Tabula Rasa HealthCare Reports Third Quarter 2021 Results

-- Third quarter revenue grew 23% year-over-year to $86.6 million.
Published: Oct. 7, 2021 at 8:30 AM AKDT|Updated: Nov. 4, 2021 at 12:30 PM AKDT

MOORESTOWN, N.J., Nov. 4, 2021 /PRNewswire/ -- Tabula Rasa HealthCare, Inc. ("TRHC") (Nasdaq: TRHC), a leading healthcare technology company advancing the safe use of medications, today reported financial results for the third quarter ended September 30, 2021.

(PRNewsfoto/Tabula Rasa HealthCare)
(PRNewsfoto/Tabula Rasa HealthCare)

"Our improved third quarter revenue growth was driven by continued strength in PACE and our CareVention HealthCare segment. While I am pleased with our markedly improved organic growth, we are not satisfied with these results and are taking a number of important steps to better position the company to deliver higher growth in 2022 and ultimately increase shareholder value," said Calvin H. Knowlton, PhD, TRHC's Chief Executive Officer, Chairman and Founder.

Third Quarter 2021 Financial Results

All comparisons, unless otherwise noted, are to the three months ended September 30, 2020.

  • Total revenue - Total revenue of $86.6 million increased 23% compared to $70.5 million in 2020. Total revenue included product revenue of $50.6 million, an increase of 29%, and solutions (i.e., software and services) revenue of $36.0 million, an increase of 15%. The October 2020 acquisition of Personica contributed 6% of inorganic growth during the third quarter.
  • Total revenue by segment
  • GAAP net loss - Net loss was $17.1 million compared to a net loss of $21.6 million with the improvement driven by a $16.1 million increase in total revenue, offset by a $14.2 million, or 19%, increase in combined cost of revenue, research and development, sales and marketing, and general and administrative expenses.
  • Non-GAAP Adjusted EBITDA - Non-GAAP Adjusted EBITDA of $5.7 million (6.6% margin) increased 12% as compared with $5.1 million (7.2% margin) in 2020. Our investments across the business, led by sales and marketing expenses, have moderated in recent quarters but remain elevated when compared to 2020.
  • Non-GAAP Adjusted EBITDA by segment - Excluding $10.9 million of shared services:

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."

Future Outlook

Based on current market conditions and our expectations as of today, we are introducing fourth quarter 2021 guidance and revised full year 2021 guidance, as summarized below.

For the fourth quarter 2021, we expect:

  • Total revenue in the range of $84 million to $86 million represents growth of 9% to 12%, all of which is organic.
  • Adjusted EBITDA in the range of $4 million to $5 million as compared with $4.7 million a year ago.

For the full year 2021, we expect:

  • Total revenue in the range of $329.6 million to $331.6 million represents growth of 11% to 12% with organic growth of 7%.
  • Adjusted EBITDA in the range of $19.3 million to $20.3 million as compared with $21.8 million a year ago



















Three Months Ended December 31, 2021



Year Ended December 31, 2021




LOW



HIGH



LOW



HIGH




(in millions except percentages)


Total revenue


$

84.0



$

86.0



$

329.6



$

331.6


Year over year growth



9

%



12

%



11

%



12

%

GAAP net loss


$

(19.8)



$

(18.8)



$

(77.5)



$

(76.5)


Adjusted EBITDA


$

4.0



$

5.0



$

19.3



$

20.3


Adjusted EBITDA margin



5

%



6

%



6

%



6

%

Quarterly Conference Call

The third quarter 2021 earnings conference call and webcast will be held tomorrow, Friday, November 5, 2021, at 8:30 a.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 passcode 5917496 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 for seven days by dialing 855-859-2056 for U.S. participants or 404-537-3406 for international participants and referencing passcode 5917496.

About Tabula Rasa HealthCare

Tabula Rasa HealthCare (TRHC) provides medication safety solutions that empower healthcare professionals and consumers to optimize medication regimens, combatting medication overload and reducing adverse drug events – the fourth leading cause of death in the U.S. TRHC's proprietary technology solutions, including DoseMeRx™ and 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, Adjusted EBITDA margin, 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.

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 expense, settlement costs, severance expense incurred in 2021 related to a realignment of resources, acquisition-related expense, and stock-based compensation expense. TRHC defines Adjusted EBITDA margin as Adjusted EBITDA as a percentage of revenue. 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, settlement costs, severance expense incurred in 2021 related to a realignment of resources, stock-based compensation expense, and the tax impact of those items using a normalized tax rate on pre-tax income (loss) 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 may define their non-GAAP financial measures differently than TRHC.

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 expectations 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, the financial and operating performance of TRHC, the impacts of the COVID-19 pandemic and TRHC's expectations for the remainder of 2021. 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 ongoing 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 governmental 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 February 26, 2021, 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)










September 30, 


December 31, 



2021


2020

Assets 





Current assets: 







Cash


$

11,347


$

23,362

Restricted cash



4,014



5,170

Accounts receivable, net



31,736



32,516

Inventories



5,127



4,261

Prepaid expenses



5,344



3,739

Client claims receivable



15,284



14,412

Other current assets



15,398



9,752

Total current assets



88,250



93,212

Property and equipment, net



13,234



15,070

Operating lease right-of-use assets



21,935



21,711

Software development costs, net



40,297



27,882

Goodwill



170,835



170,862

Intangible assets, net



161,626



183,094

Other assets



4,801



2,609

Total assets


$

500,978


$

514,440

Liabilities and stockholders' equity







Current liabilities:







Current portion of finance leases


$


$

4

Current operating lease liabilities



4,706



4,402

Acquisition-related contingent consideration





166

Acquisition-related notes payable



3,995



16,662

Accounts payable



13,019



11,245

Client claims payable



8,157



7,773

Accrued expenses and other liabilities



35,443



31,968

Total current liabilities



65,320



72,220

Line of credit



27,500



10,000

Long-term debt, net



318,969



239,285

Noncurrent operating lease liabilities



20,152



20,381

Deferred income tax liability, net



1,226



3,354

Other long-term liabilities



563



671

Total liabilities



433,730



345,911








Stockholders' equity:







Common stock



2



2

Treasury stock



(4,292)



(4,018)

Additional paid-in capital



310,514



352,445

Accumulated deficit



(238,976)



(179,900)

Total stockholders' equity



67,248



168,529

Total liabilities and stockholders' equity


$

500,978


$

514,440

TABULA RASA HEALTHCARE, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share amounts)
















Three Months Ended


Nine Months Ended



September 30, 


September 30, 



2021


2020


2021


2020

Revenue:










Product revenue


$

50,636


$

39,365


$

139,496


$

115,825

Service revenue



35,950



31,141



106,079



104,342

Total revenue



86,586



70,506



245,575



220,167

Cost of revenue, exclusive of depreciation and amortization shown below:













Product cost



38,770



28,638



105,326



84,879

Service cost



22,392



20,610



67,126



64,140

Total cost of revenue, exclusive of depreciation and amortization



61,162



49,248



172,452



149,019

Operating expenses: 













Research and development 



4,984



5,101



14,893



13,750

Sales and marketing



6,218



5,030



18,786



15,597

General and administrative 



16,870



15,620



54,360



48,914

Change in fair value of acquisition-related contingent consideration expense





2,005





2,605

Depreciation and amortization



12,099



12,199



35,343



32,323

Total operating expenses 



40,171



39,955



123,382



113,189

Loss from operations



(14,747)



(18,697)



(50,259)



(42,041)

Interest expense, net



2,230



4,722



6,959



14,000

Loss before income taxes



(16,977)



(23,419)



(57,218)



(56,041)

Income tax expense (benefit)



134



(1,830)



466



(5,705)

Net loss


$

(17,111)


$

(21,589)


$

(57,684)


$

(50,336)

Net loss per share, basic and diluted


$

(0.73)


$

(0.99)


$

(2.48)


$

(2.33)

Weighted average common shares outstanding, basic and diluted



23,407,391



21,779,808



23,230,138



21,571,214

TABULA RASA HEALTHCARE, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)










Nine Months Ended



September 30, 



2021


2020

Cash flows from operating activities:






Net loss


$

(57,684)


$

(50,336)

Adjustments to reconcile net loss to net cash provided by operating activities:







Depreciation and amortization



35,343



32,323

Amortization of deferred financing costs and debt discount



1,714



9,925

Deferred taxes



337



(5,705)

Stock-based compensation



28,962



22,408

Change in fair value of acquisition-related contingent consideration





2,605

Acquisition-related contingent consideration paid



(67)



(2,390)

Other noncash items



9



(70)

Changes in operating assets and liabilities, net of effect from acquisitions:







Accounts receivable, net



789



(3,220)

Inventories



(866)



(494)

Prepaid expenses and other current assets



(6,084)



7,209

Client claims receivables



(872)



Other assets



(2,604)



(382)

Accounts payable   



1,587



(1,432)

Accrued expenses and other liabilities



2,138



(5,408)

Client claims payables



423



Other long-term liabilities



(108)



315

Net cash provided by operating activities



3,017



5,348








Cash flows from investing activities:







Purchases of property and equipment



(1,611)



(2,537)

Software development costs



(22,649)



(13,734)

Net cash used in investing activities



(24,260)



(16,271)








Cash flows from financing activities:







Proceeds from exercise of stock options



3,683



3,225

Payments for employee taxes for shares withheld





(2,993)

Payments for debt financing costs



(8)



(38)

Borrowings on line of credit



17,500



Payment of acquisition-related notes payable



(13,000)



Payments of acquisition-related contingent consideration



(99)



(3,504)

Repayments of long-term debt and finance leases



(4)



(54)

Net cash provided by (used in) financing activities



8,072



(3,364)








Net decrease in cash and restricted cash



(13,171)



(14,287)

Cash and restricted cash, beginning of period



28,532



46,581

Cash and restricted cash, end of period


$

15,361


$

32,294

TABULA RASA HEALTHCARE, INC.

UNAUDITED SEGMENT RESULTS

(In thousands)
















Three Months Ended


Nine Months Ended



September 30, 2021


September 30, 2020


September 30, 2021


September 30, 2020

Revenue













CareVention HealthCare:













PACE product revenue


$

50,321


$

39,086


$

139,021


$

115,103

PACE solutions



14,707



11,214



42,973



34,307

Total CareVention HealthCare



65,028



50,300



181,994



149,410














MedWise HealthCare:













Product revenue



315



279



475



722

Medication safety services



9,467



9,817



31,247



39,844

Software subscription and services



11,776



10,110



31,859



30,191

Total MedWise HealthCare



21,558



20,206



63,581



70,757














Total Revenue


$

86,586


$

70,506


$

245,575


$

220,167














Adjusted EBITDA













CareVention HealthCare


$

14,014


$

12,735


$

40,983


$

36,560

MedWise HealthCare



2,618



1,009



7,532



8,537

Shared Services



(10,915)



(8,650)



(33,236)



(28,062)

Total Adjusted EBITDA


$

5,717


$

5,094


$

15,279


$

17,035














Adjusted EBITDA margin













CareVention HealthCare



21.6%



25.3%



22.5%



24.5%

MedWise HealthCare



12.1%



5.0%



11.8%



12.1%

Total Adjusted EBITDA margin



6.6%



7.2%



6.2%



7.7%

TABULA RASA HEALTHCARE, INC.

UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP MEASURES

(In thousands except share and per share amounts)
















Three Months Ended September 30, 


Nine Months Ended September 30, 



2021


2020


2021


2020

Reconciliation of Net Loss to Adjusted EBITDA













Net loss


$

(17,111)


$

(21,589)


$

(57,684)


$

(50,336)

Add:













Interest expense, net



2,230



4,722



6,959



14,000

Income tax expense (benefit)



134



(1,830)



466



(5,705)

Depreciation and amortization



12,099



12,199



35,343



32,323

Change in fair value of acquisition-related contingent
consideration expense





2,005





2,605

Settlement







500



Severance expense



354



917



516



917

Acquisition-related expense





572



217



823

Stock-based compensation expense



8,011



8,098



28,962



22,408

Adjusted EBITDA


$

5,717


$

5,094


$

15,279


$

17,035














Total revenue


$

86,586


$

70,506


$

245,575


$

220,167

Adjusted EBITDA margin



6.6%



7.2%



6.2%



7.7%




























Three Months Ended September 30, 


Nine Months Ended September 30, 



2021


2020


2021


2020



(In thousands except per share amounts)


(In thousands except per share amounts)

Reconciliation of diluted net loss per share
to Adjusted Diluted EPS

























GAAP net loss, basic and diluted, and net l
oss per share, basic and diluted


$

(17,111)


$

(0.73)


$

(21,589)


$

(0.99)


$

(57,684)


$

(2.48)


$

(50,336)


$

(2.33)

Adjustments:

























Change in fair value of acquisition-related contingent consideration expense








2,005











2,605




Amortization of acquired intangibles



7,060






8,291






21,468






21,936




Amortization of debt discount and issuance costs



406






3,280






1,310






9,647




Settlement













500









Severance expense



354






917






516






917




Acquisition-related expense








572






217






823




Stock-based compensation expense



8,011






8,098






28,962






22,408




Impact to income taxes (1)



439






(1,762)






1,588






(6,306)




Adjusted net (loss) income and Adjusted Diluted EPS


$

(841)


$

(0.04)


$

(188)


$

(0.01)


$

(3,123)


$

(0.13)


$

1,694


$

0.07

(1)

The impact to taxes was calculated using a normalized statutory tax rate applied to pre-tax income or loss adjusted for the respective items above and then subtracting or adding the tax benefit or provision, respectively,
as determined for GAAP purposes.












Three Months Ended


Nine Months Ended



September 30, 


September 30, 



2021


2020


2021


2020

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


23,407,391


21,779,808


23,230,138


21,571,214

Adjustments:









Weighted average dilutive effect of stock options





1,281,367

Weighted average dilutive effect of restricted stock





491,245

Weighted average dilutive effect of contingent shares





74,102

Weighted average shares of common stock outstanding, diluted for Adjusted Diluted EPS (1)


23,407,391


21,779,808


23,230,138


23,417,928

(1)

For the three and nine months ended September 30, 2021, we accounted for the convertible senior subordinated notes utilizing the if-converted method.
Under this method, we are required to presume that the convertible senior subordinated notes are converted at the beginning of the current period and
settled entirely in our common stock. However, no potential shares are assumed outstanding and are excluded from the diluted EPS calculation if
including them would have an anti-dilutive effect. For the three and nine months ended September 30, 2021, there was no impact on diluted EPS from
the convertible senior subordinated notes as the conversion would have had an anti-dilutive effect.




For the three and nine months ended September 30, 2020, we accounted for the convertible senior subordinated notes utilizing the treasury stock method.
Under this method, we presumed that we would settle the notes entirely or partly in cash. The underlying shares issuable upon conversion of the notes
were excluded from the calculation of diluted EPS, except to the extent that the average stock price for the reporting period exceeded their conversion
price of $69.95 per share. For the three and nine months ended September 30, 2020, there was no impact on diluted EPS from the convertible senior
subordinated notes as the conversion price exceeded our average stock price.

TABULA RASA HEALTHCARE, INC.

UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP GUIDANCE RANGES

(In millions)











Three Months Ended December 31, 2021


Year Ended December 31, 2021



LOW


HIGH


LOW


HIGH

Reconciliation from Net Loss Guidance to Adjusted
EBITDA Guidance













Net loss:


$

(19.8)


$

(18.8)


$

(77.5)


$

(76.5)

Add:













Interest expense



2.2



2.2



9.2



9.2

Income tax expense



0.1



0.1



0.6



0.6

Depreciation and amortization



12.1



12.1



47.4



47.4

Settlement







0.5



0.5

Severance expense



0.4



0.4



0.9



0.9

Stock-based compensation expense



9.0



9.0



38.0



38.0

Acquisition-related expense







0.2



0.2

Adjusted EBITDA


$

4.0


$

5.0


$

19.3


$

20.3

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