Definitive Healthcare Corp. (NASDAQ:DH) Q1 2024 Earnings Conference Call May 7, 2024 5:00 PM ET Company Participants Matthew Ruderman - Investor Relations Jason Krantz - Founder, Executive Chairman and Interim Chief Executive Officer Rick Booth - Chief Financial Officer Conference Call Participants Craig Hettenbach - Morgan Stanley Jared Haase - William Blair Matt Shea - Needham & Company Anne Samuel - JPMorgan David Grossman - Stifel Stephanie Davis - Barclays Operator Welcome to Definitive Healthcare’s Q1 ...

Definitive Healthcare Corp. (DH) came out with quarterly earnings of $0.08 per share, in line with the Zacks Consensus Estimate. This compares to earnings of $0.06 per share a year ago. These figures are adjusted for non-recurring items.A quarter ago, it was expected that this company would post earnings of $0.07 per share when it actually produced earnings of $0.07, delivering no surprise.Over the last four quarters, the company has surpassed consensus EPS estimates two times.Definitive Healthcare, which b ...

Part I. [FINANCIAL INFORMATION](index=6&type=section&id=Part%20I.%20FINANCIAL%20INFORMATION) [Financial Statements](index=6&type=section&id=Item%201.%20Financial%20Statements) The company reported revenue of $63.5 million for the first quarter of 2024, a 7% increase year-over-year, while the net loss widened to $12.7 million from $16.0 million in the prior year's quarter, and total assets decreased slightly to $1.81 billion from $1.83 billion at the end of 2023, primarily due to a decrease in cash and cash equivalents, with cash flow from operations remaining positive at $16.6 million Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | March 31, 2024 ($ thousands) | December 31, 2023 ($ thousands) | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | 105,994 | 130,976 | | Goodwill | 1,082,137 | 1,075,080 | | Total assets | 1,810,145 | 1,825,901 | | **Liabilities & Equity** | | | | Term loan (current & long-term) | 253,017 | 256,317 | | Tax receivable agreements liability | 125,150 | 127,000 | | Total liabilities | 615,114 | 626,727 | | Total equity | 1,195,031 | 1,199,174 | Condensed Consolidated Statements of Operations (Unaudited) | Metric | Three Months Ended March 31, 2024 ($ thousands) | Three Months Ended March 31, 2023 ($ thousands) | | :--- | :--- | :--- | | Revenue | 63,480 | 59,201 | | Gross Profit | 50,382 | 47,295 | | Loss from operations | (16,249) | (12,271) | | Net loss | (12,718) | (15,972) | | Net loss attributable to Definitive Healthcare Corp. | (9,518) | (12,063) | | Net loss per share (Basic and diluted) | $(0.08) | $(0.11) | Condensed Consolidated Statements of Cash Flows (Unaudited) | Activity | Three Months Ended March 31, 2024 ($ thousands) | Three Months Ended March 31, 2023 ($ thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | 16,589 | 14,957 | | Net cash used in investing activities | (24,034) | (33,470) | | Net cash used in financing activities | (17,194) | (3,525) | | Net decrease in cash and cash equivalents | (24,639) | (22,038) | [Notes to the Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) Key notes to the financial statements detail the acquisition of Carevoyance for $13.7 million, a 2024 restructuring plan incurring $7.2 million in charges, and a subsequent stock repurchase program of up to $20 million authorized in May 2024, with the company's revenue primarily from subscription services, which grew to $61.8 million, and the Tax Receivable Agreement (TRA) liability standing at $138.3 million as of March 31, 2024 - On January 16, 2024, the company acquired the Carevoyance business line for **$13.7 million** in cash, resulting in **$7.1 million** of goodwill and **$7.0 million** of intangible assets[40](index=40&type=chunk)[41](index=41&type=chunk) - In Q1 2024, the company initiated a restructuring plan, reducing its workforce by approximately 150 people and incurring **$7.2 million** in related charges, primarily for severance[65](index=65&type=chunk) Revenue Disaggregation | Revenue Type | Q1 2024 ($ thousands) | Q1 2023 ($ thousands) | | :--- | :--- | :--- | | Subscription services | 61,752 | 58,517 | | Professional services | 1,728 | 684 | | **Total revenue** | **63,480** | **59,201** | - The company's liability under the Tax Receivable Agreement (TRA) was **$138.3 million** as of March 31, 2024, with a remeasurement gain of **$2.3 million** recognized in Q1 2024[108](index=108&type=chunk) - In May 2024, the Board of Directors authorized a stock repurchase program of up to **$20.0 million** of its Class A Common Stock, expiring on December 31, 2024[116](index=116&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=36&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the 7% year-over-year revenue growth to both new customer acquisition and expansion within the existing customer base, despite facing macroeconomic headwinds leading to longer deal cycles and increased customer churn, particularly among smaller customers, and executed a significant restructuring plan in Q1 2024 to reduce operating costs, which involved a workforce reduction of approximately 150 people and changes to the go-to-market team, causing short-term sales disruption but intended to improve long-term profitability, with Adjusted EBITDA for the quarter at $20.0 million (32% margin), up from $15.7 million (26% margin) in the prior year, reflecting cost control measures - The company's customer count was approximately 2,800 as of March 31, 2024, down from 3,000 a year prior, reflecting higher churn among smaller customers, though Enterprise Customers (>**$100k** ARR) grew from 529 to 559 in the same period[121](index=121&type=chunk)[134](index=134&type=chunk) - Macroeconomic conditions are causing longer deal cycles, deferred purchasing decisions, and heightened customer churn, which impacted revenue growth in Q1 2024 and is expected to continue impacting growth for the rest of the year[131](index=131&type=chunk) - A restructuring plan in Q1 2024 reduced the workforce by about 150 people and incurred **$7.2 million** in charges, with changes to the go-to-market team creating sales disruptions in Q1, expected to continue into Q2[129](index=129&type=chunk)[132](index=132&type=chunk) Adjusted EBITDA Reconciliation (Non-GAAP) | Metric | Q1 2024 ($ thousands) | Q1 2023 ($ thousands) | | :--- | :--- | :--- | | Net loss | (12,718) | (15,972) | | Adjustments (Interest, Taxes, D&A, etc.) | 11,793 | 13,014 | | EBITDA | (925) | (2,958) | | Other Adjustments (Equity comp, Restructuring, etc.) | 20,948 | 18,625 | | **Adjusted EBITDA** | **20,023** | **15,667** | | **Adjusted EBITDA Margin** | **32%** | **26%** | [Quantitative and Qualitative Disclosures about Market Risk](index=55&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's primary market risks are interest rate risk and foreign currency exchange risk, with interest rate risk stemming from its variable-rate 2021 Term Loan, which had $254.4 million outstanding, partially mitigated by an interest rate swap agreement, and foreign currency risk currently not material as the majority of sales are denominated in U.S. dollars - The company is exposed to interest rate risk on its **$254.4 million** variable-rate 2021 Term Loan, where a hypothetical **1.0%** change in interest rates would impact interest expense by approximately **$0.6 million** for the quarter, excluding the effect of an interest rate swap[210](index=210&type=chunk) - Foreign currency exchange risk is considered minimal as the majority of sales contracts are denominated in U.S. dollars, and the impact from foreign subsidiaries in Sweden and India has not been material[211](index=211&type=chunk) [Controls and Procedures](index=56&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were not effective as of March 31, 2024, due to a previously identified and still unremediated material weakness in the design of controls over the collection, remittance, and financial recording of sales taxes, for which the company is actively implementing remediation efforts, including engaging third-party tax experts and designing new review controls - Disclosure controls and procedures were deemed ineffective as of March 31, 2024, due to an unremediated material weakness[213](index=213&type=chunk) - The material weakness relates to the design of controls over sales tax collection and remittance, and the accurate recording of sales tax obligations[215](index=215&type=chunk) - Remediation efforts are underway, including engaging third-party tax experts and implementing additional sales tax nexus reviews and controls[217](index=217&type=chunk)[218](index=218&type=chunk) Part II. [OTHER INFORMATION](index=58&type=section&id=Part%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=58&type=section&id=Item%201.%20Legal%20Proceedings) The company is subject to various legal proceedings in the ordinary course of business but does not expect the ultimate resolution of these matters to have a material adverse effect on its financial position or results of operations - The company states that the resolution of current legal proceedings is not expected to have a material adverse effect on its financial condition[222](index=222&type=chunk) [Risk Factors](index=58&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the company's risk factors since the filing of its Annual Report on Form 10-K for the year ended December 31, 2023 - No material changes in risk factors were reported since the 2023 Form 10-K filing[223](index=223&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=58&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During the first quarter of 2024, a total of 51,308 LLC Units were exchanged for an equivalent number of newly issued Class A Common Stock shares on a one-for-one basis, with these transactions conducted in reliance on Section 4(a)(2) of the Securities Act LLC Unit Exchanges for Class A Common Stock (Q1 2024) | Date of Exchange | Number of Shares Exchanged | | :--- | :--- | | February 5, 2024 | 25,000 | | February 12, 2024 | 3,331 | | February 26, 2024 | 11,387 | | March 4, 2024 | 11,590 | | **Total** | **51,308** | [Other Information](index=58&type=section&id=Item%205.%20Other%20Information) Effective May 1, 2024, the company eliminated the position of President, held by Jonathan Maack, who will remain employed through May 31, 2024, and concurrently, Kate Shamsuddin Jensen was appointed as Chief Strategy Officer, transitioning from her role as Chief Product Officer - On May 1, 2024, the company eliminated the President position, resulting in the departure of Jonathan Maack[228](index=228&type=chunk) - Effective May 1, 2024, Kate Shamsuddin Jensen was appointed Chief Strategy Officer, moving from her previous role as Chief Product Officer[228](index=228&type=chunk)

[Financial Performance](index=1&type=section&id=Financial%20Performance) This section outlines Definitive Healthcare's Q1 2024 financial performance and its forward-looking guidance for the fiscal year [First Quarter 2024 Financial Highlights](index=1&type=section&id=First%20Quarter%202024%20Financial%20Highlights) Definitive Healthcare reported mixed Q1 2024 results, with revenue growth, improved GAAP net loss, and strong non-GAAP adjusted EBITDA Q1 2024 Key Financial Metrics (vs. Q1 2023) | Metric | Q1 2024 (in millions, except percentages and basis points) | Q1 2023 (in millions, except percentages and basis points) | Change | | :--- | :--- | :--- | :--- | | Revenue | $63.5 | $59.2 | +7% | | Net Loss | $(12.7) | $(16.0) | Improvement | | Adjusted Net Income | $13.0 | $9.1 | +42.9% | | Adjusted EBITDA | $20.0 | $15.7 | +27.4% | | Adjusted EBITDA Margin | 32% | 26% | +600 basis points | | Cash Flow from Operations | $16.6 | $15.0 | +10.7% | | Unlevered Free Cash Flow | $28.3 | $20.8 | +36.1% | - The company's management characterized the first quarter performance as "mixed," but highlighted a **strong adjusted EBITDA margin** achieved through a continued focus on operational efficiencies[3](index=3&type=chunk) [Business Outlook](index=4&type=section&id=Business%20Outlook) The company provided Q2 and full fiscal year 2024 guidance, projecting revenue growth and strong Adjusted EBITDA margins Second Quarter 2024 Guidance | Metric | Guidance Range (in millions, except per share data) | | :--- | :--- | | Revenue | $62.0 – $63.5 (2-4% YoY growth) | | Adjusted Operating Income | $17.0 – $18.5 | | Adjusted EBITDA | $18.5 – $20.0 | | Adjusted EBITDA Margin | 30% - 32% | | Adjusted Net Income Per Diluted Share | $0.08 – $0.09 | Full Year 2024 Guidance | Metric | Guidance Range (in millions, except per share data) | | :--- | :--- | | Revenue | $255 – $261 (1-4% YoY growth) | | Adjusted Operating Income | $75.0 – $78.0 | | Adjusted EBITDA | $81.5 – $84.5 | | Adjusted EBITDA Margin | 32% - 33% | | Adjusted Net Income Per Diluted Share | $0.36 – $0.38 | [Business and Corporate Developments](index=2&type=section&id=Business%20and%20Corporate%20Developments) This section outlines Definitive Healthcare's recent business and corporate developments, including customer growth and a stock repurchase program [Recent Business and Operating Highlights](index=2&type=section&id=Recent%20Business%20and%20Operating%20Highlights) Definitive Healthcare expanded its enterprise customer base by **6%** year-over-year in Q1 to **559** customers, with notable wins and platform expansions - The number of enterprise customers (those with >$100k in ARR) grew by 30, or **6% year-over-year**, to a total of **559**[4](index=4&type=chunk) - Key customer wins and expansions in Q1 included: - A chronic care management provider using Definitive Healthcare as its central source of truth for provider data - A leading heart pump manufacturer expanding its use of the Carevoyance platform - One of the largest health systems in the Southeast US expanding its use of Populi Network and Market Intelligence solutions[4](index=4&type=chunk) [Stock Repurchase Program](index=3&type=section&id=Stock%20Repurchase%20Program) The Board approved a stock repurchase program, authorizing up to **$20.0 million** in Class A Common Stock buybacks through **2024** - The Board of Directors authorized the repurchase of up to **$20.0 million** of Class A Common Stock[5](index=5&type=chunk) - Repurchases can be made on the open market or in negotiated transactions and the program is expected to last through the end of **2024**[5](index=5&type=chunk) [Consolidated Financial Statements (Unaudited)](index=10&type=section&id=Consolidated%20Financial%20Statements%20%28Unaudited%29) This section presents Definitive Healthcare's unaudited condensed consolidated financial statements, covering balance sheets, statements of operations, and cash flows [Condensed Consolidated Balance Sheets](index=10&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2024, Definitive Healthcare's balance sheet showed total assets of **$1.81 billion** and total liabilities of **$615.1 million**, with decreased cash Selected Balance Sheet Data (in thousands) | Account | March 31, 2024 (in thousands) | December 31, 2023 (in thousands) | | :--- | :--- | :--- | | Cash and cash equivalents | $105,994 | $130,976 | | Total current assets | $378,717 | $393,927 | | Goodwill | $1,082,137 | $1,075,080 | | Total assets | $1,810,145 | $1,825,901 | | Total current liabilities | $164,980 | $170,682 | | Term loan (current & long-term) | $253,017 | $256,317 | | Total liabilities | $615,114 | $626,727 | | Total equity | $1,195,031 | $1,199,174 | [Condensed Consolidated Statements of Operations](index=12&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) In Q1 2024, the company reported **7.2%** revenue growth to **$63.5 million**, an increased operating loss, and an improved net loss of **$(12.7) million** Q1 Statement of Operations (in thousands, except per share data) | Account | Three Months Ended Mar 31, 2024 (in thousands) | Three Months Ended Mar 31, 2023 (in thousands) | | :--- | :--- | :--- | | Revenue | $63,480 | $59,201 | | Gross Profit | $50,382 | $47,295 | | Total operating expenses | $66,631 | $59,566 | | Loss from operations | $(16,249) | $(12,271) | | Net loss | $(12,718) | $(15,972) | | Net loss attributable to Definitive Healthcare Corp. | $(9,518) | $(12,063) | | Net loss per share (Basic and diluted) | $(0.08) | $(0.11) | [Condensed Consolidated Statements of Cash Flows](index=13&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Q1 2024 generated **$16.6 million** in operating cash flow, with significant cash used in investing and financing activities, leading to a net decrease in cash Q1 Cash Flow Summary (in thousands) | Account | Three Months Ended Mar 31, 2024 (in thousands) | Three Months Ended Mar 31, 2023 (in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $16,589 | $14,957 | | Net cash used in investing activities | $(24,034) | $(33,470) | | Net cash used in financing activities | $(17,194) | $(3,525) | | Net decrease in cash and cash equivalents | $(24,639) | $(22,038) | | Cash and cash equivalents, end of period | $105,994 | $124,961 | [Non-GAAP Financial Measures and Reconciliations](index=7&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Reconciliations) This section explains Definitive Healthcare's non-GAAP financial measures and provides detailed reconciliations to GAAP equivalents [Explanation of Non-GAAP Financial Measures](index=7&type=section&id=Explanation%20of%20Non-GAAP%20Financial%20Measures) Definitive Healthcare utilizes various non-GAAP financial measures, such as Adjusted EBITDA and Unlevered Free Cash Flow, for clearer core operational performance insights - The company presents supplemental non-GAAP financial measures to allow for an evaluation of core operations and meaningful comparisons to historical periods and peers[19](index=19&type=chunk) - Key non-GAAP measures reported include: - Unlevered Free Cash Flow - Adjusted EBITDA and Adjusted EBITDA Margin - Adjusted Gross Profit and Adjusted Gross Margin - Adjusted Operating Income - Adjusted Net Income and Adjusted Net Income Per Diluted Share[20](index=20&type=chunk) [Reconciliations of GAAP to Non-GAAP Measures](index=14&type=section&id=Reconciliations%20of%20GAAP%20to%20Non-GAAP%20Measures) Detailed reconciliations show GAAP Net Loss of **$(12.7) million** adjusted to **$20.0 million** Adjusted EBITDA, and operating cash flow to Unlevered Free Cash Flow Reconciliation of GAAP Net Loss to Adjusted EBITDA (Q1 2024, in thousands) | Line Item | Amount | | :--- | :--- | | **Net loss** | **$(12,718)** | | Interest (income) expense, net | $(111) | | Benefit from income taxes | $(780) | | Depreciation & amortization | $12,684 | | **EBITDA** | **$(925)** | | Other (income) expense, net | $(2,640) | | Equity-based compensation | $15,582 | | Transaction, integration, and restructuring expenses | $8,534 | | Other non-core items | $(528) | | **Adjusted EBITDA** | **$20,023** | Reconciliation of GAAP Operating Cash Flow to Unlevered Free Cash Flow (Q1 2024, in thousands) | Line Item | Amount | | :--- | :--- | | **Net cash provided from operating activities** | **$16,589** | | Purchases of property, equipment, and other assets | $(266) | | Interest paid in cash | $3,642 | | Transaction, integration, and restructuring expenses paid in cash | $8,264 | | Earnout payment | $602 | | Other non-core items | $(528) | | **Unlevered Free Cash Flow** | **$28,303** |

FRAMINGHAM, Mass. and LONDON, March 22, 2024 (GLOBE NEWSWIRE) -- Definitive Healthcare (NASDAQ:DH) and VML Health announced a first-of-its-kind partnership that gives clients the ability to manage their entire key opinion leader (KOL) identification and engagement operation from an integrated solution. This partnership provides an answer to the increasingly complex challenges that the health industry faces when identifying and engaging with the most relevant KOLs at a global level. The new solution has been ...

FRAMINGHAM, Mass., March 14, 2024 (GLOBE NEWSWIRE) -- Definitive Healthcare (Nasdaq: DH), an industry leader in healthcare commercial intelligence, today announced that it has been named one of the Boston Business Journal's Middle Market Leaders for 2024, a ranking of the 50 highest growth companies in Massachusetts. This marks the second year in a row that Definitive Healthcare has won this award. The Boston Business Journal selects the Middle Market Leaders using a weighted index score based on revenue gr ...

Cautionary statement regarding forward-looking statements | --- | --- | |---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- ...

Definitive Healthcare Corp. (NASDAQ:DH) Q4 2023 Earnings Conference Call February 28, 2024 5:00 PM ET Company Participants Matt Ruderman - Chief Legal Officer Jason Krantz - Founder and Executive Chairman and Interim CEO Richard Booth - CFO Conference Call Participants Stephanie Davis - Barclays Craig Hettenbach - Morgan Stanley Craig Jones - Stifel Matthew Shea - Needham & Company Allen Lutz - Bank of America Jared Haase - William Blair Johnathan McCary - Raymond James George Hill - Deutsche Bank Operator ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO Commission File Number 001-40815 Definitive Healthcare Corp. (Exact name of Registrant as specified in its Charter) Delaware 86-3988281 (State or other jurisdic ...

FRAMINGHAM, Mass., Feb. 14, 2024 (GLOBE NEWSWIRE) -- Definitive Healthcare Corp. (“Definitive Healthcare”) (Nasdaq: DH), an industry leader in healthcare commercial intelligence, today announced that it will report financial results for its fourth quarter and full year ended December 31, 2023, on Wednesday, February 28, 2024 after market close. The company will host a conference call and webcast at 5:00 PM (ET) / 2:00 PM (PT) to discuss the company’s financial results. A live audio webcast of the event will ...