Tabula Rasa HealthCare Reports Second Quarter 2021 Results

MOORESTOWN, N.J., Aug. 5, 2021 /PRNewswire/ -- Tabula Rasa HealthCare, Inc. ("TRHC") (Nasdaq: TRHC), a leading healthcare technology company advancing the safe use of medications, today reported financial results for the second quarter ended June 30, 2021.

"The continued strong recovery in PACE and our CareVention HealthCare segment led our second quarter revenue and profitability to be at the high end of our guidance range. As we look ahead to the second half of 2021, we expect our organic revenue growth rates to increase significantly as compared with the first half of 2021. Similarly, we believe our MedWise HealthCare segment is strongly positioned to capitalize on recent new contract wins, favorable industry trends, and its market-leading position in delivering superior clinical programs and outcomes," said Calvin H. Knowlton, PhD, TRHC's Chief Executive Officer, Chairman and Founder.

Second Quarter and YTD 2021 Highlights

• Our net PACE enrollment for the second quarter represented an all-time record and the strong monthly sequential growth we experienced beginning in March 2021 continued through July 2021, placing us slightly ahead of our internal projections as we enter the remaining five months of the year.
• As of June 30, 2021, our PACE implementation backlog stands at 46 with 20 projected to go live during the second half of 2021 and the remainder scheduled for 2022 (24) and 2023 (two). During the first half of 2021, we completed 15 implementations, including 12 during the second quarter. The recent implementations, current backlog, long-term renewals and healthy growth in our average PACE per member per month (PMPM) through the first half of 2021 highlight the success of our cross-selling efforts.
• We secured a multi-year renewal with one of our largest MedWise HealthCare clients, providing a strong foundation for future growth in this segment. In addition, revenue from key national accounts signed during early 2020 continues to represent a growing and significant percentage of our medication safety services revenue with revenue from this cohort during the second quarter of 2021 increasing 76% as compared to the first quarter of 2021.
• Although our second quarter bookings were lower than Q1 2021 due to the execution of certain material contracts slipping into early July, our third quarter bookings are in excess of $10 million as of August 1, 2021, and already represent the highest quarterly sales in company history, driven by our MedWise HealthCare segment. We continue to see momentum and contract wins accelerating as a result of our integration of our MedWise platform into all of our services, with important payer and provider wins in both the Medicare and Commercial markets this past quarter.

Second Quarter 2021 Financial Results

All comparisons, unless otherwise noted, are to the three months ended June 30, 2020.

• Total revenue - Total revenue of $82.3 million, at the high end of our guidance range of $80.5 million to $82.5 million, increased 7% compared to $76.8 million in 2020. Total revenue included product revenue of $46.9 million, an increase of 19%, and solutions (i.e., software and services) revenue of $35.4 million, a decrease of 5%. The October 2020 acquisition of Personica contributed 5% of inorganic growth during the second quarter.
• Total revenue by segment
• CareVention HealthCare revenue increased 21% to $61.2 million, comprised of $46.9 million of PACE product revenue (up 20%) and $14.3 million of PACE solutions revenue (up 25%). Personica contributed 8% of inorganic growth to overall segment growth and continues to perform in line with our original projections.
• Consistent with previously communicated guidance, MedWise HealthCare revenue decreased 20% to $21.1 million, in line with expectations, primarily comprised medication safety services revenue of $11.1 million (down 30%) and software subscriptions revenue of $10.0 million (down 2%).
• GAAP net loss - Net loss was $21.1 million compared to a net loss of $14.3 million, driven by our core expenses (i.e. cost of revenue, research and development, sales and marketing, and general and administrative expenses), including stock-based compensation of $12.3 million as compared to $7.2 million a year ago.
• Non-GAAP Adjusted EBITDA - Non-GAAP Adjusted EBITDA of $6.0 million (7.2% margin), at the midpoint of our guidance range of $5.5 million to $6.5 million, declined as compared to $7.1 million (9.3% margin). The decline was driven by lower revenue and profitability in our MedWise HealthCare segment and increased investments in corporate shared services, specifically sales and marketing, to support our growth strategy.
• Non-GAAP Adjusted EBITDA by segment - Excluding $11.2 million of shared services:
• CareVention HealthCare non-GAAP Adjusted EBITDA of $14.1 million (23.0% margin) increased 16% as compared to $12.1 million (23.9% margin) a year ago.
• MedWise HealthCare non-GAAP Adjusted EBITDA of $3.1 million (14.5% margin) decreased as compared to $4.7 million (17.8% margin) a year ago, primarily due to lower medication safety services revenue.

A reconciliation of generally accepted accounting principles ("GAAP") in the United States to non-GAAP results has been provided in this press release in the accompanying tables. An explanation of these measures is also included below under the heading "Non-GAAP Financial Measures."

2021 Financial Outlook

Based on current market conditions and our expectations as of today, we are introducing third quarter 2021 guidance as summarized below. Our third quarter 2021 revenue guidance reflects sequential growth of 4% to 9% as compared to the second quarter 2021 and growth of 22% to 28% as compared to a year ago with organic growth estimated to be in the range of 16% to 22%. The key factors driving the dramatic improvement in organic growth versus the first half of 2021 are: 1) the strong recovery in our CareVention HealthCare segment due to positive PACE census trends and strong levels of contracted backlog and 2) a return to positive year-over-year growth within our MedWise HealthCare segment, both in medication safety services resulting from volume/program expansion among our existing client base and as client attrition headwinds subside, as well as software subscriptions, benefiting from newly implemented contracts.

Our guidance for the full year 2021 remains unchanged with our revenue range representing growth of 13% to 20% with organic growth estimated to be in the range of 9% to 16%. The wider than normal revenue and non-GAAP adjusted EBITDA ranges for both the third quarter and full year are the reflection of a high level of ongoing sales activity, concentrated in our MedWise segment including a number of large contracts, that have a range of possible outcomes.

Quarterly Conference Call

The second quarter 2021 earnings conference call and webcast will be held tomorrow, Friday, August 6, 2021, at 8:30 a.m. ET. The conference call can be accessed by dialing 844-413-0947 for U.S. participants or 216-562-0423 for international participants, and referencing passcode 4738256 or via a live audio webcast available online at TRHC's investor website (ir.trhc.com). An audio webcast replay will be available approximately two hours after completion of the call for a period of 90 days thereafter at ir.trhc.com and a replay will be available for seven days by dialing 855-859-2056 for U.S. participants or 404-537-3406 for international participants and referencing passcode 4738256.

About Tabula Rasa HealthCare

Tabula Rasa HealthCare (TRHC) provides medication safety solutions that empower healthcare professionals and consumers to optimize medication regimens, combatting medication overload and reducing adverse drug events – the fourth leading cause of death in the U.S. TRHC's proprietary technology solutions, including DoseMeRx™ and MedWise®, improve patient outcomes, reduce hospitalizations, and lower healthcare costs. TRHC's extensive clinical tele-pharmacy network improves care for patients nationwide. Its solutions are trusted by health plans and pharmacies to help drive value-based care. For more information, visit TRHC.com.

Non-GAAP Financial Measures

In addition to reporting all financial information required in accordance with GAAP, TRHC is also reporting Adjusted EBITDA, Adjusted EBITDA margin, and Adjusted Diluted EPS, each of which is considered a non-GAAP financial measure. Generally, a non-GAAP financial measure is a numerical measure of a company's performance or financial position that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP.

Adjusted EBITDA consists of net income or loss excluding certain other expenses, which includes interest expense, provision (benefit) for income tax, depreciation and amortization, change in fair value of acquisition-related contingent consideration (income) expense, settlement costs, severance expense incurred in 2021 related to a realignment of resources, acquisition-related expense, and stock-based compensation expense. TRHC defines Adjusted EBITDA margin as Adjusted EBITDA as a percentage of revenue. TRHC defines Adjusted Diluted EPS as net income or loss before fair value adjustments for acquisition-related contingent consideration, amortization of acquired intangibles, amortization of debt discount and issuance costs, settlement costs, severance expense incurred in 2021 related to a realignment of resources, stock-based compensation expense, and the tax impact of those items using a normalized tax rate on pre-tax income (loss) adjusted for those items expressed on a per share basis using weighted average diluted shares outstanding. TRHC considers acquisition-related expense to include non-recurring direct transaction and integration costs, severance, and the impact of purchase accounting adjustments related to the fair value of acquired deferred revenue. TRHC believes the exclusion of these items assists in providing a more complete understanding of the company's underlying operations results and trends and allows for comparability with TRHC's peer company index and industry and to be more consistent with TRHC's expected capital structure on a going forward basis. Please note that other companies may define their non-GAAP financial measures differently than TRHC.

TRHC presents these non-GAAP financial measures in this release because it considers them to be important supplemental measures of performance. TRHC uses these non-GAAP financial measures for planning purposes, including analysis of the company's performance against prior periods, the preparation of operating budgets and determination of appropriate levels of operating and capital investments. TRHC believes that these non-GAAP financial measures provide additional insight for analysts and investors in evaluating the company's financial and operational performance. TRHC also intends to provide these non-GAAP financial measures as part of the company's future earnings discussions and, therefore, their inclusion should provide consistency in the company's financial reporting.

Non-GAAP financial measures have limitations as an analytical tool. Investors are encouraged to review the reconciliation of Adjusted EBITDA and Adjusted Diluted EPS to their most directly comparable GAAP measures provided in this release, including in the accompanying tables.

Safe Harbor Statement

This press release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that we believe to be reasonable as of today's date. Forward-looking statements give current expectations or forecasts of future events or our future financial or operating performance, and include TRHC's expectations regarding healthcare regulations, industry trends, available opportunities to TRHC, the financial and operating performance of TRHC, the impacts of the COVID-19 pandemic and TRHC's expectations for 2021. Such statements are identified by use of the words "anticipates," "believes," "estimates," "expects," "intends," "plans," "predicts," "projects," "should," and similar expressions. These forward-looking statements are based on management's good-faith expectations, judgements and assumptions as of the date of this press release. Actual results might differ materially from those explicit or implicit in the forward-looking statements. Important factors that could cause actual results to differ materially include: the impacts of the ongoing COVID-19 pandemic and other health epidemics; our continuing losses and need to achieve profitability; fluctuations in our financial results; the acceptance and use of our products and services by PACE organizations; the need to innovate and provide useful products and services; risks related to changing healthcare and other applicable governmental regulations; our ability to maintain relationships with a specified drug wholesaler; increasing consolidation in the healthcare industry; managing our growth effectively; our ability to adequately protect our intellectual property; the requirements of being a public company; our ability to recognize the expected benefits from acquisitions on a timely basis or at all; and the other risk factors set forth from time to time in our filings with the Securities and Exchange Commission ("SEC"), including those factors discussed under the caption "Risk Factors" in our most recent annual report on Form 10-K, filed with the SEC on February 26, 2021, and in subsequent reports filed with or furnished to the SEC, copies of which are available free of charge within the Investor Relations section of the Tabula Rasa HealthCare website https://ir.trhc.com or upon request from our Investor Relations Department. Tabula Rasa HealthCare assumes no obligation and does not intend to update these forward-looking statements, except as required by law, to reflect events or circumstances occurring after today's date.

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SOURCE Tabula Rasa HealthCare, Inc.