HMS Holdings Corp. (Nasdaq:HMSY) today announced financial results
for the fourth quarter and full year 2017. Net income for the
quarter ended December 31, 2017 was $25.7 million or $0.30 per
diluted share, compared to net income of $6.4 million or $0.07 per
diluted share in the third quarter of 2017 and $9.2 million or
$0.11 per diluted share in the prior year fourth quarter. Net
income for the quarter included a non-cash tax benefit of $15.1
million or $0.18 per diluted share, due to the revaluation of the
Company’s deferred tax balances pursuant to the tax rate reduction
included in the federal tax legislation enacted in December 2017.
Adjusted EPS in the quarter was $0.49 per diluted share, compared
to adjusted EPS of $0.19 per diluted share in the third quarter of
2017 and adjusted EPS of $0.18 per diluted share in the prior year
fourth quarter. Adjusted EPS for the quarter included a non-cash
tax benefit of $0.25 per diluted share, due to the impact of the
revaluation of the Company’s deferred tax balances pursuant to the
tax rate reduction included in the federal tax legislation enacted
in December 2017. Excluding the tax benefit, adjusted EPS for the
fourth quarter of 2017 was $0.24 per diluted share.
For the full year ended December 31, 2017, net
income was $40.1 million or $0.47 per diluted share, compared to
$37.6 million or $0.43 per diluted share in the prior year.
Adjusted EPS for the full year 2017 was $1.11 per diluted share,
including a non-cash tax benefit of $0.40 per diluted share due to
the new tax legislation, compared to $0.75 per diluted share in
full year 2016. Excluding the tax benefit, adjusted EPS for the
full year was $0.71 per diluted share. Net income and adjusted EPS
in the prior year included a benefit of $6.2 million or $0.07 per
diluted share for certain prior open years’ Research and
Development tax credits and domestic manufacturing deductions
recognized in the third quarter of 2016.
Adjusted EBITDA in the fourth quarter of 2017
was $40.2 million, compared to $34.1 million in the third quarter
of 2017 (+17.9%) and $32.3 million in the fourth quarter of 2016.
For the full year, adjusted EBITDA was $124.6 million, compared to
$117.4 million in the prior year.
Total revenue in the fourth quarter of 2017 was
a record $148.5 million, compared to total revenue of $125.7
million in the third quarter of 2017 (+18.2%) and $125.6 million in
the prior year fourth quarter. For the full year 2017, total
revenue increased 6.4% to a record $521.2 million, compared to
total revenue for the full year 2016 of $489.7 million. 2017 full
year revenue included $30.4 million in revenue from the Company’s
Eliza subsidiary, which was acquired in April 2017, partially
offset by a $14.7 million decline in Medicare RAC revenue.
"We had a strong fourth quarter to finish out
2017 – setting quarterly records for total company, commercial,
state government and coordination of benefits (COB) revenue. COB
and Payment Integrity (PI) revenues rebounded strongly from the
third quarter, as expected, with both up double digits
sequentially. We also made incremental progress in the quarter with
completed implementations of new business and significantly higher
levels of medical record requests and record reviews, which we
expect will translate into further PI revenue growth in the early
part of 2018," said Bill Lucia, Chairman and CEO. “The entire
healthcare industry is increasingly focused on enhancing the
consumer experience and improving clinical outcomes by better
engaging individuals in managing their own health. As a result, our
care management and consumer engagement solutions are really
resonating with customers and we are increasingly encouraged about
the growth profile of this new vertical.”
"We have several strategic priorities as we
enter 2018: boosting organic revenue growth across all of our
products, but particularly payment integrity; expanding our care
management and consumer engagement platform and customer base;
taking full advantage of technology, innovation and the scalability
of our business model to maximize the value of our data and expand
margins; maintaining our focus on customer satisfaction and
employee engagement; and maximizing total shareholder return, which
benefits all of the Company's stakeholders,” added Lucia.
Commercial revenue in the fourth quarter of 2017
was a record $77.2 million, compared to $62.9 million in the prior
year fourth quarter and $67.6 million in the third quarter of 2017
(+14.3%). Commercial revenue in the fourth quarter of 2017 included
$12.9 million from Eliza, compared to $9.9 million in the third
quarter of 2017 (+30.3%). State government revenue was a record
$64.2 million in the fourth quarter of 2017, compared to $57.7
million in the prior year fourth quarter and $51.6 million in the
third quarter of 2017 (+24.3%). Medicare RAC revenue in the fourth
quarter of 2017 was $2.0 million, compared to ($0.4) million in the
prior year fourth quarter and $0.8 million in the third quarter of
2017. Federal (excluding Medicare RAC) and Other revenue was
$5.1 million in the fourth quarter of 2017, a $0.2 million decrease
compared to the prior year fourth quarter and a $0.5 million
decrease compared to the third quarter of 2017.
On a full year basis, commercial revenue was
$269.2 million, a 17.0% increase compared to $230.2 million in
2016; state government revenue was $227.0 million, a 3.6% increase
compared to $219.1 million in 2016; Federal (excluding Medicare
RAC) and Other revenue was $22.6 million, a decrease of $0.7
million compared to 2016; and Medicare RAC revenue was $2.4
million, a $14.7 million decrease compared to 2016.
COB revenue, across both the state government
and commercial businesses, was a record $105.7 million in the
fourth quarter of 2017 compared to $95.0 million in the prior year
fourth quarter and $90.1 million in the third quarter of 2017
(+17.4%). COB revenue accounted for 71.2% of total company revenue
in the fourth quarter, compared to 75.6% in the prior year fourth
quarter and 71.7% in the third quarter of 2017. For the full year,
COB revenue was $382.7 million, an 8.2% increase compared to $353.8
million in 2016.
Revenue from Analytical Services, which includes
PI, Medicare RAC and Care Management and Consumer Engagement
Solutions, was $42.8 million in the fourth quarter of 2017,
compared to $30.6 million in the prior year fourth quarter and
$35.6 million in the third quarter of 2017 (+20.2%). PI revenue,
excluding Medicare RAC, was $26.8 million in the fourth quarter of
2017, compared to $30.2 million in the prior year fourth quarter
and $23.9 million in the third quarter of 2017 (+12.2%). For the
full year, Analytical Services revenue was $138.5 million.
Capital expenditures in the fourth quarter of
2017 were $10.7 million. For the full year 2017, capital
expenditures were $33.0 million.
"We ended the year with enhanced liquidity and a
strong balance sheet. Operating cash flow in the fourth quarter was
$31.4 million, which resulted in a full year total of $86.5
million. Adjusted EBITDA of $40.2 million in the fourth quarter was
up 17.9% compared to the third quarter and operating margin in the
quarter was 13.0%, compared to 10.2% in the third quarter. We
repurchased $14.1 million of our shares in the fourth quarter, and
closed on a new amended credit facility in December which increases
our financial flexibility and complements our strong operating cash
flow. At December 31st, our debt (net of cash) was under $160
million – less than 1.3 times trailing 12 month adjusted EBITDA,"
said Jeff Sherman, CFO. “We take a bottom up approach to our
annual budgeting process and have carefully evaluated all aspects
of our expected 2018 financial performance for which we believe we
have substantial visibility. On that basis, we have developed our
annual outlook for the full year as follows:
- Total company revenue of $560-570 million
- Net income of $29-33 million
- Adjusted EBITDA of $128-133 million
- Margin expansion of approximately 50 bps
- Capital expenditures of approximately $33 million
- An effective annual tax rate of 28-30%
We believe these are achievable objectives for the year,”
concluded Sherman.
For additional information about the Company’s
fourth quarter and full year 2017 financial results, see the Q4 and
Full Year 2017 Investor Presentation available on the Company’s
website at http://investor.hms.com/events.cfm.
Webcast and Conference Call
Information
HMS will report its preliminary fourth quarter
and full year 2017 financial and operating results via webcast at
7:30 AM CT / 8:30 AM ET on Friday, February 23, 2018. The webcast
will 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 on
the HMS Investor Relations website at
http://investor.hms.com/events.cfm. The webcast will also be
archived and available for replay beginning at approximately 11:00
AM CT / 12:00 PM ET on February 23, 2018 at
http://investor.hms.com/events.cfm. This press release and the
financial statements contained herein are also available on the HMS
Investor Relations website at
http://investor.hms.com/releases.cfm.
About HMS
HMS is a leading provider of cost containment
solutions in the U.S. healthcare marketplace. Using innovative
technology, extensive data services and powerful analytics, the
Company delivers coordination of benefits, payment integrity, and
care management and consumer engagement solutions to help customers
recover improper payments; prevent future overpayments; reduce
fraud, waste and abuse; better manage the care that members
receive; engage healthcare consumers to improve outcomes and
increase retention; and ensure regulatory compliance. The Company
serves a broad range of entities within the healthcare industry,
including state Medicaid programs, commercial health plans, federal
government health agencies, government and private employers and
at-risk providers.
Trademarks
HMS and the HMS logo are registered trademarks of HMS Holdings
Corp. and/or its affiliates. Other names may be trademarks of
their respective owners.
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
The financial results in this press release
reflect preliminary, unaudited results, which are not final until
the Company’s Form 10-K is filed. This press release contains
"forward-looking statements" within the meaning of the U.S. Private
Securities Litigation Reform Act of 1995. Such statements relate to
our current expectations, projections and assumptions about our
business, the economy and future events or 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 and full year guidance and projections.
Factors or events that could cause actual results to differ may
emerge from time to time and are difficult to predict. Should known
or unknown risks or uncertainties materialize, or should underlying
assumptions prove inaccurate, actual results may differ materially
from past results and those anticipated, estimated or projected. We
caution you not to place undue reliance upon any of these
forward-looking statements.
Factors that could cause or contribute to such
differences, include, but are not limited to: our ability to
execute our business plans or growth strategy; our ability to
innovate, develop or implement new or enhanced solutions or
services; 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 and realize synergies; variations in our results of
operations; our ability to accurately forecast the revenue under
our contracts and solutions; our ability to protect our systems
from damage, interruption or breach, and to maintain effective
information and technology systems and networks; our ability to
protect our intellectual property rights, proprietary technology,
information processes, and know-how; significant competition for
our solutions and services; our failure to maintain a high level of
customer retention or the unexpected reduction in scope or
termination of key contracts with major customers; customer
dissatisfaction, our non-compliance with contractual provisions or
regulatory requirements; our failure to meet performance standards
triggering significant costs or liabilities under our contracts;
our inability to manage our relationships with information and data
sources and suppliers; reliance on subcontractors and other third
party providers and parties to perform services; our ability to
continue to secure contracts and favorable contract terms through
the competitive bidding process; pending or threatened litigation;
unfavorable outcomes in legal proceedings; our success in
attracting qualified employees and members of our management team;
our ability to generate sufficient cash to cover our interest and
principal payments under our credit facility or to borrow or use
credit; unexpected changes in tax laws, regulations or guidance and
unexpected changes in our effective tax rate; unanticipated
increases in the number or amount of claims for which we are
self-insured; our ability to develop, implement and maintain
effective internal control over financial reporting; changes in the
U.S. healthcare environment or healthcare financing system,
including regulatory, budgetary or political actions that affect
healthcare spending or the practices and operations of healthcare
organizations; our failure to comply with applicable laws and
regulations governing individual privacy and information security
or to protect such information from theft and misuse; our ability
to comply with current and future legal and regulatory
requirements; negative results of government or customer reviews,
audits or investigations; state or federal limitations related to
outsourcing or certain government programs or functions;
restrictions on bidding or performing certain work due to perceived
conflicts of interests; the market price of our common stock and
lack of dividend payments; and 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 in our other filings with the Securities and Exchange
Commission. With respect to our projected effective annual
tax rate for 2018, this reflects our current reasonable estimate of
the income tax effects of the recently enacted tax legislation,
however these are provisional amounts subject to adjustment during
the one-year measurement period. 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.
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Investor
Contact: |
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Media Contact: |
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Dennis
Oakes |
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Elizabeth Bonet |
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SVP,
Investor Relations |
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Sr. Director,
Communications |
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dennis.oakes@hms.com |
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Elizabeth.bonet@hms.com |
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212-857-5786 |
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972-894-8405 |
HMS HOLDINGS CORP. AND
SUBSIDIARIESCONSOLIDATED STATEMENTS OF
INCOME(in thousands, except per share
amounts) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December
31, |
|
Twelve Months Ended
December 31, |
|
|
|
|
|
|
|
|
|
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
2016 |
|
Revenue |
|
|
|
$ |
148,493 |
|
|
$ |
125,591 |
|
|
$ |
521,212 |
|
|
$ |
489,720 |
|
Cost of
services: |
|
|
|
|
|
|
|
|
|
Compensation |
|
|
|
52,264 |
|
|
|
47,229 |
|
|
|
202,049 |
|
|
|
189,271 |
|
Data processing |
|
|
|
12,592 |
|
|
|
9,068 |
|
|
|
45,723 |
|
|
|
37,337 |
|
Occupancy |
|
|
|
5,081 |
|
|
|
3,353 |
|
|
|
17,190 |
|
|
|
14,000 |
|
Direct project expenses |
|
|
11,255 |
|
|
|
9,302 |
|
|
|
41,347 |
|
|
|
46,254 |
|
Other operating expenses |
|
|
7,214 |
|
|
|
7,130 |
|
|
|
28,425 |
|
|
|
27,778 |
|
Amortization of acquisition related software and
intangible assets |
|
8,568 |
|
|
|
7,614 |
|
|
|
30,393 |
|
|
|
28,030 |
|
Total cost of services |
|
|
96,974 |
|
|
|
83,696 |
|
|
|
365,127 |
|
|
|
342,670 |
|
Selling,
general and administrative expenses |
|
32,253 |
|
|
|
23,136 |
|
|
|
105,654 |
|
|
|
89,381 |
|
Total operating expenses |
|
|
129,227 |
|
|
|
106,832 |
|
|
|
470,781 |
|
|
|
432,051 |
|
Operating income |
|
|
|
19,266 |
|
|
|
18,759 |
|
|
|
50,431 |
|
|
|
57,669 |
|
Interest
expense |
|
|
|
(3,137 |
) |
|
|
(2,206 |
) |
|
|
(10,871 |
) |
|
|
(8,519 |
) |
Interest income |
|
|
|
93 |
|
|
|
107 |
|
|
|
295 |
|
|
|
321 |
|
Income before income taxes |
|
|
16,222 |
|
|
|
16,660 |
|
|
|
39,855 |
|
|
|
49,471 |
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Income taxes |
|
|
|
(9,501 |
) |
|
|
7,509 |
|
|
|
(199 |
) |
|
|
11,835 |
|
Net income |
|
|
$ |
25,723 |
|
|
$ |
9,151 |
|
|
$ |
40,054 |
|
|
$ |
37,636 |
|
|
|
|
|
|
|
|
|
|
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Basic income per common share: |
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|
|
|
|
|
|
Net income per common share -- basic |
$ |
0.30 |
|
|
$ |
0.11 |
|
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$ |
0.48 |
|
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$ |
0.45 |
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Diluted income per common share: |
|
|
|
|
|
|
|
Net income per common share -- diluted |
$ |
0.30 |
|
|
$ |
0.11 |
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$ |
0.47 |
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$ |
0.43 |
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Weighted average
shares: |
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|
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|
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Basic |
|
|
|
|
83,605 |
|
|
|
84,154 |
|
|
|
83,821 |
|
|
|
84,221 |
|
Diluted |
|
|
|
84,936 |
|
|
|
85,822 |
|
|
|
85,088 |
|
|
|
86,987 |
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HMS HOLDINGS CORP. AND
SUBSIDIARIESCONSOLIDATED BALANCE
SHEETS(in thousands, except per share
amounts) |
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December 31,
2017 |
|
December 31, 2016 |
Assets |
|
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Current
assets: |
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|
|
|
|
|
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Cash and cash equivalents |
|
|
|
$ |
83,313 |
|
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$ |
175,999 |
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Accounts receivable, net of allowance of $14,799 and $10,772,
at December 31, 2017 and December 31, 2016, respectively |
|
|
189,460 |
|
|
|
173,582 |
|
Prepaid expenses |
|
|
|
|
|
16,589 |
|
|
|
13,699 |
|
Income tax receivable |
|
|
|
|
1,892 |
|
|
|
3,354 |
|
Deferred financing costs, net |
|
|
|
|
564 |
|
|
|
- |
|
Other current assets |
|
|
|
|
836 |
|
|
|
1,001 |
|
Total current assets |
|
|
|
|
292,654 |
|
|
|
367,635 |
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Property
and equipment, net |
|
|
|
|
98,581 |
|
|
|
92,167 |
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Goodwill |
|
|
|
|
|
|
487,617 |
|
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|
379,716 |
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Intangible
assets, net |
|
|
|
|
91,482 |
|
|
|
37,797 |
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Deferred
financing costs, net |
|
|
|
|
2,237 |
|
|
|
2,790 |
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Other assets |
|
|
|
|
|
2,589 |
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|
|
2,650 |
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Total assets |
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|
|
|
$ |
975,160 |
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|
$ |
882,755 |
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Liabilities and Shareholders' Equity |
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Current
liabilities: |
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Accounts payable, accrued expenses and other liabilities |
|
61,900 |
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|
59,402 |
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Estimated liability for appeals |
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|
30,787 |
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|
30,755 |
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Total current liabilities |
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|
92,687 |
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|
90,157 |
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Long-term
liabilities: |
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Revolving credit facility |
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|
240,000 |
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|
197,796 |
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Net deferred tax liabilities |
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|
|
|
21,989 |
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|
22,717 |
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Deferred rent |
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|
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|
4,852 |
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|
5,427 |
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Other liabilities |
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|
|
|
9,403 |
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|
|
10,048 |
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Total long-term liabilities |
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|
|
|
276,244 |
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|
|
235,988 |
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Total liabilities |
|
|
|
|
|
368,931 |
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|
|
326,145 |
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|
|
|
|
|
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Commitments
and contingencies (Note 13) |
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Shareholders' equity: |
|
|
|
|
|
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Preferred
stock -- $0.01 par value; 5,000,000 shares authorized; none
issued |
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— |
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— |
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Common
stock -- $0.01 par value; 175,000,000 shares authorized; |
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|
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96,536,251 shares issued and 83,256,858 shares outstanding at
December 31, 2017; |
|
|
|
95,966,852 shares issued and 83,552,774 shares outstanding at
December 31, 2016 |
|
965 |
|
|
|
959 |
|
Capital in
excess of par value |
|
|
|
|
368,721 |
|
|
|
345,025 |
|
Retained
earnings |
|
|
|
|
|
366,164 |
|
|
|
326,110 |
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Treasury stock, at cost: 13,279,393 shares at December
31, 2017 and 12,414,078 shares at December 31, 2016 |
|
(129,621 |
) |
|
|
(115,484 |
) |
Total shareholders' equity |
|
|
|
|
606,229 |
|
|
|
556,610 |
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Total liabilities and shareholders'
equity |
|
|
$ |
975,160 |
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|
$ |
882,755 |
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HMS HOLDINGS CORP. AND
SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH
FLOWS(in thousands) |
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Years ended December
31, |
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2017 |
|
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2016 |
|
|
|
2015 |
|
Operating activities: |
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
|
$ |
40,054 |
|
|
$ |
37,636 |
|
|
$ |
24,527 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
|
|
Depreciation and amortization of property and equipment and
software |
|
27,515 |
|
|
|
24,882 |
|
|
|
30,328 |
|
Amortization of intangible assets |
|
|
|
|
22,555 |
|
|
|
20,164 |
|
|
|
20,270 |
|
Amortization of deferred financing costs |
|
|
|
|
2,258 |
|
|
|
2,083 |
|
|
|
2,084 |
|
Stock-based compensation expense |
|
|
|
|
24,143 |
|
|
|
13,277 |
|
|
|
14,297 |
|
Deferred income taxes |
|
|
|
|
|
(20,409 |
) |
|
|
(7,368 |
) |
|
|
(14,020 |
) |
(Gain) / Loss on disposal of assets |
|
|
|
|
209 |
|
|
|
(948 |
) |
|
|
84 |
|
Change in fair value of contingent consideration |
|
|
|
(2,865 |
) |
|
|
- |
|
|
|
- |
|
Changes in operating assets and liabilities, net of the effect
of acquistions: |
|
|
|
|
|
Accounts receivable |
|
|
|
|
|
(6,976 |
) |
|
|
(3,554 |
) |
|
|
(12,045 |
) |
Prepaid expenses |
|
|
|
|
|
(1,463 |
) |
|
|
(2,399 |
) |
|
|
549 |
|
Prepaid income taxes |
|
|
|
|
|
- |
|
|
|
- |
|
|
|
6,711 |
|
Other current assets |
|
|
|
|
|
165 |
|
|
|
2,066 |
|
|
|
(412 |
) |
Other assets |
|
|
|
|
|
|
124 |
|
|
|
234 |
|
|
|
10 |
|
Income taxes receivable / (payable) |
|
|
|
|
1,462 |
|
|
|
(7,227 |
) |
|
|
3,873 |
|
Accounts payable, accrued expenses, deferred rent and other
liabilities |
|
(340 |
) |
|
|
12,116 |
|
|
|
(250 |
) |
Estimated liability for appeals |
|
|
|
|
32 |
|
|
|
(2,323 |
) |
|
|
(3,721 |
) |
Net cash provided by operating
acitivties |
|
|
|
86,464 |
|
|
|
88,639 |
|
|
|
72,285 |
|
Investing activities: |
|
|
|
|
|
|
|
|
|
|
Acquisition of a business, net of cash acquired |
|
|
|
(171,321 |
) |
|
|
(20,678 |
) |
|
|
- |
|
Proceeds from sale of cost basis investment |
|
|
|
- |
|
|
|
2,496 |
|
|
|
- |
|
Purchases of property and equipment |
|
|
|
|
(17,318 |
) |
|
|
(13,703 |
) |
|
|
(8,620 |
) |
Investment in capitalized software |
|
|
|
|
(15,725 |
) |
|
|
(7,316 |
) |
|
|
(3,197 |
) |
Net cash used in investing
activities |
|
|
|
(204,364 |
) |
|
|
(39,201 |
) |
|
|
(11,817 |
) |
Financing activities: |
|
|
|
|
|
|
|
|
|
Proceeds from credit facility |
|
|
|
|
|
42,204 |
|
|
|
- |
|
|
|
- |
|
Payments for deferred financing costs |
|
|
|
|
(2,269 |
) |
|
|
- |
|
|
|
- |
|
Proceeds from exercise of stock options |
|
|
|
|
2,720 |
|
|
|
2,940 |
|
|
|
4,187 |
|
Payments of tax withholdings on behalf of employees for
net-share |
|
|
|
|
|
|
settlement for stock-based compensation |
|
|
|
|
(3,161 |
) |
|
|
(1,475 |
) |
|
|
(1,029 |
) |
Payments on capital lease obligations |
|
|
|
|
(143 |
) |
|
|
(44 |
) |
|
|
(1,132 |
) |
Purchases of treasury stock |
|
|
|
|
|
(14,137 |
) |
|
|
(20,470 |
) |
|
|
(50,000 |
) |
Net cash provide by / (used in) financing
activities |
|
|
25,214 |
|
|
|
(19,049 |
) |
|
|
(47,974 |
) |
Net increase (decrease) in cash and cash
equivalents |
|
|
|
(92,686 |
) |
|
|
30,389 |
|
|
|
12,494 |
|
Cash and cash equivalents |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at beginning of
year |
|
|
|
175,999 |
|
|
|
145,610 |
|
|
|
133,116 |
|
Cash and cash equivalents at end of year |
|
|
|
$ |
83,313 |
|
|
$ |
175,999 |
|
|
$ |
145,610 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow
information: |
|
|
|
|
|
|
|
Cash paid for income taxes |
|
|
|
|
$ |
17,995 |
|
|
$ |
20,326 |
|
|
$ |
22,878 |
|
Cash paid for interest |
|
|
|
|
$ |
9,944 |
|
|
$ |
6,196 |
|
|
$ |
5,694 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of noncash
activities: |
|
|
|
|
|
|
|
Change in balance of accrued property and equipment
purchases |
|
$ |
51 |
|
|
$ |
684 |
|
|
$ |
729 |
|
HMS HOLDINGS CORP. AND
SUBSIDIARIES (in thousands)
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
$40.2 million for the fourth quarter of 2017.
|
|
Three months ended
December 31, |
|
|
|
|
|
|
|
|
|
2017 |
|
|
|
2016 |
|
|
|
Net
Income |
|
$ |
25,723 |
|
|
$ |
9,151 |
|
|
|
Net interest
expense |
|
|
3,044 |
|
|
|
2,099 |
|
|
|
Income taxes |
|
|
(9,501 |
) |
|
|
7,510 |
|
|
|
Depreciation and amortization of property and equipment and
intangible assets |
|
|
13,564 |
|
|
|
10,962 |
|
|
|
Earnings before
interest, taxes, depreciation and amortization (EBITDA) |
|
|
32,830 |
|
|
|
29,722 |
|
|
|
Stock based
compensation expense |
|
|
7,382 |
|
|
|
2,530 |
|
|
|
Non-recurring legal
fees |
|
|
— |
|
|
|
— |
|
|
|
Adjusted EBITDA |
|
$ |
40,212 |
|
|
$ |
32,252 |
|
|
|
|
|
|
|
|
|
|
|
|
Twelve months ended
December 31, |
|
|
|
|
|
|
|
|
|
2017 |
|
|
|
2016 |
|
|
|
Net
Income |
|
$ |
40,054 |
|
|
$ |
37,636 |
|
|
|
Net interest
expense |
|
|
10,576 |
|
|
|
8,198 |
|
|
|
Income taxes |
|
|
(199 |
) |
|
|
11,835 |
|
|
|
Depreciation and amortization of property and equipment and
intangible assets |
|
|
50,070 |
|
|
|
44,930 |
|
|
|
Earnings before
interest, taxes, depreciation and amortization (EBITDA) |
|
|
100,501 |
|
|
|
102,599 |
|
|
|
Stock based
compensation expense |
|
|
24,143 |
|
|
|
13,277 |
|
|
|
Non-recurring legal
fees |
|
|
— |
|
|
|
1,563 |
|
|
|
Adjusted EBITDA |
|
$ |
124,644 |
|
|
$ |
117,439 |
|
|
|
|
|
|
|
|
|
|
HMS HOLDINGS CORP. AND
SUBSIDIARIES (in thousands, except per share
amounts)
Reconciliation of Net Income to GAAP EPS and Adjusted
EPS
As summarized in the following tables, diluted
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 $0.49 for the fourth quarter of 2017, an increase of 172%
from $0.18 for the fourth quarter of 2016. Diluted adjusted EPS in
the quarter included a non-cash tax benefit of $0.25 per diluted
share associated with the recently enacted federal tax
legislation.
|
|
Three months ended December
31, |
|
|
|
|
|
2017 |
|
|
|
2016 |
|
|
|
Net
Income |
|
$ |
25,723 |
|
|
$ |
9,151 |
|
|
|
Stock-based
compensation expense |
|
|
7,382 |
|
|
|
2,530 |
|
|
|
Non-recurring legal
fees |
|
|
— |
|
|
|
— |
|
|
|
Amortization of
acquisition related software and intangible assets |
|
|
8,568 |
|
|
|
6,989 |
|
|
|
Income
tax related to adjustments (1) |
|
|
80 |
|
|
|
(3,189 |
) |
|
|
Adjusted net income |
|
$ |
41,753 |
|
|
$ |
15,481 |
|
|
|
|
|
|
|
|
|
|
Weighted average common shares, diluted |
|
|
84,936 |
|
|
|
85,822 |
|
|
|
|
|
|
|
|
|
|
Diluted GAAP EPS |
|
$ |
0.30 |
|
(2) |
$ |
0.11 |
|
|
|
Diluted
adjusted EPS |
|
$ |
0.49 |
|
|
$ |
0.18 |
|
|
|
|
|
|
|
|
|
|
Federal tax legislation impact |
|
$ |
0.25 |
|
|
$ |
- |
|
|
|
Diluted
adjusted EPS after federal tax legislation |
|
$ |
0.24 |
|
|
$ |
0.18 |
|
|
|
|
|
|
|
|
|
|
Diluted adjusted EPS was $1.11 for the full year of 2017, an
increase of 48% compared $0.75 for the full year of 2016, including
a non-cash tax benefit of $0.40 per diluted share associated with
the recently enacted federal tax legislation.
|
|
|
Twelve months ended December
31, |
|
|
|
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
Net
Income |
|
$ |
40,054 |
|
|
$ |
37,636 |
|
|
|
|
Stock-based
compensation expense |
|
|
24,143 |
|
|
|
13,277 |
|
|
|
|
Non-recurring legal
fees |
|
|
— |
|
|
|
1,563 |
|
|
|
|
Amortization of
acquisition related software and intangible assets |
|
|
30,393 |
|
|
|
28,030 |
|
|
|
|
Income
tax related to adjustments (1) |
|
|
273 |
|
|
|
(15,536 |
) |
|
|
|
Adjusted net income |
|
$ |
94,863 |
|
|
$ |
64,970 |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares, diluted |
|
|
85,088 |
|
|
|
86,987 |
|
|
|
|
|
|
|
|
|
|
|
|
Diluted GAAP EPS |
|
$ |
0.47 |
|
(2) |
$ |
0.43 |
|
|
|
|
Diluted
adjusted EPS |
|
$ |
1.11 |
|
|
$ |
0.75 |
|
|
|
|
|
|
|
|
|
|
|
|
Federal tax legislation impact |
|
$ |
0.40 |
|
|
$ |
- |
|
|
|
|
Diluted
adjusted EPS after federal tax legislation |
|
$ |
0.71 |
|
|
$ |
0.75 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Tax effect of adjustments is computed as the pre-tax effect
of the adjustments multiplied by the annual effective tax rate.(2)
Diluted GAAP EPS for each of the three months and year ended
December 31, 2017 included a non-cash tax benefit of $0.18 per
diluted share associated with the recently enacted federal tax
legislation.
HMS HOLDINGS CORP. AND
SUBSIDIARIES (in millions)
Reconciliation of Projected 2018 Net Income to Projected
2018 EBITDA and Adjusted EBITDA
As summarized in the following table, the Company currently
estimates net income of between approximately $29 million and $33
million and adjusted EBITDA of between approximately $128 million
and $133 million for 2018.
|
|
Twelve Months Ending December 31,
2018 |
|
|
|
|
Estimated Range |
|
|
Low |
|
High |
Net Income |
|
$ |
29 |
|
$ |
33 |
Net interest
expense |
|
|
12 |
|
|
12 |
Income taxes |
|
|
12 |
|
|
13 |
Depreciation and amortization of property and equipment and
intangible assets |
|
|
55 |
|
|
55 |
Earnings before
interest, taxes, depreciation and amortization (EBITDA) |
|
|
108 |
|
|
113 |
Stock based
compensation expense |
|
|
20 |
|
|
20 |
Non-recurring legal
fees |
|
|
— |
|
|
— |
Adjusted EBITDA |
|
$ |
128 |
|
$ |
133 |
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