Medidata (NASDAQ: MDSO) today announced its financial results
for the second quarter of 2018.
“We executed well operationally and delivered strong business
results this quarter and in the first half of the year, all while
closing our largest acquisition to date,” said Tarek Sherif,
chairman and chief executive officer, Medidata. “Providing the life
sciences industry a next gen analytics solution for
commercialization, and the addition of leading edge, real world
evidence capabilities as part of our platform, positions Medidata
to be the strategic partner for customers pursuing digital
transformation.”
Second Quarter 2018 Results
- Total revenue was $155.9 million, an
increase of $19.9 million, or 15%, compared with $136.0 million in
the second quarter of 2017
- Subscription revenue was $130.5
million, an increase of $17.6 million, or 16%, compared with the
same period last year. Professional services revenue was $25.4
million, an increase of $2.3 million, or 10%, compared with $23.1
million in the second quarter of 2017
- GAAP operating income was $12.8
million, up 1%, compared with $12.7 million in the second quarter
of 2017. Non-GAAP operating income1 was $36.6 million, up 18%,
compared with $31.0 million a year ago
- GAAP net income was $16.6 million, or
$0.27 per diluted share, up 120%, compared with $7.5 million, or
$0.13 per diluted share, in the second quarter of 2017. Non-GAAP
net income1 was $26.4 million, or $0.43 per diluted share, up 46%,
compared with $18.1 million, or $0.30 per diluted share, in the
second quarter of 2017. See the non-GAAP reconciliation included in
this release for full details of the non-GAAP adjustments
- GAAP net income includes a gain of $7.6
million on the company’s original investment in SHYFT
- Total cash and marketable securities
were $477.4 million at the end of the quarter, compared with $663.3
million on December 31, 2017
- Remaining 2018 adjusted subscription
backlog2 as of June 30, 2018 was $263 million, an increase of $40
million, or 18%, compared with a year ago
Additional Highlights:
- IDC’s report (Worldwide Life Science
Software Market Shares, 2017), published this June, names Medidata
as the global leader in Life Science Development Software revenue.
The report cites that Medidata has extended its leadership
position.
- Novartis partnered with SHYFT to
support the commercialization of key therapies in Europe with
insights-based analytics
- Medidata delivered the industry’s
largest Synthetic Control Database in Acute Myeloid Leukemia (AML)
to a top pharma company. This targeted approach highlights the
breadth and value of the company’s clinical data repository.
- Three top 25 pharma customers added
RAVE Imaging to their existing enterprise agreements, indicating
how Medidata enables companies to address the increasing use of
medical imaging in clinical trials
- A top 10 pharma customer adopted Edge
Site Payments as their global payments platform
- On average, contracts were renewed at
24% above prior value on a trailing twelve-month basis
"We are on track to achieve our financial targets,” said Rouven
Bergmann, chief financial officer, Medidata. “Our competitive
position has never been stronger, with the acquisition of SHYFT and
continued excellent enterprise renewal performance. On top of this,
we increased EBITDAO by over 20% year to date.”
For the full year 2018, the company's guidance provided on June
12, 2018 is unchanged. Please refer to the reconciliation of
forward-looking guidance included in this release for full details
of the non-GAAP adjustments.
Conference call details:
Time:
Today, July 24, 8 a.m. ET
Live dial-in:
1-877-303-2528, domestic
1-847-829-0023, international
Webcast:
investor.mdsol.com
Replay:
1-800-585-8367, domestic
1-404-537-3406, international Passcode: 7399978
About Medidata
Medidata is leading the digital transformation of life sciences
with the world's most-used platform for clinical development,
commercial and real-world data. Powered by artificial intelligence
and delivered by #1 ranked industry experts, the Intelligent
Platform for Life Sciences helps pharmaceutical, biotech, medical
device companies and academic researchers accelerate value,
minimize risk and optimize outcomes. Medidata serves more than
1,000 customers and partners worldwide and empowers more than
100,000 certified users every day to create hope for millions of
patients. Discover the future of life sciences: www.mdsol.com
Cautionary Statement
Certain statements made in this press release are
“forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995 that involve significant
risks and uncertainties about Medidata Solutions, Inc.
(“Medidata”), including, but not limited to, statements about
Medidata’s forecast of financial performance, products and
services, business model, strategy and growth opportunities, and
competitive position. Such statements are subject to risks and
uncertainties that could cause actual performance or results to
differ materially from those expressed in these statements. Among
other things, the risks and uncertainties include, those associated
with possible fluctuations in our financial and operating results;
integration activities, performance and financial impact of
acquired companies; our ability to retain and expand our customer
base or increase new business from those customers; our ability to
continue to release, and gain customer acceptance of, new and
improved versions of our products. For additional disclosure
regarding these and other risks faced by Medidata, see disclosures
contained in Medidata’s public filings with the Securities and
Exchange Commission, including the “Risk Factors” section of
Medidata’s Annual Report on Form 10-K for the year ended December
31, 2017. You should consider these factors in evaluating the
forward-looking statements included in this press release and not
place undue reliance on such statements. The forward-looking
statements are made as of the date hereof, and Medidata undertakes
no obligation to update such statements as a result of new
information, new developments or otherwise, except as required by
law.
(1) Non-GAAP Financial Information
Medidata provides non-GAAP operating income, net income, and net
income per share data as a supplement to its operating results.
These measures are not in accordance with, or an alternative to,
generally accepted accounting principles (GAAP), and may be
different from non-GAAP measures used by other companies.
Management uses these non-GAAP measures to evaluate its financial
results, develop budgets, manage expenditures, and as an important
factor in determining variable compensation. In addition,
management believes, based on discussions with investors, that
these non-GAAP measures enhance investors’ ability to assess
Medidata’s historical and projected future financial performance.
While management believes these non-GAAP financial measures provide
useful supplemental information to investors, there are inherent
limitations associated with the use of non-GAAP financial measures.
Investors are encouraged to review the attached reconciliations of
these non-GAAP financial measures to the nearest comparable GAAP
measures.
(2) Adjusted subscription backlog equals subscription backlog
plus outstanding intra-year renewals valued at an amount equal to
the contracts to be renewed.
MEDIDATA SOLUTIONS, INC. CONSOLIDATED STATEMENTS OF
OPERATIONS (Unaudited) (Amounts in thousands, except per
share data) Three Months Ended June 30,
Six Months Ended June 30, 2018 2017
2018 2017 Revenues Subscription $ 130,486 $
112,904 (3 ) $ 257,305 $ 220,797 (3 ) Professional services 25,419
23,123 47,798 42,874 Total revenues
155,905 136,027 305,103 263,671 Cost of revenues (1)(2)
Subscription 21,602 17,017 41,943 34,146 Professional services
15,899 14,903 31,860 28,388 Total cost
of revenues 37,501 31,920 73,803 62,534 Gross profit 118,404
104,107 231,300 201,137 Operating costs and expenses Research and
development (1) 40,789 35,884 78,311 65,821 Sales and marketing
(1)(2) 37,106 32,479 (3 ) 73,967 62,705 (3 ) General and
administrative (1) 27,672 23,083 52,859 47,071
Total operating costs and expenses 105,567 91,446
205,137 175,597 Operating income 12,837 12,661
26,163 25,540
Interest and other income (expense)
Interest expense (5,700 ) (4,383 ) (11,275 ) (8,710 ) Interest
income 2,328 1,328 4,416 2,499 Other income, net 7,729 —
7,633 — Total interest and other income
(expense), net 4,357 (3,055 ) 774 (6,211 ) Income
before income taxes 17,194 9,606 26,937 19,329 Provision for income
taxes 605 2,065 (3 ) 23 1,808 (3 ) Net
income $ 16,589 $ 7,541 (3 ) $ 26,914 $ 17,521
(3 ) Earnings per share Basic $ 0.29 $ 0.13 (3
) $ 0.47 $ 0.31 (3 ) Diluted $ 0.27 $ 0.13
(3 ) $ 0.44 $ 0.30 (3 ) Weighted average
common shares outstanding Basic 57,448 56,433 57,252 56,254 Diluted
60,874 59,835 60,564 59,051 (1) Stock-based compensation expense
included in cost of revenues and operating costs and expenses is as
follows: Cost of revenues $ 1,506 $ 1,246 $ 2,774 $ 2,415 Research
and development 3,319 3,427 6,173 6,262 Sales and marketing 2,917
1,836 5,561 3,011 General and administrative 7,377 6,183
13,766 11,325 Total stock-based compensation $
15,119 $ 12,692 $ 28,274 $ 23,013 (2)
Amortization of intangible assets included in costs of revenues and
operating costs and expenses is as follows: Cost of revenues $
1,205 $ 1,022 $ 2,299 $ 1,476 Sales and marketing 231 119
351 202 Total amortization of intangible
assets $ 1,436 $ 1,141 $ 2,650 $ 1,678
(3) Figures for the three and six months ended June 30, 2017
have been recast to reflect our January 1, 2018 full retrospective
adoption of Accounting Standards Codification ("ASC") 606.
MEDIDATA SOLUTIONS, INC.
Reconciliation of GAAP Operating Income
and GAAP Net Income to
Non-GAAP Operating Income and Non-GAAP
Net Income (Unaudited)
(Amounts in thousands, except per share data)
Three Months Ended June 30, Six Months
Ended June 30, 2018 2017 2018
2017 Operating income: GAAP operating income $ 12,837
$ 12,661 (6 ) $ 26,163 $ 25,540 (6 ) GAAP operating margins 8.2
%
9.3 % (6 ) 8.6 % 9.7 % (6 ) Stock-based compensation 15,119 12,692
28,274 23,013 Depreciation and amortization 8,405 5,589 16,218
10,065 Contingent consideration adjustment (1) 79 58 7 58 Cash
compensation from acquisition-related agreements (2) 134 —
134 — Non-GAAP operating income $ 36,574
$ 31,000 (6 ) $ 70,796 $ 58,676 (6 )
Non-GAAP operating margins 23.5 % 22.8 % (6 ) 23.2 % 22.3 % (6 )
Net income: GAAP net income $ 16,589 $ 7,541 (6 ) $ 26,914 $ 17,521
(6 ) Stock-based compensation 15,119 12,692 28,274 23,013
Amortization 1,436 1,141 2,650 1,678 Contingent consideration
adjustment (1) 79 58 7 58 Cash compensation from
acquisition-related agreements (2) 134 — 134 — Non-cash interest
expense (3) 3,963 3,648 7,871 7,246 Gain on step acquisition (4)
(7,648 ) — (7,648 ) — Tax impact on add-back items (5) (3,271 )
(7,016 ) (7,822 ) (12,798 )
Non-GAAP net income
$ 26,401 $ 18,064 (6 ) $ 50,380 $ 36,718
(6 ) GAAP basic earnings per share $ 0.29 $ 0.13
(6 ) $ 0.47 $ 0.31 (6 ) GAAP diluted earnings
per share $ 0.27 $ 0.13 (6 ) $ 0.44 $ 0.30
(6 )
Non-GAAP basic earnings per share
$ 0.46 $ 0.32 (6 ) $ 0.88 $ 0.65 (6 )
Non-GAAP diluted earnings per share
$ 0.43 $ 0.30 (6 ) $ 0.83 $ 0.62 (6 )
(1) Change in fair value of acquisition-related contingent
consideration liabilities. (2) Expense associated with
acquisition-related cash compensation agreements entered into with
certain employees of SHYFT Analytics, Inc. ("SHYFT"). (3) Non-cash
interest expense includes amortization of debt discount and
issuance costs on our 1.00% convertible senior notes issued in 2013
and amortization of issuance costs on our credit agreement entered
into in 2017. We exclude this incremental non-cash interest expense
for purposes of calculating non-GAAP net income. We believe that
excluding these expenses from our non-GAAP measures is useful to
investors because such incremental non-cash interest expense does
not generate a cash outflow, nor do the debt issuance costs
represent a cash outflow except in the period of issuance;
therefore both are not indicative of our continuing operations. (4)
Elimination of gain recognized upon step acquisition of SHYFT. (5)
Tax impact calculated using tax rates of 25% and 40% for the
periods ended June 30, 2018 and 2017, respectively. (6) Figures for
the three and six months ended June 30, 2017 have been recast to
reflect our January 1, 2018 full retrospective adoption of ASC 606.
The table above presents a reconciliation
of GAAP to non-GAAP operating income, net income, and net income
per share applicable to common stockholders for the three and six
months ended June 30, 2018 and 2017. Non-GAAP operating income
excludes the impact of stock-based compensation, depreciation,
amortization of intangible assets associated with acquisitions,
adjustments to the fair value of contingent consideration, and cash
compensation from acquisition-related agreements. Non-GAAP net
income excludes the tax-affected impact of stock-based
compensation, amortization of intangible assets associated with
acquisitions, adjustments to the fair value of contingent
consideration, cash compensation from acquisition-related
agreements, non-cash interest expense, and gain on step
acquisition.
MEDIDATA SOLUTIONS, INC. CONSOLIDATED BALANCE SHEETS
(Unaudited) (Amounts in thousands, except per share
data)
June 30, 2018
December 31, 2017
ASSETS Current assets: Cash and cash equivalents $ 120,298 $
237,325 Marketable securities 287,603 246,967 Accounts receivable,
net of allowance for doubtful accounts of $1,668 and $1,454,
respectively 137,169 110,685 Prepaid commission expense 17,612
12,404 Prepaid expenses and other current assets 37,109
33,636 Total current assets 599,791 641,017 Restricted cash
5,523 5,518 Furniture, fixtures and equipment, net 93,088 88,091
Marketable securities, long-term 69,476 179,041 Goodwill 198,780
47,435 Intangible assets, net 54,938 17,587 Deferred income taxes,
long-term 37,414 35,789 Other assets 43,775 46,755
Total assets $ 1,102,785 $ 1,061,233
LIABILITIES
AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable
$ 6,527 $ 5,009 Accrued payroll and other compensation 23,061
32,537 Accrued expenses and other 37,624 36,041 Deferred revenue
72,075 77,375 1.00% convertible senior notes, net 285,748
278,094 Total current liabilities 425,035 429,056
Noncurrent liabilities: Term loan, net 91,906 92,841
Deferred revenue, less current portion 3,993 5,256 Deferred tax
liabilities 100 99 Other long-term liabilities 20,395 21,371
Total noncurrent liabilities 116,394 119,567
Total liabilities 541,429 548,623 Commitments and
contingencies Stockholders' equity: Preferred stock, par value
$0.01 per share; 5,000 shares authorized, none issued and
outstanding — — Common stock, par value $0.01 per share; 200,000
shares authorized; 64,289 and 62,801 shares issued; 59,634 and
58,607 shares outstanding, respectively 643 628 Additional paid-in
capital 527,336 486,147 Treasury stock, 4,655 and 4,194 shares,
respectively (150,964 ) (132,705 ) Accumulated other comprehensive
loss (4,490 ) (3,377 ) Retained earnings 188,831 161,917
Total stockholders' equity 561,356 512,610
Total liabilities and stockholders' equity $ 1,102,785 $
1,061,233
MEDIDATA SOLUTIONS, INC. CONSOLIDATED
STATEMENTS OF CASH FLOWS (Unaudited) (Amounts in
thousands) Six Months Ended June 30, 2018
2017 Cash flows from operating activities Net income
$ 26,914 $ 17,521 (1 ) Adjustments to reconcile net income to net
cash provided by operating activities: Amortization of intangible
assets and depreciation 16,218 10,065 Stock-based compensation
28,274 23,013 Amortization of discounts or premiums on marketable
securities 50 757 Deferred income taxes 106 2,406 (1 ) Amortization
of debt issuance costs 856 639 Amortization of debt discount 7,015
6,607 Provision for doubtful accounts 763 526 Loss (gain) on fixed
asset disposal 127 (2 ) Gain recognized on step acquisition (7,648
) — Changes in fair value of contingent consideration 7 58 Changes
in operating assets and liabilities: Accounts receivable (27,247 )
4,058 Prepaid commission expense (7,205 ) (5,514 ) (1 ) Prepaid
expenses and other current assets (3,008 ) (12,366 ) (1 ) Other
assets 1,591 1,171
Accounts payable 1,753 4,490 Accrued payroll and other compensation
(8,909 ) (10,122 ) Accrued expenses and other (764 ) 5,313 Deferred
revenue (9,572 ) 11,198 (1 ) Other long-term liabilities 4,455
884 Net cash provided by operating activities 23,776
60,702 Cash flows from investing activities Purchase
of furniture, fixtures and equipment (19,520 ) (16,642 ) Purchase
of available-for-sale securities (69,214 ) (157,228 ) Proceeds from
sale of available-for-sale securities 137,786 154,117 Acquisition
of businesses, net of cash acquired (178,568 ) (22,941 ) Net cash
used in investing activities (129,516 ) (42,694 ) Cash flows from
financing activities Proceeds from exercise of stock options 6,351
9,057 Proceeds from employee stock purchase plan 6,345 4,248
Acquisition of treasury stock (18,257 ) (14,785 ) Term loan
principal payments (1,250 ) — Payment of acquisition-related
earn-outs (4,087 ) — Payment of credit facility financing costs
(175 ) — Net cash used in financing activities (11,073 )
(1,480 ) Effect of exchange rate changes on cash, cash equivalents
and restricted cash (209 ) 414 Net (decrease) increase in
cash, cash equivalents and restricted cash (117,022 ) 16,942 Cash,
cash equivalents and restricted cash – Beginning of period 242,843
99,279
Cash, cash equivalents and restricted cash
– End of period
$ 125,821 $ 116,221 (1) Figures for the six
months ended June 30, 2017 have been recast to reflect our January
1, 2018 full retrospective adoption of ASC 606.
MEDIDATA
SOLUTIONS, INC.
Reconciliation of Forward-Looking GAAP
Operating Income Guidance and GAAP Net Income Guidance to
Non-GAAP Operating Income Guidance and
Non-GAAP Net Income Guidance (Unaudited)
(Amounts in millions) Estimated Full-Year 2018
Total revenues $ 624.0 - $648.0 GAAP operating
income: $ 45.5- $53.5 Stock-based compensation (1) 64.0
Depreciation and amortization (1) 34.0 Contingent consideration
adjustment (1) 0.5 Cash compensation from acquisition-related
agreements (1) 2.0 Non-GAAP operating income $ 146.0
- $154.0 GAAP net income: $ 28.5 - $35.5 Stock-based
compensation (1) 64.0 Amortization (1) 6.0 Non-cash interest
expense (1) 10.0 Contingent consideration adjustment (1) 0.5 Cash
compensation from acquisition-related agreements (1) 2.0 Tax impact
on add-back items (2) (20.5 )
Non-GAAP net income
$ 90.5 - $97.5 Fully diluted share count 61.0
(1) Represents the estimated midpoint of our guidance range. (2)
Tax impact estimated using a 25% rate.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180724005279/en/
Medidata SolutionsInvestor:Betsy Frank,
917-522-4620bfrank@mdsol.comorMedia:Erik Snider,
646-362-2997esnider@mdsol.com
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