Forian Inc. Announces Third Quarter 2024 Financial Results
Forian Inc. (FORA) reported Q3 2024 financial results showing revenue of $4.7 million, a 12% decrease from $5.3 million in the prior year. The company recorded a net loss of $0.2 million ($0.01 per share), compared to net income of $4.3 million ($0.13 per share) in Q3 2023. Adjusted EBITDA decreased to $0.2 million from $1.1 million year-over-year. Cash and equivalents stood at $49.4 million. Notable events include the acquisition of Kyber Data Science and the redemption of 3.5% Convertible Notes worth over $15 million.
Forian Inc. (FORA) ha riportato i risultati finanziari del terzo trimestre del 2024 mostrando ricavi di $4,7 milioni, un calo del 12% rispetto ai $5,3 milioni dell'anno precedente. L'azienda ha registrato una perdita netta di $0,2 milioni ($0,01 per azione), rispetto a un reddito netto di $4,3 milioni ($0,13 per azione) nel terzo trimestre del 2023. L'EBITDA rettificato è diminuito a $0,2 milioni da $1,1 milioni su base annua. Liquidità e equivalenti ammontavano a $49,4 milioni. Eventi degni di nota includono l'acquisizione di Kyber Data Science e il riscatto di obbligazioni convertibili del 3,5% per un valore superiore a $15 milioni.
Forian Inc. (FORA) informó los resultados financieros del tercer trimestre de 2024, mostrando ingresos de $4.7 millones, una disminución del 12% en comparación con $5.3 millones del año anterior. La compañía registró una pérdida neta de $0.2 millones ($0.01 por acción), en comparación con un ingreso neto de $4.3 millones ($0.13 por acción) en el tercer trimestre de 2023. El EBITDA ajustado disminuyó a $0.2 millones de $1.1 millones año con año. El efectivo y equivalentes se situaron en $49.4 millones. Entre los eventos notables se incluyen la adquisición de Kyber Data Science y el rescate de Notas Convertibles del 3.5% por un valor superior a $15 millones.
포리안 인크. (FORA)는 2024년 3분기 재무 결과를 발표하며 $4.7 million의 매출을 보고했습니다. 이는 전년 동기 $5.3 million에서 12% 감소한 수치입니다. 회사는 $0.2 million의 순손실 ($0.01 per 주식)을 기록했으며, 이는 2023년 3분기 순이익 $4.3 million ($0.13 per 주식)에 비해 하락한 것입니다. 조정 EBITDA는 전년 대비 $0.2 million에서 $1.1 million으로 감소했습니다. 현금과 현금성 자산은 $49.4 million에 달했습니다. 주요 사건으로는 Kyber Data Science의 인수와 3.5% 전환사채의 상환이 있었으며, 이는 $15 million 이상에 해당합니다.
Forian Inc. (FORA) a publié ses résultats financiers du troisième trimestre 2024, montrant des revenus de 4,7 millions de dollars, soit une diminution de 12 % par rapport à 5,3 millions de dollars l'année précédente. L'entreprise a enregistré une perte nette de 0,2 million de dollars (0,01 $ par action), contre un bénéfice net de 4,3 millions de dollars (0,13 $ par action) au troisième trimestre 2023. L'EBITDA ajusté a diminué à 0,2 million de dollars contre 1,1 million de dollars d'une année sur l'autre. La liquidité et les équivalents ont atteint 49,4 millions de dollars. Parmi les événements notables figurent l'acquisition de Kyber Data Science et le rachat d'Obligations Convertibles à 3,5 % d'une valeur de plus de 15 millions de dollars.
Forian Inc. (FORA) berichtete über die finanziellen Ergebnisse des dritten Quartals 2024 und vermeldete Einnahmen von 4,7 Millionen USD, was einem Rückgang von 12 % gegenüber 5,3 Millionen USD im Vorjahr entspricht. Das Unternehmen verzeichnete einen Nettoverlust von 0,2 Millionen USD (0,01 USD pro Aktie) im Vergleich zu einem Nettogewinn von 4,3 Millionen USD (0,13 USD pro Aktie) im dritten Quartal 2023. Das bereinigte EBITDA sank auf 0,2 Millionen USD von 1,1 Millionen USD im Vergleich zum Vorjahr. Zahlungsmittel und Zahlungsmitteläquivalente betrugen 49,4 Millionen USD. Zu den bemerkenswerten Ereignissen gehören die Übernahme von Kyber Data Science und die Rücknahme von 3,5 % Wandelanleihen im Wert von über 15 Millionen USD.
- Strong cash position of $49.4 million
- Strategic acquisition of Kyber Data Science expanding market reach
- Debt reduction through redemption of $15 million in convertible notes
- 12% year-over-year revenue decline to $4.7 million
- Net loss of $0.2 million compared to $4.3 million profit in prior year
- 83% decrease in Adjusted EBITDA to $0.2 million
Insights
The Q3 2024 results reveal concerning trends with
NEWTOWN, Pa., Nov. 13, 2024 (GLOBE NEWSWIRE) -- NEWTOWN, Pa. Forian Inc. (Nasdaq: FORA), a leading provider of data science driven information and analytics solutions to the life science, healthcare and financial services industries, today announced results for the quarter ended September 30, 2024.
“While this quarter’s revenue remained steady, our team’s commitment to driving long-term value has resulted in progress in our strategic vision. The addition of Kyber Data Science enhances the momentum we are building to position us well to capitalize on emerging opportunities and deliver sustained success for our stakeholders,” stated Max Wygod, Chairman and Chief Executive Officer of Forian.
Third Quarter 2024 Financial Results
- Forian delivered the following results for the third quarter of 2024:
| Three Months Ended September 30, | Period-over- | ||||||||||||
| 2024 | 2023 | Period % | |||||||||||
| Unaudited | Unaudited | Change | |||||||||||
| Revenue | $ | 4,686,312 | $ | 5,348,469 | -12 | % | |||||||
| (Loss) income from continuing operations, net of tax | $ | (204,907 | ) | $ | 5,453,643 | -104 | % | ||||||
| (Loss) income from discontinued operations, net of tax | $ | - | $ | (1,111,552 | ) | 100 | % | ||||||
| Net (loss) income | $ | (204,907 | ) | $ | 4,342,091 | -105 | % | ||||||
| (Loss) income from continuing operations, net of tax per share - diluted | $ | (0.01 | ) | $ | 0.16 | -106 | % | ||||||
| (Loss) income from discontinued operations, net of tax per share - diluted | $ | - | $ | (0.03 | ) | - | |||||||
| (Loss) income per share - diluted | $ | (0.01 | ) | $ | 0.13 | -108 | % | ||||||
| Adjusted EBITDA (a non-GAAP financial measure defined below) | $ | 185,916 | $ | 1,072,147 | -83 | % | |||||||
- Revenue for the quarter was
$4.7 million , a$0.6 decrease from$5.3 million in the prior year - Net loss from continuing operations for the quarter was
$0.2 million , or$0.01 per share, compared to net income of$4.3 million , or$0.14 per share, in the prior year - Adjusted EBITDA for the quarter was
$0.2 million , compared to$1.1 million in the prior year - Cash, cash equivalents and marketable securities at September 30, 2024 totaled
$49.4 million
Highlights
- Acquired Kyber Data Science on October 31, 2024, adding a portfolio of solutions and machine learning-empowered analytics offerings to Forian’s offering suite and expanding the markets served
- Redeemed
3.5% Convertible Notes and outstanding equity of over$15 million and$0.10 million , respectively, in October and November 2024
This release uses non-GAAP financial measures that are adjusted for the impact of various U.S. GAAP items. See the section titled “Non-GAAP Financial Measures” and the table entitled “Reconciliation of U.S. GAAP to Non-GAAP Financial Measures” below for details.
Quarterly Conference Call and Webcast
Forian will host a conference call and webcast at 4:30 p.m. ET on November 13, 2024 to discuss its financial results with the investment community. To register for the conference call, click here. The webcast will be available live at https://edge.media-server.com/mmc/p/rj92ayah. This information is also available on our website at www.forian.com/investors. To be included on the Company’s email distribution list, please sign up at www.forian.com/investors.
About Forian
Forian provides a unique suite of data management capabilities and proprietary information and analytics solutions to optimize and measure operational, clinical and financial performance for customers within the traditional and emerging life sciences and healthcare payer and provider segments and, with its recent acquisition of Kyber Data Science, the financial services industry. Forian has industry leading expertise in acquiring, integrating, normalizing and commercializing large scale healthcare data assets. Forian’s information products overlay sophisticated data management and data science capabilities on top of a comprehensive clinical data lake to identify unique relationships, create distinctive information assets and generate proprietary insights. For more information, please visit the Company’s website at www.forian.com.
Cautionary Statements Regarding Forward-Looking Statements
This release contains “forward-looking statements” within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. In this context, forward-looking statements often address expected future business and financial performance and financial condition, which may include GAAP and non-GAAP financial measures, and often contain words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “see,” “will,” “would,” “target,” similar expressions and variations or negatives of these words. Forward-looking statements by their nature address matters that involve risks and uncertainties, many of which are beyond our control and are not guarantees of future results, such as statements about future financial and operating results, company strategy and intended product offerings and market positioning. These and other forward-looking statements are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed in any forward-looking statements. Accordingly, there are or will be important factors that could cause actual results to differ materially from those indicated in such statements and, therefore, you should not place undue reliance on any such statements and caution must be exercised in relying on forward-looking statements. Factors that could cause actual results to differ include, but are not limited to, those risks and uncertainties associated with operations, strategy and goals, our ability to execute on our strategy and the additional risks and uncertainties set forth more fully under the caption “Risk Factors” in Forian’s Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on March 29, 2024, and elsewhere in Forian’s filings and reports with the SEC. Forward-looking statements contained in this release are made as of the date hereof, and we undertake no duty to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable law.
Media and Investor Contact:
forian.com/investors
ir@forian.com
267-225-6263
SOURCE: Forian Inc.
| FORIAN INC. | ||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
| September 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| (UNAUDITED) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 2,707,688 | $ | 6,042,986 | ||||
| Marketable securities | 46,650,200 | 42,296,589 | ||||||
| Accounts receivable, net | 3,546,582 | 2,572,931 | ||||||
| Proceeds receivable from sale of discontinued operation, net | - | 1,645,954 | ||||||
| Contract assets | 875,032 | 1,126,713 | ||||||
| Prepaid expenses | 697,780 | 1,077,233 | ||||||
| Other assets | 1,349,364 | 2,515,509 | ||||||
| Total current assets | 55,826,646 | 57,277,915 | ||||||
| Property and equipment, net | 52,680 | 76,085 | ||||||
| Right of use assets, net | 41,244 | 10,664 | ||||||
| Deposits and other assets | 1,591,420 | 1,523,948 | ||||||
| Total assets | $ | 57,511,990 | $ | 58,888,612 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 843,829 | $ | 161,590 | ||||
| Accrued expenses | 2,618,108 | 4,252,257 | ||||||
| Short-term operating lease liabilities | 23,146 | 10,664 | ||||||
| Warrant liability | - | 563 | ||||||
| Deferred revenues | 2,243,719 | 2,413,551 | ||||||
| Convertible notes payable, net of debt issuance costs ( | 24,370,509 | |||||||
| Total current liabilities | 30,099,311 | 6,838,625 | ||||||
| Long-term liabilities: | ||||||||
| Other liabilities | 518,098 | 1,000,000 | ||||||
| Convertible notes payable, net of debt issuance costs ( | - | 24,870,181 | ||||||
| Total long-term liabilities | 518,098 | 25,870,181 | ||||||
| Total liabilities | 30,617,409 | 32,708,806 | ||||||
| Commitments and contingencies | ||||||||
| Stockholders' equity: | ||||||||
| Preferred Stock; par value | - | - | ||||||
| Common Stock; par value | 31,093 | 30,920 | ||||||
| Additional paid-in capital | 78,519,683 | 73,834,300 | ||||||
| Accumulated deficit | (51,656,195 | ) | (47,685,414 | ) | ||||
| Total stockholders' equity | 26,894,581 | 26,179,806 | ||||||
| Total liabilities and stockholders' equity | $ | 57,511,990 | $ | 58,888,612 | ||||
| FORIAN INC. | |||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||
| (UNAUDITED) | |||||||||||||||
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||
| Revenue | $ | 4,686,312 | $ | 5,348,469 | $ | 14,340,791 | $ | 15,112,398 | |||||||
| Costs and Expenses: | |||||||||||||||
| Cost of revenue | 1,402,920 | 1,362,555 | 4,913,195 | 3,891,482 | |||||||||||
| Research and development | 291,962 | 264,781 | 989,052 | 1,100,657 | |||||||||||
| Sales and marketing | 956,983 | 1,313,212 | 3,029,783 | 3,746,731 | |||||||||||
| General and administrative | 2,822,253 | 2,887,771 | 9,771,343 | 9,641,536 | |||||||||||
| Separation expenses | - | - | - | 599,832 | |||||||||||
| Depreciation and amortization | 6,629 | 10,598 | 23,405 | 64,285 | |||||||||||
| Litigation settlements and related expenses | 1,394 | 316,820 | 1,152,670 | 751,480 | |||||||||||
| Total costs and expenses | 5,482,141 | 6,155,737 | 19,879,448 | 19,796,003 | |||||||||||
| Operating Loss From Continuing Operations | (795,829 | ) | (807,268 | ) | (5,538,657 | ) | (4,683,605 | ) | |||||||
| Other Income (Expense): | |||||||||||||||
| Change in fair value of warrant liability | 20 | 1,594 | 563 | 4,088 | |||||||||||
| Interest and investment income | 658,339 | 646,832 | 1,951,812 | 1,666,786 | |||||||||||
| Gain on sale of investment | 32,082 | 5,805,858 | 80,694 | 5,805,858 | |||||||||||
| Interest expense | (195,415 | ) | (211,333 | ) | (587,684 | ) | (630,547 | ) | |||||||
| Gain on debt redemption | - | 111,151 | 137,356 | 111,151 | |||||||||||
| Total other income, net | 495,026 | 6,354,102 | 1,582,741 | 6,957,336 | |||||||||||
| (Loss) income from continuing operations before income taxes | (300,803 | ) | 5,546,834 | (3,955,916 | ) | 2,273,731 | |||||||||
| Income taxes | 95,896 | (93,191 | ) | (14,865 | ) | (159,287 | ) | ||||||||
| (Loss) income from continuing operations, net of tax | (204,907 | ) | 5,453,643 | (3,970,781 | ) | 2,114,444 | |||||||||
| Loss from discontinued operations | - | - | - | (94,427 | ) | ||||||||||
| Gain on sale of discontinued operations | - | - | - | 11,531,849 | |||||||||||
| Income tax effect on discontinued operations | - | (1,111,552 | ) | - | (3,834,122 | ) | |||||||||
| (Loss) income from discontinued operations, net of tax | - | (1,111,552 | ) | - | 7,603,300 | ||||||||||
| Net (loss) income | $ | (204,907 | ) | $ | 4,342,091 | $ | (3,970,781 | ) | $ | 9,717,744 | |||||
| Net (loss) income per share: | |||||||||||||||
| Basic | |||||||||||||||
| Continuing operations | $ | (0.01 | ) | $ | 0.17 | $ | (0.13 | ) | $ | 0.07 | |||||
| Discontinued operations | $ | - | $ | (0.03 | ) | $ | - | $ | 0.23 | ||||||
| Net (loss) income per share - basic | $ | (0.01 | ) | $ | 0.14 | $ | (0.13 | ) | $ | 0.30 | |||||
| Diluted | |||||||||||||||
| Continuing operations | $ | (0.01 | ) | $ | 0.16 | $ | (0.13 | ) | $ | 0.07 | |||||
| Discontinued operations | $ | - | $ | (0.03 | ) | $ | - | $ | 0.23 | ||||||
| Net (loss) income per share - diluted | $ | (0.01 | ) | $ | 0.13 | $ | (0.13 | ) | $ | 0.30 | |||||
| Weighted-average shares outstanding - basic | 31,098,180 | 32,459,838 | 31,064,418 | 32,397,090 | |||||||||||
| Weighted-average shares outstanding - diluted | 31,098,180 | 35,068,716 | 31,064,418 | 32,503,359 | |||||||||||
| FORIAN INC. | |||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||
| (UNAUDITED) | |||||||||
| For the Period Ended September 30, | |||||||||
| 2024 | 2023 | ||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||
| Net (loss) income | $ | (3,970,781 | ) | $ | 9,717,744 | ||||
| Less: Income from discontinued operations | - | 7,603,300 | |||||||
| (Loss) income from continuing operations | (3,970,781 | ) | 2,114,444 | ||||||
| Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities - continuing operations: | |||||||||
| Depreciation and amortization | 23,405 | 64,285 | |||||||
| Amortization on right of use asset | 16,296 | 16,750 | |||||||
| Amortization of debt issuance costs | 3,999 | 3,999 | |||||||
| Accrued interest on convertible Notes | 583,685 | 626,549 | |||||||
| Amortization of discount - proceeds from sale of discontinued operations | (20,712 | ) | (341,205 | ) | |||||
| Accretion of discount - marketable securities | (1,876,074 | ) | (1,318,083 | ) | |||||
| Gain on sale of investment | (80,694 | ) | (5,805,858 | ) | |||||
| Gain on debt redemption | (137,356 | ) | (111,151 | ) | |||||
| Allowance for credit losses | 225,000 | - | |||||||
| Stock-based compensation expense | 4,873,593 | 4,920,572 | |||||||
| Change in fair value of warrant liability | (563 | ) | (4,088 | ) | |||||
| Change in operating assets and liabilities: | |||||||||
| Accounts receivable | (1,198,651 | ) | (1,109,505 | ) | |||||
| Contract assets | 251,681 | 983,499 | |||||||
| Prepaid expenses | 379,453 | (34,542 | ) | ||||||
| Changes in lease liabilities during the period | (27,505 | ) | (16,750 | ) | |||||
| Deposits and other assets | 1,098,673 | 57,767 | |||||||
| Accounts payable | 682,239 | (56,313 | ) | ||||||
| Accrued expenses | (1,634,149 | ) | 1,224,648 | ||||||
| Deferred revenues | (169,832 | ) | 172,332 | ||||||
| Other liabilities | (488,791 | ) | - | ||||||
| Net cash (used in) provided by operating activities - continuing operations | (1,467,084 | ) | 1,387,350 | ||||||
| Net cash used in operating activities - discontinued operations | - | (59,075 | ) | ||||||
| Net cash (used in) provided by operating activities | (1,467,084 | ) | 1,328,275 | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||
| Additions to property and equipment | - | (75,493 | ) | ||||||
| Purchase of marketable securities | (133,894,613 | ) | (103,468,975 | ) | |||||
| Sale of marketable securities | 131,417,076 | 78,597,821 | |||||||
| Proceeds from sale of investment | 80,694 | 5,805,858 | |||||||
| Cash from sale of discontinued operations | 1,666,666 | 21,501,841 | |||||||
| Net cash (used in) provided by investing activities - continuing operations | (730,177 | ) | 2,361,052 | ||||||
| Net cash (used in) provided by investing activities | (730,177 | ) | 2,361,052 | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||
| Cash used to redeem convertible notes | (950,000 | ) | (960,000 | ) | |||||
| Repurchase of common stock | (74,400 | ) | |||||||
| Tax payments related to shares withheld for vested restricted stock units | (113,637 | ) | (147,991 | ) | |||||
| Net cash used in financing activities- continuing operations | (1,138,037 | ) | (1,107,991 | ) | |||||
| Net cash used in financing activities | (1,138,037 | ) | (1,107,991 | ) | |||||
| Net change in cash | (3,335,298 | ) | 2,581,336 | ||||||
| Cash and cash equivalents, beginning of period | 6,042,986 | 2,795,743 | |||||||
| Cash and cash equivalents, end of period | $ | 2,707,688 | $ | 5,377,079 | |||||
| Supplemental disclosure of cash flow information: | |||||||||
| Cash for (received) paid for taxes | $ | (1,346,108 | ) | $ | 3,276,800 | ||||
Non-GAAP Financial Measures
In this press release, we have provided certain non-GAAP measures, which we define as financial information that has not been prepared in accordance with U.S. GAAP. The non-GAAP financial measure provided herein is earnings before interest, taxes, non-cash and other items (“Adjusted EBITDA”), which should be viewed as supplemental to, and not as an alternative for, net income or loss calculated in accordance with U.S. GAAP (referred to below as “net loss”).
Adjusted EBITDA is used by our management as an additional measure of our Company’s performance for purposes of business decision-making, including developing budgets, managing expenditures and evaluating potential acquisitions or divestitures. Period-to-period comparisons of Adjusted EBITDA help our management identify additional trends in our Company’s financial results that may not be shown solely by period-to-period comparisons of net income. In addition, we may use Adjusted EBITDA in the incentive compensation programs applicable to some of our employees in order to evaluate our Company’s performance. Our management recognizes that Adjusted EBITDA has inherent limitations because of the excluded items, particularly those items that are recurring in nature. In order to compensate for those limitations, management also reviews the specific items that are excluded from Adjusted EBITDA, but included in net income, as well as trends in those items.
We believe that the presentation of Adjusted EBITDA is useful to investors in their analysis of our results for reasons similar to the reasons why our management finds it useful and because it helps facilitate investor understanding of decisions made by management in light of the performance metrics used in making those decisions. In addition, as more fully described below, we believe that providing Adjusted EBITDA, together with a reconciliation of net loss to Adjusted EBITDA, helps investors make comparisons between our Company and other companies that may have different capital structures, different effective income tax rates and tax attributes, different capitalized asset values and/or different forms of employee compensation. However, Adjusted EBITDA is not intended as a substitute for comparisons based on net loss. In making any comparisons to other companies, investors need to be aware that companies use different non-GAAP measures to evaluate their financial performance. Investors should pay close attention to the specific definition being used and to the reconciliation between such measures and the corresponding U.S. GAAP measures provided by each company under applicable SEC rules.
The following is an explanation of the items excluded by us from Adjusted EBITDA but included in net loss:
- Depreciation and Amortization. Depreciation and amortization expense is a non-cash expense relating to capital expenditures and intangible assets arising from acquisitions that are expensed on a straight-line basis over the estimated useful life of the related assets. The Company excludes depreciation and amortization expense from Adjusted EBITDA because management believes that (i) the amount of such expenses in any specific period may not directly correlate to the underlying performance of the business operations and (ii) such expenses can vary significantly between periods as a result of new acquisitions and full amortization of previously acquired tangible and intangible assets. Accordingly, management believes that this exclusion assists management and investors in making period-to-period comparisons of operating performance. Investors should note that the use of tangible and intangible assets contributed to revenue in the periods presented and will contribute to future revenue generation and should also note that such expense will recur in future periods.
- Stock-Based Compensation Expense. Stock-based compensation expense is a non-cash expense arising from the grant of stock-based awards to employees. Management believes that excluding the effect of stock-based compensation from Adjusted EBITDA assists management and investors in making period-to-period comparisons in the Company’s operating performance because (i) the amount of such expenses in any specific period may not directly correlate to the underlying performance of business operations and (ii) such expenses can vary significantly between periods as a result of the timing of grants of new stock-based awards, including grants in connection with acquisitions. Stock-based compensation expense includes certain separation expenses related to the vesting of stock options. Effective February 10, 2023, the Company’s Chief Executive Officer, President and Class II member of the Board of Directors resigned. In connection with the resignation, the Company entered into a separation agreement providing for, among other things, accelerated vesting of 106,656 unvested restricted shares of the Company common stock. Stock based compensation expense for 2023 includes
$349,832 related to the accelerated vesting of stock, which is recognized in separation expenses in the condensed consolidated statements of operations. These expenses were incurred during the three months ended March 31, 2023, and there were no additional related expenses incurred during the three months ended September 30, 2023. Management believes that excluding stock-based compensation from Adjusted EBITDA assists management and investors in making meaningful comparisons between the Company’s operating performance and the operating performance of other companies that may use different forms of employee compensation or different valuation methodologies for their stock-based compensation. Investors should note that stock-based compensation is a key incentive offered to employees whose efforts contributed to the operating results in the periods presented and are expected to contribute to operating results in future periods. Investors should also note that such expenses will recur in the future.
- Interest Expense. Interest expense is associated with the convertible notes entered into on September 1, 2021 in the amount of
$24,000,000. T he Notes are due on September 1, 2025, and accrue interest at an annual rate of3.5% . Management excludes interest expense from Adjusted EBITDA (i) because it is not directly attributable to the performance of business operations and, accordingly, its exclusion assists management and investors in making period-to-period comparisons of operating performance and (ii) to assist management and investors in making comparisons to companies with different capital structures. Investors should note that interest expense associated with the Notes will recur in future periods.
- Interest and Investment Income. Interest and Investment income is associated with the level of marketable debt securities and other interest-bearing accounts in which the Company invests. Interest and investment income can vary over time due to changes in interest rates and level of investments. Management excludes interest and investment income from Adjusted EBITDA (i) because these items are not directly attributable to the performance of business operations and, accordingly, their exclusion assists management and investors in making period-to-period comparisons of operating performance and (ii) to assist management and investors in making comparisons to companies with different capital structures. Investors should note that interest income will recur in future periods.
- Other Items. The Company engages in other activities and transactions that can impact net income (loss). In the periods reported, these other items included (i) change in fair value of warrant liability relating to warrants assumed in the acquisition of Helix; (ii) gain on sale of investment relating to the sale of a minority equity interest; and (iii) gain on debt redemption which relates to a gain on the early retirement of a portion of the convertible notes. Management excludes these other items from Adjusted EBITDA because management believes these activities or transactions are not directly attributable to the performance of business operations and, accordingly, their exclusion assists management and investors in making period-to-period comparisons of operating performance. Investors should note that some of these other items may recur in future periods.
- Severance expenses. Effective February 10, 2023, the Company’s Chief Executive Officer, President and Class II member of the Board of Directors resigned. In connection with the resignation, the Company entered into a separation agreement providing for, among other things, (i) salary continuation for twelve months and (ii) accelerated vesting of 106,656 unvested restricted shares of the Company common stock. Severance expenses for the nine months ended September 30, 2023 includes
$250,000 related to the salary continuation. Management excludes these other items from Adjusted EBITDA because management believes these costs are not recurring and not directly attributable to the performance of business operations and, accordingly, their exclusion assists management and investors in making period-to-period comparisons of operating performance. In addition, the Company records normal course of business severance expenses in the operating expense line item related to its employees’ activities.
- Litigation related expenses. Management excludes litigation expenses that are extraordinary in nature and are unrelated to the Company’s day-to-day business operations. The nature of these expenses is primarily related to direct and incremental third-party legal expenses associated with such litigation, which pertains to entities acquired in the Helix merger.
- Strategic review related expenses. Management excludes certain professional expenses that are extraordinary in nature and are unrelated to the Company’s day-to-day business operations. The nature of these expenses is primarily related to a strategic review of the Company’s operations.
- Contract termination impacts. Management excludes certain expenses that are extraordinary in nature and are unrelated to the Company’s day-to-day business operations. The nature of these expenses is primarily related to the impact of an adjustment related to the cancellation of an inbound information contract. On September 23, 2024, the Company was informed by one of its information vendors that it was exercising the right to terminate the agreement with the Company effective September 25, 2024, based on restrictions imposed by the information vendor’s upstream licensor. As a result, the Company recorded an adjustment of
$542,389 during the quarter ended September 30, 2024, representing previously recorded charges under the contract that will not be paid.
- Income tax (benefit) expense. Management excludes the income tax (benefit) expense from Adjusted EBITDA (i) because management believes that the income tax (benefit) expense is not directly attributable to the underlying performance of business operations and, accordingly, its exclusion assists management and investors in making period-to-period comparisons of operating performance and (ii) to assist management and investors in making comparisons to companies with different tax attributes.
There are limitations to using non-GAAP financial measures because non-GAAP financial measures are not prepared in accordance with U.S. GAAP and may be different from non-GAAP financial measures provided by other companies.
The non-GAAP financial measures are limited in value because they exclude certain items that may have a material impact upon our reported financial results. In addition, they are subject to inherent limitations as they reflect the exercise of judgments by management about which items are adjusted to calculate our non-GAAP financial measures. We compensate for these limitations by analyzing current and future results on a U.S. GAAP basis as well as a non-GAAP basis and also by providing U.S. GAAP measures in our public disclosures.
Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with U.S. GAAP. We encourage investors and others to review our financial information in its entirety, not to rely on any single financial measure to evaluate our business and to view our non-GAAP financial measures in conjunction with the most directly comparable U.S. GAAP financial measures.
The following table reconciles the specific items excluded from U.S. GAAP metrics in the calculation of non-GAAP metrics for the periods shown below:
| FORIAN INC. | |||||||||||||||
| RECONCILIATION OF US GAAP TO NON-GAAP FINANCIAL MEASURES | |||||||||||||||
| (UNAUDITED) | |||||||||||||||
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||
| Revenue | $ | 4,686,312 | $ | 5,348,469 | $ | 14,340,791 | $ | 15,112,398 | |||||||
| Net (loss) income from continuing operations | $ | (204,907 | ) | $ | 5,453,643 | $ | (3,970,781 | ) | $ | 2,114,444 | |||||
| Depreciation and amortization | 6,629 | 10,598 | 23,405 | 64,285 | |||||||||||
| Stock based compensation expense | 1,552,042 | 1,551,997 | 4,873,593 | 4,920,572 | |||||||||||
| Change in fair value of warrant liability | (20 | ) | (1,594 | ) | (563 | ) | (4,088 | ) | |||||||
| Interest and investment income | (658,339 | ) | (646,832 | ) | (1,951,812 | ) | (1,666,786 | ) | |||||||
| Interest expense | 195,415 | 211,333 | 587,684 | 630,547 | |||||||||||
| Gain on sale of investment | (32,082 | ) | (5,805,858 | ) | (80,694 | ) | (5,805,858 | ) | |||||||
| Gain on debt redemption | - | (111,151 | ) | (137,356 | ) | (111,151 | ) | ||||||||
| Severance expense | - | - | - | 250,000 | |||||||||||
| Litigation settlement and related expenses | 1,394 | 316,820 | 1,152,670 | 751,480 | |||||||||||
| Strategic review related expenses | (35,931 | ) | - | 399,913 | - | ||||||||||
| Impact of contract termination | (542,389 | ) | - | (542,389 | ) | - | |||||||||
| Income tax expense | (95,896 | ) | 93,191 | 14,865 | 159,287 | ||||||||||
| Adjusted EBITDA - continuing operations | $ | 185,916 | $ | 1,072,147 | $ | 368,535 | $ | 1,302,732 | |||||||
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