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8-K - 8-K - Imprivata Incd44005d8k.htm

Exhibit 99.1

 

LOGO

Imprivata Announces Third Quarter 2015 Financial Results, Revenue Growth of 16%

Highlights

 

    Revenue of $29.3 million
    Adjusted EBITDA loss of $4.3 million
    Net loss per share: $0.29 GAAP; $0.22 non-GAAP

Lexington, Mass. — (BUSINESS WIRE) — November 2, 2015 — Imprivata® (NYSE: IMPR), the healthcare IT security company, today announced financial results for three and nine months ended September 30, 2015. Revenues for the three months ended September 30, 2015 were $29.3 million, an increase of 16% from revenues of $25.3 million for the same period in 2014. Revenues for the nine months ended September 30, 2015 were $84.9 million, an increase of 25% from revenues of $68.0 million for the same period in 2014.

“As we previously disclosed, our third quarter results were behind plan. However, we remain confident in our long-term growth prospects,” said Omar Hussain, President and CEO of Imprivata. “Our core healthcare business is positioned to grow, and we expect Imprivata Confirm ID, Imprivata Cortext and Imprivata PatientSecure will begin to contribute to our results in the near term.”

“Despite the delays we saw with some Imprivata OneSign deals last quarter, we did not lose these deals to competition, and we believe we will ultimately sign the majority of these customers. Looking forward, we have a large market opportunity, and we continue to see strong demand for our authentication and single sign on products. Our overall pipeline continues to expand across our platform, and we are on pace to meet our healthcare new customer addition target for the year.”

Fourth Quarter and Full-Year 2015 Financial Outlook

 

     Fourth
Quarter
     Full-Year
2015
 

Revenues

     $32-34m         $116.9-118.9m   

Adjusted EBITDA loss

     $(3.5)-(2.3)m         $(14.5)-(13.3)m   

GAAP Loss Per Share

     $(0.23)-(0.18)         $(1.03)-(0.98)   

Non-GAAP Loss Per Share

     $(0.18)-(0.13)         $(0.78)-(0.73)   

Weighted Average Shares Outstanding

     24.8m         24.4m   

Financial Results

Net loss for the three months ended September 30, 2015 was $7.2 million, or $(0.29) per basic and diluted share attributable to common stockholders, as compared to a net loss of $4.5 million, or $(0.19) per basic and diluted share attributable to common stockholders for the same period in 2014. Net loss for the nine months ended September 30, 2015 was $19.3 million, or $(0.80) per basic and diluted share attributable


to common stockholders, as compared to a net loss of $15.1 million, or $(1.64) per basic and diluted share attributable to common stockholders for the same period in 2014. Consistent with our operating results for the first half of 2015, the third quarter loss represents our continued strategic investments in the business.

Adjusted EBITDA(1) for the three months ended September 30, 2015 was a loss of $4.3 million, as compared to a loss of $2.8 million for the same period in 2014. Non-GAAP net loss (2) for the three months ended September 30, 2015 was $5.3 million, or $(0.22) per basic and diluted share, as compared to non-GAAP net loss of $3.8 million, or $(0.16) per basic and diluted share, for the same period in 2014. Adjusted EBITDA for the nine months ended September 30, 2015 was a loss of $11.0 million, as compared to a loss of $11.5 million for the same period in 2014. Non-GAAP net loss (2) for the nine months ended September 30, 2015 was $14.6 million, or $(0.60) per basic and diluted share, as compared to non-GAAP net loss of $14.0 million, or $(1.31) per basic and diluted share, for the same period in 2014. A reconciliation of GAAP to these non-GAAP financial measures has been provided in the financial statement tables included in this press release. An explanation of these measures is also included below under the heading “Non-GAAP Financial Measures.”

 

(1) Adjusted EBITDA is earnings before interest, taxes, depreciation and amortization adjusted for foreign currency gains (losses), stock based-compensation, transaction costs associated with business acquisitions, shelf registration and offering costs and the impact of the fair value revaluation on our contingent liability.
(2) Non-GAAP net income (loss) and non-GAAP net income (loss) per share excludes amortization of purchased intangible assets, stock-based compensation, transaction costs associated with business acquisitions, shelf registration and offering costs and the impact of the fair value revaluation on our contingent liability.

Conference Call Information

Imprivata management will host a conference call at 5:00 pm Eastern Time on Monday, November 2, 2015 to discuss the Company’s quarter ended September 30, 2015 results, its business outlook and other matters. The conference call will be accessible by dialing 877-870-4263 or for international callers, 412-317-0790, and referencing “the Imprivata, Inc. earnings call”. A live webcast of the conference call will also be available on the investor relations section of the Company’s website at http://investor.imprivata.com.

An audio replay of the conference call will be available approximately one hour after conclusion of the call and will be accessible through November 16, 2015. The replay can be accessed by dialing 877-344-7529, or 412-317-0088 for international callers, and providing access code 10074543.

About Imprivata

Imprivata® (NYSE: IMPR), the healthcare IT security company, provides healthcare organizations globally with a security and identity platform that delivers authentication management, fast access to patient information, secure communications, and positive patient identification. Imprivata enables care providers to securely and efficiently access, communicate, and transact patient health information to address critical compliance and security challenges while improving productivity and the patient experience. For more information, please visit www.imprivata.com.


Investor Relations:

Jeff Bray, CFA, 781-761-1417

Director of Investor Relations

jbray@imprivata.com

Media Contact:

John Hallock, 781-761-1921

Corporate Communications

jhallock@imprivata.com

All Imprivata products are trademarks of Imprivata, Inc. in the USA and other countries. All other product or company names mentioned are the property of their respective owners.

Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to, statements regarding our expectations on closing deals in future quarters that were not closed in the third quarter, the anticipated opportunity and trends for growth in our healthcare customer base and our overall business, our market opportunity, our expectations regarding sales of our products, our goal to maintain market leadership and our expected financial results for fourth quarter 2015 and beyond. All statements other than statements of historical fact contained in this press release are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “could,” “increases,” “improves,” “reduces,” “implements,” “results,” “addresses,” or the negative of these terms or other comparable terminology. These forward-looking statements are made as of the date they were first issued and were based on current expectations, estimates, forecasts, and projections as well as the beliefs and assumptions of management. Forward-looking statements are subject to a number of risks and uncertainties, many of which involve factors or circumstances that are beyond Imprivata’s control. Imprivata’s actual results could differ materially from those stated or implied in forward-looking statements due to a number of factors, including but not limited to, our ability to successfully develop and introduce new solutions and products for existing solutions; our ability to attract new customers and retain and increase sales to existing customers; developments in the healthcare industry or regulatory environment; seasonal variations in the purchasing patterns of our customers; longer sales cycles associated with more complex deals in our healthcare business; slower growth in the non-core areas of our business; the lengthy and unpredictable sales cycles for new customers; our ability to maintain successful relationships with our channel partners and technology alliance partners; our dependency on sole source suppliers and a contract manufacturer for hardware components of our Imprivata OneSign and Imprivata PatientSecure solutions; our ability to manage our growth effectively; our ability to respond to competitive pressures; our ability to successfully integrate HT Systems and other businesses and assets that we may acquire; potential liability related to privacy and security of protected health information; our ability to protect our intellectual property rights, and the other risks detailed in Imprivata’s risk factors discussed in filings with the U.S. Securities and Exchange Commission (“SEC”), including but not limited to Annual Report on Form 10-K for the year ended December 31, 2014 filed with the SEC on March 11, 2015, as well as other documents that may be filed by Imprivata from time to time with the SEC. The forward-looking statements included in this press release represent Imprivata’s views as of the date of this press release. Imprivata undertakes no intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

Non-GAAP Financial Measures

Imprivata has provided in this release financial information that has not been prepared in accordance with generally accepted accounting principles in the United States, or GAAP. This information includes Adjusted EBITDA, non-GAAP net income (loss) and non-GAAP net income (loss) per share. These non-GAAP financial measures are not in accordance with, or an alternative for, GAAP and may be different from similar non-GAAP financial measures used by other companies. Imprivata believes that the use of these non-GAAP financial measures provides


supplementary information for investors to use in evaluating operating performance and in comparing its financial measures with other companies in Imprivata’s industry, many of which present similar non-GAAP financial measures. Adjusted EBITDA (EBITDA adjusted for foreign currency gains (losses), stock based-compensation, transaction costs associated with business acquisitions, transaction costs associated with shelf registration and offering costs and the impact of the fair value revaluation on our contingent liability), non-GAAP net income (loss) and non-GAAP net income (loss) per share exclude amortization expense associated with our purchased intangible assets, stock-based compensation, transaction costs associated with business acquisitions, transaction costs associated with shelf registration and offering costs and the impact of the re-measurement to fair value of our contingent liability. Non-GAAP financial measures that Imprivata uses may differ from measures that other companies may use. These non-GAAP financial measures disclosed by Imprivata are not meant to be considered superior to or a substitute for results of operations prepared in accordance with GAAP, and should be viewed in conjunction with, GAAP financial measures. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measure. A reconciliation of GAAP to the non-GAAP financial measures has been provided in the tables included as part of this press release.


Imprivata, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

 

     September 30,
2015
    December 31,
2014
 
Assets     

Current assets:

    

Cash and cash equivalents

   $ 51,925      $ 78,524   

Accounts receivable, net of allowances

     26,594        25,335   

Prepaid expenses and other current assets

     4,819        3,516   
  

 

 

   

 

 

 

Total current assets

     83,338        107,375   

Property and equipment, net

     8,109        7,640   

Goodwill

     13,819        1,560   

Intangible assets, net

     5,131        1,499   

Other assets

     898        105   
  

 

 

   

 

 

 

Total assets

   $ 111,295      $ 118,179   
  

 

 

   

 

 

 
Liabilities and stockholders’ equity     

Current liabilities:

    

Accounts payable

   $ 5,402      $ 2,498   

Accrued expenses and other current liabilities

     9,343        10,565   

Current portion of capital lease obligations and long-term debt

     481        625   

Current portion of other long-term liabilities

     240        288   

Current portion of deferred revenue

     36,265        33,120   

Current portion of contingent purchase price liability

     525        152   
  

 

 

   

 

 

 

Total current liabilities

     52,256        47,248   

Deferred revenue, net of current portion

     5,043        4,021   

Deferred tax liability

     694        —     

Capital lease obligations, long-term debt and royalty obligations, net of current portion

     279        619   

Other long-term liabilities, net of current portion

     1,826        1,535   

Contingent purchase price liability, net of current portion

     178        480   
  

 

 

   

 

 

 

Total liabilities

     60,276        53,903   

Stockholders’ equity:

    

Undesignated preferred stock

     —          —     

Common stock

     25        24   

Additional paid-in capital

     178,003        171,903   

Accumulated other comprehensive loss

     (119     (100

Accumulated deficit

     (126,890     (107,551
  

 

 

   

 

 

 

Total stockholders’ equity

     51,019        64,276   
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 111,295      $ 118,179   
  

 

 

   

 

 

 


Imprivata, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except per share amounts)

(unaudited)

 

     Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
     2015     2014     2015     2014  

Revenue

        

Product

   $ 15,800      $ 14,133      $ 45,017      $ 35,632   

Maintenance and services

     13,482        11,145        39,869        32,320   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenue

     29,282        25,278        84,886        67,952   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cost of revenue

        

Product

     4,442        4,287        11,954        8,922   

Maintenance and services

     5,458        4,353        15,681        12,946   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of revenue

     9,900        8,640        27,635        21,868   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     19,382        16,638        57,251        46,084   

Operating expenses

        

Research and development

     8,496        6,425        23,207        19,252   

Sales and marketing

     12,959        11,129        37,976        32,764   

General and administrative

     4,886        3,162        14,055        8,486   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     26,341        20,716        75,238        60,502   
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss from operations

     (6,959     (4,078     (17,987     (14,418

Other income (expense)

        

Foreign currency exchange loss

     (170     (279     (482     (406

Interest and other income (expense), net

     (10     (65     (31     (130
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss before income taxes

     (7,139     (4,422     (18,500     (14,954

Income taxes

     75        32        839        119   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

   $ (7,214   $ (4,454   $ (19,339   $ (15,073

Accretion of redeemable convertible preferred stock

     —          —          —          (2,442
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss attributable to common shareholders

   $ (7,214   $ (4,454   $ (19,339   $ (17,515
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss per share attributable to common stockholders

        

Basic and diluted

   $ (0.29   $ (0.19   $ (0.80   $ (1.64
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average common shares outstanding used in computing net loss per share attributable to common stockholders

        

Basic and diluted

     24,654        23,706        24,225        10,654   
  

 

 

   

 

 

   

 

 

   

 

 

 


Imprivata, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

     September 30,  
     2015     2014  
Cash flows from operating activities:     

Net loss

   $ (19,339   $ (15,073

Adjustments to reconcile net loss to net cash used in operating activities:

    

Depreciation and amortization expense

     2,711        2,241   

Provision for doubtful accounts

     (2     90   

Stock-based compensation

     2,996        1,126   

Loss on disposal of fixed assets

     16        66   

Change in value of contingent purchase price liability

     71        (448

Deferred income taxes

     694        —     

Changes in operating assets and liabilities:

    

Accounts receivable

     4,192        380   

Prepaid expenses and other current assets

     (2,072     (856

Deferred revenue

     2,115        3,977   

Accounts payable

     2,662        (723

Accrued expenses and other current liabilities

     (1,805     (201

Other liabilities

     243        12   
  

 

 

   

 

 

 

Net cash used in operating activities

     (7,518     (9,409
  

 

 

   

 

 

 
Cash flows from investing activities:     

Purchases of property and equipment

     (1,791     (2,723

Purchases of intangible assets

     (852     —     

Acquisition of business

     (18,955     —     
  

 

 

   

 

 

 

Net cash used in investing activities

     (21,598     (2,723
  

 

 

   

 

 

 
Cash flows from financing activities:     

Proceeds from initial public offering, net of underwriting discounts and commissions

     —          80,213   

Deferred offering costs

     —          (3,287

Repayments for capital lease obligations, long-term debt and other

     (483     (497

Proceeds from employee stock purchase plan

     1,219        —     

Proceeds from exercise of stock options

     1,824        448   
  

 

 

   

 

 

 

Net cash provided by financing activities

     2,560        76,877   
  

 

 

   

 

 

 

Effect of exchange rates on cash and cash equivalents

     (43     8   
  

 

 

   

 

 

 

Net (decrease) increase in cash and cash equivalents

     (26,599     64,753   

Cash and cash equivalents, beginning of year

     78,524        13,284   
  

 

 

   

 

 

 

Cash and cash equivalents, end of year

   $ 51,925      $ 78,037   
  

 

 

   

 

 

 


Imprivata, Inc.

Non-GAAP Financial Measures

(in thousands, except per share amounts)

(unaudited)

Reconciliation of GAAP Net Loss to Adjusted EBITDA

 

     Three Months Ended
September 30,
    Nine Months Ended
September 30,
 

(in thousands, except per share amounts)

   2015     2014     2015     2014  

GAAP net loss

   $ (7,214   $ (4,454   $ (19,339   $ (15,073

Adjustments to reconcile to Adjusted EBITDA:

        

Income tax expense

     75        32        839        119   

Depreciation and amortization

     1,027        783        2,711        2,241   

Other expense, net

     180        344        513        536   

Stock-based compensation

     1,215        461        2,996        1,126   

Change in fair value of contingent liability

     21        16        71        (448

Acquisition costs

     —          —          709        —     

Shelf registration and offering costs

     433        —          490        —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ (4,263   $ (2,818   $ (11,010   $ (11,499
  

 

 

   

 

 

   

 

 

   

 

 

 
Reconciliation of GAAP Net Loss to Non-GAAP Net Loss and Non-GAAP Net Loss Per Share (a)   
     Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
     2015     2014     2015     2014  

GAAP net loss

   $ (7,214   $ (4,454   $ (19,339   $ (15,073

Adjustments to reconcile to Non-GAAP net income:

        

Amortization of purchased intangible assets

     235        128        511        385   

Stock-based compensation

     1,215        461        2,996        1,126   

Change in fair value of contingent liability

     21        16        71        (448

Acquisition costs

     —          —          709        —     

Shelf registration and offering costs

     433        —          490        —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP net loss

   $ (5,310   $ (3,849   $ (14,562   $ (14,010
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP net loss per share

        

Basic and diluted

   $ (0.22   $ (0.16   $ (0.60   $ (1.31
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average common shares outstanding used in computing non-GAAP net loss per share

        

Basic and diluted

     24,654        23,706        24,225        10,654   
  

 

 

   

 

 

   

 

 

   

 

 

 

(a) The Company reconciles non-GAAP net loss per share beginning with GAAP net loss instead of GAAP net loss attributable to common stockholders in order to eliminate the effect of the accretion of preferred stock on the calculation.


Imprivata, Inc.

Supplemental Financial Information

(in thousands)

(unaudited)

Share-based compensation included in cost of revenues and operating expenses related to the awards of stock options and the employee stock purchase plan are as follows:

 

     Three Months ended
September 30,
     Nine Months ended
September 30,
 

(in thousands)

   2015      2014      2015      2014  

Cost of maintenance and professional services

   $ 111       $ 43       $ 273       $ 94   

Research and development

     346         147         894         353   

Sales and marketing

     307         150         775         358   

General and administrative

     451         121         1,054         321   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 1,215       $ 461       $ 2,996       $ 1,126