IRVING, Texas, Nov. 06, 2020 (GLOBE NEWSWIRE) -- HMS Holdings Corp. (Nasdaq: HMSY) today announced financial results for the third quarter ended September 30, 2020.

“HMS experienced a solid rebound in top-line growth with third quarter revenue increasing 15.8% sequentially from the second quarter and rising 12.5% -- and 5.2% on an organic basis -- when compared with the same quarter last year. This is a testament to our organizational agility and our ability to continue to deliver strong client value to meet the industry's evolving needs,” said Bill Lucia, Chairman and CEO. “Our resilient business has significant financial strength and continues to generate robust cash flows.

“We remain well positioned for strong performance in the fourth quarter and into 2021 as we believe strong cost containment and clinical outcome capabilities should continue to grow in importance both during and after this health crisis. This may be crucial in helping States close budget gaps as they deal with fiscal pressures due to lower revenue and higher Medicaid costs. In addition, we believe increasing Medicaid enrollment and improving healthcare utilization and other trends should be beneficial for the HMS business over the coming months,” Lucia concluded.

Third Quarter

Total revenue in the third quarter of 2020 was $165.2 million, compared to total revenue of $146.8 million in the prior year third quarter (+12.5%). Revenue in the third quarter of 2020 from the Accent business, which was acquired at the end of 2019, was $10.7 million. Organic revenue in the third quarter of 2020, excluding Accent, increased 5.2%.

Coordination of Benefits (COB) revenue was $113.9 million in the third quarter of 2020 compared to $94.6 million in the prior year third quarter (+20.3%). Organic COB revenue, excluding Accent, was $103.1 million (+9.0%).

Payment Integrity (PI) revenue was $38.0 million in the third quarter of 2020, compared to $37.0 million in the prior year third quarter (+2.6%). Population Health Management (PHM) revenue was $13.4 million in the third quarter of 2020, compared to $15.2 million in the prior year third quarter (-11.9%).

Net income in the third quarter of 2020 was $18.0 million, or $0.20 per diluted share, compared to net income of $21.1 million, or $0.24 per diluted share, in the third quarter of 2019. Net income in the third quarter of 2019 included a net benefit of $0.06 per diluted share related to a gain on the sale of an investment (the "3Q 2019 Gain on Investment").

Adjusted EBITDA in the third quarter of 2020 was $43.8 million, compared to $40.5 million in the third quarter of 2019, which included a net benefit of $7.7 million related to the 3Q 2019 Gain on Investment (+8.1%). Excluding the impact of the 3Q 2019 Gain on Investment, adjusted EBITDA in the third quarter of 2020 increased 33.5% compared to the same period in the prior year.

Adjusted EPS in the third quarter of 2020 was $0.30 per diluted share, compared to $0.31 per diluted share in the third quarter of 2019, which included a net benefit of $0.06 per diluted share related to the 3Q 2019 Gain on Investment. Excluding the 3Q 2019 Gain on Investment, adjusted EPS in the third quarter of 2020 was $0.30 per diluted share, compared to $0.25 per diluted share in the prior year period (+20.0%).

Nine Months Ended

Total revenue for the nine months ended September 30, 2020 was $479.3 million, compared to $463.0 million in the prior year period (+3.5%). For the nine months ended September 30, 2019, total revenue included $10.5 million in revenue for the second quarter of 2019 as the Company released its remaining contract-related balance under its original Medicare RAC Contract (the "2Q 2019 Reserve Release"). Revenue in the nine months ended September 30, 2020 from the Accent business was $32.4 million. Excluding the 2Q 2019 Reserve Release and revenue from the Accent business, total revenue decreased 1.2% compared to the prior year period.

COB revenue for the nine months ended September 30, 2020 was $338.7 million, compared to $305.6 million in the prior year period (+10.8%). Organic COB revenue for the nine months ended September 30, 2020, excluding Accent, was $306.2 million (+0.2%).

PI revenue for the nine months ended September 30, 2020 was $101.7 million, compared to $113.9 million in the prior year period (-10.7%). Excluding the 2Q 2019 Reserve Release, total PI revenue for the nine months ended September 30, 2020, decreased 1.6% compared to the prior year period. PHM revenue for the nine months ended September 30, 2020 was $38.9 million, compared to $43.5 million in the prior year period (-10.5%).

Net income for the nine months ended September 30, 2020 was $37.3 million, or $0.42 per diluted share, compared to $69.9 million, or $0.77 per diluted share, in the prior year period. For the nine months ended September 30, 2019, net income included $0.07 per diluted share related to the 2Q 2019 Reserve Release, a net benefit of $0.06 per diluted share related to the 3Q 2019 Gain on Investment, and discrete tax benefits recorded in the first quarter of 2019 totaling $0.07 per diluted share.

Adjusted EBITDA for the nine months ended September 30, 2020 was $118.7 million, compared to $137.3 million in the prior year period (-13.5%), which included a net benefit of $8.2 million related to the 2Q 2019 Reserve Release and $7.7 million related to the 3Q 2019 Gain on Investment. Excluding those benefits, Adjusted EBITDA decreased 2.2% compared to the prior year period.

Adjusted EPS for the nine months ended September 30, 2020 was $0.81 per diluted share. Adjusted EPS was $1.04 per diluted share in the comparable prior year period, including $0.07 per diluted share related to the 2Q 2019 Reserve Release, $0.06 per diluted share related to the 3Q 2019 Gain on Investment and discrete tax benefits recorded in the first quarter of 2019 totaling $0.07 per diluted share. Excluding the 2Q 2019 Reserve Release, the 3Q 2019 Gain on Investment and discrete tax benefit in 2019, adjusted EPS for the first nine months of 2020 was $0.81 per diluted share, compared to $0.84 per diluted share in the prior year period (-3.6%).

Cash Flow and Capital Resources

Net cash provided by operating activities for the nine months ended September 30, 2020 was $93.0 million compared to $112.9 million in the first nine months of 2019. Capital expenditures were $21.2 million for the nine months ended September 30, 2020, compared to $16.6 million in the comparable prior year period.

The Company's balance sheet at September 30, 2020 included $211.0 million of cash and cash equivalents and $240.0 million in outstanding bank debt, compared to cash and cash equivalents of $139.3 million and outstanding bank debt of $240.0 million at December 31, 2019.

About HMS

HMS advances healthcare by helping organizations reduce costs and improve health outcomes. Through our industry-leading technology, analytics and engagement solutions, we save billions of dollars annually while helping consumers lead healthier lives. HMS provides a broad range of payment accuracy and population health management solutions that help move healthcare forward. Visit us at www.hms.com and follow us on Twitter at @HMSHealthcare.