Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2019 | Aug. 01, 2019 | |
Document And Entity Information | ||
Entity Registrant Name | MTBC, Inc. | |
Entity Central Index Key | 0001582982 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business Flag | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | true | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 12,033,242 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2019 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
CURRENT ASSETS: | ||
Cash | $ 14,472,483 | |
Accounts receivable - net of allowance for doubtful accounts of $194,000 and $189,000 at June 30, 2019 and December 31, 2018, respectively | 7,331,474 | |
Contract asset | $ 2,473,671 | 2,608,631 |
Inventory | 444,437 | |
Current assets - related party | 25,203 | |
Prepaid expenses and other current assets | 1,191,445 | |
Total current assets | 26,073,673 | |
Property and equipment - net | 1,832,187 | |
Operating lease right-of-use assets | 4,860,780 | |
Intangible assets - net | 6,634,003 | |
Goodwill | 12,593,795 | |
Other assets | 489,703 | |
TOTAL ASSETS | 47,623,361 | |
CURRENT LIABILITIES: | ||
Accounts payable | 2,438,267 | |
Accrued compensation | 1,731,063 | |
Accrued expenses | 1,589,009 | |
Deferred rent (current portion) | 90,657 | |
Operating lease liability (current portion) | 2,077,030 | |
Deferred revenue (current portion) | 25,355 | |
Accrued liability to related party | 10,663 | |
Notes payable (current portion) | 277,776 | |
Contingent consideration | 526,432 | |
Dividend payable | 1,468,724 | |
Total current liabilities | 8,157,946 | |
Notes payable | 222,400 | |
Deferred rent | 189,366 | |
Operating lease liability | 2,876,232 | |
Deferred revenue | 18,949 | |
Deferred tax liability | 164,346 | |
Total liabilities | 8,753,007 | |
COMMITMENTS AND CONTINGENCIES (Note 8) | ||
SHAREHOLDERS' EQUITY: | ||
Preferred stock, $0.001 par value - authorized 7,000,000 and 4,000,000 shares at June 30, 2019 and December 31, 2018, respectively; issued and outstanding 2,162,449 and 2,136,289 shares at June 30, 2019 and December 31, 2018, respectively | 2,136 | |
Common stock, $0.001 par value - authorized 29,000,000 and 19,000,000 shares at June 30, 2019 and December 31, 2018, respectively; issued 12,769,041 and 12,570,557 shares at June 30, 2019 and December 31, 2018, respectively; outstanding, 12,028,242 and 11,829,758 shares at June 30, 2019 and December 31, 2018, respectively | 12,571 | |
Additional paid-in capital | 65,142,460 | |
Accumulated deficit | (24,203,745) | |
Accumulated other comprehensive loss | (1,421,068) | |
Less: 740,799 common shares held in treasury, at cost at June 30, 2019 and December 31, 2018 | (662,000) | |
Total shareholders' equity | 34,409,203 | 38,870,354 |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ 47,623,361 | |
Unaudited [Member] | ||
CURRENT ASSETS: | ||
Cash | 10,583,026 | |
Accounts receivable - net of allowance for doubtful accounts of $194,000 and $189,000 at June 30, 2019 and December 31, 2018, respectively | 7,518,940 | |
Contract asset | 2,473,671 | |
Inventory | 402,570 | |
Current assets - related party | 13,200 | |
Prepaid expenses and other current assets | 843,428 | |
Total current assets | 21,834,835 | |
Property and equipment - net | 2,031,246 | |
Operating lease right-of-use assets | 4,860,780 | |
Intangible assets - net | 6,507,149 | |
Goodwill | 12,633,696 | |
Other assets | 412,101 | |
TOTAL ASSETS | 48,279,807 | |
CURRENT LIABILITIES: | ||
Accounts payable | 2,442,211 | |
Accrued compensation | 2,181,733 | |
Accrued expenses | 2,031,007 | |
Deferred rent (current portion) | ||
Operating lease liability (current portion) | 2,077,030 | |
Deferred revenue (current portion) | 16,225 | |
Accrued liability to related party | 663 | |
Notes payable (current portion) | 152,830 | |
Contingent consideration | 279,565 | |
Dividend payable | 1,486,708 | |
Total current liabilities | 10,667,972 | |
Notes payable | 158,874 | |
Deferred rent | ||
Operating lease liability | 2,876,232 | |
Deferred revenue | 18,360 | |
Deferred tax liability | 149,166 | |
Total liabilities | 13,870,604 | |
COMMITMENTS AND CONTINGENCIES (Note 8) | ||
SHAREHOLDERS' EQUITY: | ||
Preferred stock, $0.001 par value - authorized 7,000,000 and 4,000,000 shares at June 30, 2019 and December 31, 2018, respectively; issued and outstanding 2,162,449 and 2,136,289 shares at June 30, 2019 and December 31, 2018, respectively | 2,162 | |
Common stock, $0.001 par value - authorized 29,000,000 and 19,000,000 shares at June 30, 2019 and December 31, 2018, respectively; issued 12,769,041 and 12,570,557 shares at June 30, 2019 and December 31, 2018, respectively; outstanding, 12,028,242 and 11,829,758 shares at June 30, 2019 and December 31, 2018, respectively | 12,769 | |
Additional paid-in capital | 62,300,966 | |
Accumulated deficit | (25,270,408) | |
Accumulated other comprehensive loss | (1,974,286) | |
Less: 740,799 common shares held in treasury, at cost at June 30, 2019 and December 31, 2018 | (662,000) | |
Total shareholders' equity | 34,409,203 | |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ 48,279,807 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Allowance for doubtful accounts receivable | $ 189,000 | |
Preferred stock, par value | $ 0.001 | |
Preferred stock, shares authorized | 4,000,000 | |
Preferred stock, shares issued | 2,136,289 | |
Preferred stock, shares outstanding | 2,136,289 | |
Common stock, par value | $ 0.001 | |
Common stock, shares authorized | 19,000,000 | |
Common stock, shares, issued | 12,570,557 | |
Common stock, shares, outstanding | 11,829,758 | |
Treasury stock, shares | 740,799 | |
Unaudited [Member] | ||
Allowance for doubtful accounts receivable | $ 194,000 | |
Preferred stock, par value | $ 0.001 | |
Preferred stock, shares authorized | 7,000,000 | |
Preferred stock, shares issued | 2,162,449 | |
Preferred stock, shares outstanding | 2,162,449 | |
Common stock, par value | $ 0.001 | |
Common stock, shares authorized | 29,000,000 | |
Common stock, shares, issued | 12,769,041 | |
Common stock, shares, outstanding | 12,028,242 | |
Treasury stock, shares | 740,799 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Income Statement [Abstract] | ||||
NET REVENUE | $ 16,749,499 | $ 8,682,937 | $ 31,829,710 | $ 16,990,262 |
OPERATING EXPENSES: | ||||
Direct operating costs | 11,396,395 | 4,333,573 | 21,243,935 | 8,817,628 |
Selling and marketing | 382,557 | 403,057 | 743,956 | 708,071 |
General and administrative | 5,143,754 | 3,054,205 | 9,305,830 | 5,654,939 |
Research and development | 218,408 | 248,921 | 473,064 | 504,800 |
Change in contingent consideration | 11,030 | (64,203) | 42,780 | |
Depreciation and amortization | 836,161 | 559,696 | 1,592,901 | 1,150,467 |
Total operating expenses | 17,977,275 | 8,610,482 | 33,295,483 | 16,878,685 |
OPERATING (LOSS) INCOME | (1,227,776) | 72,455 | (1,465,773) | 111,577 |
OTHER: | ||||
Interest income | 67,497 | 29,939 | 145,697 | 35,224 |
Interest expense | (100,562) | (74,167) | (195,958) | (148,248) |
Other income - net | 545,221 | 218,589 | 464,191 | 369,963 |
(LOSS) INCOME BEFORE INCOME TAXES | (715,620) | 246,816 | (1,051,843) | 368,516 |
Income tax provision | 55,352 | 51,536 | 14,820 | 98,200 |
NET (LOSS) INCOME | (770,972) | 195,280 | (1,066,663) | 270,316 |
Preferred stock dividend | 1,486,706 | 1,248,717 | 2,979,406 | 2,024,049 |
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ (2,257,678) | $ (1,053,437) | $ (4,046,069) | $ (1,753,733) |
Net loss per common share: basic and diluted | $ (0.19) | $ (0.09) | $ (0.34) | $ (0.15) |
Weighted-average common shares used to compute basic and diluted loss per share | 12,022,143 | 11,665,174 | 11,984,284 | 11,641,190 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | ||
Statement of Comprehensive Income [Abstract] | |||||
NET (LOSS) INCOME | $ (770,972) | $ 195,280 | $ (1,066,663) | $ 270,316 | |
OTHER COMPREHENSIVE LOSS, NET OF TAX | |||||
Foreign currency translation adjustment | [1] | (762,563) | (227,258) | (553,218) | (430,404) |
COMPREHENSIVE LOSS | $ (1,533,535) | $ (31,978) | $ (1,619,881) | $ (160,088) | |
[1] | No tax effect has been recorded as the Company recorded a valuation allowance against the tax benefit from its foreign currency translation adjustments. |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Shareholders' Equity (Unaudited) - USD ($) | Preferred Stock [Member] | Common Stock [Member] | Additional Paid-In Capital [Member] | Accumulated Deficit [Member] | Accumulated Other Comprehensive Loss [Member] | Treasury (Common) Stock [Member] | Total |
Balance at Dec. 29, 2017 | $ 1,087 | $ 12,272 | $ 45,129,517 | $ (23,509,386) | $ (721,070) | $ (662,000) | $ 20,250,420 |
Balance, shares at Dec. 29, 2017 | 1,086,739 | 12,271,390 | |||||
Cumulative effect of adopting ASC 606 | 1,444,121 | 1,444,121 | |||||
Balance at Dec. 31, 2017 | $ 1,087 | $ 12,272 | 45,129,517 | (22,065,265) | (721,070) | (662,000) | 21,694,541 |
Balance, shares at Dec. 31, 2017 | 1,086,739 | 12,271,390 | |||||
Net income (loss) | 75,036 | 75,036 | |||||
Foreign currency translation adjustment | (203,146) | (203,146) | |||||
Issuance of stock under the Amended and Restated Equity Incentive Plan | $ 29 | $ 134 | (163) | ||||
Issuance of stock under the Amended and Restated Equity Incentive Plan, shares | 29,550 | 134,583 | |||||
Stock-based compensation, net of cash settlements | 112,090 | 112,090 | |||||
Tax withholding obligations on stock issued to employees | (226,250) | (226,250) | |||||
Preferred stock dividends | (775,332) | (775,332) | |||||
Balance at Mar. 31, 2018 | $ 1,116 | $ 12,406 | 44,239,862 | (21,990,229) | (924,216) | (662,000) | 20,676,939 |
Balance, shares at Mar. 31, 2018 | 1,116,289 | 12,405,973 | |||||
Balance at Dec. 31, 2017 | $ 1,087 | $ 12,272 | 45,129,517 | (22,065,265) | (721,070) | (662,000) | 21,694,541 |
Balance, shares at Dec. 31, 2017 | 1,086,739 | 12,271,390 | |||||
Net income (loss) | 270,316 | ||||||
Balance at Jun. 30, 2018 | $ 1,536 | $ 12,406 | 52,710,345 | (21,794,949) | (1,151,474) | (662,000) | 29,115,864 |
Balance, shares at Jun. 30, 2018 | 1,536,289 | 12,405,973 | |||||
Balance at Mar. 31, 2018 | $ 1,116 | $ 12,406 | 44,239,862 | (21,990,229) | (924,216) | (662,000) | 20,676,939 |
Balance, shares at Mar. 31, 2018 | 1,116,289 | 12,405,973 | |||||
Net income (loss) | 195,280 | 195,280 | |||||
Foreign currency translation adjustment | (227,258) | (227,258) | |||||
Stock-based compensation, net of cash settlements | 364,710 | 364,710 | |||||
Preferred stock dividends | (1,248,717) | (1,248,717) | |||||
Issuance of preferred stock, net of fees and expenses | $ 420 | 9,354,490 | 9,354,910 | ||||
Issuance of preferred stock, net of fees and expenses, shares | 420,000 | ||||||
Balance at Jun. 30, 2018 | $ 1,536 | $ 12,406 | 52,710,345 | (21,794,949) | (1,151,474) | (662,000) | 29,115,864 |
Balance, shares at Jun. 30, 2018 | 1,536,289 | 12,405,973 | |||||
Balance at Dec. 31, 2018 | $ 2,136 | $ 12,571 | 65,142,460 | (24,203,745) | (1,421,068) | (662,000) | 38,870,354 |
Balance, shares at Dec. 31, 2018 | 2,136,289 | 12,570,557 | |||||
Net income (loss) | (295,691) | (295,691) | |||||
Foreign currency translation adjustment | 209,345 | 209,345 | |||||
Issuance of stock under the Amended and Restated Equity Incentive Plan | $ 26 | $ 180 | (206) | ||||
Issuance of stock under the Amended and Restated Equity Incentive Plan, shares | 26,160 | 179,984 | |||||
Stock-based compensation, net of cash settlements | 523,556 | 523,556 | |||||
Tax withholding obligations on stock issued to employees | (800,271) | (800,271) | |||||
Preferred stock dividends | (1,492,700) | (1,492,700) | |||||
Balance at Mar. 31, 2019 | $ 2,162 | $ 12,751 | 63,372,839 | (24,499,436) | (1,211,723) | (662,000) | 37,014,593 |
Balance, shares at Mar. 31, 2019 | 2,162,449 | 12,750,541 | |||||
Balance at Dec. 31, 2018 | $ 2,136 | $ 12,571 | 65,142,460 | (24,203,745) | (1,421,068) | (662,000) | 38,870,354 |
Balance, shares at Dec. 31, 2018 | 2,136,289 | 12,570,557 | |||||
Net income (loss) | (1,066,663) | ||||||
Balance at Jun. 30, 2019 | $ 2,162 | $ 12,769 | 62,300,966 | (25,270,408) | (1,974,286) | (662,000) | 34,409,203 |
Balance, shares at Jun. 30, 2019 | 2,162,449 | 12,769,041 | |||||
Balance at Mar. 31, 2019 | $ 2,162 | $ 12,751 | 63,372,839 | (24,499,436) | (1,211,723) | (662,000) | 37,014,593 |
Balance, shares at Mar. 31, 2019 | 2,162,449 | 12,750,541 | |||||
Net income (loss) | (770,972) | (770,972) | |||||
Foreign currency translation adjustment | (762,563) | (762,563) | |||||
Issuance of stock under the Amended and Restated Equity Incentive Plan | $ 18 | (18) | |||||
Issuance of stock under the Amended and Restated Equity Incentive Plan, shares | 18,500 | ||||||
Stock-based compensation, net of cash settlements | 473,387 | 473,387 | |||||
Tax withholding obligations on stock issued to employees | (58,536) | (58,536) | |||||
Preferred stock dividends | (1,486,706) | (1,486,706) | |||||
Balance at Jun. 30, 2019 | $ 2,162 | $ 12,769 | $ 62,300,966 | $ (25,270,408) | $ (1,974,286) | $ (662,000) | $ 34,409,203 |
Balance, shares at Jun. 30, 2019 | 2,162,449 | 12,769,041 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
OPERATING ACTIVITIES: | ||
Net (loss) income | $ (1,066,663) | $ 270,316 |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||
Depreciation and amortization | 1,627,296 | 1,176,939 |
Deferred rent | (36,022) | |
Lease amortization | 943,028 | |
Deferred revenue | (9,719) | (34,832) |
Provision for doubtful accounts | 92,061 | 112,406 |
(Benefit) provision for deferred income taxes | (15,180) | 78,000 |
Foreign exchange gain | (295,487) | (332,100) |
Interest accretion | 258,735 | 95,604 |
Gain on sale of assets | (26,213) | |
Stock-based compensation expense | 1,550,188 | 537,402 |
Change in contingent consideration | (64,203) | 42,780 |
Changes in operating assets and liabilities, net of businesses acquired: | ||
Accounts receivable | 267,850 | 2,576 |
Contract asset | 274,129 | 326,631 |
Inventory | 41,867 | |
Other assets | 571,468 | (91,643) |
Accounts payable and other liabilities | (836,228) | (180,452) |
Net cash provided by operating activities | 3,312,929 | 1,967,605 |
INVESTING ACTIVITIES: | ||
Capital expenditures, net | (904,220) | (376,430) |
Cash paid for acquisitions | (1,600,000) | (1,000,000) |
Net cash used in investing activities | (2,504,220) | (1,376,430) |
FINANCING ACTIVITIES: | ||
Proceeds from issuance of preferred stock, net of fees and expenses | 9,415,000 | |
Preferred stock dividends paid | (2,961,422) | (1,714,979) |
Settlement of tax withholding obligations on stock issued to employees | (932,465) | (213,675) |
Repayments of notes payable, net | (181,457) | (139,485) |
Contingent consideration payments | (182,664) | (82,725) |
Other financing activities | (60,090) | |
Net cash (used in) provided by financing activities | (4,258,008) | 7,204,046 |
EFFECT OF EXCHANGE RATE CHANGES ON CASH | (440,158) | (434,834) |
NET (DECREASE) INCREASE IN CASH | (3,889,457) | 7,360,387 |
CASH - beginning of the period | 14,472,483 | 4,362,232 |
CASH - end of the period | 10,583,026 | 11,722,619 |
SUPPLEMENTAL NONCASH INVESTING AND FINANCING ACTIVITIES: | ||
Vehicle financing obtained | 24,909 | 75,372 |
Dividends declared, not paid | 1,486,708 | 1,056,217 |
SUPPLEMENTAL INFORMATION - Cash paid during the period for: | ||
Income taxes | 35,862 | 29,673 |
Interest | $ 28,085 | $ 20,221 |
Organization and Business
Organization and Business | 6 Months Ended |
Jun. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Business | 1. Organization and Business MTBC, Inc., (and together with its consolidated subsidiaries “MTBC” or the “Company”) is a healthcare information technology company that offers an integrated suite of proprietary cloud-based electronic health records and practice management solutions, together with related business services, to healthcare providers. The Company’s integrated services are designed to help customers increase revenues, streamline workflows and make better business and clinical decisions, while reducing administrative burdens and operating costs. The Company’s services include full-scale revenue cycle management, electronic health records, and other technology-driven practice management services for private and hospital-employed healthcare providers. MTBC has its corporate offices in Somerset, New Jersey and maintains client support teams throughout the U.S., Pakistan and Sri Lanka. MTBC was founded in 1999 and incorporated under the laws of the State of Delaware in 2001. In 2004, MTBC formed MTBC Private Limited (or “MTBC Pvt. Ltd.”), a 99.9% majority-owned subsidiary of MTBC based in Pakistan. The remaining 0.01% of the shares of MTBC Pvt. Ltd. is owned by the founder and Executive Chairman of MTBC. In 2016, MTBC formed MTBC Acquisition Corp. (“MAC”), a Delaware corporation, in connection with its acquisition of substantially all of the assets of MediGain, LLC and its subsidiary, Millennium Practice Management Associates, LLC (together “MediGain). MAC has a wholly owned subsidiary in Sri Lanka, RCM MediGain Colombo, Pvt. Ltd. In May 2018, MTBC formed MTBC Health, Inc. (“MHI”) and MTBC Practice Management, Corp. (“MPM”), each a Delaware corporation in connection with MTBC’s acquisition of substantially all of the revenue cycle management, practice management and group purchasing organization assets of Orion Healthcorp, Inc. and 13 of its affiliates (together, “Orion”). MHI is a direct, wholly owned subsidiary of MTBC, and was formed to own and operate the revenue cycle management and group purchasing organization businesses acquired from Orion. MPM is a wholly owned subsidiary of MHI and was formed to own and operate the practice management business acquired from Orion. In March 2019, MTBC formed MTBC-Med, Inc. (“MED”), a Delaware corporation, in connection with its acquisition of substantially all of the assets of Etransmedia Technology, Inc. and its subsidiaries (“ETM”). See Note 3. |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation | 2. BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial reporting and as required by Regulation S-X, Rule 8-03. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting of items of a normal and recurring nature) necessary to present fairly the Company’s financial position as of June 30, 2019, the results of operations for the three and six months ended June 30, 2019 and 2018 and cash flows for the six months ended June 30, 2019 and 2018. When preparing financial statements in conformity with GAAP, the Company must make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ significantly from those estimates. The condensed consolidated balance sheet as of December 31, 2018 was derived from our audited consolidated financial statements. The accompanying unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2018, which are included in the Company’s Annual Report on Form 10-K, filed with the SEC on March 20, 2019. Recent Accounting Pronouncements Leases (Topic 842). We adopted the standard on January 1, 2019 using the optional transition adjustment method. As part of the adoption of ASC 842, we performed an assessment of the impact of the new lease recognition standard has on the condensed consolidated financial statements. All of our leases, which consist of facility and equipment leases, have been classified as operating leases. The Company does not have any financing leases. We adopted the requirements of the new standard without restating the prior periods. There was no impact to the accumulated deficit as of the date of adoption. For leases in place at the transition date, we adopted the package of practical expedients that allows us to not reassess: (1) whether any expired or existing contracts are or contain leases, (2) lease classification for any expired or existing leases and (3) initial direct costs for any expired or existing leases. We have also adopted the practical expedients that allow us to treat the lease and non-lease components of our leases as a single component for our facility leases. We elected the short-term lease recognition exemption for all leases that qualify. As such, for those leases that qualify, we did not recognize ROU asset or lease liabilities as part of the transition adjustment. As of January 1, 2019, the impact on the consolidated assets was approximately $4.2 million and the impact on the consolidated liabilities was approximately $4.4 million. The adoption of ASC 842 did not have a material effect on the Company’s results of operations, stockholders’ equity, or statement of cash flows. We have also evaluated, documented, and implemented required changes in internal control as part of our adoption of the new lease recognition standard. These changes include implementing updated accounting policies affected by ASC 842 and implementing a new information technology application to calculate our right-of-use assets, lease liabilities and required disclosures. In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments On February 14, 2018, the FASB issued ASU 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. |
Acquisitions
Acquisitions | 6 Months Ended |
Jun. 30, 2019 | |
Business Combinations [Abstract] | |
Acquisitions | 3. ACQUISITIONS 2019 Acquisition On April 3, 2019, the Company executed an asset purchase agreement (“APA”) to acquire substantially all of the assets of ETM. The purchase price was $1.6 million and the assumption of certain liabilities, excluding acquisition-related costs of approximately $125,000. Per the APA, the acquisition had an effective date of April 1, 2019. The acquisition has been accounted for as a business combination. The ETM acquisition added additional clients to the Company’s customer base and, similar to previous acquisitions, broadened the Company’s presence in the healthcare information technology industry through geographic expansion of its customer base and by increasing available customer relationship resources and specialized trained staff. The purchase price allocation for ETM was performed by the Company and is summarized as follows: Customer relationships $ 856,000 Accounts receivable 547,377 Contract asset 139,169 Operating lease right-of-use assets 1,224,480 Property and equipment 91,277 Goodwill 39,901 Operating lease liabilities (1,224,480 ) Accrued expenses (73,724 ) Total $ 1,600,000 The acquired accounts receivable are recorded at fair value which represents amounts that have subsequently been paid or are expected to be paid by clients. The fair value of customer relationships was based on the estimated discounted cash flows generated by these intangibles. The goodwill from this acquisition is deductible ratably for income tax purposes over fifteen years and represents the Company’s ability to have an expanded local presence in additional markets and operational synergies that we expect to achieve that would not be available to other market participants. The weighted-average amortization period of the acquired intangible assets is four years. Revenue earned from the clients obtained from the ETM acquisition was approximately $2.0 million during both the three and six months ended June 30, 2019. 2018 Acquisition On May 7, 2018, the Company executed an APA to acquire substantially all of the revenue cycle, practice management, and group purchasing organization assets of Orion. The purchase price was $12.6 million, excluding acquisition-related costs of approximately $245,000. Per the APA, the acquisition had an effective date of July 1, 2018. The acquisition has been accounted for as a business combination. The Orion acquisition added a significant number of clients to the Company’s customer base and, similar to previous acquisitions, broadened the Company’s presence in the healthcare information technology industry through geographic expansion of its customer base and by increasing available customer relationship resources and specialized trained staff. The acquisition also included Orion’s practice management and group purchasing services. The practice management services provide three pediatric medical practices with the nurses, administrative support, facilities, supplies, equipment, marketing, RCM, accounting and other non-clinical services needed to efficiently operate the practices. The group purchasing services enable medical providers to purchase various vaccines directly from selected pharmaceutical companies at a discounted price. The Company engaged a third-party valuation specialist to assist the Company in valuing the assets acquired from Orion. The following table summarizes the purchase price allocation. Customer relationships $ 6,250,000 Accounts receivable 5,654,919 Contract asset 861,341 Inventory 307,278 Property and equipment 319,352 Goodwill 329,852 Accounts payable (677,872 ) Accrued expenses (444,870 ) Total $ 12,600,000 The acquired accounts receivable are recorded at fair value which represents amounts that have subsequently been paid or are expected to be paid by clients. The inventory acquired represents vaccines held at the managed practices. The fair value of customer relationships was based on the estimated discounted cash flows generated by these intangibles. The goodwill from this acquisition is deductible ratably for income tax purposes over fifteen years and represents the Company’s ability to have an expanded local presence in additional markets, operational synergies that we expect to achieve that would not be available to other market participants and the ability to offer group purchasing and practice management services. The weighted-average amortization period of the acquired intangibles is seven years. Revenue earned from the clients obtained from the Orion acquisition was approximately $7.1 million and $14.8 million during the three and six months ended June 30, 2019, respectively. Pro forma financial information (Unaudited) The unaudited pro forma information below represents condensed consolidated results of operations as if the Orion and ETM acquisitions occurred on January 1, 2018. The pro forma information has been included for comparative purposes and is not indicative of results of operations that the Company would have had if the acquisitions occurred on the above date, nor is it necessarily indicative of future results. The unaudited pro forma information reflects material, non-recurring pro forma adjustments directly attributable to the business combinations. The difference between the actual revenue and the pro forma revenue is approximately $19.1 million of additional revenue recorded by Orion and approximately $6.5 million of additional revenue recorded by ETM for the six months ended June 30, 2018. The difference between the actual and pro forma results for the three months ended June 30, 2019 represent approximately $200,000 of transaction and integration costs incurred by the Company during the period. Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 Total revenue $ 16,749 $ 21,129 $ 33,897 $ 42,610 Net loss $ (571 ) $ (2,618 ) $ (2,729 ) $ (5,953 ) Net loss attributable to common shareholders $ (2,058 ) $ (3,867 ) $ (5,708 ) $ (7,977 ) Net loss per common share $ (0.17 ) $ (0.33 ) $ (0.48 ) $ (0.69 ) |
Goodwill and Intangible Assets-
Goodwill and Intangible Assets-Net | 6 Months Ended |
Jun. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets-Net | 4. GOODWILL AND INTANGIBLE ASSETS-NET Goodwill consists of the excess of the purchase price over the fair value of identifiable net assets of businesses acquired. The following is the summary of the changes to the carrying amount of goodwill for the six months ended June 30, 2019 and the year ended December 31, 2018: Six Months Ended Year Ended June 30, 2019 December 31, 2018 Beginning gross balance $ 12,593,795 $ 12,263,943 Acquisition 39,901 329,852 Ending gross balance $ 12,633,696 $ 12,593,795 Of the total goodwill, approximately $90,000 is allocated to the Practice Management segment and the balance is allocated to the Healthcare IT segment. Intangible assets include customer contracts and relationships and covenants not-to-compete acquired in connection with acquisitions, as well as trademarks acquired and software costs. Intangible assets - net as of June 30, 2019 and December 31, 2018 consist of the following: June 30, 2019 December 31, 2018 Contracts and relationships acquired $ 23,597,300 $ 22,741,300 Non-compete agreements 1,236,377 1,236,377 Other intangible assets 1,606,552 1,477,059 Total intangible assets 26,440,229 25,454,736 Less: Accumulated amortization (19,933,080 ) (18,820,733 ) Intangible assets - net $ 6,507,149 $ 6,634,003 Amortization expense was approximately $1.2 million and $854,000 for the six months ended June 30, 2019 and 2018 and $612,000 and $415,000 for the three months ended June 30, 2019 and 2018, respectively. The weighted-average amortization period is currently seven years. As of June 30, 2019, future amortization scheduled to be expensed is as follows: Years ending December 31 2019 (six months) $ 959,035 2020 1,301,600 2021 1,157,877 2022 800,107 2023 338,528 Thereafter 1,950,002 Total $ 6,507,149 |
Net Loss Per Common Share
Net Loss Per Common Share | 6 Months Ended |
Jun. 30, 2019 | |
Earnings Per Share [Abstract] | |
Net Loss Per Common Share | 5. NET LOss per COMMON share The following table reconciles the weighted-average shares outstanding for basic and diluted net loss per share for the three and six months ended June 30, 2019 and 2018: Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 Basic and Diluted: Net loss attributable to common shareholders $ (2,257,678 ) $ (1,053,437 ) $ (4,046,069 ) $ (1,753,733 ) Weighted-average common shares used to compute basic and diluted loss per share 12,022,143 11,665,174 11,984,284 11,641,190 Net loss attributable to common shareholders per share - Basic and Diluted $ (0.19 ) $ (0.09 ) $ (0.34 ) $ (0.15 ) All unvested restricted stock units (“RSUs”), the 200,000 warrants granted to Opus Bank (“Opus”) and the 153,489 warrants granted to Silicon Valley Bank (“SVB”) have been excluded from the above calculations as they were anti-dilutive. Vested RSUs and vested restricted shares have been included in the above calculations. |
Debt
Debt | 6 Months Ended |
Jun. 30, 2019 | |
Debt Disclosure [Abstract] | |
Debt | 6. Debt SVB Vehicle Financing Notes Insurance Financing |
Leases
Leases | 6 Months Ended |
Jun. 30, 2019 | |
Leases [Abstract] | |
Leases | 7. leases We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, current operating lease liability and noncurrent operating lease liability in our condensed consolidated balance sheet as of June 30, 2019. The Company does not have any finance leases. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. We use our estimated incremental borrowing rates, which are derived from information available at the lease commencement date, in determining the present value of lease payments. For leases in existence at the adoption of ASC 842, we used the incremental borrowing rate as of January 1, 2019. We give consideration to our bank financing arrangements, geographical location and collateralization of assets when calculating our incremental borrowing rates. Our lease terms include options to extend the lease when it is reasonably certain that we will exercise that option. Leases with a term of less than 12 months are not recorded in the condensed consolidated balance sheet. Our lease agreements do not contain any residual value guarantees. For real estate leases, we account for the lease and non-lease components as a single lease component. Some leases include escalation clauses and termination options that are factored in the determination of the lease payments when appropriate. If a lease is modified after the effective date, the operating lease ROU asset and liability is re-measured using the current incremental borrowing rate. We lease all of our facilities and some equipment. Lease expense is included in direct operating costs and general and administrative expenses in the condensed consolidated statements of operations based on the nature of the expense. As of June 30, 2019, we had 34 leased properties, five in Practice Management and 29 in Healthcare IT, with remaining terms ranging from less than one year to five years. Our lease terms are determined taking into account lease renewal options, the Company’s anticipated operating plans and leases that are on a month-to-month basis. We also have some related party leases – see Note 9. The components of lease expense were as follows: Three Months Ended June 30, 2019 Six Months Ended June 30, 2019 Operating lease cost $ 639,393 $ 1,104,621 Short-term lease cost 32,425 137,976 Variable lease cost 12,450 19,033 Total- net lease cost $ 684,268 $ 1,261,630 Short-term lease cost represents leases that were not capitalized as the lease term as of the later of January 1, 2019 or the beginning of the lease was less than 12 months. Variable lease costs include utilities, real estate taxes and common area maintenance costs. Supplemental balance sheet information related to leases was as follows: June 30, 2019 Operating leases: Operating lease ROU asset, net $ 4,860,780 Current operating lease liabilities $ 2,077,030 Non-current operating lease liabilities 2,876,232 Total operating lease liabilities $ 4,953,262 Operating leases: ROU assets, gross $ 5,878,215 Asset lease expense (943,028 ) Foreign exchange loss (74,407 ) ROU assets, net $ 4,860,780 Weighted average remaining lease term (in years): Operating leases 2.67 Weighted average discount rate: Operating leases 7.04 % Supplemental cash flow and other information related to leases was as follows: Three Months Ended June 30, 2019 Six Months Ended June 30, 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 646,824 $ 1,124,884 ROU assets obtained in exchange for lease liabilities: Operating leases $ 1,453,751 $ 1,634,041 Maturities of lease liabilities are as follows: Operating leases 2019 (six months) $ 1,287,711 2020 2,033,900 2021 1,397,022 2022 561,914 2023 141,314 Total lease payments 5,421,861 Less: imputed interest (468,599 ) Total lease obligations 4,953,262 Less: current obligations (2,077,030 ) Long-term lease obligations $ 2,876,232 As of June 30, 2019, we do not have operating lease commitments that have not yet commenced. Disclosures related to periods prior to adoption of ASC 842 Operating lease rent expense was approximately $220,000 and $436,000 for the three and six months ended June 30, 2018, respectively. Month to month leases and cancellable leases are not included in the table below. Certain leases are maintained on a month to month basis. This includes leases for the US corporate facility and other locations with the Executive Chairman (see Note 9). As of December 31, 2018, future lease payment obligations under non-cancellable operating leases were as follows: Operating leases 2019 $ 932,068 2020 715,059 2021 510,927 2022 412,585 2023 91,797 Total $ 2,662,436 |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 8. Commitments and Contingencies Legal Proceedings Acquisitions — |
Related Parties
Related Parties | 6 Months Ended |
Jun. 30, 2019 | |
Related Party Transactions [Abstract] | |
Related Parties | 9. Related PARTIES The Company had sales to a related party, a physician who is the wife of the Executive Chairman. Revenues from this customer were approximately $9,000 for both the six months ended June 30, 2019 and 2018, and $5,000 and $4,000 for the three months ended June 30, 2019 and 2018, respectively. As of June 30, 2019 and December 31, 2018, the receivable balance due from this customer was approximately $1,500 and $1,600, respectively. The Company is a party to a nonexclusive aircraft dry lease agreement with Kashmir Air, Inc. (“KAI”), which is owned by the Executive Chairman. The Company recorded an expense of approximately $64,000 for both the six month periods ended June 30, 2019 and 2018, and $32,000 for both the three months ended June 30, 2019 and 2018. As of June 30, 2019 and December 31, 2018, the Company had a liability outstanding to KAI of approximately $1,000 and $11,000 respectively, which is included in accrued liability to related party in the condensed consolidated balance sheets. The original aircraft lease expired on March 31, 2019 and was not included in the ROU asset at January 1, 2019 or March 31, 2019. A lease for a different aircraft at the same lease rate was entered into as of April 1, 2019 and has been included in the ROU asset and operating lease liability at June 30, 2019. The Company leases its corporate offices in New Jersey, its temporary housing for its foreign visitors, a storage facility and its backup operations center in Bagh, Pakistan, from the Executive Chairman. The related party rent expense for the six months ended June 30, 2019 and 2018 was approximately $94,000 and $95,000, respectively, and for three months ended June 30, 2019 and 2018 was approximately $46,000 and $47,000, and is included in direct operating costs and general and administrative expense in the consolidated statements of operations. Current assets-related party in the condensed consolidated balance sheets includes security deposits and prepaid rent related to the leases of the Company’s corporate offices in the amount of approximately $13,000 and $25,000 as of June 30, 2019 and December 31, 2018, respectively. Included in the ROU asset at June 30, 2019 is approximately $570,000 applicable to the related party leases. Included in the current and non-current operating lease liability at June 30, 2019 is approximately $274,000 and $296,000, respectively applicable to the related party leases. |
Revenue
Revenue | 6 Months Ended |
Jun. 30, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | 10. REVENUE Introduction The Company accounts for revenue in accordance with ASC 606, Revenue from Contracts with Customers Most of our current contracts with customers contain a single performance obligation. For contracts where we provide multiple services, such as where we perform multiple ancillary services, each service represents its own performance obligation. Selling prices are based on the contractual price for the service, which approximates the stand alone selling price. We apply the portfolio approach as permitted by ASC 606 as a practical expedient to contracts with similar characteristics and we use estimates and assumptions when accounting for those portfolios. Our contracts generally include standard commercial payment terms. We have no significant obligations for refunds, warranties or similar obligations and our revenue does not include taxes collected from our customers. Disaggregation of Revenue from Contracts with Customers We derive revenue from seven primary sources: revenue cycle management services, practice management services, professional services, ancillary services, group purchasing services, printing and mailing services, and clearinghouse and EDI (electronic data interchange) services. The following table represents a disaggregation of revenue for the three and six months ended June 30: Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 Healthcare IT: Revenue cycle management services $ 11,432,683 $ 7,866,650 $ 21,990,125 $ 15,259,040 Professional services 383,336 59,653 718,771 184,268 Ancillary services 930,181 313,454 1,429,277 562,091 Group purchasing services 205,066 - 405,113 - Printing and mailing services 358,440 301,279 750,100 649,523 Clearinghouse and EDI services 150,869 141,901 286,933 335,340 Practice Management: Practice management services 3,288,924 - 6,249,391 - Total $ 16,749,499 $ 8,682,937 $ 31,829,710 $ 16,990,262 Revenue cycle management services: Revenue cycle management services are the recurring process of submitting and following up on claims with health insurance companies in order for the healthcare providers to receive payment for the services they rendered. MTBC typically invoices customers on a monthly basis based on the actual collections received by its customers and the agreed-upon rate in the sales contract. The services include use of practice management software and related tools (on a software-as-a-service (“SaaS”) basis), electronic health records (on a SaaS basis), medical billing services and use of mobile health solutions. We consider the services to be one performance obligation since the promises are not distinct in the context of the contract. The performance obligation consists of a series of distinct services that are substantially the same and have the same periodic pattern of transfer to our customers. In many cases, our clients may terminate their agreements with 90 days’ notice without cause, thereby limiting the term in which we have enforceable rights and obligations, although this time period can vary between clients. Our payment terms are normally net 30 days. Although our contracts typically have stated terms of one or more years, under ASC 606 our contracts are considered month-to-month and accordingly, there is no financing component. For the majority of our revenue cycle management contracts, the total transaction price is variable because our obligation is to process an unknown quantity of claims, as and when requested by our customers over the contract period. When a contract includes variable consideration, we evaluate the estimate of the variable consideration to determine whether the estimate needs to be constrained; therefore, we include variable consideration in the transaction price only to the extent that it is probable that a significant reversal of the amount of cumulative revenue recognized will not occur when the uncertainty associated with variable consideration is subsequently resolved. Estimates to determine variable consideration such as payment to charge ratios, effective billing rates, and the estimated contractual payment periods are updated at each reporting date. Revenue is recognized over the performance period using the input method. Other revenue streams: MTBC also provides implementation and professional services to clearinghouse and other customers and records revenue monthly on a time and materials or a fixed rate basis. This is a separate performance obligation from the clearinghouse and recurring EDI services provided, for which the Company receives and records monthly fees. The performance obligation is satisfied over time as the implementation or professional services are rendered. Ancillary services represent services such as coding and transcription that are rendered in connection with the delivery of revenue cycle management and related medical services. The Company invoices customers monthly, based on the actual amount of services performed at the agreed upon rate in the contract. These services are only offered to revenue cycle management customers. These services do not represent a material right because the services are optional to the customer and customers electing these services are charged the same price for those services as if they were on a standalone basis. Each individual coding or transcription transaction processed represents a performance obligation, which is satisfied over time as that individual service is rendered. The Company provides group purchasing services which enable medical providers to purchase various vaccines directly from selected pharmaceutical companies at a discounted price. Currently, there are approximately 4,000 medical providers who are members of the program. Revenue is recognized as the vaccine shipments are made to the medical providers. Fees from the pharmaceutical companies are paid either quarterly or annually and the Company adjusts its revenue accrual at the time of payment. The Company makes significant judgments regarding the variable consideration which we expect to be entitled to for the group purchasing services which includes the anticipated shipments to the members enrolled in the program, anticipated volumes of purchases made by the members, and the changes in the number of members. The amounts recorded are constrained by estimates of decreases in shipments and loss of members to avoid a significant revenue reversal in the subsequent period. The only performance obligation is to provide the pharmaceutical companies with the medical providers who want to become members in order to purchase vaccines. The performance obligation is satisfied once the medical provider agrees to purchase a specific quantity of vaccines and the medical provider’s information is forwarded to the vaccine suppliers. The Company records a contract asset for revenue earned and not paid as the ultimate payment is conditioned on achieving certain volume thresholds. The Company provides printing and mailing services for both revenue cycle management customers and a non- revenue cycle management customer, and invoices on a monthly basis based on the number of prints, the agreed-upon rate per print and the postage incurred. The performance obligation is satisfied once the printing and mailing is completed. The medical billing clearinghouse service takes claim information from customers, checks the claims for errors and sends this information electronically to insurance companies. MTBC invoices customers on a monthly basis based on the number of claims submitted and the agreed-upon rate in the agreement. This service is provided to medical practices and providers to medical practices who are not revenue cycle management customers. The performance obligation is satisfied once the relevant submissions are completed. For all of the above revenue streams other than group purchasing services, revenue is recognized over time, which is typically one month or less, which closely matches the point in time that the customer simultaneously receives and consumes the benefits provided by the Company. For the group purchasing services, revenue is recognized at a point in time. Other than the group purchasing services, each of the Company’s services are substantially the same and have the same periodic pattern of transfer to the customer. Each service provided by the Company is considered a separate performance obligation. Practice management services: The Company also provides practice management services under long-term management service agreements to three medical practices. We provide the medical practices with the nurses, administrative support, facilities, supplies, equipment, marketing, RCM, accounting, and other non-clinical services needed to efficiently operate their practices. Revenue is recognized as the services are provided to the medical practices. Revenue recorded in the consolidated statements of operations represents the reimbursement of costs paid by the Company for the practices and the management fee earned each month for managing the practice. The management fee is based on either a fixed fee or a percentage of the net operating income. The Company assumes all financial risk for the performance of the managed medical practices. Revenue is impacted by amount of the costs incurred by the practices and their operating income. The gross billing of the practices is impacted by billing rates, changes in current procedural terminology code reimbursement and collection trends which in turn impacts the management fee that the Company is entitled to. Billing rates are reviewed at least annually and adjusted based on current insurer reimbursement practices. The performance obligation is satisfied as the management services are provided. Our contracts for practice management services have approximately an additional 20 years remaining and are only cancellable under very limited circumstances. The Company receives a management fee each month for managing the day-to-day business operations of each medical group as a fixed fee or a percentage payment of the net operating income which is included in revenue in the consolidated statements of operations. The Company also provides accounting services and a practice manager to one additional medical practice for which it receives monthly fees. Our practice management services obligations consist of a series of distinct services that are substantially the same and have the same periodic pattern of transfer to our customers. Revenue is recognized over time, however, for reporting and convenience purposes management fee is computed at each month end. Information about contract balances: The contract asset in the condensed consolidated balance sheets represents the revenue associated with the amounts we estimate our revenue cycle management clients will ultimately collect associated with the services they have provided and the relative fee we charge associated with those collections, together with amounts related to the group purchasing services. As of June 30, 2019, the estimated revenue expected to be recognized in the future related to the remaining revenue cycle management performance obligations outstanding was approximately $2 million. We expect to recognize substantially all of the revenue for the remaining performance obligations over the next three months. Approximately $0.5 million of the contract asset represents revenue earned, not paid, from the group purchasing services. Accounts receivable are shown separately at their net realizable value in our condensed consolidated balance sheets. Amounts that we are entitled to collect under the applicable contract are recorded as accounts receivable. Invoicing is performed at the end of each month when the services have been provided. The contract asset results from our revenue cycle management services and is due to the timing of revenue recognition, submission of claims from our customers and payments from the insurance providers. The contract asset includes our right to payment for services already transferred to a customer when the right to payment is conditional on something other than the passage of time. For example, contracts for revenue cycle management services where we recognize revenue over time but do not have a contractual right to payment until the customer receives payment of their claim from the insurance provider. The contract asset also includes the revenue accrued, not received, for the group purchasing services. The contract asset was approximately $2.5 million and $1.7 million as of June 30, 2019 and June 30, 2018, respectively. Changes in the contract asset are recorded as adjustments to net revenue. The changes primarily result from providing services to revenue cycle management customers that result in additional consideration and are offset by our right to payment for services becoming unconditional and changes in the revenue accrued for the group purchasing services. The contract asset for our group purchasing services is reduced when we receive payments from vaccine manufacturers and is increased for revenue earned, not received. Deferred revenue represents sign-up fees received from customers that are amortized over three years. The opening and closing balances of the Company’s accounts receivable, contract asset and deferred revenue are as follows for the six months ended June 30, 2019 and 2018: Accounts Receivable, Contract Asset Deferred Revenue (current) Deferred Revenue Beginning balance as of January 1, 2019 $ 7,331,474 $ 2,608,631 $ 25,355 $ 18,949 ETM acquisition - 139,169 - - Increase (decrease), net 187,466 (274,129 ) (9,130 ) (589 ) Ending balance as of June 30, 2019 $ 7,518,940 $ 2,473,671 $ 16,225 $ 18,360 Beginning balance as of January 1, 2018 $ 3,879,463 $ 1,342,692 $ 62,104 $ 28,615 (Decrease) increase, net (441,613 ) 326,631 (34,429 ) (403 ) Ending balance as of June 30, 2018 $ 3,437,850 $ 1,669,323 $ 27,675 $ 28,212 Deferred commissions: Our sales incentive plans include commissions payable to employees and third parties at the time of initial contract execution that are capitalized as incremental costs to obtain a contract. The capitalized commissions are amortized over the period the related services are transferred. As we do not offer commissions on contract renewals, we have determined the amortization period to be the estimated client life, which is three years. Deferred commissions were approximately $60,000 and $113,000 at June 30, 2019 and 2018, respectively, and are included in the other assets amounts in the condensed consolidated balance sheets. |
Stock-Based Compensation
Stock-Based Compensation | 6 Months Ended |
Jun. 30, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Stock-Based Compensation | 11. STOCK-BASED COMPENSATION In April 2014, the Company adopted its Equity Incentive Plan (the “Plan”), reserving 1,351,000 shares of common stock for grants to employees, officers, directors and consultants. During April 2017, the Plan was amended and restated whereby an additional 1,500,000 shares of common stock and 100,000 shares of Series A Preferred Stock were added to the plan for future issuance. During June 2018, the Company’s shareholders approved the addition of 200,000 preferred shares to the Plan for future grants. As of June 30, 2019, 554,910 shares of common stock and 138,400 shares of Series A Preferred Stock are available for grant under the Plan. Permissible awards include incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock, RSUs, performance stock and cash-settled awards and other stock-based awards in the discretion of the Compensation Committee of the Board of Directors including unrestricted stock grants. The common stock equity based RSUs contain a common provision in which the units shall immediately vest and become converted into common shares at the rate of one share per RSU, immediately after a change in control, as defined in the award agreement. The preferred stock RSUs contain a similar provision, which vest and convert to Series A Preferred Stock upon a change in control. Common and preferred stock RSUs In February 2019, the Compensation Committee approved executive bonuses to be paid in shares of Series A Preferred Stock, with the number of shares and the amount based on specified criteria being achieved during the year 2019. The actual amount will be settled in early 2020 based on the achievement of the specified criteria. For the three and six months ended June 30, 2019, an expense of approximately $301,000 and $602,000, respectively, was recorded for these bonuses based on the value of the shares at the grant date and recognized over the service period. The portion of the stock compensation expense to be used for the payment of withholding and payroll taxes is included in accrued compensation in the condensed consolidated balance sheets. The balance of the stock compensation expense has been recorded as additional paid-in capital. The following table summarizes the RSU transactions related to the common and preferred stock under the Equity Incentive Plan for the six months ended June 30, 2019: Common Stock Preferred Stock Outstanding and unvested shares at January 1, 2019 929,347 44,800 Granted 5,000 44,000 Vested (319,813 ) (44,800 ) Forfeited (12,120 ) - Outstanding and unvested shares at June 30, 2019 602,414 44,000 Of the total outstanding and unvested common stock RSUs at June 30, 2019, 568,081 RSUs are classified as equity and 34,333 RSUs are classified as a liability. All of the preferred stock RSUs are classified as equity. Stock-based compensation expense The Company recognizes compensation expense on a straight-line basis over the total requisite service period for the entire award. For stock awards classified as equity, the market price of our common stock or preferred stock on the date of grant is used in recording the fair value of the award and includes the related taxes. For stock awards classified as a liability, the earned amount is marked to market based on the end of period common stock price. The liability for the cash-settled awards was approximately $479,000 and $118,000 at June 30, 2019 and December 31, 2018, respectively, and is included in accrued compensation in the condensed consolidated balance sheets. The following table summarizes the components of share-based compensation expense for the three and six months ended June 30, 2019 and 2018: Stock-based compensation included in the Three Months Ended June 30, Six Months Ended June 30, condensed consolidated statements of operations: 2019 2018 2019 2018 Direct operating costs $ 46,207 $ 8,475 $ 96,858 $ 9,859 General and administrative 711,050 396,674 1,407,471 522,600 Research and development 4,353 4,563 9,834 4,943 Selling and marketing 31,053 - 36,025 - Total stock-based compensation expense $ 792,663 $ 409,712 $ 1,550,188 $ 537,402 |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 12. INCOME TAXES The income tax expense for the three months ended June 30, 2019 was approximately $55,000, comprised of a current tax expense of $15,000 and deferred tax expense of $40,000. The current income tax provision and the deferred income tax benefit for the six months ended June 30, 2019 were approximately $30,000 and $15,000, respectively. The current income tax provision for the three and six months ended June 30, 2019 and 2018 primarily relates to state minimum taxes and foreign income taxes. Although the Company is forecasting a return to profitability, it has incurred cumulative losses which make realization of deferred tax asset difficult to support in accordance with ASC 740. Accordingly, a valuation allowance has been recorded against the Federal and state deferred tax assets as of June 30, 2019 and December 31, 2018. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 6 Months Ended |
Jun. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | 13. FAIR VALUE OF FINANCIAL INSTRUMENTS As of June 30, 2019, and December 31, 2018, the carrying amounts of accounts receivable, accounts payable and accrued expenses approximated their estimated fair values because of the short term nature of these financial instruments. Fair value measurements-Level 2 Our notes payable are carried at cost and approximate fair value since the interest rates being charged approximate market rates. As a result, the Company categorizes these borrowings as level 2 in the fair value hierarchy. Contingent Consideration The Company’s contingent consideration of approximately $280,000 and $526,000 as of June 30, 2019 and December 31, 2018, respectively, are Level 3 liabilities. The fair value of the contingent consideration at June 30, 2019 and December 31, 2018 was primarily driven by changes in revenue estimates related to the acquisitions during 2015 and 2016, the passage of time and the associated discount rate. Due to the number of factors used to determine contingent consideration, it is not possible to determine a range of outcomes. Subsequent adjustments to the fair value of the contingent consideration liability will continue to be recorded in the Company’s results of operations until all contingencies are settled. The following table provides a reconciliation of the beginning and ending balances for the contingent consideration measured at fair value using significant unobservable inputs (Level 3): Fair Value Measurement at Reporting Date Using Significant Unobservable Inputs, Level 3 Six Months Ended June 30, 2019 2018 Balance - January 1, $ 526,432 $ 603,411 Change in fair value (64,203 ) 42,780 Payments (182,664 ) (82,725 ) Balance - June 30, $ 279,565 $ 563,466 |
Segment Reporting
Segment Reporting | 6 Months Ended |
Jun. 30, 2019 | |
Segment Reporting [Abstract] | |
Segment Reporting | 1 4. SEGMENT REPORTING Both our Chief Executive Officer and Executive Chairman serve as the Chief Operating Decision Maker (“CODM”), organize the Company, manage resource allocations and measure performance among two operating and reportable segments: (i) Healthcare IT and (ii) Practice Management. The Healthcare IT segment includes revenue cycle management and other services. The Practice Management segment includes the management of three medical practices and starting April 1, 2019, certain practice management services are being provided to a fourth practice. Each segment is considered a reporting unit. The CODM evaluates financial performance of the business units on the basis of revenue and direct operating costs excluding unallocated amounts, which are mainly corporate overhead costs. Our CODM does not evaluate operating segments using asset or liability information. The accounting policies of the segments are the same as those disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 filed with the SEC on March 20, 2019. There was only one operating segment during the three and six months ended June 30, 2018 as the Practice Management segment was acquired in July 2018. The following table presents revenues, operating expenses and operating income (loss) by reportable segment: Six Months Ended June 30, 2019 Healthcare IT Practice Management Unallocated Corporate Expenses Total Net revenue $ 25,580,319 $ 6,249,391 $ - $ 31,829,710 Operating expenses: Direct operating costs 16,403,912 4,840,023 - 21,243,935 Selling and marketing 726,147 17,809 - 743,956 General and administrative 5,757,549 955,760 2,592,521 9,305,830 Research and development 473,064 - - 473,064 Change in contingent consideration (64,203 ) - - (64,203 ) Depreciation and amortization 1,435,071 157,830 - 1,592,901 Total operating expenses 24,731,540 5,971,422 2,592,521 33,295,483 Operating income (loss) $ 848,779 $ 277,969 $ (2,592,521 ) $ (1,465,773 ) Three Months Ended June 30, 2019 Healthcare IT Practice Management Unallocated Corporate Expenses Total Net revenue $ 13,460,575 $ 3,288,924 $ - $ 16,749,499 Operating expenses: Direct operating costs 8,929,458 2,466,937 - 11,396,395 Selling and marketing 374,196 8,361 - 382,557 General and administrative 3,295,146 559,390 1,289,218 5,143,754 Research and development 218,408 - - 218,408 Depreciation and amortization 757,084 79,077 - 836,161 Total operating expenses 13,574,292 3,113,765 1,289,218 17,977,275 Operating (loss) income $ (113,717 ) $ 175,159 $ (1,289,218 ) $ (1,227,776 ) |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Leases (Topic 842). We adopted the standard on January 1, 2019 using the optional transition adjustment method. As part of the adoption of ASC 842, we performed an assessment of the impact of the new lease recognition standard has on the condensed consolidated financial statements. All of our leases, which consist of facility and equipment leases, have been classified as operating leases. The Company does not have any financing leases. We adopted the requirements of the new standard without restating the prior periods. There was no impact to the accumulated deficit as of the date of adoption. For leases in place at the transition date, we adopted the package of practical expedients that allows us to not reassess: (1) whether any expired or existing contracts are or contain leases, (2) lease classification for any expired or existing leases and (3) initial direct costs for any expired or existing leases. We have also adopted the practical expedients that allow us to treat the lease and non-lease components of our leases as a single component for our facility leases. We elected the short-term lease recognition exemption for all leases that qualify. As such, for those leases that qualify, we did not recognize ROU asset or lease liabilities as part of the transition adjustment. As of January 1, 2019, the impact on the consolidated assets was approximately $4.2 million and the impact on the consolidated liabilities was approximately $4.4 million. The adoption of ASC 842 did not have a material effect on the Company’s results of operations, stockholders’ equity, or statement of cash flows. We have also evaluated, documented, and implemented required changes in internal control as part of our adoption of the new lease recognition standard. These changes include implementing updated accounting policies affected by ASC 842 and implementing a new information technology application to calculate our right-of-use assets, lease liabilities and required disclosures. In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments On February 14, 2018, the FASB issued ASU 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. |
Acquisitions (Tables)
Acquisitions (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Schedule of Business Acquisition, Pro Forma Information | Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 Total revenue $ 16,749 $ 21,129 $ 33,897 $ 42,610 Net loss $ (571 ) $ (2,618 ) $ (2,729 ) $ (5,953 ) Net loss attributable to common shareholders $ (2,058 ) $ (3,867 ) $ (5,708 ) $ (7,977 ) Net loss per common share $ (0.17 ) $ (0.33 ) $ (0.48 ) $ (0.69 ) |
2019 Acquisition [Member] | |
Schedule of Assets Acquired and Liabilities Assumed | The purchase price allocation for ETM was performed by the Company and is summarized as follows: Customer relationships $ 856,000 Accounts receivable 547,377 Contract asset 139,169 Operating lease right-of-use assets 1,224,480 Property and equipment 91,277 Goodwill 39,901 Operating lease liabilities (1,224,480 ) Accrued expenses (73,724 ) Total $ 1,600,000 |
2018 Acquisition [Member] | |
Schedule of Assets Acquired and Liabilities Assumed | The Company engaged a third-party valuation specialist to assist the Company in valuing the assets acquired from Orion. The following table summarizes the purchase price allocation. Customer relationships $ 6,250,000 Accounts receivable 5,654,919 Contract asset 861,341 Inventory 307,278 Property and equipment 319,352 Goodwill 329,852 Accounts payable (677,872 ) Accrued expenses (444,870 ) Total $ 12,600,000 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets-Net (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets and Goodwill | The following is the summary of the changes to the carrying amount of goodwill for the six months ended June 30, 2019 and the year ended December 31, 2018: Six Months Ended Year Ended June 30, 2019 December 31, 2018 Beginning gross balance $ 12,593,795 $ 12,263,943 Acquisition 39,901 329,852 Ending gross balance $ 12,633,696 $ 12,593,795 |
Schedule of Finite-Lived Intangible Assets | Intangible assets - net as of June 30, 2019 and December 31, 2018 consist of the following: June 30, 2019 December 31, 2018 Contracts and relationships acquired $ 23,597,300 $ 22,741,300 Non-compete agreements 1,236,377 1,236,377 Other intangible assets 1,606,552 1,477,059 Total intangible assets 26,440,229 25,454,736 Less: Accumulated amortization (19,933,080 ) (18,820,733 ) Intangible assets - net $ 6,507,149 $ 6,634,003 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | As of June 30, 2019, future amortization scheduled to be expensed is as follows: Years ending December 31 2019 (six months) $ 959,035 2020 1,301,600 2021 1,157,877 2022 800,107 2023 338,528 Thereafter 1,950,002 Total $ 6,507,149 |
Net Loss Per Common Share (Tabl
Net Loss Per Common Share (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Earnings Per Share [Abstract] | |
Schedule of Losses Per Share, Basic and Diluted | The following table reconciles the weighted-average shares outstanding for basic and diluted net loss per share for the three and six months ended June 30, 2019 and 2018: Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 Basic and Diluted: Net loss attributable to common shareholders $ (2,257,678 ) $ (1,053,437 ) $ (4,046,069 ) $ (1,753,733 ) Weighted-average common shares used to compute basic and diluted loss per share 12,022,143 11,665,174 11,984,284 11,641,190 Net loss attributable to common shareholders per share - Basic and Diluted $ (0.19 ) $ (0.09 ) $ (0.34 ) $ (0.15 ) |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Leases [Abstract] | |
Schedule of Lease Expense | The components of lease expense were as follows: Three Months Ended June 30, 2019 Six Months Ended June 30, 2019 Operating lease cost $ 639,393 $ 1,104,621 Short-term lease cost 32,425 137,976 Variable lease cost 12,450 19,033 Total- net lease cost $ 684,268 $ 1,261,630 |
Schedule of Supplemental Balance Sheet Information Related to Leases | Supplemental balance sheet information related to leases was as follows: June 30, 2019 Operating leases: Operating lease ROU asset, net $ 4,860,780 Current operating lease liabilities $ 2,077,030 Non-current operating lease liabilities 2,876,232 Total operating lease liabilities $ 4,953,262 Operating leases: ROU assets, gross $ 5,878,215 Asset lease expense (943,028 ) Foreign exchange loss (74,407 ) ROU assets, net $ 4,860,780 Weighted average remaining lease term (in years): Operating leases 2.67 Weighted average discount rate: Operating leases 7.04 % |
Schedule of Supplemental Cash Flow and Other Information Related to Leases | Supplemental cash flow and other information related to leases was as follows: Three Months Ended June 30, 2019 Six Months Ended June 30, 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 646,824 $ 1,124,884 ROU assets obtained in exchange for lease liabilities: Operating leases $ 1,453,751 $ 1,634,041 |
Schedule of Maturities of Lease Liabilities | Maturities of lease liabilities are as follows: Operating leases 2019 (six months) $ 1,287,711 2020 2,033,900 2021 1,397,022 2022 561,914 2023 141,314 Total lease payments 5,421,861 Less: imputed interest (468,599 ) Total lease obligations 4,953,262 Less: current obligations (2,077,030 ) Long-term lease obligations $ 2,876,232 |
Schedule of Future Minimum Lease Payments Under Non-cancellable Operating Leases | As of December 31, 2018, future lease payment obligations under non-cancellable operating leases were as follows: Operating leases 2019 $ 932,068 2020 715,059 2021 510,927 2022 412,585 2023 91,797 Total $ 2,662,436 |
Revenue (Tables)
Revenue (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Disaggregation of Revenue | The following table represents a disaggregation of revenue for the three and six months ended June 30: Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 Healthcare IT: Revenue cycle management services $ 11,432,683 $ 7,866,650 $ 21,990,125 $ 15,259,040 Professional services 383,336 59,653 718,771 184,268 Ancillary services 930,181 313,454 1,429,277 562,091 Group purchasing services 205,066 - 405,113 - Printing and mailing services 358,440 301,279 750,100 649,523 Clearinghouse and EDI services 150,869 141,901 286,933 335,340 Practice Management: Practice management services 3,288,924 - 6,249,391 - Total $ 16,749,499 $ 8,682,937 $ 31,829,710 $ 16,990,262 |
Schedule of Accounts Receivable, Contract Asset and Deferred Revenue | The opening and closing balances of the Company’s accounts receivable, contract asset and deferred revenue are as follows for the six months ended June 30, 2019 and 2018: Accounts Receivable, Contract Asset Deferred Revenue (current) Deferred Revenue Beginning balance as of January 1, 2019 $ 7,331,474 $ 2,608,631 $ 25,355 $ 18,949 ETM acquisition - 139,169 - - Increase (decrease), net 187,466 (274,129 ) (9,130 ) (589 ) Ending balance as of June 30, 2019 $ 7,518,940 $ 2,473,671 $ 16,225 $ 18,360 Beginning balance as of January 1, 2018 $ 3,879,463 $ 1,342,692 $ 62,104 $ 28,615 (Decrease) increase, net (441,613 ) 326,631 (34,429 ) (403 ) Ending balance as of June 30, 2018 $ 3,437,850 $ 1,669,323 $ 27,675 $ 28,212 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Disclosure of Share-based Compensation Arrangements by Share-based Payment Award | The following table summarizes the RSU transactions related to the common and preferred stock under the Equity Incentive Plan for the six months ended June 30, 2019: Common Stock Preferred Stock Outstanding and unvested shares at January 1, 2019 929,347 44,800 Granted 5,000 44,000 Vested (319,813 ) (44,800 ) Forfeited (12,120 ) - Outstanding and unvested shares at June 30, 2019 602,414 44,000 |
Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs | The following table summarizes the components of share-based compensation expense for the three and six months ended June 30, 2019 and 2018: Stock-based compensation included in the Three Months Ended June 30, Six Months Ended June 30, condensed consolidated statements of operations: 2019 2018 2019 2018 Direct operating costs $ 46,207 $ 8,475 $ 96,858 $ 9,859 General and administrative 711,050 396,674 1,407,471 522,600 Research and development 4,353 4,563 9,834 4,943 Selling and marketing 31,053 - 36,025 - Total stock-based compensation expense $ 792,663 $ 409,712 $ 1,550,188 $ 537,402 |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation | The following table provides a reconciliation of the beginning and ending balances for the contingent consideration measured at fair value using significant unobservable inputs (Level 3): Fair Value Measurement at Reporting Date Using Significant Unobservable Inputs, Level 3 Six Months Ended June 30, 2019 2018 Balance - January 1, $ 526,432 $ 603,411 Change in fair value (64,203 ) 42,780 Payments (182,664 ) (82,725 ) Balance - June 30, $ 279,565 $ 563,466 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Segment Reporting [Abstract] | |
Schedule of Revenues, Operating Expenses and Operating Income (Loss) by Reportable Segment | The following table presents revenues, operating expenses and operating income (loss) by reportable segment: Six Months Ended June 30, 2019 Healthcare IT Practice Management Unallocated Corporate Expenses Total Net revenue $ 25,580,319 $ 6,249,391 $ - $ 31,829,710 Operating expenses: Direct operating costs 16,403,912 4,840,023 - 21,243,935 Selling and marketing 726,147 17,809 - 743,956 General and administrative 5,757,549 955,760 2,592,521 9,305,830 Research and development 473,064 - - 473,064 Change in contingent consideration (64,203 ) - - (64,203 ) Depreciation and amortization 1,435,071 157,830 - 1,592,901 Total operating expenses 24,731,540 5,971,422 2,592,521 33,295,483 Operating income (loss) $ 848,779 $ 277,969 $ (2,592,521 ) $ (1,465,773 ) Three Months Ended June 30, 2019 Healthcare IT Practice Management Unallocated Corporate Expenses Total Net revenue $ 13,460,575 $ 3,288,924 $ - $ 16,749,499 Operating expenses: Direct operating costs 8,929,458 2,466,937 - 11,396,395 Selling and marketing 374,196 8,361 - 382,557 General and administrative 3,295,146 559,390 1,289,218 5,143,754 Research and development 218,408 - - 218,408 Depreciation and amortization 757,084 79,077 - 836,161 Total operating expenses 13,574,292 3,113,765 1,289,218 17,977,275 Operating (loss) income $ (113,717 ) $ 175,159 $ (1,289,218 ) $ (1,227,776 ) |
Organization and Business (Deta
Organization and Business (Details Narrative) | Dec. 31, 2004 |
Executive Chairman [Member] | |
Equity method investment, ownership percentage in majority-owned subsidiary based in Pakistan | 0.01% |
MTBC Private Limited [Member] | |
Equity method investment, ownership percentage in majority-owned subsidiary based in Pakistan | 99.90% |
Basis of Presentation (Details
Basis of Presentation (Details Narrative) - USD ($) | Jan. 02, 2019 | Dec. 31, 2018 |
Assets | $ 47,623,361 | |
Liabilities | $ 8,753,007 | |
ASC 842 [Member] | ||
Assets | $ 4,200,000 | |
Liabilities | $ 4,400,000 |
Acquisitions (Details Narrative
Acquisitions (Details Narrative) - USD ($) | Apr. 03, 2019 | May 07, 2018 | Jun. 30, 2019 | Jun. 30, 2019 | Jun. 30, 2018 |
ETM Acquisition [Member] | |||||
Revenue earned from acquisition | $ 2,000,000 | $ 2,000,000 | |||
Amount of difference between actual revenue and pro forma revenue | $ 6,500,000 | ||||
Orion Acquisition [Member] | |||||
Revenue earned from acquisition | 7,100,000 | $ 14,800,000 | |||
Amount of difference between actual revenue and pro forma revenue | $ 200,000 | $ 19,100,000 | |||
Asset Purchase Agreement [Member] | |||||
Purchase price amount | $ 1,600,000 | $ 12,600,000 | |||
Acquisition-related costs | $ 125,000 | $ 245,000 | |||
Weighted-average amortization period of acquired intangible assets | 4 years | 7 years | |||
Period over which goodwill is deductible for income tax purposes | 15 years |
Acquisitions - Schedule of Asse
Acquisitions - Schedule of Assets Acquired and Liabilities Assumed (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Goodwill | $ 12,593,795 | |
2019 Acquisition [Member] | ||
Customer relationships | $ 856,000 | |
Accounts receivable | 547,377 | |
Contract asset | 139,169 | |
Operating lease right-of-use assets | 1,224,480 | |
Property and equipment | 91,277 | |
Goodwill | 39,901 | |
Operating lease liabilities | (1,224,480) | |
Accrued expenses | (73,724) | |
Business combination, net | 1,600,000 | |
2018 Acquisition [Member] | ||
Customer relationships | 6,250,000 | |
Accounts receivable | 5,654,919 | |
Contract asset | 861,341 | |
Inventory | 307,278 | |
Property and equipment | 319,352 | |
Goodwill | 329,852 | |
Accounts payable | (677,872) | |
Accrued expenses | (444,870) | |
Business combination, net | $ 12,600,000 |
Acquisitions - Schedule of Busi
Acquisitions - Schedule of Business Acquisition, Pro Forma Information (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Business Combinations [Abstract] | ||||
Total revenue | $ 16,749 | $ 21,129 | $ 33,897 | $ 42,610 |
Net loss | (571) | (2,618) | (2,729) | (5,953) |
Net loss attributable to common shareholders | $ (2,058) | $ (3,867) | $ (5,708) | $ (7,977) |
Net loss per common share | $ (0.17) | $ (0.33) | $ (0.48) | $ (0.69) |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets-Net (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Goodwill | $ 12,593,795 | ||||
Amortization expenses | $ 612,000 | $ 415,000 | $ 1,200,000 | $ 854,000 | |
Weighted-average amortization period | 7 years | ||||
Practice Management Segment and Healthcare IT Segment [Member] | |||||
Goodwill | $ 90,000 | $ 90,000 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets-Net - Schedule of Intangible Assets and Goodwill (Details) - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2019 | Dec. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Beginning gross balance | $ 12,593,795 | $ 12,263,943 |
Acquisition | 39,901 | 329,852 |
Ending gross balance | $ 12,633,696 | $ 12,593,795 |
Goodwill and Intangible Asset_5
Goodwill and Intangible Assets-Net - Schedule of Finite-Lived Intangible Assets (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Finite-Lived Intangible Assets [Line Items] | ||
Total intangible assets, gross | $ 26,440,229 | $ 25,454,736 |
Less: Accumulated amortization | (19,933,080) | (18,820,733) |
Intangible assets - net | 6,507,149 | 6,634,003 |
Contracts and Relationships Acquired [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total intangible assets, gross | 23,597,300 | 22,741,300 |
Non-Compete Agreements [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total intangible assets, gross | 1,236,377 | 1,236,377 |
Other Intangible Assets [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total intangible assets, gross | $ 1,606,552 | $ 1,477,059 |
Goodwill and Intangible Asset_6
Goodwill and Intangible Assets-Net - Schedule of Finite-Lived Intangible Assets, Future Amortization Expense (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2019 (six months) | $ 959,035 | |
2020 | 1,301,600 | |
2021 | 1,157,877 | |
2022 | 800,107 | |
2023 | 338,528 | |
Thereafter | 1,950,002 | |
Total | $ 6,507,149 | $ 6,634,003 |
Net Loss Per Common Share (Deta
Net Loss Per Common Share (Details Narrative) | 6 Months Ended |
Jun. 30, 2019shares | |
Opus Bank [Member] | |
Antidilutive securities excluded from computation of earning per share, warrants | 200,000 |
Silicon Valley Bank [Member] | |
Antidilutive securities excluded from computation of earning per share, warrants | 153,489 |
Net Loss Per Common Share - Sch
Net Loss Per Common Share - Schedule of Losses Per Share, Basic and Diluted (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Earnings Per Share [Abstract] | ||||
Net loss attributable to common shareholders | $ (2,257,678) | $ (1,053,437) | $ (4,046,069) | $ (1,753,733) |
Weighted-average common shares used to compute basic and diluted loss per share | 12,022,143 | 11,665,174 | 11,984,284 | 11,641,190 |
Net loss attributable to common shareholders per share - Basic and Diluted | $ (0.19) | $ (0.09) | $ (0.34) | $ (0.15) |
Debt (Details Narrative)
Debt (Details Narrative) - USD ($) | 1 Months Ended | 6 Months Ended | |
Oct. 31, 2017 | Jun. 30, 2019 | Sep. 30, 2018 | |
Vehicle Financing Notes [Member] | |||
Vehicle financing in United stated and Pakistan | three to six years terms | ||
Insurance Financing [Member] | |||
Debt instrument interest rate | 5.87% | ||
SVB Credit Facility [Member] | |||
Secured revolving line of credit percentage | 200.00% | ||
Initial borrowing limited from SVB Bank | $ 5,000,000 | ||
Revision of borrowing limit from SVB Bank | $ 10,000,000 | ||
Unused portion of credit line fee percentage, description | There is also a fee of one-half of 1% annually for the unused portion of the credit line. | ||
Percentage of shares in offshore facilities secured for SVB credit line | 65.00% | ||
SVB Credit Facility [Member] | Prime Rate [Member] | |||
Revolving line of credit, interest rate | 1.50% |
Leases (Details Narrative)
Leases (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Lease term description | Leases with a term of less than 12 months are not recorded in the condensed consolidated balance sheet. | ||
Operating lease rent expense | $ 220,000 | $ 436,000 | |
Minimum [Member] | |||
Operating lease term | 1 year | ||
Maximum [Member] | |||
Operating lease term | 5 years |
Leases - Schedule of Lease Expe
Leases - Schedule of Lease Expense (Details) - USD ($) | 3 Months Ended | 6 Months Ended |
Jun. 30, 2019 | Jun. 30, 2019 | |
Leases [Abstract] | ||
Operating lease cost | $ 639,393 | $ 1,104,621 |
Short-term lease cost | 32,425 | 137,976 |
Variable lease cost | 12,450 | 19,033 |
Total- net lease cost | $ 684,268 | $ 1,261,630 |
Leases - Schedule of Supplement
Leases - Schedule of Supplemental Balance Sheet Information Related to Leases (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Leases [Abstract] | ||
Operating lease ROU asset, net | $ 4,860,780 | |
Current operating lease liabilities | 2,077,030 | |
Non-current operating lease liabilities | 2,876,232 | |
Total operating lease liabilities | 4,953,262 | |
ROU assets, gross | 5,878,215 | |
Asset lease expense | (943,028) | |
Foreign exchange loss | (74,407) | |
ROU assets, net | $ 4,860,780 | |
Weighted average remaining lease term (in years): Operating leases | 2 years 8 months 2 days | |
Weighted average discount rate: Operating leases | 7.04% |
Leases - Schedule of Suppleme_2
Leases - Schedule of Supplemental Cash Flow and Other Information Related to Leases (Details) - USD ($) | 3 Months Ended | 6 Months Ended |
Jun. 30, 2019 | Jun. 30, 2019 | |
Leases [Abstract] | ||
Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases | $ 646,824 | $ 1,124,884 |
ROU assets obtained in exchange for lease liabilities: Operating leases | $ 1,453,751 | $ 1,634,041 |
Leases - Schedule of Maturities
Leases - Schedule of Maturities of Lease Liabilities (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Leases [Abstract] | ||
2019 (six months) | $ 1,287,711 | |
2020 | 2,033,900 | |
2021 | 1,397,022 | |
2022 | 561,914 | |
2023 | 141,314 | |
Total lease payments | 5,421,861 | |
Less: imputed interest | (468,599) | |
Total lease obligations | 4,953,262 | |
Less: current obligations | (2,077,030) | |
Long-term lease obligations | $ 2,876,232 |
Leases - Schedule of Future Min
Leases - Schedule of Future Minimum Lease Payments Under Non-cancellable Operating Leases (Details) | Dec. 31, 2018USD ($) |
Leases [Abstract] | |
2019 | $ 932,068 |
2020 | 715,059 |
2021 | 510,927 |
2022 | 412,585 |
2023 | 91,797 |
Total | $ 2,662,436 |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) | May 30, 2018 |
Commitments and Contingencies Disclosure [Abstract] | |
Compensatory damages description | RPRWC's arbitration demand alleges MPMA, a subsidiary of MediGain, LLC, breached a billing services agreement and seeks compensatory damages of six million, six hundred thousand dollars and costs. |
Related Parties (Details Narrat
Related Parties (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Net revenue | $ 16,749,499 | $ 8,682,937 | $ 31,829,710 | $ 16,990,262 | |
Operating lease right-of-use assets | 4,860,780 | 4,860,780 | |||
Current operating lease liability | 2,077,030 | 2,077,030 | |||
Non-current operating lease liabilities | 2,876,232 | 2,876,232 | |||
Related Party Leases [Member] | |||||
Operating lease right-of-use assets | 570,000 | 570,000 | |||
Current operating lease liability | 274,000 | 274,000 | |||
Non-current operating lease liabilities | 296,000 | $ 296,000 | |||
Nonexclusive Aircraft Dry Lease Agreement [Member] | |||||
Original lease expired | Mar. 31, 2019 | ||||
Nonexclusive Aircraft Dry Lease Agreement [Member] | Kashmir Air, Inc [Member] | |||||
Operating leases, rent expense | 32,000 | 32,000 | $ 64,000 | 64,000 | |
Accrued liability to related party | 1,000 | 1,000 | 11,000 | ||
Physician [Member] | |||||
Net revenue | 5,000 | 4,000 | 9,000 | 9,000 | |
Receivable balance due from this customer | 1,500 | 1,500 | 1,600 | ||
Executive Chairman [Member] | |||||
Operating leases, rent expense | 46,000 | $ 47,000 | 94,000 | $ 95,000 | |
Security deposit and prepaid rent | $ 13,000 | $ 13,000 | $ 25,000 |
Revenue (Details Narrative)
Revenue (Details Narrative) - USD ($) | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Contract asset | $ 2,473,671 | $ 1,700,000 | $ 2,608,631 |
Capitalized amortization period to estimated client life | 3 years | ||
Deferred commissions | $ 60,000 | $ 113,000 | |
Revenue Cycle Management and Orion Acquisition [Member] | |||
Remaining performance obligations | 2,000,000 | ||
Orion Acquisition [Member] | |||
Contract asset represents revenue earned, not paid from group purchasing services | $ 500,000 |
Revenue - Schedule of Disaggreg
Revenue - Schedule of Disaggregation of Revenue (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Total | $ 16,749,499 | $ 8,682,937 | $ 31,829,710 | $ 16,990,262 |
Healthcare IT [Member] | ||||
Total | 13,460,575 | 25,580,319 | ||
Healthcare IT [Member] | Revenue Cycle Management Services [Member] | ||||
Total | 11,432,683 | 7,866,650 | 21,990,125 | 15,259,040 |
Healthcare IT [Member] | Professional Services [Member] | ||||
Total | 383,336 | 59,653 | 718,771 | 184,268 |
Healthcare IT [Member] | Ancillary Services [Member] | ||||
Total | 930,181 | 313,454 | 1,429,277 | 562,091 |
Healthcare IT [Member] | Group Purchasing Services [Member] | ||||
Total | 205,066 | 405,113 | ||
Healthcare IT [Member] | Printing and Mailing Services [Member] | ||||
Total | 358,440 | 301,279 | 750,100 | 649,523 |
Healthcare IT [Member] | Clearinghouse and EDI Services [Member] | ||||
Total | 150,869 | 141,901 | 286,933 | 335,340 |
Practice Management [Member] | ||||
Total | 3,288,924 | 6,249,391 | ||
Practice Management [Member] | Practice Management Services [Member] | ||||
Total | $ 3,288,924 | $ 6,249,391 |
Revenue - Schedule of Accounts
Revenue - Schedule of Accounts Receivable, Contract Asset and Deferred Revenue (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Beginning balance | $ 26,073,673 | |
Deferred Revenue (Current) [Member] | ||
Beginning balance | 25,355 | $ 62,104 |
ETM acquisition | ||
Increase (decrease), net | (9,130) | (34,429) |
Ending balance | 16,225 | 27,675 |
Deferred Revenue (Long Term) [Member] | ||
Beginning balance | 18,949 | 28,615 |
ETM acquisition | ||
Increase (decrease), net | (589) | (403) |
Ending balance | 18,360 | 28,212 |
Accounts Receivable, Net [Member] | ||
Beginning balance | 7,331,474 | 3,879,463 |
ETM acquisition | ||
Increase (decrease), net | 187,466 | (441,613) |
Ending balance | 7,518,940 | 3,437,850 |
Contract Asset [Member] | ||
Beginning balance | 2,608,631 | 1,342,692 |
ETM acquisition | 139,169 | |
Increase (decrease), net | (274,129) | 326,631 |
Ending balance | $ 2,473,671 | $ 1,669,323 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Apr. 30, 2017 | Jun. 30, 2019 | Jun. 30, 2019 | Dec. 31, 2018 | Apr. 30, 2014 | |
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||||
Liability for cash settled amount | $ 479,000 | $ 479,000 | $ 118,000 | |||
Restricted Shares [Member] | ||||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||||
Amount recorded for bonus | $ 301,000 | $ 602,000 | ||||
Unvested stock option award, equity | 568,081 | 568,081 | ||||
Restricted stock award classified as liability | 34,333 | 34,333 | ||||
2014 Equity Incentive Plan [Member] | Employees, Officers. Directors and Consultants [Member] | ||||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||||
Share-based compensation arrangement by share-based payment award, number of shares authorized | 1,351,000 | |||||
Amended and Restated Equity Incentive Plan [Member] | Series A Preferred Stock [Member] | ||||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||||
Number of shares added to amended and restated equity incentive plan | 100,000 | |||||
Number of shares available for grant | 138,400 | 138,400 | ||||
Amended and Restated Equity Incentive Plan [Member] | Common Stock [Member] | ||||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||||
Number of shares added to amended and restated equity incentive plan | 1,500,000 | |||||
Number of shares available for grant | 554,910 | 554,910 | ||||
Amended and Restated Equity Incentive Plan [Member] | Preferred Stock [Member] | ||||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||||
Number of shares added to amended and restated equity incentive plan | 200,000 |
Stock-Based Compensation - Disc
Stock-Based Compensation - Disclosure of Share-based Compensation Arrangements by Share-based Payment Award (Details) - Restricted Shares [Member] | 6 Months Ended |
Jun. 30, 2019shares | |
Common Stock [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Outstanding and unvested at beginning | 929,347 |
Granted | 5,000 |
Vested | (319,813) |
Forfeited | (12,120) |
Outstanding and unvested at ending | 602,414 |
Preferred Stock [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Outstanding and unvested at beginning | 44,800 |
Granted | 44,000 |
Vested | (44,800) |
Forfeited | |
Outstanding and unvested at ending | 44,000 |
Stock-Based Compensation - Sche
Stock-Based Compensation - Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Total share-based compensation expense | $ 792,663 | $ 409,712 | $ 1,550,188 | $ 537,402 |
Direct Operating Costs [Member] | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Total share-based compensation expense | 46,207 | 8,475 | 96,858 | 9,859 |
General and Administrative [Member] | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Total share-based compensation expense | 711,050 | 396,674 | 1,407,471 | 522,600 |
Research and Development [Member] | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Total share-based compensation expense | 4,353 | 4,563 | 9,834 | 4,943 |
Selling and Marketing [Member] | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Total share-based compensation expense | $ 31,053 | $ 36,025 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Income Tax Disclosure [Abstract] | ||||
Income tax benefit / provision | $ 55,352 | $ 51,536 | $ 14,820 | $ 98,200 |
Current income tax provision | 15,000 | 30,000 | ||
Deferred income tax benefit | $ 40,000 | $ (15,180) | $ 78,000 |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments (Details Narrative) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Fair Value, Input, Level 3 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Contingent consideration | $ 280,000 | $ 526,000 |
Fair Value of Financial Instr_4
Fair Value of Financial Instruments - Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation (Details) - Fair Value, Input, Level 3 [Member] - USD ($) | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Balance, beginning | $ 526,432 | $ 603,411 |
Change in fair value | (64,203) | 42,780 |
Payments | (182,664) | (82,725) |
Balance, ending | $ 279,565 | $ 563,466 |
Segment Reporting (Details Narr
Segment Reporting (Details Narrative) | 6 Months Ended |
Jun. 30, 2019Segment | |
Segment Reporting [Abstract] | |
Number of operating segments | 2 |
Segment Reporting - Schedule of
Segment Reporting - Schedule of Revenues, Operating Expenses and Operating Income (Loss) by Reportable Segment (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Net revenue | $ 16,749,499 | $ 8,682,937 | $ 31,829,710 | $ 16,990,262 |
Direct operating costs | 11,396,395 | 4,333,573 | 21,243,935 | 8,817,628 |
Selling and marketing | 382,557 | 403,057 | 743,956 | 708,071 |
General and administrative | 5,143,754 | 3,054,205 | 9,305,830 | 5,654,939 |
Research and development | 218,408 | 248,921 | 473,064 | 504,800 |
Change in contingent consideration | 11,030 | (64,203) | 42,780 | |
Depreciation and amortization | 836,161 | 559,696 | 1,592,901 | 1,150,467 |
Total operating expenses | 17,977,275 | 8,610,482 | 33,295,483 | 16,878,685 |
Operating income (loss) | (1,227,776) | $ 72,455 | (1,465,773) | $ 111,577 |
Healthcare IT [Member] | ||||
Net revenue | 13,460,575 | 25,580,319 | ||
Direct operating costs | 8,929,458 | 16,403,912 | ||
Selling and marketing | 374,196 | 726,147 | ||
General and administrative | 3,295,146 | 5,757,549 | ||
Research and development | 218,408 | 473,064 | ||
Change in contingent consideration | (64,203) | |||
Depreciation and amortization | 757,084 | 1,435,071 | ||
Total operating expenses | 13,574,292 | 24,731,540 | ||
Operating income (loss) | (113,717) | 848,779 | ||
Practice Management [Member] | ||||
Net revenue | 3,288,924 | 6,249,391 | ||
Direct operating costs | 2,466,937 | 4,840,023 | ||
Selling and marketing | 8,361 | 17,809 | ||
General and administrative | 559,390 | 955,760 | ||
Research and development | ||||
Change in contingent consideration | ||||
Depreciation and amortization | 79,077 | 157,830 | ||
Total operating expenses | 3,113,765 | 5,971,422 | ||
Operating income (loss) | 175,159 | 277,969 | ||
Unallocated Corporate Expenses [Member] | ||||
Net revenue | ||||
Direct operating costs | ||||
Selling and marketing | ||||
General and administrative | 1,289,218 | 2,592,521 | ||
Research and development | ||||
Change in contingent consideration | ||||
Depreciation and amortization | ||||
Total operating expenses | 1,289,218 | 2,592,521 | ||
Operating income (loss) | $ (1,289,218) | $ (2,592,521) |