Definitive Healthcare (DH) - 2024 Q1 - Quarterly Results

Financial Performance This section outlines Definitive Healthcare's Q1 2024 financial performance and its forward-looking guidance for the fiscal year First Quarter 2024 Financial Highlights 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] Business Outlook 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 This section outlines Definitive Healthcare's recent business and corporate developments, including customer growth and a stock repurchase program Recent Business and Operating Highlights 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] - 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] Stock Repurchase Program 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] - 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] Consolidated Financial Statements (Unaudited) This section presents Definitive Healthcare's unaudited condensed consolidated financial statements, covering balance sheets, statements of operations, and cash flows Condensed Consolidated Balance Sheets 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 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 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 This section explains Definitive Healthcare's non-GAAP financial measures and provides detailed reconciliations to GAAP equivalents Explanation of Non-GAAP Financial Measures 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] - 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] Reconciliations of GAAP to Non-GAAP Measures 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 |