HMS Holdings Corp. Announces Q4 and Full Year 2012 Results
HMS Holdings Corp. Announces Q4 and Full Year 2012 Results
Full Year Revenue Increased 30.2% y/y to $473.7M
Full Year GAAP EPS of $0.57; Adjusted EPS of $0.86
Q4 Revenue Increased 33.5% y/y to $133.1M
Q4 GAAP EPS of $0.23; Adjusted EPS of $0.27
For the quarter ended December 31, 2012, revenue increased 33.5% to $133.1 million, compared to $99.7 million for the same period a year ago. Net income for the quarter was $20.0 million or $0.23 per diluted common share compared to net income of $11.1 million or $0.13 per diluted common share for the same period a year ago, an increase of 79.6%. Fully diluted GAAP earnings per share (EPS) for the quarter increased 76.9% y/y to $0.23 and adjusted EPS increased 58.8% y/y to $0.27.
For the year ended December 31, 2012, revenue increased 30.2% to $473.7 million, compared to $363.8 million for the same period a year ago. Net income for the year ended December 31, 2012 was $50.5 million or $0.57 per diluted common share, compared to net income of $47.8 million or $0.55 per diluted common share for the same period a year ago, an increase of 5.7%. Fully diluted GAAP EPS for the full year increased 3.6% y/y to $0.57 and adjusted EPS increased 30.3% y/y to $0.86.
"Although 2012 was a challenging year for HMS, not least because of the health insurance industry's struggle to fully implement new claim transaction formats, the Company achieved a revenue increase in excess of 30%, with both acquisitions and organic growth contributing. And importantly, our results demonstrate a steady momentum in all three of our major markets — Medicaid, Medicare and commercial. From a strategic perspective, we enter the post-election year with much better visibility into the future shape of healthcare reform and the role we will play in implementing key provisions of the Affordable Care Act," commented Bill Lucia, President and Chief Executive Officer.
"So we begin 2013 not only with a strong core business, but also with significant early stage opportunities across the company, including implementing our Medicaid RAC contracts; expanding our footprint in the fraud, waste, and abuse and analytics market; and taking our eligibility verification services to the States and their new health insurance exchanges," added Lucia. "These initiatives, together with our leadership in both Medicaid and Medicare, and a steadily growing presence in the commercial market, position us well for delivering sustainable growth in 2013 and for years beyond."
Q4 2012 Conference Call
HMS will report its fourth quarter and full year 2012 financial and operating results at 9:00 a.m. ET on Friday, February 22, 2013. Individuals can access the webcast at http://investor.hms.com/events.cfm or listen to the call at (877) 303-7208. International participants can listen to the call at (224) 357-2389.
The webcast will be archived on the website at http://investor.hms.com/events.cfm. Individuals can listen to the replay at (855) 859-2056. International participants can listen to the replay at (404) 537-3406. The passcode is 94674069. The replay will be available at Noon ET on February 22 through 11:59 p.m. ET on March 1, 2013.
The HMS Form 10-K for the year ended December 31, 2012 will be filed and available on our website at http://investor.hms.com on or about March 1, 2013, and will contain additional information about our results of operations for the fiscal year-to-date. This press release and the interim financial statements herein will be available at http://investor.hms.com for at least a 12-month period. Shareholders and interested investors are welcome to contact Investor Relations at 212-857-5986.
About HMS Holdings Corp.
HMS Holdings Corp., through its subsidiaries, is the nation's leader in coordination of benefits and program integrity services for healthcare payers. HMS's clients include health and human services programs in more than 40 states; commercial programs, including commercial plans, employers, and more than 150 Medicaidmanaged care plans; the Centers for Medicare and Medicaid Services (CMS); and Veterans Administration facilities. As a result of the company's services, clients recovered $3.2 billion in 2012, and saved billions more through the prevention of erroneous payments.
Use of Non-GAAP Financials
This press release includes presentations of earnings before interest, taxes, depreciation and amortization (EBITDA) and adjusted EBITDA. Adjusted EBITDA represents EBITDA adjusted for stock-based compensation expense. EBITDA is a measure commonly used by the capital markets to value enterprises. EBITDA is a non-GAAP financial measure and is reconciled to income before income taxes, which the Company's management believes to be the most comparable generally accepted accounting principles ("GAAP") measure. Adjusted EBITDA results are calculated by adjusting GAAP income before income taxes to exclude the effects of depreciation, amortization of intangible assets, stock-based compensation expense, and net interest expense.
This press release also includes presentations of adjusted EPS. Adjusted EPS represents EPS adjusted for stock-based compensation expense and amortization of intangibles and for the related taxes for these adjustments. Adjusted EPS is a non-GAAP financial measure and is reconciled to EPS, which the Company's management believes to be the most comparable GAAP measure.
The Company uses these non-GAAP financial measures for internal management purposes, when publicly providing guidance on possible future results, and as a means to evaluate period-to-period comparisons. The Company's management believes that these non-GAAP financial measures are a common measure used by investors and analysts to evaluate its performance. 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, income before income taxes 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 expectations or forecasts of future events; they do not relate strictly to historical or current facts. Forward-looking statements can be identified by words such as "anticipates," "estimates," "expects," "projects," "intends," "plans," "believes," "will," "target," "seeks," "forecast" and similar expressions and references to guidance. In particular, these include statements relating to future actions, business plans, objects and prospects, and future operating or financial performance. Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. 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: regulatory actions, budgetary pressures and political influences that could affect the procurement practices and operations of healthcare organizations and agencies, reducing demand for our services; our ability to continue to secure contracts through the competitive bidding process and any related protests and to accurately predict the cost and time to complete such contracts; our ability to retain clients or the loss of one or more major clients; client dissatisfaction or early termination of contracts triggering significant costs or liabilities; the development by competitors of new or superior products or services; the emergence of new competitors, or the development by our clients of in-house capacity to perform the services we offer; all the risks inherent in the development, introduction, and implementation of new products and services; our ability to manage our growth and its demands on our resources and infrastructure; our ability to successfully integrate our acquisitions; our compliance with the covenants and obligations under the terms of our credit facility and our ability to generate sufficient cash to cover our interest and principal payments thereunder; variations in our results of operations; negative results of government reviews, audits or investigations to verify our compliance with contracts and applicable laws and regulations; changing conditions in the healthcare industry which could simplify the payment process and reduce the need for and price of our services; our failure to comply with laws and regulations governing health data or to protect such data from theft and misuse; and, our ability to maintain effective information systems and protect them from damage or interruption. A further description of these and other risks, uncertainties, and related matters can be found in our Annual Report on Form 10-K for the fiscal year ended December 31, 2011, which is available at www.hms.com under the "Investor Relations" tab. Any forward-looking statements made by us in this press release speak only as of the date of this press release. 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. We undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by law.
|HMS HOLDINGS CORP. AND SUBSIDIARIES|
|CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME|
|( in thousands, except per share amounts)|
|Three months ended December 31,||Year ended December 31,|
|Cost of services:|
|Direct project costs||14,699||11,971||55,272||42,517|
|Other operating costs||6,282||4,606||20,593||18,054|
|Amortization of acquisition related software and intangibles||8,104||3,402||32,551||8,450|
|Total cost of services||84,557||62,224||318,910||233,805|
|Selling, general & administrative expenses||11,377||17,218||55,274||49,150|
|Total operating expenses||95,934||79,442||374,184||282,955|
|Other income/(expense), net||30||(82||)||382||632|
|Income before income taxes||33,120||19,618||83,345||80,963|
|Net income and comprehensive income||$||19,986||$||11,131||$||50,516||$||47,785|
|Basic income per common share:|
|Net income per share -basic||$||0.23||$||0.13||$||0.59||$||0.56|
|Weighted average common shares outstanding, basic||86,780||84,619||86,204||84,588|
|Diluted income per share:|
|Net income per share- diluted||$||0.23||$||0.13||$||0.57||$||0.55|
|Weighted average common shares outstanding, diluted||88,596||87,386||88,365||87,444|
|HMS HOLDINGS CORP. AND SUBSIDIARIES|
|CONSOLIDATED BALANCE SHEETS|
|( in thousands, except per share and per share amounts)|
|December 31,||December 31,|
|Cash and cash equivalents||$||135,227||$||97,003|
Accounts receivable, net of allowance for doubtful accounts of $830 and $1,158,
|Prepaid income taxes||-||2,418|
|Current portion of deferred financing costs||3,336||3,689|
|Other current assets||317||5,793|
|Net deferred tax asset||-||2,198|
|Total current assets||306,177||237,588|
|Property and equipment, net||129,327||127,177|
|Intangible assets, net||109,919||132,740|
|Deferred financing costs||5,867||9,203|
|Liabilities and Shareholders' Equity|
|Accounts payable, accrued expenses and other liabilities||$||40,867||$||40,546|
|Acquisition related contingent consideration||588||2,300|
|Current portion of term loan||35,000||17,500|
|Deferred tax liabilities||2,398||-|
|Estimated liability for appeals||21,787||7,380|
|Total current liabilities||100,640||67,726|
|Acquisition related contingent consideration||428||-|
|Deferred tax liabilities||60,805||74,360|
|Total long-term liabilities||362,538||410,368|
|Preferred stock - $.01 par value; 5,000,000 shares authorized; none issued||-||-|
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