Driven by its leading AI-powered platform, Benefitfocus grew total revenue 17% year-over-year

CHARLESTON, S.C., Nov. 06, 2019 (GLOBE NEWSWIRE) -- Benefitfocus, Inc. (NASDAQ: BNFT), a leading cloud-based benefits management platform and services provider, today announced its third quarter 2019 financial results. Recent highlights include: 

• Grew net benefit eligible lives to 16.8 million at the end of the third quarter, up from 16.5 million at the end of the prior quarter and 13.2 million at the end of the prior year period.
  
• Extended platform to support growing gig economy and signed first customer exclusively serving independent contractors.
  
• Added over 250 premier brokers, bringing our total premier broker count to over 700.
  
• Announced MarketPlace for Carriers that provides end-to-end business rating, quoting, billing and payments.

“Benefitfocus delivered strong third quarter results and continues to make solid progress towards achieving our long-term goals,” said Ray August, President and Chief Executive Officer of Benefitfocus.

August added, “The benefits industry is undergoing a fundamental change and Benefitfocus is at the forefront helping to transform its future. For more than 25 million Americans, our platform delivers a rich experience as a result of providing enhanced consumer education and engagement with their benefits. With our considerable data assets we are transforming how benefits are bought, sold and used in the United States.”

Third Quarter 2019 Financial Highlights

Revenue

• Total revenue was $71.7 million, an increase of 17% compared to the third quarter of 2018.
  
  
• Software services revenue was $54.2 million, an increase of 16% compared to the third quarter of 2018.
  
  
• Professional services revenue was $17.5 million, an increase of 23% compared to the third quarter of 2018.

Net Loss

• GAAP net loss was ($12.6) million, compared to ($11.6) million in the third quarter of 2018. GAAP net loss per share was ($0.38), based on 32.7 million basic and diluted weighted average common shares outstanding, compared to ($0.36) for the third quarter of 2018, based on 31.9 million basic and diluted weighted average common shares outstanding.

Non-GAAP Net Loss and Adjusted EBITDA

• Non-GAAP net loss was ($7.5) million, compared to ($7.2) million in the third quarter of 2018. Non-GAAP net loss per share was ($0.23), based on 32.7 million basic and diluted weighted average common shares outstanding, compared to ($0.23) for the third quarter of 2018, based on 31.9 million basic and diluted weighted average common shares outstanding.
  
  
• Adjusted EBITDA was $2.9 million, compared to ($0.0) million in the third quarter of 2018.

See important disclosures about non-GAAP measures, and a reconciliation of them to GAAP, below.

Balance Sheet

• Cash and cash equivalents at September 30, 2019 totaled $130.7 million, compared to $138.4 million at the end of the second quarter of 2019. 

Updated Business Outlook

Based on information available as of November 6, 2019, Benefitfocus is providing guidance for the fourth quarter and updated its full year 2019 as indicated below.

Fourth Quarter 2019:

• Total revenue is expected to be in the range of $83.5 million to $91.5 million.
  
  
• Non-GAAP net (loss)/income is expected to be in the range of ($4.8) million to $0.2 million, or ($0.15) to $0.01 per share, based on 32.8 million basic (for net loss) and 33.2 million diluted (for net income) weighted average common shares outstanding.
  
  
• Adjusted EBITDA is expected to be in the range of $5.4 million to $10.4 million.

Full Year 2019:

• Total revenue is expected to be in the range of $292.0 million to $300.0 million.
  
  
• Non-GAAP net loss is expected to be in the range of ($29.0) million to ($24.0) million, or ($0.89) to ($0.74) per share, based on 32.5 million basic and diluted weighted average common shares outstanding.
  
  
• Adjusted EBITDA is expected to be in the range of $12.0 million to $17.0 million.

Management has not reconciled forward-looking non-GAAP net loss/income and Adjusted EBITDA to their most directly comparable GAAP measure of GAAP net loss.  This is because we cannot predict with reasonable certainty the ultimate outcome of the various necessary GAAP components of such reconciliations, including, for example, those related to compensation, acquisition transactions and integration, or others that may arise during the year, without unreasonable effort. These components and other factors could materially impact the amount of the future directly comparable GAAP measures, which may differ significantly from their non-GAAP counterparts. See below for additional important disclosures regarding our non-GAAP financial measures.

Conference Call Details:

In conjunction with this announcement, Benefitfocus will host a conference call today, November 6, 2019, at 5:00 p.m. Eastern Time to discuss the company’s financial results. To access this call, dial (877) 407-9208 (domestic) or (201) 493-6784 (international). A live webcast, as well as the replay, of the conference call will be available on the Investor Relations page of the company’s website at http://investor.benefitfocus.com/. After the conference call, a replay will be available until November 13, 2019, and can be accessed by dialing (844) 512-2921 (domestic) or (412) 317-6671 (international) with passcode 13695735.

About Benefitfocus
Benefitfocus (NASDAQ: BNFT) unifies the entire U.S. benefits industry on a single technology platform to protect consumers' health, wealth, property and lifestyle. Our powerful cloud-based software, data-driven insights and thoughtfully-designed services, enable employers, insurance brokers, carriers and suppliers to simplify the complexity of benefits administration and deliver a world-class benefits experience. Learn more at www.benefitfocus.com, LinkedIn and Twitter.

Non-GAAP Financial Measures

The company uses certain non-GAAP financial measures in this release, including non-GAAP gross profit, operating loss, net loss/income, net loss/income per common share, and adjusted EBITDA. 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. 

Non-GAAP gross profit, operating loss, net loss/income and net loss/income per common share exclude stock-based compensation expenses, amortization of acquisition-related intangible assets, transaction and acquisition-related costs expensed, if any, and costs not core to our business, if any.  We define adjusted EBITDA as net loss before net interest, taxes, and depreciation and amortization expense, adjusted to eliminate stock-based compensation expense, expense related to the impairment of goodwill and intangible assets, transaction and acquisition-related costs expensed, and costs not core to our business.   Please note that other companies might define their non-GAAP financial measures differently than we do.

Management presents these non-GAAP financial measures in this release because it considers them to be important supplemental measures of performance. Management 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 to determine appropriate levels of operating and capital investments. Management believes that these non-GAAP financial measures provide additional insight for analysts and investors in evaluating the company's financial and operational performance. Management 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 the non-GAAP measures to their most directly comparable GAAP measures provided in this release, including in the accompanying tables.

Safe Harbor Statement

Except for historical information, all of the statements, expectations, and assumptions contained in this press release are forward-looking statements. 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: our continuing losses and need to achieve GAAP profitability; fluctuations in our financial results; the immature and volatile market for our products and services; risks related to changing healthcare and other applicable regulations; risks associated with acquisitions; our ability to maintain our culture, recruit and retain qualified personnel and effectively expand our sales force; cyber-security risks;  the need to innovate and provide useful products and services; our ability to compete effectively; privacy, security and other risks associated with our business; and the other risk factors set forth from time to time in our SEC filings,  copies of which are available free of charge within the Investor Relations section of the Benefitfocus website at http://investor.benefitfocus.com/sec-filings or upon request from our Investor Relations Department. Benefitfocus assumes no obligation and does not intend to update these forward-looking statements, except as required by law.

Source: Benefitfocus, Inc.

Benefitfocus, Inc.
Unaudited Consolidated Statements of Operations and Comprehensive Loss
(in thousands, except share and per share data)
		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2019				2018				2019				2018
Revenue		$	71,665			$	61,006			$	208,543			$	183,950
Cost of revenue (1)(2)(3)			35,588				31,740				101,242				93,864
Gross profit			36,077				29,266				107,301				90,086
Operating expenses:(1)(2)(3)
Sales and marketing			18,527				17,661				57,464				55,978
Research and development			14,088				10,676				41,639				34,827
General and administrative			10,772				9,263				34,353				29,343
Total operating expenses			43,387				37,600				133,456				120,148
Loss from operations			(7,310	)			(8,334	)			(26,155	)			(30,062	)
Other income (expense):
Interest income			673				73				2,095				199
Interest expense			(5,926	)			(1,458	)			(17,577	)			(4,190	)
Interest expense on building lease financing obligations			–				(1,868	)			–				(5,601	)
Other (expense) income			3				2				(61	)			15
Total other expense, net			(5,250	)			(3,251	)			(15,543	)			(9,577	)
Loss before income taxes			(12,560	)			(11,585	)			(41,698	)			(39,639	)
Income tax expense			17				13				26				22
Net loss		$	(12,577	)		$	(11,598	)		$	(41,724	)		$	(39,661	)
Comprehensive loss		$	(12,577	)		$	(11,598	)		$	(41,724	)		$	(39,661	)
Net loss per common share:
Basic and diluted		$	(0.38	)		$	(0.36	)		$	(1.29	)		$	(1.25	)
Weighted-average common shares outstanding:
Basic and diluted			32,703,723				31,883,029				32,460,494				31,678,360
(1) Stock-based compensation included in above line items:
Cost of revenue		$	798			$	542			$	2,388			$	2,153
Sales and marketing			923				759				2,597				2,970
Research and development			690				494				2,600				2,103
General and administrative			2,004				1,552				6,916				5,120
(2) Amortization of acquired intangible assets included in above line items:
Cost of revenue		$	305			$	12			$	712			$	81
Sales and marketing			97				4				246				31
Research and development			118				4				289				27
General and administrative			49				2				117				11
(3) Transaction and acquisition-related costs expensed included in above line items:
General and administrative		$	3			$	–			$	1,005			$	257

Benefitfocus, Inc.
Unaudited Consolidated Balance Sheets
(in thousands, except share and per share data)
		As of				As of
		September 30,				December 31,
		2019				2018
Assets
Current assets:
Cash and cash equivalents		$	130,699			$	190,928
Accounts receivable, net			34,672				21,077
Contract, prepaid and other current assets			15,312				16,667
Total current assets			180,683				228,672
Property and equipment, net			28,689				69,965
Financing lease right-of-use assets			80,665				–
Operating lease right-of-use assets			1,868				–
Intangible assets, net			13,236				–
Goodwill			12,857				1,634
Deferred contract costs and other non-current assets			10,150				13,668
Total assets		$	328,148			$	313,939
Liabilities and stockholders' deficit
Current liabilities:
Accounts payable		$	8,552			$	8,687
Accrued expenses			10,333				11,461
Accrued compensation and benefits			13,561				17,269
Deferred revenue, current portion			33,911				36,540
Lease liabilities and financing obligations, current portion			7,022				4,486
Total current liabilities			73,379				78,443
Deferred revenue, net of current portion			7,216				9,323
Convertible senior notes			185,069				176,692
Lease liabilities and financing obligations, net current portion			89,438				57,116
Other non-current liabilities			115				2,575
Total liabilities			355,217				324,149
Commitments and contingencies
Stockholders' deficit:
Preferred stock, par value $0.001, 5,000,000 shares authorized,
no shares issued and outstanding at September 30, 2019
and December 31, 2018			–				–
Common stock, par value $0.001, 50,000,000 shares authorized,
32,710,032 and 32,017,773 shares issued and outstanding
at September 30, 2019 and December 31, 2018, respectively			33				32
Additional paid-in capital			420,808				403,631
Accumulated deficit			(447,910	)			(413,873	)
Total stockholders' deficit			(27,069	)			(10,210	)
Total liabilities and stockholders' deficit		$	328,148			$	313,939

Benefitfocus, Inc.
Unaudited Consolidated Statements of Cash Flows
(in thousands)
		Nine Months Ended
		September 30,
		2019				2018
Cash flows from operating activities
Net loss		$	(41,724	)		$	(39,661	)
Adjustments to reconcile net loss to net cash and cash
equivalents used in operating activities:
Depreciation and amortization			16,629				11,912
Stock-based compensation expense			14,501				12,346
Accretion of interest on convertible senior notes			8,377				–
Interest accrual on finance lease liabilities			25				–
Interest accrual on financing obligations (prior to adoption of ASC 842)			–				5,639
Rent payments in excess of expense			(6	)			–
Provision for doubtful accounts			108				364
Changes in operating assets and liabilities:
Accounts receivable, net			(12,791	)			2,103
Contract, prepaid and other current assets			1,282				5,179
Deferred costs and other non-current assets			3,746				2,590
Accounts payable and accrued expenses			(642	)			4,385
Accrued compensation and benefits			(1,524	)			(1,068	)
Deferred revenue			(11,427	)			(7,443	)
Other non-current liabilities			(69	)			(328	)
Net cash and cash equivalents used in operating activities			(23,515	)			(3,982	)
Cash flows from investing activities
Business combination, net of cash acquired			(20,914	)			–
Purchases of property and equipment			(10,604	)			(5,855	)
Net cash and cash equivalents used in investing activities			(31,518	)			(5,855	)
Cash flows from financing activities
Draws on revolving line of credit			–				97,000
Payments on revolving line of credit			–				(84,000	)
Payments of debt issuance costs			(357	)			–
Proceeds from exercises of stock options and ESPP			305				462
Payments on capital lease and financing obligations			(1,032	)			(7,895	)
Payments of principal on finance lease liabilities			(4,112	)			–
Net cash and cash equivalents (used in) provided by financing activities			(5,196	)			5,567
Net decrease in cash and cash equivalents			(60,229	)			(4,270	)
Cash and cash equivalents, beginning of period			190,928				55,335
Cash and cash equivalents, end of period		$	130,699			$	51,065
Supplemental disclosure of non-cash investing and financing activities
Property and equipment purchases in accounts payable and accrued expenses		$	—			$	83
Property and equipment purchased with financing and capital lease obligations (prior to adoption of ASC 842)		$	—			$	3,739
Post contract support purchased with financing obligations		$	—			$	275

Benefitfocus, Inc.
Unaudited Reconciliation of GAAP to Non-GAAP Measures
(in thousands, except share and per share data)
		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2019				2018				2019				2018
Reconciliation from Gross Profit to Non-GAAP Gross Profit:
Gross profit		$	36,077			$	29,266			$	107,301			$	90,086
Amortization of acquired intangible assets			305				12				712				81
Stock-based compensation expense			798				542				2,388				2,153
Total net adjustments			1,103				554				3,100				2,234
Non-GAAP gross profit		$	37,180			$	29,820			$	110,401			$	92,320
Reconciliation from Operating Loss to Non-GAAP Operating Loss:
Operating loss		$	(7,310	)		$	(8,334	)		$	(26,155	)		$	(30,062	)
Amortization of acquired intangible assets			569				22				1,364				150
Stock-based compensation expense			4,415				3,347				14,501				12,346
Transaction and acquisition-related costs expensed			3				—				1,005				257
Costs not core to our business			63				1,027				649				3,922
Total net adjustments			5,050				4,396				17,519				16,675
Non-GAAP operating loss		$	(2,260	)		$	(3,938	)		$	(8,636	)		$	(13,387	)
Reconciliation from Net Loss to Adjusted EBITDA:
Net loss		$	(12,577	)		$	(11,598	)		$	(41,724	)		$	(39,661	)
Depreciation			3,848				2,888				11,505				8,864
Amortization of software development costs			1,263				1,045				3,760				2,898
Amortization of acquired intangible assets			569				22				1,364				150
Interest income			(673	)			(73	)			(2,095	)			(199	)
Interest expense			5,926				1,458				17,577				4,190
Interest expense on building lease financing obligations (prior to adoption of ASC 842)			—				1,868				—				5,601
Income tax expense			17				13				26				22
Stock-based compensation expense			4,415				3,347				14,501				12,346
Transaction and acquisition-related costs expensed			3				—				1,005				257
Costs not core to our business			63				1,027				649				3,922
Total net adjustments			15,431				11,595				48,292				38,051
Adjusted EBITDA		$	2,854			$	(3	)		$	6,568			$	(1,610	)
Reconciliation from Net Loss to Non-GAAP Net Loss:
Net loss		$	(12,577	)		$	(11,598	)		$	(41,724	)		$	(39,661	)
Amortization of acquired intangible assets			569				22				1,364				150
Stock-based compensation expense			4,415				3,347				14,501				12,346
Transaction and acquisition-related costs expensed			3				—				1,005				257
Costs not core to our business			63				1,027				649				3,922
Total net adjustments			5,050				4,396				17,519				16,675
Non-GAAP net loss		$	(7,527	)		$	(7,202	)		$	(24,205	)		$	(22,986	)
Calculation of Non-GAAP Earnings Per Share:
Non-GAAP net loss		$	(7,527	)		$	(7,202	)		$	(24,205	)		$	(22,986	)
Weighted average shares outstanding - basic and diluted			32,703,723				31,883,029				32,460,494				31,678,360
Shares used in computing non-GAAP net loss per share - basic and diluted			32,703,723				31,883,029				32,460,494				31,678,360
Non-GAAP net loss per common share - basic and diluted		$	(0.23	)		$	(0.23	)		$	(0.75	)		$	(0.73	)

Benefitfocus, Inc.
843-284-1052 ext. 3527 
pr@benefitfocus.com

Investor Relations:
Michael Bauer
843-284-1052 ext. 6654
michael.bauer@benefitfocus.com