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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of

The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 5, 2021

Certara, Inc.

(Exact name of registrant as specified in its charter)

Delaware

001-39799

82-2180925

(State or other jurisdiction
of incorporation)

(Commission
File Number)

(IRS Employer
Identification No.)

 

 

100 Overlook Center
Suite 101
Princeton, New Jersey

 

08540

(Address of principal executive offices)

 

(Zip Code)

(609) 716-7900

(Registrant's telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common stock, par value $0.01 per share

CERT

The Nasdaq Global Select Market

Indicate by check mark whether the registrant is an emerging growth company, as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

Item 2.02      Results of Operations and Financial Condition.

On August 5, 2021, Certara, Inc. (the “Company”) issued a press release announcing its financial results for the three months ended June 30, 2021.  A copy of the press release containing the announcement is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

The information furnished pursuant to this Item 2.02, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities under that Section and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933 or the Exchange Act.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

Exhibit No.

    

Description

99.1*

 

Press Release dated August 5, 2021.

104

Cover Page Interactive Data File (formatted as Inline XBRL).

* Furnished herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date:  August 5, 2021

CERTARA, INC.

(Registrant)

By:

/s/ Richard M. Traynor

Richard M. Traynor

Senior Vice President and General Counsel

Exhibit 99.1

Certara Reports Second Quarter 2021 Financial Results

Raises full year 2021 guidance and announces deal to acquire Pinnacle 21

PRINCETON, N.J.—August 5, 2021-- Certara, Inc. (Nasdaq: CERT), a global leader in biosimulation, today reported its financial results for the second quarter of fiscal year 2021.

Highlights:

Revenue was $70.1 million, representing growth of 15% over the second quarter of 2020
Net loss was ($2.9) million, compared to a net income of $2.8 million in the second quarter of 2020
Adjusted EBITDA was $25.5 million, representing growth of 1% over the second quarter of 2020
Announced agreement to acquire Pinnacle 21, a leader in data standardization software for pharmaceutical clinical data, for $310 million in cash and stock, with a closing expected in early Q4 of 2021
Raised 2021 guidance from $283 million to $289 million of revenue, $101 million to $103 million of Adjusted EBITDA, and $0.21 to $0.25 of Adjusted Diluted Earnings Per Share. Updated guidance does not include the impact of the Pinnacle 21 acquisition

“Our second quarter results reflect continued momentum from increased adoption of our proprietary end-to-end platform and the launch of new software capabilities to expand use cases of biosimulation worldwide," said William F. Feehery, Chief Executive Officer of Certara.  "Earlier today, we announced the strategic and accretive deal to acquire Pinnacle 21, our largest to date. This expansion of Certara’s quantitative tools and solutions will further help researchers and regulators answer critical questions throughout the drug development life cycle.”

Second Quarter 2021 Results

“In the second quarter, Certara's differentiated portfolio of software and technology-driven services delivered strong financial performance. Looking forward, we remain well-positioned to achieve our stated long-term goals of mid-teens revenue growth and Adjusted EBITDA margin expansion. With reported trailing twelve-month bookings growth of 26%, we have a high level of visibility towards realizing our business and financial plans for the year,” said Andrew Schemick, Chief Financial Officer.

Total revenue for the second quarter of 2021 was $70.1 million, representing year-over-year growth of 15%.  The revenue growth was driven by both technology-driven services and software licenses and subscriptions.

Total cost of revenue for the second quarter of 2021 was $27.5 million, an increase from $20.6 million in the second quarter of 2020, primarily due to a $3.9 million increase in employee related costs and a $1.4 million increase in stock-based compensation costs.

Total operating expenses for the second quarter of 2021 were $37.3 million, an increase from $26.9 million in the second quarter of 2020, primarily due to a $5.6 million increase in stock-based compensation expense and a $2.1 million increase in employee related costs.  The remaining increases were due to increases in refinancing costs, acquisition related costs and D&O insurance costs.

Net loss for the second quarter of 2021 was ($2.9) million, compared to a net income of $2.8 million in the second quarter of 2020.  The loss was primarily due to a $7.0 million increase in stock-based compensation expense.  


Diluted Earnings Per Share for the second quarter 2021 were ($0.02), as compared to $0.02 in the second quarter of 2020.

Adjusted EBITDA for the second quarter of 2021 was $25.5 million compared to $25.3 million for the second quarter of 2020, representing 1% growth. Adjusted EBITDA for the second quarter of 2020 included the benefit of the completion of high margin projects and lower SG&A costs during the start of the pandemic, which when combined with public company costs incurred in 2021, led to a challenging comparison in the quarter. See note (1) in the section A Note on Non-GAAP Financial Measures, below, for more information on Adjusted EBITDA.

Adjusted Net Income for the second quarter of 2021 was $5.6 million compared to $3.8 million for the second quarter of 2020. Adjusted Diluted Earnings Per Share for the second quarter 2021 was $0.03 compared to $0.02 for the second quarter of 2020.  See note (2) in the section A Note on Non-GAAP Financial Measures, below, for more information on Adjusted Net Income and Adjusted Diluted Earnings Per Share.      

Three Months Ended June 30, 

Six Months Ended June 30, 

    

2021

    

2020

    

2021

    

2020

Key Financials (in millions, except per share data)

 

  

 

  

 

  

 

  

Revenue

$

70.1

$

61.1

$

136.8

$

118.6

Net Income (Loss)

$

(2.9)

$

2.8

$

(1.8)

$

3.8

Diluted Earnings Per Share

$

(0.02)

$

0.02

$

(0.01)

$

0.03

Adjusted EBITDA

$

25.5

$

25.3

$

49.4

$

45.2

Adjusted Net Income

$

5.6

$

3.8

$

13.6

$

5.7

Adjusted Diluted Earnings Per Share

$

0.03

$

0.02

$

0.09

$

0.04

Cash and Cash Equivalents

$

267.8

$

55.7

2021 Financial Outlook

Certara is updating its previously reported guidance for full year 2021, not including the impact of the Pinnacle 21 acquisition, by raising the ranges for revenue, Adjusted EBITDA and Adjusted Diluted Earnings Per Share. We expect the following:

Full year 2021 revenue to be in the range of $283 million to $289 million;

Full year 2021 Adjusted EBITDA to be in the range of $101 million to $103 million;

Full year 2021 Adjusted Diluted Earnings Per Share is expected to be in the range of $0.21 to $0.25;

Fully diluted shares for 2021 will be 153 million to 155 million; and

Effective annual tax rate for 2021 will be in the range of 40% to 45%.

In millions, except per share data

Full Year 2021

Prior Full Year 2021

Guidance (excluding

Guidance

Pinnacle 21)

Revenue

$

277 - $285

$

283 - $289

Adjusted EBITDA

$

100 - $102

$

101 - $103

Adjusted Diluted Earnings Per Share

$

0.20 - $0.24

$

0.21 - $0.25

Webcast and Conference Call Details

Certara will host a conference call today, August 5, 2021, at 5:00 p.m. ET to discuss its second quarter 2021 financial results and the impact of the Pinnacle 21 acquisition.  The dial-in numbers are (833) 360-0946 for domestic callers or (914) 987-


7661 for international callers, followed by Conference ID: 2728807. A live webcast of the conference call will be available on the “Investors” section of the Company's website at https://ir.certara.com/. The webcast will be archived on the website following the completion of the call for approximately one year.  

About Certara

Certara accelerates medicines using biosimulation software and technology to transform traditional drug discovery and development.  Its clients include 1,650 global biopharmaceutical companies, leading academic institutions, and key regulatory agencies across 61 countries.

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, Securities and Exchange Commission filings and public conference calls and webcasts.

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 and margin, and the impact of the Pinnacle 21 acquisition. 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; 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; any delays or defects in the release of new or enhanced software or other biosimulation tools; failure of our existing customers to renew their software licenses or any delays or terminations of contracts or reductions in scope of work by its existing customers; our ability to accurately estimate costs associated with its fixed-fee contracts; our ability to retain key personnel or recruit additional qualified personnel; risks related to our contracts with government customers; our ability to sustain recent growth rates; our ability to successfully operate a global business; our ability to comply with applicable laws and regulations; risks related to litigation; the adequacy of its insurance coverage and ability to obtain adequate insurance coverage in the future; our ability to perform in accordance with contractual requirements, regulatory standards and ethical considerations; the loss of more than one of our major customers; future capital needs; the ability of our bookings to accurately predict future revenue and our ability to realize revenue on backlog; disruptions in the operations of the third-party providers who host our software solutions or any limitations on their capacity; our ability to reliably meet data storage and management


requirements, or the experience of any failures or interruptions in the delivery of our services over the internet; our ability to comply with the terms of any licenses governing use of third-party open source software; any breach of its security measures or unauthorized access to customer data; our ability to adequately enforce or defend ownership and use of our intellectual property and other proprietary rights; ​any allegations of infringement, misappropriation or violations of a third party’s intellectual property rights; our ability to meet obligations under indebtedness and have sufficient capital to operate our business; any limitations on our ability to pursue business strategies due to restrictions under our current or future indebtedness; any impairment of goodwill or other intangible assets; our ability to use our net operating losses and R&D tax credit carryforwards; the accuracy of management’s estimates and judgments relating to critical accounting policies and changes in financial reporting standards or interpretations; any inability to design, implement, and maintain effective internal controls; the costs and management time associated with operating as a publicly traded company; and the other factors detailed under the captions “Risk Factors” and “Special Note Regarding Forward-Looking Statements” and elsewhere in our Securities and Exchange Commission (“SEC”) filings, and reports, including the Form 10-K filed by the Company with the Securities and Exchange Commission on March 15, 2021. Any forward-looking statements speak only as of the date of this release and, except to the extent required by applicable securities laws, we expressly disclaim any obligation to update or revise any of them to reflect actual results, any changes in expectations or any change in events. Factors that may materially affect our results and those risks listed in filings with the SEC.

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 U.S. generally accepted accounting principles (“GAAP”). Specifically, the Company makes use of the non-GAAP financial measures Adjusted EBITDA, Adjusted Net Income (Loss) and Adjusted Diluted Earnings Per Share which are not recognized terms under GAAP.  These measures should not be considered as alternatives to net income (loss) or GAAP diluted earnings per share as measures of financial performance or any other performance measure derived in accordance with GAAP and should not be considered a measure of discretionary cash available to the Company to invest in the growth of its business.  The presentation of these measures has limitations as an analytical tool and should not be considered in isolation, or as a substitute for the Company’s results as reported under GAAP. Because not all companies use identical calculations, the presentations of these measures may not be comparable to other similarly titled measures of other companies and can differ significantly from company to company.

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, 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 and 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 the items discussed in footnote (1) above from GAAP net income and GAAP diluted earnings per share, respectively, as well as currency gain (loss) and adjust the provision for income taxes for such charges.

In evaluating Adjusted EBITDA, Adjusted Net Income, 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:
David Deuchler
Gilmartin Group
ir@certara.com

Media Contact:
Daniel Yunger

Kekst CNC

Daniel.yunger@kekstcnc.com

Ariane Lovell
Finn Partners
ariane.lovell@finnpartners.com


CERTARA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

Three Months Ended June 30, 

Six Months Ended June 30, 

(in thousands, except per common share and share data)

    

2021

    

2020

    

2021

    

2020

Revenue

$

70,096

$

61,123

$

136,814

$

118,572

Cost of revenues

 

27,542

 

20,647

 

53,558

 

42,830

Operating expenses:

 

  

 

  

 

  

 

  

Sales and marketing

 

4,589

 

2,729

 

8,341

 

5,667

Research and development

 

4,626

 

2,969

 

9,332

 

5,844

General and administrative

 

18,034

 

11,181

 

34,596

 

22,722

Intangible asset amortization

 

9,479

 

9,323

 

18,935

 

18,682

Depreciation and amortization expense 

 

552

 

669

 

1,154

 

1,222

Total operating expenses

 

37,280

 

26,871

 

72,358

 

54,137

Income from operations

 

5,274

 

13,605

 

10,898

 

21,605

Other income (expenses):

 

  

 

  

 

  

 

  

Interest expense

 

(6,332)

 

(7,023)

 

(10,260)

 

(13,881)

Miscellaneous, net

 

(346)

 

(80)

 

(463)

 

445

Total other income (expenses)

 

(6,678)

 

(7,103)

 

(10,723)

 

(13,436)

Income (loss) before income taxes

 

(1,404)

 

6,502

 

175

 

8,169

Provision for income taxes

 

1,453

 

3,725

 

1,980

 

4,346

Net income (loss)

$

(2,857)

$

2,777

$

(1,805)

$

3,823

 

  

 

  

 

  

 

  

Net income (loss) per share attributable to common stockholders:

Basic

$

(0.02)

$

0.02

$

(0.01)

$

0.03

Diluted

$

(0.02)

$

0.02

$

(0.01)

$

0.03

Weighted average common shares outstanding:

Basic

147,485,566

132,407,786

147,323,724

132,407,786

Diluted

 

147,485,566

 

132,407,786

 

147,323,724

 

132,407,786


CERTARA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

June 30, 

December 31,

(in thousands, except per share and share data)

    

2021

    

2020

Assets

 

  

 

  

Current assets:

 

  

 

  

Cash and cash equivalents

$

267,757

$

271,382

Accounts receivable, net of allowance for doubtful accounts of $70 and $132, respectively

 

56,586

 

54,091

Restricted cash

 

1,838

 

1,909

Prepaid expenses and other current assets

 

18,627

 

19,202

Total current assets

 

344,808

 

346,584

Other assets:

 

  

 

  

Property and equipment, net

 

3,069

 

3,872

Long-term deposits

 

1,167

 

1,163

Goodwill

 

524,265

 

518,592

Intangible assets, net of accumulated amortization of $147,343 and $127,172, respectively

 

387,942

 

396,445

Other long-term assets

1,145

Deferred income taxes

 

2,939

 

2,744

Total assets

$

1,265,335

$

1,269,400

Liabilities and stockholders' equity

 

  

 

  

Current liabilities:

 

  

 

  

Accounts payable

$

5,549

$

6,394

Accrued expenses

 

18,886

 

30,729

Current portion of deferred revenue

 

29,120

 

30,662

Current portion of interest rate swap liability

 

2,390

 

2,605

Current portion of long-term debt

 

3,020

 

4,680

Current portion of capital lease obligations

 

284

 

275

Total current liabilities

 

59,249

 

75,345

Long-term liabilities:

 

  

 

  

Capital lease obligations, net of current portion

 

174

 

318

Deferred revenue, net of current portion

 

1,157

 

545

Deferred income taxes

 

76,933

 

75,894

Long-term portion of interest rate swap liability

 

 

1,066

Long-term debt, net of current portion and debt discount

 

292,622

 

294,100

Other long-term liabilities

 

690

 

Total liabilities

 

430,825

 

447,268

Commitments and contingencies

 

  

 

  

Stockholders' equity:

 

  

 

  

Preferred shares, $0.01 par value, 50,000,000 shares authorized, no shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively

 

 

Common shares, $0.01 par value, 600,000,000 shares authorized, 152,864,921 and 152,979,479 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively

 

1,529

 

1,529

Additional paid-in capital

 

897,209

 

884,528

Accumulated deficit

 

(64,143)

 

(62,338)

Accumulated other comprehensive loss

 

(85)

 

(1,587)

Total stockholders' equity

 

834,510

 

822,132

Total liabilities and stockholders' equity

$

1,265,335

$

1,269,400


CERTARA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

Six Months Ended June 30, 

(in thousands)

    

2021

    

2020

Cash flows from operating activities:

 

  

 

  

Net income (loss)

$

(1,805)

$

3,823

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

 

  

 

  

Depreciation and amortization of property and equipment

 

1,154

 

1,222

Amortization of intangible assets

 

20,227

 

19,848

Amortization of debt issuance costs

 

747

 

762

Recovery of doubtful accounts

 

(61)

 

Loss on retirement of assets

 

282

 

Equity-based compensation expense

 

12,681

 

1,105

Unrealized loss on hedge

2,390

Deferred income taxes

 

(1,971)

 

1,871

Changes in assets and liabilities, net of acquisitions:

 

  

 

  

Accounts receivable

 

620

 

(1,299)

Prepaid expenses and other current assets

 

197

 

(2,608)

Accounts payable and accrued expenses

 

(13,848)

 

(3,645)

Deferred revenue

 

(1,057)

 

(4,438)

Net cash provided by operating activities

 

19,556

 

16,641

Cash flows from investing activities:

 

  

 

  

Capital expenditures

 

(511)

 

(638)

Capitalized development costs

 

(3,374)

 

(3,928)

Business acquisitions, net of cash acquired

 

(14,114)

 

(675)

Net cash used in investing activities

 

(17,999)

 

(5,241)

Cash flows from financing activities:

 

  

 

  

Unit repurchase

 

 

(55)

Proceeds from borrowings on long-term debt

89

Payments on long-term debt and capital lease obligations

 

(2,323)

 

(2,639)

Proceeds from line of credit

 

 

19,880

Payments of debt issuance costs

 

(2,931)

 

Net cash provided by (used in) financing activities

 

(5,165)

 

17,186

Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash

 

(88)

 

1,005

Net increase (decrease) in cash and cash equivalents, and restricted cash

 

(3,696)

 

29,591

Cash and cash equivalents, and restricted cash, at beginning of period

 

273,291

 

29,762

Cash and cash equivalents, and restricted cash, at end of period

$

269,595

$

59,353


NON-GAAP FINANCIAL MEASURES

The following table reconciles Net income (loss) to Adjusted EBITDA:

Three Months Ended June 30, 

Six Months Ended June 30, 

(in thousands)

    

2021

    

2020

    

2021

    

2020

Net income (loss)(a)

$

(2,857)

$

2,777

$

(1,805)

$

3,823

Interest expense(a)

 

6,332

 

7,023

 

10,260

 

13,881

Interest income(a)

 

(100)

 

(13)

 

(171)

 

(24)

Provision for income taxes(a)

 

1,453

 

3,725

 

1,980

 

4,346

Depreciation and amortization expense(a)

 

552

 

669

 

1,154

 

1,222

Intangible asset amortization(a)

 

10,125

 

9,918

 

20,227

 

19,848

Currency gain (loss) (a)

 

164

 

55

 

356

 

(227)

Equity-based compensation expense(b)

 

7,530

 

567

 

12,681

 

1,105

Acquisition-related expenses(c)

 

556

 

494

 

2,152

 

949

Transaction related expenses(d)

 

937

 

 

1,622

 

Severance expense(e)

 

 

16

 

 

211

Reorganization expense(f)

 

 

102

 

 

107

Loss on disposal of fixed assets(g)

 

282

 

 

282

 

Executive recruiting expense(h)

327

327

First-year Sarbanes-Oxley implementation costs(i)

 

233

 

 

340

 

Adjusted EBITDA

$

25,534

$

25,333

$

49,405

$

45,241

The following table reconciles Net income (loss) to Adjusted Net Income:

Three Months Ended June 30, 

Six Months Ended June 30, 

(in thousands)

    

2021

    

2020

    

2021

    

2020

Net income (loss)(a)

$

(2,857)

$

2,777

$

(1,805)

$

3,823

Currency gain (loss) (a)

 

164

 

55

 

356

 

(227)

Equity-based compensation expense(b)

 

7,530

 

567

 

12,681

 

1,105

Acquisition-related expenses(c)

 

556

 

494

 

2,152

 

949

Transaction related expenses(d)

 

937

 

 

1,622

 

Severance expense(e)

 

 

16

 

 

211

Reorganization expense(f)

 

 

102

 

 

107

Loss on disposal of fixed assets(g)

 

282

 

 

282

 

Executive recruiting expense(h)

 

327

 

 

327

 

First-year Sarbanes-Oxley implementation costs (i)

233

340

Income tax expense impact of adjustments(j)

 

(1,594)

 

(162)

 

(2,346)

 

(265)

Adjusted Net Income

$

5,578

$

3,849

$

13,609

$

5,703


The following table reconciles diluted earnings per share to Adjusted Diluted Earnings Per Share:

Three Months Ended June 30, 

Six Months Ended June 30, 

    

2021

    

2020

    

2021

    

2020

Diluted earnings per share(a)

$

(0.02)

$

0.02

$

(0.01)

$

0.03

Currency gain (loss) (a)

 

 

 

 

Equity-based compensation expense(b)

 

0.05

 

 

0.08

 

0.01

Acquisition-related expenses(c)

 

 

 

0.01

 

Transaction related expenses(d)

 

0.01

 

 

0.02

 

Severance expense(e)

 

 

 

 

Reorganization expense(f)

 

 

 

 

Loss on disposal of fixed assets(g)

 

 

 

 

Executive recruiting expense(h)

 

 

 

 

First-year Sarbanes-Oxley implementation costs(i)

Income tax expense impact of adjustments(j)

 

(0.01)

 

 

(0.01)

 

Adjusted Diluted Earnings Per Share

$

0.03

$

0.02

$

0.09

$

0.04

 

  

 

  

 

  

 

  

Diluted weighted average common shares outstanding

 

147,485,566

 

132,407,786

 

147,323,724

 

132,407,786

Effect of potentially dilutive shares outstanding (k)

 

4,979,042

 

 

4,952,002

 

Adjusted diluted weighted average common shares outstanding

 

152,464,608

 

132,407,786

 

152,275,726

 

132,407,786

(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 costs associated with mergers and acquisitions and any retention bonuses pursuant to the acquisitions.
(d)Represents costs associated with directly expensed costs from the secondary offerings and debt modification.
(e)Represents charges for severance provided to former executives and non-executives.
(f)Represents expense related to reorganization, including legal entity reorganization.
(g)Represents the gain/loss related to disposal of fixed assets.
(h)Represents recruiting and relocation expenses related to hiring senior executives.
(i)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 in 2021.
(j)Represents the income tax effect of the non-GAAP adjustments calculated using the applicable statutory rate by jurisdiction.
(k)Represents potentially dilutive shares that were excluded from the Company's GAAP diluted weighted average shares outstanding because the Company had a reported net loss and therefore including these shares would have been anti-dilutive.