MTBC Reports Third Quarter 2014 Results

Company Provides 2014 Guidance

Q3 2014 Financial Results

• 104% Revenue Growth over Third Quarter of 2013
• GAAP Net Loss of $3.3 million, or ($0.35) per Share
• Non-GAAP Adjusted Net Income of ($1.6 million), or ($0.15) per Diluted Share

SOMERSET, N.J., Nov. 12, 2014 (GLOBE NEWSWIRE) -- Medical Transcription Billing, Corp. (Nasdaq:MTBC), a leading provider of proprietary, web-based electronic health records, practice management and mHealth solutions, today announced financial and operational results for the third quarter of fiscal year 2014. These results cover a period that includes 28 days prior to the completion of MTBC's initial public offering and concurrent acquisition of Omni, Practicare and CastleRock, and as such are not indicative of results that will be reported in future fiscal periods.

• Total revenue for the three months ended September 30, 2014 was $6.0 million, compared to $2.9 million in the same period last year, an increase of 104%.
• Total revenue for the nine months ended September 30, 2014 was $11.2 million, compared to $7.5 million in the same period last year, an increase of 50%.

"We are pleased with our third quarter results, which are in line with our expectations, and demonstrate that the integration and conversion to our platform is progressing well," said Mahmud Haq, MTBC's chairman and chief executive officer. "We believe we have a lot of great opportunities ahead of us and look forward to demonstrating the true power of our business model in the months and years to come."

• For the three months ended September 30, 2014, Adjusted EBITDA was ($878,000), or (14.6%) of revenue, compared to Adjusted EBITDA of $206,000, or 7.0% of revenue, in the same period last year.
• For the three months ended September 30, 2014, GAAP Net Loss was $3.3 million, or ($0.35) per share, compared to GAAP Net Loss of $0.1 million, or ($0.03) per share, in the same period last year.
• For the three months ended September 30, 2014, non-GAAP Adjusted Net Income was ($1.6 million), or ($0.15) per diluted share, compared to non-GAAP Adjusted Net Income of $0.1 million, or $0.02 per diluted share, in the same period last year.

"The third quarter of 2014 reflects just over two months of revenue and expenses for the three acquired businesses," said Bill Korn, MTBC's chief financial officer. "We expanded our offshore facilities and workforce, and have identified cost savings from right-shoring and are reducing the facility expenses of the acquired businesses, which will start to be reflected in our fourth quarter results. Our integration is going according to plan, and we are making good progress towards our long-term target of 30% EBITDA margins."

"Of the $3.3 million loss in the quarter, $3.0 million is due to expenses in three categories: post-acquisition ramp up costs, non-recurring expenses, and amortization of intangibles. First, during the third quarter, we spent approximately $430,000 ramping up our offshore operations by hiring and training new employees to support the integration of the acquired accounts. Second, the loss reflects $1.6 million of non-recurring expenses in the quarter, including $624,000 of transaction costs for the three acquisitions, $483,000 in IPO-related bonuses for most employees worldwide with a year or more of service, and a non-cash tax provision of $474,000, required by ASC 740. Third, we recognized approximately $1 million of amortization expenses related to purchased intangible assets, which is a non-cash expense," continued Bill Korn.

"While it's still early in the process, as of today we have already transitioned more than 40% of the core operational workflows of the acquired companies to our offshore team and are regularly migrating client accounts to our platform," said Stephen Snyder, MTBC's president. "We have also identified specific employees of the acquired businesses who will be supporting our local clients long-term and leading our local business development initiatives."  

The company is reaffirming its 2014 guidance, summarized in the following table:

Based on our year-to-date revenue and current expectations for Q4 2014, the company is guiding toward the higher end of its $18.0 to $18.5 million revenue guidance range.

Fiscal 2014 results include financial results for the three acquired businesses from July 28, 2014, the date of their acquisition.

Use of Non-GAAP Financial Measures

In our earnings releases, prepared remarks, conference calls, slide presentations, and webcasts, we may use or discuss non-GAAP financial measures, as defined by SEC Regulation G. The GAAP financial measure most directly comparable to each non-GAAP financial measure used or discussed, and a reconciliation of the differences between each non-GAAP financial measure and the comparable GAAP financial measure, are included in this press release after the condensed consolidated financial statements. Our earnings press releases containing such non-GAAP reconciliations can be found in the Investors section of our web site at www.mtbc.com.

Conference Call Information

MTBC management will host a conference call at 8:30 a.m. ET on Wednesday, November 12, 2014 to discuss the third quarter results and other matters. The conference call will be accessible by dialing 866-652-5200, or 412-317-6060 for international callers, and referencing "MTBC Third Quarter Earnings Call". An audio webcast of the call will be available live and archived on MTBC's investor relations website at ir.mtbc.com.

A replay of the conference call will be available approximately one hour after conclusion of the call and will be accessible through February 12, 2015. The replay can be accessed by dialing 877-344-7529, or 412-317-0088 for international callers, and providing access code 10054931.

About Medical Transcription Billing, Corp.

Medical Transcription Billing, Corp. is a healthcare information technology company that provides a fully integrated suite of proprietary web-based solutions, together with related business services, to healthcare providers practicing in ambulatory care settings. Our integrated Software-as-a-Service (or SaaS) platform helps our customers increase revenues, streamline workflows and make better business and clinical decisions, while reducing administrative burdens and operating costs. For additional information, please visit our website at www.mtbc.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the federal securities laws. These statements relate to anticipated future events, future results of operations or future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may," "might," "will," "should," "intends," "expects," "plans," "goals," "projects," "anticipates," "believes," "estimates," "predicts," "potential," or "continue" or the negative of these terms or other comparable terminology. These forward-looking statements include, but are not limited to: our ability to manage our growth; our ability to retain customers of the businesses we acquire, rationalize costs, retain key employees of the businesses we acquire, and to migrate acquired customers to our solutions and services; our ability to compete with other companies that are developing and selling services that are competitive with our products and services and who may have greater resources and name recognition than we do; our ability to maintain our operations in Pakistan and continue to offer competitively priced products and services; market acceptance of our products and services; changes in the healthcare industry and the changing regulatory environment we operate in; our ability to attract and retain personnel, including the services of Mahmud Haq; Our ability to protect or enforce our intellectual property rights; our ability to maintain and protect the privacy of our customers' and their patients' data. Moreover, we operate in a very competitive and rapidly changing regulatory environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all of the risks and uncertainties that could have an impact on the forward-looking statements contained in this press release.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
TO COMPARABLE GAAP MEASURES

(Unaudited)

The following is a reconciliation of the non-GAAP financial measures used by us to describe our financial results determined in accordance with accounting principles generally accepted in the United States of America ("GAAP"). An explanation of these measures is also included below under the heading "Explanation of Non-GAAP Financial Measures."

While management believes that these non-GAAP financial measures provide useful supplemental information to investors regarding the underlying performance of our business operations, investors are reminded to consider these non-GAAP measures in addition to, and not as a substitute for, financial performance measures prepared in accordance with GAAP. In addition, it should be noted that these non-GAAP financial measures may be different from non-GAAP measures used by other companies, and management may utilize other measures to illustrate performance in the future. Non-GAAP measures have limitations in that they do not reflect all of the amounts associated with our results of operations as determined in accordance with GAAP.

Adjusted EBITDA

Set forth below is a reconciliation of our "Adjusted EBITDA" and "Adjusted EBITDA Margin," which represents Adjusted EBITDA as a percentage of total revenue.

Non-GAAP Adjusted Net Income

Set forth below is a reconciliation of our "Non-GAAP Adjusted Net Income" and "Non-GAAP Adjusted Net Income per Diluted Share."

For purposes of determining non-GAAP adjusted net income per share, the Company used the number of common shares outstanding at the end of the period September 30, 2014 in order to provide comparability between periods in 2014. No tax effect has been provided as the Company has sufficient carryforward losses to offset the applicable taxes.

Explanation of Non-GAAP Financial Measures

We report our financial results in accordance with accounting principles generally accepted in the United States of America, or GAAP. However, management believes that, in order to properly understand our short-term and long-term financial and operational trends, investors may wish to consider the impact of certain non-cash or non-recurring items, when used as a supplement to financial performance measures in accordance with GAAP. These items result from facts and circumstances that vary in frequency and impact on continuing operations. Management also uses results of operations before such items to evaluate the operating performance of MTBC and compare it against past periods, make operating decisions, and serve as a basis for strategic planning. These non-GAAP financial measures provide management with additional means to understand and evaluate the operating results and trends in our ongoing business by eliminating certain non-cash expenses and other items that management believes might otherwise make comparisons of our ongoing business with prior periods more difficult, obscure trends in ongoing operations, or reduce management's ability to make useful forecasts. Management believes that these non-GAAP financial measures provide additional means of evaluating period-over-period operating performance. In addition, management understands that some investors and financial analysts find this information helpful in analyzing our financial and operational performance and comparing this performance to our peers and competitors.

Management defines "Adjusted EBITDA" as the sum of GAAP net income (loss) before provision for (benefit from) income taxes, net interest expense, other (income) expense, stock-based compensation expense, depreciation, amortization, and nonrecurring transaction costs, and "Adjusted EBITDA Margin" as Adjusted EBITDA as a percentage of total revenue.

Management defines "non-GAAP Adjusted Net Income" as the sum of GAAP net income (loss) before stock-based compensation expense, amortization of purchased intangible assets, other (income) expense, nonrecurring transaction costs, and any tax impact related to these preceding items, and "non-GAAP Adjusted Net Income per Diluted Share" as non-GAAP Adjusted Net Income divided by diluted shares outstanding at the end of the period. Management considers all of these non-GAAP financial measures to be important indicators of our operational strength and performance of our business and a good measure of our historical operating trends, in particular the extent to which ongoing operations impact our overall financial performance.

In addition to items routinely excluded from non-GAAP EBITDA, management excludes or adjusts each of the items identified below from the applicable non-GAAP financial measure referenced above for the reasons set forth with respect to that excluded item:

Other (income) expense – net. Other (income) expense is excluded because foreign currency gains and losses, whether realized or unrealized, and other non-operating expenses are non-cash expenditures that management does not consider part of ongoing operating results when assessing the performance of our business, and also because the total amount of the expense is partially outside of our control. Foreign currency gains and losses are based on global market factors which are be unrelated to our performance during the period in which the gains and losses are realized.

Stock-based compensation expense. Stock-based compensation is excluded because this is a non-cash expenditure that management does not consider part of ongoing operating results when assessing the performance of our business, and also because the total amount of the expenditure is partially outside of our control because it is based on factors such as stock price, volatility, and interest rates, which may be unrelated to our performance during the period in which the expenses are incurred.

Amortization of purchased intangible assets. Purchased intangible assets are amortized over their estimated useful lives and generally cannot be changed or influenced by management after the acquisition. Accordingly, this item is not considered by management in making operating decisions. Management does not believe such charges accurately reflect the performance of our ongoing operations for the period in which such charges are incurred.

Nonrecurring transaction costs. Transaction costs are upfront costs related to acquisitions and related transactions, such as brokerage fees, pre-acquisition accounting costs and legal fees, and certain acquisition accounting impacts. Management believes that such expenses do not have a direct correlation to future business operations, and therefore, these costs are not considered by management in making operating decisions. Management does not believe such charges accurately reflect the performance of our ongoing operations for the period in which such charges are incurred.

Disclaimer:

This press release is for information purposes only, and does not constitute an offer to sell or solicitation of an offer to buy, nor shall there be any sale of these securities in any state or other jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of such state or jurisdiction.

CONTACT: Investor Contact:

         Bob East / Asher Dewhurst
         Westwicke Partners
         MTBC@Westwicke.com
         443-213-0500

Released November 12, 2014