Emdeon Reports Third Quarter Results

NASHVILLE, Tenn., Nov. 6, 2015 /PRNewswire/ -- 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 third quarter and nine months ended September 30, 2015, as summarized below:

Highlights include:

• In August, closed the previously announced acquisition of Altegra Health.
• In August, shareholders contributed $166.1 million of equity and the Company borrowed an additional $395.0 million under incremental term loan facilities and issued $250.0 million of 6% senior notes due 2021 to fund the acquisition of Altegra Health.
• In September, announced plans to rebrand to Change Healthcare™ beginning in the fourth quarter of 2015.  The Company accelerated amortization of its existing tradename asset and recognized approximately $31.5 million of amortization expense ($18.5 million net of tax) during the third quarter.  Excluding the amortization of the existing trade name, net loss in the third quarter would have been approximately $14.4 million.

"We continue to make progress toward our strategic goals by improving existing capabilities and adding new solutions to better serve our customers," commented Neil de Crescenzo, president and chief executive officer for Emdeon. "During the quarter, we successfully completed the previously announced acquisition of Altegra Health. This acquisition further expands the breadth and quality of our solutions by adding risk analytics and quality reporting capabilities, as well as enhancing our consumer engagement solutions. Additionally, we announced the plan to rebrand our company as Change Healthcare to better reflect our diverse capabilities and solutions as well as our integral position within the U.S. healthcare system."

Solutions Revenue

Third quarter solutions revenue was $287.9 million, an increase of 12.9%, compared to $255.0 million for the same period in 2014. This increase in solutions revenue as compared to the prior year period was primarily due to recently acquired and developed solutions, including the Altegra Health acquisition, and 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.

Year-to-date solutions revenue was $810.2 million, an increase of 9.4%, compared to $740.2 million for the same period in 2014.

Net Income/Loss

Third quarter net loss was $32.9 million compared to $13.0 million for the same period in 2014. Net loss was negatively impacted by the Company's plan to rebrand as Change Healthcare beginning in the fourth quarter of 2015.   The Company accelerated amortization of its existing tradename asset and recognized $31.5 million of amortization expense ($18.5 million net of taxes) during the three months ended September 30, 2015.  Excluding the amortization of the existing trade name asset, net loss in the third quarter would have been approximately $14.4 million.

Year-to-date net loss was $30.7 million compared to $75.5 million for the same period in 2014.

Non-GAAP Adjusted EBITDA

Third quarter Non-GAAP Adjusted EBITDA increased 8.2% to $101.8 million, or 35.3% of solutions revenue, from $94.1 million, or 36.9% of solutions revenue, for the comparable period in 2014. This increase in Adjusted EBITDA compared to the prior year period is primarily due to business growth, including the impact of acquisitions. Non-GAAP Adjusted EBITDA decreased as a percentage of solutions revenue due to changes in revenue mix.

Year-to-date 2015 Non-GAAP Adjusted EBITDA increased 9.3% to $287.2 million, or 35.5% of solutions revenue, from $262.7 million, or 35.5% of solutions revenue, for the comparable period in 2014.

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."

Balance Sheet

As of September 30, 2015, cash and cash equivalents were $84.9 million compared to $82.3 million as of December 31, 2014. 

In August, shareholders contributed $166.1 million of equity in conjunction with the Altegra acquisition.

Total debt increased during the third quarter to $2.8 billion compared to $2.1 billion at December 31, 2014. The increase in debt was due to the partial financing of the Altegra Health acquisition through $395.0 million of incremental term loans under our existing senior credit facilities and the issuance of $250.0 million of 6% senior notes due 2021. 

Cash Flow

Cash flow provided by operations totaled $152.3 million for the nine months ended September 30, 2015 compared to $108.4 million for the same period in the prior year.  Cash flow for the nine months ended September 30, 2015 was positively impacted by business growth, the effects of acquisitions and the timing of collections and related disbursements.

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 the single largest financial and administrative network 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.

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.

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 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 statements made by Emdeon herein, or elsewhere, speak 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.   

SOURCE Emdeon Inc.

Related Links

http://www.emdeon.com