UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) March 27, 2014
BENEFITFOCUS, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
| 001-36061 | 46-2346314 | |
| (Commission File Number) | (IRS Employer Identification No.) |
| 100 Benefitfocus Way, Charleston, South Carolina 29492 |
| (Address of principal executive offices) (Zip Code) |
Registrant’s telephone number, including area code (843) 849-7476
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. Results of Operations and Financial Condition.
On March 27, 2014, Benefitfocus, Inc. posted on its website, www.benefitfocus.com (under the section entitled –About–Investor Relations–Financial Information–Quarterly Results), final financial results for the fourth quarter and full year ended December 31, 2013. A copy of the financial results is attached hereto as Exhibit 99.1 and is incorporated herein in its entirety by reference.
The information in this Item 2.02 (including Exhibit 99.1) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such a filing.
Item 9.01. Financial Statements and Exhibits.
| (d) | Exhibits |
| Exhibit No. |
Description | |
| 99.1 | Benefitfocus, Inc. financial results for the fourth quarter and full year ended December 31, 2013. | |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| BENEFITFOCUS, INC. | ||
| Date: March 28, 2014 | /s/ Milton A. Alpern | |
| Milton A. Alpern, Chief Financial Officer | ||
Exhibit 99.1
Benefitfocus, Inc.
Consolidated Statements of Operations and Comprehensive Loss
(in thousands, except share and per share data)
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| (Restated) | (Restated) | |||||||||||||||
| Revenue |
$ | 30,256 | $ | 22,208 | $ | 104,752 | $ | 81,739 | ||||||||
| Cost of revenue |
19,473 | 11,881 | 62,411 | 44,400 | ||||||||||||
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| Gross profit |
10,783 | 10,327 | 42,341 | 37,339 | ||||||||||||
| Operating expenses: |
||||||||||||||||
| Sales and marketing |
8,976 | 6,357 | 36,072 | 27,905 | ||||||||||||
| Research and development |
6,708 | 3,520 | 23,532 | 14,621 | ||||||||||||
| General and administrative |
2,790 | 1,990 | 10,974 | 7,494 | ||||||||||||
| Change in fair value of contingent consideration |
— | (49 | ) | (43 | ) | 121 | ||||||||||
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| Total operating expenses |
18,474 | 11,818 | 70,535 | 50,141 | ||||||||||||
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| Loss from operations |
(7,691 | ) | (1,491 | ) | (28,194 | ) | (12,802 | ) | ||||||||
| Other income (expense): |
||||||||||||||||
| Interest income |
15 | 12 | 46 | 53 | ||||||||||||
| Interest expense |
(552 | ) | (507 | ) | (2,149 | ) | (1,976 | ) | ||||||||
| Other expense |
(66 | ) | (8 | ) | (95 | ) | (64 | ) | ||||||||
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| Total other expense, net |
(603 | ) | (503 | ) | (2,198 | ) | (1,987 | ) | ||||||||
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|||||||||
| Loss before income taxes |
(8,294 | ) | (1,994 | ) | (30,392 | ) | (14,789 | ) | ||||||||
| Income tax (benefit) expense |
(12 | ) | 35 | (31 | ) | 84 | ||||||||||
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| Net loss |
$ | (8,282 | ) | $ | (2,029 | ) | $ | (30,361 | ) | $ | (14,873 | ) | ||||
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| Comprehensive loss |
$ | (8,282 | ) | $ | (2,029 | ) | $ | (30,361 | ) | $ | (14,873 | ) | ||||
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| Net loss per common share: |
||||||||||||||||
| Basic and diluted |
$ | (0.34 | ) | $ | (0.42 | ) | $ | (2.99 | ) | $ | (3.09 | ) | ||||
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| Weighted-average common shares outstanding: |
||||||||||||||||
| Basic and diluted |
24,474,566 | 4,842,205 | 10,144,243 | 4,812,632 | ||||||||||||
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Benefitfocus, Inc.
Consolidated Balance Sheets
(in thousands, except share and per share data)
| As of December 31, | ||||||||
| 2013 | 2012 | |||||||
| (Restated) | ||||||||
| Assets |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 65,645 | $ | 19,703 | ||||
| Marketable securities |
13,168 | — | ||||||
| Accounts receivable, net |
23,668 | 13,372 | ||||||
| Prepaid expenses and other current assets |
4,322 | 1,482 | ||||||
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| Total current assets |
106,803 | 34,557 | ||||||
| Property and equipment, net |
27,444 | 20,456 | ||||||
| Intangible assets, net |
1,256 | 1,579 | ||||||
| Goodwill |
1,634 | 1,634 | ||||||
| Other non-current assets |
2,474 | — | ||||||
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| Total assets |
$ | 139,611 | $ | 58,226 | ||||
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| Liabilities, redeemable convertible preferred stock and stockholders’ equity (deficit) |
||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 4,354 | $ | 1,726 | ||||
| Accrued expenses |
3,911 | 2,453 | ||||||
| Accrued compensation and benefits |
14,183 | 9,661 | ||||||
| Deferred revenue, current portion |
15,158 | 11,165 | ||||||
| Financing and capital lease obligations, current portion |
4,288 | 1,228 | ||||||
| Notes payable, current portion |
— | 2,420 | ||||||
| Contingent consideration related to acquisition, current portion |
— | 328 | ||||||
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| Total current liabilities |
41,894 | 28,981 | ||||||
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| Deferred revenue, net of current portion |
65,063 | 46,355 | ||||||
| Revolving line of credit |
5,757 | — | ||||||
| Financing and capital lease obligations, net of current portion |
14,263 | 9,589 | ||||||
| Notes payable, net of current portion |
— | 3,561 | ||||||
| Other non-current liabilities |
1,202 | 871 | ||||||
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| Total liabilities |
128,179 | 89,357 | ||||||
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| Commitments and contingencies |
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| Redeemable convertible preferred stock: |
||||||||
| Convertible Series A preferred stock, no par value, no shares authorized, issued and outstanding at December 31, 2013; 14,055,851 shares authorized, issued and outstanding at December 31, 2012 |
— | 105,505 | ||||||
| Convertible Series B preferred stock, no par value, no shares authorized, issued and outstanding at December 31, 2013; 2,441,009 shares authorized, issued and outstanding at December 31, 2012 |
— | 29,973 | ||||||
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| Total redeemable convertible preferred stock |
— | 135,478 | ||||||
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| Stockholders’ equity (deficit): |
||||||||
| Preferred stock, par value $0.001, 5,000,000 shares authorized, no shares issued and outstanding at December 31, 2013 and 2012 |
— | — | ||||||
| Common stock, no par value, no shares authorized issued and outstanding at December 31, 2013; 100,000,000 shares authorized, 20,125,063 shares issued and 4,792,347 shares outstanding at December 31, 2012 |
— | |
6,109 |
| ||||
| Common stock, par value $0.001, 50,000,000 shares authorized, 24,495,651 shares issued and outstanding at December 31, 2013; no shares authorized, issued and outstanding at December 31, 2012 |
24 | — | ||||||
| Additional paid-in capital |
214,487 | — | ||||||
| Accumulated deficit |
(203,079 | ) | (172,718 | ) | ||||
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| Total stockholders’ equity (deficit) |
11,432 | (166,609 | ) | |||||
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| Total liabilities, redeemable convertible preferred stock and stockholders’ equity (deficit) |
$ | 139,611 | $ | 58,226 | ||||
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Benefitfocus.com, Inc.
Consolidated Statements of Cash Flows
(in thousands)
| Three Months Ended December 31, |
Year Ended December 31, | |||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| (Restated) | (Restated) | |||||||||||||||
| Cash flows from operating activities |
||||||||||||||||
| Net loss |
$ | (8,282 | ) | $ | (2,029 | ) | $ | (30,361 | ) | $ | (14,873 | ) | ||||
| Adjustments to reconcile net loss to net cash and cash equivalents provided by operating activities: |
||||||||||||||||
| Depreciation and amortization |
2,246 | 1,794 | 8,172 | 8,560 | ||||||||||||
| Stock-based compensation expense |
381 | 248 | 1,202 | 712 | ||||||||||||
| Change in fair value and accretion of warrant |
223 | 168 | 892 | 488 | ||||||||||||
| Interest accrual on financing obligation |
443 | 444 | 1,768 | 1,774 | ||||||||||||
| Change in fair value of contingent consideration |
1 | (37 | ) | (17 | ) | 188 | ||||||||||
| Provision for doubtful accounts |
(87 | ) | 18 | (32 | ) | 98 | ||||||||||
| Loss on disposal of property and equipment |
45 | 8 | 65 | 17 | ||||||||||||
| Changes in operating assets and liabilities: |
||||||||||||||||
| Accounts receivable, net |
(2,404 | ) | (1,974 | ) | (10,264 | ) | (4,411 | ) | ||||||||
| Prepaid expenses and other current assets |
(428 | ) | 411 | (1,440 | ) | 639 | ||||||||||
| Accounts payable |
(1,246 | ) | 457 | 2,625 | 862 | |||||||||||
| Accrued expenses |
138 | 76 | 904 | 532 | ||||||||||||
| Accrued compensation and benefits |
(1,555 | ) | (557 | ) | 4,521 | 3,102 | ||||||||||
| Contingent consideration related to acquisition |
— | — | — | (320 | ) | |||||||||||
| Deferred revenue |
7,863 | 5,582 | 22,701 | 14,747 | ||||||||||||
| Other non-current liabilities |
97 | 73 | 331 | 293 | ||||||||||||
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| Net cash and cash equivalents (used in) provided by operating activities |
(2,565 | ) | 4,682 | 1,067 | 12,408 | |||||||||||
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| Cash flows from investing activities |
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| Purchases of short-term investments held to maturity |
(13,168 | ) | — | (13,168 | ) | — | ||||||||||
| Purchases of property and equipment |
(2,223 | ) | (1,154 | ) | (8,918 | ) | (6,308 | ) | ||||||||
| Proceeds from sale of property and equipment |
— | — | 9 | — | ||||||||||||
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| Net cash and cash equivalents used in investing activities |
(15,391 | ) | (1,154 | ) | (22,077 | ) | (6,308 | ) | ||||||||
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| Cash flows from financing activities |
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| Proceeds from initial public offering, net of issuance costs |
— | — | 70,064 | — | ||||||||||||
| Draws on revolving line of credit |
— | — | 10,757 | — | ||||||||||||
| Payments on revolving line of credit |
— | — | (5,000 | ) | — | |||||||||||
| Proceeds from notes payable borrowing |
— | 4,535 | 1,465 | 4,535 | ||||||||||||
| Repayment of notes payable |
— | (239 | ) | (7,447 | ) | (1,074 | ) | |||||||||
| Proceeds from exercises of stock options |
127 | 24 | 699 | 108 | ||||||||||||
| Proceeds from issuance of common stock (excluding IPO) |
— | — | 68 | — | ||||||||||||
| Repurchases of common stock |
— | (6 | ) | — | (599 | ) | ||||||||||
| Payments of contingent consideration |
(311 | ) | (378 | ) | (311 | ) | (2,078 | ) | ||||||||
| Payments on financing and capital lease obligations |
(887 | ) | (745 | ) | (3,343 | ) | (3,145 | ) | ||||||||
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| Net cash and cash equivalents provided by (used in) financing activities |
(1,071 | ) | 3,191 | 66,952 | (2,253 | ) | ||||||||||
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| Net increase (decrease) in cash and cash equivalents |
(19,027 | ) | 6,719 | 45,942 | 3,847 | |||||||||||
| Cash and cash equivalents, beginning of period |
84,672 | 12,984 | 19,703 | 15,856 | ||||||||||||
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| Cash and cash equivalents, end of year |
$ | 65,645 | $ | 19,703 | $ | 65,645 | $ | 19,703 | ||||||||
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Benefitfocus, Inc.
Reconciliation of GAAP to Non-GAAP Measures
For the Three Months and Years Ended December 31, 2013 and 2012
(unaudited, dollars in thousands except share and per share data)
| Three Months December 31, | Year Ended December 31, | |||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| (Restated) | (Restated) | |||||||||||||||
| Reconciliation from Gross Profit to Adjusted Gross Profit: |
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| Gross profit |
$ | 10,783 | $ | 10,327 | $ | 42,341 | $ | 37,339 | ||||||||
| Depreciation |
1,186 | 1,053 | 4,257 | 4,224 | ||||||||||||
| Amortization of software development costs |
714 | 485 | 2,618 | 3,149 | ||||||||||||
| Amortization of acquired intangible assets |
58 | 64 | 245 | 254 | ||||||||||||
| Stock-based compensation expense |
86 | 69 | 274 | 195 | ||||||||||||
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| Adjusted gross profit |
$ | 12,827 | $ | 11,998 | $ | 49,735 | $ | 45,161 | ||||||||
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| Reconciliation from Operating Loss to Non-GAAP Operating Loss: |
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| Operating loss |
$ | (7,691 | ) | $ | (1,491 | ) | $ | (28,194 | ) | $ | (12,802 | ) | ||||
| Amortization of acquired intangible assets |
76 | 84 | 323 | 335 | ||||||||||||
| Stock-based compensation expense |
381 | 248 | 1,202 | 712 | ||||||||||||
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| Total net adjustments |
$ | 457 | $ | 332 | $ | 1,525 | $ | 1,047 | ||||||||
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| Non-GAAP operating loss |
$ | (7,234 | ) | $ | (1,159 | ) | $ | (26,669 | ) | $ | (11,755 | ) | ||||
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| Reconciliation from Net Loss to Adjusted EBITDA: |
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| Net loss |
$ | (8,282 | ) | $ | (2,029 | ) | $ | (30,361 | ) | $ | (14,873 | ) | ||||
| Depreciation |
1,456 | 1,225 | 5,231 | 5,076 | ||||||||||||
| Amortization of software development costs |
714 | 485 | 2,618 | 3,149 | ||||||||||||
| Amortization of acquired intangible assets |
76 | 84 | 323 | 335 | ||||||||||||
| Interest income |
(15 | ) | (12 | ) | (46 | ) | (53 | ) | ||||||||
| Interest expense |
552 | 507 | 2,149 | 1,976 | ||||||||||||
| Income tax (benefit) expense |
(12 | ) | 35 | (31 | ) | 84 | ||||||||||
| Stock-based compensation expense |
381 | 248 | 1,202 | 712 | ||||||||||||
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| Total net adjustments |
$ | 3,152 | $ | 2,572 | $ | 11,446 | $ | 11,279 | ||||||||
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| Adjusted EBITDA |
$ | (5,130 | ) | $ | 543 | $ | (18,915 | ) | $ | (3,594 | ) | |||||
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| Reconciliation from Net Loss to Non-GAAP Net Loss: |
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| Net loss |
$ | (8,282 | ) | $ | (2,029 | ) | $ | (30,361 | ) | $ | (14,873 | ) | ||||
| Amortization of acquired intangible assets |
76 | 84 | 323 | 335 | ||||||||||||
| Stock-based compensation expense |
381 | 248 | 1,202 | 712 | ||||||||||||
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| Total net adjustments |
457 | 332 | 1,525 | 1,047 | ||||||||||||
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| Non-GAAP net loss |
(7,825 | ) | (1,697 | ) | (28,836 | ) | (13,826 | ) | ||||||||
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| Calculation of Non-GAAP Earnings Per Share: |
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| Non-GAAP net loss |
$ | (7,825 | ) | $ | (1,697 | ) | $ | (28,836 | ) | $ | (13,826 | ) | ||||
| Weighted average shares outstanding - basic and diluted |
24,474,566 | 4,842,205 | 10,144,243 | 4,812,632 | ||||||||||||
| Additional weighted average shares giving effect to conversion of convertible preferred stock at the beginning of the period |
— | 16,496,860 | 12,022,369 | 16,496,860 | ||||||||||||
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| Shares used in computing non-GAAP net loss per share - basic and diluted |
24,474,566 | 21,339,065 | 22,166,612 | 21,309,492 | ||||||||||||
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| Non-GAAP net loss per common share - basic and diluted |
$ | (0.32 | ) | $ | (0.08 | ) | $ | (1.30 | ) | $ | (0.65 | ) | ||||
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