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Exhibit 99.1

 

LOGO

Imprivata, Inc. Reports Third Quarter 2014 Financial Results

Imprivata achieves record revenues of $25.3 million, a 41% increase over the

comparable period of 2013, and increases annual revenue guidance.

Lexington, Mass. — (BUSINESS WIRE) — November 3, 2014 — Imprivata® (NYSE: IMPR), a leading provider of authentication and access management solutions for the healthcare industry, today announced financial results for the third quarter of fiscal 2014. Revenues for the third quarter were $25.3 million, an increase of 41% from revenues of $17.9 million for the same period in 2013. Revenues for the nine months ended September 30, 2014 were $68.0 million, an increase of 37% from revenues of $49.5 million for the same period in 2013.

Omar Hussain, CEO of Imprivata, commented, “Our record third quarter revenues were driven by both new and existing customers, along with key competitive takeaways. We continue to see strong demand in our business driven by Meaningful Use Stage 2 initiatives, hospitals deploying Virtual Desktop Infrastructures, and the increasing adoption of EMRs globally. Our growth and success continue to validate that Imprivata solutions are important to our customers as they balance IT security with provider productivity.”

Net loss for the third quarter of 2014 was $4.5 million, or $(0.19) per basic and diluted share attributable to common stockholders, as compared to a net loss of $0.7 million, or $(0.54) per basic and diluted share attributable to common stockholders for the same period in 2013. Net loss for the nine months ended September 30, 2014 was $15.1 million, or $(1.64) per basic and diluted share attributable to common stockholders, as compared to a net loss of $2.3 million, or $(1.82) per basic and diluted share attributable to common stockholders for the same period in 2013. Consistent with our operating results for the first half of 2014, the quarterly loss represents our continued strategic investments in the business to maintain our market leadership position and capture additional market share, as well as develop new complementary products to our existing product portfolio.

Adjusted EBITDA(1) for the third quarter of 2014 was a loss of $2.8 million, as compared to a loss of $0.8 million for the same period in 2013. Non-GAAP net loss (2) for the third quarter of 2014 was $3.8 million, or $(0.16) per basic and diluted share, as compared to non-GAAP net loss of $1.2 million, or $(0.34) per basic share and diluted share, for the same period in 2013. Adjusted EBITDA for the nine months ended September 30, 2014 was a loss of $11.5 million, as compared to a loss of $0.9 million for the same period in 2013. Non-GAAP net loss for the nine months ended September 30, 2014 was $14.0 million, or $(1.31) per basic and diluted share, as compared to non-GAAP net loss of $2.2 million, or $(0.68) per basic and diluted share, for the same period in 2013. A reconciliation of GAAP to these non-GAAP financial measures has been provided in the financial statement tables included in this press release. An explanation of these measures is also included below under the heading “Non-GAAP Financial Measures.”

 

  (1) Adjusted EBITDA is earnings before interest, taxes, depreciation and amortization adjusted for foreign currency gains (losses), stock based-compensation and the impact of the fair value revaluation on our contingent liability.
  (2) Non-GAAP net income (loss) and non-GAAP net income (loss) per share excludes amortization of purchased intangible assets, stock-based compensation and the impact of the fair value revaluation on our contingent liability.


Fourth Quarter and Full-Year 2014 Financial Outlook

For the full-year, we expect revenue between $94 million and $95 million and Adjusted EBITDA to be between a loss of $14 million and $13 million. In terms of earnings per share, we expect GAAP loss to be between $1.51 per share and $1.47 per share and non-GAAP loss, which adjusts for stock-based compensation, amortization of purchased intangible assets and the contingent liability revaluation, to be between $1.19 per share and $1.16 per share. Our annual EPS estimates are based on an estimated weighted average-share count of 13.9 million.

For the fourth quarter, we expect revenue between $26 million and $27 million and Adjusted EBITDA to be between a loss of $2.0 million and $1.0 million. In terms of earnings per share, we expect GAAP loss to be between $0.15 per share and $0.13 per share and non-GAAP loss to be between $0.11 per share and $0.09 per share. Our fourth quarter EPS estimates are based on an estimated weighted average-share count of 23.7 million.

Conference Call Information

Imprivata management will host a conference call at 5:00 pm (Eastern Time) on Monday, November 3, 2014 to discuss the Company’s third quarter 2014 results, its business outlook and other matters. The conference call will be accessible by dialing (888) 364-3108, or (719) 325-2464 for international callers, and referencing conference ID number 7055889. A live webcast of the conference call will also be available on the investor relations section of the company’s website at www.imprivata.com.

An audio replay will be available following the conclusion of the call through November 17, 2014. The replay can be accessed by dialing (888) 203-1112 in the U.S., or +1 (719) 457-0820 for international callers. The passcode for the replay is: 7055889.

About Imprivata

Imprivata, Inc. (NYSE: IMPR) headquartered in Lexington, Massachusetts, is a leading provider of authentication and access management solutions for the healthcare industry. Imprivata’s flagship solution, Imprivata OneSign®, is an integrated enterprise single sign-on, authentication and access management and workflow automation platform that addresses multiple security and productivity challenges faced by hospitals and other healthcare organizations. For more information, please visit www.imprivata.com.

Investor relations:

Bob East / Asher Dewhurst

Westwicke Partners, LLC

(443) 213-0503

imprivata@westwicke.com

Public relations:

Dan Borgasano

Imprivata, Inc.

(781) 430-2812

dborgasano@Imprivata.com

All Imprivata products are trademarks of Imprivata, Inc. in the USA and other countries. All other product or company names mentioned are the property of their respective owners.


Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to, statements regarding the anticipated opportunity and trends for growth in our customer base and our overall business, our market opportunity, our goal to maintain market leadership and our expected financial results for Q4 2014 and the full fiscal year 2014. All statements other than statements of historical fact contained in this press release are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “could,” “increases,” “improves,” “reduces,” “implements,” “results,” “addresses,” or the negative of these terms or other comparable terminology. These forward-looking statements are made as of the date they were first issued and were based on current expectations, estimates, forecasts, and projections as well as the beliefs and assumptions of management. Forward-looking statements are subject to a number of risks and uncertainties, many of which involve factors or circumstances that are beyond Imprivata’s control. Imprivata’s actual results could differ materially from those stated or implied in forward-looking statements due to a number of factors, including but not limited to, our ability to successfully develop and introduce new solutions and products for existing solutions; our ability to attract new customers and retain and increase sales to existing customers; developments in the healthcare industry or regulatory environment; seasonal variations in the purchasing patterns of our customers; the lengthy and unpredictable sales cycles for new customers; our ability to maintain successful relationships with our channel partners and technology alliance partners; our dependency on sole source suppliers and a contract manufacturer for hardware components of our Imprivata OneSign solution; our ability to manage our growth effectively; our ability to respond to competitive pressures; potential liability related to privacy and security of protected health information; our ability to protect our intellectual property rights, and the other risks detailed in Imprivata’s risk factors discussed in filings with the U.S. Securities and Exchange Commission (“SEC”), including but not limited to Imprivata’s Registration Statement on Form S-1 declared effective by the SEC on June 24, 2014, as well as other documents that may be filed by Imprivata from time to time with the SEC. The forward-looking statements included in this press release represent Imprivata’s views as of the date of this press release. Imprivata undertakes no intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

Non-GAAP Financial Measures

Imprivata has provided in this release financial information that has not been prepared in accordance with generally accepted accounting principles in the United States, or GAAP. This information includes Adjusted EBITDA, non-GAAP net income (loss) and non-GAAP net income (loss) per share. These non-GAAP financial measures are not in accordance with, or an alternative for, GAAP and may be different from similar non-GAAP financial measures used by other companies. Imprivata believes that the use of these non-GAAP financial measures provides supplementary information for investors to use in evaluating operating performance and in comparing its financial measures with other companies in Imprivata’s industry, many of which present similar non-GAAP financial measures. Adjusted EBITDA (EBITDA adjusted for foreign currency gains (losses), stock based-compensation and the impact of the fair value revaluation on our contingent liability), non-GAAP net income (loss) and non-GAAP net income (loss) per share exclude amortization expense associated with our purchased intangible assets, stock-based compensation and the impact of the re-measurement to fair value of our contingent liability. Non-GAAP financial measures that Imprivata uses may differ from measures that other companies may use. These non-GAAP financial measures disclosed by Imprivata are not meant to be considered superior to or a substitute for results of operations prepared in accordance with GAAP, and should be viewed in conjunction with, GAAP financial measures. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measure. A reconciliation of GAAP to the non-GAAP financial measures has been provided in the tables included as part of this press release.


Imprivata, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except per share amounts)

(unaudited)

 

     Three Months
Ended
September 30,
    Nine Months
Ended
September 30,
 
     2014     2013     2014     2013  

Revenue

        

Product

   $ 14,133      $ 10,017      $ 35,632      $ 26,923   

Maintenance and services

     11,145        7,890        32,320        22,554   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenue

     25,278        17,907        67,952        49,477   

Cost of revenue

        

Product

     4,287        1,753        8,922        4,923   

Maintenance and services

     4,353        2,779        12,946        7,525   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of revenue

     8,640        4,532        21,868        12,448   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     16,638        13,375        46,084        37,029   

Operating expenses

        

Research and development

     6,425        4,923        19,252        13,376   

Sales and marketing

     11,129        7,368        32,764        20,827   

General and administrative

     3,162        1,767        8,486        5,136   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     20,716        14,058        60,502        39,339   
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss from operations

     (4,078     (683     (14,418     (2,310

Other income (expense)

        

Interest and other income (expense), net

     (344     66        (536     120   
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss before income taxes

     (4,422     (617     (14,954     (2,190

Income taxes

     32        33        119        74   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

     (4,454     (650     (15,073     (2,264

Accretion of redeemable convertible preferred stock

            (1,238     (2,442     (3,714
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss attributable to common stockholders

   $ (4,454   $ (1,888   $ (17,515   $ (5,978
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss per share attributable to common stockholders

        

Basic and diluted

   $ (0.19   $ (0.54   $ (1.64   $ (1.82
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average common shares outstanding used in computing net loss per share attributable to common stockholders

        

Basic and diluted

     23,706        3,490        10,654        3,288   
  

 

 

   

 

 

   

 

 

   

 

 

 


Imprivata, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

 

     September 30,
2014
    December 31,
2013
 

Assets

    

Current assets:

    

Cash and cash equivalents

   $ 78,037      $ 13,284   

Accounts receivable, net of allowances

     19,284        19,754   

Prepaid expenses and other current assets

     3,782        2,541   
  

 

 

   

 

 

 

Total current assets

     101,103        35,579   

Property and equipment, net

     8,142        6,682   

Goodwill

     1,560        1,560   

Intangible assets, net

     1,615        2,000   

Other assets

     103        649   
  

 

 

   

 

 

 

Total assets

   $ 112,523      $ 46,470   
  

 

 

   

 

 

 

Liabilities, redeemable convertible preferred stock and stockholders’ equity (deficit)

    

Current liabilities:

    

Accounts payable

   $ 2,981      $ 3,586   

Accrued expenses and other current liabilities

     8,123        9,149   

Current portion of capital lease obligations and long-term debt

     666        313   

Current portion of other long-term liabilities

     288        249   

Current portion of deferred revenue

     28,249        25,084   
  

 

 

   

 

 

 

Total current liabilities

     40,307        38,381   

Deferred revenue, net of current portion

     4,302        3,490   

Capital lease obligations, long-term debt and royalty obligations, net of current portion

     759        410   

Other long-term liabilities, net of current portion

     1,153        1,181   

Contingent purchase price liability

     560        1,008   
  

 

 

   

 

 

 

Total liabilities

     47,081        44,470   

Commitments and contingencies

    

Redeemable convertible preferred stock

            91,607   

Stockholders’ equity (deficit):

    

Undesignated preferred stock

         

Common stock

     24        4   

Additional paid-in capital

     171,366          

Accumulated other comprehensive loss

     (60     (145

Accumulated deficit

     (105,888     (89,466
  

 

 

   

 

 

 

Total stockholders’ equity (deficit)

     65,442        (89,607
  

 

 

   

 

 

 

Total liabilities, redeemable convertible preferred stock and stockholders’ equity (deficit)

   $ 112,523      $ 46,470   
  

 

 

   

 

 

 


Imprivata, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

     Nine Months Ended
September 30,
 
     2014     2013  

Cash flows from operating activities:

    

Net Loss

   $ (15,073   $ (2,264

Adjustments to reconcile net loss to net cash used in operating activities:

    

Depreciation and amortization expense

     2,241        1,747   

Provision for doubtful accounts

     90        57   

Stock-based compensation

     1,126        409   

Loss on disposal of fixed assets

     66        16   

Change in value of contingent purchase price liability

     (448     (784

Changes in operating assets and liabilities

    

Accounts receivable

     380        (322

Prepaid expenses and other current assets

     (856     (1,092

Other assets

            18   

Deferred revenue

     3,977        2,781   

Accounts payable

     (723     (1,795

Accrued expenses and other current liabilities

     (201     (520

Other liabilities

     12        (192
  

 

 

   

 

 

 

Net cash used in operating activities

     (9,409     (1,941
  

 

 

   

 

 

 

Cash flows from investing activities:

    

Purchases of property and equipment

     (2,723     (1,781

Restricted cash

            97   
  

 

 

   

 

 

 

Net cash used in investing activities

     (2,723     (1,684
  

 

 

   

 

 

 

Cash flows from financing activities:

    

Proceeds from initial public offering, net of underwriting discounts and commissions

     80,213          

Deferred offering costs

     (3,287       

Repayments for capital lease obligations, long-term debt and other

     (497     (238

Proceeds from exercise of stock options

     448        812   
  

 

 

   

 

 

 

Net cash provided by financing activities

     76,877        574   
  

 

 

   

 

 

 

Effect of exchange rates on cash and cash equivalents

     8        (129
  

 

 

   

 

 

 

Net increase (decrease) in cash and cash equivalents

     64,753        (3,180

Cash and cash equivalents, beginning of period

     13,284        15,410   
  

 

 

   

 

 

 

Cash and cash equivalents, end of period

   $ 78,037      $ 12,230   
  

 

 

   

 

 

 


Imprivata, Inc.

Non-GAAP Financial Measures

(in thousands, except per share amounts)

(unaudited)

Reconciliation of GAAP Net Loss to Adjusted EBITDA

 

     Three Months
Ended
September 30,
    Nine Months
Ended
September 30,
 
     2014     2013     2014     2013  

GAAP net loss

   $ (4,454   $ (650   $ (15,073   $ (2,264

Adjustments to reconcile to Adjusted EBITDA:

        

Income tax expense

     32        33        119        74   

Depreciation and amortization

     783        584        2,241        1,747   

Other expense (income), net

     344        (66     536        (120

Stock-based compensation

     461        152        1,126        409   

Change in fair value of contingent liability

     16        (815     (448     (784
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ (2,818   $ (762   $ (11,499   $ (938
  

 

 

   

 

 

   

 

 

   

 

 

 

Reconciliation of GAAP Net Loss to Non-GAAP Net Loss

and Non-GAAP Net Loss Per Share (a)

 

     Three Months
Ended
September 30,
    Nine Months
Ended
September 30,
 
     2014     2013     2014     2013  

GAAP net loss

   $ (4,454   $ (650   $ (15,073   $ (2,264

Adjustments to reconcile to Non-GAAP net income:

        

Amortization of purchased intangible assets

     128        129        385        393   

Stock-based compensation

     461        152        1,126        409   

Change in fair value of contingent liability

     16        (815     (448     (784
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP net loss

   $ (3,849   $ (1,184   $ (14,010   $ (2,246
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP net loss per share

        

Basic and diluted

   $ (0.16   $ (0.34   $ (1.31   $ (0.68
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average common shares outstanding used in computing non-GAAP net loss per share

        

Basic and diluted

     23,706        3,490        10,654        3,288   
  

 

 

   

 

 

   

 

 

   

 

 

 

(a) The Company reconciles non-GAAP net loss per share beginning with GAAP net loss instead of GAAP net loss attributable to common stockholders in order to eliminate the effect of the accretion of preferred stock on the calculation.