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): March 16, 2015
EMDEON INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware | 1-34435 | 20-5799664 | ||
(State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
3055 Lebanon Pike, Suite 1000 Nashville, TN |
37214 | |||
(Address of Principal Executive Offices) | (Zip Code) |
(615) 932-3000
(Registrants 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 (see General Instruction A.2. below):
¨ | 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)) |
Item 2.02. Results of Operations and Financial Condition.
On March 16, 2015, Emdeon Inc. (the Company) issued a press release announcing its results of operations for the fourth quarter and full year ended December 31, 2014. A copy of the press release is furnished herewith as Exhibit 99.1 to this Current Report on Form 8-K.
The information included in this Current Report on Form 8-K (including Exhibit 99.1) shall not be deemed filed for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the Exchange Act), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any filing made by the Company under the Exchange Act or Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits. The following exhibit is being furnished herewith to this Current Report on Form 8-K.
Exhibit No. |
Description | |
99.1 | Press Release dated March 16, 2015 |
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.
EMDEON INC. | ||||||
Date: March 16, 2015 | By: | /s/ Gregory T. Stevens | ||||
Name: | Gregory T. Stevens | |||||
Title: | Executive Vice President, General Counsel and Secretary |
INDEX TO EXHIBITS
Exhibit No. |
Description | |
99.1 | Press Release dated March 16, 2015 |
Exhibit 99.1
FOR IMMEDIATE RELEASE
Emdeon Reports Fourth Quarter and Full Year 2014 Results
| Fourth Quarter Revenue of $353.4 million and Adjusted EBITDA of $101.7 million |
| Full Year 2014 Revenue of $1,350.4 million and Adjusted EBITDA of $364.3 million |
NASHVILLE, Tenn. (March 16, 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, 2014, as summarized below:
(In millions) | 4Q 2014 | 4Q 2013 | % Change | FY 2014 | FY 2013 | % Change | ||||||||||||||||||
Revenue |
$ | 353.4 | $ | 320.1 | 10.4 | % | $ | 1,350.4 | $ | 1,242.6 | 8.7 | % | ||||||||||||
Net Loss |
$ | 0.3 | $ | 16.5 | 97.9 | % | $ | 75.9 | $ | 74.5 | -1.9 | % | ||||||||||||
Non-GAAP Adjusted EBITDA |
$ | 101.7 | $ | 85.5 | 18.8 | % | $ | 364.3 | $ | 324.0 | 12.5 | % |
We are very pleased with our strong fourth quarter and full year 2014 financial results. The 12.5% increase in Adjusted EBITDA and expansion of Adjusted EBITDA margin over the prior year was largely due to revenue growth and continued productivity improvements throughout our business. Our revenue growth in 2014 was driven by increased sales of our solutions and volume gains due to the increase in the number of insured lives of our customers, said Neil de Crescenzo, president and chief executive officer for Emdeon. Throughout 2014, we also made important progress in positioning Emdeon for future success. During the fourth quarter, we completed two strategic acquisitions - Change Healthcare, a leader in healthcare consumer engagement, and Adminisource, a leading provider of healthcare payment and communication solutions. In connection with these acquisitions, we also closed a $160 million incremental secured loan on favorable terms under our existing senior credit facility. Together with the acquisition of Capario earlier in the year, these transactions significantly strengthened our overall portfolio of solutions to better serve our customers entering 2015.
Fourth quarter revenue was $353.4 million, an increase of 10.4%, compared to $320.1 million for the same period in 2013. This increase in revenue was primarily due to business growth. Net loss for the fourth quarter of 2014 was $0.3 million compared to $16.5 million for the same period in 2013. This improvement in net loss was primarily due to business growth and the absence of a charge related to cancelling a product development project in the prior year period.
Fourth quarter 2014 Non-GAAP Adjusted EBITDA increased 18.8% to $101.7 million, or 28.8% of revenue, from Non-GAAP Adjusted EBITDA of $85.5 million, or 26.7% of revenue, for the comparable period in 2013. This increase in Adjusted EBITDA and as a percentage of revenue compared to the same period in 2013 is primarily due to business growth and productivity improvements throughout the business.
For the year ended December 31, 2014, revenue was $1,350.4 million compared to $1,242.6 million for 2013, an increase of 8.7%. This increase in revenue was primarily due to business growth, accelerated by the impact of healthcare utilization, new solutions and acquisitions. Net loss for 2014 was $75.9 million compared to $74.5 million in 2013.
Full year 2014 Non-GAAP Adjusted EBITDA increased 12.5% to $364.3 million, or 27.0% of revenue, from Non-GAAP Adjusted EBITDA of $324.0 million, or 26.1% of revenue, for the comparable period in 2013. This increase was primarily due to the impact of business growth in higher margin businesses and productivity improvements.
A reconciliation of Emdeons 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, pharmacies and patients in the U.S. healthcare system. Emdeons offerings integrate and automate key business and administrative functions of its payer, provider and pharmacy customers throughout the patient encounter. Through the use of Emdeons 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 Emdeons or managements 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 Emdeons possible or assumed future results of operations, including descriptions of Emdeons 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 Emdeons operations and business environment, all of which are difficult to predict and many of which are beyond Emdeons control. Although Emdeon believes that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect Emdeons 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 Emdeons actual financial results or results of operations include: effects of competition, including competition from entities that are customers for certain of Emdeons solutions; Emdeons ability to maintain relationships with its customers and channel partners; Emdeons 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 Emdeons 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 Managements Discussion and Analysis of Financial Condition and Results of Operations sections and elsewhere in Emdeons Annual Report filed on Form 10-K for the year ended December 31, 2014, as well as other reports filed by Emdeon with the Securities and Exchange Commission.
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 Emdeons 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
bob.east@westwicke.com or
Emdeon@westwicke.com
Emdeon Inc.
Condensed Consolidated Statements of Operations
(unaudited and amounts in thousands)
Three Months Ended December 31, 2014 |
Three Months Ended December 31, 2013 |
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Year Ended December 31, 2014 |
Year Ended December 31, 2013 |
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Revenue |
$ | 353,440 | $ | 320,115 | $ | 1,350,413 | $ | 1,242,567 | ||||||||
Costs and expenses: |
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Cost of operations (exclusive of depreciation and amortization below) |
205,747 | 196,264 | 803,590 | 759,409 | ||||||||||||
Development and engineering |
8,793 | 9,337 | 33,564 | 32,538 | ||||||||||||
Sales, marketing, general and administrative |
49,238 | 45,239 | 199,977 | 168,708 | ||||||||||||
Depreciation and amortization |
47,678 | 45,896 | 189,218 | 183,839 | ||||||||||||
Accretion |
5,226 | 7,759 | 14,446 | 26,470 | ||||||||||||
Impairment of long-lived assets |
479 | 8,732 | 83,169 | 10,619 | ||||||||||||
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Operating income (loss) |
36,279 | 6,888 | 26,449 | 60,984 | ||||||||||||
Interest expense, net |
37,088 | 36,779 | 146,829 | 153,169 | ||||||||||||
Loss on extinguishment of debt |
| | | 23,160 | ||||||||||||
Contingent consideration |
(2,339 | ) | (1,948 | ) | 1,307 | (69 | ) | |||||||||
Other |
| (1,208 | ) | (3,968 | ) | (4,133 | ) | |||||||||
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Income (loss) before income tax provision (benefit) |
1,530 | (26,735 | ) | (117,719 | ) | (111,143 | ) | |||||||||
Income tax provision (benefit) |
1,868 | (10,262 | ) | (41,865 | ) | (36,685 | ) | |||||||||
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Net income (loss) |
$ | (338 | ) | $ | (16,473 | ) | $ | (75,854 | ) | $ | (74,458 | ) | ||||
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Emdeon Inc.
Condensed Consolidated Balance Sheets
(unaudited and amounts in thousands, except share and per share amounts)
December 31, 2014 |
December 31, 2013 |
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ASSETS | ||||||||
Current assets: |
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Cash and cash equivalents |
$ | 82,306 | $ | 76,538 | ||||
Accounts receivable, net of allowance for doubtful accounts of $6,377 and $3,856 at December 31, 2014 and December 31, 2013, respectively |
233,791 | 214,247 | ||||||
Deferred income tax assets |
18,893 | 6,317 | ||||||
Prepaid expenses and other current assets |
29,246 | 27,019 | ||||||
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Total current assets |
364,236 | 324,121 | ||||||
Property and equipment, net |
244,153 | 269,470 | ||||||
Goodwill |
1,702,569 | 1,502,434 | ||||||
Intangible assets, net |
1,539,394 | 1,632,688 | ||||||
Other assets, net |
20,312 | 19,169 | ||||||
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Total assets |
$ | 3,870,664 | $ | 3,747,882 | ||||
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LIABILITIES AND EQUITY | ||||||||
Current liabilities: |
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Accounts payable |
$ | 16,399 | $ | 8,367 | ||||
Accrued expenses |
175,206 | 131,149 | ||||||
Deferred revenues |
10,518 | 10,881 | ||||||
Current portion of long-term debt |
27,308 | 31,330 | ||||||
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Total current liabilities |
229,431 | 181,727 | ||||||
Long-term debt, excluding current portion |
2,146,597 | 1,999,026 | ||||||
Deferred income tax liabilities |
413,227 | 436,263 | ||||||
Tax receivable agreement obligations to related parties |
163,983 | 150,496 | ||||||
Other long-term liabilities |
15,361 | 11,824 | ||||||
Commitments and contingencies |
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Equity: |
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Common stock (par value, $.01), 100 shares authorized and outstanding at December 31, 2014 and December 31, 2013, respectively |
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Additional paid-in capital |
1,149,360 | 1,139,375 | ||||||
Accumulated other comprehensive income (loss) |
(1,955 | ) | (1,343 | ) | ||||
Accumulated deficit |
(245,340 | ) | (169,486 | ) | ||||
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Total equity |
902,065 | 968,546 | ||||||
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Total liabilities and equity |
$ | 3,870,664 | $ | 3,747,882 | ||||
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Emdeon Inc.
Condensed Consolidated Statements of Cash Flows
(unaudited and amounts in thousands)
Year Ended December 31, 2014 |
Year Ended December 31, 2013 |
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Operating activities |
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Net income (loss) |
$ | (75,854 | ) | $ | (74,458 | ) | ||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
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Depreciation and amortization |
189,218 | 183,839 | ||||||
Accretion |
14,446 | 26,470 | ||||||
Equity compensation |
7,334 | 7,021 | ||||||
Deferred income tax expense (benefit) |
(43,392 | ) | (39,555 | ) | ||||
Amortization of debt discount and issuance costs |
7,847 | 8,475 | ||||||
Contingent consideration |
1,307 | (69 | ) | |||||
Gain on sale of cost method investment |
(114 | ) | (2,925 | ) | ||||
Loss on extinguishment of debt |
| 22,828 | ||||||
Impairment of long-lived assets |
83,169 | 10,619 | ||||||
Other |
(2,255 | ) | (1,962 | ) | ||||
Changes in operating assets and liabilities: |
||||||||
Accounts receivable |
(6,824 | ) | (20,791 | ) | ||||
Prepaid expenses and other |
536 | 1,442 | ||||||
Accounts payable |
4,591 | 1,335 | ||||||
Accrued expenses, deferred revenue and other liabilities |
26,650 | 29,273 | ||||||
Tax receivable agreement obligations to related parties |
(988 | ) | (1,142 | ) | ||||
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Net cash provided by (used in) operating activities |
205,671 | 150,400 | ||||||
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Investing activities |
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Purchases of property and equipment |
(55,926 | ) | (71,086 | ) | ||||
Payments for acquisitions, net of cash acquired |
(252,772 | ) | (18,291 | ) | ||||
Proceeds from sale of cost method investment |
677 | 5,820 | ||||||
Other |
(139 | ) | | |||||
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Net cash provided by (used in) investing activities |
(308,160 | ) | (83,557 | ) | ||||
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Financing activities |
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Proceeds from Term Loan Facility |
157,600 | | ||||||
Payments on Term Loan Facility |
(13,279 | ) | (12,912 | ) | ||||
Payment of debt assumed from acquisition |
(25,262 | ) | (218 | ) | ||||
Proceeds from Revolving Facility |
183,000 | | ||||||
Payments on Revolving Facility |
(183,000 | ) | | |||||
Payment of loan costs |
(2,096 | ) | (2,178 | ) | ||||
Data sublicense and deferred financing obligation payments |
(10,741 | ) | (7,564 | ) | ||||
Repurchase of Parent common stock |
(1,221 | ) | (613 | ) | ||||
Capital contribution from Parent |
3,256 | 1,999 | ||||||
Other |
| (582 | ) | |||||
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Net cash provided by (used in) financing activities |
108,257 | (22,068 | ) | |||||
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Net increase (decrease) in cash and cash equivalents |
5,768 | 44,775 | ||||||
Cash and cash equivalents at beginning of period |
76,538 | 31,763 | ||||||
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Cash and cash equivalents at end of period |
$ | 82,306 | $ | 76,538 | ||||
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Explanation of Non-GAAP Financial Measures
Emdeons management believes that, in order to properly understand Emdeons 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 (loss) before net interest expense, income tax provision (benefit) and depreciation and amortization), plus certain other non-cash or non-operating items (collectively, EBITDA Adjustments).
To properly evaluate Emdeons business, Emdeon encourages investors to review the GAAP financial information included in this release, and not rely on any single financial measure to evaluate Emdeons 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 also are 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 Emdeons operating performance on a consistent basis from period to period that, when viewed in combination with Emdeons GAAP results, management believes provides a more complete understanding of factors and trends affecting Emdeons business than GAAP measures alone. Management believes this non-GAAP measure assists Emdeons board of directors, management, lenders and investors in comparing Emdeons operating performance on a consistent basis because it removes where applicable, the impact of Emdeons capital structure, asset base, acquisition accounting, non-cash charges and non-operating items from Emdeons operating performance.
Emdeon Inc.
Reconciliation of GAAP Net Income to Adjusted EBITDA
(unaudited and amounts in thousands)
Three Months Ended December 31, 2014 |
Three Months Ended December 31, 2013 |
Year Ended December 31, 2014 |
Year Ended December 31, 2013 |
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Net income (loss) |
$ | (338 | ) | $ | (16,473 | ) | $ | (75,854 | ) | $ | (74,458 | ) | ||||
Interest expense, net |
37,088 | 36,779 | 146,829 | 153,169 | ||||||||||||
Income tax provision (benefit) |
1,868 | (10,262 | ) | (41,865 | ) | (36,685 | ) | |||||||||
Depreciation and amortization |
47,678 | 45,896 | 189,218 | 183,839 | ||||||||||||
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EBITDA |
86,296 | 55,940 | 218,328 | 225,865 | ||||||||||||
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EBITDA Adjustments: |
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Equity compensation |
1,420 | 1,385 | 7,334 | 7,021 | ||||||||||||
Acquisition accounting adjustments |
370 | 152 | 1,035 | 894 | ||||||||||||
Acquisition-related costs |
2,394 | 788 | 6,927 | 3,245 | ||||||||||||
Transaction-related costs and advisory fees |
1,650 | 2,122 | 6,448 | 6,948 | ||||||||||||
Strategic initiatives, duplicative and transition costs |
2,671 | 4,004 | 12,864 | 8,401 | ||||||||||||
Severance costs |
2,058 | 2,384 | 8,005 | 7,520 | ||||||||||||
Loss on extinguishment of debt and other related costs |
| | | 24,311 | ||||||||||||
Accretion |
5,226 | 7,759 | 14,446 | 26,470 | ||||||||||||
Impairment of long-lived assets |
479 | 8,732 | 83,169 | 10,619 | ||||||||||||
Contingent Consideration |
(2,339 | ) | (1,948 | ) | 1,307 | (69 | ) | |||||||||
Other non-routine, net |
1,436 | 4,230 | 4,484 | 2,765 | ||||||||||||
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EBITDA Adjustments |
15,365 | 29,608 | 146,019 | 98,125 | ||||||||||||
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Adjusted EBITDA |
$ | 101,661 | $ | 85,548 | $ | 364,347 | $ | 323,990 | ||||||||
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