BioTelemetry, Inc. Reports Third Quarter 2016 Financial Results

MALVERN, Pa., Nov. 02, 2016 (GLOBE NEWSWIRE) -- BioTelemetry, Inc. (NASDAQ:BEAT), the leading wireless 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 third quarter ended September 30, 2016.

Company Highlights
  • Recognized highest quarterly revenue in Company's history of $53.1 million, a 22% increase over the prior year
  • Recorded $4.1 million GAAP net income for the third quarter
  • Realized highest quarterly adjusted EBITDA in Company's history of $12.2 million, a 40% increase over the prior year
  • Experienced 9% year over year growth in patient volume
  • Generated $26.4 million of cash from operations year to date, the highest in the Company's history
  • Repaid $11.5 million of revolving debt in early October
  • Received positive coverage decision from Anthem for use of MCT for certain patients

President and CEO Commentary

Joseph H. Capper, President and Chief Executive Officer of BioTelemetry, Inc., commented: "With our strong third quarter results, we delivered our seventeenth consecutive quarter of year over year revenue growth and our seventh consecutive quarter of year over year net income growth.  Our commitment to our core operating principles continues to deliver outstanding results, as evidenced by our 40% adjusted EBITDA growth.  Our top line momentum, with 22% growth, was driven by the success of our sales strategy to be the single source provider of cardiac monitoring solutions.  As a result, we continue to grow substantially faster than the market, posting 9% patient volume growth, highlighted by double digit MCT growth.  Additionally, our second quarter acquisitions had a positive impact on both our top and bottom lines.     

"BioTelemetry is on track to deliver record results for 2016, and we expect to achieve the higher end of our adjusted EBITDA guidance of $44 to $46 million.  Looking forward to 2017, we expect the Company's growth to continue to outpace the cardiac monitoring industry.  This will be driven, in part, by the expansion of our unmatched product portfolio with the upcoming launch of our next generation device, the MCOT TM Patch, and by maximizing the opportunity to now service certain Anthem patients with MCT.  We are also uniquely positioned to capitalize on other opportunities to use our technology to improve patient care and lower costs.  With our proven strategy and strong performance, we are confident that our growth will continue into 2017."        

Third Quarter Financial Results

Revenue for the third quarter 2016 was $53.1 million compared to $43.5 million for the third quarter 2015, reflecting an increase of $9.6 million, or 22.0%.  Healthcare revenue increased $4.7 million due to increased patient volumes and higher patient pricing due to a favorable product mix as well as higher MCT Medicare pricing.  Research revenue increased $4.9 million, due to the acquisition of VirtualScopics during the second quarter. 

Gross profit for the third quarter 2016 increased to $32.9 million, or 61.9% of revenue, compared to $26.3 million, or 60.6% of revenue, for the third quarter 2015.  The increase in gross margin percentage was due to Healthcare volume efficiencies, higher Healthcare pricing as well as reduced costs related to shipping and device communications.  These increases were partially offset by the impact of our acquisitions, which caused a shift in our revenue mix toward Research which carries a lower margin than our Healthcare business.

On a GAAP basis, operating expense for the third quarter 2016 was $27.9 million, compared to $23.3 million for the second quarter 2015.  On an adjusted basis 1, operating expense for the third quarter 2016 was $25.5 million compared to $21.9 million for the third quarter 2015.  The adjusted operating expense excludes $2.4 million of other charges for the third quarter 2016 primarily related to patent litigation and the integration of the second quarter acquisitions and $1.4 million for the third quarter 2015 primarily related to patent litigation. The increase in adjusted expense was driven by the addition of $2.0 million related to our acquired companies, a $1.0 million increase in employee related expense, a $0.3 million increase in bad debt expense and $0.3 million of additional consulting expense primarily related to ongoing product development.

Interest and other loss, net was $0.6 million for the third quarter 2016 compared to $0.4 million for the third quarter 2015.  The increase was primarily due to higher interest expense stemming from borrowings under the revolving credit facility.

On a GAAP basis, net income for the third quarter 2016 was $4.1 million, or $0.14 per diluted share, compared to net income of $2.5 million, or $0.08 per diluted share, for the third quarter 2015.  Excluding the $2.4 million of other charges 1, adjusted net income for the third quarter 2016 was $6.5 million, or $0.21 per diluted share.  This compares to adjusted net income of $3.9 million, or $0.13 per diluted share, for the third quarter 2015, which excludes the impact of $1.4 million of other charges.

Liquidity

As of September 30, 2016, total cash was $32.3 million, an increase of $6.8 million compared to June 30, 2016.  During the quarter ended September 30, 2016, the Company generated $8.9 million of cash from operations.  In addition, the Company used $2.8 million of cash during the quarter for capital expenditures, primarily medical devices.  Consolidated days sales outstanding decreased to 48 days as of September 30, 2016, down from 49 days as of June 30, 2016.

As of September 30, 2016, the Company had total indebtedness of $37.4 million.  On October 11, 2016, the Company repaid $11.5 million of the outstanding borrowings under the revolving credit facility.

______________________________________1 The Company believes that its adjusted financial results, which exclude Other charges, offer a meaningful representation of the Company's performance as they exclude expenses that are not necessary to support the Company's ongoing business.  

Conference Call BioTelemetry, Inc. will host an earnings conference call on Wednesday, November 2, 2016 at 5:00 PM Eastern Time.  The call will be simultaneously webcast on the investor information page of our website, www.gobio.com.  The call will be archived on our website for two weeks. 

About BioTelemetryBioTelemetry, Inc., formerly known as CardioNet, Inc., is the leading wireless medical technology company focused on the delivery of health information to improve quality of life and reduce cost of care.  The Company currently provides cardiac monitoring services, original equipment manufacturing with a primary focus on cardiac monitoring devices and centralized cardiac core laboratory services.  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.  These statements may be identified by words such as "expect," "anticipate," "estimate," "intend," "plan," "believe," "promises" and other words and terms of similar meaning.  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 successfully integrate acquisitions into our business and the effect such acquisitions will have on our results of operation, effectiveness of our cost savings initiatives, relationships with our government and commercial payors, changes to insurance coverage and reimbursement levels for our products, the success of our sales and marketing initiatives, our ability to attract and retain talented executive management and sales personnel, our ability to identify acquisition candidates, acquire them on attractive terms and integrate their operations into our business, the commercialization of new products, market factors, internal research and development initiatives, partnered research and development initiatives, competitive product development, changes in governmental regulations and legislation, the continued consolidation of payors, acceptance of our new products and services, patent protection, adverse regulatory action, and litigation success.  For further details and a discussion of these and other risks and uncertainties, please see our public filings with the Securities and Exchange Commission, including our latest periodic reports on Form 10-K and 10-Q.  We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise.
   
   
  Three Months Ended
Consolidated Statements of Operations (unaudited)
(In Thousands, Except Per Share Amounts)        
    September 30 , 2016   September 30 , 2015
         
Revenues $ 53,055     $ 43,492  
Cost of revenues   20,189       17,155  
Gross profit   32,866       26,337  
Gross profit %     61.9 %       60.6 %
         
Operating expenses:      
General and administrative   13,853       11,497  
Sales and marketing   7,018       6,632  
Bad debt expense   2,495       2,245  
Research and development   2,137       1,565  
Other charges   2,397       1,392  
Total operating expenses   27,900       23,331  
         
Income from operations   4,966       3,006  
Interest and other loss, net   (630 )     (391 )
         
Income before income taxes   4,336       2,615  
Provision for income taxes   (235 )     (137 )
Net Income $ 4,101     $ 2,478  
         
Net income per share:      
Basic $ 0.15     $ 0.09  
Diluted $ 0.14     $ 0.08  
       
Weighted average number of common shares outstanding:        
Basic   28,102       27,181  
Diluted   30,334       29,311  
       

   
  Nine Months Ended
Consolidated Statements of Operations (unaudited)
(In Thousands, Except Per Share Amounts)        
    September 30 , 2016   September 30 , 2015
         
Revenues $ 154,375     $ 131,739  
Cost of revenues   57,961       53,446  
Gross profit   96,414       78,293  
Gross profit %   62.5 %     59.4 %
         
Operating expenses:      
General and administrative   40,577       35,100  
Sales and marketing   21,687       20,741  
Bad debt expense   7,797       6,769  
Research and development   5,888       5,161  
Other charges   5,844       4,462  
Total operating expenses   81,793       72,233  
         
Income from operations   14,621       6,060  
Interest and other loss, net   (1,686 )     (1,220 )
         
Income before income taxes   12,935       4,840  
Provision for income taxes   (529 )     (260 )
Net Income $ 12,406     $ 4,580  
         
Net income per share:      
Basic $ 0.45     $ 0.17  
Diluted $ 0.42     $ 0.16  
       
Weighted average number of common shares outstanding:        
Basic   27,811       27,063  
Diluted   29,857       29,019  
       

     
Summary Financial Data
(In Thousands, except days sales outstanding)                       
     September 30,  2016    December 31, 2015
  (unaudited)   (unaudited)
       
Cash and cash equivalents $ 32,255     $ 18,986  
Healthcare accounts receivable, net   15,654       15,179  
Other accounts receivable, net   12,794       8,997  
Days sales outstanding   48       47  
Working capital   25,657       23,157  
Total assets   165,211       124,143  
Total indebtedness   37,414       23,582  
Total shareholders' equity   95,032       75,926  
       

Reconciliation of Non-GAAP Financial Measures(In Thousands, Except Per Share Amounts)

In accordance with Regulation G of the Securities and Exchange Commission, the table set forth below reconciles certain financial measures used in this press release that were not calculated in accordance with generally accepted accounting principles, or GAAP, with the most directly comparable financial measure calculated in accordance with GAAP.  The Company believes that its adjusted financial results, which exclude Other charges, offer a meaningful representation of the Company's performance as they exclude expenses that are not necessary to support the Company's ongoing business.  

  Three Months Ended (unaudited)
  September 30 , 2016   September 30 , 2015
Income from operations - GAAP $ 4,966     $ 3,006  
Other charges (a)   2,397       1,392  
Adjusted income from operations $  7,363     $    4,398  
               
Net income - GAAP $ 4,101     $ 2,478  
Other charges (a)   2,397       1,392  
Adjusted net income $ 6,498     $  3,870  
                   
Net income per diluted share - GAAP $ 0.14     $ 0.08  
Other charges per diluted share (a)   0.07       0.05  
Adjusted net income per diluted share     $ 0.21     $      0.13  
                   
                   
    Three Months Ended
  (unaudited)
       
  September 30 , 2016   September 30 , 2015
       
Cash provided by operating activities $ 8,879     $ 4,164  
Capital expenditures   (2,815 )     (3,641 )
Free cash flow $ 6,064     $ 523  
               

      Three Months Ended
  (unaudited)
       
  September 30 , 2016   September 30 , 2015
       
Net income - GAAP $ 4,101     $ 2,478  
Provision for income taxes   235       137  
Interest, other loss (net)   630       391  
Other charges (a)   2,397       1,392  
Depreciation and amortization expense       3,689       3,165  
Stock compensation expense   1,138       1,139  
Adjusted EBITDA $ 12,190     $ 8,702  

(a) In the third quarter 2016, the Company incurred $2.4 million of other charges primarily due to patent litigation and the acquisitions completed in the second quarter.  In the third quarter 2015, the Company incurred $1.4 million of other charges primarily related to patent litigation.

Reconciliation of Non-GAAP Financial Measures(In Thousands, Except Per Share Amounts)

In accordance with Regulation G of the Securities and Exchange Commission, the table set forth below reconciles certain financial measures used in this press release that were not calculated in accordance with generally accepted accounting principles, or GAAP, with the most directly comparable financial measure calculated in accordance with GAAP.  The Company believes that its adjusted financial results, which exclude Other charges, offer a meaningful representation of the Company's performance as they exclude expenses that are not necessary to support the Company's ongoing business.  
  Nine Months Ended (unaudited)
  September 30 , 2016   September 30 , 2015
Income from operations - GAAP $ 14,621     $ 6,060  
Other charges (a)   5,844       4,462  
Adjusted income from operations $     20,465     $   10,522  
               
Net income - GAAP $ 12,406     $ 4,580  
Other charges (a)   5,844       4,462  
Adjusted net income $     18,250     $   9,042  
       
Net income per diluted share - GAAP $ 0.42     $ 0.16  
Other charges per diluted share (a)   0.19       0.15  
Adjusted net income per diluted share     $      0.61     $     0.31  
       

   
    Nine Months Ended
  (unaudited)
       
  September 30 , 2016   September 30 , 2015
       
Cash provided by operating activities         $ 26,405     $ 7,153  
Capital expenditures   (8,507 )     (10,310 )
Free cash flow $ 17,898     $ (3,157 )

   
    Nine Months Ended
  (unaudited)
       
  September 30 , 2016   September 30 , 2015
       
Net income - GAAP $ 12,406     $ 4,580  
Provision for income taxes   529       260  
Interest, other loss (net)   1,686       1,220  
Other charges (a)   5,844       4,462  
Depreciation and amortization expense       10,619       9,124  
Stock compensation expense   3,757       3,321  
Adjusted EBITDA $ 34,841     $ 22,967  

(a) In the first three quarters of 2016, the Company incurred $5.8 million other charges primarily due to patent litigation and the acquisitions completed in the second quarter.  In the first three quarters of 2015, the Company incurred $4.5 million of other charges primarily due to patent litigation as well as costs related to the integration of the 2014 acquisitions. 
Contact: BioTelemetry, Inc.Heather C. GetzInvestor Relations800-908-7103investorrelations@biotelinc.com

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