MOORESTOWN, N.J., May 07, 2020 (GLOBE NEWSWIRE) -- Tabula Rasa HealthCare®, Inc. (“TRHC”) (NASDAQ:TRHC), a healthcare technology company advancing the field of medication safety, today reported financial results for the first quarter ended March 31, 2020.

First Quarter 2020 Highlights

“I am proud of the actions we have taken as a company to keep our team members safe, well informed, and engaged during these challenging times, all while continuing to deliver for our clients and execute on our long-term vision. We are particularly excited about the proactive role we are taking with the current pandemic through our scientific research efforts and support of COVID-19 testing at our nationwide network of community pharmacies, as well as the growing recognition of the important role pharmacists are playing under new federal and state legislative actions,” said TRHC Chief Executive Officer, Chairman and Founder Calvin H. Knowlton, PhD.

Dr. Knowlton continued, “During 2019, we made significant investments in our sales and marketing organization and I am pleased to report we have begun to benefit from these investments with a record number of bookings in the first quarter. Our performance was driven by our MedWise HealthCare business segment and specifically, important pharmacy wins at Health Mart and with a large pharmacy chain, as well as a number of exciting new relationships including WellCare, MODA Health Plan and two of the top ten largest plans in the United States. We signed a multi-year enterprise license agreement with Health Mart, the nation’s largest independent pharmacy franchise with more than 5,000 members. We plan to share more about this expanded relationship in the coming months.”

First Quarter 2020 Results

All comparisons, unless otherwise noted, are to the three months ended March 31, 2019.

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.”

Financial Outlook

Our guidance is based on current market conditions and our expectations as of today. Given the uncertainty associated with the duration and magnitude of the COVID-19 pandemic, as well as its broader impact, the factors underlying our outlook may change in the coming months.

For the second quarter ending June 30, 2020 we expect:

For the full year ending December 31, 2020 we continue to expect:

Upcoming Events
Brian Adams, TRHC’s Chief Financial Officer, will be presenting at the RBC Capital Markets Global Healthcare Virtual Conference on Wednesday, May 20, 2020. Dr. Knowlton and Mr. Adams will be presenting at the William Blair 40th Annual Growth Stock Conference on Wednesday, June 10, 2020.

Quarterly Conference Call
The first quarter 2020 earnings conference call and webcast will be held today, Thursday, May 7, 2020, at 5:00 p.m. ET. The conference call can be accessed by dialing 844-413-0947 for U.S. participants or 216-562-0423 for international participants, and referencing Conference ID Number: 4293305 or via a live audio webcast available online at TRHC’s investor website (ir.trhc.com). An audio webcast replay will be available approximately two hours after completion of the call for a period of 90 days thereafter at ir.trhc.com and a replay will be available until May 14, 2020 by dialing 855-859-2056 for U.S. participants or 404-537-3406 for international participants and referencing Conference ID Number: 4293305.

About Tabula Rasa HealthCare
Tabula Rasa HealthCare (TRHC) is a leader in providing patient-specific, data-driven technology and solutions that enable healthcare organizations to optimize performance to improve patient outcomes, reduce hospitalizations, lower healthcare costs and manage risk. Medication risk management is TRHC’s lead offering, and its cloud-based software applications provide solutions for a range of payers, providers and other healthcare organizations. 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 gross margin excluding depreciation and amortization expense, Adjusted EBITDA and Adjusted Diluted EPS, each of 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.

Gross margin is calculated as total revenue minus total cost of revenue, exclusive of depreciation and amortization (as presented in the Consolidated Statements of Operations), as a percentage of total revenue. Product margin is calculated as product revenue minus cost of product revenue, exclusive of depreciation and amortization (as presented in the Consolidated Statements of Operations), as a percentage of product revenue. Service margin is calculated as service revenue minus cost of service revenue, exclusive of depreciation and amortization (as presented in the Consolidated Statements of Operations), as a percentage of service revenue.

Adjusted EBITDA consists of net income or loss excluding certain other expenses, which includes interest expense, provision (benefit) for income tax, depreciation and amortization, change in fair value of acquisition-related contingent consideration (income) expense, acquisition-related expense and stock-based compensation expense. TRHC defines Adjusted Diluted EPS as net income or loss before fair value adjustments for acquisition-related contingent consideration, amortization of acquired intangibles, amortization of debt discount and issuance costs, acquisition-related expense, stock-based compensation expense, and the tax impact of using a normalized tax rate on pre-tax income adjusted for those items expressed on a per share basis using weighted average diluted shares outstanding. TRHC considers acquisition-related expense to include non-recurring direct transaction and integration costs, severance, and the impact of purchase accounting adjustments related to the fair value of acquired deferred revenue. TRHC believes the exclusion of these items assists in providing a more complete understanding of the company’s underlying operations results and trends and allows for comparability with TRHC’s peer company index and industry and to be more consistent with TRHC’s expected capital structure on a going forward basis. Please note that other companies might define their non-GAAP financial measures differently than TRHC does.

TRHC presents these non-GAAP financial measures in this release because it considers them to be important supplemental measures of performance. TRHC 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 determination of appropriate levels of operating and capital investments. TRHC believes that these non-GAAP financial measures provide additional insight for analysts and investors in evaluating the company's financial and operational performance. TRHC 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 Adjusted EBITDA and Adjusted Diluted EPS to their most directly comparable GAAP measures provided in this release, including in the accompanying tables.

Safe Harbor Statement

This press release includes 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, that we believe to be reasonable as of today’s date.  Forward-looking statements give current expectation or forecasts of future events or our future financial or operating performance, and include TRHC’s expectations regarding healthcare regulations, industry trends, available opportunities to TRHC and the financial and operating performance of TRHC, including with respect to international expansion and integration of recent acquisitions, and the impacts of the COVID-19 pandemic. Such statements are identified by use of the words “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “projects,” “should,” and similar expressions.  These forward-looking statements are based on management's good-faith expectations, judgements and assumptions as of the date of this press release.  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: the impacts of the current COVID-19 pandemic and other health epidemics; our continuing losses and need to achieve profitability; fluctuations in our financial results; the acceptance and use of our products and services by PACE organizations; the need to innovate and provide useful products and services; risks related to changing healthcare and other applicable regulations; our ability to maintain relationships with a specified drug wholesaler; increasing consolidation in the healthcare industry; managing our growth effectively; our ability to adequately protect our intellectual property; the requirements of being a public company; our ability to recognize the expected benefits from acquisitions on a timely basis or at all; and the other risk factors set forth from time to time in our filings with the Securities and Exchange Commission (“SEC”),  including those factors discussed under the caption “Risk Factors” in our most recent annual report on Form 10-K, filed with the SEC on March 2, 2020, and in subsequent reports filed with or furnished to the SEC, copies of which are available free of charge within the Investor Relations section of the Tabula Rasa HealthCare website http://ir.trhc.com or upon request from our Investor Relations Department. Tabula Rasa HealthCare assumes no obligation and does not intend to update these forward-looking statements, except as required by law, to reflect events or circumstances occurring after today’s date.


TABULA RASA HEALTHCARE, INC.
UNAUDITED CONSOLIDATED BALANCE SHEETS
(In thousands)

       
  March 31, December 31, 
  2020  2019 
Assets      
Current assets:      
Cash $38,134  $42,478 
Restricted cash  3,763   4,103 
Accounts receivable, net  36,237   29,123 
Inventories  5,135   3,700 
Prepaid expenses  4,615   4,299 
Other current assets  5,780   10,835 
Total current assets  93,664   94,538 
Property and equipment, net  15,612   15,798 
Operating lease right-of-use assets  23,260   22,100 
Software development costs, net  20,906   18,501 
Goodwill  150,760   150,760 
Intangible assets, net  182,591   189,413 
Other assets  1,058   1,281 
Total assets $487,851  $492,391 
Liabilities and stockholders’ equity      
Current liabilities:      
Current portion of long-term debt and finance leases, net $10  $125 
Current operating lease liabilities  4,635   4,350 
Accounts payable  10,354   8,622 
Accrued expenses and other liabilities  25,312   26,906 
Total current liabilities  40,311   40,003 
Long-term debt and finance leases, net  229,444   226,294 
Noncurrent operating lease liabilities  21,853   21,017 
Long-term acquisition-related contingent consideration  11,500   10,800 
Deferred income tax liability  5,289   8,656 
Other long-term liabilities  53   73 
Total liabilities  308,450   306,843 
       
Stockholders' equity:      
Common stock  2   2 
Treasury stock  (3,956)  (3,865)
Additional paid-in capital  296,726   288,345 
Accumulated deficit  (113,371)  (98,934)
Total stockholders’ equity  179,401   185,548 
Total liabilities and stockholders’ equity $487,851  $492,391 


TABULA RASA HEALTHCARE, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share amounts)

       
  Three Months Ended
  March 31,
  2020  2019 
Revenue:     
Product revenue $ 37,087  $ 30,982 
Service revenue   35,740    29,977 
Total revenue   72,827    60,959 
Cost of revenue, exclusive of depreciation and amortization shown below:      
Product cost   27,199    23,475 
Service cost   20,874    18,193 
Total cost of revenue, exclusive of depreciation and amortization   48,073    41,668 
Operating expenses:       
Research and development    4,828    5,550 
Sales and marketing   5,540    4,850 
General and administrative    16,967    13,743 
Change in fair value of acquisition-related contingent consideration expense   700    1,176 
Depreciation and amortization   9,913    6,299 
Total operating expenses    37,948    31,618 
Loss from operations   (13,194)   (12,327)
Interest expense, net   4,610    2,693 
Loss before income taxes   (17,804)   (15,020)
Income tax benefit   (3,367)   (4,041)
Net loss $ (14,437) $ (10,979)
Net loss per share, basic and diluted $ (0.68) $ (0.54)
Weighted average common shares outstanding, basic and diluted   21,374,897    20,384,557 


TABULA RASA HEALTHCARE, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

       
  Three Months Ended
  March 31,
  2020  2019 
Cash flows from operating activities:     
Net loss $ (14,437) $ (10,979)
Adjustments to reconcile net loss to net cash used in operating activities:      
Depreciation and amortization   9,913    6,299 
Amortization of deferred financing costs and debt discount   3,252    1,575 
Deferred taxes   (3,367)   (3,381)
Stock-based compensation   7,137    6,852 
Change in fair value of acquisition-related contingent consideration   700    1,176 
Acquisition-related contingent consideration paid   —    (24,428)
Other noncash items   —    12 
Changes in operating assets and liabilities, net of effect from acquisitions:      
Accounts receivable, net   (7,114)   (3,258)
Inventories   (1,435)   (117)
Prepaid expenses and other current assets   4,625    (2,029)
Other assets   54    (354)
Accounts payable    1,528    (1,458)
Accrued expenses and other liabilities   (1,633)   3,464 
Other long-term liabilities   (20)   (20)
Net cash used in operating activities   (797)   (26,646)
       
Cash flows from investing activities:      
Purchases of property and equipment   (763)   (1,019)
Software development costs   (4,228)   (2,630)
Proceeds from repayment of note receivable   —    1,000 
Acquisitions of businesses, net of cash acquired   —    (158,726)
Net cash used in investing activities   (4,991)   (161,375)
       
Cash flows from financing activities:      
Proceeds from exercise of stock options   1,153    1,037 
Payments for debt financing costs   —    (9,418)
Repayments of line of credit   —    (45,000)
Payments of acquisition-related contingent consideration   —    (18,722)
Repayments of long-term debt and finance leases   (49)   (276)
Proceeds from issuance of convertible senior subordinated notes   —    325,000 
Proceeds from sale of warrants   —    65,910 
Purchase of convertible note hedges   —    (101,660)
Net cash provided by financing activities   1,104    216,871 
Net (decrease) increase in cash and restricted cash   (4,684)   28,850 
Cash and restricted cash, beginning of period   46,581    25,029 
Cash and restricted cash, end of period $ 41,897  $ 53,879 


TABULA RASA HEALTHCARE, INC.
UNAUDITED SEGMENT RESULTS
(In thousands)

    
  Three Months Ended
   March 31, 2020
Revenue   
CareVention HealthCare:   
PACE product revenue $ 37,087 
PACE solutions   11,571 
Total CareVention HealthCare   48,658 
    
MedWise HealthCare:   
Medication safety services   14,320 
Software subscriptions   9,849 
Total MedWise HealthCare   24,169 
    
Total Revenue $ 72,827 
    
Adjusted EBITDA   
CareVention HealthCare $ 11,748 
MedWise HealthCare   2,831 
Shares Services   (9,772)
Total Adjusted EBITDA $ 4,807 


                
  Three Months Ended  Year Ended
  March 31, 2019 June 30, 2019 September 30, 2019 December 31, 2019 December 31, 2019
Revenue               
CareVention HealthCare:               
PACE product revenue $ 30,982  $ 33,372  $ 34,966  $ 37,810  $ 137,130 
PACE solutions   11,174    11,437    11,276    12,021    45,908 
Total CareVention HealthCare   42,156    44,809    46,242    49,831    183,038 
                
MedWise HealthCare:               
Medication safety services   15,351    22,498    18,706    13,362    69,917 
Software subscriptions   3,452    8,948    9,322    10,030    31,752 
Total MedWise HealthCare   18,803    31,446    28,028    23,392    101,669 
                
Total Revenue $ 60,959  $ 76,255  $ 74,270  $ 73,223  $ 284,707 
                
Adjusted EBITDA               
CareVention HealthCare $ 10,620  $ 11,466  $ 12,632  $ 12,773  $ 47,491 
MedWise HealthCare   1,648    9,059    5,388    2,181    18,276 
Shares Services   (6,577)   (6,873)   (7,444)   (6,952)   (27,846)
Total Adjusted EBITDA $ 5,691  $ 13,652  $ 10,576  $ 8,002  $ 37,921 

TABULA RASA HEALTHCARE, INC.
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP MEASURES
(In thousands except share and per share amounts)

       
  Three Months Ended March 31,
  2020  2019 
Reconciliation of net loss to Adjusted EBITDA      
Net loss $ (14,437) $ (10,979)
Add:      
Interest expense, net   4,610    2,693 
Income tax benefit   (3,367)   (4,041)
Depreciation and amortization   9,913    6,299 
Change in fair value of acquisition-related contingent consideration expense   700    1,176 
Acquisition-related expense   251    3,691 
Stock-based compensation related expense   7,137    6,852 
Adjusted EBITDA $ 4,807  $ 5,691 


             
  Three Months Ended March 31,
  2020  2019 
Reconciliation of diluted net loss per share to Adjusted Diluted EPS            
GAAP net loss, basic and diluted, and net loss per share, basic and diluted $ (14,437) $ (0.68) $ (10,979) $ (0.54)
Adjustments:            
Change in fair value of acquisition-related contingent consideration expense   700       1,176    
Amortization of acquired intangibles   6,822       4,667    
Amortization of debt discount and issuance costs   3,152       1,527    
Acquisition-related expense   251       3,691    
Stock-based compensation expense   7,137       6,852    
Impact to income taxes (1)   (3,435)      (4,737)   
Adjusted net income and Adjusted Diluted EPS $ 190  $ 0.01  $ 2,197  $ 0.10 

(1)   The impact to taxes was calculated using a normalized statutory tax rate applied to pre-tax loss adjusted for the respective items above and then subtracting the tax provision as determined for GAAP purposes.

     
  Three Months Ended
  March 31,
  2020 2019
Reconciliation of weighted average shares of common stock outstanding, diluted, to weighted average shares of common stock outstanding, diluted for Adjusted Diluted EPS    
Weighted average shares of common stock outstanding, basic and diluted for GAAP  21,374,897  20,384,557
Adjustments:    
Weighted average dilutive effect of stock options  1,384,878  1,675,014
Weighted average dilutive effect of restricted stock  484,979  842,134
Weighted average dilutive effect of contingent shares  75,569  28,665
Weighted average shares of common stock outstanding, diluted for Adjusted Diluted EPS (1)  23,320,323  22,930,370

 (1)    TRHC account for the convertible senior subordinated notes utilizing the Treasury Stock Method as we currently intend to settle the notes entirely or partly in cash. Under this method, the underlying shares of TRHC common stock issuable upon conversion of the notes are excluded from the calculation of diluted EPS, except to the extent that the average stock price for the reporting period exceeds their conversion price of $69.95 per share. For the three months ended March 31, 2020, there was no impact on diluted EPS from the convertible senior subordinated notes as the conversion price exceeded TRHC’s average stock price.

TABULA RASA HEALTHCARE, INC.
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP GUIDANCE RANGES
(In millions)

             
  LOW HIGH LOW HIGH
  Three Months Ended June 30, 2020 Year Ended December 31, 2020
Reconciliation from Net Loss Guidance to Adjusted EBITDA Guidance            
Net loss: $ (12.3) $ (10.8) $ (35.5) $ (30.5)
Add:            
Interest expense   4.7    4.7    19.0    19.0 
Income tax benefit   (2.6)   (2.1)   (7.3)   (6.3)
Depreciation and amortization   10.2    10.2    40.7    40.7 
Stock-based compensation expense   7.0    7.0    28.1    28.1 
Change in fair value of contingent consideration   —    —    0.7    0.7 
Acquisition-related expense   —    —    0.3    0.3 
Adjusted EBITDA $ 7.0  $ 9.0  $ 46.0  $ 52.0 

Contact:

Investors
Frank Sparacino
fsparacino@TRHC.com
T: 866-648-2767

Media
Dianne Semingson
dsemingson@TRHC.com
T: 215-870-0829

Amanda Bednar
abednar@trhc.com
T: (856) 912-5714