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HMS Holdings Management Discusses Q2 2012 Results - Earnings Call Transcript

Stocks in this article: HMSY

Revenue growth across our products was also mixed. Our core Coordination of Benefits revenue grew 13% year-over-year in the quarter. Excluding the federal business area, Program Integrity revenues were flat year-over-year. This reflects the longer ramp-up time for the Medicaid RAC. We expect to see growth rates in the non-federal Program Integrity products area to increase in the second half of this year.

Total revenues in the quarter, excluding HDI and our federal businesses, were up 10.1% year-over-year. As a reminder, we continue to see revenue shortfalls in Q2 relating to 5010/D.0 transition issues with our trading partners as reported earlier this year. We expect these issues to be resolved in the second half of this year.

Revenue for the first half of 2012 increased 32.4% year-over-year to $227.4 million. This included $47.3 million of revenue associated with the acquisition of HDI. Excluding HDI, revenue for the first half of the year was $180.1 million.

At this time, we are also reaffirming our 2012 revenue guidance in the range of $500 million to $515 million.

Now let's look at expenses for the quarter. Total cost of services for the quarter was $79.6 million. Excluding HDI, total cost of services for the quarter were $60.4 million, an increase of $2.2 million or 3.8% compared to the $58.2 million last year.

Total cost of services for the first half of 2012 was $156 million. Excluding HDI, total cost of services were $120.3 million, an increase of $6.4 million or 5.6% compared to the $113.9 million last year.

Compensation related to cost of services was $40 million. Excluding HDI, total compensation related to cost of services for the quarter was $31.6 million, an increase of $0.1 million or 0.4% compared to the $31.5 million in last year. As a percentage of revenue, this expense was 33.3% versus 35.3% in the prior year.

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