Certara Reports First Quarter 2022 Financial Results
First Quarter Highlights:
- Revenue was
$81.6 million , compared to$66.7 million in the first quarter of 2021, representing growth of 22% over the first quarter of 2021. Excluding Pinnacle 21, revenue was$75.6 million , representing growth of 13% over the first quarter of 2021. - Net income was
$2.2 million , compared to net income of$1.1 million in the first quarter of 2021, representing growth of 110% over the first quarter of 2021. - Adjusted EBITDA was
$27.7 million , compared to$23.9 million in the first quarter of 2021, representing growth of 16% over the first quarter of 2021.
“Certara delivered strong revenue growth in the first quarter, despite experiencing some COVID-related delays in activity,” said
First Quarter 2022 Results
“Certara’s solid first quarter results reflect continued strong demand for our technology-driven services and proprietary software. Our positive momentum positions us well to deliver on our 2022 outlook, and we have made investments to drive sustainable mid-teens revenue growth,” said
Total revenue for the first quarter of 2022 was
Total cost of revenue for the first quarter of 2022 was
Total operating expenses for the first quarter of 2022 were
Net income for the first quarter of 2022 was
Diluted earnings per share for the first quarter 2022 was
Adjusted EBITDA for the first quarter of 2022 was
Adjusted net income for the first quarter of 2022 was
| Three Months Ended |
|||||||
| 2022 | 2021 | ||||||
| Key Financials (in millions, except per share data) | |||||||
| Revenue | $ | 81.6 | $ | 66.7 | |||
| Net income | $ | 2.2 | $ | 1.1 | |||
| Diluted earnings per share | $ | 0.01 | $ | 0.01 | |||
| Adjusted EBITDA | $ | 27.7 | $ | 23.9 | |||
| Adjusted net income | $ | 16.9 | $ | 14.4 | |||
| Adjusted diluted earnings per share | $ | 0.11 | $ | 0.09 | |||
| Cash and cash equivalents | $ | 184.3 | $ | 273.0 | |||
2022 Financial Outlook
| FY 2022 Guidance | ||
| In millions, except per share data | ||
| Revenue | $ | 350 - |
| Adjusted EBITDA | $ | 127 - |
| Adjusted diluted earnings per share | $ | 0.48 - |
Fully diluted shares for 2022 to be in the range of 159 million to 161 million;
GAAP tax rate for 2022 to be in the range of 40% to 45%; and
Cash tax rate for 2022 to be in the range of 20% to 25%
Webcast and Conference Call Details
About
Please visit our website at www.certara.com. We intend to use our website as a means of disclosing material, non-public information and for complying with our disclosure obligations under Regulation FD.
Such disclosures will be included in the Investor Relations section of our website at https://ir.certara.com. Accordingly, investors should monitor such portion of our website, in addition to following our press releases,
Forward-Looking Statements
This press release contains certain statements that constitute forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, with respect to the Company’s future business and financial performance, revenue, margin, and bookings. These statements typically contain words such as “believe,” “may,” “potential,” “will,” “plan,” “could,” “estimate,” “expects” and “anticipates” or the negative of these words or other similar terms or expressions. Any statement in this press release that is not a statement of historical fact is a forward-looking statement and involves significant risks and uncertainties. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we cannot provide any assurance that these expectations will prove to be correct. You should not rely upon forward-looking statements as predictions of future events and actual results, events, or circumstances. Actual results may differ materially from those described in the forward-looking statements and are subject to a variety of assumptions, uncertainties, risks and factors that are beyond our control, including the Company’s ability to compete within its market; any deceleration in, or resistance to, the acceptance of model-informed biopharmaceutical discovery; changes or delays in relevant government regulation; increasing competition, regulation and other cost pressures within the pharmaceutical and biotechnology industries; trends in research and development (R&D) spending; delays or cancellations in projects due to supply chain interruptions or disruptions or delays to pipeline development and clinical trials experienced by our customers due to COVID-19 or other external factors, consolidation within the biopharmaceutical industry; reduction in the use of the Company’s products by academic institutions; pricing pressures; the Company’s ability to successfully enter new markets, increase its customer base and expand its relationships with existing customers; the impact of the Pinnacle 21 acquisition and any future acquisitions and our ability to successfully integrate such acquisitions; the occurrence of natural disasters and epidemic diseases, such as the recent COVID-19 pandemic; the occurrence of global conflicts, such as the conflict between Russian and
A Note on Non-GAAP Financial Measures
This press release contains “non-GAAP measures” that are financial measures that either exclude or include amounts that are not excluded or included in the most directly comparable measures calculated and presented in accordance with
You should refer to the footnotes below as well as the “Non-GAAP Financial Measures” section in this press release below for a further explanation of these measures and reconciliations of these non-GAAP measures in specific periods to their most directly comparable financial measure calculated and presented in accordance with GAAP for those periods.
Management uses various financial metrics, including total revenues, income (loss) from operations, net income (loss), and certain non-GAAP measures, including those discussed above, to measure and assess the performance of the Company’s business, to evaluate the effectiveness of its business strategies, to make budgeting decisions, to make certain compensation decisions, and to compare the Company’s performance against that of other peer companies using similar measures. In addition, management believes these metrics provide useful measures for period-to-period comparisons of the Company’s business, as they remove the effect of certain non-cash expenses and other items not indicative of its ongoing operating performance.
Management believes that adjusted EBITDA, adjusted net income (loss), and adjusted diluted earnings per share are helpful to investors, analysts, and other interested parties because they can assist in providing a more consistent and comparable overview of our operations across our historical periods. In addition, each of these measures are frequently used by analysts, investors, and other interested parties to evaluate and assess performance.
Please note that the Company has not reconciled the adjusted EBITDA or adjusted diluted earnings per share forward-looking guidance included in this press release to the most directly comparable GAAP measures because this cannot be done without unreasonable effort due to the variability and low visibility with respect to costs related to acquisitions, financings, and employee stock compensation programs, which are potential adjustments to future earnings. We expect the variability of these items to have a potentially unpredictable, and a potentially significant, impact on our future GAAP financial results.
| (1) | Adjusted EBITDA represents net income excluding interest expense, provision (benefit) for income taxes, depreciation and amortization expense, intangible asset amortization, equity-based compensation expense, acquisition and integration expense and other items not indicative of our ongoing operating performance. |
| (2) | Adjusted net income and adjusted diluted earnings per share exclude the effect of equity-based compensation expense, amortization of acquisition-related intangible assets, acquisition and integration expense, and other items not indicative of our ongoing operating performance as well as income tax provision adjustment for such charges. |
In evaluating adjusted EBITDA, adjusted net income, and adjusted diluted earnings per share, you should be aware that in the future the Company may incur expenses similar to those eliminated in this presentation and this presentation should not be construed as an inference that future results will be unaffected by unusual items.
Contacts:
Investor Relations Contact:
ir@certara.com
Media Contact:
Kekst CNC
daniel.yunger@kekstcnc.com
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
| (IN THOUSANDS, EXCEPT PER SHARE AND SHARE DATA) | 2022 |
2021 |
|||||||
| Revenues | $ | 81,551 | $ | 66,718 | |||||
| Cost of revenues | 32,789 | 26,016 | |||||||
| Operating expenses: | |||||||||
| Sales and marketing | 6,111 | 3,752 | |||||||
| Research and development | 7,548 | 4,706 | |||||||
| General and administrative | 18,339 | 16,562 | |||||||
| Intangible asset amortization | 10,149 | 9,456 | |||||||
| Depreciation and amortization expense | 482 | 602 | |||||||
| Total operating expenses | 42,629 | 35,078 | |||||||
| Income from operations | 6,133 | 5,624 | |||||||
| Other income (expenses): | |||||||||
| Interest expense | (3,228 | ) | (3,928 | ) | |||||
| Miscellaneous, net | 841 | (117 | ) | ||||||
| Total other expenses | (2,387 | ) | (4,045 | ) | |||||
| Income before income taxes | 3,746 | 1,579 | |||||||
| Provision of income taxes | 1,536 | 527 | |||||||
| Net Income | 2,210 | 1,052 | |||||||
| Net income per share attributable to common stockholders: | |||||||||
| Basic | $ | 0.01 | $ | 0.01 | |||||
| Diluted | $ | 0.01 | $ | 0.01 | |||||
| Weighted average common shares outstanding: | |||||||||
| Basic | 155,936,953 | 147,160,084 | |||||||
| Diluted | 159,160,321 | 152,084,745 | |||||||
CONDENSED CONSOLIDATED BALANCE SHEETS
| (IN THOUSANDS, EXCEPT PER SHARE AND SHARE DATA) | 2022 |
2021 |
||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 184,315 | $ | 185,797 | ||||
| Accounts receivable, net of allowance for credit losses of |
72,719 | 69,555 | ||||||
| Restricted cash | 745 | 827 | ||||||
| Prepaid expenses and other current assets | 17,407 | 18,548 | ||||||
| Total current assets | 275,186 | 274,727 | ||||||
| Other assets: | ||||||||
| Property and equipment, net | 2,927 | 2,935 | ||||||
| Operating lease right-of-use assets | 13,631 | 12,634 | ||||||
| 704,788 | 703,371 | |||||||
| Intangible assets, net of accumulated amortization of |
504,310 | 511,823 | ||||||
| Deferred income taxes | 4,086 | 4,073 | ||||||
| Other long-term assets | 2,098 | 2,167 | ||||||
| Total assets | $ | 1,507,026 | $ | 1,511,730 | ||||
| Liabilities and stockholders’ equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 6,255 | $ | 7,458 | ||||
| Accrued expenses | 18,592 | 29,830 | ||||||
| Current portion of deferred revenue | 48,168 | 45,496 | ||||||
| Current portion of long-term debt | 3,020 | 3,020 | ||||||
| Current operating lease liabilities | 4,897 | 5,040 | ||||||
| Other current liabilities | 685 | 1,381 | ||||||
| Total current liabilities | 81,617 | 92,225 | ||||||
| Long-term liabilities: | ||||||||
| Deferred revenue, net of current portion | 1,080 | 1,531 | ||||||
| Deferred income taxes | 75,268 | 76,098 | ||||||
| Operating lease liabilities, net of current portion | 9,348 | 8,256 | ||||||
| Long-term debt, net of current portion and debt discount | 291,308 | 291,746 | ||||||
| Non-current finance lease liabilities | — | 25 | ||||||
| Total liabilities | 458,621 | 469,881 | ||||||
| Commitments and contingencies | ||||||||
| Stockholders' equity: | ||||||||
| Preferred shares, |
— | — | ||||||
| Common shares, |
1,596 | 1,596 | ||||||
| Additional paid-in capital | 1,127,334 | 1,119,821 | ||||||
| Accumulated deficit | (73,394 | ) | (75,604 | ) | ||||
| Accumulated other comprehensive loss | (7,046 | ) | (3,926 | ) | ||||
| (85 | ) | (38 | ) | |||||
| Total stockholders’ equity | 1,048,405 | 1,041,849 | ||||||
| Total liabilities and stockholders’ equity | $ | 1,507,026 | $ | 1,511,730 | ||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| THREE MONTHS ENDED |
|||||||||
| (IN THOUSANDS) | 2022 |
2021 |
|||||||
| Cash flows from operating activities: | |||||||||
| Net income | $ | 2,210 | $ | 1,052 | |||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||
| Depreciation and amortization of property and equipment | 482 | 602 | |||||||
| Amortization of intangible assets | 12,450 | 10,102 | |||||||
| Amortization of debt issuance costs | 386 | 378 | |||||||
| (Recovery of) provision for credit losses | 34 | (1 | ) | ||||||
| Loss on retirement of assets | 5 | — | |||||||
| Equity-based compensation expense | 7,513 | 5,151 | |||||||
| Deferred income taxes | (715 | ) | 12 | ||||||
| Changes in assets and liabilities, net of acquisitions: | |||||||||
| Accounts receivable | (3,244 | ) | (2 | ) | |||||
| Prepaid expenses and other assets | 653 | (673 | ) | ||||||
| Accounts payable and other liabilities | (11,830 | ) | (11,109 | ) | |||||
| Deferred revenue | 2,556 | (507 | ) | ||||||
| Other current liabilities | (792 | ) | — | ||||||
| Changes in operating lease assets and liabilities, net | 95 | (71 | ) | ||||||
| Net cash provided by operating activities | 9,803 | 4,934 | |||||||
| Cash flows from investing activities: | |||||||||
| Capital expenditures | (506 | ) | (222 | ) | |||||
| Capitalized development costs | (2,187 | ) | (1,192 | ) | |||||
| Business acquisitions, net of cash acquired | (5,983 | ) | (2,044 | ) | |||||
| Net cash used in investing activities | (8,676 | ) | (3,458 | ) | |||||
| Cash flows from financing activities: | |||||||||
| Payments on long-term debt and finance lease obligations | (826 | ) | (855 | ) | |||||
| Payments on financing component of interest rate swap | (646 | ) | — | ||||||
| Payment of taxes on shares withheld for employee taxes | (48 | ) | — | ||||||
| Net cash used in financing activities | (1,520 | ) | (855 | ) | |||||
| Effect of foreign exchange rate changes on cash and cash equivalents, and restricted cash | (1,171 | ) | (191 | ) | |||||
| Net (decrease) increase in cash and cash equivalents, and restricted cash | (1,564 | ) | 430 | ||||||
| Cash and cash equivalents, and restricted cash, at beginning of period | 186,624 | 273,291 | |||||||
| Cash and cash equivalents, and restricted cash, at end of period | $ | 185,060 | $ | 273,721 | |||||
NON-GAAP FINANCIAL MEASURES
The following table reconciles net income to adjusted EBITDA:
| THREE MONTHS ENDED |
||||||||
| 2022 |
2021 |
|||||||
| (in thousands) | ||||||||
| Net income(a) | $ | 2,210 | $ | 1,052 | ||||
| Interest expense(a) | 3,228 | 3,928 | ||||||
| Interest income(a) | (11 | ) | (70 | ) | ||||
| Provision for income taxes(a) | 1,536 | 527 | ||||||
| Depreciation and amortization expense(a) | 482 | 602 | ||||||
| Intangible asset amortization(a) | 12,450 | 10,102 | ||||||
| Currency (gain) loss(a) | (705 | ) | 191 | |||||
| Equity-based compensation expense(b) | 7,513 | 5,151 | ||||||
| Acquisition-related expenses(d) | 272 | 1,596 | ||||||
| Transaction-related expenses(e) | 17 | 685 | ||||||
| Loss on disposal of fixed assets(f) | 5 | — | ||||||
| First-year Sarbanes-Oxley implementation costs(g) | 653 | 107 | ||||||
| Adjusted EBITDA | $ | 27,650 | $ | 23,871 | ||||
The following table reconciles net income to adjusted net income:
| THREE MONTHS ENDED |
||||||||
| 2022 |
2021 |
|||||||
| (in thousands) | ||||||||
| Net income(a) | $ | 2,210 | $ | 1,052 | ||||
| Currency gain (loss)(a) | (705 | ) | 191 | |||||
| Equity-based compensation expense(b) | 7,513 | 5,151 | ||||||
| Amortization of acquisition-related intangible assets(c) | 10,880 | 8,428 | ||||||
| Acquisition-related expenses(d) | 272 | 1,596 | ||||||
| Transaction-related expenses(e) | 17 | 685 | ||||||
| Loss on disposal of fixed assets(f) | 5 | — | ||||||
| First-year Sarbanes-Oxley implementation costs(g) | 653 | 107 | ||||||
| Income tax expense impact of adjustments(h) | (3,916 | ) | (2,786 | ) | ||||
| Adjusted Net Income | $ | 16,929 | $ | 14,424 | ||||
The following table reconciles diluted earnings per share to adjusted diluted earnings per share:
| THREE MONTHS ENDED |
||||||||
| 2022 |
2021 |
|||||||
| Net income(a) | $ | 0.01 | $ | 0.01 | ||||
| Currency (gain) loss(a) | — | — | ||||||
| Equity-based compensation expense(b) | 0.05 | 0.03 | ||||||
| Amortization of acquisition-related intangible assets(c) | 0.07 | 0.06 | ||||||
| Acquisition-related expenses(d) | — | 0.01 | ||||||
| Transaction-related expenses(e) | — | — | ||||||
| Loss on disposal of fixed assets(f) | — | — | ||||||
| First-year Sarbanes-Oxley implementation costs(g) | — | — | ||||||
| Income tax expense impact of adjustments(h) | (0.02 | ) | (0.02 | ) | ||||
| Adjusted Diluted Earnings Per Share | $ | 0.11 | $ | 0.09 | ||||
| Diluted weighted average common shares outstanding | 155,936,953 | 147,160,084 | ||||||
| Effect of potentially dilutive shares outstanding (i) | 3,223,368 | 4,924,661 | ||||||
| Diluted weighted average common shares outstanding | 159,160,321 | 152,084,745 | ||||||
________________________________________
(a) Represents amounts as determined under GAAP.
(b) Represents expense related to equity-based compensation. Equity-based compensation has been, and will continue to be for the foreseeable future, a recurring expense in our business and an important part of our compensation strategy.
(c) Represents amortization costs associated with acquired intangible assets in connection with business acquisitions.
(d) Represents costs associated with mergers and acquisitions and any retention bonuses pursuant to the acquisitions.
(e) Represents costs associated with our public offerings that are not capitalized.
(f) Represents the gain/loss related to disposal of fixed assets.
(g) Represents the first-year Sarbanes-Oxley costs for accounting and consulting fees related to the Company's preparation to comply with Section 404 of the Sarbanes-Oxley Act.
(h) Represents the income tax effect of the non-GAAP adjustments calculated using the applicable statutory rate by jurisdiction.
(i) Represents potentially dilutive shares that were included in the Company's GAAP diluted weighted average common shares outstanding.
Source: Certara