February 21, 2019
MALVERN, Pa., Feb. 21, 2019 (GLOBE NEWSWIRE) — 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.
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 $0.29per 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.
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.
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.
Heather C. Getz
Executive Vice President, Chief Financial Officer
Condensed Consolidated Statements of Operations
|Three Months Ended December 31,||Year Ended December 31,|
|(in thousands, except per share data)||2018||2017||2018||2017|
|Cost of revenues||39,657||37,318||148,986||114,406|
|Gross profit %||61.7%||59.3%||62.7%||60.1%|
|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|
|Total operating expenses||49,367||61,737||200,672||174,133|
|Income (loss) from operations||14,579||(7,312)||49,814||(1,763)|
|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 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.:|
|Weighted average number of common shares outstanding:|
|Reconciliation of GAAP to Non-GAAP Financial Measures|
|Three Months Ended|
|(Unaudited)||December 31, 2018|
|(in thousands, except per share data)||Income from
attributable to BioTelemetry, Inc.
|Net income per
share attributable to BioTelemetry Inc.
|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|
|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)
before Income Taxes
|Net income (loss) attributable to BioTelemetry, Inc.||Net income (loss) per share attributable to BioTelemetry Inc.|
|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|
|Weighted average number of common shares outstanding – diluted||35,044|
|Twelve Months Ended|
|(Unaudited)||December 31, 2018|
|(in thousands, except per share data)||Income from
|Net income attributable to BioTelemetry, Inc.||Net income per share attributable to BioTelemetry Inc.|
|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)|
|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.|
|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|
|Weighted average number of common shares outstanding – diluted||33,049|
|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|
|Depreciation and amortization expense (a)||9,883||11,341||39,637||27,900|
|Stock compensation expense||2,984||1,995||9,261||7,680|
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.