Good afternoon. Thank you for joining us for the BioTelemetry Fourth Quarter 2019 Earnings Conference Call.Certain statements during the conference call and question-and-answer period to follow may relate to future events and expectations and as such constitute forward-looking statements within the meaning of the Private Securities Litigation Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors, which may cause actual results, performance or achievements of the Company in the future to be materially different from the statements that the Company's executives may make today. These risks are described in detail in our public filings with the Securities and Exchange Commission, including our latest periodic report on Form 10-K or 10-Q. We assume no duty to update these statements.During this call, we will present both GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP measures is included in today's earnings press release, which is distributed and available to the public through be Investor Information section of the BioTelemetry website at gobio.com. [Operator Instructions]It is now my pleasure to turn the floor over to your host, Mr. Joseph Capper, President and CEO of BioTelemetry. Sir, you may begin.

Thank you, operator, and good afternoon, everyone.I'm Joe Capper, President and CEO of BioTelemetry. With me for today's call is Heather Getz, our Chief Financial Officer. I'll start with highlights about our fourth quarter performance and other recent developments. Heather will take you through a detailed review of our financial results. I will then provide commentary on how we see the business continuing to evolve as we get further into 2020. After our prepared remarks, we will open up the call for questions.I am pleased to report that we delivered another exceptional quarter, setting new all-time highs in quarterly revenue and EBITDA, marking our 30th consecutive growth quarter. This outstanding performance is particularly noteworthy given the previously reported malware incident, which struck the Company in the third week of October.Our operational performance in the face of this significant challenge speaks volumes about the resilience and quality of our organization. We were able to contain, respond and eradicate the issue quickly. And we moved through the recovery phase expeditiously, while minimizing customer disruption, allowing us to finish near the high end of our projected revenue range for the quarter. Most importantly, no sensitive patient or customer information was accessed or extracted.For the full year 2019, revenue grew by 10%, making it our fourth consecutive year with double-digit year-over-year growth. In fact, we have had a remarkable 25% compounded annual growth rate for this four-year period. In addition to our record-setting financial performance, we accomplished a great deal throughout the year.We added critical resources to many parts of the Company, including an expansion to the healthcare division's sales force. We implemented several product and infrastructure enhancements, expanded payer coverage for MCOT and completed a few acquisitions, adding substantially to our addressable market.Our core business was rock solid. In fact, all segments of…

Thank you, Joe, and good afternoon, everyone.As Joe just announced, we closed 2019 with a record-setting fourth quarter. It was our 30th consecutive quarter of year-over-year revenue growth and our highest revenue and adjusted EBITDA in the history of the Company. This is even more remarkable when you consider the challenges the Company faced in the quarter as a result of the malware attack.Total revenue grew 8%, reaching $112 million and coming in at the high end of our expectations. This growth resulted from revenue increases in all of our business lines. Healthcare revenue increased $7.8 million or 9% to $95.1 million, once again driven by patient volume growth of 9% in our MCT and over 50% in extended Holter service lines, as well as the addition of Geneva's revenue from the monitoring of implantable cardiac devices.These increases were partially offset by the $3 million impact from the reduction in the Medicare - the MCT Medicare pricing and negative payor mix. Excluding this reduction, our healthcare revenue growth in the quarter would have been over 12%.Our research revenue increased slightly to $13.4 million, benefiting from new studies utilizing our ePatch extended-wear Holter device. Lastly, our other revenue increased 20% to $3.5 million, resulting from new partnerships in our digital population health business.Moving to gross profit, our margin for the fourth quarter was 62.4% versus 61.7% in the prior-year period. The slight increase in our margin was primarily due to volume efficiencies and product mix, partially offset by the lower MCT prices and higher cost of sales in our research business. We view 62% to 63% as a more normal range for our gross profit margin at this point.Our fourth quarter adjusted EBITDA was $31.7 million, an increase of $1.3 million, representing a 28.3% return on revenue. The increase in our…

Thanks Heather.As you've just heard, we finished 2019 with another great quarter, capping off a record-setting year and continuing to build upon our long-standing momentum. Our forward-thinking strategy is yielding the results we had envisioned, and it has positioned us quite well to compete within today's evolving healthcare market.Our road map for success in 2020 is well defined. For the full year, we expect double-digit organic revenue growth, which will put us at nearly $0.5 billion in sales prior to any acquisitions. On last quarter's call, I gave our rationale for why we are confident this will be the case. It bears repeating.In order for the Company to achieve this objective, the healthcare segment, which constitutes 85% of the Company's revenue, must achieve double-digit growth. With reimbursement rates expected to be flat from year to year, the primary factors affecting healthcare revenue growth will be MCT and extended-wear Holter volume and sales of the Geneva platform.The 2019 expansion of the sales force, all of whom are now carrying quota for the Geneva sales as of January 1, combined with the addition of the Geneva-focused resources I spoke about earlier, will add significant fuel to our already market-leading sales engine. If we perform at or above expectations in these three areas, we are most of the way there.Any additional contributions from the ADEA business or collaborations we may implement throughout the year will further bolster the performance of this division. Therefore, we are well positioned to achieve our double-digit revenue growth objective, even with more modest contributions from the other businesses.Add to this, the possibility of additional investments and acquisitions in various parts of the enterprise. As mentioned, our business development pipeline is active, and we were able to execute on it, given our strong balance sheet and significant free cash generation. As Heather mentioned, we recently added even more flexibility and capacity with the establishment of a new debt facility.Given our dynamic capabilities, BioTelemetry is able to capitalize both in the short term and long term, as our technology and platform are uniquely suited to address large and developing opportunities. For these reasons, we are extremely excited about our future prospects and expect 2020 to be another record setting year.I would again like to sincerely thank those of you who helped deliver our 30th consecutive growth quarter, and a special thank you goes to so many people in the Company who went well above and beyond the call in the face of the previously mentioned challenges.With that, we'll now pause and open the call to your questions. Operator, we're ready for our first question.

[Operator Instructions] Our first question comes from Kaila Krum with SunTrust. Your line is now open.

So first on the healthcare services business, a great quarter with 9% growth and hurdling those malware issues in the quarter. So first, is there a way to quantify how those malware issues impacted the business in the fourth quarter? Did they weigh on your performance at all? And just any additional color there would be helpful.

They certainly weighed on our performance. I can't tell you exactly how much. We tried to capture that in our revenue range that we had put out prior to the quarter, and I think we put out $108 million to $113 million, as I recall, based on the information we had at the time. We actually did much better than we thought we would through the quarter. We were up and running a lot quicker than we thought, and we had less impact. That being said, there was significant impact. And sometimes, it takes a while before you can look back and actually calculate what exactly that impact was.

Makes a lot of sense. But, no, that's helpful. And then, can you just remind us or just give us any updated thoughts on your strategy in the extended-wear Holter market? Obviously, we won't know final reimbursement rates until mid-year. But curious how you are thinking about this opportunity in the interim, how you're planning to invest in this market this year and just how you're thinking about it contributing to growth in 2020?

Yes. The potential for any reimbursement change does not affect our approach to the market at all. For some time, our team has been trained on detailing and positioning our portfolio of solutions to the healthcare providers. So we have an array of remote cardiac monitoring solutions, some of which are appropriate for different types of patients.And we educate the physician on what the capabilities are of each one of these solutions, and then it's really their decision on what's modality they choose for which patients, which patient type and which condition. So we really sell the portfolio. Extended-wear Holter is actually growing at the fastest rate within the portfolio, given the market dynamics and the fact that it's newer and it's tending to replace some of the older modalities.

Our next question comes from Brooks O'Neil with Lake Street Capital. Your line is now open.

Frank Takkinen on for Brooks. Thanks for taking my questions. I just have two today. First, I was hoping you could help us think about the contribution you're thinking from Geneva for your fiscal year '20 guidance. I know you're not going to get too specific with it. But seeing it's about $5.5 million, $6 million in revenue by my estimates, just curious if you could kind of quantify how you feel about the growth profile of that in 2020.

Yes, it's going to be our highest growth service line for sure. We'll likely nearly double the size of the business year-over-year, which will put the revenue somewhere in the $30 million range, plus or minus a little bit, but that kind of gives you a ballpark. And I think the important message is, we have a tremendous amount of momentum. We literally just assigned quota to 120 salespeople in our organization.We're in the process of adding more specialized resources. We think we can do a lot of business with this service line. And more importantly, we think it ties together a nice solution, if you will, continuous cardiac portfolio that is - it has a lot of value within the market. So we see future growth for this for years to come.

And then secondly, on the balance sheet, I saw accounts receivable come up for a second quarter in a row. Just hoping you could help us understand what's going on there exactly.

Yes. What you're seeing there is a direct impact of the malware incident. While our patient systems got back up and running very quickly, some of the operational systems took a little bit more time. So it's a bit more time to get the billing out. You should expect to see that recover in the beginning of 2020.

Our next question comes from Jayson Bedford with Raymond James. Your line is now open.

So just a couple of questions. Just on the 9% growth in Healthcare, obviously extended Holter growing north of 50%, Geneva being nicely additive, what piece of the business may be weighing on the growth a little bit? Is it event or traditional Holter? Just a little color there would be helpful.

Yes, both more event than traditional Holter. Event is the one that seems to be cannibalized by both MCT and likely extended-wear Holter. For us - we hear in the marketplace that the Holter business is - the traditional Holter business is declining. But ironically, ours has been kind of flat, maybe down just a smidge.

And just how big is that? I realize most of the growth is coming from a few areas. But event and Holter, how big is that as a percent of all of healthcare? I imagine, it's getting smaller.

Yes. So, from a revenue perspective, it is in the quarter - if I exclude Geneva, so like if I want to give apples-to-apples compared to the prior year, as a percentage of our revenue, last year, event was more like 15%, 16%. And this year, it was like 13%, 14%. So you can see, as a percentage of our revenue, it has been declining.

Okay, perfect. And Joe, you mentioned new market opportunities around digital population health. And it sounds like you're getting closer to something a little bit more tangible there. Can you just walk us through, from a revenue earnings perspective, how you would expect either collaborations or partnerships to play out either in '20 and beyond?

I probably would stop short of revenue and earnings discussions for 2020. I think the message for 2020 is, we're continuing to invest. We invested modestly in 2019. We'll invest a little bit more aggressively in 2020. And we do have opportunity to do that through a partnership or potentially licensing or acquisition. So we're still in the phase where we're kind of building out the total business solution, and we're doing it in a cost-effective manner. So we will invest in the business as appropriate. Obviously, I can't run with a $20 million loss in a business segment.So I have to balance that within the portfolio. But where possible and where appropriate, it's one of the businesses we will look to accelerate investing in when we can. So I know I don't answer your question about revenue and earnings or numbers for 2020. But I think as we get further into 2020 in the back half, we'll be in a better position to do that.

And Joe, the way to address that, it sounds like you have the infrastructure in place. It's just more collaborations and partnerships versus acquisition to fulfill this opportunity. Is that a fair way of looking at it?

Yes, I think a little bit of both. Yeah, more on the former than the latter. But there might be opportunities to do some from an acquisition standpoint. It's really a developing market. And as you know, everybody wants more for the business than we want to pay. It's just the nature of the game.So we're trying to be prudent about it. The business has developed slower than I would have liked to see it, but I think part of that has to do with the dynamics in the marketplace and the fact that, I think, it's still kind of developing. I love the market. I think we're in a great position to participate in the market and to leverage some of our other infrastructure.Certainly, the concept of pop health and connected health and digital health couldn't be more - the demand for it couldn't be more obvious than what we're seeing right now with the coronavirus. That is a perfect example of why organizations should be developing and investing more in connected health or telehealth solutions. That is a prime example of how those technologies could be used. So we love the market, and we think that you'll see more and more opportunity for it as the years roll by. But again, we just can't throw a ton of money at it this early on.

Our next question comes from Marco Rodriguez with Stonegate Capital. Your line is now open.

Joe, I was wondering maybe you could expand a little bit on the sales force expansion. Obviously, you've done a lot to get your general sales force up to speed on Geneva. They've got certain incentive structures. You're adding more specific people for Geneva. Can you just talk a little bit more about whether or not you've hit those full 12 reps there on Geneva and what is sort of the expectations you have as they start to kind of roll out your sales strategy there?

Yes. We have not filled all of those positions yet. We have 12 regions across the country. Thought would be to start with one, what we're calling, innovation sales specialist in each region. These are, as you would imagine, tend to be slightly more experienced and seasoned sales professionals that can cut back a complex sales process, as it involves financial selling, it involves workflow, it involves technology.So that process is under way. Some of those people will come from within our existing organization. Some of them will come from outside the Company. I think we're a little bit more than halfway down. We might have seven or eight of the 12 filled. But we're moving very, very fast through the process.

And then, how should we be thinking about those additional investments for the sales force as well as obviously the IT? What sort of additional expenses we should expect here that run through the OpEx and sort of the kind of the cadence as we progress through fiscal '20?

Yes. You're going to see on the sales side, it would be a little bit more front loaded from a standpoint of it rolling in. But that obviously has been taken account in the guidance we gave for Q1, as well as the full year guidance of the 28.5% EBITDA margin.

And a last quick question. We're getting close to lapping here the Geneva acquisition. Just kind of wondering if you can maybe update us on the acquisition landscape, what sort of opportunities look sort of interesting, and if you can maybe talk to what the valuations look like.

Yes. Think in terms of the three primary tenets of our growth strategy, that is to go deeper and wider in cardiac monitoring, to really fortify our position there. Geneva really, really helped in that regard. There is potentially more opportunities for acquisition and partnership to do more of the same, to build out that comprehensive solution.In the research business, it's adding capabilities. We've validated in the past that when we bring more service lines to our partners or the vendors, we are a more attractive supplier. So we think that there is some capabilities that are attractive there that we could add to our portfolio. And then, obviously, we talked about what we're doing with pop health in and around that.So I would think about it along those lines. We will only make - we only look to make acquisitions or really spend any money outside of the Company when it fits in that strategy. If it doesn't accelerate the growth plan, we don't really spend a lot of time on it. There's a lot of interesting things out there, especially in connected health that may not fit into our plan.In terms of valuation, we just do the best we can. And I think we're pretty good about that. Most of the acquisitions we've made to date have been fairly accretive. I think the Geneva one is one exception. We went heavy upfront with an aggressive earn-out because we saw the potential for that platform, and it was close to the market we were already in. We knew that we could leverage our existing sales channel.So we thought we could have a fairly dramatic impact on the growth of that business in the first three years of ownership. So we're really comfortable with that structure. It looks like I paid too much upfront. After three years, it's going to look like I stole it.

Our next question comes from Mitra Ramgopal with Sidoti. Your line is now open.

First, I just wanted to follow up a little more on the investment spending and regarding the sales force on the digital population side. Assuming the start fairly early there, do you think you need to start looking at sales people for that initiative? Or is that more of a 2021 and beyond story?

Mitra, I apologize. Whatever reason, you line is [technical difficulty].

Oh, yes, [technical difficulty] but as it relates to the sales force expansion, do you need to start adding on the digital population side? Or is it too early for that?

We've been adding a little bit on the [technical difficulty] and we'll continue to do that as appropriate.

Okay, thanks. Then, on the guidance does it assume any of the Blues coming on board? Or are you going to wait till it's actually happened before maybe updating that?

To be determined.

Okay. And then, finally, any change in the competitive environment?

I'm sorry, say that again.

Any change in the competitive environment for you? Are you seeing any additional challenges there?

Again, we have a lot of background noise. I would say [technical difficulty].

Okay. Thanks again. Sorry about the connection.

Our next question comes from Gene Mannheimer with Dougherty & Company. Your line is now open.

Congrats on the strong finish to 2019. I wanted - you're welcome. I wanted to ask the - so what type of growth is contemplated in MCOT this year? I'm coming up with like 7% in our model. Is that the right way to think about it?

Are you talking about for 2020?

Yes.

So I would probably think of it a little bit differently, Gene. When we provide the overall double-digit guidance, and I know Joe threw out there the Geneva number, and if you're backing into that, there is - you have to balance it among the different segments. And we expect our research to be a little bit softer next year. So what you're going to see is our healthcare being a little bit stronger in total. So I wouldn't assume that healthcare is growing by 10% and back into that MCT.

Okay, that helps out a lot. Thanks. And the other - I think the prior question related to competition, I'm just wondering if you're seeing any share shift in the market now that there is a competitive offering available for MCT?

So could you elaborate more? There's been competitive entities on the market for many years.

Right. So, you have Preventice that has something, the BodyGuardian MINI. You have iRhythm with their AT service that looks to be sort of relaunched or generally available at this time. Any impact from those?

No. I would say that we - competitive landscape really hasn't changed a whole lot. These guys have been out there for a while. Some of them have done well. Some of them haven't done well. So there has been competitors in and out of the MCT market. Obviously, we're the largest participant. So we have the toughest time continuing to grow at double-digits in a market that doesn't grow that much. So I think it's about the same as it has been, Gene We have good competitors and we have some competitors that are not as good.

Okay, makes sense. And Heather, you made the comment about research being a little softer. Is it reasonable to assume that it would grow again this year? Or is flattish the best way to think about it?

Yes, I'd say flattish, Gene. We've talked about in the past, that's a choppy market. And we've been on a nice run with it. So we're kind of going through a natural cycle where the backlog - the pipeline has sort of flattened out a bit. So I would say, think about that as a flattish kind of business for this year.

And at this time, I'm showing no further questions. I'd like to turn the call back over to Joe for any closing remarks.

Thank you. Thanks everybody for your continued support and interest in the Company. We will speak to you next quarter. Operator, that concludes today's call.

If you joined the conference late today, you may listen to the conference call via digital replay, which will be available through the Investor Information section of the BioTelemetry website at gobio.com until March 11, 2020.