HMS Holdings Corp. (NASDAQ:HMSY) today announced financial results for its first quarter ended March 31, 2014.
For the first quarter of 2014, HMS reported revenue of $104.7 million, a decrease of 10.2% compared to revenue of $116.6 million for the same period a year ago. Net income for the quarter was $3.4 million or $0.04 per fully diluted share compared to net income of $7.0 million, or $0.08 per fully diluted share for the same period a year ago. Adjusted EPS decreased 26.7% year over year to $0.11.
"Our overall financial results continue to reflect the effects of an extended Medicare RAC reprocurement process," commented Bill Lucia, President and CEO. "The majority of our business, however, remains strong and is beginning to show the positive effects of ACA-fueled Medicaid expansion, commercial market demand for our innovative solutions, and our rigorous cost rationalization initiatives. Given this strong start to the year, we believe that we are well positioned to achieve our 2014 guidance of 10-11% growth in non-Medicare RAC revenue with expansion of operating margin by 5-6%."
Lucia added, "In this quarter, we began to observe a considerable increase in the number of new lives related to Medicaid expansion, supporting growth estimates for our Medicaid coordination of benefits product line. We are also seeing significant growth in commercial market sales and now serve seven of the 10 largest insurers in the country. As commercial clients, including Medicare Advantage Plans, face the challenges of doing business in the post-reform environment, they are asking for additional cost containment solutions to ensure the integrity of their programs and protect their bottom lines."
"Our continued focus on streamlining our cost structure has resulted in a tightening of operating expenses two quarters in a row, with a 9% decrease in our cost run rate from Q3 of 2013—all as a result of operational improvements in our non-Medicare RAC business," continued Lucia. "Product yield and infrastructure improvements are ongoing as we drive toward maximizing margin."
Lucia concluded, "We are excited to see growth related to the ACA begin to materialize. As we move through 2014, we are focused on capitalizing on these growth areas, reducing our cost structure, and exploring new ways to further strengthen the company. We maintain our strong support for the Medicare RAC program as the most effective tool in the nation for protecting the Medicare Trust Fund, and look forward to CMS issuing contract awards."
Q1 2014 Conference Call
HMS will report its first quarter 2014 financial and operating results at 9:00 a.m. EDT on Friday, May 9, 2014.