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Exhibit 99.1

 

LOGO

FOR IMMEDIATE RELEASE

Emdeon Reports Fourth Quarter and Full Year 2012 Results

 

   

Fourth Quarter 2012 Revenue of $300.7 million and Adjusted EBITDA of $78.7 million

 

   

Full Year 2012 Revenue of $1.178 billion and Adjusted EBITDA of $316.4 million

NASHVILLE, Tenn. (March 18, 2013) – 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, 2012, as summarized below:

 

           Combined                 Combined        
(In millions)    4Q 12     4Q 11     % Change     FY 12     FY 11     % Change  

Revenue

   $ 300.7      $ 283.9        5.9   $ 1,178.3      $ 1,119.6        5.2

Net Income (Loss)

   $ (10.2   $ (70.0     85.4   $ (78.3   $ (36.3     -115.9

Non-GAAP Adjusted EBITDA

   $ 78.7      $ 80.3        -2.0   $ 316.4      $ 300.5        5.3

“During the first full year following our acquisition by Blackstone, Emdeon achieved solid financial results and made tremendous progress in establishing a firm foundation for our future growth,” said George Lazenby, chief executive officer for Emdeon. “Of particular note, we saw volumes steadily improve across Emdeon’s entire business during the second half of 2012, and our pharmacy business and payment integrity solutions continued to perform very well. We are excited about continuing to execute on our growth strategy in 2013.”

Fourth quarter 2012 revenue was $300.7 million, an increase of 5.9%, compared to $283.9 million for the same period in 2011. Net loss for the fourth quarter of 2012 was $10.2 million compared to $70.0 million for the same period in 2011. This improvement in net loss compared to the corresponding prior year period was primarily due to the impact of business growth and reduced transaction costs and expenses in the fourth quarter of 2012 associated with the November 2011 acquisition of Emdeon by affiliates of Blackstone and the related financing. These two factors were partially offset by increased interest, depreciation and amortization expense in the fourth quarter of 2012 related to the Blackstone transactions.

Fourth quarter 2012 Non-GAAP Adjusted EBITDA decreased 2.0% to $78.7 million, or 26.2% of revenue, from Non-GAAP Adjusted EBITDA of $80.3 million, or 28.3% of revenue, for the comparable period in 2011. This decline was primarily due to one less business day in the fourth quarter of 2012 and additional investments in sales and other initiatives to support our growth strategy.

For the year ended December 31, 2012, revenue was $1,178.3 million compared to $1,119.6 million for 2011, an increase of 5.2%. Net loss for full year 2012 was $78.3 million compared to $36.3 million in full year 2011. The 2012 net loss was primarily due to increased interest, depreciation and amortization expense related to the Blackstone transactions, partially offset by the impact of business growth.

 


Full year 2012 Non-GAAP Adjusted EBITDA increased 5.3% to $316.4 million, or 26.9% of revenue, from Non-GAAP Adjusted EBITDA of $300.5 million, or 26.8% of revenue, for the comparable period in 2011. This increase was primarily due to the impact of business growth.

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

Emdeon@westwicke.com

 

2


Emdeon Inc.

Consolidated Statements of Operations

(unaudited and amounts in thousands)

 

    Successor     Predecessor     Combined     Successor     Predecessor     Combined  
    Three Months     November 2     October 1     Three Months     Fiscal     November 2     January 1     Fiscal  
    Ended     through     through     Ended     Year Ended     through     through     Year Ended  
    December 31,     December 31,     November 1,     December 31,     December 31,     December 31,     November 1,     December 31,  
    2012     2011     2011     2011     2012     2011     2011     2011  

Revenue

  $ 300,694      $ 190,384      $ 93,506      $ 283,890      $ 1,178,271      $ 190,384      $ 929,264      $ 1,119,648   

Costs and expenses:

               

Cost of operations (exclusive of
depreciation and amortization below)

    188,972        117,421        57,062        174,483        731,525        117,421        572,541        689,962   

Development and engineering

    7,548        5,153        2,487        7,640        31,794        5,153        26,090        31,243   

Sales, marketing, general and administrative

    34,805        21,778        10,668        32,446        142,186        21,778        111,463        133,241   

Depreciation and amortization

    46,871        29,094        11,975        41,069        187,225        29,094        128,761        157,855   

Accretion

    (6,439     2,459        —          2,459        8,666        2,459        —          2,459   

Transaction related costs

    1,250        17,857        61,813        79,670        1,250        17,857        66,625        84,482   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

    27,687        (3,378     (50,499     (53,877     75,625        (3,378     23,784        20,406   

Interest expense, net

    41,714        29,343        5,353        34,696        172,253        29,343        43,201        72,544   

Loss on extinguishment of debt

    —          —          —          —          21,853        —          —          —     

Other

    —          (5,843     —          (5,843     —          (5,843     (8,036     (13,879
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loss before income tax provision (benefit)

    (14,027     (26,878     (55,852     (82,730     (118,481     (26,878     (11,381     (38,259

Income tax provision (benefit)

    (3,781     (10,185     (2,533     (12,718     (40,146     (10,185     8,201        (1,984
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

    (10,246     (16,693     (53,319     (70,012     (78,335     (16,693     (19,582     (36,275

Net income attributable to noncontrolling interest

    —          —          (4,105     (4,105     —          —          5,109        5,109   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loss attributable to Emdeon Inc.

  $ (10,246   $ (16,693   $ (49,214   $ (65,907   $ (78,335   $ (16,693   $ (24,691   $ (41,384
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

3


Emdeon Inc.

Consolidated Balance Sheets

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

 

     December 31,     December 31,  
     2012     2011  
ASSETS   

Current assets:

    

Cash and cash equivalents

   $ 31,763      $ 37,925   

Accounts receivable, net of allowance for doubtful accounts of $3,585 and $1,201 at December 31, 2012 and December 31, 2011, respectively

     190,021        188,960   

Deferred income tax assets

     4,184        5,614   

Prepaid expenses and other current assets

     28,160        15,869   
  

 

 

   

 

 

 

Total current assets

     254,128        248,368   

Property and equipment, net

     272,088        277,768   

Goodwill

     1,481,889        1,443,574   

Intangible assets, net

     1,730,089        1,821,897   

Other assets, net

     29,694        40,460   
  

 

 

   

 

 

 

Total assets

   $ 3,767,888      $ 3,832,067   
  

 

 

   

 

 

 
LIABILITIES AND EQUITY   

Current liabilities:

    

Accounts payable

   $ 6,223      $ 8,827   

Accrued expenses

     102,069        132,096   

Deferred revenues

     9,342        4,671   

Current portion of long-term debt

     17,330        16,034   
  

 

 

   

 

 

 

Total current liabilities

     134,964        161,628   

Long-term debt, excluding current portion

     1,999,392        1,945,074   

Deferred income tax liabilities

     467,912        501,796   

Tax receivable agreement obligations to related parties

     125,003        117,477   

Other long-term liabilities

     8,466        2,303   

Commitments and contingencies

    

Equity:

    

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

     —          —     

Additional paid-in capital

     1,130,968        1,120,676   

Accumulated other comprehensive loss

     (3,789     (194

Accumulated deficit

     (95,028     (16,693
  

 

 

   

 

 

 

Total equity

     1,032,151        1,103,789   
  

 

 

   

 

 

 

Total liabilities and equity

   $ 3,767,888      $ 3,832,067   
  

 

 

   

 

 

 

 

4


Emdeon Inc.

Consolidated Statements of Cash Flows

(unaudited and amounts in thousands)

 

     Successor     Predecessor  
     Fiscal     November 2     January 1     Combined  
     Year Ended     through     through     Year Ended  
     December 31,     December 31,     November 1,     December 31,  
     2012     2011     2011     2010  

Operating activities

        

Net Income (loss)

   $ (78,335   $ (16,693   $ (19,582   $ 33,167   

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

        

Depreciation and amortization

     187,225        29,094        128,761        124,721   

Equity compensation expense

     6,842        —          54,932        17,721   

Deferred income tax expense (benefit)

     (38,447     (6,397     (15,045     12,236   

Accretion expense

     8,666        2,459        —          —     

Loss on extinguishment of debt

     18,293        —          —          —     

Amortization of debt discount and issuance costs

     10,185        1,642        11,673        12,911   

Amortization of discontinued cash flow hedge from other comprehensive loss

     —          —          —           5,800   

Amortization of interest rate swap

     —          —          3,167        —     

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

     —          (2,755     (7,983     (3,908

Change in contingent consideration

     —          (5,843     (8,036     (9,284

Other

     2,685        489        1,119        419   

Changes in operating assets and liabilities:

        

Accounts receivable

     1,601        (13,447     660        (2,429

Prepaid expenses and other

     (12,096     3,126        6,638        (12,552

Accounts payable

     (2,149     (2,912     8,505        (7,499

Accrued expenses, deferred revenue, and other liabilities

     (25,218     (17,544     47,613        451   

Tax receivable agreement obligations to related parties

     (334     —          (3,519     95   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by (used in) operating activities

     78,918        (28,781     208,903        171,849   
  

 

 

   

 

 

   

 

 

   

 

 

 

Investing activities

        

Purchases of property and equipment

     (62,054     (8,279     (51,902     (79,988

Payments for acquisitions, net of cash acquired

     (59,011     —          (39,422     (251,464

Purchase of Emdeon Inc, net of cash acquired

     —          (1,943,218     —          —     

Other

     —          —          —          (3,000
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash used in investing activities

     (121,065     (1,951,497     (91,324     (334,452
  

 

 

   

 

 

   

 

 

   

 

 

 

Financing activities

        

Proceeds from issuance of stock

     —           863,245        —          306   

Proceeds from Term Loan Facility

     —           1,185,114        —          —     

Proceeds from Revolving Facility

     —           25,000        —          —     

Proceeds from Senior Notes

     —           729,375        —          —     

Payments on Revolving Facility

     (15,000     (10,000     —          —     

Payment of debt issue costs

     (2,060     (35,901     —          —     

Proceeds from incremental term loan

     70,351        —          —          97,982   

Debt principal and data sublicense obligation payments

     (16,613     (942,138     (10,128     (11,423

Repayment of assumed debt obligations

     —          —          —          (35,254

Other

     (693     (2,868     (263     (1,819
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by (used in) financing activities

     35,985        1,811,827        (10,391     49,792   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) in cash and cash equivalents

     (6,162     (168,451     107,188        (112,811

Cash and cash equivalents at beginning of period

     37,925        206,376        99,188        211,999   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 31,763      $ 37,925      $ 206,376      $ 99,188   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

5


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.

 

6


Emdeon Inc.

Reconciliation of GAAP Net Income to Adjusted EBITDA

(unaudited and amounts in thousands)

 

           Combined              
     Three Months     Three Months           Combined  
     Ended     Ended     Year Ended     Year Ended  
     December 31,     December 31,     December 31,     December 31,  
     2012     2011     2012     2011  

Net income (loss)

   $ (10,246   $ (70,012   $ (78,335   $ (36,275

Interest expense, net

     41,714        34,696        172,253        72,544   

Income tax provision (benefit)

     (3,781     (12,718     (40,146     (1,984

Depreciation and amortization

     46,871        41,069        187,225        157,855   
  

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA

     74,558        (6,965     240,997        192,140   
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-2011 Transaction related adjustments:

        

Equity compensation

     2,873        2,036        6,842        19,646   

Acquisition-related costs

     2,649        3,066        6,913        7,140   

Strategic initiatives, duplicative running and transition costs

     1,428        2,101        7,020        2,812   

Contingent consideration adjustments

     —          (5,843     —          (13,879

Loss on extinguishment of debt and other related costs

     —          —          25,411        —     

Other

     302        1,416        3,261        2,271   

2011 Transaction related adjustments:

        

Equity compensation

     —          35,285        —          35,285   

Costs and fees

     3,009        44,385        9,908        49,197   

Acquisition accounting adjustments

     327        2,104        4,697        2,104   

Strategic initiatives costs

     —          280        2,709        1,349   

Accretion expense

     (6,439     2,459        8,666        2,459   
  

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA Adjustments

     4,149        87,289        75,427        108,384   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 78,707      $ 80,324      $ 316,424      $ 300,524   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

7