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 first quarter ended March 31, 2018.
Company Highlights
- Recognized highest quarterly revenue in Company’s history of
$94.5 million
- Achieved 11% year over year organic revenue growth
- Achieved 23rd consecutive quarter of year over year revenue
growth
- Recorded GAAP net income attributable to BioTelemetry, Inc. of
$6.0 million
- Realized record quarterly adjusted EBITDA of $23.6 million, or
25.0% of revenue
- Realized approximately $7.0 million of synergies in the 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: “The first quarter was an
exceptional start to the year, with revenue and adjusted EBITDA
that surpassed our expectations. These results were due to
our 11% organic revenue growth driven by a 10% increase in MCT
patient volume. This volume growth was augmented by the full
commercial launch of our next generation MCT and extended wear
Holter devices in a patch form factor. Additionally, we
delivered record adjusted EBITDA with a 25% margin, powered by
excellent organic growth and synergies related to the integration
of LifeWatch.
“Our strong performance is the direct result of the successful
execution of our key initiatives. With the largest and most
productive sales force in the industry, a vast network of covered
lives and the most comprehensive suite of products, we anticipate
further expansion of our leadership position in the cardiac
monitoring market. Our research business is also experiencing
accelerated growth, up 21% in the first quarter versus the prior
year quarter. Finally, we continue to develop strategic
relationships in our digital population health business, which have
the potential to drive significant future growth. Given these
factors, we expect the positive momentum experienced over the last
few quarters to continue, resulting in another standout year for
the Company, with over $380 million of revenue and an adjusted
EBITDA margin percent in the mid-twenties.”
First Quarter Financial Results
Revenue for the first quarter 2018 was $94.5 million compared to
$55.9 million for the first quarter 2017, an increase of $38.6
million, or 69.1%.
Gross profit for the first quarter 2018 was $58.0 million, or
61.4% of revenue, compared to $32.9 million, or 58.9% of revenue,
for the first quarter 2017.
On a GAAP basis, net income attributable to BioTelemetry, Inc.
for the first quarter 2018 was $6.0 million, or net income
attributable to BioTelemetry, Inc. of $0.17 per diluted share,
compared to net income of $0.2 million, or $0.01 per diluted share,
for the first quarter 2017.
On an adjusted basis1, net income attributable to BioTelemetry,
Inc. for the first quarter 2018 was $13.9 million, or $0.39 per
diluted share. This compares to adjusted net income of $4.9
million, or $0.16 per diluted share, for the first quarter
2017. This increase was attributable to the addition of
LifeWatch, the 11% organic revenue growth and synergies gained from
the integration of LifeWatch. The details regarding 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
Wednesday, April 25, 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) |
|
March 31, |
|
|
|
|
2018 |
|
|
|
2017 |
|
|
Revenues |
|
|
94,496 |
|
|
|
55,881 |
|
|
Cost of revenues |
|
|
36,448 |
|
|
|
22,972 |
|
|
Gross profit |
|
|
58,048 |
|
|
|
32,909 |
|
|
Gross profit % |
|
|
61.4 |
% |
|
|
58.9 |
% |
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
General
and administrative |
|
|
26,719 |
|
|
|
15,917 |
|
|
Sales and
marketing |
|
|
11,340 |
|
|
|
7,701 |
|
|
Bad debt
expense |
|
|
4,879 |
|
|
|
2,791 |
|
|
Research
and development |
|
|
3,289 |
|
|
|
2,433 |
|
|
Other
charges |
|
|
5,085 |
|
|
|
1,739 |
|
|
Total operating
expenses |
|
|
51,312 |
|
|
|
30,581 |
|
|
|
|
|
|
|
|
Income from
operations |
|
|
6,736 |
|
|
|
2,328 |
|
|
|
|
|
|
|
|
Other expense: |
|
|
|
|
|
Interest
expense |
|
|
(1,890 |
) |
|
|
(388 |
) |
|
Loss on
equity method investment |
|
|
(139 |
) |
|
|
(95 |
) |
|
Other
non-operating income / (expense), net |
|
|
187 |
|
|
|
(2,515 |
) |
|
Total other
expense |
|
|
(1,842 |
) |
|
|
(2,998 |
) |
|
|
|
|
|
|
|
Income / (loss) before
income taxes |
|
|
4,894 |
|
|
|
(670 |
) |
|
Benefit from income
taxes |
|
|
142 |
|
|
|
866 |
|
|
Net income |
|
|
5,036 |
|
|
|
196 |
|
|
|
|
|
|
|
|
Net loss attributable
to noncontrolling interest |
|
|
(946 |
) |
|
|
- |
|
|
|
|
|
|
|
|
Net income attributable
to BioTelemetry, Inc. |
|
$ |
5,982 |
|
|
$ |
196 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
per common share attributable to BioTelemetry, Inc.: |
|
|
|
Basic |
|
$ |
0.18 |
|
|
$ |
0.01 |
|
|
Diluted |
|
$ |
0.17 |
|
|
$ |
0.01 |
|
|
|
|
|
|
|
|
Weighted
average number of common shares outstanding: |
|
|
|
|
Basic |
|
|
32,570 |
|
|
|
28,429 |
|
|
Diluted |
|
|
35,235 |
|
|
|
31,315 |
|
|
|
|
|
|
|
|
Reconciliation of Non-GAAP Financial Measures(In
Thousands, Except Per Share Amounts)
|
|
|
|
|
|
|
|
|
|
|
|
2018 |
Three Months Ended March 31,
2018 |
|
|
(unaudited) |
|
|
|
|
Income fromoperations |
|
Income beforeincome taxes |
|
Net incomeattributable toBioTelemetry,
Inc. |
|
Net income perdiluted shareattributable
toBioTelemetry Inc. |
|
|
GAAP |
$ |
6,736 |
|
|
$ |
4,894 |
|
|
$ |
5,982 |
|
|
$ |
0.17 |
|
|
|
Non-GAAP
Adjustments: |
|
|
|
|
|
|
|
|
|
|
Other charges (a) |
|
5,085 |
|
|
|
5,085 |
|
|
|
5,085 |
|
|
|
0.14 |
|
|
|
|
LifeWatch amortization
(b) |
|
3,235 |
|
|
|
3,235 |
|
|
|
3,235 |
|
|
|
0.09 |
|
|
|
|
Income tax effect of
adjustments (c) |
|
- |
|
|
|
- |
|
|
|
(2,246 |
) |
|
|
(0.06 |
) |
|
|
|
NOL utilization
(d) |
|
- |
|
|
|
- |
|
|
|
1,813 |
|
|
|
0.05 |
|
|
|
Adjusted |
$ |
15,056 |
|
|
$ |
13,214 |
|
|
$ |
13,869 |
|
|
$ |
0.39 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017 |
Three Months Ended March 31,
2017 |
|
|
(unaudited) |
|
|
|
|
Income fromoperations |
|
Income (loss)before incometaxes |
|
Net incomeattributable toBioTelemetry,
Inc. |
|
Net income perdiluted shareattributable
toBioTelemetry Inc. |
|
|
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) (e) |
|
1,533 |
|
|
|
1,533 |
|
|
|
1,533 |
|
|
|
0.05 |
|
|
|
|
Dept. of Health and
Human Services settlement (f) |
|
- |
|
|
|
2,500 |
|
|
|
2,500 |
|
|
|
0.08 |
|
|
|
|
Income tax effect of
adjustments (c) |
|
- |
|
|
|
- |
|
|
|
(2,193 |
) |
|
|
(0.07 |
) |
|
|
|
NOL utilization
(d) |
|
- |
|
|
|
- |
|
|
|
1,164 |
|
|
|
0.03 |
|
|
|
Adjusted |
$ |
5,600 |
|
|
$ |
5,102 |
|
|
$ |
4,939 |
|
|
$ |
0.16 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
|
|
|
|
|
(unaudited) |
|
|
|
|
|
|
|
|
|
2018 |
|
|
|
2017 |
|
|
|
|
|
|
|
|
Net income
attributable to BioTelemetry – GAAP |
$ |
5,982 |
|
|
$ |
196 |
|
|
|
|
|
|
|
|
Net loss attributable
to noncontrolling interest |
|
(946 |
) |
|
|
- |
|
|
|
|
|
|
|
|
Benefit from income
taxes |
|
(142 |
) |
|
|
(866 |
) |
|
|
|
|
|
|
|
Total other
expense |
|
1,842 |
|
|
|
2,998 |
|
|
|
|
|
|
|
|
Other charges (a) |
|
5,085 |
|
|
|
1,739 |
|
|
|
|
|
|
|
|
Depreciation and
amortization expense |
|
9,757 |
|
|
|
3,715 |
|
|
|
|
|
|
|
|
Stock compensation
expense |
|
2,065 |
|
|
|
3,058 |
|
|
|
|
|
|
|
|
Adjusted
EBITDA |
$ |
23,643 |
|
|
$ |
10,840 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
a) |
In the first quarter
2018, the Company incurred $5.1 million of other charges with $3.2
million related to the consolidation and closure of certain legacy
LifeWatch international locations, $1.8 million of professional,
legal and other costs related to the integration of LifeWatch, $0.4
million for patent litigation, $0.2 million related to other
restructuring activities and $0.2 million related to the
implementation of the new revenue recognition standard. These
charges were partially offset by a $0.7 million reduction in
contingent consideration related to the Telcare acquisition.
In the first quarter 2017, the Company incurred $1.7 million of
other charges resulting from $1.7 million of professional and legal
fees related to the LifeWatch acquisition and $0.6 million of
expense related to patent litigation, the Company’s 2016
acquisitions and other restructuring activities. These
charges were partially offset by a $0.6 million reduction in
contingent consideration related to the ePatch acquisition. |
|
|
b) |
In the first quarter
2018, the Company recognized $3.2 million of expense related to the
amortization of intangibles as a result of the LifeWatch
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 based on the estimated annual
effective tax rate of 27% for the first quarter 2018 and 38% for
the first quarter 2017. |
|
|
d) |
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 2.9% for the first quarter
2018. After giving effect to taxes at the estimated annual
effective tax rate of 27% on the other adjustments, the utilization
of net operating loss carryforwards had a $1.8 million positive
impact on the first quarter 2018. For the first quarter 2017,
the Company reported a tax benefit of 129.3%. 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. |
|
|
e) |
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 upon the achievement of the second
performance measure. The first of the two performance
measures was achieved in the fourth quarter 2016, resulting in $1.3
million of expense at that time. This is a nonrecurring
expense for the Company and is the only time in the Company’s
history when such a bonus was awarded to a third party. There
are no additional agreements outstanding of this nature. This was
recorded in general and administrative expense. |
|
|
f) |
In 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. |
|
|
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
first quarter 2018 excludes other charges of $5.1 million driven by
$3.2 million of expense related to the consolidation and closure of
certain legacy LifeWatch international locations, $1.8 million of
professional, legal and other costs related to the integration of
LifeWatch, $0.4 million for patent litigation, $0.2 million for
other restructuring activities and $0.2 million related to the
implementation of the new revenue recognition standard. These
charges were partially offset by a $0.7 million reduction in
contingent consideration related to the Telcare acquisition.
Adjusted net income attributable to BioTelemetry, Inc. for the
first quarter 2018 also excludes $3.2 million of amortization
expense related to LifeWatch intangibles. 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 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 severance, 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 as well as the impact from the
utilization of our net operating loss
carryforwards.
Adjusted net income for the first quarter 2017 excludes $1.7
million of other charges resulting from $1.7 million of
professional and legal fees related to the LifeWatch acquisition
and $0.6 million of expense related to patent litigation, the
Company’s 2016 acquisitions and other restructuring
activities. These charges were partially offset by a $0.6
million reduction in contingent consideration related to the ePatch
acquisition. Adjusted net income for the first quarter 2017
also excludes a $1.5 million 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 all of the
adjustments, as well as the impact from the utilization of our net
operating loss carryforwards.
In addition to adjusted income from operations, adjusted net
income attributable to BioTelemetry, Inc. and adjusted net income
per diluted share attributable to BioTelemetry, Inc., 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), net, 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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