Benefitfocus Announces Third Quarter 2015 Financial Results

Total Revenue of $45.4 Million Grew 33% Year-Over-Year 
Signed the Largest Employer Transaction in Company History  
Large Employer Customer Count Grows to Over 700

Charleston, S.C. – November 4, 2015 – Benefitfocus, Inc. (NASDAQ: BNFT), a leading provider of cloud- based benefits software solutions, today announced its third quarter 2015 financial results.

"Benefitfocus reported record third quarter financial results that exceeded expectations from both a revenue and profitability perspective," said Shawn Jenkins, Chief Executive Officer of Benefitfocus. "We experienced strong customer activity in both our carrier business and employer business resulting in the best quarter in the company's history. In addition, once again our software services revenue retention rate was over 95 percent."

Jenkins added, "We are also pleased to announce we recently signed the largest employer transaction in the company's history, which serves as a significant testament to the value the Benefitfocus Platform brings to our customers. We remain focused on delivering a best-in-class cloud-based benefits management solution to our customers and we are confident that our expanding product portfolio and industry leadership puts us in an excellent position to capitalize on this multi-billion dollar market opportunity."

 

Third Quarter 2015 Financial Highlights

Revenue

  • Total revenue was $45.4 million, an increase of 33% compared to the third quarter of 2014.
  • Software services revenue was $39.3 million, an increase of 28% compared to the third quarter of 2014. 
  • Professional services revenue was $6.1 million, an increase of 74% compared to the third quarter of 2014. 
  • Employer revenue was $22.8 million, an increase of 53% compared to the third quarter of 2014.
  • Insurance carrier revenue was $22.6 million, an increase of 17% compared to the third quarter of 2014.

Non-GAAP Net Loss and Adjusted EBITDA

  • Non-GAAP net loss was ($13.2) million, compared to ($16.9) million in the third quarter of 2014. Non-GAAP net loss per share was ($0.46), based on 28.8 million basic and diluted weighted average common shares outstanding, compared to ($0.66) for the third quarter of 2014, based on 25.5 million basic and diluted weighted average common shares outstanding.
  • Adjusted EBITDA was ($8.8) million, compared to ($13.5) million in the third quarter of 2014.
  • See important disclosures about non-GAAP measures, and a reconciliation of them to GAAP, below.

Balance Sheet and Cash Flow

  • Cash, cash equivalents and marketable securities at September 30, 2015 totaled $85.2 million, compared to $88.5 million at the end of the second quarter of 2015.
Third Quarter and Recent Business Highlights
  • Ended the quarter with 703 large employer customers, up from 540 at the end of the year ago period and 662 at the end of the second quarter of 2015, and 55 insurance carrier customers, up from 44 at the end of the year ago period and 52 at the end of the second quarter of 2015.
  • New employer customer relationships added during the quarter include Flowers Foods, Ubisoft Entertainment, Potash Corporation, Sargento Foods and Steve Madden.
  • Announced the launch of the Autumn Software Release, which includes several new platform configurations and feature enhancements as well as the general availability of BENEFITFOCUS® Core Analytics. We expect the latest release to improve the user experience and simplify the open enrollment process for Benefitfocus' employer and insurance carrier customers.
  • Introduced BENEFITFOCUS® ACA Management & Reporting and have received certification as an approved transmitter, allowing us to electronically file required ACA compliance documents with the Internal Revenue Service on behalf of our customers.
  • Announced a $46 million, three-and-a-half year, multi-product agreement to provide benefits eligibility and enrollment services to the North Carolina State Health Plan's more than 500,000 active and retired members. The agreement includes the option to renew for two additional years in one-year increments and as part of the relationship Benefitfocus will deploy BENEFITFOCUS® Marketplace, BENEFITFOCUS® Benefits Service Center and BENEFITFOCUS® ACA Management & Reporting.        
Business Outlook

Based on information available as of November 4, 2015, Benefitfocus is providing guidance for the fourth quarter and updating full year 2015 as indicated below.

Fourth Quarter 2015:

  • Total revenue is expected to be in the range of $51.2 million to $52.2 million.
  • Non-GAAP net loss is expected to be in the range of ($13.7) million to ($13.2) million, or ($0.47) to ($0.46) per share, based on 29.0 million basic and diluted weighted average common shares outstanding.
  • Adjusted EBITDA is expected to be in the range of ($8.2) million to ($7.7) million.

Full Year 2015:

  • Total revenue is expected to be in the range of $182.0 million to $183.0 million.
  • Non-GAAP net loss is expected to be in the range of ($55.0) million to ($54.5) million, or ($1.94) to ($1.93) per share, based on 28.3 million basic and diluted weighted average common shares outstanding.
  • Adjusted EBITDA is expected to be in the range of ($35.5) million to ($35.0) million.
Conference Call Details:

In conjunction with this announcement, Benefitfocus will host a conference call today, November 4, 2015 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 61980950. 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 November 11, 2015.

Please click here to view financial tables.

About Benefitfocus

Benefitfocus, Inc. (NASDAQ:BNFT) is a leading provider of cloud-based benefits software solutions for consumers, employers, insurance carriers and brokers. Benefitfocus has served more than 25 million consumers on its platform, which consists of an integrated portfolio of products and services enabling clients to more efficiently shop, enroll, manage and exchange benefits information. With a user-friendly interface and consumer-centric design, theBenefitfocus platform provides one place for consumers to access all their benefits. Benefitfocus solutions support the administration of all types of benefits, including core medical, dental and other voluntary benefits plans, as well as wellness programs. For more information, visit www.benefitfocus.com.

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. 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, amortization of acquisition-related intangible assets and offering costs expensed.  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. 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: 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; our ability to maintain our culture and recruit and retain qualified personnel; privacy, security and other risks associated with our business; and the other risk factors set forth from time to time in our SECfilings, 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. Benefitfocusassumes no obligation and does not intend to update these forward-looking statements, except as required by law.

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