UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________
Form 8-K
_____________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event Reported): August 3, 2018
HMS Holdings Corp.
(Exact Name of Registrant as Specified in Charter)
| Delaware | 0-50194 | 11-3656261 |
| (State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification Number) |
| 5615 High Point Drive, Irving, Texas 75038 |
| (Address of Principal Executive Offices) (Zip Code) |
(214) 453-3000
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
| 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: | ||
| [ ] | 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)) | |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company [ ]
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
Item 2.02. Results of Operations and Financial Condition.
On August 3, 2018, HMS Holdings Corp. (the “Company”) issued a press release announcing its financial results for the second quarter and six months ended June 30, 2018. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K. The information contained in this Item 2.02, including Exhibit 99.1 attached hereto, is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, and shall not be incorporated by reference into any Company filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except as shall be expressly set forth by specific reference in such filing. The Company is making reference to non-GAAP financial information in the press release and on the conference call. A reconciliation of the non-GAAP financial measures to the comparable GAAP financial measures is contained in the attached press release.
Item 9.01. Financial Statements and Exhibits.
(d) ExhibitsExhibit No. Description 99.1 Press release of HMS Holdings Corp., dated August 3, 2018
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| HMS HOLDINGS CORP. | ||
| Date: August 3, 2018 | By: | /s/ Jeffrey S. Sherman |
| Jeffrey S. Sherman | ||
| Executive Vice President, Chief Financial Officer and Treasurer | ||
EXHIBIT 99.1
HMS Holdings Corp. Reports Second Quarter 2018 Results
IRVING, Texas, Aug. 03, 2018 (GLOBE NEWSWIRE) -- HMS Holdings Corp. (Nasdaq: HMSY) today announced financial results for the second quarter of 2018. Net loss for the quarter ended June 30, 2018 was ($3.4) million or ($0.04) per diluted share, compared to net income of $6.4 million or $0.07 per diluted share in the first quarter of 2018 and $6.5 million or $0.08 per diluted share in the prior year second quarter. The net loss for the quarter ended June 30, 2018 included an expense of $20.0 million related to the previously announced settlement on June 27, 2018 of litigation in connection with the earn-out portion of the purchase price for an acquisition the Company completed in 2010 (the “Settlement”).
Adjusted EPS in the second quarter of 2018 was $0.25 per diluted share compared to adjusted EPS of $0.22 per diluted share in the first quarter of 2018 and adjusted EPS of $0.16 per diluted share in the prior year second quarter. Adjusted EPS in the second quarter of 2018 includes an adjustment for the non-recurring Settlement expense. Adjusted EPS in the first quarter of 2018 included a net benefit of $0.05 per diluted share related to the reversal of the Company’s reserve liability for open or pending Medicare RAC appeals following expiration of the original Medicare RAC contract on January 31, 2018 (the “Reserve Release”).
Total revenue in the second quarter of 2018 was $146.8 million, compared to total revenue of $141.4 million in the first quarter of 2018 (which included the $8.4 million Reserve Release) and $133.3 million in the prior year second quarter. Adjusted EBITDA in the second quarter of 2018 was $40.0 million, compared to $34.9 million in the first quarter of 2018 and $30.5 million in the prior year second quarter. Adjusted EBITDA in the second quarter of 2018 includes an adjustment for the non-recurring Settlement expense. Adjusted EBITDA in the first quarter of 2018 included a net benefit of $6.3 million related to the Reserve Release.
"Over the past 18 months we have made investments in technology, undertaken extensive work to revamp new business implementations, continued to put in place new process improvement and cost containment initiatives across the enterprise, and heightened our focus on internal innovation. We have also expanded the solution set we offer payers, which now includes care management and consumer engagement services, and focused on exceptional execution. The success of these internal and external efforts is reflected in our second quarter financial results,” said Bill Lucia, Chairman and CEO. “We are extremely pleased with both our top line and bottom line performance, highlighted by record quarterly commercial revenue and a strong quarter for Eliza solutions.”
Commercial revenue increased 12.1% sequentially to a record $80.5 million in the second quarter of 2018, compared to $71.8 million in the first quarter of 2018 and $69.4 million in the prior year second quarter. Commercial revenue in the second quarter of 2018 included $13.7 million from Eliza, an increase of 41.2% compared to $9.7 million in the first quarter of 2018 and $7.6 million in the prior year second quarter following the close of the Eliza acquisition in April 2017. For comparison purposes, Eliza revenue for the full second quarter of 2017, including the portion of April 2017 prior to the acquisition, was approximately $10 million.
State government revenue increased 7.7% sequentially to $58.8 million in the second quarter of 2018, compared to $54.6 million in the first quarter of 2018 and $57.9 million in the prior year second quarter. Federal (including Medicare RAC) and other revenue was $7.5 million in the second quarter of 2018, compared to $15.0 million in the first quarter of 2018 (which included the $8.4 million Reserve Release) and $6.0 million in the prior year second quarter.
Coordination of benefits (COB) revenue was $100.8 million in the second quarter of 2018, compared to $91.7 million in the first quarter of 2018 and $98.5 million in the prior year second quarter. COB accounted for 68.7% of total revenue in the second quarter, compared to 64.9% in the first quarter of 2018 and 73.9% in the prior year second quarter.
Revenue from Analytical Services, which include Payment Integrity (PI), care management and consumer engagement solutions and Medicare RAC, was $46.0 million in the second quarter of 2018, compared to $49.7 million in the first quarter of 2018 (which included the $8.4 million Reserve Release) and $34.8 million in the prior year second quarter. PI revenue was $29.5 million in the second quarter of 2018, compared to $28.7 million in the first quarter of 2018 and $26.9 million in the prior year second quarter. Care management and consumer engagement revenue was $14.8 million in the second quarter of 2018, including Eliza revenue of $13.7 million and Essette revenue of $1.1 million, compared to $11.0 million in the first quarter of 2018 and $8.6 million in the prior year second quarter. Medicare RAC revenue was $1.7 million in the second quarter of 2018, compared to $10.0 million in the first quarter of 2018 (which included the $8.4 million Reserve Release) and ($0.7) million in the prior year second quarter.
Capital expenditures in the second quarter of 2018 were $6.8 million, compared to $5.8 million in the first quarter of 2018 and $7.0 million in the prior year second quarter.
“Based on our strong financial performance through the first half of the year, we are raising our full year 2018 revenue guidance to a range of $575 - $585 million and our adjusted EBITDA guidance to a range of $143 - $148 million. Both take into account the impact of the $8.4 million Reserve Release in Q1 2018 and the $20 million Settlement in Q2 2018,” said Jeff Sherman, CFO. “Our second quarter results and revised full year outlook clearly demonstrate the leveragability inherent in our business model, as adjusted EBITDA of $75 million year-to-date is nearly 50% ahead of the first half of 2017.”
Outlook for FY 2018 – As Revised
*Reflects impact of the $8.4 million Reserve Release in Q1 2018 and the $20 million Settlement in Q2 2018
For additional information about the Company’s second quarter 2018 financial results, see the Q2 2018 Investor Presentation available on the HMS Investor Relations Website at http://investor.hms.com/events-and-presentations.
Webcast and Conference Call Information
HMS will report its preliminary second quarter 2018 financial and operating results via webcast at 7:30 AM CT / 8:30 AM ET on August 3, 2018. 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-and-presentations. The webcast will also be archived and available for replay beginning at approximately 11:00 AM CT / 12:00 PM ET on August 3, 2018 at http://investor.hms.com/events-and-presentations. 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, care management, consumer engagement and risk stratification solutions to help healthcare payers improve financial performance and clinical outcomes. Together our various services help customers recover improper payments; prevent future improper payments; reduce fraud, waste and abuse; better manage the care their members receive; engage healthcare consumers to improve clinical outcomes and increase retention; and achieve regulatory compliance. The Company serves commercial health plans, state government agencies, federal programs, at-risk providers, pharmacy benefit managers, employers and other healthcare payers and sponsors. The Company also serves as a subcontractor for certain business outsourcing and technology firms.
Trademarks
HMS, Eliza, Essette 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 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 June 30, 2018 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 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, and future operating or financial performance, including our updated guidance for full year 2018. 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 relating to 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 or 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; our 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 and retaining 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, obtain financing, maintain liquidity or use credit; unexpected changes in tax laws, regulations or guidance and 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 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 of 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.
| Investor Contact: | Media Contact: | |
| Dennis Oakes | Lacey Hautzinger | |
| SVP, Investor Relations | Sr. Director, External Communications | |
| dennis.oakes@hms.com | lacey.hautzinger@hms.com | |
| 212-857-5786 | 469-284-7240 | |
| HMS HOLDINGS CORP. AND SUBSIDIARIES | |||||||||||||||||
| CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||||
| (in thousands, except per share amounts) | |||||||||||||||||
| (unaudited) | |||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||
| 2018 | 2017 | 2018 | 2017 | ||||||||||||||
| Revenue | $ | 146,791 | $ | 133,313 | $ | 288,216 | $ | 247,046 | |||||||||
| Cost of services: | |||||||||||||||||
| Compensation | 55,188 | 51,853 | 111,267 | 100,773 | |||||||||||||
| Information technology | 14,240 | 11,281 | 26,503 | 21,064 | |||||||||||||
| Occupancy | 4,014 | 4,230 | 8,397 | 7,777 | |||||||||||||
| Direct project expenses | 10,908 | 10,101 | 20,991 | 20,544 | |||||||||||||
| Other operating expenses | 7,051 | 6,562 | 13,616 | 13,765 | |||||||||||||
| Amortization of acquisition related software and intangible assets | 9,621 | 7,372 | 17,753 | 13,658 | |||||||||||||
| Total cost of services | 101,022 | 91,399 | 198,527 | 177,581 | |||||||||||||
| Selling, general and administrative expenses | 26,532 | 27,553 | 58,530 | 51,161 | |||||||||||||
| Settlement expense | 20,000 | - | 20,000 | - | |||||||||||||
| Total operating expenses | 147,554 | 118,952 | 277,057 | 228,742 | |||||||||||||
| Operating (loss)/income | (763 | ) | 14,361 | 11,159 | 18,304 | ||||||||||||
| Interest expense | (3,034 | ) | (2,339 | ) | (5,682 | ) | (4,625 | ) | |||||||||
| Interest income | 188 | 33 | 308 | 188 | |||||||||||||
| (Loss)/income before income taxes | (3,609 | ) | 12,055 | 5,785 | 13,867 | ||||||||||||
| Income taxes | (242 | ) | 5,538 | 2,761 | 5,908 | ||||||||||||
| Net (loss)/income | $ | (3,367 | ) | $ | 6,517 | $ | 3,024 | $ | 7,959 | ||||||||
| Basic income per common share: | |||||||||||||||||
| Net (loss)/income per common share -- basic | $ | (0.04 | ) | $ | 0.08 | $ | 0.04 | $ | 0.10 | ||||||||
| Diluted income per common share: | |||||||||||||||||
| Net (loss)/income per common share -- diluted | $ | (0.04 | ) | $ | 0.08 | $ | 0.04 | $ | 0.09 | ||||||||
| Weighted average shares: | |||||||||||||||||
| Basic | 83,231 | 83,921 | 83,222 | 83,708 | |||||||||||||
| Diluted | 83,231 | 85,826 | 84,837 | 85,534 | |||||||||||||
| HMS HOLDINGS CORP. AND SUBSIDIARIES | ||||||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||||||
| (in thousands, except share and per share amounts) | ||||||||||||
| June 30, 2018 | December 31, 2017 | |||||||||||
| Assets | (unaudited) | |||||||||||
| Current assets: | ||||||||||||
| Cash and cash equivalents | $ | 88,127 | $ | 83,313 | ||||||||
| Accounts receivable, net of allowance of $14,322 and $14,799, | ||||||||||||
| at June 30, 2018 and December 31, 2017, respectively | 193,114 | 189,460 | ||||||||||
| Prepaid expenses | 16,526 | 16,589 | ||||||||||
| Income tax receivable | 7,216 | 1,892 | ||||||||||
| Deferred financing costs, net | 564 | 564 | ||||||||||
| Other current assets | 266 | 836 | ||||||||||
| Total current assets | 305,813 | 292,654 | ||||||||||
| Property and equipment, net | 93,369 | 98,581 | ||||||||||
| Goodwill | 487,617 | 487,617 | ||||||||||
| Intangible assets, net | 78,708 | 91,482 | ||||||||||
| Deferred financing costs, net | 1,955 | 2,237 | ||||||||||
| Other assets | 2,618 | 2,589 | ||||||||||
| Total assets | $ | 970,080 | $ | 975,160 | ||||||||
| Liabilities and Shareholders' Equity | ||||||||||||
| Current liabilities: | ||||||||||||
| Accounts payable, accrued expenses and other liabilities | $ | 56,687 | $ | 61,900 | ||||||||
| Estimated liability for appeals | 22,252 | 30,787 | ||||||||||
| Total current liabilities | 78,939 | 92,687 | ||||||||||
| Long-term liabilities: | ||||||||||||
| Revolving credit facility | 240,000 | 240,000 | ||||||||||
| Net deferred tax liabilities | 18,089 | 21,989 | ||||||||||
| Deferred rent | 4,539 | 4,852 | ||||||||||
| Other liabilities | 9,874 | 9,403 | ||||||||||
| Total long-term liabilities | 272,502 | 276,244 | ||||||||||
| Total liabilities | 351,441 | 368,931 | ||||||||||
| Commitments and contingencies | ||||||||||||
| 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; | ||||||||||||
| 97,051,108 shares issued and 83,387,914 shares outstanding at June 30, 2018; | ||||||||||||
| 96,536,251 shares issued and 83,256,858 shares outstanding at December 31, 2017 | 970 | 965 | ||||||||||
| Capital in excess of par value | 382,630 | 368,721 | ||||||||||
| Retained earnings | 370,615 | 366,164 | ||||||||||
| Treasury stock, at cost: 13,663,194 shares at June 30, 2018 | ||||||||||||
| and 13,279,393 shares at December 31, 2017 | (135,576 | ) | (129,621 | ) | ||||||||
| Total shareholders' equity | 618,639 | 606,229 | ||||||||||
| Total liabilities and shareholders' equity | $ | 970,080 | $ | 975,160 | ||||||||
| HMS HOLDINGS CORP. AND SUBSIDIARIES | ||||||||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||||
| (in thousands) | ||||||||||||||
| (unaudited) | ||||||||||||||
| Six Months Ended June 30, | ||||||||||||||
| 2018 | 2017 | |||||||||||||
| Operating activities: | ||||||||||||||
| Net income | $ | 3,024 | $ | 7,959 | ||||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||
| Depreciation and amortization of property, equipment and software | 16,758 | 12,927 | ||||||||||||
| Amortization of intangible assets | 12,774 | 9,740 | ||||||||||||
| Amortization of deferred financing costs | 282 | 1,042 | ||||||||||||
| Stock-based compensation expense | 14,208 | 9,380 | ||||||||||||
| Deferred income taxes | (3,900 | ) | 1,265 | |||||||||||
| Change in fair value of contingent consideration | - | 500 | ||||||||||||
| Release of estimated liability for appeals | (8,436 | ) | - | |||||||||||
| Changes in operating assets and liabilities: | ||||||||||||||
| Accounts receivable | (3,654 | ) | (9,039 | ) | ||||||||||
| Prepaid expenses | 63 | 149 | ||||||||||||
| Other current assets | 570 | 526 | ||||||||||||
| Other assets | (29 | ) | 149 | |||||||||||
| Income taxes receivable / (payable) | (5,324 | ) | (6,180 | ) | ||||||||||
| Accounts payable, accrued expenses and other liabilities | (2,546 | ) | (8,196 | ) | ||||||||||
| Estimated liability for appeals | (99 | ) | 518 | |||||||||||
| Net cash provided by operating activities | 23,691 | 20,740 | ||||||||||||
| Investing activities: | ||||||||||||||
| Acquisition of a business, net of cash acquired | - | (171,174 | ) | |||||||||||
| Purchases of property and equipment | (2,455 | ) | (8,881 | ) | ||||||||||
| Investment in capitalized software | (10,173 | ) | (6,626 | ) | ||||||||||
| Net cash used in investing activities | (12,628 | ) | (186,681 | ) | ||||||||||
| Financing activities: | ||||||||||||||
| Proceeds from exercise of stock options | 2,390 | 1,986 | ||||||||||||
| Payments of tax withholdings on behalf of employees for net-share settlement for stock-based compensation | (2,684 | ) | (2,874 | ) | ||||||||||
| Payments on capital lease obligations | - | (5 | ) | |||||||||||
| Proceeds from credit facility | - | 42,204 | ||||||||||||
| Purchases of treasury stock | (5,955 | ) | - | |||||||||||
| Net cash (used in)/provided by financing activities | (6,249 | ) | 41,311 | |||||||||||
| Net increase (decrease) in cash and cash equivalents | 4,814 | (124,630 | ) | |||||||||||
| Cash and Cash Equivalents | ||||||||||||||
| Cash and cash equivalents at beginning of year | 83,313 | 175,999 | ||||||||||||
| Cash and cash equivalents at end of period | $ | 88,127 | $ | 51,369 | ||||||||||
| Supplemental disclosure of cash flow information: | ||||||||||||||
| Cash paid for income taxes | $ | 11,472 | $ | 10,656 | ||||||||||
| Cash paid for interest | $ | 4,916 | $ | 3,451 | ||||||||||
| Supplemental disclosure of non-cash activities: | ||||||||||||||
| Change in balance of accrued property and equipment purchases | $ | 1,082 | $ | (1,313 | ) | |||||||||
HMS HOLDINGS CORP. AND SUBSIDIARIES
(in thousands)
(unaudited)
Reconciliation of Net (Loss)/Income to EBITDA and Adjusted EBITDA
As summarized in the following table, earnings before interest, taxes, depreciation and amortization, stock-based compensation expense and settlement expense (adjusted EBITDA) was $40.0 million for the second quarter of 2018.
Three Months Ended | ||||||||||
| June 30, 2018 | March 31, 2018 | June 30, 2017 | ||||||||
| Net (Loss)/income | $ | (3,367 | ) | $ | 6,391 | $ | 6,517 | |||
| Net interest expense | 2,846 | 2,528 | 2,306 | |||||||
| Income taxes | (242 | ) | 3,003 | 5,538 | ||||||
| Depreciation and amortization of property and equipment and intangible assets | 16,066 | 13,466 | 12,105 | |||||||
| Earnings before interest, taxes, depreciation and amortization (EBITDA) | 15,303 | 25,388 | 26,466 | |||||||
| Stock based compensation expense | 4,714 | 9,494 | 3,994 | |||||||
| Settlement expense | 20,000 | - | - | |||||||
| Adjusted EBITDA | $ | 40,017 | $ | 34,882 | $ | 30,460 | ||||
As summarized in the following table, earnings before interest, taxes, depreciation and amortization, stock-based compensation expense and settlement expense (adjusted EBITDA) was $74.9 million for the first half of 2018.
Six Months Ended | |||||||
| June 30, 2018 | June 30, 2017 | ||||||
| Net Income | $ | 3,024 | $ | 7,959 | |||
| Net interest expense | 5,374 | 4,437 | |||||
| Income taxes | 2,761 | 5,908 | |||||
| Depreciation and amortization of property and equipment and intangible assets | 29,532 | 22,667 | |||||
| Earnings before interest, taxes, depreciation and amortization (EBITDA) | 40,691 | 40,971 | |||||
| Stock based compensation expense | 14,208 | 9,380 | |||||
| Settlement expense | 20,000 | - | |||||
| Adjusted EBITDA | $ | 74,899 | $ | 50,351 | |||
HMS HOLDINGS CORP. AND SUBSIDIARIES
(in thousands, except per share amounts)
(unaudited)
Reconciliation of Net (Loss)/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, settlement expense, amortization of acquisition related software and intangible assets and for the related taxes (adjusted EPS) was $0.25 for the second quarter of 2018.
Three Months Ended | ||||||||||||
| June 30, 2018 | March 31, 2018 | June 30, 2017 | ||||||||||
| Net (Loss)/income | $ | (3,367 | ) | $ | 6,391 | $ | 6,517 | |||||
| Stock-based compensation expense | 4,714 | 9,494 | 3,994 | |||||||||
| Settlement expense | 20,000 | - | - | |||||||||
| Amortization of acquisition related software and intangible assets | 9,621 | 8,132 | 7,372 | |||||||||
| Income tax related to adjustments (1) | (10,404 | ) | (5,505 | ) | (4,319 | ) | ||||||
| Adjusted net income | $ | 20,564 | $ | 18,512 | $ | 13,564 | ||||||
| Weighted average common shares, basic or diluted | 83,231 | 85,682 | 85,826 | |||||||||
| Diluted GAAP EPS | $ | (0.04 | ) | $ | 0.07 | $ | 0.08 | |||||
| Diluted adjusted EPS | $ | 0.25 | $ | 0.22 | $ | 0.16 | ||||||
As summarized in the following table, diluted earnings per share adjusted for stock-based compensation expense, settlement expense, amortization of acquisition related software and intangible assets and for the related taxes (adjusted EPS) was $0.46 for the first half of 2018.
Six Months Ended | |||||||||
| June 30, 2018 | June 30, 2017 | ||||||||
| Net Income | $ | 3,024 | $ | 7,959 | |||||
| Stock-based compensation expense | 14,208 | 9,380 | |||||||
| Settlement expense | 20,000 | - | |||||||
| Amortization of acquisition related software and intangible assets | 17,753 | 13,658 | |||||||
| Income tax related to adjustments (1) | (15,744 | ) | (8,754 | ) | |||||
| Adjusted net income | $ | 39,241 | $ | 22,243 | |||||
| Weighted average common shares, diluted | 84,837 | 85,534 | |||||||
| Diluted GAAP EPS | $ | 0.04 | $ | 0.09 | |||||
| Diluted adjusted EPS | $ | 0.46 | $ | 0.26 | |||||
(1) Tax effect of adjustments is computed as the pre-tax effect of the adjustments multiplied by the forecasted adjusted annual effective tax rate at period end.
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 $23 million and $26 million and adjusted EBITDA of between approximately $143 million and $148 million for 2018.
| Twelve Months Ending December 31, 2018 | |||||||||||||
| Estimated Range | |||||||||||||
| Current Guidance | Prior Guidance | ||||||||||||
| Low | High | Low | High | ||||||||||
| Net Income | $ | 23 | $ | 26 | $ | 29 | $ | 33 | |||||
| Net interest expense | 11 | 11 | 12 | 12 | |||||||||
| Income taxes | 10 | 12 | 12 | 13 | |||||||||
| Depreciation and amortization of property and equipment and intangible assets | 58 | 58 | 55 | 55 | |||||||||
| Earnings before interest, taxes, depreciation and amortization (EBITDA) | $ | 102 | 107 | $ | 108 | 113 | |||||||
| Stock based compensation expense | 21 | 21 | 20 | 20 | |||||||||
| Settlement expense | 20 | 20 | - | - | |||||||||
| Adjusted EBITDA | $ | 143 | $ | 148 | $ | 128 | $ | 133 | |||||