EX-99.1 2 d693644dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

 

LOGO

FOR IMMEDIATE RELEASE

Emdeon Reports Fourth Quarter and Full Year 2013 Results

 

    Fourth Quarter 2013 Revenue of $320.1 million and Adjusted EBITDA of $85.5 million

 

    Full Year 2013 Revenue of $1,242.6 million and Adjusted EBITDA of $324.0 million

NASHVILLE, Tenn. (March 17, 2014) – Emdeon Inc., a leading provider of healthcare revenue and payment cycle management and clinical information exchange solutions, today announced financial results for the fourth quarter and year ended December 31, 2013, as summarized below:

 

(In millions)    4Q 13      4Q 12      % Change     FY 13      FY 12      % Change  

Revenue

   $   320.1       $   294.4         8.7   $   1,242.6       $   1,152.3         7.8

Net Loss

   $ 16.5       $ 10.3         -60.7   $ 74.5       $ 78.3         4.9

Non-GAAP Adjusted EBITDA

   $ 85.5       $ 78.7         8.7   $ 324.0       $ 316.4         2.4

“We are pleased with our 2013 year end results as well as the strong fourth quarter close,” said Neil de Crescenzo, president and chief executive officer for Emdeon. “As we develop innovative products and services that build upon our core capabilities and delight our customers, we look forward to increasing positive momentum across all of our lines of business in 2014.”

Fourth quarter 2013 revenue was $320.1 million, an increase of 8.7%, compared to $294.4 million for the same period in 2012. This increase in revenue was primarily due to business growth. Net loss for the fourth quarter of 2013 was $16.5 million compared to $10.3 million for the same period in 2012. This increase in net loss compared to the corresponding prior year period was primarily due to a charge related to cancelling a product development project and other non-routine charges.

Fourth quarter 2013 Non-GAAP Adjusted EBITDA increased 8.7% to $85.5 million, or 26.7% of revenue, from Non-GAAP Adjusted EBITDA of $78.7 million, or 26.7% of revenue, for the comparable period in 2012. This increase in Adjusted EBITDA compared to the same period in 2012 is primarily due to business growth, partially offset by increased investments related to sales and other strategic growth initiatives.

For the year ended December 31, 2013, revenue was $1,242.6 million compared to $1,152.3 million for 2012, an increase of 7.8%. This increase in revenue was primarily due to business growth, including the June 2013 acquisition of Goold Health Systems. Net loss for 2013 was $74.5 million compared to $78.3 million in 2012. The improvement in the net loss was primarily due to business growth and reduced interest rates as a result of the repricing of Emdeon’s term debt in April 2013.


Full year 2013 Non-GAAP Adjusted EBITDA increased 2.4% to $324.0 million, or 26.1% of revenue, from Non-GAAP Adjusted EBITDA of $316.4 million, or 27.5% of revenue, for the comparable period in 2012. This increase was primarily due to the impact of business growth, partially offset by increased investments related to sales and other strategic growth initiatives.

A reconciliation of Emdeon’s financial results determined in accordance with U.S. Generally Accepted Accounting Principles (GAAP) to certain non-GAAP financial measures has been provided in the financial statement tables included in this release to supplement its unaudited condensed consolidated financial statements presented on a GAAP basis. An explanation of these non-GAAP measures is also included below under the heading “Explanation of Non-GAAP Financial Measures.”

About Emdeon

Emdeon is a leading provider of revenue and payment cycle management and clinical information exchange solutions, connecting payers, providers and patients in the U.S. healthcare system. Emdeon’s offerings integrate and automate key business and administrative functions of its payer and provider customers throughout the patient encounter. Through the use of Emdeon’s comprehensive suite of solutions, which are designed to easily integrate with existing technology infrastructures, customers are able to improve efficiency, reduce costs, increase cash flow and more efficiently manage the complex revenue and payment cycle and clinical information exchange processes. For more information, visit www.emdeon.com.

Forward-Looking Statements

Statements made in this press release that express Emdeon’s or management’s intentions, plans, beliefs, expectations or predictions of future events are forward-looking statements. These statements often include words such as “may,” “will,” “should,” “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate” or similar expressions. Forward-looking statements may include information concerning Emdeon’s possible or assumed future results of operations, including descriptions of Emdeon’s revenues, profitability, outlook and overall business strategy. You should not place undue reliance on these statements because they are subject to numerous uncertainties and factors relating to Emdeon’s operations and business environment, all of which are difficult to predict and many of which are beyond Emdeon’s control. Although Emdeon believes that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect Emdeon’s actual financial results or results of operations and could cause actual results to differ materially from those in the forward-looking statements. Such factors related to Emdeon’s actual financial results or results of operations include: effects of competition, including competition from entities that are customers for certain of Emdeon’s solutions; Emdeon’s ability to maintain relationships with its customers and channel partners; Emdeon’s ability to effectively cross-sell its solutions to existing customers and to continue to generate revenue and maintain profitability by developing or acquiring and successfully deploying new or updated solutions; pricing pressures on Emdeon’s solutions; the anticipated benefits from acquisitions not being fully realized or not being realized within the expected time frames; and general economic, business or regulatory conditions affecting the healthcare information technology and services industries; as well as the other risks discussed in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections and elsewhere in Emdeon’s Annual Report filed on Form 10-K for the year ended December 31, 2013, as well as other reports filed by Emdeon with the Securities and Exchange Commission.

 

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You should keep in mind that any forward-looking statement made by Emdeon herein, or elsewhere, speaks only as of the date on which made. Emdeon expressly disclaims any intent, obligation or undertaking to update or revise any forward-looking statements made herein to reflect any change in Emdeon’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based.

# # #

Contacts:

Investor Relations

Bob East

Westwicke Partners

443.213.0502

Emdeon@westwicke.com

 

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Emdeon Inc.

Consolidated Statements of Operations

(unaudited and amounts in thousands)

 

     Three Months
Ended
    Three Months
Ended
    Year Ended     Year Ended  
     December 31,     December 31,     December 31,     December 31,  
     2013     2012     2013     2012  

Revenue

   $ 320,115      $ 294,436      $ 1,242,567      $ 1,152,313   

Costs and expenses:

        

Cost of operations (exclusive of depreciation and amortization below)

     196,016        179,125        758,025        693,819   

Development and engineering

     9,355        8,271        32,612        34,591   

Sales, marketing, general and administrative

     54,201        37,675        180,637        151,137   

Depreciation and amortization

     45,896        46,871        183,839        187,225   

Accretion

     7,759        (6,439     26,470        8,666   

Transaction related costs

     —          1,250        —          1,250   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

     6,888        27,683        60,984        75,625   

Interest expense, net

     36,779        41,714        153,169        172,253   

Loss on extinguishment of debt

     —          —          23,160        21,853   

Other

     (3,156     —          (4,202     —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss before income tax provision (benefit)

     (26,735     (14,031     (111,143     (118,481

Income tax provision (benefit)

     (10,262     (3,781     (36,685     (40,146
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

   $ (16,473   $ (10,250   $ (74,458   $ (78,335
  

 

 

   

 

 

   

 

 

   

 

 

 

 

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Emdeon Inc.

Consolidated Balance Sheets

(unaudited and amounts in thousands, except share and per share amounts)

 

     December 31,     December 31,  
     2013     2012  
ASSETS   

Current assets:

    

Cash and cash equivalents

   $ 76,538      $ 31,763   

Accounts receivable, net of allowance for doubtful accounts of $3,856 and $3,585 at December 31, 2013 and December 31, 2012, respectively

     214,247        192,243   

Deferred income tax assets

     6,317        4,184   

Prepaid expenses and other current assets

     27,019        28,159   
  

 

 

   

 

 

 

Total current assets

     324,121        256,349   

Property and equipment, net

     269,470        264,852   

Goodwill

     1,502,434        1,488,134   

Intangible assets, net

     1,632,688        1,730,089   

Other assets, net

     19,169        29,694   
  

 

 

   

 

 

 

Total assets

   $ 3,747,882      $ 3,769,118   
  

 

 

   

 

 

 
LIABILITIES AND EQUITY   

Current liabilities:

    

Accounts payable

   $ 8,367      $ 6,223   

Accrued expenses

     131,149        104,026   

Deferred revenues

     10,881        9,342   

Current portion of long-term debt

     31,330        17,595   
  

 

 

   

 

 

 

Total current liabilities

     181,727        137,186   

Long-term debt, excluding current portion

     1,999,026        1,999,415   

Deferred income tax liabilities

     436,263        466,921   

Tax receivable agreement obligations to related parties

     150,496        125,003   

Other long-term liabilities

     11,824        8,442   

Commitments and contingencies

    

Equity:

    

Common stock (par value, $.01), 100 shares authorized, issued and outstanding at December 31, 2013 and December 31, 2012, respectively

     —          —     

Additional paid-in capital

     1,139,375        1,130,968   

Accumulated other comprehensive loss

     (1,343     (3,789

Accumulated deficit

     (169,486     (95,028
  

 

 

   

 

 

 

Total equity

     968,546        1,032,151   
  

 

 

   

 

 

 

Total liabilities and equity

   $ 3,747,882      $ 3,769,118   
  

 

 

   

 

 

 

 

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Emdeon Inc.

Consolidated Statements of Cash Flows

(unaudited and amounts in thousands)

 

     Year Ended     Year Ended  
     December 31,     December 31,  
     2013     2012  

Operating activities

    

Net Income (loss)

   $ (74,458   $ (78,335

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

    

Depreciation and amortization

     183,839        187,225   

Equity compensation expense

     7,021        6,842   

Deferred income tax expense (benefit)

     (39,555     (38,447

Accretion expense

     26,470        8,666   

Loss on extinguishment of debt

     22,828        18,293   

Amortization of debt discount and issuance costs

     8,475        10,185   

Change in contingent consideration

     (69     —     

Impairment of property and equipment

     10,619        1,865   

Gain on sale of cost method investment

     (2,925     —     

Other

     (1,962     820   

Changes in operating assets and liabilities:

    

Accounts receivable

     (20,791     1,601   

Prepaid expenses and other

     1,442        (12,096

Accounts payable

     1,335        (2,149

Accrued expenses, deferred revenue, and other liabilities

     29,273        (25,216

Tax receivable agreement obligations to related parties

     (1,142     (334
  

 

 

   

 

 

 

Net cash provided by (used in) operating activities

     150,400        78,920   
  

 

 

   

 

 

 

Investing activities

    

Purchases of property and equipment

     (71,086     (62,054

Payments for acquisitions, net of cash acquired

     (18,291     (59,011

Proceeds from sale of cost method investment

     5,820        —     
  

 

 

   

 

 

 

Net cash used in investing activities

     (83,557     (121,065
  

 

 

   

 

 

 

Financing activities

    

Payments on Revolving Facility

     —          (15,000

Payment of debt issue costs

     (2,178     (2,060

Proceeds from incremental term loan

     —          70,351   

Payment on Term Loan

     (12,912     (12,817

Data sublicense and deferred financing obligation payments

     (7,564     (3,796

Capital contribution from Parent

     1,999        —     

Repurchase of Parent common stock

     (613     (317

Other

     (800     (376
  

 

 

   

 

 

 

Net cash provided by (used in) financing activities

     (22,068     35,985   
  

 

 

   

 

 

 

Net increase (decrease) in cash and cash equivalents

     44,775        (6,160

Cash and cash equivalents at beginning of period

     31,763        37,923   
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 76,538      $ 31,763   
  

 

 

   

 

 

 

 

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Explanation of Non-GAAP Financial Measures

Emdeon’s management believes that, in order to properly understand Emdeon’s short-term and long-term financial trends, investors may wish to consider the impact of certain non-cash or non-operating items, when used as a supplement to financial performance measures prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP). Management uses results of operations before such excluded items to evaluate the operational performance of Emdeon as a basis for strategic planning and as a performance evaluation metric in determining achievement of certain executive and management incentive compensation programs. Investors should consider these non-GAAP measures in addition to, and not as a substitute for, financial performance measures prepared in accordance with GAAP. In addition to the description provided below, reconciliations of GAAP to non-GAAP results are provided in the financial statement tables included in this release.

In this release, Emdeon defines Adjusted EBITDA as EBITDA (which is defined as net income before income tax provision (benefit), net interest expense and depreciation and amortization), plus certain other non-cash or non-operating items (collectively, “EBITDA Adjustments”).

To properly evaluate Emdeon’s business, Emdeon encourages investors to review the GAAP financial information included in this release, and not rely on any single financial measure to evaluate Emdeon’s business. Emdeon also strongly encourages investors to review the reconciliation of net income (loss) to the non-GAAP measure of Adjusted EBITDA. Adjusted EBITDA, as Emdeon defines it, may differ from and may not be comparable to similarly titled measures used by other companies, because Adjusted EBITDA is not a measure of financial performance under GAAP and is susceptible to varying calculations. Adjusted EBITDA calculations are also used in our credit facilities and indentures, although the adjustments used to calculate Adjusted EBITDA as used in our credit facilities and indentures may vary in certain respects among such agreements and from those presented below.

Management uses Adjusted EBITDA to facilitate a comparison of Emdeon’s operating performance on a consistent basis from period to period that, when viewed in combination with Emdeon’s GAAP results, management believes provides a more complete understanding of factors and trends affecting Emdeon’s business than GAAP measures alone. Management believes this non-GAAP measure assists Emdeon’s board of directors, management, lenders and investors in comparing Emdeon’s operating performance on a consistent basis because it removes where applicable, the impact of Emdeon’s capital structure, asset base, acquisition accounting, non-cash charges and non-operating items from Emdeon’s operating performance.

 

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Emdeon Inc.

Reconciliation of GAAP Net Income to Adjusted EBITDA

(unaudited and amounts in thousands)

 

     Three Months     Three Months              
     Ended     Ended     Year Ended     Year Ended  
     December 31,     December 31,     December 31,     December 31,  
     2013     2012     2013     2012  

Net income (loss)

   $ (16,473   $ (10,250   $ (74,458   $ (78,335

Interest expense, net

     36,779        41,714        153,169        172,253   

Income tax provision (benefit)

     (10,262     (3,781     (36,685     (40,146

Depreciation and amortization

     45,896        46,871        183,839        187,225   
  

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA

     55,940        74,554        225,865        240,997   
  

 

 

   

 

 

   

 

 

   

 

 

 

Equity compensation

     1,385        2,873        7,021        6,842   

Acquisition accounting adjustments

     152        327        894        4,697   

Acquisition-related costs

     788        2,649        3,245        6,913   

Transaction-related costs and advisory fees

     2,122        1,759        6,948        9,907   

Strategic initiatives, duplicative running and transition costs

     4,004        1,428        8,401        9,730   

Severance and retention costs

     2,384        553        7,520        1,632   

Accretion expense

     7,759        (6,439     26,470        8,666   

(Gain) loss on disposal of assets and other non-routine charges

     13,485        —          12,447        52   

Contingent consideration

     (1,948     —          (69     —     

Loss on extinguishment of debt and other related costs

     —          —          24,311        25,411   

Other

     (523     1,000        937        1,577   
  

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA Adjustments

     29,608        4,150        98,125        75,427   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 85,548      $ 78,704      $ 323,990      $ 316,424   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

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