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SEC
8-K
BIOTELEMETRY, INC. filed this Form 8-K on 10/30/2018
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Nine Months Ended
(Unaudited)
 
September 30, 2017
(in thousands, except per share data)
 
Income from operations
 
Income/(loss) before income taxes
 
Net income/(loss) attributable to BioTelemetry, Inc.
 
Net income/(loss) per diluted share attributable to BioTelemetry, Inc.*
GAAP
 
$
5,549

 
$
(673
)
 
$
(363
)
 
$
(0.01
)
Non-GAAP adjustments:
 
 
 
 
 
 
 
 
Other charges (h)
 
14,542

 
14,542

 
14,542

 
0.45

LifeWatch amortization (i)
 
2,719

 
2,719

 
2,719

 
0.08

Performance bonus (stock-based comp) (m)
 
1,533

 
1,533

 
1,533

 
0.05

Dept. of Health and Human Services settlement (n)
 

 
2,500

 
2,500

 
0.08

Foreign currency option related to LifeWatch acquisition (o)
 

 
1,322

 
1,322

 
0.04

Loss on extinguishment of debt (p)
 

 
543

 
543

 
0.02

Gain on legal settlement (q)
 

 
(1,333
)
 
(1,333
)
 
(0.04
)
Income tax effect of adjustments (k)
 

 

 
(6,687
)
 
(0.20
)
NOL utilization (l)
 

 

 
6,047

 
0.19

Non-GAAP Adjusted
 
$
24,343

 
$
21,153

 
$
20,823

 
$
0.64

Weighted average number of common shares outstanding - diluted
 
 
 
 
 
32,667

* total does not add due to rounding
 
 
 
 
 
 
 
 

h)
For the nine months ended September 30, 2018, other charges of $11.6 million consisted of $7.9 million for the continued integration and restructuring activities related to the LifeWatch acquisition, a $1.8 million reserve for a note receivable with a bankrupt customer, $1.5 million for patent litigation, $0.8 million of other expense including legal, professional fees and depreciation, partially offset by a $0.7 million reduction in contingent consideration related to a 2016 acquisition. In the nine months ended September 30, 2017, other charges of $14.5 million were due to $12.7 million of legal and professional fees, as well as severance, related to the acquisition and integration of LifeWatch, $2.4 million related to other restructuring activities, $1.0 million for patent litigation and $0.4 million for other expenses, partially offset by a $2.0 million reduction in contingent consideration related to our 2016 acquisitions.
i)
For the nine months ended September 30, 2018, we recognized $9.9 million of expense related to the amortization of intangibles as a result of the LifeWatch acquisition. In the nine months ended September 30, 2017, we recognized $2.7 million of LifeWatch amortization of intangibles. The presentation of the 2017 LifeWatch amortization of intangibles has been conformed to the 2018 presentation. We have excluded the LifeWatch amortization of intangibles from adjusted net income for year over year comparative purposes. This amortization was recorded as a component of general and administrative expense.
j)
As part of Other expense, for the nine months ended September 30, 2018, we incurred $0.3 million of interest related to a ruling on an arbitration demand filed against LifeWatch prior to the acquisition. This was offset by an unrealized foreign exchange gain of $1.0 million associated with our uncertain tax positions.
k)
Represents the tax effect on the non-GAAP adjustments at the Company’s estimated annual effective tax rate.
l)
During the fourth quarter 2016, the Company released the tax valuation allowance on its net deferred tax assets. The benefit from this release was excluded from the Company’s 2016 adjusted results. Without a valuation allowance in place and due to the timing of discrete items, for GAAP financial reporting purposes the Company is reporting a tax benefit of 10.2% for the nine months ended September 30, 2018 and a nominal benefit for the nine months ended September 30, 2017. After giving effect to taxes at the estimated annual effective tax rate on the adjustments, the Company is excluding a $3.3 million benefit from discrete items for the nine months ended September 30, 2018. For the nine months ended September 30, 2017, the utilization of net operating loss carryforwards had a $6.0 million positive impact.
m)
During the nine months ended September 30, 2017, the Company incurred $1.5 million for the second half of a one-time performance bonus paid to a third party in the form of stock-based compensation. The first of two performance measures was achieved in the fourth quarter 2016, resulting in $1.3 million of expense at that time. The second performance measure was achieved in the first quarter 2017, resulting in $1.5 million of expense. This is a nonrecurring expense for the Company and is the only time in the Company’s history when such a bonus was awarded. There are no additional agreements outstanding of this nature. This was recorded in General & Administrative expense.
n)
During the nine months ended September 30, 2017, the Company reached a $2.5 million settlement with the United States Department of Health and Human Services. This was related to the conclusion of an investigation into the theft of two unencrypted laptop computers that occurred in 2011. This was recorded in Other non-operating income/(expense), net.
o)
During the nine months ended September 30, 2017, the Company incurred $1.3 million of expense for a foreign currency option related to the acquisition of LifeWatch which is included in Other non-operating income/(expense), net.



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