Full Press Release Details
Definitive Healthcare Reports Financial Results for Third Quarter Fiscal Year 2021
Third quarter revenue grew 43% year-over-year to $43.1 million
Framingham, MA (November 8, 2021) Definitive Healthcare Corp. ( Definitive Healthcare ) (Nasdaq: DH), an industry leader in healthcare
commercial intelligence, today announced financial results for the quarter ended September 30, 2021.
Third Quarter 2021 Financial and Other
Financial Highlights:
I am extremely pleased with our
performance in our first quarter as a public company, said Jason Krantz, founder and CEO of Definitive Healthcare. We saw strong revenue growth and continued to produce exceptional results. Our strength was broad-based across all of our
segments, and we continue to innovate to build the next generation of healthcare commercial intelligence solutions. I want to thank all of our employees who have worked so diligently to help our customers create new paths to commercial success in
the healthcare market.
Recent Business and Operating Highlights:
Based on information as of November 8, 2021, the Company is issuing the following financial guidance.
Fourth Quarter 2021:
Conference Call Information
Definitive Healthcare will host a conference call today, November 8, 2021, at 5:00 p.m. (Eastern Time) to discuss the Company s financial results and
current business outlook. To access the call, dial (877) 407-3982 (domestic) or (201) 493-6780 (international). The conference ID number is 13723517. Shortly after the
conclusion of the call, a replay of this conference call will be available through November 22, 2021 at (844) 512-2921 (domestic) or (412) 317-6671 (international).
The replay passcode is 13723517. A live audio webcast of the event will be available on the Definitive Healthcare s Investor Relations website at https://ir.definitivehc.com/.
About Definitive Healthcare
At Definitive Healthcare, our passion is to transform data, analytics and expertise into healthcare commercial intelligence. We help clients uncover the right
free trial at www.definitivehc.com.
Forward-Looking Statements
This press release may include forward-looking statements that reflect our current views with respect to future events and financial performance. Such
statements are provided under the safe harbor protection of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all statements that do not relate solely to historical or current facts, and can
generally be identified by words or phrases written in the future tense and/or preceded by words such as likely, should, may, anticipates, intends, plans, seeks,
believes, estimates, expects or similar words or variations thereof, or the negative thereof, references to future periods, or by the inclusion of forecasts or projections, but these terms are not the exclusive
means of identifying such statements. Examples of forward-looking statements include, but are not limited to, statements we make regarding our outlook, financial guidance, the market, industry and macroeconomic environment, our business, growth
strategies, product development efforts and future expenses, and statements reflecting our expectations about our ability to execute on our strategic plans, achieve future growth and profitability and achieve our financial goals.
Forward-looking statements in this press release are based on our current expectations and assumptions regarding our business, the economy and other future
conditions. Because forward-looking statements relate to the future, by their nature, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. As a result, our actual results may differ materially
from those contemplated by the forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include the following: an outbreak of disease, global or localized health
pandemic or epidemic, or the fear of such an event (such as the COVID-19 global pandemic), including the global economic uncertainty and measures taken in response; the short- and long-term effects of the COVID-19 global pandemic, including the pace of recovery or any future resurgence; our inability to generate substantially all of our revenue and cash flows from sales of subscriptions to our platform and any
decline in demand for our platform and the data we offer; the competitiveness of the market in which we operate and our ability to compete effectively; the failure to maintain and improve our platform, or develop new modules or insights for
healthcare commercial intelligence; the inability to obtain and maintain accurate, comprehensive or reliable data, which could result in reduced demand for our platform; the risk that our recent growth rates may not be indicative of our future
growth; the inability to achieve or sustain profitability in the future compared to historical levels as we increase investments in our business; the loss of our access to our data providers, which could negatively impact our platform; the failure
to respond to advances in healthcare commercial intelligence; an inability to attract new customers and expand subscriptions of current customers; the risk of cyber-attacks and security vulnerabilities; and if our security measures are breached or
unauthorized access to data is otherwise obtained, our platform may be perceived as not being secure, customers may reduce the use of or stop using our platform, and we may incur significant liabilities.
For additional discussion of factors that could impact our operational and financial results, refer to our final prospectus filed with the U.S. Securities
and Exchange Commission ( SEC ) on September 16, 2021, our Quarterly Report on Form 10-Q for the three months ended September 30, 2021 that will be filed following this earnings release,
and our subsequent SEC filings, which are or will be available on the Investor Relations page of our website at ir.definitivehc.com and on the SEC website at www.sec.gov.
Additional factors or events that could cause our actual performance to differ from these forward-looking
statements may emerge from time to time, and it is not possible for us to predict all of them. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, our actual financial condition, results
of operations, future performance and business may vary in material respects from the performance projected in these forward-looking statements.
Any forward-looking statement made by us speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking
statement, whether as a result of new information, future developments or otherwise, except as may be required by law.
Definitive Healthcare intends to use its website as a distribution channel of material company information. Financial and other important information
regarding the Company is routinely posted on and accessible through the Company s website at [https://www.definitivehc.com/]. Accordingly, you should monitor the investor relations portion of our website at [https://ir.definitivehc.com/] in
addition to following our press releases, SEC filings, and public conference calls and webcasts. In addition, you may automatically receive email alerts and other information about the Company when you enroll your email address by visiting the
Email Alerts section of our investor relations page at [https://ir.definitivehc.com/].
Basis of Presentation
A Reconciliation of GAAP to Non-GAAP results has been provided in the financial statement tables included at the end
of this press release. An explanation of these measures is also included below under the heading Non-GAAP Financial Measures.
Non-GAAP Financial Measures
We have presented supplemental non-GAAP financial measures as part of this earnings release. We
believe that these supplemental non-GAAP financial measures are useful to investors because they allow for an evaluation of the company with a focus on the performance of its core operations, including more
meaningful comparisons of financial results to historical periods and to the financial results of peer and competitor companies.
We refer in this earnings release to Unlevered Free Cash Flow, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Gross Profit, Adjusted
Gross Margin, Adjusted Operating Income and Adjusted Net Income as non-GAAP financial measures. These non-GAAP financial measures are not prepared in accordance with
generally accepted accounting principles in the U.S., ( GAAP ). These are supplemental financial measures of our performance and should not be considered substitutes for net (loss) income, gross profit or any other measure derived in
accordance with GAAP.
We define Unlevered Free Cash Flow as net cash provided from operating activities less purchases of property
and equipment and other assets, plus cash interest expense, cash payments related to transaction related expenses and cash payments related to other non-recurring items. Unlevered Free Cash Flow does not
represent residual cash flow available for discretionary expenditures since, among other things, we have mandatory debt service requirements.
We define EBITDA as earnings before debt-related costs, including interest expense, net and loss on extinguishment of debt and depreciation
and amortization. Adjusted EBITDA is defined as EBITDA adjusted to exclude certain items of a significant or unusual nature, including equity-based compensation, transaction expenses and other non-recurring
expenses. Adjusted EBITDA Margin is determined by calculating the percentage Adjusted EBITDA is of revenue. Adjusted EBITDA and Adjusted EBITDA Margin are key metrics used by management and our board of directors to assess the profitability of our
operations. We believe that Adjusted EBITDA and Adjusted EBITDA Margin provide useful measures to investors to assess our operating performance because these metrics eliminate non-recurring and unusual items
and non-cash expenses, which we do not consider indicative of ongoing operational performance. We believe that these metrics are helpful to investors in measuring the profitability of our operations on a
We define Adjusted Gross Profit as revenue less cost of revenue (excluding acquisition-related depreciation
and amortization and equity compensation costs) and Adjusted Gross Margin means Adjusted Gross Profit as a percentage of revenue. Adjusted Gross Profit differs from gross profit, in that gross profit includes acquisition-related depreciation and
amortization expense and equity compensation costs. Adjusted Gross Profit and Adjusted Gross Margin are key metrics used by management and our board of directors to assess our operations. We exclude acquisition-related depreciation and amortization
expenses as they have no direct correlation to the cost of operating our business on an ongoing basis. A small quantity of equity-based compensation is included in cost of revenue in accordance with GAAP but is excluded from our Adjusted Gross
Profit calculations due to its non-cash nature.
We define Adjusted Operating Income as
income (loss) from operations plus acquisition related amortization, equity-based compensation, transaction expenses and other non-recurring expenses.
We define Adjusted Net Income as Adjusted Operating Income less interest expense, net,
foreign currency loss (gain) and including the incremental tax effects of adjustments to arrive at Adjusted Operating Income. We define Adjusted Net Income Per Share as Adjusted Net Income divided by diluted weighted average outstanding shares.
Our use of these non-GAAP terms may vary from the use of similar terms by other companies
in our industry and accordingly may not be comparable to similarly titled measures used by other companies and are not measures of performance calculated in accordance with GAAP. Our presentation of these
non-GAAP financial measures are intended as supplemental measures of our performance that are not required by, or presented in accordance with, GAAP. These non-GAAP
financial measures should not be considered as alternatives to (loss) income from operations, net (loss) income, gross profit, earnings per share or any other performance measures derived in accordance with GAAP, or as measures of operating cash
We do not provide a quantitative reconciliation of the forward-looking
non-GAAP financial measures included in this press release to the most directly comparable GAAP measures due to the high variability and difficulty to predict certain items excluded from these non-GAAP financial measures; in particular, the effects of stock-based compensation expense, taxes and amounts under the exchange tax receivable agreement, deferred tax assets and deferred tax liabilities, and
restructuring and transaction expenses. We expect the variability of these excluded items may have a significant, and potentially unpredictable, impact on our future GAAP financial results.
In evaluating our non-GAAP financial measures, you should be aware that in the future we may incur
expenses similar to those eliminated in these presentations.
ICR for Definitive Healthcare
Definitive Healthcare Corp.
Condensed Consolidated Balance Sheets
(amounts in thousands, except number of shares)
| September 30, 2021 | December 31, 2020 | |||||||
| (unaudited) | ||||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | 189,752 | 24,774 | ||||||
| Accounts receivable, net | 27,886 | 33,108 | ||||||
| Prepaid expenses and other current assets | 3,642 | 3,016 | ||||||
| Current portion of deferred contract costs | 5,359 | 2,947 | ||||||
| Total current assets | 226,639 | 63,845 | ||||||
| Property and equipment, net | 4,697 | 3,248 | ||||||
| Other assets | 747 | 472 | ||||||
| Deferred contract costs, net of current portion | 9,388 | 5,952 | ||||||
| Deferred tax asset | 161 | 161 | ||||||
| Intangible assets, net | 366,723 | 410,237 | ||||||
| Goodwill | 1,261,444 | 1,261,444 | ||||||
| Total assets | $ | 1,869,799 | $ | 1,745,359 | ||||
| Liabilities and Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | 7,055 | 5,662 | ||||||
| Accrued expenses and other current liabilities | 19,296 | 17,321 | ||||||
| Current portion of deferred revenue | 69,811 | 61,060 | ||||||
| Current portion of term loan | 6,875 | 4,680 | ||||||
| Total current liabilities | 103,037 | 88,723 | ||||||
| Long term liabilities: | ||||||||
| Deferred revenue | 368 | 140 | ||||||
| Tax receivable agreements liability | 146,106 | |||||||
| Term loan, net of current portion | 265,388 | 457,197 | ||||||
| Deferred tax liabilities | 71,341 | |||||||
| Other long-term liabilities | 475 | 3,736 | ||||||
| Total liabilities | 586,715 | 549,796 | ||||||
| Commitments and Contingencies | ||||||||
| Equity: | ||||||||
| Members equity | 1,195,694 | |||||||
| Class A Common Stock, par value $0.001, 600,000,000 shares authorized, 88,263,333 shares issued and outstanding at September 30, 2021 | 88 | |||||||
| Class B Common Stock, no par value, 65,000,000 shares authorized, 60,020,525 shares issued and 57,220,661 outstanding at September 30, 2021 | ||||||||
| Additional paid-in capital | 700,773 | |||||||
| Accumulated other comprehensive income (loss) | 24 | (131 | ) | |||||
| Accumulated deficit | (7,978 | ) | ||||||
| Noncontrolling interests | 590,177 | |||||||
| Total equity | 1,283,084 | 1,195,563 | ||||||
| Total liabilities and equity | $ | 1,869,799 | $ | 1,745,359 |
Definitive Healthcare Corp.
Condensed Consolidated Statements of Operations
(amounts in thousands, except share amounts and per share data; unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Revenue | $ | 43,084 | $ | 30,073 | $ | 119,841 | $ | 84,659 | ||||||||
| Cost of revenue: | ||||||||||||||||
| Cost of revenue exclusive of amortization shown below (1) | 5,129 | 2,619 | 13,895 | 7,876 | ||||||||||||
| Amortization | 5,356 | 4,794 | 15,896 | 14,278 | ||||||||||||
| Gross profit | 32,599 | 22,660 | 90,050 | 62,505 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Sales and marketing (1) | 14,376 | 8,292 | 39,003 | 23,542 | ||||||||||||
| Product development (1) | 4,746 | 2,618 | 12,817 | 7,566 | ||||||||||||
| General and administrative (1) | 7,880 | 2,538 | 18,891 | 8,105 | ||||||||||||
| Depreciation and amortization | 9,760 | 10,112 | 28,814 | 30,037 | ||||||||||||
| Transaction expenses | (137 | ) | 40 | 3,332 | 748 | |||||||||||
| Total operating expenses | 36,625 | 23,600 | 102,857 | 69,998 | ||||||||||||
| Loss from operations | (4,026 | ) | (940 | ) | (12,807 | ) | (7,493 | ) | ||||||||
| Other expense, net: | ||||||||||||||||
| Foreign currency transaction (loss) gain | 119 | 143 | ||||||||||||||
| Interest expense, net | (7,186 | ) | (9,022 | ) | (23,956 | ) | (27,802 | ) | ||||||||
| Loss on extinguishment of debt | (9,873 | ) | (9,873 | ) | ||||||||||||
| Total other expense, net | (16,940 | ) | (9,022 | ) | (33,686 | ) | (27,802 | ) | ||||||||
| Net loss | (20,966 | ) | (9,962 | ) | (46,493 | ) | (35,295 | ) | ||||||||
| Less: Net loss attributable to Definitive OpCo prior to the Reorganization Transactions | (7,816 | ) | (9,962 | ) | (33,343 | ) | (35,295 | ) | ||||||||
| Less: Net loss attributable to noncontrolling interests | (5,172 | ) | (5,172 | ) | ||||||||||||
| Net loss attributable to Definitive Healthcare Corp. | $ | (7,978 | ) | $ | $ | (7,978 | ) | $ | ||||||||
| Net loss per share of Class A Common Stock: | ||||||||||||||||
| Basic and diluted | $ | (0.09 | ) | N/A | $ | (0.09 | ) | N/A | ||||||||
| Weighted average common stock outstanding: | ||||||||||||||||
| Basic and diluted | 88,263,333 | N/A | 88,263,333 | N/A | ||||||||||||
| (1) Amounts include equity-based compensation expense as follows: | ||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Cost of revenue | $ | 48 | $ | 16 | $ | 79 | $ | 46 | ||||||||
| Sales and marketing | 326 | 132 | 567 | 380 | ||||||||||||
| Product development | 187 | 93 | 341 | 267 | ||||||||||||
| General and administrative | 1,756 | 217 | 3,351 | 637 | ||||||||||||
| Total equity-based compensation expense | $ | 2,317 | $ | 458 | $ | 4,338 | $ | 1,330 |
Definitive Healthcare Corp.
Condensed Consolidated Statements of Cash Flows
(amounts in thousands; unaudited)