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Exhibit 99.1

 

LOGO

FOR IMMEDIATE RELEASE

EMDEON REPORTS SECOND QUARTER RESULTS

Solutions Revenue of $263.8 million, Increased 5.9% for the Quarter and 7.6% Year-to-Date

Adjusted EBITDA of $97.9 million, Increased 8.4% for the Quarter and 10.0% Year-to-Date

NASHVILLE, Tenn. (July 24, 2015) – Emdeon Inc., a leading provider of software and analytics, network solutions and technology-enabled services that optimize communications, payments and actionable insights by leveraging its intelligent healthcare platform, today announced financial results for the second quarter and six months ended June 30, 2015, as summarized below:

 

     Three Months Ended June 30,     Six Months Ended June 30,  
(In millions)    2015      2014     %
Change
    2015      2014     %
Change
 

Solutions Revenue (exclusive of postage)

   $ 263.8       $ 249.1        5.9   $ 522.2       $ 485.2        7.6

Net Income (Loss)

   $ 7.9       ($ 59.5     113.3   $ 2.2       ($ 62.5     103.5

Adjusted EBITDA

   $ 97.9       $ 90.3        8.4   $ 185.5       $ 168.6        10.0

Highlights include:

 

    Solutions revenue increased 5.9% and 7.6% for the three and six month periods, respectively, compared to the prior year periods led by volume gains within network solutions and the continued acceleration of Emdeon’s software and analytics suite of solutions.

 

    Adjusted EBITDA increased 8.4% and 10.0% for the three and six month periods, respectively, compared to the prior year periods as a result of revenue growth, operational efficiencies and other productivity improvements.

 

    In July, Emdeon entered into a definitive agreement to acquire Altegra Health, a cloud-based analytics platform and related healthcare consumer engagement provider that combines data aggregation and analytics with unique member engagement and reporting capabilities to achieve actionable insights and improved management for value-based healthcare. The transaction is subject to customary closing conditions and expected to close in the third quarter.


“We are pleased with our financial performance, which resulted in 10.0% Adjusted EBITDA growth for the year-to-date period. During the second quarter, we continued to experience positive sales momentum and network volume gains throughout our platform,” commented Neil de Crescenzo, president and chief executive officer for Emdeon. “Going forward, the strong strategic fit of our pending acquisition of Altegra Health will further position Emdeon for success by helping our customers address the needs of value-based healthcare. The combination of Altegra Health’s data and analytic solutions and our Intelligent Healthcare Network will accelerate growth in our software and analytics segment and allow us to further expand our suite of solutions to create new, innovative platforms and deliver actionable insights to our customers.”

Operating Performance

Second quarter solutions revenue was $263.8 million, an increase of 5.9%, compared to $249.1 million for the same period in 2014. Year-to-date solutions revenue was $522.2 million, an increase of 7.6%, compared to $485.2 million for the same period in 2014. This increase in solutions revenue as compared to the prior year periods was primarily due to continued volume gains in network solutions as a result of increases in the number of insured lives of customers from the ongoing expansion of Medicaid, Medicare Advantage and federal and state exchanges and growth in recently developed and acquired solutions.

Second quarter net income was $7.9 million compared to a net loss of $59.5 million for the same period in 2014. Year-to-date net income was $2.2 million compared to a net loss of $62.5 million for the same period in 2014. This increase in net income as compared to the prior year periods was primarily due to the absence of an impairment charge related to the partial loss of a customer contract recognized in the prior year periods a recent change to state tax laws impacting the current year periods.

Second quarter Non-GAAP Adjusted EBITDA increased 8.4% to $97.9 million, or 37.1% of solutions revenue, from $90.3 million, or 36.3% of solutions revenue, for the comparable period in 2014. Year-to-date 2015 Non-GAAP Adjusted EBITDA increased 10.0% to $185.5 million, or 35.5% of solutions revenue, from $168.6 million, or 34.8% of solutions revenue, for the comparable period in 2014. This increase in Adjusted EBITDA and as a percentage of solutions revenue compared to the prior year periods is primarily due to business growth and productivity improvements throughout the business.

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 software and analytics, network solutions and technology-enabled services that optimize communications, payments and actionable insights by leveraging its intelligent healthcare platform, which includes one of the largest financial and administrative networks in the United States healthcare system. Emdeon’s platform and solutions integrate and automate key functions of its payer, provider and pharmacy customers throughout the patient encounter, from consumer engagement and pre-care eligibility and enrollment through payment. By using 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 complex workflows. 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; the anticipated benefits from acquisitions (including the pending acquisition of Altegra Health) 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, 2014, as well as other reports filed by Emdeon with the Securities and Exchange Commission.

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.


Emdeon Inc.

Condensed Consolidated Statements of Operations

(unaudited and amounts in thousands)

 

     Three
Months
    Three
Months
   

Six

Months

   

Six

Months

 
     Ended     Ended     Ended     Ended  
     June 30,     June 30,     June 30,     June 30,  
     2015     2014     2015     2014  

Revenue:

        

Solutions revenue

   $ 263,805      $ 249,077      $ 522,216      $ 485,211   

Postage revenue

     90,996        87,081        178,280        170,154   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenue

     354,801        336,158        700,496        655,365   

Costs and expenses:

        

Cost of operations (exclusive of depreciation and amortization below)

     121,288        115,499        242,474        227,832   

Development and engineering

     10,123        7,062        20,949        15,968   

Sales, marketing, general and administrative

     46,973        52,738        95,237        103,911   

Customer postage

     90,996        87,081        178,280        170,154   

Depreciation and amortization

     49,515        46,630        97,629        93,093   

Accretion

     3,818        4,844        8,797        4,768   

Impairment of long-lived assets

     122        76,508        961        79,576   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

     31,966        (54,204     56,169        (39,937

Interest expense, net

     38,135        36,543        76,143        73,106   

Contingent consideration

     1,850        (290     (165     1,670   

Other

     —          (3,971     —          (3,971
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income tax provision (benefit)

     (8,019     (86,486     (19,809     (110,742

Income tax provision (benefit)

     (15,947     (26,959     (21,987     (48,226
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

   $ 7,928      $ (59,527   $ 2,178      $ (62,516
  

 

 

   

 

 

   

 

 

   

 

 

 


Emdeon Inc.

Condensed Consolidated Balance Sheets

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

 

     June 30,     December 31,  
     2015     2014  
ASSETS     

Current assets:

    

Cash and cash equivalents

   $ 160,376      $ 82,306   

Accounts receivable, net of allowance for doubtful accounts of $3,470 and $6,377 at June 30, 2015 and December 31, 2014, respectively

     234,140        233,791   

Deferred income tax assets

     14,055        18,893   

Prepaid expenses and other current assets

     29,939        29,246   
  

 

 

   

 

 

 

Total current assets

  438,510      364,236   

Property and equipment, net

  222,392      244,153   

Goodwill

  1,697,891      1,702,569   

Intangible assets, net

  1,484,772      1,539,394   

Other assets, net

  18,849      20,312   
  

 

 

   

 

 

 

Total assets

$ 3,862,414    $ 3,870,664   
  

 

 

   

 

 

 
LIABILITIES AND EQUITY

Current liabilities:

Accounts payable

$ 21,896    $ 16,399   

Accrued expenses

  196,494      175,206   

Deferred revenues

  10,636      10,518   

Current portion of long-term debt

  27,133      27,308   
  

 

 

   

 

 

 

Total current liabilities

  256,159      229,431   

Long-term debt, excluding current portion

  2,137,214      2,146,597   

Deferred income tax liabilities

  378,488      413,227   

Tax receivable agreement obligations to related parties

  172,780      163,983   

Other long-term liabilities

  12,858      15,361   

Commitments and contingencies

Equity:

Common stock (par value, $.01), 100 shares authorized and outstanding at June 30, 2015 and December 31, 2014, respectively

  —        —     

Additional paid-in capital

  1,150,667      1,149,360   

Accumulated other comprehensive income (loss)

  (2,590   (1,955

Accumulated deficit

  (243,162   (245,340
  

 

 

   

 

 

 

Total equity

  904,915      902,065   
  

 

 

   

 

 

 

Total liabilities and equity

$ 3,862,414    $ 3,870,664   
  

 

 

   

 

 

 


Emdeon Inc.

Condensed Consolidated Statements of Cash Flows

(unaudited and amounts in thousands)

 

     Six Months     Six Months  
     Ended     Ended  
     June 30,     June 30,  
     2015     2014  

Operating activities

    

Net income (loss)

   $ 2,178      $ (62,516

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

    

Depreciation and amortization

     97,629       93,093  

Accretion

     8,797       4,768  

Equity compensation

     4,183       3,682  

Deferred income tax expense (benefit)

     (23,213     (48,695

Amortization of debt discount and issuance costs

     4,579       3,843  

Contingent consideration

     (165     1,670  

Impairment of long-lived assets

     961       79,576  

Other

     —          (2,029

Changes in operating assets and liabilities:

    

Accounts receivable

     (1,420     (25,648

Prepaid expenses and other

     (1,084     (7,251

Accounts payable

     6,293       1,237  

Accrued expenses, deferred revenue and other liabilities

     24,860        (7,897
  

 

 

   

 

 

 

Net cash provided by (used in) operating activities

     123,598       33,833  
  

 

 

   

 

 

 

Investing activities

    

Purchases of property and equipment

     (24,654     (25,952

Proceeds/(payments) for acquisitions, net of cash acquired

     824       (779

Other

     (90     36  
  

 

 

   

 

 

 

Net cash provided by (used in) investing activities

     (23,920     (26,695
  

 

 

   

 

 

 

Financing activities

    

Payments on Term Loan Facility

     (7,240     (7,669

Payment of debt assumed from acquisition

     —          (1,877

Deferred financing obligation payments

     (5,939     (4,176

Repurchase of Parent common stock

     (3,681     (869

Capital contribution from Parent

     805       2,092  

Payment of Contingent Consideration

     (5,553     —     
  

 

 

   

 

 

 

Net cash provided by (used in) financing activities

     (21,608     (12,499
  

 

 

   

 

 

 

Net increase (decrease) in cash and cash equivalents

     78,070       (5,361

Cash and cash equivalents at beginning of period

     82,306       76,538  
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 160,376     $ 71,177  
  

 

 

   

 

 

 


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 (loss) before net interest expense, income tax provision (benefit) 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 also are used in Emdeon’s credit facilities and indentures, although the adjustments used to calculate Adjusted EBITDA as used in Emdeon’s 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.


Emdeon Inc.

Reconciliation of GAAP Net Income to Adjusted EBITDA

(unaudited and amounts in thousands)

 

     Three
Months
    Three
Months
   

Six

Months

    Six
Months
 
     Ended     Ended     Ended     Ended  
     June 30,     June 30,     June 30,     June 30,  
     2015     2014     2015     2014  

Net income (loss)

   $ 7,928      $ (59,527   $ 2,178      $ (62,516

Interest expense, net

     38,135        36,543        76,143        73,106   

Income tax provision (benefit)

     (15,947     (26,959     (21,987     (48,226

Depreciation and amortization

     49,515        46,630        97,629        93,093   
  

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA

     79,631        (3,313     153,963        55,457   
  

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA Adjustments:

        

Equity compensation

     1,998        1,790        4,183        3,682   

Acquisition accounting adjustments

     484        224        926        535   

Acquisition-related costs

     2,385        1,689        3,154        3,554   

Transaction-related costs and advisory fees

     1,662        1,615        3,179        3,115   

Strategic initiatives, duplicative and transition costs

     2,278        4,307        3,235        9,353   

Severance costs

     2,014        973        4,118        3,721   

Accretion

     3,818        4,844        8,797        4,768   

Impairment of long-lived assets

     122        76,508        961        79,576   

Contingent consideration

     1,850        (290     (165     1,670   

Other non-routine, net

     1,648        1,984        3,100        3,205   
  

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA Adjustments

     18,259        93,644        31,488        113,179   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 97,890      $ 90,331      $ 185,451      $ 168,636   
  

 

 

   

 

 

   

 

 

   

 

 

 


# # #

Contact:

Julie Loftus Trudell

Senior Vice President, Investor Relations

3055 Lebanon Pike, Suite 1000

Nashville, TN 37214

Direct: 615.932.3445

Cell: 757-642-1995

Email: jtrudell@emdeon.com

Bob East

Westwicke Partners

443.213.0502

bob.east@westwicke.com or

Emdeon@westwicke.com