Everyday Health Reports Second Quarter 2014 Financial Results

11 Aug, 2014, 16:01 ET from Everyday Health, Inc.

NEW YORK, Aug. 11, 2014 /PRNewswire/ -- Everyday Health, Inc. (NYSE: EVDY), a leading digital health and wellness company, today announced financial results for the second quarter ended June 30, 2014.  

  • Advertising and sponsorship revenue grew 16% year-over-year.
  • Average revenue per advertiser increased 39% year-over-year.
  • Mobile revenue grew 60% year-over-year.
  • Adjusted EBITDA grew 72% year-over-year.
  • Non-GAAP EPS was $0.07.

"We are extremely pleased with our performance in the second quarter of 2014, as we continue to provide market-leading solutions and real results for our customers, consumers, and healthcare professionals," said Ben Wolin, Co-Founder and CEO of Everyday Health. "Our new consumer and professional partnerships with influential constituents across the healthcare ecosystem further validate our unique business model and will strengthen our leadership position in the marketplace."

Financial Highlights

For the three months ended June 30, 2014:

  • Total revenue was $41.4 million, an 11% increase from $37.2 million in the prior year period. 
    • Advertising and sponsorship revenue was $36.9 million, a 16% increase from $31.8 million in the prior year period.
    • Premium services revenue was $4.6 million, a 15% decrease from $5.4 million in the prior year period, consistent with the Company's strategy of focusing on advertising and sponsorship revenue.
  • Adjusted EBITDA was $6.9 million, a 72% increase from $4.0 million in the prior year period.
  • Net income on a non-GAAP basis was $2.4 million, compared to a loss of ($2.9) million in the prior year period. Earnings per share on a non-GAAP diluted basis was $0.07. Net loss on a GAAP basis was ($0.6) million, before the impact of the non-cash, one-time deemed dividend of $8.1 million associated with the conversion of the Company's Series G preferred stock at the time of its initial public offering, compared to a net loss of ($6.2) million in the prior year period. Net loss per share on a GAAP basis was ($0.02) before the Series G deemed dividend, or ($0.29) including the impact of the Series G deemed dividend. A description of the non-GAAP calculations and reconciliation to comparable GAAP measures is provided in the accompanying tables entitled "Adjusted EBITDA Reconciliation" and "Reconciliation of Non-GAAP Net Income (Loss)."

"Our continued ability to deliver profitable growth validates the success of our strategy to go deeper with our existing customers and to leverage our partnership business model," said Brian Cooper, CFO of Everyday Health. "We are pleased with our performance and excited about our opportunity in the second half of 2014."

Business Highlights

The Company has also entered into several key business partnerships across its consumer and professional businesses, including the following:

  • An extension of the Company's long-standing relationship with Mayo Clinic, through which the Company will deliver Mayo Clinic's educational content, resources, and tools on MedPage Today.
  • The "Diabetes Step-by-Step" initiative, a highly engaging multimedia consumer resource for diabetes education and support, which will feature Randy Jackson, the popular television personality and diabetes advocate.
  • A partnership with the American Society of Clinical Oncology ("ASCO") to provide editorial coverage of ASCO's numerous conferences and a digital channel to communicate directly with their physicians. With this partnership, Everyday Health will reach approximately 90% of all oncologists and hematologists in the U.S.
  • A collaboration with SERMO, the leading social network for physicians, to provide MedPage Today content to the SERMO physician audience and to offer MedPage Today's custom marketing programs on the SERMO network.

Financial Outlook

For the third quarter of 2014 and full year 2014, the Company anticipates achieving financial results as set forth below:

Third Quarter of 2014

Total Revenue

$41.4 million – $42.2 million

Advertising & Sponsorship Revenue

$37.0 million – $37.8 million

Adjusted EBITDA

$6.75 million – $6.85 million

Full Year 2014

Total Revenue

$180.2 million – $181.8 million

Advertising & Sponsorship Revenue

$162.0 million – $164.0 million

Adjusted EBITDA

$34.2 million – $34.7 million

Earnings Teleconference Information

The Company will discuss its second quarter 2014 financial results and business outlook during a teleconference today, August 11, 2014, at 5:00 PM ET.  The conference call can be accessed at (877) 201-0168 or (647) 788-4901 (International), conference ID# 76415896. The call will also be broadcast simultaneously at http://ir.everydayhealth.com.

Following completion of the call, a recorded replay of the webcast will be available on Everyday Health's website.  To listen to the telephone replay, call toll-free (855) 859-2056 or (404) 537-3406 (International), conference ID# 76415896. The telephone replay will be available from 8:00 PM ET August 11 through 11:59 PM ET August 17, 2014. Additional investor information can be accessed at http://ir.everydayhealth.com.

About Everyday Health, Inc.  

Everyday Health, Inc. (NYSE: EVDY) is a leading provider of digital health and wellness solutions. Everyday Health attracts a large and engaged audience of consumers and healthcare professionals to its premier health and wellness properties, and utilizes its data and analytics expertise to deliver highly personalized content experiences and efficient and effective marketing and engagement solutions. Everyday Health enables consumers to manage their daily health and wellness needs, healthcare professionals to stay informed and make better decisions for their patients, and marketers, health payors and providers to communicate and engage with consumers and healthcare professionals to drive better health outcomes. Everyday Health's content and solutions are delivered through multiple channels, including desktop, mobile web, and mobile phone and tablet applications, as well as video and social media.

Safe Harbor Provision

This press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may be identified by their use of terms and phrases such as "anticipate," "enable," "expect," "will," "believe," "continue" and other similar terms and phrases, and such forward-looking statements include, but are not limited to, the statements regarding our future financial performance set forth under the heading "Financial Outlook." The outcome of the events described in these forward-looking statements is subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from the results anticipated by these forward-looking statements, including, but not limited to: our ability to attract and retain users to our portfolio of properties; our ability to attract and retain customers; the timing and amount of advertising spending by our current and future customers; our ability to enter into new, or extend existing, partnership arrangements; our ability to successfully pursue opportunities in the broader health and wellness sectors; as well as those factors contained in the "Risk Factors" section of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2014 filed with the SEC on May 13, 2014 and our other SEC filings. All information in this release is as of August 11, 2014. Except as required by law, we undertake no obligation to update publicly any forward-looking statement made herein for any reason to conform the statement to actual results or changes in our expectations.

Use of Non-GAAP Financial Measures

To supplement the financial measures presented in the Company's press release and related conference call or webcast in accordance with accounting principles generally accepted in the United States ("GAAP"), we also present the following non-GAAP measures of financial performance: Adjusted EBITDA, non-GAAP net income (loss) and non-GAAP earnings per share ("EPS"). A "non-GAAP financial measure" refers to a numerical measure of the Company's historical or future financial performance, financial position, or cash flows that excludes (or includes) amounts that are included in (or excluded from) the most directly comparable measure calculated and presented in accordance with GAAP in the Company's financial statements. The Company provides certain non-GAAP measures as additional information relating to its operating results as a complement to results provided in accordance with GAAP. The non-GAAP financial information presented here should be considered in conjunction with, and not as a substitute for or superior to, the financial information presented in accordance with GAAP and should not be considered a measure of the Company's liquidity. There are significant limitations associated with the use of non-GAAP financial measures. Further, these measures may differ from the non-GAAP information, even where similarly titled, used by other companies and therefore should not be used to compare the Company's performance to that of other companies. The Company has presented Adjusted EBITDA, non-GAAP net income (loss) and non-GAAP EPS as non-GAAP financial measures in this press release. We define Adjusted EBITDA as net loss plus: interest expense, net; income tax expense; depreciation and amortization expense; stock-based compensation expense; compensation expense related to acquisition earnout arrangements; write-offs of unamortized deferred financing and other debt extinguishment costs; reduction in force severance charges; loss from discontinued operations; and certain other non-cash charges such as preferred stock warrant mark-to-market adjustments. We define non-GAAP net income (loss) as net loss, plus non-cash stock-based compensation, non-cash deemed dividend on the Series G IPO ratchet, compensation expense related to acquisition earnout arrangements, loss from discontinued operations, and other unusual or significant adjustments such as the write-off of deferred finance costs and other debt extinguishment costs and the preferred stock mark-to-market adjustment. We define non-GAAP EPS as non-GAAP net income (loss) divided by weighted-average shares outstanding, which reflects the issuance of the shares sold in the IPO, as well as the conversion of all outstanding shares of preferred stock into common stock in connection with the Company's IPO, which closed on April 2, 2014. The Company believes the use of non-GAAP financial measures, as a supplement to GAAP measures, is useful to investors in that they eliminate items that are either not part of the Company's core operations or do not require a cash outlay, such as stock-based compensation. Our management uses these non-GAAP financial measures when evaluating the Company's operating performance and for internal planning and forecasting purposes. The Company believes that these non-GAAP financial measures help indicate underlying trends in the Company's business, are important in comparing current results with prior period results, and are useful to investors and financial analysts in assessing the Company's operating performance.

 

EVERYDAY HEALTH, INC.

Consolidated Balance Sheets

(in thousands, except share and per share data)

June 30, 2014  (unaudited)

December 31, 2013

Assets

Current assets:

Cash and cash equivalents

$

55,084

$

16,242

Accounts receivable, net of allowance for doubtful accounts of $487 and $530 as of June 30, 2014 and December 31, 2013, respectively

39,635

49,373

Deferred tax asset

133

133

Prepaid expenses and other current assets

7,193

7,822

Total current assets

102,045

73,570

Property and equipment, net

22,839

21,095

Goodwill

82,153

82,153

Intangible assets, net

8,644

9,735

Other assets

4,806

5,729

Total assets

$

220,487

$

192,282

Liabilities, redeemable convertible preferred stock and stockholders' equity (deficit)

Current liabilities:

Accounts payable

$

7,108

$

8,459

Accrued expenses

14,609

25,919

Deferred revenue

8,156

6,808

Current portion of long-term debt

2,000

1,333

Other current liabilities

854

830

Total current liabilities

32,727

43,349

Long-term debt

38,000

70,000

Deferred tax liabilities

5,680

5,199

Other long-term liabilities

4,340

4,937

Redeemable convertible preferred stock (Series A-G), net of expenses, $0.01 par value: 10,000,000 and 27,204,144 shares authorized at June 30, 2014 and December 31, 2013, respectively; no shares and 26,820,270 shares issued and outstanding at  June 30, 2014 and December 31, 2013, respectively

-

158,766

Stockholders' equity (deficit):

Common stock, $0.01 par value: 90,000,000 and 45,000,000 shares authorized at June 30, 2014 and December 31, 2013, respectively; 30,185,974 and 5,366,478 shares issued and outstanding at June 30, 2014 and December 31, 2013, respectively

302

54

Treasury stock

(55)

(55)

Additional paid-in capital

279,620

33,726

Accumulated deficit

(140,127)

(123,694)

Total stockholders' equity (deficit)

139,740

(89,969)

Total liabilities, redeemable convertible preferred stock and stockholders' equity (deficit)

$

220,487

$

192,282

 

EVERYDAY HEALTH, INC.

Consolidated Statements of Operations

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

Three months ended June 30,

Six months ended June 30,

2014

2013

2014

2013

Revenues

Advertising and sponsorship revenues 

$

36,882

$

31,819

$

69,574

$

57,199

Premium services revenues 

4,565

5,379

9,378

10,503

Total revenues 

41,447

37,198

78,952

67,702

Operating expenses:

Cost of revenues

10,961

10,826

22,382

20,661

Sales and marketing

13,069

11,860

24,039

20,921

Product development

9,952

10,700

19,964

20,860

General and administrative

7,126

6,191

13,721

12,730

Total operating expenses

41,108

39,577

80,106

75,172

Income (loss) from operations

339

(2,379)

(1,154)

(7,470)

Interest expense, net

(585)

(2,015)

(2,448)

(4,144)

Other expense

-

-

(4,114)

-

Loss from continuing operations before provision for income taxes 

(246)

(4,394)

(7,716)

(11,614)

Provision for income taxes 

(349)

(247)

(638)

(511)

Loss from continuing operations

(595)

(4,641)

(8,354)

(12,125)

Loss from discontinued operations, net of tax

-

(1,596)

-

(3,341)

Net loss

(595)

(6,237)

(8,354)

(15,466)

Series G preferred stock deemed dividend

(8,079)

-

(8,079)

-

Net loss attributable to common stockholders

$

(8,674)

$

(6,237)

$

(16,433)

$

(15,466)

Net loss from continuing operations per share—basic and diluted

$

(0.02)

$

(0.92)

$

(0.47)

$

(2.44)

Net loss from discontinued operations per share—basic and diluted

$

-

$

(0.32)

$

-

$

(0.67)

Net loss per share—basic and diluted

$

(0.02)

$

(1.24)

$

(0.47)

$

(3.11)

Net loss attributable to common stockholders per share—basic and diluted

$

(0.29)

$

(1.24)

$

(0.93)

$

(3.11)

Weighted-average common shares outstanding—basic and diluted

29,802,970

5,030,265

17,670,809

4,978,075

 

EVERYDAY HEALTH, INC.

Consolidated Statements of Cash Flows

(in thousands, unaudited)

Six months ended June 30,

2014

2013

Cash flows from operating activities

Net loss 

$

(8,354)

$

(15,466)

Less loss from discontinued operations, net of tax 

-

3,341

Loss from continuing operations 

(8,354)

(12,125)

Adjustments to reconcile loss from continuing operations to net cash provided    by operating activities:

Depreciation and amortization 

7,150

7,817

Amortization of video and television costs 

-

449

Provision for doubtful accounts 

215

62

Stock-based compensation 

4,019

969

Amortization and write-off of financing costs 

4,239

823

Loss on disposals of property and equipment

-

147

Provision for deferred income taxes 

481

481

Changes in operating assets and liabilities:

Accounts receivable 

9,522

5,741

Prepaid expenses and other current assets 

(456)

(334)

Additions to video and television costs  

-

(423)

Accounts payable and accrued expenses 

(11,740)

(1,333)

Deferred revenue 

1,347

1,943

Other current liabilities 

(103)

(331)

Other long-term liabilities 

618

631

Net cash provided by operating activities from continuing operations 

6,938

4,517

Net cash used in operating activities from discontinued operations 

-

(3,504)

Net cash provided by operating activities 

6,938

1,013

Cash flows from investing activities

Additions to property and equipment, net 

(7,441)

(5,438)

Proceeds from sale of business 

400

-

Payment for business purchased, net of cash acquired 

-

(4,304)

Payment of security deposits and other assets 

47

(755)

Net cash used in investing activities 

(6,994)

(10,497)

Cash flows from financing activities

Net proceeds from common stock issuance

70,622

-

Proceeds from the exercise of stock options 

2,151

31

Repayments of principal under former revolver credit facility

(30,000)

(400)

Repayment of principal under former term loan facility 

(41,333)

(1,417)

Borrowings under revolver credit facility

32,300

-

Repayment of principal under revolver credit facility

(32,300)

-

Borrowings under term loan facility 

40,000

-

Principal payments on capital lease obligations 

(308)

(156)

Payments of credit facility financing costs 

(2,234)

-

Payment for purchase of treasury stock 

-

(55)

Net cash provided by (used in) financing activities

38,898

(1,997)

Net decrease in cash and cash equivalents 

38,842

(11,481)

Cash and cash equivalents, beginning of period

16,242

23,888

Cash and cash equivalents, end of period

$

55,084

$

12,407

Supplemental disclosure of cash flow information

Interest paid 

$

2,867

$

3,229

Income taxes paid 

$

163

$

37

Supplemental disclosure of non-cash investing and financing activities

Issuance of common stock for acquired business 

$

919

$

1,814

Issuance of common stock for acquired assets

$

-

$

74

Warrants issued in connection with website partner agreement

$

1,131

$

-

Capital lease obligations incurred

$

362

$

344

Reclassification of liability warrants to equity warrants

$

1,140

$

-

 

EVERYDAY HEALTH, INC.

Adjusted EBITDA Reconciliation

(in thousands, unaudited)

Three months ended June 30,

Six months ended June 30,

2014

2013

2014

2013

Adjusted EBITDA

$

6,932

$

4,030

$

10,149

$

4,196

       Interest Expense, net

585

2,015

2,448

4,144

       Income tax provision

349

247

638

511

       Depreciation and amortization expense

3,592

3,897

7,150

7,817

       Stock compensation expense

2,950

517

4,019

969

       Compensation expense related to acquisition earnout

51

1,175

135

1,375

       Write-off of debt extinguishment costs

-

-

3,861

-

       Reduction in force severance charges

-

673

-

1,358

       Preferred stock warrant mark-to-market adjustment

-

-

252

-

       Asset impairment charges

-

147

-

147

       Loss from discontinued operations

-

1,596

-

3,341

Net loss

$

(595)

$

(6,237)

$

(8,354)

$

(15,466)

       Deemed Dividend on Series G Ratchet Provision

8,079

-

8,079

-

Net loss attributable to common stockholders

$

(8,674)

$

(6,237)

$

(16,433)

$

(15,466)

 

EVERYDAY HEALTH, INC.

Reconciliation of Non-GAAP Net Income (Loss)

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

Three months ended June 30,

Six months ended June 30,

2014

2013

2014

2013

Net loss attributable to common stockholders

$

(8,674)

$

(6,237)

$

(16,433)

$

(15,466)

       Deemed Dividend on Series G Ratchet Provision

8,079

-

8,079

-

       Stock compensation expense

2,950

517

4,019

969

       Write-off of debt extinguishment costs

-

-

3,861

-

       Preferred stock warrant mark-to-market adjustment

-

-

252

-

       Compensation expense related to acquisition earnout

51

1,175

135

1,375

       Loss from discontinued operations

-

1,596

-

3,341

Non-GAAP net income (loss)

$

2,406

$

(2,949)

$

(87)

$

(9,781)

Weighted-average common shares outstanding—basic

29,802,970

5,030,265

17,670,809

4,978,075

Weighted-average common shares outstanding—diluted

32,663,419

5,030,265

17,670,809

4,978,075

Non-GAAP net income (loss) per common share—basic

$

0.08

$

(0.59)

$

(0.00)

$

(1.96)

Non-GAAP net income (loss) per common share—diluted

$

0.07

$

(0.59)

$

(0.00)

$

(1.96)

 

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SOURCE Everyday Health, Inc.



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