Review of Financial Results for the Fourth Quarter of 2012

Revenue increased 26% to $51.4 million for the fourth quarter of 2012 from $40.9 million for the fourth quarter of 2011. The increase in revenue was driven primarily by the growth in professional management revenue, which increased 37% to $43.2 million for the fourth quarter of 2012 from $31.5 million for the fourth quarter of 2011.

Costs and expenses increased 28% to $41.2 million for the fourth quarter of 2012 from $32.2 million for the fourth quarter of 2011. This was due primarily to an increase in fees paid to plan providers for connectivity to plan and plan participant data, printed material costs associated with enrollment campaigns and member materials, wages due to increased headcount and higher compensation, and non-cash stock-based compensation expense.

As a percentage of revenue, cost of revenue (exclusive of amortization of internal use software) increased to 36% for the fourth quarter of 2012 from 32% for the fourth quarter of 2011, due primarily to an increase in fees paid to plan providers for connectivity to plan and plan participant data resulting from the achievement of certain contractual AUM-based milestones in 2012 and, to a lesser extent, due to an increase in print costs as a result of a revised agreement with one of our subadvisory plan providers.

Income from operations was $10.1 million for the fourth quarter of 2012 compared to $8.7 million for the fourth quarter of 2011. As a percentage of revenue, income from operations was 20% for the fourth quarter of 2012 compared to 21% for the fourth quarter of 2011.

Net income was $6.5 million, or $0.13 per diluted share, for the fourth quarter of 2012 compared to net income of $5.8 million, or $0.12 per diluted share, for the fourth quarter of 2011.

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