[February 15, 2019] |
|
CPSI Announces Fourth Quarter and Year-End 2018 Results
CPSI (NASDAQ: CPSI):
Highlights for Fourth Quarter 2018:
-
Revenues of $72.3 million;
-
TruBridge bookings of $7.8 million;
-
Backlog of $257 million;
-
Total bookings of $23.6 million;
-
GAAP net income of $7.6 million and non-GAAP net income of $10.7
million;
-
Adjusted EBITDA of $15.3 million;
-
Cash provided by operations of $9.1 million;
-
GAAP earnings per diluted share of $ 0.54 and non-GAAP earnings per
diluted share of $0.78; 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, 2018.
The Company also announced that its Board of Directors has declared a
quarterly cash dividend of $0.10 per share, payable on March 18, 2019,
to stockholders of record as of the close of business on March 1, 2019.
Total revenues for the fourth quarter ended December 31, 2018, were
$72.3 million, compared with total revenues of $78.1 million for the
prior-year fourth quarter. GAAP net income for the quarter ended
December 31, 2018, was $7.6 million, or $0.54 per diluted share,
compared with a net loss of $21.5 million, or $1.57 per diluted share,
for the quarter ended December 31, 2017. The fourth quarter of 2017
included a $28.0 million non-cash goodwill impairment charge related to
the Company's post-acute care business. Cash provided by operations for
the fourth quarter of 2018 was $9.1 million, compared with $5.3 million
for the prior-year period.
"CPSI closed out 2018 with a solid performance in the fourth quarter,"
said Boyd Douglas, president and chief executive officer of CPSI. "We
are especially pleased with the greater than 40% increase in fourth
quarter bookings for our services business, TruBridge. The healthy
installation schedule for our acute care electronic health record (EHR)
systems, decent add-on sales and stable net new bookings this quarter
all contributed to a strong finish for 2018."
Commenting on the Company's financial performance for the quarter, Matt
Chambless, chief financial officer of CPSI, stated, "The fourth quarter
was one of milestones for CPSI, with nearly all profitability metrics at
or near their highest points since bringing Healthland and AHT into our
family of companies. Strength in cash flows allowed for aggressive
de-leveraging, resulting in a final leverage ratio that was effectively
at our target. Looking forward, we are committed to continuing to
deliver value to our EHR clients, harvesting additional growth
opportunities with TruBridge, and using the flexibility of our improved
leverage profile to pursue more opportunistic uses of capital, all while
continuing to ensure that we are making the best use of our resources."
CPSI will hold a live webcast to discuss fourth quarter and year-end
2018 results today, Friday, February 15, 2019, at 9:30 a.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, their clinics and post-acute care facilities.
Founded in 1979, CPSI is the parent of three companies - Evident, LLC,
American HealthTech, Inc. and TruBridge, LLC. 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 for community hospitals and their affiliated
clinics. American HealthTech is one of the nation's largest providers of
EHR solutions and services for post-acute care facilities. TruBridge
focuses on providing business, consulting and managed IT services, along
with its complete RCM solution for all care settings. 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; 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 Income
(In thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31,
|
|
|
Twelve Months Ended December 31,
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
Sales revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
System sales and support
|
|
|
$
|
47,242
|
|
|
|
$
|
54,998
|
|
|
|
$
|
180,164
|
|
|
|
$
|
188,261
|
|
TruBridge
|
|
|
|
25,085
|
|
|
|
|
23,065
|
|
|
|
|
100,247
|
|
|
|
|
88,666
|
|
Total sales revenues
|
|
|
|
72,327
|
|
|
|
|
78,063
|
|
|
|
|
280,411
|
|
|
|
|
276,927
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs of sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
System sales and support
|
|
|
|
18,445
|
|
|
|
|
20,551
|
|
|
|
|
75,984
|
|
|
|
|
80,018
|
|
TruBridge
|
|
|
|
14,198
|
|
|
|
|
13,309
|
|
|
|
|
54,699
|
|
|
|
|
49,636
|
|
Total costs of sales
|
|
|
|
32,643
|
|
|
|
|
33,860
|
|
|
|
|
130,683
|
|
|
|
|
129,654
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
|
39,684
|
|
|
|
|
44,203
|
|
|
|
|
149,728
|
|
|
|
|
147,273
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Product development
|
|
|
|
8,995
|
|
|
|
|
8,996
|
|
|
|
|
36,371
|
|
|
|
|
33,737
|
|
Sales and marketing
|
|
|
|
7,935
|
|
|
|
|
9,760
|
|
|
|
|
30,713
|
|
|
|
|
33,021
|
|
General and administrative
|
|
|
|
10,514
|
|
|
|
|
12,964
|
|
|
|
|
47,275
|
|
|
|
|
46,923
|
|
Amortization of acquisition-related
intangibles
|
|
|
|
2,592
|
|
|
|
|
2,601
|
|
|
|
|
10,487
|
|
|
|
|
10,406
|
|
Goodwill impairment
|
|
|
|
-
|
|
|
|
|
28,000
|
|
|
|
|
-
|
|
|
|
|
28,000
|
|
Total operating expenses
|
|
|
|
30,036
|
|
|
|
|
62,321
|
|
|
|
|
124,846
|
|
|
|
|
152,087
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
|
9,648
|
|
|
|
|
(18,118
|
)
|
|
|
|
24,882
|
|
|
|
|
(4,814
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense)
|
|
|
|
210
|
|
|
|
|
(1,175
|
)
|
|
|
|
803
|
|
|
|
|
407
|
|
Interest expense
|
|
|
|
(1,963
|
)
|
|
|
|
(1,928
|
)
|
|
|
|
(7,577
|
)
|
|
|
|
(9,076
|
)
|
Total other expense
|
|
|
|
(1,753
|
)
|
|
|
|
(3,103
|
)
|
|
|
|
(6,774
|
)
|
|
|
|
(8,669
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before taxes
|
|
|
|
7,895
|
|
|
|
|
(21,221
|
)
|
|
|
|
18,108
|
|
|
|
|
(13,483
|
)
|
Provision for income taxes
|
|
|
|
307
|
|
|
|
|
316
|
|
|
|
|
476
|
|
|
|
|
3,933
|
|
Net income (loss)
|
|
|
$
|
7,588
|
|
|
|
$
|
(21,537
|
)
|
|
|
$
|
17,632
|
|
|
|
$
|
(17,416
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per common share - basic
and diluted
|
|
|
$
|
0.54
|
|
|
|
$
|
(1.57
|
)
|
|
|
$
|
1.26
|
|
|
|
$
|
(1.27
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding used
in per common share computations:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
13,606
|
|
|
|
|
13,450
|
|
|
|
|
13,561
|
|
|
|
|
13,419
|
|
Diluted
|
|
|
|
13,630
|
|
|
|
|
13,450
|
|
|
|
|
13,568
|
|
|
|
|
13,419
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMPUTER PROGRAMS AND SYSTEMS, INC.
Condensed Consolidated Balance Sheets
(In thousands, except per share data)
|
|
|
|
|
Dec. 31, 2018
|
|
|
Dec. 31, 2017
|
|
|
|
(Unaudited)
|
|
|
|
ASSETS
|
Current assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
5,732
|
|
|
|
$
|
520
|
|
Accounts receivable, net of allowance for doubtful accounts of
$2,124 and $2,654, respectively
|
|
|
|
40,474
|
|
|
|
|
38,061
|
|
Financing receivables, current portion, net
|
|
|
|
15,059
|
|
|
|
|
15,055
|
|
Inventories
|
|
|
|
1,498
|
|
|
|
|
1,417
|
|
Prepaid income taxes
|
|
|
|
2,120
|
|
|
|
|
-
|
|
Prepaid expenses and other
|
|
|
|
5,055
|
|
|
|
|
2,824
|
|
Total current assets
|
|
|
|
69,938
|
|
|
|
|
57,877
|
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
|
|
10,875
|
|
|
|
|
11,692
|
|
Financing receivables, net of current portion
|
|
|
|
19,263
|
|
|
|
|
11,485
|
|
Other assets, net of current portion
|
|
|
|
995
|
|
|
|
|
-
|
|
Intangible assets, net
|
|
|
|
86,226
|
|
|
|
|
96,713
|
|
Goodwill
|
|
|
|
140,449
|
|
|
|
|
140,449
|
|
Total assets
|
|
|
$
|
327,746
|
|
|
|
$
|
318,216
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
Current liabilities:
|
|
|
|
|
|
|
Accounts payable
|
|
|
$
|
5,668
|
|
|
|
$
|
7,620
|
|
Current portion of long-term debt
|
|
|
|
6,486
|
|
|
|
|
5,820
|
|
Deferred revenue
|
|
|
|
10,201
|
|
|
|
|
8,707
|
|
Accrued vacation
|
|
|
|
3,929
|
|
|
|
|
3,794
|
|
Income taxes payable
|
|
|
|
-
|
|
|
|
|
810
|
|
Other accrued liabilities
|
|
|
|
12,219
|
|
|
|
|
14,098
|
|
Total current liabilities
|
|
|
|
38,503
|
|
|
|
|
40,849
|
|
|
|
|
|
|
|
|
Long-term debt, less current portion
|
|
|
|
124,583
|
|
|
|
|
136,614
|
|
Deferred tax liabilities
|
|
|
|
4,877
|
|
|
|
|
4,667
|
|
Total liabilities
|
|
|
|
167,963
|
|
|
|
|
182,130
|
|
|
|
|
|
|
|
|
Stockholders' Equity:
|
|
|
|
|
|
|
Common stock, $0.001 par value per share; 30,000 shares authorized;
14,083 and 13,760 shares issued and outstanding
|
|
|
|
14
|
|
|
|
|
14
|
|
Additional paid-in capital
|
|
|
|
164,793
|
|
|
|
|
155,078
|
|
Retained earnings
|
|
|
|
(5,024
|
)
|
|
|
|
(19,006
|
)
|
Total stockholders' equity
|
|
|
|
159,783
|
|
|
|
|
136,086
|
|
Total liabilities and stockholders' equity
|
|
|
$
|
327,746
|
|
|
|
$
|
318,216
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMPUTER PROGRAMS AND SYSTEMS, INC.
Unaudited Condensed Consolidated Statements of Cash Flows
(In thousands)
|
|
|
|
|
Twelve Months Ended
December 31,
|
|
|
|
2018
|
|
|
2017
|
Operating activities:
|
|
|
|
|
|
|
Net income (loss)
|
|
|
$
|
17,632
|
|
|
|
$
|
(17,416
|
)
|
Adjustments to net income (loss):
|
|
|
|
|
|
|
Provision for bad debt
|
|
|
|
3,176
|
|
|
|
|
3,421
|
|
Deferred taxes
|
|
|
|
(364
|
)
|
|
|
|
1,421
|
|
Stock-based compensation
|
|
|
|
9,715
|
|
|
|
|
7,166
|
|
Depreciation
|
|
|
|
1,795
|
|
|
|
|
2,473
|
|
Intangible amortization
|
|
|
|
10,487
|
|
|
|
|
10,406
|
|
Amortization of deferred finance costs
|
|
|
|
345
|
|
|
|
|
645
|
|
Goodwill impairment
|
|
|
|
-
|
|
|
|
|
28,000
|
|
Loss on extinguishment of debt
|
|
|
|
-
|
|
|
|
|
1,340
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
Accounts receivable
|
|
|
|
(3,898
|
)
|
|
|
|
(7,847
|
)
|
Financing receivables
|
|
|
|
(9,473
|
)
|
|
|
|
(17,308
|
)
|
Inventories
|
|
|
|
(81
|
)
|
|
|
|
280
|
|
Prepaid expenses and other
|
|
|
|
549
|
|
|
|
|
(30
|
)
|
Accounts payable
|
|
|
|
(1,952
|
)
|
|
|
|
779
|
|
Deferred revenue
|
|
|
|
264
|
|
|
|
|
2,867
|
|
Other liabilities
|
|
|
|
(1,336
|
)
|
|
|
|
6,069
|
|
Income taxes payable
|
|
|
|
(2,930
|
)
|
|
|
|
1,377
|
|
Net cash provided by operating activities
|
|
|
|
23,929
|
|
|
|
|
23,643
|
|
|
|
|
|
|
|
|
Investing activities:
|
|
|
|
|
|
|
Purchases of property and equipment
|
|
|
|
(978
|
)
|
|
|
|
(726
|
)
|
Net cash used in investing activities
|
|
|
|
(978
|
)
|
|
|
|
(726
|
)
|
|
|
|
|
|
|
|
Financing activities:
|
|
|
|
|
|
|
Dividends paid
|
|
|
|
(5,620
|
)
|
|
|
|
(11,636
|
)
|
Proceeds from long-term debt
|
|
|
|
7,300
|
|
|
|
|
777
|
|
Payments of long-term debt
|
|
|
|
(19,010
|
)
|
|
|
|
(13,134
|
)
|
Payments of contingent consideration
|
|
|
|
(409
|
)
|
|
|
|
(625
|
)
|
Proceeds from exercise of stock options
|
|
|
|
-
|
|
|
|
|
1
|
|
Net cash used in financing activities
|
|
|
|
(17,739
|
)
|
|
|
|
(24,617
|
)
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
|
5,212
|
|
|
|
|
(1,700
|
)
|
|
|
|
|
|
|
|
Cash and cash equivalents, beginning of period
|
|
|
|
520
|
|
|
|
|
2,220
|
|
Cash and cash equivalents, end of period
|
|
|
$
|
5,732
|
|
|
|
$
|
520
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMPUTER PROGRAMS AND SYSTEMS, INC.
Unaudited Other Supplemental Information
Consolidated Bookings
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
|
Twelve Months Ended
December 31,
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
System sales and support(1)
|
|
|
$
|
15,863
|
|
|
$
|
14,284
|
|
|
$
|
62,764
|
|
|
$
|
77,482
|
TruBridge(2)
|
|
|
|
7,752
|
|
|
|
5,511
|
|
|
|
25,244
|
|
|
|
31,435
|
Total
|
|
|
$
|
23,615
|
|
|
$
|
19,795
|
|
|
$
|
88,008
|
|
|
$
|
108,917
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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,
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
Net income (loss), as reported
|
|
|
$
|
7,588
|
|
|
$
|
(21,537
|
)
|
|
|
$
|
17,632
|
|
|
$
|
(17,416
|
)
|
Depreciation expense
|
|
|
|
379
|
|
|
|
528
|
|
|
|
|
1,795
|
|
|
|
2,473
|
|
Amortization of acquisition-related intangible assets
|
|
|
|
2,592
|
|
|
|
2,601
|
|
|
|
|
10,487
|
|
|
|
10,406
|
|
Stock-based compensation
|
|
|
|
2,412
|
|
|
|
2,146
|
|
|
|
|
9,715
|
|
|
|
7,166
|
|
Severance and other non-recurring charges
|
|
|
|
270
|
|
|
|
94
|
|
|
|
|
1,186
|
|
|
|
2,380
|
|
Goodwill impairment charges
|
|
|
|
-
|
|
|
|
28,000
|
|
|
|
|
-
|
|
|
|
28,000
|
|
Interest expense and other, net
|
|
|
|
1,753
|
|
|
|
3,103
|
|
|
|
|
6,774
|
|
|
|
8,669
|
|
Provision for income taxes
|
|
|
|
307
|
|
|
|
316
|
|
|
|
|
476
|
|
|
|
3,933
|
|
Adjusted EBITDA
|
|
|
$
|
15,301
|
|
|
$
|
15,251
|
|
|
|
$
|
48,065
|
|
|
$
|
45,611
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 $0.9 million
and $3.3 million for the three and twelve months ended December 31,
2018, respectively, compared with $0.6 million and $6.0 million for
the three and twelve months ended December 31, 2017, respectively.
|
|
|
|
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,
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
Net income (loss), as reported
|
|
|
$
|
7,588
|
|
|
|
$
|
(21,537
|
)
|
|
|
$
|
17,632
|
|
|
|
$
|
(17,416
|
)
|
Pre-tax adjustments for Non-GAAP EPS:
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of acquisition-related intangible assets
|
|
|
|
2,592
|
|
|
|
|
2,601
|
|
|
|
|
10,487
|
|
|
|
|
10,406
|
|
Stock-based compensation
|
|
|
|
2,412
|
|
|
|
|
2,146
|
|
|
|
|
9,715
|
|
|
|
|
7,166
|
|
Severance and other non-recurring charges
|
|
|
|
270
|
|
|
|
|
94
|
|
|
|
|
1,186
|
|
|
|
|
2,380
|
|
Non-cash interest expense
|
|
|
|
86
|
|
|
|
|
98
|
|
|
|
|
345
|
|
|
|
|
645
|
|
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 21% and 35%, respectively
|
|
|
|
(1,126
|
)
|
|
|
|
(2,198
|
)
|
|
|
|
(4,564
|
)
|
|
|
|
(7,678
|
)
|
Tax shortfall from stock-based compensation
|
|
|
|
2
|
|
|
|
|
72
|
|
|
|
|
396
|
|
|
|
|
1,155
|
|
Tax reform effects
|
|
|
|
-
|
|
|
|
|
(1,890
|
)
|
|
|
|
-
|
|
|
|
|
(1,890
|
)
|
Valuation allowance for state NOLs
|
|
|
|
(1,149
|
)
|
|
|
|
(304
|
)
|
|
|
|
(1,149
|
)
|
|
|
|
(304
|
)
|
Non-GAAP net income
|
|
|
$
|
10,675
|
|
|
|
$
|
8,422
|
|
|
|
$
|
34,048
|
|
|
|
$
|
23,804
|
|
Weighted average shares outstanding, diluted
|
|
|
|
13,630
|
|
|
|
|
13,450
|
|
|
|
|
13,568
|
|
|
|
|
13,419
|
|
Non-GAAP EPS
|
|
|
$
|
0.78
|
|
|
|
$
|
0.63
|
|
|
|
$
|
2.51
|
|
|
|
$
|
1.77
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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)
depreciation; (ii) amortization of acquisition-related intangible
assets; (iii) stock-based compensation; (iv) severance and other
non-recurring expenses; (v) goodwill impairment charges; (vi) interest
expense and other, net; and (vii) 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)
amortization of acquisition-related intangible assets; (ii)
stock-based compensation; (iii) severance and other non-recurring
expenses; (iv) non-cash charges to interest expense; (v) loss on
extinguishment of debt; (vi) goodwill impairment charges; and (vii)
the total tax effect of items (i) through (vi). Adjustments to
Non-GAAP net income also include the after-tax effect of the shortfall
from stock-based compensation, 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:
-
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.
-
Severance and other non-recurring expenses -
Non-recurring expenses relate to certain severance and other charges
incurred in connection with activities that are considered one-time.
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.
-
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 such amounts
(i) 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 such amounts (i) 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: https://www.businesswire.com/news/home/20190215005206/en/
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