HMS Holdings Corp. (NASDAQ:HMSY) today announced financial results
for the third quarter of 2017. Net income for the quarter ended
September 30, 2017 was $6.4 million or $0.07 per diluted share,
compared to net income of $14.0 million or $0.17 per diluted share
in the prior year third quarter and $6.5 million or $0.08 per
diluted share in the second quarter of 2017. Net income in the
prior year third quarter included approximately $7.3 million or
$0.08 per diluted share, recorded in the quarter, for certain tax
credits and deductions relating to prior periods. Adjusted EPS in
the third quarter was $0.19 per diluted share, compared to adjusted
EPS of $0.24 per diluted share in the prior year third quarter and
adjusted EPS of $0.16 per diluted share in the second quarter of
2017. Adjusted EPS in the prior year third quarter included a $0.07
per diluted share tax benefit of approximately $6.2 million
recorded in the prior year quarter for certain tax credits and
deductions relating to prior open periods. Total revenue in the
third quarter was $125.7 million, compared to total revenue of
$122.9 million in the prior year third quarter and $133.3 million
in the second quarter of 2017.
“Sales of our heritage coordination of benefits
and payment integrity solutions have been robust in recent
quarters, creating an implementation backlog which bodes well for
future revenue growth. We have made investments throughout 2017 in
people, technology, big data and process improvements – with a
particular focus on re-engineering the implementation process -
which we expected would accelerate revenue generation immediately
and in future quarters. We simply did not see the anticipated
short-term payback from those collective efforts in our third
quarter performance,” said Bill Lucia, Chairman and CEO. "Revenue
in the quarter was below expectations, due principally to three
factors. We saw an unusual sequential mid-year decline of
approximately $8 million in coordination of benefits, though COB is
still up 7% year-to-date; Eliza revenue did not step up from the
prior quarter run rate, which is inconsistent with their historical
pattern; and our efforts to accelerate payment integrity revenue
did not produce the desired results. We understand what needs to be
done to boost revenue growth next quarter and have plans in place
to do so.”
“The health management and member engagement
platforms we acquired since the third quarter of last year
significantly expand the addressable market for our services and
position us to play an important role as the healthcare industry
shifts more and more to the consumer perspective. We are confident
the business already sold, the investments in our growth and the
substantial leverage inherent in our business model will be more
evident in coming quarters. The entire HMS team is committed to
working diligently to ensure that measurable progress is manifested
in our financial results as quickly as possible,” concluded
Lucia.
Commercial revenue in the third quarter of 2017
was $67.6 million, a 16.8% increase compared to $57.9 million in
the prior year third quarter and a $1.8 million or 2.6% decrease
compared to the second quarter of 2017 total of $69.4 million.
Commercial revenue in the third quarter included $9.9 million from
Eliza Holding Corp. (“Eliza”). State government revenue was $51.6
million in the third quarter, a 2.6% decrease compared to $53.0
million in the prior year third quarter and a $6.3 million or 10.9%
decrease compared to the second quarter of 2017 total of $57.9
million. Federal (including Medicare RAC) and Other revenue was
$6.5 million in the third quarter, a $5.5 million decrease compared
to the prior year third quarter and $0.5 million higher than the
second quarter of 2017. The decline from the prior year third
quarter was due primarily to Medicare RAC revenue of $0.8 million
in the third quarter of 2017, compared to $5.4 million in the prior
year third quarter.
Coordination of benefits (COB) revenue was $90.1
million in the third quarter of 2017, compared to $86.2 million in
the prior year third quarter and $98.5 million in the second
quarter of 2017. COB accounted for 71.7% of total revenue in the
third quarter of 2017, compared to 70.1% in the prior year third
quarter and 73.9% in the second quarter of 2017. Revenue from
analytical services, which includes payment integrity (PI),
Medicare RAC and health management and member engagement solutions,
was $35.6 million in the third quarter of 2017, compared to $36.7
million in the prior year third quarter and $34.8 million in the
second quarter of 2017. PI revenue was $23.9 million in the third
quarter of 2017, compared to $31.2 million in the prior year third
quarter and $26.9 million in the second quarter of 2017.
The Company’s Board of Directors has authorized
the repurchase of up to $50 million of the Company’s common stock,
on a discretionary basis, for a period of up to two years. The new
authorization replaces a program that expired in July 2017.
"Lower-than-expected second half revenue
requires a reset of our outlook for full year revenue and negates
the operating margin expansion we anticipated this year, which was
largely dependent upon year-over-year revenue growth. We now expect
fourth quarter revenue of approximately $135-140 million, which
would result in full year revenue of approximately $508-513
million. There were bright spots in our third quarter performance
as we continued our expense discipline, despite ongoing investments
in support of revenue growth. We also saw evidence in the quarter
of the strong cash flow and solid adjusted EBITDA inherent in our
business model." said Jeff Sherman, CFO. “We view share repurchases
as an important component of prudent capital allocation and
consistent with our overall commitment to building shareholder
value. Our strong liquidity gives us the opportunity to both invest
in the business, including future acquisitions, and return cash to
shareholders via share repurchases pursuant to the new $50 million
share buyback program authorized by our Board.”
For additional information about the Company’s
preliminary third quarter 2017 financial results and an update to
the Company’s full-year financial outlook, see the Q3 2017
Investor Presentation available on the HMS Investor Relations
Website at: http://investor.hms.com/events.cfm.
Webcast and Conference Call Information
HMS will report its preliminary third quarter
2017 financial and operating results via webcast at 7:30 AM CT /
8:30 AM ET on November 3, 2017. 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 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 November 3, 2017 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 as well as extensive data services and powerful
analytics, the Company delivers coordination of benefits, payment
integrity, and health management and member engagement solutions to
help customers recover improper payments; prevent future improper
payments; reduce fraud, waste and abuse; effectively engage their
members and better manage the care they receive; and ensure
regulatory compliance. The Company serves commercial health plans,
state government agencies, federal programs, at-risk providers,
pharmacy benefit managers and employers.
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
press 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 results, which are not final until the
Company’s Form 10-Q for the quarter ended September 30, 2017 is
filed with the Securities and Exchange Commission. This press
release contains "forward-looking statements" within the meaning of
the U.S. Private Securities Litigation Reform Act of 1995. Such
statements reflect 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. In addition, statements in this press
release regarding our intention to repurchase shares of our common
stock under the share repurchase program and expected results with
respect to future share purchases are forward-looking statements
subject to uncertainties. 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 and to prevail in protests or
challenges to contract awards; 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 revolving credit facility, or to
borrow, obtain financing, maintain liquidity or use credit;
unexpected changes in our effective tax rates; unanticipated
increases in the number or amount of claims for which we are
self-insured; our ability to successfully remediate material
weaknesses in our internal control over financial reporting;
changes in the U.S. healthcare environment or healthcare financing
system, including regulatory, budgetary or political actions that
affect procurement practices and healthcare spending; our failure
to comply with applicable laws and regulations governing individual
privacy and information security or to protect such information
from theft and misuse; 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. 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.
Investor Contact:
Dennis Oakes SVP, Investor
Relationsdennis.oakes@hms.com212-857-5786
Media Contact:
Elizabeth Bonet Sr. Director,
CommunicationsElizabeth.bonet@hms.com 972-894-8405
|
|
|
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, |
|
|
|
|
|
|
|
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
2016 |
|
|
Revenue |
|
$ |
125,673 |
|
|
$ |
122,860 |
|
|
$ |
372,719 |
|
|
$ |
364,130 |
|
|
Cost of
services: |
|
|
|
|
|
|
|
|
Compensation |
|
49,012 |
|
|
|
48,298 |
|
|
|
149,784 |
|
|
|
142,042 |
|
|
Data processing |
|
12,067 |
|
|
|
9,541 |
|
|
|
33,131 |
|
|
|
28,269 |
|
|
Occupancy |
|
4,332 |
|
|
|
3,388 |
|
|
|
12,109 |
|
|
|
10,647 |
|
|
Direct project expenses |
|
9,548 |
|
|
|
10,997 |
|
|
|
30,092 |
|
|
|
36,952 |
|
|
Other operating expenses |
|
7,446 |
|
|
|
8,465 |
|
|
|
21,212 |
|
|
|
20,649 |
|
|
Amortization of acquisition related software and
intangible assets |
|
8,167 |
|
|
|
6,390 |
|
|
|
21,825 |
|
|
|
20,416 |
|
|
Total cost of services |
|
90,572 |
|
|
|
87,079 |
|
|
|
268,153 |
|
|
|
258,975 |
|
|
Selling,
general and administrative expenses |
|
22,240 |
|
|
|
23,131 |
|
|
|
73,400 |
|
|
|
66,245 |
|
|
Total operating expenses |
|
112,812 |
|
|
|
110,210 |
|
|
|
341,553 |
|
|
|
325,220 |
|
|
Operating income |
|
12,861 |
|
|
|
12,650 |
|
|
|
31,166 |
|
|
|
38,910 |
|
|
Interest
expense |
|
(3,109 |
) |
|
|
(2,121 |
) |
|
|
(7,734 |
) |
|
|
(6,313 |
) |
|
Interest income |
|
14 |
|
|
|
105 |
|
|
|
201 |
|
|
|
215 |
|
|
Income before income taxes |
|
9,766 |
|
|
|
10,634 |
|
|
|
23,633 |
|
|
|
32,812 |
|
|
Income taxes |
|
3,394 |
|
|
|
(3,412 |
) |
|
|
9,302 |
|
|
|
4,326 |
|
|
Net income |
$ |
6,372 |
|
|
$ |
14,046 |
|
|
$ |
14,331 |
|
|
$ |
28,486 |
|
|
|
|
|
|
|
|
|
|
|
|
Basic income per common share: |
|
|
|
|
|
|
|
|
Net income per common share -- basic |
$ |
0.08 |
|
|
$ |
0.17 |
|
|
$ |
0.17 |
|
|
$ |
0.34 |
|
|
Diluted income per common share: |
|
|
|
|
|
|
|
|
Net income per common share -- diluted |
$ |
0.07 |
|
|
$ |
0.17 |
|
|
$ |
0.17 |
|
|
$ |
0.33 |
|
|
Weighted average
shares: |
|
|
|
|
|
|
|
|
Basic |
|
|
83,923 |
|
|
|
84,101 |
|
|
|
83,778 |
|
|
|
84,338 |
|
|
Diluted |
|
85,730 |
|
|
|
84,853 |
|
|
|
85,586 |
|
|
|
85,993 |
|
|
|
Note:
Certain amounts in the 2016 periods presented in the accompanying
financial statements have been adjusted to reflect the
retrospective application required by the early adoption of ASU No.
2016-09, Compensation – Stock Compensation (Topic 718):
Improvements to Employee Share-Based Payment Accounting, (“ASU
2016-09”) related to the recognition of excess tax benefits in the
provision for income taxes and the cash flow presentation of
share-based compensation. |
|
HMS HOLDINGS CORP. AND
SUBSIDIARIES |
CONSOLIDATED BALANCE SHEETS |
(in thousands, except share and per share
amounts) |
|
|
|
September 30,
2017 |
|
December 31, 2016 |
|
|
Assets |
(unaudited) |
|
|
|
|
Current assets: |
|
|
|
|
|
Cash and
cash equivalents |
$ |
79,484 |
|
|
$ |
175,999 |
|
|
|
Accounts
receivable, net of allowance of $11,276 and $10,772, |
|
|
|
|
|
at
September 30, 2017 and December 31, 2016, respectively |
|
178,700 |
|
|
|
173,582 |
|
|
|
Prepaid
expenses |
|
14,369 |
|
|
|
13,699 |
|
|
|
Income
tax receivable |
|
6,085 |
|
|
|
3,354 |
|
|
|
Deferred
financing costs, net |
|
1,227 |
|
|
|
- |
|
|
|
Other current assets |
|
289 |
|
|
|
1,001 |
|
|
|
Total
current assets |
|
280,154 |
|
|
|
367,635 |
|
|
|
Property and equipment,
net |
|
95,034 |
|
|
|
92,167 |
|
|
|
Goodwill |
|
485,540 |
|
|
|
379,716 |
|
|
|
Intangible assets,
net |
|
98,090 |
|
|
|
37,797 |
|
|
|
Deferred financing
costs, net |
|
- |
|
|
|
2,790 |
|
|
|
Other
assets |
|
2,403 |
|
|
|
2,650 |
|
|
|
Total assets |
$ |
961,221 |
|
|
$ |
882,755 |
|
|
|
|
|
|
|
|
|
Liabilities and
Shareholders' Equity |
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
Revolving
credit facility |
$ |
240,000 |
|
|
$ |
- |
|
|
|
Accounts
payable, accrued expenses and other liabilities |
|
47,484 |
|
|
|
59,402 |
|
|
|
Estimated
liability for appeals |
|
30,754 |
|
|
|
30,755 |
|
|
|
Total current liabilities |
|
318,238 |
|
|
|
90,157 |
|
|
|
Long-term
liabilities: |
|
|
|
|
|
Revolving
credit facility |
|
- |
|
|
|
197,796 |
|
|
|
Net
deferred tax liabilities |
|
41,441 |
|
|
|
22,717 |
|
|
|
Deferred
rent |
|
4,883 |
|
|
|
5,427 |
|
|
|
Other
liabilities |
|
9,275 |
|
|
|
10,048 |
|
|
|
Total long-term liabilities |
|
55,599 |
|
|
|
235,988 |
|
|
|
Total liabilities |
|
373,837 |
|
|
|
326,145 |
|
|
|
|
|
|
|
|
|
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; |
|
|
|
|
|
96,492,808 shares issued and 84,078,730 shares outstanding at
September 30, 2017; |
|
|
|
|
|
95,966,852 shares issued and 83,552,774 shares outstanding at
December 31, 2016 |
|
965 |
|
|
|
959 |
|
|
|
Capital in excess of
par value |
|
361,462 |
|
|
|
345,025 |
|
|
|
Retained earnings |
|
340,441 |
|
|
|
326,110 |
|
|
|
Treasury stock, at
cost: 12,414,078 shares at September 30, 2017 and December 31,
2016 |
|
(115,484 |
) |
|
|
(115,484 |
) |
|
|
|
|
|
|
|
|
Total shareholders' equity |
|
587,384 |
|
|
|
556,610 |
|
|
|
|
|
|
|
|
|
Total liabilities and shareholders' equity |
$ |
961,221 |
|
|
$ |
882,755 |
|
|
|
|
|
|
|
|
|
HMS HOLDINGS CORP. AND
SUBSIDIARIES |
CONSOLIDATED STATEMENTS OF CASH
FLOWS |
(in thousands) |
(unaudited) |
|
|
Nine Months Ended
September 30, |
|
|
|
|
|
|
|
2017 |
|
|
|
2016 |
|
|
|
Operating activities: |
|
|
|
|
|
Net income |
$ |
14,331 |
|
|
$ |
28,486 |
|
|
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
|
|
Depreciation and amortization of property and equipment |
|
20,599 |
|
|
|
18,875 |
|
|
|
Amortization of intangible assets |
|
15,947 |
|
|
|
15,101 |
|
|
|
Amortization of deferred financing costs |
|
1,563 |
|
|
|
1,563 |
|
|
|
Stock-based compensation expense |
|
16,761 |
|
|
|
10,747 |
|
|
|
Deferred income taxes |
|
(726 |
) |
|
|
(5,902 |
) |
|
|
(Gain) / Loss on disposal of assets |
|
- |
|
|
|
(970 |
) |
|
|
Change in fair value of contingent consideration |
|
2,450 |
|
|
|
- |
|
|
|
Changes in operating assets and liabilities, net of
acquisition: |
|
|
|
|
|
Accounts receivable |
|
5,630 |
|
|
|
8,534 |
|
|
|
Prepaid expenses |
|
757 |
|
|
|
(1,905 |
) |
|
|
Other current assets |
|
712 |
|
|
|
2,579 |
|
|
|
Other assets |
|
163 |
|
|
|
(38 |
) |
|
|
Income taxes receivable / (payable) |
|
(2,731 |
) |
|
|
(15,368 |
) |
|
|
Accounts payable, accrued expenses and other liabilities |
|
(20,357 |
) |
|
|
(2,584 |
) |
|
|
Estimated liability for appeals |
|
(1 |
) |
|
|
(2,896 |
) |
|
|
Net cash provided by operating
activities |
|
55,098 |
|
|
|
56,222 |
|
|
|
Investing activities: |
|
|
|
|
|
Acquisition of a business, net of cash acquired |
|
(171,174 |
) |
|
|
(20,910 |
) |
|
|
Proceeds from sale of cost basis investment |
|
- |
|
|
|
2,496 |
|
|
|
Purchases of property and equipment |
|
(11,656 |
) |
|
|
(8,796 |
) |
|
|
Investment in capitalized software |
|
(10,664 |
) |
|
|
(4,910 |
) |
|
|
Net cash used in investing
activities |
|
(193,494 |
) |
|
|
(32,120 |
) |
|
|
Financing activities: |
|
|
|
|
|
Proceeds from exercise of stock options |
|
2,580 |
|
|
|
2,940 |
|
|
|
Payments of tax withholdings on behalf of employees for
net-share settlement for stock-based compensation |
|
(2,898 |
) |
|
|
(1,090 |
) |
|
|
Payments on capital lease obligations |
|
(5 |
) |
|
|
(43 |
) |
|
|
Proceeds from revolving credit facility |
|
42,204 |
|
|
|
- |
|
|
|
Net cash provided by financing
activities |
|
41,881 |
|
|
|
1,807 |
|
|
|
Net (decrease) / increase in cash and cash
equivalents |
|
(96,515 |
) |
|
|
25,909 |
|
|
|
Cash and Cash Equivalents |
|
|
|
|
|
Cash and
cash equivalents at beginning of year |
|
175,999 |
|
|
|
145,610 |
|
|
|
Cash and cash equivalents at end of
period |
$ |
79,484 |
|
|
$ |
171,519 |
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow
information: |
|
|
|
|
|
Cash paid for income taxes |
$ |
12,317 |
|
|
$ |
19,478 |
|
|
|
Cash paid for interest |
$ |
5,819 |
|
|
$ |
4,597 |
|
|
|
|
|
|
|
|
|
Supplemental disclosure of non-cash
activities: |
|
|
|
|
|
Change in balance of accrued property and equipment
purchases |
$ |
(414 |
) |
|
$ |
(176 |
) |
|
|
|
|
|
|
|
|
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 table, earnings before interest, taxes,
depreciation and amortization, stock-based compensation expense,
and non-recurring legal fees (adjusted EBITDA) was $34.1 million
for the third quarter of 2017. |
|
|
|
Three months ended September
30, |
|
|
|
|
|
|
|
2017 |
|
|
2016 |
|
|
Net
Income |
|
$ |
6,372 |
|
$ |
14,046 |
|
|
|
|
|
|
|
|
Net interest
expense |
|
|
3,095 |
|
|
2,016 |
|
|
Income taxes |
|
|
3,394 |
|
|
(3,412 |
) |
|
Depreciation and
amortization of property and equipment and intangible assets |
|
|
13,879 |
|
|
11,106 |
|
|
|
|
|
|
|
|
Earnings before
interest, taxes, depreciation and amortization (EBITDA) |
|
|
26,740 |
|
|
23,756 |
|
|
Stock based
compensation expense |
|
|
7,381 |
|
|
2,102 |
|
|
Non-recurring legal
fees |
|
|
— |
|
|
— |
|
|
Adjusted EBITDA |
|
$ |
34,121 |
|
$ |
25,858 |
|
|
|
|
|
|
|
|
As
summarized in the following table, earnings before interest, taxes,
depreciation and amortization, stock-based compensation expense,
and non-recurring legal fees (adjusted EBITDA) was $84.5 million
for the first nine months of 2017. |
|
|
|
|
|
|
|
Nine months ended September
30, |
|
|
|
|
|
|
|
2017 |
|
|
2016 |
Net
Income |
|
|
$ |
14,331 |
|
$ |
28,486 |
|
|
|
|
|
|
Net interest
expense |
|
|
|
7,533 |
|
|
6,098 |
Income taxes |
|
|
|
9,302 |
|
|
4,326 |
Depreciation and
amortization of property and equipment and intangible assets |
|
|
|
36,546 |
|
|
33,976 |
|
|
|
|
|
|
Earnings before
interest, taxes, depreciation and amortization (EBITDA) |
|
|
|
67,712 |
|
$ |
72,886 |
Stock based
compensation expense |
|
|
|
16,761 |
|
|
10,747 |
Non-recurring legal
fees |
|
|
|
— |
|
|
1,563 |
Adjusted EBITDA |
|
|
$ |
84,473 |
|
$ |
85,196 |
|
|
|
|
|
|
Note: Certain amounts in the 2016 periods presented in
the reconciliations have been adjusted to reflect the retrospective
application required by the early adoption of ASU No. 2016-09
related to the recognition of excess tax benefits in the provision
for income taxes and the cash flow presentation of share-based
compensation. |
|
|
|
|
|
|
|
HMS HOLDINGS CORP. AND
SUBSIDIARIES |
(in thousands, except per share
amounts) |
(unaudited) |
|
Reconciliation of Net Income to GAAP EPS (Diluted) and
Adjusted EPS (Diluted) |
|
As
summarized in the following table, diluted earnings per share
adjusted for stock-based compensation expense, non-recurring legal
fees, amortization of acquisition related software and intangible
assets and for the related taxes (adjusted EPS) was $0.19 for the
third quarter of 2017. |
|
|
|
Three months ended September
30, |
|
|
|
|
|
|
|
|
|
|
2017 |
|
|
|
2016 |
|
|
Net
Income |
|
$ |
6,372 |
|
|
$ |
14,046 |
|
|
|
|
|
|
|
|
Stock-based
compensation expense |
|
|
7,381 |
|
|
|
2,102 |
|
|
Non-recurring legal
fees |
|
|
— |
|
|
|
— |
|
|
Amortization of
acquisition related software and intangible assets |
|
|
8,167 |
|
|
|
7,015 |
|
|
Income
tax related to adjustments (1) |
|
|
(5,815 |
) |
|
|
(2,644 |
) |
|
|
|
|
|
|
|
Adjusted net income |
|
$ |
16,105 |
|
|
$ |
20,519 |
|
|
|
|
|
|
|
|
Weighted average common shares, diluted |
|
|
85,730 |
|
|
|
84,853 |
|
|
|
|
|
|
|
|
Diluted GAAP EPS |
|
$ |
0.07 |
|
|
$ |
0.17 |
|
|
Diluted
adjusted EPS |
|
$ |
0.19 |
|
|
$ |
0.24 |
|
|
|
|
|
|
|
|
As
summarized in the following table, diluted earnings per share
adjusted for stock-based compensation expense, non-recurring legal
fees, amortization of acquisition related software and intangible
assets and for the related taxes (adjusted EPS) was $0.45 for the
first nine months of 2017. |
|
|
|
|
Nine months ended September
30, |
|
|
|
|
|
|
|
|
|
|
2017 |
|
|
|
2016 |
|
Net
Income |
|
|
$ |
14,331 |
|
|
$ |
28,486 |
|
|
|
|
|
|
|
Stock-based
compensation expense |
|
|
|
16,761 |
|
|
|
10,747 |
|
Non-recurring legal
fees |
|
|
|
— |
|
|
|
1,563 |
|
Amortization of
acquisition related software and intangible assets |
|
|
|
21,825 |
|
|
|
21,041 |
|
Income
tax related to adjustments (1) |
|
|
|
(14,431 |
) |
|
|
(12,223 |
) |
|
|
|
|
|
|
Adjusted net income |
|
|
$ |
38,486 |
|
|
$ |
49,614 |
|
|
|
|
|
|
|
Weighted average common shares, diluted |
|
|
|
85,586 |
|
|
|
85,993 |
|
|
|
|
|
|
|
Diluted GAAP EPS |
|
|
$ |
0.17 |
|
|
$ |
0.33 |
|
Diluted
adjusted EPS |
|
|
$ |
0.45 |
|
|
$ |
0.58 |
|
|
|
|
|
|
|
1 Tax
effect of adjustments is computed as the pre-tax effect of the
adjustments multiplied by the annual effective tax rate. |
|
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