the implementation of the new revenue recognition
standard and $1.1 million for ongoing patent litigation offset by a
$2.0 million reduction in contingent consideration related to the
Telcare acquisition. Adjusted net income attributable to
BioTelemetry, Inc. for the twelve months ended December 31, 2017
also excludes $8.7 million of tax expense related to the one-time
revaluation of the Company’s deferred tax assets resulting from the
reduction of the prospective federal tax rate from 35% to 21%
stemming from tax reform enacted in December 2017, $6.0 million of
amortization of intangibles related to LifeWatch, 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, a $1.5 million one-time performance
bonus paid to a third party in the form of stock-based
compensation, $1.3 million of expense for a foreign currency option
related to the acquisition of LifeWatch AG, a $1.3 million gain on
a legal settlement, a $0.5 million loss on the extinguishment of
the Company’s previous debt and the tax effect of these
adjustments. By excluding expenses that are considered not
necessary to support the ongoing business or which are nonrecurring
in nature or which limit year over year comparability, the Company
believes that these Non-GAAP financial measures offer a meaningful
representation of the Company’s ongoing operating
performance. Included in these excluded items are transaction
related expenses, primarily legal and professional fees, legal fees
related to patent litigation, costs related to restructuring
programs aimed at streamlining operations and reducing future
expense as well as other one-time items. These excluded
charges are not part of the ongoing operations, and therefore, not
reflective of the Company’s core operations. The Company
views 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. 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.
Adjusted net income for the twelve months ended December 31,
2016 excludes $8.6 million of other charges related to patent
litigation and costs associated with the Company’s 2016
acquisitions, $1.3 million of expense paid to a third party in the
form of stock-based compensation, and a $37.6 million benefit
related to the release of the Company’s tax valuation allowance on
its net deferred tax assets.
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, noncontrolling interest, Other charges,
other excluded items included in total other income (expense),
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. GetzInvestor
Relations800-908-7103investorrelations@biotelinc.com
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