Definitive Healthcare Corp. (“Definitive Healthcare” or the
“Company”) (Nasdaq: DH), an industry leader in healthcare
commercial intelligence, today announced financial results for the
quarter and full year ended December 31, 2023.
Fourth Quarter 2023 Financial
Highlights:
-
Revenue was $65.9 million, an increase of 9% from
$60.6 million in Q4 2022.
-
Net (Loss) Income was ($13.4) million, or (20)% of
revenue, compared to $5.9 million, or 10% of revenue in Q4
2022.
-
Adjusted Net Income was $10.6 million, compared to
$10.3 million in Q4 2022.
-
Adjusted EBITDA was $19.8 million, or 30% of
revenue, compared to $17.0 million, or 28% of revenue in Q4
2022.
-
Cash Flow from Operations was $4.7 million in the
quarter.
-
Unlevered Free Cash Flow was $11.1 million in the
quarter.
Full Year 2023 Financial
Highlights:
-
Revenue was $251.4 million for the year, an
increase of 13% from $222.7 million for the full year
2022.
-
Net Loss was ($289.6) million, or (115)% of
revenue, compared to ($24.2) million, or (11)% of revenue for the
full year 2022.
-
Adjusted Net Income was $46.7 million, compared to
$35.4 million for the full year 2022.
-
Adjusted EBITDA was $74.5 million, or 30% of
revenue, compared to $63.7 million, or 29% of revenue for the full
year 2022.
-
Cash Flow from Operations was $41.2 million for
the full year 2023.
-
Unlevered Free Cash Flow was $68.6 million for the
full year 2023.
“We are pleased with our performance in 2023. We
delivered double-digit revenue growth year-over-year in a difficult
macro environment, along with 30% full-year adjusted EBITDA margin,
for Rule of Forty performance,” said Jason Krantz, Founder,
Executive Chairman, and Interim CEO of Definitive Healthcare. “At
the same time, we continued to make investments in innovative
products that will help us continue to drive long term growth and
profitability for our shareholders.”
Recent Business and Operating
Highlights:
Customer Wins
In the fourth quarter, Definitive Healthcare
grew its enterprise client base by 28, or 5% year-over-year, ending
the quarter with 565 enterprise customers, defined as those
customers with more than $100,000 in annual recurring revenue.
Customer wins included:
- A Swiss robotics company, focused on minimally invasive
surgery, plans to utilize our platform across their sales and
marketing organization to create a game plan for entering the U.S.
market by identifying and targeting the most valuable opportunities
for their products within the surgery center, hospital, and
individual physician market.
- A New Jersey-based biopharma company, focused on oncology
therapies for patients with limited treatment options, selected our
Monocl platform to help their marketing and Medical Affairs teams
grow their Key Opinion Leader network to support the launch of a
new combination therapy to treat patients with liver cancer.
- One of the largest not-for-profit, integrated health care
systems based in Massachusetts, selected our new Populi platform to
help them build their physician network by analyzing diagnoses and
procedure volumes in their markets, physician referral patterns,
and service line utilization.
- A global leader in commercial real estate commercial services
and investment selected Definitive Healthcare to help them map out
their clients’ market opportunities including specific pain points
by geography. Additionally, they’re integrating our data into their
Snowflake instance which is an integration partnership that we
launched last year that reinforces our goal of becoming heavily
integrated into our clients’ workflow.
Business Outlook
Based on information as of February 28, 2024,
the Company is issuing the following financial guidance. This
guidance includes the effect of the acquisition of the Carevoyance
product suite.
First Quarter
2024:
-
Revenue is expected to be in the range of $63.0 –
$65.0 million, a 6-10% increase year over year.
-
Adjusted Operating Income is expected to be in the
range of $18.0 – $19.0 million.
-
Adjusted EBITDA is expected to be in the range of
$19.5 – $20.5 million.
- Adjusted Net
Income is expected to be $12.0 – $13.0 million.
- Adjusted Net
Income Per Diluted Share is expected to be $0.07 –
$0.08 per share on approximately 157.4 million weighted-average
shares outstanding.
Full Year 2024:
-
Revenue is expected to be in the range of $263.0 –
$269.0 million, a 5-7% increase from the prior year at the
midpoint.
-
Adjusted Operating Income is expected to be in the
range of $78.0 – $82.0 million.
-
Adjusted EBITDA is expected to be in the range of
$84.0 – $88.0 million.
- Adjusted Net
Income is expected to be $59.0 – $63.0 million.
- Adjusted Net
Income Per Diluted Share is expected to be $0.37 –
$0.40 per share on approximately 159.3 million weighted-average
shares outstanding.
We do not provide a quantitative reconciliation
of the forward-looking non-GAAP financial measures included in this
press release to the most directly comparable GAAP measures due to
the high variability and difficulty to predict certain items
excluded from these non-GAAP financial measures; in particular, the
effects of equity-based compensation expense, taxes and amounts
under the tax receivable agreement, deferred tax assets and
deferred tax liabilities, and transaction, integration, and
restructuring expenses. We expect the variability of these excluded
items may have a significant, and potentially unpredictable, impact
on our future GAAP financial results.
Conference Call Information
Definitive Healthcare will host a conference
call on February 28, 2024, at 5:00 p.m. (Eastern Time) to discuss
the Company's full financial results and current business outlook.
Participants may access the call at 1-877-358-7298 or
1-848-488-9244. Shortly after the conclusion of the call, a replay
of this conference call will be available through March 28, 2024 at
1-800-645-7964 or 1-757-849-6722. The replay passcode is 1765#. A
live audio webcast of the event will be available on Definitive
Healthcare’s Investor Relations website at
https://ir.definitivehc.com/.
About Definitive Healthcare
At Definitive Healthcare, our passion is to
transform data, analytics and expertise into healthcare commercial
intelligence. We help clients uncover the right markets,
opportunities and people, so they can shape tomorrow’s healthcare
industry. Our SaaS platform creates new paths to commercial success
in the healthcare market, so companies can identify where to go
next. Learn more at definitivehc.com.
Forward-Looking
Statements
This press release includes forward-looking statements that
reflect our current views with respect to future events and
financial performance. Such statements are provided under the “safe
harbor” protection of the Private Securities Litigation Reform Act
of 1995. Forward-looking statements include all statements that do
not relate solely to historical or current facts, and can generally
be identified by words or phrases written in the future tense
and/or preceded by words such as “likely,” “will,” “should,” “may,”
“anticipates,” “intends,” “plans,” “seeks,” “believes,”
“estimates,” “expects,” “continues,” “assumes,” “would,”
“potentially” or similar words or variations thereof, or the
negative thereof, references to future periods, or by the inclusion
of forecasts or projections, but these terms are not the exclusive
means of identifying such statements. Examples of forward-looking
statements include, but are not limited to, statements we make
regarding our outlook, financial guidance, the benefits of our
healthcare commercial intelligence solutions, our competitive
position, customer behaviors and use of our solutions, the market,
industry and macroeconomic environment, our business, growth
strategies, product development efforts and future expenses,
customer growth and statements reflecting our expectations about
our ability to execute on our strategic plans, achieve future
growth and profitability and achieve our financial goals.
Forward-looking statements in this press release are based on
our current expectations and assumptions regarding our business,
the economy and other future conditions. Because forward-looking
statements relate to the future, by their nature, they are subject
to inherent uncertainties, risks and changes in circumstances that
are difficult to predict. As a result, our actual results may
differ materially from those contemplated by the forward-looking
statements. Important factors that could cause actual results to
differ materially from those in the forward-looking statements
include the following: our inability to realize expected business
or financial benefits from acquisitions and the risk that our
acquisitions or investments could prove difficult to integrate,
disrupt our business, dilute stockholder value and adversely affect
our business, financial condition and results of operations; our
inability to achieve the anticipated cost savings, operating
efficiencies or other benefits of our internal restructuring
activities; global geopolitical tension and difficult macroeconomic
conditions; actual or potential changes in international, national,
regional and local economic, business and financial conditions,
including recessions, inflation, high interest rates, volatility in
the capital markets and related market uncertainty; the impact of
challenging macroeconomic conditions on our new and existing
customers; our inability to acquire new customers and generate
additional revenue from existing customers; our inability to
generate sales of subscriptions to our platform or any decline in
demand for our platform and the data we offer; the competitiveness
of the market in which we operate and our ability to compete
effectively; the failure to maintain and improve our platform, or
develop new modules or insights for healthcare commercial
intelligence; the inability to obtain and maintain accurate,
comprehensive or reliable data, which could result in reduced
demand for our platform; the risk that our recent growth rates may
not be indicative of our future growth; the inability to achieve or
sustain GAAP or non-GAAP profitability in the future as we increase
investments in our business; the loss of our access to our data
providers; the failure to respond to advances in healthcare
commercial intelligence; an inability to attract new customers and
expand subscriptions of current customers; our ability to
successfully transition executive leadership; the risk of
cyber-attacks and security vulnerabilities; litigation,
investigations or other legal, governmental or regulatory actions;
the possibility that our security measures are breached or
unauthorized access to data is otherwise obtained; the risk that
additional material weaknesses or significant deficiencies that
will occur in the future; and the risks of being required to
collect sales or other related taxes for subscriptions to our
platform in jurisdictions where we have not historically done
so.
Additional factors or events that could cause our actual
performance to differ from these forward-looking statements may
emerge from time to time, and it is not possible for us to predict
all of them. Should one or more of these risks or uncertainties
materialize, or should any of our assumptions prove incorrect, our
actual financial condition, results of operations, future
performance and business may vary in material respects from the
performance projected in these forward-looking
statements.
For additional discussion of factors that could impact our
operational and financial results, refer to our Annual Report on
Form 10-K for the fiscal year ended December 31, 2023 that will be
filed following this earnings release, as well as our Current
Reports on Form 8-K and other subsequent SEC filings, which are or
will be available on the Investor Relations page of our website at
ir.definitivehc.com and on the SEC website at
www.sec.gov.
All information in this press release speaks only as of the date
on which it is made. We undertake no obligation to publicly update
this information, whether as a result of new information, future
developments or otherwise, except as may be required by
law.
Website
Definitive Healthcare intends to use its website as a
distribution channel of material company information. Financial and
other important information regarding the Company is routinely
posted on and accessible through the Company’s website at
https://www.definitivehc.com/. Accordingly, you should monitor the
investor relations portion of our website at
https://ir.definitivehc.com/ in addition to following our press
releases, SEC filings, and public conference calls and webcasts. In
addition, you may automatically receive email alerts and other
information about the Company when you enroll your email address by
visiting the “Email Alerts” section of our investor relations page
at https://ir.definitivehc.com/.
Non-GAAP Financial
Measures
We have presented supplemental non-GAAP
financial measures as part of this earnings release. We believe
that these supplemental non-GAAP financial measures are useful to
investors because they allow for an evaluation of the Company with
a focus on the performance of its core operations, including
providing meaningful comparisons of financial results to historical
periods and to the financial results of peer and competitor
companies. Our use of these non-GAAP terms may vary from the use of
similar terms by other companies in our industry and accordingly
may not be comparable to similarly titled measures used by other
companies and are not measures of performance calculated in
accordance with GAAP. A reconciliation of GAAP to non-GAAP
results has been provided in the financial statement tables
included at the end of this press release.
We refer to Unlevered Free Cash Flow, Adjusted
EBITDA, Adjusted EBITDA Margin, Adjusted Gross Profit, Adjusted
Gross Margin, Adjusted Operating Income, Adjusted Net Income and
Adjusted Net Income Per Diluted Share as non-GAAP financial
measures. These non-GAAP financial measures are not required by or
prepared in accordance with generally accepted accounting
principles in the U.S. (“GAAP”). These are supplemental financial
measures of our performance and should not be considered
substitutes for cash provided by (used in) operating activities,
loss from operations, net (loss) income, net (loss) income margin,
gross profit, gross margin, or any other measure derived in
accordance with GAAP.
We define Unlevered Free Cash Flow as net cash
provided by (used in) operating activities less purchases of
property, equipment and other assets, plus cash interest expense,
and cash payments related to transaction, integration, and
restructuring related expenses, earnouts, and other non-core items.
Unlevered Free Cash Flow does not represent residual cash flow
available for discretionary expenditures since, among other things,
we have mandatory debt service requirements.
We define EBITDA as earnings before debt-related
costs, including interest expense, net and loss on extinguishment
of debt, income taxes and depreciation and amortization. Adjusted
EBITDA is defined as EBITDA adjusted to exclude certain items of a
significant or unusual nature, including other income and expense,
equity-based compensation, goodwill impairments, transaction,
integration, and restructuring expenses and other non-core
expenses. Adjusted EBITDA Margin is defined as Adjusted EBITDA as a
percentage of revenue. Adjusted EBITDA and Adjusted EBITDA Margin
are key metrics used by management and our board of directors to
assess the profitability of our operations. We believe that
Adjusted EBITDA and Adjusted EBITDA Margin provide useful measures
to investors to assess our operating performance because these
metrics eliminate non-core and unusual items and non-cash expenses,
which we do not consider indicative of ongoing operational
performance. We believe that these metrics are helpful to investors
in measuring the profitability of our operations on a consolidated
level.
We define Adjusted Gross Profit as gross profit
excluding acquisition-related depreciation and amortization and
equity-based compensation costs and Adjusted Gross Margin is
defined as Adjusted Gross Profit as a percentage of revenue.
Adjusted Gross Profit and Adjusted Gross Margin are key metrics
used by management and our board of directors to assess our
operations. We exclude acquisition-related depreciation and
amortization expenses as they have no direct correlation to the
cost of operating our business on an ongoing basis. A small portion
of equity-based compensation is included in cost of revenue in
accordance with GAAP but is excluded from our Adjusted Gross Profit
calculations due to its non-cash nature.
We define Adjusted Operating Income as loss from
operations plus acquisition related amortization, equity-based
compensation, goodwill impairments, transaction, integration, and
restructuring expenses and other non-core expenses.
We define Adjusted Net Income as Adjusted
Operating Income less interest expense, net, recurring income tax
benefit, foreign currency (loss) gain, and tax effects of
adjustments. We define Adjusted Net Income Per Diluted Share as
Adjusted Net Income divided by diluted outstanding
shares.
In evaluating our non-GAAP financial measures,
you should be aware that in the future we may incur expenses
similar to those eliminated in these presentations.
Investor Contact: Brian Denyeau ICR
for Definitive
Healthcare brian.denyeau@icrinc.com646-277-1251
Media Contact: Danielle
Johns djohns@definitivehc.com
Definitive Healthcare Corp. |
Consolidated Balance Sheets |
(amounts in thousands, except number of shares and par value;
unaudited) |
|
|
|
|
|
|
|
December 31, 2023 |
|
December 31, 2022 |
Assets |
|
|
|
|
Current assets: |
|
|
|
|
Cash and cash equivalents |
|
|
130,976 |
|
|
|
146,934 |
|
Short-term investments |
|
|
177,092 |
|
|
|
184,939 |
|
Accounts receivable, net |
|
|
59,249 |
|
|
|
58,799 |
|
Prepaid expenses and other assets |
|
|
13,120 |
|
|
|
12,686 |
|
Deferred contract costs |
|
|
13,490 |
|
|
|
10,387 |
|
Total current assets |
|
|
393,927 |
|
|
|
413,745 |
|
Property and equipment, net |
|
|
4,471 |
|
|
|
4,464 |
|
Operating lease right-of-use assets, net |
|
|
9,594 |
|
|
|
9,681 |
|
Other assets |
|
|
2,388 |
|
|
|
4,683 |
|
Deferred contract costs, net of current portion |
|
|
17,320 |
|
|
|
14,596 |
|
Intangible assets, net |
|
|
323,121 |
|
|
|
350,722 |
|
Goodwill |
|
|
1,075,080 |
|
|
|
1,324,733 |
|
Total assets |
|
$ |
1,825,901 |
|
|
$ |
2,122,624 |
|
Liabilities and Equity |
|
|
|
|
Current liabilities: |
|
|
|
|
Accounts payable |
|
|
5,787 |
|
|
|
3,948 |
|
Accrued expenses and other liabilities |
|
|
51,529 |
|
|
|
26,855 |
|
Deferred revenue |
|
|
97,377 |
|
|
|
99,692 |
|
Term loan |
|
|
13,750 |
|
|
|
8,594 |
|
Operating lease liabilities |
|
|
2,239 |
|
|
|
1,521 |
|
Total current liabilities |
|
|
170,682 |
|
|
|
140,610 |
|
Long-term liabilities: |
|
|
|
|
Deferred revenue |
|
|
9 |
|
|
|
236 |
|
Term loan |
|
|
242,567 |
|
|
|
255,765 |
|
Operating lease liabilities |
|
|
9,372 |
|
|
|
9,969 |
|
Tax receivable agreements liability |
|
|
127,000 |
|
|
|
155,111 |
|
Deferred tax liabilities |
|
|
67,163 |
|
|
|
75,737 |
|
Other liabilities |
|
|
9,934 |
|
|
|
3,251 |
|
Total liabilities |
|
|
626,727 |
|
|
|
640,679 |
|
|
|
|
|
|
Equity: |
|
|
|
|
Class A Common Stock, par value $0.001, 600,000,000 shares
authorized, 116,562,252 and 105,138,273 shares issued and
outstanding at December 31, 2023 and 2022, respectively |
|
|
117 |
|
|
|
105 |
|
Class B Common Stock, par value $0.00001, 65,000,000 shares
authorized, 39,762,700 and 39,168,047 shares issued and
outstanding, respectively, at December 31, 2023, and 50,433,101 and
48,923,952 shares issued and outstanding, respectively, at December
31, 2022 |
|
|
— |
|
|
|
— |
|
Additional paid-in capital |
|
|
1,086,581 |
|
|
|
970,207 |
|
Accumulated other comprehensive income |
|
|
2,109 |
|
|
|
3,668 |
|
Accumulated deficit |
|
|
(227,450 |
) |
|
|
(25,062 |
) |
Noncontrolling interests |
|
|
337,817 |
|
|
|
533,027 |
|
Total equity |
|
|
1,199,174 |
|
|
|
1,481,945 |
|
Total liabilities and equity |
|
$ |
1,825,901 |
|
|
$ |
2,122,624 |
|
|
|
|
|
|
|
|
|
- |
|
|
|
- |
|
Definitive Healthcare Corp. |
Consolidated Statements of Operations |
(amounts in thousands, except share amounts and per share data;
unaudited) |
|
|
|
|
|
|
|
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Revenue |
$ |
65,932 |
|
|
$ |
60,599 |
|
|
$ |
251,415 |
|
|
$ |
222,653 |
|
Cost of revenue: |
|
|
|
|
|
|
|
Cost of revenue exclusive of amortization (1) |
|
9,447 |
|
|
|
7,149 |
|
|
|
34,740 |
|
|
|
25,866 |
|
Amortization |
|
3,066 |
|
|
|
2,646 |
|
|
|
12,742 |
|
|
|
16,759 |
|
Gross profit |
|
53,419 |
|
|
|
50,804 |
|
|
|
203,933 |
|
|
|
180,028 |
|
Operating expenses: |
|
|
|
|
|
|
|
Sales and marketing (1) |
|
23,605 |
|
|
|
23,523 |
|
|
|
94,534 |
|
|
|
89,585 |
|
Product development (1) |
|
11,569 |
|
|
|
10,129 |
|
|
|
42,441 |
|
|
|
34,890 |
|
General and administrative (1) |
|
16,567 |
|
|
|
16,121 |
|
|
|
58,861 |
|
|
|
51,561 |
|
Depreciation and amortization |
|
9,935 |
|
|
|
10,040 |
|
|
|
39,008 |
|
|
|
40,145 |
|
Transaction, integration, and restructuring expenses |
|
1,823 |
|
|
|
1,528 |
|
|
|
11,489 |
|
|
|
7,890 |
|
Goodwill impairment |
|
— |
|
|
|
— |
|
|
|
287,400 |
|
|
|
— |
|
Total operating expenses |
|
63,499 |
|
|
|
61,341 |
|
|
|
533,733 |
|
|
|
224,071 |
|
Loss from operations |
|
(10,080 |
) |
|
|
(10,537 |
) |
|
|
(329,800 |
) |
|
|
(44,043 |
) |
Other (expense) income, net: |
|
|
|
|
|
|
|
Interest expense, net |
|
(125 |
) |
|
|
(1,483 |
) |
|
|
(1,559 |
) |
|
|
(8,413 |
) |
Other (expense) income, net |
|
(1,982 |
) |
|
|
863 |
|
|
|
23,179 |
|
|
|
10,579 |
|
Total other (expense) income, net |
|
(2,107 |
) |
|
|
(620 |
) |
|
|
21,620 |
|
|
|
2,166 |
|
Loss before income taxes |
|
(12,187 |
) |
|
|
(11,157 |
) |
|
|
(308,180 |
) |
|
|
(41,877 |
) |
(Provision for) benefit from income taxes |
|
(1,175 |
) |
|
|
17,044 |
|
|
|
18,553 |
|
|
|
17,698 |
|
Net (loss) income |
|
(13,362 |
) |
|
|
5,887 |
|
|
|
(289,627 |
) |
|
|
(24,179 |
) |
Less: Net loss attributable to noncontrolling interests |
|
(3,129 |
) |
|
|
(3,978 |
) |
|
|
(87,239 |
) |
|
|
(16,957 |
) |
Net (loss) income attributable to Definitive
Healthcare Corp. |
$ |
(10,233 |
) |
|
$ |
9,865 |
|
|
$ |
(202,388 |
) |
|
$ |
(7,222 |
) |
Net (loss) income per share of Class A Common Stock: |
|
|
|
|
|
|
|
Basic |
$ |
(0.09 |
) |
|
$ |
0.09 |
|
|
$ |
(1.79 |
) |
|
$ |
(0.07 |
) |
Diluted |
$ |
(0.09 |
) |
|
$ |
0.06 |
|
|
$ |
(1.79 |
) |
|
$ |
(0.07 |
) |
Weighted average Common Stock outstanding: |
|
|
|
|
|
|
|
Basic |
|
116,418,495 |
|
|
|
105,082,585 |
|
|
|
112,764,537 |
|
|
|
101,114,105 |
|
Diluted |
|
116,418,495 |
|
|
|
154,006,454 |
|
|
|
112,764,537 |
|
|
|
101,114,105 |
|
|
|
|
|
|
|
|
|
(1) Amounts include equity-based compensation expense as
follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Cost of revenue |
$ |
267 |
|
|
$ |
244 |
|
|
$ |
1,097 |
|
|
$ |
942 |
|
Sales and marketing |
|
3,110 |
|
|
|
2,446 |
|
|
|
11,407 |
|
|
|
13,508 |
|
Product development |
|
3,572 |
|
|
|
2,504 |
|
|
|
13,138 |
|
|
|
7,805 |
|
General and administrative |
|
6,305 |
|
|
|
6,230 |
|
|
|
23,097 |
|
|
|
14,179 |
|
Total equity-based compensation expense |
$ |
13,254 |
|
|
$ |
11,424 |
|
|
$ |
48,739 |
|
|
$ |
36,434 |
|
|
|
|
|
|
|
|
|
Definitive Healthcare Corp. |
Consolidated Statements of Cash Flows |
(amounts in thousands; unaudited) |
|
|
|
|
|
|
|
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Cash flows provided by (used in) operating
activities: |
|
|
|
|
|
|
|
Net (loss) income |
$ |
(13,362 |
) |
|
$ |
5,887 |
|
|
$ |
(289,627 |
) |
|
$ |
(24,179 |
) |
Adjustments to reconcile net (loss) income to net cash (used in)
provided by operating activities: |
|
|
|
|
|
|
|
Depreciation and amortization |
|
562 |
|
|
|
472 |
|
|
|
1,953 |
|
|
|
2,193 |
|
Amortization of intangible assets |
|
12,439 |
|
|
|
12,214 |
|
|
|
49,797 |
|
|
|
54,711 |
|
Amortization of deferred contract costs |
|
3,488 |
|
|
|
2,542 |
|
|
|
12,963 |
|
|
|
8,816 |
|
Equity-based compensation |
|
13,254 |
|
|
|
11,424 |
|
|
|
48,739 |
|
|
|
36,434 |
|
Amortization of debt issuance costs |
|
175 |
|
|
|
175 |
|
|
|
702 |
|
|
|
702 |
|
Provision for doubtful accounts receivable |
|
554 |
|
|
|
556 |
|
|
|
1,374 |
|
|
|
1,325 |
|
Non-cash restructuring charges related to office leases |
|
— |
|
|
|
— |
|
|
|
155 |
|
|
|
1,023 |
|
Goodwill impairment charge |
|
— |
|
|
|
— |
|
|
|
287,400 |
|
|
|
— |
|
Tax receivable agreement remeasurement |
|
1,507 |
|
|
|
(1,134 |
) |
|
|
(23,470 |
) |
|
|
(9,717 |
) |
Changes in fair value of contingent consideration |
|
302 |
|
|
|
1,250 |
|
|
|
302 |
|
|
|
1,250 |
|
Deferred income taxes |
|
1,015 |
|
|
|
(17,087 |
) |
|
|
(18,713 |
) |
|
|
(17,806 |
) |
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
Accounts receivable |
|
(18,559 |
) |
|
|
(25,676 |
) |
|
|
811 |
|
|
|
(13,222 |
) |
Prepaid expenses and other assets |
|
(1,348 |
) |
|
|
(2,681 |
) |
|
|
(7,156 |
) |
|
|
(127 |
) |
Deferred contract costs |
|
(5,770 |
) |
|
|
(5,182 |
) |
|
|
(18,790 |
) |
|
|
(15,252 |
) |
Contingent consideration |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(6,400 |
) |
Accounts payable, accrued expenses and other liabilities |
|
2,919 |
|
|
|
(2,694 |
) |
|
|
1,330 |
|
|
|
3,138 |
|
Deferred revenue |
|
7,533 |
|
|
|
15,714 |
|
|
|
(6,580 |
) |
|
|
12,690 |
|
Net cash provided by (used in) operating activities |
|
4,709 |
|
|
|
(4,220 |
) |
|
|
41,190 |
|
|
|
35,579 |
|
Cash flows provided by (used in) investing
activities: |
|
|
|
|
|
|
|
Purchases of property, equipment, and other assets |
|
(594 |
) |
|
|
(4,871 |
) |
|
|
(2,977 |
) |
|
|
(8,326 |
) |
Purchases of short-term investments |
|
(45,595 |
) |
|
|
(120,695 |
) |
|
|
(259,208 |
) |
|
|
(337,961 |
) |
Maturities of short-term investments |
|
100,596 |
|
|
|
57,680 |
|
|
|
275,426 |
|
|
|
153,680 |
|
Cash paid for acquisitions and investments, net of cash
acquired |
|
— |
|
|
|
— |
|
|
|
(45,023 |
) |
|
|
(56,296 |
) |
Net cash provided by (used in) investing activities |
|
54,407 |
|
|
|
(67,886 |
) |
|
|
(31,782 |
) |
|
|
(248,903 |
) |
Cash flows used in financing activities: |
|
|
|
|
|
|
|
Repayments of term loans and delayed draw term loan |
|
(3,438 |
) |
|
|
(1,719 |
) |
|
|
(8,594 |
) |
|
|
(6,875 |
) |
Taxes paid related to net share settlement of equity awards |
|
(1,035 |
) |
|
|
(1,371 |
) |
|
|
(4,432 |
) |
|
|
(4,116 |
) |
Payment of contingent consideration |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,100 |
) |
Payments under tax receivable agreement |
|
— |
|
|
|
— |
|
|
|
(246 |
) |
|
|
— |
|
Payments of equity offering issuance costs |
|
— |
|
|
|
(435 |
) |
|
|
(30 |
) |
|
|
(1,734 |
) |
Member distributions |
|
(1,589 |
) |
|
|
(5,932 |
) |
|
|
(12,282 |
) |
|
|
(12,871 |
) |
Net cash used in financing activities |
|
(6,062 |
) |
|
|
(9,457 |
) |
|
|
(25,584 |
) |
|
|
(26,696 |
) |
Net increase (decrease) in cash and cash equivalents |
|
53,054 |
|
|
|
(81,563 |
) |
|
|
(16,176 |
) |
|
|
(240,020 |
) |
Effect of exchange rate changes on cash and cash equivalents |
|
462 |
|
|
|
(331 |
) |
|
|
218 |
|
|
|
(544 |
) |
Cash and cash equivalents, beginning of year |
|
77,460 |
|
|
|
228,828 |
|
|
|
146,934 |
|
|
|
387,498 |
|
Cash and cash equivalents, end of year |
$ |
130,976 |
|
|
$ |
146,934 |
|
|
$ |
130,976 |
|
|
$ |
146,934 |
|
Supplemental cash flow disclosures: |
|
|
|
|
|
|
|
Cash paid during the year for: |
|
|
|
|
|
|
|
Interest |
$ |
3,684 |
|
|
$ |
3,195 |
|
|
$ |
14,456 |
|
|
$ |
10,443 |
|
Income taxes |
|
— |
|
|
|
— |
|
|
|
136 |
|
|
|
— |
|
Acquisitions: |
|
|
|
|
|
|
|
Net assets acquired, net of cash acquired |
$ |
— |
|
|
$ |
— |
|
|
$ |
52,678 |
|
|
$ |
97,296 |
|
Working capital adjustment receivable |
|
— |
|
|
|
— |
|
|
|
145 |
|
|
|
— |
|
Initial cash investment in prior year |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(40,000 |
) |
Contingent consideration |
|
— |
|
|
|
— |
|
|
|
(7,800 |
) |
|
|
(1,000 |
) |
Net cash paid for acquisitions |
$ |
— |
|
|
$ |
— |
|
|
$ |
45,023 |
|
|
$ |
56,296 |
|
|
|
|
|
|
|
|
|
Supplemental disclosure of non-cash investing
activities: |
|
|
|
|
|
|
|
Capital expenditures included in accounts payable and accrued
expenses and other current liabilities |
$ |
47 |
|
|
$ |
1,166 |
|
|
$ |
47 |
|
|
$ |
1,166 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Definitive Healthcare Corp. |
Reconciliations of Non-GAAP Financial Measures to Closest
GAAP Equivalent |
|
|
|
|
|
|
|
|
Reconciliation of GAAP Operating Cash Flow to Unlevered Free Cash
Flow |
(in thousands; unaudited) |
|
|
|
|
|
|
|
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Net cash provided from operating activities |
$ |
4,709 |
|
|
$ |
(4,220 |
) |
|
$ |
41,190 |
|
|
$ |
35,579 |
|
Purchases of property, equipment, and other assets |
|
(594 |
) |
|
|
(4,871 |
) |
|
|
(2,977 |
) |
|
|
(8,326 |
) |
Interest paid in cash |
|
3,684 |
|
|
|
3,195 |
|
|
|
14,456 |
|
|
|
10,443 |
|
Transaction, integration, and restructuring expenses paid in cash
(a) |
|
1,521 |
|
|
|
582 |
|
|
|
11,032 |
|
|
|
6,326 |
|
Earnout payment (b) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
6,400 |
|
Other non-core items (c) |
|
1,803 |
|
|
|
1,947 |
|
|
|
4,875 |
|
|
|
6,561 |
|
Unlevered Free Cash Flow |
$ |
11,123 |
|
|
$ |
(3,367 |
) |
|
$ |
68,576 |
|
|
$ |
56,983 |
|
|
|
|
|
|
|
|
|
(a) Transaction and integration expenses paid in cash primarily
represent legal, accounting, and consulting expenses related to our
acquisitions. Restructuring expenses paid in cash relate to our
restructuring plans announced in the first and third quarters of
2023 and exit costs related to office relocations. (b) Earnout
payment represents final settlement of contingent consideration
included in cash flow from operations. (c) Non-core items represent
expenses driven by events that are typically by nature one-time,
non-operational, and unrelated to our core operations. |
|
|
|
|
|
|
|
|
Reconciliation of GAAP Net Loss to Adjusted Net Income and |
GAAP Operating Loss to Adjusted Operating Income |
(in thousands, except per share amounts; unaudited) |
|
|
|
|
|
|
|
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Net (loss) income |
$ |
(13,362 |
) |
|
$ |
5,887 |
|
|
$ |
(289,627 |
) |
|
$ |
(24,179 |
) |
Add: Income tax provision (benefit) |
|
1,175 |
|
|
|
(17,044 |
) |
|
|
(18,553 |
) |
|
|
(17,698 |
) |
Add: Interest expense, net |
|
125 |
|
|
|
1,483 |
|
|
|
1,559 |
|
|
|
8,413 |
|
Add: Other expense (income), net |
|
1,982 |
|
|
|
(863 |
) |
|
|
(23,179 |
) |
|
|
(10,579 |
) |
Loss from operations |
|
(10,080 |
) |
|
|
(10,537 |
) |
|
|
(329,800 |
) |
|
|
(44,043 |
) |
Add: Amortization of intangible assets acquired through business
combinations |
|
11,510 |
|
|
|
11,969 |
|
|
|
46,099 |
|
|
|
53,667 |
|
Add: Equity-based compensation |
|
13,254 |
|
|
|
11,424 |
|
|
|
48,739 |
|
|
|
36,434 |
|
Add: Transaction, integration and restructuring expenses |
|
1,823 |
|
|
|
1,528 |
|
|
|
11,489 |
|
|
|
7,890 |
|
Add: Goodwill impairment charge |
|
— |
|
|
|
— |
|
|
|
287,400 |
|
|
|
— |
|
Add: Other non-core items |
|
1,803 |
|
|
|
1,947 |
|
|
|
4,875 |
|
|
|
6,561 |
|
Adjusted Operating Income |
|
18,310 |
|
|
|
16,331 |
|
|
|
68,802 |
|
|
|
60,509 |
|
Less: Interest expense, net |
|
(125 |
) |
|
|
(1,483 |
) |
|
|
(1,559 |
) |
|
|
(8,413 |
) |
Less: Recurring income tax benefit (a) |
|
(1,175 |
) |
|
|
1,197 |
|
|
|
1,374 |
|
|
|
1,730 |
|
Less: Foreign currency (loss) gain |
|
(475 |
) |
|
|
(271 |
) |
|
|
(291 |
) |
|
|
862 |
|
Less: Tax impacts of adjustments to net (loss) income |
|
(5,886 |
) |
|
|
(5,469 |
) |
|
|
(21,633 |
) |
|
|
(19,273 |
) |
Adjusted Net Income |
$ |
10,649 |
|
|
$ |
10,305 |
|
|
$ |
46,693 |
|
|
$ |
35,415 |
|
Shares for Adjusted Net Income Per Diluted Share (b) |
|
155,560,756 |
|
|
|
154,006,454 |
|
|
|
154,836,706 |
|
|
|
153,601,602 |
|
Adjusted Net Income Per Diluted Share |
$ |
0.07 |
|
|
$ |
0.07 |
|
|
$ |
0.30 |
|
|
$ |
0.23 |
|
|
|
|
|
|
|
|
|
(a) Non-recurring income tax (benefit) provision items were
primarily driven by the impact of changes in the state effective
tax rate during the fourth quarter of 2022. (b) Diluted Adjusted
Net Income Per Share is computed by giving effect to all potential
weighted average Class A common stock and any securities that are
convertible into Class A common stock, including Definitive OpCo
units and restricted stock units. The dilutive effect of
outstanding awards and convertible securities is reflected in
diluted earnings per share by application of the treasury stock
method assuming proceeds from unrecognized compensation as required
by GAAP. Fully diluted shares are 163,153,442 and 159,134,761 as of
December 31, 2023 and 2022, respectively. |
|
|
|
|
|
|
|
|
Reconciliation of Adjusted Gross Profit and Margin to GAAP Gross
Profit and Margin |
(in thousands; unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
(in thousands) |
|
Amount |
|
% of Revenue |
|
Amount |
|
% of Revenue |
|
Amount |
|
% of Revenue |
|
Amount |
|
% of Revenue |
Reported gross profit and
margin |
|
$ |
53,419 |
|
81 |
% |
|
$ |
50,804 |
|
84 |
% |
|
$ |
203,933 |
|
81 |
% |
|
$ |
180,028 |
|
81 |
% |
Amortization of intangible assets acquired through business
combinations |
|
2,137 |
|
3 |
% |
|
|
2,401 |
|
4 |
% |
|
|
9,044 |
|
4 |
% |
|
|
15,715 |
|
7 |
% |
Equity-based compensation costs |
|
|
267 |
|
0 |
% |
|
|
244 |
|
0 |
% |
|
|
1,097 |
|
0 |
% |
|
|
942 |
|
0 |
% |
Adjusted gross profit and margin |
|
$ |
55,823 |
|
85 |
% |
|
$ |
53,449 |
|
88 |
% |
|
$ |
214,074 |
|
85 |
% |
|
$ |
196,685 |
|
88 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Adjusted EBITDA to GAAP Net Loss |
(in thousands; unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
Amount |
|
% of Revenue |
|
Amount |
|
% of Revenue |
|
Amount |
|
% of Revenue |
|
Amount |
|
% of Revenue |
Net loss and margin |
$ |
(13,362 |
) |
|
|
(20 |
)% |
|
$ |
5,887 |
|
|
|
10 |
% |
|
$ |
(289,627 |
) |
|
(115 |
)% |
|
$ |
(24,179 |
) |
|
(11 |
)% |
Interest expense, net |
|
125 |
|
|
|
0 |
% |
|
|
1,483 |
|
|
|
2 |
% |
|
|
1,559 |
|
|
1 |
% |
|
|
8,413 |
|
|
4 |
% |
Income tax provision (benefit) |
|
1,175 |
|
|
|
2 |
% |
|
|
(17,044 |
) |
|
|
(28 |
)% |
|
|
(18,553 |
) |
|
(7 |
)% |
|
|
(17,698 |
) |
|
(8 |
)% |
Depreciation & amortization |
|
13,001 |
|
|
|
20 |
% |
|
|
12,686 |
|
|
|
21 |
% |
|
|
51,750 |
|
|
21 |
% |
|
|
56,904 |
|
|
26 |
% |
EBITDA and margin |
|
939 |
|
|
|
1 |
% |
|
|
3,012 |
|
|
|
5 |
% |
|
|
(254,871 |
) |
|
(101 |
)% |
|
|
23,440 |
|
|
11 |
% |
Other expense (income), net (a) |
|
1,982 |
|
|
|
3 |
% |
|
|
(863 |
) |
|
|
(1 |
)% |
|
|
(23,179 |
) |
|
(9 |
)% |
|
|
(10,579 |
) |
|
(5 |
)% |
Equity-based compensation (b) |
|
13,254 |
|
|
|
20 |
% |
|
|
11,424 |
|
|
|
19 |
% |
|
|
48,739 |
|
|
19 |
% |
|
|
36,434 |
|
|
16 |
% |
Transaction, integration, and restructuring expenses (c ) |
|
1,823 |
|
|
|
3 |
% |
|
|
1,528 |
|
|
|
3 |
% |
|
|
11,489 |
|
|
5 |
% |
|
|
7,890 |
|
|
4 |
% |
Goodwill impairment (d) |
|
— |
|
|
|
0 |
% |
|
|
— |
|
|
|
0 |
% |
|
|
287,400 |
|
|
114 |
% |
|
|
— |
|
|
0 |
% |
Other non-core items (e) |
|
1,803 |
|
|
|
3 |
% |
|
|
1,947 |
|
|
|
3 |
% |
|
|
4,875 |
|
|
2 |
% |
|
|
6,561 |
|
|
3 |
% |
Adjusted EBITDA and margin |
$ |
19,801 |
|
|
|
30 |
% |
|
$ |
17,048 |
|
|
|
28 |
% |
|
$ |
74,453 |
|
|
30 |
% |
|
$ |
63,746 |
|
|
29 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Primarily represents foreign exchange and TRA liability
remeasurement gains and losses. (b) Equity-based compensation
represents non-cash compensation expense recognized in association
with equity awards made to employees and directors. (c) Transaction
and integration expenses primarily represent legal, accounting, and
consulting expenses and fair value adjustments for contingent
consideration related to our acquisitions. Restructuring expenses
relate to our restructuring plans announced in the first and third
quarters of 2023 and impairment and restructuring charges related
to office closures and relocations. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months EndedDecember 31, |
|
Year EndedDecember 31, |
|
|
|
|
|
|
|
|
(in thousands) |
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
|
|
|
Merger and acquisition due diligence and transaction costs |
$ |
1,309 |
|
|
$ |
12 |
|
|
$ |
5,419 |
|
|
$ |
1,580 |
|
|
|
|
|
|
|
|
|
Integration costs |
|
129 |
|
|
|
266 |
|
|
|
934 |
|
|
|
3,765 |
|
|
|
|
|
|
|
|
|
Fair value adjustment for contingent consideration |
|
302 |
|
|
|
1,250 |
|
|
|
302 |
|
|
|
1,250 |
|
|
|
|
|
|
|
|
|
Restructuring charges for severance and other separation costs |
|
83 |
|
|
|
— |
|
|
|
4,679 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
Office closure and relocation restructuring charges and
impairments |
|
— |
|
|
|
— |
|
|
|
155 |
|
|
|
1,295 |
|
|
|
|
|
|
|
|
|
Total transaction, integration and restructuring expense |
$ |
1,823 |
|
|
$ |
1,528 |
|
|
$ |
11,489 |
|
|
$ |
7,890 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(d) Goodwill impairment represents a non-cash, pretax, goodwill
impairment charge of $287.4 million recorded during the quarter
ended September 30, 2023. We experienced a sustained decline in our
stock price and market capitalization, which represented a
triggering event and required us to perform a goodwill impairment
test as of September 30, 2023. As a result of our quantitative
impairment test, we determined that the fair value of our single
reporting unit was lower than its carrying value and, accordingly,
recorded this impairment charge. (e) Other non-core items represent
expenses driven by events that are typically by nature one-time,
non-operational, and/or unrelated to our core operations. These
expenses are comprised of non-core legal and regulatory costs
isolated to unique and extraordinary litigation, legal and
regulatory matters that are not considered normal and recurring
business activity including sales tax accrual charges inclusive of
penalties and interest for sales taxes that we may have been
required to collect from customers in 2023 and certain previous
years, professional fees related to the filing delay and
restatement of our previously issued financial statements filed
concurrently with our Quarterly Report on Form 10-Q for the second
quarter of 2023, and other non-recurring legal and regulatory
matters. Other non-core items also include non-recurring strategic
consulting fees associated with a strategic initiative to
restructure and transform the Company through commercial and
operational reorganization that right sizes the organization as
well as professional fees related to financing, capital structure
changes, and other non-recurring set-up costs related to public
company operations. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months EndedDecember 31, |
|
Year EndedDecember 31, |
|
|
|
|
|
|
|
|
(in thousands) |
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
|
|
|
Non-core legal and regulatory |
$ |
(60 |
) |
|
$ |
1,327 |
|
|
$ |
2,370 |
|
|
$ |
3,696 |
|
|
|
|
|
|
|
|
|
Consulting fees for non-recurring strategic restructuring |
|
1,977 |
|
|
$ |
— |
|
|
|
1,977 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
Professional fees for set-up of Up-C, TRA, tax and public company
infrastructure |
|
— |
|
|
|
435 |
|
|
|
— |
|
|
|
2,467 |
|
|
|
|
|
|
|
|
|
Other non-core expenses |
|
(114 |
) |
|
|
185 |
|
|
|
528 |
|
|
|
398 |
|
|
|
|
|
|
|
|
|
Total other non-core items |
$ |
1,803 |
|
|
$ |
1,947 |
|
|
$ |
4,875 |
|
|
$ |
6,561 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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