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 quarter ended March 31, 2020.
Quarter Highlights
- Recognized quarterly revenue of $113.0 million
- Reached 8.7% year-over-year quarterly revenue growth
- Achieved 31st consecutive quarter of year-over-year revenue
growth
- Reported quarterly GAAP net income of $7.1 million, or 6.3% of
revenue
- Realized quarterly adjusted EBITDA of $29.5 million, or 26.1%
of revenue
President and CEO Commentary
Joseph H. Capper, President and Chief Executive
Officer of BioTelemetry, Inc., commented:
“I would like to first express my sincere
gratitude to the entire BioTelemetry team and to our many
customers, suppliers and partners for their unwavering commitment
in providing continuous service as we navigate this crisis.
“In spite of the current challenges, we had an
excellent first quarter, during which we grew revenue to a record
high of $113.0 million and recorded $29.5 million of adjusted
EBITDA. All segments of the business grew and contributed to
our 31st consecutive quarter with year-over-year revenue
growth.
“When the crisis hit, we made the necessary
adjustments to scale back our operating cost structure without
dramatically changing our capabilities. Our focus now is to
guide the Company through this crisis as efficiently and
effectively as possible, while remaining well positioned to meet
demand in the event of a rapid recovery. Our excellent
financial position will also enable us to continue advancing our
business development opportunities.
“In a post-COVID healthcare environment, there
will certainly be a greater acceptance of tele-health and remote
monitoring solutions. As one of the largest, fastest growing
and most profitable connected health companies, we are fortunate to
be well ahead of the demand curve and perfectly positioned to
capitalize on this opportunity.”
First Quarter Financial Results
Revenue for the first quarter 2020 was $113.0
million compared to $104.0 million for the first quarter 2019, an
increase of $9.1 million, or 8.7%.
Gross profit for the first quarter 2020 was
$70.5 million, or 62.4% of revenue, compared to $64.8 million, or
62.3% of revenue, for the first quarter 2019.
On a GAAP basis, net income for the first
quarter 2020 was $7.1 million, or $0.19 per diluted share, compared
to net income of $11.7 million, or $0.32 per diluted share, for the
first quarter 2019. The decline in net income was primarily
due to an increase in income tax expense, driven by the higher
equity compensation deductions in the prior year as compared to the
current period.
On an adjusted basis1, net income for the first
quarter 2020 was $16.4 million, or $0.45 per diluted share.
This compares to adjusted net income of $15.2 million, or $0.42 per
diluted share, for the first quarter 2019. Revenue growth is
being offset by the impact of the ongoing investments in our sales
force and technology. 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.
2020 Guidance
In view of the COVID-19 pandemic, BioTelemetry
is withdrawing its previous financial guidance issued on February
26, 2020. Given the uncertain scope and duration of the
pandemic, BioTelemetry is unable to estimate the impact of the
COVID-19 outbreak on its operations and financial results.
Conference Call
BioTelemetry, Inc. will host an earnings
conference call on Wednesday, May 6, 2020, 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 the delivery of health information to
improve quality of life and reduce cost of care. We provide
remote cardiac monitoring, centralized core laboratory services for
clinical trials, remote blood glucose monitoring 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, our ability to increase demand for
our products and services, to grow our market share and to recover
from the impacts of the COVID-19 pandemic, our expectations
regarding revenue trends in our segments, and our growth
expectations for 2020. 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; acceptance of our
new products and services, such as our mobile cardiac telemetry
patch; the impact of the COVID-19 pandemic; the impact of the
October 2019 information technology incident; our ability to obtain
and maintain required regulatory approvals for our products,
services and manufacturing facilities; changes in governmental
regulations and legislation; adverse regulatory actions; our
ability to obtain and maintain adequate protection of our
intellectual property; interruptions or delays in the
telecommunications systems and/or information technology 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, 2019, as
well as the factors that are described in “Part II; Item
1A. Risk Factors” of our Quarterly Report on Form
10-Q for the quarter ended March 31, 2020.
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. GetzExecutive Vice President, Chief
Financial and Administrative
Officer800-908-7103investorrelations@gobio.com
BioTelemetry,
Inc.Consolidated Statements of
Operations(unaudited)
|
Three Months Ended |
|
March 31, |
(in thousands, except
per share data) |
2020 |
|
2019 |
Revenue |
$ |
113,031 |
|
|
$ |
103,979 |
|
Cost of revenue |
42,523 |
|
|
39,201 |
|
Gross profit |
70,508 |
|
|
64,778 |
|
Gross profit % |
62.4 |
% |
|
62.3 |
% |
|
|
|
|
Operating
expenses: |
|
|
|
General and administrative |
31,881 |
|
|
27,607 |
|
Sales and marketing |
13,446 |
|
|
12,440 |
|
Credit loss expense |
6,020 |
|
|
5,148 |
|
Research and development |
3,568 |
|
|
3,333 |
|
Other charges |
2,084 |
|
|
3,070 |
|
Total operating
expenses |
56,999 |
|
|
51,598 |
|
|
|
|
|
Income from operations |
13,509 |
|
|
13,180 |
|
|
|
|
|
Other
expense: |
|
|
|
Interest expense |
(2,107 |
) |
|
(2,482 |
) |
Loss on equity method investments |
— |
|
|
(32 |
) |
Other non-operating income/(expense), net |
931 |
|
|
(1,054 |
) |
Total other expense,
net: |
(1,176 |
) |
|
(3,568 |
) |
|
|
|
|
Income before income
taxes |
12,333 |
|
|
9,612 |
|
(Provision for)/benefit from
income taxes |
(5,224 |
) |
|
2,073 |
|
Net
income |
$ |
7,109 |
|
|
$ |
11,685 |
|
|
|
|
|
Net income per common
share: |
|
|
|
Basic |
$ |
0.21 |
|
|
$ |
0.35 |
|
Diluted |
$ |
0.19 |
|
|
$ |
0.32 |
|
|
|
|
|
Weighted average
number of common shares outstanding: |
|
|
|
Basic |
34,186 |
|
|
33,654 |
|
Diluted |
36,589 |
|
|
36,406 |
|
|
|
|
|
|
|
BioTelemetry,
Inc.Condensed Consolidated Balance
Sheets
|
March 31, 2020 |
|
December 31, 2019 |
(in
thousands) |
|
ASSETS |
(unaudited) |
|
|
Current
assets: |
|
|
|
Cash and cash equivalents |
$ |
106,845 |
|
|
$ |
68,614 |
|
Healthcare accounts receivable, net |
74,864 |
|
|
71,851 |
|
Other accounts receivable, net |
18,727 |
|
|
15,625 |
|
Inventory |
7,612 |
|
|
5,738 |
|
Prepaid expenses and other current assets |
5,026 |
|
|
6,505 |
|
Total current
assets |
213,074 |
|
|
168,333 |
|
|
|
|
|
Property and equipment,
net |
58,330 |
|
|
56,380 |
|
Intangible assets, net |
125,816 |
|
|
129,596 |
|
Goodwill |
301,150 |
|
|
301,321 |
|
Deferred tax assets |
8,547 |
|
|
12,626 |
|
Other assets |
33,509 |
|
|
17,464 |
|
Total
assets |
$ |
740,426 |
|
|
$ |
685,720 |
|
|
|
|
|
LIABILITIES AND
EQUITY |
|
|
|
Current
liabilities: |
|
|
|
Accounts payable |
25,339 |
|
|
24,198 |
|
Accrued liabilities |
23,379 |
|
|
27,318 |
|
Current portion of finance lease obligations |
373 |
|
|
394 |
|
Current portion of long-term debt |
— |
|
|
3,844 |
|
Total current
liabilities |
49,091 |
|
|
55,754 |
|
|
|
|
|
Long-term portion of finance
lease obligations |
272 |
|
|
289 |
|
Long-term debt |
227,425 |
|
|
190,823 |
|
Other long-term
liabilities |
86,640 |
|
|
71,937 |
|
Total
liabilities |
363,428 |
|
|
318,803 |
|
|
|
|
|
Total
equity |
376,998 |
|
|
366,917 |
|
|
|
|
|
Total liabilities and
equity |
$ |
740,426 |
|
|
$ |
685,720 |
|
|
BioTelemetry,
Inc.Reconciliation of GAAP to Non-GAAP Financial
MeasuresQuarterly Non-GAAP Adjusted Net Income and
Non-GAAP Adjusted Net Income Per Share
|
|
Three Months Ended |
(Unaudited) |
|
March 31, 2020 |
(in thousands, except per share data) |
|
Income from operations |
|
Income before income taxes |
|
Net income |
|
Net income per diluted share |
GAAP |
|
$ |
13,509 |
|
|
$ |
12,333 |
|
|
$ |
7,109 |
|
|
$ |
0.19 |
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
Other charges (a) |
|
2,084 |
|
|
2,084 |
|
|
2,084 |
|
|
0.06 |
|
Acquisition amortization (b) |
|
3,728 |
|
|
3,728 |
|
|
3,728 |
|
|
0.10 |
|
Other expense adjustments (c) |
|
— |
|
|
(532 |
) |
|
(532 |
) |
|
(0.01 |
) |
Income tax effect of adjustments (d) |
|
— |
|
|
— |
|
|
(2,202 |
) |
|
(0.06 |
) |
Impact of NOL utilization (e) |
|
— |
|
|
— |
|
|
6,198 |
|
|
0.17 |
|
Non-GAAP
Adjusted |
|
$ |
19,321 |
|
|
$ |
17,613 |
|
|
$ |
16,385 |
|
|
$ |
0.45 |
|
|
|
Three Months Ended |
(Unaudited) |
|
March 31, 2019 |
(in thousands, except per share data) |
|
Income from operations |
|
Income before income taxes |
|
Net income |
|
Net income per diluted share |
GAAP |
|
$ |
13,180 |
|
|
$ |
9,612 |
|
|
$ |
11,685 |
|
|
$ |
0.32 |
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
Other charges (a) |
|
3,070 |
|
|
3,070 |
|
|
3,070 |
|
|
0.08 |
|
Acquisition amortization (b) |
|
3,262 |
|
|
3,262 |
|
|
3,262 |
|
|
0.09 |
|
Income tax effect of adjustments (d) |
|
— |
|
|
— |
|
|
(1,212 |
) |
|
(0.03 |
) |
(Benefit) of discrete items / NOL utilization (e) |
|
— |
|
|
— |
|
|
(1,596 |
) |
|
(0.04 |
) |
Non-GAAP
Adjusted |
|
$ |
19,512 |
|
|
$ |
15,944 |
|
|
$ |
15,209 |
|
|
$ |
0.42 |
|
- In the first quarter 2020, other charges of $2.1 million were
primarily due to $1.9 million for patent and other litigation and
$0.7 million of integration and other non-recurring charges, offset
partially by a $0.3 million favorable change in the fair value of
acquisition-related contingent consideration and a $0.3 million net
credit from insurance proceeds related to our October 2019
information technology incident. In the first quarter 2019,
other charges of $3.1 million were primarily due to $1.9 million
for integration and restructuring activities related to our
acquisitions and $1.0 million for patent and other
litigation.
- In the first quarter 2020 and 2019, we recognized $3.7 million
and $3.3 million of expense, respectively, related to the
amortization of acquisition-related intangibles assets. We
have excluded this amortization of acquisition-related intangible
assets from non-GAAP adjusted net income due to the non-operational
nature of the expense. This amortization was recorded as a
component of general and administrative expense.
- In the first quarter 2020, we had an unrealized foreign
exchange gain of $1.0 million and incurred $0.4 million of interest
expense related to a portion of the Geneva Healthcare deferred
purchase consideration.
- Represents the tax effect of the non-GAAP adjustments at the
Company’s annual effective tax rate.
- After giving effect to taxes at the estimated annual effective
tax rate on the adjustments, the utilization of net operating loss
carryforwards and exclusion of discrete items had a $6.2 million
positive and a $1.6 million negative impact on the first quarter
2020 and 2019, respectively.
BioTelemetry,
Inc.Reconciliation of GAAP to Non-GAAP Financial
MeasuresQuarterly Non-GAAP Adjusted EBITDA and
EBITDA Margin
(Unaudited) |
|
Three Months Ended |
|
|
March 31, |
(in thousands) |
|
2020 |
|
2019 |
Net income - GAAP |
|
$ |
7,109 |
|
|
$ |
11,685 |
|
Provision for/(benefit from) income taxes |
|
5,224 |
|
|
(2,073 |
) |
Total other expense, net |
|
1,176 |
|
|
3,568 |
|
Other charges |
|
2,084 |
|
|
3,070 |
|
Depreciation and amortization expense |
|
10,485 |
|
|
10,021 |
|
Stock compensation expense |
|
3,382 |
|
|
2,549 |
|
Non-GAAP Adjusted
EBITDA |
|
$ |
29,460 |
|
|
$ |
28,820 |
|
GAAP Net income as a
percentage of revenue |
|
6.3 |
% |
|
11.2 |
% |
Non-GAAP Adjusted EBITDA
margin |
|
26.1 |
% |
|
27.7 |
% |
|
|
|
|
|
|
|
Quarterly Non-GAAP Free Cash
Flow
(Unaudited) |
|
Three Months Ended |
|
|
March 31, |
(in thousands) |
|
2020 |
|
2019 |
Cash provided by operating activities |
|
$ |
12,703 |
|
|
$ |
17,544 |
|
Capital expenditures |
|
(6,984 |
) |
|
(5,334 |
) |
Non-GAAP Free Cash
Flow |
|
$ |
5,719 |
|
|
$ |
12,210 |
|
|
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 income before
income taxes, adjusted net income, adjusted net income per diluted
share, adjusted EBITDA and free cash flow. 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 for the first quarter 2020
excludes other charges of $2.1 million, $3.7 million of
amortization expense related to our acquisition-related intangible
assets, $1.0 million of unrealized foreign currency gain, $0.4
million of interest expense related to a portion of the Geneva
Healthcare deferred purchase consideration, the 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 2019 excludes other charges of $3.1 million, $3.3
million of amortization expense related to acquired intangibles,
the tax effect of these adjustments, as well as the exclusion of
the benefit of discrete tax items. 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
legal and professional fees, integration related expenses,
primarily severance, patent and other litigation, amortization of
acquired intangibles, costs related to the October 2019 information
technology incident net of insurance proceeds, 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.
In addition to adjusted income from operations,
adjusted income before income taxes, adjusted net income, adjusted
net income per diluted share and free cash flow, we also present
adjusted EBITDA. This Non-GAAP financial measure excludes
income taxes, total other expense, net, 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 may calculate adjusted
EBITDA in a different manner.
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