Imprivata Achieves Record Revenue of $30.0 Million for the Second Quarter of 2015

Highlights

  • Revenue of $30.0 million
  • Adjusted EBITDA loss of $2.2 million
  • Net loss per share: $(0.22) GAAP; $(0.15) non-GAAP
  • Completed HT Systems Acquisition on April 30, 2015

LEXINGTON, Mass.--()--Imprivata® (NYSE: IMPR), a leading provider of IT security and identity solutions to the healthcare industry, today announced financial results for three and six months ended June 30, 2015. Revenues for the three months ended June 30, 2015 were $30.0 million, an increase of 29% from revenues of $23.2 million for the same period in 2014. Revenues for the six months ended June 30, 2015 were $55.6 million, an increase of 30% from revenues of $42.7 million for the same period in 2014.

“The second quarter marks the one year anniversary since our IPO, and I am very proud of our performance,” said Omar Hussain, President and CEO of Imprivata. “We have shown strong revenue growth, expanded our product platform, and completed a key acquisition. We have driven growth through both the acquisition of new customers, and strong add-on business to our existing customers. I am especially excited about the launch of our PatientSecure product, which expands our market to address frustrations faced by patients and registrars. PatientSecure will solidify our leadership as a security platform for healthcare, solving critical workflow challenges for electronic health records, communications, electronic prescribing, and patient identification.”

Financial Results

Net loss for the three months ended June 30, 2015 was $5.4 million, or $(0.22) per basic and diluted share attributable to common stockholders, as compared to a net loss of $4.8 million, or $(1.08) per basic and diluted share attributable to common stockholders for the same period in 2014. Net loss for the six months ended June 30, 2015 was $12.1 million, or $(0.51) per basic and diluted share attributable to common stockholders, as compared to a net loss of $13.1 million, or $(3.25) per basic and diluted share attributable to common stockholders for the same period in 2014. Consistent with our operating results for the first quarter of 2015, the second quarter loss represents our continued strategic investments in the business.

Adjusted EBITDA(1) for the three months ended June 30, 2015 was a loss of $2.2 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 June 30, 2015 was $3.5 million, or $(0.15) per basic and diluted share, as compared to non-GAAP net loss of $3.6 million, or $(0.81) per basic and diluted share, for the same period in 2014. Adjusted EBITDA for the six months ended June 30, 2015 was a loss of $6.7 million, as compared to a loss of $8.7 million for the same period in 2014. Non-GAAP net loss (2) for the six months ended June 30, 2015 was $9.3 million, or $(0.39) per basic and diluted share, as compared to non-GAAP net loss of $10.2 million, or $(2.53) 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 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 costs and the impact of the fair value revaluation on our contingent liability.
 

Third Quarter and Full-Year 2015 Financial Outlook

For the full-year, we expect revenue between $124.0 million and $126.0 million and Adjusted EBITDA to be between a loss of $10.0 million and $8.5 million. In terms of earnings per share, we expect GAAP loss to be between $(0.82) per share and $(0.76) per share and non-GAAP net loss, which adjusts for stock-based compensation, amortization of purchased intangible assets, transaction costs associated with business acquisitions, shelf registration costs and the contingent liability revaluation, to be between $(0.60) per share and $(0.54) per share. Our annual EPS estimates are based on an estimated weighted average-share count of 24.2 million.

For the third quarter, we expect revenue between $31.0 million and $31.5 million and Adjusted EBITDA to be between a loss of $4.2 million and $3.9 million. In terms of earnings per share, we expect GAAP loss to be between $(0.27) per share and $(0.25) per share and non-GAAP net loss, which adjusts for stock-based compensation, amortization of purchased intangible assets, transaction costs associated with business acquisitions, shelf registration costs and the contingent liability revaluation, to be between $(0.22) per share and $(0.20) per share. Our third quarter EPS estimates are based on an estimated weighted average-share count of 24.3 million.

Conference Call Information

Imprivata management will host a conference call at 4:30 pm (Eastern Time) on Wednesday, July 29, 2015 to discuss the Company’s quarter ended June 30, 2015 results, its business outlook and other matters. The conference call will be accessible by dialing 888-427-9419 or 719-325-2361 for international callers, and referencing conference ID number 1338195. 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 August 12, 2015. The replay can be accessed by dialing 888-203-1112, or 719-457-0820 for international callers, and providing access code 1338195.

About Imprivata

Imprivata, Inc. (NYSE: IMPR) headquartered in Lexington, Massachusetts, is a leading provider of IT security and identity solutions to the healthcare industry that help providers securely and efficiently access, communicate and transact patient information. The Company’s security and identity solutions provide authentication management, fast access to patient information, secure communications and positive patient identification to address critical security and compliance challenges faced by hospitals and other healthcare organizations, while improving provider productivity and the patient experience. For more information, please visit www.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 the anticipated opportunity and trends for growth in our customer base and our overall business, our market opportunity, our goal to maintain market leadership and our expected financial results for Q3 2015 and the full fiscal year 2015. 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; 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, shelf registration 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, shelf registration 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)
 
 
  June 30,   December 31,
2015 2014
 
Assets
Current assets:
Cash and cash equivalents $ 54,673 $ 78,524
Accounts receivable, net of allowances 24,639 25,335
Prepaid expenses and other current assets   4,178     3,516  
Total current assets 83,490 107,375
Property and equipment, net 7,367 7,640
Goodwill 14,766 1,560
Intangible assets, net 4,951 1,499
Other assets   668     105  
Total assets $ 111,242   $ 118,179  
 
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 3,936 $ 2,498
Accrued expenses and other current liabilities 7,693 10,565
Current portion of capital lease obligations and long-term debt 549 625
Current portion of other long-term liabilities 240 288
Current portion of deferred revenue 34,954 33,120
Current portion of contingent purchase price liability   374     152  
Total current liabilities 47,746 47,248
Deferred revenue, net of current portion 4,737 4,021
Deferred tax liability 694

-

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

374 619
Other long-term liabilities, net of current portion 1,862 1,535
Contingent purchase price liability, net of current portion   308     480  
Total liabilities 55,721 53,903
 
Stockholders' equity:
Undesignated preferred stock

-

-

Common stock 24 24
Additional paid-in capital 175,266 171,903
Accumulated other comprehensive loss (93 ) (100 )
Accumulated deficit   (119,676 )   (107,551 )
 
Total stockholders' equity   55,521     64,276  
 
Total liabilities and stockholders' equity $ 111,242   $ 118,179  
 
 
Imprivata, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except per share amounts)
(unaudited)
 
 
  Three Months Ended   Six Months Ended
June 30, June 30,
2015   2014 2015   2014
Revenue
Product $ 16,305 $ 12,225 $ 29,218 $ 21,499
Maintenance and services   13,663     11,008     26,386     21,175  
Total revenue   29,968     23,233     55,604     42,674  
 
Cost of revenue
Product 4,088 2,475 7,511 4,635
Maintenance and services   5,296     4,400     10,223     8,593  
Total cost of revenue   9,384     6,875     17,734     13,228  
Gross profit 20,584 16,358 37,870 29,446
 
Operating expenses
Research and development 7,840 6,291 14,711 12,827
Sales and marketing 12,999 11,216 25,018 21,635
General and administrative   4,590     2,311     9,170     5,324  
Total operating expenses   25,429     19,818     48,899     39,786  
Loss from operations (4,845 ) (3,460 ) (11,029 ) (10,340 )
 
Other income (expense)
Foreign currency exchange gain (loss) 150 4 (312 ) (127 )
Interest and other income (expense), net   (4 )   (35 )   (20 )   (65 )
Loss before income taxes (4,699 ) (3,491 ) (11,361 ) (10,532 )
Income taxes   727     61     764     87  
Net loss $ (5,426 ) $ (3,552 ) $ (12,125 ) $ (10,619 )
Accretion of redeemable convertible preferred stock   -     (1,204 )   -     (2,442 )
Net loss attributable to common shareholders $ (5,426 ) $ (4,756 ) $ (12,125 ) $ (13,061 )
 
Net loss per share attributable to common stockholders
Basic and diluted $ (0.22 ) $ (1.08 ) $ (0.51 ) $ (3.25 )

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

Basic and diluted   24,144     4,410     24,007     4,021  
 
 
Imprivata, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)
(unaudited)
 
 
  Six Months Ended
June 30,
2015   2014
Cash flows from operating activities:
Net loss $ (12,125 ) $ (10,619 )

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

Depreciation and amortization expense 1,684 1,458
Provision for doubtful accounts (19 ) 13
Stock-based compensation 1,781 665
Loss on disposal of fixed assets 14 12
Change in value of contingent purchase price liability 50 (464 )
Deferred income taxes 694

-

Changes in operating assets and liabilities:
Accounts receivable 4,479 5,763
Prepaid expenses and other current assets

(616

) (544 )
Deferred revenue 604 1,338
Accounts payable

1,028

(897 )
Accrued expenses and other current liabilities

(2,955

) (1,549 )
Other liabilities   279     82  
Net cash used in operating activities   (5,102 )   (4,742 )
 
Cash flows from investing activities:
Purchases of property and equipment (644 ) (1,354 )
Purchases of intangible assets (437 ) -
Acquisition of business   (18,886 )   -  
Net cash used in investing activities   (19,967 )   (1,354 )
 
Cash flows from financing activities:
Proceeds from initial public offering, net of underwriting discounts and commissions - 80,213
Deferred offering costs - (1,748 )
Repayments for capital lease obligations, long-term debt and other (322 ) (348 )
Proceeds from employee stock purchase plan 684 -
Proceeds from exercise of stock options   853     389  
Net cash provided by financing activities   1,215     78,506  
 
Effect of exchange rates on cash and cash equivalents   3     100  
 
Net (decrease) increase in cash and cash equivalents (23,851 ) 72,510
Cash and cash equivalents, beginning of year   78,524     13,284  
 
Cash and cash equivalents, end of year $ 54,673   $ 85,794  
 
 
Imprivata, Inc.
Non-GAAP Financial Measures
(in thousands, except per share amounts)
(unaudited)
 
 
Reconciliation of GAAP Net Loss to Adjusted EBITDA
   
Three Months Ended Six Months Ended
June 30, June 30,

(in thousands, except per share amounts)

2015   2014 2015   2014
GAAP net loss $ (5,426 ) $ (3,552 ) $ (12,125 ) $ (10,619 )
Adjustments to reconcile to Adjusted EBITDA:
Income tax expense 727 61 764 87
Depreciation and amortization 905 763 1,684 1,458
Other expense (income), net (146 ) 31 332 192
Stock-based compensation 1,080 367 1,781 665
Change in fair value of contingent liability 29 (509 ) 50 (464 )
Acquisition costs 546

-

709

-

Shelf registration costs   57    

-

    57    

-

 
Adjusted EBITDA $ (2,228 ) $ (2,839 ) $ (6,748 ) $ (8,681 )
 
 
 

Reconciliation of GAAP Net Loss to Non-GAAP Loss and Non-GAAP Net Loss Per Share(a)

 
Three Months Ended Six Months Ended
June 30, June 30,
2015 2014 2015 2014
GAAP net loss $ (5,426 ) $ (3,552 ) $ (12,125 ) $ (10,619 )
Adjustments to reconcile to Non-GAAP net income:
Amortization of purchased intangible assets 184 128 276 257
Stock-based compensation 1,080 367 1,781 665
Change in fair value of contingent liability 29 (509 ) 50 (464 )
Acquisition costs 546 - 709 -
Shelf registration costs   57     -     57     -  
Non-GAAP net loss $ (3,530 ) $ (3,566 ) $ (9,252 ) $ (10,161 )
Non-GAAP net loss per share
Basic and diluted $ (0.15 ) $ (0.81 ) $ (0.39 ) $ (2.53 )
Weighted average common shares outstanding used in computing non-GAAP net loss per share
Basic and diluted   24,144     4,410     24,007     4,021  
 

(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.

 

Contacts

Investor relations:
Westwicke Partners
Bob East / Asher Dewhurst
443-213-0503
imprivata@westwicke.com
or
Media contact:
Imprivata
John Hallock
Vice President, Corporate Communications
781-761-1921
jhallock@IMPRIVATA.com

Contacts

Investor relations:
Westwicke Partners
Bob East / Asher Dewhurst
443-213-0503
imprivata@westwicke.com
or
Media contact:
Imprivata
John Hallock
Vice President, Corporate Communications
781-761-1921
jhallock@IMPRIVATA.com