Leading provider of proprietary, cloud-based electronic health records, Medical Transcription Billing Corp. (NASDAQ:MTBC), announces results of Q3, 2016 financial reports.
Medical Transcription Billing, Corp. ( NASDAQ : MTBC ) ( NASDAQ : MTBCP ), a leading provider of proprietary, cloud-based electronic health records, practice management and mHealth solutions, today announces financial and operational results for third quarter 2016 and provides a review of its largest acquisition to-date and its upcoming offering of additional shares of its non-convertible Series A Preferred Stock.
“We are pleased to announce another quarter of quarter-over-quarter revenue growth,” says Mahmud Haq, MTBC’s chairman and chief executive officer. “Even though we continue to report a GAAP net loss, which is largely a result of non-cash amortization and depreciation expense, we are proud to report four consecutive quarters of positive adjusted EBITDA.”
As previously announced, on October 3, MTBC closed its largest acquisition to date as it acquired substantially all of the assets of MediGain, LLC, a Texas-based medical billing company, and its subsidiary, Millennium Practice Management, LLC, a New Jersey-based medical billing company. Expected to be accretive to shareholders in 2017, the acquisition reflects the strategic nature of MTBC’s acquisition-based growth strategy.
“We are greatly encouraged by the growth opportunities provided by our recent acquisition of MediGain. The successful closing of this transaction has positioned MTBC to experience exponential growth through access to new, untapped markets,” says Haq. “In turn, we expect to expand our client base and deliver significant revenue growth in 2017.”
The acquired accounts in good standing have annual revenues of more than $10 million, which will contribute to MTBC’s overall revenue growth in 2017;
MediGain was purchased for $7 million, which will be financed primarily through sale of additional Series A Preferred Stock, which is not dilutive to shareholders;
The incremental profits from this acquisition are expected to greatly exceed our cost of capital; it is expected that this acquisition will be accretive to MTBC shareholders in 2017;
MTBC added experienced team members in North America, and expanded its Asia-based team to additional countries with talented, cost-effective workforces.
“We are excited by the opportunities presented with this acquisition and privileged to be able to support the team members formerly with MediGain as they continue to provide world-class practice management support to healthcare providers throughout the United States,” says Stephen Snyder, MTBC’s President. “We look forward to leveraging our combined team of professionals and proprietary technology to help healthcare providers increase their revenues and reduce operating costs. There are significant synergies between the two companies. Our global team of professionals and proprietary technology will allow us to continue improving operating margins while delivering outstanding service to our clients.”
Three and Nine Months Financial Results
“We are pleased to report consecutive quarterly revenue growth during each quarter of 2016 so far, and expect this trend will continue through year-end,” says MTBC Chief Financial Officer Bill Korn. “While our revenue on a year over year basis was down, this was principally due to the loss of clients during 2015 from the companies we purchased in the third quarter of 2014.”
Revenues for third quarter 2016 were $5.3 million, compared to $5.6 million in the same period last year, and $5.2 million for second quarter 2016.
The third quarter GAAP net loss was $1.5 million, 28% of net revenue, or $0.17 per share, compared to a GAAP net loss of $1.2 million in the same period last year. The GAAP net loss is largely a result of non-cash amortization and depreciation expense of $1.1 million. The increase in net loss compared to 2015 is partly the result of lower revenues, as well as increasing selling and marketing expense from $59,000 to $275,000. Direct operating costs were reduced by 5%, from $2.8 million in the third quarter of 2015 to $2.7 million in the third quarter of 2016, while general and administrative expenses declined 17% from $3.1 million to $2.6 million.
Non-GAAP adjusted net income for the third quarter was ($208,000), or ($0.02) per share, compared to the non-GAAP adjusted net Income of ($397,000) in the same period last year. Non-GAAP adjusted net income per share is calculated using the end-of-period common shares outstanding, including shares which are part of contingent consideration.
Adjusted EBITDA for the quarter was $130,000, or 2.4% of revenue, compared to adjusted EBITDA of ($184,000), or (3.3%) of revenue, in the same period last year. Adjusted EBITDA has been positive each quarter since the fourth quarter of 2015.
MTBC’s revenues for the nine months ended September 30, 2016, were $15.7 million, compared to $17.7 million in the same period last year.
The nine-month GAAP net loss was $4.8 million, or 30% of net revenue, compared to a GAAP net loss of $3.9 million for the same period last year. The GAAP net loss is largely a result of non-cash amortization and depreciation expense of $3.5 million. The increase in net loss is partly the result of lower revenues. Direct operating costs were reduced by 21%, from $9.3 million in the first nine months of 2015 to $7.3 million in first nine months of 2016, while general and administrative expenses declined from $9.4 million to $8.2 million. The GAAP net loss was $0.53 per share, calculated using the net loss attributable to common shareholders divided by the weighted average number of common shares outstanding.
Non-GAAP adjusted net income was ($724,000), or ($0.07) per share, compared to the non-GAAP adjusted net income of ($1.5 million) in the same period last year.
Adjusted EBITDA for the nine-month period was $209,000 or 1.3% of revenue, compared to adjusted EBITDA of ($989,000), or (5.6%) of revenue, in the same period last year The improvement in adjusted EBITDA is primarily the result of our reduction in direct operating costs and general and administrative expenses.
“The difference of $5.0 million between adjusted EBITDA and the GAAP net loss in the nine months ended September 30, 2016, reflects $3.5 million of non-cash amortization and depreciation expense, $3.1 million of which results from amortization of intangibles resulting from our acquisitions. The remaining difference is based on $816,000 of stock-based compensation, $609,000 of integration and transaction costs related to recent acquisitions, $126,000 of provision for taxes, and $461,000 of net interest expense, offset by a $608,000 decrease in the contingent consideration liability,” says Korn.
MTBC is preparing to file a Registration Statement on Form S-1 to sell 400,000 additional shares of its 11% Series A Cumulative Redeemable Perpetual Non-Convertible Preferred Stock at a price of $25.00 per share. If all 400,000 shares are sold, this would result in net proceeds of approximately $9 million, of which $5 million will be used for the remaining payment of the MediGain acquisition. The Series A Preferred Stock is identical to the $7.4 million of Series A Preferred Stock issued in November 2015 and July 2016. It carries an 11% annual dividend payable monthly and a $25.00 liquidation preference. The shares are not convertible, have no stated maturity, and are not subject to a sinking fund or mandatory redemption. Shares of Series A Preferred Stock will remain outstanding indefinitely unless we decide to redeem the shares, which can occur at the Company’s option at any time after five years or within 120 days of a change of control. The Board of Directors has declared monthly dividends on the Preferred Stock payable through March, 2017. The proposed offering will be made only by means of a written prospectus forming a part of the S-1 Registration Statement to be filed.
Conference Call Information
MTBC management will host a conference call at 8:30 a.m. EST on Thursday, November 10, 2016, to discuss the third quarter 2016 results. The conference call will be accessible by dialing 844-802-2438, or 412-317-5131 for international callers, and referencing “MTBC Third Quarter 2016 Earnings Call.” An audio webcast of the call will be available live and archived on MTBC’s investor relations website at ir.mtbc.com.
A replay of the conference call will be available approximately one hour after conclusion of the call and will be accessible through December 31, 2016. The replay can be accessed by dialing 877-344-7529, or 412-317-0088 for international callers, and providing access code 10095250.
MTBC is a healthcare information technology company that provides a fully integrated suite of proprietary web-based solutions, together with related business services, to healthcare providers practicing in ambulatory care settings. Our integrated Software-as-a-Service (or SaaS) platform helps our customers increase revenues, streamline workflows and make better business and clinical decisions, while reducing administrative burdens and operating costs. MTBC’s common stock trades on the NASDAQ Capital Market under the ticker symbol “MTBC,” and its Series A Preferred Stock trades on the NASDAQ Capital Market under the ticker symbol “MTBCP.”
For additional information, please visit our website at www.mtbc.com.
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Use of Non-GAAP Financial Measures
In our earnings releases, prepared remarks, conference calls, slide presentations, and webcasts, we may use or discuss non-GAAP financial measures, as defined by SEC Regulation G. The GAAP financial measure most directly comparable to each non-GAAP financial measure used or discussed, and a reconciliation of the differences between each non-GAAP financial measure and the comparable GAAP financial measure, are included in this press release after the condensed consolidated financial statements. Our earnings press releases containing such non-GAAP reconciliations can be found in the Investor Relations section of our web site at ir.mtbc.com.
Shares of Medical Transcription Billing Corp. (NASDAQ:MTBC) are actively moving -2.30% thus far today on the news and have traded in the range of $0.85 – 1.00 during the session. A number of research firms have recently weighed in on the stock, providing future price targets. The covering firms currently have a consensus one-year price target of $2.25 on the stock. This is according to brokerage analysts polled by Thomson Reuters First Call. This is the average number from the individual targets provided by the firms. Analysts are projecting earnings per share of $-0.24 for the next fiscal quarter. For the current year, analysts are predicting earnings of $-0.71 per share according to First Call.
In looking at where the stock is trading on a technical level, the stock is trading -1.74% away from its 50-day moving average of $0.87. Based on the most recent available data, the equity is -51.43% off of its 52-week high of $1.75 and +25.37% away from its 52-week low which is $0.68.
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Today, the stock opened at $0.91 and the last bid at the time of writing stood at $0.85. During the session thus far, the equity dipped down to $0.85 and touched $1.00 as the high point. Medical Transcription Billing Corp. (NASDAQ:MTBC) has a market cap of $8.49M and has seen an average daily volume of 15,706 over the past three months.
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