“In the third quarter, we delivered strong revenue growth and steady gross margin improvement driven by a team that is dedicated to leading the way in clinical documentation innovation,” said Manny Krakaris, Chief Executive Officer of
CEO
Third Quarter 2021 Financial and Operational Highlights
All comparisons, unless otherwise noted, are to the three months ended
- Total revenue was
$5.6 million , an increase of 33% compared to$4.2 million . - Dollar-based Net Revenue Retention was 122% for our Health Enterprise customers compared to 129% in 2Q21 and 113% in the third quarter of 2020.
- Clinicians in Service were 834 as of
September 30, 2021 , an increase of 51% compared to 551 as ofSeptember 30, 2020 . Average clinicians in service were 784 in the third quarter of 2021, an increase of 42% from 552 in the same quarter of 2020. - GAAP gross margin expanded 81 basis points to 45.0% compared to 44.2%. Cost of revenue increased by 31%. Adjusted gross margin, which excludes stock-based compensation, grew to 45.3% from 44.3%.
- GAAP operating expenses were
$7.2 million compared to$5.2 million . Operating expenses grew due to investment into both our sales capacity and marketing; additional software developers as we enhanced our AI-driven Notebuilder tool; and incremental costs associated with being a public company. Expenses in the third quarter of 2020 were approximately$0.4 million lower due to temporary salary reductions and furloughs attributable to the COVID-19 pandemic. Adjusted operating expenses, which exclude stock-based compensation and one-time items, were$6.8 million versus$4.4 million as ofSeptember 30, 2020 . - Stock-based compensation expense was
$0.4 million compared to$0.1 million . - Net loss was
$2.9 million compared to$4.1 million . The net loss in the third quarter of 2021 benefited from the$2.2 million gain from the Paycheck Protection Program (“PPP”) loan forgiveness. - EBITDA losses were
$2.1 million compared to$3.5 million . Adjusted EBITDA losses were$3.9 million compared to$2.6 million , which excludes stock-based compensation and one-time items in both periods. - Cash and restricted cash as of
September 30, 2021 , was$11.1 million .
Adjusted gross margin, Adjusted operating expenses, EBITDA and Adjusted EBITDA are a Non-GAAP financial measure. See “Non-GAAP Financial Measures”.
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Definition of Key Metrics
Dollar-Based Net Revenue Retention: We define a "Health Enterprise" as a company or network of doctors that has at least 50 clinicians currently employed or affiliated that could utilize our services. Dollar-based net revenue retention is determined as the revenue from
Clinicians in Service: We define a clinician in service as an individual doctor, nurse practitioner or other healthcare professional using our services. Clinicians in service is determined as the total clinicians in service as of the period end. We believe growth in the number of clinicians in service is an indicator of the performance of our business as it demonstrates our ability to penetrate the market and grow our business.
About
Non-GAAP Financial Measures
To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we use the following non-GAAP financial measures: adjusted cost of revenue, adjusted gross profit, adjusted gross margin, adjusted operating expenses, EBITDA, and adjusted EBITDA. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.
We use these non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. We believe that these non-GAAP financial measures provide meaningful supplemental information regarding our performance by excluding certain items that may not be indicative of our recurring core business operating results, like one-time transaction costs related to the reverse merger and OTC listing. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting, and analyzing future periods. These non-GAAP financial measures also facilitate management's internal comparisons to our historical performance and liquidity as well as comparisons to our competitors' operating results. We believe these non-GAAP financial measures are useful to investors both because (1) they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making and (2) they are used by our institutional investors and the analyst community to help them analyze the health of our business.
There are a number of limitations related to the use of non-GAAP financial measures. We compensate for these limitations by providing specific information regarding the GAAP amounts excluded from these non-GAAP financial measures and evaluating these non-GAAP financial measures together with their relevant financial measures in accordance with GAAP.
Forward-Looking Statements
This press release contains "forward-looking statements" that involve a number of risks and uncertainties. Words such as "believes," "may," "will," "estimates," "potential," "continues," "anticipates," "intends," "expects," "could," "would," "projects," "plans," "targets," and variations of such words and similar expressions are intended to identify forward-looking statements. Such forward-looking statements include, without limitation, statements regarding our next stage of growth and the overarching goal of our technology platform and offering. Forward-looking statements are based on management's expectations as of the date of this filing and are subject to a number of risks, uncertainties and assumptions, many of which involve factors or circumstances that are beyond our control. Our actual results could differ materially from those stated or implied in forward-looking statements due to a number of factors, including but not limited to, those factors described in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of our most recent Form 10-K and Form 10-Q filed with the
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Condensed Consolidated Statements of Operations | |||||||
(Unaudited, in thousands except Average Clinicians in Service) | |||||||
Three Months Ended | |||||||
2021 | 2020 | ||||||
Revenue | $ | 5,625 | $ | 4,245 | |||
Cost of revenues | 3,092 | 2,368 | |||||
Gross profit | 2,533 | 1,877 | |||||
Operating expenses | |||||||
General and administrative | 3,238 | 3,336 | |||||
Sales and marketing | 2,157 | 887 | |||||
Research and development | 1,810 | 1,009 | |||||
Total operating expenses | 7,205 | 5,232 | |||||
Loss from operations | (4,672) | (3,355) | |||||
Other income (expense), net | 1,813 | (761) | |||||
Net loss | $ | (2,859) | $ | (4,116) | |||
Average Clinicians in Service | 784 | 552 | |||||
Clinicians in Service end of period | 834 | 551 |
Reconciliation of GAAP to Non-GAAP Metrics | |||||||
(Unaudited, in thousands) | |||||||
Three Months Ended | |||||||
Stock Based Compensation Expense | 2021 | 2020 | |||||
Cost of revenues | $ | 14 | $ | 3 | |||
General and administrative | 258 | 69 | |||||
Sales and marketing | 31 | 18 | |||||
Research and development | 68 | 9 | |||||
Total stock-based compensation expense | $ | 371 | $ | 99 | |||
Net loss | $ | (2,859) | $ | (4,116) | |||
Interest expense | 589 | 402 | |||||
Tax | 37 | 26 | |||||
Depreciation and Amortization | 156 | 213 | |||||
EBITDA | $ | (2,077) | $ | (3,475) | |||
Stock-based compensation expense | 371 | 99 | |||||
Transaction related expense | 753 | ||||||
Less: Forgiveness of PPP loan | (2,180) | - | |||||
Adjusted EBITDA | $ | (3,886) | $ | (2,623) | |||
GAAP Cost of Revenues | $ | 3,092 | $ | 2,368 | |||
Less: Stock-based compensation expense | (14) | ( 3) | |||||
Adjusted cost of revenues | 3,078 | 2,365 | |||||
Non-GAAP gross profit | $ | 2,547 | $ | 1,880 | |||
Adjusted gross margin | 45.3% | 44.3% | |||||
GAAP Operating Expenses | $ | 7,205 | $ | 5,232 | |||
Less: Stock-based compensation expense | (357) | (96) | |||||
Less: Transaction related expense | (753) | ||||||
Non-GAAP Operating Expenses | $ | 6,848 | $ | 4,383 | |||
Source:
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