[February 08, 2018] |
|
CPSI Announces Fourth Quarter and Year-End 2017 Results
CPSI (NASDAQ: CPSI):
Highlights for Fourth Quarter 2017:
-
Revenues of $78.1 million;
-
12-month backlog of $253.8 million;
-
Quarterly bookings of $19.8 million;
-
GAAP results inclusive of $28.0 million non-cash goodwill impairment
charge related to our post-acute care business;
-
GAAP loss per diluted share of $1.57 and non-GAAP earnings per diluted
share of $0.63;
-
GAAP net loss of $21.5 million and Adjusted EBITDA of $15.3 million;
-
Cash provided by operations of $5.3 million; and
-
Quarterly dividend of $0.10 per share.
CPSI (NASDAQ: CPSI), a community healthcare solutions company, today
announced results for the fourth quarter and twelve months ended
December 31, 2017.
The Company also announced that its Board of Directors has declared a
quarterly cash dividend of $0.10 per share, payable on March 9, 2018, to
stockholders of record as of the close of business on February 22, 2018.
Total revenues for the fourth quarter ended December 31, 2017, were
$78.1 million, compared with total revenues of $64.6 million for the
prior-year fourth quarter. Inclusive of a $28.0 million non-cash
goodwill impairment charge related to the Company's post-acute care
business, net loss for the quarter ended December 31, 2017, was $21.5
million, or $1.57 per diluted share, compared with net income of $2.0
million, or $0.15 per diluted share, for the quarter ended December 31,
2016. Cash provided by operations for the fourth quarter was $5.3
million, compared with cash used by operations of $468,000 for the
prior-year period.
Total revenues for the year ended December 31, 2017, were $276.9
million, compared with total revenues of $267.3 million for the prior
year. Inclusive of the aforementioned non-cash goodwill impairment
charge, net loss for the year ended December 31, 2017, was $17.4
million, or $1.27 per diluted share, compared with net income of $3.9
million, or $0.29 per diluted share, for the year ended December 31,
2016. Cash provided by operations for 2017 was $23.6 million, compared
with $2.1 million for the prior year.
"Our fourth quarter financial performance was strong from both a revenue
and non-GAAP earnings perspective," said Boyd Douglas, president and
chief executive officer of CPSI.
"Looking back over 2017, we are very proud of the continued affirmation
that the value we bring to the community healthcare market is making a
real difference. This past year, we launched the CPSI Rural Accountable
Care Organization (ACO) program, experienced continued revenue growth
with TruBridge and had record bookings performance in three of the four
quarters. These bookings included a number of returning clients, and
resulted in 10.5% bookings growth across our family of companies in 2017.
"These developments have helped to steady our operations and support
CPSI and our family of companies as we continue to evolve. With our eye
toward the long-term health and growth of our company, we also took
important steps to enhance our corporate governance structure and
strategy. With the addition of three new members in the fourth quarter,
we have expanded the talent, financial expertise and industry experience
of our board of directors. We look forward to 2018, as we are well
positioned to capitalize on new growth opportunities that will help us
deliver on our shared vision of creating healthier, financially stronger
and more vibrant communities," added Douglas.
Commenting on the Company's financial performance for the quarter, Matt
Chambless, chief financial officer of CPSI, stated, "Our continued
execution around the meaningful use program and consistent success with
TruBridge offerings propelled the fourth quarter to all-time highs in
terms of revenues. These results translated into non-GAAP EPS and
Adjusted EBITDA that were their highest level since our acquisition of
Healthland in January 2016. These high marks in profitability were
achieved despite elevated general and administrative expenses, including
increased bad debt estimates for balance sheet risk related to financing
receivables and increased health claims volumes and severity While
accounting rules required us to record a non-cash goodwill impairment
charge of $28.0 million related to our post-acute care business, and
bookings volatility casted a bit of a shadow, we are proud of the fourth
quarter's results and excited about our trajectory as we enter 2018.
"Looking back on the year, we were able to deliver on our commitment of
revenue and non-GAAP profitability growth for 2017 and make significant,
smart changes to our capital allocation strategy that will allow for
greater flexibility for investment in CPSI's future growth," said
Chambless.
CPSI will hold a live webcast to discuss fourth quarter and year-end
2017 results today, Thursday, February 8, 2018, at 4:30 p.m. Eastern
time. A 30-day online replay will be available approximately one hour
following the conclusion of the live webcast. To listen to the live
webcast or access the replay, visit the Company's website, www.cpsi.com.
About CPSI
CPSI is a leading provider of healthcare solutions and services for
community hospitals plus other healthcare systems and post-acute care
facilities. Founded in 1979, CPSI is the parent of four companies -
Evident, LLC, TruBridge, LLC, Healthland Inc. and American HealthTech,
Inc. Our combined companies are focused on helping improve the health of
the communities we serve, connecting communities for a better patient
care experience, and improving the financial operations of our
customers. Evident provides comprehensive EHR solutions and services for
community hospitals and their affiliated clinics. TruBridge focuses on
providing business, consulting and managed IT services along with its
complete RCM solution for all care settings. Healthland provides
integrated technology solutions and services to small rural and critical
access hospitals. American HealthTech is one of the nation's largest
providers of financial and clinical technology solutions and services
for post-acute care facilities. For more information, visit www.cpsi.com.
Forward-Looking Statements
This press release contains forward-looking statements within the
meaning of the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995. These forward-looking statements can be
identified generally by the use of forward-looking terminology and words
such as "expects," "anticipates," "estimates," "believes," "predicts,"
"intends," "plans," "potential," "may," "continue," "should," "will" and
words of comparable meaning. Without limiting the generality of the
preceding statement, all statements in this press release relating to
estimated and projected earnings, leverage ratio, margins, costs,
expenditures, cash flows, growth rates, the Company's level of
recurring and non-recurring revenue and backlog, the Company's
shareholder returns and future financial results are forward-looking
statements. We caution investors that any such forward-looking
statements are only predictions and are not guarantees of future
performance. Certain risks, uncertainties and other factors may cause
actual results to differ materially from those projected in the
forward-looking statements. Such factors may include: overall business
and economic conditions affecting the healthcare industry, including the
potential effects of the federal healthcare reform legislation enacted
in 2010, and implementing regulations, on the businesses of our hospital
customers; government regulation of our products and services and the
healthcare and health insurance industries, including changes in
healthcare policy affecting Medicare and Medicaid
reimbursement rates and qualifying technological standards; changes
in customer purchasing priorities, capital expenditures and demand for
information technology systems; saturation of our target market and
hospital consolidations; general economic conditions, including changes
in the financial and credit markets that may affect the availability and
cost of credit to us or our customers; our substantial indebtedness, and
our ability to incur additional indebtedness in the future; our
potential inability to generate sufficient cash in order to meet our
debt service obligations; restrictions on our current and future
operations because of the terms of our senior secured credit facilities;
market risks related to interest rate changes; our ability to
successfully integrate the businesses of Healthland, American HealthTech
and Rycan with our business and the inherent risks associated with any
potential future acquisitions; our ability to remediate a material
weakness in our internal control over financial reporting; competition
with companies that have greater financial, technical and marketing
resources than we have; failure to develop new or enhance current
technology and products in response to market demands; failure of our
products to function properly resulting in claims for losses; breaches
of security and viruses in our systems resulting in customer claims
against us and harm to our reputation; failure to maintain customer
satisfaction through new product releases or enhancements free of
undetected errors or problems; interruptions in our power supply and/or
telecommunications capabilities, including those caused by natural
disaster; our ability to attract and retain qualified customer service
and support personnel; failure to properly manage growth in new markets
we may enter; misappropriation of our intellectual property rights and
potential intellectual property claims and litigation against us;
changes in accounting principles generally accepted in the United
States; fluctuations in quarterly financial performance due to, among
other factors, timing of customer installations; and other risk factors
described from time to time in our public releases and reports filed
with the Securities and Exchange Commission, including, but not
limited to, our most recent Annual Report on Form 10-K. Relative to our
dividend policy, the payment of cash dividends is subject to the
discretion of our Board of Directors and will be determined in light of
then-current conditions, including our earnings, our leverage, our
operations, our financial conditions, our capital requirements and other
factors deemed relevant by our Board of Directors. In the future, our
Board of Directors may change our dividend policy, including the
frequency or amount of any dividend, in light of then-existing
conditions. We also caution investors that the forward-looking
information described herein represents our outlook only as of this
date, and we undertake no obligation to update or revise any
forward-looking statements to reflect events or developments after the
date of this press release.
|
COMPUTER PROGRAMS AND SYSTEMS, INC.
Unaudited Condensed Consolidated Statements of Operations
(In thousands, except per share data)
|
|
|
|
|
Three Months Ended December 31,
|
|
|
Twelve Months Ended December 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
Sales revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
System sales and support
|
|
|
$
|
54,998
|
|
|
|
$
|
44,136
|
|
|
|
$
|
188,261
|
|
|
|
$
|
185,665
|
|
TruBridge
|
|
|
|
23,065
|
|
|
|
|
20,415
|
|
|
|
|
88,666
|
|
|
|
|
81,607
|
|
Total sales revenues
|
|
|
|
78,063
|
|
|
|
|
64,551
|
|
|
|
|
276,927
|
|
|
|
|
267,272
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs of sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
System sales and support
|
|
|
|
19,373
|
|
|
|
|
19,280
|
|
|
|
|
75,994
|
|
|
|
|
84,356
|
|
TruBridge
|
|
|
|
13,309
|
|
|
|
|
11,780
|
|
|
|
|
49,636
|
|
|
|
|
45,656
|
|
Total costs of sales
|
|
|
|
32,682
|
|
|
|
|
31,060
|
|
|
|
|
125,630
|
|
|
|
|
130,012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
|
45,381
|
|
|
|
|
33,491
|
|
|
|
|
151,297
|
|
|
|
|
137,260
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Product development
|
|
|
|
10,174
|
|
|
|
|
8,855
|
|
|
|
|
37,761
|
|
|
|
|
32,621
|
|
Sales and marketing
|
|
|
|
9,760
|
|
|
|
|
6,853
|
|
|
|
|
33,021
|
|
|
|
|
27,194
|
|
General and administrative
|
|
|
|
12,964
|
|
|
|
|
11,089
|
|
|
|
|
46,923
|
|
|
|
|
52,888
|
|
Amortization of acquisition-related intangibles
|
|
|
|
2,601
|
|
|
|
|
2,602
|
|
|
|
|
10,406
|
|
|
|
|
10,182
|
|
Goodwill impairment
|
|
|
|
28,000
|
|
|
|
|
-
|
|
|
|
|
28,000
|
|
|
|
|
-
|
|
Total operating expenses
|
|
|
|
63,499
|
|
|
|
|
29,399
|
|
|
|
|
156,111
|
|
|
|
|
122,885
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
|
(18,118
|
)
|
|
|
|
4,092
|
|
|
|
|
(4,814
|
)
|
|
|
|
14,375
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense)
|
|
|
|
(1,175
|
)
|
|
|
|
100
|
|
|
|
|
(933
|
)
|
|
|
|
220
|
|
Interest expense
|
|
|
|
(1,928
|
)
|
|
|
|
(1,781
|
)
|
|
|
|
(7,736
|
)
|
|
|
|
(6,609
|
)
|
Total other expense
|
|
|
|
(3,103
|
)
|
|
|
|
(1,681
|
)
|
|
|
|
(8,669
|
)
|
|
|
|
(6,389
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before taxes
|
|
|
|
(21,221
|
)
|
|
|
|
2,411
|
|
|
|
|
(13,483
|
)
|
|
|
|
7,986
|
|
Provision for income taxes
|
|
|
|
316
|
|
|
|
|
410
|
|
|
|
|
3,933
|
|
|
|
|
4,053
|
|
Net income (loss)
|
|
|
$
|
(21,537
|
)
|
|
|
$
|
2,001
|
|
|
|
$
|
(17,416
|
)
|
|
|
$
|
3,933
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per common share - basic and diluted
|
|
|
$
|
(1.57
|
)
|
|
|
$
|
0.15
|
|
|
|
$
|
(1.27
|
)
|
|
|
$
|
0.29
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding used in per common share
computations - basic and diluted
|
|
|
|
13,450
|
|
|
|
|
13,347
|
|
|
|
|
13,419
|
|
|
|
|
13,255
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMPUTER PROGRAMS AND SYSTEMS, INC.
Condensed Consolidated Balance Sheets
(In thousands, except per share data)
|
|
|
|
|
Dec. 31, 2017
|
|
|
Dec. 31, 2016
|
|
|
|
(Unaudited)
|
|
|
|
ASSETS
|
Current assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
520
|
|
|
|
$
|
2,220
|
Accounts receivable, net of allowance for doubtful accounts of
$2,654 and $2,370, respectively
|
|
|
|
38,061
|
|
|
|
|
31,812
|
Financing receivables, current portion, net
|
|
|
|
15,055
|
|
|
|
|
5,459
|
Inventories
|
|
|
|
1,417
|
|
|
|
|
1,697
|
Prepaid income taxes
|
|
|
|
-
|
|
|
|
|
567
|
Prepaid expenses and other
|
|
|
|
2,824
|
|
|
|
|
2,794
|
Total current assets
|
|
|
|
57,877
|
|
|
|
|
44,549
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
|
|
11,692
|
|
|
|
|
13,439
|
Financing receivables, net of current portion
|
|
|
|
11,485
|
|
|
|
|
5,595
|
Intangible assets, net
|
|
|
|
96,713
|
|
|
|
|
107,118
|
Goodwill
|
|
|
|
140,449
|
|
|
|
|
168,449
|
Total assets
|
|
|
$
|
318,216
|
|
|
|
$
|
339,150
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
Current liabilities:
|
|
|
|
|
|
|
Accounts payable
|
|
|
$
|
7,620
|
|
|
|
$
|
6,841
|
Current portion of long-term debt
|
|
|
|
5,820
|
|
|
|
|
5,817
|
Deferred revenue
|
|
|
|
8,707
|
|
|
|
|
5,840
|
Accrued vacation
|
|
|
|
3,794
|
|
|
|
|
3,650
|
Income taxes payable
|
|
|
|
810
|
|
|
|
|
-
|
Other accrued liabilities
|
|
|
|
14,098
|
|
|
|
|
8,797
|
Total current liabilities
|
|
|
|
40,849
|
|
|
|
|
30,945
|
|
|
|
|
|
|
|
Long-term debt, less current portion
|
|
|
|
136,614
|
|
|
|
|
146,989
|
Deferred tax liabilities
|
|
|
|
4,667
|
|
|
|
|
3,246
|
Total liabilities
|
|
|
|
182,130
|
|
|
|
|
181,180
|
|
|
|
|
|
|
|
Stockholders' equity:
|
|
|
|
|
|
|
Common stock, $0.001 par value; 30,000 shares authorized; 13,760 and
13,533 shares issued and outstanding, respectively
|
|
|
|
14
|
|
|
|
|
13
|
Additional paid-in capital
|
|
|
|
155,078
|
|
|
|
|
147,911
|
Retained earnings
|
|
|
|
(19,006
|
)
|
|
|
|
10,046
|
Total stockholders' equity
|
|
|
|
136,086
|
|
|
|
|
157,970
|
Total liabilities and stockholders' equity
|
|
|
$
|
318,216
|
|
|
|
$
|
339,150
|
|
|
|
|
|
|
|
|
COMPUTER PROGRAMS AND SYSTEMS, INC.
Unaudited Condensed Consolidated Statements of Cash Flows
(In thousands)
|
|
|
|
|
Twelve Months Ended December 31,
|
|
|
|
2017
|
|
|
2016
|
Operating activities:
|
|
|
|
|
|
|
Net income (loss)
|
|
|
$
|
(17,416
|
)
|
|
|
$
|
3,933
|
|
Adjustments to net income (loss):
|
|
|
|
|
|
|
Provision for bad debt
|
|
|
|
3,421
|
|
|
|
|
2,259
|
|
Deferred taxes
|
|
|
|
1,421
|
|
|
|
|
3,672
|
|
Stock-based compensation
|
|
|
|
7,166
|
|
|
|
|
5,366
|
|
Excess tax benefit from stock-based compensation
|
|
|
|
-
|
|
|
|
|
(210
|
)
|
Depreciation
|
|
|
|
2,473
|
|
|
|
|
3,062
|
|
Intangible amortization
|
|
|
|
10,406
|
|
|
|
|
10,182
|
|
Amortization of deferred finance costs
|
|
|
|
645
|
|
|
|
|
673
|
|
Goodwill impairment
|
|
|
|
28,000
|
|
|
|
|
-
|
|
Loss on extinguishment of debt
|
|
|
|
1,340
|
|
|
|
|
-
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
Accounts receivable
|
|
|
|
(7,847
|
)
|
|
|
|
(3,927
|
)
|
Financing receivables
|
|
|
|
(17,308
|
)
|
|
|
|
1,514
|
|
Inventories
|
|
|
|
280
|
|
|
|
|
14
|
|
Prepaid expenses and other
|
|
|
|
(30
|
)
|
|
|
|
1,787
|
|
Accounts payable
|
|
|
|
779
|
|
|
|
|
(5,588
|
)
|
Deferred revenue
|
|
|
|
2,867
|
|
|
|
|
(13,662
|
)
|
Other liabilities
|
|
|
|
6,069
|
|
|
|
|
(7,250
|
)
|
Prepaid income taxes
|
|
|
|
1,377
|
|
|
|
|
280
|
|
Net cash provided by operating activities
|
|
|
|
23,643
|
|
|
|
|
2,105
|
|
|
|
|
|
|
|
|
Investing activities:
|
|
|
|
|
|
|
Purchases of property and equipment
|
|
|
|
(726
|
)
|
|
|
|
(39
|
)
|
Purchase of business, net of cash received
|
|
|
|
-
|
|
|
|
|
(162,611
|
)
|
Sale of investments
|
|
|
|
-
|
|
|
|
|
10,861
|
|
Net cash used in investing activities
|
|
|
|
(726
|
)
|
|
|
|
(151,789
|
)
|
|
|
|
|
|
|
|
Financing activities:
|
|
|
|
|
|
|
Dividends paid
|
|
|
|
(11,636
|
)
|
|
|
|
(25,092
|
)
|
Proceeds from long-term debt
|
|
|
|
777
|
|
|
|
|
156,397
|
|
Payments of long-term debt
|
|
|
|
(13,134
|
)
|
|
|
|
(5,196
|
)
|
Payments of contingent consideration
|
|
|
|
(625
|
)
|
|
|
|
(500
|
)
|
Proceeds from stock option exercise
|
|
|
|
1
|
|
|
|
|
1,134
|
|
Excess tax benefit from stock-based compensation
|
|
|
|
-
|
|
|
|
|
210
|
|
Net cash provided by (used in) financing activities
|
|
|
|
(24,617
|
)
|
|
|
|
126,953
|
|
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents
|
|
|
|
(1,700
|
)
|
|
|
|
(22,731
|
)
|
|
|
|
|
|
|
|
Cash and cash equivalents, beginning of period
|
|
|
|
2,220
|
|
|
|
|
24,951
|
|
Cash and cash equivalents, end of period
|
|
|
$
|
520
|
|
|
|
$
|
2,220
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMPUTER PROGRAMS AND SYSTEMS, INC.
Unaudited Other Supplemental Information
Consolidated Bookings
(In thousands)
|
|
|
|
|
Three Months Ended December 31,
|
|
|
Twelve Months Ended December 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
System sales and support(1)
|
|
|
$
|
14,284
|
|
|
$
|
22,861
|
|
|
$
|
77,482
|
|
|
$
|
76,306
|
TruBridge(2)
|
|
|
|
5,511
|
|
|
|
7,761
|
|
|
|
31,435
|
|
|
|
22,299
|
Total
|
|
|
$
|
19,795
|
|
|
$
|
30,622
|
|
|
$
|
108,917
|
|
|
$
|
98,605
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Generally calculated as the total contract price (for system sales)
and annualized contract value (for support).
|
(2)
|
Generally calculated as the total contract price (for non-recurring,
project-related amounts) and annualized contract value (for
recurring amounts).
|
|
|
|
COMPUTER PROGRAMS AND SYSTEMS, INC.
Unaudited Reconciliation of Non-GAAP Financial Measures
(In thousands)
|
|
Adjusted EBITDA
|
|
|
Three Months Ended December 31,
|
|
|
Twelve Months Ended December 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
Net income (loss), as reported
|
|
|
$
|
(21,537
|
)
|
|
|
$
|
2,001
|
|
|
$
|
(17,416
|
)
|
|
|
$
|
3,933
|
Deferred revenue and other acquisition-related adjustments
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
2,226
|
Depreciation expense
|
|
|
|
528
|
|
|
|
|
640
|
|
|
|
2,473
|
|
|
|
|
3,062
|
Amortization of acquisition-related intangible assets
|
|
|
|
2,601
|
|
|
|
|
2,601
|
|
|
|
10,406
|
|
|
|
|
10,182
|
Stock-based compensation
|
|
|
|
2,146
|
|
|
|
|
1,343
|
|
|
|
7,166
|
|
|
|
|
5,366
|
Transaction-related costs
|
|
|
|
3
|
|
|
|
|
77
|
|
|
|
27
|
|
|
|
|
8,164
|
Non-recurring severance
|
|
|
|
91
|
|
|
|
|
-
|
|
|
|
2,353
|
|
|
|
|
-
|
Goodwill impairment charges
|
|
|
|
28,000
|
|
|
|
|
-
|
|
|
|
28,000
|
|
|
|
|
-
|
Interest expense and other, net
|
|
|
|
3,103
|
|
|
|
|
1,682
|
|
|
|
8,669
|
|
|
|
|
6,389
|
Provision for income taxes
|
|
|
|
316
|
|
|
|
|
410
|
|
|
|
3,933
|
|
|
|
|
4,053
|
Adjusted EBITDA
|
|
|
$
|
15,251
|
|
|
|
$
|
8,754
|
|
|
$
|
45,611
|
|
|
|
$
|
43,375
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The performance measure of Adjusted EBITDA, as presented above, excludes
the cash benefits derived from the utilization of net operating loss
carryforwards acquired in the Healthland acquisition ("NOL
Utilization"), which is included as an adjustment to net income in order
to calculate Consolidated EBITDA per the terms of our credit facility.
NOL Utilization was approximately $0.6 million and $6.0 million,
respectively, for the three and twelve months ended December 31, 2017,
compared to effectively zero and $5.0 million for the three and twelve
months ended December 31, 2016.
|
COMPUTER PROGRAMS AND SYSTEMS, INC.
Unaudited Reconciliation of Non-GAAP Financial Measures
(In thousands, except per share data)
|
|
Non-GAAP Net Income and Non-GAAP Earnings Per Share ("EPS")
|
|
|
Three Months Ended December 31,
|
|
|
Twelve Months Ended December 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
Net income (loss), as reported
|
|
|
$
|
(21,537
|
)
|
|
|
$
|
2,001
|
|
|
|
$
|
(17,416
|
)
|
|
|
$
|
3,933
|
|
Pre-tax adjustments for Non-GAAP EPS:
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred revenue and other acquisition-related adjustments
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
2,226
|
|
Amortization of acquisition-related intangible assets
|
|
|
|
2,601
|
|
|
|
|
2,601
|
|
|
|
|
10,406
|
|
|
|
|
10,182
|
|
Stock-based compensation
|
|
|
|
2,146
|
|
|
|
|
1,343
|
|
|
|
|
7,166
|
|
|
|
|
5,366
|
|
Transaction-related costs
|
|
|
|
3
|
|
|
|
|
77
|
|
|
|
|
27
|
|
|
|
|
8,164
|
|
Non-recurring severance
|
|
|
|
91
|
|
|
|
|
-
|
|
|
|
|
2,353
|
|
|
|
|
-
|
|
Non-cash interest expense
|
|
|
|
98
|
|
|
|
|
172
|
|
|
|
|
645
|
|
|
|
|
673
|
|
Loss on extinguishment of debt
|
|
|
|
1,340
|
|
|
|
|
-
|
|
|
|
|
1,340
|
|
|
|
|
-
|
|
Goodwill impairment charges
|
|
|
|
28,000
|
|
|
|
|
-
|
|
|
|
|
28,000
|
|
|
|
|
-
|
|
After-tax adjustments for Non-GAAP EPS:
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax-effect of pre-tax adjustments, at 35%
|
|
|
|
(2,198
|
)
|
|
|
|
(1,468
|
)
|
|
|
|
(7,678
|
)
|
|
|
|
(9,314
|
)
|
Tax-effect of non-deductible transaction-related costs
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
1,410
|
|
Tax shortfall from stock-based compensation
|
|
|
|
72
|
|
|
|
|
-
|
|
|
|
|
1,155
|
|
|
|
|
-
|
|
Tax reform effects
|
|
|
|
(1,890
|
)
|
|
|
|
-
|
|
|
|
|
(1,890
|
)
|
|
|
|
-
|
|
Valuation allowance for state NOLs
|
|
|
|
(304
|
)
|
|
|
|
|
|
|
(304
|
)
|
|
|
|
Non-GAAP net income
|
|
|
$
|
8,422
|
|
|
|
$
|
4,726
|
|
|
|
$
|
23,804
|
|
|
|
$
|
22,640
|
|
Weighted average shares outstanding, diluted
|
|
|
|
13,450
|
|
|
|
|
13,347
|
|
|
|
|
13,419
|
|
|
|
|
13,255
|
|
Non-GAAP EPS
|
|
|
$
|
0.63
|
|
|
|
$
|
0.35
|
|
|
|
$
|
1.77
|
|
|
|
$
|
1.71
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Explanation of Non-GAAP Financial Measures
We report our financial results in accordance with accounting principles
generally accepted in the United States of America, or "GAAP." However,
management believes that, in order to properly understand our short-term
and long-term financial and operational trends, investors may wish to
consider the impact of certain non-cash or non-recurring items, when
used as a supplement to financial performance measures that are prepared
in accordance with GAAP. These items result from facts and circumstances
that vary in frequency and impact on continuing operations. Management
uses these non-GAAP financial measures in order to evaluate the
operating performance of the Company and compare it against past
periods, make operating decisions, and serve as a basis for strategic
planning. These non-GAAP financial measures provide management with
additional means to understand and evaluate the operating results and
trends in our ongoing business by eliminating certain non-cash expenses
and other items that management believes might otherwise make
comparisons of our ongoing business with prior periods more difficult,
obscure trends in ongoing operations, or reduce management's ability to
make useful forecasts. In addition, management understands that some
investors and financial analysts find these non-GAAP financial measures
helpful in analyzing our financial and operational performance and
comparing this performance to our peers and competitors.
As such, to supplement the GAAP information provided, we present in this
press release the following non-GAAP financial measures: Adjusted
EBITDA, Non-GAAP net income, and Non-GAAP earnings per share ("EPS").
We calculate each of these non-GAAP financial measures as follows:
-
Adjusted EBITDA - Adjusted EBITDA
consists of GAAP net income (loss) as reported and adjusts for: (i)
deferred revenue and other adjustments arising from purchase
allocation adjustments related to the Healthland acquisition; (ii)
depreciation; (iii) amortization of acquisition-related intangible
assets; (iv) stock-based compensation; (v) non-recurring expenses and
transaction-related costs; (vi) goodwill impairment charges; (vii)
interest expense and other, net; and (viii) the provision for income
taxes.
-
Non-GAAP net income - Non-GAAP net income
consists of GAAP net income (loss) as reported and adjusts for (i)
deferred revenue and other adjustments arising from purchase
allocation adjustments related to the Healthland acquisition; (ii)
amortization of acquisition-related intangible assets; (iii)
stock-based compensation; (iv) non-recurring expenses and
transaction-related costs; (v) non-cash charges to interest expense
and other; (vi) loss on extinguishment of debt; (vii) goodwill
impairment charges; and (viii) the total tax effect of items (i)
through (vii). Adjustments to Non-GAAP net income also include the
after-tax effect of non-deductible transaction-related costs, the
effects of recent tax reform legislation, and changes in valuation
allowances for certain state NOLs acquired in the Healthland
acquisition.
-
Non-GAAP EPS - Non-GAAP EPS consists of
Non-GAAP net income, as defined above, divided by weighted average
shares outstanding (diluted) in the applicable period.
Certain of the items excluded or adjusted to arrive at these non-GAAP
financial measures are described below:
-
Deferred revenue and other adjustments -
Deferred revenue and other adjustments includes acquisition-related
deferred revenue adjustments, which reflect the fair value adjustments
to deferred revenues acquired in business acquisitions. The fair value
of deferred revenue represents an amount equivalent to the estimated
cost plus an appropriate profit margin, to perform services related to
the acquiree's software and product support, which assumes a legal
obligation to do so, based on the deferred revenue balances as of the
acquisition date. We add back deferred revenue and other adjustments
for non-GAAP financial measures because we believe the inclusion of
this amount directly correlates to the underlying performance of our
operations.
-
Amortization of acquisition-related intangible
assets - Acquisition-related amortization expense is a non-cash
expense arising primarily from the acquisition of intangible assets in
connection with acquisitions or investments. We exclude
acquisition-related amortization expense from non-GAAP financial
measures because we believe (i) the amount of such expenses in any
specific period may not directly correlate to the underlying
performance of our business operations and (ii) such expenses can vary
significantly between periods as a result of new acquisitions and full
amortization of previously acquired intangible assets. Investors
should note that the use of these intangible assets contributed to
revenue in the periods presented and will contribute to future revenue
generation, and the related amortization expense will recur in future
periods.
-
Stock-based compensation - Stock-based
compensation expense is a non-cash expense arising from the grant of
stock-based awards. We exclude stock-based compensation expense from
non-GAAP financial measures because we believe (i) the amount of such
expenses in any specific period may not directly correlate to the
underlying performance of our business operations and (ii) such
expenses can vary significantly between periods as a result of the
timing and valuation of grants of new stock-based awards, including
grants in connection with acquisitions. Investors should note that
stock-based compensation is a key incentive offered to employees whose
efforts contributed to the operating results in the periods presented
and are expected to contribute to operating results in future periods,
and such expense will recur in future periods.
-
Non-recurring expenses and transaction-related
costs - Non-recurring expenses relate to certain severance and
other charges incurred in connection with activities that are
considered one-time. Transaction-related costs are the non-recurring
costs related to specific acquisitions (such as the Healthland
acquisition). We exclude non-recurring expenses and
transaction-related costs from non-GAAP financial measures because we
believe (i) the amount of such expenses in any specific period may not
directly correlate to the underlying performance of our business
operations and (ii) such expenses can vary significantly between
periods.
-
Goodwill impairment charges - Goodwill
impairment charges are non-cash expenses that are the result of annual
(and, if necessary, more frequently than annual) impairment tests
required by GAAP. These impairment tests are required to be on a
per-reporting-unit basis, with our accounting policy elections
resulting in any impairment being the result of the reporting unit
carrying value exceeding the estimated fair value. We exclude these
non-cash goodwill impairment charges because we believe (i) such items
are largely non-recurring in nature and (ii) the amount of such
expenses in any specific period may not directly correlate to the
underlying performance of our business operations.
-
Non-cash charges to interest expense and other
- Non-cash charges to interest expense and other includes amortization
of deferred debt issuance costs. We exclude non-cash charges to
interest expense and other from non-GAAP financial measures because we
believe these non-cash amounts relate to specific transactions and, as
such, may not directly correlate to the underlying performance of our
business operations.
-
After-tax effect of non-deductible
transaction-related costs - Certain transaction costs incurred
in the Healthland acquisition are non-deductible for federal income
tax purposes as they are considered facilitative costs of the specific
transaction. Similar to the treatment of non-recurring expenses and
transaction-related costs, we exclude the after-tax effect of
non-deductible transaction-related costs from non-GAAP net income
because we believe (i) the amount of such expenses in any specific
period may not directly correlate to the underlying performance of our
business operations and (ii) such expenses can vary significantly
between periods.
-
Tax shortfall (excess tax benefit) from
stock-based compensation - ASU 2016-09, Improvements
to Employee Share-Based Payment Accounting, became effective for
the Company during the first quarter of 2017 and changes the treatment
of tax shortfall and excess tax benefits arising from stock-based
compensation arrangements. Prior to ASU 2016-09, these amounts were
recorded as an increase (for excess benefits) or decrease (for
shortfalls) to additional paid-in capital. With the adoption of ASU
2016-09, these amounts are now captured in the period's income tax
expense. We exclude this component of income tax expense from non-GAAP
financial measures because we believe (i) the amount of such expenses
or benefits in any specific period may not directly correlate to the
underlying performance of our business operations; (ii) such expenses
or benefits can vary significantly between periods as a result of the
valuation of grants of new stock-based awards, the timing of vesting
of awards, and periodic movements in the fair value of our common
stock; and (iii) excluding these amounts assists in the comparability
between current period results and results during periods prior to the
adoption of ASU 2016-09.
-
Tax reform effects - The enactment of the
Tax Cuts and Jobs Act on December 22, 2017 resulted in a one-time
adjustment to deferred tax positions carried on our balance sheet to
reflect the reduced federal tax rate at which these temporary items
are expected to reverse, with a resulting non-recurring impact to that
period's income tax expense. We exclude tax reform's effects on income
tax expense from non-GAAP net income because we believe (i) such
amounts are nonrecurring in nature and (ii) are not indicative of that
period's underlying performance or ongoing operations.
-
Valuation allowance for state NOLs - As
part of the Healthland acquisition, we acquired certain state NOLs for
which a valuation allowance was established in purchase accounting
related to states which do not permit consolidated returns and for
which projected taxable income results in a conclusion that some of
these NOLs will expire unused. We exclude the impact on our periodic
income tax expense arising from changes in these valuation allowances
as we believe (i) such amounts are nonrecurring in nature and (ii) are
not indicative of that period's underlying performance or ongoing
operations.
Management considers these non-GAAP financial measures to be important
indicators of our operational strength and performance of our business
and a good measure of our historical operating trends, in particular the
extent to which ongoing operations impact our overall financial
performance. In addition, management may use Adjusted EBITDA, Non-GAAP
net income and/or Non-GAAP EPS to measure the achievement of performance
objectives under the Company's stock and cash incentive programs. Note,
however, that these non-GAAP financial measures are performance measures
only, and they do not provide any measure of cash flow or liquidity.
Non-GAAP financial measures are not alternatives for measures of
financial performance prepared in accordance with GAAP and may be
different from similarly titled non-GAAP measures presented by other
companies, limiting their usefulness as comparative measures. Non-GAAP
financial measures have limitations in that they do not reflect all of
the amounts associated with our results of operations as determined in
accordance with GAAP. Additionally, there is no certainty that we will
not incur expenses in the future that are similar to those excluded in
the calculations of the non-GAAP financial measures presented in this
press release. Investors and potential investors are encouraged to
review the "Unaudited Reconciliation of Non-GAAP Financial Measures"
above.
View source version on businesswire.com: http://www.businesswire.com/news/home/20180208005964/en/
[ Back To TMCnet.com's Homepage ]
|