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EX-99.2 - EX-99.2 - Cotiviti Holdings, Inc.cotv-20160809ex99287a0a8.htm
8-K - 8-K - Cotiviti Holdings, Inc.cotv-20160809x8k.htm

Exhibit 99.1

 

Cotiviti-Investment-300x199.jpg

Cotiviti Announces Second Quarter 2016 Results

 

Revenue of $158.3 million, up 19% over prior year period

Net Income of $10.9 million, up 40% over prior year period

Net Income per diluted share of $0.13

Non-GAAP Adjusted Net Income per diluted share of $0.37

Non-GAAP Adjusted EBITDA of $63.0 million, up 20% over prior year period

 

Atlanta, GA, August 9, 2016. (BUSINESSWIRE) Cotiviti Holdings Inc. (NYSE:COTV), a leading provider of analytics-driven payment accuracy solutions primarily focused on the healthcare industry, today announced financial results for the three and six months ended June 30, 2016.  The Company will host a conference call on August 10, 2016 at 8:30 a.m. Eastern Time to discuss second quarter and year-to-date results.

 

“We delivered strong financial and operating performance as we continue to execute against the business plan we articulated throughout the IPO process.  Our second quarter results demonstrate the strength of our business and the value delivered to clients, with total revenue growth of 19% compared to the prior year period driven by 22% revenue growth in our Healthcare segment,” said Doug Williams, Chief Executive Officer. “Cotiviti’s financial model is tightly aligned with our clients and our success depends on the results we deliver. Our robust performance, as demonstrated by the 20% growth in non-GAAP Adjusted EBITDA in the second quarter, is a result of the payment solutions we provide our clients through our proprietary technology platform, advanced analytics capabilities and the unique expertise collected from decades of experience across the payment continuum.  As healthcare and retail continue to experience industry-wide disruption through demographic shifts and increasing payment complexities, we believe that Cotiviti remains well-positioned to deliver tangible value through actionable information and proprietary solutions to new clients while expanding our relationships with existing clients.”

 

With the proceeds from the IPO and cash from operations, we were able to significantly reduce our net leverage ratio to 3.5 times at June 30, 2016, which is down a full turn from 4.5 times at December 31, 2015,” said Steve Senneff, Chief Financial Officer.  “In addition to reducing debt, our strong cash flow from operations allows us to further innovate by investing in analytics and technology to continuously evolve our payment accuracy solutions in order to bring value to clients.”

 

Second Quarter 2016 Financial Results

 

·

Total revenue for the quarter increased 19% to $158.3 million, compared to $133.3 million a year ago. Revenue growth was driven by a 22% increase in the Healthcare segment to $141.0 million, with the Global Retail and Other segment contributing $17.3 million, a 4% decline from a year ago.  Healthcare revenue was favorably impacted during both the quarter and first six months by an increase in volume and expanding adoption of our solutions within existing healthcare clients.  In addition, we experienced certain one-time, special projects in the second quarter totaling approximately $5 million that are not anticipated to reoccur in the second half of 2016.  Retail revenue decreased due to timing and the nature of claims reviewed, along with foreign currency fluctuations due to the strengthening U.S. dollar.

 

·

Net income increased 40% to $10.9 million, or $0.13 per diluted share for the quarter, compared to $7.8 million in the prior year quarter, or $0.10 per diluted share.  Cotiviti used proceeds from the IPO and cash from operations to pay down $236.1 million of the Company’s Second Lien Credit Facility.  This early payment of debt resulted in a $7.1 million loss on extinguishment of debt and a reduction in interest expense of approximately $1.3 million for the second quarter.  As a result of the IPO, certain stock options were accelerated resulting in an additional $2.3 million of stock compensation expense during the second quarter. 

 

1


 

 

·

Non-GAAP Adjusted EBITDA for the quarter was $63.0 million, compared to $52.6 million a year ago, or a 20% increase.

 

·

Non-GAAP Adjusted Net Income for the quarter was $31.1 million, or $0.37 per diluted share, compared to $24.1 million, or $0.31 per diluted share a year ago.

 

Adjusted EBITDA, Adjusted Net Income, and Adjusted Net Income per Share are non-GAAP financial measures.  For an explanation of these as measures of the Company’s operating performance, refer to the reconciliation in “Non-GAAP Financial Measures.”

 

Initial Public Offering (IPO)

 

On May 26, 2016, Cotiviti Holdings, Inc. began trading on the New York Stock Exchange after completing its IPO, issuing 12,936,038 shares (including the partial exercise of the underwriter overallotment of 436,038 shares).  The offering price of the shares sold in the IPO was $19.00 per share, resulting in net proceeds to the Company of approximately $226.9 million after the underwriters’ discounts and commissions and other expenses payable by the Company.

 

Guidance

 

Cotiviti is providing the following full year 2016 guidance:

 

·

Total revenue in a range of $610 - $615 million; and

 

·

Adjusted EBITDA in a range of $233 - $235 million.

 

Conference Call Information

 

To participate in the conference call, domestic callers can dial (877) 883-0383 and international callers can dial (412) 902-6506 and provide the following conference passcode: 7893080.  The call will also be webcast and be accessible on the Investor page of Cotiviti’s website at http://investors.cotiviti.com. 

 

Supplemental Financial Information

 

Supplemental financial information including detailed historical financial statements that are not part of this press release is available on the Investor page of Cotiviti’s website at http://investors.cotiviti.com.

 

About Cotiviti

 

Cotiviti is a leading payment accuracy provider that helps healthcare payers and retailers achieve their business objectives by unlocking value from the incongruities the company discovers in the complex interactions customers have with stakeholders. Cotiviti helps clients capture over $3 billion annually through improved payment accuracy. Cotiviti provides services to eight of the top ten U.S. healthcare payers and eight of the top ten U.S. retailers.

 

Forward-Looking Statements

 

This press release contains forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995.  These statements are subject to risks and uncertainties. All statements other than statements of historical fact or relating to present facts or current conditions included in this press release are forward-looking statements. Forward-looking statements give our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “anticipate,” “estimate,” “expect,” “project,” “seek,” “plan,” “intend,” “believe,” “will,” “may,” “could,” “continue,” “likely,” “should,” and other words.

 

The forward-looking statements contained in this press release are based on assumptions that we have made in light of our industry experience and our perceptions of historical trends, current conditions, expected future developments and other factors that we believe are appropriate under the circumstances. These statements are not guarantees of performance or results. These assumptions and our future performance or results involve risks and uncertainties (many of which are beyond our control). Important factors that could cause actual results to differ materially from those in the

2


 

forward-looking statements include regional, national or global political, economic, business, competitive, market and regulatory conditions and the following: our inability to successfully leverage our existing client base by expanding the volume of claims reviewed and cross-selling additional solutions; improvements to healthcare claims and retail billing processes reducing the demand for our solutions or rendering our solutions unnecessary; healthcare spending fluctuations; our clients declining to renew their agreements with us or renewing at lower performance fee levels; inability to develop new client relationships; delays in implementing our solutions; system interruptions or failures, including cyber-security breaches, identity theft or other disruptions that could compromise our information; our failure to innovate and develop new solutions for our clients; our failure to comply with applicable privacy, security and data laws, regulations and standards; changes in regulations governing healthcare administration and policies, including governmental restrictions on the outsourcing of functions such as those that we provide; loss of a large client; consolidation among healthcare payers or retailers; slow development of the healthcare payment accuracy market; negative publicity concerning the healthcare payment industry or patient confidentiality and privacy; significant competition for our solutions; our inability to protect our intellectual property rights, proprietary technology, information, processes and know-how; compliance with current and future regulatory requirements; declines in contracts awarded through competitive bidding or our inability to re-procure contracts through the competitive bidding process; our failure to accurately estimate the factors upon which we base our contract pricing; our inability to manage our growth; our inability to successfully integrate and realize synergies from the merger of Connolly Superholdings, Inc. and iHealth Technologies, Inc. in May 2014 or any future acquisitions or strategic partnerships; our failure to maintain or upgrade our operational platforms; our failure to reprocure our Medicare Recovery Audit Contractor program contract; litigation, regulatory or dispute resolution proceedings, including claims or proceedings related to intellectual property infringements; our inability to expand our retail business; our inability to manage our relationships with information suppliers, software vendors or utility providers; fluctuation in our results of operations; changes in tax rates; risks associated with international operations; our inability to realize the book value of intangible assets; our success in attracting and retaining qualified employees and key personnel; and general economic, political and market forces and dislocations beyond our control. Additional factors or events that could cause our actual performance to differ from these forward-looking statements may emerge from time to time, and it is not possible for us to predict all of them. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, our actual financial condition, results of operations, future performance and business may vary in material respects from the performance projected in these forward-looking statements.

 

Any forward-looking statement made by us in this press release speaks only as of the date on which it is made. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

 

Non-GAAP Financial Measures

 

The Company defines Adjusted EBITDA as net income before depreciation and amortization, interest expense, other non-operating (income) expense such as foreign currency translation, income tax expense (benefit), gain on discontinued operations, transaction-related expenses and other, stock-based compensation and loss on extinguishment of debt.  The Company defines Adjusted Net Income as net income adjusted for non-cash and other non-recurring items.

 

Management believes Adjusted EBITDA is useful because it provides meaningful supplemental information about our operating performance and facilitates period-to-period comparisons without regard to our financing methods, capital structure or other items that we believe are not indicative of our ongoing operating performance.  Management believes Adjusted Net Income is useful because it provides meaningful supplemental information about our operating performance and facilitates period-to-period comparisons without regard to non-cash expenses and other items that are one-time in nature.  In order to assure that all investors have access to similar data the Company has determined that it is appropriate to provide these non-GAAP financial measures.  Management believes we are enhancing investors’ understanding of our business and our results of operations, as well as assisting them in evaluating how well we are executing our strategic initiatives.  Adjusted EBITDA and Adjusted Net Income are intended as supplemental measures of our performance that is not required by, or presented in accordance with U.S. generally accepted accounting principles, or GAAP.  Adjusted EBITDA and Adjusted Net Income are not determined in accordance with U.S. GAAP, and should not be considered in isolation or as an alternative to net income, income from operations, net cash provided by operating, investing or financing activities or other financial statement data presented as indicators of financial performance or liquidity, each as presented in accordance with GAAP.

3


 

 

Cotiviti Holdings, Inc.

Consolidated Balance Sheets

 

 

 

 

 

 

 

 

 

 

 

June 30, 

 

December 31, 

 

(in thousands)

    

2016

    

2015

 

 

 

(Unaudited)

 

 

 

 

ASSETS

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

45,703

 

$

149,365

 

Restricted cash

 

 

7,566

 

 

10,741

 

Accounts receivable, net of allowance for doubtful accounts of $761 and $1,053 at June 30, 2016 and December 31, 2015, respectively; and net of estimated allowance for refunds and appeals of $45,495 and $33,406 at June 30, 2016 and December 31, 2015, respectively

 

 

74,674

 

 

78,856

 

Prepaid expenses and other current assets

 

 

13,237

 

 

24,044

 

Deferred tax assets

 

 

38,233

 

 

32,919

 

Total current assets

 

 

179,413

 

 

295,925

 

Property and equipment, net

 

 

60,703

 

 

57,452

 

Goodwill

 

 

1,196,585

 

 

1,197,044

 

Intangible assets, net

 

 

563,863

 

 

594,410

 

Other long-term assets

 

 

2,864

 

 

2,176

 

TOTAL ASSETS

 

$

2,003,428

 

$

2,147,007

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Current maturities of long-term debt

 

$

8,100

 

$

21,099

 

Customer deposits

 

 

7,566

 

 

10,741

 

Accounts payable and accrued other expenses

 

 

30,223

 

 

29,521

 

Accrued compensation costs

 

 

37,775

 

 

42,902

 

Estimated liability for refunds and appeals

 

 

70,574

 

 

67,775

 

Total current liabilities

 

 

154,238

 

 

172,038

 

Long-term liabilities:

 

 

 

 

 

 

 

Long-term debt

 

 

795,563

 

 

1,012,971

 

Other long-term liabilities

 

 

9,628

 

 

12,199

 

Deferred tax liabilities

 

 

157,176

 

 

162,203

 

Total long-term liabilities

 

 

962,367

 

 

1,187,373

 

Total liabilities

 

 

1,116,605

 

 

1,359,411

 

Commitments and contingencies (Note 6)

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

Common stock ($0.001 par value; 600,000,000 and 122,000,000 shares authorized, 90,177,862 and 77,237,711 issued, and 90,170,462 and 77,230,311 outstanding at June 30, 2016 and December 31, 2015, respectively)

 

 

90

 

 

77

 

Additional paid-in capital

 

 

888,893

 

 

807,419

 

Retained earnings (deficit)

 

 

4,042

 

 

(14,935)

 

Accumulated other comprehensive loss

 

 

(6,104)

 

 

(4,867)

 

Treasury stock, at cost (7,400 shares at June 30, 2016 and December 31, 2015)

 

 

(98)

 

 

(98)

 

Total stockholders’ equity

 

 

886,823

 

 

787,596

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

 

$

2,003,428

 

$

2,147,007

 

 

4


 

 

Cotiviti Holdings, Inc.

Consolidated Statements of Comprehensive Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

(unaudited, in thousands except per share data)

 

June 30, 

 

June 30, 

 

 

    

2016

    

2015

    

2016

    

2015

    

Net revenue

 

$

158,291

 

$

133,306

 

$

301,009

 

$

252,944

 

Cost of revenue (exclusive of depreciation and amortization, stated separately below):

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation

 

 

55,285

 

 

44,528

 

 

108,746

 

 

86,504

 

Other costs of revenue

 

 

5,275

 

 

4,621

 

 

10,673

 

 

8,983

 

Total cost of revenue

 

 

60,560

 

 

49,149

 

 

119,419

 

 

95,487

 

Selling, general and administrative expenses (exclusive of depreciation and amortization, stated separately below):

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation

 

 

23,176

 

 

17,443

 

 

42,286

 

 

35,589

 

Other selling, general and administrative expenses

 

 

14,945

 

 

14,756

 

 

30,174

 

 

28,072

 

Total selling, general and administrative expenses

 

 

38,121

 

 

32,199

 

 

72,460

 

 

63,661

 

Depreciation and amortization of property and equipment

 

 

4,811

 

 

2,775

 

 

9,646

 

 

5,497

 

Amortization of intangible assets

 

 

15,208

 

 

15,410

 

 

30,415

 

 

30,819

 

Transaction-related expenses

 

 

653

 

 

 —

 

 

893

 

 

 —

 

Total operating expenses

 

 

119,353

 

 

99,533

 

 

232,833

 

 

195,464

 

Operating income

 

 

38,938

 

 

33,773

 

 

68,176

 

 

57,480

 

Other expense (income):

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

14,660

 

 

16,753

 

 

30,720

 

 

33,675

 

Loss on extinguishment of debt

 

 

7,068

 

 

4,084

 

 

7,068

 

 

4,084

 

Other non-operating (income) expense

 

 

(359)

 

 

(21)

 

 

(658)

 

 

(197)

 

Total other expense (income)

 

 

21,369

 

 

20,816

 

 

37,130

 

 

37,562

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations before income taxes

 

 

17,569

 

 

12,957

 

 

31,046

 

 

19,918

 

Income tax expense

 

 

6,676

 

 

5,177

 

 

12,069

 

 

8,503

 

Income from continuing operations

 

 

10,893

 

 

7,780

 

 

18,977

 

 

11,415

 

Gain on discontinued operations, net of tax

 

 

 —

 

 

 —

 

 

 

 

559

 

Net income

 

$

10,893

 

$

7,780

 

$

18,977

 

$

11,974

 

Other comprehensive (loss) income, net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

(645)

 

 

905

 

 

(671)

 

 

(239)

 

Change in fair value of derivative instruments (net of related taxes of $160 and $208 for the three months ended June 30, 2016 and 2015, respectively and $453 and $519 for the six months ended June 30, 2016 and 2015, respectively)

 

 

(84)

 

 

(494)

 

 

(566)

 

 

(1,568)

 

Total other comprehensive (loss) income

 

 

(729)

 

 

411

 

 

(1,237)

 

 

(1,807)

 

Comprehensive income

 

$

10,164

 

$

8,191

 

$

17,740

 

$

10,167

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share from continuing operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.13

 

$

0.10

 

$

0.24

 

$

0.15

 

Diluted

 

 

0.13

 

 

0.10

 

 

0.24

 

 

0.14

 

Earnings per share from discontinued operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

 

$

 —

 

$

 

$

0.01

 

Diluted

 

 

 

 

 —

 

 

 

 

0.01

 

Total earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.13

 

$

0.10

 

$

0.24

 

$

0.16

 

Diluted

 

 

0.13

 

 

0.10

 

 

0.24

 

 

0.15

 

 

5


 

 

Cotiviti Holdings, Inc.

Consolidated Statements of Cash Flows

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended

 

(unaudited, in thousands)

 

June 30, 

 

 

    

2016

    

2015

 

Cash flows from operating activities:

 

 

 

 

 

 

 

Net income

 

$

18,977

 

$

11,974

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

Deferred income taxes

 

 

(9,797)

 

 

(2,171)

 

Depreciation and amortization

 

 

40,061

 

 

36,316

 

Stock-based compensation expense

 

 

4,502

 

 

1,219

 

Amortization of debt issuance costs

 

 

2,675

 

 

2,878

 

Accretion of asset retirement obligations

 

 

92

 

 

76

 

Loss on extinguishment of debt

 

 

7,068

 

 

4,084

 

Gain on discontinued operations

 

 

 —

 

 

(900)

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Restricted cash

 

 

3,176

 

 

10,298

 

Accounts receivable

 

 

4,182

 

 

(7,358)

 

Other current assets

 

 

9,625

 

 

(249)

 

Other long-term assets

 

 

(688)

 

 

894

 

Customer deposits

 

 

(3,176)

 

 

(10,298)

 

Accrued compensation

 

 

(5,127)

 

 

(10,594)

 

Accounts payable and accrued other expenses

 

 

(1,295)

 

 

(18,897)

 

Estimated liability for refunds and appeals

 

 

2,799

 

 

(4,296)

 

Other long-term liabilities

 

 

98

 

 

(156)

 

Other

 

 

(598)

 

 

24

 

Net cash provided by operating activities

 

 

72,574

 

 

12,844

 

Cash flows from investing activities:

 

 

 

 

 

 

 

Expenditures for property and equipment

 

 

(14,019)

 

 

(6,324)

 

Other investing activities

 

 

1,181

 

 

406

 

Net cash used in investing activities

 

 

(12,838)

 

 

(5,918)

 

Cash flows from financing activities:

 

 

 

 

 

 

 

Net proceeds from issuance of common stock

 

 

226,929

 

 

 —

 

Proceeds from exercise of stock options

 

 

56

 

 

 —

 

Dividends paid

 

 

(150,000)

 

 

 —

 

Payment of debt issuance costs

 

 

 —

 

 

(1,086)

 

Repayment of debt

 

 

(240,150)

 

 

(4,050)

 

Net cash used in financing activities

 

 

(163,165)

 

 

(5,136)

 

Effect of foreign exchanges on cash and cash equivalents

 

 

(233)

 

 

(124)

 

Net (decrease) increase in cash and cash equivalents

 

 

(103,662)

 

 

1,666

 

Cash and cash equivalents at beginning of period

 

 

149,365

 

 

118,612

 

Cash and cash equivalents at end of the period

 

$

45,703

 

$

120,278

 

Supplemental disclosures of cash flow information:

 

 

 

 

 

 

 

Cash paid for income taxes

 

$

11,268

 

$

29,435

 

Cash paid for interest

 

 

27,795

 

 

30,733

 

Noncash investing activities (accrued property and equipment purchases)

 

 

11,779

 

 

1,398

 

 

6


 

Reconciliation of Net Income to Adjusted EBITDA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

Six Months Ended

 

 

 

 

 

June 30,

 

Percent

 

June 30,

 

Percent

 

(unaudited, in thousands)

    

2016

    

2015

    

Change

    

2016

    

2015

    

Change

 

Net income

 

$

10,893

 

$

7,780

 

40

%  

$

18,977

 

$

11,974

 

58

%

Adjustments to net income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

20,019

 

 

18,185

 

10

%  

 

40,061

 

 

36,316

 

10

%

Interest expense

 

 

14,660

 

 

16,753

 

(12)

%  

 

30,720

 

 

33,675

 

(9)

%

Other non-operating (income) expense (a)

 

 

(359)

 

 

(21)

 

NM

 

 

(658)

 

 

(197)

 

234

%

Income tax expense

 

 

6,676

 

 

5,177

 

29

%  

 

12,069

 

 

8,503

 

42

%

Gain on discontinued operations, net of tax (b)

 

 

 —

 

 

 —

 

 —

 

 

 —

 

 

(559)

 

(100)

%

Transaction-related expenses and other (c)

 

 

653

 

 

 —

 

100

%  

 

893

 

 

 —

 

100

%

Stock-based compensation (d)

 

 

3,428

 

 

616

 

456

%  

 

4,502

 

 

1,219

 

269

%

Loss on extinguishment of debt (e)

 

 

7,068

 

 

4,084

 

73

%  

 

7,068

 

 

4,084

 

73

%

Adjusted EBITDA

 

$

63,038

 

$

52,574

 

20

%  

$

113,632

 

$

95,015

 

20

%

% of revenue

 

 

40

%  

 

39

%  

 

 

 

38

%  

 

38

%  

 

 


(1)

Represents other nonoperating (income) expense that consists primarily of gains and losses on transactions settled in foreign currencies. Income received for certain subleases is included herein.

(2)

Represents payment on a $900 note receivable ($559 net of taxes) related to a  business that was disposed of in 2012. This note receivable had been reported in the loss on discontinued operations in 2012 upon the sale of that business. Since the date of sale, we had elected to fully reserve the note receivable as the collectability was determined to be uncertain.

(3)

Represents transactionrelated expenses that consist primarily of certain expenses associated with the preparation for our Initial Public Offering and certain corporate development activity.

(4)

Represents expense related to stockbased compensation awards granted to certain employees, officers and nonemployee directors as longterm incentive compensation. We recognize the related expense for these awards ratably over the vesting period.

(5)

Represents loss on extinguishment of debt that consists primarily of fees paid and writeoffs of unamortized debt issuance costs and original issue discount in connection with the repricing of our longterm debt in 2015 and the early repayment of a portion of our long-term debt in 2016.

 

Reconciliation of Net Income to Adjusted Net Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

Six Months Ended

 

 

 

 

 

June 30,

 

Percent

 

June 30,

 

Percent

 

(unaudited, in thousands)

    

2016

    

2015

    

Change

    

2016

    

2015

    

Change

 

Net income

 

$

10,893

 

$

7,780

 

40

%  

$

18,977

 

$

11,974

 

58

%

Adjustments to net income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of Acquired Intangible Assets - Non Tax Deductible

 

 

10,402

 

 

10,597

 

(2)

%  

 

20,804

 

 

21,194

 

(2)

%

Amortization of Acquired Intangible Assets - Tax Deductible

 

 

4,806

 

 

4,813

 

 —

 

 

9,611

 

 

9,625

 

 —

 

Loss on extinguishment of debt

 

 

7,068

 

 

4,084

 

73

%  

 

7,068

 

 

4,084

 

73

%

Transaction-related expenses and other

 

 

653

 

 

 —

 

100

%  

 

893

 

 

 —

 

100

%

Stock-based compensation

 

 

3,428

 

 

616

 

456

%  

 

4,502

 

 

1,219

 

269

%

Gain on discontinued operations

 

 

 —

 

 

 —

 

 —

 

 

 —

 

 

(900)

 

100

%

Tax effect of above adjustments (1)

 

 

(6,121)

 

 

(3,805)

 

61

%  

 

(8,473)

 

 

(5,611)

 

51

%

Adjusted Net Income

 

$

31,129

 

$

24,085

 

29

%  

$

53,382

 

$

41,585

 

28

%

Adjusted Net Income per diluted share

 

$

0.37

 

$

0.31

 

21

%  

0.66

 

$

0.54

 

24

%


(1)

This line represents the tax impact of the amortization of acquired intangible assets - tax deductible, loss on extinguishment of debt, stock-based compensation and gain on discontinued operations assuming a 40% tax rate.

 

Adjusted EBITDA 2016 Guidance Reconciliation

(unaudited, in millions)

 

 

 

 

 

 

 

 

 

 

 

2016 Guidance Range

 

 

    

Low

    

High

 

Net income

 

$

42

 

$

45

 

Adjustments to net income (excluding income taxes) (1)

 

 

163

 

 

160

 

Income tax expense (2)

 

 

28

 

 

30

 

Adjusted EBITDA

 

$

233

 

$

235

 


(1)

Adjustments to net income include depreciation and amortization, interest expense, other non-operating (income) expense, transaction-related expenses and other, stock-based compensation and loss on extinguishment of debt.

(2)

A 40% tax rate is assumed to approximate the Company's effective tax rate.

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Investor and Media Contact:

 

Jennifer W. DiBerardino

Vice President, Investor Relations 203-642-0718

Investors.Relations@Cotiviti.com 

 

 

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