MOORESTOWN, N.J., Nov. 9, 2016 (GLOBE NEWSWIRE) — Tabula Rasa HealthCare, Inc. (“TRHC”) (NASDAQ:TRHC), a leader in providing patient-specific, data-driven technology and solutions that enable healthcare organizations to optimize medication regimens to improve patient outcomes, reduce hospitalizations, lower healthcare costs and manage risk, today announced its financial results for the third quarter ended September 30, 2016.
TRHC Chairman and CEO, Calvin H. Knowlton, PhD, commented, “I’m pleased with our performance during our first publically reported quarter. We continue to win new business within our core market, PACE (Program of All-Inclusive Care for the Elderly, a Medicare Advantage-type plan), as well as successfully expand our Medication Risk Mitigation platform into adjacent markets with other types of health plans, further proving its scalability.”
Dr. Knowlton continued, “There is significant runway ahead of us as we continue to develop and evolve our proprietary Medication Risk Mitigation platform and address larger patient populations with our goal of improving outcomes and lowering healthcare cost.”
Financial Performance for the Three Months Ended September 30, 2016
All comparisons, unless otherwise noted, are to the three months ended September 30, 2015.
- Total revenue was $24.2 million, an increase of 35%. Total revenue included product revenue of $20.7 million, an increase of 35%, and service revenue of $3.4 million, an increase of 34%.
- Gross margin was 29%, compared to 32%. The year over year decline is primarily related to a mix shift in client and business make-up, as well as to staffing increases associated with upcoming contracts.
- Net loss was $142 thousand, compared to a net loss of $3.3 million. Third quarter 2016 included a $1.4 million expense related to the early extinguishment of debt.
- Net loss per diluted share was $0.08, compared to a net loss per share of $3.21. The net loss per share calculations were based on a diluted share count of 10.3 million for the third quarter of 2016, compared to 4.4 million shares a year ago.
- Non-GAAP Adjusted EBITDA was $3.3 million, compared to $2.4 million, an increase of 38% compared to a year ago. Adjusted EBITDA margin of 13.5% in the third quarter of 2016 compared favorably to 13.2% during the same period in 2015.
- Non-GAAP Adjusted net income per diluted share was $0.06, compared to a net loss per share of $0.01.
A reconciliation of GAAP to non-GAAP results has been provided in this press release in the accompanying tables. Non-GAAP results exclude change in fair value of warrant liability, loss on extinguishment of debt, change in fair value of acquisition-related contingent consideration (income) expense and stock-based compensation expense. An explanation of these measures is also included below under the heading “Non-GAAP Financial Measures”.
Fourth Quarter 2016 Guidance: Revenue for TRHC’s fourth quarter 2016 is expected to be in the range of $25 million to $26 million. Net loss is expected to be in the range of $6 million to $7 million. Net loss projections include approximately $5 million of expense related to the extinguishment of debt associated with the early repayment of a credit facility in connection with TRHC’s initial public offering, as well as stock based compensation expense of approximately $3.5 million related to restricted stock grants and shares issued in connection with the initial public offering. Adjusted EBITDA is expected to be in the range of $3.5 million to $4.0 million.
Full Year 2016 Guidance: Revenue for fiscal year 2016 is expected to be in the range of $92 million to $93 million. Net loss is expected to be in the range of $6 million to $7 million. Net loss projections include approximately $6.4 million of expense related to the extinguishment of debt, as well as stock based compensation expense of approximately $3.6 million related to restricted stock grants and shares issued in connection with the initial public offering. Adjusted EBITDA is expected to be in the range of $12.5 million to $13.0 million.
TRHC has not provided a reconciliation of projected GAAP Net Income to Adjusted EBITDA guidance because estimates of certain reconciling items cannot be provided without unreasonable effort. Our Adjusted EBITDA guidance for the year ending December 31, 2016, assumes anticipated losses of $6.4 million related to the extinguishment of debt, income of $0.6 million related to the remeasurement of our warrant liability, projected stock compensation of $4.2 million, projected depreciation and amortization charges of $5.1 million and interest expense of $4.5 million. In addition, we assume $0.4 million of income tax expense related to indefinite-lived deferred tax liabilities for goodwill amortization. We cannot provide a reliable forward-looking estimate of certain other reconciling items because they are either event-driven or difficult to quantify without unreasonable effort, in particular the revaluation of our contingent consideration.
Quarterly Conference Call
As previously announced, TRHC will hold a conference call with members of executive management to discuss its third quarter 2016 performance today, Wednesday, November 9, 2016, at 5:00 p.m. EST. Stockholders and other interested participants may listen to a live broadcast of the conference call by dialing 844-413-0947 or 216-562-0423 for international callers, and referencing participant code 98688454 approximately 15 minutes prior to the call. A live webcast of the conference call will be available on the investor relations section of TRHC’s web site (ir.trhc.com) and an audio file of the call will also be archived for 90 days at ir.trhc.com. After the conference call, a replay will be available until December 9, 2016 and can be accessed by dialing 855-859-2056 or 404-537-3406 for international callers, and referencing participant code 98688454.
Non-GAAP Financial Measures
In addition to reporting all financial information required in accordance with accounting principles generally accepted in the United States of America (GAAP), TRHC is also reporting Adjusted EBITDA and Adjusted Diluted EPS, each of which is a non-GAAP financial measure. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance or financial position that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP.
Adjusted EBITDA consists of net loss plus total other expenses, which includes change in fair value of warrant liability, interest expense, loss on extinguishment of debt, provision (benefit) for income tax, depreciation and amortization, change in fair value of acquisition-related contingent consideration (income) expense and stock-based compensation expense. TRHC defines Adjusted Diluted EPS as net income (loss) attributable to common stockholders before accretion of redeemable convertible preferred stock, fair value adjustments related to the remeasurement of warrant liabilities, losses on the extinguishment of debt, fair value adjustments for acquisition-related contingent consideration, stock-based compensation expense, and the tax impact of those items expressed on a per share basis using weighted average diluted shares outstanding. TRHC believes the exclusion of these items assists in providing a more complete understanding of the company’s underlying operations results and trends and allows for comparability with TRHC’s peer company index and industry and to be more consistent with TRHC’s expected capital structure on a going forward basis. Please note that other companies might define their non-GAAP financial measures differently than TRHC does.
TRHC presents these non-GAAP financial measures in this release because it considers them to be important supplemental measures of performance. TRHC uses these non-GAAP financial measures for planning purposes, including analysis of the company’s performance against prior periods, the preparation of operating budgets and determination of appropriate levels of operating and capital investments. TRHC believes that these non-GAAP financial measures provide additional insight for analysts and investors in evaluating the company’s financial and operational performance. TRHC also intends to provide these non-GAAP financial measures as part of the company’s future earnings discussions and, therefore, their inclusion should provide consistency in the company’s financial reporting.
Non-GAAP financial measures have limitations as an analytical tool. Investors are encouraged to review the reconciliation of the non-GAAP measures to their most directly comparable GAAP measures provided in this release, including in the accompanying tables.
Safe Harbor Statement
This press release includes forward-looking statements that we believe to be reasonable as of today’s date. Such statements are identified by use of the words “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “projects,” “should,” and similar expressions. These forward-looking statements are based on management’s expectations and assumptions as of the date of this press release. Actual results might differ materially from those explicit or implicit in the forward-looking statements. Important factors that could cause actual results to differ materially include: our continuing losses and need to achieve profitability; fluctuations in our financial results; the acceptance and use of our products and services by PACE organizations; the need to innovate and provide useful products and services; risks related to changing healthcare and other applicable regulations; our ability to maintain relationships with a specified drug wholesaler; increasing consolidation in the healthcare industry; managing our growth effectively; our ability to adequately protect our intellectual property; the requirements of being a public company; our ability to recognize the expected benefits from acquisitions on a timely basis or at all; our status as an “emerging growth company”; and the other risk factors set forth from time to time in our SEC filings, including those factors discussed under the caption “Risk Factors” in our prospectus, filed with the SEC on September 29, 2016, pursuant to Rule 424(b) under the Securities Act, copies of which are available free of charge within the Investor Relations section of the Tabula Rasa HealthCare website ir.trhc.com or upon request from our Investor Relations Department. Tabula Rasa HealthCare assumes no obligation and does not intend to update these forward-looking statements, except as required by law, to reflect events or circumstances occurring after today’s date.
- TRHC Unaudited Consolidated Balance Sheets
- TRHC Unaudited Consolidated Statements of Operations
- TRHC Unaudited Consolidated Statements of Cash Flows
- TRHC Unaudited Reconciliation of GAAP to Non-GAAP Measures