Cover
Cover - shares | 3 Months Ended | |
Mar. 31, 2024 | May 01, 2024 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2024 | |
Document Transition Report | false | |
Entity File Number | 001-39799 | |
Entity Registrant Name | Certara, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 82-2180925 | |
Entity Address, Address Line One | 100 Overlook Center | |
Entity Address, Address Line Two | Suite 101 | |
Entity Address, City or Town | Princeton | |
Entity Address, State or Province | NJ | |
Entity Address, Postal Zip Code | 08540 | |
City Area Code | 609 | |
Local Phone Number | 716-7900 | |
Title of 12(b) Security | Common stock, par value $0.01 per share | |
Trading Symbol | CERT | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 160,841,451 | |
Document Fiscal Year Focus | 2024 | |
Current Fiscal Year End Date | --12-31 | |
Entity Central Index Key | 0001827090 | |
Amendment Flag | false | |
Document Fiscal Period Focus | Q1 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Current assets: | ||
Cash and cash equivalents | $ 224,776 | $ 234,951 |
Accounts receivable, net of allowance for credit losses of $1,341 and $1,312, respectively | 80,949 | 84,857 |
Prepaid expenses and other current assets | 22,732 | 20,393 |
Total current assets | 328,457 | 340,201 |
Other assets: | ||
Property and equipment, net | 2,846 | 2,670 |
Operating lease right-of-use assets | 14,292 | 9,604 |
Goodwill | 715,620 | 716,333 |
Intangible assets, net of accumulated amortization of $289,090 and $273,522, respectively | 473,687 | 487,043 |
Deferred income taxes | 4,236 | 4,236 |
Other long-term assets | 3,240 | 3,053 |
Total assets | 1,542,378 | 1,563,140 |
Current liabilities: | ||
Accounts payable | 3,733 | 5,171 |
Accrued expenses | 32,744 | 56,779 |
Current portion of deferred revenue | 56,801 | 60,678 |
Current portion of long-term debt | 3,020 | 3,020 |
Other current liabilities | 4,331 | 4,375 |
Total current liabilities | 100,629 | 130,023 |
Long-term liabilities: | ||
Deferred revenue, net of current portion | 1,437 | 1,070 |
Deferred income taxes | 46,307 | 50,826 |
Operating lease liabilities, net of current portion | 11,631 | 6,955 |
Long-term debt, net of current portion and debt discount | 287,772 | 288,217 |
Other long-term liabilities | 40,244 | 39,209 |
Total liabilities | 488,020 | 516,300 |
Commitments and contingencies | ||
Stockholders' equity | ||
Preferred shares, $0.01 par value, 50,000,000 shares authorized, no shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively | 0 | 0 |
Common shares, $0.01 par value, 600,000,000 shares authorized, 160,687,886 and 160,284,901 shares issued as of March 31, 2024 and December 31, 2023, respectively; 160,191,094 and 159,848,286 shares outstanding as of March 31, 2024 and December 31, 2023, respectively | 1,607 | 1,603 |
Additional paid-in capital | 1,191,237 | 1,178,461 |
Accumulated deficit | (120,913) | (116,230) |
Accumulated other comprehensive loss | (7,036) | (7,593) |
Treasury stock at cost, 496,792 and 436,615 shares at March 31, 2024 and December 31, 2023, respectively | (10,537) | (9,401) |
Total stockholders' equity | 1,054,358 | 1,046,840 |
Total liabilities and stockholders' equity | $ 1,542,378 | $ 1,563,140 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance for credit loss | $ 1,341 | $ 1,312 |
Accumulated amortization | $ 289,090 | $ 273,522 |
Preferred share, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred share, shares authorized (in shares) | 50,000,000 | 50,000,000 |
Preferred share, shares issued (in shares) | 0 | 0 |
Preferred share, shares outstanding (in shares) | 0 | 0 |
Common share, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common share, shares authorized (in shares) | 600,000,000 | 600,000,000 |
Common share, shares issued (in shares) | 160,687,886 | 160,284,901 |
Common stock, shares, outstanding (in shares) | 160,191,094 | 159,848,286 |
Treasury stock (in shares) | 496,792 | 436,615 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Income Statement [Abstract] | ||
Revenues | $ 96,654 | $ 90,301 |
Cost of revenues | 39,255 | 34,856 |
Operating expenses: | ||
Sales and marketing | 10,687 | 8,002 |
Research and development | 11,995 | 9,287 |
General and administrative | 22,979 | 19,772 |
Intangible asset amortization | 12,593 | 10,535 |
Depreciation and amortization expense | 432 | 411 |
Total operating expenses | 58,686 | 48,007 |
Income (loss) from operations | (1,287) | 7,438 |
Other income (expenses): | ||
Interest expense | (5,751) | (5,475) |
Net other income | 1,604 | 506 |
Total other expenses | (4,147) | (4,969) |
Income (loss) before income taxes | (5,434) | 2,469 |
Provision (benefit) for income taxes | (751) | 1,111 |
Net income (loss) | (4,683) | 1,358 |
Other comprehensive income (loss): | ||
Foreign currency translation adjustment, net of tax of $60, $(182), respectively | (7) | 2,601 |
Change in fair value from interest rate swap, net of tax of $186, $(588), respectively | 564 | (1,691) |
Total other comprehensive income | 557 | 910 |
Comprehensive income (loss) | $ (4,126) | $ 2,268 |
Net income (loss) per share attributable to common stockholders: | ||
Basic (in dollar per share) | $ (0.03) | $ 0.01 |
Diluted (in dollar per share) | $ (0.03) | $ 0.01 |
Weighted average common shares outstanding: | ||
Basic (in shares) | 159,524,270 | 158,177,025 |
Diluted (in shares) | 159,524,270 | 159,727,412 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Income Statement [Abstract] | ||
Other comprehensive income (loss), foreign currency translation adjustment, tax, portion attributable to parent | $ 60 | $ (182) |
Other comprehensive income (loss), cash flow hedge, gain (loss), before reclassification, tax | $ 186 | $ (588) |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Total | COMMON STOCK | ADDITIONAL PAID-IN CAPITAL | ACCUMULATED DEFICIT | ACCUMULATED OTHER COMPREHENSIVE LOSS | TREASURY STOCK |
Common stock, beginning balance (in shares) at Dec. 31, 2022 | 159,676,150 | |||||
Beginning balance at Dec. 31, 2022 | $ 1,079,661 | $ 1,596 | $ 1,150,168 | $ (60,873) | $ (8,230) | $ (3,000) |
Treasury shares beginning balance (in shares) at Dec. 31, 2022 | 150,207 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Equity-based compensation expense, net of forfeiture | 8,543 | 8,543 | ||||
Common shares issued for share-based compensation awards and shares withheld for tax (in shares) | 608,179 | 228,159 | ||||
Common shares issued for share-based compensation awards and shares withheld for tax | 5,417 | $ (6) | 4 | $ 5,419 | ||
Restricted stock forfeiture (in shares) | (66,220) | |||||
Restricted stock forfeiture | 0 | $ (1) | 1 | |||
Change in fair value from interest rate swap, net of tax | (1,691) | (1,691) | ||||
Net income (loss) | 1,358 | 1,358 | ||||
Foreign currency translation adjustment, net of tax | 2,601 | 2,601 | ||||
Common stock, ending balance (in shares) at Mar. 31, 2023 | 160,218,109 | |||||
Ending balance at Mar. 31, 2023 | $ 1,085,055 | $ 1,601 | 1,158,708 | (59,515) | (7,320) | $ (8,419) |
Treasury shares ending balance (in shares) at Mar. 31, 2023 | 378,366 | |||||
Common stock, beginning balance (in shares) at Dec. 31, 2023 | 159,848,286 | 160,284,901 | ||||
Beginning balance at Dec. 31, 2023 | $ 1,046,840 | $ 1,603 | 1,178,461 | (116,230) | (7,593) | $ (9,401) |
Treasury shares beginning balance (in shares) at Dec. 31, 2023 | 436,615 | 436,615 | ||||
Increase (Decrease) in Stockholders' Equity | ||||||
Equity-based compensation expense, net of forfeiture | $ 9,073 | 9,073 | ||||
Common stock withheld for tax liabilities (in shares) | 60,177 | |||||
Common shares issued for share-based compensation awards and shares withheld for tax | (1,136) | $ (1,136) | ||||
Common shares issued for employee share-based compensation (in shares) | 188,293 | |||||
Common shares issued for employee share-based compensation | 0 | $ 2 | (2) | |||
Common shares issued related with Vyasa (in shares) | 214,692 | |||||
Common shares issued for contingent consideration | 3,707 | $ 2 | 3,705 | |||
Change in fair value from interest rate swap, net of tax | 564 | 564 | ||||
Net income (loss) | (4,683) | (4,683) | ||||
Foreign currency translation adjustment, net of tax | $ (7) | (7) | ||||
Common stock, ending balance (in shares) at Mar. 31, 2024 | 160,191,094 | 160,687,886 | ||||
Ending balance at Mar. 31, 2024 | $ 1,054,358 | $ 1,607 | $ 1,191,237 | $ (120,913) | $ (7,036) | $ (10,537) |
Treasury shares ending balance (in shares) at Mar. 31, 2024 | 496,792 | 496,792 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | Sep. 30, 2023 | |
Cash flows from operating activities: | |||
Net income (loss) | $ (4,683) | $ 1,358 | |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||
Depreciation and amortization of property and equipment | 432 | 411 | |
Amortization of intangible assets | 15,996 | 13,113 | |
Amortization of debt issuance costs | 380 | 383 | |
(Recovery of) provision for credit losses | 59 | (168) | $ 684 |
Loss on retirement of assets | 0 | 4 | |
Equity-based compensation expense | 9,073 | 8,543 | |
Change in fair value of contingent considerations | 2,878 | 1,261 | |
Lease abandonment expense | 29 | 0 | |
Deferred income taxes | (4,829) | (1,524) | |
Changes in assets and liabilities: | |||
Accounts receivable | 3,635 | 647 | |
Prepaid expenses and other assets | (578) | 559 | |
Accounts payable, accrued expenses, and other liabilities | (14,825) | (13,596) | |
Deferred revenues | (3,271) | (1,034) | |
Net cash provided by operating activities | 4,296 | 9,957 | |
Cash flows from investing activities: | |||
Capital expenditures | (619) | (317) | |
Capitalized software development costs | (2,959) | (2,360) | |
Investment in intangible assets | 0 | (54) | |
Net cash used in investing activities | (3,578) | (2,731) | |
Cash flows from financing activities: | |||
Payments on long-term debt and finance lease obligations | (755) | (780) | |
Payments for business acquisition related contingent consideration | (8,649) | 0 | |
Payment of taxes on shares withheld for employee taxes | (943) | (70) | |
Net cash used in financing activities | (10,347) | (850) | |
Effect of foreign exchange rate changes on cash and cash equivalents, and restricted cash | (546) | 1,174 | |
Net (decrease) increase in cash and cash equivalents, and restricted cash | (10,175) | 7,550 | |
Cash and cash equivalents, and restricted cash, at beginning of period | 234,951 | 239,688 | $ 239,688 |
Cash and cash equivalents, and restricted cash, at end of period | 224,776 | 247,238 | |
Supplemental disclosures of cash flow information | |||
Cash paid for interest | 5,395 | 5,196 | |
Cash paid for taxes | 3,640 | 517 | |
Supplemental schedule of noncash investing and financing activities | |||
Issuance of common stock for business acquisition related contingent consideration | $ 3,707 | $ 0 |
Description of Business
Description of Business | 3 Months Ended |
Mar. 31, 2024 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business | Description of Business Certara, Inc. and its wholly-owned subsidiaries (together, the “Company”) deliver software products and technology-driven services to customers to efficiently carry out and realize the full benefits of biosimulation in drug discovery, preclinical and clinical research, regulatory submissions and market access. The Company is a global leader in biosimulation, and the Company’s biosimulation software and technology-driven services help optimize, streamline, or even waive certain clinical trials to accelerate programs, reduce costs, and increase the probability of success. The Company’s regulatory science and market access software and services are underpinned by technologies such as regulatory submissions software, natural language processing, and Bayesian analytics. When combined, these solutions allow the Company to offer customers end-to-end support across the entire product life cycle. The Company has operations in the United States, Australia, Brazil, Canada, China, Egypt, France, Germany, India, Italy, Japan, Korea, Luxembourg, Netherlands, Philippines, Poland, Portugal, Spain, Switzerland, and the United Kingdom. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2024 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies There have been no changes other than what is discussed herein to the Company’s significant accounting policies as compared to the significant accounting policies described in Note 2 to the Company’s audited consolidated financial statements included in our 2023 Annual Report. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes as of and for the year ended December 31, 2023. (a) Basis of Presentation and Use of Estimates The preparation of condensed consolidated financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include, among other estimates, assumptions used in the allocation of the transaction price to separate performance obligations, estimates towards the measure of progress of completion on fixed-price service contracts, the determination of fair values and useful lives of long-lived assets as well as intangible assets, goodwill, allowance for credit losses for accounts receivable, recoverability of deferred tax assets, recognition of deferred revenue, valuation of interest rate swaps, determination of fair value of equity-based awards, measurement of fair value of contingent consideration, and assumptions used in testing for impairment of long-lived assets. Actual results could differ from those estimates, and such differences may be material to the condensed consolidated financial statements. (b) Unaudited Interim Financial Statements The accompanying condensed consolidated balance sheet as of March 31, 2024, the condensed consolidated statements of operations and comprehensive income (loss) for the three months ended March 31, 2024 and 2023, the condensed consolidated statements of stockholders’ equity for the three months ended March 31, 2024 and 2023, the condensed consolidated statements of cash flows for the three months ended March 31, 2024 and 2023, and the related interim disclosures are unaudited. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP. These unaudited condensed consolidated financial statements include all adjustments necessary to fairly state the financial position and the results of the Company’s operations and cash flows for interim periods in accordance with U.S. GAAP. Certain amounts reported in prior periods have been reclassified to conform with the current presentation. Interim period results are not necessarily indicative of results of operations or cash flows for a full year or any subsequent interim period. The accompanying condensed consolidated financial statements should be read in conjunction with the Company’s 2023 audited consolidated financial statements and notes thereto. The information as of December 31, 2023 in the Company’s condensed consolidated balance sheet included herein is derived from the Company’s audited consolidated financial statements included in the Company’s 2023 Annual Report. (c) Accounting Pronouncements Not Yet Adopted In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.” The ASU requires an enhanced disclosure of significant segment expenses on an annual and interim basis. This ASU will be effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. Upon adoption, the guidance should be applied retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the impact of this ASU on the disclosures in our consolidated financial statements. In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures". The ASU requires disclosure of specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold and further disaggregation of income taxes paid for individually significant jurisdictions. The ASU will be effective for public business entities for annual periods beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the impact of this ASU on the disclosures in our consolidated financial statements. (d) Principles of Consolidation The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. (e) Fair Value Measurements The Company follows FASB Accounting Standards Codification (“ASC”) 820-10, “Fair Value Measurements” (“ASC 820-10”), which defines fair value, establishes a framework for measuring fair value in U.S. GAAP, and requires certain disclosures about fair value measurements. ASC 820-10 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the most advantageous market for the asset or liability in an orderly transaction. Fair value measurement is based on a hierarchy of observable or unobservable inputs. The standard describes three levels of inputs that may be used to measure fair value. Level 1 — Inputs to the valuation methodology are quoted prices available in active markets for identical securities as of the reporting date; Level 2 — Inputs to the valuation methodology are other significant observable inputs, including quoted prices for similar securities, interest rates, credit risk etc. as of the reporting date, and the fair value can be determined through the use of models or other valuation methodologies; and Level 3 — Inputs to the valuation methodology are unobservable inputs in situations where there is little or no market activity of the securities and the reporting entity makes estimates and assumptions relating to the pricing of the securities including assumptions regarding risk. If the inputs used to measure fair value fall at different levels of the fair value hierarchy, the hierarchy is based on the lowest level of input that is significant to the fair value measurement. For the acquisitions noted in Note 5, the fair value measurement methods used to estimate the fair value of the assets acquired and liabilities assumed at the acquisition dates utilized a number of significant unobservable inputs of Level 3 assumptions. These assumptions included, among other things, projections of future operating results, implied fair value of assets using an income approach by preparing a discounted cash flow analysis, and other subjective assumptions. Interest rate swaps are valued in the market using discounted cash flows techniques. These techniques incorporate Level 1 and Level 2 inputs. The market inputs are utilized in the discounted cash flows’ calculation considering the instrument’s term, notional amount, discount rate and credit risk. Significant inputs to the derivative instrument valuation model for interest rate swaps are observable in active markets and are classified as Level 2 in the hierarchy. Contingent liabilities related to acquisitions are measured at fair value using Level 3 unobservable inputs. The Company's estimates of fair value are based upon assumptions believed to be reasonable but which are uncertain and involve significant judgments by management. Any changes in the fair value of these contingent liabilities are included in the earnings in the condensed consolidated statements of operations and comprehensive income (loss). The Company utilizes Monte Carlo or a series of Black-Scholes-Merton options models to estimate the fair value of the contingent consideration liabilities of business acquisitions. Significant inputs used in the fair value measurement of contingent consideration include: expected eligible revenue for the acquired businesses over the relevant measurement periods, the risk-profile of the expected eligible revenue for the acquired businesses, the uncertainty regarding the expected eligible revenue for the acquired businesses, the risk-free rate of return, the expected timing at which settlement of the contingent liabilities may occur, and the credit-adjusted discount rate associated with the risk of the Company’s future liability payments. The following table sets forth the assets and liabilities that were measured at fair value on a recurring and non-recurring basis by their levels in the fair value hierarchy at March 31, 2024: LEVEL 1 LEVEL2 LEVEL 3 TOTAL (In thousands) Assets Money market funds $ 149,397 $ — $ — $ 149,397 Interest rate swap assets — 6,374 — 6,374 Total assets $ 149,397 $ 6,374 $ — $ 155,771 Liabilities Contingent liabilities $ — $ — $ 44,982 $ 44,982 Total liabilities $ — $ — $ 44,982 $ 44,982 The following table sets forth the assets and liabilities that were measured at fair value on a recurring and non-recurring basis by their levels in the fair value hierarchy at December 31, 2023: LEVEL 1 LEVEL2 LEVEL 3 TOTAL (In thousands) Assets Money market funds $ 147,478 $ — $ — $ 147,478 Interest rate swap assets — 5,624 — 5,624 Total assets $ 147,478 $ 5,624 $ — $ 153,102 Liabilities Contingent liabilities $ — $ — $ 54,457 $ 54,457 Total liabilities $ — $ — $ 54,457 $ 54,457 For the period ended March 31, 2024, there were no transfers between the levels within the fair value hierarchy. The Company’s Level 3 liabilities are acquisition related contingent consideration liabilities. The following table summarizes the Level 3 activity of the changes in the contingent consideration liability. MARCH 31, 2024 (In thousands) Beginning balance at December 31, 2023 $ 54,457 Additions — Payments (12,356) Fair value remeasurement 2,881 Ending balance at March 31, 2024 $ 44,982 For more information regarding fair value measurements and the fair value hierarchy, see Note 2. “Summary of Significant Accounting Policies” in the notes to the consolidated financial statements in the Company’s 2023 Annual Report. (f) Cash and Cash Equivalents Cash equivalents include highly liquid investments with maturities of three months or less from the date purchased. The cash and cash equivalents was $224,776 and $234,951 at March 31, 2024 and December 31, 2023, respectively. (g) Accounts Receivable Accounts receivable includes current outstanding invoices billed to customers. Invoices are typically issued with net 30 days to net 90 days terms upon delivery of the product or upon achievement of billable events for service-based contracts. Unbilled receivables relate to the Company’s rights to consideration for performance obligations satisfied but not billed at the reporting date on contracts. Unbilled receivables are billed and transferred to customer accounts receivable when the rights become unconditional. The carrying amount of accounts receivable is reduced by a valuation allowance. The Company estimates the expected credit losses for accounts receivables using historical loss data adjusted for current economic conditions, including reasonable and supportable forecasts to estimate the relative size of credit losses to be expected. The Company generally writes off a receivable or records a specific allowance for credit losses if the Company determines that the receivable is not collectible. Allowances for credit losses of $1,341 and $1,312 were provided in the accompanying condensed consolidated financial statements as of March 31, 2024 and December 31, 2023, respectively. Accounts receivable consists of the following: MARCH 31, DECEMBER 31, (In thousands) Trade receivables $ 71,268 $ 75,410 Unbilled receivables 10,767 10,405 Other receivables 255 354 Allowances for credit losses (1,341) (1,312) Accounts receivable, net $ 80,949 $ 84,857 The following table presents the information regarding the allowance of accounts receivable: MARCH 31, DECEMBER 31, (In thousands) Beginning balance $ 1,312 $ 1,250 Provision for credit losses 59 684 Charge-offs, net of recoveries (30) (622) Ending balance $ 1,341 $ 1,312 (h) Derivative Instruments In the normal course of business, the Company is subject to risk from adverse fluctuations in interest rates. The Company has chosen to manage this risk through the use of derivative financial instruments that consist of interest rate swap contracts. Counterparties to these contracts are major financial institutions. The Company is exposed to credit loss in the event of nonperformance by these counterparties. The Company does not use derivative instruments for trading or speculative purposes. The objective in managing exposure to market risk is to limit the impact on cash flows. To qualify for hedge accounting, the interest rate swaps must effectively reduce the risk exposure that they are designed to hedge. In addition, at the inception of a qualifying cash flow hedging relationship, the underlying transaction or transactions must be, and be expected to remain, probable of occurring in accordance with the related assertions. FASB ASC 815, “Derivatives and Hedging,” requires the Company to recognize all derivatives on the balance sheet at fair value. The Company may enter into derivative contracts such as interest rate swap contracts that effectively convert portions of the Company’s floating rate debt to a fixed rate, which serves to mitigate interest rate risk. The Company’s objectives in using interest rate swaps are to add stability to interest expense and to manage its exposure to interest rate movements. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. The Company entered into an interest rate swap agreement in May 2022 that pays a fixed interest rate and receives a variable interest rate to modify the interest rate characteristics of term loan debt from variable to fixed in order to reduce the impact of changes in future cash flows due to market interest rate changes. The swap agreement has a notional amount of $230,000, a fixed rate of 2.8% and a termination date of August 31, 2025. During the quarter ended September 30, 2023, the Company and the counter party amended the floating rate of the swap agreement from term LIBOR to term SOFR due to LIBOR cessation. At March 31, 2024 and December 31, 2023, the interest swap had a fair value of $6,374 and $5,624, respectively; The gross fair value recognized in accumulated other comprehensive income was $6,374 and $5,624, respectively, at March 31, 2024 and December 31, 2023. The Company uses derivatives to manage certain interest exposures and designated all the derivatives as cash flow hedges. The Company records derivatives at fair value on its condensed consolidated balance sheets. Changes in the fair value of derivatives designated as cash flow hedges are recorded as a component of accumulated other comprehensive income (loss). Those amounts are reclassified into interest expense in the same period during which the hedged transactions impact earnings. The amount of derivative gains reclassified from accumulated other comprehensive income on derivative instruments recognized in the Company’s condensed consolidated statements of operations and comprehensive income (loss) was $1,525 and $986 for the three months ended March 31, 2024 and 2023, respectively. The notional amounts, fair values, and classification of derivative instruments in the condensed consolidated balance sheets as of March 31, 2024 and December 31, 2023 were as follows: Interest rate swap derivative designated as cash flow hedging instrument: MARCH 31, DECEMBER 31, (In thousands) Notional amounts $ 230,000 $ 230,000 Prepaid expenses and other current assets $ 5,033 $ 4,473 Other long-term assets $ 1,341 $ 1,151 The net amount of deferred gains related to derivative instruments designated as cash flow hedges that is expected to be reclassified from accumulated other comprehensive gains into earnings over the next twelve month s is $5,041. (i) Revenue Recognition In accordance with ASC Topic 606, “Revenue from Contracts with Customers”, the Company determines revenue recognition through the following steps: i. Identification of the contract, or contracts, with a customer ii. Identification of the performance obligations in the contract iii. Determination of the transaction price iv. Allocation of the transaction price to the performance obligations in the contract v. Recognition of revenue when, or as, the Company satisfies a performance obligation The Company’s revenue consists of fees for perpetual and term licenses for its software products, post-contract customer support (referred to as maintenance), software as a service (“SaaS”), and professional services including training and other revenue. Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for promised goods or services. The following describes the nature of the Company’s primary types of revenues and the revenue recognition policies as they pertain to the types of transactions the Company enters into with its customers. Software Licenses Revenues Software license revenue consists primarily of sales of software licenses downloaded and installed by our customers on their own hardware. The license period is generally one year or less and includes an insignificant amount of customer support to assist the customer with the software. Software license performance obligations are generally recognized upfront at the point in time when the software license has been delivered. Software as a Service (SaaS) Revenues SaaS revenues consist of subscription fees for access to, and related support for, the Company’s cloud-based solutions. The Company typically invoices subscription fees in advance in annual installments. The invoice is initially deferred and revenue is recognized ratably over the life of the contract. The Company’s software contracts do not typically include variable consideration or options for future purchases that would not be similar to the original goods. Software Service Revenues Maintenance services agreements on perpetual software consist of fees for providing software updates and for providing technical support for software products for a specified term. Revenue allocated to maintenance services is recognized ratably over the contract term beginning on the delivery date of each offering. Maintenance contracts generally have a term of one year. While the transfer of control of the software training and implementation performance obligations are over time, the services are typically started and completed within a few days. Due to the quick nature of the performance obligation from start to finish and the insignificant amounts, the Company recognizes any software training or implementation revenue at the completion of the service. Any unrecognized portion of amounts paid in advance for licenses and services is recorded as deferred revenue. Consulting Service Revenues The Company’s primary professional services offering includes consulting services, which may be either strategic consulting services, reporting and analysis services, regulatory writing services, or any combination of the three. The Company’s professional services contracts are either time-and-materials or fixed fee. Service revenues are generally recognized over time as the services are performed. Generally, these services are delivered to customers electronically. Revenue from time-and-material contracts is recognized on an output basis as labor hours are delivered and/or direct expenses are incurred. Revenues for fixed-price services are generally recognized over time by applying input methods to estimate progress to completion. Accordingly, the number of resources being paid for and the varying lengths of time they are being paid for determine the measure of progress. Arrangements with Multiple Performance Obligations For contracts with multiple performance obligations, such as a software license plus software training, implementation, and/or maintenance/support, or in contracts where there are multiple software licenses, the Company determines if the products or services are distinct and allocates the consideration to each distinct performance obligation on a relative standalone selling price basis. The delivery of a particular type of software and each of the user licenses would be one performance obligation. Additionally, any training, implementation, or support and maintenance promises sold as part of the software license agreement would be considered separate performance obligations, as those promises are distinct and separately identifiable from the software licenses. The payment terms in these arrangements are less than one year such that there is no significant financing component. Contract Balances The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (contract assets), and customer advances and deposits (deferred revenue, contract liabilities) on the condensed consolidated balance sheets. Amounts are billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals (e.g., quarterly or monthly) or upon achievement of contractual milestones. Contract assets relate to the Company’s rights to consideration for performance obligations satisfied but not billed at the reporting date on contracts (i.e., unbilled revenue, a component of accounts receivable in the condensed consolidated balance sheets). Contract assets are billed and transferred to customer accounts receivable when the rights become unconditional. The Company typically invoices customers for term licenses, subscriptions, maintenance and support fees in advance with payment due before the start of the subscription term, ranging from one Contract balances at March 31, 2024 and December 31, 2023 were as follows: MARCH 31, DECEMBER 31, (In thousands) Contract assets $ 10,767 $ 10,405 Contract liabilities 58,238 61,748 During the three months ended March 31, 2024, the Company recognized revenue of $29,351 related to contract liabilities at December 31, 2023. The unsatisfied performance obligations as of March 31, 2024 were approximately $115,418. We expect to recognize approximately $102,229 or 88.6% of this revenue over the next 12 months and the remainder thereafter. Deferred Contract Acquisition Costs Under ASC Topic 606, sales commissions paid to the sales force and the related employer payroll taxes, collectively deferred contract acquisition costs, are considered incremental and recoverable costs of obtaining a contract with a customer. The Company recognizes an asset for the incremental costs of obtaining a contract with a customer if the Company expects the benefit of those costs to be longer than one year. The Company has determined that certain sales incentive programs meet the requirements to be capitalized. The costs capitalized are primarily sales commissions for our sales force personnel. Capitalized costs to obtain a contract are amortized on a straight-line basis over the expected period of benefit. Amortization of capitalized costs is included in sales and marketing expenses in our condensed consolidated statements of operations and comprehensive income (loss). Capitalized contract acquisition costs were $597 and $655 as of March 31, 2024 and December 31, 2023, respectively, and were included in prepaid expenses and other current assets in the condensed consolidated balance sheets. Grant Revenue The Company receives grant funding for certain specific projects from time to time. These grants specify the funds provided are to be used exclusively to satisfy the deliverables outlined in the grant agreements. In these agreements, both involved parties receive and sacrifice approximately commensurate value so these are accounted for as exchange transactions and revenue is recognized according to ASC Topic 606. Grant funding is generally provided near contract inception, so a contract liability is initially recorded and revenue is recognized as the performance obligations are satisfied over time. Sources and Timing of Revenue The Company’s performance obligations are satisfied either over time or at a point in time. The following table presents the Company’s revenue by timing of revenue recognition to understand the risks of timing of transfer of control and cash flows: THREE MONTHS ENDED MARCH 31, 2024 2023 Software licenses transferred at a point in time $ 15,380 $ 14,498 Software licenses transferred over time 23,927 18,507 Service revenues earned over time 57,347 57,296 Total $ 96,654 $ 90,301 (j) Earnings per Share |
Concentrations of Credit Risk
Concentrations of Credit Risk | 3 Months Ended |
Mar. 31, 2024 | |
Risks and Uncertainties [Abstract] | |
Concentrations of Credit Risk | Concentrations of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk have consisted principally of cash and cash equivalent investments and trade receivables. The Company invests available cash in bank deposits, investment-grade securities, and short-term interest-producing investments, including government obligations and other money market instruments. At March 31, 2024 and December 31, 2023, the investments were bank deposits, overnight sweep accounts, and money market funds. The Company has adopted credit policies and standards to evaluate the risk associated with sales that require collateral, such as letters of credit or bank guarantees, whenever deemed necessary. Management believes that any risk of loss is significantly reduced due to the nature of the customers and distributors with which the Company does business.. As of March 31, 2024 and December 31, 2023, no single customer accounted for more than 10% of the Company’s accounts receivable. No single customer accounted for more than 10% of the Company’s revenues during the three months ended March 31, 2024 and 2023. |
Business Combinations
Business Combinations | 3 Months Ended |
Mar. 31, 2024 | |
Business Combination and Asset Acquisition [Abstract] | |
Business Combinations | Business Combinations Acquisitions have been accounted for by using the acquisition method of accounting pursuant to FASB ASC 805, “Business Combinations.” Amounts allocated to the purchased assets and liabilities assumed are based upon the total purchase price and the estimated fair values of such assets and liabilities on the effective date of the purchase as determined by an independent third party. The results of operations for the acquisitions have been included in the Company’s results of operations prospectively from the date of acquisition. Since 2013, and as of March 31, 2024, the Company has completed 20 acquisitions, of which 13 have included software or technology. Details of acquisitions that have closed since the beginning of fiscal year 2023 are provided below. Drug Interaction Solutions, University of Washington ("DIDB") On June 20, 2023, the Company entered into an asset purchase agreement with the University of Washington and completed the acquisition of DIDB, including the Drug Interaction Database and related products, from The University of Washington for a total consideration of $8,340. The business combination was not significant to the Company’s consolidated financial statements. The total estimated consideration includes a portion of contingent consideration that is payable over the next two years in cash, not to exceed $2,000. Future payments of contingent consideration are based on eligible revenue for the period from July 1, 2023 through June 30, 2025. The fair value of the contingent consideration was estimated to be $790 as of the acquisition date. At March 31, 2024, the contingent consideration was remeasured to $136, resulting in a fair value adjustment of $4 and recorded in general and administrative expenses (“G&A”) on the accompanying condensed consolidated statement of operations and comprehensive income (loss). Based on the Company’s purchase price allocation, approximately $330, $5,600, $360, and $2,289 of the purchase price were assigned to trademarks, database content/technology, customer relationships and goodwill, respectively. The Company expects goodwill to be fully deductible for U.S. federal income tax purposes due to the fact the acquisition was treated as an asset acquisition under the relevant sections of the Internal Revenue Code (“IRC”). Formedix Limited ("Formedix") On October 10, 2023, the Company completed the acquisition of Formedix, a provider of clinical metadata repository and clinical trial automation software, for total estimated consideration of $41,389. The business combination was not material to the Company’s consolidated financial statements. The total estimated consideration includes a portion of contingent consideration that is payable over the next two years in cash, not to exceed $9,000. The fair value of the contingent consideration related to revenue threshold was estimated to be $4,380 as of the acquisition date. Future payments of contingent consideration are based on achieving certain eligible revenue targets for each of the twelve-month periods ended December 31, 2023 and 2024, respectively. Additionally, the Company agreed to further contingent consideration based on the resolution of certain tax contingencies. In total, the fair value of the contingent consideration was estimated to be $5,161 as of the acquisition date. At March 31, 2024, the contingent consideration related to eligible revenue was remeasured to $3,189, resulting in a negative fair value remeasurement and adjustment of $507 and recorded in G&A on the accompanying condensed consolidated statement of operations and comprehensive income (loss). Based on the Company’s purchase price allocation, approximately $11,700, $3,100, and $25,062 of the purchase price were assigned to developed technology, customer relationships and goodwill, respectively. The Company does not expect goodwill to be deductible due to the fact the Company treated the acquisition as a stock acquisition under the relevant sections of the IRC. Applied BioMath, LLC ("ABM") On December 12, 2023, the Company completed the acquisition of ABM, an industry-leader in providing model-informed drug discovery and development support to help accelerate and de-risk therapeutic research and development, for total estimated consideration of $36,594. The business combination was not material to the Company’s consolidated financial statements. Based on the Company’s preliminary purchase price allocation, approximately $4,600, $800, $13,700 and $15,872 of the purchase price were assigned to developed technology, non-compete agreements, customer relationships and goodwill, respectively. The Company expects goodwill to be fully deductible for U.S. federal income tax purposes due to the fact the Company treated the acquisition as an asset acquisition under the relevant sections of the IRC. The total estimated consideration includes a portion of contingent consideration that is payable over the next two years in cash, not to exceed $17,550. Future payments of contingent consideration are based on achieving certain eligible revenue targets for each of the twelve-month periods ended December 31, 2023 and 2024, respectively. The fair value of the contingent consideration was estimated to be $5,357 as of the acquisition date. At March 31, 2024, the contingent consideration was remeasured to $4,442, resulting in a negative fair value adjustment of $938 and recorded in G&A on the accompanying condensed consolidated statement of operations and comprehensive income (loss). The contingent considerations for all acquisitions were classified as liability and included in accrued expense and other long-term liabilities on the Company’s condensed consolidated balance sheet. The contingent consideration related to eligible revenues that are remeasured on a recurring basis at fair value for each reporting period. Any changes in the fair value of these contingent liabilities are included in the earnings in the condensed consolidated statements of operations and comprehensive income (loss). The current purchase price allocations for the acquisitions of Formedix and ABM are preliminary. The primary areas of the preliminary purchase price allocations that are not yet finalized that relate to the fair value of certain tangible assets and liabilities assumed, and residual goodwill. The Company continues to gather information supporting the acquired assets and liabilities, including but not limited to the estimation of the fair value of the identifiable intangible assets, measurement of deferred revenue and corresponding impact on goodwill, during the measurement period. Any adjustments to the preliminary purchase price allocation identified during the measurement period, which will not exceed one year from the acquisition date, will be accounted for prospectively. |
Prepaid Expenses and Other Curr
Prepaid Expenses and Other Current Assets and Other Long-Term Assets | 3 Months Ended |
Mar. 31, 2024 | |
Prepaid Expense and Other Assets, Current [Abstract] | |
Prepaid Expenses And Other Current Assets and Other Long-Term Assets | Prepaid Expenses and Other Current Assets and Other Long-Term Assets Prepaid expense and other current assets at March 31, 2024 and December 31, 2023 consist of the following: MARCH 31, DECEMBER 31, (In thousands) Prepaid expenses $ 8,077 $ 6,363 Income tax receivable 2,396 3,395 Research and development tax credit receivable 5,804 5,004 Current portion of interest rate swap asset 5,033 4,473 Other current assets 1,422 1,158 Prepaid expenses and other current assets $ 22,732 $ 20,393 Other long-term assets at March 31, 2024 and December 31, 2023 consisted of the following: MARCH 31, DECEMBER 31, (In thousands) Long-term deposits $ 1,517 $ 1,451 Interest rate swap asset - long-term 1,341 1,151 Deferred financing cost 382 451 Total other long-term assets $ 3,240 $ 3,053 |
Long-Term Debt and Revolving Li
Long-Term Debt and Revolving Line of Credit | 3 Months Ended |
Mar. 31, 2024 | |
Debt Disclosure [Abstract] | |
Long-Term Debt and Revolving Line of Credit | Long-Term Debt and Revolving Line of Credit The Company has been a party to a Credit Agreement since August 2017 that provides for a senior secured term loan and commitments under a revolving credit facility. The Company and the lenders most recently modified the Credit Agreement on June 17, 2021, which provides for, among other things, (i) the extension of the termination date applicable to the revolving credit commitments to August 2025, (ii) the extension of the maturity date applicable to the term loans under the Credit Agreement to August 2026, and (iii) an increase of approximately $80,000 in commitments available under the revolving line of credit (resulting in an aggregate amount of commitments of $100,000). The term loan under this Amendment has substantially the same terms as the existing term loans and revolving credit commitments. The Credit Agreement is collateralized by substantially all U.S. assets and stock pledges for the non-U.S. subsidiaries and contain various financial and nonfinancial covenants. Borrowings under the Credit Agreement are subject to a variable interest rate at LIBOR plus a margin. The applicable margins were based on achieving certain levels of compliance with financial covenants. In response to the discontinuation of LIBOR, the Company executed a LIBOR transition amendment on June 26, 2023, formalizing the replacement of LIBOR with the Secured Overnight Funding Rate (“SOFR”). As part of this modification, a Credit Spread Adjustment (“CSA”) was introduced to align SOFR with LIBOR in terms of the overall interest rate earned by lenders under the Credit Agreement. The CSA varied depending on the selected interest period. As of March 31, 2024 and December 31, 2023, available borrowings under the revolving lines of credit were $100,000. The effective interest rate was 9.24% and 8.03% for the three months ended March 31, 2024 and 2023 for the term loan debt. As discussed previously, the Company entered into interest rate swap agreements to mitigate the interest risk. Interest incurred on the Credit Agreement with respect to the term loan amounted to $6,798 and $5,974 for the three months ended March 31, 2024 and 2023, respectively. Accrued interest payable on the Credit Agreement with respect to the term loan amounted to $2,382 and $2,400 at March 31, 2024 and December 31, 2023, respectively, and is included in accrued expenses. Interest incurred on the Credit Agreement with respect to the revolving line of credit was $63 for both the three months ended March 31, 2024 and 2023, respectively. There was $2 accrued interest payable on the revolving line of credit each at March 31, 2024 and December 31, 2023, respectively. Long-term debt consists of the following: MARCH 31, DECEMBER 31, (In thousands) Term loans $ 293,695 $ 294,450 Revolving line of credit — — Less: debt issuance costs (2,903) (3,213) Total 290,792 291,237 Current portion of long-term debt (3,020) (3,020) Long-term debt, net of current portion and debt issuance costs $ 287,772 $ 288,217 The principal amount of long-term debt outstanding as of March 31, 2024 matures in the following years: Remainder of 2024 2025 2026 TOTAL (In thousands) Maturities $ 2,265 $ 3,020 $ 288,410 $ 293,695 The Credit Agreement requires the Company to make an annual mandatory prepayment as it relates to the Company’s Excess Cash Flow calculation. For the year ended December 31, 2023, the Company was not required to make a mandatory prepayment on the term loan. The Company is required to make a quarterly principal payment of $755 on the term loan. The fair values of the Company’s variable interest term loan and revolving line of credit are not significantly different than their carrying value because the interest rates on these instruments are subject to change with market interest rates. |
Leases
Leases | 3 Months Ended |
Mar. 31, 2024 | |
Leases [Abstract] | |
Leases | Leases The Company leases certain office facilities and equipment under non-cancelable operating leases with remaining terms from less than one Operating lease ROU assets are included in other assets. With respect to operating lease liabilities, current operating lease liabilities are included in current liabilities and non-current operating lease liabilities are included in long-term liabilities in the condensed consolidated balance sheets. At March 31, 2024, the weighted average remaining lease terms were 6.09 years for operating leases and the weighted average discount rate was 5.47% for operating leases. For additional information on the Company's leases, see Note 14 to the condensed consolidated financial statements included in the Company’s 2023 Annual Report. The following table summarizes the lease-related assets and liabilities recorded in the condensed consolidated balance sheets at March 31, 2024 and December 31, 2023: Lease Position Balance Sheet Classification MARCH 31, 2024 DECEMBER 31, 2023 (In thousands) Assets Operating lease assets Operating lease right-of-use assets $ 14,292 $ 9,604 Total lease assets $ 14,292 $ 9,604 Liabilities Current Operating Other current liabilities $ 4,331 $ 4,375 Noncurrent Operating Operating lease liabilities, net of current portion 11,631 6,955 Total lease liabilities $ 15,962 $ 11,330 The following table summarizes by year the maturities of our minimum lease payments as of March 31, 2024: OPERATING (In thousands) Remainder of 2024 $ 3,460 2025 3,839 2026 2,528 2027 1,777 2028 979 Thereafter 6,107 Total future lease payments 18,690 Less: imputed interest (2,728) Total $ 15,962 |
Leases | Leases The Company leases certain office facilities and equipment under non-cancelable operating leases with remaining terms from less than one Operating lease ROU assets are included in other assets. With respect to operating lease liabilities, current operating lease liabilities are included in current liabilities and non-current operating lease liabilities are included in long-term liabilities in the condensed consolidated balance sheets. At March 31, 2024, the weighted average remaining lease terms were 6.09 years for operating leases and the weighted average discount rate was 5.47% for operating leases. For additional information on the Company's leases, see Note 14 to the condensed consolidated financial statements included in the Company’s 2023 Annual Report. The following table summarizes the lease-related assets and liabilities recorded in the condensed consolidated balance sheets at March 31, 2024 and December 31, 2023: Lease Position Balance Sheet Classification MARCH 31, 2024 DECEMBER 31, 2023 (In thousands) Assets Operating lease assets Operating lease right-of-use assets $ 14,292 $ 9,604 Total lease assets $ 14,292 $ 9,604 Liabilities Current Operating Other current liabilities $ 4,331 $ 4,375 Noncurrent Operating Operating lease liabilities, net of current portion 11,631 6,955 Total lease liabilities $ 15,962 $ 11,330 The following table summarizes by year the maturities of our minimum lease payments as of March 31, 2024: OPERATING (In thousands) Remainder of 2024 $ 3,460 2025 3,839 2026 2,528 2027 1,777 2028 979 Thereafter 6,107 Total future lease payments 18,690 Less: imputed interest (2,728) Total $ 15,962 |
Accrued Expenses and Other Liab
Accrued Expenses and Other Liabilities | 3 Months Ended |
Mar. 31, 2024 | |
Accrued Liabilities, Current [Abstract] | |
Accrued Expenses and Other Liabilities | Accrued Expenses and Other Liabilities Accrued expenses consist of the following: MARCH 31, DECEMBER 31, (In thousands) Accrued compensation $ 16,390 $ 28,624 Legal and professional accruals 3,060 3,913 Interest payable 2,317 2,351 Income taxes payable 1,321 1,010 Short-term contingent consideration liabilities 6,787 18,410 Other 2,869 2,471 Total accrued expenses $ 32,744 $ 56,779 Other long-term liabilities consist of the following: MARCH 31, DECEMBER 31, (In thousands) Uncertain tax position liability $ 1,267 $ 2,381 Contingent consideration 38,977 36,828 Total other long-term liabilities $ 40,244 $ 39,209 |
Equity-Based Compensation
Equity-Based Compensation | 3 Months Ended |
Mar. 31, 2024 | |
Share-Based Payment Arrangement [Abstract] | |
Equity-Based Compensation | Equity-Based Compensation The Company’s equity-based compensation programs are intended to attract, retain and provide incentives for employees, officers and directors. The Company has the following stock-based compensation plans and programs. Restricted Stock The majority of the Company’s restricted stock awarded to its employees was originally issued on December 10, 2020 in exchange for the Class B Profits Interest Unit (the “Class B Units”) of EQT, which was the former parent of the Company. Share-based compensation for the restricted stock exchanged for the time-based Class B Units is recognized on a straight-line basis over the requisite service period of the award, which is generally five years. Share-based compensation for the restricted stock exchanged for the performance-based Class B Units is recognized using the accelerated attribution approach. In 2021, the Company granted 87,127 replacement shares of restricted stock in connection with the Pinnacle 21 acquisition under which equity-based awards are outstanding. The fair value of the restricted stock awarded was initially based on the fair value of our common stock on the date of grant, then adjusted for time restrictions due to unregistered shares and lack of marketability. The non-vested restricted stock at March 31, 2024 issued in 2021 has a three-year vesting period. SHARES WEIGHTED- Non-vested restricted stock as of December 31, 2023 538,661 $ 23.18 Granted* 16,842 17.35 Vested* (63,041) 21.49 Forfeited — — Cancelled* (16,842) 23.00 Non-vested restricted stock as of March 31, 2024 475,620 $ 23.20 ___________________________________ * The Company did not legally authorize or issue any restricted stock during the three month period ended March 31, 2024. During the first quarter of 2024, the Company modified an award for a recipient, resulting in 16,842 shares assumed to be granted, vested, and cancelled. Equity-based compensation expenses related to the restricted stock exchanged for performance-based Class B Units were $250 and $655 for the three months ended March 31, 2024 and 2023, respectively. At March 31, 2024, the total unrecognized equity-based compensation expense related to outstanding restricted stock recognized using the accelerated attribution approach was $637, which is expected to be recognized over a weighted-average period of 12.5 months. Equity-based compensation expenses related to the restricted stock exchanged for time-based Class B Units were $377 and $498 for the three months ended March 31, 2024 and 2023, respectively. At March 31, 2024, the total unrecognized equity-based compensation expense related to outstanding restricted stock recognized using the straight-line attribution approach was $888, which is expected to be recognized over a weighted-average period of 14.8 months. Equity-based employee compensation expense related to the time-based restricted stock for the Pinnacle acquisition was $106 and $292 for the three months ended March 31, 2024 and 2023, respectively. At March 31, 2024, the total unrecognized equity-based compensation expenses related to outstanding restricted stock recognized using the straight-line attribution approach was $212, which is expected to be recognized over a weighted-average period of 6 months. 2020 Incentive Plan In order to align the Company’s equity compensation program with public company practices, the Company’s Board of Directors adopted and stockholders approved the 2020 Incentive Plan. The 2020 Incentive Plan allows for grants of non-qualified stock options, incentive stock options, restricted stock, restricted stock units (“RSUs”), and performance stock units (“PSUs”) to employees, directors, officers, and consultants or advisors of the Company. The 2020 Incentive Plan allows for 20,000,000 shares (the “plan share reserve”) of common stock to be issued. No more than the number of shares of common stock equal to the plan share reserve may be issued in the aggregate pursuant to the exercise of incentive stock options. The maximum number of shares of common stock granted during a single fiscal year to any non-employee director, taken together with any cash fees paid to such non-employee director during the fiscal year, may not exceed $1,000,000 in total value, except for certain awards made to a non-executive chair of our Board of Directors. Restricted Stock Units ("RSU") RSUs represent the right to receive shares of the Company’s common stock at a specified date in the future. The fair value of the RSUs is based on the fair value of the underlying shares on the date of grant. A summary of the Company’s RSU activity is as follows: UNITS WEIGHTED- Non-vested RSUs as of December 31, 2023 2,588,403 $ 23.77 Granted* 247,434 17.55 Vested** (42,810) 17.71 Forfeited (23,968) 23.83 Cancelled* (38,729) $ 23.95 Non-vested RSUs as of March 31, 2024 2,730,330 $ 23.30 ___________________________________ * The majority of shares granted during the first quarter of 2024 were issued under the 2020 Incentive Plan. During the first quarter of 2024, the Company modified awards for a recipient, resulting in 38,729 shares assumed to be granted, vested, and cancelled for accounting purpose. ** The number of the RSUs vested included 1,492 shares that were withheld on behalf of employees to satisfy the statutory tax withholding requirements. Equity-based compensation expenses related to the RSUs were $7,705 and $4,798 for three months ended March 31, 2024 and 2023, respectively. At March 31, 2024, the total unrecognized equity-based compensation expense related to outstanding RSUs was $35,779, which is expected to be recognized over a weighted-average period of 21.5 months. Performance Stock Units ("PSU") PSUs are issued under the 2020 Incentive Plan and represent the right to receive shares of the Company’s common stock at a specified date in the future based on the satisfaction of various service conditions and the achievement of certain performance thresholds including year over year revenue growth, unlevered free cash flow growth, annual revenue, and annual EBITDA. The PSUs granted in 2023 and 2024 also contains market conditions. Share-based compensation for the PSUs is only recognized to the extent a threshold is probable of being achieved and is recognized using the accelerated attribution approach. The Company will continue to assess the probability of each condition being achieved at each reporting period to determine whether and when to recognize compensation cost. A summary of the Company’s PSU activity for the period ended March 31, 2024 is as follows: UNITS WEIGHTED- Non-vested PSUs as of December 31, 2023 849,467 $ 24.84 Granted* 315,814 19.08 Vested — — Forfeited — — Cancelled* (394,050) 27.09 Non-vested PSUs as of March 31, 2024 771,231 $ 21.33 ___________________________________ * During the first quarter of 2024, the Company modified an award for a recipient, resulting in 6,651 shares assumed to be granted and cancelled for accounting purpose. Equity-based compensation expenses related to the PSUs were $636 and $2,287 for the three months ended at March 31, 2024 and 2023, respectively. At March 31, 2024, the total unrecognized equity-based compensation expense related to outstanding PSUs was $4,981, which is expected to be recognized over a weighted-average period of 18.6 months. The following table summarizes the components of total equity-based compensation expense included in the condensed consolidated statements of operations and comprehensive income (loss) for each period presented: THREE MONTHS ENDED MARCH 31, 2024 2023 (In thousands) Cost of revenues $ 3,239 $ 2,042 Sales and marketing 617 381 Research and development 1,649 1,650 General and administrative 3,568 4,470 Total $ 9,073 $ 8,543 |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2024 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Contingent consideration In connection with the Vyasa Analytics LLC, DIDB, Formedix, and ABM acquisitions, the Company is required to pay additional consideration if the acquired businesses achieve certain eligible revenue thresholds for certain periods. The maximum contingent considerations related to revenue thread for Vyasa, DIDB, Formedix, and ABM to be earned are $60,000, $2,000, $9,000, and $17,550, respectively. Additionally, the Company agreed to further contingent consideration based on the resolution of certain tax contingencies related with Formedix acquisition. During the quarter ended March 31, 2024, the Company made a combined payment of $12,356 on the contingent consideration, consisting of $8,649 in cash and $3,707 in Company's stock. The total contingent liabilities were $45,764 and $55,238 at March 31, 2024 and December 31, 2023, respectively. The contingent liabilities are included in accrued expenses and other long-term liabilities in the Company's condensed consolidated balance sheet. Legal proceedings The Company does not have any pending or threatened litigation which, individually or in the aggregate, would have a material adverse effect on its condensed consolidated financial statements as of March 31, 2024. Assurance-type warranty The Company includes an assurance commitment warranting that the application software products will perform in accordance with written user documentation and the agreements negotiated with customers. Since the Company does not customize its application software, warranty costs have historically been insignificant and expensed as incurred. For information related to commitments for future minimum lease payments, please see Note 7 – Leases. |
Segment Data
Segment Data | 3 Months Ended |
Mar. 31, 2024 | |
Segment Reporting [Abstract] | |
Segment Data | Segment Data Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”), in deciding how to allocate resources and in assessing performance. The Company has determined that its chief executive officer is its CODM. The Company manages its operations as a single segment for the purposes of assessing and making operating decisions. The Company’s CODM allocates resources and assesses performance based upon financial information at the consolidated level. Since the Company operates in one operating segment, all required financial segment information can be found in the condensed consolidated financial statements. The following table summarizes revenue by geographic area for the three months ended March 31, 2024 and 2023: THREE MONTHS ENDED 2024 2023 Revenue(1): Americas $ 69,165 $ 67,023 EMEA 20,843 16,915 Asia Pacific 6,646 6,363 Total $ 96,654 $ 90,301 ___________________________________ (1) Revenue is attributable to the countries based on the location of the customer. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2024 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company generally records its interim tax provision based upon a projection of the Company's estimated annual effective tax rate ("EAETR"). This EAETR is applied to the year-to-date consolidated pre-tax income to determine the interim provision for income taxes before discrete items. The effective tax rate ("ETR") each period is impacted by a number of factors, including the relative mix of domestic and international earnings, permanent differences, adjustments to the valuation allowances, and discrete items. The currently forecasted ETR may vary from the actual year-end due to the changes in these factors. |
Earnings per Share
Earnings per Share | 3 Months Ended |
Mar. 31, 2024 | |
Earnings Per Share [Abstract] | |
Earnings per Share | Earnings per Share Basic earnings per share is computed by dividing net income (loss) attributable to common stockholders by the weighted-average common shares outstanding for the period. Diluted earnings per share is computed by dividing the net income (loss) attributable to stockholders by the weighted-average number of shares and dilutive potential common shares during the period. THREE MONTHS ENDED MARCH 31, 2024 2023 Basic earnings per share Net income (loss) available to common shareholders $ (4,683) $ 1,358 Basic weighted-average common shares outstanding 159,524,270 158,177,025 Basic earnings per common share $ (0.03) $ 0.01 Diluted earnings per share Net income (loss) available to common shares $ (4,683) $ 1,358 Basic weighted-average common shares outstanding 159,524,270 158,177,025 Dilutive potential common shares — 1,550,387 Diluted weighted-average common shares outstanding 159,524,270 159,727,412 Diluted earnings per common share $ (0.03) $ 0.01 __________________________________ • For the period ended March 31, 2024, the Company excluded the restricted stock and RSUs from the calculation of diluted earnings per share that could potentially dilute earnings per share in the future because of the anti-dilutive effect of the reported net loss. • |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Pay vs Performance Disclosure | ||
Net income (loss) available to common shareholders | $ (4,683) | $ 1,358 |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Mar. 31, 2024 shares | |
Trading Arrangements, by Individual | |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Robert Aspbury [Member] | |
Trading Arrangements, by Individual | |
Material Terms of Trading Arrangement | On March 15, 2024, Robert Aspbury, our President, Certara Scientific Software, adopted a Rule 10b5-1 trading plan. The plan provides for the potential sale, on the dates and prices set forth in the plan, of up to 120,000 shares of our common stock from June 28, 2024 through December 13, 2024 |
Name | Robert Aspbury |
Title | President |
Rule 10b5-1 Arrangement Adopted | true |
Adoption Date | March 15, 2024 |
Arrangement Duration | 168 days |
Aggregate Available | 120,000 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2024 | |
Accounting Policies [Abstract] | |
Basis of Presentation | The preparation of condensed consolidated financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include, among other estimates, assumptions used in the allocation of the transaction price to separate performance obligations, estimates towards the measure of progress of completion on fixed-price service contracts, the determination of fair values and useful lives of long-lived assets as well as intangible assets, goodwill, allowance for credit losses for accounts receivable, recoverability of deferred tax assets, recognition of deferred revenue, valuation of interest rate swaps, determination of fair value of equity-based awards, measurement of fair value of contingent consideration, and assumptions used in testing for impairment of long-lived assets. Actual results could differ from those estimates, and such differences may be material to the condensed consolidated financial statements. |
Use of Estimates | The preparation of condensed consolidated financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include, among other estimates, assumptions used in the allocation of the transaction price to separate performance obligations, estimates towards the measure of progress of completion on fixed-price service contracts, the determination of fair values and useful lives of long-lived assets as well as intangible assets, goodwill, allowance for credit losses for accounts receivable, recoverability of deferred tax assets, recognition of deferred revenue, valuation of interest rate swaps, determination of fair value of equity-based awards, measurement of fair value of contingent consideration, and assumptions used in testing for impairment of long-lived assets. Actual results could differ from those estimates, and such differences may be material to the condensed consolidated financial statements. |
Unaudited Interim Financial Statements | The accompanying condensed consolidated balance sheet as of March 31, 2024, the condensed consolidated statements of operations and comprehensive income (loss) for the three months ended March 31, 2024 and 2023, the condensed consolidated statements of stockholders’ equity for the three months ended March 31, 2024 and 2023, the condensed consolidated statements of cash flows for the three months ended March 31, 2024 and 2023, and the related interim disclosures are unaudited. |
Accounting Pronouncements Not Yet Adopted | In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.” The ASU requires an enhanced disclosure of significant segment expenses on an annual and interim basis. This ASU will be effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. Upon adoption, the guidance should be applied retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the impact of this ASU on the disclosures in our consolidated financial statements. In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures". The ASU requires disclosure of specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold and further disaggregation of income taxes paid for individually significant jurisdictions. The ASU will be effective for public business entities for annual periods beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the impact of this ASU on the disclosures in our consolidated financial statements. |
Principles of Consolidation | The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. |
Fair Value Measurements | The Company follows FASB Accounting Standards Codification (“ASC”) 820-10, “Fair Value Measurements” (“ASC 820-10”), which defines fair value, establishes a framework for measuring fair value in U.S. GAAP, and requires certain disclosures about fair value measurements. ASC 820-10 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the most advantageous market for the asset or liability in an orderly transaction. Fair value measurement is based on a hierarchy of observable or unobservable inputs. The standard describes three levels of inputs that may be used to measure fair value. Level 1 — Inputs to the valuation methodology are quoted prices available in active markets for identical securities as of the reporting date; Level 2 — Inputs to the valuation methodology are other significant observable inputs, including quoted prices for similar securities, interest rates, credit risk etc. as of the reporting date, and the fair value can be determined through the use of models or other valuation methodologies; and Level 3 — Inputs to the valuation methodology are unobservable inputs in situations where there is little or no market activity of the securities and the reporting entity makes estimates and assumptions relating to the pricing of the securities including assumptions regarding risk. If the inputs used to measure fair value fall at different levels of the fair value hierarchy, the hierarchy is based on the lowest level of input that is significant to the fair value measurement. For the acquisitions noted in Note 5, the fair value measurement methods used to estimate the fair value of the assets acquired and liabilities assumed at the acquisition dates utilized a number of significant unobservable inputs of Level 3 assumptions. These assumptions included, among other things, projections of future operating results, implied fair value of assets using an income approach by preparing a discounted cash flow analysis, and other subjective assumptions. Interest rate swaps are valued in the market using discounted cash flows techniques. These techniques incorporate Level 1 and Level 2 inputs. The market inputs are utilized in the discounted cash flows’ calculation considering the instrument’s term, notional amount, discount rate and credit risk. Significant inputs to the derivative instrument valuation model for interest rate swaps are observable in active markets and are classified as Level 2 in the hierarchy. Contingent liabilities related to acquisitions are measured at fair value using Level 3 unobservable inputs. The Company's estimates of fair value are based upon assumptions believed to be reasonable but which are uncertain and involve significant judgments by management. Any changes in the fair value of these contingent liabilities are included in the earnings in the condensed consolidated statements of operations and comprehensive income (loss). |
Cash and Cash Equivalents | Cash equivalents include highly liquid investments with maturities of three months or less from the date purchased. |
Accounts Receivable | Accounts receivable includes current outstanding invoices billed to customers. Invoices are typically issued with net 30 days to net 90 days terms upon delivery of the product or upon achievement of billable events for service-based contracts. Unbilled receivables relate to the Company’s rights to consideration for performance obligations satisfied but not billed at the reporting date on contracts. Unbilled receivables are billed and transferred to customer accounts receivable when the rights become unconditional. The carrying amount of accounts receivable is reduced by a valuation allowance. |
Derivative Instruments | In the normal course of business, the Company is subject to risk from adverse fluctuations in interest rates. The Company has chosen to manage this risk through the use of derivative financial instruments that consist of interest rate swap contracts. Counterparties to these contracts are major financial institutions. The Company is exposed to credit loss in the event of nonperformance by these counterparties. The Company does not use derivative instruments for trading or speculative purposes. The objective in managing exposure to market risk is to limit the impact on cash flows. To qualify for hedge accounting, the interest rate swaps must effectively reduce the risk exposure that they are designed to hedge. In addition, at the inception of a qualifying cash flow hedging relationship, the underlying transaction or transactions must be, and be expected to remain, probable of occurring in accordance with the related assertions. FASB ASC 815, “Derivatives and Hedging,” requires the Company to recognize all derivatives on the balance sheet at fair value. The Company may enter into derivative contracts such as interest rate swap contracts that effectively convert portions of the Company’s floating rate debt to a fixed rate, which serves to mitigate interest rate risk. The Company’s objectives in using interest rate swaps are to add stability to interest expense and to manage its exposure to interest rate movements. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. The Company entered into an interest rate swap agreement in May 2022 that pays a fixed interest rate and receives a variable interest rate to modify the interest rate characteristics of term loan debt from variable to fixed in order to reduce the impact of changes in future cash flows due to market interest rate changes. The swap agreement has a notional amount of $230,000, a fixed rate of 2.8% and a termination date of August 31, 2025. During the quarter ended September 30, 2023, the Company and the counter party amended the floating rate of the swap agreement from term LIBOR to term SOFR due to LIBOR cessation. At March 31, 2024 and December 31, 2023, the interest swap had a fair value of $6,374 and $5,624, respectively; The gross fair value recognized in accumulated other comprehensive income was $6,374 and $5,624, respectively, at March 31, 2024 and December 31, 2023. |
Revenue Recognition | In accordance with ASC Topic 606, “Revenue from Contracts with Customers”, the Company determines revenue recognition through the following steps: i. Identification of the contract, or contracts, with a customer ii. Identification of the performance obligations in the contract iii. Determination of the transaction price iv. Allocation of the transaction price to the performance obligations in the contract v. Recognition of revenue when, or as, the Company satisfies a performance obligation The Company’s revenue consists of fees for perpetual and term licenses for its software products, post-contract customer support (referred to as maintenance), software as a service (“SaaS”), and professional services including training and other revenue. Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for promised goods or services. The following describes the nature of the Company’s primary types of revenues and the revenue recognition policies as they pertain to the types of transactions the Company enters into with its customers. Software Licenses Revenues Software license revenue consists primarily of sales of software licenses downloaded and installed by our customers on their own hardware. The license period is generally one year or less and includes an insignificant amount of customer support to assist the customer with the software. Software license performance obligations are generally recognized upfront at the point in time when the software license has been delivered. Software as a Service (SaaS) Revenues SaaS revenues consist of subscription fees for access to, and related support for, the Company’s cloud-based solutions. The Company typically invoices subscription fees in advance in annual installments. The invoice is initially deferred and revenue is recognized ratably over the life of the contract. The Company’s software contracts do not typically include variable consideration or options for future purchases that would not be similar to the original goods. Software Service Revenues Maintenance services agreements on perpetual software consist of fees for providing software updates and for providing technical support for software products for a specified term. Revenue allocated to maintenance services is recognized ratably over the contract term beginning on the delivery date of each offering. Maintenance contracts generally have a term of one year. While the transfer of control of the software training and implementation performance obligations are over time, the services are typically started and completed within a few days. Due to the quick nature of the performance obligation from start to finish and the insignificant amounts, the Company recognizes any software training or implementation revenue at the completion of the service. Any unrecognized portion of amounts paid in advance for licenses and services is recorded as deferred revenue. Consulting Service Revenues The Company’s primary professional services offering includes consulting services, which may be either strategic consulting services, reporting and analysis services, regulatory writing services, or any combination of the three. The Company’s professional services contracts are either time-and-materials or fixed fee. Service revenues are generally recognized over time as the services are performed. Generally, these services are delivered to customers electronically. Revenue from time-and-material contracts is recognized on an output basis as labor hours are delivered and/or direct expenses are incurred. Revenues for fixed-price services are generally recognized over time by applying input methods to estimate progress to completion. Accordingly, the number of resources being paid for and the varying lengths of time they are being paid for determine the measure of progress. Arrangements with Multiple Performance Obligations For contracts with multiple performance obligations, such as a software license plus software training, implementation, and/or maintenance/support, or in contracts where there are multiple software licenses, the Company determines if the products or services are distinct and allocates the consideration to each distinct performance obligation on a relative standalone selling price basis. The delivery of a particular type of software and each of the user licenses would be one performance obligation. Additionally, any training, implementation, or support and maintenance promises sold as part of the software license agreement would be considered separate performance obligations, as those promises are distinct and separately identifiable from the software licenses. The payment terms in these arrangements are less than one year such that there is no significant financing component. Contract Balances The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (contract assets), and customer advances and deposits (deferred revenue, contract liabilities) on the condensed consolidated balance sheets. Amounts are billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals (e.g., quarterly or monthly) or upon achievement of contractual milestones. Contract assets relate to the Company’s rights to consideration for performance obligations satisfied but not billed at the reporting date on contracts (i.e., unbilled revenue, a component of accounts receivable in the condensed consolidated balance sheets). Contract assets are billed and transferred to customer accounts receivable when the rights become unconditional. The Company typically invoices customers for term licenses, subscriptions, maintenance and support fees in advance with payment due before the start of the subscription term, ranging from one Contract balances at March 31, 2024 and December 31, 2023 were as follows: MARCH 31, DECEMBER 31, (In thousands) Contract assets $ 10,767 $ 10,405 Contract liabilities 58,238 61,748 During the three months ended March 31, 2024, the Company recognized revenue of $29,351 related to contract liabilities at December 31, 2023. The unsatisfied performance obligations as of March 31, 2024 were approximately $115,418. We expect to recognize approximately $102,229 or 88.6% of this revenue over the next 12 months and the remainder thereafter. Deferred Contract Acquisition Costs Under ASC Topic 606, sales commissions paid to the sales force and the related employer payroll taxes, collectively deferred contract acquisition costs, are considered incremental and recoverable costs of obtaining a contract with a customer. The Company recognizes an asset for the incremental costs of obtaining a contract with a customer if the Company expects the benefit of those costs to be longer than one year. The Company has determined that certain sales incentive programs meet the requirements to be capitalized. The costs capitalized are primarily sales commissions for our sales force personnel. Capitalized costs to obtain a contract are amortized on a straight-line basis over the expected period of benefit. Amortization of capitalized costs is included in sales and marketing expenses in our condensed consolidated statements of operations and comprehensive income (loss). Capitalized contract acquisition costs were $597 and $655 as of March 31, 2024 and December 31, 2023, respectively, and were included in prepaid expenses and other current assets in the condensed consolidated balance sheets. Grant Revenue The Company receives grant funding for certain specific projects from time to time. These grants specify the funds provided are to be used exclusively to satisfy the deliverables outlined in the grant agreements. In these agreements, both involved parties receive and sacrifice approximately commensurate value so these are accounted for as exchange transactions and revenue is recognized according to ASC Topic 606. Grant funding is generally provided near contract inception, so a contract liability is initially recorded and revenue is recognized as the performance obligations are satisfied over time. Sources and Timing of Revenue |
Earnings per Share | Basic earnings per common share is computed by dividing the net earnings by the weighted-average number of shares outstanding during the reporting period, without consideration for potentially dilutive securities. Diluted shares are calculated under the treasury stock method. Diluted earnings per share is calculated by dividing the net earnings attributable to stockholders by the weighted-average number of shares and dilutive securities outstanding during the period. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Accounting Policies [Abstract] | |
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | The following table sets forth the assets and liabilities that were measured at fair value on a recurring and non-recurring basis by their levels in the fair value hierarchy at March 31, 2024: LEVEL 1 LEVEL2 LEVEL 3 TOTAL (In thousands) Assets Money market funds $ 149,397 $ — $ — $ 149,397 Interest rate swap assets — 6,374 — 6,374 Total assets $ 149,397 $ 6,374 $ — $ 155,771 Liabilities Contingent liabilities $ — $ — $ 44,982 $ 44,982 Total liabilities $ — $ — $ 44,982 $ 44,982 The following table sets forth the assets and liabilities that were measured at fair value on a recurring and non-recurring basis by their levels in the fair value hierarchy at December 31, 2023: LEVEL 1 LEVEL2 LEVEL 3 TOTAL (In thousands) Assets Money market funds $ 147,478 $ — $ — $ 147,478 Interest rate swap assets — 5,624 — 5,624 Total assets $ 147,478 $ 5,624 $ — $ 153,102 Liabilities Contingent liabilities $ — $ — $ 54,457 $ 54,457 Total liabilities $ — $ — $ 54,457 $ 54,457 |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation | The following table summarizes the Level 3 activity of the changes in the contingent consideration liability. MARCH 31, 2024 (In thousands) Beginning balance at December 31, 2023 $ 54,457 Additions — Payments (12,356) Fair value remeasurement 2,881 Ending balance at March 31, 2024 $ 44,982 |
Schedule of Accounts, Notes, Loans and Financing Receivable | Accounts receivable consists of the following: MARCH 31, DECEMBER 31, (In thousands) Trade receivables $ 71,268 $ 75,410 Unbilled receivables 10,767 10,405 Other receivables 255 354 Allowances for credit losses (1,341) (1,312) Accounts receivable, net $ 80,949 $ 84,857 |
Accounts Receivable, Allowance for Credit Loss | The following table presents the information regarding the allowance of accounts receivable: MARCH 31, DECEMBER 31, (In thousands) Beginning balance $ 1,312 $ 1,250 Provision for credit losses 59 684 Charge-offs, net of recoveries (30) (622) Ending balance $ 1,341 $ 1,312 |
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value | The notional amounts, fair values, and classification of derivative instruments in the condensed consolidated balance sheets as of March 31, 2024 and December 31, 2023 were as follows: Interest rate swap derivative designated as cash flow hedging instrument: MARCH 31, DECEMBER 31, (In thousands) Notional amounts $ 230,000 $ 230,000 Prepaid expenses and other current assets $ 5,033 $ 4,473 Other long-term assets $ 1,341 $ 1,151 |
Contract Balances, Contract Asset, Contract Liability, and Receivable | Contract balances at March 31, 2024 and December 31, 2023 were as follows: MARCH 31, DECEMBER 31, (In thousands) Contract assets $ 10,767 $ 10,405 Contract liabilities 58,238 61,748 |
Summary of Revenue by Timing of Revenue Recognition | The following table presents the Company’s revenue by timing of revenue recognition to understand the risks of timing of transfer of control and cash flows: THREE MONTHS ENDED MARCH 31, 2024 2023 Software licenses transferred at a point in time $ 15,380 $ 14,498 Software licenses transferred over time 23,927 18,507 Service revenues earned over time 57,347 57,296 Total $ 96,654 $ 90,301 |
Prepaid Expenses and Other Cu_2
Prepaid Expenses and Other Current Assets and Other Long-Term Assets (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Prepaid Expense and Other Assets, Current [Abstract] | |
Schedule of Prepaid and Other Current Assets | MARCH 31, DECEMBER 31, (In thousands) Prepaid expenses $ 8,077 $ 6,363 Income tax receivable 2,396 3,395 Research and development tax credit receivable 5,804 5,004 Current portion of interest rate swap asset 5,033 4,473 Other current assets 1,422 1,158 Prepaid expenses and other current assets $ 22,732 $ 20,393 |
Schedule of Other Long-Term Assets | Other long-term assets at March 31, 2024 and December 31, 2023 consisted of the following: MARCH 31, DECEMBER 31, (In thousands) Long-term deposits $ 1,517 $ 1,451 Interest rate swap asset - long-term 1,341 1,151 Deferred financing cost 382 451 Total other long-term assets $ 3,240 $ 3,053 |
Long-Term Debt and Revolving _2
Long-Term Debt and Revolving Line of Credit (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term debt | Long-term debt consists of the following: MARCH 31, DECEMBER 31, (In thousands) Term loans $ 293,695 $ 294,450 Revolving line of credit — — Less: debt issuance costs (2,903) (3,213) Total 290,792 291,237 Current portion of long-term debt (3,020) (3,020) Long-term debt, net of current portion and debt issuance costs $ 287,772 $ 288,217 |
Schedule of Maturity of Long-Term Debt | The principal amount of long-term debt outstanding as of March 31, 2024 matures in the following years: Remainder of 2024 2025 2026 TOTAL (In thousands) Maturities $ 2,265 $ 3,020 $ 288,410 $ 293,695 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Leases [Abstract] | |
Schedule Of Operating And Financing Lease Right Of Use Assets And Lease Liabilities | The following table summarizes the lease-related assets and liabilities recorded in the condensed consolidated balance sheets at March 31, 2024 and December 31, 2023: Lease Position Balance Sheet Classification MARCH 31, 2024 DECEMBER 31, 2023 (In thousands) Assets Operating lease assets Operating lease right-of-use assets $ 14,292 $ 9,604 Total lease assets $ 14,292 $ 9,604 Liabilities Current Operating Other current liabilities $ 4,331 $ 4,375 Noncurrent Operating Operating lease liabilities, net of current portion 11,631 6,955 Total lease liabilities $ 15,962 $ 11,330 |
Schedule Of Minimum Lease Payments Of Operating Leases | The following table summarizes by year the maturities of our minimum lease payments as of March 31, 2024: OPERATING (In thousands) Remainder of 2024 $ 3,460 2025 3,839 2026 2,528 2027 1,777 2028 979 Thereafter 6,107 Total future lease payments 18,690 Less: imputed interest (2,728) Total $ 15,962 |
Schedule Of Minimum Lease Payments Of Finance Leases | The following table summarizes by year the maturities of our minimum lease payments as of March 31, 2024: OPERATING (In thousands) Remainder of 2024 $ 3,460 2025 3,839 2026 2,528 2027 1,777 2028 979 Thereafter 6,107 Total future lease payments 18,690 Less: imputed interest (2,728) Total $ 15,962 |
Accrued Expenses and Other Li_2
Accrued Expenses and Other Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Accrued Liabilities, Current [Abstract] | |
Schedule Of Accrued Expenses | Accrued expenses consist of the following: MARCH 31, DECEMBER 31, (In thousands) Accrued compensation $ 16,390 $ 28,624 Legal and professional accruals 3,060 3,913 Interest payable 2,317 2,351 Income taxes payable 1,321 1,010 Short-term contingent consideration liabilities 6,787 18,410 Other 2,869 2,471 Total accrued expenses $ 32,744 $ 56,779 |
Other Noncurrent Liabilities | Other long-term liabilities consist of the following: MARCH 31, DECEMBER 31, (In thousands) Uncertain tax position liability $ 1,267 $ 2,381 Contingent consideration 38,977 36,828 Total other long-term liabilities $ 40,244 $ 39,209 |
Equity-Based Compensation (Tabl
Equity-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Share-Based Payment Arrangement [Abstract] | |
Summary Of The Restricted Stock | SHARES WEIGHTED- Non-vested restricted stock as of December 31, 2023 538,661 $ 23.18 Granted* 16,842 17.35 Vested* (63,041) 21.49 Forfeited — — Cancelled* (16,842) 23.00 Non-vested restricted stock as of March 31, 2024 475,620 $ 23.20 ___________________________________ * The Company did not legally authorize or issue any restricted stock during the three month period ended March 31, 2024. During the first quarter of 2024, the Company modified an award for a recipient, resulting in 16,842 shares assumed to be granted, vested, and cancelled. |
Summary Of The Company's RSU activity | A summary of the Company’s RSU activity is as follows: UNITS WEIGHTED- Non-vested RSUs as of December 31, 2023 2,588,403 $ 23.77 Granted* 247,434 17.55 Vested** (42,810) 17.71 Forfeited (23,968) 23.83 Cancelled* (38,729) $ 23.95 Non-vested RSUs as of March 31, 2024 2,730,330 $ 23.30 ___________________________________ * The majority of shares granted during the first quarter of 2024 were issued under the 2020 Incentive Plan. During the first quarter of 2024, the Company modified awards for a recipient, resulting in 38,729 shares assumed to be granted, vested, and cancelled for accounting purpose. ** |
Schedule Of Nonvested Performance-Based Units Activity | A summary of the Company’s PSU activity for the period ended March 31, 2024 is as follows: UNITS WEIGHTED- Non-vested PSUs as of December 31, 2023 849,467 $ 24.84 Granted* 315,814 19.08 Vested — — Forfeited — — Cancelled* (394,050) 27.09 Non-vested PSUs as of March 31, 2024 771,231 $ 21.33 ___________________________________ * During the first quarter of 2024, the Company modified an award for a recipient, resulting in 6,651 shares assumed to be granted and cancelled for accounting purpose. |
Schedule Of Compensation Expense | The following table summarizes the components of total equity-based compensation expense included in the condensed consolidated statements of operations and comprehensive income (loss) for each period presented: THREE MONTHS ENDED MARCH 31, 2024 2023 (In thousands) Cost of revenues $ 3,239 $ 2,042 Sales and marketing 617 381 Research and development 1,649 1,650 General and administrative 3,568 4,470 Total $ 9,073 $ 8,543 |
Segment Data (Tables)
Segment Data (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Segment Reporting [Abstract] | |
Schedule of Revenue by Geographic Area | The following table summarizes revenue by geographic area for the three months ended March 31, 2024 and 2023: THREE MONTHS ENDED 2024 2023 Revenue(1): Americas $ 69,165 $ 67,023 EMEA 20,843 16,915 Asia Pacific 6,646 6,363 Total $ 96,654 $ 90,301 ___________________________________ (1) Revenue is attributable to the countries based on the location of the customer. |
Earnings per Share (Tables)
Earnings per Share (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Earnings Per Share [Abstract] | |
Schedule of Basic and Diluted Earnings per Share | THREE MONTHS ENDED MARCH 31, 2024 2023 Basic earnings per share Net income (loss) available to common shareholders $ (4,683) $ 1,358 Basic weighted-average common shares outstanding 159,524,270 158,177,025 Basic earnings per common share $ (0.03) $ 0.01 Diluted earnings per share Net income (loss) available to common shares $ (4,683) $ 1,358 Basic weighted-average common shares outstanding 159,524,270 158,177,025 Dilutive potential common shares — 1,550,387 Diluted weighted-average common shares outstanding 159,524,270 159,727,412 Diluted earnings per common share $ (0.03) $ 0.01 __________________________________ • For the period ended March 31, 2024, the Company excluded the restricted stock and RSUs from the calculation of diluted earnings per share that could potentially dilute earnings per share in the future because of the anti-dilutive effect of the reported net loss. • |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Fair Value Measurements (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Assets | ||
Money market funds | $ 149,397 | $ 147,478 |
Interest rate swap assets | 6,374 | 5,624 |
Total assets | 155,771 | 153,102 |
Liabilities | ||
Contingent liabilities | 44,982 | 54,457 |
Total liabilities | 44,982 | 54,457 |
LEVEL 1 | ||
Assets | ||
Money market funds | 149,397 | 147,478 |
Interest rate swap assets | 0 | 0 |
Total assets | 149,397 | 147,478 |
Liabilities | ||
Contingent liabilities | 0 | 0 |
Total liabilities | 0 | 0 |
LEVEL2 | ||
Assets | ||
Money market funds | 0 | 0 |
Interest rate swap assets | 6,374 | 5,624 |
Total assets | 6,374 | 5,624 |
Liabilities | ||
Contingent liabilities | 0 | 0 |
Total liabilities | 0 | 0 |
LEVEL 3 | ||
Assets | ||
Money market funds | 0 | 0 |
Interest rate swap assets | 0 | 0 |
Total assets | 0 | 0 |
Liabilities | ||
Contingent liabilities | 44,982 | 54,457 |
Total liabilities | $ 44,982 | $ 54,457 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Level 3 Contingent Liability Roll Forward (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2024 USD ($) | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Beginning balance at December 31, 2023 | $ 54,457 |
Additions | 0 |
Payments | (12,356) |
Fair value remeasurement | 2,881 |
Ending balance at March 31, 2024 | $ 44,982 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Cash and Cash Equivalents (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Accounting Policies [Abstract] | ||
Cash and cash equivalents | $ 224,776 | $ 234,951 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Accounts Receivable Narrative (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 | Dec. 31, 2022 |
Accounting Policies [Abstract] | |||
Accounts receivable, allowance for credit loss | $ 1,341 | $ 1,312 | $ 1,250 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Accounts Receivable (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 | Dec. 31, 2022 |
Accounting Policies [Abstract] | |||
Trade receivables | $ 71,268 | $ 75,410 | |
Unbilled receivables | 10,767 | 10,405 | |
Other receivables | 255 | 354 | |
Allowances for credit losses | (1,341) | (1,312) | $ (1,250) |
Accounts receivable, net | $ 80,949 | $ 84,857 |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - Allowance of Accounts Receivable (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | Sep. 30, 2023 | |
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | |||
Beginning balance | $ 1,312 | $ 1,250 | $ 1,250 |
(Recovery of) provision for credit losses | 59 | $ (168) | 684 |
Charge-offs, net of recoveries | (30) | $ (622) | |
Ending balance | $ 1,341 |
Summary of Significant Accou_10
Summary of Significant Accounting Policies - Derivative Instruments (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | May 31, 2022 | |
Derivative | ||||
Loss reclassified from AOCI into income | $ 1,525 | $ 986 | ||
Interest rate swap assets | 6,374 | $ 5,624 | ||
Secured Overnight Financing Rate SOFR | ||||
Derivative | ||||
Embedded derivative, fair value of embedded derivative liability | 6,374 | 5,624 | ||
Not Designated as Hedging Instrument, Economic Hedge | Cash Flow Hedging | Prepaid expenses and other current assets | ||||
Derivative | ||||
Interest rate swap assets | 5,033 | 4,473 | ||
Not Designated as Hedging Instrument, Economic Hedge | Cash Flow Hedging | Other long-term assets | ||||
Derivative | ||||
Interest rate swap assets | 1,341 | 1,151 | ||
LEVEL2 | ||||
Derivative | ||||
Interest rate swap assets | 6,374 | 5,624 | ||
LEVEL2 | Fair Value, Recurring | ||||
Derivative | ||||
Notional amounts | 230,000 | $ 230,000 | ||
Interest rate swap assets | Not Designated as Hedging Instrument, Economic Hedge | Cash Flow Hedging | ||||
Derivative | ||||
Interest rate | 2.80% | |||
Interest rate swap assets | Designated as Hedging Instrument | Cash Flow Hedging | ||||
Derivative | ||||
Notional amounts | $ 230,000 | |||
Interest rate cash flow hedge gain to be reclassified during next 12 months | $ 5,041 |
Summary of Significant Accou_11
Summary of Significant Accounting Policies - Revenue Recognition (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | |
Summary of Significant Accounting Policies | |||
Software license revenue term of recognition period | 1 year | ||
Contract assets | $ 10,767 | $ 10,405 | |
Contract liabilities | 58,238 | 61,748 | |
Contract with customer, liability, revenue recognized | 29,351 | ||
Remaining performance obligation, amount | 115,418 | ||
Capitalized contract cost, net | 597 | $ 655 | |
Revenue | 96,654 | $ 90,301 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-04-01 | |||
Summary of Significant Accounting Policies | |||
Remaining performance obligation, amount | $ 102,229 | ||
Remaining performance obligation, expected timing of satisfaction, period | 12 months | ||
Remaining performance obligation, percentage | 88.60% | ||
Minimum | |||
Summary of Significant Accounting Policies | |||
Subscription term | 1 year | ||
Maximum | |||
Summary of Significant Accounting Policies | |||
Subscription term | 3 years | ||
Software licenses transferred at a point in time | Software Licenses | |||
Summary of Significant Accounting Policies | |||
Revenue | $ 15,380 | 14,498 | |
Software licenses transferred over time | Software Licenses | |||
Summary of Significant Accounting Policies | |||
Revenue | 23,927 | 18,507 | |
Software licenses transferred over time | Service Revenue | |||
Summary of Significant Accounting Policies | |||
Revenue | $ 57,347 | $ 57,296 |
Business Combinations - (Detail
Business Combinations - (Details) $ in Thousands | 3 Months Ended | |||||
Dec. 12, 2023 USD ($) | Oct. 10, 2023 USD ($) | Jun. 20, 2023 USD ($) | Mar. 31, 2024 USD ($) acquisition | Mar. 31, 2023 USD ($) | Dec. 31, 2023 USD ($) | |
Business Acquisition [Line Items] | ||||||
Number of businesses acquired | acquisition | 20 | |||||
Goodwill | $ 715,620 | $ 716,333 | ||||
Contingent liabilities | 44,982 | $ 54,457 | ||||
Change in fair value of contingent considerations | $ 2,878 | $ 1,261 | ||||
Software or Technology Related Acquisitions | ||||||
Business Acquisition [Line Items] | ||||||
Number of businesses acquired | acquisition | 13 | |||||
Drug Interaction Solutions University of Washington (DIDB) | ||||||
Business Acquisition [Line Items] | ||||||
Business combination, consideration transferred | $ 8,340 | |||||
Goodwill | $ 2,289 | |||||
Contingent consideration earn out period | 2 years | |||||
Contingent liabilities | $ 136 | |||||
Contingent consideration arrangements, range of outcomes, high | $ 2,000 | 2,000 | ||||
Change in fair value of contingent considerations | 4 | |||||
Drug Interaction Solutions University of Washington (DIDB) | Revenue Target | ||||||
Business Acquisition [Line Items] | ||||||
Contingent liabilities | 790 | |||||
Drug Interaction Solutions University of Washington (DIDB) | Developed Technology Rights | ||||||
Business Acquisition [Line Items] | ||||||
Finite-lived intangible assets acquired | 5,600 | |||||
Drug Interaction Solutions University of Washington (DIDB) | Customer Relationships | ||||||
Business Acquisition [Line Items] | ||||||
Finite-lived intangible assets acquired | 360 | |||||
Drug Interaction Solutions University of Washington (DIDB) | Trademarks | ||||||
Business Acquisition [Line Items] | ||||||
Finite-lived intangible assets acquired | $ 330 | |||||
Formedix | ||||||
Business Acquisition [Line Items] | ||||||
Business combination, consideration transferred | $ 41,389 | |||||
Goodwill | $ 25,062 | |||||
Contingent consideration earn out period | 2 years | |||||
Contingent liabilities | $ 5,161 | 3,189 | ||||
Contingent consideration arrangements, range of outcomes, high | 9,000 | 9,000 | ||||
Change in fair value of contingent considerations | (507) | |||||
Formedix | Revenue Target | ||||||
Business Acquisition [Line Items] | ||||||
Contingent liabilities | 4,380 | |||||
Formedix | Developed Technology Rights | ||||||
Business Acquisition [Line Items] | ||||||
Finite-lived intangible assets acquired | 11,700 | |||||
Formedix | Customer Relationships | ||||||
Business Acquisition [Line Items] | ||||||
Finite-lived intangible assets acquired | $ 3,100 | |||||
Applied Biomath | ||||||
Business Acquisition [Line Items] | ||||||
Business combination, consideration transferred | $ 36,594 | |||||
Goodwill | $ 15,872 | |||||
Contingent consideration earn out period | 2 years | |||||
Contingent liabilities | 4,442 | |||||
Contingent consideration arrangements, range of outcomes, high | $ 17,550 | 17,550 | ||||
Change in fair value of contingent considerations | $ (938) | |||||
Applied Biomath | Revenue Target | ||||||
Business Acquisition [Line Items] | ||||||
Contingent liabilities | 5,357 | |||||
Applied Biomath | Developed Technology Rights | ||||||
Business Acquisition [Line Items] | ||||||
Finite-lived intangible assets acquired | 4,600 | |||||
Applied Biomath | Customer Relationships | ||||||
Business Acquisition [Line Items] | ||||||
Finite-lived intangible assets acquired | 13,700 | |||||
Applied Biomath | Noncompete Agreements | ||||||
Business Acquisition [Line Items] | ||||||
Finite-lived intangible assets acquired | $ 800 |
Prepaid Expenses and Other Cu_3
Prepaid Expenses and Other Current Assets and Other Long-Term Assets - Prepaid and Other Current Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Prepaid Expense and Other Assets, Current [Abstract] | ||
Prepaid expenses | $ 8,077 | $ 6,363 |
Income tax receivable | 2,396 | 3,395 |
Research and development tax credit receivable | 5,804 | 5,004 |
Current portion of interest rate swap asset | 5,033 | 4,473 |
Other current assets | 1,422 | 1,158 |
Prepaid expenses and other current assets | $ 22,732 | $ 20,393 |
Prepaid Expenses and Other Cu_4
Prepaid Expenses and Other Current Assets and Other Long-Term Assets - Other Long-term Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Prepaid Expense and Other Assets, Current [Abstract] | ||
Long-term deposits | $ 1,517 | $ 1,451 |
Interest rate swap asset - long-term | 1,341 | 1,151 |
Deferred financing cost | 382 | 451 |
Total other long-term assets | $ 3,240 | $ 3,053 |
Long-Term Debt and Revolving _3
Long-Term Debt and Revolving Line of Credit - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | Jun. 17, 2021 | |
Debt Instrument | ||||
Accrued interest payable | $ 2,317 | $ 2,351 | ||
Revolving Credit Facility | ||||
Debt Instrument | ||||
Available borrowings | $ 100,000 | $ 100,000 | $ 80,000 | |
Maximum borrowing capacity of revolving line of credit | $ 100,000 | |||
Effective interest rate | 9.24% | 8.03% | ||
Interest incurred | $ 63 | |||
Accrued interest payable | 2 | $ 2 | ||
Prepayment on the loan | 755 | |||
Variable Interest Term Loan | ||||
Debt Instrument | ||||
Interest incurred | 6,798 | $ 5,974 | ||
Interest payable | $ 2,382 | $ 2,400 |
Long-Term Debt and Revolving _4
Long-Term Debt and Revolving Line of Credit - Long-Term Debt (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Debt Instrument | ||
Term loans | $ 293,695 | |
Less: debt issuance costs | (2,903) | $ (3,213) |
Total | 290,792 | 291,237 |
Current portion of long-term debt | (3,020) | (3,020) |
Long-term debt, net of current portion and debt issuance costs | 287,772 | 288,217 |
Term Loan | ||
Debt Instrument | ||
Term loans | 293,695 | 294,450 |
Revolving Credit Facility | ||
Debt Instrument | ||
Revolving line of credit | $ 0 | $ 0 |
Long-Term Debt and Revolving _5
Long-Term Debt and Revolving Line of Credit - Maturity of Long Term Debt (Details) $ in Thousands | Mar. 31, 2024 USD ($) |
Maturities | |
Remainder of 2024 | $ 2,265 |
2025 | 3,020 |
2026 | 288,410 |
TOTAL | $ 293,695 |
Leases - Narrative (Details)
Leases - Narrative (Details) | Mar. 31, 2024 |
Leases | |
Operating leases - Weighted-average remaining lease term (years) | 6 years 1 month 2 days |
Operating leases - Weighted-average discount rate | 5.47% |
Minimum | |
Leases | |
Remaining operating and capital lease term | 1 year |
Maximum | |
Leases | |
Remaining operating and capital lease term | 10 years |
Leases - Lease-related Assets a
Leases - Lease-related Assets and Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Assets | ||
Operating lease right-of-use assets | $ 14,292 | $ 9,604 |
Liabilities [Abstract] | ||
Current portion of operating lease liabilities | 4,331 | 4,375 |
Operating lease liabilities, net of current portion | 11,631 | 6,955 |
Total | $ 15,962 | $ 11,330 |
Leases - Maturities of our Mini
Leases - Maturities of our Minimum Lease Payments (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
OPERATING LEASES | ||
Remainder of 2024 | $ 3,460 | |
2025 | 3,839 | |
2026 | 2,528 | |
2027 | 1,777 | |
2028 | 979 | |
Thereafter | 6,107 | |
Total future lease payments | 18,690 | |
Less: imputed interest | (2,728) | |
Total | $ 15,962 | $ 11,330 |
Accrued Expenses and Other Li_3
Accrued Expenses and Other Liabilities - Accrued expenses (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Accrued Liabilities, Current [Abstract] | ||
Accrued compensation | $ 16,390 | $ 28,624 |
Legal and professional accruals | 3,060 | 3,913 |
Interest payable | 2,317 | 2,351 |
Income taxes payable | 1,321 | 1,010 |
Short-term contingent consideration liabilities | 6,787 | 18,410 |
Other | 2,869 | 2,471 |
Total accrued expenses | $ 32,744 | $ 56,779 |
Accrued Expenses and Other Li_4
Accrued Expenses and Other Liabilities - Other Long Term Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Payables and Accruals [Abstract] | ||
Uncertain tax position liability | $ 1,267 | $ 2,381 |
Contingent consideration | 38,977 | 36,828 |
Total other long-term liabilities | $ 40,244 | $ 39,209 |
Equity-Based Compensation - Nar
Equity-Based Compensation - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2021 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Compensation expense | $ 9,073 | $ 8,543 | |
2020 Incentive Plan | |||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Number of units authorized (in shares) | 20,000,000 | ||
Authorized amount | $ 1,000,000 | ||
Time Based Class B Units | |||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Service period | 5 years | ||
Unrecognized share-based compensation expense | $ 888 | ||
Compensation expense | $ 377 | 498 | |
Restricted Stock | |||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Non-vested restricted stock (in shares) | 16,842 | ||
Vesting period | 3 years | ||
Unrecognized share-based compensation expense, recognition period | 14 months 24 days | ||
Restricted Stock | Pinnacle 21, LLC | |||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Non-vested restricted stock (in shares) | 87,127 | ||
Unrecognized share-based compensation expense, recognition period | 6 months | ||
Performance Based Class B Units | |||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Share-based payment arrangement, income | $ 250 | 655 | |
Unrecognized share-based compensation expense | $ 637 | ||
Unrecognized share-based compensation expense, recognition period | 12 months 15 days | ||
Time Based Restricted Stock | Pinnacle 21, LLC | |||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Unrecognized share-based compensation expense | $ 212 | ||
Compensation expense | $ 106 | 292 | |
Restricted Stock Units (RSUs) | |||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Non-vested restricted stock (in shares) | 247,434 | ||
Compensation expense | $ 7,705 | 4,798 | |
Unrecognized share-based compensation expense | $ 35,779 | ||
Unrecognized share-based compensation expense, recognition period | 21 months 15 days | ||
Performance Shares | |||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Non-vested restricted stock (in shares) | 315,814 | ||
Compensation expense | $ 636 | $ 2,287 | |
Unrecognized share-based compensation expense | $ 4,981 | ||
Unrecognized share-based compensation expense, recognition period | 18 months 18 days |
Equity-Based Compensation - Non
Equity-Based Compensation - Non-vested Restricted Stock (Details) - Restricted Stock | 3 Months Ended |
Mar. 31, 2024 $ / shares shares | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |
Non-vested restricted stock beginning balance (in shares) | 538,661 |
Granted (in shares) | 16,842 |
Vested (in shares) | (63,041) |
Forfeited (in shares) | 0 |
Cancelled (in shares) | (16,842) |
Non-vested restricted stock ending balance (in shares) | 475,620 |
WEIGHTED- AVERAGE GRANT DATE FAIR VALUE | |
Non-vested restricted stock of beginning balance (in dollars per share) | $ / shares | $ 23.18 |
Granted (in dollars per share) | $ / shares | 17.35 |
Vested (in dollars per share) | $ / shares | 21.49 |
Forfeited (in dollars per share) | $ / shares | 0 |
Cancelled (in dollars per share) | $ / shares | 23 |
Non-vested restricted stock of ending balance (in dollars per share) | $ / shares | $ 23.20 |
Assumed, granted, and cancelled (in shares) | 16,842 |
Equity-Based Compensation - Res
Equity-Based Compensation - Restricted Stock Units (Details) | 3 Months Ended |
Mar. 31, 2024 $ / shares shares | |
Restricted Stock Units (RSUs) | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |
Non-vested restricted stock beginning balance (in shares) | 2,588,403 |
Granted (in shares) | 247,434 |
Vested (in shares) | (42,810) |
Forfeited (in shares) | (23,968) |
Cancelled (in shares) | (38,729) |
Non-vested restricted stock ending balance (in shares) | 2,730,330 |
WEIGHTED- AVERAGE GRANT DATE FAIR VALUE | |
Non-vested restricted stock of beginning balance (in dollars per share) | $ / shares | $ 23.77 |
Granted (in dollars per share) | $ / shares | 17.55 |
Vested (in dollars per share) | $ / shares | 17.71 |
Forfeited (in dollars per share) | $ / shares | 23.83 |
Cancelled (in dollars per share) | $ / shares | 23.95 |
Non-vested restricted stock of ending balance (in dollars per share) | $ / shares | $ 23.30 |
Common shares issued for share-based compensation awards and shares withheld for tax (in shares) | 1,492 |
Assumed, granted, and cancelled (in shares) | 38,729 |
Restricted Stock | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |
Non-vested restricted stock beginning balance (in shares) | 538,661 |
Granted (in shares) | 16,842 |
Vested (in shares) | (63,041) |
Forfeited (in shares) | 0 |
Cancelled (in shares) | (16,842) |
Non-vested restricted stock ending balance (in shares) | 475,620 |
WEIGHTED- AVERAGE GRANT DATE FAIR VALUE | |
Non-vested restricted stock of beginning balance (in dollars per share) | $ / shares | $ 23.18 |
Granted (in dollars per share) | $ / shares | 17.35 |
Vested (in dollars per share) | $ / shares | 21.49 |
Forfeited (in dollars per share) | $ / shares | 0 |
Cancelled (in dollars per share) | $ / shares | 23 |
Non-vested restricted stock of ending balance (in dollars per share) | $ / shares | $ 23.20 |
Assumed, granted, and cancelled (in shares) | 16,842 |
Equity-Based Compensation - Per
Equity-Based Compensation - Performance Stock Units (Details) - Performance Shares | 3 Months Ended |
Mar. 31, 2024 $ / shares shares | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |
Non-vested restricted stock beginning balance (in shares) | 849,467 |
Granted (in shares) | 315,814 |
Vested (in shares) | 0 |
Forfeited (in shares) | 0 |
Cancelled (in shares) | (394,050) |
Non-vested restricted stock ending balance (in shares) | 771,231 |
WEIGHTED- AVERAGE GRANT DATE FAIR VALUE | |
Non-vested restricted stock of beginning balance (in dollars per share) | $ / shares | $ 24.84 |
Granted (in dollars per share) | $ / shares | 19.08 |
Vested (in dollars per share) | $ / shares | 0 |
Forfeited (in dollars per share) | $ / shares | 0 |
Cancelled (in dollars per share) | $ / shares | 27.09 |
Non-vested restricted stock of ending balance (in dollars per share) | $ / shares | $ 21.33 |
Assumed, granted, and cancelled (in shares) | 6,651 |
Equity-Based Compensation - Com
Equity-Based Compensation - Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Equity-Based Compensation | ||
Compensation expense | $ 9,073 | $ 8,543 |
Cost of revenues | ||
Equity-Based Compensation | ||
Compensation expense | 3,239 | 2,042 |
Sales and marketing | ||
Equity-Based Compensation | ||
Compensation expense | 617 | 381 |
Research and development | ||
Equity-Based Compensation | ||
Compensation expense | 1,649 | 1,650 |
General and administrative | ||
Equity-Based Compensation | ||
Compensation expense | $ 3,568 | $ 4,470 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) $ in Thousands | 3 Months Ended | |||||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | Dec. 12, 2023 | Oct. 10, 2023 | Jun. 20, 2023 | |
Loss Contingencies [Line Items] | ||||||
Contingent consideration transferred | $ 12,356 | |||||
Payments for business acquisition related contingent consideration | 8,649 | $ 0 | ||||
Payment for contingent consideration liability, common stock, value | 3,707 | |||||
Contingent liabilities | 44,982 | $ 54,457 | ||||
Reported Value Measurement | ||||||
Loss Contingencies [Line Items] | ||||||
Contingent liabilities | 45,764 | $ 55,238 | ||||
Vyasa Analytics, LLC | ||||||
Loss Contingencies [Line Items] | ||||||
Contingent consideration arrangements, range of outcomes, high | 60,000 | |||||
Drug Interaction Solutions University of Washington (DIDB) | ||||||
Loss Contingencies [Line Items] | ||||||
Contingent consideration arrangements, range of outcomes, high | 2,000 | $ 2,000 | ||||
Contingent liabilities | 136 | |||||
Formedix | ||||||
Loss Contingencies [Line Items] | ||||||
Contingent consideration arrangements, range of outcomes, high | 9,000 | $ 9,000 | ||||
Contingent liabilities | 3,189 | $ 5,161 | ||||
Applied Biomath | ||||||
Loss Contingencies [Line Items] | ||||||
Contingent consideration arrangements, range of outcomes, high | 17,550 | $ 17,550 | ||||
Contingent liabilities | $ 4,442 |
Segment Data (Details)
Segment Data (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 USD ($) segment | Mar. 31, 2023 USD ($) | |
Segments | ||
Number of operating segment | segment | 1 | |
Revenue | $ 96,654 | $ 90,301 |
Americas | ||
Segments | ||
Revenue | 69,165 | 67,023 |
EMEA | ||
Segments | ||
Revenue | 20,843 | 16,915 |
Asia Pacific | ||
Segments | ||
Revenue | $ 6,646 | $ 6,363 |
Income Taxes (Details)
Income Taxes (Details) | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Income Tax Disclosure [Abstract] | ||
Effective tax rate | 14% | 45% |
Earnings per Share (Details)
Earnings per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Earnings Per Share [Abstract] | ||
Net income (loss) available to common shareholders | $ (4,683) | $ 1,358 |
Basic weighted-average common shares outstanding (in shares) | 159,524,270 | 158,177,025 |
Basic earnings per common share (in dollars per share) | $ (0.03) | $ 0.01 |
Diluted earnings per share | ||
Net income (loss) available to common shares | $ (4,683) | $ 1,358 |
Dilutive potential common shares (in shares) | 0 | 1,550,387 |
Diluted weighted average common shares outstanding (in shares) | 159,524,270 | 159,727,412 |
Diluted earnings per common share (in dollars per share) | $ (0.03) | $ 0.01 |