Fiscal 2023 First Quarter Operating and Financial Highlights
(All comparisons versus the prior-year period unless otherwise noted)
Consolidated:
- Consolidated revenue for the first quarter was
$18.6 million , up 12% compared to$16.5 million in the prior-year period. - On a consolidated basis, GEG recognized a net loss of
$8.5 million for the first quarter, compared to net income of$0.1 million for the same period in the prior year. The variance was primarily a function of higher losses on investments in shares ofGreat Elm Capital Corp. (“GECC”), as well as the absence of benefits related to government stimulus recognized in the prior-year period. - Consolidated Adjusted EBITDA for the first quarter ended
September 30, 2022 was$2.7 million , compared to$4.3 million in the prior-year period. Removing the government stimulus recognized in the prior year, Consolidated Adjusted EBITDA increased by$0.8 million , or more than 45% compared to the prior-year period, primarily driven by top-line revenue growth. - As of
June 30, 2022 , we had approximately$821 million of net operating loss (NOL) carryforwards for federal income tax purposes.
Investment Management (IM):
- IM grew total revenue for the first quarter by 89% to
$1.9 million , compared to$1.0 million for the same period in the prior year, primarily attributable to the acquisition of the management agreement forMonomoy Properties REIT, LLC and its subsidiaries (collectively, “Monomoy REIT”). - IM reported a net loss for the first quarter of
$6.0 million , compared to a net loss of$0.1 million in the prior-year-period, with the variance primarily a function of higher realized and unrealized losses on GECC shares. - IM recognized Adjusted EBITDA of
$0.3 million for the first quarter, compared to$0.1 million in the same period in the prior fiscal year. - IM assets under management totaled
$623.9 million as ofSeptember 30, 2022 , representing 2.8% sequential growth fromJune 30, 2022 , due largely to growth at Monomoy REIT. - IM fee paying assets under management totaled
$428.0 million as ofSeptember 30, 2022 , representing 4.8% sequential growth fromJune 30, 2022 . - Following quarter end, on
November 14, 2022 , GECC announced that it launchedGreat Elm Healthcare Finance, LLC (“GEHF”) with an affiliate ofBerkadia Commercial Mortgage, LLC (“Berkadia”), its strategic minority partner.- GEHF provides asset-based revolving loans, mortgage financing, secured debt and other capital solutions to healthcare businesses including skilled nursing, assisted living, senior housing, memory and acute care facilities and specialty pharmacies.
- GEHF provides asset-based revolving loans, mortgage financing, secured debt and other capital solutions to healthcare businesses including skilled nursing, assisted living, senior housing, memory and acute care facilities and specialty pharmacies.
Operating Companies:
- Durable Medical Equipment (DME) grew total revenue for the first quarter by 7% to
$16.7 million , compared to$15.6 million for the prior-year period. - DME net income for the first quarter was
$6.8 million , compared to$2.1 million for the same period in the prior year. The year-over-year increase primarily reflected higher revenue and a$7.0 million benefit related to the fair value adjustment of an embedded derivative that was eliminated in consolidation. - DME Adjusted EBITDA for the first quarter was
$3.4 million , compared to$5.1 million for the prior-year quarter. The most recent quarter did not include any benefit related to government stimulus, which totaled$2.3 million in the prior-year period.
Management Commentary
Alignment of Interest
A distinct attribute of
Financial Review
Fiscal 2023 First Quarter Financial Highlights
(in millions) | Three Months Ended | |||||||
2022 | 2021 | |||||||
Revenue by Segment | ||||||||
DME | $ | 16.7 | $ | 15.6 | ||||
Investment Management | 1.9 | 1.0 | ||||||
General Corporate | 0.2 | 0.2 | ||||||
Eliminations | (0.2 | ) | (0.2 | ) | ||||
Consolidated | $ | 18.6 | $ | 16.5 | ||||
Net income (loss) by Segment | ||||||||
DME | $ | 6.8 | $ | 2.1 | ||||
Investment Management | (6.0 | ) | (0.1 | ) | ||||
General Corporate | (9.3 | ) | (1.8 | ) | ||||
Consolidated | $ | (8.5 | ) | $ | 0.1 | |||
Adj. EBITDA1 by Segment | ||||||||
DME | $ | 3.4 | $ | 5.1 | ||||
Investment Management | 0.3 | 0.1 | ||||||
General Corporate | (0.9 | ) | (1.0 | ) | ||||
Consolidated | $ | 2.7 | $ | 4.3 |
(1) Please refer to the disclaimers and the Adjusted EBITDA reconciliation tables in the Appendix.
Discussion of Financial Results by Segment for the
Investment Management
During the three months ended
During the three months ended
During the three months ended
Operating Companies
During the three months ended
During the three months ended
During the three months ended
General Corporate
During the three months ended
During the three months ended
During the three months ended
Recent Developments
In
GEHF provides asset-based revolving loans, mortgage financing, secured debt and other capital solutions to healthcare business including skilled nursing, assisted living, senior housing, memory and acute care facilities and specialty pharmacies.
Fiscal 2023 First Quarter Conference Call & Webcast Information | |
When: | |
Call: | All interested parties are invited to participate in the conference call by dialing +1 (888) 440-4537; international callers should dial +1 (646) 960-0669. Participants should enter the Conference ID 2595129 when asked. |
Webcast: | The conference call will be webcast simultaneously and can be accessed at the following link: https://events.q4inc.com/attendee/934406621. For a copy of the slide presentation accompanying the conference call, please visit: https://www.greatelmgroup.com/events-and-presentations. |
About
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
Statements in this press release that are “forward-looking” statements, including statements regarding revenue, Adjusted EBITDA, expected growth, profitability, acquisition opportunities and outlook involve risks and uncertainties that may individually or collectively impact the matters described herein. Investors are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the date they are made and represent Great Elm’s assumptions and expectations in light of currently available information. These statements involve risks, variables and uncertainties, and Great Elm’s actual performance results may differ from those projected, and any such differences may be material. For information on certain factors that could cause actual events or results to differ materially from Great Elm’s expectations, please see Great Elm’s filings with the
Non-GAAP Financial Measures
The
Adjusted EBITDA has limitations as an analytical tool, and you should not consider it either in isolation from, or as a substitute for, analyzing Great Elm’s results as reported under US GAAP. Non-GAAP financial measures reported by
Included in the financial tables below is a reconciliation of Adjusted EBITDA to the most directly comparable US GAAP financial measure, net income.
Investor Relations Contact:
investorrelations@greatelmcap.com
Condensed Consolidated Balance Sheets (Unaudited)
Dollar amounts in thousands (except per share data)
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 23,265 | $ | 23,595 | ||||
Accounts receivable | 5,854 | 5,867 | ||||||
Related party receivables | 2,578 | 2,445 | ||||||
Investments, at fair value (cost | 40,624 | 48,042 | ||||||
Inventories | 1,017 | 898 | ||||||
Prepaid and other current assets | 1,391 | 1,050 | ||||||
Assets of | ||||||||
Investments, at fair value (cost | - | 1,797 | ||||||
Prepaid expenses | - | 746 | ||||||
Total current assets | 74,729 | 84,440 | ||||||
Property and equipment, net | 503 | 538 | ||||||
Equipment held for rental, net | 7,923 | 7,504 | ||||||
Identifiable intangible assets, net | 18,592 | 19,171 | ||||||
52,463 | 52,463 | |||||||
Right of use assets | 3,815 | 3,722 | ||||||
Other assets | 253 | 249 | ||||||
Total assets | $ | 158,278 | $ | 168,087 | ||||
LIABILITIES, NON-CONTROLLING INTEREST AND STOCKHOLDERS' EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 6,340 | $ | 6,038 | ||||
Accrued expenses and other liabilities | 5,814 | 7,389 | ||||||
Deferred revenue | 1,250 | 1,218 | ||||||
Current portion of related party payables | 73 | 486 | ||||||
Current portion of lease liabilities | 1,684 | 1,559 | ||||||
Current portion of related party notes payable | 5,661 | - | ||||||
Current portion of equipment financing debt | 3,909 | 2,993 | ||||||
Liabilities of | - | 11 | ||||||
Total current liabilities | 24,731 | 19,694 | ||||||
Lease liabilities, net of current portion | 2,342 | 2,375 | ||||||
Long term debt (face value | 25,597 | 25,532 | ||||||
Related party payables | 1,050 | 1,120 | ||||||
Related party notes payable, net of current portion | - | 6,270 | ||||||
Convertible notes (face value | 35,216 | 35,187 | ||||||
Redeemable preferred stock of subsidiaries (held by related parties, face value | 34,450 | 34,747 | ||||||
Other liabilities | 977 | 908 | ||||||
Total liabilities | 124,363 | 125,833 | ||||||
Contingently redeemable non-controlling interest | 2,887 | 2,225 | ||||||
Stockholders' equity | ||||||||
Preferred stock, | - | - | ||||||
Common stock, | 29 | 29 | ||||||
Additional paid-in-capital | 3,313,597 | 3,312,763 | ||||||
Accumulated deficit | (3,287,587 | ) | (3,279,296 | ) | ||||
26,039 | 33,496 | |||||||
Non-controlling interests | 4,989 | 6,533 | ||||||
Total stockholders' equity | 31,028 | 40,029 | ||||||
Total liabilities, non-controlling interest and stockholders' equity | $ | 158,278 | $ | 168,087 |
Condensed Consolidated Statements of Operations (Unaudited)
Amounts in thousands (except per share data)
For the three months ended | ||||||||
2022 | 2021 | |||||||
Revenues: | ||||||||
Durable medical equipment sales and services revenue | $ | 11,028 | $ | 10,076 | ||||
Durable medical equipment rental income | 5,691 | 5,479 | ||||||
Investment management revenue | 1,860 | 983 | ||||||
Total revenues | 18,579 | 16,538 | ||||||
Operating costs and expenses: | ||||||||
Cost of durable medical equipment sold and services | 4,340 | 4,060 | ||||||
Cost of durable medical equipment rentals(1) | 2,050 | 1,850 | ||||||
Durable medical equipment other operating expenses(2) | 8,971 | 6,253 | ||||||
Investment management expenses | 1,989 | 1,187 | ||||||
Depreciation and amortization | 681 | 562 | ||||||
Selling, general and administrative(3) | 1,487 | 1,573 | ||||||
Expenses of | 46 | 52 | ||||||
Total operating costs and expenses | 19,564 | 15,537 | ||||||
Operating (loss) income | (985 | ) | 1,001 | |||||
Dividends and interest income | 1,473 | 653 | ||||||
Net realized and unrealized loss on investments | (6,797 | ) | (14 | ) | ||||
Net realized and unrealized loss on investments of | (16 | ) | (189 | ) | ||||
Interest expense | (1,996 | ) | (1,362 | ) | ||||
Extinguishment of debt | (23 | ) | - | |||||
Other income, net | 1 | 16 | ||||||
(Loss) income before income taxes | (8,343 | ) | 105 | |||||
Income tax (expense) benefit | (196 | ) | 1 | |||||
Net (loss) income | $ | (8,539 | ) | $ | 106 | |||
Less: net (loss) income attributable to non-controlling interest | (248 | ) | 306 | |||||
Net loss attributable to | $ | (8,291 | ) | $ | (200 | ) | ||
Basic and diluted loss per share | $ | (0.29 | ) | $ | (0.01 | ) | ||
Weighted average shares outstanding | ||||||||
Basic | 28,543 | 25,982 | ||||||
Diluted | 28,543 | 25,982 | ||||||
(1) Includes depreciation expense of: | 1,889 | 1,688 | ||||||
(2) Net of CARES Act Stimulus of: | - | 2,321 | ||||||
(3) Net of CARES Act Stimulus of: | - | 84 |
Reconciliation from EBITDA to Adjusted EBITDA - Quarterly
Dollar amounts in thousands
For the three months ended | ||||||||||||||||
$ in thousands | Durable Medical Equipment | Investment Management | General Corporate | Consolidated | ||||||||||||
EBITDA: | ||||||||||||||||
Net income (loss) - GAAP | $ | 6,758 | $ | (6,031 | ) | $ | (9,266 | ) | $ | (8,539 | ) | |||||
Interest expense | 1,106 | 136 | 1,839 | 3,081 | ||||||||||||
Interest income from preferred stock | - | - | (1,085 | ) | (1,085 | ) | ||||||||||
Depreciation & amortization | 2,275 | 294 | - | 2,569 | ||||||||||||
Tax expense | - | - | 196 | 196 | ||||||||||||
EBITDA | 10,139 | (5,601 | ) | (8,316 | ) | (3,778 | ) | |||||||||
Adjusted EBITDA | ||||||||||||||||
Non-cash compensation | - | 477 | 464 | 941 | ||||||||||||
Change in contingent consideration | 12 | (70 | ) | - | (58 | ) | ||||||||||
Dividend income | - | (1,386 | ) | - | (1,386 | ) | ||||||||||
Losses on investments | - | 6,813 | - | 6,813 | ||||||||||||
Other (income) expense | (7,007 | ) | - | 7,006 | (1 | ) | ||||||||||
Transaction and integration related costs, including ext of debt (1) | 130 | 46 | - | 176 | ||||||||||||
DME management and monitoring fees | 90 | - | (90 | ) | - | |||||||||||
Adjusted EBITDA | $ | 3,364 | $ | 279 | $ | (936 | ) | $ | 2,707 | |||||||
For the three months ended | ||||||||||||||||
$ in thousands | Durable Medical Equipment | Investment Management | General Corporate | Consolidated | ||||||||||||
EBITDA: | ||||||||||||||||
Net income (loss) - GAAP | $ | 2,082 | $ | (140 | ) | $ | (1,836 | ) | $ | 106 | ||||||
Interest expense | 1,287 | 24 | 1,269 | 2,580 | ||||||||||||
Interest income from preferred stock | - | - | (1,218 | ) | (1,218 | ) | ||||||||||
Depreciation & amortization | 2,142 | 109 | - | 2,251 | ||||||||||||
Tax expense | - | - | (1 | ) | (1 | ) | ||||||||||
EBITDA | 5,511 | (7 | ) | (1,786 | ) | 3,718 | ||||||||||
Adjusted EBITDA | ||||||||||||||||
Non-cash compensation | - | 396 | 372 | 768 | ||||||||||||
Change in contingent consideration | (163 | ) | - | - | (163 | ) | ||||||||||
Dividend Income | - | (554 | ) | (99 | ) | (653 | ) | |||||||||
(Gains) / Losses on investments | - | 305 | (102 | ) | 203 | |||||||||||
Other (income) expense | (560 | ) | - | 544 | (16 | ) | ||||||||||
Transaction and integration related costs (1) | 219 | - | 184 | 403 | ||||||||||||
DME management and monitoring fees | 130 | - | (130 | ) | - | |||||||||||
Adjusted EBITDA | $ | 5,137 | $ | 140 | $ | (1,017 | ) | $ | 4,260 | |||||||
(1) Transaction and integration related costs include costs to acquire and integrate acquired businesses.
Source:
2022 GlobeNewswire, Inc., source