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HMS Holdings' (HMSY) Q4 Earnings Beat, Revenues Rise Y/Y

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HMS Holdings Corp. (HMSY - Free Report) reported adjusted earnings of 31 cents per share in fourth-quarter 2018, which surpassed the Zacks Consensus Estimate of 25 cents. In the year-ago quarter, the company’s earnings came in at 24 cents per share.

Revenues totaled $155.8 million, which marginally missed the Zacks Consensus Estimate of $156 million. However, the top line increased 4.9% on a year-over-year basis.

2018 at a Glance

Net revenues in 2018 amounted to $598.3 million, up 14.8% on a year-over-year basis.

Analyzing the segments by market, 2018 Commercial revenues were $323.2 million (54% of net revenues). State government revenues summed $233.9 million (39.1%).  Federal and Other revenues totaled $41.2 million (12.7%).

Analyzing the segments by product, Coordination of Benefits (COB) revenues in 2018 were $397.1 million (66.4%). Analytical Services revenues summed $201.2 million (33.6%).

HMS Holdings Corp Price and Consensus

 

Q4 Segmental Analysis by Product

Analytical Services

Revenues at this segment were $56.9 million in the fourth quarter, up 32.9% year over year. 

Within Analytical Services, PI revenues (excluding Medicare RAC) amounted to $35.5 million, up 32% year over year. Medicare RAC revenues were $5.4 million, which skyrocketed 170% year over year.

TPM revenues totaled $16 million in the quarter under review, mirroring a 15.1% improvement on a year-over-year basis.

COB

Revenues at the COB segment grossed $98.9 million in the fourth quarter, down 6.4% year over year.

Q4 Segmental Analysis by Market

Commercial revenues in the fourth quarter were $84.2 million, reflecting 9.1% growth on a year-over-year basis. 

State government revenues amounted to $61.2 million, which decreased 4.7% year over year. 

Federal and Other revenues totaled $10.4 million in the quarter, up 46.5% year over year.

Margin Analysis

Total cost of services in the reported quarter was $101.2 million, up 4.4% year over year.

Adjusted gross profit came in at $54.5 million, up 5.9% from the prior-year quarter figure. Adjusted gross margin was 35% of net revenues, up 30 basis points (bps) year over year.

Selling, general and administrative expenses totaled $26.7 million, down 17% year over year. Operating income in the fourth quarter was $27.8 million, up 44.5% on a year-over-year basis. Operating margin in the quarter was 17.9% of net revenues, up 490 bps.

Guidance

For 2019, the Zacks Rank #3 (Hold) company expects revenues between $640 million and $650 million. This depicts year-over-year growth in the band of 8.4-10.2%. The mid-point of $645 million is above the Zacks Consensus Estimate of $636.8 million.

Net income is expected in the band of $64-$70 million, mirroring 27.2-39.2% growth year over year.

Adjusted EBITDA is expected in the range of $170-$175 million, reflecting growth of 9-12.2%.

Earnings of MedTech Majors at a Glance

Some better-ranked MedTech stocks that delivered solid results in the respective quarters are Varian Medical Systems (VAR - Free Report) , AngioDynamics (ANGO - Free Report) and CONMED Corporation (CNMD - Free Report) .

Varian reported fiscal first-quarter 2019 adjusted earnings per share (EPS) of $1.06, in line with the Zacks Consensus Estimate. Revenues of $741 million outpaced the consensus mark of $717.9 million. The stock has a Zacks Rank #2 (Buy).

AngioDynamics’ fiscal second-quarter 2019 adjusted EPS of 22 cents exceeded the Zacks Consensus Estimate by a penny. Revenues totaled $91.5 million, which surpassed the consensus estimate by 2.9%. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

CONMED delivered fourth-quarter 2018 adjusted EPS of 73 cents, in line with the Zacks Consensus Estimate. Revenues of $242.4 million outshined the Zacks Consensus Estimate of $229.2 million. The stock carries a Zacks Rank of 2.

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