Spok Holdings (NASDAQ: SPOK) reported Q4 EPS of ($2.44), versus ($2.32) reported last year. Revenue for the quarter came in at $37.48 million, versus $39.55 million reported last year.

Management Commentary:

“In most respects, 2020 was the most challenging year in our history from both a management and operational perspective,” said Vincent D. Kelly, president and chief executive officer. “However, in the face of a 100-year global pandemic our team was able to accomplish a lot. Though the spread of the virus impeded the many customer meetings we had set up early in the year to introduce Spok Go, our new cloud-native platform, our team was able to stay focused, delivering five new customer relationships for our new platform in the second half of the year, while building the pipeline into 2021. In the fourth quarter we added three of these Spok Go wins; two with existing customers and one new customer joining the Spok family. We also made significant progress in clinical innovation partner development, while adding hundreds of new features to our platform. And that progress continues into 2021. We continue to believe Spok Go is set to meet significant need in the healthcare marketplace and will create significant value for our shareholders in the coming years. Once again Spok Customers received Top rankings from U.S. News & World report’s annual honor roll. In August Spok solutions achieved SOC 2 Type II Compliance. In September our team completed our tenth annual survey on the State of Healthcare Communications. In October we hosted our very well attended user conference, Connect, highlighting the importance of care team communication amidst COVID-19. And in November for the fourth consecutive year Spok was rated as the #1 Secure Healthcare Communications Platform for the fourth consecutive year by Black Book Research. I am particularly proud of our Spok team and their ability to adapt and change under challenging circumstances. We broke a five-year record on selling console licenses last year and also provided over 360 remote license seats at no charge so our customer’s operators could be reconfigured to work from home. Our team has already begun converting these to paid seats and we expect that to continue throughout 2021. This momentum gives us confidence as we enter the new year and an eventual resolution to the global pandemic. We expect as the year progresses that our business will continue to pick up each quarter, building momentum and ending the year on a very positive footing.

"In the second half of 2020 we saw a more than 22% increase in software bookings from the first half of the year, as well as continued solid trends in our wireless business. Sustained expense management drove a sharp reduction in full year 2020 operating expenses and adjusted operating expenses from the prior year, even after adding back capitalized software development costs. A big part of those expense savings came from the commitment, support and sacrifices of our employees, who along with the entire leadership team including me, accepted furloughs to contribute to our savings goals. Our software revenue backlog continues at record levels, and we generated nearly $5.7 million of adjusted EBITDA in 2020. We were also able to grow our cash, cash equivalents and short-term investments balance from the prior year-end level, even after capital expenditures and paying our quarterly dividend. We are focused on driving positive free cash flow for 2021, and Spok remains committed to paying our regular quarterly dividend. We believe we will be able to achieve this while continuing to support our Spok Care Connect® platform, and in the near term, investing in innovation and the evolution of our cloud-native and integrated communication platform, Spok Go.

"Finally, continuing our promise to add clinical talent to our team in order to support our customers and facilitate our transition, in late November we announced the appointment of our new Chief Product Officer, Kristen Lalowski. Kristen brings over 20 years of experience in healthcare and healthcare IT, specifically in the areas of nursing, product management and marketing, operations, sales and client services. We believe that Spok provides a critical function that has become even more important in this environment, and the addition of leaders like Kristen to our management team is key to our success. Spok's clinical communications platform provides hospitals with a system of action, delivering reliable communications and clinical information, including clinical test results, to care teams when and where it matters most to improve patient outcomes. We are proud to be leaders in this mission," concluded Kelly.

GUIDANCE:

Spok Holdings sees FY2021 revenue of $132.2-147.2 million.

Business Outlook:

Michael W. Wallace, chief operating officer and chief financial officer, said, “Expense management and strong financial discipline have always been critical in aligning our expense levels with anticipated near- and long-term demand for our products, and that was especially the case throughout 2020. During the year, operating expenses were down nearly 3% and adjusted operating expenses were down more than 6% from prior year levels, with improvements in all expense categories over that period. Spok’s balance sheet remains strong, as the cash, cash equivalents and short-term investment balance grew to $78.7 million at December 31, 2020.”

Regarding financial guidance for 2021, Wallace said that the Company expects total revenue to range from $132.2 million to $147.2 million. Included in that total, Spok expects software revenue to comprise $58.2 million to $67.2 million. Also, the Company expects adjusted operating expenses to range from $142.7 million to $150.7 million, and capital expenses to range from $2.7 million to $6.7 million.

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