Benefitfocus, Inc.
May 4, 2016

Benefitfocus Announces First Quarter 2016 Financial Results

Total revenue of $54.8 million grew 28% year-over-year
Employer revenue of $32.2 million grew 54% year-over-year

CHARLESTON, S.C., May 04, 2016 (GLOBE NEWSWIRE) --  Benefitfocus, Inc. (NASDAQ:BNFT), a leading provider of cloud-based benefits management software, today announced its first quarter 2016 financial results.

"Benefitfocus continued its impressive momentum and delivered a great start to 2016, as our revenue and profitability exceeded the high-end of our guidance," said Shawn Jenkins, Chief Executive Officer of Benefitfocus. "Driven by strong demand from both new and existing customers, our employer segment delivered 54% year-over-year revenue growth for the first quarter.  In addition, once again, our software revenue retention rate was over 95%."

Jenkins added, "We are making significant progress on achieving our long-term goals and we remain on track to achieve Q4 adjusted EBITDA profitability.  The combination of the rapid growth of our cloud-based platform, leadership position and loyal customer base are all leading indicators of the tremendous market opportunity for the company." 

First Quarter 2016 Financial Highlights

Revenue

Non-GAAP Net Loss and Adjusted EBITDA

Balance Sheet

First Quarter and Recent Business Highlights

Business Outlook

Based on information available as of May 4, 2016, Benefitfocus is providing guidance for the second quarter and full year 2016 as indicated below.

Second Quarter 2016:

Full Year 2016:

Conference Call Details:

In conjunction with this announcement, Benefitfocus will host a conference call today, May 4, 2016, at 5:00 p.m. Eastern Time to discuss the company's financial results. To access this call, dial (855) 233-6991 (domestic) or (317) 586-4497 (international) with conference ID 91214060. A live webcast, as well as the replay, of the conference call will be available on the Investor Relations page of the company's website at http://investor.benefitfocus.com/. A replay of this conference call can also be accessed by dialing (855) 859-2056 (domestic) or (404) 537-3406 (international) through May 11, 2016.

About Benefitfocus

Benefitfocus (NASDAQ:BNFT) provides a leading cloud-based benefits management platform that simplifies how organizations and individuals shop for, enroll in, manage and exchange benefits. Every day leading employers, insurance companies and millions of consumers rely on our platform to manage, scale and exchange benefits data seamlessly. In an increasingly complex benefits landscape, we bring order to chaos so our clients and their employees have access to better information, make better decisions and lead better lives. Learn more at www.benefitfocus.com, LinkedIn and Twitter.

Non-GAAP Financial Measures

The company uses certain non-GAAP financial measures in this release, including non-GAAP gross profit, operating loss, net loss, net loss per common share and adjusted EBITDA, and free cash flow. Generally, a non-GAAP financial measure is a numerical measure of a company's performance or financial position that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. 

Non-GAAP gross profit, operating loss, net loss and net loss per share exclude stock-based compensation expenses and amortization of acquisition-related intangible assets and offering costs expensed, if any.  We define adjusted EBITDA as net loss before net interest, taxes, and depreciation and amortization expense, adjusted to eliminate stock-based compensation expense and expense related to the impairment of goodwill and intangible assets. We define free cash flow as cash from operations plus purchases of property and equipment. Please note that other companies might define their non-GAAP financial measures differently than we do.

Management presents these non-GAAP financial measures in this release because it considers them to be important supplemental measures of performance. Management uses these non-GAAP financial measures for planning purposes, including analysis of the company's performance against prior periods, the preparation of operating budgets and to determine appropriate levels of operating and capital investments. Management believes that these non-GAAP financial measures provide additional insight for analysts and investors in evaluating the company's financial and operational performance. Management also intends to provide these non-GAAP financial measures as part of the company's future earnings discussions and, therefore, their inclusion should provide consistency in the company's financial reporting.

Non-GAAP financial measures have limitations as an analytical tool. Investors are encouraged to review the reconciliation of the non-GAAP measures to their most directly comparable GAAP measures provided in this release, including in the accompanying tables.

Safe Harbor Statement

Except for historical information, all of the statements, expectations, and assumptions contained in this press release are forward-looking statements. Actual results might differ materially from those explicit or implicit in the forward-looking statements. Important factors that could cause actual results to differ materially include: our continuing losses and need to achieve profitability; our ability to maintain our culture and recruit and retain qualified personnel; fluctuations in our financial results; general economic risks;  the immature and volatile market for our products and services; the need to innovate and provide useful products and services; risks related to changing healthcare and other applicable regulations; our ability to compete effectively; privacy, security and other risks associated with our business; and the other risk factors set forth from time to time in our SEC filings,  copies of which are available free of charge within the Investor Relations section of the Benefitfocus website at http://investor.benefitfocus.com/sec.cfm or upon request from our Investor Relations Department. Benefitfocus assumes no obligation and does not intend to update these forward-looking statements, except as required by law.


Benefitfocus, Inc.
Unaudited Consolidated Statements of Operations and Comprehensive Loss
(in thousands, except share and per share data)
          
  Three Months Ended
March 31,
  
  2016  2015  
Revenue $54,792  $42,669  
Cost of revenue (1)(2)  29,297   22,463  
Gross profit  25,495   20,206  
Operating expenses:(1)(2)         
Sales and marketing  13,574   15,475  
Research and development  15,015   11,777  
General and administrative  8,395   5,411  
Total operating expenses  36,984   32,663  
Loss from operations  (11,489)  (12,457) 
Other income (expense):         
Interest income  56   18  
Interest expense on building lease financing obligations  (1,716)  (1,915) 
Interest expense on other borrowings  (198)  (280) 
Total other expense, net  (1,858)  (2,177) 
Loss before income taxes  (13,347)  (14,634) 
Income tax expense  5   15  
Net loss $(13,352) $(14,649) 
Comprehensive loss $(13,352) $(14,649) 
          
Net loss per common share:         
Basic and diluted $(0.46) $(0.55) 
          
Weighted-average common shares outstanding:         
Basic and diluted  29,213,198   26,745,444  
          
          
(1) Stock-based compensation included in above line items:         
Cost of revenue $548  $320  
Sales and marketing  632   323  
Research and development  1,468   439  
General and administrative  2,085   754  
          
(2) Amortization of acquired intangible assets included in
         
above line items:         
Cost of revenue $36  $58  
Sales and marketing  10   7  
Research and development  15   10  
General and administrative  3   2  






Benefitfocus, Inc.
Unaudited Consolidated Balance Sheets
(in thousands, except share and per share data)
          
  As of
March 31,
2016
  As of
December 31,
2015
  
Assets         
Current assets:         
Cash and cash equivalents $22,253  $48,074  
Marketable securities  15,797   40,448  
Accounts receivable, net  31,066   27,616  
Accounts receivable, related party  2,216   2,082  
Prepaid expenses and other current assets  6,775   5,725  
Total current assets  78,107   123,945  
Property and equipment, net  54,284   55,037  
Intangible assets, net  601   665  
Goodwill  1,634   1,634  
Other non-current assets  1,345   838  
Total assets $135,971  $182,119  
Liabilities and stockholders' deficit         
Current liabilities:         
Accounts payable $3,900  $7,953  
Accrued expenses  12,188   10,449  
Accrued compensation and benefits  15,380   20,684  
Deferred revenue, current portion  33,411   37,858  
Revolving line of credit, current portion     25,000  
Financing and capital lease obligations, current portion  3,641   3,648  
Total current liabilities  68,520   105,592  
Deferred revenue, net of current portion  54,699   55,671  
Revolving line of credit, net of current portion  5,246   5,246  
Financing and capital lease obligations, net of current portion  31,812   31,183  
Other non-current liabilities  2,361   2,436  
Total liabilities  162,638   200,128  
Commitments and contingencies         
Stockholders' deficit:         
Preferred stock, par value $0.001, 5,000,000 shares authorized,
         
no shares issued and outstanding at March 31, 2016  -   -  
and December 31, 2015         
Common stock, par value $0.001, 50,000,000 shares authorized,
         
29,225,503 and 29,194,332 shares issued and outstanding         
at March 31, 2016 and December 31, 2015, respectively  29   29  
Additional paid-in capital  314,998   310,304  
Accumulated deficit  (341,694)  (328,342) 
Total stockholders' deficit  (26,667)  (18,009) 
Total liabilities and stockholders' deficit $135,971  $182,119  
          






Benefitfocus, Inc. 
Unaudited Consolidated Statements of Cash Flows 
(in thousands) 
  Three Months Ended
March 31,
 
   2016   2015 
Cash flows from operating activities        
Net loss $(13,352) $(14,649)
Adjustments to reconcile net loss to net cash and cash
        
equivalents used in operating activities:        
Depreciation and amortization  3,043   2,823 
Stock-based compensation expense  4,733   1,836 
Interest accrual on financing obligation  1,716   1,915 
Provision for doubtful accounts  (22)   
Changes in operating assets and liabilities:        
Accounts receivable, net  (3,562)  2,457 
Accrued interest on short-term investments  130   80 
Prepaid expenses and other current assets  (2)  (915)
Other non-current assets  (508)  421 
Accounts payable  (3,911)  (295)
Accrued expenses  2,715   299 
Accrued compensation and benefits  (5,304)  1,938 
Deferred revenue  (5,419)  (2,170)
Other non-current liabilities  (75)  85 
Net cash and cash equivalents used in operating
  activities
  (19,818)  (6,175)
Cash flows from investing activities        
Purchases of short-term investments held to maturity  (2,004)  (38,830)
Proceeds from maturity of short-term investments held to
        
maturity  26,525   5,065 
Purchases of property and equipment  (2,610)  (6,003)
Net cash and cash equivalents provided by (used in) investing activities  21,911   (39,768)
Cash flows from financing activities        
Draws on revolving line of credit     22,492 
Payments on revolving line of credit  (25,000)  (30,903)
Proceeds from exercises of stock options  163   379 
Proceeds from issuance of common stock and warrant, net of issuance costs     74,538 
Payments of deferred financing costs and debt issuance costs     (566)
Remittance of taxes upon vesting of restricted stock units  (202)   
Payments on financing and capital lease obligations  (2,875)  (2,460)
Net cash and cash equivalents (used in) provided by financing activities  (27,914)  63,480 
Net (decrease) increase in cash and cash equivalents  (25,821)  17,537 
Cash and cash equivalents, beginning of period  48,074   51,074 
Cash and cash equivalents, end of period $22,253  $68,611 
         
Supplemental disclosure of non-cash investing
  and financing activities
        
Property and equipment purchases in accounts payable and
        
accrued expenses $428  $708 
Property and equipment purchased with financing and
        
capital lease obligations $733  $236 
Post contract support purchased with financing obligations $1,048  $ 
Allocation of proceeds to deferred revenue from issuance of
        
common stock based on relative selling price $  $207 






Benefitfocus, Inc. 
Reconciliation of GAAP to Non-GAAP Measures 
(unaudited, in thousands except share and per share data) 
         
  Three Months Ended
March 31,
 
  2016  2015 
Reconciliation from Gross Profit to Non-GAAP Gross Profit:        
Gross profit $25,495  $20,206 
Amortization of acquired intangible assets  36   58 
Stock-based compensation expense  548   320 
Total net adjustments  584   378 
Non-GAAP gross profit $26,079  $20,584 
         
Reconciliation from Operating Loss to Non-GAAP Operating Loss:        
Operating loss $(11,489) $(12,457)
Amortization of acquired intangible assets  64   77 
Stock-based compensation expense  4,733   1,836 
Total net adjustments  4,797   1,913 
Non-GAAP operating loss $(6,692) $(10,544)
         
Reconciliation from Net Loss to Adjusted EBITDA:        
Net loss $(13,352) $(14,649)
Depreciation  2,353   2,070 
Amortization of software development costs  626   676 
Amortization of acquired intangible assets  64   77 
Interest income  (56)  (18)
Interest expense on building lease financing obligations  1,716   1,915 
Interest expense on other borrowings  198   280 
Income tax expense  5   15 
Stock-based compensation expense  4,733   1,836 
Total net adjustments  9,639   6,851 
Adjusted EBITDA $(3,713) $(7,798)
         
Reconciliation from Net Loss to Non-GAAP Net Loss:        
Net loss $(13,352) $(14,649)
Amortization of acquired intangible assets  64   77 
Stock-based compensation expense  4,733   1,836 
Total net adjustments  4,797   1,913 
Non-GAAP net loss $(8,555) $(12,736)
         
Calculation of Non-GAAP Earnings Per Share:        
Non-GAAP net loss $(8,555) $(12,736)
         
Weighted average shares outstanding - basic and diluted  29,213,198   26,745,444 
Shares used in computing non-GAAP net loss per share -
basic and diluted
  29,213,198   26,745,444 
Non-GAAP net loss per common share - basic and diluted $(0.29) $(0.48)

 

Benefitfocus, Inc.
843-284-1052 ext. 3527
pr@benefitfocus.com

Investor Relations:
Michael Bauer
843-284-1052 ext. 6654
michael.bauer@benefitfocus.com