Greenway Reports Fourth-Quarter and Fiscal 2013 Results

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 investments

8,043

29,350

Accounts receivable, net of a $900 and $720 allowance for doubtful accounts in

2013 and 2012, respectively

21,151

28,875

Inventory

284

281

Prepaids and other current assets

3,772

3,001

Deferred tax assets

2,407

1,699

Total current assets

38,841

68,791

Property and equipment, net

28,416

20,340

Acquired intangibles, net

1,819

510

Software development cost, net

28,142

17,156

Deferred tax assets - noncurrent

26,903

25,846

Goodwill

1,540

440

Other assets

468

40

Total assets

$

126,129

$

133,123

Liabilities and shareholders' equity

Current liabilities:

Accounts payable

$

9,325

$

12,436

Accrued liabilities

5,846

9,533

Deferred revenue

9,323

12,192

Total current liabilities

24,494

34,161

Obligation for purchased technology

-

116

Shareholders' equity:

Common stock

3

3

Additional paid-in capital

245,412

237,558

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 services

4,207

7,269

19,420

27,816

Support services

11,827

9,636

44,553

33,143

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 sales

5,777

3,093

18,420

10,259

Training and consulting services

2,487

4,535

13,682

18,881

Support services

3,438

2,944

13,092

10,564

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 administrative

15,175

13,603

58,336

47,565

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

)

12

309

54

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: