BioTelemetry, Inc. Reports Third Quarter 2020 Financial Results

MALVERN, Pa., Oct. 29, 2020 (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 quarter ended September 30, 2020.

Quarter Highlights

  • Recognized quarterly total revenue of $114.7 million
  • Reached 3.0% year-over-year quarterly revenue growth, despite the impact of COVID-19
  • Reported quarterly GAAP net income of $6.7 million, or 5.9% of total revenue
  • Realized quarterly adjusted EBITDA of $30.6 million, or 26.7% of total revenue
  • Acquired Remote Patient Monitoring (“RPM”) assets from a subsidiary of Centene Corporation

President and CEO Commentary

Joseph H. Capper, President and Chief Executive Officer of BioTelemetry, Inc., commented:

“We are pleased to announce that we achieved solid third quarter results with record revenue of $114.7 million and EBITDA of $30.6 million despite the external challenges facing the market at large.  This is a testament to the dedication and commitment of the entire BioTelemetry team.  All segments of the business contributed to this excellent Q3 rebound, posting 15.7% sequential growth.  Cardiac monitoring volumes exited the quarter above pre-COVID levels, and our recurring cardiac revenue increased as a percentage of total revenue.  Our Population Health business grew nicely as well, driven by the launch of the Centene partnership.

“Despite the numerous challenges posed by the pandemic, we remained focused on executing our strategy.  We continued to augment our Artificial Intelligence capabilities, which are enhancing scalability and improving efficiencies across the enterprise.  Telehealth and remote monitoring will continue to play an integral role in a post-COVID-19 marketplace.  As one of the largest, fastest growing and most profitable connected health companies, we are perfectly positioned to capitalize on these opportunities.  As such, we expect to outperform the market for years to come, with top-line growth of over 15% in 2021.”

Third Quarter Financial Results

Total revenue for the third quarter 2020 was $114.7 million compared to $111.3 million for the third quarter 2019, an increase of $3.4 million, or 3.0%.

Gross profit for the third quarter 2020 was $69.0 million, or 60.2% of total revenue, compared to $69.3 million, or 62.3% of total revenue, for the third quarter 2019.

On a GAAP basis, net income for the third quarter 2020 was $6.7 million, or $0.18 per diluted share, compared to net income of $8.3 million, or $0.23 per diluted share, for the third quarter 2019.  The decline in net income was primarily due to increased fixed operating costs as we continue to invest in our anticipated growth, which has been affected by COVID-19. 

On an adjusted basis1, net income for the third quarter 2020 was $16.5 million, or $0.45 per diluted share.  This compares to adjusted net income of $18.8 million, or $0.52 per diluted share, for the third quarter 2019.  The decline in non-GAAP adjusted net income was consistent with the change in GAAP net income.  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.

Conference Call

BioTelemetry, Inc. will host an earnings conference call on Thursday, October 29, 2020, at 5:00 PM Eastern Time.  The call will be webcast on the investor information page of our website, www.gobio.com.  The call will be archived on our website for at least two weeks.

About BioTelemetry

BioTelemetry, Inc. is the leading remote medical technology company focused on the delivery of health information to improve quality of life and reduce cost of care.  We provide remote cardiac monitoring, centralized core laboratory services for clinical trials, remote blood glucose monitoring 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, including our ability to increase demand for our products and services, to grow our market share and to recover from the impacts of the COVID-19 pandemic 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; acceptance of our new products and services, such as our mobile cardiac telemetry patch; the impact of the COVID-19 pandemic; the impact of the October 2019 information technology incident; our ability to obtain and maintain required regulatory approvals for our products, services and manufacturing facilities; changes in governmental regulations and legislation; adverse regulatory actions; our ability to obtain and maintain adequate protection of our intellectual property; interruptions or delays in the telecommunications systems and/or information technology 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, 2019, as well as the factors that are described in “Part II; Item 1A.  Risk Factors” of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020.

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.

Contact:       
BioTelemetry, Inc.
Heather C. Getz
Executive Vice President, Chief Financial and Administrative Officer
(800) 908-7103
investorrelations@gobio.com


BioTelemetry, Inc.
Consolidated Statements of Operations
(unaudited)

 Three Months Ended Nine Months Ended
 September 30, September 30,
(in thousands, except per share data)2020 2019 2020 2019
Revenue$114,655  $111,291  $317,093  $327,073 
Other revenue    9,702   
Total revenue114,655  111,291  326,795  327,073 
Cost of revenue45,668  41,952  125,773  122,716 
Gross profit68,987  69,339  201,022  204,357 
Gross profit %60.2 62.3% 61.5 62.5
        
Operating expenses:       
General and administrative32,757  29,651  95,737  87,845 
Sales and marketing11,652  12,572  35,619  37,807 
Credit loss expense6,465  5,858  18,651  16,385 
Research and development3,039  3,661  9,306  10,526 
Other charges3,186  2,598  10,273  7,902 
Total operating expenses57,099  54,340  169,586  160,465 
        
Income from operations11,888  14,999  31,436  43,892 
        
Other expense:       
Interest expense(902) (2,338) (4,711) (7,358)
Loss on equity method investments  (65)   (251)
Other non-operating expense, net(312) (845) (781) (1,813)
Total other expense, net(1,214) (3,248) (5,492) (9,422)
        
Income before income taxes10,674  11,751  25,944  34,470 
Provision for income taxes(3,960) (3,468) (9,840) (6,202)
Net income$6,714  $8,283  $16,104  $28,268 
        
Net income per common share:       
Basic$0.20  $0.24  $0.47  $0.83 
Diluted$0.18  $0.23  $0.44  $0.78 
        
Weighted average number of common shares outstanding:       
Basic34,321  33,908  34,267  33,885 
Diluted36,624  36,268  36,629  36,445 


BioTelemetry, Inc.
Condensed Consolidated Balance Sheets

 September 30,
2020
 December 31,
2019
(in thousands) 
ASSETS(unaudited)  
Current assets:   
Cash and cash equivalents$90,229  $68,614 
Healthcare accounts receivable, net72,351  71,851 
Other accounts receivable, net16,287  15,625 
Inventory5,538  5,738 
Prepaid expenses and other current assets5,976  6,505 
Total current assets190,381  168,333 
    
Property and equipment, net63,138  56,380 
Intangible assets, net129,023  129,596 
Goodwill305,591  301,321 
Deferred tax assets4,273  12,626 
Other assets44,689  17,464 
Total assets$737,095  $685,720 
    
LIABILITIES AND STOCKHOLDERS’ EQUITY   
Current liabilities:   
Accounts payable21,229  24,198 
Accrued liabilities46,530  27,318 
Current portion of finance lease obligations253  394 
Current portion of long-term debt  3,844 
Total current liabilities68,012  55,754 
    
Long-term portion of finance lease obligations194  289 
Long-term debt157,883  190,823 
Other long-term liabilities114,625  71,937 
Total liabilities340,714  318,803 
    
Total stockholders’ equity396,381  366,917 
    
Total liabilities and stockholders’ equity$737,095  $685,720 



BioTelemetry, Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures
Quarterly Non-GAAP Adjusted Net Income and Non-GAAP Adjusted Net Income Per Share

  Three Months Ended
(unaudited) September 30, 2020
(in thousands, except per share data) Income from operations Income before income taxes Net income Net income per diluted share
GAAP $11,888  $10,674  $6,714  $0.18 
Non-GAAP adjustments:        
Other charges (a) 3,186  3,186  3,186  0.09 
Acquisition amortization (b) 4,084  4,084  4,084  0.11 
Other expense adjustments (c)   (6) (6)  
Income tax effect of adjustments (d)     (2,414) (0.07)
Impact of NOL utilization (e)     4,984  0.14 
Non-GAAP Adjusted $19,158  $17,938  $16,548  $0.45 


  Three Months Ended
(unaudited) September 30, 2019
(in thousands, except per share data) Income from operations Income before income taxes Net income Net income per diluted share
GAAP $14,999  $11,751  $8,283  $0.23 
Non-GAAP adjustments:        
Other charges (a) 2,598  2,598  2,598  0.07 
Acquisition amortization (b) 3,668  3,668  3,668  0.10 
Other expense adjustments (c)   787  787  0.02 
Income tax effect of adjustments (d)     (1,436) (0.04)
Impact of NOL utilization (e)     4,903  0.14 
Non-GAAP Adjusted $21,265  $18,804  $18,803  $0.52 
  1. In the third quarter 2020, other charges of $3.2 million were primarily due to a $1.2 million unfavorable change in the fair value of acquisition-related contingent consideration, $1.1 million for patent and other litigation and $0.9 million of integration and other non-recurring charges.  In the third quarter 2019, other charges of $2.6 million were primarily due to $2.1 million for patent and other litigation and $0.4 million for integration and other non-recurring charges.
     
  2. In the third quarter 2020 and 2019, we recognized $4.1 million and $3.7 million of expense, respectively, related to the amortization of acquisition-related intangible assets.  We have excluded this amortization of acquisition-related intangible assets from non-GAAP adjusted net income due to the non-operational nature of the expense.  This amortization was recorded as a component of general and administrative expense.
     
  3. In the third quarter 2020, we had an unrealized foreign exchange gain of $0.1 million, offset partially by $0.1 million of interest expense related to a portion of the Geneva Healthcare deferred purchase consideration.  In the third quarter 2019, we had an unrealized foreign exchange loss of $0.7 million and interest expense of $0.1 million related to a portion of the Geneva Healthcare deferred purchase consideration.
     
  4. Represents the tax effect of the non-GAAP adjustments at the Company’s annual effective tax rate.
     
  5. After giving effect to taxes at the estimated annual effective tax rate on the adjustments, the utilization of net operating loss carryforwards had a positive $5.0 million and $4.9 million impact on the third quarter 2020 and 2019, respectively.


BioTelemetry, Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures
Year-to-Date Non-GAAP Adjusted Net Income and Non-GAAP Adjusted Net Income Per Share

  Nine Months Ended
(unaudited) September 30, 2020
(in thousands, except per share data) Income from operations Income before income taxes Net income Net income per diluted share*
GAAP $31,436  $25,944  $16,104  $0.44 
Non-GAAP adjustments:        
Other charges (f) 10,273  10,273  10,273  0.28 
Acquisition amortization (g) 11,492  11,492  11,492  0.31 
Other expense adjustments (h)   1,159  1,159  0.03 
Income tax effect of adjustments (i)     (7,618) (0.21)
Impact of NOL utilization (j)     14,381  0.39 
Non-GAAP Adjusted $53,201  $48,868  $45,791  $1.25 
* Total does not add due to rounding        


  Nine Months Ended
(unaudited) September 30, 2019
(in thousands, except per share data) Income from operations Income before income taxes Net income Net income per diluted share*
GAAP $43,892  $34,470  $28,268  $0.78 
Non-GAAP adjustments:        
Other charges (f) 7,902  7,902  7,902  0.22 
Acquisition amortization (g) 10,742  10,742  10,742  0.29 
Other expense adjustments (h)   1,719  1,719  0.05 
Income tax effect of adjustments (i)     (4,146) (0.11)
Impact of NOL utilization (j)     8,942  0.25 
Non-GAAP Adjusted $62,536  $54,833  $53,427  $1.47 
* Total does not add due to rounding        
  1. For the nine months ended September 30, 2020, other charges of $10.3 million were primarily due to $3.9 million for patent and other litigation, a $3.1 million unfavorable change in the fair value of acquisition-related contingent consideration, $1.4 million of acquisition and integration costs and $1.9 million of other non-recurring charges.  For the nine months ended September 30, 2019, other charges of $7.9 million were primarily due to $5.8 million for patent and other litigation and $3.3 million for integration and restructuring activities related to our acquisitions, partially offset by a $1.7 million reduction in the fair value of acquisition-related contingent consideration.
     
  2. For the nine months ended September 30, 2020 and 2019, we recognized $11.5 million and $10.7 million of expense, respectively, related to the amortization of acquisition-related intangible assets.  We have excluded this amortization of acquisition-related intangible assets from non-GAAP adjusted net income due to the non-operational nature of the expense.  This amortization was recorded as a component of general and administrative expense.
     
  3. For the nine months ended September 30, 2020, we incurred $0.9 million of interest expense related to a portion of the Geneva Healthcare deferred purchase consideration and had an unrealized foreign exchange loss of $0.3 million.  For the nine months ended September 30, 2019, we had an unrealized foreign exchange loss of $2.2 million and interest expense of $0.2 million related to a portion of the Geneva Healthcare deferred purchase consideration, partially offset by a $0.7 million gain associated with the termination of a former LifeWatch foreign pension plan.
     
  4. Represents the tax effect of the non-GAAP adjustments at the Company’s annual effective tax rate.
     
  5. After giving effect to taxes at the estimated annual effective tax rate on the adjustments, the utilization of net operating loss carryforwards items had a positive $14.4 million and $8.9 million impact for the nine months ended September 30, 2020 and 2019, respectively.


BioTelemetry, Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures
Quarterly and Year-to-Date Non-GAAP Adjusted EBITDA and EBITDA Margin

(unaudited) Three Months Ended Nine Months Ended
  September 30, September 30,
(in thousands) 2020 2019 2020 2019
Net income - GAAP $6,714  $8,283  $16,104  $28,268 
Provision for income taxes 3,960  3,468  9,840  6,202 
Total other expense, net 1,214  3,248  5,492  9,422 
Other charges 3,186  2,598  10,273  7,902 
Depreciation and amortization expense 11,518  10,295  32,882  30,508 
Stock compensation expense 4,020  3,636  11,080  9,662 
Non-GAAP Adjusted EBITDA $30,612  $31,528  $85,671  $91,964 
GAAP Net income as a percentage of total revenue 5.9% 7.4% 4.9% 8.6%
Non-GAAP Adjusted EBITDA margin 26.7% 28.3% 26.2% 28.1%

Quarterly and Year-to-Date Non-GAAP Free Cash Flow

(unaudited) Three Months Ended Nine Months Ended
  September 30, September 30,
(in thousands) 2020 2019 2020 2019
Cash provided by operating activities $21,889  $16,472  $91,434  $52,602 
Capital expenditures (10,767) (7,594) (27,877) (23,686)
Non-GAAP Free Cash Flow $11,122  $8,878  $63,557  $28,916 

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 income before income taxes, adjusted net income, adjusted net income per diluted share, adjusted EBITDA and free cash flow.  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 for the third quarter 2020 excludes other charges of $3.2 million, $4.1 million of amortization expense related to our acquisition-related intangible assets, $0.1 million of unrealized foreign currency gain, $0.1 million of interest expense related to a portion of the Geneva Healthcare deferred purchase consideration, the tax effect of these adjustments, as well as the impact from the utilization of our net operating loss carryforwards.  Adjusted net income for the third quarter 2019 excludes other charges of $2.6 million, $3.7 million of amortization expense related to acquisition-related intangible assets, $0.7 million of unrealized foreign currency loss, $0.1 million of interest expense related to a portion of the Geneva Healthcare contingent consideration, the tax effect of these adjustments, as well as the impact from the utilization of net operating loss carryforwards.  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 legal and professional fees, integration related expenses, primarily severance, patent and other litigation, amortization of acquired intangibles, costs related to the October 2019 information technology incident net of insurance proceeds, 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.

In addition to adjusted income from operations, adjusted income before income taxes, adjusted net income, adjusted net income per diluted share and free cash flow, we also present adjusted EBITDA.  This Non-GAAP financial measure excludes income taxes, total other expense, net, 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 may calculate adjusted EBITDA in a different manner.

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