BNFT - Benefitfocus Announces First Quarter 2019 Financial Results

May, 01 2019 04:05 PM Benefitfocus Inc.

CHARLESTON, S.C., May 01, 2019 (GLOBE NEWSWIRE) -- Benefitfocus, Inc. (NASDAQ: BNFT), a leading cloud-based benefits management platform and services provider, today announced its first quarter 2019 financial results. Highlights from the quarter include:

Net benefit eligible lives grew to 15.5 million at the end of the first quarter, up from 13.3 million at the end of the prior quarter and 11.8 million at the end of the prior year period.
BenefitsPlace™ expanded to include personal property insurance products to complement the company’s health, wealth and lifestyle categories, premiering the benefits industry’s first integrated personal auto and renters’ insurance offerings.
BenefitsPlace welcomed 9 new suppliers, including MassMutual and three major personal auto insurers: MetLife Auto & Home, Liberty Mutual and Bristol West Insurance, a member of the Farmers Insurance Group of Companies.
Our One Place user conference had the largest attendance to date, growing 40% from last year’s event.
BenefitSAIGE™ launched, a Superior Artificial Intelligence Guidance Engine that is fully deployed across our platform.

“Benefitfocus delivered strong first quarter results, which marks our sixth consecutive quarter of meeting or exceeding our expectations,” said Ray August, President and Chief Executive Officer of Benefitfocus. “Our selling season is off to a solid start and we are well positioned to accelerate growth in the second half of 2019.”

August added, “We are making meaningful progress towards achieving our vision of being the essential benefits platform that connects buyers and sellers. Our strategy is resonating, our market position is strengthening and our ecosystem is flourishing.”

First Quarter 2019 Financial Highlights

Revenue

Total revenue was $68.3 million, an increase of 10% compared to the first quarter of 2018.
Software services revenue was $53.0 million, an increase of 10% compared to the first quarter of 2018.
Professional services revenue was $15.3 million, an increase of 8% compared to the first quarter of 2018.

Net Loss

GAAP net loss was ($14.2) million, compared to ($13.8) million in the first quarter of 2018. GAAP net loss per share was ($0.44), based on 32.1 million basic and diluted weighted average common shares outstanding, compared to ($0.44) for the first quarter of 2018, based on 31.3 million basic and diluted weighted average common shares outstanding.

Non-GAAP Net Loss and Adjusted EBITDA

Non-GAAP net loss was ($6.7) million, compared to ($8.0) million in the first quarter of 2018. Non-GAAP net loss per share was ($0.21), based on 32.1 million basic and diluted weighted average common shares outstanding, compared to ($0.26) for the first quarter of 2018, based on 31.3 million basic and diluted weighted average common shares outstanding.
Adjusted EBITDA was $3.6 million, compared to ($1.0) million in the first quarter of 2018.

See important disclosures about non-GAAP measures, and a reconciliation of them to GAAP, below.

Balance Sheet

Cash and cash equivalents at March 31, 2019 totaled $144.2 million, compared to $190.9 million at the end of the fourth quarter of 2018.

Business Outlook

Based on information available as of May 1, 2019, Benefitfocus is providing guidance for the second quarter and full year 2019 as indicated below.

Second Quarter 2019:

Total revenue is expected to be in the range of $66.5 million to $68.5 million.
Non-GAAP net loss is expected to be in the range of ($15.0) million to ($13.0) million, or ($0.46) to ($0.40) per share, based on 32.6 million basic and diluted weighted average common shares outstanding.
Adjusted EBITDA is expected to be in the range of ($5.0) million to ($3.0) million.

Full Year 2019:

Total revenue is expected to be in the range of $301.0 million to $309.0 million.
Non-GAAP net loss is expected to be in the range of ($27.0) million to ($22.0) million, or ($0.83) to ($0.68) per share, based on 32.5 million basic and diluted weighted average common shares outstanding.
Adjusted EBITDA is expected to be in the range of $15.0 million to $20.0 million.

Management has not reconciled forward-looking non-GAAP net loss and Adjusted EBITDA to their most directly comparable GAAP measure of GAAP net loss. Management is unable to predict with reasonable certainty the ultimate outcome of the various necessary GAAP components of such reconciliations, including, for example, those related to compensation, acquisition transactions and integration, or others that may arise during the year, without unreasonable effort. These components and other factors could materially impact the amount of the future directly comparable GAAP measures, which may differ significantly from their non-GAAP counterparts. See below for additional important disclosures regarding our non-GAAP financial measures.

Conference Call Details:

In conjunction with this announcement, Benefitfocus will host a conference call today, May 1, 2019, at 5:00 p.m. Eastern Time to discuss the company’s financial results. To access this call, dial (877) 407-9208 (domestic) or (201) 493-6784 (international). A live webcast, as well as the replay, of the conference call will be available on the Investor Relations page of the company’s website at http://investor.benefitfocus.com/. After the conference call, a replay will be available until May 8, 2019, and can be accessed by dialing (844) 512-2921 (domestic) or (412) 317-6671 (international) with passcode 13689938.

About Benefitfocus
Benefitfocus (NASDAQ: BNFT) unifies the entire U.S. benefits industry on a single technology platform to protect consumers' health, wealth and lifestyle. Our powerful cloud-based software, data-driven insights and thoughtfully-designed services, enable employers, insurance brokers, carriers and suppliers to simplify the complexity of benefits administration and deliver a world-class benefits experience. Learn more at www.benefitfocus.com, LinkedIn and Twitter.

Non-GAAP Financial Measures

The company uses certain non-GAAP financial measures in this release, including non-GAAP gross profit, operating loss, net loss, net loss per common share, and adjusted EBITDA. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance or financial position that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP.

Non-GAAP gross profit, operating loss, net loss and net loss per common share exclude stock-based compensation expenses, amortization of acquisition-related intangible assets, transaction and acquisition-related costs expensed, if any, and costs not core to our business, if any. We define adjusted EBITDA as net loss before net interest, taxes, and depreciation and amortization expense, adjusted to eliminate stock-based compensation expense, expense related to the impairment of goodwill and intangible assets, transaction and acquisition-related costs expensed, and costs not core to our business. Please note that other companies might define their non-GAAP financial measures differently than we do.

Management presents these non-GAAP financial measures in this release because it considers them to be important supplemental measures of performance. Management uses these non-GAAP financial measures for planning purposes, including analysis of the company's performance against prior periods, the preparation of operating budgets and to determine appropriate levels of operating and capital investments. Management believes that these non-GAAP financial measures provide additional insight for analysts and investors in evaluating the company's financial and operational performance. Management also intends to provide these non-GAAP financial measures as part of the company’s future earnings discussions and, therefore, their inclusion should provide consistency in the company’s financial reporting.

Non-GAAP financial measures have limitations as an analytical tool. Investors are encouraged to review the reconciliation of the non-GAAP measures to their most directly comparable GAAP measures provided in this release, including in the accompanying tables.

Safe Harbor Statement

Except for historical information, all of the statements, expectations, and assumptions contained in this press release are forward-looking statements. Actual results might differ materially from those explicit or implicit in the forward-looking statements. Important factors that could cause actual results to differ materially include: our continuing losses and need to achieve GAAP profitability; fluctuations in our financial results; the immature and volatile market for our products and services; risks related to changing healthcare and other applicable regulations; risks associated with acquisitions; our ability to maintain our culture, recruit and retain qualified personnel and effectively expand our sales force; cyber-security risks; the need to innovate and provide useful products and services; our ability to compete effectively; privacy, security and other risks associated with our business; and the other risk factors set forth from time to time in our SEC filings, copies of which are available free of charge within the Investor Relations section of the Benefitfocus website at http://investor.benefitfocus.com/sec-filings or upon request from our Investor Relations Department. Benefitfocus assumes no obligation and does not intend to update these forward-looking statements, except as required by law.

Source: Benefitfocus, Inc.

Benefitfocus, Inc.
843-284-1052 ext. 3527
pr@benefitfocus.com

Investor Relations:
Michael Bauer
843-284-1052 ext. 6654
michael.bauer@benefitfocus.com

Benefitfocus, Inc. Unaudited Consolidated Statements of Operations and Comprehensive Loss (in thousands, except share and per share data)


Three Months Ended



March 31,



2019


2018

Revenue

$
68,299


$
62,363

Cost of revenue ^(1)(2)(3)


32,852



31,403

Gross profit


35,447



30,960

Operating expenses:^(1)(2)(3)








Sales and marketing


19,619



19,917

Research and development


13,090



12,023

General and administrative


11,796



9,693

Total operating expenses


44,505



41,633

Loss from operations


(9,058
)


(10,673
)
Other income (expense):








Interest income


660



58

Interest expense on building lease financing obligations (prior to adoption of ASC 842)


–



(1,866
)
Interest expense


(5,814
)


(1,317
)
Other expense


9



–

Total other expense, net


(5,145
)


(3,125
)
Loss before income taxes


(14,203
)


(13,798
)
Income tax expense


6



4

Net loss

$
(14,209
)

$
(13,802
)
Comprehensive loss

$
(14,209
)

$
(13,802
)









Net loss per common share:








Basic and diluted

$
(0.44
)

$
(0.44
)
Weighted-average common shares outstanding:








Basic and diluted


32,056,934



31,333,348



















(1) Stock-based compensation included in above line items:








Cost of revenue

$
899


$
711

Sales and marketing


1,686



954

Research and development


1,192



768

General and administrative


2,590



1,892










(2) Amortization of acquired intangible assets included in above line items:








Cost of revenue

$
99


$
34

Sales and marketing


36



14

Research and development


40



12

General and administrative


15



4










(3) Transaction and acquisition-related costs expensed included in above line items:








General and administrative

$
642


$
–

Benefitfocus, Inc. Unaudited Consolidated Balance Sheets (in thousands, except share and per share data)



As of March 31,


As of December 31,








2019


2018

Assets








Current assets:








Cash and cash equivalents

$
144,158


$
190,928

Accounts receivable, net


28,247



21,077

Contract, prepaid and other current assets


19,039



16,667

Total current assets


191,444



228,672

Property and equipment, net


27,324



69,965

Financing lease right-of-use assets


80,867



–

Operating lease right-of-use assets


2,172



–

Intangible assets, net


14,411



–

Goodwill


12,304



1,634

Deferred contract costs and other non-current assets


12,507



13,668

Total assets

$
341,029


$
313,939

Liabilities and stockholders' deficit








Current liabilities:








Accounts payable

$
4,755


$
8,687

Accrued expenses


10,310



11,461

Accrued compensation and benefits


13,989



17,269

Deferred revenue, current portion


36,326



36,540

Lease liabilities and financing obligations, current portion


6,771



4,486

Total current liabilities


72,151



78,443

Deferred revenue, net of current portion


10,569



9,323

Convertible senior notes


179,442



176,692

Lease liabilities and financing obligations, net current portion


89,095



57,116

Other non-current liabilities


162



2,575

Total liabilities


351,419



324,149

Commitments and contingencies








Stockholders' deficit:








Preferred stock, par value $0.001, 5,000,000 shares authorized,








no shares issued and outstanding at March 31, 2019








and December 31, 2018


–



–

Common stock, par value $0.001, 50,000,000 shares authorized,








32,070,628 and 32,017,773 shares issued and outstanding








at March 31, 2019 and December 31, 2018, respectively


32



32

Additional paid-in capital


409,973



403,631

Accumulated deficit


(420,395
)


(413,873
)
Total stockholders' deficit


(10,390
)


(10,210
)
Total liabilities and stockholders' deficit

$
341,029


$
313,939

Benefitfocus, Inc. Unaudited Consolidated Statements of Cash Flows (in thousands)



Three Months Ended



March 31,



2019


2018

Cash flows from operating activities








Net loss

$
(14,209
)

$
(13,802
)
Adjustments to reconcile net loss to net cash and cash








equivalents used in operating activities:








Depreciation and amortization


5,335



3,930

Stock-based compensation expense


6,367



4,325

Accretion of interest on convertible senior notes


2,749



–

Interest accrual on financing obligations (prior to adoption of ASC 842)


–



1,879

Rent expense in excess of payments


9



–

Provision for doubtful accounts


265



359

Changes in operating assets and liabilities:








Accounts receivable, net


(6,514
)


54

Contract, prepaid and other current assets


(2,495
)


881

Deferred costs and other non-current assets


1,568



1,166

Accounts payable and accrued expenses


(4,867
)


2,722

Accrued compensation and benefits


(3,580
)


(2,962
)
Deferred revenue


(5,089
)


(2,127
)
Other non-current liabilities


(23
)


(108
)
Net cash and cash equivalents used in operating activities


(20,484
)


(3,683
)
Cash flows from investing activities








Business combination, net of cash acquired


(21,033
)


–

Purchases of property and equipment


(2,955
)


(1,641
)
Net cash and cash equivalents used in investing activities


(23,988
)


(1,641
)
Cash flows from financing activities








Draws on revolving line of credit


–



31,000

Payments on revolving line of credit


–



(24,000
)
Payments of debt issuance costs


(357
)


–

Proceeds from exercises of stock options and ESPP


89



222

Payments on capital lease and financing obligations


(655
)


(2,448
)
Payments of principal on financing lease obligations


(1,375
)


–

Net cash and cash equivalents (used in) provided by financing activities


(2,298
)


4,774

Net decrease in cash and cash equivalents


(46,770
)


(550
)
Cash and cash equivalents, beginning of period


190,928



55,335

Cash and cash equivalents, end of period

$
144,158


$
54,785










Supplemental disclosure of non-cash investing and financing activities








Property and equipment purchases in accounts payable and accrued expenses

$
382


$
452

Property and equipment purchased with financing and capital lease obligations

$
—


$
713

Post contract support purchased with financing obligations

$
—


$
275

Benefitfocus, Inc. Unaudited Reconciliation of GAAP to Non-GAAP Measures (in thousands, except share and per share data)



Three Months Ended

March 31,


2019


2018

Reconciliation from Gross Profit to Non-GAAP Gross Profit:








Gross profit

$
35,447


$
30,960

Amortization of acquired intangible assets


99



34

Stock-based compensation expense


899



711

Total net adjustments


998



745

Non-GAAP gross profit

$
36,445


$
31,705










Reconciliation from Operating Loss to Non-GAAP Operating Loss:








Operating loss

$
(9,058
)

$
(10,673
)
Amortization of acquired intangible assets


190



64

Stock-based compensation expense


6,367



4,325

Transaction and acquisition-related costs expensed


642



—

Costs not core to our business


320



1,371

Total net adjustments


7,519



5,760

Non-GAAP operating loss

$
(1,539
)

$
(4,913
)









Reconciliation from Net Loss to Adjusted EBITDA:








Net loss

$
(14,209
)

$
(13,802
)
Depreciation


3,967



2,977

Amortization of software development costs


1,178



889

Amortization of acquired intangible assets


190



64

Interest income


(660
)


(58
)
Interest expense on building lease financing obligations (prior to the adoption of ASC 842)


—



1,866

Interest expense


5,814



1,317

Income tax expense


6



4

Stock-based compensation expense


6,367



4,325

Transaction and acquisition-related costs expensed


642



—

Costs not core to our business


320



1,371

Total net adjustments


17,824



12,755

Adjusted EBITDA

$
3,615


$
(1,047
)









Reconciliation from Net Loss to Non-GAAP Net Loss:








Net loss

$
(14,209
)

$
(13,802
)
Amortization of acquired intangible assets


190



64

Stock-based compensation expense


6,367



4,325

Transaction and acquisition-related costs expensed


642



—

Costs not core to our business


320



1,371

Total net adjustments


7,519



5,760

Non-GAAP net loss

$
(6,690
)

$
(8,042
)









Calculation of Non-GAAP Earnings Per Share:








Non-GAAP net loss

$
(6,690
)

$
(8,042
)









Weighted average shares outstanding - basic and diluted


32,056,934



31,333,348

Shares used in computing non-GAAP net loss per share - basic and diluted


32,056,934



31,333,348

Non-GAAP net loss per common share - basic and diluted

$
(0.21
)

$
(0.26
)

Company Name:	Benefitfocus Inc.
Stock Symbol:	BNFT
Market:	NASDAQ
Website:	benefitfocus.com