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Exhibit 99.1

 

LOGO

FOR IMMEDIATE RELEASE

Emdeon Reports Third Quarter 2014 Results

 

    Revenue of $341.6 million for Third Quarter 2014

 

    Adjusted EBITDA of $94.1 million for Third Quarter 2014

NASHVILLE, Tenn. (November 7, 2014) – 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, 2014 as summarized below:

 

(In millions)    3Q 2014      3Q 2013      % Change  

Revenue

   $ 341.6       $ 317.8         7.5

Net Loss

   $ 13.0       $ 16.3         20.1

Non-GAAP Adjusted EBITDA

   $ 94.1       $ 85.2         10.3

“We remain pleased with our Adjusted EBITDA and revenue growth trajectory. The 10.3% increase in Adjusted EBITDA over the prior year period and expansion of Adjusted EBITDA margin to 27.5% for the quarter was largely due to revenue growth and continued productivity improvements throughout our business. Our revenue growth was driven by increased sales of our solutions and volume gains due to the increase in the number of insured lives of our customers,” said Neil de Crescenzo, president and chief executive officer for Emdeon. “Our integration efforts related to the July 2014 Capario acquisition and its suite of innovative, cloud-based applications are going well. During the third quarter, we were able to fully repay the portion of the purchase price that was funded by our revolving credit facility through operating cash flow, and are already enjoying positive impacts to our financial results.”

Third quarter revenue was $341.6 million, an increase of 7.5%, compared to $317.8 million for the same period in 2013. This increase in revenue was primarily due to business growth, including the Capario acquisition, partially offset by a one-time reduction of revenue. Net loss for the third quarter of 2014 was $13.0 million compared to $16.3 million for the same period in 2013. This improvement in net loss was primarily due to business growth.

Third quarter 2014 Non-GAAP Adjusted EBITDA increased 10.3% to $94.1 million, or 27.5% of revenue, from Non-GAAP Adjusted EBITDA of $85.2 million, or 26.8% of revenue, for the comparable period in 2013. This increase in Adjusted EBITDA and as a percentage of revenue compared to the same period in 2013 is primarily due to business growth and productivity improvements throughout the business, partially offset by increased investments related to sales and product development initiatives and the one-time reduction of revenue described above.

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, pharmacies and patients in the U.S. healthcare system. Emdeon’s offerings integrate and automate key business and administrative functions of its payer, provider and pharmacy 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 Annual Report filed on Form 10-K for the year ended December 31, 2013, 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


Emdeon Inc.

Condensed Consolidated Statements of Operations

(unaudited and amounts in thousands)

 

     Three Months
Ended
September 30,
2014
    Three Months
Ended
September 30,
2013
    Nine Months
Ended
September 30,
2014
    Nine Months
Ended
September 30,
2013
 

Revenue

   $ 341,608      $ 317,810      $ 996,973      $ 922,452   

Costs and expenses:

        

Cost of operations (exclusive of depreciation and amortization below)

     202,305        191,695        597,843        563,146   

Development and engineering

     8,156        7,878        24,771        23,201   

Sales, marketing, general and administrative

     45,031        44,104        150,739        123,469   

Depreciation and amortization

     48,448        47,181        141,541        137,943   

Accretion

     4,452        7,112        9,220        18,712   

Impairment of long-lived assets

     3,114        25        82,689        1,887   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

     30,102        19,815        (9,830     54,094   

Interest expense, net

     36,635        37,000        109,741        116,390   

Loss on extinguishment of debt

     —          —          —          23,160   

Contingent consideration

     1,976        1,879        3,646        1,879   

Other

     —          (2,925     (3,968     (2,925
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income tax provision (benefit)

     (8,509     (16,139     (119,249     (84,410

Income tax provision (benefit)

     4,493        126        (43,733     (26,422
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

   $ (13,002   $ (16,265   $ (75,516   $ (57,988
  

 

 

   

 

 

   

 

 

   

 

 

 


Emdeon Inc.

Condensed Consolidated Balance Sheets

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

 

     September 30,
2014
    December 31,
2013
 
ASSETS     

Current assets:

    

Cash and cash equivalents

   $ 23,927      $ 76,538   

Accounts receivable, net of allowance for doubtful accounts of $4,310 and $3,856 at September 30, 2014 and December 31, 2013, respectively

     231,950        214,247   

Deferred income tax assets

     16,974        6,317   

Prepaid expenses and other current assets

     33,085        27,019   
  

 

 

   

 

 

 

Total current assets

     305,936        324,121   

Property and equipment, net

     239,635        269,470   

Goodwill

     1,584,655        1,502,434   

Intangible assets, net

     1,530,775        1,632,688   

Other assets, net

     19,656        19,169   
  

 

 

   

 

 

 

Total assets

   $ 3,680,657      $ 3,747,882   
  

 

 

   

 

 

 
LIABILITIES AND EQUITY     

Current liabilities:

    

Accounts payable

   $ 12,263      $ 8,367   

Accrued expenses

     143,807        131,149   

Deferred revenues

     10,233        10,881   

Current portion of long-term debt

     24,493        31,330   
  

 

 

   

 

 

 

Total current liabilities

     190,796        181,727   

Long-term debt, excluding current portion

     1,998,569        1,999,026   

Deferred income tax liabilities

     416,986        436,263   

Tax receivable agreement obligations to related parties

     159,716        150,496   

Other long-term liabilities

     13,576        11,824   

Commitments and contingencies

    

Equity:

    

Common stock (par value, $.01), 100 shares authorized and outstanding at September 30, 2014 and December 31, 2013, respectively

     —          —     

Additional paid-in capital

     1,147,586        1,139,375   

Accumulated other comprehensive income (loss)

     (1,570     (1,343

Accumulated deficit

     (245,002     (169,486
  

 

 

   

 

 

 

Total equity

     901,014        968,546   
  

 

 

   

 

 

 

Total liabilities and equity

   $ 3,680,657      $ 3,747,882   
  

 

 

   

 

 

 


Emdeon Inc.

Condensed Consolidated Statements of Cash Flows

(unaudited and amounts in thousands)

 

     Nine
Months Ended
September 30, 2014
    Nine
Months Ended
September 30, 2013
 

Operating activities

    

Net income (loss)

   $ (75,516   $ (57,988

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

    

Depreciation and amortization

     141,541        137,943   

Accretion

     9,220        18,712   

Equity compensation

     5,914        5,637   

Deferred income tax expense (benefit)

     (44,886     (27,884

Amortization of debt discount and issuance costs

     5,804        6,585   

Contingent consideration

     3,646        1,879   

Gain on sale of cost method investment

     —          (2,925

Loss on extinguishment of debt

     —          22,828   

Impairment of long-lived assets

     82,689        1,887   

Other

     (3,125     (819

Changes in operating assets and liabilities:

    

Accounts receivable

     (12,656     (15,582

Prepaid expenses and other

     (4,490     (1,804

Accounts payable

     644        685   

Accrued expenses, deferred revenue and other liabilities

     (375     20,985   

Tax receivable agreement obligations to related parties

     —          (103
  

 

 

   

 

 

 

Net cash provided by (used in) operating activities

     108,410        110,036   
  

 

 

   

 

 

 

Investing activities

    

Purchases of property and equipment

     (37,673     (52,806

Payments for acquisitions, net of cash acquired

     (87,909     (18,291

Proceeds from sale of cost method investment

     36        5,820   

Other

     (133     —     
  

 

 

   

 

 

 

Net cash provided by (used in) investing activities

     (125,679     (65,277
  

 

 

   

 

 

 

Financing activities

    

Debt principal payments

     (9,659     (9,692

Payment of debt assumed from acquisition

     (23,262     (218

Proceeds from Revolving Facility

     65,000        —     

Payments on Revolving Facility

     (65,000     —     

Payment of loan costs

     —          (2,178

Repayment of deferred financing arrangements

     (4,717     (2,103

Repurchase of Parent common stock

     (960     (250

Capital contribution from Parent

     3,256        —     

Other

     —          (518
  

 

 

   

 

 

 

Net cash provided by (used in) financing activities

     (35,342     (14,959
  

 

 

   

 

 

 

Net increase (decrease) in cash and cash equivalents

     (52,611     29,800   

Cash and cash equivalents at beginning of period

     76,538        31,763   
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 23,927      $ 61,563   
  

 

 

   

 

 

 


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 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.


Emdeon Inc.

Reconciliation of GAAP Net Income to Adjusted EBITDA

(unaudited and amounts in thousands)

 

     Three Months
Ended
September 30,
2014
    Three Months
Ended
September 30,
2013
    Nine Months
Ended
September 30,
2014
    Nine Months
Ended
September 30,
2013
 

Net income (loss)

   $ (13,002   $ (16,265   $ (75,516   $ (57,988

Interest expense, net

     36,635       37,000       109,741       116,390  

Income tax provision (benefit)

     4,493       126       (43,733     (26,422

Depreciation and amortization

     48,448       47,181       141,541       137,943  
  

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA

     76,574       68,042       132,033       169,923  
  

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA Adjustments:

        

Equity compensation

     2,232        2,089        5,914        5,637   

Acquisition accounting adjustments

     189        251        725        741   

Acquisition-related costs

     1,387        1,519        5,473        2,457   

Transaction-related costs and advisory fees

     1,683        1,500        4,799        4,825   

Strategic initiatives, duplicative and transition costs

     406        2,427        9,686        4,355   

Severance costs

     1,902        3,509        5,752        5,138   

Loss on extinguishment of debt and other related costs

     —          —          —          24,311   

Accretion

     4,452        7,112        9,220        18,712   

Impairment of long-lived assets

     3,114        25        82,689        1,887   

Contingent Consideration

     1,976        1,879        3,646        1,879   

Other non-routine, net

     137        (3,105     2,748        (1,425
  

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA Adjustments

     17,478        17,206        130,652        68,517   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 94,052      $ 85,248      $ 262,685      $ 238,440