HMS Holdings Corp. (Nasdaq: HMSY) today announced
financial results for the fourth quarter and full year ended
December 31, 2020.
Fourth QuarterTotal revenue in
the fourth quarter of 2020 was $194.0 million, compared to total
revenue of $163.4 million in the fourth quarter of 2019 (+18.7%).
Revenue in the fourth quarter of 2020 from the Accent business,
which was acquired at the end of 2019, was $10.9 million. Organic
revenue in the fourth quarter of 2020, excluding Accent, increased
13.2%.
Coordination of Benefits (COB) revenue was
$130.5 million in the fourth quarter of 2020 compared to $98.6
million in the fourth quarter of 2019 (+32.4%). Organic COB
revenue, excluding Accent, was $119.7 million (+23.5%).
Payment Integrity (PI) revenue was $50.3 million
in the fourth quarter of 2020, compared to $48.4 million in the
fourth quarter of 2019 (+4.1%). Population Health Management (PHM)
revenue was $13.1 million in the fourth quarter of 2020, compared
to $16.6 million in the prior year fourth quarter (-20.6%).
Net income in the fourth quarter of 2020 was
$32.8 million, or $0.36 per diluted share, compared to net income
of $17.3 million, or $0.20 per diluted share, in the fourth quarter
of 2019.
Adjusted EBITDA in the fourth quarter of 2020
was $64.9 million, compared to $42.3 million in the fourth quarter
of 2019 (+53.4%).
Adjusted EPS in the fourth quarter of 2020 was
$0.51 per diluted share, compared to adjusted EPS of $0.27 per
diluted share in the fourth quarter of 2019 (+88.9%).
Full YearTotal revenue for the
twelve months ended December 31, 2020 was $673.3 million, compared
to $626.4 million in the prior year (+7.5%). For the twelve months
ended December 31, 2019, total revenue included $10.5 million
in revenue from the second quarter of 2019 related to the Company's
release of its remaining contract-related balance under its
original Medicare RAC Contract (the “2Q 2019 Reserve Release”).
Revenue in the twelve months ended December 31, 2020 from the
Accent business was $43.3 million. Excluding the 2Q 2019 Reserve
Release and revenue from the Accent business, total revenue
increased 2.6% compared to the prior year.
COB revenue for the twelve months ended December
31, 2020 was $469.2 million, compared to $404.1 million in the
prior year (+16.1%). Organic COB revenue for the twelve months
ended December 31, 2020, excluding Accent, was $425.9 million
(+5.8%).
PI revenue for the twelve months ended December
31, 2020 was $152.0 million, compared to $162.2 million in the
prior year (-6.3%). Excluding the 2Q 2019 Reserve Release, PI
revenue increased 0.2% compared to the prior year. PHM revenue for
the twelve months ended December 31, 2020 was $52.1 million,
compared to $60.1 million in the prior year (-13.3%).
Net income for the twelve months ended December
31, 2020 was $70.1 million, or $0.78 per diluted share, compared to
$87.2 million, or $0.98 per diluted share, in the prior year. For
the twelve months ended December 31, 2019, net income included
$0.07 per diluted share related to the 2Q 2019 Reserve Release, a
net benefit of $0.06 per diluted share related to a gain on the
sale of an investment in the third quarter of 2019 (the "3Q 2019
Gain on Investment"), and discrete tax benefits recorded in the
first quarter of 2019 totaling $0.07 per diluted share.
Adjusted EBITDA for the twelve months ended
December 31, 2020 was $184.3 million, compared to $179.6 million in
the prior year (+2.6%), which included a net benefit of $8.2
million related to the 2Q 2019 Reserve Release and $7.7 million
related to the 3Q 2019 Gain on Investment. Excluding those
benefits, Adjusted EBITDA increased 12.6% compared to the prior
year.
Adjusted EPS for the twelve months ended
December 31, 2020 was $1.33 per diluted share. Adjusted EPS was
$1.32 per diluted share in the prior year, including $0.07 per
diluted share related to the 2Q 2019 Reserve Release, $0.06 per
diluted share related to the 3Q 2019 Gain on Investment and
discrete tax benefits recorded in the first quarter of 2019
totaling $0.07 per diluted share. Excluding the 2Q 2019 Reserve
Release, the 3Q 2019 Gain on Investment and discrete tax benefits
in 2019, adjusted EPS for the twelve months ended December 31, 2020
was $1.33 per diluted share, compared to $1.12 per diluted share in
the prior year period (+18.8%).
Cash Flow and Capital
ResourcesNet cash provided by operating activities for the
twelve months ended December 31, 2020 was $99.0 million compared to
$133.2 million in the prior year. Capital expenditures were $27.9
million for the twelve months ended December 31, 2020, compared to
$21.6 million in the prior year.
The Company's balance sheet at December 31,
2020 included $207.1 million of cash and cash equivalents and
$240.0 million in outstanding bank debt, compared to cash and cash
equivalents of $139.3 million and outstanding bank debt of $240.0
million at December 31, 2019.
About HMSHMS advances
healthcare by helping organizations reduce costs and improve health
outcomes. Through our industry-leading technology, analytics and
engagement solutions, we save billions of dollars annually while
helping consumers lead healthier lives. HMS provides a broad range
of payment accuracy and population health management solutions that
help move healthcare forward. Visit us at www.hms.com.
TrademarksHMS 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 MeasuresThe
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 release.
The Company believes that the non-GAAP financial
measures presented in this press release are relevant and provide
useful information to the Company's management, investors, and
other interested parties about the Company's operating performance
because the measures allow them to understand and compare the
Company's actual and expected operating results during the prior,
current and future 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 StatementThe
financial results in this press release reflect preliminary,
unaudited results, which are not final until the Company’s Annual
Report on Form 10-K for the year ended December 31, 2020 is filed.
This press release, and other written or oral statements made by
management from time to time, may contain "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,” “assumes,” “believes,” “estimates,” “expects,”
“forecasts,” “future,” “intends,” “likely,” “may,” “outlook,”
“plans,” “potential,” “projects,” “seeks,” “strategy,” “targets,”
“trends,” “will,” “would,” “could,” “should,” variations of such
terms and similar expressions and references to guidance, although
some forward-looking statements may be expressed differently.
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: the occurrence of any
event, change, or other circumstances that could delay or prevent
closing of the proposed acquisition of HMS by Gainwell Acquisition
Corp. ("Gainwell"), or give rise to the termination of that certain
Agreement and Plan of Merger, dated December 20, 2020, by and among
HMS, Gainwell, Mustang MergerCo Inc. and Gainwell Intermediate
Holding Corp.; the course of the COVID-19 pandemic and the
responses to the pandemic, and their effects on our business and
operations, including those of our customers and partners, and
general economic, business and market conditions; our ability to
execute our business plans or growth strategy; our ability to
innovate, develop, implement and deliver new or enhanced solutions
or services; the nature of any strategic acquisition, investment,
partnership and divestiture opportunities we are pursuing, and our
ability to successfully execute on such opportunities; our ability
to successfully integrate or merge acquired businesses and realize
synergies; significant and increased competition for our solutions
and services; changes in the 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 ability to protect our
systems from damage, interruption or breach, and to maintain
effective information and technology systems and networks,
including during a catastrophic or extraordinary event, such as the
COVID-19 pandemic; 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 data and IT suppliers; our
reliance on subcontractors and other third party providers and
parties to perform services; our ability to secure future contracts
and favorable contract terms through the competitive bidding
process; our success in attracting and retaining qualified
employees and members of our management team; risks relating to our
international operations, including political, regulatory,
economic, foreign exchange, cybersecurity, tax compliance and other
risks; variations in our results of operations; our ability to
accurately forecast the revenue under our contracts and solutions;
our ability to generate sufficient cash to cover our interest and
principal payments under our credit facility; changes in tax laws,
regulations or guidance or unexpected changes in our effective tax
rate; unanticipated increases in the number or amount of claims for
which we are self-insured; accounting changes or revisions; our
ability to protect our intellectual property rights, proprietary
technology, information processes, and know-how; our failure to
comply with applicable laws and regulations governing individual
privacy and information security, domestically and internationally,
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; pending or threatened litigation;
unfavorable outcomes in legal proceedings; 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; 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. Any forward-looking statements
herein speak only as of the date such statements are first made.
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: |
Robert Borchert |
|
Lacey Hautzinger |
SVP, Investor Relations |
|
Sr. Director, External
Communications |
robert.borchert@hms.com |
|
lacey.hautzinger@hms.com |
469-284-2140 |
|
469-284-7240 |
HMS HOLDINGS CORP. AND
SUBSIDIARIESCONSOLIDATED STATEMENTS OF
INCOME(in thousands, except per share
amounts)(unaudited)
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Revenue |
$ |
193,981 |
|
|
|
$ |
163,445 |
|
|
|
$ |
673,283 |
|
|
|
$ |
626,395 |
|
|
Cost of services: |
|
|
|
|
|
|
|
Compensation |
67,521 |
|
|
|
59,288 |
|
|
|
261,199 |
|
|
|
231,321 |
|
|
Direct project and other
operating expenses |
24,967 |
|
|
|
26,376 |
|
|
|
96,182 |
|
|
|
90,069 |
|
|
Information technology |
16,245 |
|
|
|
14,323 |
|
|
|
61,433 |
|
|
|
53,950 |
|
|
Occupancy |
4,012 |
|
|
|
4,100 |
|
|
|
16,528 |
|
|
|
16,375 |
|
|
Amortization of acquisition related software and intangible
assets |
5,389 |
|
|
|
4,509 |
|
|
|
21,964 |
|
|
|
16,999 |
|
|
Total cost of services |
118,134 |
|
|
|
108,596 |
|
|
|
457,306 |
|
|
|
408,714 |
|
|
Selling, general and
administrative expenses |
33,889 |
|
|
|
29,151 |
|
|
|
122,750 |
|
|
|
114,665 |
|
|
Total operating expenses |
152,023 |
|
|
|
137,747 |
|
|
|
580,056 |
|
|
|
523,379 |
|
|
Operating income |
41,958 |
|
|
|
25,698 |
|
|
|
93,227 |
|
|
|
103,016 |
|
|
Interest expense |
(1,451 |
) |
|
|
(2,634 |
) |
|
|
(7,586 |
) |
|
|
(11,013 |
) |
|
Interest income |
5 |
|
|
|
857 |
|
|
|
271 |
|
|
|
4,148 |
|
|
Other income |
(386 |
) |
|
|
514 |
|
|
|
1,358 |
|
|
|
8,211 |
|
|
Income before income taxes |
40,126 |
|
|
|
24,435 |
|
|
|
87,270 |
|
|
|
104,362 |
|
|
Income taxes |
7,307 |
|
|
|
7,089 |
|
|
|
17,121 |
|
|
|
17,138 |
|
|
Net income |
$ |
32,819 |
|
|
|
$ |
17,346 |
|
|
|
$ |
70,149 |
|
|
|
$ |
87,224 |
|
|
|
|
|
|
|
|
|
|
Basic income per common
share: |
|
|
|
|
|
|
|
Net income per common share — basic |
$ |
0.37 |
|
|
|
$ |
0.20 |
|
|
|
$ |
0.79 |
|
|
|
$ |
1.00 |
|
|
Diluted income per common share: |
|
|
|
|
|
|
|
Net income per common share — diluted |
$ |
0.36 |
|
|
|
$ |
0.20 |
|
|
|
$ |
0.78 |
|
|
|
$ |
0.98 |
|
|
Weighted average shares: |
|
|
|
|
|
|
|
Basic |
88,546 |
|
|
|
86,328 |
|
|
|
88,438 |
|
|
|
87,222 |
|
|
Diluted |
90,369 |
|
|
|
87,987 |
|
|
|
90,081 |
|
|
|
89,317 |
|
|
HMS HOLDINGS CORP. AND
SUBSIDIARIESCONSOLIDATED BALANCE
SHEETS(in thousands, except share and per share
amounts)(unaudited)
|
December 31,2020 |
|
December 31,2019 |
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
207,124 |
|
|
|
$ |
139,268 |
|
|
Accounts receivable, net |
265,717 |
|
|
|
223,443 |
|
|
Prepaid expenses and other
current assets |
26,332 |
|
|
|
30,925 |
|
|
Income tax receivable |
— |
|
|
|
3,210 |
|
|
Deferred financing costs,
net |
564 |
|
|
|
564 |
|
|
Total current assets |
499,737 |
|
|
|
397,410 |
|
|
Property and equipment, net |
81,539 |
|
|
|
86,947 |
|
|
Goodwill |
594,561 |
|
|
|
599,351 |
|
|
Intangible assets, net |
117,193 |
|
|
|
131,849 |
|
|
Operating lease right-of-use
assets |
14,428 |
|
|
|
17,493 |
|
|
Deferred financing costs,
net |
545 |
|
|
|
1,109 |
|
|
Other assets |
21,674 |
|
|
|
10,117 |
|
|
Total assets |
$ |
1,329,677 |
|
|
|
$ |
1,244,276 |
|
|
|
|
|
|
Liabilities and
Shareholders' Equity |
|
|
|
Current liabilities: |
|
|
|
Accounts payable, accrued
expenses and other liabilities |
$ |
96,322 |
|
|
|
$ |
97,747 |
|
|
Liability for appeals |
6,047 |
|
|
|
3,570 |
|
|
Total current liabilities |
102,369 |
|
|
|
101,317 |
|
|
Long-term liabilities: |
|
|
|
Revolving credit facility |
240,000 |
|
|
|
240,000 |
|
|
Operating lease
liabilities |
11,991 |
|
|
|
14,881 |
|
|
Net deferred tax
liabilities |
18,906 |
|
|
|
25,587 |
|
|
Other
liabilities |
8,082 |
|
|
|
7,626 |
|
|
Total long-term liabilities |
278,979 |
|
|
|
288,094 |
|
|
Total liabilities |
381,348 |
|
|
|
389,411 |
|
|
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;102,249,981, shares issued and
88,586,787 shares outstanding at December 31, 2020; 101,766,468
shares issued and 88,103,566 shares outstanding at December 31,
2019 |
1,022 |
|
|
|
1,018 |
|
|
Capital in excess of par
value |
503,275 |
|
|
|
479,964 |
|
|
Retained earnings |
579,608 |
|
|
|
509,459 |
|
|
Treasury stock, at cost:
13,663,194 shares at December 31, 2020 and 13,663,194 shares at
December 31, 2019 |
(135,576 |
) |
|
|
(135,576 |
) |
|
|
|
|
|
Total shareholders' equity |
948,329 |
|
|
|
854,865 |
|
|
|
|
|
|
Total liabilities and shareholders' equity |
$ |
1,329,677 |
|
|
|
$ |
1,244,276 |
|
|
HMS HOLDINGS CORP. AND
SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH
FLOWS(in thousands, unaudited)
|
Years Ended December 31, |
|
2020 |
|
2019 |
|
2018 |
Operating activities: |
|
|
|
|
|
Net income |
$ |
70,149 |
|
|
|
$ |
87,224 |
|
|
|
$ |
54,989 |
|
|
Adjustments to reconcile net
income to net cash provided by operating activities: |
|
|
|
|
|
Depreciation and amortization of
property, equipment and software |
32,104 |
|
|
|
33,293 |
|
|
|
33,254 |
|
|
Amortization of intangible
assets |
14,656 |
|
|
|
9,691 |
|
|
|
24,342 |
|
|
Amortization of deferred
financing costs |
564 |
|
|
|
564 |
|
|
|
564 |
|
|
Gain on sale of cost basis
investment |
— |
|
|
|
(7,697 |
) |
|
|
— |
|
|
Stock-based compensation
expense |
24,044 |
|
|
|
21,901 |
|
|
|
21,507 |
|
|
Deferred income taxes |
(6,681 |
) |
|
|
7,290 |
|
|
|
(3,504 |
) |
|
Noncash lease expense |
3,065 |
|
|
|
4,133 |
|
|
|
— |
|
|
Change in fair value of
contingent consideration |
— |
|
|
|
— |
|
|
|
(35 |
) |
|
Release of estimated liability
for appeals, net |
— |
|
|
|
(10,478 |
) |
|
|
(8,436 |
) |
|
Changes in operating assets and
liabilities: |
|
|
|
|
|
Accounts receivable |
(39,977 |
) |
|
|
(16,292 |
) |
|
|
(17,312 |
) |
|
Prepaid expenses and other
current assets |
4,593 |
|
|
|
(10,487 |
) |
|
|
(2,785 |
) |
|
Other assets |
(8,169 |
) |
|
|
(2,173 |
) |
|
|
245 |
|
|
Income taxes receivable /
payable |
9,790 |
|
|
|
15,607 |
|
|
|
(16,925 |
) |
|
Accounts payable, accrued
expenses and other liabilities |
(4,677 |
) |
|
|
4,744 |
|
|
|
11,181 |
|
|
Operating lease liabilities |
(2,890 |
) |
|
|
(5,315 |
) |
|
|
— |
|
|
Liability for appeals |
2,477 |
|
|
|
1,227 |
|
|
|
(628 |
) |
|
Net cash provided by operating activities |
99,048 |
|
|
|
133,232 |
|
|
|
96,457 |
|
|
Investing activities: |
|
|
|
|
|
Acquisition of businesses, net of
cash acquired |
1,529 |
|
|
|
(185,790 |
) |
|
|
— |
|
|
Proceeds from sale of cost basis
investment |
— |
|
|
|
9,776 |
|
|
|
— |
|
|
Investment in common stock |
(3,388 |
) |
|
|
(7,421 |
) |
|
|
— |
|
|
Purchases of property and
equipment |
(11,253 |
) |
|
|
(8,276 |
) |
|
|
(11,264 |
) |
|
Investment in capitalized software |
(16,636 |
) |
|
|
(13,348 |
) |
|
|
(19,149 |
) |
|
Net cash used in investing activities |
(29,748 |
) |
|
|
(205,059 |
) |
|
|
(30,413 |
) |
|
Financing activities: |
|
|
|
|
|
Proceeds from exercise of stock
options |
2,779 |
|
|
|
39,332 |
|
|
|
38,362 |
|
|
Payments of tax withholdings on
behalf of employees for net-share settlements |
(3,508 |
) |
|
|
(6,988 |
) |
|
|
(2,818 |
) |
|
Payments on capital lease
obligations |
(715 |
) |
|
|
(195 |
) |
|
|
— |
|
|
Purchases of treasury stock |
— |
|
|
|
— |
|
|
|
(5,955 |
) |
|
Net cash (used in)/provided by financing
activities |
(1,444 |
) |
|
|
32,149 |
|
|
|
29,589 |
|
|
Net increase/(decrease) in cash and cash
equivalents |
67,856 |
|
|
|
(39,678 |
) |
|
|
95,633 |
|
|
Cash and Cash Equivalents |
|
|
|
|
|
Cash and cash equivalents at beginning of year |
139,268 |
|
|
|
178,946 |
|
|
|
83,313 |
|
|
Cash and cash equivalents at end of period |
$ |
207,124 |
|
|
|
$ |
139,268 |
|
|
|
$ |
178,946 |
|
|
Supplemental disclosure of cash flow
information: |
|
|
|
|
|
Cash paid for income taxes/(refunds received), net of refunds |
$ |
13,734 |
|
|
|
$ |
(5,298 |
) |
|
|
$ |
22,225 |
|
|
Cash paid for interest |
$ |
5,928 |
|
|
|
$ |
10,457 |
|
|
|
$ |
10,326 |
|
|
Supplemental disclosure of non-cash
activities: |
|
|
|
|
|
Change in balance of accrued property and equipment purchases |
$ |
1,193 |
|
|
|
$ |
(1,303 |
) |
|
|
$ |
1,305 |
|
|
HMS HOLDINGS CORP. AND
SUBSIDIARIES(unaudited)
Reconciliation of Net Income to EBITDA and Adjusted
EBITDA
|
Three Months Ended |
(in
thousands, except percentages) |
December 31, 2020 |
|
December 31, 2019 |
Net income |
$ |
32,819 |
|
|
$ |
17,346 |
|
|
|
|
|
Net interest expense |
1,446 |
|
|
1,777 |
|
Income taxes |
7,307 |
|
|
7,089 |
|
Depreciation and amortization of property and equipment and
intangible assets |
11,545 |
|
|
11,256 |
|
Earnings before interest, taxes, depreciation and amortization
(EBITDA) |
53,117 |
|
|
37,468 |
|
Stock-based compensation
expense |
2,961 |
|
|
3,186 |
|
Transaction and integration
costs |
8,783 |
|
|
1,638 |
|
Adjusted EBITDA |
$ |
64,861 |
|
|
$ |
42,292 |
|
% of Revenue |
33.4 |
% |
|
25.9 |
% |
|
Twelve Months Ended |
(in
thousands, except percentages) |
December 31, 2020 |
|
December 31, 2019 |
Net income |
$ |
70,149 |
|
|
$ |
87,224 |
|
|
|
|
|
Net interest expense |
7,315 |
|
|
6,865 |
|
Income taxes |
17,121 |
|
|
17,138 |
|
Depreciation and amortization of property and equipment and
intangible assets |
46,760 |
|
|
42,984 |
|
Earnings before interest, taxes, depreciation and amortization
(EBITDA) |
141,345 |
|
|
154,211 |
|
Stock-based compensation
expense |
24,044 |
|
|
21,901 |
|
Transaction and integration
costs |
18,894 |
|
|
3,489 |
|
Adjusted EBITDA |
$ |
184,283 |
|
|
$ |
179,601 |
|
% of Revenue |
27.4 |
% |
|
28.7 |
% |
Adjusted EBITDA excluding 2Q
2019 Reserve Release and 3Q 2019 Gain on Investment |
$ |
184,283 |
|
|
$ |
163,701 |
|
% of Revenue |
27.4 |
% |
|
26.6 |
% |
HMS HOLDINGS CORP. AND
SUBSIDIARIES(unaudited)
Reconciliation of Net Income to GAAP EPS (Diluted) and
Adjusted EPS (Diluted)
|
Three Months Ended |
(in
thousands, except per share amounts) |
December 31, 2020 |
|
December 31, 2019 |
Net income |
$ |
32,819 |
|
|
|
$ |
17,346 |
|
|
|
|
|
|
Stock-based compensation
expense |
2,961 |
|
|
|
3,186 |
|
|
Transaction and integration
costs |
8,783 |
|
|
|
1,638 |
|
|
Amortization of acquisition
related software and intangible assets |
5,389 |
|
|
|
4,509 |
|
|
Income tax related to adjustments¹ |
(4,009 |
) |
|
|
(2,595 |
) |
|
|
|
|
|
Adjusted net income |
$ |
45,943 |
|
|
|
$ |
24,084 |
|
|
|
|
|
|
Weighted average common shares, diluted |
90,369 |
|
|
|
87,987 |
|
|
|
|
|
|
Diluted EPS² |
$ |
0.36 |
|
|
|
$ |
0.20 |
|
|
Diluted adjusted EPS² |
$ |
0.51 |
|
|
|
$ |
0.27 |
|
|
|
Twelve Months Ended |
(in
thousands, except per share amounts) |
December 31, 2020 |
|
December 31, 2019 |
Net income |
$ |
70,149 |
|
|
|
$ |
87,224 |
|
|
|
|
|
|
Stock-based compensation
expense |
24,044 |
|
|
|
21,901 |
|
|
Transaction and integration
costs |
18,894 |
|
|
|
3,489 |
|
|
Settlement expense |
— |
|
|
|
— |
|
|
Amortization of acquisition
related software and intangible assets |
21,964 |
|
|
|
16,999 |
|
|
Income tax related to adjustments¹ |
(15,187 |
) |
|
|
(11,784 |
) |
|
|
|
|
|
Adjusted net income |
$ |
119,864 |
|
|
|
$ |
117,829 |
|
|
|
|
|
|
Weighted average common shares, diluted |
90,081 |
|
|
|
89,317 |
|
|
|
|
|
|
Diluted EPS² |
$ |
0.78 |
|
|
|
$ |
0.98 |
|
|
Diluted adjusted EPS² |
$ |
1.33 |
|
|
|
$ |
1.32 |
|
|
|
|
|
|
Discrete tax benefits |
$ |
— |
|
|
|
$ |
0.07 |
|
|
2Q 2019 Reserve Release benefit³ |
$ |
— |
|
|
|
$ |
0.07 |
|
|
3Q 2019 Gain on Investment³ |
$ |
— |
|
|
|
$ |
0.06 |
|
|
Diluted adjusted EPS excluding 2Q 2019 Reserve Release, 3Q 2019
Gain on Investment, and discrete tax benefits |
$ |
1.33 |
|
|
|
$ |
1.12 |
|
|
(1) Tax effect of adjustments is computed as the
pre-tax effect of the adjustments multiplied by the adjusted annual
effective tax rate at period end.
(2) Diluted GAAP EPS and Diluted adjusted EPS
for the twelve months ended December 31, 2019 included (i) discrete
tax benefits of $0.07 per diluted share primarily related to the
exercise of employee stock options, (ii) $0.07 per diluted share
related to the 2Q 2019 Reserve Release benefit and (iii) a $0.06
per diluted share benefit related to the 3Q 2019 Gain on
Investment.
(3) The 2Q 2019 Reserve Release benefit of $0.07
per diluted share for the twelve months ended December 31, 2019 is
net of income tax of approximately $0.03 per diluted share. The 3Q
2019 Gain on Investment benefit of $0.06 per diluted share for the
twelve months ended December 31, 2019 is net of income tax of
approximately $0.02 per diluted share.
HMS HOLDINGS CORP. AND
SUBSIDIARIES(unaudited)
Reconciliation of Total Debt to Net Leverage
Ratio
(in
thousands, except ratios) |
December 31, 2020 |
|
December 31, 2019 |
Total Debt (revolving credit facility) |
$ |
240,000 |
|
|
|
$ |
240,000 |
|
|
Cash
and cash equivalents |
(207,124 |
) |
|
|
(139,268 |
) |
|
Total net debt⁴ |
$ |
32,876 |
|
|
|
$ |
100,732 |
|
|
|
|
|
|
Net
income⁵ |
$ |
70,149 |
|
|
|
$ |
87,224 |
|
|
Adjusted EBITDA⁶ |
$ |
184,283 |
|
|
|
$ |
179,601 |
|
|
Net leverage ratio⁷ |
0.18 |
|
|
|
0.56 |
|
|
(4) Total Debt consists of the outstanding principal under our
senior secured revolving credit facility(5) Trailing twelve months
Net income(6) Trailing twelve months Adjusted EBITDA(7) The
Company's net leverage ratio is calculated by dividing total net
debt by trailing twelve months' Adjusted
EBITDAReconciliation of Net Cash Provided by Operating
Activities to Free Cash Flow
|
Twelve Months Ended |
(In
thousands) |
December 31, 2020 |
|
December 31, 2019 |
Net cash provided by operating activities |
$ |
99,048 |
|
|
|
$ |
133,232 |
|
|
Purchases of property and
equipment |
(11,253 |
) |
|
|
(8,276 |
) |
|
Investment in capitalized software |
(16,636 |
) |
|
|
(13,348 |
) |
|
|
|
|
|
Non-GAAP free cash flow |
$ |
71,159 |
|
|
|
$ |
111,608 |
|
|
The Company believes that the non-GAAP free cash
flow financial measures presented in this press release provide
useful information regarding how much cash flow is available, after
purchases of property and equipment and investment in capitalized
software, to be used for working capital needs or for other
opportunities. It should not be inferred that the entire non-GAAP
free cash flow amount is available for discretionary expenditures.
These non-GAAP measures may not be comparable to similarly titled
measures used by other companies.
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