SOC Telemed Reports Third Quarter 2020 Results
RESTON, Va., Nov. 16, 2020 /PRNewswire/ -- SOC Telemed, Inc. (Nasdaq: TLMD), the largest national provider of acute care telemedicine, today announced its pre-acquisition results for its third quarter ended September 30, 2020.
"I'm pleased to report that we delivered strong third-quarter results, achieved record levels of bookings, added several new customers, and expanded our relationships with existing customers. During the quarter, we also completed our business combination and have since begun trading on the Nasdaq," said John Kalix, CEO of SOC Telemed.
Mr. Kalix continued, "We have seen utilization levels rebound from the early days of the pandemic and remain optimistic about our full-year revenue outlook. We are a leader in the acute telemedicine market and our 2020 guidance reflects that we expect to continue to build on our momentum from the third quarter to finish out the year strong."
Mr. Hai Tran, Chief Operating Officer and Chief Financial Officer of SOC Telemed commented, "Utilization has rebounded from the lows we experienced in the early days of the pandemic and despite the recent increases in COVID-19 cases, utilization of our core services remains stable as Hospitals adapt to operating in a post pandemic environment."
Third Quarter Highlights
Financial performance for the three months ended September 30, 2020 compared to the three months ended September 30, 2019.
-- Bookings of $2.6 million compared to $1.7 million, a 54% increase
primarily driven by the increased interest in telemedicine and overall
momentum in the business.
-- Revenue was $15.1 million compared to $17.1 million, an 11% decrease due
to lower utilization resulting from a decrease in hospital visits due to
the COVID-19 pandemic.
-- GAAP gross profit was $5.6 million compared to $7.2 million and adjusted
gross profit (non-GAAP) was $6.6 million compared to $8.0 million.
-- GAAP gross margin was 37.0% compared to 42.2% and adjusted gross margin
(non-GAAP) as 44% compared to 47%. Despite the COVID-19 impact to
revenue, the Company was able to partially offset margin pressure by
leveraging costs.
-- Net loss of $(9.7) million compared to a loss of $(3.3) million.
-- Adjusted EBITDA was a loss of $(2.9) million compared to positive $0.5
million as SOC continues to increase its investments in its go-to-market
functions and preparations to become a public company.
-- On a pro forma basis, total cash was $47.4 million as of September 30,
2020.
Year-to-Date Highlights
Performance for the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019. Core consults are defined as consultations utilizing core services, including teleNeurology, telePsychiatry and teleICU solutions.
-- Bookings of $8.3 million compared to $4.1 million, a 103% increase.
-- Core revenue per core consult of $424 compared to $399, a 6% increase.
-- Core consults of 98,686 compared to 121,894, a 19% decrease.
2020 Outlook
For the full year 2020, the Company continues to expect:
-- Bookings in the range of $11.5 to $12.5 million
-- Revenue of approximately $57.3 million
-- Adjusted EBITDA of approximately ($11.1) million
Conference Call Details
The third quarter 2020 earnings conference call and webcast will be held Monday, November 16, 2020 at 5:00 p.m. ET. The conference call can be accessed by dialing 1-877-870-4263 for U.S. participants, or 1-412-317-0790 for international participants, and referencing the "SOC Telemed call"; or via a live audio webcast available on the Investor Relations section of the Company website at investors.soctelemed.com. A webcast replay will be available for on-demand listening shortly after the completion of the call at the same web link.
About SOC Telemed
SOC Telemed (SOC) is the largest national provider of telemedicine technology and solutions to hospitals, health systems, post-acute providers, physician networks, and value-based care organizations. Built on proven and scalable infrastructure as an enterprise-wide solution, SOC's technology platform, Telemed IQ, rapidly deploys and seamlessly optimizes telemedicine programs across the continuum of care. SOC provides a supportive and dedicated partner presence, virtually delivering patient care through teleNeurology, telePsychiatry and teleICU, enabling healthcare organizations to build sustainable telemedicine programs in any clinical specialty. SOC enables organizations to enrich their care models and touch more lives by supplying healthcare teams with industry-leading solutions that drive improved clinical care, patient outcomes, and organizational health. The company was the first provider of acute clinical telemedicine services to earn The Joint Commission's Gold Seal of Approval and has maintained that accreditation every year since inception. For more information, visit www.soctelemed.com.
Forward-Looking Statements
This press release includes "forward-looking statements" within the meaning of the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. In some cases, you can identify these forward-looking statements by the use of terms such as "expect," "will," "continue," or similar expressions, and variations or negatives of these words, but the absence of these words does not mean that a statement is not forward-looking. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including, but not limited to: the statements under "2020 Outlook," including expectations relating to bookings and revenue; statements regarding relationships with customers and business momentum; and any other statements of expectation or belief. These statements are subject to known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from results expressed or implied in this press release. Such risk factors include, but are not limited to, those related to: the current and future impact of the COVID-19 pandemic on SOC Telemed's business and industry; the effects of competition on the future business of SOC Telemed; uncertainty regarding the demand for and market utilization of its solution; returns on investments in its business; the ability to maintain customer relationships; difficulties maintaining and expanding its network of qualified physicians and other provider specialists; disruptions in SOC Telemed's relationships with affiliated professional entities or third party suppliers or service providers; general business and economic conditions; the ability of SOC Telemed to successfully execute strategic plans; the timing and market acceptance of new solutions or success of new enhancements, features modifications to existing solutions and the degree to which they gain acceptance. Additional information concerning these and other risk factors is contained in the Risk Factors section of SOC's most recent report on Form 10-Q. SOC Telemed assumes no obligation, and does not intend, to update these forward-looking statements as a result of future events or developments.
Use of Non-GAAP Financial Information
We believe that, in addition to our financial results determined in accordance with GAAP, adjusted gross profit (non-GAAP), adjusted gross margin (non-GAAP), and adjusted EBITDA, all of which are non-GAAP financial measures, are useful in evaluating our business, results of operations, and financial condition. However, our use of the terms adjusted gross profit, adjusted gross margin and adjusted EBITDA may vary from that of others in our industry. Adjusted gross profit, adjusted gross margin and adjusted EBITDA should not be considered as an alternative to gross profit, net loss, net loss per share or any other performance measures derived in accordance with GAAP as measures of performance. Adjusted gross profit, Adjusted gross margin and adjusted EBITDA have important limitations as analytical tools and you should not consider them in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:
-- adjusted EBITDA does not reflect the significant interest expense on our
debt;
-- although depreciation and amortization are non-cash charges, the assets
being depreciated and amortized will often have to be replaced in the
future, and adjusted gross profit, adjusted gross margin and adjusted
EBITDA do not reflect any expenditures for such replacements; and
-- other companies in our industry may calculate these financial measures
differently than we do, limiting their usefulness as comparative
measures.
We compensate for these limitations by using these non-GAAP financial measures along with other comparative tools, together with GAAP measurements, to assist in the evaluation of operating performance. Such GAAP measurements include gross profit, net loss, net loss per share and other performance measures. In evaluating these financial measures, you should be aware that in the future we may incur expenses similar to those eliminated in this presentation. Our presentation of non-GAAP financial measures should not be construed as an inference that our future results will be unaffected by unusual or nonrecurring items. When evaluating our performance, you should consider these non-GAAP financial measures alongside other financial performance measures, including the most directly comparable GAAP measures set forth in the reconciliation tables below and our other GAAP results.
Our non-GAAP financial measures are described as follows:
Adjusted gross profit and adjusted gross margin. Adjusted gross profit is defined as revenues less cost of revenues plus depreciation and amortization plus equipment leasing costs. Adjusted gross margin is adjusted gross profit divided by revenue.
Adjusted EBITDA. Adjusted EBITDA is defined as net income (loss) before interest, taxes, stock-based compensation, gain or loss on puttable options, depreciation and amortization and integration, acquisition, transaction and executive severance costs.
Readers are encouraged to review the reconciliation of our non-GAAP financial measures to the comparable GAAP results, which is attached to this earnings release and which can be found on SOC Telemed's investor relations page of its website at: investors.soctelemed.com.
Specialists On Call, Inc. and Subsidiaries and Affiliates
CONSOLIDATED BALANCE SHEETS
(In thousands, except shares and per share amounts)
(Unaudited)
---
ASSETS
September 30,
December 31,
2020 2019
---
CURRENT ASSETS
Cash and cash equivalents (from Variable interest entities $1,589 and $3,509, respectively) $2,395 $4,541
Accounts receivable, net of allowance for doubtful accounts of $458 and $538 (from Variable interest entities, net of allowance $8,339 and $10,125,
respectively) 8,820 10,545
Prepaid expenses and other current assets 3,611 843
Total current assets 14,826 15,929
Property and equipment, net 3,905 2,387
Capitalized software costs, net 8,669 7,647
Intangible assets, net 6,348 7,429
Goodwill 16,281 16,281
Deposits and other assets 289 321
Total assets $50,318 $49,994
===
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Accounts payable (from Variable interest entities $868 and $1,882, respectively) $4,581 $3,435
Accrued expenses (from Variable interest entities $1,948 and $1,226, respectively) 10,051 6,078
Deferred revenues 523 516
Capital lease obligations 9 48
Total current liabilities 15,164 10,077
Puttable option liabilities 518 1
Deferred revenues 1,013 807
Related party - Convertible bridge notes payable, net of unamortized issuance costs 3,982 -
Long term debt, net of unamortized discount and debt issuance costs 80,523 77,140
Total liabilities $101,200 $88,025
COMMITMENTS AND CONTINGENCIES (Note 11)
CONTINGENTLY REDEEMABLE PREFERRED STOCK (Redeemable convertible preferred stock, $0.001 par value; 21,816,134 and 21,805,134 shares authorized as of
September 30, 2020 and December 31, 2019, respectively; 21,816,134 and 21,805,134 shares issued and outstanding as of September 30, 2020 and December 31,
2019 respectively; aggregate liquidation preference of $79,094 and, $62,466 as of September 30, 2020 and December 31, 2019 respectively). 78,514 61,907
STOCKHOLDERS' DEFICIT
Common stock, $0.001 par value; 132,034,637 and 132,034,637 shares authorized as of September 30, 2020 and December 31, 2019; 84,370,027 and 84,370,027
shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively. 84 84
Treasury stock 223,157 shares, at cost, as of September 30, 2020 and December 31, 2019 (768) (768)
Additional paid-in capital 82,728 87,118
Accumulated deficit (211,440) (186,372)
Total stockholders' deficit (129,396) (99,938)
Total liabilities, contingently redeemable preferred stock and stockholders' deficit
$50,318 $49,994
--- ---
Specialists On Call, Inc. and Subsidiaries and Affiliates
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except shares and per share amounts)
(Unaudited)
---
Three Months Ended Nine Months Ended
September 30, September 30,
2020 2019 2020 2019
---
Revenues $15,132 $17,052 $43,493 $49,615
Cost of revenues 9,534 9,853 29,277 30,251
Operating expenses
Selling, general and administrative 11,993 8,135 30,267 25,805
Changes in fair value of contingent consideration (258) (1,712)
Total operating expenses 11,993 7,878 30,267 24,093
---
Loss from operations (6,395) (678) (16,051) (4,729)
Other income (expense)
Gain (Loss) on puttable option liabilities (412) (517) -
Interest expense (2,853) (2,650) (8,469) (7,495)
Interest expense - Related party (21) (21) -
Total other expense (3,286) (2,650) (9,007) (7,495)
---
Loss before income taxes (9,681) (3,328) (25,058) (12,224)
Income tax expense 7 2 10 5
Net loss and comprehensive loss $(9,688) $(3,330) $(25,068) $(12,229)
Accretion of redeemable convertible preferred stock (2,152) (1,412) (5,670) (4,054)
---
Net loss attributable to common stockholders $(11,840) $(4,742) $(30,738) $(16,283)
Net loss per share attributable to common stockholders
Basic $(0.14) $(0.06) $(0.36) $(0.19)
Diluted $(0.14) $(0.06) $(0.36) $(0.19)
Weighted-average shares used to compute net loss per
share attributable to common stockholders:
Basic 84,874,870 84,581,205 84,874,870 84,581,205
Diluted 84,874,870 84,581,205 84,874,870 84,581,205
Specialists On Call, Inc. and Subsidiaries and Affiliates
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
---
Nine Months Ended September 30,
Cash flows from operating activities: 2020 2019
Net loss $(25,068) $(12,229)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization 4,008 3,150
Stock-based compensation 1,280 1,115
Loss on puttable option liabilities 517
Change in fair value of contingent consideration (1,712)
Bad debt expense 64 150
Accrued interest on convertible bridge debt (related party) 21
Paid-in kind interest on senior debt 2,310 2,055
Amortization of debt issuance costs and accretion of original issuance discount 1,073 920
Change in assets and liabilities, net of acquisitions
Accounts receivable, net of allowance 1,661 (262)
Prepaid expense and other current assets (599) (32)
Deposits and other assets 32
Accounts payable 891 214
Accrued expenses and other liabilities 1,657 (2,012)
Deferred revenues 213 (93)
---
Net cash used in operating activities (11,940) (8,736)
Cash flows from investing activities:
Capitalization of software development costs (3,252) (3,002)
Purchase of property and equipment (1,724) (973)
Net cash used in investing activities (4,976) (3,975)
Cash flows from financing activities:
Principal payments under capital lease obligations (66) (104)
Proceeds from long term debt, net of issuance costs 3,961 12,867
Exercise of stock options 19
Payment of deferred transaction related costs (63)
Issuance of contingently redeemable preferred stock, net of offering costs 10,938
---
Net cash provided by financing activities 14,770 12,782
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 5(2,146) 771
Cash and cash equivalents at beginning of the period 4,541 3,989
---
Cash and cash equivalents at end of the period $2,395 $4,060
Specialists On Call, Inc. and Subsidiaries and Affiliates
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(In thousands
, except per share data
)
(Unaudited)
Three Months Ended
Nine Months Three Months Ended Nine Months
September 30,, Ended September 30, Ended
September 30, September 30,
2020 2019 2020 2019 2020 2019 2020 2019
Change % Change Change % Change
(dollars in thousands)
---
Revenues $
15,132 $
17,052 $
43,493 $
49,615 $
(1,920) (11) $
(6,122) (12)
%
%
Cost of revenues 9,534 9,853 29,277 30,251 (319) (3) (974) (3)
%
%
Gross profit 5,598 7,199 14,216 19,364 (1,601) (22) (5,148) (27)
%
%
Add:
Depreciation and amortization (a) 1,004 719 2,807 1,898 285 40 909 48
% %
Equipment leasing costs (b) 15 61 57 208 (46) (75) (151) (73)
%
%
Adjusted gross profit $
6,617 $
7,979 $
17,080 $
21,470 (1,362) (17) (4,390) (20)
%
%
Adjusted gross margin 44 47 39 43
% % % %
(as a percentage of revenues)
Three Months
Nine Months Three Months Ended Nine Months
Ended Ended September 30, Ended
September 30, September 30, September 30,
2020 2019 2020 2019 2020 2019 2020 2019
Change % Change Change % Change
(dollars in thousands)
---
Net loss $
(9,688) $
(3,330) $
(25,068) $
(12,229) $
(6,358) 191 $
(12,839) 105
%
%
Add:
Interest expense (c) 2,874 2,650 8,490 7,495 224 8 995 13
% %
Income tax expense (benefit) (d) 7 2 10 5 5 250 5 100
%
%
Depreciation and amortization (a) 1,401 1,130 4,008 3,150 271 24 858 27
% %
Stock-based compensation (e) 1,033 252 1,280 1,115 781 310 165 15
% %
Gain/(Loss) on puttable option 412 517 412
* 517
*
revaluation (f)
Changes in fair value of contingent (258) (1,712) 258
* 1,712
*
consideration (g)
Integration, acquisition, transaction, 1,018 31 3,521 1,050 987 3,184 2,471 235
% %
and severance costs (h)
Adjusted EBITDA $
(2,943) $
477 $
(7,242) $
(1,126) (3,420) (717) (6,116) 543
% %
* Percentage not meaningful
Three Months Ended September 30,
2020 2019 Change % Change
(dollars in thousands)
Selling, general and administrative expenses (1) $
11,993 $
8,135 $
3,858 47
%
Sales and marketing 1,936 1,364 572 42
%
Research and development 398 270 128 47
%
Operations 2,357 1,991 366 18
%
General and administrative 7,302 4,510 2,792 62
%
$
11,993 $
8,135 $
3,858 47
%
(1) Selling, general, and administrative expenses include the following expenses for the periods presented:
Three Months Ended September 30, 2020 Three Months Ended September 30, 2019
Stock-Based Depreciation and Integration Stock-Based Depreciation and Integration
Amortization Amortization
Compensation Costs Compensation Costs
(dollars in thousands)
Sales and marketing $
3
$
$ $
100
$
$ -
Research and development 8 8
Operations 10 11
General and administrative 1,012 397 1,018 133 411 31
$
1,033 $
397 $
1,018 $
252 $
411 $
31
Three Months Ended September 30,
2020 2019 Change % Change
(dollars in thousands)
Selling, general and administrative expenses excluding $
9,545 $
7,441 $
2,104 28
%
stock based compensation, depreciation and
amortization and integration costs
Sales and marketing 1,933 1,264 669 53
%
Research and development 390 262 128 49
%
Operations 2,347 1,980 367 19
%
General and administrative 4,875 3,935 940 24
%
$
9,545 $
7,441 $
2,104 28
%
Nine Months Ended September 30,
2020 2019 Change % Change
(dollars in thousands)
Selling, general and administrative expenses (1) $
30,267 $
25,805 $
4,462 17
%
Sales and marketing 4,920 5,122 (202) (4)
%
Research and development 940 827 113 14
%
Operations 6,539 5,916 623 11
%
General and administrative 17,868 13,940 3,928 28
%
$
30,267 $
25,805 $
4,462 17
%
(1) Selling, general, and administrative expenses include the following expenses for the periods presented:
Nine Months Ended September 30, 2020 Nine Months Ended September 30, 2019
Stock-Based Depreciation and Integration Stock-Based Depreciation and Integration
Amortization Amortization
Compensation Costs Compensation Costs
(dollars in thousands)
Sales and marketing $
18
$
$ $
671
$
$ -
Research and development 48 38
Operations 45 34
General and administrative 1,169 1,201 3,521 372 1,252 1,050
$
1,280 $
1,201 $
3,521 $
1,115 $
1,252 $
1,050
Nine Months Ended September 30,
2020 2019 Change % Change
(dollars in thousands)
Selling, general and administrative expenses excluding $
24,265 $
22,388 $
1,877 8
%
stock based compensation, depreciation and
amortization and integration costs
Sales and marketing 4,902 4,451 451 10
%
Research and development 892 789 103 13
%
Operations 6,494 5,882 612 10
%
General and administrative 11,977 11,266 711 6
%
$
24,265 $
22,388 $
1,877 8
%
Explanation of Non-GAAP Adjustments
(a) Amortization and depreciation
consists primarily of depreciation
of fixed assets, amortization of
capitalized software development
costs and amortization of
acquisition-related intangible
assets, such as customer
relationships, non-compete
agreements, and trade names
acquired in connection with
business combinations. While
depreciation and amortization are
non-cash charges, the assets being
depreciated or amortized will often
have to be replaced or updated in
the future, and these measures do
not reflect any cash requirements
for these replacements or updates.
Additionally, we incur amortization
of acquisition-related intangible
assets based on the portion of the
purchase price allocated to
intangible assets and the estimated
useful lives of such assets.
However, the purchase price
allocated to these assets is not
necessarily reflective of the cost
we would incur to internally
develop the intangible asset and we
do not believe these charges are
reflective of our operating results
in the period incurred. We
eliminate these non-cash charges
from our non-GAAP operating
results to facilitate an
understanding of our operating and
financial performance from period-
to-period.
(b) Equipment leasing costs consist of
the cost of procuring equipment
through lease financing. We ceased
this practice in the second quarter
of 2017. We eliminate these charges
from our non-GAAP operating
results to facilitate an
understanding of our operating and
financial performance from period-
to-period.
(c) Interest expense consists primarily
of interest incurred on our
outstanding indebtedness and non-
cash interest related to the
amortization of debt discount and
issuance costs associated with our
term loan agreement. We eliminate
these cash and non-cash expenses
from our non-GAAP operating
results to facilitate an
understanding of our operating and
financial performance from period-
to-period within our presentation
of adjusted EBITDA. Adjusted EBITDA
is widely used by investors to
measure a company's operating
performance without regard to
items, such as interest benefit and
expense, income tax benefit and
expense, depreciation and
amortization, stock-based
compensation, and other charges and
income. We believe adjusted EBITDA
is useful in evaluating our
operating performance compared to
that of other companies in our
industry as this metric generally
eliminates the effects of certain
items that may vary from company to
company for reasons unrelated to
overall operating performance.
(d) We incur income tax expenses or
benefits that are related to prior
periods. We eliminate these
expenses from our non-GAAP
operating results to facilitate an
understanding of our operating and
financial performance from period-
to-period within our presentation
of adjusted EBITDA.
(e) Stock-based compensation expense
consists primarily of expenses for
stock options. Although stock-
based compensation is a key
incentive offered to our employees,
we continue to evaluate our
operating and financial performance
excluding stock-based compensation
expenses. Stock-based compensation
expenses will recur in future
periods. We evaluate our
performance both with and without
these measures because stock-based
compensation is a non-cash expense
and can vary significantly over
time based on the timing, size,
nature and design of the awards
granted, and is influenced in part
by certain factors that are
generally beyond our control, such
as the volatility of the market
value of our common stock. In
addition, we eliminate stock-based
compensation expense from our non-
GAAP operating results to
facilitate an understanding of our
operating and financial performance
from period-to-period.
(f) Gain (loss) on puttable option
liabilities consists of changes in
the fair value of puttable option
liabilities. We eliminate these
non-cash expenses from our non-
GAAP operating results to
facilitate an understanding of our
operating and financial performance
from period-to-period.
(g) Changes in fair value of contingent
consideration consists of the
change in fair value of contingent
consideration associated with a
business combination in August
2018.
(h) Integration, acquisition,
transaction and executive severance
costs represent the transaction and
business integration costs related
to our recent business combination
with Healthcare Merger Corp.,
including incremental expenses
incurred to affect business
combinations such as advisory,
legal, accounting, valuation, and
other professional or consulting
fees, as well as other related
incremental executive severance
costs. We exclude these costs from
our non-GAAP results as they have
no direct correlation to the
operation of our business, and
because we believe that the non-
GAAP financial measures excluding
these costs provide useful
information about our spending
trends to facilitate an
understanding of our operating and
financial performance from period-
to-period.
Media Relations:
Lauren Shankman
Trevelino/Keller
lshankman@trevelinokeller.com
Investor Relations:
Bob East or Jordan Kohnstam
Westwicke, an ICR company
SOCIR@westwicke.com
(443) 213-0500
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SOURCE SOC Telemed
