Company’s Results Exceed
Expectations
BioTelemetry, Inc. (NASDAQ:BEAT), the leading remote 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 third quarter ended
September 30, 2018.
Quarter Highlights
- Recognized quarterly revenue of $100.0 million,
exceeding expectations
- Exceeded 23% year over year revenue growth
- Achieved 25th consecutive quarter of year over
year revenue growth
- Realized GAAP net income attributable to
BioTelemetry, Inc. of $16.0 million, or 16.0% of revenue
- Realized record quarterly adjusted EBITDA of $30.1
million, or 30.1% of revenue
- Raising full-year revenue guidance to $397 to $400
million with an approximate 28% adjusted EBITDA margin
President and CEO Commentary
Joseph H. Capper, President and Chief Executive
Officer of BioTelemetry, Inc., commented: “I am pleased to report
that we had an exceptional third quarter with revenue and adjusted
EBITDA exceeding expectations. Revenue grew 23% versus the
prior year, driven by patient volume growth highlighted by
double-digit MCT and triple-digit extended Holter growth. Our
next generation MCT and extended Holter products in multiple form
factors have been extremely well received in the market and are
successfully broadening our existing customer relationships.
In addition to the continued volume strength, a favorable payor and
product mix also had a positive impact on our revenue in the
quarter. Not to be outdone, our Research division delivered
exceptional revenue growth of 45% over the prior year.
“In addition to our strong revenue growth, our
adjusted EBITDA reached new highs in the third quarter, growing
more than 70% year over year. The combination of the
favorable payor and product mix and the benefit from the $30
million of annualized synergies resulting from the integration of
LifeWatch helped to drive tremendous EBITDA margin expansion, with
an over 800 basis point improvement versus the prior year.
“The Company has established a track record of
consistently delivering excellent results, with the third quarter
representing our 25th consecutive quarter of year over year revenue
growth. Given our many competitive advantages, numerous
opportunities for growth and strong financial position, we are
extremely well-positioned for continued success. As a result,
we are raising our full-year revenue outlook to $397 to $400
million with an adjusted EBITDA margin of approximately 28%.”
Third Quarter Financial Results
Revenue for the third quarter 2018 was $100.0
million compared to $81.0 million for the third quarter 2017, an
increase of $19.0 million, or 23.4%.
Gross profit for the third quarter 2018 was
$62.7 million, or 62.7% of revenue, compared to $49.1 million, or
60.6% of revenue, for the third quarter 2017.
On a GAAP basis, net income attributable to
BioTelemetry, Inc. for the third quarter 2018 was $16.0 million, or
$0.45 per diluted share, compared to a net loss of $2.3 million, or
$(0.07) per diluted share, for the third quarter 2017.
On an adjusted basis1, net income attributable
to BioTelemetry, Inc. for the third quarter 2018 was $19.2 million,
or $0.53 per diluted share. This compares to adjusted net
income of $8.5 million, or $0.24 per diluted share, for the third
quarter 2017. This increase was attributable to the organic
revenue growth, the full-quarter impact of the LifeWatch
acquisition as well as 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 our
performance, as we exclude expenses that are not necessary to
support our ongoing business. We also make adjustments to
facilitate year over year comparisons. Please refer to our
“Reconciliation of GAAP to Non-GAAP Financial Measures” in this
release for additional information.
Conference Call
BioTelemetry, Inc. will host an earnings
conference call on Tuesday, October 30, 2018, at 5:00 PM
Eastern Time. The call will be webcast on the investor
information page of our website,
www.gobio.com/investors/events. The call will be archived on
our website for two weeks.
About BioTelemetry
BioTelemetry, Inc. is the leading remote and
wireless medical technology company focused on delivery of health
information to improve quality of life and reduce cost of
care. We provide cardiac monitoring, mobile blood glucose
monitoring, centralized medical imaging, and original equipment
manufacturing that serves 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 regarding,
among other things, our growth prospects, the prospects for our
products and our confidence in our future. These statements
may be identified by words such as “expect,” “anticipate,”
“estimate,” “intend,” “plan,” “believe,” “promises” and other words
and terms of similar meaning. Examples of forward-looking
statements include statements we make regarding our ability to
increase demand for our products and services, to leverage our
Mobile Cardiac Outpatient Telemetry platform to expand into new
markets, to grow our market share, our expectations regarding
revenue trends in our segments and the achievement of cost
efficiencies through process improvements. 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 identify acquisition candidates,
acquire them on attractive terms and integrate their operations
into our business; our ability to educate physicians and continue
to obtain prescriptions for our products and services; changes to
insurance coverage and reimbursement levels by Medicare and
commercial payors for our products and services; our ability to
attract and retain talented executive management and sales
personnel; the commercialization of new competitive products; our
ability to obtain and maintain required regulatory approvals for
our products, services and manufacturing facilities; changes in
governmental regulations and legislation; our ability to obtain and
maintain adequate protection of our intellectual property;
acceptance of our new products and services; adverse regulatory
action; interruptions or delays in the telecommunications systems
that we use; our ability to successfully resolve outstanding legal
proceedings; and the other factors that are described in
“Part I; Item 1A. Risk Factors” of our
Annual Report on Form 10-K for the year ended December 31,
2017.
We undertake no obligation to publicly update
any forward-looking statement, whether as a result of new
information, future events, or otherwise, except as may be required
by law.
Contact:
BioTelemetry, Inc.Heather C. GetzInvestor RelationsExecutive Vice
President, Chief Financial
Officer800-908-7103investorrelations@biotelinc.com
BioTelemetry,
Inc.Condensed Consolidated Statements of
Operations(Unaudited)
|
Three Months Ended |
|
Nine Months Ended |
(in thousands,
except per share data) |
September 30, 2018 |
|
September 30, 2017 |
|
September 30, 2018 |
|
September 30, 2017 |
Revenues |
$ |
100,013 |
|
|
$ |
81,023 |
|
|
$ |
295,869 |
|
|
$ |
195,033 |
|
Cost of revenues |
37,276 |
|
|
31,954 |
|
|
109,329 |
|
|
77,088 |
|
Gross profit |
62,737 |
|
|
49,069 |
|
|
186,540 |
|
|
117,945 |
|
Gross profit % |
62.7 |
% |
|
60.6 |
% |
|
63.0 |
% |
|
60.5 |
% |
|
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
|
General
and administrative |
26,325 |
|
|
25,320 |
|
|
81,785 |
|
|
55,603 |
|
Sales and
marketing |
10,120 |
|
|
9,719 |
|
|
32,535 |
|
|
25,051 |
|
Bad debt
expense |
5,157 |
|
|
3,768 |
|
|
16,911 |
|
|
8,975 |
|
Research
and development |
2,429 |
|
|
3,277 |
|
|
8,451 |
|
|
8,225 |
|
Other
charges |
1,330 |
|
|
8,152 |
|
|
11,623 |
|
|
14,542 |
|
Total operating
expenses |
45,361 |
|
|
50,236 |
|
|
151,305 |
|
|
112,396 |
|
|
|
|
|
|
|
|
|
Income/(loss) from
operations |
17,376 |
|
|
(1,167 |
) |
|
35,235 |
|
|
5,549 |
|
|
|
|
|
|
|
|
|
Other
expense: |
|
|
|
|
|
|
|
Interest
expense |
(2,408 |
) |
|
(1,841 |
) |
|
(6,982 |
) |
|
(2,622 |
) |
Loss on
extinguishment of debt |
— |
|
|
(543 |
) |
|
— |
|
|
(543 |
) |
Loss on
equity method investment |
(54 |
) |
|
(106 |
) |
|
(238 |
) |
|
(302 |
) |
Other
non-operating income/(expense), net |
(194 |
) |
|
658 |
|
|
543 |
|
|
(2,755 |
) |
Total other
expense: |
(2,656 |
) |
|
(1,832 |
) |
|
(6,677 |
) |
|
(6,222 |
) |
|
|
|
|
|
|
|
|
Income/(loss)
before income taxes |
14,720 |
|
|
(2,999 |
) |
|
28,558 |
|
|
(673 |
) |
Benefit
from income taxes |
1,281 |
|
|
435 |
|
|
2,923 |
|
|
31 |
|
Net
income/(loss) |
16,001 |
|
|
(2,564 |
) |
|
31,481 |
|
|
(642 |
) |
|
|
|
|
|
|
|
|
Net loss attributable
to noncontrolling interests |
— |
|
|
(279 |
) |
|
(946 |
) |
|
(279 |
) |
|
|
|
|
|
|
|
|
Net
income/(loss) attributable to BioTelemetry, Inc. |
$ |
16,001 |
|
|
$ |
(2,285 |
) |
|
$ |
32,427 |
|
|
$ |
(363 |
) |
|
|
|
|
|
|
|
|
Net
income/(loss) per common share attributable to BioTelemetry,
Inc.: |
|
|
|
|
|
|
|
Basic |
$ |
0.48 |
|
|
$ |
(0.07 |
) |
|
$ |
1.00 |
|
|
$ |
(0.01 |
) |
Diluted |
$ |
0.45 |
|
|
$ |
(0.07 |
) |
|
$ |
0.91 |
|
|
$ |
(0.01 |
) |
|
|
|
|
|
|
|
|
Weighted
average number of common shares outstanding: |
|
|
|
|
|
|
|
Basic |
33,003 |
|
|
31,897 |
|
|
32,488 |
|
|
29,682 |
|
Diluted |
35,918 |
|
|
31,897 |
|
|
35,566 |
|
|
29,682 |
|
BioTelemetry,
Inc.Summary Financial
Data(Unaudited)
(in thousands) |
|
September 30, 2018 |
|
December 31, 2017 |
Cash and cash
equivalents |
|
$ |
63,118 |
|
|
$ |
36,022 |
|
Healthcare accounts
receivables, net |
|
36,414 |
|
|
25,190 |
|
Other accounts
receivables, net |
|
14,609 |
|
|
13,296 |
|
Working capital |
|
83,907 |
|
|
39,153 |
|
Total assets |
|
574,206 |
|
|
524,562 |
|
Total indebtedness |
|
201,255 |
|
|
204,865 |
|
Total equity |
|
295,515 |
|
|
249,703 |
|
Summary Cash Flow
Data(Unaudited)
|
|
Three Months Ended |
|
Nine Months Ended |
(in thousands) |
|
September 30, 2018 |
|
September 30, 2017 |
|
September 30, 2018 |
|
September 30, 2017 |
Cash provided/(used) by
operating activities |
|
28,151 |
|
|
(72 |
) |
|
44,287 |
|
|
10,661 |
|
Capital
expenditures |
|
(7,561 |
) |
|
(5,743 |
) |
|
(17,498 |
) |
|
(11,940 |
) |
Reconciliation of GAAP to Non-GAAP
Financial Measures(Unaudited)
|
|
Three Months Ended |
(Unaudited) |
|
September 30, 2018 |
(in thousands, except per share data) |
|
Income from operations |
|
Income before income taxes |
|
Net income attributable to BioTelemetry,
Inc. |
|
Net income per diluted share attributable to
BioTelemetry, Inc.* |
GAAP |
|
$ |
17,376 |
|
|
$ |
14,720 |
|
|
$ |
16,001 |
|
|
$ |
0.45 |
|
Non-GAAP
adjustments: |
|
|
|
|
|
|
|
|
Other
charges (a) |
|
1,330 |
|
|
1,330 |
|
|
1,330 |
|
|
0.04 |
|
LifeWatch
amortization (b) |
|
3,267 |
|
|
3,267 |
|
|
3,267 |
|
|
0.09 |
|
Income
tax effect of adjustments (c) |
|
— |
|
|
— |
|
|
(103 |
) |
|
— |
|
Benefit
of discrete items/NOL utilization (d) |
|
— |
|
|
— |
|
|
(1,338 |
) |
|
(0.04 |
) |
Non-GAAP
Adjusted |
|
$ |
21,973 |
|
|
$ |
19,317 |
|
|
$ |
19,157 |
|
|
$ |
0.53 |
|
Weighted average number of common shares outstanding -
diluted |
|
35,918 |
|
*
total does not add due to rounding |
|
|
|
|
|
|
|
|
Three Months Ended |
(Unaudited) |
|
September 30, 2017 |
(in thousands, except per share data) |
|
Income/(loss) from operations |
|
Income/(loss) before income taxes |
|
Net income/(loss) attributable to BioTelemetry,
Inc. |
|
Net income/(loss) per diluted share
attributable to BioTelemetry, Inc. |
GAAP |
|
$ |
(1,167 |
) |
|
$ |
(2,999 |
) |
|
$ |
(2,285 |
) |
|
$ |
(0.07 |
) |
Non-GAAP
adjustments: |
|
|
|
|
|
|
|
|
Other
charges (a) |
|
8,152 |
|
|
8,152 |
|
|
8,152 |
|
|
0.23 |
|
LifeWatch
amortization (b) |
|
2,719 |
|
|
2,719 |
|
|
2,719 |
|
|
0.08 |
|
Foreign
currency option related to LifeWatch acquisition (e) |
|
|
— |
|
|
424 |
|
|
424 |
|
|
0.01 |
|
Loss on
extinguishment of debt (f) |
|
— |
|
|
543 |
|
|
543 |
|
|
0.02 |
|
Gain on
legal settlement (g) |
|
|
— |
|
|
(1,333 |
) |
|
(1,333 |
) |
|
(0.04 |
) |
Income
tax effect of adjustments (c) |
|
— |
|
|
— |
|
|
(2,725 |
) |
|
(0.08 |
) |
NOL
utilization (d) |
|
— |
|
|
— |
|
|
2,978 |
|
|
0.09 |
|
Non-GAAP
Adjusted |
|
$ |
9,704 |
|
|
$ |
7,506 |
|
|
$ |
8,473 |
|
|
$ |
0.24 |
|
Weighted average number of common shares outstanding -
diluted |
|
|
|
|
|
34,982 |
|
|
|
|
|
|
|
|
|
(a) In the third quarter 2018, other charges of $1.3 million
were due primarily to $0.7 million for the continued integration
and restructuring activities related to the LifeWatch acquisition
and $0.3 million for patent litigation. In the third quarter
2017, other charges of $8.2 million were due to $7.6 million of
professional and legal fees, as well as severance, related to the
acquisition and integration of LifeWatch, $1.0 million of other
legal and professional fees, $0.6 million for ongoing patent
litigation partially offset by a $1.4 million reduction in
contingent consideration related to our 2016 acquisitions.
(b) In the third quarter 2018, we recognized $3.3 million of
expense related to the amortization of intangibles as a result of
the LifeWatch acquisition. In the third quarter 2017, we
recognized $2.7 million of LifeWatch amortization of
intangibles. The presentation of the 2017 LifeWatch
amortization of intangibles has been conformed to the 2018
presentation. We have excluded the LifeWatch amortization of
intangibles from adjusted net income for year over year comparative
purposes. This amortization was recorded as a component of
general and administrative expense.
(c) Represents the tax effect on the non-GAAP adjustments at the
Company’s estimated annual effective tax rate.
(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 8.7% for the
third quarter 2018 and 14.5% for the third quarter 2017.
After giving effect to taxes at the estimated annual effective tax
rate on the adjustments, the Company is excluding a $1.3 million
benefit from discrete items in the third quarter 2018. For
the third quarter 2017, the utilization of net operating loss
carryforwards had a $3.0 million positive impact.
(e) In the third quarter 2017, the Company incurred $0.4 million
of expense for a foreign currency option related to the acquisition
of LifeWatch which is included in Other non-operating
income/(expense), net.
(f) In the third quarter 2017, in connection with the
acquisition of LifeWatch, 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 previous
credit agreement. As a result, the Company had a loss of $0.5
million on the extinguishment of the 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.
|
|
Nine Months Ended |
(Unaudited) |
|
September 30, 2018 |
(in thousands, except per share data) |
|
Income from operations |
|
Income before income taxes |
|
Net income attributable to BioTelemetry,
Inc. |
|
Net income per diluted share attributable to
BioTelemetry, Inc.* |
GAAP |
|
$ |
35,235 |
|
|
$ |
28,558 |
|
|
$ |
32,427 |
|
|
$ |
0.91 |
|
Non-GAAP
adjustments: |
|
|
|
|
|
|
|
|
Other
charges (h) |
|
11,623 |
|
|
11,623 |
|
|
11,623 |
|
|
0.33 |
|
LifeWatch
amortization (i) |
|
9,852 |
|
|
9,852 |
|
|
9,852 |
|
|
0.28 |
|
Other
expense adjustment (j) |
|
|
— |
|
|
(748 |
) |
|
(748 |
) |
|
(0.02 |
) |
Income
tax effect of adjustments (k) |
|
— |
|
|
— |
|
|
(464 |
) |
|
(0.01 |
) |
Benefit
of discrete items/NOL utilization (l) |
|
— |
|
|
— |
|
|
(3,341 |
) |
|
(0.09 |
) |
Non-GAAP
Adjusted |
|
$ |
56,710 |
|
|
$ |
49,285 |
|
|
$ |
52,690 |
|
|
$ |
1.39 |
|
Weighted average number of common shares outstanding -
diluted |
|
|
|
35,566 |
|
* total does
not add due to rounding |
|
|
|
|
|
|
|
|
|
|
Nine Months Ended |
(Unaudited) |
|
September 30, 2017 |
(in thousands, except per share data) |
|
Income from operations |
|
Income/(loss) before income taxes |
|
Net income/(loss) attributable to BioTelemetry,
Inc. |
|
Net income/(loss) per diluted share
attributable to BioTelemetry, Inc.* |
GAAP |
|
$ |
5,549 |
|
|
$ |
(673 |
) |
|
$ |
(363 |
) |
|
$ |
(0.01 |
) |
Non-GAAP
adjustments: |
|
|
|
|
|
|
|
|
Other
charges (h) |
|
14,542 |
|
|
14,542 |
|
|
14,542 |
|
|
0.45 |
|
LifeWatch
amortization (i) |
|
2,719 |
|
|
2,719 |
|
|
2,719 |
|
|
0.08 |
|
Performance bonus (stock-based comp) (m) |
|
1,533 |
|
|
1,533 |
|
|
1,533 |
|
|
0.05 |
|
Dept. of
Health and Human Services settlement (n) |
|
— |
|
|
2,500 |
|
|
2,500 |
|
|
0.08 |
|
Foreign
currency option related to LifeWatch acquisition (o) |
|
|
— |
|
|
1,322 |
|
|
1,322 |
|
|
0.04 |
|
Loss on
extinguishment of debt (p) |
|
— |
|
|
543 |
|
|
543 |
|
|
0.02 |
|
Gain on
legal settlement (q) |
|
|
— |
|
|
(1,333 |
) |
|
(1,333 |
) |
|
(0.04 |
) |
Income
tax effect of adjustments (k) |
|
— |
|
|
— |
|
|
(6,687 |
) |
|
(0.20 |
) |
NOL
utilization (l) |
|
— |
|
|
— |
|
|
6,047 |
|
|
0.19 |
|
Non-GAAP
Adjusted |
|
$ |
24,343 |
|
|
$ |
21,153 |
|
|
$ |
20,823 |
|
|
$ |
0.64 |
|
Weighted average number of common shares outstanding -
diluted |
|
|
|
|
|
32,667 |
|
* total does
not add due to rounding |
|
|
|
|
|
|
|
|
(h) For the nine months ended September 30, 2018, other
charges of $11.6 million consisted of $7.9 million for the
continued integration and restructuring activities related to the
LifeWatch acquisition, a $1.8 million reserve for a note receivable
with a bankrupt customer, $1.5 million for patent litigation, $0.8
million of other expense including legal, professional fees and
depreciation, partially offset by a $0.7 million reduction in
contingent consideration related to a 2016 acquisition. In
the nine months ended September 30, 2017, other charges of
$14.5 million were due to $12.7 million of legal and professional
fees, as well as severance, related to the acquisition and
integration of LifeWatch, $2.4 million related to other
restructuring activities, $1.0 million for patent litigation and
$0.4 million for other expenses, partially offset by a $2.0 million
reduction in contingent consideration related to our 2016
acquisitions.
(i) For the nine months ended September 30, 2018, we
recognized $9.9 million of expense related to the amortization of
intangibles as a result of the LifeWatch acquisition. In the
nine months ended September 30, 2017, we recognized $2.7 million of
LifeWatch amortization of intangibles. The presentation
of the 2017 LifeWatch amortization of intangibles has been
conformed to the 2018 presentation. We have excluded the
LifeWatch amortization of intangibles from adjusted net income for
year over year comparative purposes. This amortization was
recorded as a component of general and administrative expense.
(j) As part of Other expense, for the nine months ended
September 30, 2018, we incurred $0.3 million of interest
related to a ruling on an arbitration demand filed against
LifeWatch prior to the acquisition. This was offset by an
unrealized foreign exchange gain of $1.0 million associated with
our uncertain tax positions.
(k) Represents the tax effect on the non-GAAP adjustments at the
Company’s estimated annual effective tax rate.
(l) 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 10.2% for the
nine months ended September 30, 2018 and a nominal benefit for the
nine months ended September 30, 2017. After giving effect to
taxes at the estimated annual effective tax rate on the
adjustments, the Company is excluding a $3.3 million benefit from
discrete items for the nine months ended September 30, 2018.
For the nine months ended September 30, 2017, the utilization of
net operating loss carryforwards had a $6.0 million positive
impact.
(m) During the nine months ended September 30, 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 & Administrative
expense.
(n) During the nine months ended September 30, 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.
(o) During the nine months ended September 30, 2017, the Company
incurred $1.3 million of expense for a foreign currency option
related to the acquisition of LifeWatch which is included in Other
non-operating income/(expense), net.
(p) In the third quarter 2017, in connection with the
acquisition of LifeWatch, 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 previous
credit agreement. As a result, the Company had a loss of $0.5
million on the extinguishment of the debt.
(q) 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.
(Unaudited) |
|
Three Months Ended |
|
Nine Months Ended |
(in thousands) |
|
September 30, 2018 |
|
September 30, 2017 |
|
September 30, 2018 |
|
September 30, 2017 |
Net
income/(loss) attributable to BioTelemetry, Inc. -
GAAP |
|
$ |
16,001 |
|
|
$ |
(2,285 |
) |
|
$ |
32,427 |
|
|
$ |
(363 |
) |
Net loss
attributable to noncontrolling interest |
|
— |
|
|
(279 |
) |
|
(946 |
) |
|
(279 |
) |
Benefit
from income taxes |
|
(1,281 |
) |
|
(435 |
) |
|
(2,923 |
) |
|
(31 |
) |
Total
other expense |
|
2,656 |
|
|
1,832 |
|
|
6,677 |
|
|
6,222 |
|
Other
charges |
|
1,330 |
|
|
8,152 |
|
|
11,623 |
|
|
14,542 |
|
Depreciation and amortization (r) |
|
10,063 |
|
|
9,019 |
|
|
29,757 |
|
|
16,559 |
|
Stock
compensation expense |
|
1,355 |
|
|
1,485 |
|
|
6,278 |
|
|
5,685 |
|
Non-GAAP
Adjusted EBITDA |
|
$ |
30,124 |
|
|
$ |
17,489 |
|
|
$ |
82,893 |
|
|
$ |
42,335 |
|
(r) For the nine months ended September 30, 2018, depreciation
and amortization expense excludes $0.5 million of expense related
to the write-off of foreign assets as a result of the dissolution
of entities acquired as part of the LifeWatch acquisition.
This expense is included in Other charges.
Use of Non-GAAP Financial Measures
In addition to the results prepared in
accordance with generally accepted accounting principles
in the United States, (“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 attributable to BioTelemetry, Inc., adjusted net income per
diluted share attributable to BioTelemetry, Inc. and adjusted
EBITDA. In accordance with Regulation G of the Securities and
Exchange Commission, we have 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 our 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 our
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 third quarter 2018 excludes other
charges of $1.3 million, $3.3 million of amortization expense
related to LifeWatch intangibles, and the tax effect of all of the
adjustments. By excluding expenses that are considered
unnecessary to support the ongoing business, are nonrecurring in
nature or which limit year over year comparability, we believe
these Non-GAAP financial measures offer a meaningful representation
of our 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 our core
operations. 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
us. We commenced patent litigation proceedings after we
uncovered specific evidence of four distinct cases of
misappropriation and infringement. We can choose to resolve
the outstanding matters and terminate the expense at any
time. We also included the income tax effect of these
adjustments.
Adjusted net income attributable to
BioTelemetry, Inc. for the third quarter 2017 excludes $8.2 million
of other charges primarily resulting from the LifeWatch
acquisition, $2.7 million of amortization expense related to
LifeWatch intangibles, a $0.4 million expense for a foreign
currency option related to the acquisition of LifeWatch, a $0.5
million loss on the extinguishment of debt, a $1.3 million gain on
legal settlement, 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 other income,
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-based compensation expense
because it is non-cash in nature. Other companies in our
industry may calculate adjusted EBITDA in a different manner.
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