BioTelemetry, Inc. (NASDAQ:BEAT), the leading remote 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, 2018.
Quarter Highlights
- Recognized quarterly revenue of $103.6 million
- Reached 12.9% year-over-year revenue growth
- Achieved 26th consecutive quarter of year-over-year revenue
growth
- Reported GAAP net income of $10.4 million, or $0.29 per
diluted share
- Realized record quarterly adjusted EBITDA of $30.5 million, or
29.4% of revenue
President and CEO Commentary
Joseph H. Capper, President and Chief Executive Officer of
BioTelemetry, Inc., commented: “I am pleased to report another
outstanding growth quarter, with the highest revenue and adjusted
EBITDA in the Company’s history. The success of our fourth
quarter was driven by our continued significant MCT and
extended-wear Holter patient volume growth as well as 26%
year-over-year growth in Research revenue. This top line
growth, coupled with our more efficient operating structure
resulting from the successful integration of LifeWatch, drove our
fourth quarter adjusted EBITDA higher and enabled us to exceed
expectations for the quarter.
“2018 was a tremendous year for BioTelemetry. During the
year, we fully integrated LifeWatch, achieving all major milestones
well ahead of schedule. We also successfully managed the
commercial launches of our next generation MCT and extended-wear
Holter patch devices as well as our new wireless blood glucose
monitor. Furthermore, we forged strategic partnerships with
consumer technology and population health management companies
seeking to improve the current healthcare delivery system.
All of these accomplishments helped us achieve 14% organic revenue
growth for the year, deliver significant improvement to our
adjusted EBITDA margin and position the Company for continued
growth.
“In 2019, we will remain focused on advancing our core strategy,
as evidenced by the pending acquisition of Geneva Healthcare.
This addition will extend our monitoring expertise into the
implantable cardiac device market and further secure our leadership
position as the most accurate and comprehensive source of remote
cardiac monitoring. We believe the successful execution of
our operating plan, coupled with this new service offering, will
lead to another record year for the
Company.”
Fourth Quarter Financial Results
Revenue for the fourth quarter 2018 was $103.6 million compared
to $91.7 million for the fourth quarter 2017, an increase of $11.9
million, or 12.9%.
Gross profit for the fourth quarter 2018 was $63.9 million, or
61.7% of revenue, compared to $54.4 million, or 59.3% of revenue,
for the fourth quarter 2017.
On a GAAP basis, net income attributable to BioTelemetry, Inc.
for the fourth quarter 2018 was $10.4 million, or $0.29 per diluted
share, compared to a net loss attributable to BioTelemetry, Inc. of
$15.6 million, or a loss of $0.48 per diluted share, for the fourth
quarter 2017.
On an adjusted basis1, net income attributable to BioTelemetry,
Inc. for the fourth quarter 2018 was $20.1 million, or $0.56 per
diluted share. This compares to adjusted net income
attributable to BioTelemetry, Inc. of $11.3 million, or $0.32 per
diluted share, for the fourth quarter 2017. This increase was
driven by the revenue growth 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
Thursday, February 21, 2019, 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 medical technology
company focused on delivery of health information to improve
quality of life and reduce cost of care. We provide remote
cardiac monitoring, remote blood glucose monitoring, centralized
core lab services for clinical trials and original equipment
manufacturing that serves both healthcare and clinical research
customers. 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 the successful execution of
our operating plan, the proposed merger with Geneva, including
Geneva’s actual and expected annualized revenue and profitability
and the growth and success of the combined entity, our ability to
increase demand for our products and services, to grow our market
share and our expectations regarding revenue trends in our
segments. 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,
2018.
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 |
|
|
Three Months Ended December 31, |
|
Year Ended December
31, |
|
|
|
|
|
(unaudited) |
|
(in thousands, except per share data) |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Revenues |
|
$ |
103,603 |
|
$ |
91,743 |
|
$ |
399,472 |
|
$ |
286,776 |
Cost of revenues |
|
39,657 |
|
37,318 |
|
148,986 |
|
114,406 |
Gross profit |
|
63,946 |
|
54,425 |
|
250,486 |
|
172,370 |
Gross profit % |
|
61.7% |
|
59.3% |
|
62.7% |
|
60.1% |
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
General and administrative |
|
27,951 |
|
27,380 |
|
109,736 |
|
82,983 |
Sales and marketing |
|
10,314 |
|
10,271 |
|
42,849 |
|
35,322 |
Bad debt expense |
|
5,311 |
|
4,316 |
|
22,222 |
|
13,291 |
Research and development |
|
2,755 |
|
2,876 |
|
11,206 |
|
11,101 |
Other charges |
|
3,036 |
|
16,894 |
|
14,659 |
|
31,436 |
Total operating expenses |
|
49,367 |
|
61,737 |
|
200,672 |
|
174,133 |
|
|
|
|
|
|
|
|
|
Income (loss) from operations |
|
14,579 |
|
(7,312) |
|
49,814 |
|
(1,763) |
|
|
|
|
|
|
|
|
|
Other expense: |
|
|
|
|
|
|
|
|
Interest expense |
|
(2,447) |
|
(2,275) |
|
(9,429) |
|
(4,897) |
Loss on extinguishment of debt |
|
- |
|
- |
|
- |
|
(543) |
Loss on equity method
investment |
|
(8) |
|
(82) |
|
(246) |
|
(384) |
Other non-operating
income/(expense), net |
822 |
|
(54) |
|
1,365 |
|
(2,809) |
Total other expense |
|
(1,633) |
|
(2,411) |
|
(8,310) |
|
(8,633) |
|
|
|
|
|
|
|
|
|
Income/(loss) before income
taxes |
|
12,946 |
|
(9,723) |
|
41,504 |
|
(10,396) |
(Provision for)/Benefit from income taxes |
|
(2,553) |
|
(6,778) |
|
370 |
|
(6,747) |
Net income/(loss) |
|
10,393 |
|
(16,501) |
|
41,874 |
|
(17,143) |
|
|
|
|
|
|
|
|
|
Net loss attributable to
noncontrolling interests |
- |
|
908 |
|
946 |
|
1,187 |
|
|
|
|
|
|
|
|
|
Net income/(loss) attributable to
BioTelemetry, Inc. |
|
$ |
10,393 |
|
$ |
(15,593) |
|
$ |
42,820 |
|
$ |
(15,956) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share attributable
to BioTelemetry, Inc.: |
|
|
|
|
|
|
|
|
Basic (a) |
|
$ |
0.31 |
|
$ |
(0.48) |
|
$ |
1.31 |
|
$ |
(0.53) |
Diluted |
|
$ |
0.29 |
|
$ |
(0.48) |
|
$ |
1.20 |
|
$ |
(0.53) |
|
|
|
|
|
|
|
|
|
Weighted
average number of common shares outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
33,363 |
|
32,413 |
|
32,709 |
|
30,386 |
Diluted |
|
36,197 |
|
32,413 |
|
35,783 |
|
30,386 |
|
|
|
|
|
|
|
|
|
- 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 and full year ended December 31, 2017.
Accordingly, basic and diluted net loss per share is the same for
the two periods ended December 31, 2017. Please refer to the
reconciliation of Non-GAAP Financial Measures for diluted share
count information for the periods ended December 31,
2017
|
Reconciliation of GAAP to Non-GAAP Financial
Measures |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months Ended |
(Unaudited) |
|
December 31, 2018 |
(in thousands, except per share
data) |
|
Income from operations |
|
Income before income taxes |
|
Net income attributable to BioTelemetry,
Inc. |
|
Net income per share attributable to BioTelemetry
Inc. |
GAAP |
|
$ |
14,579 |
|
$ |
12,946 |
|
$ |
10,393 |
|
$ |
0.29 |
Non-GAAP
Adjustments: |
|
|
|
|
|
|
|
|
|
Other charges (a) |
|
3,036 |
|
3,036 |
|
3,036 |
|
|
|
LifeWatch amortization
(b) |
|
3,267 |
|
3,267 |
|
3,267 |
|
|
|
Income tax effect of
adjustments (c) |
|
|
|
|
(56) |
|
|
|
Benefit of discrete
items (d) |
|
|
|
|
3,459 |
|
|
Non-GAAP Adjusted |
|
$ |
20,882 |
|
$ |
19,249 |
|
$ |
20,099 |
|
$ |
0.56 |
Weighted average number of common shares outstanding -
diluted |
|
|
|
|
|
36,197 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months Ended |
(Unaudited) |
|
December 31, 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 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
(e) |
|
- |
|
- |
|
8,749 |
|
|
Non-GAAP Adjusted |
|
$ |
12,845 |
|
$ |
10,434 |
|
$ |
11,254 |
|
$ |
0.32 |
Weighted average number of common shares outstanding -
diluted |
|
|
|
|
|
35,044 |
|
|
|
|
|
|
|
|
|
|
- In the fourth quarter 2018, other charges of $3.0 million were
due primarily to $1.7 million for the integration and restructuring
activities related to the LifeWatch acquisition, $0.8 million for
patent litigation and $0.5 million for other deal related costs and
restructuring activities. In the fourth quarter 2017, other
charges of $16.9 million were 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 were 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 2018 and the fourth quarter 2017, we
recognized $3.3 million of expense related to the amortization of
intangibles as a result of the LifeWatch acquisition. We have
excluded the LifeWatch amortization of intangibles from adjusted
net income due to the non-operational nature of the expense.
This amortization was recorded as a component of general and
administrative expense.
- Represents the tax effect of the non-GAAP
adjustments.
- 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 reporting purposes we
reported a tax rate of 19.7% for the fourth quarter 2018.
After giving effect to taxes at the estimated annual effective tax
rate on the adjustments, the Company is excluding a $3.5 million
benefit from discrete items in the fourth quarter 2018.
- 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 prior federal tax rate of
35%. This resulted in a one-time tax expense of $8.7
million.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve
Months Ended |
|
(Unaudited) |
|
December 31, 2018 |
|
(in thousands, except per share
data) |
|
Income from operations |
|
Income before income taxes |
|
Net income attributable to BioTelemetry,
Inc. |
|
Net income per share attributable to BioTelemetry
Inc. |
|
GAAP |
|
$ |
49,814 |
|
$ |
41,504 |
|
$ |
42,820 |
|
$ |
1.20 |
|
Non-GAAP
Adjustments: |
|
|
|
|
|
|
|
|
|
|
Other charges (a) |
|
14,659 |
|
14,659 |
|
14,659 |
|
|
|
|
LifeWatch amortization
(b) |
|
13,119 |
|
13,119 |
|
13,119 |
|
|
|
|
Other expense
adjustments (c) |
|
- |
|
(748) |
|
(748) |
|
|
|
|
Income tax effect of
adjustments (d) |
|
|
|
|
|
(241) |
|
|
|
|
Benefit of discrete
items (e) |
|
- |
|
- |
|
(161) |
|
|
|
Non-GAAP Adjusted |
|
$ |
77,592 |
|
$ |
68,534 |
|
$ |
69,448 |
|
$ |
1.94 |
|
Weighted average number of common shares outstanding -
diluted |
|
|
|
|
|
|
|
35,783 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve
Months Ended |
|
(Unaudited) |
|
December 31, 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 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) (f) |
|
1,533 |
|
1,533 |
|
1,533 |
|
|
|
|
Dept. of Health and
Human Services settlement (g) |
|
- |
|
2,500 |
|
2,500 |
|
|
|
|
Foreign currency option
related to LifeWatch acquisition (h) |
|
- |
|
1,322 |
|
1,322 |
|
|
|
|
Loss on extinguishment
of debt (i) |
|
- |
|
543 |
|
543 |
|
|
|
|
Gain on legal
settlement (j) |
|
- |
|
(1,333) |
|
(1,333) |
|
|
|
|
Income tax effect of
adjustments (d) |
|
- |
|
- |
|
(2,699) |
|
|
|
|
Impact of tax reform
(k) |
|
- |
|
- |
|
8,749 |
|
|
|
Non-GAAP Adjusted |
|
$ |
37,188 |
|
$ |
31,587 |
|
$ |
32,077 |
|
$ |
0.97 |
|
Weighted average number of common shares outstanding -
diluted |
|
|
|
|
|
|
|
33,049 |
- For the twelve months ended December 31, 2018, other charges of
$14.7 million consisted of $9.6 million for the integration and
restructuring activities related to the LifeWatch acquisition, $2.4
million for patent litigation, a $1.8 million reserve for a note
receivable with a bankrupt customer and $1.2 million of other costs
primarily related to previous acquisitions, partially offset by a
$0.7 million reduction in contingent consideration related to a
2016 acquisition. For the twelve months ended December 31,
2017, other charges of $31.4 million were 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 were 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. 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, 2018, we recognized
$13.1 million of expense related to the amortization of intangibles
as a result of the LifeWatch acquisition, compared to $6.0 million
for the twelve months ended December 31, 2017. The increase
was due to the full year impact of the LifeWatch acquisition.
We have excluded the LifeWatch amortization of intangibles from
adjusted net income due to the non-operational nature of the
expense. This amortization was recorded as a component of
general and administrative expense.
- As part of Other expense, for the twelve months ended December
31, 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.
- Represents the tax effect on the non-GAAP
adjustments.
- 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 0.9% for the
twelve months ended December 31, 2018. After giving effect to
taxes at the estimated annual effective tax rate on the
adjustments, the Company is excluding a $0.2 million benefit from
discrete items for the twelve months ended December 31, 2018.
- During 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.
- During the twelve months ended December 31, 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.
- During 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 which is included in Other
non-operating income/(expense), net.
- During the twelve months ended December 31, 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.
- During the twelve months ended December 31, 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.
- 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 prior federal tax rate of
35%. This resulted in a one-time tax expense of $8.7
million.
BioTelemetry, Inc. |
Summary Financial Data |
|
|
|
|
|
|
|
|
|
(unaudited) |
|
Three Months Ended |
|
Twelve Months Ended |
(in thousands) |
|
December 31, 2018 |
|
December 31, 2017 |
|
December 31, 2018 |
|
December 31, 2017 |
Net income (loss) attributable to
BioTelemetry – GAAP |
|
$ |
10,393 |
|
$ |
(15,593) |
|
$ |
42,820 |
|
$ |
(15,956) |
Net loss attributable to noncontrolling
interest |
|
- |
|
(908) |
|
(946) |
|
(1,187) |
Provision for (benefit from) income taxes |
|
2,553 |
|
6,778 |
|
(370) |
|
6,747 |
Total other expense |
|
1,633 |
|
2,411 |
|
8,310 |
|
8,633 |
Other charges |
|
3,036 |
|
16,894 |
|
14,659 |
|
31,436 |
Depreciation and amortization expense (a) |
|
9,883 |
|
11,341 |
|
39,637 |
|
27,900 |
Stock compensation expense |
|
2,984 |
|
1,995 |
|
9,261 |
|
7,680 |
Adjusted EBITDA |
|
$ |
30,482 |
|
$ |
22,918 |
|
$ |
113,371 |
|
$ |
65,253 |
|
|
29.4% |
|
25.0% |
|
28.4% |
|
22.8% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- For the three months ended December 31, 2018, depreciation and
amortization expense excludes $0.3 million of expense related to
the write-off of assets as a result of the dissolution of entities
acquired as part of the LifeWatch acquisition compared to $0.7
million for the three months ended December 31, 2017. For the
twelve months ended December 31, 2018, depreciation and
amortization expense excludes $0.5 million of expense related to
the write-off of assets as a result of the dissolution of entities
acquired as part of the LifeWatch acquisition compared to $0.7
million for the twelve months ended December 31, 2017. 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 fourth quarter 2018 excludes other
charges of $3.0 million, $3.3 million of amortization expense
related to LifeWatch intangibles, and the tax effect of these
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 fourth quarter 2017 excludes $16.9
million of other charges primarily driven by a $12.1 million asset
impairment charge related to certain trade names and internally
developed software that were 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. Adjusted
net income attributable to BioTelemetry, Inc. for the fourth
quarter 2017 also excludes $3.3 million of amortization expense
related to LifeWatch intangibles, the tax effect of these
adjustments and $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.
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 loss from noncontrolling interest, income taxes, total
other expense, 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-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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