Merge Healthcare Incorporated (Nasdaq:MRGE), a leading provider of
innovative enterprise imaging, interoperability and clinical
systems that seek to advance healthcare, today announced its
financial and business results for the fourth quarter of 2013 and
provided 2014 guidance.
"We continued in 2013 to improve our solution portfolio to meet
government mandates, our cash collections, our capital structure,
and the alignment of our core business operations, while we also
increased our recurring revenue base," said Justin Dearborn, CEO of
Merge Healthcare. "Merge remains a leader in enterprise imaging and
advanced interoperability, and we believe we are the only vendor
that has a complete enterprise imaging and interoperability
solution. We announced general availability of our new iConnect®
Network for MU2, expanded our customer base with the addition of
one of the largest imaging centers in the United States and
announced a new strategic partnership with athenahealth. We've made
enterprise imaging a reality with the addition of two new hospital
clients that will deploy our latest radiology, cardiology and
interoperability solutions. Our cardiology business captured top
honors in the recent 2013 Best in KLAS Awards: Software &
Services report. As a result, despite the lingering reimbursement
uncertainty that healthcare providers face, I remain optimistic
that our core enterprise solutions will continue to deliver
tangible value for our customers as we deploy the iConnect Network
and our clinical trials platform and grow our recurring revenue
base."
Financial Summary:
- Cash generated from business operations grew to $14.2 million
(51%) in the fourth quarter of 2013 from $9.4 million in the fourth
quarter of 2012, which compares to net cash provided by (used in)
operating activities on the statement of cash flows of $14.0
million in the fourth quarter of 2013 and ($6.0) million in the
fourth quarter of 2012;
- Although sales decreased to $53.6 million ($53.9 million on a
pro forma basis) in the fourth quarter of 2013, from $64.7 million
($65.1 million on a pro forma basis) in the fourth quarter of 2012,
adjusted EBITDA increased in the fourth quarter of 2013 to $9.0
million, representing 17% of pro forma revenue, compared to $0.7
million and 1% in the fourth quarter of 2012;
- Subscription backlog grew 39% since the fourth quarter of 2012
(as revised), with growth in both Merge Healthcare and DNA
segments;
- Net loss in the fourth quarter of 2013 was $0.3 million, or
$0.00 per share, compared to $17.3 million, or a loss of $0.19 per
share, in the fourth quarter of 2012; and
- We repaid $9.7 million of debt principal and achieved a
leverage ratio of 5.3:1, within the 5.5:1 leverage covenant of our
credit facility.
Business Highlights:
- Continued to drive a new white-space market opportunity for
advanced interoperability with iConnect Network, executing
agreements including the Center for Diagnostic Imaging (CDI), and
its affiliated providers, which is one of the nation's largest
providers of diagnostic imaging, interventional radiology and
mobile imaging services;
- Added athenahealth, a leading provider of cloud-based services
for electronic health records (EHR), practice management and care
coordination, as a new partner for iConnect Network. athenahealth
will integrate iConnect Network with athenahealth's national
cloud-based platform so that athenahealth clients can receive and
view exam results, diagnostic quality images and other critical
patient information within the athenaClinicals® EHR workflow;
- Continued to make progress with large enterprise imaging deals,
securing two significant hospital contracts valued at more than $3
million total in sales combined;
- Announced that Merge Cardio™ has been named "Best in KLAS" in
the Cardiology Software Category and Merge Hemo™ has been named the
"Category Leader" for Cardiology Hemodynamics for the third
consecutive year in the "2013 Best in KLAS: Software &
Services" report. Also, Merge was ranked in the top 10 for "Overall
Software Vendor";
- Supported the conduct of 267 active clinical trials, with more
than 225,000 study subjects, using the Merge eClinical OS™
platform;
- Successfully certified iConnect® Access, Merge PACS™, Merge Eye
Care PACS™, Merge OrthoPACS™, Merge Cardio, Merge RIS™ and
Merge LIS™ for MU; and
- Started ICD-10 readiness in all applicable Merge solutions and
launched ICD-10 versions of our billing solutions.
Quarter Results:
Results compared to the same quarter in the prior year on a GAAP
basis are as follows (in millions, except per share data):
|
Q4 2013 |
Q4 2012 |
Net sales |
$53.6 |
$64.7 |
Operating income (loss) |
3.7 |
(8.4) |
Net loss |
(0.3) |
(17.3) |
Net loss per diluted share |
$0.00 |
($0.19) |
|
|
|
Cash balance at period end |
$19.7 |
$35.9 |
Cash from business operations* |
14.2 |
9.4 |
|
|
|
*See table at the back of this
earnings release for a reconciliation. |
Pro forma results and other, non-GAAP measures compared to the
same quarter in the prior year are as follows (in millions, except
percentages and per share data):
|
|
|
|
Q4 2013 |
Q4 2012 |
Pro forma results |
|
|
Net sales |
$53.9 |
$65.1 |
Adjusted net income (loss) |
3.4 |
(11.6) |
Adjusted EBITDA |
9.0 |
0.7 |
|
|
|
Adjusted net income (loss) per diluted
share |
$0.04 |
($0.13) |
Adjusted EBITDA per diluted share |
$0.09 |
$0.01 |
|
|
|
Non-GAAP and other
measures |
|
|
Subscription, maintenance & EDI revenue
as % of net sales |
64% |
58% |
Subscription and non-recurring backlog at
period end |
$79.5 |
$71.1 |
Days sales outstanding |
106 |
102 |
A reconciliation of GAAP net income (loss) to adjusted net
income and adjusted EBITDA is included after the financial
information below.
Pro Forma Operating Group Results:
Results (in millions) for our operating groups are as
follows:
|
Three Months
Ended December 31, 2013 |
|
Healthcare |
DNA |
Corporate/
Other |
Total |
Net sales: |
|
|
|
|
Software and other |
$ 14.3 |
$ 3.7 |
|
$ 18.0 |
Service |
6.8 |
3.0 |
|
9.8 |
Maintenance |
25.7 |
0.4 |
|
26.1 |
Total net sales |
46.8 |
7.1 |
|
53.9 |
Gross Margin |
27.3 |
3.7 |
|
31.0 |
Gross Margin % |
58.3% |
52.1% |
|
57.5% |
Expenses |
20.5 |
3.7 |
|
24.2 |
Segment income (loss) |
$ 6.8 |
$ -- |
|
$ 6.8 |
Operating Margin % |
15% |
0% |
|
13% |
Net corporate/other expenses (1) |
|
|
$ 7.2 |
7.2 |
Loss before income taxes |
|
|
|
(0.4) |
Adj. EBITDA reconciling adjustments |
3.6 |
0.8 |
5.0 |
9.4 |
Adjusted EBITDA |
$ 10.4 |
$ 0.8 |
$ (2.2) |
$ 9.0 |
Adjusted EBITDA % |
22.2% |
11.3% |
|
16.7% |
|
|
|
|
|
(1) Net corporate/other expenses
include public company costs, corporate administration costs,
acquisition-related expenses and net interest expense. |
|
|
|
|
|
|
Net Sales in the
Three Months Ended December 31, 2013 |
|
Backlog as of
December 31, 2013 |
|
|
Healthcare |
DNA |
|
Healthcare |
DNA |
|
Revenue Source |
$ |
% |
$ |
% |
Total |
$ |
% |
$ |
% |
Total |
Maintenance & EDI (1) |
$ 25.7 |
54.9% |
$ 0.4 |
5.6% |
48.4% |
|
|
|
|
|
Subscription |
2.2 |
4.7% |
6.3 |
88.8% |
15.8% |
$ 11.8 |
32.8% |
$ 43.5 |
100.0% |
69.6% |
Non-recurring |
18.9 |
40.4% |
0.4 |
5.6% |
35.8% |
24.2 |
67.2% |
-- |
0.0% |
30.4% |
Total |
$ 46.8 |
100.0% |
$ 7.1 |
100.0% |
100.0% |
$ 36.0 |
100.0% |
$ 43.5 |
100.0% |
100.0% |
|
86.8% |
|
13.2% |
|
|
45.3% |
|
54.7% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Due to the variability in
timing and length of maintenance renewals, we do not believe
backlog for this revenue component is a meaningful disclosure. |
2014 Outlook:
During 2013, we exited certain low to no-margin businesses that
generated approximately $14 million of revenue. Excluding
those net sales, our 2013 GAAP revenue would have been
approximately $218 million, which we believe is a reasonable
starting point for our 2014 outlook. Looking ahead to 2014, we
continue to believe that overall market conditions may delay
certain large-scale perpetual-license purchases of our software,
and subscription software offerings will remain a relatively small
percentage of our total revenue base. As a result, our outlook
for 2014 sales is essentially flat with 2013 sales for our
continuing businesses, while our adjusted EBITDA is expected to
improve due to the positive impact of our 2013 cost containment
initiatives.
The following table outlines expectations surrounding the
various items comprising the difference between GAAP net income and
adjusted EBITDA:
2014
Projection |
(in millions, except
for per share data) |
(unaudited) |
|
|
|
|
High |
Low |
Net sales |
$ 225 |
$ 212 |
Adjusted EBTIDA % |
20% |
19% |
|
|
|
Adjusted EBITDA |
45 |
40 |
Income tax expense |
(3) |
(2) |
Net interest expense |
(15) |
(15) |
Depreciation & amortization
- COGS |
(1) |
(1) |
Depreciation & amortization
- operating expense |
(6) |
(6) |
Adjusted net income |
20 |
16 |
Share-based compensation
expense |
(5) |
(5) |
Amortization of significant
acquisition intangibles - COGS |
(4) |
(4) |
Amortization of significant
acquisition intangibles - operating expense |
(5) |
(5) |
Net acquisition-related sales
& COGS adjustments |
(1) |
(1) |
Net income |
$ 5 |
$ 1 |
|
|
|
Net income per share - diluted |
$ 0.05 |
$ 0.01 |
Adjusted net income per share - diluted |
$ 0.21 |
$ 0.16 |
|
|
|
Estimated fully diluted shares |
95 |
100 |
|
|
|
Cash flow considerations: |
|
|
Adjusted EBITDA |
$ 45 |
$ 40 |
Income taxes |
(1) |
(1) |
Net interest expense |
(13) |
(14) |
Capital expenditures |
(5) |
(5) |
Capitalized software costs |
(3) |
(2) |
Estimated cash flow (assuming no working
capital change) |
$ 23 |
$ 18 |
We expect to continue to use excess cash to make voluntary debt
payments in 2014. Based on our 2014 outlook, we anticipate
maintaining compliance with the loan leverage covenant in our
credit facility. We have already repaid $3.0 million of debt
principal in January 2014.
Explanation of Non-GAAP Financial Measures
We report our financial results in accordance with generally
accepted accounting principles or GAAP. This press release includes
certain non-GAAP financial measures to supplement its GAAP
information. Non-GAAP measures are not an alternative to GAAP and
may be different from non-GAAP measures used by other companies. A
quantitative reconciliation of GAAP net income available to common
shareholders to adjusted net income and adjusted EBITDA is included
after the financial information included in this press release.
Management believes that the presentation of non-GAAP results,
when shown in conjunction with corresponding GAAP measures,
provides useful information to it and investors regarding financial
and business trends related to results of operations, because
certain charges, costs and expenses reflect events that are not
essential to recurring business operations. In addition, management
believes these non-GAAP measures provide investors useful
information regarding the underlying performance of the
post-acquisition business operations when compared to the
pre-acquisition results of Merge and any significant acquired
company. Purchase accounting adjustments made in accordance
with GAAP can make it difficult to make meaningful comparisons of
the underlying operations of the business without considering the
non-GAAP adjustments that are provided and discussed herein.
Further, management believes that these non-GAAP measures improve
its and investors' ability to compare Merge's financial performance
with other companies in the technology industry. Management also
uses financial statements that exclude these charges, costs and
expenses for its internal budgets. While GAAP results are more
complete, these supplemental metrics are offered since, with
reconciliations to GAAP, they may provide greater insight into our
financial results. Management does not intend the presentation of
these non-GAAP financial measures to be considered in isolation or
as a substitute for results prepared in accordance with GAAP.
Additional information regarding the non-GAAP financial measures
presented is as follows:
- Pro forma revenue consists of GAAP revenue as reported,
adjusted to add back the acquisition related sales adjustments (for
all significant acquisitions) recorded for GAAP purposes.
- Subscription revenue and the related backlog are comprised of
software, hardware and professional services (including
installation, training, etc.) contracted with and payable by the
customer over a number of years. Generally, these contracts
will include a minimum volume / dollar commitment. As such,
the revenue from these transactions is recognized ratably over an
extended period of time. These types of arrangements will
include monthly payments (including leases), long-term clinical
trials, renewable annual software agreements (with very high renew
rate), to specify a few contract methods.
- Non-recurring revenue and related backlog represents revenue
that we anticipate recognizing in future periods from signed
customer contracts as of the end of the period
presented. Non-recurring revenue is comprised of perpetual
software license sales and includes licenses, hardware and
professional services (including installation, training and
consultative engineering services).
- Adjusted net income consists of GAAP net income available to
common stockholders, adjusted to exclude (a) acquisition-related
costs, (b) debt extinguishment costs, (c) restructuring and other
costs, (d) share-based compensation expense, (e)
acquisition-related amortization (f) acquisition-related sales
adjustments, and (g) acquisition-related cost of sales
adjustments.
- Adjusted EBITDA adjusts GAAP net income available to common
stockholders for the items considered in adjusted net income as
well as (a) remaining depreciation and amortization, (b) net
interest expense and (c) income tax expense (benefit).
- Cash from business operations reconciles the cash generated
from such operations to the change in GAAP cash balance for the
period by reflecting payments of liabilities associated with debt
issuance and retirement activities, acquisitions, payments of
acquisition related fees, interest payments and other payments and
receipts of cash not generated by the business
operations. Cash generated from business operations and
used to pay restructuring initiatives, acquisition related costs
and interest approximates net cash provided by operating activities
in the condensed consolidated statement of cash flows.
Management has excluded certain items from non-GAAP adjusted net
income because it believes (i) the amount of certain expenses in
any specific period may not directly correlate to the underlying
performance of business operations and (ii) the adjustment
facilitates comparisons of pre-acquisition results to
post-acquisition results. In addition, the following
adjustments are described in more detail below:
- Debt extinguishment expense is comprised of both non-cash
expenses, such as the remaining unamortized balance of costs
associated with the issuance of the old debt and unamortized
balance of the discount when the old debt was issued, as well as
contractually owed cash charges to the holders of the old debt to
allow us to retire it early. Management excludes this expense
from non-GAAP net income because it believes such expense does not
directly correlate to the underlying performance of operations,
rather is an expense that is specific to a transaction that we
would expect to occur infrequently.
- Acquisition-related amortization expense is a non-cash expense
arising from the acquisition of intangible assets in connection
with significant acquisitions. Management excludes
acquisition-related amortization expense from non-GAAP net income
because it believes such expenses can vary significantly between
periods as a result of new acquisitions and full amortization of
previously acquired intangible assets.
- Share-based compensation expense is a non-cash expense arising
from the grant of stock awards to employees and is excluded from
non-GAAP net income because management believes such expenses can
vary significantly between periods as a result of the timing of
grants of new stock-based awards, including grants to new employees
resulting from acquisitions.
- Acquisition-related sales and costs of sales adjustments
reflect the fair value adjustment to deferred revenues acquired in
connection with significant acquisitions. The fair value of
deferred revenue represents an amount equivalent to the estimated
cost plus an appropriate profit margin to perform services-related
software and product support, which assumes a legal obligation to
do so, based on the deferred revenue balances as of the date the
acquisition of a significant company was completed. Management adds
back this deferred revenue adjustment, net of related costs, for
non-GAAP revenue and non-GAAP net income because it believes the
inclusion of this amount directly correlates to the underlying
performance of operations and facilitates comparisons of
pre-acquisition to post-acquisition results.
Notice of Conference Call
Merge will host a conference call at 8:30 AM ET on Thursday,
February 20, 2014. The call will address fourth quarter results and
will provide a business update on the company's market outlook and
strategies for 2014.
Participants may preregister for this teleconference at
http://emsp.intellor.com?p=414469&do=register&t=8. Upon
registration, a confirmation page will display dial-in numbers and
a unique PIN, and the participant will also receive an email
confirmation with this information.
A replay via the Internet or phone will be available after the
call at
http://www.merge.com/Company/Investors/Conference-Call-Info.aspx.
Source: 2013 Best in KLAS Awards: Software & Services
report
About Merge
Merge is a leading provider of innovative enterprise imaging,
interoperability and clinical systems that seek to advance
healthcare. Merge's enterprise and cloud-based technologies for
image intensive specialties provide access to any image, anywhere,
any time. Merge also provides clinical trials software with
end-to-end study support in a single platform and other intelligent
health data and analytics solutions. With solutions that have been
used by providers for more than 25 years, Merge is helping to
reduce costs, improve efficiencies and enhance the quality of
healthcare worldwide. For more information, visit merge.com and
follow us @MergeHealthcare.
Cautionary Notice Regarding Forward-Looking
Statements
The matters discussed in this press release may include
forward-looking statements, which could involve a number of risks
and uncertainties. When used in this press release, the words
"will," "believes," "intends," "anticipates," "expects" and similar
expressions are intended to identify forward-looking statements.
Actual results could differ materially from those expressed in, or
implied by, such forward-looking statements. The potential risks
and uncertainties include those risks and uncertainties included
under the captions "Risk Factors" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" in our
Annual Report on Form 10-K for the year ended December 31, 2012 and
our most recent Quarterly Report on Form 10-Q for the quarter ended
September 30, 2013 which are on file with the SEC and are available
on our investor relations website at merge.com and on the SEC
website at www.sec.gov. Additional information will also be set
forth in our Annual Report on Form 10-K for the year ended December
31, 2013. Except as expressly required by the federal securities
laws, Merge undertakes no obligation to update such factors or to
publicly announce the results of any of the forward-looking
statements.
MERGE HEALTHCARE
INCORPORATED AND SUBSIDIARIES |
CONDENSED CONSOLIDATED
BALANCE SHEETS |
(in
thousands) |
(unaudited) |
|
|
|
|
December 31,
2013 |
December 31,
2012 |
Current assets: |
|
|
Cash (including restricted
cash) |
$ 19,729 |
$ 35,875 |
Accounts receivable,
net |
61,895 |
72,065 |
Inventory |
5,851 |
5,979 |
Prepaid expenses |
4,803 |
4,972 |
Deferred income taxes |
1,915 |
3,135 |
Other current assets |
12,631 |
21,621 |
Total current assets |
106,824 |
143,647 |
|
|
|
Property and equipment, net |
4,739 |
4,964 |
Purchased and developed software, net |
14,882 |
19,007 |
Other intangible assets, net |
26,200 |
35,628 |
Goodwill |
214,374 |
214,312 |
Deferred income taxes |
6,979 |
7,041 |
Other assets |
8,413 |
12,254 |
Total assets |
$ 382,411 |
$ 436,853 |
|
|
|
Current liabilities: |
|
|
Accounts payable |
$ 22,072 |
$ 24,438 |
Current maturities of long-term
debt |
2,490 |
-- |
Interest payable |
-- |
4,944 |
Accrued wages |
5,559 |
5,881 |
Restructuring accrual |
1,301 |
222 |
Other current liabilities |
8,205 |
12,606 |
Deferred revenue |
55,183 |
52,355 |
Total current liabilities |
94,810 |
100,446 |
|
|
|
Long-term debt, less current maturities, net
of unamortized discount |
233,942 |
250,046 |
Deferred income taxes |
4,065 |
3,046 |
Deferred revenue |
378 |
894 |
Income taxes payable |
1,399 |
1,040 |
Other liabilities |
2,557 |
3,920 |
Total liabilities |
337,151 |
359,392 |
Total Merge shareholders' equity |
44,813 |
77,011 |
Noncontrolling interest |
447 |
450 |
Total shareholders' equity |
45,260 |
77,461 |
Total liabilities and shareholders'
equity |
$ 382,411 |
$ 436,853 |
|
MERGE HEALTHCARE
INCORPORATED AND SUBSIDIARIES |
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS |
(in thousands, except
for share and per share data) |
(unaudited) |
|
|
|
|
|
|
Three Months
Ended December 31, |
Year Ended
December 31, |
|
2013 |
2012 |
2013 |
2012 |
Net sales |
|
|
|
|
Software and other |
$ 17,768 |
$ 25,215 |
$ 78,575 |
$ 94,466 |
Professional services |
9,708 |
10,405 |
43,830 |
40,978 |
Maintenance and EDI |
26,119 |
29,026 |
109,262 |
113,460 |
Total net sales |
53,595 |
64,646 |
231,667 |
248,904 |
Cost of sales |
|
|
|
|
Software and other |
8,706 |
14,278 |
41,813 |
43,281 |
Professional services |
5,939 |
6,171 |
25,114 |
24,693 |
Maintenance and EDI |
6,661 |
7,250 |
28,989 |
31,090 |
Depreciation and
amortization |
1,555 |
3,158 |
6,980 |
8,987 |
Total cost of sales |
22,861 |
30,857 |
102,896 |
108,051 |
Gross margin |
30,734 |
33,789 |
128,771 |
140,853 |
Operating costs and expenses: |
|
|
|
|
Sales and marketing |
7,603 |
11,435 |
36,585 |
43,908 |
Product research and
development |
7,400 |
8,168 |
32,388 |
32,419 |
General and administrative |
9,122 |
18,544 |
34,689 |
42,366 |
Acquisition-related
expenses |
306 |
958 |
906 |
3,402 |
Restructuring and other
expenses |
-- |
-- |
3,856 |
830 |
Depreciation and
amortization |
2,641 |
3,125 |
10,540 |
11,308 |
Total operating costs and expenses |
27,072 |
42,230 |
118,964 |
134,233 |
Operating income (loss) |
3,662 |
(8,441) |
9,807 |
6,620 |
Loss on debt extinguishment |
-- |
-- |
(23,822) |
-- |
Other expense, net |
(4,287) |
(8,130) |
(22,079) |
(31,349) |
Loss before income taxes |
(625) |
(16,571) |
(36,094) |
(24,729) |
Income tax expense (benefit) |
(360) |
681 |
2,889 |
4,091 |
Net loss |
(265) |
(17,252) |
(38,983) |
(28,820) |
Less: noncontrolling interest's
share |
26 |
12 |
(2) |
(18) |
Net loss available to common
shareholders |
$ (291) |
$ (17,264) |
$ (38,981) |
$ (28,802) |
|
|
|
|
|
Net loss per share - basic |
$ (0.00) |
$ (0.19) |
$ (0.42) |
$ (0.31) |
Weighted average number of common shares
outstanding - basic |
94,394,867 |
93,057,636 |
93,727,394 |
92,134,191 |
|
|
|
|
|
Net loss per share - diluted |
$ (0.00) |
$ (0.19) |
$ (0.42) |
$ (0.31) |
Weighted average number of common shares
outstanding - diluted |
94,394,867 |
93,057,636 |
93,727,394 |
92,134,191 |
|
MERGE HEALTHCARE
INCORPORATED AND SUBSIDIARIES |
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS |
(in
thousands) |
(unaudited) |
|
|
|
|
|
|
Year Ended
December 31, |
|
|
2013 |
2012 |
Cash flows from operating
activities: |
|
|
|
Net loss |
|
$ (38,983) |
$ (28,820) |
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities: |
|
|
|
Depreciation and
amortization |
|
17,520 |
20,295 |
Share-based compensation |
|
4,839 |
5,786 |
Change in contingent
consideration for acquisitions |
|
-- |
1,380 |
Amortization of debt issuance
costs & discount |
|
1,649 |
2,724 |
Loss on extinguishment of
debt |
|
23,822 |
-- |
Provision for doubtful accounts
receivable and allowances, net of recoveries |
|
(2,136) |
9,993 |
Deferred income
taxes |
|
2,301 |
3,581 |
Realized and unrealized loss
(gain) on equity security |
|
645 |
(486) |
Loss on acquisition
settlement |
|
1,345 |
-- |
Stock issued for lawsuit
settlement |
|
885 |
-- |
Net change in assets and liabilities (net of
effects of acquisitions) |
|
9,394 |
(15,333) |
Net cash provided by (used in) operating
activities |
|
21,281 |
(880) |
Cash flows from investing
activities: |
|
|
|
Cash paid for acquisitions, net of cash
acquired |
|
-- |
(876) |
Purchases of property, equipment and
leasehold improvements |
|
(1,574) |
(2,174) |
Purchased technology and capitalized software
development |
|
(535) |
-- |
Proceeds from sale of equity investment |
|
1,785 |
-- |
Change in restricted cash |
|
422 |
(106) |
Net cash provided by (used in) investing
activities |
|
98 |
(3,156) |
Cash flows from financing
activities: |
|
|
|
Proceeds from exercise of stock options and
employee stock purchase plan |
|
1,489 |
1,039 |
Proceeds from debt issuance |
|
252,450 |
-- |
Retirement of debt |
|
(252,000) |
-- |
Penalty for early extinguishment of debt |
|
(16,863) |
-- |
Note issuance costs paid |
|
(4,588) |
-- |
Principal payments on notes |
|
(16,286) |
(37) |
Principal payments on capital leases |
|
(1,200) |
(396) |
Net cash provided by (used in) financing
activities |
|
(36,998) |
606 |
Effect of exchange rate changes on cash |
|
(106) |
(73) |
Net increase (decrease) in cash and cash
equivalents |
|
(15,725) |
(3,503) |
Cash and cash equivalents, beginning of
period (net of restricted cash) |
(1) |
35,062 |
38,565 |
Cash and cash equivalents, end of period (net
of restricted cash) |
(2) |
$ 19,337 |
$ 35,062 |
|
|
|
|
(1) Restricted cash of $813
and $707 as of December 31, 2012 and 2011, respectively. |
|
|
|
(2) Restricted cash of $392
and $813 as of December 31, 2013 and 2012, respectively. |
|
|
|
|
MERGE HEALTHCARE
INCORPORATED AND SUBSIDIARIES |
RECONCILIATION OF NET
INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS TO ADJUSTED
EBITDA |
(in thousands, except
for share and per share data) |
(unaudited) |
|
|
|
|
|
|
Three Months
Ended December 31, |
Year Ended
December 31, |
|
2013 |
2012 |
2013 |
2012 |
Net loss available to common shareholders of
Merge |
$ (291) |
$ (17,264) |
$ (38,981) |
$ (28,802) |
Acquisition-related costs |
306 |
958 |
906 |
3,402 |
Debt extinguishment costs |
-- |
-- |
23,822 |
-- |
Restructuring and other |
-- |
-- |
3,856 |
830 |
Share-based compensation
expense |
647 |
1,541 |
4,645 |
5,786 |
Amortization of significant
acquisition intangibles |
2,506 |
2,726 |
10,026 |
10,905 |
Acquisition-related sales
adjustments |
277 |
435 |
1,432 |
2,055 |
Acquisition-related cost of
sales adjustments |
(61) |
(35) |
(215) |
(361) |
Adjusted net income (loss) |
$ 3,384 |
$ (11,639) |
$ 5,491 |
$ (6,185) |
Depreciation and
amortization |
1,690 |
3,557 |
7,494 |
9,390 |
Net interest expense |
4,291 |
8,137 |
21,248 |
32,160 |
Income tax expense
(benefit) |
(360) |
681 |
2,889 |
4,091 |
Adjusted EBITDA |
$ 9,005 |
$ 736 |
$ 37,122 |
$ 39,456 |
|
|
|
|
|
Adjusted net income (loss) per share -
diluted |
$ 0.04 |
$ (0.13) |
$ 0.06 |
$ (0.07) |
Adjusted EBITDA per share - diluted |
$ 0.09 |
$ 0.01 |
$ 0.39 |
$ 0.42 |
|
|
|
|
|
Fully diluted shares (if net income) |
95,643,567 |
94,984,813 |
95,463,373 |
94,545,728 |
|
|
|
|
|
|
Pro Forma Three
Months Ended December 31, |
Pro Forma Year
Ended December 31, |
|
2013 |
2012 |
2013 |
2012 |
Net loss available to common shareholders of
Merge |
$ (75) |
$ (16,864) |
$ (37,764) |
$ (27,108) |
Acquisition-related costs |
306 |
958 |
906 |
3,402 |
Debt extinguishment costs |
-- |
-- |
23,822 |
-- |
Restructuring and other |
-- |
-- |
3,856 |
830 |
Share-based compensation
expense |
647 |
1,541 |
4,645 |
5,786 |
Amortization of significant
acquisition intangibles |
2,506 |
2,726 |
10,026 |
10,905 |
Adjusted net income (loss) |
$ 3,384 |
$ (11,639) |
$ 5,491 |
$ (6,185) |
Depreciation and
amortization |
1,690 |
3,557 |
7,494 |
9,390 |
Net interest expense |
4,291 |
8,137 |
21,248 |
32,160 |
Income tax expense
(benefit) |
(360) |
681 |
2,889 |
4,091 |
Adjusted EBITDA |
$ 9,005 |
$ 736 |
$ 37,122 |
$ 39,456 |
|
|
|
|
|
Adjusted net income (loss) per share -
diluted |
$ 0.04 |
$ (0.13) |
$ 0.06 |
$ (0.07) |
Adjusted EBITDA per share - diluted |
$ 0.09 |
$ 0.01 |
$ 0.39 |
$ 0.42 |
|
|
|
|
|
Fully diluted shares (if net income) |
95,643,567 |
94,984,813 |
95,463,373 |
94,545,728 |
|
MERGE HEALTHCARE
INCORPORATED AND SUBSIDIARIES |
CASH FROM BUSINESS
OPERATIONS |
(unaudited) |
|
|
|
|
|
|
Three Months
Ended December 31, |
Year Ended
December 31, |
|
2013 |
2012 |
2013 |
2012 |
|
(amounts in millions) |
Cash received from (paid for): |
|
|
|
|
Issuance of debt, net of OID of $2.5 |
$ -- |
$ -- |
$ 252.5 |
$ -- |
Debt principal reduction |
(9.7) |
-- |
(16.3) |
-- |
Debt issuance costs |
-- |
-- |
(4.6) |
-- |
Retirement of debt, including prepayment
penalty of $16.8 |
-- |
-- |
(268.9) |
-- |
Interest paid, net |
(3.8) |
(14.9) |
(24.8) |
(29.7) |
Acquisitions |
-- |
-- |
-- |
(0.9) |
Restructuring initiatives |
(0.8) |
(0.3) |
(2.8) |
(1.5) |
Acquisition related costs |
(0.3) |
(0.2) |
(1.1) |
(1.0) |
Sale of investment |
-- |
-- |
1.8 |
-- |
Proceeds from stock option exercises |
0.3 |
-- |
1.2 |
-- |
Property and equipment purchases |
-- |
(0.2) |
(1.7) |
(2.2) |
Purchased technology and capitalized software
development |
(0.5) |
-- |
(0.5) |
-- |
Business operations |
14.2 |
9.4 |
49.0 |
32.0 |
Decrease in cash |
$ (0.6) |
$ (6.2) |
$ (16.2) |
$ (3.3) |
CONTACT: Media Contact:
Jennifer Jawor
Vice President, Corporate Marketing
312.565.6825
jennifer.jawor@merge.com
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