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 |
WageWorks, Inc. | ||
Date: November 8, 2017 | By: | /s/ Joseph L. Jackson |
Joseph L. Jackson | ||
Chief Executive Officer and Director | ||
Exhibit No. | Description | |
99.1 |
• | Third quarter 2017 non-GAAP net income of $18.0 million or $0.45 per diluted shares, a 43 percent increase year-over-year |
WAGEWORKS, INC. | ||||||||||||||||
CONDENSED 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 | |||||||||||||
Revenues: | ||||||||||||||||
Healthcare | $ | 66,203 | $ | 48,478 | $ | 210,187 | $ | 146,918 | ||||||||
Commuter | 17,966 | 17,580 | 54,376 | 52,339 | ||||||||||||
COBRA | 27,540 | 18,670 | 83,581 | 51,955 | ||||||||||||
Other | 4,037 | 4,196 | 12,483 | 12,439 | ||||||||||||
Total revenues | 115,746 | 88,924 | 360,627 | 263,651 | ||||||||||||
Operating expenses: | ||||||||||||||||
Cost of revenues (excluding amortization of internal use software) | 38,805 | 30,566 | 129,410 | 90,237 | ||||||||||||
Technology and development | 13,949 | 11,668 | 43,852 | 32,656 | ||||||||||||
Sales and marketing | 16,401 | 14,012 | 47,244 | 42,317 | ||||||||||||
General and administrative | 20,220 | 16,130 | 63,410 | 47,875 | ||||||||||||
Amortization and change in contingent consideration | 9,698 | 6,944 | 28,920 | 26,084 | ||||||||||||
Employee termination and other charges | (148 | ) | 162 | 1,500 | 475 | |||||||||||
Total operating expenses | 98,925 | 79,482 | 314,336 | 239,644 | ||||||||||||
Income from operations | 16,821 | 9,442 | 46,291 | 24,007 | ||||||||||||
Other income (expense): | ||||||||||||||||
Interest income | 340 | 117 | 502 | 300 | ||||||||||||
Interest expense | (1,987 | ) | (465 | ) | (5,047 | ) | (1,279 | ) | ||||||||
Other income (expense) | (25 | ) | 22 | (246 | ) | 24 | ||||||||||
Income before income taxes | 15,149 | 9,116 | 41,500 | 23,052 | ||||||||||||
Income tax provision | (5,464 | ) | (3,222 | ) | (1,613 | ) | (8,509 | ) | ||||||||
Net income | $ | 9,685 | $ | 5,894 | $ | 39,887 | $ | 14,543 | ||||||||
Basic net income per share | $ | 0.24 | $ | 0.16 | $ | 1.05 | $ | 0.40 | ||||||||
Diluted net income per share | $ | 0.24 | $ | 0.16 | $ | 1.02 | $ | 0.39 | ||||||||
Shares used in basic net income per share calculations | 39,641 | 36,605 | 38,028 | 36,312 | ||||||||||||
Shares used in diluted net income per share calculations | 40,264 | 37,454 | 39,106 | 37,078 |
STOCK-BASED COMPENSATION EXPENSE | ||||||||||||||||
(in thousands) (unaudited) | ||||||||||||||||
Total stock-based compensation expense included in the Condensed Consolidated Statements of Income is as follows: | ||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Cost of revenues | $ | 1,824 | $ | 1,581 | $ | 5,554 | $ | 4,549 | ||||||||
Technology and development | 527 | 671 | 1,794 | 1,815 | ||||||||||||
Sales and marketing | 719 | 789 | 2,166 | 2,287 | ||||||||||||
General and administrative | 5,002 | 4,490 | 15,582 | 13,722 | ||||||||||||
Total | $ | 8,072 | $ | 7,531 | $ | 25,096 | $ | 22,373 |
WAGEWORKS, INC. | ||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
(in thousands, except per share amount) | ||||||||
September 30, 2017 | December 31, 2016 | |||||||
(unaudited) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 798,266 | $ | 678,300 | ||||
Restricted cash | 332 | 332 | ||||||
Short-term investments | 94,087 | — | ||||||
Accounts receivable, net | 183,237 | 92,888 | ||||||
Prepaid expenses and other current assets | 21,410 | 19,422 | ||||||
Total current assets | 1,097,332 | 790,942 | ||||||
Property and equipment, net | 69,963 | 56,902 | ||||||
Goodwill | 297,409 | 297,409 | ||||||
Acquired intangible assets, net | 161,281 | 176,489 | ||||||
Deferred tax assets | 16,562 | 16,309 | ||||||
Other assets | 7,009 | 5,300 | ||||||
Total assets | $ | 1,649,556 | $ | 1,343,351 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable and accrued expenses | $ | 90,961 | $ | 72,966 | ||||
Customer obligations | 702,432 | 603,842 | ||||||
Other current liabilities | 223 | 467 | ||||||
Total current liabilities | 793,616 | 677,275 | ||||||
Long-term debt | 244,791 | 248,848 | ||||||
Other non-current liabilities | 10,468 | 9,131 | ||||||
Total liabilities | 1,048,875 | 935,254 | ||||||
Stockholders' Equity: | ||||||||
Common stock, par value $0.001 per share (authorized 1,000,000 shares; 40,095 shares issued and 39,616 shares outstanding at September 30, 2017 and 37,247 shares issued and 36,902 shares outstanding at December 31, 2016) | 41 | 37 | ||||||
Additional paid-in capital | 563,893 | 403,459 | ||||||
Treasury stock at cost (480 shares at September 30, 2017 and 345 shares at December 31, 2016) | (22,309 | ) | (14,374 | ) | ||||
Accumulated other comprehensive loss | (35 | ) | — | |||||
Retained earnings | 59,091 | 18,975 | ||||||
Total stockholders’ equity | 600,681 | 408,097 | ||||||
Total liabilities and stockholders’ equity | $ | 1,649,556 | $ | 1,343,351 |
WAGEWORKS, INC. | ||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
(in thousands) (unaudited) | ||||||||
Nine Months Ended September 30, | ||||||||
2017 | 2016 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 39,887 | $ | 14,543 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation | 7,941 | 6,202 | ||||||
Amortization and change in contingent consideration | 28,920 | 25,986 | ||||||
Amortization of debt issuance costs | 294 | 111 | ||||||
Stock-based compensation expense | 25,096 | 22,373 | ||||||
Loss on disposal of fixed assets | 98 | 185 | ||||||
Provision for doubtful accounts | 4,299 | 1,238 | ||||||
Deferred taxes | — | (424 | ) | |||||
Other | (99 | ) | — | |||||
Excess tax benefits related to stock-based compensation arrangements | — | (8,824 | ) | |||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | (94,648 | ) | (14,102 | ) | ||||
Prepaid expenses and other current assets | (2,488 | ) | 919 | |||||
Other assets | (1,709 | ) | (50 | ) | ||||
Accounts payable and accrued expenses (1) | 14,615 | 6,076 | ||||||
Customer obligations | 98,590 | 148,495 | ||||||
Other liabilities | 1,093 | (688 | ) | |||||
Net cash provided by operating activities | 121,889 | 202,040 | ||||||
Cash flows from investing activities: | ||||||||
Purchases of property and equipment | (28,489 | ) | (20,529 | ) | ||||
Purchases of short-term investments | (99,445 | ) | — | |||||
Proceeds from sales of short-term investments | 5,398 | — | ||||||
Purchases of intangible assets | (2,107 | ) | (20,777 | ) | ||||
Net cash used in investing activities | (124,643 | ) | (41,306 | ) | ||||
Cash flows from financing activities: | ||||||||
Proceeds from public stock offering, net of underwriting discounts, commissions and other costs | 130,832 | — | ||||||
Proceeds from exercise of common stock options | 10,834 | 10,705 | ||||||
Proceeds from issuance of common stock under Employee Stock Purchase Plan | 2,172 | 1,672 | ||||||
Payments of debt issuance costs | (1,851 | ) | (200 | ) | ||||
Payments of debt principal | (2,500 | ) | — | |||||
Payments of contingent consideration | — | (653 | ) | |||||
Payment for treasury stock acquired | (7,935 | ) | (9,371 | ) | ||||
Taxes paid related to net share settlement of stock-based compensation arrangements(1) | (8,832 | ) | (5,995 | ) | ||||
Excess tax benefits related to stock-based compensation arrangements | — | 8,824 | ||||||
Net cash provided by financing activities | 122,720 | 4,982 | ||||||
Net increase in cash and cash equivalents | 119,966 | 165,716 | ||||||
Cash and cash equivalents at beginning of period | 678,300 | 500,918 | ||||||
Cash and cash equivalents at end of period | $ | 798,266 | $ | 666,634 |
WAGEWORKS, INC. | ||||||||||||||||
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES | ||||||||||||||||
(in thousands, 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 September 30, | Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
(1) | (1) | |||||||||||||||
Operating income: | ||||||||||||||||
GAAP income from operations | $ | 16,821 | $ | 9,442 | $ | 46,291 | $ | 24,007 | ||||||||
Stock-based compensation expense | 8,072 | 7,531 | 25,096 | 22,373 | ||||||||||||
Amortization of acquired intangibles | 6,376 | 4,105 | 19,375 | 16,967 | ||||||||||||
Employer paid taxes for selling stockholders | — | — | 363 | — | ||||||||||||
Employee termination and other charges | (148 | ) | 162 | 1,500 | 475 | |||||||||||
Non-GAAP income from operations | $ | 31,121 | $ | 21,240 | $ | 92,625 | $ | 63,822 | ||||||||
Non-GAAP income from operations as a percentage of total revenue | 26.9 | % | 23.9 | % | 25.7 | % | 24.2 | % | ||||||||
Net income: | ||||||||||||||||
GAAP net income | $ | 9,685 | $ | 5,894 | $ | 39,887 | $ | 14,543 | ||||||||
Stock-based compensation expense | 8,072 | 7,531 | 25,096 | 22,373 | ||||||||||||
Amortization of acquired intangibles | 6,376 | 4,105 | 19,375 | 16,967 | ||||||||||||
Employer paid taxes for selling stockholders | — | — | 363 | — | ||||||||||||
Employee termination and other charges | (148 | ) | 162 | 1,500 | 475 | |||||||||||
Tax effect of above adjustments * | (6,017 | ) | (5,144 | ) | (33,033 | ) | (16,638 | ) | ||||||||
Non-GAAP net income | $ | 17,968 | $ | 12,548 | $ | 53,188 | $ | 37,720 | ||||||||
Weighted-average shares outstanding used in computing GAAP and Non-GAAP per share amounts (diluted) | 40,264 | 37,454 | 39,106 | 37,078 | ||||||||||||
Non-GAAP diluted net income per share | $ | 0.45 | $ | 0.34 | $ | 1.36 | $ | 1.02 | ||||||||
* 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 | $ | 9,685 | $ | 5,894 | $ | 39,887 | $ | 14,543 | ||||||||
Interest income | (340 | ) | (117 | ) | (502 | ) | (300 | ) | ||||||||
Interest expense | 1,987 | 465 | 5,047 | 1,279 | ||||||||||||
Income tax provision | 5,464 | 3,222 | 1,613 | 8,509 | ||||||||||||
Depreciation | 2,872 | 2,389 | 7,941 | 6,202 | ||||||||||||
Amortization and change in contingent consideration | 9,698 | 6,944 | 28,920 | 26,084 | ||||||||||||
Stock-based compensation expense | 8,072 | 7,531 | 25,096 | 22,373 | ||||||||||||
Employer paid taxes for selling stockholders | — | — | 363 | — | ||||||||||||
Employee termination and other charges | (148 | ) | 162 | 1,500 | 475 | |||||||||||
Adjusted EBITDA | $ | 37,290 | $ | 26,490 | $ | 109,865 | $ | 79,165 |