Tabula Rasa HealthCare Reports Third Quarter 2022 Results
- Revenue from continuing operations of $77.1 million increased 14% vs. a year ago
- GAAP net loss from continuing operations of $25.9 million vs. $11.8 million a year ago
- Adjusted EBITDA from continuing operations of $2.1 million vs. $3.1 million a year ago
- Cash of $80.8 million as of September 30, 2022, vs. $26.5 million as of June 30, 2022
MOORESTOWN, N.J., Nov. 3, 2022 /PRNewswire/ -- Tabula Rasa HealthCare, Inc.® (NASDAQ:TRHC), a leading healthcare technology company advancing the safe use of medications, today reported financial results for the third quarter ended September 30, 2022.
"We delivered another quarter of solid revenue growth and continue on a pace to perform strongly against our 2022 guidance. With our strong position in PACE today, serving more than eight out of every ten participants, we have a robust foundation to build upon as we enter adjacent value-based care markets that are exponentially larger and focus on high-cost, high-risk patients. We are committed to driving shareholder value by narrowing our focus to core assets and markets with a competitive advantage to improve top-line growth and enhance margins," said Brian Adams, President and Interim CEO.
Key Financial Results | ||||||||||||
(in millions except percentages) | ||||||||||||
Three Months Ended | Year over Year | Q3 2022 | ||||||||||
2022 | 2021 | Change | Guidance | |||||||||
Revenue from continuing operations | $ | 77.1 | $ | 67.9 | 14 | % | $ | 72.5 – 75.0 | ||||
Net loss from continuing operations | $ | (25.9) | $ | (11.8) | (120) | % | ||||||
Adjusted EBITDA from continuing operations | $ | 2.1 | $ | 3.1 | (35) | % | ||||||
Third Quarter 2022 Financial Results
All comparisons, unless otherwise noted, are to the three months ended September 30, 2021, and reflect continuing operations.
- Revenue – Revenue of $77.1 million increased 14% compared to $67.9 million in 2021. Product (medication) revenue of $59.8 million increased 19% due to strong PACE participant growth. Service revenue of $17.3 million decreased 2% from the year ago period. Excluding $2.3 million of revenue related to the concluded CMS Enhanced Medication Therapy Management ("EMTM") pilot program included in the third quarter of 2021, service revenue increased 13%, led by growth in our pharmacy benefit management ("PBM") and risk adjustment services, each of which grew by more than 20%.
- GAAP net loss – GAAP net loss from continuing operations of $25.9 million compared to a loss of $11.8 million a year ago with the decline largely driven by costs, including stock-based compensation of $8.1 million and other expenses, related to the leadership transition and cooperation agreement with Indaba Capital Management announced on September 14, 2022. Gross margin, excluding depreciation and amortization, of $16.9 million (21.9% of revenue) increased as compared to $16.7 million (24.6% of revenue) a year ago. The decline in gross margin as a percentage of revenue was largely driven by product and service revenue mix, as well as increased shipping charges.
GAAP net loss from discontinued operations of $14.2 million compares to a loss of $5.4 million a year ago and includes the SinfoníaRx and DoseMe businesses, as well as one month of the PrescribeWellness business. As previously announced, TRHC's sale of PrescribeWellness closed on August 1, 2022.
- Adjusted EBITDA – Adjusted EBITDA from continuing operations of $2.1 million (2.7% margin) declined as compared to $3.1 million (4.6% margin) a year ago, primarily due to the timing of cash compensation expense, as well as the reasons noted above negatively impacting gross margin.
A reconciliation of generally accepted accounting principles ("GAAP") in the United States to non-GAAP results has been provided in this press release in the accompanying tables. An explanation of these measures is also included below under the heading "Non-GAAP Financial Measures."
Operational Metrics
To provide greater transparency into our financial results, we are providing the following operational metrics.
- Total PACE participants utilizing at least one of our solutions increased by 8% as of September 30, 2022, to 52,230, as compared to September 30, 2021.
- Average PACE per member per month revenue increased 9% during the third quarter of 2022, as compared to the same period a year ago. This metric is defined as quarterly revenue for PACE clients across all service lines divided by quarterly member months.
- PACE participants for our pharmacy services as of September 30, 2022, increased 18% as compared to a year ago. This growth was driven by continued participant growth at existing PACE centers and the onboarding of a large PACE program in California completed during the third quarter.
- PACE backlog as of September 30, 2022, stands at 56 implementations (by product and service), valued at $54 million in annual revenue at maturity, which the Company defines as enrollment of 250 participants. By comparison, these figures were 65 implementations and $59 million as of June 30, 2022.
- PACE implementations during the third quarter and first nine months of 2022 totaled 16 and 38, respectively, as compared with 4 and 19, respectively, in the same period a year ago.
Business Outlook
This outlook updates the previously issued financial guidance that was provided on August 4, 2022.
Year over year growth | |||||||||||
Low | High | Low | High | ||||||||
Three Months Ended December 31, 2022 | (in millions except percentages) | ||||||||||
CareVention HealthCare revenue | $ | 76.5 | $ | 79.0 | 16 % | 20 % | |||||
Other revenue from continuing operations | $ | 1.0 | $ | 1.5 | NM | NM | |||||
Total revenue from continuing operations | $ | 77.5 | $ | 80.5 | 12 % | 17 % | |||||
Year over year growth | |||||||||||
Low | High | Low | High | ||||||||
Year Ended December 31, 2022* | (in millions except percentages) | ||||||||||
CareVention HealthCare revenue | $ | 290.5 | $ | 293.0 | 17 % | 18 % | |||||
Other revenue from continuing operations | $ | 3.5 | $ | 4.0 | NM | NM | |||||
Total revenue from continuing operations | $ | 294.0 | $ | 297.0 | 13 % | 14 % | |||||
*Totals may not add due to rounding |
NM = not meaningful |
Upcoming Events
Members of TRHC's executive team will be presenting at the following conferences:
- Piper Sandler's 34th Annual Healthcare Conference from November 29th to December 1st, and
- The Benchmark Company 11th Annual Discovery One-on-One Conference on December 1st.
Quarterly Conference Call
The third quarter 2022 earnings conference call and webcast will be held tomorrow, Friday, November 4, 2022, at 8:30 a.m. ET. Those interested in participating via webcast in listen-only mode can access the event here. For participants who would like to participate via telephone, please register here to receive the dial-in number along with a unique PIN number that is required to access the call. A replay of the earnings call will be available via webcast at the Investor Relations section of TRHC's website (ir.tabularasahealthcare.com).
About Tabula Rasa HealthCare
Tabula Rasa HealthCare provides medication safety solutions that empower healthcare professionals and consumers to optimize medication regimens, combating medication overload and reducing adverse drug events – the fourth leading cause of death in the U.S. TRHC's proprietary technology solutions, including MedWise®, improve patient outcomes, reduce hospitalizations, and lower healthcare costs. TRHC's extensive clinical tele-pharmacy network improves care for patients nationwide. Its solutions are trusted by health plans and pharmacies to help drive value-based care. For more information, visit TRHC.com.
Non-GAAP Financial Measures
In addition to reporting all financial information required in accordance with GAAP, TRHC is also reporting Adjusted EBITDA, which is considered a non-GAAP financial measure. 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. Adjusted EBITDA consists of net loss plus certain other expenses, which include interest expense, provision for income tax, depreciation and amortization, impairment charges, business optimization expenses, severance costs, executive transition costs, cooperation agreement costs, divestiture-related expense, acquisition-related expense, stock-based compensation expense, loss on disposal of business, and settlement costs. TRHC considers business optimization expenses to include contract termination payments, severance, retention payments, and other employee and non-recurring vendor costs incurred related to our business optimization initiatives during 2022. TRHC considers executive transition costs to include nonrecurring costs related to the hiring and onboarding of new named executive officers and separation costs related to former named executive officers. TRHC considers cooperation agreement costs to include legal, professional services, and other non-recurring costs related to the Company's cooperation agreement with Indaba Capital Management. TRHC considers severance costs to include severance payments related to the realignment of our resources. TRHC considers divestiture-related expense to include nonrecurring direct transaction costs. TRHC considers acquisition-related expense to include nonrecurring direct transaction and integration costs. TRHC considers loss on disposal of business to include the nonrecurring loss resulting from the sale of the PrescribeWellness business. TRHC considers settlement costs to include amounts payable by TRHC or reductions to amounts owed to TRHC as a result of a contractual settlement.
TRHC presents this non-GAAP financial measure in this release because it considers it to be an important supplemental measure of performance. TRHC uses this non-GAAP financial measure for planning purposes, including analysis of the Company's performance against prior periods, the preparation of operating budgets and determination of appropriate levels of operating and capital investments. TRHC believes that this non-GAAP financial measure provides additional insight for analysts and investors in evaluating the Company's financial and operational performance. TRHC also intends to provide this non-GAAP financial measure as part of the Company's future earnings discussions and, therefore, its 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 Adjusted EBITDA to its most directly comparable GAAP measures provided in this release, including in the accompanying tables.
Safe Harbor Statement
This press release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements may be identified by words such as "believe," "will," "may," "estimate," "continue," "anticipate," "intend," "should," "plan," "expect," "predict," "could," "potentially" or the negative of these terms or similar expressions. You should read these statements carefully because they discuss future expectations, contain projections of future results of operations or financial condition, or state other "forward-looking" information. These statements relate to, without limitation, our future plans, objectives, expectations, intentions, the potential sales of the SinfoníaRx and DoseMe businesses of the Company and the timing and benefits thereof, and financial performance and the assumptions that underlie these statements. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated in the forward-looking statements. Factors that might cause such a difference include, but are not limited to: (i) the overall macroeconomic environment, including the effects of inflation, supply chain constraints, and the impact of changes in interest rates, on our business and results of operations; (ii) our ability to adapt to changes or trends within the market for healthcare in the U.S.; (iii) a significant increase in competition from a variety of companies in the healthcare industry; (iv) developments and changes in laws and regulations, including increased regulation of the healthcare industry through legislative action and revised rules and standards; (v) the extent to which we are successful in gaining new long-term relationships with clients or retaining existing clients; (vi) clients demands for our services and our ability to fulfill client demands; (vii) the growth and success of our clients, which is difficult to predict and is subject to factors outside of our control; (viii) our ability to maintain relationships with a specified drug wholesaler; (ix) increasing consolidation in the healthcare industry; (x) managing our growth effectively; (xi) fluctuations in operating results; (xii) our ability to manage our cash flows; (xiii) failure or disruption of our information technology and security systems; (xiv) dependence on or changes to our senior management and key employees; (xv) changes in our strategy as a result of our entry into the Cooperation Agreement with Indaba; (xvi) our future indebtedness and our ability to obtain additional financing, reduce expenses, or generate funds when necessary; (xvii) our ability to execute on our planned divestitures of our SinfoníaRx and DoseMe businesses, the costs associated therewith, and risks related to diverting management's attention from our ongoing business operations; (xviii) risks related to the volatility in our stock price; (xix) the impacts of the ongoing COVID-19 pandemic and other health epidemics; and (xx) the risks described in Part I, Item 1A of our 2021 Form 10-K and our other filings and reports filed with or furnished to the Securities and Exchange Commission. Forward-looking statements are based on our management's beliefs and assumptions and on information currently available to our management. These statements, like all statements in this report, speak only as of their date, and we undertake no obligation to update or revise these statements in light of future developments, except as required by applicable law. We caution investors that our business and financial performance are subject to substantial risks and uncertainties.
UNAUDITED CONSOLIDATED BALANCE SHEETS | ||||||
September 30, | December 31, | |||||
2022 | 2021 | |||||
Assets | ||||||
Current assets: | ||||||
Cash | $ | 80,783 | $ | 9,395 | ||
Restricted cash | 7,389 | 6,038 | ||||
Accounts receivable, net | 18,960 | 21,405 | ||||
Inventories | 5,735 | 5,444 | ||||
Prepaid expenses | 3,484 | 3,812 | ||||
Client claims receivable | 16,193 | 11,257 | ||||
Other current assets | 20,439 | 18,033 | ||||
Current assets of discontinued operations | 26,861 | 14,511 | ||||
Total current assets | 179,844 | 89,895 | ||||
Contingent consideration receivable | 7,000 | — | ||||
Property and equipment, net | 10,038 | 11,778 | ||||
Operating lease right-of-use assets | 14,069 | 16,323 | ||||
Software development costs, net | 32,606 | 29,254 | ||||
Goodwill | 115,323 | 115,323 | ||||
Intangible assets, net | 40,275 | 45,358 | ||||
Other assets | 4,691 | 3,929 | ||||
Noncurrent assets of discontinued operations | — | 187,558 | ||||
Total assets | $ | 403,846 | $ | 499,418 | ||
Liabilities and stockholders' equity (deficit) | ||||||
Current liabilities: | ||||||
Current operating lease liabilities | $ | 3,195 | $ | 3,275 | ||
Accounts payable | 14,685 | 8,870 | ||||
Client claims payable | 9,537 | 8,398 | ||||
Accrued expenses and other liabilities | 59,507 | 40,997 | ||||
Current liabilities of discontinued operations | 11,132 | 12,380 | ||||
Total current liabilities | 98,056 | 73,920 | ||||
Line of credit | — | 29,500 | ||||
Long-term debt, net of discount | 231,868 | 319,299 | ||||
Long-term debt – related party, net of discount | 88,429 | — | ||||
Noncurrent operating lease liabilities | 13,223 | 15,792 | ||||
Deferred income tax liability, net | 889 | 1,402 | ||||
Other long-term liabilities | 3,032 | 176 | ||||
Noncurrent liabilities of discontinued operations | — | 3,573 | ||||
Total liabilities | 435,497 | 443,662 | ||||
Stockholders' equity (deficit): | ||||||
Common stock | 3 | 3 | ||||
Treasury stock | (3,350) | (4,292) | ||||
Additional paid-in capital | 349,911 | 320,392 | ||||
Accumulated deficit | (378,215) | (260,347) | ||||
Total stockholders' equity (deficit) | (31,651) | 55,756 | ||||
Total liabilities and stockholders' equity (deficit) | $ | 403,846 | $ | 499,418 | ||
TABULA RASA HEALTHCARE, INC. | ||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||
September 30, | September 30, | |||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||
Revenue: | ||||||||||||
Product revenue | $ | 59,780 | $ | 50,321 | $ | 166,645 | $ | 139,021 | ||||
Service revenue | 17,321 | 17,589 | 50,163 | 51,964 | ||||||||
Total revenue | 77,101 | 67,910 | 216,808 | 190,985 | ||||||||
Cost of revenue, exclusive of depreciation and amortization shown below: | ||||||||||||
Product cost | 46,221 | 38,518 | 129,157 | 104,939 | ||||||||
Service cost | 14,014 | 12,697 | 40,430 | 37,875 | ||||||||
Total cost of revenue, exclusive of depreciation and amortization | 60,235 | 51,215 | 169,587 | 142,814 | ||||||||
Operating expenses: | ||||||||||||
Research and development | 4,018 | 3,699 | 11,226 | 11,069 | ||||||||
Sales and marketing | 2,857 | 2,719 | 7,678 | 8,225 | ||||||||
General and administrative | 27,917 | 14,393 | 58,945 | 45,725 | ||||||||
Long-lived asset impairment charge | — | — | 4,062 | — | ||||||||
Depreciation and amortization | 5,723 | 5,328 | 16,954 | 15,109 | ||||||||
Total operating expenses | 40,515 | 26,139 | 98,865 | 80,128 | ||||||||
Loss from operations | (23,649) | (9,444) | (51,644) | (31,957) | ||||||||
Other income (expense): | ||||||||||||
Interest expense, net | (2,717) | (2,230) | (7,430) | (6,959) | ||||||||
Other income | 479 | — | 479 | — | ||||||||
Total other expense, net | (2,238) | (2,230) | (6,951) | (6,959) | ||||||||
Loss from continuing operations before income taxes | (25,887) | (11,674) | (58,595) | (38,916) | ||||||||
Income tax (benefit) expense | (7) | 82 | 368 | 284 | ||||||||
Net loss from continuing operations | (25,880) | (11,756) | (58,963) | (39,200) | ||||||||
Net loss from discontinued operations, net of tax | (14,185) | (5,355) | (58,905) | (18,484) | ||||||||
Net loss | $ | (40,065) | $ | (17,111) | $ | (117,868) | $ | (57,684) | ||||
Net loss per share: | ||||||||||||
Net loss per share from continuing operations, basic and diluted | $ | (1.07) | $ | (0.50) | $ | (2.45) | $ | (1.68) | ||||
Net loss per share from discontinued operations, basic and diluted | (0.58) | (0.23) | (2.45) | (0.80) | ||||||||
Total net loss per share, basic and diluted | $ | (1.65) | $ | (0.73) | $ | (4.90) | $ | (2.48) | ||||
Weighted average common shares outstanding, basic and diluted | 24,350,182 | 23,407,391 | 24,075,666 | 23,230,138 | ||||||||
TABULA RASA HEALTHCARE, INC. | ||||||
Nine Months Ended | ||||||
September 30, | ||||||
2022 | 2021 | |||||
Cash flows from operating activities: | ||||||
Net loss | $ | (117,868) | $ | (57,684) | ||
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||
Depreciation and amortization | 24,285 | 35,343 | ||||
Amortization of deferred financing costs and debt discount | 1,972 | 1,714 | ||||
Deferred taxes | (513) | 337 | ||||
Stock-based compensation | 32,537 | 28,962 | ||||
Acquisition-related contingent consideration paid | — | (67) | ||||
Impairment charges | 46,355 | — | ||||
Loss on divestiture of business | 2,879 | — | ||||
Other noncash items | (9) | 9 | ||||
Changes in operating assets and liabilities, net of effect of divestiture: | ||||||
Accounts receivable, net | 5,107 | 789 | ||||
Inventories | (291) | (866) | ||||
Prepaid expenses and other current assets | (1,375) | (6,084) | ||||
Client claims receivables | (4,936) | (872) | ||||
Other assets | (1,357) | (2,604) | ||||
Accounts payable | 5,074 | 1,587 | ||||
Accrued expenses and other liabilities | 13,534 | 2,138 | ||||
Client claims payables | 1,139 | 423 | ||||
Other long-term liabilities | 3,220 | (108) | ||||
Net cash provided by operating activities | 9,753 | 3,017 | ||||
Cash flows from investing activities: | ||||||
Purchases of property and equipment | (1,021) | (1,611) | ||||
Software development costs | (23,860) | (22,649) | ||||
Proceeds from divestiture of business | 118,561 | — | ||||
Net cash provided by (used in) investing activities | 93,680 | (24,260) | ||||
Cash flows from financing activities: | ||||||
Proceeds from exercise of stock options | 64 | 3,683 | ||||
Payments for employee taxes for shares withheld | (1,112) | — | ||||
Payments for debt financing costs | (350) | (8) | ||||
Borrowings on line of credit | 27,700 | 17,500 | ||||
Repayments of line of credit | (57,200) | — | ||||
Payment of acquisition-related notes payable | — | (13,000) | ||||
Payments of acquisition-related contingent consideration | — | (99) | ||||
Repayments of long-term debt and finance leases | — | (4) | ||||
Net cash (used in) provided by financing activities | (30,898) | 8,072 | ||||
Net increase (decrease) in cash and restricted cash | 72,535 | (13,171) | ||||
Cash and restricted cash, beginning of period | 15,706 | 28,532 | ||||
Cash and restricted cash, end of period | $ | 88,241 | $ | 15,361 | ||
TABULA RASA HEALTHCARE, INC. | ||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||
Reconciliation of Net Loss to Adjusted EBITDA from Continuing Operations | ||||||||||||
Net loss | $ | (40,065) | $ | (17,111) | $ | (117,868) | $ | (57,684) | ||||
Add: | ||||||||||||
Interest expense, net | 2,717 | 2,230 | 7,430 | 6,959 | ||||||||
Income tax (benefit) expense | (7) | 82 | 368 | 284 | ||||||||
Depreciation and amortization | 5,723 | 5,328 | 16,954 | 15,109 | ||||||||
Impairment charges | — | — | 4,062 | — | ||||||||
Business optimization expenses | — | — | 787 | — | ||||||||
Severance costs | 122 | 354 | 697 | 516 | ||||||||
Executive transition | 1,821 | — | 1,971 | — | ||||||||
Cooperation agreement costs | 1,122 | — | 1,122 | — | ||||||||
Divestiture-related expense | 1,057 | — | 2,591 | — | ||||||||
Acquisition-related expense | — | — | — | 217 | ||||||||
Stock-based compensation expense | 15,378 | 6,901 | 28,173 | 24,100 | ||||||||
Loss from discontinued operations | 14,185 | 5,355 | 58,905 | 18,484 | ||||||||
Adjusted EBITDA from continuing operations | $ | 2,053 | $ | 3,139 | $ | 5,192 | $ | 7,985 | ||||
Adjusted EBITDA (loss) from discontinued operations | (3,593) | 2,578 | (1,036) | 7,294 | ||||||||
Total Adjusted EBITDA (loss) | $ | (1,540) | $ | 5,717 | $ | 4,156 | $ | 15,279 | ||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||
Reconciliation of Net Loss from Discontinued Operations, net of tax to Adjusted EBITDA (Loss) from Discontinued Operations | ||||||||||||
Net loss from discontinued operations, net of tax | $ | (14,185) | $ | (5,355) | $ | (58,905) | $ | (18,484) | ||||
Add: | ||||||||||||
Income tax (benefit) expense | (94) | 52 | (662) | 182 | ||||||||
Depreciation and amortization | — | 6,771 | 7,331 | 20,234 | ||||||||
Impairment charges | 5,845 | — | 42,293 | — | ||||||||
Loss on disposal of business | 2,879 | — | 2,879 | — | ||||||||
Settlement | — | — | 1,448 | 500 | ||||||||
Divestiture-related expense | 104 | — | 216 | — | ||||||||
Stock-based compensation expense | 1,858 | 1,110 | 4,364 | 4,862 | ||||||||
Adjusted EBITDA (loss) from discontinued operations | $ | (3,593) | $ | 2,578 | $ | (1,036) | $ | 7,294 | ||||
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SOURCE Tabula Rasa HealthCare, Inc.