Exhibit 99.1

 

 

SOC Telemed Reports Third Quarter 2020 Results

Record bookings of $2.6 million, a 54% increase year over year

Reaffirms 2020 Outlook

 

Reston, VA – November 16, 2020 – SOC Telemed, Inc. (Nasdaq: TLMD), the largest national provider of acute care telemedicine, today announced its pre-acquisition results for its third quarter ended September 30, 2020.

 

“I’m pleased to report that we delivered strong third quarter results, achieved record levels of bookings, added several new customers, and expanded our relationships with existing customers. During the quarter, we also completed our business combination and have since begun trading on the Nasdaq,” said John Kalix, CEO of SOC Telemed.

 

Mr. Kalix continued, “We have seen utilization levels rebound from the early days of the pandemic and remain optimistic about our full year revenue outlook. We are a leader in the acute telemedicine market and our 2020 guidance reflects that we expect to continue to build on our momentum from the third quarter to finish out the year strong.”

 

Mr. Hai Tran, Chief Operating Officer and Chief Financial Officer of SOC Telemed commented, “Utilization has rebounded from the lows we experienced in the early days of the pandemic and despite the recent increases in COVID-19 cases, utilization of our core services remains stable as Hospitals adapt to operating in a post pandemic environment.”

 

Third Quarter Highlights

Financial performance for the three months ended September 30, 2020 compared to the three months ended September 30, 2019.

 

●

Bookings of $2.6 million compared to $1.7 million, a 54% increase primarily driven by the increased interest in telemedicine and overall momentum in the business.

●

Revenue was $15.1 million compared to $17.1 million, an 11% decrease due to lower utilization resulting from a decrease in hospital visits due to the COVID-19 pandemic.

●

GAAP gross profit was $5.6 million compared to $7.2 million and adjusted gross profit (non-GAAP) was $6.6 million compared to $8.0 million.

●

GAAP gross margin was 37.0% compared to 42.2% and adjusted gross margin (non-GAAP) as 44% compared to 47%. Despite the COVID-19 impact to revenue, the Company was able to partially offset margin pressure by leveraging costs.

●

Net loss of $(9.7) million compared to a loss of $(3.3) million.

●

Adjusted EBITDA was a loss of $(2.9) million compared to positive $0.5 million as SOC continues to increase investments in its go to market functions and preparations to become a public company.

●

On a pro forma basis, total cash was $47.4 million as of September 30, 2020.

 

Year-to-Date Highlights

Performance for the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019. Core consults are defined as consultations utilizing core services, including teleNeurology, telePsychiatry and teleICU solutions.

 

●

Bookings of $8.3 million compared to $4.1 million, a 103% increase.

●

Core revenue per core consult of $424 compared to $399, a 6% increase.

●

Core consults of 98,686 compared to 121,894, a 19% decrease.

 

 

2020 Outlook

For the full year 2020, the Company continues to expect:

 

●

Bookings in the range of $11.5 to $12.5 million

●

Revenue of approximately $57.3 million

●

Adjusted EBITDA of approximately ($11.1) million

 

Conference Call Details

The third quarter 2020 earnings conference call and webcast will be held Monday, November 16, 2020 at 5:00 p.m. ET. The conference call can be accessed by dialing 1-877-870-4263 for U.S. participants, or 1-412-317-0790 for international participants, and referencing the “SOC Telemed call”; or via a live audio webcast available on the Investor Relations section of the Company website at investors.soctelemed.com. A webcast replay will be available for on-demand listening shortly after the completion of the call at the same web link.

 

About SOC Telemed

SOC Telemed (SOC) is the largest national provider of telemedicine technology and solutions to hospitals, health systems, post-acute providers, physician networks, and value-based care organizations. Built on proven and scalable infrastructure as an enterprise-wide solution, SOC’s technology platform, Telemed IQ, rapidly deploys and seamlessly optimizes telemedicine programs across the continuum of care. SOC provides a supportive and dedicated partner presence, virtually delivering patient care through teleNeurology, telePsychiatry and teleICU, enabling healthcare organizations to build sustainable telemedicine programs in any clinical specialty. SOC enables organizations to enrich their care models and touch more lives by supplying healthcare teams with industry-leading solutions that drive improved clinical care, patient outcomes, and organizational health. The company was the first provider of acute clinical telemedicine services to earn The Joint Commission’s Gold Seal of Approval and has maintained that accreditation every year since inception. For more information, visit www.soctelemed.com.

 

Forward-Looking Statements

This press release includes “forward-looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. In some cases, you can identify these forward-looking statements by the use of terms such as “expect,” “will,” “continue,” or similar expressions, and variations or negatives of these words, but the absence of these words does not mean that a statement is not forward-looking. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including, but not limited to: the statements under “2020 Outlook,” including expectations relating to bookings and revenue; statements regarding relationships with customers and business momentum; and any other statements of expectation or belief. These statements are subject to known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from results expressed or implied in this press release. Such risk factors include, but are not limited to, those related to: the current and future impact of the COVID-19 pandemic on SOC Telemed’s business and industry; the effects of competition on the future business of SOC Telemed; uncertainty regarding the demand for and market utilization of its solution; returns on investments in its business; the ability to maintain customer relationships; difficulties maintaining and expanding its network of qualified physicians and other provider specialists; disruptions in SOC Telemed’s relationships with affiliated professional entities or third party suppliers or service providers; general business and economic conditions; the ability of SOC Telemed to successfully execute strategic plans; the timing and market acceptance of new solutions or success of new enhancements, features modifications to existing solutions and the degree to which they gain acceptance. Additional information concerning these and other risk factors is contained in the Risk Factors section of SOC’s most recent report on Form 10-Q. SOC Telemed assumes no obligation, and does not intend, to update these forward-looking statements as a result of future events or developments.

 

 

Use of Non-GAAP Financial Information

We believe that, in addition to our financial results determined in accordance with GAAP, adjusted gross profit (non-GAAP), adjusted gross margin (non-GAAP), and adjusted EBITDA, all of which are non-GAAP financial measures, are useful in evaluating our business, results of operations, and financial condition. However, our use of the terms adjusted gross profit, adjusted gross margin and adjusted EBITDA may vary from that of others in our industry. Adjusted gross profit, adjusted gross margin and adjusted EBITDA should not be considered as an alternative to gross profit, net loss, net loss per share or any other performance measures derived in accordance with GAAP as measures of performance. Adjusted gross profit, Adjusted gross margin and adjusted EBITDA have important limitations as analytical tools and you should not consider them in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:

 

●

adjusted EBITDA does not reflect the significant interest expense on our debt;

 

●

although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and adjusted gross profit, adjusted gross margin and adjusted EBITDA do not reflect any expenditures for such replacements; and

 

●

other companies in our industry may calculate these financial measures differently than we do, limiting their usefulness as comparative measures.

 

We compensate for these limitations by using these non-GAAP financial measures along with other comparative tools, together with GAAP measurements, to assist in the evaluation of operating performance. Such GAAP measurements include gross profit, net loss, net loss per share and other performance measures. In evaluating these financial measures, you should be aware that in the future we may incur expenses similar to those eliminated in this presentation. Our presentation of non-GAAP financial measures should not be construed as an inference that our future results will be unaffected by unusual or nonrecurring items. When evaluating our performance, you should consider these non-GAAP financial measures alongside other financial performance measures, including the most directly comparable GAAP measures set forth in the reconciliation tables below and our other GAAP results.

 

Our non-GAAP financial measures are described as follows:

 

Adjusted gross profit and adjusted gross margin. Adjusted gross profit is defined as revenues less cost of revenues plus depreciation and amortization plus equipment leasing costs. Adjusted gross margin is adjusted gross profit divided by revenue.

 

Adjusted EBITDA. Adjusted EBITDA is defined as net income (loss) before interest, taxes, stock-based compensation, gain or loss on puttable options, depreciation and amortization and integration, acquisition, transaction and executive severance costs.

 

Readers are encouraged to review the reconciliation of our non-GAAP financial measures to the comparable GAAP results, which is attached to this earnings release and which can be found on SOC Telemed’s investor relations page of its website at: investors.soctelemed.com.

 

 

		September 30, 2020				December 31, 2019
ASSETS
CURRENT ASSETS
Cash and cash equivalents (from Variable interest entities $1,589 and $3,509, respectively)		$	2,395			$	4,541
Accounts receivable, net of allowance for doubtful accounts of $458 and $538 (from Variable interest entities, net of allowance $8,339 and $10,125, respectively)			8,820				10,545
Prepaid expenses and other current assets			3,611				843
Total current assets			14,826				15,929
Property and equipment, net			3,905				2,387
Capitalized software costs, net			8,669				7,647
Intangible assets, net			6,348				7,429
Goodwill			16,281				16,281
Deposits and other assets			289				321
Total assets		$	50,318			$	49,994
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities
Accounts payable (from Variable interest entities $868 and $1,882, respectively)		$	4,581			$	3,435
Accrued expenses (from Variable interest entities $1,948 and $1,226, respectively)			10,051				6,078
Deferred revenues			523				516
Capital lease obligations			9				48
Total current liabilities			15,164				10,077
Puttable option liabilities			518				1
Deferred revenues			1,013				807
Related party - Convertible bridge notes payable, net of unamortized issuance costs			3,982				-
Long term debt, net of unamortized discount and debt issuance costs			80,523				77,140
Total liabilities		$	101,200			$	88,025
COMMITMENTS AND CONTINGENCIES (Note 11)
CONTINGENTLY REDEEMABLE PREFERRED STOCK (Redeemable convertible preferred stock, $0.001 par value; 21,816,134 and 21,805,134 shares authorized as of September 30, 2020 and December 31, 2019, respectively; 21,816,134 and 21,805,134 shares issued and outstanding as of September 30, 2020 and December 31, 2019 respectively; aggregate liquidation preference of $79,094 and, $62,466 as of September 30, 2020 and December 31, 2019 respectively).			78,514				61,907
STOCKHOLDERS’ DEFICIT
Common stock, $0.001 par value; 132,034,637 and 132,034,637 shares authorized as of September 30, 2020 and December 31, 2019; 84,370,027 and 84,370,027 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively.			84				84
Treasury stock 223,157 shares, at cost, as of September 30, 2020 and December 31, 2019			(768	)			(768	)
Additional paid-in capital			82,728				87,118
Accumulated deficit			(211,440	)			(186,372	)
Total stockholders’ deficit			(129,396	)			(99,938	)
Total liabilities, contingently redeemable preferred stock and stockholders’ deficit		$	50,318			$	49,994

 

 

 

		Three Months Ended September 30,								Nine Months Ended September 30,
		2020				2019				2020				2019
Revenues		$	15,132			$	17,052			$	43,493			$	49,615
Cost of revenues			9,534				9,853				29,277				30,251
Operating expenses
Selling, general and administrative			11,993				8,135				30,267				25,805
Changes in fair value of contingent consideration			-				(258	)			-				(1,712	)
Total operating expenses			11,993				7,878				30,267				24,093
Loss from operations			(6,395	)			(678	)			(16,051	)			(4,729	)
Other income (expense)
Gain (Loss) on puttable option liabilities			(412	)			-				(517	)			-
Interest expense			(2,853	)			(2,650	)			(8,469	)			(7,495	)
Interest expense – Related party			(21	)			-				(21	)			-
Total other expense			(3,286	)			(2,650	)			(9,007	)			(7,495	)
Loss before income taxes			(9,681	)			(3,328	)			(25,058	)			(12,224	)
Income tax expense			7				2				10				5
Net loss and comprehensive loss		$	(9,688	)		$	(3,330	)		$	(25,068	)		$	(12,229	)
Accretion of redeemable convertible preferred stock			(2,152	)			(1,412	)			(5,670	)			(4,054	)
Net loss attributable to common stockholders		$	(11,840	)		$	(4,742	)		$	(30,738	)		$	(16,283	)
Net loss per share attributable to common stockholders
Basic		$	(0.14	)		$	(0.06	)		$	(0.36	)		$	(0.19	)
Diluted		$	(0.14	)		$	(0.06	)		$	(0.36	)		$	(0.19	)
Weighted-average shares used to compute net loss per share attributable to common stockholders:
Basic			84,874,870				84,581,205				84,874,870				84,581,205
Diluted			84,874,870				84,581,205				84,874,870				84,581,205

 

 

		Nine Months Ended September 30,
		2020				2019
Cash flows from operating activities:
Net loss		$	(25,068	)		$	(12,229	)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization			4,008				3,150
Stock-based compensation			1,280				1,115
Loss on puttable option liabilities			517				-
Change in fair value of contingent consideration			-				(1,712	)
Bad debt expense			64				150
Accrued interest on convertible bridge debt (related party)			21				-
Paid-in kind interest on senior debt			2,310				2,055
Amortization of debt issuance costs and accretion of original issuance discount			1,073				920
Change in assets and liabilities, net of acquisitions
Accounts receivable, net of allowance			1,661				(262	)
Prepaid expense and other current assets			(599	)			(32	)
Deposits and other assets			32				-
Accounts payable			891				214
Accrued expenses and other liabilities			1,657				(2,012	)
Deferred revenues			213				(93	)
Net cash used in operating activities			(11,940	)			(8,736	)
Cash flows from investing activities:
Capitalization of software development costs			(3,252	)			(3,002	)
Purchase of property and equipment			(1,724	)			(973	)
Net cash used in investing activities			(4,976	)			(3,975	)
Cash flows from financing activities:
Principal payments under capital lease obligations			(66	)			(104	)
Proceeds from long term debt, net of issuance costs			3,961				12,867
Exercise of stock options			-				19
Payment of deferred transaction related costs			(63	)			-
Issuance of contingently redeemable preferred stock, net of offering costs			10,938				-
Net cash provided by financing activities			14,770				12,782
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS			5(2,146	)			771
Cash and cash equivalents at beginning of the period			4,541				3,989
Cash and cash equivalents at end of the period		$	2,395			$	4,060

 

 

		Three Months Ended September 30,								Nine Months Ended September 30,								Three Months Ended September 30,								Nine Months Ended September 30,
		2020				2019				2020				2019				2020				2019				2020				2019
																		Change				% Change				Change				% Change
		(dollars in thousands)
Revenues		$	15,132			$	17,052			$	43,493			$	49,615			$	(1,920	)			(11	)%		$	(6,122	)			(12	)%
Cost of revenues			9,534				9,853				29,277				30,251				(319	)			(3	)%			(974	)			(3	)%
Gross profit			5,598				7,199				14,216				19,364				(1,601	)			(22	)%			(5,148	)			(27	)%
Add:
Depreciation and amortization (a)			1,004				719				2,807				1,898				285				40	%			909				48	%
Equipment leasing costs (b)			15				61				57				208				(46	)			(75	)%			(151	)			(73	)%
Adjusted gross profit		$	6,617			$	7,979			$	17,080			$	21,470				(1,362	)			(17	)%			(4,390	)			(20	)%
Adjusted gross margin (as a percentage of revenues)			44	%			47	%			39	%			43	%
		Three Months Ended September 30,								Nine Months Ended September 30,								Three Months Ended September 30,								Nine Months Ended September 30,
		2020				2019				2020				2019				2020				2019				2020				2019
																		Change				% Change				Change				% Change
		(dollars in thousands)
Net loss		$	(9,688	)		$	(3,330	)		$	(25,068	)		$	(12,229	)		$	(6,358	)			191	%		$	(12,839	)			105	%
Add:
Interest expense (c)			2,874				2,650				8,490				7,495				224				8	%			995				13	%
Income tax expense (benefit) (d)			7				2				10				5				5				250	%			5				100	%
Depreciation and amortization (a)			1,401				1,130				4,008				3,150				271				24	%			858				27	%
Stock-based compensation (e)			1,033				252				1,280				1,115				781				310	%			165				15	%
Gain/(Loss) on puttable option revaluation (f)			412				—				517				—				412				*				517				*
Changes in fair value of contingent consideration (g)			—				(258	)			—				(1,712	)			258				*				1,712				*
Integration, acquisition, transaction, and severance costs (h)			1,018				31				3,521				1,050				987				3,184	%			2,471				235	%
Adjusted EBITDA		$	(2,943	)		$	477			$	(7,242	)		$	(1,126	)			(3,420	)			(717	)%			(6,116	)			543	%

 

*

Percentage not meaningful

 

 

		Three Months Ended September 30,
		2020				2019				Change				% Change
		(dollars in thousands)
Selling, general and administrative expenses (1)		$	11,993			$	8,135			$	3,858				47	%
Sales and marketing			1,936				1,364				572				42	%
Research and development			398				270				128				47	%
Operations			2,357				1,991				366				18	%
General and administrative			7,302				4,510				2,792				62	%
		$	11,993			$	8,135			$	3,858				47	%

 

(1)

Selling, general, and administrative expenses include the following expenses for the periods presented:

 

		Three Months Ended September 30, 2020												Three Months Ended September 30, 2019
		Stock-Based Compensation				Depreciation and Amortization				Integration Costs				Stock-Based Compensation				Depreciation and Amortization				Integration Costs
		(dollars in thousands)
Sales and marketing		$	3			$	—			$	—			$	100			$	—			$	—
Research and development			8				—				—				8				—				—
Operations			10				—				—				11				—				—
General and administrative			1,012				397				1,018				133				411				31
		$	1,033			$	397			$	1,018			$	252			$	411			$	31

 

		Three Months Ended September 30,
		2020				2019				Change				% Change
		(dollars in thousands)
Selling, general and administrative expenses excluding stock based compensation, depreciation and amortization and integration costs		$	9,545			$	7,441			$	2,104				28	%
Sales and marketing			1,933				1,264				669				53	%
Research and development			390				262				128				49	%
Operations			2,347				1,980				367				19	%
General and administrative			4,875				3,935				940				24	%
		$	9,545			$	7,441			$	2,104				28	%

 

 

		Nine Months Ended September 30,
		2020				2019				Change				% Change
		(dollars in thousands)
Selling, general and administrative expenses (1)		$	30,267			$	25,805			$	4,462				17	%
Sales and marketing			4,920				5,122				(202	)			(4	)%
Research and development			940				827				113				14	%
Operations			6,539				5,916				623				11	%
General and administrative			17,868				13,940				3,928				28	%
		$	30,267			$	25,805			$	4,462				17	%

 

(1)

Selling, general, and administrative expenses include the following expenses for the periods presented:

 

		Nine Months Ended September 30, 2020												Nine Months Ended September 30, 2019
		Stock-Based Compensation				Depreciation and Amortization				Integration Costs				Stock-Based Compensation				Depreciation and Amortization				Integration Costs
		(dollars in thousands)
Sales and marketing		$	18			$	—			$	—			$	671			$	—			$	—
Research and development			48				—				—				38				—				—
Operations			45				—				—				34				—				—
General and administrative			1,169				1,201				3,521				372				1,252				1,050
		$	1,280			$	1,201			$	3,521			$	1,115			$	1,252			$	1,050

 

		Nine Months Ended September 30,
		2020				2019				Change				% Change
		(dollars in thousands)
Selling, general and administrative expenses excluding stock based compensation, depreciation and amortization and integration costs		$	24,265			$	22,388			$	1,877				8	%
Sales and marketing			4,902				4,451				451				10	%
Research and development			892				789				103				13	%
Operations			6,494				5,882				612				10	%
General and administrative			11,977				11,266				711				6	%
		$	24,265			$	22,388			$	1,877				8	%

 

 

Explanation of Non-GAAP Adjustments

 

(a)

Amortization and depreciation consists primarily of depreciation of fixed assets, amortization of capitalized software development costs and amortization of acquisition-related intangible assets, such as customer relationships, non-compete agreements, and trade names acquired in connection with business combinations. While depreciation and amortization are non-cash charges, the assets being depreciated or amortized will often have to be replaced or updated in the future, and these measures do not reflect any cash requirements for these replacements or updates. Additionally, we incur amortization of acquisition-related intangible assets based on the portion of the purchase price allocated to intangible assets and the estimated useful lives of such assets. However, the purchase price allocated to these assets is not necessarily reflective of the cost we would incur to internally develop the intangible asset and we do not believe these charges are reflective of our operating results in the period incurred. We eliminate these non-cash charges from our non-GAAP operating results to facilitate an understanding of our operating and financial performance from period-to-period.

 

(b)

Equipment leasing costs consist of the cost of procuring equipment through lease financing. We ceased this practice in the second quarter of 2017. We eliminate these charges from our non-GAAP operating results to facilitate an understanding of our operating and financial performance from period-to-period.

 

(c)

Interest expense consists primarily of interest incurred on our outstanding indebtedness and non-cash interest related to the amortization of debt discount and issuance costs associated with our term loan agreement. We eliminate these cash and non-cash expenses from our non-GAAP operating results to facilitate an understanding of our operating and financial performance from period-to-period within our presentation of adjusted EBITDA. Adjusted EBITDA is widely used by investors to measure a company’s operating performance without regard to items, such as interest benefit and expense, income tax benefit and expense, depreciation and amortization, stock-based compensation, and other charges and income. We believe adjusted EBITDA is useful in evaluating our operating performance compared to that of other companies in our industry as this metric generally eliminates the effects of certain items that may vary from company to company for reasons unrelated to overall operating performance.

 

(d)

We incur income tax expenses or benefits that are related to prior periods. We eliminate these expenses from our non-GAAP operating results to facilitate an understanding of our operating and financial performance from period-to-period within our presentation of adjusted EBITDA.

 

(e)

Stock-based compensation expense consists primarily of expenses for stock options. Although stock-based compensation is a key incentive offered to our employees, we continue to evaluate our operating and financial performance excluding stock-based compensation expenses. Stock-based compensation expenses will recur in future periods. We evaluate our performance both with and without these measures because stock-based compensation is a non-cash expense and can vary significantly over time based on the timing, size, nature and design of the awards granted, and is influenced in part by certain factors that are generally beyond our control, such as the volatility of the market value of our common stock. In addition, we eliminate stock-based compensation expense from our non-GAAP operating results to facilitate an understanding of our operating and financial performance from period-to-period.

 

(f)

Gain (loss) on puttable option liabilities consists of changes in the fair value of puttable option liabilities. We eliminate these non-cash expenses from our non-GAAP operating results to facilitate an understanding of our operating and financial performance from period-to-period.

 

(g)

Changes in fair value of contingent consideration consists of the change in fair value of contingent consideration associated with a business combination in August 2018.

 

(h)

Integration, acquisition, transaction and executive severance costs represent the transaction and business integration costs related to our recent business combination with Healthcare Merger Corp., including incremental expenses incurred to affect business combinations such as advisory, legal, accounting, valuation, and other professional or consulting fees, as well as other related incremental executive severance costs. We exclude these costs from our non-GAAP results as they have no direct correlation to the operation of our business, and because we believe that the non-GAAP financial measures excluding these costs provide useful information about our spending trends to facilitate an understanding of our operating and financial performance from period-to-period.

 

 

10