HMS Holdings Corp. (NASDAQ:HMSY) today announced financial results
for the third quarter of 2016. Net income for the quarter ended
September 30, 2016 was $13.5 million or $0.16 per diluted share,
compared to net income of $8.6 million or $0.10 per diluted share
in the second quarter of 2016 and $6.9 million or $0.08 per diluted
share in the prior year third quarter. Net income in the quarter
included tax benefits of approximately $1.1 million or $0.01 per
diluted share in connection with 2016 year-to-date and $6.2 million
or $0.07 per diluted share for certain prior open years’ Research
and Development (“R&D”) credits and domestic manufacturing
deductions recognized in the quarter. Adjusted EPS in the quarter
was $0.24 per diluted share, compared to adjusted EPS of $0.18 per
diluted share in the second quarter of 2016 and adjusted EPS of
$0.15 per diluted share in the prior year third quarter. Adjusted
EPS in the quarter included a cumulative tax benefit of
approximately $6.2 million or $0.07 per diluted share in connection
with certain tax credits and deductions for prior years recognized
in the quarter. Total revenue in the quarter was $124.6 million,
compared to $123.6 million in the second quarter of 2016 and $118.4
million in the prior year third quarter.
"Record commercial health plan revenue in the
third quarter resulted in year-to-date growth of 18% compared to
the comparable period in 2015. New business and incremental
product sales to existing customers have been extremely strong
throughout 2016 and new product implementations are up nearly 20%
year-over-year through the first three quarters, compared to the
same period last year. We believe we are well-positioned,
therefore, for a strong fourth-quarter," said Bill Lucia, HMS
Chairman and CEO. "Early reaction to our acquisition of Essette has
been very encouraging. We see meaningful cross-sell
opportunities with existing customers for the web-based Essette
care management and care coordination platform, particularly with
the heightened focus among risk-bearing healthcare entities on
identifying, engaging and better managing their members to improve
outcomes while controlling costs," added Lucia.
Total revenue in the third quarter of 2016 of
$124.6 million was approximately 5.2% higher than the prior year
third quarter. Total revenue for the year-to-date of $367.9 million
was approximately 6.4% higher than the first nine months of 2015.
Commercial health plan revenue in the quarter was $59.2 million, a
13.9% increase compared to $52.0 million in the prior year third
quarter and a $4.0 million increase from the second quarter of
2016. Total commercial revenue for the year-to-date of $170.4
million was approximately 17.9% higher than the first nine months
of 2015. State government revenue in the quarter was $53.0 million,
a decrease of $1.6 million compared to $54.6 million in the prior
year third quarter, and a decrease of $4.6 million compared to the
second quarter of 2016 which included a one-time acceleration of
approximately $5.5 million of subrogation related revenue. Total
state revenue for the year-to-date was $161.3 million or
approximately 6.0% lower than the first nine months of 2015.
Non-Medicare RAC Federal and other revenue was $6.6 million in the
third quarter of 2016, a $0.7 million decrease compared to the
prior year third quarter and a $0.1 million decrease from the
second quarter of 2016. Medicare RAC revenue in the quarter was
$5.8 million, compared to $4.5 million in the prior year third
quarter and $4.1 million in the second quarter of 2016. Medicare
RAC revenue in the quarter included reconciliation and continued
invoicing activity on certain recoupments prior to contract
termination.
Coordination of Benefits (“COB”) revenue, which
continues to be our largest product line across both the state
government and commercial health plan sectors, was $86.3 million in
the third quarter of 2016 compared to $84.2 million in the prior
year third quarter and $89.7 million in the second quarter of 2016.
COB revenue for the year to date was $258.9 million or
approximately 3.4% higher than the first nine months of 2015. COB
revenue accounted for 69.3% of total revenue in the quarter,
compared to 71.1% in the prior year third quarter and 73.0% in the
second quarter of 2016. Payment integrity (“PI”) revenue (excluding
Medicare RAC) was $32.5 million in the quarter, a $2.8 million or
9.3% increase from the third quarter of last year and a $2.7
million or 9.1% increase from the second quarter of 2016. Total PI
revenue for the year-to-date of $90.9 million was approximately
7.6% higher than the first nine months of 2015.
"We concluded a tax analysis in the quarter,
with the assistance of an outside consultant, which identified
certain tax credits and deductions to which the Company is entitled
and which we project will reduce our effective annual tax rate by
approximately 300 basis points to approximately 37%. That lower
rate will be reflected for full year 2016, but we are also seeking
refunds for tax years 2012–2015 in order to take advantage of the
same benefits," said Jeff Sherman, HMS CFO. "We recognized a
cumulative tax benefit in the third quarter of approximately $6.2
million related to certain prior open tax years, which boosted
adjusted EPS by approximately $0.07 per diluted share."
For additional information about the Company’s
third quarter 2016 financial results, see the Q3 2016 Investor
Presentation which is available on the Company’s website at
http://investor.hms.com/events.cfm.
Webcast and Conference Call
Information
HMS will report its third quarter 2016 financial
and operating results via webcast at 7:30 AM CT / 8:30 AM ET on
Wednesday, November 9, 2016. The webcast may also include
discussion of HMS developments, forward-looking statements and
other material information about business and financial
matters. The webcast can be accessed via phone at (877)
303–7208 or (224) 357–2389 for international participants, or at
http://investor.hms.com/events.cfm on the HMS Investor Relations
website. The webcast will also be archived and available for replay
beginning at approximately 11:00 AM CT / 12:00 PM ET on November 9,
2016 at http://investor.hms.com/events.cfm. This press release and
the financial statements contained herein are also available at
http://investor.hms.com/releases.cfm.
The HMS Quarterly Report on Form 10-Q for the
period ended September 30, 2016 is expected to be filed with the
Securities and Exchange Commission and available on the HMS website
at http://investor.hms.com/financials.cfm and at www.sec.gov on
November 9, 2016 and will contain additional information about our
results of operations for the fiscal year-to-date.
About HMS
HMS Holdings Corp., through its subsidiaries,
provides coordination of benefits, payment integrity and care
management solutions for payers. The Company serves State Medicaid
programs; commercial health plans, including Medicaid managed care,
Medicare Advantage and group and individual health lines of
business; federal government health agencies, including the Centers
for Medicare & Medicaid Services and the Veterans Health
Administration; government and private employers; child support
agencies; and other healthcare payers and sponsors. As a result of
the Company's services, customers recover billions of dollars
annually and save billions more through the prevention of improper
payments.
Non-GAAP Financial Measures
The Company reports and discusses its operating
results using financial measures consistent with accounting
principles generally accepted in the United States ("GAAP"). From
time to time, in press releases, financial presentations, earnings
conference calls or otherwise, the Company may disclose certain
non-GAAP financial measures. The non-GAAP financial measures
presented in this press release should not be viewed as
alternatives or substitutes for the Company's reported GAAP
results. A reconciliation to the most directly comparable GAAP
financial measure is set forth in the tables that accompany this
release.
The Company believes that the non-GAAP financial
measures presented in this press release provide useful information
to the Company's management, investors, and other interested
parties about the Company's operating performance because they
allow them to understand and compare the Company's operating
results during the current periods to the prior year periods in a
more consistent manner. The non-GAAP measures presented in this
press release may not be comparable to similarly titled measures
used by other companies. These non-GAAP financial measures are used
in addition to and in conjunction with results presented in
accordance with GAAP and reflect an additional way of viewing
aspects of the Company's operations that, when viewed with GAAP
results and the accompanying reconciliations to corresponding GAAP
financial measures, provides a more complete understanding of the
results of operations and trends affecting the Company's business.
These non-GAAP financial measures should be considered as a
supplement to, and not as a substitute for, or superior to
financial measures calculated in accordance with GAAP.
Safe Harbor
Statement
This press release contains "forward-looking
statements" within the meaning of the U.S. Private Securities
Litigation Reform Act of 1995. Such statements give our projections
or forecasts of future events and are based on our current
expectations and assumptions regarding our business, the economy
and other future conditions; they do not relate strictly to
historical or current facts. Forward‐looking statements can be
identified by words such as “aims,” “anticipates,” “believes,”
“estimates,” “expects,” “forecasts,” “intends,” “likely,” “may,”
“plans,” “projects,” “seeks,” “targets,” “will,” “would,” “could,”
“should,” and similar expressions and references to guidance,
although some forward-looking statements may be expressed
differently. In particular, these include statements relating to
future actions, business plans, objectives and prospects, future
operating or financial performance. Factors or events that could
cause actual results to differ may emerge from time to time and it
is not possible for us to predict all of them. Should known or
unknown risks or uncertainties materialize, or should underlying
assumptions prove inaccurate, actual results could differ
materially from past results and those anticipated, estimated or
projected. We caution you therefore against relying on any of these
forward-looking statements.
Factors that could cause or contribute to such
differences, include, but are not limited to: changes in the
U.S. healthcare environment or healthcare financing system;
negative or reduced growth rate of spending on Medicaid/Medicare;
our ability to retain customers or the loss of one or more major
customers; the unexpected reduction in scope or termination of a
significant contract; customer dissatisfaction or our
non-compliance with contractual provisions or regulatory
requirements; our failure to meet performance standards triggering
significant costs or liabilities under our contracts; emergence of
new competitors or competitors’ introduction of new or superior
products or services; intellectual property rights, confidential
and proprietary information; the cancellation or delay of
procurements or contract implementation due to protests or
challenges to government awards; regulatory, budgetary or political
actions that affect procurement practices; our ability to continue
to secure contracts or favorable contract terms through the
competitive bidding process; our ability to execute our business
plans or growth strategy; variations in our results of operations;
development and implementation of new product solutions or new
process improvements; the risk that guidance may not be achieved;
our ability to maintain effective information and technology
systems and networks, and to protect them from damage, interruption
or breach, including cyber-security breaches and other disruptions;
our failure to comply with applicable laws and regulations
governing the conduct of certain electronic health transactions and
the confidentiality of individually identifiable health information
or to protect such information from theft and misuse; the nature of
investment and acquisition opportunities we are pursuing, and the
successful execution of such investments and acquisitions; our
ability to successfully integrate acquired businesses; the failure
to realize the full value of goodwill or intangible assets from
acquisitions; negative results of government or customer reviews,
audits or investigations; state or federal limitations related to
the outsourcing of certain government programs or functions; our
reliance on subcontractors, vendors or other third party providers
and sources to perform services; pending or threatened litigation;
unfavorable outcomes in legal proceedings; restrictions on bidding
or performing certain work due to perceived conflicts of interests;
our ability to attract and retain qualified employees and key
personnel and to manage leadership transitions effectively; our
cash flows from operations, available cash and ability to generate
sufficient cash to cover our interest and principal payments under
our credit facility or to borrow or use credit; unanticipated
changes in our effective tax rates; unanticipated increases in the
number or amount of claims for which we are self-insured; the
market price of our common stock and lack of dividend payments;
risks related to internal control over financial reporting;
anti-takeover provisions in our corporate governance documents; and
other factors, risks and uncertainties described in our most recent
Annual Report on Form 10-K and subsequent filings with the
Securities and Exchange Commission. Any forward-looking statements
are made as of the date of this press release. Except as may be
required by law, we disclaim any obligation to publicly update
forward-looking statements, whether as a result of new information,
future events or otherwise.
|
HMS HOLDINGS CORP. AND
SUBSIDIARIES |
CONSOLIDATED STATEMENTS OF
INCOME |
(in thousands, except per share
amounts) |
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September
30, |
|
Nine Months Ended September
30, |
|
|
|
|
|
2016 |
|
|
|
2015 |
|
|
|
2016 |
|
|
|
2015 |
|
Revenue |
|
|
|
$ |
124,604 |
|
|
$ |
118,444 |
|
|
$ |
367,916 |
|
|
$ |
345,702 |
|
Cost of services: |
|
|
|
|
|
|
|
|
|
Compensation |
|
|
|
48,298 |
|
|
|
43,628 |
|
|
|
142,042 |
|
|
|
131,578 |
|
Data processing |
|
|
|
9,541 |
|
|
|
10,023 |
|
|
|
28,269 |
|
|
|
30,506 |
|
Occupancy |
|
|
|
3,388 |
|
|
|
4,188 |
|
|
|
10,647 |
|
|
|
12,001 |
|
Direct project
expenses |
|
|
10,997 |
|
|
|
12,702 |
|
|
|
36,952 |
|
|
|
36,752 |
|
Other operating
expenses |
|
|
8,465 |
|
|
|
6,551 |
|
|
|
20,649 |
|
|
|
20,442 |
|
Amortization of acquisition related software and intangible
assets |
|
6,390 |
|
|
|
7,041 |
|
|
|
20,416 |
|
|
|
21,135 |
|
Total cost of
services |
|
|
87,079 |
|
|
|
84,133 |
|
|
|
258,975 |
|
|
|
252,414 |
|
Selling, general and administrative expenses |
|
24,875 |
|
|
|
21,295 |
|
|
|
70,033 |
|
|
|
60,539 |
|
Total operating
expenses |
|
|
111,954 |
|
|
|
105,428 |
|
|
|
329,008 |
|
|
|
312,953 |
|
Operating income |
|
|
|
12,650 |
|
|
|
13,016 |
|
|
|
38,908 |
|
|
|
32,749 |
|
Interest
expense |
|
|
|
(2,121 |
) |
|
|
(1,948 |
) |
|
|
(6,313 |
) |
|
|
(5,842 |
) |
Interest income |
|
|
|
105 |
|
|
|
11 |
|
|
|
215 |
|
|
|
34 |
|
Income before income taxes |
|
|
10,634 |
|
|
|
11,079 |
|
|
|
32,810 |
|
|
|
26,941 |
|
Income tax (benefit) / expense |
|
|
(2,874 |
) |
|
|
4,217 |
|
|
|
6,177 |
|
|
|
11,139 |
|
Net income |
|
|
$ |
13,508 |
|
|
$ |
6,862 |
|
|
$ |
26,633 |
|
|
$ |
15,802 |
|
|
|
|
|
|
|
|
|
|
|
|
Basic income per common share: |
|
|
|
|
|
|
|
Net income per common share -- basic |
$ |
0.16 |
|
|
$ |
0.08 |
|
|
$ |
0.32 |
|
|
$ |
0.18 |
|
Diluted income per common share: |
|
|
|
|
|
|
|
Net income per common share -- diluted |
$ |
0.16 |
|
|
$ |
0.08 |
|
|
$ |
0.31 |
|
|
$ |
0.18 |
|
Weighted average
shares: |
|
|
|
|
|
|
|
|
Basic |
|
|
|
|
84,101 |
|
|
|
87,299 |
|
|
|
84,338 |
|
|
|
88,019 |
|
Diluted |
|
|
|
|
84,853 |
|
|
|
87,792 |
|
|
|
85,993 |
|
|
|
88,451 |
|
|
|
|
|
|
|
|
|
|
|
|
Certain reclassifications were made to prior period
amounts to conform to current period presentations. |
|
HMS HOLDINGS CORP. AND
SUBSIDIARIES |
CONSOLIDATED BALANCE SHEETS |
(in thousands, except per share
amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September
30, 2016 |
|
December 31, 2015 |
Assets |
|
|
|
|
|
(unaudited) |
|
|
Current
assets: |
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
|
$ |
171,519 |
|
|
$ |
145,610 |
|
Accounts receivable, net of allowance for doubtful accounts of
$3,017 and $4,849, and estimated |
|
|
|
allowance for appeals
of $7,035 and $6,614, at September 30, 2016 and December 31, 2015,
respectively |
|
161,499 |
|
|
|
169,146 |
|
Prepaid expenses |
|
|
|
|
|
13,205 |
|
|
|
11,261 |
|
Net deferred tax assets |
|
|
|
|
7,532 |
|
|
|
7,460 |
|
Income tax receivable |
|
|
|
|
11,494 |
|
|
|
- |
|
Other current assets |
|
|
|
|
716 |
|
|
|
3,051 |
|
Total current assets |
|
|
|
|
365,965 |
|
|
|
336,528 |
|
Property
and equipment, net |
|
|
|
|
91,532 |
|
|
|
96,551 |
|
Goodwill |
|
|
|
|
|
|
378,575 |
|
|
|
361,468 |
|
Intangible
assets, net |
|
|
|
|
42,628 |
|
|
|
54,308 |
|
Deferred
financing costs, net |
|
|
|
|
3,310 |
|
|
|
4,873 |
|
Other assets |
|
|
|
|
|
2,920 |
|
|
|
4,329 |
|
Total assets |
|
|
|
|
$ |
884,930 |
|
|
$ |
858,057 |
|
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders' Equity |
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
Accounts payable, accrued expenses and other liabilities |
$ |
43,923 |
|
|
$ |
51,661 |
|
Estimated liability for appeals |
|
|
|
|
30,182 |
|
|
|
33,078 |
|
Income taxes payable |
|
|
|
|
- |
|
|
|
3,873 |
|
Total current
liabilities |
|
|
|
|
74,105 |
|
|
|
88,612 |
|
Long-term
liabilities: |
|
|
|
|
|
|
|
Revolving credit facility |
|
|
|
|
197,796 |
|
|
|
197,796 |
|
Net deferred tax liabilities |
|
|
|
|
32,546 |
|
|
|
38,421 |
|
Deferred rent |
|
|
|
|
|
5,667 |
|
|
|
6,006 |
|
Other liabilities |
|
|
|
|
|
9,903 |
|
|
|
2,520 |
|
Total long-term
liabilities |
|
|
|
|
245,912 |
|
|
|
244,743 |
|
Total liabilities |
|
|
|
|
|
320,017 |
|
|
|
333,355 |
|
|
|
|
|
|
|
|
|
|
Commitments
and contingencies (Note 11) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders' equity: |
|
|
|
|
|
|
Preferred
stock -- $0.01 par value; 5,000,000 shares authorized; none
issued |
|
- |
|
|
|
- |
|
Common
stock -- $0.01 par value; 175,000,000 shares authorized; 95,928,520
shares issued and 84,654,774 shares |
|
|
|
outstanding at September 30, 2016; 95,263,461 shares issued and
83,989,715 shares outstanding at December 31, 2015 |
|
959 |
|
|
|
952 |
|
Capital in
excess of par value |
|
|
|
|
343,861 |
|
|
|
330,290 |
|
Retained
earnings |
|
|
|
|
|
315,107 |
|
|
|
288,474 |
|
Treasury stock, at cost -- 11,273,746 shares at
September 30, 2016 and December 31, 2015 |
|
(95,014 |
) |
|
|
(95,014 |
) |
|
|
|
|
|
|
|
|
|
Total shareholders' equity |
|
|
|
|
564,913 |
|
|
|
524,702 |
|
|
|
|
|
|
|
|
|
|
Total liabilities and shareholders'
equity |
|
|
$ |
884,930 |
|
|
$ |
858,057 |
|
|
|
|
|
|
|
|
|
|
Certain reclassifications were made to prior period
amounts to conform to current period presentations. |
|
|
HMS HOLDINGS CORP. AND
SUBSIDIARIES |
CONSOLIDATED STATEMENTS OF CASH
FLOWS |
(in thousands) |
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September
30, |
|
|
|
|
|
|
|
2016 |
|
|
|
2015 |
|
Operating activities: |
|
|
|
|
|
|
Net income |
|
|
|
|
$ |
26,633 |
|
|
$ |
15,802 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
Depreciation and
amortization of property and equipment |
|
18,875 |
|
|
|
23,228 |
|
Amortization of intangible assets |
|
|
|
15,101 |
|
|
|
15,226 |
|
Amortization of deferred financing costs |
|
|
1,563 |
|
|
|
1,563 |
|
Stock-based compensation expense |
|
|
|
10,747 |
|
|
|
10,208 |
|
Excess tax benefit from exercised stock options |
|
|
(1,851 |
) |
|
|
(1,477 |
) |
Deferred income taxes |
|
|
|
|
(5,902 |
) |
|
|
(8,925 |
) |
(Gain) / loss on disposal of assets |
|
|
|
(970 |
) |
|
|
40 |
|
Changes in operating assets and liabilities: |
|
|
|
|
Accounts receivable |
|
|
|
|
8,534 |
|
|
|
(17,051 |
) |
Prepaid expenses |
|
|
|
|
(1,905 |
) |
|
|
1,186 |
|
Prepaid income taxes |
|
|
|
|
- |
|
|
|
6,619 |
|
Other current assets |
|
|
|
|
2,579 |
|
|
|
162 |
|
Other assets |
|
|
|
|
|
(37 |
) |
|
|
(229 |
) |
Income taxes (receivable) payable |
|
|
|
(13,516 |
) |
|
|
4,182 |
|
Accounts payable, accrued expenses and other liabilities |
|
(2,584 |
) |
|
|
(8,174 |
) |
Estimated
liability for appeals |
|
|
|
(2,896 |
) |
|
|
(1,907 |
) |
Net cash provided by operating
activities |
|
|
54,371 |
|
|
|
40,453 |
|
Investing activities: |
|
|
|
|
|
|
Acquisition of a business, net of cash acquired |
|
|
(20,910 |
) |
|
|
- |
|
Proceeds from sale of cost basis investment |
|
|
2,496 |
|
|
|
- |
|
Purchases of land, property and equipment |
|
|
(8,796 |
) |
|
|
(5,903 |
) |
Investment in
capitalized software |
|
|
|
(4,910 |
) |
|
|
(1,985 |
) |
Net cash used in investing
activities |
|
|
(32,120 |
) |
|
|
(7,888 |
) |
Financing activities: |
|
|
|
|
|
|
Purchase of treasury stock |
|
|
|
|
- |
|
|
|
(25,000 |
) |
Proceeds from exercise of stock options |
|
|
2,940 |
|
|
|
4,188 |
|
Excess tax benefit from exercised stock options |
|
|
1,851 |
|
|
|
1,477 |
|
Payments of tax withholdings on behalf of employees for
net-share settlement for stock-based compensation |
|
(1,090 |
) |
|
|
(635 |
) |
Payments on capital lease obligations |
|
|
|
(43 |
) |
|
|
(907 |
) |
Net cash provided by (used in) financing
activities |
|
3,658 |
|
|
|
(20,877 |
) |
Net increase in cash and cash
equivalents |
|
|
25,909 |
|
|
|
11,688 |
|
Cash and Cash Equivalents |
|
|
|
|
|
|
Cash and
cash equivalents at beginning of year |
|
|
145,610 |
|
|
|
133,116 |
|
Cash and cash equivalents at end of
period |
|
$ |
171,519 |
|
|
$ |
144,804 |
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow
information: |
|
|
|
|
Cash paid for income taxes |
|
|
|
$ |
19,478 |
|
|
$ |
13,619 |
|
Cash paid for interest |
|
|
|
$ |
4,597 |
|
|
$ |
5,295 |
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of non-cash
activities: |
|
|
|
|
Change in balance of accrued property and equipment
purchases |
$ |
(176 |
) |
|
$ |
392 |
|
|
|
|
|
|
|
|
|
|
Certain reclassifications were made to prior period
amounts to conform to current period presentations. |
HMS HOLDINGS CORP. AND
SUBSIDIARIES (in thousands, except per share
amounts)(unaudited) |
|
Reconciliation of Net Income to EBITDA and Adjusted
EBITDA |
|
As summarized in the following tables, earnings before
interest, taxes, depreciation and amortization, stock-based
compensation, and non-recurring legal expense (adjusted EBITDA) was
$25.9 million for the third quarter of 2016. |
|
|
Three months ended
September 30, |
|
|
|
2016 |
|
|
|
2015 |
|
Net Income |
$ |
13,508 |
|
|
$ |
6,862 |
|
|
|
|
|
Net interest
expense |
|
2,016 |
|
|
|
1,937 |
|
Income taxes |
|
(2,874 |
) |
|
|
4,217 |
|
Depreciation and amortization, net of deferred financing costs,
included in net interest expense |
|
11,106 |
|
|
|
12,298 |
|
Earnings
before interest, taxes, depreciation and amortization
(EBITDA) |
|
23,756 |
|
|
|
25,314 |
|
Stock based
compensation expense |
|
2,102 |
|
|
|
3,140 |
|
Non-recurring legal
fees (1) |
|
- |
|
|
|
- |
|
Adjusted EBITDA |
$ |
25,858 |
|
|
$ |
28,454 |
|
|
Adjusted EBITDA was $85.2 million for the first nine months
of 2016. |
|
|
Nine months ended
September 30, |
|
|
|
2016 |
|
|
|
2015 |
|
Net Income |
$ |
26,633 |
|
|
$ |
15,802 |
|
|
|
|
|
Net interest
expense |
|
6,098 |
|
|
|
5,808 |
|
Income taxes |
|
6,177 |
|
|
|
11,139 |
|
Depreciation and amortization, net of deferred financing costs,
included in net interest expense |
|
33,976 |
|
|
|
38,454 |
|
Earnings
before interest, taxes, depreciation and amortization
(EBITDA) |
|
72,884 |
|
|
|
71,203 |
|
Stock based
compensation expense |
|
10,747 |
|
|
|
10,208 |
|
Non-recurring legal
fees (1) |
|
1,563 |
|
|
|
- |
|
Adjusted EBITDA |
$ |
85,194 |
|
|
$ |
81,411 |
|
|
1 In periods prior to 2016, legal fees related to
disputes involving PCG were not included in adjusted earnings
because they were not considered non-recurring at the time. For the
three months ended September 30, 2015 related legal fees were $0.9
million. For the nine months ended September 30, 2015 related legal
fees were $4.2 million. |
|
HMS HOLDINGS CORP. AND
SUBSIDIARIES (in thousands, except per share
amounts)(unaudited) |
|
Reconciliation of Net Income to GAAP EPS and Adjusted
EPS |
|
As summarized in the following tables, earnings per
share adjusted for stock-based compensation expense, non-recurring
legal expense, amortization of acquisition related software and
intangible assets and for the related taxes (adjusted EPS) was
$0.24 for the third quarter of 2016, an increase of 60.0% from
$0.15 for the third quarter of 2015. |
|
|
Three months ended
September 30, |
|
|
|
2016 |
|
|
|
2015 |
|
|
|
|
|
Net Income |
$ |
13,508 |
|
|
$ |
6,862 |
|
|
|
|
|
Stock-based
compensation expense |
|
2,102 |
|
|
|
3,140 |
|
Non-recurring legal
fees (2) |
|
- |
|
|
|
- |
|
Amortization of
acquisition related software and intangible assets |
|
7,015 |
|
|
|
7,041 |
|
Income tax related to adjustments |
|
(2,644 |
) |
|
|
(3,711 |
) |
Sub-total |
$ |
19,981 |
|
|
$ |
13,332 |
|
|
|
|
|
Weighted average common shares, diluted |
|
84,853 |
|
|
|
87,792 |
|
|
|
|
|
Diluted GAAP EPS |
$ |
0.16 |
|
|
$ |
0.08 |
|
Diluted adjusted EPS |
$ |
0.24 |
|
|
$ |
0.15 |
|
|
Adjusted
EPS was $0.56 for the first nine months of 2016, an increase of
43.6% compared to the first nine months of 2015. |
|
|
Nine months ended
September 30, |
|
|
|
2016 |
|
|
|
2015 |
|
|
|
|
|
Net Income |
$ |
26,633 |
|
|
$ |
15,802 |
|
|
|
|
|
Stock-based
compensation expense |
|
10,747 |
|
|
|
10,208 |
|
Non-recurring legal
fees (2) |
|
1,563 |
|
|
|
- |
|
Amortization of
acquisition related software and intangible assets |
|
21,041 |
|
|
|
21,135 |
|
Income tax related to adjustments |
|
(12,223 |
) |
|
|
(12,945 |
) |
Sub-total |
$ |
47,761 |
|
|
$ |
34,200 |
|
|
|
|
|
Weighted average common shares, diluted |
|
85,993 |
|
|
|
88,451 |
|
|
|
|
|
Diluted GAAP EPS |
|
0.31 |
|
|
$ |
0.18 |
|
Diluted adjusted EPS |
|
0.56 |
|
|
$ |
0.39 |
|
|
2 Related legal fees were not considered non-recurring
in 2015. For the three months ended September 30, 2015, related
legal fees were approximately $0.9 million and income taxes on
related legal fees were approximately $0.3 million or the
equivalent of $0.01 per diluted Adjusted EPS. For the nine months
ended September 30, 2015, related legal fees were approximately
$4.2 million and income taxes on related legal fees were
approximately $1.7 million or the equivalent of $0.02 per diluted
Adjusted EPS. |
Investor Contact:
Dennis Oakes
SVP, Investor Relations
dennis.oakes@hms.com
212-857-5786
Media Contact:
Francesca Marraro
VP, Marketing and Communications
fmarraro@hms.com
212-857-5442
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