Delaware | 001-35232 | 94-3351864 |
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification Number) |
1100 Park Place, 4th floor, San Mateo, California 94403 |
(Address of Principal Executive Offices) (Zip Code) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2): | ||
☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Exhibit No. | Description | |
99.1 | Press release issued by WageWorks, Inc. dated August 1, 2017 |
WageWorks, Inc. | ||
Date: August 1, 2017 | By: | /s/ Joseph L. Jackson |
Joseph L. Jackson | ||
Chief Executive Officer and Director | ||
Exhibit No. | Description | |
99.1 | Press release issued by WageWorks, Inc. dated August 1, 2017 |
• | Second quarter 2017 non-GAAP net income of $17.7 million or $0.46 per diluted shares, a 33 percent increase year-over-year |
WAGEWORKS, INC. | ||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||
(in thousands, except per share amount) | ||||||||||||||||
(unaudited) | ||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Revenues: | ||||||||||||||||
Healthcare | $ | 69,988 | $ | 48,070 | $ | 143,984 | $ | 98,440 | ||||||||
Commuter | 18,058 | 17,383 | 36,410 | 34,759 | ||||||||||||
COBRA | 27,744 | 17,879 | 56,041 | 33,285 | ||||||||||||
Other | 4,084 | 4,393 | 8,446 | 8,243 | ||||||||||||
Total revenues | 119,874 | 87,725 | 244,881 | 174,727 | ||||||||||||
Operating expenses: | ||||||||||||||||
Cost of revenues (excluding amortization of internal use software) | 43,401 | 28,411 | 90,605 | 59,671 | ||||||||||||
Technology and development | 14,564 | 11,157 | 29,903 | 20,988 | ||||||||||||
Sales and marketing | 14,782 | 14,385 | 30,843 | 28,305 | ||||||||||||
General and administrative | 22,625 | 17,130 | 43,190 | 31,745 | ||||||||||||
Amortization and change in contingent consideration | 9,689 | 11,695 | 19,222 | 19,140 | ||||||||||||
Employee termination and other charges | 917 | 313 | 1,648 | 313 | ||||||||||||
Total operating expenses | 105,978 | 83,091 | 215,411 | 160,162 | ||||||||||||
Income from operations | 13,896 | 4,634 | 29,470 | 14,565 | ||||||||||||
Other income (expense): | ||||||||||||||||
Interest income | 95 | 97 | 162 | 183 | ||||||||||||
Interest expense | (1,695 | ) | (409 | ) | (3,060 | ) | (814 | ) | ||||||||
Other income (expense) | (5 | ) | 6 | (221 | ) | 2 | ||||||||||
Income before income taxes | 12,291 | 4,328 | 26,351 | 13,936 | ||||||||||||
Income tax benefit (provision) | 6,813 | (1,475 | ) | 3,851 | (5,287 | ) | ||||||||||
Net income | $ | 19,104 | $ | 2,853 | $ | 30,202 | $ | 8,649 | ||||||||
Basic net income per share | $ | 0.51 | $ | 0.08 | $ | 0.81 | $ | 0.24 | ||||||||
Diluted net income per share | $ | 0.49 | $ | 0.08 | $ | 0.78 | $ | 0.23 | ||||||||
Shares used in basic net income per share calculations | 37,419 | 36,361 | 37,209 | 36,139 | ||||||||||||
Shares used in diluted net income per share calculations | 38,613 | 37,195 | 38,514 | 36,862 |
STOCK-BASED COMPENSATION EXPENSE | ||||||||||||||||
Total stock-based compensation expense included in the Condensed Consolidated Statements of Income is as follows: | ||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
(unaudited) | ||||||||||||||||
(in thousands) | ||||||||||||||||
Cost of revenues | $ | 2,007 | $ | 1,818 | $ | 3,730 | $ | 2,968 | ||||||||
Technology and development | 649 | 659 | 1,267 | 1,144 | ||||||||||||
Sales and marketing | 674 | 791 | 1,448 | 1,498 | ||||||||||||
General and administrative | 5,725 | 5,583 | 10,579 | 9,232 | ||||||||||||
Total | $ | 9,055 | $ | 8,851 | $ | 17,024 | $ | 14,842 |
WAGEWORKS, INC. | ||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
(in thousands, except per share amount) | ||||||||
June 30, 2017 | December 31, 2016 | |||||||
(unaudited) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 774,766 | $ | 678,300 | ||||
Restricted cash | 332 | 332 | ||||||
Accounts receivable, net | 119,102 | 92,888 | ||||||
Prepaid expenses and other current assets | 34,338 | 19,422 | ||||||
Total current assets | 928,538 | 790,942 | ||||||
Property and equipment, net | 63,446 | 56,902 | ||||||
Goodwill | 297,409 | 297,409 | ||||||
Acquired intangible assets, net | 163,597 | 176,489 | ||||||
Deferred tax assets | 16,539 | 16,309 | ||||||
Other assets | 4,781 | 5,300 | ||||||
Total assets | $ | 1,474,310 | $ | 1,343,351 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable and accrued expenses | $ | 101,669 | $ | 72,966 | ||||
Customer obligations | 528,114 | 603,842 | ||||||
Other current liabilities | 198 | 467 | ||||||
Total current liabilities | 629,981 | 677,275 | ||||||
Long-term debt | 244,621 | 248,848 | ||||||
Other non-current liabilities | 10,093 | 9,131 | ||||||
Total liabilities | 884,695 | 935,254 | ||||||
Stockholders' Equity: | ||||||||
Common stock, par value $0.001 per share (authorized 1,000,000 shares; 40,039 shares issued and 39,694 shares outstanding at June 30, 2017 and 37,247 shares issued and 36,902 shares outstanding at December 31, 2016) | 40 | 37 | ||||||
Additional paid-in capital | 554,543 | 403,459 | ||||||
Treasury stock at cost (345 shares at June 30, 2017 and December 31, 2016) | (14,374 | ) | (14,374 | ) | ||||
Retained earnings | 49,406 | 18,975 | ||||||
Total stockholders’ equity | 589,615 | 408,097 | ||||||
Total liabilities and stockholders’ equity | $ | 1,474,310 | $ | 1,343,351 |
WAGEWORKS, INC. | ||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
(in thousands) | ||||||||
(unaudited) | ||||||||
Six Months Ended June 30, | ||||||||
2017 | 2016 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 30,202 | $ | 8,649 | ||||
Adjustments to reconcile net income to net cash (used in) provided by operating activities: | ||||||||
Depreciation | 5,069 | 3,813 | ||||||
Amortization and change in contingent consideration | 19,222 | 19,042 | ||||||
Amortization of debt issuance costs | 171 | — | ||||||
Stock-based compensation expense | 17,024 | 14,842 | ||||||
Loss on disposal of fixed assets | 91 | 199 | ||||||
Provision for doubtful accounts | 4,891 | 996 | ||||||
Excess tax benefits related to stock-based compensation arrangements | — | (5,287 | ) | |||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | (31,105 | ) | (22,704 | ) | ||||
Prepaid expenses and other current assets | (14,626 | ) | 302 | |||||
Other assets | 520 | 172 | ||||||
Accounts payable and accrued expenses (1) | 28,120 | 3,784 | ||||||
Customer obligations | (75,728 | ) | 67,332 | |||||
Other liabilities | 691 | 1,136 | ||||||
Net cash (used in) provided by operating activities | (15,458 | ) | 92,276 | |||||
Cash flows from investing activities: | ||||||||
Purchases of property and equipment | (17,534 | ) | (10,430 | ) | ||||
Purchases of intangible assets | (397 | ) | (14,259 | ) | ||||
Net cash used in investing activities | (17,931 | ) | (24,689 | ) | ||||
Cash flows from financing activities: | ||||||||
Proceeds from public stock offering, net of underwriting discounts and commissions and other costs | 131,177 | — | ||||||
Proceeds from exercise of common stock options | 10,002 | 9,665 | ||||||
Proceeds from issuance of common stock under Employee Stock Purchase Plan | 1,511 | 1,192 | ||||||
Payments of debt issuance costs | (1,898 | ) | — | |||||
Payments of debt principal | (2,500 | ) | — | |||||
Payments of contingent consideration | — | (653 | ) | |||||
Payment for treasury stock acquired | — | (9,371 | ) | |||||
Taxes paid related to net share settlement of stock-based compensation arrangements (1) | (8,437 | ) | (5,632 | ) | ||||
Excess tax benefits related to stock-based compensation arrangements | — | 5,287 | ||||||
Net cash provided by financing activities | 129,855 | 488 | ||||||
Net increase in cash and cash equivalents | 96,466 | 68,075 | ||||||
Cash and cash equivalents at beginning of period | 678,300 | 500,918 | ||||||
Cash and cash equivalents at end of period | $ | 774,766 | $ | 568,993 |
WAGEWORKS, INC. | ||||||||||||||||
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES | ||||||||||||||||
(in millions, except for percentage and per share data) | ||||||||||||||||
(unaudited) | ||||||||||||||||
The following tables detail the reconciliation of GAAP financial measures to non-GAAP financial measures included in this release: | ||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Operating income: | ||||||||||||||||
GAAP income from operations | $ | 13.9 | $ | 4.6 | $ | 29.5 | $ | 14.6 | ||||||||
Stock-based compensation expense | 9.1 | 8.8 | 17.0 | 14.8 | ||||||||||||
Amortization of acquired intangibles | 6.5 | 8.6 | 13.0 | 12.9 | ||||||||||||
Employer paid taxes for selling stockholders | 0.4 | — | 0.4 | — | ||||||||||||
Employee termination and other charges | 0.9 | 0.3 | 1.6 | 0.3 | ||||||||||||
Non-GAAP income from operations | $ | 30.8 | $ | 22.3 | $ | 61.5 | $ | 42.6 | ||||||||
Non-GAAP income from operations as a percentage of total revenue | 25.7 | % | 25.4 | % | 25.1 | % | 24.4 | % | ||||||||
Net income: | ||||||||||||||||
GAAP net income | $ | 19.1 | $ | 2.9 | $ | 30.2 | $ | 8.7 | ||||||||
Stock-based compensation expense | 9.1 | 8.8 | 17.0 | 14.8 | ||||||||||||
Amortization of acquired intangibles | 6.5 | 8.6 | 13.0 | 12.9 | ||||||||||||
Employer paid taxes for selling stockholders | 0.4 | — | 0.4 | — | ||||||||||||
Employee termination and other charges | 0.9 | 0.3 | 1.6 | 0.3 | ||||||||||||
Tax effect of above adjustments * | (18.3 | ) | (7.3 | ) | (27.0 | ) | (11.5 | ) | ||||||||
Non-GAAP net income | $ | 17.7 | $ | 13.3 | $ | 35.2 | $ | 25.2 | ||||||||
Weighted-average shares outstanding used in computing GAAP and Non-GAAP per share amounts (diluted) | 38.6 | 37.2 | 38.5 | 36.9 | ||||||||||||
Non-GAAP diluted net income per share | $ | 0.46 | $ | 0.36 | $ | 0.91 | $ | 0.68 | ||||||||
* Tax effect adjustments assume a 40% tax rate plus stock excess tax benefits recorded in income tax benefit (provision). | ||||||||||||||||
Reconciliation of GAAP net income to Non-GAAP Adjusted EBITDA: | ||||||||||||||||
GAAP net income | $ | 19.1 | $ | 2.9 | $ | 30.2 | $ | 8.7 | ||||||||
Interest income | (0.1 | ) | (0.1 | ) | (0.2 | ) | (0.2 | ) | ||||||||
Interest expense | 1.7 | 0.4 | 3.1 | 0.8 | ||||||||||||
Income tax (benefit) provision | (6.8 | ) | 1.5 | (3.9 | ) | 5.3 | ||||||||||
Depreciation | 2.6 | 2.0 | 5.1 | 3.8 | ||||||||||||
Amortization and change in contingent consideration | 9.7 | 11.7 | 19.2 | 19.1 | ||||||||||||
Stock-based compensation expense | 9.1 | 8.8 | 17.0 | 14.8 | ||||||||||||
Employer paid taxes for selling stockholders | 0.4 | — | 0.4 | — | ||||||||||||
Employee termination and other charges | 0.9 | 0.3 | 1.6 | 0.3 | ||||||||||||
Adjusted EBITDA | $ | 36.6 | $ | 27.5 | $ | 72.5 | $ | 52.6 |