Greenway Reports Fiscal 2013 Third-Quarter Results

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Greenway Reports Fiscal 2013 Third-Quarter Results

CARROLLTON, Ga.--(BUSINESS WIRE)-- Greenway Medical Technologies, Inc. (NYS: GWAY) , which delivers innovative software and business service solutions for healthcare care providers through its PrimeSUITE® platform, today announced financial results for the three months and nine months ended March 31, 2013.

"Our efforts to shift the adoption of our PrimeSUITE platform from license sales to cloud-based services has accelerated the shift in our revenue streams to recurring sources during the fiscal 2013 third quarter," said Tee Green, president and chief executive officer of Greenway®. "This has reduced our revenue from one-time systems sales and training, but moved us faster than anticipated to a business model that is recurring in nature and more predictable than we have experienced with non-recurring revenue. We're managing through this transition in our business, continuing to add providers to our platform, growing our backlog, and increasing the percentage of ourbacklog and revenue that is comprised of revenue from recurring sources."


Operating Results

Greenway generated revenue of $33.8 million for the three months ended March 31, 2013, a 3% increase from $32.9 million for the comparable prior-year period. Revenue from recurring sources grew by 28% from the prior-year period, and comprised 56.6% of total revenue, up from 45.5% of revenue for the fiscal 2012 third quarter. During the fiscal 2013 third quarter compared to the prior-year period, revenue from the company's cloud-based PrimeSUITE subscription offering increased by 61%, PrimePATIENT® revenue grew by 63%, and PrimeEXCHANGE® interoperability engine revenue grew by 38%, and revenue from the Company's clinically driven revenue cycle management services grew by 49%. This was offset by 2% growth of System Sales and a decline in Training and Consulting revenue related to fewer deployments than in the prior-year period, as well as deferred implementations at several large enterprise sites. Through the first nine months of fiscal 2013, Greenway's revenue has grown by 13%, to $99.3 million, compared with $87.6 million through nine months ended March 31, 2012.

Greenway generated gross profit of $16.9 million for the three months ended March 31, 2013, which compares with gross profit of $18.0 million for the prior-year period. Gross profit margin for the fiscal 2013 third quarter was 49.8%. The Company's overall gross profit and gross margin is being impacted by the shift in the Company's revenue sources, specifically fewer one-time Systems Sales as well as lower Training and Consulting revenue associated with one-time System Sales, that is being replaced by revenue growth and gross margin expansion of revenue from recurring sources. Gross margin for recurring revenue sources grew to 55.8% for the three months ended March 31, 2013, from 53.7% for the prior-year period.

Through nine months of fiscal 2013 ended March 31, 2013, Greenway has earned gross profit of $52.1 million, an increase of 13% from $46.3 million through nine months of fiscal 2012. Overall gross margin was 52.5% through nine months ended March 31, 2013, which compares with 52.8% through nine months of fiscal 2012.

Greenway reported a loss from operations of ($2.8 million) for the fiscal 2013 third quarter, which compares with operating income of $2.2 million for the prior-year period. Through nine months ended March 31, 2013, Greenway has reported an operating loss of ($4.8 million), which compares with operating income of $1.3 million for the prior-year period.

The Company had a net loss of ($608,000), or (two cents) per share, based on 29.7 million shares outstanding for the three months ended March 31, 2013. This compares with net income of $1.4 million, or six cents per share based on a weighted average 24.1 million shares outstanding for the fiscal 2012 third quarter.

As of March 31, 2013, Greenway had $13.2 million in cash and short-term investments and no outstanding indebtedness.

Non-GAAP Measures

Greenway's non-GAAP adjusted EBITDA, which is defined as earnings before interest, taxes, depreciation and amortization, acquisition-related transaction costs and stock-based compensation, was $588,000, or 2% of revenue, for the three months ended March 31, 2013, down from $4.0 million, or 12% of revenue, from the prior-year period. Through nine months ended March 31, 2013, Greenway's adjusted EBITDA was $4.5 million, or 5% of revenue, which compares with $6.2 million, or 7% of revenue, through nine months ended March 31, 2012.

Adjusted, or non-GAAP net income, which is defined as net income before stock-based compensation, acquisition-related transaction costs and amortization of purchased intangibles and any estimated tax impact related to these items, was $409,000 or one cent per diluted share, for the three months ended March 31, 2013. This compares with non-GAAP net income of $1.8 million, or eight cents per diluted share for the third quarter of fiscal 2013. For the nine months ended March 31, 2013, Greenway's non-GAAP net income was $1.3 million or four cents per share, which compares with adjusted net income of $2.3 million, or 14 cents per share, through nine months ended March 31, 2012.

The GAAP financial measures most directly comparable to each non-GAAP financial measure used, and a reconciliation of the differences between each non-GAAP financial measure and the comparable GAAP financial measure, are included in this press release following the condensed financial statements.

Conference Call

Greenway will host a conference call today, Monday, May 6, 2013, at 5 p.m. Eastern to discuss the Company's earnings and other information. The call can be accessed by dialing (866) 700-6067 or (617) 213-8834 for international calls. The participant code is 65582046. For listen-only mode, participants should go to the Investors section of www.greenwaymedical.com prior to the call to register and download the necessary audio software.

An audio replay will be posted following the call and will be available from approximately 7 p.m. Eastern time on May 6. The replay will be accessible through a link on www.greenwaymedical.com/investors.

About Greenway and PrimeSUITE

Greenway Medical Technologies, Inc. (NYS: GWAY) delivers smarter solutions for smarter healthcare. PrimeSUITE® — Greenway's certified and fully integrated electronic health record, practice management and interoperability solution — helps improve care coordination, quality and cost-efficiency as part of a smarter, sustainable healthcare system. Thousands of ambulatory care providers across more than 30 specialties and sub-specialties use cloud-based, remote-hosted or on-premise Greenway® solutions in healthcare enterprises, physician practices and clinics nationwide. For details, see greenwaymedical.com,Twitter, Facebook or YouTube.

Forward-Looking Statements

In addition to historical information, this press release includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include both implied and express statements regarding the Company's financial condition, growth strategy, business development efforts, service offerings, and service delivery models. Such forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to differ materially from the historical results or from any results expressed or implied by such forward-looking statements. Risks that could affect the Company's future performance include, but are not limited to, our ability to adapt to evolving technology and industry standards; our ability to implement our growth strategy; our ability to retain management and other qualified personnel; failure to prevent disruptions in service or damage to our third-party providers' data centers; failure to avoid liability for the use of content we provide; accelerated transition to a subscription pricing model, which would reduce our near-term revenues; regulation of the healthcare information technology industry; our ability to ensure our solutions meet industry and government standards; failure to maintain adequate security measures for our customers' confidential information and personal identifiable information and their patients' protected health information; our ability to obtain new provider customers; failure of the HITECH Act and other incentive programs to be fully implemented or funded by the government; our ability to implement our strategic relationships as currently intended; failure to establish, protect or enforce our intellectual property; restrictions in our credit facility and future indebtedness. Further information concerning these and other factors is included in the Company's filings with the Securities and Exchange Commission, including the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2012. The Company disclaims any obligation or duty to update or modify these forward-looking statements.

Greenway, the Greenway logo, PrimeSUITE, PrimePATIENT and PrimeEXCHANGE are registered trademarks and the phrase "smarter solutions for smarter healthcare" is a trademark of Greenway Medical Technologies, Inc. Other product or company names are the property of their respective owners.

Greenway Medical Technologies, Inc.
 
Condensed Balance Sheets — Unaudited
(In Thousands)
   
March 31,June 30,
20132012
Assets
Current assets:
Cash and cash equivalents$2,004$5,585
Short-term investments11,21229,350
Accounts receivable, net of a $751 and $720 allowance for doubtful accounts at March 31, 2013 and June 30, 2012, respectively25,63828,875
Inventory391281
Prepaids and other current assets2,1583,001
Deferred tax assets 2,127  1,699 
Total current assets43,53068,791
Property and equipment, net29,18720,340
Software development cost, net24,65717,156
Acquired intangibles, net1,911510
Deferred tax assets - noncurrent28,41525,846
Goodwill1,539440
Other assets 468  40 
Total assets$129,707 $133,123 
 
Liabilities and shareholders' equity
Current liabilities:
Accounts payable$8,683$12,436
Accrued liabilities7,7279,533
Deferred revenue 9,670  12,192 
Total current liabilities 26,080   34,161 
 
Obligation for purchased technology -  116 
Shareholders' equity:
Common stock33
Additional paid-in capital243,923237,558
Accumulated deficit (140,299) (138,715)
Total shareholders' equity 103,627  98,846 
Total liabilities and shareholders' equity$129,707 $133,123 
 

Greenway Medical Technologies, Inc.
 
Condensed Statements of Operations — Unaudited
(In Thousands except Per Share Data)
     
Three Months Ended March 31,Nine Months Ended March 31,
2013201220132012
Revenue:
System sales$10,430$10,271$30,103$26,125
Training and consulting services4,2437,64315,21320,547
Support services11,3758,74132,72623,508
Electronic data interchange and business services 7,775  6,210 21,276  17,458 
Total revenue 33,823  32,865 99,318  87,638 
Cost of revenue (Note 1):
System sales5,2212,55812,6437,166
Training and consulting services3,2815,35511,19514,347
Support services3,3402,6919,6547,620
Electronic data interchange and business services 5,130  4,226 13,723  12,201 
Total cost of revenue 16,972  14,830 47,215  41,334 
Gross profit 16,851  18,035 52,103  46,304 
Operating expenses (Note 1):
Sales, general and administrative15,08811,80243,16133,962
Research and development 4,555  4,021 13,767  11,029 
Total operating expenses 19,643  15,823 56,928  44,991 
Operating loss

 

( 2,792)2,212( 4,825)1,313
Interest income, net385031142
Other (expense) income, net ( 16) 65 ( 57) (22)
(Loss) income before (benefit) provision for income taxes( 2,770)2,327( 4,571)1,333
(Benefit) provision for income taxes ( 2,162) 948 ( 2,986) 628 
Net (loss) income( 608)1,379( 1,585)705
Preferred stock dividends and accretion -  - -  28,395 
(Loss) income available to common shareholders$( 608)$1,379$( 1,585)$29,100 
Per share data:
(Loss) income per share available to common shareholders:
Basic$(0.02)$0.06$(0.05)$1.89 
Diluted$(0.02)$0.06$(0.05)$0.04 
Weighted average number of common shares outstanding:
Basic 29,690  22,859 29,519  15,410 
Diluted 29,690  24,131 29,519  16,739 
 
 
Note 1 - Includes stock-based compensation in the following amounts:
Cost of revenue:
System sales$8$3$24$9
Training and consulting services4634141245
Software support services26157997
Electronic data interchange and business services 5  6 15  49 
Total cost of revenue 85  58 259  400 
Operating expenses:
Sales, general and administrative7912182,425775
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