Medidata (NASDAQ: MDSO) today announced its financial results
for the first quarter of 2019.
“Medidata is at the forefront of driving the digital
transformation of life science with our platform, data assets and
industry expertise, helping fulfill the mission we set almost 20
years ago to positively impact patients’ lives," said Tarek Sherif,
chairman and chief executive officer, Medidata. “While we achieved
solid results this quarter, importantly we have laid the foundation
for the future with the launch of Acorn AI."
First Quarter 2019 Results
- Total revenue was $173.5 million, an
increase of 16% compared with $149.2 million in the first quarter
of 2018
- Subscription revenue was $146.9
million, an increase of 16% compared with the first quarter of
2018. Professional services revenue was $26.6 million, an increase
of 19% compared with the first quarter of 2018
- GAAP operating income was $5.0 million
and non-GAAP operating income1 was $35.9 million, representing a
GAAP and non-GAAP operating margin of 2.9% and 20.7%,
respectively
- GAAP net income was $11.1 million, or
$0.18 per diluted share, compared with $10.3 million, or $0.17 per
diluted share, in the first quarter of 2018. Non-GAAP net income1
was $27.9 million, or $0.45 per diluted share, compared with $24.0
million, or $0.40 per diluted share, in the first quarter of 2018.
See the non-GAAP reconciliation included in this release for full
details of the non-GAAP adjustments
- Total cash and marketable securities
were $206.1 million at the end of the quarter, compared with $240.5
million on December 31, 2018
Additional Highlights:
- Remaining 2019 adjusted subscription
backlog2 as of March 31, 2019 was $432 million, an increase of $62
million, or 17%, compared with a year ago
- Launched Acorn AI™, a company designed
to provide actionable insights by breaking data silos and improving
data agility across the entire life science continuum
- Appointed the company’s first-ever
Chief Information Officer, Dr. Rama Kondru, an industry visionary
and former CIO of Janssen Americas. Additionally, Dr. Rachel
Sherman, former principal deputy commissioner of FDA, joined Acorn
AI as chief scientific and medical advisor
- In collaboration with the FDA Center
for Drug Evaluation and Research (CDER), Medidata will apply a
Synthetic Control Arm™ approach to adult historical clinical trial
data and extrapolate results to children. The aim is to minimize
exposure of children to clinical trials and increase the speed and
efficiency of pediatric drug development
- Secured a competitive win with a top 10
medical device company that will use Rave EDC, CTMS and eTMF to
standardize operations and increase efficiency across business
units
- Revenue retention rate3 was nearly 100%
for the quarter
“We had a good start to the year with 16% total revenue growth,"
said Rouven Bergmann, chief financial officer, Medidata. "With a
rock-solid core business, combined with the launch of Acorn AI, we
are well positioned for future growth while we focus on expanding
our operating margins.”
Conference call details:
Time: Today, April 30, 8 a.m. ET Conference ID:
9260289 Live dial-in: 1-877-791-0148, domestic
1-647-689-5652, international Webcast:
investors.medidata.com Replay: 1-800-585-8367, domestic
1-416-621-4642, international
About Medidata
Medidata is leading the digital transformation of life sciences,
with the world's most-used platform for clinical development,
commercial, and real-world data. Powered by artificial intelligence
and delivered by industry experts, Medidata helps pharmaceutical,
biotech, medical device companies, and academic researchers
accelerate value, minimize risk and optimize outcomes. Medidata and
its companies, Acorn AI and SHYFT, serve more than 1,200 customers
and partners worldwide and empower more than 150,000 certified
users every day to create hope for millions of patients. Discover
the future of life sciences: www.medidata.com
Cautionary Statement
Certain statements made in this press release are
“forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995 that involve significant
risks and uncertainties about Medidata Solutions, Inc.
(“Medidata”), including, but not limited to, statements about
Medidata’s forecast of financial performance, products and
services, business model, strategy and growth opportunities, and
competitive position. Such statements are subject to risks and
uncertainties that could cause actual performance or results to
differ materially from those expressed in these statements. Among
other things, the risks and uncertainties include those associated
with possible fluctuations in our financial and operating results;
integration activities, performance and financial impact of
acquired companies; our ability to retain and expand our customer
base or increase new business from those customers; and our ability
to continue to release, and gain customer acceptance of, new and
improved versions of our products. For additional disclosure
regarding these and other risks faced by Medidata, see disclosures
contained in Medidata’s public filings with the Securities and
Exchange Commission, including the “Risk Factors” section of
Medidata’s Annual Report on Form 10-K for the year ended December
31, 2018. You should consider these factors in evaluating the
forward-looking statements included in this press release and not
place undue reliance on such statements. The forward-looking
statements are made as of the date hereof, and Medidata undertakes
no obligation to update such statements as a result of new
information, new developments or otherwise, except as required by
law.
(1) Non-GAAP Financial Information
Medidata provides non-GAAP operating income, net income, and net
income per share data as a supplement to its operating results.
These measures are not in accordance with, or an alternative to,
generally accepted accounting principles (GAAP), and may be
different from non-GAAP measures used by other companies.
Management uses these non-GAAP measures to evaluate its financial
results, develop budgets, manage expenditures, and as an important
factor in determining variable compensation. In addition,
management believes, based on discussions with investors, that
these non-GAAP measures enhance investors’ ability to assess
Medidata’s historical and projected future financial performance.
While management believes these non-GAAP financial measures provide
useful supplemental information to investors, there are inherent
limitations associated with the use of non-GAAP financial measures.
Investors are encouraged to review the attached reconciliations of
these non-GAAP financial measures to the nearest comparable GAAP
measures.
(2) Adjusted subscription backlog equals subscription backlog
plus outstanding intra-year renewals valued at an amount equal to
the contracts to be renewed.
(3) Revenue retention rate is calculated as the percentage of
prior year revenue attributable to customers retained in the
current year.
MEDIDATA SOLUTIONS, INC. CONSOLIDATED STATEMENTS
OF OPERATIONS (Unaudited) (Amounts in thousands, except per
share data) Three Months Ended March
31, 2019 2018 Revenues Subscription $
146,875 $ 126,819 Professional services 26,629 22,379
Total revenues 173,504 149,198 Cost of revenues (1)(2) Subscription
26,728 20,341 Professional services 19,275 15,961
Total cost of revenues 46,003 36,302 Gross profit 127,501 112,896
Operating costs and expenses Research and development (1) 46,489
37,522 Sales and marketing (1)(2) 43,396 36,861 General and
administrative (1) 32,634 25,187 Total operating
costs and expenses 122,519 99,570 Operating income
4,982 13,326 Interest and other income (expense) Interest expense
(1,110 ) (5,575 ) Interest income 945 2,088 Other expense, net (28
) (96 ) Total interest and other expense, net (193 ) (3,583 )
Income before income taxes 4,789 9,743 Provision for income taxes
(6,356 ) (582 ) Net income $ 11,145 $ 10,325 Earnings
per share Basic $ 0.19 $ 0.18 Diluted $ 0.18 $
0.17 Weighted average common shares outstanding Basic 59,693
57,055 Diluted 61,755 60,098 (1) Stock-based compensation expense
included in cost of revenues and operating costs and expenses is as
follows: Cost of revenues $ 2,383 $ 1,268 Research and development
4,249 2,854 Sales and marketing 5,426 2,644 General and
administrative 7,606 6,389 Total stock-based
compensation $ 19,664 $ 13,155 (2) Amortization of
intangible assets included in costs of revenues and operating costs
and expenses is as follows: Cost of revenues $ 1,364 $ 1,094 Sales
and marketing 506 120 Total amortization of
intangible assets $ 1,870 $ 1,214
MEDIDATA SOLUTIONS, INC. Reconciliation of GAAP Operating
Income and GAAP Net Income to
Non-GAAP Operating Income and Non-GAAP
Net Income (Unaudited)
(Amounts in thousands, except per share data)
Three Months Ended March 31,
2019 2018 Operating income: GAAP operating
income $ 4,982 $ 13,326 GAAP operating margins 2.9 % 8.9 %
Stock-based compensation 19,664 13,155 Depreciation and
amortization 10,529 7,813 Contingent consideration adjustments (1)
161 (72 ) Cash compensation from acquisition-related agreements (2)
590 — Non-GAAP operating income $ 35,926 $
34,222 Non-GAAP operating margins 20.7 % 22.9 % Net income:
GAAP net income $ 11,145 $ 10,325 Stock-based compensation 19,664
13,155 Amortization 1,870 1,214 Contingent consideration
adjustments (1) 161 (72 ) Cash compensation from
acquisition-related agreements (2) 590 — Non-cash interest expense
(3) 109 3,908 Tax impact on add-back items (4) (5,599 ) (4,551 )
Non-GAAP net income $ 27,940 $ 23,979 GAAP basic
earnings per share $ 0.19 $ 0.18 GAAP diluted
earnings per share $ 0.18 $ 0.17 Non-GAAP basic
earnings per share $ 0.47 $ 0.42 Non-GAAP diluted
earnings per share $ 0.45 $ 0.40 (1) Change in
fair value of acquisition-related contingent consideration
liability. (2) Expense associated with acquisition-related cash
compensation agreements entered into with certain employees of
SHYFT Analytics, Inc. ("SHYFT"). (3) Non-cash interest expense for
the three months ended March 31, 2019 and 2018 includes
amortization of issuance costs of our credit agreement entered into
in 2017. Non-cash interest expense for the three months ended March
31, 2018 also includes amortization of debt discount and issuance
costs on our 1.00% convertible senior notes issued in 2013 and
settled in August 2018. We exclude this incremental non-cash
interest expense for purposes of calculating non-GAAP net income.
We believe that excluding these expenses from our non-GAAP measures
is useful to investors because such incremental non-cash interest
expense does not generate a cash outflow, nor do the debt issuance
costs represent a cash outflow except in the period of issuance;
therefore both are not indicative of our continuing operations. (4)
Tax impact calculated using a 25% rate.
The table above presents a reconciliation
of GAAP to non-GAAP operating income, net income, and net income
per share applicable to common stockholders for the three months
ended March 31, 2019 and 2018. Non-GAAP operating income excludes
the impact of stock-based compensation, depreciation, amortization
of intangible assets associated with acquisitions, adjustments to
the fair value of contingent consideration, and cash compensation
from acquisition-related agreements. Non-GAAP net income excludes
the tax-affected impact of stock-based compensation, amortization
of intangible assets associated with acquisitions, adjustments to
the fair value of contingent consideration, cash compensation from
acquisition-related agreements, and non-cash interest expense.
MEDIDATA SOLUTIONS, INC. CONSOLIDATED
BALANCE SHEETS (Unaudited) (Amounts in thousands, except per
share data) March 31, 2019
December 31, 2018
ASSETS Current assets: Cash and cash equivalents $ 109,052 $
105,440 Marketable securities 97,060 135,105 Accounts receivable,
net of allowance for doubtful accounts of $1,959 and $1,999,
respectively (1) 177,853 170,744 Capitalized contract costs 23,186
22,247 Prepaid expenses and other current assets 36,817
28,949 Total current assets 443,968 462,485 Restricted cash
7,212 7,205 Operating lease assets (2) 86,383 — Furniture, fixtures
and equipment, net 111,035 98,983 Goodwill 215,958 216,017
Intangible assets, net 28,276 29,546 Deferred tax assets 46,503
45,982 Other assets 57,367 52,994 Total assets $
996,702 $ 913,212
LIABILITIES AND STOCKHOLDERS'
EQUITY Current liabilities: Accounts payable $ 8,137 $ 7,482
Accrued payroll and other compensation 31,823 51,270 Accrued
expenses and other 46,785 37,487 Operating lease liabilities (2)
14,286 — Deferred revenue 71,591 74,463 Total current
liabilities 172,622 170,702 Noncurrent liabilities:
Term loan, net 86,606 88,366 Deferred revenue, noncurrent 2,424
3,843 Deferred tax liabilities 98 99 Operating lease liabilities,
noncurrent (2) 96,585 — Other long-term liabilities 1,641
18,754 Total noncurrent liabilities 187,354 111,062
Total liabilities 359,976 281,764 Commitments
and contingencies Stockholders' equity: Preferred stock, par value
$0.01 per share; 5,000 shares authorized, none issued and
outstanding — — Common stock, par value $0.01 per share; 200,000
shares authorized; 67,434 and 66,103 shares issued; 62,246 and
61,348 shares outstanding, respectively 674 661 Additional paid-in
capital 596,725 574,667 Treasury stock, 5,188 and 4,755 shares,
respectively (181,553 ) (152,849 ) Accumulated other comprehensive
loss (4,103 ) (4,869 ) Retained earnings 224,983 213,838
Total stockholders' equity 636,726 631,448
Total liabilities and stockholders' equity $ 996,702 $
913,212 (1) Unbilled receivables of $48,648 and
$38,601, respectively, are included in accounts receivable as of
March 31, 2019 and December 31, 2018. (2) Figures as of March 31,
2019 reflect the Company's January 1, 2019 adoption of Accounting
Standards Update ("ASU") No. 2016-02, Leases.
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version on businesswire.com: https://www.businesswire.com/news/home/20190430005307/en/
Investor:Betsy Frank917-522-4620bfrank@medidata.com
Media:Erik Snider646-362-2997esnider@medidata.com
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