CareCloud Inc (CCLD) 2017 Q4 法說會逐字稿

Good day, and welcome to the MTBC Fourth Quarter 2017 Earnings Conference Call and Webcast.

(Operator Instructions)

I would now like to turn the conference over to Shruti Patel, General Counsel.

Please go ahead.

Good morning.

Thank you.

Good morning, everyone.

Welcome to the MTBC 2017 Fourth Quarter Conference Call.

On today's call are Mahmud Haq, our Founder and Executive Chairman; Stephen Snyder, our Chief Executive Officer and a Director; A. Hadi Chaudhry, our President; and Bill Korn, our Chief Financial Officer.

Before we begin, I would like to remind you that certain statements made during this conference call are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities Exchange Act of 1934 as amended.

All statements other than statements of historical fact made during this conference call are forward-looking statements, including, without limitation, statements regarding our expectations and guidance for future financial and operational performance, expected growth and business outlook.

Forward-looking statements may sometimes be identified with words such as will, may, expect, plan, anticipate, upcoming, believe, estimate or similar terminology and the negative of these terms.

Forward-looking statements are not promises or guarantees of future performance and are subject to a variety of risks and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from those contemplated in these forward-looking statements.

These statements reflect our opinions only as of the date of this presentation and we undertake no obligation to revise these forward-looking statements in light of new information or future events.

Please refer to our press release and our reports filed with the Securities and Exchange Commission, where you will find a more comprehensive discussion of our performance and factors that could cause actual results to differ materially from these forward-looking statements.

Finally, on today's call, we may refer to certain non-GAAP financial measures.

Please refer to today's press release announcing our fourth quarter and full year 2017 results for a reconciliation of these non-GAAP performance measures to our GAAP financial results.

With that said, I'll now turn the call over to the Chief Executive Officer of MTBC, Stephen Snyder.

Steve?

Thank you, Shruti, and thank you, everyone, for joining us on our fourth quarter 2017 earnings call.

2017 was a landmark year for MTBC on all fronts.

I'm very pleased to report a strong finish to the year with a revenue of $31.8 million, representing growth of 30% over full year 2016.

We are also reporting record adjusted EBITDA for the fourth quarter of $1.5 million, with total adjusted EBITDA for full year 2017 of $2.3 million.

We achieved the high-end of our guidance range for both revenue and adjusted EBITDA.

In addition to significant revenue growth and profit improvement, we are generating positive cash from operations and ended the year with our strongest balance sheet ever.

During 2017, we fully repaid our $10 million credit facility with Opus Bank 2 years ahead of schedule, while also paying the entire $5 million balance of the consideration for MediGain transaction.

We ended 2017 with $4.4 million in cash and a completely untapped $5 million credit facility with Silicon Valley Bank, positioning us for another strong year of growth during this year.

Our growth and improved profitability were driven by the success of our organic growth strategy together with the integration of operations from our last major acquisition, which allowed us to dramatically reduce costs and begin generating positive cash flow.

While our financial metrics are continuing to demonstrate proof-of-concept, our deepest enthusiasm actually centers around the significant business opportunities that we see for the year ahead and our belief that we are properly positioned to succeed as we pursue these opportunities.

First, the newest additions to our Software-as-a-Service offering are continuing to gain traction.

As you may recall, we launched 2 major new products during 2017: EnrollmentPLus and talkEHR.

I'll first talk about EnrollmentPLus.

EnrollmentPLus is a Software-as-a-Service electronic data interchange product that streamlines the process of enrolling employees through benefit administrators in group insurance plans.

With EnrollmentPLus, we are working to disrupt the conventional electronic data interchange process status quo in the employer group insurance enrollment space.

We are doing so by borrowing from the claim adjudication model, which is known as health care clearinghouses that took root in the health care industry decades ago.

We have believed in this model since we started our development work in earnest during 2017, but at that time it was untested in this space.

During our last earnings call, we were pleased to report that one of the nation's top insurers embraced our concept and agreed to move forward and try EnrollmentPLus.

Today, we're very pleased to report that our testing has demonstrated the strength of EnrollmentPLus, and our first customer has now completed testing and is live in production.

We have also signed a second customer, albeit smaller than our first, and we are in active conversations today with other large insurance carriers who are giving EnrollmentPLus serious consideration.

The second key Software-as-a-Service solution that we launched during last year was talkEHR.

Our vision with talkEHR is to harness the latest in voice recognition technology and artificial intelligence to deliver an easy-to-use, yet robust solution for small- to medium-size practices.

During 2017, we completed the first phase of our talkEHR development and launched to a group of early users.

Our talkEHR team has been working closely with these users to incorporate their feedback as we prepare for a product update and full launch during the next few months.

Our go-to-market strategy involves offering talkEHR, together with full data migration and support completely free of cost based upon our belief that a segment of the talkEHR user base will decide to use our fee-based revenue cycle management solution.

Today, there is only one other viable stage 3 certified product in the free EHR segment of the market, which purportedly represents tens of thousands of users.

And this competitor has just announced its intention to abandon its free model and begin charging providers starting in June of this year.

As we released our updated free EHR, we believe that the narrowed playing field is likely to cause providers searching for a free or low-cost EHR solution to take a very serious look at talkEHR.

Second, in addition to our newest products, we see significant opportunities for growth by continuing to mature existing partnerships and develop new relationships with industry vendors.

During last year, we closed approximately $3 of new business on an annualized basis for every $1 invested in sales and marketing.

This strong return on our own -- our investment was largely result of our strategy to build lead generating partnerships.

We believe that these types of partnerships are the most direct and cost-efficient way to identify and close larger practices, such as the 1,000-provider group that we signed during late 2017.

2 months ago, we launched our most comprehensive new partnership outreach to date focused largely on EHR vendors that lack the integrated revenue cycle management service that, we believe, is required to remain a viable EHR vendor in the new health care paradigm, which increasingly ties insurance reimbursement levels to reporting of clinical outcomes.

By partnering with MTBC, a stand-alone EHR vendor is able to round out its offering, and our integrated practice management system and technology revenue -- technology-driven revenue cycle of management allow the vendor to generate referral revenue from MTBC, while further differentiating the stand-alone EHR user, now part of our integrated solution from other stand-alone EHRs.

While we are early in our discussions with various potential EHR partners, we are encouraged by the response we've received so far and optimistic that our broader focus on building industry partnerships will help us grow the medium to large group segment of our client base during 2018.

In addition to organic growth, we are continuing to work on identifying the best acquisition targets.

We do business in a highly fragmented market and believe that our team has closed and integrated more acquisitions in the revenue cycle management segment of our market than any other company.

The MediGain acquisition provides a vivid picture of the power of our model in the context of these acquisitions, and we are actively looking for the next acquisition target.

We will continue to ensure that we methodically select the best targets and negotiate the optimal terms.

I'll now turn the floor over to our President, A. Hadi Chaudhry.

Hadi?

Thank you, Steve, and thank you, everyone, for joining us on our fourth quarter 2017 call.

As Steve mentioned, we're excited about the progress we are making on talkEHR.

Our experience tells us that small physician practices needs an easy-to-use, cost-efficient clinical solution that is fully integrated with the revenue cycle and practice management solution.

TalkEHR will address this need in the market.

And while building and refining a leading EHR, of course, takes a great deal of work and time, we believe that we are right on track to deliver a top-tier product in time for a late second quarter full launch of talkEHR.

On the broader product development perspective, our team of more than 200 developers and technologists will continue to lead the way during 2018.

In addition to talkEHR advancements, our team is leveraging blockchain technology to develop the next generation of solutions to support health information exchange between our provider clients and their colleagues and patients.

We believe that a blockchain solution will allow physicians to share protected health information in highly efficient and secure manner.

We also intend to further build out our national network of direct connections with payers and interfaces with other leading software solutions, while launching enhanced version of our mobile apps and cloud-based practice management system.

On an operational front, I'm pleased to report that we have recently achieved various important operational milestones.

First, we have completed the integration phase of our MediGain business unit, having rationalized costs and retained revenues in accordance with our plan.

Second, we are now handling the entire contracted universe of claims for our new 1,000-provider group and have already been able to help them increase collections.

We have also integrated key components of our platform into their workflow and are ahead of schedule in developing customized solutions to support their unique workflow.

We believe that our proof of concept with this client will support the signing of additional large groups.

I will now turn the floor over to our Chief Financial Officer, Bill Korn.

Bill?

Thank you, Hadi.

Let's start with our full year results.

You will be pleased to hear that we achieved everything we set out to do at the start of the year.

As Steve had mentioned, in 2017, we generated our highest revenues ever.

Revenues for the full year were $31.8 million, an increase of 30% compared to $24.5 million last year.

The increase was primarily due to the MediGain transaction.

Revenue exceeded the midpoint of our upward adjusted guidance, which was a range of $31 million to $32 million.

Our guidance at the start of the year was a range of $30 million to $31 million.

For the year, our GAAP net loss was $5.6 million, which was largely a result of noncash amortization and depreciation expense of $4.3 million.

This was an improvement of $3.2 million compared to the prior year.

We saw a steady improvement in our GAAP net loss during each of the last 4 quarters, as we reduced expenses, which arose from our acquisition of the assets of MediGain in October 2016.

The significant cost savings we have achieved included reducing reliance on subcontractors, reducing fees paid to third-party software vendors, reducing U.S. facilities and personnel costs, closing offices in Poland and Bangalore, India and improving operating efficiencies.

The GAAP net loss for 2017 was $0.69 per share, calculated using the net loss attributable to common shareholders divided by the weighted average number of common shares outstanding during the year.

Adjusted EBITDA for the full year of 2017 was $2.3 million or 7.2% of revenue, an improvement of $2.9 million compared to adjusted EBITDA of negative $605,000 in 2016.

Adjusted EBITDA exceeded the midpoint of our guidance, which was a range of $2 million to $2.5 million and represents the highest adjusted EBITDA MTBC has achieved in its 15-year history.

Our business now has a scale higher than we did during any prior year.

So we are able to spread our fixed expenses over a larger revenue base and generate larger adjusted EBITDA than we have ever done before.

The difference of $7.9 million between adjusted EBITDA and the GAAP net loss in 2017 reflects $4.3 million of noncash amortization and depreciation expense, $1.3 million of net interest expense, $1.5 million of stock-based compensation, $791,000 of integration, transaction and restructuring costs related to recent acquisitions and a $68,000 provision for income taxes.

Our non-GAAP adjusted net income for 2017 was positive $36,000, which represents $0.00 per share, an improvement of $2 million compared to last year.

Non-GAAP adjusted net income per share is calculated using the end-of-period common shares outstanding.

Non-GAAP adjusted net income excludes $3.4 million of noncash amortization of purchased intangible assets, $1.5 million of cash-based compensation, $791,000 of integration, transaction and restructuring costs and $249,000 of foreign exchange gains.

The 2017 GAAP operating loss was $4.5 million, which represents an improvement of $3.4 million or 43% from the operating loss in 2016.

GAAP operating loss excludes the provision for income taxes, net interest expense and other income and expenses, which are included in the GAAP net loss.

Non-GAAP adjusted operating income was $1.3 million or 4.1% of revenue, which represents an improvement of $2.6 million from 2016.

This is our third consecutive quarter of positive non-GAAP adjusted operating income, which excludes noncash expenses, such as $3.4 million of purchased intangible assets, $1.5 million of stock-based compensation and $791,000 of integration, transaction and restructuring costs.

While 2017 was the year we achieved our best annual results ever, our fourth quarter 2017 illustrates the transition that occurred throughout the year as we integrated the business from MediGain and achieved economies of scale.

Revenues for fourth quarter 2017 were $8.3 million compared to $8.8 million in the same period last year.

Fourth quarter 2016 revenue included residual revenue from certain MediGain clients, who we knew had decided not to continue prior to the closing of our transaction in October 2016.

As these clients completed their transition, we recognized some onetime revenues in 2016.

We were able to turn around MediGain's largest client, who prior to our acquisition had given indication that they were prepared to terminate services.

Hadi spends considerable time in Kentucky helping them improve processes to increase their insurance reimbursements.

They're very pleased with our performance and were our largest revenue-generating client in 2017.

The fourth quarter 2017 GAAP net loss was $184,000 or 2.2% of revenue, an improvement of $3.8 million compared to a net loss of $4 million in fourth quarter 2016.

This dramatic reduction in our GAAP net loss was due to a $2 million or 33% reduction in direct operating costs, a $781,000 or 18% reduction in general and administrative expense and a $908,000 reduction in depreciation and amortization expenses compared with fourth quarter 2016.

The GAAP net loss for fourth quarter 2017 was $0.08 per share, calculated using net loss attributable to common shareholders divided by the weighted average number of common shares outstanding during the quarter.

Adjusted EBITDA for fourth quarter of 2017 was $1.5 million or 18% of revenue compared to adjusted EBITDA of negative $814,000 or negative 9.2% of revenue in the same period last year.

The fourth quarter 2017 adjusted EBITDA represents a $2.3 million improvement from the same period last year, reflecting the significant cost savings we have achieved.

Difference of $1.7 million between adjusted EBITDA and the GAAP net loss in the fourth quarter of 2017 reflects $663,000 of noncash amortization and depreciation expense, $78,000 of net interest expense, $1.2 million of stock-based compensation, $155,000 of integration and transaction costs and a $124,000 benefit for income taxes.

Non-GAAP adjusted net income for fourth quarter 2017 was positive $1.3 million or $0.13 per share compared to adjusted net income of negative $1.3 million in the same period last year.

Non-GAAP adjusted net income per share is calculated using end-of-period common shares outstanding.

This is the company's best quarter of adjusted net income in our history.

The fourth quarter 2017 GAAP operating loss was $454,000, which represents an improvement of $3.3 million from fourth quarter of 2016.

Non-GAAP adjusted operating income for fourth quarter 2017 was a positive $1.4 million or 16% of revenue.

The fourth quarter 2017 adjusted operating income represents an improvement of $1 million from the adjusted operating income in the third quarter of 2017 and an improvement of $2.4 million from the fourth quarter of 2016.

This is our third consecutive quarter of positive non-GAAP adjusted operating income and reflects the fact that our business is now at a scale where our revenues are consistently exceeding our cash operating expenses quarter after quarter.

Fourth quarter 2017 cash flow from operations was a positive $1.6 million, which was similar to adjusted EBITDA and for the full year, cash flow from operations was a positive $282,000.

MTBC started 2017 with $3.5 million of cash, owing $9.3 million to Opus Bank and $5 million to Prudential for MediGain.

At December 31, 2017, the company had $4.4 million of cash, virtually no debt and positive working capital of approximately $4.6 million, a $12 million improvement from the working capital deficiency at the end of 2016.

The company raised net proceeds of $16.5 million from the sale of approximately $765,000 (sic) [765,000] of additional shares of its nonconvertible Series A preferred stock via 6 small public offerings from June through December of 2017 as well as net proceeds of $2 million from a registered direct sale of 1 million shares of common stock in May 2017.

The preferred shares trade on the Nasdaq Capital Market under the ticker MTBCP and pay monthly cash dividends at the rate of 11% per year.

This allowed us to repay our debts with minimum dilution to our shareholders.

The cash cost of our dividends on our preferred stock is far less than what most businesses pay for term debt, which is typically repaid over 3 or 4 years.

Typically, 25% or 33% of the value of debt is spent annually to repay principal, on top of the interest rate.

Our Series A preferred stock is perpetual, has no mandatory redemption, is not convertible and although the company can choose to redeem shares at $25 per share starting in November 2020, we have no obligation to do so.

So our 11% cost is lower than the typical cash outlay, which could be 30% per year or more.

Company used a portion of the net proceeds of these preferred stock offerings to repay in full its term loans and line of credit with Opus, which totaled approximately $9.3 million as of December 31, 2016.

In addition, we paid Prudential approximately $5.3 million, which covered the remainder of the purchase price related to the MediGain transaction plus interest.

During early October, the company entered into a new revolving credit facility with Silicon Valley Bank and repaid and terminated its previous revolving credit facility with Opus.

The SVB credit facility is a $5 million secured revolving line of credit where borrowings are based on a formula of 200% of repeatable revenue adjusted by the annualized attrition rate as defined in the agreement.

While there was nothing drawn on the SVB credit facility at year-end 2017 and nothing as of today, the SVB line can be used for future growth initiatives, including acquisitions with SVB's approval.

Based on MTBC's financial position at the end of fourth quarter 2017, with net losses significantly lower than last year, adjusted net income and adjusted EBITDA that are positive, cash flow from operations that is positive, we were able to remove the going concern disclosure that was in last year's 10-K.

We now have a rock-solid financial foundation, which leaves the company well positioned for growth.

We have more capital available now than at any time in the company's history and see exciting opportunities to profit from the continued consolidation of the industry.

In 2017 (sic) [2018], we have 3 paths for continued growth, including organic growth, partnership opportunities and the potential for an accretive acquisition, which might be material.

We are pursuing all 3 of these in parallel.

Unlike past years, today we can point to our recent results rather than simply giving expectations for the future.

We anticipate spending more on sales and marketing in 2018 than the 3.5% of revenue we spent in 2017.

But we're confident that we will be able to report significant growth in our adjusted EBITDA in 2018.

Other metrics may change, and the exact revenue and quarterly numbers will depend on the actual opportunities we close and the timing.

As a result, the company has decided not to provide detailed forward-looking guidance at this time.

I'll now turn the floor over to Mahmud Haq, our Executive Chairman, for his concluding remarks.

Thank you, Bill.

2017 was a record year for us and leaves us well positioned to build on our success as we begin 2018 on a strong footing.

We look forward to giving you future updates on our progress as we move forward.

We appreciate the support of our shareholders and extend our thanks to all of our team members for their hard work and great results.

Finally, we thank our health care provider customers for trusting us to help manage their practices.

We will now open the call to questions.

Operator?

(Operator Instructions) And today's first question comes from Kevin Dede of HCW.

Steve, I think everybody touched on partnerships as a leg for growth.

But it's not crystal clear for me how you see that progressing.

So if you wouldn't mind, could you talk a little bit about the different dimensions of the partnerships you seek to pursue?

And maybe give us a couple of examples of ones that you forged.

Sure.

We'll be happy to, Kevin.

I think as we look at it and kind of step back for a minute, we believe that 2017 was truly a watershed year for us, in which we transitioned to the second phase of our growth as a public company.

We've now kind of built out the team and the proprietary platform, the processes that allow us to effectively and efficiently both achieve organic growth, but also to identify and acquire and integrate the company's competitors in our space in this highly fragmented market.

And, again, as we look at 2017, we think that the revenue growth -- 30% revenue growth, turning cash flow positive and the significant EBITDA growth and margin growth demonstrates a proof of concept.

And to your point, as we continue to move forward from an organic growth perspective, we believe much of the organic growth during this year and future years will continue to come through partnerships.

With regard to the existing partnerships, we today have partnerships with groups like the HealthCare Compliance Network and [Mabry HealthCare], some smaller EHRs.

And when we look at and reflect on the 2017 organic growth, the majority of our organic growth came from those partnerships, other players in our industry who are focused on the same target market, who are providing and addressing different needs of that same market, but see the opportunity for MTBC to really add value to those relationships that they have by helping to increase collections of those practices and also to provide a technology platform that rounds out those relationships.

So we continue to actively move forward with those partnerships from a cross-referral perspective and even developing some integrated solutions with those partners, and we're also working on developing additional partnerships.

4 of our team members are spending this entire week, just as an example, out at the top industry conference of the year at HIMSS, and we're spending all day, each day meeting with potential channel partners and in some cases, existing channel partners with an eye towards developing some of those additional partnerships.

I'll use one other example, and this in a more robust focus on this particular type of partnership is a bit newer for us, but we see significant opportunity, and that's the partnership opportunity with other EHRs.

So from the perspective of the EHR industry, the meaningful use incentives really drove significant growth over the last 5 years.

But unlike MTBC -- of course, our model is really based upon an integrated solution, revenue cycle management, electronic health records and practice management as an integrated solution at a pricing that's a bundled pricing that's typically based upon the collections of a practice -- a percentage of collections of a practice.

Unlike that model, many other EHR players in the marketplace have had a more traditional model where they're simply charging a monthly fee or charging for an upfront license and then ongoing maintenance and support for an EHR solution.

The market is moving -- the industry is moving in such a way that a stand-alone EHR in our estimation is really not a viable solution to go to market with today.

Whether it's Medicare or Medicaid or the commercial payers, they're increasingly requiring providers to be -- in the context of the claim submission and revenue cycle management process to be providing integrated clinical details to support the quality of outcomes in order to achieve the optimal reimbursements.

So because that's required from a -- the integrated solution is more or less required from a revenue cycle management perspective, one and secondly, because EHRs are looking for other ways to now monetize their base, we really think that there is a significant opportunity to partner with other EHRs to help round out their offering, to help them find a new revenue stream by giving them a percentage of our revenue and also that makes them a more viable player as they're competing for new business in this space as well.

Well, yes, thank you for touching on that topic of EHR and RCM integration.

I appreciate that.

But the -- maybe there is a flip-side opportunity too as these EHRs find that their business model might not be -- is compressed or not viable.

Is there a chance that they go into the M&A pipeline?

Could you talk to that a little bit?

Absolutely.

Yes.

And the answer to that is absolutely yes.

And from the perspective of the EHRs that again no longer have, in our estimation, at least in the long term a viable business model if they're simply providing an EHR solution, we do believe that some of those EHRs could very well be good acquisition targets as we move forward.

Our primary focus right now continues to be on revenue cycle management solutions, but we're also actively looking at the possibility of some acquisitions in the EHR space where the strategy there is really acquiring that customer relationship as we've already built out our technology.

And then when we acquire an EHR, depending upon the quality and the strength of that EHR, we'd either leverage our 200-plus IT R&D team members to take that acquired product and to help it reach new heights or depending upon the strength of that product, either migrate -- perhaps migrate those customers to our EHR.

Again, that's down the road.

We're not announcing any of those acquisitions today.

But, for sure, as we think about acquisition opportunities, that certainly is one of the areas that we're focusing on.

Okay.

So congrats, too, on the EnrollmentPLus progress.

You spoke to your first main customer as being fully signed up.

I'm wondering if you can speak to sort of the revenue trajectory there.

And then maybe a little bit more insight on where your second customer is.

Because I think on the last -- third quarter conference call, you spoke to perhaps a longer sales cycle for that solution and it seems -- I mean, the color that you've offered thus far seems to offer the impression that things are moving a little -- perhaps a little bit quicker than you had expected.

Thanks, Kevin.

In terms of EnrollmentPLus, as we think about the revenue for this year, we still believe the EnrollmentPLus as a percentage of our overall revenue will still be less than 10%.

So in terms of the overall revenue mix, even for this year, we still think it'll represent a minority of the overall revenue.

We think it's, however, an example of the opportunity that's there.

An innovative approach that we're taking where we're really taking the expertise that we've gained, and we've developed in the health care IT space and -- with regard to our clearinghouse and repurposing that same approach in a different part of the health care industry -- a different part of the insurance industry rather.

So as we move forward, we still continue to see that revenue this year being less than 10%.

The smaller group that signed is very similar to the first, albeit much smaller.

The other opportunities that we're pursuing are larger opportunities that are more similar to the first client that we signed -- a top 10 insurer that we signed during last year.

So I would say we're right on track with regard to our belief in terms of how EnrollmentPLus will grow.

Okay.

Fair enough.

Just switching gears a little to housekeeping items.

Bill, I think D&A for the quarter was just about $700,000, as you spoke to.

Stock comp, I get my numbers work to $1.15 million, I think you rounded it to $1.2 million.

Fair enough.

I'm wondering how you think we should look at those figures going forward, given double declining balance and the MediGain acquisition being amortized more fully.

Thanks, Kevin.

So I'm happy to give you a little bit of a view there.

So first in terms of the depreciation and amortization, you're right that it's down significantly and yes, we do use double declining balance, which means that in general, you'll see some small reductions in depreciation and amortization.

In large part, MediGain sort of crossed the point in the amortization where you're always taking double and then you switch to the straight line for the remaining term.

So you won't see as big a decrease and again, a lot of the decrease that you saw in the middle of 2017 was the amortization from the 3 companies we bought on the day of the IPO.

And at that time, we were using straight line.

So those 3 continued through straight line.

They're fully amortized.

So you should expect to see the depreciation and amortization slowly go down until or unless we do a major acquisition.

Obviously, when we buy companies, what happens is you're really buying assets, but there's not a lot of tangible assets.

We're not buying brick-and-mortars.

We're not buying factory and land and inventory.

So, therefore, it pretty much all gets attributed to intangibles, which we then amortize quickly.

So until we do something major, I wouldn't expect to see any increase in the amortization.

In terms of our stock-based comp, in some respects, it's a little bit harder to predict because the amount that you're taking as stock-based comp is based on the value of our common stock on days that stock events vest.

So there are restricted stock units that were granted some time ago to management, key employees, board members, those vest on particular days.

If the stock is at $4 on a day that they vest, you book a $4 expense.

If the stock is twice that or 4x that, then that's what you're going to book.

So it's kind of hard for us to predict exactly what that number is going to look like.

Again, from one perspective as the CFO, that's an accounting entry, but it's not a cash entry, I'm not writing a check.

So it may affect my GAAP reported numbers, but we remove it from our non-GAAP metrics.

Okay.

Last question for me.

Just based on sort of my rough numbers, I'm looking at general, administration costs in the quarter of about $3.5 million.

Was that about right?

Yes.

I think that's just exactly on the money.

Yes.

Okay.

And the question I have is sort of how do you see that -- I mean, given that it was up almost $1 million sequentially, I'm just kind of curious on how you might suggest we think about that when going through the balance of this year.

Sure.

So the previous quarter was just a little under $2.5 million.

In Q4, there was $1.1 million of stock-based compensation expense that hit G&A.

So with that $1.1 million, the total was $3.5 million.

From a cash perspective, the number would have been more like $2.4 million.

Thanks for visiting our facility overseas.

Everybody out there was really excited to see you and the questions you asked illustrated that you've really done a lot of homework on the company and the industry.

So thanks for doing that.

(Operator Instructions) I'm showing no further questions.

I'd like to turn the conference back over to the management team for any final remarks.

Thank you.

This is Mahmud.

I just want to touch on the last point that Kevin raised, guys, that the reason that we are not giving guidance for 2018 is because we see amazing things happening in 2018.

This is the first time as a company that we have this much cash available.

Whether it is acquisition, whether it is organic growth, general partnerships, we see significant improvement in our numbers.

So the guidance will be -- at this point will be -- all we can say is that our 2018 numbers will be significantly better than 2017.

As we go through the year, we will be giving you updated information on our progress.

Shruti?

Great.

We thank everybody for joining, and at this time, we will adjourn our call.

Thanks everybody.

Thank you, everyone.

Today's conference has now concluded.

We thank you all for attending today's presentation.

You may now disconnect your lines and have a wonderful day.