RECAP: Safeguard Scientifics First Quarter 2012 Financial Results

Posted by | April 27, 2012

Here is a recap of our first quarter 2012 financial results.

Our team is executing a focused and disciplined strategy that enhances Safeguard’s brand as the preferred catalyst to build great companies. Our partner companies continue to generate attractive growth. In the first quarter, aggregate revenue of our partner companies grew 26 percent. For full-year 2012, we project aggregate partner company revenue in a range of $160 million to $165 million, keeping in mind that partner company revenues are reported on a one-quarter lag. In addition, four of our partner companies have achieved positive EBITDA performance.

We reported some exciting progress at our partner companies during the first quarter… here are some highlights:

  • AdvantEdge Healthcare Solutions acquired COMPUDATA, a medical-billing firm focused on Ohio and Pennsylvania anesthesia practices. AHS has now completed five acquisitions since mid-2009. Including acquisition activity, AHS revenue increased 40 percent in 2011 to approximately $40 million.
  • Good Start Genetics announced the initial closing of a $14 million Series B Preferred Stock financing, which was led by existing investors Safeguard, OrbiMed Advisors, and SV Life Sciences. Proceeds from this financing will be used to augment commercial efforts for the company’s pre-conception carrier screening tests, and to support continued R&D efforts around its proprietary technology platform for future applications.
  • Medivo acquired WellApps, a developer of mobile health applications that help patients manage chronic diseases.
  • NuPathe received notices of allowance for two U.S. patent applications, one offering patent protection through 2025 for NP202 and another extending protection through 2027 for NP101.

During our call we received some questions to update the investor community on other developments. We discussed the PixelOptics rollout, which is moving forward with people anticipating the product’s arrival in their market. A new CEO has been added with over 2,000 eye care professional organizations targeted. We have rolled out the ability to demonstrate the technology as well as the complete selection of frames to well over 500 kiosk locations. We are planning for a growth acceleration path as we get into the second half of the year.

Our CEO Peter Boni reiterated that we provide multiple-stage as well as multiple-domain patient capital and expertise. With a focus on tech and life sciences, we have one foot each in industries that tend to be countercyclical. Being multiple-stage is also somewhat countercyclical. We can enter at any stage of investment, from some of our selective developmental stage companies to initial revenue-stage companies through to expansion-stage and even high-traction companies.

Today, later-stage technology firms are attracting investor attention, with LinkedIn, Facebook, and Zynga mania. That has impacted tech valuations. If we were single-domain or single-stage, we’d be locked into this market and its higher risk of buying high and selling low. Fortunately, we have the luxury of moving in and out of industries and up and down the growth ladder, to buy low with the opportunity to sell high – what is basically the essence of our strategy.

Rounding out some of the financial results from the quarter, we ended the quarter with cash, cash equivalents, and marketable securities of $234.4 million. This amount does not include an aggregate of $16.4 million of restricted cash and cash held in escrow. The total carrying value of outstanding debt was $45.9 million, and net cash was $188.5 million. Consolidated net loss for the three months ended March 31, 2012 was $9.7 million, or $0.46 per share, compared with net loss of $9.0 million, or $0.44 per share, for the same period in 2011.

If you were unable to join us live this morning, check out our podcast or listen to a replay of the call at 855-859-2056 or (international) +404-537-340. The replay will be available through May 25, 2011 at 11:59 p.m. EDT.

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