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Greenway Medical Technologies, Inc. (GWAY), which delivers
innovative software and business services solutions for ambulatory care
providers through its PrimeSUITE(R) platform, today announced record
financial results for the three and 12 months ended June 30, 2012.
"We continue to make excellent progress in meeting increased demand for
our clinically driven solutions across a rapidly changing and growing
ambulatory market," said Tee Green, President and Chief Executive
Officer of Greenway. "Our results for both the fourth quarter and 12
months of our fiscal year demonstrate the successful execution of our
growth strategy as we achieve operating and financial efficiencies. We
remain encouraged that our award-winning, easy-to-use solutions offered
through our flexible PrimeSUITE platform continue to be met
enthusiastically among providers who are caring for patients in
increasingly diverse settings."
Highlights
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Revenue increased by 24% for the 2012 fourth quarter when compared
with the year-ago period.
--
Gross profit increased by 27% with gross margin improving by 145 basis
points for the fourth quarter from the prior-year period.
--
Adjusted EBITDA margin was 16% for the 2012 fourth quarter. Adjusted
EBITDA is a non-GAAP measure that is described and reconciled to net
income below and is not a substitute for the GAAP equivalent.
Operating Results
Greenway generated record quarterly revenue of $36.4 million for the
three months ended June 30, 2012, up 24% from $29.4 million for the
three months ended June 30, 2011. For the 12 months ended June 30, 2012,
total revenue grew by 38% to an annual record $124.0 million, from $89.8
million for the year-ago period.
Gross profit for the three months ended June 30, 2012, was $21.8
million, which compares with $17.2 million for the three months ended
June 30, 2011, a 27% increase. Gross profit margin of 60% for the 2012
fourth quarter was 145 basis points higher than the previous year,
largely as a result of revenue growth as well as margin improvement
efforts in training and consulting services, support services and
electronic data interchange and business services, offset by a decline
in system sales margins for the period. This improvement in gross margin
included the absorption of increased amortization expense of
approximately $1 million related to acquired technology and software
development costs in the fourth quarter of 2012. Amortization commences
as various projects become available for market. For the 12 months ended
June 30, 2012, gross profit was $68.1 million, compared with $49.4
million for the prior-year period. Gross margin for fiscal year 2012 was
essentially unchanged, at 55%, from the prior-year period. Gross profit
for fiscal 2012 included the absorption of increased amortization
expense of approximately $2.5 million.
Operating income was $3.5 million and $4.9 million for the three and 12
months ended June 30, 2012, respectively. This compares to operating
income of $4.4 million and $3.8 million for the comparable periods of
the prior year.
Greenway earned net income of $2.2 million for the three months ended
June 30, 2012, or seven cents per diluted share for the fiscal 2012
fourth quarter. For the three months ended June 30, 2011, Greenway had
net income of $2.6 million and a loss available to common shareholders
of ($12.6 million), or ($1.09) per share. The Company’s results for the
2011 fourth quarter and fiscal year include dividends and accretion
related to preferred stock that was converted to common stock in
February 2012.
Net income for the 12 months ended June 30, 2012, was $2.9 million, or
11 cents per diluted share. This compares with net income of $33.0
million, which includes a net tax benefit of $29.2 million for fiscal
2011. The Company reported a loss available to common shareholders of
($22.0 million), or ($1.90) per share for fiscal 2011 due to preferred
stock accretion and dividends.
As of June 30, 2012, the Company had $34.9 million in cash and
short-term investments and no outstanding indebtedness.
Non-GAAP Measures
Greenway’s non-GAAP adjusted EBITDA, which is defined as earnings before
interest, taxes, depreciation and amortization, acquisition-related
transaction costs and stock-based compensation, was $5.9 million for the
three months ended June 30, 2012, a 17% increase from $5.0 million for
the prior-year period. For fiscal 2012, non-GAAP adjusted EBITDA
increased by 89% to $12.1 million, from $6.4 million for fiscal 2011.
Adjusted, or non-GAAP net income for the three months ended June 30,
2012, was $3.0 million, or 10 cents per diluted share. Non-GAAP net
income for fiscal 2012 was $5.3 million or 26 cents per diluted share.
Greenway earned 21 cents per diluted share, non GAAP, for the fourth
quarter of fiscal 2011. Non-GAAP net income for fiscal 2011 was $33.9
million, including a $29.2 million net income tax benefit, or $2.71 per
diluted share. The effects of dividends and accretion related to the
converted preferred stock have been excluded from all periods presented
for non-GAAP measures.
The GAAP financial measures most directly comparable to each non-GAAP
financial measure used, and a reconciliation of the differences between
each non-GAAP financial measure and the comparable GAAP financial
measure, are included in this press release following the condensed
financial statements.
Fiscal 2013 Outlook
Greenway Medical Technologies believes that its revenue will grow by 20%
to 26% for the 12 months ended June 30, 2013, from fiscal 2012 actual
results, while achieving gross margin and adjusted EBITDA margin
improvement. The following table summarizes the Company’s outlook for
fiscal 2013:
Range
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Revenue $149 million to $156 million
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Gross Profit $83 million to $89 million
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Margin 56% to 57.0%
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Operating Income $8 million to $10 million
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Effective Tax Rate 40%
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Net income $4.8 million to $6.1 million
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GAAP EPS $0.15 to $0.20
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Adjusted EBITDA $19.3 million to $23.4 million
------------------ ------------------------------
Margin 13.8% to 14.4%
------------------ ------------------------------
Adjusted EPS $0.27 to $0.31
------------------ ------------------------------
Conference Call
Greenway will host a conference call today, Wednesday, August 29, 2012,
at 5 p.m. Eastern time to discuss the Company’s earnings and other
information. The call can be accessed by dialing (866) 270-6057 or (617)
213-8891 for international calls. The participant code is 59550481. For
listen-only mode, participants should go to the Investors section of www.greenwaymedical.com
prior to the call to register and download the necessary audio software.
An audio replay will be posted following the call and will be available
from approximately 7 p.m. Eastern on August 29 through 11:59 p.m.
Eastern on September 5. The replay will be accessible through a link on www.greenwaymedical.com/investors
or by calling (888) 286-8010 or internationally (617) 801-6888. Replay
code is 70349477.
About Greenway and PrimeSUITE
Greenway Medical Technologies, Inc. (GWAY) delivers smarter
solutions for smarter healthcare(TM). PrimeSUITE(R)
-- Greenway’s certified and fully integrated electronic health record,
practice management and interoperability solution -- helps improve care
coordination, quality and cost-efficiency as part of a smarter,
sustainable healthcare system. Thousands of providers across 30
specialties and sub-specialties use on-premise or cloud-based Greenway(R)
solutions in physician practices, clinics and health systems. To learn
more, go to greenwaymedical.com,
Twitter,
Facebook
and YouTube,
or email info@greenwaymedical.com.
Forward-Looking Statements
In addition to historical information, this press release includes
certain forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Such statements include both
implied and express statements regarding the company’s financial
condition, growth strategy, business development efforts, service
offerings, and service delivery models. Such forward-looking statements
are not guarantees of future performance and are subject to risks,
uncertainties and other factors that may cause the actual results,
performance or achievements of the company to differ materially from the
historical results or from any results expressed or implied by such
forward-looking statements. Risks that could affect the company’s future
performance include, but are not limited to, risks detailed in
Greenway’s most recent S-1/A filed with the Securities and Exchange
Commission and, in particular, our ability to adapt to evolving
technology and industry standards; our ability to implement our growth
strategy; our ability to retain management and other qualified
personnel; failure to prevent disruptions in service or damage to our
third-party providers’ data centers; failure to avoid liability for the
use of content we provide; regulation of the healthcare information
technology industry; our ability to ensure our solutions meet industry
and government standards; failure to maintain adequate security measures
for our customers’ confidential information and personal identifiable
information and their patients’ protected health information; our
ability to obtain new provider clients; failure of the HITECH Act and
other incentive programs to be fully implemented or funded by the
government; our ability to implement our strategic relationships as
currently intended; failure to establish, protect or enforce our
intellectual property; restrictions in our credit facility and future
indebtedness. The company disclaims any obligation or duty to update or
modify these forward-looking statements.
Greenway, the Greenway logo and PrimeSUITE are registered trademarks and
the phrase "smarter solutions for smarter healthcare" are trademarks of
Greenway Medical Technologies, Inc. Other product and company names may
be the trademarks of respective owners.
Greenway Medical Technologies, Inc.
Condensed Balance Sheets - Unaudited
(In Thousands)
June 30, June 30,
2012 2011
-------- --------
Assets
Current assets:
Cash and cash equivalents $ 5,585 $ 5,722
Short-term investments 29,350 10,446
Accounts receivable, net of $720 and $585 allowance for doubtful
accounts at June 30, 2012 and 2011, respectively 28,875 18,113
Inventory 281 460
Prepaids and other current assets 3,001 1,705
Deferred tax assets 1,699 476
-------- --------
Total current assets 68,791 36,922
Property and equipment, net 20,340 9,632
Acquired intangibles, net 510 -
Software development cost, net 17,156 6,811
Deferred tax assets - noncurrent 25,846 28,751
Goodwill 440 -
Other assets 40 40
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Total assets $ 133,123 $ 82,156
==== ======== ==== ========
Liabilities and shareholders’ equity (deficit)
Current liabilities:
Accounts payable $ 12,436 $ 7,903
Accrued liabilities 9,533 5,900
Deferred revenue 12,192 8,672
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Total current liabilities 34,161 22,475
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Obligation for purchased technology 116 349
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Convertible preferred stock, at fair value - 158,816
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Shareholders’ equity (deficit):
Common stock 3 11,498
Additional paid-in capital 237,558 59,038
Accumulated deficit (138,715 ) (170,020 )
-------- ---- -------- ----
Total shareholders’ equity (deficit) 98,846 (99,484 )
-------- -------- ----
Total liabilities, convertible preferred stock and shareholders’ $ 133,123 $ 82,156
equity (deficit)
==== ======== ==== ==== ======== ====
Greenway Medical Technologies, Inc.
Condensed Statements of Operations - Unaudited
(In Thousands except Share and Per Share Data)
Three Months Ended Year Ended
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June 30, June 30, June 30, June 30,
2012 2011 2012 2011
---------- ---------- ---------- ----------
Revenue:
System sales $ 13,175 $ 11,943 $ 39,300 $ 31,726
Training and consulting services 7,269 6,173 27,816 18,373
Support services 9,635 6,390 33,143 22,401
Electronic data interchange and business services 6,296 4,901 23,754 17,339
---------- ---------- ---------- ----------
Total revenue 36,375 29,407 124,013 89,839
---------- ---------- ---------- ----------
Cost of revenue (Note 1):
System sales 3,093 2,324 10,259 7,522
Training and consulting services 4,534 4,077 18,881 13,550
Support services 2,944 2,309 10,564 7,059
Electronic data interchange and business services 3,996 3,494 16,197 12,280
---------- ---------- ---------- ----------
Total cost of revenue 14,567 12,204 55,901 40,411
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Gross profit 21,808 17,203 68,112 49,428
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Operating expenses (Note 1):
Sales, general and administrative 13,603 10,254 47,565 37,399
Research and development 4,667 2,590 15,696 8,218
---------- ---------- ---------- ----------
Total operating expenses 18,270 12,844 63,261 45,617
---------- ---------- ---------- ----------
Operating income 3,538 4,359 4,851 3,811
Interest income (expense), net 12 (2 ) 54 31
Other (expense), net (18 ) (23 ) (40 ) (77 )
---------- -- ---------- -- ---------- -- ---------- --
Income before provision for income taxes 3,532 4,334 4,865 3,765
Provision (benefit) for income taxes 1,327 1,744 1,955 (29,200 )
---------- ---------- ---------- ---------- --
Net income 2,205 2,590 2,910 32,965
Preferred stock dividends and accretion - (15,233 ) 28,395 (54,961 )
---------- ---------- -- ---------- ---------- --
Income (loss) available to common shareholders $ 2,205 $ (12,643 ) $ 31,305 $ (21,996 )
== ========== == ========== == == ========== == ========== ==
Per share data:
Net income (loss) per share available to common shareholders:
Basic $ 0.08 $ (1.09 ) $ 1.66 $ (1.90 )
== ========== == ========== == == ========== == ========== ==
Diluted $ 0.07 $ (1.09 ) $ 0.11 $ (1.90 )
== ========== == ========== == == ========== == ========== ==
Weighted average number of common shares outstanding:
Basic 29,096,917 11,628,758 18,808,086 11,578,559
========== ========== ========== ==========
Diluted 30,514,275 11,628,758 25,369,352 11,578,559
========== ========== ========== ==========
Note 1 - Includes stock-based compensation in the following
amounts:
Cost of revenue:
System sales $ 2 $ - $ 11 $ 7
Training and consulting services 45 - 290 74
Software support services 15 - 112 37
Electronic data interchange and business services 6 - 55 9
---------- ---------- ---------- ----------
Total cost of revenue 68 - 468 127
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Operating expenses:
Sales, general and administrative 768 59 1,543 1,118
Research and development 88 - 744 154
---------- ---------- ---------- ----------
Total operating expenses 856 59 2,287 1,272
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Total stock-based compensation expense $ 924 $ 59 $ 2,755 $ 1,399
== ========== == ========== == ========== == ==========
Greenway Medical Technologies, Inc.
Condensed Statements of Cash Flows - Unaudited
(Amounts in Thousands)
Year Ended
---------------------------------------
June 30, June 30,
2012 2011
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Cash flows from operating activities:
Net income $ 2,910 $ 32,965
Adjustments to reconcile net income to net cash provided by
operating activities:
Net stock compensation expense 2,755 1,399
Deferred income tax provision 1,682 2,333
Reversal of deferred income tax valuation allowance - (31,560 )
Depreciation and amortization 4,372 1,252
Provision for bad debts 1,412 1,083
Reduction in obligation for acquired technology (100 ) -
Changes in current assets and liabilities:
Accounts receivable (12,176 ) (7,680 )
Inventory 179 (136 )
Prepaids and other current assets (1,296 ) (1,012 )
Accounts payable and accrued liabilities 5,028 3,247
Deferred revenue 3,520 4,352
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Net cash provided by operating activities 8,286 6,243
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Cash flows from investing activities:
Purchase of short-term investments - net (18,902 ) (10,446 )
Purchases of property and equipment (8,041 ) (4,129 )
Business combination to acquire technology and other assets (3,000 ) -
Capitalized software development cost (12,193 ) (5,739 )
------- ---- ------- ----
Net cash used in investing activities (42,136 ) (20,314 )
------- ---- ------- ----
Cash flows from financing activities:
Payments on capital leases - (12 )
Payments on obligation for acquired technology (137 ) (83 )
Proceeds from exercise of stock options and warrants 897 709
Payments in connection with preferred stock conversion (23,300 ) -
Sale of common stock, net of issue costs and expenses 56,253 -
------- -------
Net cash provided by financing activities 33,713 614
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Net decrease in cash and cash equivalents (137 ) (13,457 )
Cash and cash equivalents at beginning of period 5,722 19,179
------- -------
Cash and cash equivalents at end of period $ 5,585 $ 5,722
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Supplemental cash flow information:
Cash paid for interest $ 8 $ 27
==== ======= ==== =======
Cash paid for taxes $ 196 $ 333
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Non-cash investing and financing activities:
Conversion of preferred stock $ 135,517 $ -
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Common stock and obligations for future payments at fair value,
given in exchange for acquisition of technology $ 954 $ 974
==== ======= ==== =======
Reduction in obligation for acquired technology $ 100 $ -
==== ======= ==== =======
Reconciliation of Non-GAAP Financial Measures to Comparable GAAP
Measures (Unaudited, in thousands, except share amounts)
The following is a reconciliation of the non-GAAP financial measures
used by the Company in describing its financial performance in
accordance with U.S. "generally accepted accounting principles" (GAAP).
An explanation of these measures is also included below under the
heading "Explanation of Non-GAAP Financial Measures". While management
believes these non-GAAP financial measures provide useful supplemental
information to investors regarding the Company’s operations, investors
are reminded to consider these non-GAAP measures in addition to, and not
a substitute for, financial performance measures in accordance with
GAAP. In addition, it should be noted that these non-GAAP financial
measures may be different from non-GAAP measures used by other
companies, and management may utilize other measures to illustrate
performance in the future. Non-GAAP measures have limitations in that
they do not reflect all of the amounts associated with the Company’s
results of the operations as determined in accordance with GAAP.
Non-GAAP Adjusted EBITDA (Unaudited, in thousands)
Set forth below is a presentation of the Company’s "non-GAAP Adjusted
EBITDA" and the "non-GAAP Adjusted EBITDA Margin" which is non-GAAP
Adjusted EBITDA as a percentage of total revenue:
Three Months Ended June 30, Year Ended June 30,
------------------------------- ------------------------------
2012 2011 2012 2011
----- ----- ------ -------
Reconciliation of net income to Non-GAAP Adjusted EBITDA:
Net income $ 2,205 $ 2,590 $ 2,910 $ 32,965
Stock-based compensation 924 59 2,755 1,399
Acquisition-related transaction costs - - 123 -
Depreciation and amortization 1,410 617 4,372 1,252
Interest (income) expense, net (12 ) 2 (54 ) (31 )
Provision (benefit) for income taxes 1,327 1,744 1,955 (29,200 )
----- ----- ------ ------- --
Non-GAAP adjusted EBITDA $ 5,854 $ 5,012 $ 12,061 $ 6,385
=== ===== === ===== == ====== == =======
Non-GAAP adjusted EBITDA margin 16 % 17 % 10 % 7 %
===== === ===== === ====== == ======= ==
Non-GAAP Adjusted Net Income (Unaudited, in thousands
except share and per share amounts)
Set forth below is a reconciliation of the Company’s "Non-GAAP Adjusted
Net Income" and "Non-GAAP Adjusted Net Income per Diluted Share":
Three Months Ended June 30, Year Ended June 30,
----------------------------------------- ----------------------------------------
2012 2011 2012 2011
---------- ---------- ---------- ----------
Non-GAAP adjusted net income
GAAP net income $ 2,205 $ 2,590 $ 2,910 $ 32,965
Add: Stock-based compensation 924 59 2,755 1,399
Add: Acquisition-related transaction costs - - 123 -
Add: Amortization of purchased intangibles 382 86 1,109 201
---------- ---------- ---------- ----------
Subtotal of tax deductible items 1,306 145 3,987 1,600
---------- ---------- ---------- ----------
Less: tax impact of tax deductible items (40% rate) (522 ) (58 ) (1,595 ) (640 )
---------- --- ---------- --- ---------- -- ---------- --
Non-GAAP adjusted net income $ 2,989 $ 2,677 $ 5,302 $ 33,925
=== ========== === ========== == ========== == ==========
Weighted average number of shares - diluted 30,514,275 13,020,496 (1) 20,136,760 (1) 12,496,283
Non-GAAP adjusted net income per diluted share $ 0.10 $ 0.21 $ 0.26 $ 2.71
Three Months Ended June 30, Year Ended June 30,
----------------------------------------- ----------------------------------------
2012 2011 2012 2011
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GAAP net income per share - diluted(1) $ 0.07 $ 0.20 (1) $ 0.14 (1) $ 2.64
Add: Stock-based compensation $ 0.03 $ 0.01 $ 0.14 $ 0.11
Add: Acquisition-related transaction costs $ - $ - $ - $ -
Add: Amortization of purchased intangibles $ 0.01 $ 0.01 $ 0.06 $ 0.02
--- ---------- --- ---------- -- ---------- -- ----------
Subtotal of tax deductible items $ 0.04 $ 0.02 $ 0.20 $ 0.13
--- ---------- --- ---------- -- ---------- -- ----------
Less: tax impact of tax deductible items (40% rate) $ (0.01 ) $ (0.01 ) $ (0.08 ) $ (0.06 )
--- ---------- --- --- ---------- --- -- ---------- -- -- ---------- --
Non-GAAP adjusted net income per share - diluted $ 0.10 $ 0.21 $ 0.26 $ 2.71
=== ========== === ========== == ========== == ==========
(1) The presentation of non-GAAP adjusted net income and
non-GAAP net income per share excludes, for all periods, the effect of
dividends and accretion related to preferred stock converted to common
in February 2012. Accordingly, for the affected periods GAAP weighted
average shares outstanding and GAAP net income per diluted share differ
from that presented in the accompanying unaudited statement of
operations. Net income per share for 2011’s fourth quarter and year end
is computed based on weighted average shares outstanding that include
options and warrants totaling 1.3 million and 918,000 shares,
respectively, which would otherwise have been anti-dilutive and
excluded. For fiscal 2012, GAAP net income per share is computed based
on weighted average shares outstanding excluding the dilutive effect of
preferred stock assumed to have been converted at the beginning of the
year totaling 5.2 million shares.
Explanation of Non-GAAP Measures
The Company reports its financial results in accordance with U.S. GAAP.
The Company’s management believes that investors may wish to consider
the impact of certain non-cash or non-recurring items as a supplement to
financial performance measures in accordance with GAAP. These items
result from facts and circumstances that may vary in frequency and
impact on continuing operations. Management also presents results of
operations before such items to evaluate operating performance, compare
performance against past periods and as a basis for strategic planning.
These non-GAAP financial measures provide management with additional
means to understand and evaluate operating results and trends by
eliminating certain non-cash expenses and other items that management
believes might complicate comparisons with prior periods, obscure
current trends or reduce the ability to make useful forecasts.
Management believes that these non-GAAP measures provide additional
means of evaluating performance, period-over-period. In addition,
management understands that some investors and financial analysts find
this information useful in analyzing the Company’s financial and
operational performance and comparing such performance to peers and
competitors.
Non-GAAP Adjusted EBITDA is defined as earnings before interest,
income taxes, depreciation and amortization, acquisition-related
transaction costs and stock-based compensation. It is presented as a
supplemental measure of the Company’s performance. However, Adjusted
EBITDA has limitations as an analytical tool, and you should not
consider it in isolation or as a substitute for analysis of the
Company’s results as reported under GAAP.
Non-GAAP Adjusted Net Income is defined as net income before
stock-based compensation, acquisition-related transaction costs and
amortization of purchased intangibles and any tax impact related to
these items.
Non-GAAP Adjusted Net Income Per Diluted Share is defined as
Non-GAAP Adjusted Net Income divided by the weighted average diluted
shares outstanding. Management considers all of these non-GAAP financial
measures to be useful indicators of the Company’s performance and a
measure of historical trends.
The following items are excluded from non-GAAP Adjusted Net Income and
related Per Diluted Share financial measures referenced above, and the
reasons therefore are:
--
Stock-based compensation - Excluded because these are
non-cash expenses that management does not consider useful in
assessing ongoing operating results or performance of the business,
and also because the amount of the expense is not totally within the
Company’s control since it is based on factors such as stock price,
volatility and interest rates which may be unrelated to the Company’s
performance during the period the expense is incurred.
--
Amortization of purchased intangibles - Purchased intangibles
are amortized over their estimated useful life and generally cannot be
influenced after the acquisition. Accordingly, this item is not
considered by management in making operating decisions. Thus,
including such charges does not accurately reflect the performance for
the period in which such charge is incurred.
--
Acquisition-related transaction costs - Transaction costs
associated with acquisitions are non-recurring and related
specifically to a subject acquisition. Accordingly, management does
not believe that they reflect the underlying performance of ongoing
business operations for the period incurred.
SOURCE: Greenway Medical Technologies, Inc.
Greenway Medical Technologies, Inc.
Al Cochran, 678-839-5860
Chief Financial Officer
alcochran@greenwaymedical.com
or
Bob Kneeley, 678-390-7262
Vice President, Investor Relations
bobkneeley@greenwaymedical.com
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