Greenway Reports Fourth-Quarter and Fiscal 2013 Results

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Greenway Reports Fourth-Quarter and Fiscal 2013 Results

CARROLLTON, Ga.--(BUSINESS WIRE)-- Greenway Medical Technologies, Inc. (NYS: GWAY) , reported results from operations for the three months and year ended June 30, 2013, that reflect the ongoing shift in revenue from recurring sources as more providers adopt the Company's cloud-based subscription services and clinically driven revenue cycle management solutions. Greenway® delivers innovative software and business service solutions to healthcare providers through its PrimeSUITE® platform.

"Our results for the fourth quarter and full year reflect an organization that is successfully reducing its reliance on one-time sales and increasing revenue from more predictable recurring sources while introducing a platform that is gaining increased acceptance among those providers we serve," said Tee Green, president and chief executive officer of Greenway. "We are encouraged by the continued strong growth of revenue from recurring sources of 28% during our fiscal fourth quarter, when compared to the prior year, and the substantial improvement in overall revenue mix from predictable sources."


During the 2013 fiscal fourth quarter, Greenway added more than 790 providers to its PrimeSUITE platform, which compares with 425 providers added during the 2013 fiscal third quarter. The number of providers on the Company's clinically driven revenue cycle management platform grew by nearly 50% sequentially, from the 2013 third quarter to the 2013 fourth quarter, to more than 550.

Operating Results

Greenway generated quarterly revenue of $35.5 million for the three months ended June 30, 2013, which compares with $36.4 million for the prior-year period. For the year ended June 30, 2013, total revenue increased by 9% to $134.8 million from $124.0 million for the year-ago period.

Throughout fiscal 2013, Greenway's results from operations have been impacted by a shift toward a higher percentage of revenue derived from recurring services such as cloud-based subscription services as well as electronic data interchange and business services including the Company's rapidly growing clinically driven revenue cycle management solution.

During the 2013 fourth quarter, revenue from recurring sources grew by 28%, year over year, and comprised 57.6% of revenue for the period, up from 43.8% for the prior-year period. For all of 2013, revenue from recurring sources grew by 31%, year over year, and as a percent of revenue increased by 933 basis points to 55.2% from the prior year. Revenue from one-time systems sales and training and consulting services declined by 26% for the 2013 fourth quarter, and by 10% for the fiscal year, when compared to prior-year periods.

For the three months ended June 30, 2013, gross profit was $18.3 million and gross profit margin was 51.5%. These figures compare with gross profit of $21.8 million and gross margin of 60% for the three months ended June 30, 2012. Overall gross profit and gross margin for the 2013 fourth quarter declined from the prior year as a result of lower revenue and gross profit from one-time systems sales and training and consulting services offset by a 28% increase in gross profit from recurring items. For the year ended June 30, 2013, gross profit was $70.4 million, up 3% from $68.1 million for the prior-year period. Gross margin for fiscal year 2013 was 52.2%, which compares with 55.0% for the prior-year period.

Greenway reported a loss from operations of ($2.1 million) for the three months ended June 30, 2013, and ($6.9 million) for fiscal 2013. This compares to operating income of $3.5 million for the 2012 fourth quarter and $4.9 million for fiscal 2012.

For the fiscal 2013 fourth quarter and full year, Greenway had a net loss of ($3.5 million), or (12 cents) per share, and ($5.1 million) or (17 cents) per share, respectively. This compares with net income of $2.2 million for the three months ended June 30, 2012, or seven cents per diluted share for the fiscal 2012 fourth quarter and $2.9 million, or 11 cents per diluted share, for fiscal 2012.

As of June 30, 2013, the Company had $11.2 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 $2.2 million for the three months ended June 30, 2013, which compares with $5.9 million for the prior-year period. For fiscal 2013, non-GAAP adjusted EBITDA was $6.7 million, which compares with $12.1 million for fiscal 2012.

Adjusted, or non-GAAP net loss for the three months ended June 30, 2013, was ($2.4 million), or (eight cents) per diluted share, which compares with non-GAAP net income of $3.0 million, or 10 cents per diluted share for the fiscal 2012 fourth quarter. For fiscal 2013, Greenway's non-GAAP net loss was ($1.3 million), or (five cents) per share, which compares with $5.3 million or 21 cents per diluted share for fiscal 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.

Fiscal 2014 Outlook

Greenway Medical Technologies has introduced its financial outlook for fiscal 2014 that assumes a continuation in the shift in revenue to recurring sources, as well as increased adoption of the Company's clinically driven revenue cycle management platform by both new and existing customers. The following table summarizes the Company's outlook for fiscal 2013:

   

Range

Revenue  $142 million to $150 million
Gross Profit  $62.5 million to $68 million
Margin  44% to 45%
GAAP Operating (loss)  ($6.3) million to ($4.5) million
Net (loss)  ($6.3) million to ($5.0) million
GAAP (loss per share)  ($0.21) to ($0.17)
Adjusted EBITDA  $15.9 million to $17.7 million
Margin  11.2% to 11.8%
Non-GAAP Adjusted EPS  ($0.05) to ($0.01)
  

Conference Call

Greenway will host a conference call today, Monday, Aug. 19, 2013, at 5 p.m. Eastern time to discuss the Company's earnings and other information. The call can be accessed by dialing (866) 953-6859 or (617) 399-3483 for international calls. The participant code is 11961778. 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 on Aug. 19 through 11:59 p.m. Eastern on Aug 26. The replay will be accessible through a link on www.greenwaymedical.com/investors or by calling (888) 286-8010 or internationally (617) 801-6888. Replay code is 81927875.

About Greenway and PrimeSUITE

Greenway Medical Technologies (NYS: GWAY) delivers smarter information solutions that improve the financial performance of healthcare providers and enable them to deliver smarter care. Greenway PrimeSUITE® — the company's certified, single-database electronic health record, practice management and interoperability solution platform — is complemented by an expanding array of integrated business and data services, including clinically driven revenue cycle management (RCM). Thousands of care providers across primary care and more than 30 specialties and sub-specialties use cloud-based or on-premise Greenway® solutions to improve outcomes in healthcare enterprises, physician practices, retail and other ambulatory clinics, and alternate care venues 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; and 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 and PrimeSUITE 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 Consolidated Balance Sheets — Unaudited
(In Thousands)
   
June 30,
 2013  2012 
Assets
Current assets:
Cash and cash equivalents$3,184$5,585
Short-term investments8,04329,350
Accounts receivable, net of a $900 and $720 allowance for doubtful accounts in
2013 and 2012, respectively21,15128,875
Inventory284281
Prepaids and other current assets3,7723,001
Deferred tax assets 2,407  1,699 
Total current assets38,84168,791
Property and equipment, net28,41620,340
Acquired intangibles, net1,819510
Software development cost, net28,14217,156
Deferred tax assets - noncurrent26,90325,846
Goodwill1,540440
Other assets 468  40 
Total assets$126,129 $133,123 
 
Liabilities and shareholders' equity
Current liabilities:
Accounts payable$9,325$12,436
Accrued liabilities5,8469,533
Deferred revenue 9,323  12,192 
Total current liabilities 24,494   34,161 
 
Obligation for purchased technology -  116 
Shareholders' equity:
Common stock33
Additional paid-in capital245,412237,558
Accumulated deficit (143,780) (138,715)
Total shareholders' equity 101,635  98,846 
Total liabilities and shareholders' equity$126,129 $133,123 
 
 

Greenway Medical Technologies, Inc.
Condensed Consolidated Statements of Operations — Unaudited
(In Thousands except Per Share Data)
        
Three Months Ended June 30, Year Ended June 30,
 2013  2012  2013  2012 
Revenue:
System sales$10,872$13,176$40,975$39,300
Training and consulting services4,2077,26919,42027,816
Support services11,8279,63644,55333,143
Electronic data interchange and business services 8,620  6,295  29,896  23,754 
Total revenue 35,526  36,376  134,844  124,013 
Cost of revenue (Note 1):
System sales5,7773,09318,42010,259
Training and consulting services2,4874,53513,68218,881
Support services3,4382,94413,09210,564
Electronic data interchange and business services 5,542  3,997  19,265  16,197 
Total cost of revenue 17,244  14,569  64,459  55,901 
Gross profit 18,282  21,807  70,385  68,112 
Operating expenses (Note 1):
Sales, general and administrative15,17513,60358,33647,565
Research and development 5,192  4,666  18,959  15,696 
Total operating expenses 20,367  18,269  77,295  63,261 
Operating (loss) Income

 

(2,085

)3,538

(6,910

)4,851
Interest income (expense), net

(2

)1230954
Other expense, net 2  

(18

) 

(55

) 

(40

)
(Loss) income before benefit for income taxes

(2,085

)3,532

(6,656

)4,865
(Benefit) provision for income taxes 1,395  1,327  ( 1,591) 1,955 
Net (loss) income

(3,480

)2,205

(5,065

)2,910
Preferred stock dividends and accretion -  -  -  28,395 
(Loss) income available to common shareholders$

(3,480

)$2,205 $

(5,065

)$31,305 
Per share data:
(Loss) income per share available to common shareholders:
Basic$(0.12)$0.08 $(0.17)$1.66 
Diluted$(0.12)$0.07 $(0.17)$0.11 
Weighted average number of common shares outstanding:
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