Emdeon Reports First Quarter 2013 Results -- Revenue of $305.7 million for First Quarter 2013

-- Adjusted EBITDA of $76.0 million for First Quarter 2013

NASHVILLE, Tenn., May 9, 2013 /PRNewswire/ -- Emdeon Inc., a leading provider of healthcare revenue and payment cycle management and clinical information exchange solutions, today announced financial results for the first quarter ended March 31, 2013 as summarized below:


(In millions)


1Q 2013



1Q 2012



% Change


Revenue

$

305.7


$

286.0



6.9%


Net Income (Loss)

$

(13.5)


$

(17.5)



23.3%


Non-GAAP Adjusted EBITDA

$

76.0


$

78.4



-3.1%

"Our operating results for the first quarter were solid, and particularly strong in payment distribution services and revenue cycle solutions," said George Lazenby, chief executive officer for Emdeon. "We remain pleased with the overall performance of our businesses and continue to invest in new initiatives to support our long-term growth strategies."

First quarter revenue was $305.7 million, an increase of 6.9%, compared to $286.0 for the same period in 2012. Net loss for the first quarter of 2013 was $13.5 million compared to $17.5 million for the same period in 2012.  This improvement in net loss compared to the corresponding prior year period was primarily due to the impact of business growth and lower interest expense as a result of the repricing of Emdeon's term debt in April 2012.

First quarter 2013 Non-GAAP Adjusted EBITDA decreased 3.1% to $76.0 million, or 24.9% of revenue, from Non-GAAP Adjusted EBITDA of $78.4 million, or 27.4% of revenue, for the comparable period in 2012.  This decline in Adjusted EBITDA as compared to the same period in 2012 is primarily due to increased investments related to sales and other growth initiatives and one less business day in the first quarter of 2013.

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 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, 2012, 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.  

 

 


Emdeon Inc


Condensed Consolidated Statements of Operations


(unaudited and amounts in thousands)























Three Months



Three Months





Ended March 31,



Ended March 31,





2013



2012












Revenue


$

305,702



$

286,035


Costs and expenses:










Cost of operations (exclusive of depreciation and










amortization below)



189,307




173,146



Development and engineering



7,722




9,085



Sales, marketing, general and administrative



39,111




36,127



Depreciation and amortization



46,815




45,156



Accretion



4,140




3,768


Operating income



18,607




18,753


Interest expense, net



41,415




45,739


Income (loss) before income tax provision (benefit)



(22,808)




(26,986)


Income tax provision (benefit)



(9,357)




(9,452)


Net income (loss)


$

(13,451)



$

(17,534)


 

 


Emdeon Inc


Condensed Consolidated Balance Sheets


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


















March 31,


December 31,







2013


2012


ASSETS


Current assets:









Cash and cash equivalents


$

53,321


$

31,763



Accounts receivable, net of allowance for doubtful accounts of $4,062









and $3,585 at March 31, 2013 and December 31, 2012, respectively



206,804



190,021



Deferred income tax assets



3,788



4,184



Prepaid expenses and other current assets



28,985



28,160


Total current assets



292,898



254,128


Property and equipment, net



275,936



272,088


Goodwill



1,481,889



1,481,889


Intangible assets, net



1,702,811



1,730,089


Other assets, net



31,471



29,694


Total assets


$

3,785,005


$

3,767,888











LIABILITIES AND EQUITY


Current liabilities:









Accounts payable


$

13,518


$

6,223



Accrued expenses



115,916



102,069



Deferred revenues



10,285



9,342



Current portion of long-term debt



23,498



17,330


Total current liabilities



163,217



134,964


Long-term debt, excluding current portion



2,006,198



1,999,392


Deferred income tax liabilities



457,851



467,912


Tax receivable agreement obligations to related parties



129,142



125,003


Other long-term liabilities



7,729



8,466


Commitments and contingencies








Equity:









Common stock (par value, $.01), 100 shares authorized and outstanding









      at March 31, 2013 and December 31, 2012, respectively



-



-



Additional paid-in capital



1,132,743



1,130,968



Accumulated other comprehensive income (loss)



(3,396)



(3,789)



Accumulated deficit



(108,479)



(95,028)


Total equity



1,020,868



1,032,151


Total liabilities and equity


$

3,785,005


$

3,767,888


 

 


Emdeon Inc

Condensed Consolidated Statements of Cash Flows

(unaudited and amounts in thousands)














Three Months Ended


Three Months Ended



March 31, 2013


March 31, 2012


Operating activities







Net income (loss)

$

(13,451)


$

(17,534)


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








Depreciation and amortization


46,815



45,156



Accretion


4,140



3,768



Equity compensation


1,775



-



Deferred income tax expense (benefit)


(9,917)



(9,956)



Amortization of debt discount and issuance costs


2,601



2,545



Other


(34)



149


Changes in operating assets and liabilities:








Accounts receivable


(16,783)



(188)



Prepaid expenses and other


(971)



(6,655)



Accounts payable


6,922



1,754



Accrued expenses, deferred revenue and other liabilities


17,817



2,802



Tax receivable agreement obligations to related parties


(103)



(114)


Net cash provided by (used in) operating activities


38,811



21,727









Investing activities








Purchases of property and equipment


(13,551)



(15,146)


Net cash provided by (used in) investing activities


(13,551)



(15,146)









Financing activities








Debt principal payments


(3,252)



(3,060)



Payments on revolver


-



(15,000)



Other


(450)



(68)


Net cash provided by (used in) financing activities


(3,702)



(18,128)









Net increase (decrease) in cash and cash equivalents


21,558



(11,547)


Cash and cash equivalents at beginning of period


31,763



37,925


Cash and cash equivalents at end of period

$

53,321


$

26,378


 

 

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)

























Three Months



Three Months








Ended March 31,



Ended March 31,








2013



2012













Net income (loss)


$

(13,451)


$

(17,534)


Interest expense, net



41,415



45,739


Income tax provision (benefit)



(9,357)



(9,452)


Depreciation and amortization



46,815



45,156


EBITDA



65,422



63,909













EBITDA Adjustments:









Equity compensation



1,775



-



Acquisition accounting adjustments



274



1,937



Acquisition-related costs



497



927



Transaction-related costs and advisory fees



1,500



2,148



Strategic initiatives, duplicative and transition costs



2,045



5,216



Accretion expense



4,140



3,768



Other



391



538



EBITDA Adjustments



10,622



14,534


Adjusted EBITDA


$

76,044


$

78,443


 

SOURCE Emdeon Inc.



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