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Exhibit 99.1

 

LOGO

FOR IMMEDIATE RELEASE

Emdeon Reports Third Quarter 2013 Results

 

    Revenue of $323.9 million for Third Quarter 2013

 

    Adjusted EBITDA of $85.2 million for Third Quarter 2013

NASHVILLE, Tenn. (November 8, 2013) – 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, 2013 as summarized below:

 

(In millions)    3Q 2013     3Q 2012     % Change  

Revenue

   $ 323.9      $ 297.1        9.0

Net Income (Loss)

   $ (16.3   $ (15.2     -7.3

Non-GAAP Adjusted EBITDA

   $ 85.2      $ 79.2        7.7

“In my first few weeks at Emdeon, I am pleased to find so many opportunities to accelerate our growth trajectory,” said Neil de Crescenzo, president and chief executive officer for Emdeon. “During the third quarter, we continued to see positive momentum as a result of our strategic growth initiatives in sales across all of our lines of business, and in key growth areas such as payment integrity and revenue cycle solutions.”

Third quarter revenue was $323.9 million, an increase of 9.0%, compared to $297.1 for the same period in 2012. Net loss for the third quarter of 2013 was $16.3 million compared to $15.2 million for the same period in 2012. The increase in revenue as compared to the prior year period was primarily due to the impact of business growth, including the June 2013 acquisition of Goold Health Systems. The increase in net loss compared to the same period in 2012 was primarily due to a change in the company’s estimated effective tax rate, partially offset by the impact of business growth and lower interest expense as a result of the repricing of Emdeon’s term debt in April 2013.

Third quarter 2013 Non-GAAP Adjusted EBITDA increased 7.7% to $85.2 million, or 26.3% of revenue, from Non-GAAP Adjusted EBITDA of $79.2 million, or 26.7% of revenue, for the comparable period in 2012. This increase in Adjusted EBITDA as compared to the same period in 2012 is primarily due to business growth, partially offset by increased investments related to sales and other strategic growth initiatives.

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.

 

1


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 Annual Report filed on Form 10-K for the year ended December 31, 2012, 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 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

 

2


Emdeon Inc.

Condensed Consolidated Statements of Operations

(unaudited and amounts in thousands)

 

     Three Months
Ended
September 30,
2013
    Three Months
Ended
September 30,
2012
    Nine Months
Ended
September 30,
2013
    Nine Months
Ended
September 30,
2012
 

Revenue

   $ 323,906      $ 297,075      $ 941,093      $ 877,577   

Costs and expenses:

        

Cost of operations (exclusive of depreciation and amortization below)

     197,378        181,818        580,501        534,463   

Development and engineering

     7,896        8,644        23,263        26,320   

Sales, marketing, general and administrative

     44,524        37,634        126,580        113,395   

Depreciation and amortization

     47,181        48,572        137,943        140,354   

Accretion

     7,112        2,758        18,712        15,104   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     19,815        17,649        54,094        47,941   

Interest expense, net

     37,000        41,898        116,390        130,539   

Loss on extinguishment of debt

     —          —          23,160        21,853   

Other

     (1,046     —          (1,046     —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income tax provision (benefit)

     (16,139     (24,249     (84,410     (104,451

Income tax provision (benefit)

     126        (9,093     (26,422     (36,364
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

   $ (16,265   $ (15,156   $ (57,988   $ (68,087
  

 

 

   

 

 

   

 

 

   

 

 

 

 

3


Emdeon Inc.

Condensed Consolidated Balance Sheets

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

 

     September 30,
2013
    December 31,
2012
 

ASSETS

    

Current assets:

    

Cash and cash equivalents

   $ 61,563      $ 31,763   

Accounts receivable, net of allowance for doubtful accounts of $4,624 and $3,585 at September 30, 2013 and December 31, 2012, respectively

     209,039        190,021   

Deferred income tax assets

     5,578        4,184   

Prepaid expenses and other current assets

     29,339        28,160   
  

 

 

   

 

 

 

Total current assets

     305,519        254,128   

Property and equipment, net

     279,195        264,852   

Goodwill

     1,502,361        1,488,134   

Intangible assets, net

     1,658,049        1,730,089   

Other assets, net

     19,538        29,694   
  

 

 

   

 

 

 

Total assets

   $ 3,764,662      $ 3,766,897   
  

 

 

   

 

 

 

LIABILITIES AND EQUITY

    

Current liabilities:

    

Accounts payable

   $ 8,495      $ 6,223   

Accrued expenses

     118,414        101,805   

Deferred revenues

     10,222        9,342   

Current portion of long-term debt

     22,031        17,595   
  

 

 

   

 

 

 

Total current liabilities

     159,162        134,965   

Long-term debt, excluding current portion

     2,015,743        1,999,414   

Deferred income tax liabilities

     447,217        466,921   

Tax receivable agreement obligations to related parties

     143,697        125,003   

Other long-term liabilities

     16,847        8,443   

Commitments and contingencies

    

Equity:

    

Common stock (par value, $.01), 100 shares authorized and outstanding at September 30, 2013 and December 31, 2012, respectively

     —          —     

Additional paid-in capital

     1,136,355        1,130,968   

Accumulated other comprehensive income (loss)

     (1,343     (3,789

Accumulated deficit

     (153,016     (95,028
  

 

 

   

 

 

 

Total equity

     981,996        1,032,151   
  

 

 

   

 

 

 

Total liabilities and equity

   $ 3,764,662      $ 3,766,897   
  

 

 

   

 

 

 

 

4


Emdeon Inc.

Condensed Consolidated Statements of Cash Flows

(unaudited and amounts in thousands)

 

     Nine Months Ended
September 30, 2013
    Nine Months Ended
September 30, 2012
 

Operating activities

    

Net income (loss)

   $ (57,988   $ (68,087

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

    

Depreciation and amortization

     137,943        140,354   

Accretion

     18,712        15,104   

Equity compensation

     5,637        3,969   

Deferred income tax expense (benefit)

     (27,884     (37,369

Amortization of debt discount and issuance costs

     6,585        7,613   

Change in contingent consideration

     1,879        —     

Gain on sale of cost method investment

     (2,925     —     

Loss on extinguishment of debt

     22,828        18,293   

Other

     1,068        1,927   

Changes in operating assets and liabilities:

    

Accounts receivable

     (15,582     (5,547

Prepaid expenses and other

     (1,804     (3,686

Accounts payable

     685        5,153   

Accrued expenses, deferred revenue and other liabilities

     20,985        (8,444

Tax receivable agreement obligations to related parties

     (103     (114
  

 

 

   

 

 

 

Net cash provided by (used in) operating activities

     110,036        69,166   
  

 

 

   

 

 

 

Investing activities

    

Purchases of property and equipment

     (52,806     (40,949

Payments for acquisitions, net of cash acquired

     (18,291     (59,011

Proceeds from sale of cost method investment

     5,820        —     
  

 

 

   

 

 

 

Net cash provided by (used in) investing activities

     (65,277     (99,960
  

 

 

   

 

 

 

Financing activities

    

Proceeds from Term Loan Facility

     —          70,351   

Debt principal payments

     (9,692     (9,565

Payments on Revolving Facility

     —          (15,000

Payment of loan costs

     (2,178     (2,060

Repayment of deferred financing arrangements

     (2,103     —     

Repurchase of Parent common stock

     (250     (317

Other

     (736     (203
  

 

 

   

 

 

 

Net cash provided by (used in) financing activities

     (14,959     43,206   
  

 

 

   

 

 

 

Net increase (decrease) in cash and cash equivalents

     29,800        12,412   

Cash and cash equivalents at beginning of period

     31,763        37,925   
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 61,563      $ 50,337   
  

 

 

   

 

 

 

 

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). 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 may 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 operating performance.

 

6


Emdeon Inc.

Reconciliation of GAAP Net Income to Adjusted EBITDA

(unaudited and amounts in thousands)

 

     Three Months
Ended
September 30,
2013
    Three Months
Ended
September 30,
2012
    Nine Months
Ended
September 30,
2013
    Nine Months
Ended
September 30,
2012
 

Net income (loss)

   $ (16,265   $ (15,156   $ (57,988   $ (68,087

Interest expense, net

     37,000        41,898        116,390        130,539   

Income tax provision (benefit)

     126        (9,093     (26,422     (36,364

Depreciation and amortization

     47,181        48,572        137,943        140,354   
  

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA

     68,042        66,221        169,923        166,442   
  

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA Adjustments:

        

Equity compensation

     2,089        3,969        5,637        3,969   

Acquisition accounting adjustments

     251        937        741        4,369   

Acquisition-related costs

     1,198        609        2,457        4,264   

Transaction-related costs and advisory fees

     1,500        2,237        4,825        6,899   

Strategic initiatives, duplicative and transition costs

     1,888        2,059        4,355        8,302   

Severance and retention costs

     3,507        163        5,136        1,080   

Accretion expense

     7,112        2,758        18,712        15,104   

(Gain) loss on disposal of assets

     (2,900     —          (997     52   

Contingent consideration

     1,879        —          1,879        —     

Loss on extinguishment of debt and other related costs

     —          —          24,311        25,411   

Other

     682        227        1,460        1,828   
  

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA Adjustments

     17,206        12,959        68,516        71,278   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 85,248      $ 79,180      $ 238,439      $ 237,720   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

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