MTBC Reports First Quarter 2018 Results

MTBC (NASDAQ:MTBC), a leading provider of proprietary, cloud based healthcare IT solutions and services announced financial and operational results for the first quarter of 2018.

The company said that they had a revenue of $8.3 million while its GAAP net income was $75,000 which is an increase of $2.8 million from Q1 2017. The adjusted EBITDA was $974,000 or an 11.7 percent of revenue.

As quoted in the press release:

Mahmud Haq, Executive Chairman said, “First quarter 2018 was an important milestone, with positive GAAP net income for our first time since we’ve been a public company. We have dramatically reduced costs, are generating positive cash flow, and our balance sheet has never been stronger, with virtually no debt, $13 million of cash and an untapped credit line of $5 million.”

“2017 was a record year for MTBC, and we’re pleased to report a strong start to 2018,” said Stephen Snyder, Chief Executive Officer. “As a management team, we’re committed to eclipsing last year’s 30% revenue growth rate during 2018 and we believe we’re well positioned to achieve this objective.”

“Our industry leading platform, processes, and team are continuing to drive our record revenue and earnings growth,” said A. Hadi Chaudhry, President. “During 2018, our proprietary platform will continue to lead the way as we leverage AI, blockchain and other leading technology to further differentiate our offering and enhance the user experience.”

“First quarter 2018 was a remarkable quarter for MTBC,” said Bill Korn, Chief Financial Officer. “We are reporting quarter over quarter revenue growth, even though across our industry the first quarter is typically materially lower than other quarters due to seasonality. We are very pleased to report our first quarter of positive GAAP net income since the IPO, an increase of $2.8 million from Q1 2017, together with adjusted EBITDA for the first quarter of almost $1 million.”

Revenues for first quarter 2018 were $8.3 million, compared to $8.2 million in the same period last year.

Bill Korn further explained, “First quarter revenue is typically at its seasonal lowest for companies like MTBC, where revenues are a percentage of the payments received by our clients, which are generally cyclically low due to annual deductibles. First quarter 2018 revenue compares favorably to $8.2 million in the same period last year. MTBC’s revenue growth includes revenue from clients who signed contracts with MTBC during fourth quarter 2017 and began generating revenue during the first quarter of 2018.”

Revenue for 2018 is based on the new ASC 606 revenue recognition standard, which did not have a material impact on reported revenue. MTBC adopted the new revenue recognition standard on January 1, 2018. Under the old standard, revenue could not be recognized until it was fixed and determinable, which meant that MTBC recognized revenue at the same time insurance agreed upon payments to our health care provider clients. Under the new standard, revenue is recognized as value is created for clients, which means a portion of the revenue is recognized over a period of weeks after each patient visit, as work is performed, and the final amount of revenue, based on the ultimate payments by insurers and patients, is trued up each quarter.

During first quarter 2018, MTBC recognized $47,000 of additional revenue due to the new revenue standard. We have included a reconciliation of our statement of operations showing the impact of the new standard on our entire statement of operations, which was not material to any line item.

The first quarter 2018 GAAP net income was $75,000, or 0.9% of revenue, an improvement of $2.8 million compared to a net loss of $2.7 million in the first quarter of 2017. This was MTBC’s first quarter with positive GAAP net income since our IPO and the purchase of three companies in 2014. First quarter GAAP net income includes 591,000 of non-cash amortization and depreciation expenses.

“The dramatic turnaround from a GAAP net loss of $2.7 million to GAAP net income of $75,000 was due to four factors: a reduction of $739,000 or 14% in direct operating costs, a $385,000 or 13% reduction in general & administrative expenses, a $929,000 reduction in depreciation & amortization expenses, and elimination of $276,000 of restructuring charges, all compared with first quarter 2017,” said Bill Korn. “First quarter 2017 included restructuring charges, as we closed offices in Poland and Bangalore, India obtained during prior acquisitions and shifted the work to our teams in Pakistan and Sri Lanka, to gain operating efficiencies. The impact of the new revenue standard on our net income was $51,000, so our net income would have been positive even without the new revenue recognition standard.”

Click here for the full text release.