EX-99.2 3 cotv_ex992.htm EX-99.2 cotv_Ex99_2

Exhibit 99.2

 

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2016 Fourth Quarter Financial Supplement Analytics. Insight. Value. As of December 31, 2016

 

 


 

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Cotiviti Holdings, Inc. 2016 Revenue by Segment 2016 2015 Change 2016 2015 Change Healthcare $ 86,161 $ 72,470 19% $ 310,496 $ 251,288 24% 59,859 54,564 10% 229,491 201,899 14% 2,378 3,327 -29% 12,054 13,857 -13% Total Healthcare 148,398 130,361 14% 552,041 467,044 18% Global Retail and Other 18,926 20,514 -8% 70,656 72,060 -2% Other 588 588 0% 2,465 2,239 10% Total Global Retail and Other 19,514 21,102 -8% 73,121 74,299 -2% $167,912 $151,463 11% $625,162 $541,343 15% Consolidated Net Revenue Three Months Ended December 31, Year Ended December 31, ($ in thousands) Retrospective claims accuracy Prospective claims accuracy Transaction services Retrospective claims accuracy (unaudited)

 

 


 

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Cotiviti Holdings, Inc. 2016 Consolidated Statement of Operations ( $ in thousands) 2016 2015 Change 2016 2015 Change Net revenue $ 167,912 $ 151,463 11% $ 625,162 $ 541,343 15% Cost of revenue 67,174 57,060 18% 251,768 204,617 23% Selling, general and administrative expenses 37,750 39,736 -5% 156,684 136,745 15% Depreciation and amortization of property and equipment 5,287 3,425 54% 20,151 12,695 59% Amortization of intangible assets 15,200 15,211 - 60,818 61,467 -1% Transaction-related expenses 879 1,115 -21% 1,788 1,469 22% Impairment of intangible assets - - - - 27,826 -100% Total Operating Expenses 126,290 116,547 8% 491,209 444,819 10% Operating income 41,622 34,916 19% 133,953 96,524 39% Other expense (income) 8,140 15,264 -47% 64,131 68,819 -7% Income tax expense 8,190 10,469 -22% 20,970 14,401 46% Gain on discontinued operations, net of tax - - - - 559 -100% Net Income 25,292 $ 9,183 $ 175% 48,852 $ 13,863 $ 252% Earnings per share: Basic $ 0.28 $ 0.12 $ 0.57 $ 0.18 Diluted 0.27 0.12 0.55 0.18 Effective Tax Rate 24.5% 53.3% 30.0% 52.0% Cost of revenue $ 288 $ 379 -24% $ 5,026 $ 963 NM Selling, general and administrative expenses 1,122 1,396 -20% 17,928 2,436 NM Total Stock-Based Compensation $ 1,410 $ 1,775 -21% $ 22,954 $ 3,399 NM Stock-based Compensation (included within the lines shown above) Three Months Ended December 31, Year Ended December 31, (unaudited)

 

 


 

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Cotiviti Holdings, Inc. 2016 Adjusted EBITDA (Non-GAAP) Represents an impairment during the quarter ended September 30, 2015 as a result of our rebranding and the related impact to our trademarks. Represents other non-operating (income) expense that consists primarily of gains and losses on transactions settled in foreign currencies. Income received for certain sub-leases is included herein. Represents payment on a $900 note receivable ($559 net of taxes) related to a business that was disposed of in 2012. This note receivable had been reported in the loss on discontinued operations in 2012 upon the sale of that business. Since the date of sale, we had elected to fully reserve the note receivable as the collectability was determined to be uncertain. Represents transaction-related expenses that consist primarily of certain expenses associated with the preparation for our Initial Public Offering and other offering costs as well as certain corporate development activity. Represents expense related to stock‑based compensation awards granted to certain employees, officers and non‑employee directors as long‑term incentive compensation. We recognize the related expense for these awards ratably over the vesting period. During the year ended December 31, 2016, performance awards vested resulting in stock compensation expense of $15,898. Represents loss on extinguishment of debt that consists primarily of fees paid and write-offs of unamortized debt issuance costs and original issue discount in connection with the repricing of our long-term debt in 2015, the early repayment of a portion of our long-term debt in 2016 and the refinancing of our long-term debt in 2016. 2016 2015 Change 2016 2015 Change Net Income $ 25,292 $ 9,183 175% $ 48,852 $ 13,863 252% Adjustments to net income: Depreciation and amortization 20,487 18,636 10% 80,969 74,162 9% Impairment of intangible assets (1) - - - - 27,826 -100% Interest expense 8,308 15,706 -47% 48,653 65,561 -26% Other non-operating (income) expense (2) (168) (442) -62% (939) (826) 14% Income tax expense 8,190 10,469 -22% 20,970 14,401 46% Gain on discontinued operations, net of tax (3) - - - - (559) -100% Transaction-related expenses and other (4) 879 1,115 -21% 1,788 1,469 22% Stock-based compensation (5) 1,410 1,775 -21% 22,954 3,399 575% Loss on extinguishment of debt (6) - - - 16,417 4,084 302% Adjusted EBITDA $ 64,398 $ 56,442 14% $ 239,664 $ 203,380 18% % of revenue 38.4% 37.3% 38.3% 37.6% Year Ended December 31, (unaudited, $ in thousands) Three Months Ended December 31,

 

 


 

 

 

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Cotiviti Holdings, Inc. 2016 Adjusted Net Income (Non-GAAP) Represents an impairment during the quarter ended September 30, 2015 as a result of our rebranding and the related impact to our trademarks. Represents loss on extinguishment of debt that consists primarily of fees paid and write-offs of unamortized debt issuance costs and original issue discount in connection with the repricing of our long-term debt in 2015, the early repayment of a portion of our long-term debt in 2016 and the refinancing of our long-term debt in 2016. Represents transaction-related expenses that consist primarily of certain expenses associated with the preparation for our Initial Public Offering and other offering costs as well as certain corporate development activity. Represents expense related to stock‑based compensation awards granted to certain employees, officers and non‑employee directors as long‑term incentive compensation. We recognize the related expense for these awards ratably over the vesting period. During the year ended December 31, 2016, performance awards vested resulting in stock compensation expense of $15,898 million. Represents payment on a $900 note receivable ($559 net of taxes) related to a business that was disposed of in 2012. This note receivable had been reported in the loss on discontinued operations in 2012 upon the sale of that business. Since the date of sale, we had elected to fully reserve the note receivable as the collectability was determined to be uncertain. This line represents the tax impact of the amortization of acquired intangible assets - tax deductible, a portion of impairment of intangible assets, loss on extinguishment of debt, a portion of transaction-related expenses and other, stock-based compensation and gain on discontinued operations. The tax rate assumed is 38% and 40% for the years ended December 31, 2016 and 2015, respectively. The assumed tax rate decreased during the three months ended December 31, 2016 resulting in a lower tax effect for that period. 2016 2015 Change 2016 2015 Change Net Income $ 25,292 $ 9,183 175% $ 48,852 $ 13,863 252% Adjustments to net income: Amortization of Acquired Intangible Assets - Non Tax Deductible 10,401 10,402 NM 41,607 42,187 -1% Amortization of Acquired Intangible Assets - Tax Deductible 4,799 4,809 NM 19,211 19,280 NM Impairment of intangible assets (1) - - - - 27,826 -100% Loss on extinguishment of debt (2) - - - 16,417 4,084 302% Transaction-related expenses and other (3) 879 1,115 -21% 1,788 1,469 22% Stock-based compensation (4) 1,410 1,775 -21% 22,954 3,399 575% Gain on discontinued operations (5) - - - - (900) -100% Tax effect of above adjustments (6) (1,624) (2,634) -38% (22,573) (18,465) 22% Tax benefit related to stock option exercises (4,000) - NM (4,000) - NM Adjusted Net Income $ 37,157 $ 24,650 51% $ 124,256 $ 92,743 34% Weighted average shares of common stock - Diluted (000s) 94,071 77,733 88,578 77,641 Adjusted Net Income per Diluted Share $ 0.39 $ 0.32 $ 1.40 $ 1.19 (unaudited, $ in thousands) Three Months Ended December 31, Year Ended December 31,

 

 


 

 

 

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(unaudited, $ in millions) Low High Net Income $89 $95 Adjustments to net income (1) 177 177 Adjusted EBITDA $266 $272 Cotiviti Holdings, Inc. 2017 Adjusted EBITDA Guidance (Non-GAAP) Adjustments to net income include depreciation and amortization, interest expense, other non-operating (income) expense, income tax expense and stock-based compensation. A 38% tax rate is assumed to approximate the Company's effective tax rate.

 

 


 

 

 

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Cotiviti Holdings, Inc. Consolidated Balance Sheet Data

($ in thousands) December 31, 2016 December 31, 2015

Cash and cash equivalents $ 110,635 $ 149,365 Total assets2,002,263 2,114,088 Total long-term debt(1) 780,202 1,034,070 Total liabilities 1,062,927 1,326,492 Total stockholders’ equity 939,336 787,596 Net debt leverage 2.9x 4.5x Working capital 31,037 90,968 (1) Includes the current portion of our long-term debt and is net of debt issuance costs.7

 

 


 

 

 

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Cotiviti Holdings, Inc. Cash Flow Data ($ in thousands) Year Ended December 31, 2016 2015 Operating Cash Flow $ 189,171 $ 63,154 Capex 35,213 22,982 Free Cash Flow $ 153,958 $ 40,172

 

 


 

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