Epocrates Announces First Quarter 2012 Results
Reaffirms 2012 Revenue Guidance and Announces Earnings Guidance
SAN MATEO, Calif. – May 1, 2012 – Epocrates, Inc. (NASDAQ: EPOC), a leading physician platform for clinical content, practice tools and health industry engagement, today reported its first quarter 2012 results and provided full year earnings guidance.
First Quarter 2012 Results
- Revenue for the quarter ended March 31, 2012 was $27.5 million compared to $29.2 million for the quarter ended March 31, 2011, a decrease of 6%.
- Income from continuing operations was $1.4 million for the first quarter of 2012, versus $0.2 million for the first quarter of 2011. On a dilutive basis, income from continuing operations per share was $0.06 for the first quarter of 2012 compared to a loss from continuing operations of negative $0.01 per share for the first quarter of 2011. On a non-GAAP dilutive basis, income from continuing operations per share was $0.09 and $0.12 for the quarters ended March 31, 2012 and 2011, respectively.
- Net loss was $1.4 million for the quarter ended March 31, 2012 versus $1.1 million for the quarter ended March 31, 2011. The net loss in Q1 2012 was impacted by decreased revenue and increased costs associated with discontinued operations, offset by a decrease in operating expenses. Following the previously disclosed strategic decision to discontinue the Epocrates EHR solution, the EHR business is presented as discontinued operations for both Q1 2012 and Q1 2011.
- Earnings before interest, taxes, non-cash and other items ("adjusted EBITDA"), as defined in the GAAP to non-GAAP reconciliation provided later in this release, was $4.7 million for the current period compared to adjusted EBITDA of $6.3 million in the prior year period. The decrease in adjusted EBITDA for the first quarter of 2012 was primarily attributable to decreased revenue coupled with an increase in cost of revenue, offset by lower operating expenses compared to the first quarter of 2011.
Balance Sheet Highlights
- Cash, cash equivalents and short-term investments totaled $81.6 million as of March 31, 2012.
Outlook for Full Year 2012
- Revenue is reaffirmed to be in the range of $105 to $115 million, representing a decrease of 7% to an increase of 1% over full year 2011 revenue.
- Adjusted EBITDA is expected to be $9.0 million to $12.0 million, or 9% to 10% of revenue. This would represent a decrease in adjusted EBITDA of 9% to 32% over adjusted EBITDA reported in 2011.
- Net loss is expected to be in the range of $2.3 to $4.3 million, and net loss per diluted share is expected to be between a negative $0.09 and a negative $0.16 per share based on approximately 26.0 million shares outstanding.
"Epocrates is in a strong position in the dynamic and evolving mHealth industry," said Andy Hurd, Epocrates' president and chief executive officer. "We are focused on growing the business by deepening our relationship with the Epocrates network that includes more than 50 percent of U.S. physicians."
Earnings Call Information
Epocrates will host a conference call today beginning at 5:00 p.m. ET to discuss its first quarter 2012 results, followed by a question and answer session.
To participate in Epocrates' live conference call and webcast, please dial (877) 398-9481 (domestic) or (760) 298-5095 (international) using conference code 62943507, or visit http://investor.epocrates.com. A replay of the call will be available at the same address.
About Epocrates, Inc.
Epocrates, Inc. (Nasdaq: EPOC) is a leading physician platform for clinical content, practice tools and health industry engagement at the point of care. The Epocrates network consists of more than one million healthcare professionals, including 50 percent of U.S. physicians, who routinely use its solutions and services. Epocrates' portfolio includes top-ranked medical apps, such as the industry's #1 most used mobile drug reference, and valuable manufacturer resources. Through these intuitive and reliable resources, Epocrates supports clinical decisions, helps improve physician workflow and impacts patient outcomes. For more information, please visit www.epocrates.com/company.
Epocrates is a trademark of Epocrates, Inc., registered in the U.S. and other countries.
Certain statements contained in this press release are forward-looking statements intended to qualify for the safe harbors from liability established by the Private Securities Litigation Reform Act of 1995. The words "believe," "estimate," "anticipate," "plan," "predict," "may," "hope," "can," "potential," "will," "should," "expect," "intend," "is designed to," "with the intent," and the negative of these words or such other variations may identify statements as forward-looking statements, but their absence does not mean that a statement is not forward-looking. Forward-looking statements by their nature address matters that are, to different degrees, uncertain. The forward-looking statements include uncertainties and risks including, among others: the inability to retain and expand the Epocrates physician network at the rate expected; unexpected delays in delivering new products; lack of market acceptance of new products; the inability to maintain product quality and brand credibility; the inability to keep up with the technological advances within the marketplace and by competitors; the inability to realize estimates and guidance made by management with respect to Epocrates' financial results; and other factors, including general economic conditions and regulatory developments not within Epocrates' control. The factors discussed herein and expressed from time to time in Epocrates' filings with the Securities and Exchange Commission could cause actual results and developments to be materially different from those expressed in or implied by such statements. The forward-looking statements are made only as of the date of this press release, and except as required by law, Epocrates undertakes no obligation to publicly update its forward-looking statements to reflect subsequent events or circumstances. You should review the Epocrates' filings, especially the risk factors contained in its most recent filings with the Securities and Exchange Commission on Form 10-K and Form 10-Q.
Use of non-GAAP Financial Measures
To supplement Epocrates' consolidated financial statements presented on a U.S. generally accepted accounting principles ("GAAP") basis, Epocrates uses non-GAAP measures of adjusted EBITDA, gross profit, gross margin, net income (loss) and net income (loss) per share, which are adjusted to exclude certain costs, expenses, gains and losses Epocrates believes are appropriate to enhance an overall understanding of its past and future financial performance. These adjustments to current period GAAP results are made with the intent of providing both management and investors a more complete understanding of Epocrates' underlying operational results and trends and its marketplace performance. In addition, these adjusted non-GAAP results are among the information management uses as a basis for planning and forecasting for future periods. The presentation of this additional information is not meant to be considered in isolation or as a substitute for results prepared in accordance with GAAP.
Adjusted EBITDA is not a measure of liquidity calculated in accordance with GAAP, and should be viewed as a supplement to—not a substitute for—results of operations presented on a GAAP basis. Adjusted EBITDA does not purport to represent cash flow provided by, or used in, operating activities as defined by GAAP. Epocrates' Condensed Consolidated Statements of Cash Flows presents its cash flow activity in accordance with GAAP. Furthermore, adjusted EBITDA is not necessarily comparable to similarly‑titled measures reported by other companies.
Epocrates believes adjusted EBITDA, adjusted net income, adjusted net income per share, adjusted gross profit and adjusted gross margin are used by and are useful to investors and other users of its financial statements in evaluating its operating performance because it provides them with additional tools to compare business performance across companies and across periods. Epocrates believes that:
- EBITDA is widely used by investors to measure a company's operating performance without regard to such items as non-recurring items, interest (income) expense, taxes, depreciation and amortization, which can vary substantially from company to company depending upon accounting methods and book value of assets, capital structure and the method by which assets were acquired;
- investors commonly adjust EBITDA information to eliminate the effect of stock‑based compensation expenses and other charges, which can vary widely from company to company and impair comparability; and
- adjusted net income, adjusted net income per share and adjusted gross profit/gross margin eliminate the effect of non-recurring and non-cash charges, which can vary widely from company to company and impair comparability year over year and across companies.
Epocrates management uses adjusted EBITDA, adjusted net income, adjusted net income per share, adjusted gross profit and adjusted gross margin:
- as measures of operating performance to assist in comparing performance from period to period on a consistent basis;
- as measures for planning and forecasting overall expectations and for evaluating actual results against such expectations; and
- in communications with the Board of Directors, stockholders, analysts and investors concerning Epocrates' financial performance.
Additionally, Epocrates management uses adjusted EBITDA as a significant performance measurement included in its bonus plan.
The tables that follow set forth a reconciliation of net (loss) income to adjusted net (loss) income and adjusted EBITDA. These tables also show a reconciliation of gross profit and gross margin from a GAAP to a non-GAAP basis.
The table that follows sets forth a reconciliation of net (loss) income per diluted common share to adjusted net income per diluted common share.