| (1) | Represents revenue not recognized under GAAP due to acquisition accounting adjustments associated with the accounting for deferred revenue in significant business combinations. |
| (2) | Includes a) nonrecurring severance expenses of $0.4 million and nonrecurring acquisition related costs of $0.6 million, for both the three and nine months ended September 30, 2019, and b) an impairment charge for royalty contracts resulting in $1.0 million of expenses for the nine months ended September 30, 2019. |
| Includes a) a gain on the sale of a building of $4.4 million for the three and nine months ended September 30, 2018, b) an impairment charge for royalty contracts resulting in $0.2 million and $2.0 million for the three and nine months ended September 30, 2018, respectively and c) a non-recurring adjustment for a change in estimated legal expenses resulting in $2.0 million of income for the nine months ended September 30, 2018. |
The following table provides a reconciliation of Adjusted EBITDA and Modified Adjusted EBITDA to net (loss) income, the most comparable GAAP financial measure:
| (Unaudited) | ||||||||||||||||
|
Three Months Ended
September 30, |
Nine Months Ended
September 30, | |||||||||||||||
| (in thousands) | 2019 | 2018 | 2019 | 2018 | ||||||||||||
| Net (loss) income | $ | (15,939 | ) | $ | 934 | $ | (6,040 | ) | $ | 24,538 | ||||||
| Income tax expense | 3,294 | 1,885 | 7,215 | 5,617 | ||||||||||||
| Stock-based compensation expense | 2,292 | 563 | 5,584 | 1,213 | ||||||||||||
| Interest expense | 2,726 | 31 | 3,586 | 92 | ||||||||||||
| Interest income and other (1) | (76 | ) | (4,384 | ) | 633 | (5,103 | ) | |||||||||
| Depreciation and amortization | 5,368 | 3,370 | 15,836 | 10,895 | ||||||||||||
| Adjusted EBITDA | (2,335 | ) | 2,399 | 26,814 | 37,252 | |||||||||||
| Acquisition related deferred revenue (2) | 2,250 | — | 6,750 | — | ||||||||||||
| Modified Adjusted EBITDA | $ | (85 | ) | $ | 2,399 | $ | 33,564 | $ | 37,252 | |||||||
