Definitive Healthcare (US:DH)2024-11-07 21:20Financial Performance - Revenue for Q3 2024 was $62.7 million, a decrease of 4.9% from $65.3 million in Q3 2023[12] - Gross profit for Q3 2024 was $49.0 million, down from $53.4 million in Q3 2023, reflecting a gross margin of 78.2%[12] - Net loss for Q3 2024 was $187.8 million, compared to a net loss of $248.7 million in Q3 2023, representing a 24.4% improvement[13] - Net loss attributable to Definitive Healthcare Corp. for Q3 2024 was $130.9 million, down from $171.5 million in Q3 2023[12] - Basic and diluted net loss per share for Q3 2024 was $(1.12), an improvement from $(1.50) in Q3 2023[12] - Comprehensive loss for Q3 2024 was $(188.8) million, compared to $(248.9) million in Q3 2023[13] - The company experienced a comprehensive loss of $961 million for the quarter ending September 30, 2024[15] - The net loss for the nine months ended September 30, 2023, was $506.729 million, compared to a net loss of $276.265 million for the same period in 2022, indicating a significant increase in losses[18] - The company experienced a net loss of $506.7 million for the nine months ended September 30, 2024, compared to a net loss of $276.3 million in the same period of 2023[121] Equity and Deficits - Total equity as of September 30, 2024, was $695.6 million, a decrease from $1.2 billion at the end of 2023[10] - Accumulated deficit increased to $(581.5) million as of September 30, 2024, compared to $(227.5) million at the end of 2023[10] - Total equity as of September 30, 2023, was $1.203 billion, with a significant accumulated deficit of $217.217 million[17] - The total accumulated deficit increased to $(581.499) million by September 30, 2024[15] Cash Flow and Investments - Cash flows provided by operating activities for the nine months ended September 30, 2023, were $50.061 million, up from $36.481 million in the prior year, reflecting improved operational efficiency[18] - Cash and cash equivalents at the end of the period were $137.609 million, an increase from $77.460 million at the end of the previous year[18] - The net cash used in investing activities was $139 million, primarily due to purchases of short-term investments totaling $192.670 million[18] - Cash used in financing activities totaled $43.4 million, driven by $15.0 million for stock repurchases and $10.3 million in repayments of the 2021 Term Loan[132] - As of September 30, 2024, the company held cash and cash equivalents totaling $87,869,000, with short-term investments including U.S. treasuries of $62,461,000 and commercial paper of $94,336,000[63] Acquisitions - Definitive Healthcare Corp. completed the acquisition of Carevoyance for $13.7 million in cash, with the transaction accounted for under the acquisition method[24] - The acquisition of Populi, Inc. was finalized for a total estimated consideration of $54.1 million, including $46.4 million in cash and up to $28.0 million in contingent consideration[26] - The company’s consolidated results include the operations of both Carevoyance and Populi from their respective acquisition dates[24][26] Goodwill and Impairments - The company recorded non-cash, pretax goodwill impairment charges of $228.2 million and $363.6 million during the three months ended September 30, 2024, and June 30, 2024, respectively[42] - Goodwill impairment charges of $228.2 million were recorded during the three months ended September 30, 2024, following declines in market capitalization[86] - Goodwill acquired during the nine months ended September 30, 2024, was $7,057,000, while the goodwill impairment loss for the same period was $591,794,000[43] Operating Expenses - Total operating expenses for Q3 2024 were $274.4 million, a decrease of 21.3% compared to $348.8 million in Q3 2023[12] - Operating expenses decreased by $74.4 million, or 21%, to $274.4 million for the three months ended September 30, 2024, driven by a lower goodwill impairment charge[110] - The company incurred restructuring and related charges of $8.0 million during the nine months ended September 30, 2024, as part of the 2024 Restructuring Plan[44] Stock Repurchase and Equity-Based Compensation - The company repurchased 3,144,516 shares of Class A Common Stock for $15,000,000 under a stock repurchase program authorized in May 2024[68] - The company authorized a stock repurchase program of up to $20,000,000 in share repurchases, set to expire on December 31, 2024[68] - Total equity-based compensation expense for the three months ended September 30, 2024, was $6,296,000, a decrease from $11,994,000 in the same period of 2023[70] Customer Metrics - The total customer count as of September 30, 2024, was approximately 2,570, down from approximately 2,750 customers as of September 30, 2023, reflecting a decrease due to higher churn rates among smaller customers[90] - The number of Enterprise Customers increased to 530 as of September 30, 2024, compared to 529 as of September 30, 2023, indicating stability in the higher revenue segment[90] Future Outlook - The company anticipates a decline in revenue in the final quarter of 2024 and into 2025 due to macroeconomic headwinds and sales execution challenges[101] - Gross profit margin is expected to decrease in 2025 due to revenue declines and a largely fixed cost structure[103] - The company expects its cash flow from operations and available liquidity to meet its needs for at least the next twelve months[127] Tax and Compliance - The effective tax rate for the three months ended September 30, 2024, was 6.8%, compared to 6.6% for the same period in 2023[71] - The company identified a material weakness in internal controls related to sales tax obligations, which remains unremediated as of September 30, 2024[144] - Management has engaged third-party tax experts and implemented additional controls to address the identified material weakness[146]