Tabula Rasa HealthCare Reports Third Quarter 2020 Results

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    Tabula Rasa HealthCare Reports Third Quarter 2020 Results

    03 Nov 2020

    MOORESTOWN, N.J., Nov. 03, 2020 (GLOBE NEWSWIRE) -- Tabula Rasa HealthCare, Inc. (“TRHC”) (Nasdaq:TRHC), a healthcare technology company advancing the field of medication safety, today reported financial results for the third quarter ended September 30, 2020.

    “We are pleased with the resilience and focus of our team during these unprecedented times. While the ongoing pandemic impacted our financial results during the third quarter, we are continuing to see signs of recovery that we believe will be meaningful drivers of improved performance in the fourth quarter of 2020 and in 2021. For example, our October 2020 PACE net enrollment figures far exceeded our expectations and are at the highest levels we have seen in two years. Recent industry data from the National PACE Association shows a sharp decline in the number of COVID-19 cases and number of deaths among PACE members. This, combined with our increasing sales pipeline, strong contracted backlog, recent acquisition of Personica, and new leadership talent, provides us with amplified confidence regarding our 2021 revenue growth,” said Calvin H. Knowlton, PhD, TRHC’s Chief Executive Officer, Chairman and Founder.

    CareVention Highlights

    • Our net PACE organic enrollment additions for the month of October 2020 more than doubled as compared with September 2020 and represented the highest net enrollment figure we have recorded since October 2018. We expect that our PACE census will be the single largest growth driver in 2021.
    • Importantly, these gains were broad-based with a number of PACE organizations recording their highest net enrollment figures during October of any month in 2020 and an outsized contribution from our for-profit PACE organizations, which are a growing component of our membership base. We head into 2021 with a strong pipeline of new PACE centers opening, as well as current PACE centers expanding the number of their sites. This activity includes a new contract with ConcertoHealth, a risk-bearing provider group partnering with Edenbridge Health to open PACE centers during 2021.
    • Despite COVID-19, we have not seen any delays in the scheduled PACE center openings through the third quarter of 2020. The current backlog of new extension centers and new PACE organizations under contract to open over the next 12 months has now increased to 31, which we believe represents in excess of $75 million in annual revenue when the centers are operating at full capacity.

    MedWise Highlights

    • Our wins in the payer division through the first nine months of 2020 continues to be a bright spot, with record third quarter bookings growing 50%, as compared with the second quarter of 2020, and more than doubled compared to the first quarter of 2020. Our payer division has accounted for 45% of total bookings year-to-date.
    • Despite continued COVID-related challenges, third quarter bookings across all divisions (i.e. MedWise and CareVention) increased 12% as compared with the second quarter of 2020 and increased 15% (excluding COVID-19 test kits) as compared with a year ago. Through the first three quarters of 2020, our total bookings (excluding COVID-19 test kits) have increased 22%. It is important to note that 43% of our 2020 bookings represent 2021 revenue including our HealthMart contract, which now has an official launch date at the end of the first quarter of 2021. Our overall sales pipeline as of October 1, 2020 has continued to grow, increasing 18% as compared with July 1, 2020 and increasing 136% as compared with January 1, 2020.
    • Notable third quarter 2020 deals included expanded contracts with existing clients WellCare, Humana, Magellan, and MedImpact, including engagements for our MedWise™ Enhanced MTM Model (EMTM) plus new contracts with Clear Spring Health (a Medicare Advantage plan in six states) and Direct Scripts.
    • As we discussed last quarter, our MedWise Risk Score™ and MedWise™ integration is now available within the PrescribeWellness platform, a key acquisition milestone for the business unit. Tens of thousands of community pharmacists can now utilize MedWise™ to transition to clinical care providers in their local communities. For the full year 2020, our EMTM program will deliver more than 50,000 Medication Safety Reviews (MSRs) with 45% of these MSRs completed locally by our 400 EMTM certified community pharmacies that license MedWise™ as part of the CMS EMTM program.
    • Finally, we recently contracted with PioneerRx to embed our MedWise Risk Score™ in their pharmacy management system, which is used by 4,700 community pharmacies. Between our PrescribeWellness and PioneerRx pharmacies, we can connect MedWise™ with more than 14,000 pharmacies and more than 40,000 pharmacists.

    Third Quarter 2020 Financial Results

    All comparisons, unless otherwise noted, are to the three months ended September 30, 2019.

    • Total revenue - Total revenue of $70.5 million declined 5% as compared to $74.3 million. Total revenue included product revenue of $39.4 million, an increase of 13%, and solutions (i.e. software and services) revenue of $31.1 million, a decrease of 21%.
    • Total revenue by segment

    ° CareVention HealthCare revenue increased 9% to $50.3 million, comprised of $39.1 million (up 12% as compared to a year ago) of PACE product revenue and $11.2 million (down 1%) of PACE solutions revenue, the latter of which remains negatively impacted by the large renegotiated contract we have highlighted in prior quarters.

    ° MedWise HealthCare revenue decreased 28% to $20.2 million, comprised of $9.8 million (down 48%) of medication safety services and $10.1 million (up 8%) of software subscriptions and software related services. Medication safety services accounted for our entire shortfall relative to our original revenue guidance expectations and were negatively impacted by: (i) COVID-related delays with two large health plan contracts, originally signed in the first quarter of 2020, that went live later than expected during the end of the third quarter and (ii) new restrictions related to Comprehensive Medication Reviews (CMRs) performed with caregivers and prescribers temporarily slowed patient engagement in the third quarter.

    • Non-GAAP Adjusted EBITDA - Non-GAAP Adjusted EBITDA of $5.1 million declined as compared to $10.6 million a year ago, driven entirely by lower revenue and profitability in our MedWise HealthCare segment. Non-GAAP Adjusted EBITDA margin decreased to 7.2% as compared to 14.2% a year ago.
    • Non-GAAP Adjusted EBITDA by segment (excluding $8.7 million of shared services allocated to corporate)

    ° CareVention HealthCare non-GAAP Adjusted EBITDA of $12.7 million (25.3% margin) increased 1% as compared to $12.6 million (27.3% margin) a year ago.

    ° MedWise HealthCare non-GAAP Adjusted EBITDA of $1.0 million (5.0% margin) decreased as compared to $5.4 million (19.2% margin) a year ago primarily due to lower medication safety services revenue.

    • GAAP Net loss - Net loss was $21.6 million compared to a net loss of $8.1 million a year ago. The primary factors contributing to the net loss were depreciation and amortization of $12.2 million, stock-based compensation expense of $8.1 million, and interest expense of $4.7 million.

    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.”

    2020 Financial Outlook

    Our guidance is based on current market conditions and our expectations as of today.

    For the full year 2020 ending December 31, we expect:

    • Revenue in the range of $294 million to $296 million, the mid-point of which represents 4% growth compared to the full year 2019, and fourth quarter revenue to increase 5% to 8% as compared to the third quarter through a combination of organic growth and our October acquisition of Personica. The key factors influencing our guidance are: (i) the aforementioned CMR restrictions and (ii) the negative impact from COVID-19 on medication adherence initiatives, which are seasonally weighted toward the second half of the calendar year.
    • GAAP net loss in the range of $68.8 million to $67.9 million.
    • Non-GAAP Adjusted EBITDA in the range of $21 million to $22 million with fourth quarter non-GAAP Adjusted EBITDA in the range of $4 million to $5 million.

    2021 Outlook

    We plan to provide formal guidance following our fourth quarter and full year 2020 results. Currently, we believe that overall revenue can grow at 20% in 2021 as compared to the mid-point of our 2020 guidance. At present, our confidence in our growth outlook is based on: (i) positive PACE enrollment trends, (ii) our contracted backlog, which now includes a committed timeline for implementing our single largest new contract signed in 2020 in our pharmacy segment, and (iii) the growth of our sales pipeline across all segments of the business. In addition, we are excited about our October acquisition of Personica, and expect Personica revenue could grow at a rate materially faster than our other business lines, with further potential upside based on cross-selling efforts.

    Looking farther ahead, in addition to the October 15, 2020 launch of our medication safety campaign (“Medication Safety Starts with a Pharmacist”) with the American Pharmacists Association, we have a number of exciting initiatives aimed at building greater awareness and, ultimately, revenue. Our MedWise™ science is attracting a high level of attention from pharmacists, state and national pharmacy associations, state boards of pharmacy, and the 60,000 student pharmacists in 145 schools of pharmacy in the U.S. Lastly, we see strong levels of interest and ongoing discussions with healthcare organizations recognizing the compelling value of MedWise™ as part of broader value-based agreements with employers, health plans, and government entities. Dr. Knowlton concluded, “As we exit 2020, we are encouraged by many of our leading indicators for future revenue growth in 2021 and beyond.”


    We started the year with strong performance as evidenced by our first quarter results but, unfortunately, as the second quarter of 2020 progressed, began to see the negative impact from the pandemic across all of the three key markets we serve: PACE, health plans, and independent community pharmacies. Despite these challenges, our dedicated team has continued to support the needs of our clients without disruption and deliver the forecasted positive revenue growth in 2020 noted earlier. Our sales activity and engagement with existing clients and prospects began to improve during the third quarter and we are optimistic TRHC and our clients can return to a more normal business environment in 2021.

    Upcoming Events

    Brian Adams, TRHC’s Chief Financial Officer, and Frank Sparacino, TRHC’s SVP of Investor Relations and Corporate Development, will be presenting at the following conferences: (1) Piper Sandler’s 32nd Annual Virtual Healthcare Conference, December 1-3, 2020 and (2) Guggenheim’s first annual Digital Health Virtual Summit, December 8-9, 2020.

    Quarterly Conference Call

    The third quarter 2020 earnings conference call and webcast will be held tomorrow, Wednesday, November 4, 2020, 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 6455748 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 6455748.

    About Tabula Rasa HealthCare

    Tabula Rasa HealthCare (Nasdaq: TRHC) is innovating the next frontier of medication safety, creating solutions designed to empower pharmacists and providers to optimize medication regimens. Our advanced proprietary technology, MedWise™, identifies adverse drug events, so healthcare professionals can minimize harm and reduce medication-related risks. Our software and services help improve patient outcomes, reduce hospitalizations and lower healthcare costs. TRHC believes it has the most extensive clinical tele-pharmacist network in the United States and a community pharmacy network of more than 15,000 rooftops. Our suite of solutions is trusted by health plans and pharmacies nationwide to assist them in driving value-based payment results. For more information, visit: www.trhc.com.

    Non-GAAP Financial Measures

    In addition to reporting all financial information required in accordance with GAAP, TRHC is also reporting Adjusted EBITDA 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 expense (income), severance expense incurred in 2020 in connection with the Company’s reorganization, acquisition-related expense, and stock-based compensation expense. 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, severance expense incurred in 2020 in connection with the Company’s reorganization, acquisition-related expense, 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 current 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 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 March 2, 2020, 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 http://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.

    (In thousands)

        September 30   December 31
        2020   2019
    Current assets:            
    Cash   $ 28,721     $ 42,478  
    Restricted cash     3,573       4,103  
    Accounts receivable, net     32,343       29,123  
    Inventories     4,194       3,700  
    Prepaid expenses     3,196       4,299  
    Other current assets     4,162       10,835  
    Total current assets     76,189       94,538  
    Property and equipment, net     15,284       15,798  
    Operating lease right-of-use assets     21,549       22,100  
    Software development costs, net     25,622       18,501  
    Goodwill     150,760       150,760  
    Intangible assets, net     167,477       189,413  
    Other assets     1,353       1,281  
    Total assets   $ 458,234     $ 492,391  
    Liabilities and stockholders’ equity            
    Current liabilities:            
    Current portion of long-term debt and finance leases, net   $ 6     $ 125  
    Current operating lease liabilities     4,399       4,350  
    Acquisition-related contingent consideration     658        
    Accounts payable     7,272       8,622  
    Accrued expenses and other liabilities     21,643       26,906  
    Total current liabilities     33,978       40,003  
    Long-term debt and finance leases, net     235,938       226,294  
    Noncurrent operating lease liabilities     20,273       21,017  
    Long-term acquisition-related contingent consideration           10,800  
    Deferred income tax liability     2,951       8,656  
    Other long-term liabilities     388       73  
    Total liabilities     293,528       306,843  
    Stockholders' equity:            
    Common stock     2       2  
    Treasury stock     (4,018 )     (3,865 )
    Additional paid-in capital     317,992       288,345  
    Accumulated deficit     (149,270 )     (98,934 )
    Total stockholders’ equity     164,706       185,548  
    Total liabilities and stockholders’ equity   $ 458,234     $ 492,391  

    (In thousands, except share and per share amounts)

        Three Months Ended   Nine Months Ended
        September 30   September 30
        2020     2019     2020     2019  
    Product revenue   $ 39,365     $ 34,966     $ 115,825     $ 99,320  
    Service revenue     31,141       39,304       104,342       112,164  
    Total revenue     70,506       74,270       220,167       211,484  
    Cost of revenue, exclusive of depreciation and amortization shown below:                        
    Product cost     28,638       25,931       84,879       74,267  
    Service cost     20,610       20,510       64,140       58,998  
    Total cost of revenue, exclusive of depreciation and amortization     49,248       46,441       149,019       133,265  
    Operating expenses:                        
    Research and development     5,101       5,902       13,750       16,649  
    Sales and marketing     5,030       6,884       15,597       18,605  
    General and administrative     15,620       12,155       48,914       38,781  
    Change in fair value of acquisition-related contingent consideration expense     2,005       1,510       2,605       4,516  
    Depreciation and amortization     12,199       9,142       32,323       24,519  
    Total operating expenses     39,955       35,593       113,189       103,070  
    Loss from operations     (18,697 )     (7,764 )     (42,041 )     (24,851 )
    Interest expense, net     4,722       4,441       14,000       11,442  
    Loss before income taxes     (23,419 )     (12,205 )     (56,041 )     (36,293 )
    Income tax benefit     (1,830 )     (4,101 )     (5,705 )     (10,681 )
    Net loss   $ (21,589 )   $ (8,104 )   $ (50,336 )   $ (25,612 )
    Net loss per share, basic and diluted   $ (0.99 )   $ (0.39 )   $ (2.33 )   $ (1.25 )
    Weighted average common shares outstanding, basic and diluted     21,779,808       20,691,112       21,571,214       20,520,357  

    (In thousands)

        Nine Months Ended
        September 30
        2020     2019  
    Cash flows from operating activities:          
    Net loss   $ (50,336 )   $ (25,612 )
    Adjustments to reconcile net loss to net cash provided by (used in) operating activities:            
    Depreciation and amortization     32,323       24,519  
    Amortization of deferred financing costs and debt discount     9,925       7,689  
    Deferred taxes     (5,705 )     (10,749 )
    Stock-based compensation     22,408       20,983  
    Change in fair value of acquisition-related contingent consideration     2,605       4,516  
    Acquisition-related contingent consideration paid     (2,390 )     (24,480 )
    Other noncash items     (70 )     12  
    Changes in operating assets and liabilities, net of effect from acquisitions:            
    Accounts receivable, net     (3,220 )     (417 )
    Inventories     (494 )     (220 )
    Prepaid expenses and other current assets     7,209       (2,626 )
    Other assets     (382 )     (53 )
    Accounts payable     (1,432 )     (5,787 )
    Accrued expenses and other liabilities     (5,408 )     5,474  
    Other long-term liabilities     315       (60 )
    Net cash provided by (used in) operating activities     5,348       (6,811 )
    Cash flows from investing activities:            
    Purchases of property and equipment     (2,537 )     (5,202 )
    Software development costs     (13,734 )     (10,285 )
    Purchases of intangible assets           (1,202 )
    Proceeds from repayment of note receivable           1,000  
    Acquisitions of businesses, net of cash acquired           (158,762 )
    Net cash used in investing activities     (16,271 )     (174,451 )
    Cash flows from financing activities:            
    Proceeds from exercise of stock options     3,225       2,503  
    Payments for employee taxes for shares withheld     (2,993 )      
    Payments for debt financing costs     (38 )     (9,632 )
    Repayments of line of credit           (45,000 )
    Payments of acquisition-related contingent consideration     (3,504 )     (29,062 )
    Repayments of long-term debt and finance leases     (54 )     (757 )
    Proceeds from issuance of convertible senior subordinated notes           325,000  
    Proceeds from sale of warrants           65,910  
    Purchase of convertible note hedges           (101,660 )
    Net cash (used in) provided by financing activities     (3,364 )     207,302  
    Net (decrease) increase in cash and restricted cash     (14,287 )     26,040  
    Cash and restricted cash, beginning of period     46,581       25,029  
    Cash and restricted cash, end of period   $ 32,294     $ 51,069  

    (In thousands)

          Three Months Ended   Nine Months Ended
        March 31, 2020   June 30, 2020   September 30, 2020   September 30, 2020
    CareVention HealthCare:                        
    PACE product revenue   $ 37,087     $ 38,930     $ 39,086     $ 115,103  
    PACE solutions     11,571       11,522       11,214       34,307  
    Total CareVention HealthCare     48,658       50,452       50,300       149,410  
    MedWise HealthCare:                        
    Product revenue           443       279       722  
    Medication safety services     14,320       15,707       9,817       39,844  
    Software subscription and services     9,849       10,232       10,110       30,191  
    Total MedWise HealthCare     24,169       26,382       20,206       70,757  
    Total Revenue   $ 72,827     $ 76,834     $ 70,506     $ 220,167  
    Adjusted EBITDA                        
    CareVention HealthCare   $ 11,748     $ 12,077     $ 12,735     $ 36,560  
    MedWise HealthCare     2,831       4,697       1,009       8,537  
    Shared Services     (9,772 )     (9,640 )     (8,650 )     (28,062 )
    Total Adjusted EBITDA   $ 4,807     $ 7,134     $ 5,094     $ 17,035  

        Three Months Ended   Year Ended
        March 31, 2019   June 30, 2019   September 30, 2019   December 31, 2019   December 31, 2019
    CareVention HealthCare:                              
    PACE product revenue   $ 30,982     $ 33,372     $ 34,966     $ 37,810     $ 137,130  
    PACE solutions     11,174       11,437       11,276       12,021       45,908  
    Total CareVention HealthCare     42,156       44,809       46,242       49,831       183,038  
    MedWise HealthCare:                              
    Medication safety services     15,351       22,498       18,706       13,362       69,917  
    Software subscription and services     3,452       8,948       9,322       10,030       31,752  
    Total MedWise HealthCare     18,803       31,446       28,028       23,392       101,669  
    Total Revenue   $ 60,959     $ 76,255     $ 74,270     $ 73,223     $ 284,707  
    Adjusted EBITDA                              
    CareVention HealthCare   $ 10,620     $ 11,466     $ 12,632     $ 12,773     $ 47,491  
    MedWise HealthCare     1,648       9,059       5,388       2,181       18,276  
    Shares Services     (6,577 )     (6,873 )     (7,444 )     (6,952 )     (27,846 )
    Total Adjusted EBITDA   $ 5,691     $ 13,652     $ 10,576     $ 8,002     $ 37,921  

    (In thousands except share and per share amounts)

        Three Months Ended September 30   Nine Months Ended September 30
        2020     2019     2020     2019  
    Reconciliation of net loss to Adjusted EBITDA                        
    Net loss   $ (21,589 )   $ (8,104 )   $ (50,336 )   $ (25,612 )
    Interest expense, net     4,722       4,441       14,000       11,442  
    Income tax benefit     (1,830 )     (4,101 )     (5,705 )     (10,681 )
    Depreciation and amortization     12,199       9,142       32,323       24,519  
    Change in fair value of acquisition-related contingent consideration expense     2,005       1,510       2,605       4,516  
    Severance expense     917             917        
    Acquisition-related expense     572       463       823       4,752  
    Stock-based compensation expense     8,098       7,225       22,408       20,983  
    Adjusted EBITDA   $ 5,094     $ 10,576     $ 17,035     $ 29,919  

        Three Months Ended September 30   Nine Months Ended September 30
        (In thousands except per share amounts)   (In thousands except per share amounts)
    Reconciliation of diluted net loss per share to Adjusted Diluted EPS                                                
    GAAP net loss, basic and diluted, and net loss per share, basic and diluted   $ (21,589 )   $ (0.99 )   $ (8,104 )   $ (0.39 )   $ (50,336 )   $ (2.33 )   $ (25,612 )   $ (1.25 )
    Change in fair value of acquisition-related contingent consideration expense     2,005             1,510             2,605             4,516        
    Amortization of acquired intangibles     8,291             6,927             21,936             18,678        
    Amortization of debt discount and issuance costs     3,280             3,012             9,647             7,506        
    Severance expense     917                         917                    
    Acquisition-related expense     572             463             823             4,752        
    Stock-based compensation expense     8,098             7,225             22,408             20,983        
    Impact to income taxes (1)     (1,762 )           (6,049 )           (6,306 )           (15,716 )      
    Adjusted net (loss) income and Adjusted Diluted EPS   $ (188 )   $ (0.01 )   $ 4,984     $ 0.22     $ 1,694     $ 0.07     $ 15,107     $ 0.66  

    (1)   The impact to taxes was calculated using a normalized statutory tax rate applied to pre-tax income or loss adjusted for the respective items above and then subtracting or adding the tax provision or benefit, respectively, as determined for GAAP purposes.

        Three Months Ended   Nine Months Ended
        September 30   September 30
        2020   2019   2020   2019
    Reconciliation of weighted average shares of common stock outstanding, diluted, to weighted average shares of common stock outstanding, diluted for Adjusted Diluted EPS                
    Weighted average shares of common stock outstanding, basic and diluted for GAAP   21,779,808   20,691,112   21,571,214   20,520,357
    Weighted average dilutive effect of stock options     1,555,922   1,281,367   1,577,258
    Weighted average dilutive effect of restricted stock     809,601   491,245   803,618
    Weighted average dilutive effect of contingent shares     30,502   74,102   27,037
    Weighted average shares of common stock outstanding, diluted for Adjusted Diluted EPS (1)   21,779,808   23,087,137   23,417,928   22,928,270

    (1)   TRHC accounts for the convertible senior subordinated notes utilizing the Treasury Stock Method as the Company currently intends to settle the notes entirely or partly in cash. Under this method, the underlying shares of TRHC common stock issuable upon conversion of the notes are excluded from the calculation of diluted EPS, except to the extent that the average stock price for the reporting period exceeds their conversion price of $69.95 per share. For the three and nine months ended September 30, 2020, there was no impact on diluted EPS from the convertible senior subordinated notes as the conversion price exceeded TRHC’s average stock price.


    (In millions)

        Three Months Ended December 31, 2020   Year Ended December 31, 2020
        LOW   HIGH   LOW   HIGH
    Reconciliation from Net Loss Guidance to Adjusted EBITDA Guidance                        
    Net loss:   $ (18.5 )   $ (17.6 )   $ (68.8 )   $ (67.9 )
    Interest expense     4.9       4.9       18.9       18.9  
    Income tax benefit     (2.1 )     (2.0 )     (7.8 )     (7.7 )
    Depreciation and amortization     12.6       12.6       44.9       44.9  
    Stock-based compensation expense     7.1       7.1       29.5       29.5  
    Change in fair value of contingent consideration                 2.6       2.6  
    Severance expense                 0.9       0.9  
    Acquisition-related expense                 0.8       0.8  
    Adjusted EBITDA   $ 4.0     $ 5.0     $ 21.0     $ 22.0  


    Frank Sparacino
    T: 866-648-2767

    Dianne Semingson
    T: 215-870-0829

    Amanda Bednar
    T: 856-912-5714


    Source: Tabula Rasa HealthCare, Inc.