Benefytt Technologies, Inc. (NASDAQ:BFYT), a health insurance
technology company and leading distributor of Medicare-related
health insurance plans, today announced financial results for the
first quarter ended March 31, 2020. The Company will host a live
conference call on Thursday, May 7, 2020, at 9:00 A.M. ET.
Commenting on the Company’s first quarter
operating results, Gavin Southwell, President and Chief Executive
Officer, said, “Compared to many industries, which are
significantly impacted by the current environment, our market
continues to grow. Our technology-driven model positions us for
growth as we help consumers connect with Medicare and other health
and life insurance products, something that is now more important
than ever, in a safe and easy manner via eCommerce or on the
telephone with a licensed agent.”
Mr. Southwell continued, “In addition to the
Medicare growth potential we are also seeing evolving tailwinds in
the IFP market. Building on our success in 2019, 2020 is a year in
which we expect to scale the Medicare business. We made good
progress on that in the first quarter and are in a strong position
for the 2021 annual enrollment period later this year.”
As previously announced, the Company’s Board of
Directors commenced in July 2019 a process for exploring,
reviewing, and evaluating strategic alternatives focused on
maximizing shareholder value. These alternatives could include,
among other things, a sale of the Company or a portion thereof, a
strategic business combination, changes in the Company’s operations
or strategy, or continuing to execute on the Company’s current
business plan. This review process is currently ongoing, and
the Company is in discussions with interested parties, including
both strategic and financial institutions (1).
First quarter
2020 Consolidated Financial
HighlightsAll comparisons are to the three months
ended March 31, 2019
- Revenue was $71.6 million, compared to revenue of $87.3
million. Revenue from our Medicare segment was $18.9 million and is
new to the Company starting in June 2019. Revenue from our
Individual and Family Plan (IFP) segment was $52.7 million.
- Net loss was $49.8 million, compared to net income of $2.2
million in the first quarter of 2019. Q1 2020 loss includes a $41.1
million goodwill impairment due to the previously announced
deemphasis of the IFP business and a $2.9 million fair value
adjustment to contingent acquisition consideration.
- Adjusted EBITDA (earnings before interest, taxes, depreciation
and amortization) was $0.9 million, compared to adjusted EBITDA of
$9.3 million. Loss from our Medicare segment was $1.6 million.
Profit from our IFP segment was $8.3 million.
- GAAP diluted net loss per share was $3.68, compared to GAAP
diluted net income per share of $0.11 in the first quarter of
2019.
- Adjusted net income per share was $0.01 compared to adjusted
net income per share of $0.43.
- Net contract asset (contract asset receivable plus advanced
commissions less commission payable) at March 31, 2020 was $251.0
million (2). $178.1 million related to the IFP segment and $72.9
million related to the Medicare segment.
Adjusted EBITDA and adjusted net income per
share are non-GAAP financial measures. See the reconciliations of
these measures to their respective most directly comparable GAAP
measure below in this press release.
2020 First Quarter Financial
Discussion
First quarter revenues of $71.6 million
decreased 18.0% compared to revenues of $87.3 million in the first
quarter of 2019.
Revenue from our Medicare segment was $18.9
million. We did not have Medicare revenue in the first quarter of
2019. Revenue from our IFP segment was $52.7 million compared to
$87.3 million in the first quarter of 2019. The year-over-year
decline in IFP revenue was anticipated as we deemphasized IFP sales
and shifted resources to our new Medicare segment.
Revenues in the quarter for Medicare and IFP
were negatively impacted in the amount of $1.9 million and $2.9
million, respectively, by changes in estimated variable
consideration (i.e. lifetime value or LTV) based on the Company’s
quarterly reassessment process. Without this change in
estimate, first quarter total revenues would have been $76.4
million, Medicare revenues would have been $20.8 million and IFP
revenues would have been $55.6 million.
Third-party commission expense was $32.8 million
(62.2% of IFP revenues) in the first quarter of 2020, compared to
$60.7 million (69.5% of IFP revenues) in the same period in 2019.
The decrease is attributable to the decline in revenues in our IFP
segment.
Total selling, general & administrative
expense (“SG&A”) was $27.9 million (39.0% of net revenues) in
the first quarter, compared to $15.6 million (17.9% of net
revenues) in the same period in 2019. The increase is attributable
primarily to legal expenses and increased payroll from scaling our
captive distribution.
Marketing and Advertising expense was $18.5
million in the first quarter, compared to $3.1 million in the same
period in 2019. The increased expense is due to investments in
Medicare consumer engagement.
Net loss was $49.8 million in the first quarter
of 2020, compared to net income of $2.2 million in the same period
in 2019. First quarter loss includes a $41.1 million goodwill
impairment driven by the deemphasis of our IFP business.
EBITDA was ($53.0) million in the first quarter
of 2020, compared to $6.5 million in the same period in 2019.
Adjusted EBITDA was $0.9 million in the first
quarter of 2020 compared to $9.3 million in the same period in
2019. Adjusted EBITDA is calculated by taking EBITDA and adjusting
for items that are not part of regular operating activities,
including stock-based compensation and related costs, transaction
costs, tax receivable adjustments, indemnity and other legal costs,
and severance, restructuring, fair value adjustment to contingent
consideration, asset impairments and other charges.
Adjusted EBITDA in the quarter for Medicare and
IFP were negatively impacted in the amount of $1.9 million and $1.6
million, respectively, by changes in estimated variable
consideration based on the Company’s quarterly reassessment
process. Without this change in estimate, the first quarter
Adjusted EBITDA would have been $4.4 million.
GAAP diluted net loss per share was $3.68 in the
first quarter of 2020, compared to GAAP diluted net income per
share of $0.11 in the same period in 2019.
Adjusted net income per share was $0.01 in the
first quarter of 2020, compared to adjusted net income per share of
$0.43 in the same period in 2019.
Adjusted net income per share in the quarter was
negatively impacted in the amount of $0.20 by changes in the
estimated variable consideration based on the Company’s quarterly
reassessment process. Without the change in estimate the first
quarter adjusted net income per share would have been $0.21.
Cash and cash equivalents totaled $5.1 million
as of March 31, 2020, an increase of $1.3 million from December 31,
2019. We ended the quarter with $194.4 million of debt outstanding
including $50.0 million drawn against our $65.0 million revolving
credit facility. Net cash used in operating activities for the
first quarter 2020 was $11.2 million, due to higher advances of
commissions in the IFP segment from strong sales in the quarter,
increased legal expenses and marketing and advertising expense. The
Company is currently expecting approximately $23 million of refunds
from various federal, state and local taxing authorities (of which
$11.2 million was expected to already have been received). As the
timing of such receipts is difficult to predict because of the
COVID-19 outbreak and the resulting stay at home orders issued by
various states, the Company stated that it intends to draw the
remaining $15 million of its available revolving line of credit in
order to continue to execute on its business plans for 2020.
Maintaining 2020 Full Year Revenue and Earnings
Guidance
The Company is providing guidance for the full
year ending December 31, 2020 based on information available as of
May 5, 2020. These expectations are forward-looking and the Company
assumes no obligation to update these statements. Actual results
may be materially different and are affected by the risk factors
and uncertainties identified in this release and in the Company’s
annual and quarterly filings with the Securities and Exchange
Commission, including uncertainties associated with the impact of
the COVID-19 pandemic.
The following is guidance for the full year
ending December 31, 2020.
- Total revenue is expected to be in the range of $290 million to
$350 million. Revenue from the Medicare segment is expected to be
in the range of $190 million to $210 million. Revenue from the IFP
segment is expected to be in the range of $100 million to $140
million.
- Adjusted net income per share is expected to be in the range of
$3.10 to $4.15.
- Adjusted EBITDA is expected to be in the range of $65.0 million
to $80.0 million.
- Profit from the Medicare (3) segment is expected to be in the
range of $70.0 million to $80.0 million. Profit from the IFP
segment is expected to be in the range of $15.0 million to $20.0
million.
- Corporate (4) expense is expected to be approximately $20.0
million.
(1) The Company’s Board of Directors has not set
a timetable for completing the strategic review nor has it made any
decisions related to strategic alternatives at this time.
There can be no assurance that the Board’s exploration of strategic
alternatives, including the current ongoing discussions with
potentially interested strategic and financial institutions, will
result in changes in strategy or any transaction or, if a
transaction is undertaken, as to its terms, structure or timing.
The Company does not expect to make further public comment
regarding these matters unless and until the Board has approved a
specific transaction or alternative or otherwise concludes its
review of strategic alternatives, or the Company otherwise deems
disclosure of significant developments to be appropriate. In
connection with the strategic review, BofA Securities is acting as
financial advisor and Weil, Gotshal & Manges LLP is acting as
legal advisor to the Company.
(2) The net contract asset includes $42.8
million of advanced commissions that reduce the commissions payable
balance but are required to be showed gross under GAAP.
(3) Segment profit is calculated as total
revenue for the applicable segment less direct and allocated
marketing and advertising, customer care and enrollment, technology
and content and general and administrative operating expenses,
excluding stock-based compensation, depreciation and amortization
expense, before Corporate expenses.
(4) Corporate consists of other indirect
General and Administrative operating expenses, excluding
stock-based compensation and depreciation and amortization expense,
which are managed in a corporate shared services environment and,
since they are not the responsibility of segment operating
management, are not allocated to the reportable segments.
Conference Call and Webcast
The Company will host an earnings conference
call on May 7, 2020 at 9:00 A.M. Eastern time. All interested
parties can join the call by dialing (800) 289-0438 or (323)
794-2423; the conference ID is 2760328. An archive of the call will
be available on Benefytt Technologies’ website, BFYT.com, for 30
days beginning on Thursday, May 7, 2020, 12:00 PM ET.
About Benefytt Technologies,
Inc.
Benefytt Technologies, Inc. is a health
insurance technology company that primarily engages in the
development and operation of private e-commerce health insurance
marketplaces, consumer engagement platforms, agency technology
systems, and insurance policy administration platforms. By
leveraging existing and emerging platforms and Technologies, the
Company offers a range of Medicare-related insurance plans from
many of the nation’s leading carriers as well as other types of
health insurance and supplemental products that meet the needs of
consumers.
Forward-Looking Statements
This press release contains "forward-looking
statements" within the meaning of the U.S. Private Securities
Litigation Reform Act of 1995. Forward-looking statements are
statements other than historical fact, and may include statements
relating to goals, plans and projections regarding new markets,
products, services, growth strategies, anticipated trends in our
business and anticipated changes and developments in the United
States health insurance system and laws. Forward-looking statements
are based on Benefytt Technologies, Inc.’s (the “Company’s”)
current assumptions, expectations and beliefs are generally
identifiable by use of words “may,” “might,” “will,” “should,”
“expects,” “plans,” “anticipates,” “believes,” “estimates,”
“predicts,” “potential” or “continue,” or similar expressions and
involve significant risks and uncertainties that could cause actual
results, developments and business decisions to differ materially
from those contemplated by these statements. These risks and
uncertainties include, among other things, our focus on the
Medicare market, our ability to maintain relationships and develop
new relationships with health insurance carriers and distributors,
uncertainty associated with the future impact of the COVID-19
pandemic on our business and company, our ability to retain our
members, the demand for products offered through our platform,
regulatory oversight and examinations of us and our carriers and
distributors, legal and regulatory compliance by our carriers and
distributors, the amount of commissions paid to us or changes in
health insurance plan pricing practices, competition, changes and
developments in the United States health insurance system and laws,
and the Company’s ability to adapt to them, the ability to maintain
and enhance our name recognition, difficulties arising from
acquisitions or other strategic transactions, and our ability to
build the necessary infrastructure and processes to maintain
effective controls over financial reporting. These and other risk
factors that could cause actual results to differ materially from
those expressed or implied in our forward-looking statements will
be discussed in the Company’s Annual Report on Form 10-K filed with
the Securities and Exchange Commission (SEC) as well as other
documents that may be filed by the Company from time to time with
the Securities and Exchange Commission, which are available at
www.sec.gov. Any forward-looking statement made by us in this press
release is based only on information currently available to us and
speaks only as of the date on which it is made. You should not rely
on any forward-looking statement as representing our views in the
future. We undertake no obligation to publicly update any
forward-looking statement, whether written or oral, that may be
made from time to time, whether as a result of new information,
future developments or otherwise.
Non-GAAP Financial
Information
To supplement the Company’s financial
information presented in accordance with generally accepted
accounting principles in the United States of America, or GAAP, the
Company presents certain financial measures that are not prepared
in accordance with GAAP, which are adjusted EBITDA, and adjusted
net income per share. These non-GAAP financial measures, which are
defined below, should not be considered in isolation from, or as a
substitute for, financial information prepared in accordance with
GAAP. These non-GAAP financial measures are not based on any
standardized methodology prescribed by GAAP and are not necessarily
comparable to similarly titled measures presented by other
companies.
The Company is presenting these non-GAAP
financial measures to assist investors in seeing the Company’s
operating results through the eyes of management and because
the Company believes that these measures provide a useful tool for
investors to use in assessing the Company’s operating performance
against prior period operating results and against business
objectives. The Company uses the non-GAAP financial measures in
evaluating its operating results and for financial and operational
decision-making purposes.
The accompanying tables provide more detail on
the GAAP financial measures that are most directly comparable to
the non-GAAP financial measures described above and the related
reconciliations between these financial measures. The Company has
not reconciled adjusted EBITDA guidance or adjusted net income per
share guidance to GAAP net income or GAAP net income per diluted
share, respectively, because the Company does not provide guidance
for the reconciling items between these measures and GAAP net
income or GAAP net income per diluted share, respectively. As
certain of the items that impact GAAP net income and/or GAAP net
income per diluted share cannot be reasonably predicted at this
time, the Company is unable to provide such guidance. Accordingly,
a reconciliation to GAAP net income or GAAP net income per diluted
share is not available without unreasonable effort.
BENEFYTT TECHNOLOGIES, INC.Condensed
Consolidated Balance Sheets($ in thousands, except
share and per share data) |
|
March 31, 2020 |
|
December 31, 2019 |
|
(unaudited) |
|
|
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
5,051 |
|
|
$ |
3,771 |
|
Restricted cash |
16,030 |
|
|
17,788 |
|
Accounts receivable, net, prepaid expenses and other current
assets |
4,561 |
|
|
2,911 |
|
Income taxes receivable |
23,018 |
|
|
18,210 |
|
Advanced commissions, net |
40,524 |
|
|
45,250 |
|
Contract asset |
172,554 |
|
|
184,474 |
|
Total current assets |
261,738 |
|
|
272,404 |
|
Long-term contract asset |
207,675 |
|
|
209,239 |
|
Property and equipment,
net |
5,494 |
|
|
5,415 |
|
Deferred tax asset |
645 |
|
|
— |
|
Right-of-use assets |
16,568 |
|
|
496 |
|
Goodwill |
94,814 |
|
|
135,182 |
|
Intangible assets, net |
25,473 |
|
|
28,963 |
|
Other assets |
2,623 |
|
|
159 |
|
Total assets |
$ |
615,030 |
|
|
$ |
651,858 |
|
Liabilities and
stockholders’ equity |
|
|
|
Current liabilities: |
|
|
|
Accounts payable and accrued expenses |
$ |
42,768 |
|
|
$ |
51,477 |
|
Commissions payable |
92,833 |
|
|
97,785 |
|
Contingent consideration, current |
1,750 |
|
|
— |
|
Long-term debt, net, current |
9,488 |
|
|
10,684 |
|
Operating lease liabilities, current |
1,466 |
|
|
237 |
|
Other current liabilities |
296 |
|
|
557 |
|
Total current liabilities |
148,601 |
|
|
160,740 |
|
Commissions payable,
long-term |
79,287 |
|
|
82,369 |
|
Contingent consideration,
long-term |
66,302 |
|
|
65,171 |
|
Debt, net, long-term |
183,470 |
|
|
167,947 |
|
Due to member |
34,142 |
|
|
29,121 |
|
Deferred tax liability,
net |
— |
|
|
5,722 |
|
Operating lease liabilities,
long-term |
14,965 |
|
|
224 |
|
Other liabilities |
330 |
|
|
590 |
|
Total liabilities |
527,097 |
|
|
511,884 |
|
Commitments and
contingencies |
|
|
|
Stockholders’ equity: |
|
|
|
Class A common stock (par value $0.001 per share, 100,000,000
shares authorized; 17,119,217 and 16,219,217 shares issued as of
March 31, 2020 and December 31, 2019, respectively; 13,243,293 and
12,273,630 shares outstanding as of March 31, 2020 and December 31,
2019, respectively) |
17 |
|
|
16 |
|
Class B common stock (par value $0.001 per share, 20,000,000 shares
authorized; 1,016,667 and 1,916,667 shares issued and outstanding
as of March 31, 2020 and December 31, 2019, respectively) |
1 |
|
|
2 |
|
Preferred stock (par value $0.001 per share, 5,000,000 shares
authorized; no shares issued and outstanding as of March 31, 2020
and December 31, 2019, respectively) |
— |
|
|
— |
|
Additional paid-in
capital |
132,473 |
|
|
118,465 |
|
Treasury stock, at cost (3,915,690 and 3,945,587 shares as of March
31, 2020 and December 31, 2019, respectively) |
(125,643 |
) |
|
(127,400 |
) |
Retained earnings |
66,152 |
|
|
110,418 |
|
Total Benefytt Technologies, Inc. stockholders’ equity |
73,000 |
|
|
101,501 |
|
Noncontrolling interests |
14,933 |
|
|
38,473 |
|
Total stockholders’ equity |
87,933 |
|
|
139,974 |
|
Total liabilities and stockholders' equity |
$ |
615,030 |
|
|
$ |
651,858 |
|
|
|
|
|
|
|
|
|
BENEFYTT TECHNOLOGIES,
INC.Condensed Consolidated Statements of
Operations (unaudited)($ in thousands, except
share and per share data)
|
Three Months Ended March 31, |
|
2020 |
|
2019 |
Revenues |
$ |
71,561 |
|
|
$ |
87,326 |
|
Operating expenses: |
|
|
|
Third-party commissions |
32,770 |
|
|
60,671 |
|
Selling, general and administrative |
27,946 |
|
|
15,597 |
|
Marketing and advertising |
18,453 |
|
|
3,062 |
|
Credit card and ACH fees |
1,417 |
|
|
1,523 |
|
Depreciation and amortization |
4,345 |
|
|
1,132 |
|
Loss on impairment |
41,076 |
|
|
— |
|
Total operating expenses |
126,007 |
|
|
81,985 |
|
(Loss) income from operations |
(54,446 |
) |
|
5,341 |
|
|
|
|
|
Other expense: |
|
|
|
Interest expense |
2,094 |
|
|
345 |
|
Fair value adjustment to contingent acquisition consideration |
2,881 |
|
|
— |
|
Other expense |
— |
|
|
17 |
|
Net (loss) income before
income taxes |
(59,421 |
) |
|
4,979 |
|
(Benefit) provision for income taxes |
(9,606 |
) |
|
2,797 |
|
Net (loss) income |
(49,815 |
) |
|
2,182 |
|
Net (loss) income attributable to noncontrolling interests |
(5,549 |
) |
|
851 |
|
Net (loss) income attributable
to Benefytt Technologies, Inc. |
$ |
(44,266 |
) |
|
$ |
1,331 |
|
|
|
|
|
Per share
data: |
|
|
|
Net (loss) income per
share attributable to Benefytt Technologies, Inc. |
|
|
|
Basic |
$ |
(3.68 |
) |
|
$ |
0.12 |
|
Diluted |
$ |
(3.68 |
) |
|
$ |
0.11 |
|
Weighted average Class
A common shares outstanding |
|
|
|
Basic |
12,023,121 |
|
|
11,388,490 |
|
Diluted |
12,023,121 |
|
|
12,472,731 |
|
|
|
|
|
|
|
BENFYTT TECHNOLOGIES,
INC.Condensed Consolidated Statements of Cash
Flows($ in thousands)
|
Three Months Ended March 31, |
|
2020 |
|
2019 |
Operating activities: |
|
|
|
Net (loss) income |
$ |
(49,815 |
) |
|
$ |
2,182 |
|
Adjustments to reconcile net (loss) income to net cash used in
operating activities: |
|
|
|
Stock-based compensation |
2,627 |
|
|
1,816 |
|
Fair value adjustment to contingent acquisition consideration |
2,881 |
|
|
— |
|
Loss on disposal of assets |
73 |
|
|
— |
|
Provision for allowance for doubtful accounts |
116 |
|
|
13 |
|
Impairment of assets |
41,076 |
|
|
— |
|
Depreciation and amortization |
4,345 |
|
|
1,132 |
|
Deferred financing costs |
202 |
|
|
— |
|
Deferred income taxes |
(4,838 |
) |
|
191 |
|
Changes in operating assets and liabilities: |
|
|
|
(Increase) decrease in accounts receivable, prepaid expenses and
other assets |
(4,114 |
) |
|
275 |
|
Decrease (increase) in advanced commissions |
4,610 |
|
|
(196 |
) |
Increase in income taxes receivable |
(4,808 |
) |
|
— |
|
Increase in right-of-use asset |
(16,072 |
) |
|
(639 |
) |
Decrease (increase) in contract asset |
12,776 |
|
|
(13,327 |
) |
Increase in lease liability |
15,893 |
|
|
538 |
|
Decrease in accounts payable, accrued expenses and other
liabilities |
(8,153 |
) |
|
(6,568 |
) |
(Decrease) increase in commission payable |
(8,034 |
) |
|
6,387 |
|
Increase in income taxes payable, net |
— |
|
|
2,452 |
|
Net cash used in operating activities |
(11,235 |
) |
|
(5,744 |
) |
Investing activities: |
|
|
|
Business acquisition: release of hold-back |
(1,000 |
) |
|
— |
|
Capitalized internal-use software and website development
costs |
(501 |
) |
|
(315 |
) |
Purchases of property and equipment |
(429 |
) |
|
(109 |
) |
Net cash used in investing activities |
(1,930 |
) |
|
(424 |
) |
Financing activities: |
|
|
|
Proceeds from borrowings under credit agreement |
18,000 |
|
|
50,000 |
|
Payments on borrowings under credit agreement |
(3,875 |
) |
|
— |
|
Payments related to tax withholding for share-based
compensation |
(1,526 |
) |
|
(918 |
) |
Purchases of Class A common stock pursuant to share repurchase
plan |
— |
|
|
(45,272 |
) |
Contributions (distributions) |
88 |
|
|
(677 |
) |
Net cash provided by financing activities |
12,687 |
|
|
3,133 |
|
Net decrease in cash and cash equivalents, and restricted cash |
(478 |
) |
|
(3,035 |
) |
Cash and cash equivalents, and restricted cash at beginning of
period |
21,559 |
|
|
25,999 |
|
Cash and cash equivalents, and restricted cash at end of
period |
$ |
21,081 |
|
|
$ |
22,964 |
|
|
|
|
|
|
|
|
|
Reconciliation of Net Income to EBITDA
and Adjusted EBITDA(unaudited)($
in thousands)
|
Three Months Ended March 31, |
|
2020 |
|
2019 |
Net (loss) income |
$ |
(49,815 |
) |
|
$ |
2,182 |
|
Interest expense |
2,094 |
|
|
345 |
|
Depreciation and amortization |
4,345 |
|
|
1,132 |
|
(Benefit) provision for income taxes |
(9,606 |
) |
|
2,797 |
|
EBITDA |
(52,982 |
) |
|
6,456 |
|
Loss on impairment |
41,076 |
|
|
— |
|
Stock-based compensation and related costs |
2,707 |
|
|
1,861 |
|
Fair value adjustment to contingent consideration |
2,881 |
|
|
— |
|
Transaction costs |
129 |
|
|
273 |
|
Indemnity and other legal costs |
7,092 |
|
|
672 |
|
Severance, restructuring and other |
30 |
|
|
3 |
|
Adjusted EBITDA |
$ |
933 |
|
|
$ |
9,265 |
|
|
|
|
|
|
|
|
|
Reconciliation of Net Income to Adjusted
Net Income per
Share(unaudited) ($ in
thousands except per share data)
|
Three Months Ended March 31, |
|
2020 |
|
2019 |
Net (loss) income |
$ |
(49,815 |
) |
|
$ |
2,182 |
|
Interest expense |
2,094 |
|
|
345 |
|
Amortization |
3,505 |
|
|
335 |
|
(Benefit) provision for income
taxes |
(9,606 |
) |
|
2,797 |
|
Loss on impairment |
41,076 |
|
|
— |
|
Stock-based compensation and
related costs |
2,707 |
|
|
1,861 |
|
Fair value adjustment to
contingent consideration |
2,881 |
|
|
— |
|
Transaction costs |
129 |
|
|
273 |
|
Indemnity and other legal
costs |
7,092 |
|
|
672 |
|
Severance, restructuring and
other charges |
30 |
|
|
3 |
|
Adjusted pre-tax income |
93 |
|
|
8,468 |
|
Pro forma income taxes |
(22 |
) |
|
(2,032 |
) |
Adjusted net income |
$ |
71 |
|
|
$ |
6,436 |
|
Total weighted average diluted
share count |
13,247 |
|
|
15,000 |
|
Adjusted net income per
share |
$ |
0.01 |
|
|
$ |
0.43 |
|
|
|
|
|
|
|
|
|
(1) EBITDA is defined as net income before
interest, income taxes and depreciation and amortization. We have
included EBITDA in this report because it is a key measure used by
our management and board of directors to understand and evaluate
our core operating performance and trends, to prepare and approve
our annual budget and to develop short- and long-term operational
plans. In particular, the exclusion of certain expenses in
calculating EBITDA can provide a useful measure for
period-to-period comparisons of our business. However, EBITDA does
not represent, and should not be considered as, an alternative to
net income or cash flows from operations, each as determined in
accordance with GAAP. Other companies may calculate EBITDA
differently than we do. EBITDA has limitations as an analytical
tool, and you should not consider it in isolation or as a
substitute for analysis of our results as reported under GAAP.
(2) To calculate adjusted EBITDA, we calculate
EBITDA, which is then further adjusted for items such as
stock-based compensation and related costs, and items that are not
generally a part of regular operating activities, including tax
receivable adjustments, indemnity and other legal costs, and
severance, restructuring, acquisition costs and asset
impairments. Adjusted EBITDA does not represent, and should
not be considered as, an alternative to net income or cash flows
from operations, each as determined in accordance with GAAP. We
have presented adjusted EBITDA because we consider it an important
supplemental measure of our performance and believe that it is
frequently used by analysts, investors and other interested parties
in the evaluation of companies. Other companies may calculate
adjusted EBITDA differently than we do. Adjusted EBITDA has
limitations as an analytical tool, and you should not consider it
in isolation or as a substitute for analysis of our results as
reported under GAAP.
(3) To calculate adjusted net income, we
calculate net income then add back amortization (but not
depreciation), interest, tax expense, items such as stock-based
compensation and related costs, and other items that are not
generally a part of regular operating activities, including, tax
receivable adjustments, indemnity and other legal costs, severance,
restructuring, acquisition costs and asset impairments. From
adjusted pre-tax net income, we apply a pro forma tax expense
calculated at an assumed rate of 24%, which consists of the
maximum federal corporate rate of 21%, with an assumed 3% state tax
rate. We believe that when measuring Company and executive
performance against the adjusted net income measure, applying a pro
forma tax rate better reflects the performance of the Company
without regard to the Company’s organizational tax structure. We
have included adjusted net income in this report because it is a
key performance measure used by our management to understand and
evaluate our core operating performance and trends and because we
believe it is frequently used by analysts, investors, and other
interested parties in their evaluation of the Company. Other
companies may calculate this measure differently than we do.
Adjusted net income has limitations as an analytical tool, and you
should not consider it in isolation or substitution for earnings
per share as reported under GAAP.
(4) Adjusted net income per share is
computed by dividing adjusted net income by the total number of
weighted-average diluted Class A and weighted-average Class B
shares of our common stock for each period. We have included
adjusted net income per share in this report because it is a key
measure used by our management to understand and evaluate our core
operating performance and trends and because we believe it is
frequently used by analysts, investors and other interested parties
in the evaluation of companies. Other companies may calculate this
measure differently than we do. Adjusted net income per share has
limitations as an analytical tool, and you should not consider it
in isolation or as a substitute for earnings per share as reported
under GAAP.
The following table presents revenues and profit from our
operating segments for the three months and year ended March 31,
2020 ($ in thousands):
|
Three Months Ended March 31, 2020 |
Revenue |
|
Medicare revenue |
$ |
18,896 |
|
IFP revenue |
52,665 |
|
Total revenue |
71,561 |
|
|
|
Segment
Profit |
|
Medicare loss |
(1,643 |
) |
IFP profit |
8,328 |
|
Total segment profit |
6,685 |
|
|
|
Corporate |
(5,752 |
) |
Interest expense |
(2,094 |
) |
Depreciation and amortization |
(4,345 |
) |
Provision for income taxes |
9,606 |
|
Loss on impairment |
(41,076 |
) |
Stock-based compensation and related costs |
(2,707 |
) |
Fair value adjustment to contingent consideration |
(2,881 |
) |
Transaction costs |
(129 |
) |
Indemnity and other legal costs |
(7,092 |
) |
Severance, restructuring and other |
(30 |
) |
Net loss |
$ |
(49,815 |
) |
|
|
|
|
(1) Medicare revenue is net of Customer Care and Enrollment
(CC&E) expenses with certain Medicare Business Process
Outsourcing (BPO) partners who are deemed a customer under ASC 606.
CC&E netted against revenue for the three months ended March
31, 2020 was $3.4 million.
Disaggregated Revenue
The following table presents our revenue,
disaggregated by major product type and timing of revenue
recognition ($ in thousands):
|
March 31, 2020 |
|
March 31, 2019 |
|
Sales and Marketing Services |
|
Member Management |
|
Total |
|
Sales and Marketing Services |
|
Member Management |
|
Total |
Revenue by
Source |
|
|
|
|
|
|
|
|
|
|
|
Commission revenue(1) |
|
|
|
|
|
|
|
|
|
|
|
STM(2) |
$ |
20,137 |
|
|
$ |
936 |
|
|
$ |
21,073 |
|
|
$ |
32,319 |
|
|
$ |
884 |
|
|
$ |
33,203 |
|
HBIP |
12,406 |
|
|
1,205 |
|
|
13,611 |
|
|
28,329 |
|
|
1,797 |
|
|
30,126 |
|
Supplemental(2) |
15,867 |
|
|
1,030 |
|
|
16,897 |
|
|
21,394 |
|
|
1,112 |
|
|
22,506 |
|
Medicare |
16,742 |
|
|
— |
|
|
16,742 |
|
|
— |
|
|
— |
|
|
— |
|
Services revenue |
— |
|
|
631 |
|
|
631 |
|
|
— |
|
|
1,168 |
|
|
1,168 |
|
Consumer engagement
revenue |
2,280 |
|
|
— |
|
|
2,280 |
|
|
— |
|
|
— |
|
|
— |
|
Other revenues |
327 |
|
|
— |
|
|
327 |
|
|
323 |
|
|
— |
|
|
323 |
|
Total revenue |
$ |
67,759 |
|
|
$ |
3,802 |
|
|
$ |
71,561 |
|
|
$ |
82,365 |
|
|
$ |
4,961 |
|
|
$ |
87,326 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Timing of Revenue
Recognition |
|
|
|
|
|
|
|
|
|
|
|
Transferred at a point in
time |
$ |
67,759 |
|
|
$ |
— |
|
|
$ |
67,759 |
|
|
$ |
82,365 |
|
|
$ |
— |
|
|
$ |
82,365 |
|
Transferred over time |
— |
|
|
3,802 |
|
|
3,802 |
|
|
— |
|
|
4,961 |
|
|
4,961 |
|
Total revenue |
$ |
67,759 |
|
|
$ |
3,802 |
|
|
$ |
71,561 |
|
|
$ |
82,365 |
|
|
$ |
4,961 |
|
|
$ |
87,326 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) For the purposes of disaggregated revenue
presentation, when additional Discount Benefit products are sold
with an STM, HBIP, or supplemental product, the associated revenue
for the Discount Benefit products are reported within the STM,
HBIP, or supplemental product category depicted within the
table.(2) The Company changed its presentation of brokerage
revenue during the fourth quarter of 2019. Previously brokerage
revenue was reported as a separate line item with the disaggregated
revenue table however the Company has reclassified the revenue into
the respective STM or supplemental category that the brokerage
sales were associated with.
Summary of Selected
Metrics(unaudited)
The following table presents submitted
applications by product type:
|
Submitted Applications by Product Type |
|
Three Months Ended March 31, |
|
2020 |
|
2019 |
|
Change (%) |
Medicare |
|
|
|
|
|
Medicare Advantage |
20,000 |
|
|
— |
|
|
— |
|
Medicare Supplement |
400 |
|
|
— |
|
|
— |
|
Medicare Part D |
200 |
|
|
— |
|
|
— |
|
Supplementals |
700 |
|
|
— |
|
|
— |
|
Total Medicare |
21,300 |
|
|
— |
|
|
— |
|
IFP |
|
|
|
|
|
STM <12 Months |
5,300 |
|
|
11,200 |
|
|
(53 |
)% |
STM ≥ 12 Months |
23,100 |
|
|
29,200 |
|
|
(21 |
)% |
Total STM |
28,400 |
|
|
40,400 |
|
|
(30 |
)% |
Health Benefit Plans |
17,800 |
|
|
35,300 |
|
|
(50 |
)% |
Supplementals |
47,400 |
|
|
67,700 |
|
|
(30 |
)% |
Total IFP |
93,600 |
|
|
143,400 |
|
|
(35 |
)% |
Total Submitted Applications |
114,900 |
|
|
143,400 |
|
|
(20 |
)% |
|
|
|
|
|
|
|
|
|
The following table presents approved
applications by product type:
|
Approved Applications by Product Type |
|
Three Months Ended March 31, |
|
2020 |
|
2019 |
|
Change (%) |
Medicare |
|
|
|
|
|
Medicare Advantage |
18,400 |
|
|
— |
|
|
— |
|
Medicare Supplement |
400 |
|
|
— |
|
|
— |
|
Medicare Part D |
200 |
|
|
— |
|
|
— |
|
Supplementals |
600 |
|
|
— |
|
|
— |
|
Total Medicare |
19,600 |
|
|
— |
|
|
— |
|
IFP |
|
|
|
|
|
STM <12 Months |
5,300 |
|
|
11,200 |
|
|
(53 |
)% |
STM ≥ 12 Months |
23,100 |
|
|
29,200 |
|
|
(21 |
)% |
Total STM |
28,400 |
|
|
40,400 |
|
|
(30 |
)% |
Health Benefit Plans |
17,800 |
|
|
35,300 |
|
|
(50 |
)% |
Supplementals |
47,400 |
|
|
67,700 |
|
|
(30 |
)% |
Total IFP |
93,600 |
|
|
143,400 |
|
|
(35 |
)% |
Total Approved Applications |
113,200 |
|
|
143,400 |
|
|
(21 |
)% |
|
|
|
|
|
|
|
|
|
Approved applications represent the number of submitted
applications that were approved by the relevant insurance carrier
for the identified product during the relevant period. Medicare
approved applications are calculated assuming a 92% conversion of
submitted applications.
The following tables present the Constrained Lifetime Value
(CLTV) per approved application, by product type:
|
Three Months Ended March 31, |
|
2020 |
|
2019 |
|
Change (%) |
Medicare(1) |
$ |
1,065 |
|
|
$ |
— |
|
|
— |
% |
Short Term Medical<12
months |
352 |
|
|
354 |
|
|
(0.6 |
)% |
Short Term Medical ≥12
months |
832 |
|
|
1,019 |
|
|
(18.4 |
)% |
Total STM |
746 |
|
|
843 |
|
|
(11.5 |
)% |
Health Benefit Plans |
908 |
|
|
865 |
|
|
5.0 |
% |
Supplemental |
329 |
|
|
329 |
|
|
— |
% |
(1) CLTV per approved application for Medicare is presented
gross of CC&E expenses. Including CC&E, Medicare CLTV per
approved application for the three months ended March 31, 2020 was
$893.
The following tables present expense metrics per
approved application, by product type:
|
Three Months Ended March 31, 2020 |
Medicare variable marketing cost per approved application(1) |
$ |
672 |
|
Medicare variable CC&E
cost per approved application(2) |
305 |
|
Total Medicare cost per approved member |
$ |
977 |
|
|
|
|
|
(1) Medicare variable marketing cost per approved
application includes direct costs incurred in member acquisition
for all Medicare products from our direct marketing partners and
online advertising channels divided by Medicare approved
applications in each period.
(2) Medicare CC&E cost per approved application includes
compensation and benefits costs for personnel engaged in assistance
to applicants during the enrollment process divided by Medicare
approved applications in each period. CC&E costs include
amounts netted against revenue for certain Medicare BPO
relationships.
Contact:
Benefytt Technologies, Inc. :Michael DeVriesSenior Vice
President, Finance(813) 906-5314mdevries@bfyt.com
Benefytt Technologies (NASDAQ:BFYT)
Gráfico Histórico do Ativo
De Mai 2024 até Jun 2024
Benefytt Technologies (NASDAQ:BFYT)
Gráfico Histórico do Ativo
De Jun 2023 até Jun 2024