Medidata (NASDAQ:MDSO), the leading global provider of cloud-based solutions for clinical research in life sciences, today announced its financial results for the second quarter of 2016.
“Our second quarter results come from strong execution across the Company and reflect Medidata’s momentum in driving adoption of our integrated cloud platform,” said Tarek Sherif, Medidata’s chairman and chief executive officer. “With demand growing for Medidata CTMS, Payments, Balance and mHealth, as well as data analytics, we’re building on the success of the broadest platform in the industry, while continually delivering greater value to our clients. Today, more than ever, our ability to generate sustainable, long-term growth is driven by the large opportunity created by our clients’ innovation, scientific advances and our mission of powering smarter treatments to improve healthcare. It’s clear that Medidata is becoming the strategic technology partner to a massive and important transformation in life sciences and healthcare driven by digital automation in drug development.”
Second Quarter 2016 Results
- Total revenue for the second quarter of 2016 was $114.6 million, an increase of $16.5 million, or 17%, compared with $98.1 million in the second quarter of 2015. Subscription revenue was $96.8 million, an increase of $12.9 million, or 15%, compared with $83.9 million in 2015.
- Professional services revenue for the second quarter of 2016 was a record $17.9 million, an increase of $3.7 million, or 26%, compared with $14.2 million in the second quarter of 2015.
- Adjusted subscription backlog1 for the remainder of the year as of June 30, 2016 was $189 million, an increase of $28 million, or 17%, year over year.
- GAAP operating income for the quarter was $11.1 million, up 124%, compared with $5.0 million in the second quarter of 2015. Non-GAAP operating income2 for the second quarter of 2016 increased to $25.4 million, up 17%, compared with $21.8 million a year ago.
- GAAP net income for the second quarter of 2016 was $4.9 million, or $0.09 per diluted share, up 226%, compared with $1.5 million, or $0.03 per diluted share, in the second quarter of 2015. Adjusted non-GAAP net income2 for the second quarter of 2016 was $13.5 million, or $0.24 per diluted share, up 12%, compared with $12.1 million, or $0.22 per diluted share, in the second quarter of 2015. See the non-GAAP reconciliation included in this release for full details of the non-GAAP adjustments.
- Cash flow from operations was $25.5 million in the second quarter of 2016, an increase of $13.6 million, or 115%, compared with $11.9 million a year ago. For the six-month period ending June 30, cash flow from operations was $38.0 million in 2016, an increase of $9.3 million, or 32%, compared with $28.7 million in 2015.
- Total cash, cash equivalents and marketable securities were $482.9 million at the end of the second quarter of 2016, an increase of $4.2 million, or 1%, compared with $478.7 million on December 31, 2015.
Additional Highlights
- Medidata added a record 96 new clients, including 32 from the recently acquired Intelemage business, during the second quarter. Medidata’s client base grew to 711 at the end of the second quarter, up 32% year over year.
- Medidata Payments—the market’s only end-to-end, global payment solution to trigger, calculate and disburse payments around the globe—signed its first two customers, a major CRO and an oncology-focused biotech company.
- Powered by Medidata Patient Cloud® AppConnect, GSK launched the Patient Rheumatoid Arthritis Data from the Real World (PARADE) study in July 2016, making it the first pharmaceutical manufacturer to use Apple’s ResearchKit™ to conduct a virtual study. Through AppConnect, Medidata is collecting data from the PARADE app’s surveys and iPhone® (Apple Inc.) sensors—which track common symptoms of rheumatoid arthritis such as joint pain, fatigue and mood—and pulling it into a secure environment for patient information.
- 68% of clients had committed to multiple products at the end of the second quarter of 2016, up from 61% at the end of the second quarter of 2015. Increased product adoption was broad based across our integrated platform, with particular strength in Medidata Rave®, Image Management, Risk-Based Monitoring, Medidata Balance®, Medidata CTMS®, and Medidata Patient Cloud.
- Medidata’s revenue retention rate was nearly 100%.
“Our strong second quarter performance reflects continued execution and growth across all segments of our business,” said Rouven Bergmann, Medidata’s chief financial officer. "Our strategy is working as the industry looks to Medidata as the most strategic cloud technology partner in clinical development. Our strong year-to-date results, continued momentum, and record professional services demand provide us with increased visibility and confidence in our full-year revenue and profitability expectations."
Financial Outlook
For the full-year 2016, the Company is maintaining its previously stated total revenue and profitability guidance ranges, as follows:
- Total revenue between $450.0 and $474.0 million at constant currency.
- Professional services revenue is now expected to range from $68.0 to $70.0 million, compared with the prior expectation of approximately $60.0 million. This reflects strong demand for platform adoption with several large implementations currently underway.
- GAAP operating income between $38.5 and $45.5 million. Non-GAAP operating income, which excludes the impact of depreciation, amortization of intangible assets, and stock-based compensation expense, between $102.0 and $109.0 million.
- GAAP net income between $16.5 and $21.0 million. Adjusted non-GAAP net income, which excludes the impact of stock-based compensation, non-cash interest expense associated with convertible senior notes, and amortization, tax-affected at a 40% rate, between $54.5 and $59.0 million.
- While changes in the stock price could change the fully diluted share count, the Company is now assuming 57.0 million fully diluted shares.
The operating and net income measures above reflect the Company’s non-GAAP financial guidance and the corresponding GAAP equivalents to its guidance.
Conference Call
The Company plans to host its investor conference call today at 8:00 a.m. Eastern time. The investor conference call will be available via live webcast on the “Investor” section of Medidata’s website at http://investor.mdsol.com. To participate by telephone, domestic participants may dial 877-303-2528 and international participants may dial 847-829-0023. Those interested in participating in the conference call should dial in at least 10 minutes prior to the call to register. Participants can also join the call via a simultaneous live audio webcast, which will be made available on the “Investor” section of Medidata’s website at http://investor.mdsol.com. A replay of the conference call can be accessed until Wednesday, August 3, 2016, by dialing 800-585-8367 domestically or 404-537-3406 internationally, with the passcode 40485281. An archive of the call will also be hosted on the “Investor” section of Medidata’s website, http://investor.mdsol.com, for a limited period of time.
About Medidata
Medidata is the leading global provider of cloud-based solutions for clinical research in life sciences, transforming clinical development through its advanced applications and intelligent data analytics. We are committed to advancing the competitive and scientific goals of our life sciences customers worldwide: more than 700 global pharmaceutical companies; innovative biotech, diagnostic and device firms; leading academic medical centers; and contract research organizations. Our industry-leading technology platform, the Medidata Clinical Cloud®, is the primary technology solution powering clinical trials for 17 of the world's top 25 global pharmaceutical companies, bringing new levels of productivity and quality to the clinical testing of promising medical treatments, from study design and planning through execution, management and reporting.
Cautionary Statement
Certain statements made in this press release are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 that involve significant risks and uncertainties about Medidata Solutions, Inc. (“Medidata”), including but not limited to statements about Medidata’s forecast of financial performance, products and services, business model, strategy and growth opportunities, and competitive position. Such statements are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in these statements. In particular, the risks and uncertainties include, among other things, risks associated with possible fluctuations in our financial and operating results; errors, interruptions or delays in our service or our web hosting; the financial impact of any future acquisitions; our ability to continue to release, and gain customer acceptance of, new and improved versions of our products; changes in our sales and implementation cycles; competition; our ability to retain and expand our customer base or increase new business from those customers; our ability to hire, retain and motivate our employees and manage our growth; regulatory developments; litigation; and general developments in the economy. For additional disclosure regarding these and other risks faced by the Company, see disclosures contained in Medidata’s public filings with the Securities and Exchange Commission, including the “Risk Factors” section of Medidata’s Annual Report on Form 10-K for the year ended December 31, 2015. You should consider these factors in evaluating the forward-looking statements included in this press release and not place undue reliance on such statements. The forward-looking statements are made as of the date hereof, and Medidata undertakes no obligation to update such statements as a result of new information.
(1) Adjusted subscription backlog equals subscription backlog plus outstanding intra-year renewals valued at an amount equal to the contracts to be renewed.
(2) Non-GAAP Financial Information
Medidata provides non-GAAP
operating income, net income and net income per share applicable to
common stockholders data as additional information for its operating
results. These measures are not in accordance with, or an alternative
for, generally accepted accounting principles and may be different from
non-GAAP measures used by other companies. Non-GAAP operating income
excludes the impact of depreciation, amortization of intangible assets
associated with acquisitions, and stock-based compensation expense.
Adjusted non-GAAP net income excludes the tax-affected impact of
amortization of intangible assets associated with acquisitions,
stock-based compensation expense, and non-cash interest expense on
convertible senior notes. Management uses these non-GAAP measures to
evaluate its financial results, develop budgets, manage expenditures,
and as an important factor in determining variable compensation. In
addition, investors frequently have requested information from
management regarding depreciation, amortization and other non-cash
charges, such as share-based compensation, and management believes,
based on discussions with investors, that these non-GAAP measures
enhance investors’ ability to assess Medidata’s historical and projected
future financial performance. While management believes these non-GAAP
financial measures provide useful supplemental information to investors,
there are limitations associated with the use of non-GAAP financial
measures. One limitation of non-GAAP operating income is that it
excludes depreciation and amortization, which represents the periodic
costs of certain capitalized tangible and intangible assets used in
generating revenues in our business. Medidata compensates for these
limitations by using these non-GAAP financial measures as supplements to
GAAP financial measures and by reviewing the reconciliations of the
non-GAAP financial measures to their most comparable GAAP financial
measures. Investors are encouraged to review the reconciliations of
these non-GAAP financial measures to the comparable GAAP results, which
are attached to this press release.
| MEDIDATA SOLUTIONS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (Amounts in thousands, except per share data) | ||||||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||||||
| Revenues | ||||||||||||||||||||
| Subscription | $ | 96,760 | $ | 83,929 | $ | 186,728 | $ | 162,678 | ||||||||||||
| Professional services | 17,850 | 14,155 | 32,120 | 27,846 | ||||||||||||||||
| Total revenues | 114,610 | 98,084 | 218,848 | 190,524 | ||||||||||||||||
| Cost of revenues (1)(2) | ||||||||||||||||||||
| Subscription | 15,600 | 12,354 | 29,929 | 23,827 | ||||||||||||||||
| Professional services | 13,457 | 10,557 | 23,796 | 21,260 | ||||||||||||||||
| Total cost of revenues | 29,057 | 22,911 | 53,725 | 45,087 | ||||||||||||||||
| Gross profit | 85,553 | 75,173 | 165,123 | 145,437 | ||||||||||||||||
| Operating costs and expenses | ||||||||||||||||||||
| Research and development (1) | 28,267 | 22,519 | 56,495 | 44,430 | ||||||||||||||||
| Sales and marketing (1)(2) | 27,609 | 25,724 | 53,067 | 50,042 | ||||||||||||||||
| General and administrative (1) | 18,531 | 21,943 | 37,777 | 42,512 | ||||||||||||||||
| Total operating costs and expenses | 74,407 | 70,186 | 147,339 | 136,984 | ||||||||||||||||
| Operating income | 11,146 | 4,987 | 17,784 | 8,453 | ||||||||||||||||
| Interest and other income (expense) | ||||||||||||||||||||
| Interest expense | (4,183 | ) | (3,997 | ) | (8,310 | ) | (7,955 | ) | ||||||||||||
| Interest income | 932 | 612 | 1,804 | 1,146 | ||||||||||||||||
| Other income (expense), net | 3 | (34 | ) | (1 | ) | (68 | ) | |||||||||||||
| Total interest and other expense, net | (3,248 | ) | (3,419 | ) | (6,507 | ) | (6,877 | ) | ||||||||||||
| Income before income taxes | 7,898 | 1,568 | 11,277 | 1,576 | ||||||||||||||||
| Provision for income taxes | 2,961 | 55 | 492 | (94 | ) | |||||||||||||||
| Net income | $ | 4,937 | $ | 1,513 | $ | 10,785 | $ | 1,670 | ||||||||||||
| Earnings per share | ||||||||||||||||||||
| Basic | $ | 0.09 | $ | 0.03 | $ | 0.20 | $ | 0.03 | ||||||||||||
| Diluted | $ | 0.09 | $ | 0.03 | $ | 0.19 | $ | 0.03 | ||||||||||||
| Weighted average common shares outstanding | ||||||||||||||||||||
| Basic | 55,392 | 53,647 | 55,255 | 53,453 | ||||||||||||||||
| Diluted | 56,604 | 56,191 | 56,594 | 56,050 | ||||||||||||||||
| ||||||||||||||||||||
| Cost of revenues | $ | 1,239 | $ | 1,311 | $ | 2,449 | $ | 2,559 | ||||||||||||
| Research and development | 2,323 | 2,013 | 4,517 | 3,799 | ||||||||||||||||
| Sales and marketing | 1,839 | 2,460 | 3,716 | 4,827 | ||||||||||||||||
| General and administrative | 5,046 | 8,352 | 10,015 | 14,621 | ||||||||||||||||
| Total stock-based compensation | $ | 10,447 | $ | 14,136 | $ | 20,697 | $ | 25,806 | ||||||||||||
| ||||||||||||||||||||
| Cost of revenues | $ | 314 | $ | 180 | $ | 393 | $ | 359 | ||||||||||||
| Sales and marketing | 85 | 30 | 109 | 59 | ||||||||||||||||
| Total amortization of intangible assets | $ | 399 | $ | 210 | $ | 502 | $ | 418 | ||||||||||||
MEDIDATA SOLUTIONS, INC. Non-GAAP Operating Income and Adjusted Non-GAAP Net Income
(Unaudited) (Amounts in thousands, except per share data) | ||||||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||||||
| Operating income: | ||||||||||||||||||||
| GAAP operating income | $ | 11,146 | $ | 4,987 | $ | 17,784 | $ | 8,453 | ||||||||||||
| GAAP operating margins | 9.7 | % | 5.1 | % | 8.1 | % | 4.4 | % | ||||||||||||
| Stock-based compensation | 10,447 | 14,136 | 20,697 | 25,806 | ||||||||||||||||
| Depreciation and amortization | 3,766 | 2,637 | 6,983 | 5,190 | ||||||||||||||||
| Non-GAAP operating income | $ | 25,359 | $ | 21,760 | $ | 45,464 | $ | 39,449 | ||||||||||||
| Non-GAAP operating margins | 22.1 | % | 22.2 | % | 20.8 | % | 20.7 | % | ||||||||||||
| Net income: | ||||||||||||||||||||
| GAAP net income | $ | 4,937 | $ | 1,513 | $ | 10,785 | $ | 1,670 | ||||||||||||
| Stock-based compensation | 10,447 | 14,136 | 20,697 | 25,806 | ||||||||||||||||
| Amortization | 399 | 210 | 502 | 418 | ||||||||||||||||
| Non-cash interest expense on convertible senior notes (1) | 3,455 | 3,273 | 6,863 | 6,501 | ||||||||||||||||
| Tax impact on add-back items (2) | (5,721 | ) | (7,048 | ) | (11,225 | ) | (13,090 | ) | ||||||||||||
| Adjusted non-GAAP net income | $ | 13,517 | $ | 12,084 | $ | 27,622 | $ | 21,305 | ||||||||||||
| GAAP basic earnings per share | $ | 0.09 | $ | 0.03 | $ | 0.20 | $ | 0.03 | ||||||||||||
| GAAP diluted earnings per share | $ | 0.09 | $ | 0.03 | $ | 0.19 | $ | 0.03 | ||||||||||||
| Adjusted Non-GAAP basic earnings per share | $ | 0.24 | $ | 0.23 | $ | 0.50 | $ | 0.40 | ||||||||||||
| Adjusted Non-GAAP diluted earnings per share | $ | 0.24 | $ | 0.22 | $ | 0.49 | $ | 0.38 | ||||||||||||
| (1) Amount represents non-cash interest expense, including amortization of debt discount and issuance costs, on our 1.00% convertible senior notes issued during the third quarter of 2013. We exclude this incremental non-cash interest expense for purposes of calculating adjusted non-GAAP net income. We believe that excluding these expenses from our non-GAAP measures is useful to investors because such incremental non-cash interest expense does not generate a cash outflow for the Company and the debt issuance costs do not represent a cash outflow for the Company except in the period the notes were issued; therefore both are not indicative of our continuing operations. |
| (2) Tax impact calculated using a 40% tax rate. |
| The table above presents a reconciliation of GAAP to non-GAAP operating income, net income, and net income per share applicable to common stockholders for the three and six months ended June 30, 2016 and 2015. Non-GAAP operating income excludes the impact of depreciation, amortization of intangible assets associated with acquisitions, and stock-based compensation expense. Adjusted non-GAAP net income excludes the tax-affected impact of amortization of intangible assets associated with acquisitions, stock-based compensation expense, and non-cash interest expense on convertible senior notes. |
| MEDIDATA SOLUTIONS, INC. CONSOLIDATED BALANCE SHEETS (Amounts in thousands, except per share data) | ||||||||||
| June 30, 2016 | December 31, 2015 | |||||||||
| ASSETS | (unaudited) | |||||||||
| Current assets: | ||||||||||
| Cash and cash equivalents | $ | 64,346 | $ | 49,562 | ||||||
| Marketable securities | 253,930 | 220,126 | ||||||||
| Accounts receivable, net of allowance for doubtful accounts of $1,989 and $1,992, respectively | 90,433 | 90,590 | ||||||||
| Prepaid commission expense | 2,665 | 1,670 | ||||||||
| Prepaid expenses and other current assets | 17,546 | 21,165 | ||||||||
| Deferred income taxes | 102 | 88 | ||||||||
| Total current assets | 429,022 | 383,201 | ||||||||
| Restricted cash | 5,758 | 5,755 | ||||||||
| Furniture, fixtures and equipment, net | 54,683 | 51,043 | ||||||||
| Marketable securities, long-term | 164,596 | 209,041 | ||||||||
| Goodwill | 30,320 | 18,797 | ||||||||
| Intangible assets, net | 5,887 | 1,172 | ||||||||
| Deferred income taxes, long-term | 12,668 | 12,128 | ||||||||
| Other assets | 9,080 | 3,043 | ||||||||
| Total assets | $ | 712,014 | $ | 684,180 | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||
| Current liabilities: | ||||||||||
| Accounts payable | $ | 1,406 | $ | 6,283 | ||||||
| Accrued payroll and other compensation | 17,688 | 23,744 | ||||||||
| Accrued expenses and other | 18,951 | 15,469 | ||||||||
| Deferred revenue | 76,466 | 75,582 | ||||||||
| Total current liabilities | 114,511 | 121,078 | ||||||||
| Noncurrent liabilities: | ||||||||||
| 1.00% convertible senior notes, net | 256,350 | 249,487 | ||||||||
| Deferred revenue, less current portion | 2,820 | 2,993 | ||||||||
| Deferred tax liabilities | 444 | 414 | ||||||||
| Other long-term liabilities | 23,238 | 26,052 | ||||||||
| Total noncurrent liabilities | 282,852 | 278,946 | ||||||||
| Total liabilities | 397,363 | 400,024 | ||||||||
| Commitments and contingencies | ||||||||||
| Stockholders' equity: | ||||||||||
| Preferred stock, par value $0.01 per share; 5,000 shares authorized, none issued and outstanding | — | — | ||||||||
| Common stock, par value $0.01 per share; 200,000 shares authorized; 60,970 and 59,455 shares issued; 57,399 and 56,311 shares outstanding, respectively | 610 | 594 | ||||||||
| Additional paid-in capital | 395,817 | 364,973 | ||||||||
| Treasury stock, 3,571 and 3,144 shares, respectively | (112,430 | ) | (100,806 | ) | ||||||
| Accumulated other comprehensive loss | (2,930 | ) | (3,404 | ) | ||||||
| Retained earnings | 33,584 | 22,799 | ||||||||
| Total stockholders' equity | 314,651 | 284,156 | ||||||||
| Total liabilities and stockholders' equity | $ | 712,014 | $ | 684,180 | ||||||
| MEDIDATA SOLUTIONS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Amounts in thousands) | ||||||||||
| Six Months Ended June 30, | ||||||||||
| 2016 | 2015 | |||||||||
| Cash flows from operating activities | ||||||||||
| Net income | $ | 10,785 | $ | 1,670 | ||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||
| Depreciation and amortization | 6,983 | 5,190 | ||||||||
| Stock-based compensation | 20,697 | 25,806 | ||||||||
| Amortization of discounts or premiums on marketable securities | 1,700 | 2,502 | ||||||||
| Deferred income taxes | (1,164 | ) | (5,846 | ) | ||||||
| Amortization of debt issuance costs | 639 | 639 | ||||||||
| Amortization of debt discount | 6,224 | 5,862 | ||||||||
| Excess tax benefit associated with equity awards | (5,048 | ) | (3,712 | ) | ||||||
| Provision for doubtful accounts | 508 | 550 | ||||||||
| Loss on fixed asset disposal | 4 | — | ||||||||
| Changes in operating assets and liabilities: | ||||||||||
| Accounts receivable | (7,729 | ) | (33,894 | ) | ||||||
| Prepaid commission expense | (2,931 | ) | (123 | ) | ||||||
| Prepaid expenses and other current assets | 3,040 | (3,303 | ) | |||||||
| Other assets | (3,583 | ) | 1,497 | |||||||
| Accounts payable | (1,932 | ) | (702 | ) | ||||||
| Accrued payroll and other compensation | (4,302 | ) | 196 | |||||||
| Accrued expenses and other | 7,715 | 4,439 | ||||||||
| Deferred revenue | 9,206 | 27,085 | ||||||||
| Other long-term liabilities | (2,814 | ) | 889 | |||||||
| Net cash provided by operating activities | 37,998 | 28,745 | ||||||||
| Cash flows from investing activities | ||||||||||
| Purchase of furniture, fixtures and equipment | (13,425 | ) | (5,925 | ) | ||||||
| Purchase of available-for-sale securities | (144,136 | ) | (140,856 | ) | ||||||
| Proceeds from sale of available-for-sale securities | 154,784 | 126,632 | ||||||||
| Acquisition of business, net of cash acquired | (17,142 | ) | — | |||||||
| Net decrease (increase) in restricted cash | 81 | (464 | ) | |||||||
| Net cash used in investing activities | (19,838 | ) | (20,613 | ) | ||||||
| Cash flows from financing activities | ||||||||||
| Proceeds from exercise of stock options | 1,691 | 5,199 | ||||||||
| Proceeds from employee stock purchase plan | 3,385 | 2,960 | ||||||||
| Excess tax benefit associated with equity awards | 5,048 | 3,712 | ||||||||
| Repayment of obligations under capital leases | — | (17 | ) | |||||||
| Acquisition of treasury stock | (13,797 | ) | (16,154 | ) | ||||||
| Repayment of notes payable | (100 | ) | — | |||||||
| Net cash used in financing activities | (3,773 | ) | (4,300 | ) | ||||||
| Effect of exchange rate changes on cash and cash equivalents | 397 | 17 | ||||||||
| Net increase in cash and cash equivalents | 14,784 | 3,849 | ||||||||
| Cash and cash equivalents - beginning of period | 49,562 | 39,517 | ||||||||
| Cash and cash equivalents - end of period | $ | 64,346 | $ | 43,366 | ||||||
View source version on businesswire.com: http://www.businesswire.com/news/home/20160720005398/en/
Contacts:
Investors:
Hulus Alpay, 212-419-1025
halpay@mdsol.com
or
Media:
Nicole
Pariser, 212-659-1069
npariser@mdsol.com
