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Exhibit 99.1

 

LOGO

FOR IMMEDIATE RELEASE

Emdeon Reports Third Quarter 2012 Results

 

   

Revenue of $297.1 million, increased 5.3% over third quarter 2011

 

   

Adjusted EBITDA of $79.2 million, increased 3.3% over third quarter 2011

NASHVILLE, Tenn. (November 8, 2012) – Emdeon Inc., a leading provider of healthcare revenue and payment cycle management and clinical information exchange solutions, today announced financial results for the third quarter ended September 30, 2012 as summarized below:

 

(In millions)    3Q 2012     3Q 2011      % Change  

Revenue

   $ 297.1      $ 282.1         5.3

Net Income (Loss)

   $ (15.2   $ 6.3         -341.3

Non-GAAP Adjusted EBITDA

   $ 79.2     $ 76.7        3.3

“We continue to make significant progress towards our financial goals as demonstrated by our operational performance in the third quarter,” said George Lazenby, chief executive officer for Emdeon. “The third quarter also proved productive strategically with the recently announced patient medication history initiative in our pharmacy services division and the launch of our integrated payment integrity suite, Emdeon EdgeTM. We are looking forward to continued success to round out the year.”

Third quarter revenue was $297.1 million, an increase of 5.3%, compared to $282.1 for the same period in 2011. Net loss for the third quarter of 2012 was $15.2 million compared to net income of $6.3 million for the same period in 2011. This loss was primarily due to increased interest and other expenses associated with the November 2011 acquisition of Emdeon by affiliates of Blackstone, which more than offset the impact of business growth as compared to the prior year period. Third quarter 2012 Non-GAAP Adjusted EBITDA grew 3.3% to $79.2 million, or 26.7% of revenue, from Non-GAAP Adjusted EBITDA of $76.7 million, or 27.2% of revenue, for the comparable period in 2011.

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 Registration Statement on Form S-4 (File No. 333-182786) and the accompanying Prospectus thereto, as well as Emdeon’s periodic and other reports, filed 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 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

bob.east@westwicke.com or

Emdeon@westwicke.com


Emdeon Inc.

Condensed Consolidated Statements of Operations

(unaudited and amounts in thousands)

 

     Successor     Predecessor     Successor     Predecessor  
      Three Months
Ended
September 30,
2012
    Three Months
Ended
September 30,
2011
    Nine Months
Ended
September 30,
2012
    Nine Months
Ended
September 30,
2011
 

Revenue

   $ 297,075     $ 282,149     $ 877,577     $ 835,758  

Costs and expenses:

          

Cost of operations (exclusive of depreciation and amortization below)

     184,794       173,455       542,550       515,481  

Development and engineering

     7,994       7,473       24,246       23,602  

Sales, marketing, general and administrative

     35,308       38,342       107,382       105,604  

Depreciation and amortization

     48,572       39,830       140,354       116,786  

Accretion

     2,758       —          15,104       —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     17,649       23,049       47,941       74,285  

Interest expense, net

     41,898       12,573       130,539       37,848  

Loss on extinguishment of debt

     —          —          21,853       —     

Other

     —          (4,398     —          (8,036
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income tax provision (benefit)

     (24,249     14,874       (104,451     44,473  

Income tax provision (benefit)

     (9,093     8,601       (36,364     21,696  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

     (15,156     6,273       (68,087     22,777  

Net income attributable to noncontrolling interest

     —          2,906       —          9,214  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to Emdeon Inc.

   $ (15,156   $ 3,367     $ (68,087   $ 13,563  
  

 

 

   

 

 

   

 

 

   

 

 

 


Emdeon Inc.

Condensed Consolidated Balance Sheets

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

 

     September 30,
2012
    December 31,
2011
 
ASSETS   

Current assets:

    

Cash and cash equivalents

   $ 50,337     $ 37,925  

Accounts receivable, net of allowance for doubtful accounts of $4,276 and $1,201 at September 30, 2012 and December 31, 2011, respectively

     197,169       188,960  

Deferred income tax assets

     4,772       5,862  

Prepaid expenses and other current assets

     20,914       16,926  
  

 

 

   

 

 

 

Total current assets

     273,192       249,673  

Property and equipment, net

     268,381       277,768  

Goodwill

     1,481,951       1,443,574  

Intangible assets, net

     1,757,783       1,821,897  

Other assets, net

     30,797       39,403  
  

 

 

   

 

 

 

Total assets

   $ 3,812,104     $ 3,832,315  
  

 

 

   

 

 

 
LIABILITIES AND EQUITY   

Current liabilities:

    

Accounts payable

   $ 13,567     $ 8,827  

Accrued expenses

     119,461       132,096  

Deferred revenues

     8,967       5,561  

Current portion of long-term debt

     16,805       16,034  
  

 

 

   

 

 

 

Total current liabilities

     158,800       162,518  

Long-term debt, excluding current portion

     2,005,368       1,945,074  

Deferred income tax liabilities

     469,578       502,044  

Tax receivable agreement obligations to related parties

     132,581       117,477  

Other long-term liabilities

     6,145       1,413  

Commitments and contingencies

    

Equity:

    

Common stock (par value, $.01), 100 shares authorized and outstanding at September 30, 2012 and December 31, 2011, respectively

     —          —     

Additional paid-in capital

     1,128,320       1,120,676  

Accumulated other comprehensive income (loss)

     (3,908     (194

Accumulated deficit

     (84,780     (16,693
  

 

 

   

 

 

 

Total equity

     1,039,632       1,103,789  
  

 

 

   

 

 

 

Total liabilities and equity

   $ 3,812,104     $ 3,832,315  
  

 

 

   

 

 

 


Emdeon Inc.

Condensed Consolidated Statements of Cash Flows

(unaudited and amounts in thousands)

 

     Successor     Predecessor  
      Nine Months Ended
September 30, 2012
    Nine Months Ended
September 30, 2011
 

Operating activities

    

Net income (loss)

   $ (68,087   $ 22,777  

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

    

Depreciation and amortization

     140,354       116,786  

Accretion

     15,104       —     

Equity compensation

     3,969       17,610  

Deferred income tax expense (benefit)

     (37,369     2,611  

Amortization of debt discount and issuance costs

     7,613       10,470  

Amortization of discontinued cash flow hedge from other comprehensive loss

     —          2,843  

Change in contingent consideration

     —          (8,036

Change in fair value of interest rate swap (not subject to hedge accounting)

     —          (7,983

Loss on extinguishment of debt

     18,293       —     

Other

     1,927       36  

Changes in operating assets and liabilities:

    

Accounts receivable

     (5,547     (7,040

Prepaid expenses and other

     (3,686     10,843  

Accounts payable

     5,153       5,888  

Accrued expenses, deferred revenue and other liabilities

     (8,444     16,329  

Tax receivable agreement obligations to related parties

     (114     (2,593
  

 

 

   

 

 

 

Net cash provided by operating activities

     69,166       180,541  
  

 

 

   

 

 

 

Investing activities

    

Purchases of property and equipment

     (40,949     (48,207

Payments for acquisitions, net of cash acquired

     (59,011     (39,422
  

 

 

   

 

 

 

Net cash used in investing activities

     (99,960     (87,629
  

 

 

   

 

 

 

Financing activities

    

Proceeds from Term Loan Facility

     70,351       —     

Debt principal payments

     (9,565     (6,412

Payments on revolver

     (15,000     —     

Payment of loan costs

     (2,060     —     

Repurchase of Parent common stock

     (317     —     

Other

     (203     (620
  

 

 

   

 

 

 

Net cash provided by (used in) financing activities

     43,206       (7,032
  

 

 

   

 

 

 

Net increase in cash and cash equivalents

     12,412       85,880  

Cash and cash equivalents at beginning of period

     37,925       99,188  
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 50,337     $ 185,068  
  

 

 

   

 

 

 


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). These items result from facts and circumstances that vary in frequency and/or impact continuing operations. In addition, 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 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 operations.


Emdeon Inc.

Reconciliation of GAAP Net Income to Adjusted EBITDA

(unaudited and amounts in thousands)

 

     For the Three Months     For the Nine Months  
     Ended September 30,     Ended September 30,  
     2012     2011     2012     2011  

Net income (loss)

   $ (15,156   $ 6,273     $ (68,087   $ 22,777  

Interest expense, net

     41,898       12,573       130,539       37,848  

Income tax provision (benefit)

     (9,093     8,601       (36,364     21,696  

Depreciation and amortization

     48,572       39,830       140,354       116,786  
  

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA

     66,221       67,277       166,442       199,107  
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-2011 Transactions related adjustments:

        

Equity compensation

     3,969       6,126       3,969       17,610  

Acquisition-related costs

     609       1,448       4,264       4,237  

Strategic initiatives, duplicative running and transition costs

     2,059       198       5,592       711  

Contingent consideration adjustments

     —          (4,398     —          (8,036

Loss on extinguishment of debt and other related costs

     —          —          25,411       —     

Other

     390       321       2,960       547  

2011 Transactions related adjustments:

        

Costs and fees

     2,237       5,689       6,899       6,024  

Acquisition accounting adjustments

     937       —          4,370       —     

Strategic initiatives costs

     —          —          2,709       —     

Accretion expense

     2,758       —          15,104       —     
  

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA Adjustments

     12,959       9,384       71,277       21,093  
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 79,180     $ 76,661     $ 237,720     $ 220,200