Safeguard Scientifics Announces First Quarter 2018 Financial Results
"The growth-stage, technology-driven businesses in Safeguard's portfolio continue to demonstrate revenue growth and achieve critical operational and strategic milestones," said
2018 First quarter Highlights
- For the three months ended
March 31, 2018 , Safeguard's net loss was$6.2 million , or$0.30 per share, compared with net loss of$22.1 million , or$1.08 per share, for the same period in 2017. - Subsequent to the end of the quarter, the Company announced a series of management changes intended to streamline the Company's organizational structure and reduce operating costs, including the appointment of
Brian J. Sisko as President and Chief Executive Officer, effectiveJuly 1 , andDavid Kille as Chief Financial Officer, effectiveJune 1 . In connection with this, the roles of Chief Operating Officer and Corporate Controller have been eliminated. - The management changes are part of aggressive cost-reduction initiatives that are expected to trim annual operating expenses to between
$8 million and$9 million , excluding interest, depreciation, severance and stock-based compensation, compared to approximately$15.1 million in 2017. - Partner Company Spongecell agreed to merge with privately held Flashtalking, a global platform for digital advertising management and analysis; Safeguard now holds a 10% equity position in Flashtalking.
Nexxt, Inc. , formerly Beyond.com, repaid a$10.5 million note received in connection with the Company's sale of its interests back toNexxt for$26.0 million inMarch 2017 .- Deployed
$4.0 million in follow-on funding to support seven existing Partner Companies.
AGGREGATE PARTNER COMPANY REVENUE
For full-year 2018, aggregate
CHANGE IN STRATEGY AND OPERATIONS
On
"We remain committed to supporting the needs of our existing Partner Companies and continue to maintain a deep belief in their underlying value proposition," Zarrilli said. "We are encouraged by the market interest in our portfolio and are confident that the actions we are taking will deliver enhanced value for all Safeguard shareholders."
PARTNER COMPANY HIGHLIGHTS
This section summarizes significant accomplishments by Safeguard's Partner Companies during the first quarter of 2018. For more details on milestones achieved during this period, please visit www.safeguard.com/PartnerNews.
~ Product Launches / Regulatory Approvals ~
Zipnosis achieved HITRUST CSF Certified status for information security for its application and workstations. This certification means the Zipnosis telemedicine platform has undergone rigorous testing to ensure that healthcare industry-defined benchmarks are met for managing risk and sensitive, private health information and patient records.
~ Major Customer Wins / Strategic Partnerships ~
Flashtalking said its strategic partnership with
Trice Medical reports that
Zipnosis is now collaborating with the
~ Industry Awards / Certifications ~
~ Other Milestones ~
Propeller Health and peer-reviewed healthcare journal, Health Affairs, published results from a cross-sector research project in
Trice Medical has promoted
Zipnosis has promoted Dr.
PARTNER COMPANY HOLDINGS AT
Partner Company Revenue Stages |
|||
Development Stage
|
Initial Revenue Stage
|
Expansion Stage
|
High Traction Stage
|
Partner Companies |
Stage |
Category |
Acquisition |
Primary |
Carrying (in millions) |
Cost (in millions) |
|
High Traction |
Healthcare |
2006 |
40% |
|
|
|
Expansion |
Healthcare |
2016 |
25% |
3.6 |
9.7 |
|
Expansion |
Other |
2013 |
29% |
7.2 |
22.1 |
Brickwork |
Initial Revenue |
Digital Media |
2016 |
20% |
3.8 |
4.6 |
|
Initial Revenue |
Other |
2015 |
31% |
7.2 |
13.3 |
CloudMine |
Initial Revenue |
Healthcare |
2015 |
47% |
5.0 |
10.0 |
|
Expansion |
Digital Media |
2013 |
41% |
8.3 |
16.3 |
Flashtalking |
High Traction |
Digital Media |
2018 |
10% |
11.2 |
19.2 |
|
Initial Revenue |
Digital Media |
2011 |
26% |
- |
5.1 |
|
Initial Revenue |
Healthcare |
2014 |
40% |
0.5 |
20.5 |
Lumesis |
Expansion |
Financial Services |
2012 |
44% |
1.6 |
6.3 |
|
High Traction |
Digital Media |
2009 |
20.5% |
3.5 |
25.5 |
meQuilibrium |
Initial Revenue |
Healthcare |
2015 |
36% |
4.9 |
10.5 |
|
Initial Revenue |
Healthcare |
2016 |
32% |
3.4 |
4.5 |
|
High` Traction |
Healthcare |
2011 |
32% |
2.6 |
25.5 |
|
Expansion |
Healthcare |
2011 |
29% |
8.5 |
12.6 |
|
Initial Revenue |
Healthcare |
2014 |
24% |
5.9 |
14.0 |
QuanticMind |
Expansion |
Digital Media |
2015 |
25% |
6.6 |
11.5 |
Sonobi |
Expansion |
Digital Media |
2015 |
22% |
6.4 |
9.4 |
|
Expansion |
Healthcare |
2014 |
20% |
6.3 |
15.6 |
T-REX |
Initial Revenue |
Financial Services |
2016 |
21% |
4.8 |
6.0 |
|
Expansion |
Financial Services |
2014 |
24% |
8.4 |
14.5 |
Trice Medical |
Initial Revenue |
Healthcare |
2014 |
25% |
3.1 |
10.2 |
|
Expansion |
Digital Media |
2014 |
38% |
7.2 |
14.5 |
Zipnosis |
Initial Revenue |
Healthcare |
2015 |
25% |
3.3 |
7.0 |
TOTAL: |
|
|
CONFERENCE CALL AND WEBCAST DETAILS
Please call 10-15 minutes prior to the call to register.
Date:
Time:
Live Number: 866-393-4306 // (International) 734-385-2616
Replay Number: 855-859-2056 // (International) 404-537-3406
Access Code: 3885618
Speakers: President and Chief Executive Officer,
Format: Discussion of first quarter 2018 financial results followed by Q&A.
Replay will be available through
About
Historically,
Forward-looking Statements
Except for the historical information and discussions contained herein, statements contained in this release may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Our forward-looking statements are subject to risks and uncertainties. Forward-looking statements include, but are not limited to, statements regarding Safeguard's initiatives taken or contemplated to enhance and unlock value for all of its stockholders, Safeguard's efforts to execute on and implement its strategy to streamline its organizational structure, reduce its operating costs, pursue monetization opportunities for Partner Companies and maximize the net proceeds distributable to its shareholders, Safeguard's ability to create, unlock, enhance and maximize shareholder value, Safeguard's ability to have a smooth transition to a new management team, the timing of Safeguard's management succession plan and its effect on driving increased organizational effectiveness and efficiencies, the ability of the new management team to execute Safeguard's strategy, the availability of, the timing of, and the proceeds that may ultimately be derived from the monetization of Partner Companies, Safeguard's projections regarding the reduction in its ongoing operating expenses, Safeguard's projections regarding annualized operating expenses and expected severance expenses, monetization opportunities for Partner Company Interests, and the amount of net proceeds from the monetization of Partner Company Interests that are ultimately distributable to Safeguard shareholders after satisfying Safeguard's debt obligations and working capital needs and the timing of such distributions. Such forward-looking statements are not guarantees of future operational or financial performance and are based on current expectations that involve a number of uncertainties, risks and assumptions that are difficult to predict. Therefore, actual outcomes and/or results may differ materially from those expressed or implied by such forward-looking statements. The risks and uncertainties that could cause actual results to differ materially include, among others, our ability to make good decisions about the monetization of our Partner Companies for maximum value or at all and distributions to our shareholders, our ability to successfully execute on our strategy to streamline our organizational structure and align our cost structure to increase shareholder value, whether our strategy will better position us to focus our resources on the highest-return opportunities and deliver enhanced shareholder value, the ongoing support of our existing Partner Companies, the fact that our Partner Companies may vary from period to period, challenges to achieving liquidity from our partner company holdings, fluctuations in the market prices of our publicly traded partner company holdings, competition, our inability to obtain maximum value for our partner company holdings, our ability to attract and retain qualified employees, market valuations in sectors in which our Partner Companies operate, our inability to control our Partner Companies, our need to manage our assets to avoid registration under the Investment Company Act of 1940, risks, disruption, costs and uncertainty caused by or related to the actions of activist shareholders, including that if individuals are elected to our Board with a specific agenda, it may adversely affect our ability to effectively implement our business strategy and create value for our shareholders and perceived uncertainties as to our future direction as a result of potential changes to the composition of our Board may lead to the perception of a change in the direction of our business, instability or a lack of continuity that may adversely affect our business, and risks associated with our Partner Companies, including the fact that most of our Partner Companies have a limited operating history and a history of operating losses, face intense competition and may never be profitable, the effect of economic conditions in the business sectors in which Safeguard's Partner Companies operate, and other uncertainties described in our filings with the
SAFEGUARD CONTACT:
John E. Shave III
Senior Vice President, Investor Relations and Corporate Communications
(610) 975.4952
[email protected]
MEDIA CONTACT:
|
|||||||||
Condensed Consolidated Balance Sheets |
|||||||||
(in thousands) |
|||||||||
|
|
||||||||
Assets |
|||||||||
Cash, cash equivalents and marketable securities |
$ |
34,338 |
$ |
25,203 |
|||||
Other current assets |
2,856 |
8,405 |
|||||||
Total current assets |
37,194 |
33,608 |
|||||||
Ownership interests in and advances to partner companies |
132,277 |
134,691 |
|||||||
Long-term restricted cash equivalents |
— |
6,336 |
|||||||
Other assets |
1,751 |
1,829 |
|||||||
Total Assets |
$ |
171,222 |
$ |
176,464 |
|||||
Liabilities and Equity |
|||||||||
Other current liabilities |
$ |
5,481 |
$ |
5,327 |
|||||
Convertible senior debentures - current |
40,829 |
40,485 |
|||||||
Total current liabilities |
46,310 |
45,812 |
|||||||
Other long-term liabilities |
3,341 |
3,535 |
|||||||
Credit facility |
45,736 |
45,321 |
|||||||
Total equity |
75,835 |
81,796 |
|||||||
Total Liabilities and Equity |
$ |
171,222 |
$ |
176,464 |
|||||
|
||||||||
Condensed Consolidated Statements of Operations |
||||||||
(in thousands, except per share amounts) |
||||||||
Three Months Ended March 31, |
||||||||
2018 |
2017 |
|||||||
Operating expenses |
$ |
5,589 |
$ |
4,947 |
||||
Operating loss |
(5,589) |
(4,947) |
||||||
Other income (loss) |
(1,435) |
249 |
||||||
Interest, net |
(1,892) |
(397) |
||||||
Equity income (loss) |
2,746 |
(17,002) |
||||||
Net loss before income taxes |
(6,170) |
(22,097) |
||||||
Income tax benefit (expense) |
— |
— |
||||||
Net loss |
$ |
(6,170) |
$ |
(22,097) |
||||
Net loss per share: |
||||||||
Basic |
$ |
(0.30) |
$ |
(1.08) |
||||
Diluted |
$ |
(0.30) |
$ |
(1.08) |
||||
Weighted average shares used in computing loss per share: |
||||||||
Basic |
20,506 |
20,380 |
||||||
Diluted |
20,506 |
20,380 |
||||||
|
||||||||||||||||
Partner Company Financial Data |
||||||||||||||||
(in thousands) |
||||||||||||||||
Additional Financial Information |
||||||||||||||||
To assist investors in understanding Safeguard and our 25 partner companies as of |
||||||||||||||||
|
||||||||||||||||
Carrying |
Cost |
|||||||||||||||
Safeguard Carrying Value and Cost |
||||||||||||||||
Equity method partner companies |
$ |
116,395 |
$ |
305,568 |
||||||||||||
Other partner company |
11,244 |
19,150 |
||||||||||||||
Other holdings |
4,638 |
37,705 |
||||||||||||||
$ |
132,277 |
$ |
362,423 |
|||||||||||||
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