Emdeon Reports Third Quarter 2012 Results -- Revenue of $297.1 million, increased 5.3% over third quarter 2011 -- Adjusted EBITDA of $79.2 million, increased 3.3% over third quarter 2011 PR Newswire NASHVILLE, Tenn., Nov. 8, 2012 NASHVILLE, Tenn., Nov. 8, 2012 /PRNewswire/ --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, 2012 as summarized below: (In millions) 3Q 2012 3Q 2011 % Change Revenue $ 297.1 $ 282.1 5.3% Net Income (Loss) $ (15.2) $ 6.3 -341.3% Non-GAAP Adjusted EBITDA $ 79.2 $ 76.7 3.3% "We continue to make significant progress towards our financial goals as demonstrated by our operational performance in the third quarter," said George Lazenby, chief executive officer for Emdeon. "The third quarter also proved productive strategically with the recently announced patient medication history initiative in our pharmacy services division and the launch of our integrated payment integrity suite, Emdeon Edge^™. We are looking forward to continued success to round out the year." Third quarter revenue was $297.1 million, an increase of 5.3%, compared to $282.1 for the same period in 2011. Net loss for the third quarter of 2012 was $15.2 million compared to net income of $6.3 million for the same period in 2011. This loss was primarily due to increased interest and other expenses associated with the November 2011 acquisition of Emdeon by affiliates of Blackstone, which more than offset the impact of business growth as compared to the prior year period. Third quarter 2012 Non-GAAP Adjusted EBITDA grew 3.3% to $79.2 million, or 26.7% of revenue, from Non-GAAP Adjusted EBITDA of $76.7 million, or 27.2% of revenue, for the comparable period in 2011. 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 discussedin 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. Emdeon Inc. Condensed Consolidated Statements of Operations (unaudited and amounts in thousands) Successor Predecessor Successor Predecessor Three Months Three Months Nine Months Nine Months Ended Ended Ended Ended September September September 30, September 30, 30, 30, 2012 2011 2012 2011 Revenue $ 297,075 $ 282,149 $ 877,577 $ 835,758 Costs and expenses: Cost of operations (exclusive of depreciation and amortization 184,794 173,455 542,550 515,481 below) Development and 7,994 7,473 24,246 23,602 engineering Sales, marketing, general and 35,308 38,342 107,382 105,604 administrative Depreciation and 48,572 39,830 140,354 116,786 amortization Accretion 2,758 - 15,104 - Operating income 17,649 23,049 47,941 74,285 Interest expense, 41,898 12,573 130,539 37,848 net Loss on extinguishment of - - 21,853 - debt Other - (4,398) - (8,036) Income (loss) before income tax (24,249) 14,874 (104,451) 44,473 provision (benefit) Income tax provision (9,093) 8,601 (36,364) 21,696 (benefit) Net income (loss) (15,156) 6,273 (68,087) 22,777 Net income attributable to - 2,906 - 9,214 noncontrolling interest Net income (loss) attributable to $ (15,156) $ 3,367 $ (68,087) $ 13,563 Emdeon Inc. Emdeon Inc. Condensed Consolidated Balance Sheets (unaudited and amounts in thousands, except share and per share amounts) September 30, December 31, 2012 2011 ASSETS Current assets: Cash and cash equivalents $ 50,337 $ 37,925 Accounts receivable, net of allowance for doubtful accounts of $4,276 and $1,201 at September 30, 2012 and December 197,169 188,960 31, 2011, respectively Deferred income tax assets 4,772 5,862 Prepaid expenses and other current assets 20,914 16,926 Total current assets 273,192 249,673 Property and equipment, net 268,381 277,768 Goodwill 1,481,951 1,443,574 Intangible assets, net 1,757,783 1,821,897 Other assets, net 30,797 39,403 Total assets $ 3,812,104 $ 3,832,315 LIABILITIES AND EQUITY Current liabilities: Accounts payable $ 13,567 $ 8,827 Accrued expenses 119,461 132,096 Deferred revenues 8,967 5,561 Current portion of long-term debt 16,805 16,034 Total current liabilities 158,800 162,518 Long-term debt, excluding current portion 2,005,368 1,945,074 Deferred income tax liabilities 469,578 502,044 Tax receivable agreement obligations to related 132,581 117,477 parties Other long-term liabilities 6,145 1,413 Commitments and contingencies Equity: Common stock (par value, $.01), 100 shares authorized and outstanding at September 30, 2012 and December 31, 2011, - - respectively Additional paid-in capital 1,128,320 1,120,676 Accumulated other comprehensive income (loss) (3,908) (194) Accumulated deficit (84,780) (16,693) Total equity 1,039,632 1,103,789 Total liabilities and equity $ 3,812,104 $ 3,832,315 Emdeon Inc. Condensed Consolidated Statements of Cash Flows (unaudited and amounts in thousands) Successor Predecessor Nine Months Ended Nine Months Ended September 30, 2012 September 30, 2011 Operating activities Net income (loss) $ (68,087) $ 22,777 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 140,354 116,786 Accretion 15,104 - Equity compensation 3,969 17,610 Deferred income tax expense (37,369) 2,611 (benefit) Amortization of debt discount 7,613 10,470 and issuance costs Amortization of discontinued cash flow hedge from other - 2,843 comprehensive loss Change in contingent - (8,036) consideration Change in fair value of interest rate swap (not subject - (7,983) to hedge accounting) Loss on extinguishment of debt 18,293 - Other 1,927 36 Changes in operating assets and liabilities: Accounts receivable (5,547) (7,040) Prepaid expenses and other (3,686) 10,843 Accounts payable 5,153 5,888 Accrued expenses, deferred (8,444) 16,329 revenue and other liabilities Tax receivable agreement (114) (2,593) obligations to related parties Net cash provided by operating 69,166 180,541 activities Investing activities Purchases of property and equipment (40,949) (48,207) Payments for acquisitions, net of (59,011) (39,422) cash acquired Net cash used in investing activities (99,960) (87,629) Financing activities Proceeds from Term Loan Facility 70,351 - Debt principal payments (9,565) (6,412) Payments on revolver (15,000) - Payment of loan costs (2,060) - Repurchase of Parent common stock (317) - Other (203) (620) Net cash provided by (used in) 43,206 (7,032) financing activities Net increase in cash and cash 12,412 85,880 equivalents Cash and cash equivalents at 37,925 99,188 beginning of period Cash and cash equivalents at end of $ 50,337 $ 185,068 period 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. Emdeon Inc. Reconciliation of GAAP Net Income to Adjusted EBITDA (unaudited and amounts in thousands) For the Three Months For the Nine Months Ended September 30, Ended September 30, 2012 2011 2012 2011 Net income (loss) $ (15,156) $ 6,273 $ (68,087) $ 22,777 Interest expense, net 41,898 12,573 130,539 37,848 Income tax provision (benefit) (9,093) 8,601 (36,364) 21,696 Depreciation and amortization 48,572 39,830 140,354 116,786 EBITDA 66,221 67,277 166,442 199,107 Non-2011 Transactions related adjustments: Equity compensation 3,969 6,126 3,969 17,610 Acquisition-related costs 609 1,448 4,264 4,237 Strategic initiatives, duplicative running and 2,059 198 5,592 711 transition costs Contingent consideration - (4,398) - (8,036) adjustments Loss on extinguishment of debt - - 25,411 - and other related costs Other 390 321 2,960 547 2011 Transactions related adjustments: Costs and fees 2,237 5,689 6,899 6,024 Acquisition accounting 937 - 4,370 - adjustments Strategic initiatives costs - - 2,709 - Accretion expense 2,758 - 15,104 - EBITDA Adjustments 12,959 9,384 71,277 21,093 Adjusted EBITDA $ 79,180 $ 76,661 $ 237,720 $ 220,200 SOURCE Emdeon Inc. Website: http://www.emdeon.com Contact: Investor Relations, Bob East, Westwicke Partners, +1-443-213-0502, email@example.com or Emdeon@westwicke.com
Emdeon Reports Third Quarter 2012 Results
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