UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
Current Report
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Item 2.02 Results of Operations and Financial Condition.
On November 3, 2022, Definitive Healthcare Corp. (the “Company”) issued a press release announcing its financial results for the third quarter ended September 30, 2022. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated by reference herein.
The information furnished in this Item 2.02 on this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, regardless of any general incorporation language in such filing.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On November 3, 2022, the Company announced that, on September 16, 2022, its Board of Directors (the “Board”) appointed Jonathan Maack to the position of President, effective November 3, 2022 (the “Effective Date”).
Prior to joining the Company, Mr. Maack, 44, served as Chief Strategy and Corporate Development Officer at athenahealth, a leading provider of cloud-based EHR/PM solutions and revenue cycle and value-based care services, which he joined in May 2021. Prior to his time at athenahealth, Mr. Maack served as Chief Strategy Officer at OptumInsight, an information and technology-enabled health services business, having joined via acquisition in November 2017 and remaining through May 2021. Prior to joining OptumInsight, Mr. Maack held a variety of senior leadership roles at The Advisory Board Company from August 2014 to November 2017, culminating in a role as the General Manager of the Health System Growth Business, which helped health systems market their services to patients and engage physicians. Prior to The Advisory Board Company, Mr. Maack was a management consultant at Bain & Company from January 2010 to August 2014, where he focused on private equity due diligence and operational improvement work in healthcare. Mr. Maack holds a B.A. in Art History, Economics and German from New York University and an M.B.A. in Healthcare from The Wharton School of the University of Pennsylvania.
Maack Employment Agreement; Initial RSU Grant
In connection with his appointment as President, the Board approved the entry into an employment agreement by and between Definitive Healthcare, LLC and Mr. Maack, dated September 22, 2022 (the “Employment Agreement”), which sets forth certain terms of his employment and pursuant to which Mr. Maack is entitled to (i) an annual base salary of $400,000, and (ii) an annual bonus equal to (a) for 2022, a guaranteed amount equal to 70% of Mr. Maack’s base salary, pro-rated from Mr. Maack’s start date through December 31, 2022 and (b) for future years, in the sole discretion of the Compensation Committee of the Board, an amount up to 70% of Mr. Maack’s base salary, based on the Company’s achieving specified revenue targets and other requirements determined annually by the Chief Executive Officer of the Company and the Board. The Board has also approved an initial grant (the “Initial RSU Grant”) of 546,303 restricted stock units with respect to the Company’s Class A common stock, par value $0.001 per share (“RSUs”), to Mr. Maack, which RSUs vest (i) 25% on November 3, 2023 and (iii) thereafter, 6.25% every three months for the next three years until fully vested, in each case subject to Mr. Maack’s continued Service (as defined in the Definitive Healthcare Corp. 2021 Equity Incentive Plan (the “Equity Plan”)) through each vesting date and the terms of the Equity Plan. The Initial RSU Grant is also subject to the terms and conditions of an RSU award agreement in substantially the form of the Company’s form of executive RSU award agreement under the Equity Plan, which is attached as Exhibit 10.1 to this Current Report on Form 8-K and incorporated by reference herein. In addition, the Employment Agreement provides that Mr. Maack will be eligible for an annual equity award in 2024 (the “2024 Award”) pursuant to the Equity Plan, upon such terms and conditions as are determined by the Compensation Committee in its sole discretion, provided that management will recommend to the Compensation Committee that the 2024 Award have a target grant value of at least $2 million and that any time-based component thereof vest consistent with the vesting scheduling of the Initial RSU Grant.
Mr. Maack is eligible to participate in the Company’s benefit plans that are generally available to the Company’s executive employees, and for reimbursement of certain expenses, including a one-time lump-sum relocation payment of $330,000, which is subject to repayment requirements should Mr. Mack’s employment terminate with 24 months of the Effective Date. Mr. Maack is also eligible for reimbursement of 100% of all health insurance premiums for Mr. Maack if enrolled in a Company sponsored health plan. The Employment Agreement includes customary provisions requiring confidentiality, assignment of inventions and non-competition and non-solicitation of the Company’s employees during employment and one year thereafter.
Mr. Maack’s employment is at will. If we terminate Mr. Maack’s employment without Cause and other than as a result of death or Disability (each as defined in the Employment Agreement) or Mr. Maack terminates his employment for Good Reason (as defined in the Employment Agreement) then, subject to his execution of a general release of claims and certain other conditions set forth in the Employment Agreement, we must provide Mr. Maack with (i) continuation of regular payments of base salary for a period of twelve months; (ii) payment of any annual bonus for a prior fiscal year to the extent earned but not previously paid, plus a lump-sum payment of the annual bonus to be earned by Mr. Maack during the twelve month period following the date of termination of employment at the
greater of “target” or the average bonus paid over the prior two years (if such history exists); (iii) accelerated vesting of all forms of equity awarded to Mr. Maack by the Company at any time that are subject to time-based vesting and would otherwise have vested during the twelve-month period following the termination date; and (iv) payment for twelve months of COBRA coverage, if applicable.
If during a Change of Control Period (as defined in the Employment Agreement), Mr. Maack’s employment is terminated without Cause, or Mr. Maack terminates his employment for Good Reason, then we must provide Mr. Maack with (i) continuation of regular payments of base salary for a period of eighteen months from the date of termination of employment; (ii) payment any annual bonus for a prior fiscal year to the extent earned but not previously paid, plus a lump-sum payment of 1.5 times the greater of the target annual bonus to be earned by Mr. Maack in the year of termination or the average of the bonuses paid in the last two calendar years (if such history exists); (iii) acceleration of the vesting of all forms of equity awarded to Mr. Maack by the Company at any time; and (iv) payment for eighteen months of COBRA coverage, if applicable.
The foregoing description of the Employment Agreement is qualified in its entirety by reference to the full text and terms of the Employment Agreement, which is attached as Exhibit 10.2 to this Current Report on Form 8-K and incorporated by reference herein.
Mr. Maack will also entered into the Company’s standard form of indemnity agreement in the form previously approved by the Board, which form is filed as Exhibit 10.6 to the Company’s Registration Statement on Form S-1 (File No. 333-258990) filed with the SEC on August 20, 2021.
Item 7.01 Regulation FD Disclosures
On November 3, 2022, the Company issued a press release announcing the appointment of Mr. Maack as the Company’s President. A copy of the press release is furnished as Exhibit 99.2 to this Current Report on Form 8-K and is incorporated by reference herein.
The information furnished in this Item 7.01 on this Current Report on Form 8-K, including Exhibit 99.2, shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act, or the Exchange Act, regardless of any general incorporation language in such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
10.1 |
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99.1 |
Press Release Dated November 3, 2022 (furnished herewith pursuant to Item 2.02) |
99.2 |
Press Release Dated November 3, 2022 (furnished herewith pursuant to Item 7.01) |
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Cover Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
DEFINITIVE HEALTHCARE CORP. |
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/s/ David Samuels |
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David Samuels |
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Chief Legal Officer |
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Date: November 3, 2022 |
Exhibit 10.1
EMPLOYMENT AGREEMENT
This Agreement (the “Agreement”), dated as of September 22, 2022, is made and entered into by and between Definitive Healthcare, LLC, a Massachusetts limited liability company (the “Company”), and Jonathan Maack (the “Executive”).
Introduction
The Company desires to retain the services of the Executive pursuant to the terms and conditions set forth herein and the Executive wishes to be employed by the Company on such terms and conditions. The Executive will be a senior executive of the Company, with significant access to information concerning the Company and its business. The disclosure or misuse of such information or the engaging in competitive activities would cause substantial harm to the Company.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
to time applicable to similarly situated executives; provided, however, unless approved in advance, no more than three (3) weeks of PTO may be taken consecutively.
Reimbursement of Documented Business Expenses. The Executive will be entitled to reimbursement of all reasonable expenses incurred in the ordinary course of business on behalf of the Company, subject to the presentation of appropriate documentation and approved by, or in accordance with the Company’s policies as approved by the Board. If any reimbursement provided by the Company pursuant to this Agreement would constitute deferred compensation for purposes
of Section 409A of the Internal Revenue Code of 1986, as amended (together with the regulations and guidance thereunder, “Section 409A”), such reimbursement shall be subject to the following rules: (i) the amounts to be reimbursed shall be determined pursuant to the terms of the applicable benefit plan, policy or agreement; (ii) the amounts eligible for reimbursement during any calendar year may not affect the expenses eligible for reimbursement in any other calendar year; (iii) any reimbursement of an eligible expense shall be made on or before the last day of the calendar year following the calendar year in which the expense was incurred; and (iv) the Executive’s right to reimbursement is not subject to liquidation or exchange for cash or another benefit. In addition, in association with the Executive’s relocation to the Boston area, the Company agrees to provide a lump-sum relocation payment of $330,000 (the “Relocation Amount”). The Relocation Amount shall be paid to Executive in the next regularly schedule payroll date within the month following the Start Date. The Relocation Amount shall be included in Executive’s gross income as wages and will be subject to withholding of all applicable taxes. If the Executive’s employment with the Company is terminated (i) within 12 months following the Start Date, then the Executive shall repay to the Company 100% of the Relocation Amount; or (ii) between the date that is 12 months following the Start Date and 24 months following the Start Date, then the Executive shall repay to the Company 50% of the Relocation Amount. Notwithstanding the foregoing, the Executive shall not be required to repay the Company any portion of the Relocation Amount if the Executive’s employment with the Company is terminated by the Company without Cause (other than as a result of death or Disability of the Executive) or by the Executive for Good Reason.
relating to the business of the Company including, without limitation, any customer or vendor lists, prospective customer names, financial statements and projections, know-how, pricing policies, operational methods, methods of doing business, technical processes, formulae, designs and design projects, inventions, computer hardware, software programs, business plans and projects pertaining to the Company and including any information of others that the Company has agreed to keep confidential; provided, that Confidential Information shall not include any information that has entered or enters the public domain through no fault of the Executive.
of its affiliates conducts its business (provided that the Executive shall not be prohibited from owning up to five percent (5%) of the outstanding stock of a corporation which is publicly traded, so long as the Executive has no active participation in the business of such corporation). The post- employment restrictions in this Section 7 shall not apply in the case of a termination of the Executive’s employment by the Company without Cause. The Executive acknowledges and agrees that the compensation, including the Initial RSU Grant, provided to the Executive by the Company under this Agreement constitute fair and reasonable, mutually agreed upon consideration for the restrictions contained in this Agreement, including, without limitation, in this Section 7. If the Executive has unlawfully taken, physically or electronically, property belonging to the Company, or has breached any fiduciary duties owed to the Company, the duration of the post- service restrictions in this Section 7 shall be extended to two years following the termination of the Executive’s employment. The Executive acknowledges that he has been provided notice of this Section 7 at least 10 business days prior to this Section 7 becoming effective, and that he or she has the right to consult with counsel prior to signing this Agreement.
meanings:
“Cause” shall mean, with respect to the Executive, (i) commission of or indictment
for, pleading guilty or no contest to, a felony, a gross misdemeanor, or any crime involving moral turpitude; (ii) any unlawful act which is materially injurious or detrimental to the reputation or financial interests of the Company or its affiliates; (iii) theft of property of the Company or its affiliates or falsification of documents of the Company or its affiliates or dishonesty in their preparation; or (iv) breach of any material provision of any agreement with the Company or its affiliates, including any non-competition, non-solicitation or confidentiality provisions, or any other similar restrictive covenants to which the Executive is or may become a party with the Company or its affiliates. To the extent any breach set forth in this definition of Cause can be cured, the Company shall provide written notice to the Executive identifying the breach and Executive shall have thirty (30) calendar days to cure the breach.
“Change of Control” shall mean the occurrence of any of the following events:
or voting power of which is owned, directly or indirectly, by a Person described in this subsection (iii)(B)(3). For purposes of this subsection (iii), gross fair market value means
the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets.
For purposes of this definition, Persons will be considered to be acting as a group if they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of stock, or similar business transaction with the Company.
Notwithstanding the foregoing, a transaction will not be deemed a Change of Control unless the transaction qualifies as a change in control event within the meaning of Code Section 409A, as it has been and may be amended from time to time, and any proposed or final Treasury Regulations and Internal Revenue Service guidance that has been promulgated or may be promulgated thereunder from time to time.
Further and for the avoidance of doubt, a transaction will not constitute a Change of Control if: (i) its sole purpose is to change the state of the Company’s incorporation, or (ii) its sole purpose is to create a holding company that will be owned in substantially the same proportions by the persons who held the Company’s securities immediately before such transaction.
“Change of Control Period” means the period beginning on the date three (3) months prior to, and ending on the date eighteen (18) months following, a Change of Control.
“Good Reason” means, without the Executive’s written consent, (a) a material diminution (of 10% or more) of the Base Salary or target Annual Bonus (i.e. the size of the target Annual Bonus that the Executive has the opportunity to earn); or (b) any material breach by the Company of any material written agreement between the Executive and the Company; or (c) a material relocation of the Executive’s principal office of employment; (d) a material diminution of the duties, title, authority, or responsibilities of the Executive (to include any change in reporting that results in Executive not reporting to the CEO of the Company or to the Board) other than those duties, titles, authority or responsibilities that are by their nature or specifically identified as temporary, provided that no condition set forth in the preceding (a), (b), (c) or (d) will be deemed Good Reason unless the Company fails to cure the condition(s) giving rise to Good Reason within
30 days from the date on which the Executive notifies the Company, in writing, of such condition(s) (the “Cure Period”), and Executive resigns from employment within thirty (30) days following the expiration of the Cure Period.
“Disability” means illness (mental or physical) or accident, which results in the Executive being unable to perform the Executive’s duties as an Executive of the Company as reasonably determined by a competent physician, for a period of 180 days, whether or not consecutive, in any 12-month period.
“Severance” means (i) continuation of regular payments of Base Salary (at the rate in effect on the date of termination) to the Executive for a period of twelve (12) months from the date of termination of employment, payable in accordance with the Company’s regular payroll schedule and subject to withholding for all applicable taxes; and; (ii) payment of any Annual Bonus
for a prior fiscal year to the extent earned and not previously paid, plus a lump sum payment of the Annual Bonus to be earned by the Executive during the twelve month period following the date of termination of employment at a level equal to the greater of the bonus for the current year at target or the average of the bonus paid in the last two (2) calendar years if such history exists, in each case, payable within thirty (30) days following the date of termination and subject to
withholding for all applicable taxes; (iii) acceleration of the vesting of all stock options, restricted stock shares and RSUs, profit interests, or other forms of equity (the “Equity”), awarded to the Executive by the Company at any time, that would otherwise have vested during the twelve-month period following the termination date; and (iv) should Executive timely elect and be eligible to continue receiving group medical insurance pursuant to the Consolidated Omnibus Budget Reconciliation Act, payment for a period of twelve (12) months of the entire amount of the premiums for such coverage. For the purposes of clarity, the above acceleration of vesting will only apply to instruments that vest based on time. Instruments that vest based on performance will be excluded from this acceleration.
The Severance benefits available to the Executive under this Section 11 are the sole and exclusive severance payments and benefits to which the Executive may be entitled upon termination of the Executive’s employment. The Executive shall not be entitled to receive any other severance-related payments or benefits under any other plan or agreement which may from time to time be made available to other Executives of the Company or any affiliate.
pursuant to the Consolidated Omnibus Budget Reconciliation Act, payment for a period of eighteen (18) months of the entire amount of the premiums for such coverage.
For purposes of Section 409A, each payment of Severance shall be considered a separate payment and not one of a series of payments. Any payment under this Section 10 that is not made during the period following the termination of the Employee’s employment because the Employee has not executed the release contemplated hereby shall be paid to the Employee in a single lump sum on the first payroll date following the last day of any applicable revocation period after the Employee executes the release; provided, that the Employee executes and does not revoke the release in accordance with the requirements hereof.
For purposes of Section 409A of the Code, each payment made under this Agreement shall be treated as a separate payment. In no event may Executive, directly or indirectly, designate the calendar year of any payment. All reimbursements provided under this Agreement shall be made or provided in accordance with the requirements of Section 409A of the Code, including, where applicable, the requirement that (i) any reimbursement be for expenses incurred during Executive’s lifetime (or during a shorter period of time specified in this Agreement), (ii) the amount of expenses eligible for reimbursement during a calendar year may not affect the expenses eligible for reimbursement in any other calendar year, (iii) the reimbursement of an eligible expense will be made on or before the last day of the calendar year following the year in which the expense is incurred, and (iv) the right to reimbursement is not subject to liquidation or exchange for another benefit.
Notwithstanding anything to the contrary herein, if a payment or benefit under this Agreement is due to a “separation from service” for purposes of the rules under Treas. Reg. § 1.409A-3(i)(2) (payments to specified employees upon a separation from service) and Executive
is determined to be a “specified employee” (as determined under Treas. Reg. § 1.409A-1(i)), such payment or benefit shall, to the extent necessary to comply with the requirements of Section 409A of the Code, be made or provided on the later of the date specified by the foregoing provisions of this Agreement or the date that is six months after the date of Executive’s separation from service (or, if earlier, the date of Executive’s death). Any installment payments that are delayed pursuant to this Section 12 shall be accumulated and paid in a lump sum on the first day of the seventh month following Executive’s separation from service, and the remaining installment payments shall begin on such date in accordance with the schedule provided in this Agreement.
and benefits will be treated in accordance with the results of such vote, except that any reduction in, or waiver of, such payments or benefits required by such vote will be applied without any application of discretion by Executive and in the order prescribed by this Section 14. Unless the Company and Executive otherwise agree in writing, any determination required under this Section 14 will be made in writing by an independent firm (the “Firm”), whose determination will be conclusive and binding upon Executive and the Company for all purposes. For purposes of making the calculations required by this Section 14, the Firm may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code. The Company and Executive will furnish to the Firm such information and documents as the Firm may reasonably request in order to make a determination under this Section 14. The Company will bear the fees of the Firm and all costs the Firm may reasonably incur in connection with any calculations contemplated by this Section 14.
records.
such courts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding and irrevocably waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding which is brought in any such court has been brought in an inconvenient form.
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IN WITNESS WHEREOF, this Agreement has been executed and delivered as a sealed instrument as of the date first above written.
DEFINITIVE HEALTHCARE, LLC
By: /s/ Robert Musslewhite
Name: Robert Musslewhite Title: Chief Executive Officer
/s/ Jonathan Niles Maack
Executive: Jonathan Maack
[Signature Page to Employment Agreement]
Exhibit 10.2
Definitive Healthcare Corp.
2021 Equity Incentive Plan
Restricted Stock Unit Award Agreement
This Restricted Stock Unit Award Agreement (this “Agreement”) is made by and between Definitive Healthcare Corp., a Delaware corporation (the “Company”), and [●] (the “Participant”), effective as of [●], 2022 (the “Date of Grant”).
RECITALS
WHEREAS, the Company has adopted the Definitive Healthcare Corp. 2021 Equity Incentive Plan (the “Plan”), which is incorporated herein by reference and made a part of this Agreement. Capitalized terms not otherwise defined in this Agreement shall have the meanings ascribed to those terms in the Plan; and
WHEREAS, the Committee has authorized and approved the grant of an Award to the Participant that will provide the Participant the opportunity to receive shares of Common Stock upon the settlement of restricted stock units on the terms and conditions set forth in the Plan and this Agreement (“Restricted Stock Units”).
NOW THEREFORE, in consideration of the premises and mutual covenants set forth in this Agreement, the parties agree as follows:
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(c) Termination of Service; Breach. Except as set forth in Section 11.3 of the Plan which shall apply upon termination of the Participant’s service without Cause or for Good Reason (as defined in the Participant’s then-current employment agreement with the Company or its Affiliate, if any; if no such agreement or no such definition, Good Reason shall not apply), upon termination of the Participant’s Service for any other reason or no reason, any then unvested Restricted Stock Units will be forfeited immediately, automatically and without consideration. If the Participant breaches Section 4, Section 5, or any other restrictive covenant with the
Company or its Affiliate, any vested or unvested Restricted Stock Units will be forfeited immediately, automatically and without consideration.
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[Signature page follows.]
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IN WITNESS WHEREOF, the Company and the Participant have executed this Restricted Stock Unit Award Agreement as of the dates set forth below.
PARTICIPANT DEFINITIVE HEALTHCARE CORP.
______________________________ By: ______________________________
Date:_________________________ Date: _____________________________
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Exhibit 99.1
Definitive Healthcare Reports Financial Results for Third Quarter Fiscal Year 2022
Third quarter revenue grew 33% year-over-year to $57.4 million
Framingham, MA (November 3, 2022) – Definitive Healthcare Corp. (“Definitive Healthcare" or the "Company") (Nasdaq: DH), an industry leader in healthcare commercial intelligence, today announced financial results for the quarter ended September 30, 2022.
Third Quarter 2022 Financial and Other Recent Highlights:
Financial Highlights:
"We once again delivered an attractive combination of strong top line growth and substantial profitability. Revenue exceeded the top end of our guidance range and adjusted EBITDA was at the top end of our range, a clear demonstration of our highly efficient business model,” said Robert Musslewhite, CEO of Definitive Healthcare. “We continued to execute on our land and expand strategy with important wins at new and existing customers. We also launched several important products, including Passport Express, while making good progress on the continuing integration of Analytical Wizards.”
Recent Business and Operating Highlights:
Customer Wins
In the third quarter, Definitive Healthcare had multiple key customer wins, including:
Innovation
Definitive Healthcare also continued to release new products and enhance its core platform in the quarter. Notable innovations include:
In addition, the Company continues to invest in the core Definitive Healthcare platform. Some of the new features recently added to the platform include:
Business Outlook
Based on information as of November 3, 2022, the Company is issuing the following financial guidance.
Fourth Quarter 2022:
Full Year 2022:
Conference Call Information
Definitive Healthcare will host a conference call today, November 3, 2022, at 5:00 p.m. (Eastern Time) to discuss the Company's financial results and current business outlook. To access the call, dial (844) 826-3033 (domestic) or (412) 317-5185 (international). The conference ID number is 10170962. Shortly after the conclusion of the call, a replay of this conference call will be available through November 17, 2022 at (844) 512-2921 (domestic) or (412) 317-6671 (international). The replay passcode is 10170962. A live audio webcast of the event will be available on the Definitive Healthcare’s Investor Relations website at https://ir.definitivehc.com/.
About Definitive Healthcare
At Definitive Healthcare, our passion is to transform data, analytics and expertise into healthcare commercial intelligence. We help clients uncover the right markets, opportunities, and people, so they can shape tomorrow’s healthcare industry. Our SaaS platform creates new paths to commercial success in the healthcare market, so companies can identify where to go next. Learn more at definitivehc.com.
Forward-Looking Statements
This press release may include forward-looking statements that reflect our current views with respect to future events and financial performance. Such statements are provided under the “safe harbor” protection of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all statements that do not relate solely to historical or current facts, and can generally be identified by words or phrases written in the future tense and/or preceded by words such as “likely,” “should,” “may,” “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects” or similar words or variations thereof, or the negative thereof, references to future periods, or by the inclusion of forecasts or projections, but these terms are not the exclusive means of identifying such statements. Examples of forward-looking statements include, but are not limited to, statements we make regarding our outlook, financial guidance, the market, industry and macroeconomic environment, our business, growth strategies, product development efforts and future expenses, customer growth and statements reflecting our expectations about our ability to execute on our strategic plans, achieve future growth and profitability and achieve our financial goals.
Forward-looking statements in this press release are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, by their nature, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. As a result, our actual results may differ materially from those contemplated by the forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include the following: an outbreak of disease, global or localized health pandemic or epidemic, or the fear of such an event (such as the COVID-19 global pandemic), including the global economic uncertainty and measures taken in response; the short- and long-term effects of the COVID-19 global pandemic, including the pace of recovery or any future resurgence; the ongoing hostility between Russia and Ukraine and global geopolitical tension and the related impact on macroeconomic conditions; actual or potential changes in international, national, regional and local economic, business and financial conditions, including recessions, inflation, rising interest rates, volatility in the capital markets and related market uncertainty; the impact of worsening macroeconomic conditions on our new and existing customers, and the related impacts on our ability to acquire new customers and generate additional revenue from existing customers; our inability to generate substantially all of our revenue and cash flows from sales of subscriptions to our platform and any decline in demand for our platform and the data we offer; the competitiveness of the market in which we operate and our ability to compete effectively; the failure to maintain and improve our platform, or develop new modules or insights for healthcare commercial intelligence; the inability to obtain and maintain accurate, comprehensive or reliable data, which could result in reduced demand for our platform; the risk that our recent growth rates may not be indicative of our future growth; the inability to achieve or sustain profitability in the future compared to historical levels as we increase investments in our business; the loss of our access to our data providers; the failure to respond to advances in healthcare commercial intelligence; an inability to attract new customers and expand subscriptions of current customers; the risk of cyber-attacks and security vulnerabilities; litigation, investigations
or other legal, governmental or regulatory actions; and the possibility that our security measures are breached or unauthorized access to data is otherwise obtained.
Additional factors or events that could cause our actual performance to differ from these forward-looking statements may emerge from time to time, and it is not possible for us to predict all of them. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, our actual financial condition, results of operations, future performance and business may vary in material respects from the performance projected in these forward-looking statements.
For additional discussion of factors that could impact our operational and financial results, refer to our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 and our Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other subsequent SEC filings, which are or will be available on the Investor Relations page of our website at ir.definitivehc.com and on the SEC website at www.sec.gov.
All information in this press release speaks only as of the date on which it is made. We undertake no obligation to publicly update this information, whether as a result of new information, future developments or otherwise, except as may be required by law.
Website
Definitive Healthcare intends to use its website as a distribution channel of material company information. Financial and other important information regarding the Company is routinely posted on and accessible through the Company’s website at https://www.definitivehc.com/. Accordingly, you should monitor the investor relations portion of our website at https://ir.definitivehc.com/ in addition to following our press releases, SEC filings, and public conference calls and webcasts. In addition, you may automatically receive email alerts and other information about the Company when you enroll your email address by visiting the “Email Alerts” section of our investor relations page at https://ir.definitivehc.com/.
Non-GAAP Financial Measures
We have presented supplemental non-GAAP financial measures as part of this earnings release. We believe that these supplemental non-GAAP financial measures are useful to investors because they allow for an evaluation of the Company with a focus on the performance of its core operations, including providing meaningful comparisons of financial results to historical periods and to the financial results of peer and competitor companies. A reconciliation of GAAP to Non-GAAP results has been provided in the financial statement tables included at the end of this press release.
We refer to Unlevered Free Cash Flow, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Gross Profit, Adjusted Gross Margin, Adjusted Operating Income, Adjusted Net Income and Adjusted Net Income Per Diluted Share as non-GAAP financial measures. These non-GAAP financial measures are not prepared in accordance with generally accepted accounting principles in the U.S., (“GAAP”). These are supplemental financial measures of our performance and should not be considered substitutes for net (loss) income, gross profit or any other measure derived in accordance with GAAP.
We define Unlevered Free Cash Flow as net cash provided from operating activities less purchases of property, equipment and other assets, plus cash interest expense and cash payments related to transaction, integration and restructuring related expenses, earnouts and other non-recurring items. Unlevered Free Cash Flow does not represent residual cash flow available for discretionary expenditures since, among other things, we have mandatory debt service requirements.
We define EBITDA as earnings before debt-related costs, including interest expense, net and loss on extinguishment of debt, income taxes and depreciation and amortization. Adjusted EBITDA is defined as EBITDA adjusted to exclude certain items of a significant or unusual nature, including other income and expense, equity-based compensation, transaction, integration and restructuring expenses and other non-recurring expenses. Adjusted EBITDA Margin is defined as Adjusted EBITDA as a percentage of revenue. Adjusted EBITDA and Adjusted EBITDA Margin are key metrics used by management and our board of directors to assess the profitability of our operations. We believe that Adjusted EBITDA and Adjusted EBITDA Margin provide useful
measures to investors to assess our operating performance because these metrics eliminate non-recurring and unusual items and non-cash expenses, which we do not consider indicative of ongoing operational performance. We believe that these metrics are helpful to investors in measuring the profitability of our operations on a consolidated level.
We define Adjusted Gross Profit as revenue less cost of revenue (excluding acquisition-related depreciation and amortization and equity compensation costs) and Adjusted Gross Margin means Adjusted Gross Profit as a percentage of revenue. Adjusted Gross Profit differs from gross profit, in that gross profit includes acquisition-related depreciation and amortization expense and equity compensation costs. Adjusted Gross Profit and Adjusted Gross Margin are key metrics used by management and our board of directors to assess our operations. We exclude acquisition-related depreciation and amortization expenses as they have no direct correlation to the cost of operating our business on an ongoing basis. A small quantity of equity-based compensation is included in cost of revenue in accordance with GAAP but is excluded from our Adjusted Gross Profit calculations due to its non-cash nature.
We define Adjusted Operating Income as income from operations plus acquisition related amortization, equity-based compensation, transaction, integration and restructuring expenses and other non-recurring expenses.
We define Adjusted Net Income as Adjusted Operating Income less interest expense, net, other expense, net, excluding TRA liability remeasurement expense and recurring income tax expense including the incremental tax effects of adjustments to arrive at Adjusted Operating Income. We define Adjusted Net Income Per Diluted Share as Adjusted Net Income divided by diluted outstanding shares.
Our use of these non-GAAP terms may vary from the use of similar terms by other companies in our industry and accordingly may not be comparable to similarly titled measures used by other companies and are not measures of performance calculated in accordance with GAAP. Our presentation of these non-GAAP financial measures are intended as supplemental measures of our performance that are not required by, or presented in accordance with, GAAP. These non-GAAP financial measures should not be considered as alternatives to (loss) income from operations, net (loss) income, gross profit, earnings per share or any other performance measures derived in accordance with GAAP, or as measures of operating cash flows or liquidity.
We do not provide a quantitative reconciliation of the forward-looking non-GAAP financial measures included in this press release to the most directly comparable GAAP measures due to the high variability and difficulty to predict certain items excluded from these non-GAAP financial measures; in particular, the effects of stock-based compensation expense, taxes and amounts under the exchange tax receivable agreement, deferred tax assets and deferred tax liabilities, and transaction, integration and restructuring expenses. We expect the variability of these excluded items may have a significant, and potentially unpredictable, impact on our future GAAP financial results.
In evaluating our non-GAAP financial measures, you should be aware that in the future we may incur expenses similar to those eliminated in these presentations.
Investor Contact:
Brian Denyeau
ICR for Definitive Healthcare
brian.denyeau@icrinc.com
646-277-1251
Media Contact:
Danielle Johns
djohns@definitivehc.com
Definitive Healthcare Corp.
Condensed Consolidated Balance Sheets
(amounts in thousands, except number of shares and par value)
|
|
September 30, 2022 |
|
|
December 31, 2021 |
|
||
|
|
(unaudited) |
|
|
|
|
||
Assets |
|
|
|
|
|
|
||
Current assets: |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
228,828 |
|
|
$ |
387,498 |
|
Short-term investments |
|
|
120,798 |
|
|
|
— |
|
Accounts receivable, net |
|
|
33,689 |
|
|
|
43,336 |
|
Prepaid expenses and other current assets |
|
|
9,716 |
|
|
|
6,518 |
|
Current portion of deferred contract costs |
|
|
9,179 |
|
|
|
6,880 |
|
Total current assets |
|
|
402,210 |
|
|
|
444,232 |
|
Property and equipment, net |
|
|
4,581 |
|
|
|
5,069 |
|
Operating lease right-of-use assets, net |
|
|
10,051 |
|
|
|
— |
|
Other assets |
|
|
5,105 |
|
|
|
8,431 |
|
Deferred contract costs, net of current portion |
|
|
13,164 |
|
|
|
11,667 |
|
Investment in equity securities |
|
|
— |
|
|
|
32,675 |
|
Intangible assets, net |
|
|
361,703 |
|
|
|
352,470 |
|
Goodwill |
|
|
1,322,959 |
|
|
|
1,261,444 |
|
Total assets |
|
$ |
2,119,773 |
|
|
$ |
2,115,988 |
|
Liabilities and Equity |
|
|
|
|
|
|
||
Current liabilities: |
|
|
|
|
|
|
||
Accounts payable |
|
|
10,266 |
|
|
|
4,651 |
|
Accrued expenses and other current liabilities |
|
|
18,885 |
|
|
|
22,658 |
|
Current portion of deferred revenue |
|
|
83,820 |
|
|
|
83,611 |
|
Current portion of term loan |
|
|
6,875 |
|
|
|
6,875 |
|
Current portion of operating lease liabilities |
|
|
1,706 |
|
|
|
— |
|
Total current liabilities |
|
|
121,552 |
|
|
|
117,795 |
|
Long term liabilities: |
|
|
|
|
|
|
||
Deferred revenue |
|
|
504 |
|
|
|
412 |
|
Term loan, net of current portion |
|
|
259,064 |
|
|
|
263,808 |
|
Operating lease liabilities, net of current portion |
|
|
10,450 |
|
|
|
— |
|
Tax receivable agreements liability |
|
|
157,175 |
|
|
|
153,529 |
|
Deferred tax liabilities |
|
|
91,533 |
|
|
|
75,888 |
|
Other long-term liabilities |
|
|
1,973 |
|
|
|
1,294 |
|
Total liabilities |
|
|
642,251 |
|
|
|
612,726 |
|
Equity: |
|
|
|
|
|
|
||
Class A Common Stock, par value $0.001, 600,000,000 shares authorized, 104,961,965 and 97,030,095 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively |
|
|
105 |
|
|
|
97 |
|
Class B Common Stock, par value $0.00001, 65,000,000 shares authorized, 50,566,898 and 48,778,774 shares issued and outstanding, respectively, at September 30, 2022, and 58,244,627 and 55,488,221 shares issued and outstanding, respectively at December 31, 2021 |
|
|
— |
|
|
|
— |
|
Additional paid-in capital |
|
|
962,874 |
|
|
|
890,724 |
|
Accumulated other comprehensive income |
|
|
3,911 |
|
|
|
62 |
|
Accumulated deficit |
|
|
(34,140 |
) |
|
|
(17,677 |
) |
Noncontrolling interests |
|
|
544,772 |
|
|
|
630,056 |
|
Total equity |
|
|
1,477,522 |
|
|
|
1,503,262 |
|
Total liabilities and equity |
|
$ |
2,119,773 |
|
|
$ |
2,115,988 |
|
Definitive Healthcare Corp.
Condensed Consolidated Statements of Operations
(amounts in thousands, except share amounts and per share data: unaudited)
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||
Revenue |
|
$ |
57,382 |
|
|
$ |
43,084 |
|
|
$ |
162,054 |
|
|
$ |
119,841 |
|
Cost of revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cost of revenue exclusive of amortization (1) |
|
|
6,569 |
|
|
|
5,129 |
|
|
|
18,717 |
|
|
|
13,895 |
|
Amortization |
|
|
3,155 |
|
|
|
5,356 |
|
|
|
14,113 |
|
|
|
15,896 |
|
Gross profit |
|
|
47,658 |
|
|
|
32,599 |
|
|
|
129,224 |
|
|
|
90,050 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Sales and marketing (1) |
|
|
21,184 |
|
|
|
14,376 |
|
|
|
66,062 |
|
|
|
39,003 |
|
Product development (1) |
|
|
9,205 |
|
|
|
4,746 |
|
|
|
24,761 |
|
|
|
12,817 |
|
General and administrative (1) |
|
|
13,718 |
|
|
|
7,880 |
|
|
|
33,564 |
|
|
|
18,891 |
|
Depreciation and amortization |
|
|
10,037 |
|
|
|
9,760 |
|
|
|
30,105 |
|
|
|
28,814 |
|
Transaction, integration and restructuring expenses |
|
|
2,945 |
|
|
|
(137 |
) |
|
|
6,362 |
|
|
|
3,332 |
|
Total operating expenses |
|
|
57,089 |
|
|
|
36,625 |
|
|
|
160,854 |
|
|
|
102,857 |
|
Loss from operations |
|
|
(9,431 |
) |
|
|
(4,026 |
) |
|
|
(31,630 |
) |
|
|
(12,807 |
) |
Other income (expense), net: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other income, net |
|
|
5,528 |
|
|
|
119 |
|
|
|
9,429 |
|
|
|
143 |
|
Interest expense, net |
|
|
(2,466 |
) |
|
|
(7,186 |
) |
|
|
(6,930 |
) |
|
|
(23,956 |
) |
Loss on extinguishment of debt |
|
|
- |
|
|
|
(9,873 |
) |
|
|
- |
|
|
|
(9,873 |
) |
Total other income (expense), net |
|
|
3,062 |
|
|
|
(16,940 |
) |
|
|
2,499 |
|
|
|
(33,686 |
) |
Net loss before income taxes |
|
|
(6,369 |
) |
|
|
(20,966 |
) |
|
|
(29,131 |
) |
|
|
(46,493 |
) |
Income tax benefit |
|
|
15 |
|
|
|
- |
|
|
|
141 |
|
|
|
- |
|
Net loss |
|
|
(6,354 |
) |
|
|
(20,966 |
) |
|
|
(28,990 |
) |
|
|
(46,493 |
) |
Less: Net loss attributable to Definitive OpCo prior to the Reorganization Transactions |
|
|
— |
|
|
|
(7,816 |
) |
|
|
— |
|
|
|
(33,343 |
) |
Less: Net loss attributable to noncontrolling interests |
|
|
(3,665 |
) |
|
|
(5,172 |
) |
|
|
(12,527 |
) |
|
|
(5,172 |
) |
Net loss attributable to Definitive Healthcare Corp. |
|
$ |
(2,689 |
) |
|
$ |
(7,978 |
) |
|
$ |
(16,463 |
) |
|
$ |
(7,978 |
) |
Net loss per share of Class A Common Stock: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic and diluted |
|
$ |
(0.03 |
) |
|
$ |
(0.09 |
) |
|
$ |
(0.16 |
) |
|
$ |
(0.09 |
) |
Weighted average Class A Common Stock outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic and diluted |
|
|
102,904,565 |
|
|
|
88,263,333 |
|
|
|
99,776,742 |
|
|
|
88,263,333 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
(1) Amounts include equity-based compensation expense as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||
Cost of revenue |
|
$ |
236 |
|
|
$ |
48 |
|
|
$ |
698 |
|
|
$ |
79 |
|
Sales and marketing |
|
|
2,260 |
|
|
|
326 |
|
|
|
11,062 |
|
|
|
567 |
|
Product development |
|
|
2,171 |
|
|
|
187 |
|
|
|
5,301 |
|
|
|
341 |
|
General and administrative |
|
|
4,466 |
|
|
|
1,756 |
|
|
|
7,949 |
|
|
|
3,351 |
|
Total equity-based compensation expense |
|
$ |
9,133 |
|
|
$ |
2,317 |
|
|
$ |
25,010 |
|
|
$ |
4,338 |
|
Definitive Healthcare Corp.
Condensed Consolidated Statements of Cash Flows
(amounts in thousands, unaudited)
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net loss |
|
$ |
(6,354 |
) |
|
$ |
(20,966 |
) |
|
$ |
(28,990 |
) |
|
$ |
(46,493 |
) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Depreciation and amortization |
|
|
469 |
|
|
|
452 |
|
|
|
1,721 |
|
|
|
1,193 |
|
Amortization of intangible assets |
|
|
12,723 |
|
|
|
14,664 |
|
|
|
42,497 |
|
|
|
43,517 |
|
Amortization of deferred contract costs |
|
|
2,283 |
|
|
|
1,293 |
|
|
|
6,274 |
|
|
|
3,195 |
|
Equity-based compensation |
|
|
9,133 |
|
|
|
2,317 |
|
|
|
25,010 |
|
|
|
4,338 |
|
Amortization of debt issuance costs |
|
|
176 |
|
|
|
475 |
|
|
|
527 |
|
|
|
1,522 |
|
Allowance for doubtful accounts |
|
|
763 |
|
|
|
181 |
|
|
|
769 |
|
|
|
76 |
|
Loss on extinguishment of debt |
|
|
— |
|
|
|
9,843 |
|
|
|
— |
|
|
|
9,843 |
|
Non-cash restructuring charges related to office leases |
|
|
— |
|
|
|
— |
|
|
|
1,023 |
|
|
|
— |
|
Tax receivable agreement remeasurement |
|
|
(5,153 |
) |
|
|
— |
|
|
|
(8,296 |
) |
|
|
— |
|
Changes in fair value of contingent consideration |
|
|
— |
|
|
|
(212 |
) |
|
|
— |
|
|
|
3,169 |
|
Deferred income taxes |
|
|
(42 |
) |
|
|
— |
|
|
|
(206 |
) |
|
|
— |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Accounts receivable |
|
|
(2,816 |
) |
|
|
(5,297 |
) |
|
|
12,454 |
|
|
|
5,179 |
|
Prepaid expenses and other current assets |
|
|
1,235 |
|
|
|
53 |
|
|
|
2,554 |
|
|
|
(561 |
) |
Deferred contract costs |
|
|
(3,224 |
) |
|
|
(3,001 |
) |
|
|
(10,070 |
) |
|
|
(9,043 |
) |
Contingent consideration |
|
|
— |
|
|
|
— |
|
|
|
(6,400 |
) |
|
|
— |
|
Accounts payable, accrued expenses and other current liabilities |
|
|
6,194 |
|
|
|
(1,846 |
) |
|
|
3,956 |
|
|
|
(3,965 |
) |
Deferred revenue |
|
|
(4,702 |
) |
|
|
1,096 |
|
|
|
(3,024 |
) |
|
|
9,023 |
|
Net cash provided by (used in) operating activities |
|
|
10,685 |
|
|
|
(948 |
) |
|
|
39,799 |
|
|
|
20,993 |
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Purchases of property, equipment and other assets |
|
|
(1,878 |
) |
|
|
(440 |
) |
|
|
(3,455 |
) |
|
|
(5,662 |
) |
Purchases of short-term investments |
|
|
(54,309 |
) |
|
|
— |
|
|
|
(217,266 |
) |
|
|
— |
|
Maturities of short-term investments |
|
|
52,000 |
|
|
|
— |
|
|
|
96,000 |
|
|
|
— |
|
Cash paid for acquisitions, net of cash acquired |
|
|
203 |
|
|
|
— |
|
|
|
(56,296 |
) |
|
|
— |
|
Net cash used in investing activities |
|
|
(3,984 |
) |
|
|
(440 |
) |
|
|
(181,017 |
) |
|
|
(5,662 |
) |
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Proceeds from term loan |
|
|
— |
|
|
|
275,000 |
|
|
|
— |
|
|
|
275,000 |
|
Repayments of term loans |
|
|
(1,718 |
) |
|
|
(470,402 |
) |
|
|
(5,156 |
) |
|
|
(472,742 |
) |
Taxes paid related to net share settlement of equity awards |
|
|
(2,745 |
) |
|
|
— |
|
|
|
(2,745 |
) |
|
|
— |
|
Payment of contingent consideration |
|
|
— |
|
|
|
— |
|
|
|
(1,100 |
) |
|
|
(1,500 |
) |
Payment of debt issuance costs |
|
|
— |
|
|
|
(3,511 |
) |
|
|
— |
|
|
|
(3,511 |
) |
Proceeds from equity offerings, net of underwriting discounts |
|
|
— |
|
|
|
452,812 |
|
|
|
— |
|
|
|
452,812 |
|
Repurchase of outstanding equity/Definitive OpCo units |
|
|
— |
|
|
|
(92,812 |
) |
|
|
— |
|
|
|
(92,812 |
) |
Payments of equity offering issuance costs |
|
|
— |
|
|
|
(4,519 |
) |
|
|
(1,299 |
) |
|
|
(5,913 |
) |
Member contributions |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
5,500 |
|
Member distributions |
|
|
(1,652 |
) |
|
|
(3,811 |
) |
|
|
(6,939 |
) |
|
|
(7,139 |
) |
Net cash (used in) provided by financing activities |
|
|
(6,115 |
) |
|
|
152,757 |
|
|
|
(17,239 |
) |
|
|
149,695 |
|
Net increase (decrease) in cash and cash equivalents |
|
|
586 |
|
|
|
151,369 |
|
|
|
(158,457 |
) |
|
|
165,026 |
|
Effect of exchange rate changes on cash and cash equivalents |
|
|
40 |
|
|
|
(55 |
) |
|
|
(213 |
) |
|
|
(48 |
) |
Cash and cash equivalents, beginning of period |
|
|
228,202 |
|
|
|
38,438 |
|
|
|
387,498 |
|
|
|
24,774 |
|
Cash and cash equivalents, end of period |
|
$ |
228,828 |
|
|
$ |
189,752 |
|
|
$ |
228,828 |
|
|
$ |
189,752 |
|
Supplemental cash flow disclosures: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash paid during the period for: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest |
|
$ |
2,898 |
|
|
$ |
11,615 |
|
|
$ |
7,248 |
|
|
$ |
27,587 |
|
Income taxes |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
13 |
|
Acquisitions: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net assets acquired, net of cash acquired |
|
$ |
(203 |
) |
|
$ |
— |
|
|
$ |
97,296 |
|
|
$ |
— |
|
Initial cash investment in prior year |
|
|
— |
|
|
|
— |
|
|
|
(40,000 |
) |
|
|
— |
|
Contingent consideration |
|
|
— |
|
|
|
— |
|
|
|
(1,000 |
) |
|
|
— |
|
Net cash paid for acquisitions |
|
$ |
(203 |
) |
|
$ |
— |
|
|
$ |
56,296 |
|
|
$ |
— |
|
Supplemental disclosure of non-cash investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Capital expenditures included in accrued expenses |
|
$ |
4,504 |
|
|
$ |
369 |
|
|
$ |
4,504 |
|
|
$ |
369 |
|
Decrease in accrued purchases of data |
|
$ |
— |
|
|
$ |
(3,389 |
) |
|
$ |
— |
|
|
$ |
(3,389 |
) |
Supplemental disclosure of non-cash financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Unpaid equity offering costs included in accrued expenses |
|
$ |
147 |
|
|
$ |
5,481 |
|
|
$ |
147 |
|
|
$ |
5,481 |
|
Definitive Healthcare Corp.
Reconciliations of Non-GAAP Financial Measures to Closest GAAP Equivalent
Reconciliation of GAAP Operating Cash Flow to Unlevered Free Cash Flow
(in thousands; unaudited)
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||
Cash flow from operations |
$ |
10,685 |
|
|
$ |
(948 |
) |
|
$ |
39,799 |
|
|
$ |
20,993 |
|
Purchases of property, equipment and other assets |
|
(1,878 |
) |
|
|
(440 |
) |
|
|
(3,455 |
) |
|
|
(5,662 |
) |
Interest paid in cash |
|
2,898 |
|
|
|
11,615 |
|
|
|
7,248 |
|
|
|
27,587 |
|
Transaction, integration and restructuring expenses paid in cash (a) |
|
3,249 |
|
|
|
75 |
|
|
|
5,744 |
|
|
|
163 |
|
Earnout payment (b) |
|
— |
|
|
|
— |
|
|
|
6,400 |
|
|
|
— |
|
Other non-recurring items (c) |
|
547 |
|
|
|
1,149 |
|
|
|
2,738 |
|
|
|
3,313 |
|
Unlevered Free Cash Flow |
$ |
15,501 |
|
|
$ |
11,451 |
|
|
$ |
58,474 |
|
|
$ |
46,394 |
|
(a) Transaction and integration expenses paid in cash primarily represent legal, accounting and consulting expenses related to our acquisitions, including a go-to market integration project conducted in the third quarter of 2022. Restructuring expenses paid in cash primarily represent rent and exit costs related to office relocations.
(b) Earnout payment represents final settlement of contingent consideration included in cash flow from operations.
(c) Non-recurring items represent expenses that are typically one-time or non-operational in nature.
Reconciliation of GAAP Net Loss to Adjusted Net Income and GAAP Operating Loss to Adjusted Operating Income
(in thousands, except per share amounts; unaudited)
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||
Net loss |
$ |
(6,354 |
) |
|
$ |
(20,966 |
) |
|
$ |
(28,990 |
) |
|
$ |
(46,493 |
) |
Add: Income tax provision (benefit) |
|
(15 |
) |
|
|
— |
|
|
|
(141 |
) |
|
|
— |
|
Add: Interest expense, net |
|
2,466 |
|
|
|
7,186 |
|
|
|
6,930 |
|
|
|
23,956 |
|
Add: Loss from extinguishment from debt |
|
— |
|
|
|
9,873 |
|
|
|
— |
|
|
|
9,873 |
|
Add: Other expense (income), net |
|
(5,528 |
) |
|
|
(119 |
) |
|
|
(9,429 |
) |
|
|
(143 |
) |
Loss from operations |
|
(9,431 |
) |
|
|
(4,026 |
) |
|
|
(31,630 |
) |
|
|
(12,807 |
) |
Add: Amortization of intangible assets acquired through business combinations |
|
12,478 |
|
|
|
14,404 |
|
|
|
41,698 |
|
|
|
42,746 |
|
Add: Equity-based compensation |
|
9,133 |
|
|
|
2,317 |
|
|
|
25,010 |
|
|
|
4,338 |
|
Add: Transaction, integration and restructuring expenses |
|
2,945 |
|
|
|
(137 |
) |
|
|
6,362 |
|
|
|
3,332 |
|
Add: Other non-recurring items |
|
547 |
|
|
|
1,149 |
|
|
|
2,738 |
|
|
|
3,313 |
|
Adjusted Operating Income |
|
15,672 |
|
|
|
13,707 |
|
|
|
44,178 |
|
|
|
40,922 |
|
Less: Interest expense, net |
|
(2,466 |
) |
|
|
(7,186 |
) |
|
|
(6,930 |
) |
|
|
(23,956 |
) |
Less: Recurring income tax benefit (provision) |
|
15 |
|
|
|
— |
|
|
|
533 |
|
|
|
— |
|
Less: Foreign currency gain |
|
375 |
|
|
|
119 |
|
|
|
1,133 |
|
|
|
143 |
|
Less: Tax impacts of adjustments to net income (loss) |
|
(4,722 |
) |
|
|
(4,472 |
) |
|
|
(13,470 |
) |
|
|
(10,304 |
) |
Adjusted Net Income |
$ |
8,874 |
|
|
$ |
2,168 |
|
|
$ |
25,444 |
|
|
$ |
6,805 |
|
Shares for Adjusted Net Income Per Diluted Share (a) |
|
155,524,190 |
|
|
|
148,298,331 |
|
|
|
154,835,056 |
|
|
|
148,298,331 |
|
Adjusted Net Income Per Share |
$ |
0.06 |
|
|
$ |
0.01 |
|
|
$ |
0.16 |
|
|
$ |
0.05 |
|
(a) Diluted Adjusted Net Income Per Share is computed by giving effect to all potential weighted average Class A common stock and any securities that are convertible into Class A common stock, including Definitive OpCo units and restricted stock units. The dilutive effect of outstanding awards and convertible securities is reflected in diluted earnings per share by application of the treasury stock method assuming proceeds from unrecognized compensation as required by GAAP. Fully diluted shares are 158,940,807 and 149,745,883 as of September 30, 2022 and 2021, respectively.
Reconciliation of Adjusted EBITDA to GAAP Net Loss
(in thousands; unaudited)
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||
Net loss |
$ |
(6,354 |
) |
|
$ |
(20,966 |
) |
|
$ |
(28,990 |
) |
|
$ |
(46,493 |
) |
Interest expense, net |
|
2,466 |
|
|
|
7,186 |
|
|
|
6,930 |
|
|
|
23,956 |
|
Income tax provision (benefit) |
|
(15 |
) |
|
|
— |
|
|
|
(141 |
) |
|
|
— |
|
Loss from extinguishment of debt |
|
— |
|
|
|
9,873 |
|
|
|
— |
|
|
|
9,873 |
|
Depreciation & amortization |
|
13,192 |
|
|
|
15,116 |
|
|
|
44,218 |
|
|
|
44,710 |
|
EBITDA |
|
9,289 |
|
|
|
11,209 |
|
|
|
22,017 |
|
|
|
32,046 |
|
Other (income) expense, net (a) |
|
(5,528 |
) |
|
|
(119 |
) |
|
|
(9,429 |
) |
|
|
(143 |
) |
Equity-based compensation (b) |
|
9,133 |
|
|
|
2,317 |
|
|
|
25,010 |
|
|
|
4,338 |
|
Transaction, integration and restructuring expenses (c ) |
|
2,945 |
|
|
|
(137 |
) |
|
|
6,362 |
|
|
|
3,332 |
|
Other non-recurring items (d) |
|
547 |
|
|
|
1,149 |
|
|
|
2,738 |
|
|
|
3,313 |
|
Adjusted EBITDA |
$ |
16,386 |
|
|
$ |
14,419 |
|
|
$ |
46,698 |
|
|
$ |
42,886 |
|
Revenue |
$ |
57,382 |
|
|
$ |
43,084 |
|
|
$ |
162,054 |
|
|
$ |
119,841 |
|
Adjusted EBITDA margin |
|
29 |
% |
|
|
33 |
% |
|
|
29 |
% |
|
|
36 |
% |
(a) Primarily represents foreign exchange and TRA liability remeasurement gains and losses.
(b) Equity-based compensation represents non-cash compensation expense recognized in association with equity awards made to employees and directors.
(c) Transaction and integration expenses primarily represent legal, accounting and consulting expenses and fair value adjustments for contingent consideration related to our acquisitions, including a go-to market integration project conducted in the third quarter of 2022. Restructuring expenses relate to impairment and restructuring charges related to office relocations.
(d) Non-recurring items represent expenses that are typically one-time or non-operational in nature.
Reconciliation of Adjusted Gross Profit to GAAP Gross Profit
(in thousands; unaudited)
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||
Reported gross profit |
$ |
47,658 |
|
|
$ |
32,599 |
|
|
$ |
129,224 |
|
|
$ |
90,050 |
|
Amortization of intangible assets resulting from acquisition-related purchase accounting adjustments (a) |
|
2,910 |
|
|
|
5,096 |
|
|
|
13,314 |
|
|
|
15,125 |
|
Equity-based compensation |
|
236 |
|
|
|
48 |
|
|
|
698 |
|
|
|
79 |
|
Adjusted Gross Profit |
$ |
50,804 |
|
|
$ |
37,743 |
|
|
$ |
143,236 |
|
|
$ |
105,254 |
|
Revenue |
|
57,382 |
|
|
|
43,084 |
|
|
|
162,054 |
|
|
|
119,841 |
|
Adjusted Gross Margin |
|
89 |
% |
|
|
88 |
% |
|
|
88 |
% |
|
|
88 |
% |
(a) Amortization of intangible assets resulting from purchase accounting adjustments represents non-cash amortization of acquired intangibles, primarily resulting from the Advent acquisition.
Exhibit 99.2
Definitive Healthcare Names Jon Maack as President Effective November 3, 2022
FRAMINGHAM, MA – November 3, 2022 – Definitive Healthcare Corp. (Nasdaq: DH), an industry leader in healthcare commercial intelligence, today announced Jon Maack has joined the company as President, effective November 3, 2022. Maack will report to Definitive Healthcare CEO Robert Musslewhite and have responsibility for product management, engineering, corporate strategy, and M&A.
“I am thrilled that Jon has decided to join the Definitive Healthcare team,” said Musslewhite. “Jon has a keen strategic mind and decades of healthcare industry experience, particularly with Software-as-a-Service healthcare information companies. Jon’s proven leadership will help him guide the team through the exciting challenges that come with a rapid growth company like Definitive Healthcare.”
Maack most recently served as Chief Strategy and Corporate Development Officer at athenahealth, a leading provider of network-enabled services and mobile applications for medical groups and health systems. Prior to joining athenahealth, Maack served in senior executive leadership roles at Optum, The Advisory Board Company and Bain & Company. He received his B.A. from New York University and his M.B.A. from Wharton.
“I am tremendously excited to join the Definitive Healthcare team,” said Maack, “I’ve dedicated my career to improving the healthcare ecosystem, and joining Definitive Healthcare is the absolute right next step in my journey. The market for healthcare commercial intelligence is still in its early innings, and I can’t wait to jump in with the team to design, build, and deliver the next great set of tools to help our more than 3,000 customers create new paths to commercial success.”
Conference Call Information
Definitive Healthcare will host a conference call today, November 3, 2022, at 5:00 p.m. (Eastern Time) to discuss the Company's financial results and current business outlook. To access the call, dial (844) 826-3033 (domestic) or (412) 317-5185 (international). The conference ID number is 10170962. Shortly after the conclusion of the call, a replay of this conference call will be available through November 17, 2022 at (844) 512-2921 (domestic) or (412) 317-6671 (international). The replay passcode is 10170962. A live audio webcast of the event will be available on the Definitive Healthcare’s Investor Relations website at https://ir.definitivehc.com/.
About Definitive Healthcare
At Definitive Healthcare, our passion is to transform data, analytics and expertise into healthcare commercial intelligence. We help clients uncover the right markets, opportunities and people, so they can shape tomorrow’s healthcare industry. Our SaaS platform creates new paths to commercial success in the healthcare market, so companies can identify where to go next. Learn more at definitivehc.com.
Forward-Looking Statements
This press release may include forward-looking statements that reflect our current views with respect to future events and financial performance. Such statements are provided under the “safe harbor” protection of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all statements that do not relate solely to historical or current facts, and can generally be identified by words or phrases written in the future tense and/or preceded by words such as “likely,” “should,” “may,” “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects” or similar words or variations thereof, or the negative thereof, references to future periods, or by the inclusion of forecasts or projections, but these terms are not the exclusive means of identifying such statements. Examples of forward-looking statements include, but are not limited to, statements we make regarding our outlook, continued growth, customers, and product development, the market for healthcare intelligence, our expectations with respect to the effectiveness of our executive leadership and our related plans, goals and objectives. Forward-looking statements in this press release are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, by their nature, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. As a result, our actual results may differ materially from those contemplated by the forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include the following: an outbreak of disease, global or localized health pandemic or epidemic, or the fear of such an event (such as the COVID-19 global pandemic), including the global economic uncertainty and measures taken in response; the short- and long-term effects of the COVID-19 global pandemic, including the pace of recovery or any future resurgence; the ongoing hostility between Russia and Ukraine and global geopolitical tension and the related impact on macroeconomic conditions; actual or potential changes in international, national, regional and local economic business and financial conditions, including recessions, inflation, rising interest rates, volatility in the capital markets and related market uncertainty; the impact of worsening economic conditions on our new and existing customers, and the related impacts on our ability to acquire new customers and generate additional revenue from existing customers; our inability to generate substantially all of our revenue and cash flows from sales of subscriptions to our platform and any decline in demand for our platform and the data we offer; the competitiveness of the market in which we operate and our ability to compete effectively; the failure to maintain and improve our platform, or develop new modules or insights for healthcare commercial intelligence; the inability to obtain and maintain accurate, comprehensive or reliable data, which could result in reduced demand for our platform; the risk that our recent growth rates may not be indicative of our future growth; the inability to achieve or sustain profitability in the future compared to historical levels as we increase investments in our business; the loss of our access to our data providers; the failure to respond to advances in healthcare commercial intelligence; an inability to attract new customers and expand subscriptions of current customers; the risk of cyber-attacks and security vulnerabilities; litigation, investigations or other legal, governmental or regulatory actions; and the possibility that our security measures are breached or unauthorized access to data is otherwise obtained.
Additional factors or events that could cause our actual performance to differ from these forward-looking statements may emerge from time to time, and it is not possible for us to predict all of them. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, our actual financial condition, results of operations, future performance and business may vary in material respects from the performance projected in these forward-looking statements.
For additional discussion of factors that could impact our operational and financial results, refer to Annual Report on Form 10-K for the fiscal year ended December 31, 2021 and our Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other subsequent SEC filings, which are or will be available on the Investor Relations page of our website at ir.definitivehc.com and on the SEC website at www.sec.gov.
All information in this press release speaks only as of the date on which it is made. We undertake no obligation to publicly update this information, whether as a result of new information, future developments or otherwise, except as may be required by law.
Investor Relations Contact:
Brian Denyeau
ICR for Definitive Healthcare
brian.denyeau@icrinc.com
646-277-1251
Media Contacts:
Danielle Johns
djohns@definitivehc.com
Highwire PR
definitivehealthcare@highwirepr.com
###