Vocera Announces Fourth Quarter Revenue of $48.9 Million

SAN JOSE, Calif.–(BUSINESS WIRE)–lt;a href=”https://twitter.com/search?q=%24VCRA&src=ctag” target=”_blank”gt;$VCRAlt;/agt; lt;a href=”https://twitter.com/hashtag/earnings?src=hash” target=”_blank”gt;#earningslt;/agt;–Vocera
Communications, Inc.
(NYSE: VCRA), a recognized leader in
clinical communication and workflow solutions, today reported total
revenue of $48.9 million for the fourth quarter of 2018, compared to
revenue of $44.1 million in the fourth quarter of 2017.

“Highlights in the fourth quarter included several large system wins in
both the US and International markets,” said Brent Lang, Chairman and
Chief Executive Officer of Vocera. “With the completion of our new
Smartbadge, we delivered an unprecedented advancement in product
innovation, enhancing our ability to deliver patient context to care
teams, and further extending our leadership position in enabling the
Real Time Health System.”

Fourth quarter of 2018 financial highlights include:

  • Total revenue of $48.9 million, up 11% year-over-year
  • GAAP net loss per share of $(0.04); non-GAAP net income per share of
    $0.18
  • GAAP net loss of $(1.1) million; Adjusted EBITDA of $7.5 million
  • Deferred revenue and backlog of $120.4 million as of December 31, 2018
  • Cash flows from operations of $6.4 million

Fourth Quarter 2018 Results

Total revenue for the fourth quarter of 2018 was $48.9 million, up 11%
compared to last year.

(in thousands)   Three months ended December 31,
2018   2017   % change
Product revenue
Device $ 15,402 $ 16,174 (4.8 )%
Software 11,793   8,349   41.3
Total product $ 27,195 $ 24,523 10.9

 %

 
Service revenue
Maintenance and support $ 16,774 $ 13,835 21.2

 %

Professional services and training 4,911   5,762   (14.8 )
Total service 21,685   19,597   10.7

 %

Total revenue $ 48,880   $ 44,120   10.8

 %

GAAP gross margin for the fourth quarter of 2018 was 63.8%, compared to
63.4% in the fourth quarter of 2017.

  Three months ended December 31,
2018   2017
Gross margin
Product 72.1 % 72.2 %
Service 53.4 52.4
Total gross margin 63.8 % 63.4 %
 
Non-GAAP gross margin
Product 75.3 % 75.3 %
Service 57.4 56.0
Total non-GAAP gross margin 67.4 % 66.7 %

GAAP net loss for the fourth quarter of 2018 was $(1.1) million, or
$(0.04) per share, compared to GAAP net income of $0.4 million, or $0.01
per share in the fourth quarter of 2017.

  Three months ended December 31,
(in thousands except per share amounts) 2018   2017
Net income (loss) $ (1,101 ) $ 374
Net income (loss) per share $ (0.04 ) $ 0.01
Non-GAAP net income $ 5,591 $ 6,717
Non-GAAP net income per share $ 0.18 $ 0.22
Adjusted EBITDA $ 7,528 $ 7,045

Deferred revenue at December 31, 2018 was $58.6 million compared to
$55.2 million at December 31, 2017. Cash equivalents and short-term
investments were $221.2 million at December 31, 2018 and $81.2 million
at December 31, 2017.

Full Year and First Quarter 2019 Guidance

For the full-year 2019, the Company expects revenue between $187 million
and $197 million and a GAAP loss per share between $(0.58) and $(0.39).
The Company expects non-GAAP net income per share to be between $0.36
and $0.48 and non-GAAP Adjusted EBITDA to be between $22 million and $26
million.

For the first quarter of 2019, the Company expects revenue between $32
million and $35 million and a GAAP loss per share between $(0.52) and
$(0.43). The Company expects non-GAAP net loss per share to be between
$(0.29) and $(0.22) and non-GAAP Adjusted EBITDA to be between $(6.8)
million and $(4.5) million.

(in millions except per share amounts)     Q1’19   FY’19
Low   High Low   High
Revenue $ 32.0 $ 35.0 $ 187.0 $ 197.0
Loss per share $ (0.52 ) $ (0.43 ) $ (0.58 ) $ (0.39 )
Non-GAAP net income (loss) per share $ (0.29 ) $ (0.22 ) $ 0.36 $ 0.48
Adjusted EBITDA $ (6.8 ) $ (4.5 ) $ 22.0 $ 26.0

Certain amounts in our release may not re-compute due to rounding. A
reconciliation of non-GAAP to GAAP financial measures, and first quarter
and full-year guidance, are included in the financial schedules. The
Company’s re-cast financial statements for 2017 and 2016 are included in
the Company’s accompanying financial schedules.

Conference Call Information

Vocera Communications will host a conference call at 5 p.m. ET (2 p.m.
PT) today, February 7, 2019, to discuss the Company’s results.

Investors may access a free, live webcast of the call through the
Investors section of the Company’s website at investors.vocera.com.

The call also can be accessed by dialing 833-238-7944, or 647-689-4192
for international callers, and using the access code 2999716.

A webcast replay of the call will be archived at investors.vocera.com.

Forward-Looking Statements

Statements in this press release that are not strictly historical in
nature are forward-looking statements within the meaning of the U.S.
federal securities laws, including our expected operating results for
the first quarter and full year 2019. These forward-looking statements
are based on limited information currently available to us and our
management`s expectations, which are inherently subject to change and
involve a number of risks and uncertainties.

Actual events or results may differ materially from those in any
forward-looking statement due to various factors, including but not
limited to, changes in regulations in the U.S. and other countries; the
effects on government and commercial hospital customers of the federal
budget and budgetary uncertainty; changes in healthcare insurance
coverage and consumers’ utilization of healthcare and hospital services;
our ability to achieve and maintain profitability; the demand for our
various solutions in the healthcare and other markets; our lengthy and
unpredictable sales cycle; our ability to offer high-quality services
and support for our solutions; our ability to achieve anticipated
strategic or financial benefits from our acquisitions; our ability to
acquire the sole and limited source hardware and software components of
our solutions; our ability to obtain the required capacity and product
quality from our contract manufacturers; our ability to develop and
introduce new solutions and features to existing solutions and to manage
our growth; the impact of tax law reform on us or our customers; and the
other factors described in our most recently filed Quarterly Report on
Form 10-Q, as well as our other filings with the Securities and Exchange
Commission (SEC). Our filings with the SEC are available on the
Investors section of the Company’s web site at www.vocera.com.
The financial and other information contained in this press release
should be read in conjunction with the financial statements and notes
thereto included in our filings with the SEC. Our operating results for
any historical period, including the fourth quarter of 2018, are not
necessarily indicative of our operating results for any future periods.
This press release speaks only as of its date. We assume no obligation
to update the information in this press release, to revise any
forward-looking statements, or to update the reasons actual events or
results could differ materially from those anticipated in
forward-looking statements.

Use of Non-GAAP Financial Information

This press release contains financial measures that are not calculated
in accordance with U.S. generally accepted accounting principles (GAAP).
Our management evaluates the Company’s results and makes operating
decisions using various GAAP and non-GAAP measures. In addition to our
GAAP results, we also consider non-GAAP gross margin, non-GAAP gross
margin for products and for services, non-GAAP net income/(loss),
non-GAAP income/(loss) per diluted share and non-GAAP operating
expenses. We also present Adjusted EBITDA, a non-GAAP measure that we
reconcile to net income/(loss). These non-GAAP measures should not be
considered as a substitute for the corresponding financial measure
derived in accordance with GAAP. We present the non-GAAP measures
because we consider them to be important supplemental information for
our investors for analyzing our performance, core operating results and
trends. Investors are encouraged to review the reconciliation of
non-GAAP financial measures to their most directly comparable GAAP
measures included with this press release.

Our non-GAAP gross margins, non-GAAP net income/(loss), non-GAAP
earnings/(loss) per diluted share, non-GAAP operating expenses, and
Adjusted EBITDA are exclusive of certain items to facilitate
management’s review of the comparability of our core operating results
on a period to period basis because such items are not related to our
ongoing core operating results as viewed by management. We define our
“core operating results” as those revenues recorded in a particular
period and the expenses incurred within that period that directly drive
operating income in that period. Management uses these non-GAAP
financial measures in making operating decisions because, in addition to
meaningful supplemental information regarding operating performance, the
measures give us a better understanding of how we should invest in
research and development, fund infrastructure growth and evaluate the
effectiveness of marketing strategies. In calculating the above non-GAAP
results, management specifically adjusted for the following excluded
items:

a) Stock-based compensation expense impact. We recognize
equity plan-related compensation expenses, which represent the fair
value of all share-based payments to employees, including grants of
employee stock options and restricted stock units as non-GAAP
adjustments in each period.

b) Amortization of acquired intangibles. We acquired certain
companies in 2010, 2014 and 2016, and booked intangible assets related
to these acquisitions. The amortization of these acquired intangible
assets is excluded from non-GAAP net income because it is not related to
ongoing controllable management decisions and because it is non-cash in
nature.

c) Acquisition related expenses. In addition to the amortization
of acquired intangibles mentioned above, we also adjust for certain
acquisition-related expenses that we may incur including (i)
professional service fees and (ii) transition costs. Professional
service fees include third party costs related to the acquisition, such
as due diligence costs, accounting fees, legal fees, valuation services
and commissions, if any. Transition costs include retention payments,
transitional employee costs and earn-out payments (including amounts
relating to the distribution of purchase consideration among the selling
equity holders) treated as compensation expense. We consider such costs
and adjustments as highly variable in amount and frequency, being
significantly impacted by the timing and size of any acquisitions. By
excluding acquisition-related costs and adjustments from our non-GAAP
measures, management can better focus on the organic continuing
operations of our baseline and acquired businesses.

d) Restructuring costs. We exclude restructuring costs from
non-GAAP measures because we do not regard these limited-term or
one-time costs as reflective of normal costs we incur to operate our
business. These are defined in U.S. GAAP to include one-time employee
termination benefits, contract termination costs, and other associated
costs, with respect to exit or disposal activities.

Management adjusts for the above items because management believes that,
in general, these items possess one or more of the following
characteristics: their magnitude and timing is largely outside of
Vocera’s control; they are unrelated to the ongoing operation of the
business in the ordinary course; they are unusual and we do not expect
them to occur in the ordinary course of business; or they are
non-operational, or non-cash expenses involving stock award grants.

We believe that the presentation of these non-GAAP financial measures is
warranted for several reasons:

1) Such non-GAAP financial measures provide an additional analytical
tool for understanding our financial performance by excluding the impact
of items which may obscure trends in the core operating results of the
business;

2) These non-GAAP financial measures facilitate comparisons to the
operating results of other companies commonly compared to us, which use
similar financial measures to supplement their GAAP results, thus
enhancing the perspective of investors who wish to utilize such
comparisons in their analysis of our performance; and

3) These non-GAAP financial measures are employed by our management in
their own evaluation of performance and are utilized in financial and
operational decision making processes, such as budget planning and
forecasting.

Set forth below are additional reasons why share-based compensation
expense is excluded from our non-GAAP financial measures:

i) While share-based compensation constitutes one of our ongoing and
recurring expenses, it is not an expense that requires cash settlement
by us. We therefore exclude these charges for purposes of evaluating
core operating results. Thus, our non-GAAP measurements are presented
exclusive of stock-based compensation expense to assist management and
investors in evaluating our core operating results.

ii) We present share-based payment compensation expense in our
reconciliation of non-GAAP financial measures on a pre-tax basis because
the exact tax differences related to the timing and deductibility of
share-based compensation are dependent upon the trading price of our
common stock and the timing and exercise by employees of their stock
options. As a result of these timing and market uncertainties, the tax
effect related to share-based compensation expense would be inconsistent
in amount and frequency and is therefore excluded from our non-GAAP
results.

As stated above, we present non-GAAP financial measures because we
consider them to be important supplemental measures of performance.
However, non-GAAP financial measures have limitations as an analytical
tool and should not be considered in isolation or as a substitute for
our GAAP results. In the future, we expect to incur expenses similar to
certain of the non-GAAP adjustments described above and expect to
continue reporting non-GAAP financial measures excluding such items.
Some of the limitations in relying on non-GAAP financial measures are:

  • Our stock options, restricted stock units, and stock purchase plans
    are important components of incentive compensation arrangements and
    will be reflected as expenses in our GAAP results for the foreseeable
    future; and
  • Other companies may calculate non-GAAP financial measures differently
    than us, limiting their usefulness as a comparative measure.

Pursuant to the requirements of SEC Regulation G, a detailed
reconciliation between our non-GAAP and GAAP financial results is set
forth in the financial tables referred to above, and linked to, this
press release. Investors are advised to carefully review and consider
this information strictly as a supplement to the GAAP results for the
respective periods.

About Vocera:

The mission of Vocera Communications, Inc. is to simplify and improve
the lives of healthcare professionals and patients, while enabling
hospitals to enhance quality of care and operational efficiency. In
2000, when the company was founded, we began to forever change the way
care teams communicate. Today, Vocera continues to offer the leading
platform for clinical communication and workflow. More than 1,700
facilities worldwide, including nearly 1,500 hospitals and healthcare
facilities, have selected our solutions for team members to text
securely using smartphones or make calls with our hands-free, wearable
Vocera Badge. Interoperability between Vocera and more than 140 clinical
and operational systems helps reduce alarm fatigue, speed up staff
response times, and improve patient care, safety and experience. In
addition to healthcare, Vocera is at home in luxury hotels, aged care
facilities, nuclear facilities, libraries, retail stores and more.
Vocera makes a difference in any industry where workers are on the move
and need to connect instantly with team members and access resources or
information quickly. In 2017, Vocera made the list of Forbes 100 Most
Trustworthy Companies in America.

Learn more at www.vocera.com,
and follow @VoceraComm on Twitter.

The Vocera logo is a trademark of Vocera Communications, Inc. Vocera®
is a trademark of Vocera Communications, Inc. registered in the United
States and other jurisdictions. All other trademarks appearing in this
release are the property of their respective owners.

 

Vocera Communications, Inc.

Condensed Consolidated Statements of Operations

(In Thousands, Except Per Share Amounts)

(Unaudited)

 
Three months ended December 31, Year ended December 31,
  2018   2017   2018   2017
Revenue    
Product $ 27,195 $ 24,523 $ 97,447 $ 91,585
Service 21,685   19,597   82,183   74,404  
Total revenue 48,880   44,120   179,630   165,989  
Cost of revenue
Product 7,578 6,820 27,425 27,244
Service 10,105   9,325   40,318   37,683  
Total cost of revenue 17,683   16,145   67,743   64,927  
Gross profit 31,197   27,975   111,887   101,062  
Operating expenses
Research and development 8,249 6,741 30,879 27,685
Sales and marketing 16,272 15,099 62,214 60,107
General and administrative 6,126   6,203   25,099   23,970  
Total operating expenses 30,647   28,043   118,192   111,762  
Income (loss) from operations 550 (68 ) (6,305 ) (10,700 )
Interest income 1,189 194 3,044 604
Interest expense (2,138 ) (5,241 )
Other income (expense), net (558 ) (43 ) (1,523 ) (42 )
Income (loss) before income taxes (957 ) 83 (10,025 ) (10,138 )
Benefit from (provision for) income taxes (144 ) 291   351   (759 )
Net income (loss) $ (1,101 ) $ 374   $ (9,674 ) $ (10,897 )
 
Net income (loss) per share
Basic $ (0.04 ) $ 0.01   $ (0.32 ) $ (0.38 )
Diluted $ (0.04 ) $ 0.01   $ (0.32 ) $ (0.38 )
Weighted average shares used to compute net income (loss) per share
Basic 30,592   29,317   30,041   28,655  
Diluted 30,592   30,704   30,041   28,655  
     

Vocera Communications, Inc.

Condensed Consolidated Balance Sheets

(In Thousands)

(Unaudited)

 
      December 31,
2018
  December 31,
2017
Assets
Current assets
Cash and cash equivalents $ 34,276 $ 28,726
Short-term investments 186,894 52,507
Accounts receivable, net of allowance 40,127 35,105
Other receivables 4,148 1,331
Inventories 4,350 2,815
Prepaid expenses and other current assets 4,691   3,957
Total current assets 274,486 124,441
Property and equipment, net 7,468 5,751
Intangible assets, net 9,070 13,567
Goodwill 49,246 49,246
Deferred commissions 10,303 10,301
Other long-term assets 1,525   1,667
Total assets $ 352,098   $ 204,973
Liabilities and stockholders’ equity
Current liabilities
Accounts payable $ 4,217 $ 2,678
Accrued payroll and other current liabilities 12,885 14,689
Deferred revenue, current 44,053   40,734
Total current liabilities 61,155 58,101
Deferred revenue, long-term 14,579 14,417
Convertible senior notes, net 110,540
Other long-term liabilities 2,957   4,455
Total liabilities 189,231 76,973
Stockholders’ equity 162,867   128,000
Total liabilities and stockholders’ equity $ 352,098   $ 204,973
 
Vocera Communications, Inc.
Three months ended December 31, 2018
 
  Stock   Intangible   Acquisition    
(In thousands) GAAP compensation amortization related Total Non-GAAP
2018 expense (a) (b) expense (c) adjustments 2018
Reconciliation of GAAP Gross Profit to Non-GAAP Gross Profit
(Unaudited)
Revenue
Product $ 27,195 $ $ $ $ $ 27,195
Service 21,685           21,685
Total revenue 48,880           48,880
Cost of revenue
Product 7,578 123 748 871 6,707
Service 10,105   855     20   875   9,230
Total cost of revenue 17,683   978   748   20   1,746   15,937
Gross profit $ 31,197   $ 978   $ 748   $ 20   $ 1,746   $ 32,943
                     
Stock Intangible Acquisition
(In thousands) GAAP compensation amortization related Total Non-GAAP
2018 expense (a) (b) expense (c) adjustments 2018
Reconciliation of GAAP Operating Expenses to Non-GAAP Operating
Expenses (Unaudited)
 
Research and development $ 8,249 $ 812 $ $ $ 812 $ 7,437
Sales and marketing 16,272 1,654 378 2,032 14,240
General and administrative 6,126   2,043   39   20   2,102   4,024
Total operating expenses $ 30,647   $ 4,509   $ 417   $ 20   $ 4,946   $ 25,701
(a)   This adjustment reflects the accounting impact of non-cash
stock-based compensation expense.
(b) This adjustment reflects the accounting impact of acquisitions in
2010, 2014 and 2016 in non-cash expense.
(c) This adjustment reflects the costs associated with the acquisition
in 2016.
Three months ended December 31, 2017
  Stock   Intangible   Acquisition    
(In thousands) GAAP compensation amortization related Total Non-GAAP
2017 expense (a) (b) expense (c) adjustments 2017
Reconciliation of GAAP Gross Profit to Non-GAAP Gross Profit
(Unaudited)
Revenue
Product $ 24,523 $ $ $ $ $ 24,523
Service 19,597           19,597
Total revenue 44,120           44,120
Cost of revenue
Product 6,820 104 651 755 6,065
Service 9,325   650     60   710   8,615
Total cost of revenue 16,145   754   651   60   1,465   14,680
Gross profit $ 27,975   $ 754   $ 651   $ 60   $ 1,465   $ 29,440
                     
Stock Intangible Acquisition
(In thousands) GAAP compensation amortization related Total Non-GAAP
2017 expense (a) (b) expense (c) adjustments 2017
Reconciliation of GAAP Operating Expenses to Non-GAAP Operating
Expenses (Unaudited)
 
Research and development $ 6,741 $ 580 $ $ $ 580 $ 6,161
Sales and marketing 15,099 1,866 385 2,251 12,848
General and administrative 6,203   1,792   55   200   2,047   4,156
Total operating expenses $ 28,043   $ 4,238   $ 440   $ 200   $ 4,878   $ 23,165
(a)   This adjustment reflects the accounting impact of non-cash
stock-based compensation expense.
(b) This adjustment reflects the accounting impact of acquisitions in
2010, 2014 and 2016 in non-cash expense.
(c) This adjustment reflects the costs associated with the acquisition
in 2016.
Vocera Communications, Inc.
Year ended December 31, 2018
  Stock   Intangible   Acquisition    
(In thousands) GAAP compensation amortization related Total Non-GAAP
2018 expense (a) (b) expense (c) adjustments 2018
Reconciliation of GAAP Gross Profit to Non-GAAP Gross Profit
(Unaudited)
Revenue
Product $ 97,447 $ $ $ $ $ 97,447
Service 82,183           82,183
Total revenue 179,630           179,630
Cost of revenue
Product 27,425 491 2,824 3,315 24,110
Service 40,318   3,123     200   3,323   36,995
Total cost of revenue 67,743   3,614   2,824   200   6,638   61,105
Gross profit $ 111,887   $ 3,614   $ 2,824   $ 200   $ 6,638   $ 118,525
                     
Stock Intangible Acquisition
(In thousands) GAAP compensation amortization related Total Non-GAAP
2018 expense (a) (b) expense (c) adjustments 2018
Reconciliation of GAAP Operating Expenses to Non-GAAP Operating
Expenses (Unaudited)
 
Research and development $ 30,879 $ 2,976 $ $ 2,976 $ 27,903
Sales and marketing 62,214 6,560 1,511 8,071 54,143
General and administrative 25,099   7,814   162   110   8,086   17,013
Total operating expenses $ 118,192   $ 17,350   $ 1,673   $ 110   $ 19,133   $ 99,059

(a)

  This adjustment reflects the accounting impact of non-cash
stock-based compensation expense.
(b) This adjustment reflects the accounting impact of acquisitions in
2010, 2014 and 2016 in non-cash expense
.
(c) This adjustment reflects the costs associated with the acquisition
in 2016.
Year ended December 31, 2017
  Stock   Intangible   Acquisition    
(In thousands) GAAP compensation amortization related Total Non-GAAP
2017 expense (a) (b) expense (c) adjustments 2017
Reconciliation of GAAP Gross Profit to Non-GAAP Gross Profit
(Unaudited)
Revenue
Product $ 91,585 $ $ $ $ $ 91,585
Service 74,404           74,404
Total revenue 165,989           165,989
Cost of revenue
Product 27,244 413 2,873 3,286 23,958
Service 37,683   2,458     289   2,747   34,936
Total cost of revenue 64,927   2,871   2,873   289   6,033   58,894
Gross profit $ 101,062   $ 2,871   $ 2,873   $ 289   $ 6,033   $ 107,095
 
 
Reconciliation of GAAP Operating Expenses to Non-GAAP Operating
Expenses (Unaudited)
 
Research and development $ 27,685 $ 2,122 $ $ 47 $ 2,169 $ 25,516
Sales and marketing 60,107 6,563 1,539 15 8,117 51,990
General and administrative 23,970   6,640   221   918   7,779   16,191
Total operating expenses $ 111,762   $ 15,325   $ 1,760   $ 980   $ 18,065   $ 93,697

Contacts

Investors:
Sue Dooley
Vocera Communications, Inc.
408.882.5971
investorrelations@vocera.com

Media:
Philip Anast
Amendola Communications
312.576.6990
panast@acmarketingpr.com

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