Safeguard Scientifics Announces Second Quarter 2022 Financial Results

Safeguard Scientifics

RADNOR, PA — Safeguard Scientifics, Inc. (NYSE: SFE) recently announced financial results for the three and six months ended June 30, 2022.

SECOND QUARTER 2022 HIGHLIGHTS

  • Safeguard Company Performance
    • Moxe raised $30 million in an equity round to further support its strong growth and expand its clinical data exchange solutions. The new capital reduced Safeguard’s primary ownership interest to 19.4% and resulted in a non-cash dilution gain of $5.3 million.
    • Subsequent to the quarter, Syapse raised a total of $35 million in growth capital, including $1.6 million from Safeguard. The capital will be used to expand Syapse’s focus on providing real-world insights to improve outcomes for people with cancer.
    • The aggregate trailing twelve-month revenues ending March 31, 2022 for nine of Safeguard’s companies, which excludes Other Ownership Interests, was $145 million, an increase of 14.1% from the comparable prior period.
  • Exits & Deployments
    • There were no exits or deployments during the second quarter.
    • Subsequent to the quarter, Safeguard funded $1.6 million to Syapse, as noted above.
  • Capital Return
    • Safeguard repurchased 221,479 shares during the quarter (369,274 shares year-to-date) on the open market at an average price of $4.27 per share, totaling $0.9 million ($1.7 million or $4.67 per share for the year-to-date period).
    • The remaining authorization for open market purchases pursuant to this plan is $1.1 million.
  • Financial Results
    • Cash, cash equivalents and restricted cash totaled $17.5 million at June 30, 2022.
    • The carrying value of the Company’s ownership interests totaled $25.6 million at June 30, 2022.
    • The total cost of Safeguard’s ownership interests was $154.4 million.
    • Net income for the three months ended June 30, 2022 was $0.5 million, or $0.03 per share, compared with a net loss of $0.3 million, or $0.02 per share, for the same period in 2021.
    • Net loss for the six months ended June 30, 2022 was $6.2 million, or $0.38 per share, compared with net income of $17.3 million, or $0.83 per share, for the same period of 2021.
  • Operating Costs
    • Safeguard continued to reduce its operating costs.   General and administrative expenses totaled $1.1 million for the quarter as compared to $2.0 million for the comparable period of 2021.
    • Safeguard also continued to lower its corporate expenses,1 which totaled $0.8 million for the second quarter of 2022, as compared to $1.0 million for the comparable period of 2021, a 13% year-on-year decline.
  • Outlook
    • Safeguard continues to closely manage corporate expenses in 2022 and expects to be at the low-end or below its reporrted target of $3.5 million to $4.0 million for the year, exclusive of strategic transaction related expenses.
    • Safeguard’s year-to-date deployments, including July’s Syapse funding, totaled $5.0 million. The Company reportedly currently expects the full year 2022 deployments could come in towards the upper half of its reported initial range of $5 to $9 million.
    • Safeguard continues to pursue options to maximize shareholder value and is working with its financial advisor Houlihan Lokey to explore all strategic alternatives.
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1 Corporate expenses are general and administrative expenses excluding depreciation, severance, stock-based compensation and other non-recurring items. See full reconciliation in the financial section of this statement.

“While market conditions and the general business environment have deteriorated in the past quarter, we remain confident in our companies’ ability to generate substantial value for our shareholders.   We are actively involved with each of our companies to drive operational performance, shorten paths to profitability, and explore a range of exits in a timely manner. We also continue to work with our financial advisor Houlihan Lokey to explore a range of strategic alternatives,” said Eric C. Salzman, Chief Executive Officer.

OWNERSHIP INTERESTS AT JUNE 30, 2022

Companies Category Acquisition Year Primary Ownership% Fully Diluted Ownership%
**
Carrying Value
(in millions)
Cost
(in millions)
Initial Revenue Stage: Up to $1 million
None
Revenue of $1 million to $5 million
None
Revenue of $5 million to $10 million
Lumesis, Inc. Financial Services 2012 43.2 % 43.3 % $ 1.5 $ 5.6
Moxe Healthcare 2016 19.4 % 18.4 % 8.1 7.5
Revenue of $10 million to $20 million
Clutch Holdings, Inc. Digital Media 2013 41.7 % 33.2 % 5.1 18.3
InfoBionic, Inc. Healthcare 2014 25.2 % 22.1 % 22.0
meQuilibrium Healthcare 2015 31.5 % 22.1 % 0.6 14.0
Syapse, Inc. Healthcare 2014 11.0 % 8.8 % 3.2 25.0
Revenue of $20 million to $50 million
Aktana, Inc. Healthcare 2016 13.4 % 11.4 % 15.9
Prognos Health, Inc. Healthcare 2011 28.5 % 24.7 % 3.0 14.6
Trice Medical + Healthcare 2011 12.6 % 9.0 % 0.6 11.8
Other Ownership Interests
Bright Health Group Healthcare 2021 2.4
All others Various 1.1 19.7
TOTAL: $ 25.6 $ 154.4
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+ Company progressed into higher revenue stage this quarter.

** Based on information provided by each respective company. Assumes the conversion or exercise of all currently outstanding securities including the issuance of all shares available under authorized employee equity programs. Does not reflect liquidation preferences, priority payments, proceeds from option and/or warrant exercises or other company-specific transaction-related obligations in a liquidation or exit transaction.

For more information, visit www.safeguard.com.

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