Benefitfocus, Inc. (NASDAQ: BNFT), a leading cloud-based benefits
management platform and services provider, today announced its
first quarter 2019 financial results. Highlights from the
quarter include:
- Net benefit eligible lives grew to 15.5 million at the end of
the first quarter, up from 13.3 million at the end of the prior
quarter and 11.8 million at the end of the prior year period.
- BenefitsPlace™ expanded to include personal property insurance
products to complement the company’s health, wealth and lifestyle
categories, premiering the benefits industry’s first integrated
personal auto and renters’ insurance offerings.
- BenefitsPlace welcomed 9 new suppliers, including
MassMutual and three major personal auto insurers: MetLife Auto
& Home, Liberty Mutual and Bristol West Insurance, a member of
the Farmers Insurance Group of Companies.
- Our One Place user conference had the largest attendance to
date, growing 40% from last year’s event.
- BenefitSAIGE™ launched, a Superior Artificial Intelligence
Guidance Engine that is fully deployed across our platform.
“Benefitfocus delivered strong first quarter results, which
marks our sixth consecutive quarter of meeting or exceeding our
expectations,” said Ray August, President and Chief Executive
Officer of Benefitfocus. “Our selling season is off to a
solid start and we are well positioned to accelerate growth in the
second half of 2019.”
August added, “We are making meaningful progress towards
achieving our vision of being the essential benefits platform that
connects buyers and sellers. Our strategy is resonating, our
market position is strengthening and our ecosystem is
flourishing.”
First Quarter 2019 Financial
Highlights
Revenue
- Total revenue was $68.3 million, an increase of 10% compared to
the first quarter of 2018.
- Software services revenue was $53.0 million, an increase of 10%
compared to the first quarter of 2018.
- Professional services revenue was $15.3 million, an increase of
8% compared to the first quarter of 2018.
Net Loss
- GAAP net loss was ($14.2) million, compared to ($13.8) million
in the first quarter of 2018. GAAP net loss per share was ($0.44),
based on 32.1 million basic and diluted weighted average common
shares outstanding, compared to ($0.44) for the first quarter of
2018, based on 31.3 million basic and diluted weighted average
common shares outstanding.
Non-GAAP Net Loss and Adjusted
EBITDA
- Non-GAAP net loss was ($6.7) million, compared to ($8.0)
million in the first quarter of 2018. Non-GAAP net loss per share
was ($0.21), based on 32.1 million basic and diluted weighted
average common shares outstanding, compared to ($0.26) for the
first quarter of 2018, based on 31.3 million basic and diluted
weighted average common shares outstanding.
- Adjusted EBITDA was $3.6 million, compared to ($1.0) million in
the first quarter of 2018.
See important disclosures about non-GAAP measures, and a
reconciliation of them to GAAP, below.
Balance Sheet
- Cash and cash equivalents at March 31, 2019 totaled $144.2
million, compared to $190.9 million at the end of the fourth
quarter of 2018.
Business Outlook
Based on information available as of May 1,
2019, Benefitfocus is providing guidance for the second quarter and
full year 2019 as indicated below.
Second Quarter 2019:
- Total revenue is expected to be in the range of $66.5 million
to $68.5 million.
- Non-GAAP net loss is expected to be in the range of ($15.0)
million to ($13.0) million, or ($0.46) to ($0.40) per share, based
on 32.6 million basic and diluted weighted average common shares
outstanding.
- Adjusted EBITDA is expected to be in the range of ($5.0)
million to ($3.0) million.
Full Year 2019:
- Total revenue is expected to be in the range of $301.0 million
to $309.0 million.
- Non-GAAP net loss is expected to be in the range of ($27.0)
million to ($22.0) million, or ($0.83) to ($0.68) per share, based
on 32.5 million basic and diluted weighted average common shares
outstanding.
- Adjusted EBITDA is expected to be in the range of $15.0 million
to $20.0 million.
Management has not reconciled forward-looking non-GAAP net loss
and Adjusted EBITDA to their most directly comparable GAAP measure
of GAAP net loss. Management is unable to predict with
reasonable certainty the ultimate outcome of the various necessary
GAAP components of such reconciliations, including, for example,
those related to compensation, acquisition transactions and
integration, or others that may arise during the year, without
unreasonable effort. These components and other factors could
materially impact the amount of the future directly comparable GAAP
measures, which may differ significantly from their non-GAAP
counterparts. See below for additional important disclosures
regarding our non-GAAP financial measures.
Conference Call Details:
In conjunction with this announcement,
Benefitfocus will host a conference call today, May 1, 2019, at
5:00 p.m. Eastern Time to discuss the company’s financial results.
To access this call, dial (877) 407-9208 (domestic) or (201)
493-6784 (international). A live webcast, as well as the replay, of
the conference call will be available on the Investor Relations
page of the company’s website at http://investor.benefitfocus.com/.
After the conference call, a replay will be available until May 8,
2019, and can be accessed by dialing (844) 512-2921 (domestic) or
(412) 317-6671 (international) with passcode 13689938.
About BenefitfocusBenefitfocus (NASDAQ: BNFT)
unifies the entire U.S. benefits industry on a single technology
platform to protect consumers' health, wealth and lifestyle. Our
powerful cloud-based software, data-driven insights and
thoughtfully-designed services, enable employers, insurance
brokers, carriers and suppliers to simplify the complexity of
benefits administration and deliver a world-class benefits
experience. Learn more at www.benefitfocus.com, LinkedIn and
Twitter.
Non-GAAP Financial Measures
The company uses certain non-GAAP financial
measures in this release, including non-GAAP gross profit,
operating loss, net loss, net loss per common share, and adjusted
EBITDA. Generally, a non-GAAP financial measure is a numerical
measure of a company’s performance or financial position that
either excludes or includes amounts that are not normally excluded
or included in the most directly comparable measure calculated and
presented in accordance with GAAP.
Non-GAAP gross profit, operating loss, net loss
and net loss per common share exclude stock-based compensation
expenses, amortization of acquisition-related intangible assets,
transaction and acquisition-related costs expensed, if any, and
costs not core to our business, if any. We define adjusted
EBITDA as net loss before net interest, taxes, and depreciation and
amortization expense, adjusted to eliminate stock-based
compensation expense, expense related to the impairment of goodwill
and intangible assets, transaction and acquisition-related costs
expensed, and costs not core to our business. Please
note that other companies might define their non-GAAP financial
measures differently than we do.
Management presents these non-GAAP
financial measures in this release because it considers them to be
important supplemental measures of performance. Management uses
these non-GAAP financial measures for planning purposes, including
analysis of the company's performance against prior periods, the
preparation of operating budgets and to determine appropriate
levels of operating and capital investments. Management believes
that these non-GAAP financial measures provide additional insight
for analysts and investors in evaluating the company's financial
and operational performance. Management also intends to provide
these non-GAAP financial measures as part of the company’s future
earnings discussions and, therefore, their inclusion should provide
consistency in the company’s financial reporting.
Non-GAAP financial measures have limitations as
an analytical tool. Investors are encouraged to review the
reconciliation of the non-GAAP measures to their most directly
comparable GAAP measures provided in this release, including in the
accompanying tables.
Safe Harbor Statement
Except for historical information, all of the
statements, expectations, and assumptions contained in this press
release are forward-looking statements. Actual results might differ
materially from those explicit or implicit in the forward-looking
statements. Important factors that could cause actual results to
differ materially include: our continuing losses and need to
achieve GAAP profitability; fluctuations in our financial results;
the immature and volatile market for our products and services;
risks related to changing healthcare and other applicable
regulations; risks associated with acquisitions; our ability to
maintain our culture, recruit and retain qualified personnel and
effectively expand our sales force; cyber-security risks; the
need to innovate and provide useful products and services; our
ability to compete effectively; privacy, security and other risks
associated with our business; and the other risk factors set forth
from time to time in our SEC filings, copies of which are
available free of charge within the Investor Relations section of
the Benefitfocus website at
http://investor.benefitfocus.com/sec-filings or upon request from
our Investor Relations Department. Benefitfocus assumes no
obligation and does not intend to update these forward-looking
statements, except as required by law.
Source: Benefitfocus, Inc.
Benefitfocus, Inc.843-284-1052 ext. 3527pr@benefitfocus.com
Investor Relations:Michael Bauer843-284-1052 ext.
6654michael.bauer@benefitfocus.com |
Benefitfocus, Inc.Unaudited
Consolidated Statements of Operations and Comprehensive
Loss(in thousands, except share and per share data) |
|
|
Three Months Ended |
|
|
|
March 31, |
|
|
|
2019 |
|
|
2018 |
|
Revenue |
|
$ |
68,299 |
|
|
$ |
62,363 |
|
Cost of revenue
(1)(2)(3) |
|
|
32,852 |
|
|
|
31,403 |
|
Gross profit |
|
|
35,447 |
|
|
|
30,960 |
|
Operating
expenses:(1)(2)(3) |
|
|
|
|
|
|
|
|
Sales and
marketing |
|
|
19,619 |
|
|
|
19,917 |
|
Research
and development |
|
|
13,090 |
|
|
|
12,023 |
|
General
and administrative |
|
|
11,796 |
|
|
|
9,693 |
|
Total
operating expenses |
|
|
44,505 |
|
|
|
41,633 |
|
Loss from
operations |
|
|
(9,058 |
) |
|
|
(10,673 |
) |
Other income
(expense): |
|
|
|
|
|
|
|
|
Interest
income |
|
|
660 |
|
|
|
58 |
|
Interest
expense on building lease financing obligations (prior to adoption
of ASC 842) |
|
|
– |
|
|
|
(1,866 |
) |
Interest
expense |
|
|
(5,814 |
) |
|
|
(1,317 |
) |
Other
expense |
|
|
9 |
|
|
|
– |
|
Total
other expense, net |
|
|
(5,145 |
) |
|
|
(3,125 |
) |
Loss before income
taxes |
|
|
(14,203 |
) |
|
|
(13,798 |
) |
Income tax expense |
|
|
6 |
|
|
|
4 |
|
Net loss |
|
$ |
(14,209 |
) |
|
$ |
(13,802 |
) |
Comprehensive loss |
|
$ |
(14,209 |
) |
|
$ |
(13,802 |
) |
|
|
|
|
|
|
|
|
|
Net loss per common
share: |
|
|
|
|
|
|
|
|
Basic and
diluted |
|
$ |
(0.44 |
) |
|
$ |
(0.44 |
) |
Weighted-average common
shares outstanding: |
|
|
|
|
|
|
|
|
Basic and
diluted |
|
|
32,056,934 |
|
|
|
31,333,348 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Stock-based
compensation included in above line items: |
|
|
|
|
|
|
|
|
Cost of revenue |
|
$ |
899 |
|
|
$ |
711 |
|
Sales and marketing |
|
|
1,686 |
|
|
|
954 |
|
Research and development |
|
|
1,192 |
|
|
|
768 |
|
General and administrative |
|
|
2,590 |
|
|
|
1,892 |
|
|
|
|
|
|
|
|
|
|
(2) Amortization of
acquired intangible assets included in above line items: |
|
|
|
|
|
|
|
|
Cost of revenue |
|
$ |
99 |
|
|
$ |
34 |
|
Sales and marketing |
|
|
36 |
|
|
|
14 |
|
Research and development |
|
|
40 |
|
|
|
12 |
|
General and administrative |
|
|
15 |
|
|
|
4 |
|
|
|
|
|
|
|
|
|
|
(3) Transaction and
acquisition-related costs expensed included in above line
items: |
|
|
|
|
|
|
|
|
General and administrative |
|
$ |
642 |
|
|
$ |
– |
|
Benefitfocus, Inc.Unaudited
Consolidated Balance Sheets(in thousands, except share and
per share data) |
|
|
|
As of March
31, |
|
|
As
of December 31, |
|
|
|
|
|
|
|
|
2019 |
|
|
2018 |
|
Assets |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
144,158 |
|
|
$ |
190,928 |
|
Accounts receivable, net |
|
|
28,247 |
|
|
|
21,077 |
|
Contract, prepaid and other current
assets |
|
|
19,039 |
|
|
|
16,667 |
|
Total current assets |
|
|
191,444 |
|
|
|
228,672 |
|
Property and equipment, net |
|
|
27,324 |
|
|
|
69,965 |
|
Financing lease right-of-use assets |
|
|
80,867 |
|
|
|
– |
|
Operating lease right-of-use assets |
|
|
2,172 |
|
|
|
– |
|
Intangible assets, net |
|
|
14,411 |
|
|
|
– |
|
Goodwill |
|
|
12,304 |
|
|
|
1,634 |
|
Deferred contract costs and other non-current
assets |
|
|
12,507 |
|
|
|
13,668 |
|
Total assets |
|
$ |
341,029 |
|
|
$ |
313,939 |
|
Liabilities and stockholders'
deficit |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
4,755 |
|
|
$ |
8,687 |
|
Accrued expenses |
|
|
10,310 |
|
|
|
11,461 |
|
Accrued compensation and
benefits |
|
|
13,989 |
|
|
|
17,269 |
|
Deferred revenue, current
portion |
|
|
36,326 |
|
|
|
36,540 |
|
Lease liabilities and financing
obligations, current portion |
|
|
6,771 |
|
|
|
4,486 |
|
Total current liabilities |
|
|
72,151 |
|
|
|
78,443 |
|
Deferred revenue, net of current portion |
|
|
10,569 |
|
|
|
9,323 |
|
Convertible senior notes |
|
|
179,442 |
|
|
|
176,692 |
|
Lease liabilities and financing obligations, net
current portion |
|
|
89,095 |
|
|
|
57,116 |
|
Other non-current liabilities |
|
|
162 |
|
|
|
2,575 |
|
Total liabilities |
|
|
351,419 |
|
|
|
324,149 |
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
Stockholders' deficit: |
|
|
|
|
|
|
|
|
Preferred stock, par value $0.001,
5,000,000 shares authorized, |
|
|
|
|
|
|
|
|
no shares issued and
outstanding at March 31, 2019 |
|
|
|
|
|
|
|
|
and December 31, 2018 |
|
|
– |
|
|
|
– |
|
Common stock, par value $0.001,
50,000,000 shares authorized, |
|
|
|
|
|
|
|
|
32,070,628 and 32,017,773
shares issued and outstanding |
|
|
|
|
|
|
|
|
at March 31, 2019 and
December 31, 2018, respectively |
|
|
32 |
|
|
|
32 |
|
Additional paid-in capital |
|
|
409,973 |
|
|
|
403,631 |
|
Accumulated deficit |
|
|
(420,395 |
) |
|
|
(413,873 |
) |
Total stockholders' deficit |
|
|
(10,390 |
) |
|
|
(10,210 |
) |
Total liabilities and stockholders'
deficit |
|
$ |
341,029 |
|
|
$ |
313,939 |
|
Benefitfocus, Inc.Unaudited Consolidated
Statements of Cash Flows(in thousands) |
|
|
|
Three Months
Ended |
|
|
|
March 31, |
|
|
|
2019 |
|
|
2018 |
|
Cash flows from operating
activities |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(14,209 |
) |
|
$ |
(13,802 |
) |
Adjustments to reconcile net loss
to net cash and cash |
|
|
|
|
|
|
|
|
equivalents used in
operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
5,335 |
|
|
|
3,930 |
|
Stock-based compensation
expense |
|
|
6,367 |
|
|
|
4,325 |
|
Accretion of interest on
convertible senior notes |
|
|
2,749 |
|
|
|
– |
|
Interest accrual on financing
obligations (prior to adoption of ASC 842) |
|
|
– |
|
|
|
1,879 |
|
Rent expense in excess of
payments |
|
|
9 |
|
|
|
– |
|
Provision for doubtful
accounts |
|
|
265 |
|
|
|
359 |
|
Changes in operating assets and
liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable, net |
|
|
(6,514 |
) |
|
|
54 |
|
Contract, prepaid and other current
assets |
|
|
(2,495 |
) |
|
|
881 |
|
Deferred costs and other
non-current assets |
|
|
1,568 |
|
|
|
1,166 |
|
Accounts payable and accrued
expenses |
|
|
(4,867 |
) |
|
|
2,722 |
|
Accrued compensation and
benefits |
|
|
(3,580 |
) |
|
|
(2,962 |
) |
Deferred revenue |
|
|
(5,089 |
) |
|
|
(2,127 |
) |
Other non-current liabilities |
|
|
(23 |
) |
|
|
(108 |
) |
Net cash and cash equivalents used in operating
activities |
|
|
(20,484 |
) |
|
|
(3,683 |
) |
Cash flows from investing
activities |
|
|
|
|
|
|
|
|
Business combination, net of cash
acquired |
|
|
(21,033 |
) |
|
|
– |
|
Purchases of property and
equipment |
|
|
(2,955 |
) |
|
|
(1,641 |
) |
Net cash and cash equivalents used in investing
activities |
|
|
(23,988 |
) |
|
|
(1,641 |
) |
Cash flows from financing
activities |
|
|
|
|
|
|
|
|
Draws on revolving line of
credit |
|
|
– |
|
|
|
31,000 |
|
Payments on revolving line of
credit |
|
|
– |
|
|
|
(24,000 |
) |
Payments of debt issuance
costs |
|
|
(357 |
) |
|
|
– |
|
Proceeds from exercises of stock
options and ESPP |
|
|
89 |
|
|
|
222 |
|
Payments on capital lease and
financing obligations |
|
|
(655 |
) |
|
|
(2,448 |
) |
Payments of principal on financing
lease obligations |
|
|
(1,375 |
) |
|
|
– |
|
Net cash and cash equivalents (used in) provided
by financing activities |
|
|
(2,298 |
) |
|
|
4,774 |
|
Net decrease in cash and cash
equivalents |
|
|
(46,770 |
) |
|
|
(550 |
) |
Cash and cash equivalents, beginning of
period |
|
|
190,928 |
|
|
|
55,335 |
|
Cash and cash equivalents, end of
period |
|
$ |
144,158 |
|
|
$ |
54,785 |
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of non-cash
investing and financing activities |
|
|
|
|
|
|
|
|
Property and equipment purchases in
accounts payable and accrued expenses |
|
$ |
382 |
|
|
$ |
452 |
|
Property and equipment purchased
with financing and capital lease obligations |
|
$ |
— |
|
|
$ |
713 |
|
Post contract support purchased
with financing obligations |
|
$ |
— |
|
|
$ |
275 |
|
Benefitfocus, Inc.Unaudited
Reconciliation of GAAP to Non-GAAP Measures(in thousands,
except share and per share data) |
|
|
|
Three Months Ended |
|
March 31, |
|
|
2019 |
|
|
2018 |
|
Reconciliation
from Gross Profit to Non-GAAP Gross Profit: |
|
|
|
|
|
|
|
|
Gross
profit |
|
$ |
35,447 |
|
|
$ |
30,960 |
|
Amortization of acquired intangible assets |
|
|
99 |
|
|
|
34 |
|
Stock-based compensation expense |
|
|
899 |
|
|
|
711 |
|
Total net
adjustments |
|
|
998 |
|
|
|
745 |
|
Non-GAAP
gross profit |
|
$ |
36,445 |
|
|
$ |
31,705 |
|
|
|
|
|
|
|
|
|
|
Reconciliation
from Operating Loss to Non-GAAP Operating Loss: |
|
|
|
|
|
|
|
|
Operating
loss |
|
$ |
(9,058 |
) |
|
$ |
(10,673 |
) |
Amortization of acquired intangible assets |
|
|
190 |
|
|
|
64 |
|
Stock-based compensation expense |
|
|
6,367 |
|
|
|
4,325 |
|
Transaction and acquisition-related costs expensed |
|
|
642 |
|
|
|
— |
|
Costs not
core to our business |
|
|
320 |
|
|
|
1,371 |
|
Total net
adjustments |
|
|
7,519 |
|
|
|
5,760 |
|
Non-GAAP
operating loss |
|
$ |
(1,539 |
) |
|
$ |
(4,913 |
) |
|
|
|
|
|
|
|
|
|
Reconciliation
from Net Loss to Adjusted EBITDA: |
|
|
|
|
|
|
|
|
Net
loss |
|
$ |
(14,209 |
) |
|
$ |
(13,802 |
) |
Depreciation |
|
|
3,967 |
|
|
|
2,977 |
|
Amortization of software development costs |
|
|
1,178 |
|
|
|
889 |
|
Amortization of acquired intangible assets |
|
|
190 |
|
|
|
64 |
|
Interest
income |
|
|
(660 |
) |
|
|
(58 |
) |
Interest
expense on building lease financing obligations (prior to the
adoption of ASC 842) |
|
|
— |
|
|
|
1,866 |
|
Interest
expense |
|
|
5,814 |
|
|
|
1,317 |
|
Income
tax expense |
|
|
6 |
|
|
|
4 |
|
Stock-based compensation expense |
|
|
6,367 |
|
|
|
4,325 |
|
Transaction and acquisition-related costs expensed |
|
|
642 |
|
|
|
— |
|
Costs not
core to our business |
|
|
320 |
|
|
|
1,371 |
|
Total net
adjustments |
|
|
17,824 |
|
|
|
12,755 |
|
Adjusted
EBITDA |
|
$ |
3,615 |
|
|
$ |
(1,047 |
) |
|
|
|
|
|
|
|
|
|
Reconciliation
from Net Loss to Non-GAAP Net Loss: |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(14,209 |
) |
|
$ |
(13,802 |
) |
Amortization of acquired intangible assets |
|
|
190 |
|
|
|
64 |
|
Stock-based compensation expense |
|
|
6,367 |
|
|
|
4,325 |
|
Transaction and acquisition-related costs expensed |
|
|
642 |
|
|
|
— |
|
Costs not
core to our business |
|
|
320 |
|
|
|
1,371 |
|
Total net
adjustments |
|
|
7,519 |
|
|
|
5,760 |
|
Non-GAAP
net loss |
|
$ |
(6,690 |
) |
|
$ |
(8,042 |
) |
|
|
|
|
|
|
|
|
|
Calculation of
Non-GAAP Earnings Per Share: |
|
|
|
|
|
|
|
|
Non-GAAP
net loss |
|
$ |
(6,690 |
) |
|
$ |
(8,042 |
) |
|
|
|
|
|
|
|
|
|
Weighted
average shares outstanding - basic and diluted |
|
|
32,056,934 |
|
|
|
31,333,348 |
|
Shares
used in computing non-GAAP net loss per share - basic and
diluted |
|
|
32,056,934 |
|
|
|
31,333,348 |
|
Non-GAAP
net loss per common share - basic and diluted |
|
$ |
(0.21 |
) |
|
$ |
(0.26 |
) |
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