CHICAGO, March 10, 2016 (GLOBE NEWSWIRE) -- Accretive Health, Inc. (OTC Pink:ACHI), a leading provider of revenue cycle services and physician advisory services to healthcare providers, today announced results for the quarter and year ended December 31, 2015.
Fourth Quarter 2015 Results:
- GAAP net services revenue of $68.3 million, compared to $47.5 million for the fourth quarter of 2014
- GAAP net income of $5.4 million, compared to a net loss of $17.7 million for the fourth quarter of 2014
- Gross cash generated from customer contracting activities of $72.7 million, compared to $60.7 million for the fourth quarter of 2014
- Net cash generated from customer contracting activities of $27.0 million, compared to $6.8 million for the fourth quarter of 2014
Calendar Year 2015 Results:
- GAAP net services revenue of $117.2 million, compared to $210.1 million for 2014
- GAAP net loss of $84.3 million, compared to a net loss of $79.6 million for 2014
- Gross cash generated from customer contracting activities of $230.2 million, compared to $233.6 million for 2014
- Net cash generated from customer contracting activities of $26.4 million, compared to $7.8 million for 2014
Emad Rizk, M.D., President and Chief Executive Officer of Accretive Health, commented, “Over the last year we have transformed our organization, with focus on scalable infrastructure and applications, operational excellence, and expanding shared services capacity. I am confident in our team’s ability to execute over the next few years on the anticipated addition of more than $8 billion in net patient revenue under management from Ascension.”
Peter Csapo, Chief Financial Officer and Treasurer, added, “The strategic review process impacted our ability to realize some projected opportunities at the end of the year, and our results were consequently below our expectations. However, despite this, we delivered significant sequential improvement in the fourth quarter and over the prior year.”
The Company currently serves 77 hospitals with collective net patient revenue (NPR) of $16.5 billion. NPR represents net revenue collected annually by the Company’s customers for patient services and is not a measure of the revenue the Company recognizes.
2016 Outlook
The Company at this time is not providing financial guidance for 2016 since its annual planning process is still ongoing as a result of the recent signing of the new master professional services agreement (MPSA) with Ascension. The Company expects to begin to transition Ascension hospitals currently served by the Company to the new MPSA terms in the second quarter of 2016, and anticipates Ascension hospitals not currently served by Accretive to begin to transition to the Company’s platform in the third quarter of 2016. The Company expects to fund infrastructure investments and growth initiatives with capital raised in the recently completed transaction with Ascension and TowerBrook Capital Partners.
Conference Call and Webcast Details
Accretive Health’s management team will host a conference call today at 4:30 p.m. Eastern Time to discuss the results and business outlook. To participate, please dial 888-822-6508 (440-996-5712 outside the U.S. and Canada) using conference code number 57301868. A live webcast and replay of the call will be available at the Investor Relations section of the Company’s web site at www.accretivehealth.com.
Accompanying slides will be posted to the Investor Relations section of Accretive Health’s web site at www.accretivehealth.com.
Non-GAAP Financial Measures
In order to provide a more comprehensive understanding of the information used by Accretive Health’s management team in financial and operational decision making, the Company supplements its GAAP consolidated financial statements with certain non-GAAP financial measures, which are included in this press release. These include gross and net cash generated from customer contracting activities and adjusted EBITDA. Our Board and management team use these non-GAAP measures as (i) one of the primary methods for planning and forecasting overall expectations and for evaluating actual results against such expectations; and (ii) a performance evaluation metric in determining achievement of certain executive incentive compensation programs, as well as for incentive compensation plans for employees.
Gross cash generated from customer contracting activities is defined as GAAP net services revenue, plus the change in deferred customer billings. Accordingly, gross cash generated from customer contracting activities is the sum of (i) invoiced or accrued net operating fees, (ii) cash collections on incentive fees and (iii) other services fees. Net cash generated from customer contracting activities reflects non-GAAP adjusted EBITDA and the change in deferred customer billings.
Adjusted EBITDA is defined as net income before net interest income (expense), income tax provision, depreciation and amortization expense, share-based compensation expense, restatement-related expense, reorganization-related expense and certain non-recurring items. The use of adjusted EBITDA to measure operating and financial performance is limited by our revenue recognition criteria, pursuant to which GAAP net services revenue is recognized at the end of a contract or other contractual agreement event. Adjusted EBITDA does not adequately match corresponding cash flows from customer contracting activities. As a result, the Company uses gross cash and net cash generated from customer contracting activities to better compare cash flows to operating performance.
Deferred customer billings include the portion of both (i) invoiced or accrued net operating fees and (ii) cash collections of incentive fees, in each case, that have not met our revenue recognition criteria. Deferred customer billings are included in the detail of our customer liabilities balance in the consolidated balance sheet available in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.
Table 4 presents a reconciliation of GAAP revenue to gross cash generated from customer contracting activities, and Table 5 presents a reconciliation of GAAP net income (loss), the most comparable GAAP measure, to adjusted EBITDA and net cash generated from customer contracting activities, in each case, for each of the periods indicated. These adjusted measures are non-GAAP and should be considered in addition to, but not as a substitute for, the information prepared in accordance with GAAP.
Safe Harbor
This press release contains forward-looking statements, and in particular, any statements about the benefits, expectations and financial impact of the strategic relationship and renewed master professional services agreement with Ascension and our future growth, plans and performance are forward-looking statements. All forward-looking statements contained in this press release involve risks and uncertainties. The Company’s actual results and outcomes could differ materially from those anticipated in these forward-looking statements as a result of various factors, including the factors set forth under the heading “Risk Factors” in its Annual Report on Form 10-K for the year ended December 31, 2015, filed with the SEC on March 10, 2016. The words “strive,” “objective,” “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “vision,” “would,” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. The Company has based these forward-looking statements on its current expectations and projections about future events. Although the Company believes that the expectations underlying any of its forward-looking statements are reasonable, these expectations may prove to be incorrect and all of these statements are subject to risks and uncertainties. Should one or more of these risks and uncertainties materialize, or should underlying assumptions, projections, or expectations prove incorrect, actual results, performance, financial condition, or events may vary materially and adversely from those anticipated, estimated, or expected.
All forward-looking statements included in this press release are expressly qualified in their entirety by these cautionary statements. The Company cautions readers not to place undue reliance on any forward-looking statement that speaks only as of the date made and to recognize that forward-looking statements are predictions of future results, which may not occur as anticipated. Actual results could differ materially from those anticipated in the forward-looking statements and from historical results, due to the uncertainties and factors described above, as well as others that the Company may consider immaterial or does not anticipate at this time. Although the Company believes that the expectations reflected in its forward-looking statements are reasonable, the Company does not know whether its expectations may prove correct. The Company’s expectations reflected in its forward-looking statements can be affected by inaccurate assumptions it might make or by known or unknown uncertainties and factors, including those described above. The risks and uncertainties described above are not exclusive, and further information concerning the Company and its business, including factors that potentially could materially affect its financial results or condition or relationships with customers and potential customers, may emerge from time to time. The Company assumes no, and it specifically disclaims any, obligation to update, amend, or clarify forward-looking statements to reflect actual results or changes in factors or assumptions affecting such forward-looking statements. The Company advises investors, however, to consult any further disclosures it makes on related subjects in our periodic reports that it files with or furnishes to the SEC.
About Accretive Health
Accretive Health is a leading provider of revenue cycle services and physician advisory services to healthcare providers. Accretive Health’s mission is to help healthcare providers strengthen their financial stability so they can deliver better care at a more affordable cost to the communities they serve, increasing healthcare access for all. Accretive Health’s distinctive operating model includes people, processes, and sophisticated integrated technology/analytics that help customers realize sustainable improvements in their operating margins and improve the satisfaction of their patients, physicians, and staff. Accretive Health’s customers typically are multi-hospital systems, including faith-based or community healthcare systems, academic medical centers and independent ambulatory clinics, and their affiliated physician practice groups.
Table 1 | ||||||||
Accretive Health, Inc. | ||||||||
Condensed Consolidated Balance Sheets | ||||||||
(In thousands, except per share data) | ||||||||
December 31, | ||||||||
2015 | 2014 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 103,497 | $ | 145,167 | ||||
Short-term investments | 1,023 | — | ||||||
Restricted cash | — | 5,000 | ||||||
Accounts receivable, net | 10,194 | 4,438 | ||||||
Prepaid income taxes | 1,102 | 6,138 | ||||||
Current deferred tax assets | — | 62,322 | ||||||
Other current assets | 10,924 | 7,389 | ||||||
Total current assets | 126,740 | 230,454 | ||||||
Property, equipment and software, net | 27,217 | 14,594 | ||||||
Non-current deferred tax asset | 300,825 | 201,163 | ||||||
Restricted cash equivalents | 1,500 | — | ||||||
Goodwill and other assets, net | 4,007 | 162 | ||||||
Total assets | $ | 460,289 | $ | 446,373 | ||||
Liabilities and stockholders’ equity (deficit) | ||||||||
Current liabilities: | ||||||||
Accounts payable | 5,306 | 12,488 | ||||||
Current portion of customer liabilities | 202,516 | 219,998 | ||||||
Accrued compensation and benefits | 9,062 | 14,983 | ||||||
Other accrued expenses | 15,743 | 15,680 | ||||||
Total current liabilities | 232,627 | 263,149 | ||||||
Non-current portion of customer liabilities | 432,477 | 317,065 | ||||||
Other non-current liabilities | 8,498 | 8,405 | ||||||
Total liabilities | $ | 673,602 | $ | 588,619 | ||||
Stockholders’ equity (deficit): | ||||||||
Common stock, $0.01 par value, 500,000,000 shares authorized, 113,259,408 shares issued and 107,715,436 shares outstanding at December 31, 2015; 102,890,241 shares issued and 98,112,019 shares outstanding at December 31, 2014 | 1,133 | 1,029 | ||||||
Additional paid-in capital | 322,492 | 307,075 | ||||||
Accumulated deficit | (481,773 | ) | (397,517 | ) | ||||
Accumulated other comprehensive loss | (2,488 | ) | (1,763 | ) | ||||
Treasury stock | (52,677 | ) | (51,070 | ) | ||||
Total stockholders’ equity (deficit) | (213,313 | ) | (142,246 | ) | ||||
Total liabilities and stockholders’ equity (deficit) | $ | 460,289 | $ | 446,373 |
Table 2 | |||||||||||||||
Accretive Health, Inc. | |||||||||||||||
Consolidated Statements of Operations and Comprehensive Income (Loss) | |||||||||||||||
(In thousands, except per share data) | |||||||||||||||
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Net services revenue | $ | 68,341 | $ | 47,456 | $ | 117,239 | $ | 210,140 | |||||||
Operating expenses: | |||||||||||||||
Cost of services | 38,693 | 43,893 | 168,977 | 182,144 | |||||||||||
Selling, general and administrative | 15,237 | 16,274 | 74,963 | 69,883 | |||||||||||
Restatement and other | 3,493 | 18,859 | 9,343 | 86,766 | |||||||||||
Total operating expenses | 57,423 | 79,026 | 253,283 | 338,793 | |||||||||||
Income (loss) from operations | 10,918 | (31,570 | ) | (136,044 | ) | (128,653 | ) | ||||||||
Net interest income | 84 | 50 | 231 | 302 | |||||||||||
Income (loss) before income tax provision | 11,002 | (31,520 | ) | (135,813 | ) | (128,351 | ) | ||||||||
Income tax provision (benefit) | 5,555 | (13,869 | ) | (51,557 | ) | (48,731 | ) | ||||||||
Net income (loss) | $ | 5,447 | $ | (17,651 | ) | $ | (84,256 | ) | $ | (79,620 | ) | ||||
Net income (loss) per common share: | |||||||||||||||
Basic | $ | 0.06 | $ | (0.18 | ) | $ | (0.87 | ) | $ | (0.83 | ) | ||||
Diluted | $ | 0.06 | $ | (0.18 | ) | $ | (0.87 | ) | $ | (0.83 | ) | ||||
Weighted average shares used in calculating net income (loss) per common share: | |||||||||||||||
Basic | 98,137,885 | 95,790,065 | 96,806,885 | 95,760,762 | |||||||||||
Diluted | 98,751,254 | 95,790,065 | 96,806,885 | 95,760,762 | |||||||||||
Consolidated statements of comprehensive income (loss) | |||||||||||||||
Net income (loss) | 5,447 | (17,651 | ) | (84,256 | ) | (79,620 | ) | ||||||||
Other comprehensive loss: | |||||||||||||||
Foreign currency translation adjustments | (23 | ) | (310 | ) | (725 | ) | (304 | ) | |||||||
Comprehensive income (loss) | $ | 5,424 | $ | (17,961 | ) | $ | (84,981 | ) | $ | (79,924 | ) |
Table 3 | ||||||||||||
Accretive Health, Inc. | ||||||||||||
Condensed Consolidated Statements of Cash Flows | ||||||||||||
(In thousands) | ||||||||||||
Year Ended December 31, | ||||||||||||
2015 | 2014 | 2013 | ||||||||||
Operating activities | ||||||||||||
Net income (loss) | $ | (84,256 | ) | $ | (79,620 | ) | $ | 130,083 | ||||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operations: | ||||||||||||
Depreciation and amortization | 8,462 | 6,047 | 6,823 | |||||||||
Share-based compensation | 29,236 | 27,181 | 25,025 | |||||||||
Loss on disposal | — | 1,604 | — | |||||||||
Provision (recovery) for doubtful receivables | (46 | ) | (430 | ) | 634 | |||||||
Deferred income taxes | (52,690 | ) | (49,227 | ) | 79,356 | |||||||
Excess tax benefit from share-based awards | — | (176 | ) | (15 | ) | |||||||
Changes in operating assets and liabilities: | ||||||||||||
Accounts receivable | (5,709 | ) | 20,548 | 658 | ||||||||
Restricted cash equivalents | (1,500 | ) | — | — | ||||||||
Prepaid income taxes | 5,058 | 3,794 | (4,836 | ) | ||||||||
Other assets | (7,465 | ) | (47 | ) | 14,434 | |||||||
Accounts payable | (7,162 | ) | 8,251 | 3,378 | ||||||||
Accrued compensation and benefits | (5,918 | ) | 3,174 | 3,813 | ||||||||
Other liabilities | 248 | (3,312 | ) | (2,955 | ) | |||||||
Customer liabilities | 97,930 | (15,023 | ) | (201,975 | ) | |||||||
Net cash provided by (used in) operating activities | (23,812 | ) | (77,236 | ) | 54,423 | |||||||
Investing activities | ||||||||||||
Purchase of short-term investments | (1,023 | ) | — | — | ||||||||
Purchases of property, equipment, and software | (21,275 | ) | (6,034 | ) | (1,877 | ) | ||||||
Net cash used in investing activities | (22,298 | ) | (6,034 | ) | (1,877 | ) | ||||||
Financing activities | ||||||||||||
Excess tax benefit from share-based awards | — | 176 | 15 | |||||||||
Exercise of vested stock options | 1,547 | — | 46 | |||||||||
Purchase of treasury stock | (1,607 | ) | (370 | ) | (161 | ) | ||||||
Restricted cash release from letter of credit | 5,000 | — | — | |||||||||
Net cash provided by (used in) financing activities | 4,940 | (194 | ) | (100 | ) | |||||||
Effect of exchange rate changes in cash | (500 | ) | (260 | ) | (511 | ) | ||||||
Net increase (decrease) in cash and cash equivalents | (41,670 | ) | (83,724 | ) | 51,935 | |||||||
Cash and cash equivalents, at beginning of year | 145,167 | 228,891 | 176,956 | |||||||||
Cash and cash equivalents, at end of year | $ | 103,497 | $ | 145,167 | $ | 228,891 | ||||||
Supplemental disclosures of cash flow information | ||||||||||||
Income taxes paid | $ | (1,088 | ) | $ | (801 | ) | $ | (1,742 | ) | |||
Income taxes refunded | $ | 1,441 | $ | 3,014 | $ | 754 |
Table 4 | |||||||||||||||||||||||||||||
Accretive Health, Inc. | |||||||||||||||||||||||||||||
Reconciliation of GAAP Revenue to Non-GAAP Gross Cash Generated from Customer Contracting Activities | |||||||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||||
Three Months Ended December 31, | 2015 vs. 2014 Change | Year Ended December 31, | 2015 vs. 2014 Change | ||||||||||||||||||||||||||
2015 | 2014 | Amount | % | 2015 | 2014 | Amount | % | ||||||||||||||||||||||
Consolidated Statement of Operations Data: | |||||||||||||||||||||||||||||
RCM services: net operating fees | $ | 46,832 | $ | 14,639 | $ | 32,193 | n.m. | $ | 66,234 | $ | 77,456 | $ | (11,222 | ) | (14.5 | )% | |||||||||||||
RCM services: incentive fees | 11,289 | 24,858 | (13,569 | ) | (54.6 | )% | 20,311 | 99,934 | (79,623 | ) | (79.7 | )% | |||||||||||||||||
RCM services: other | 6,790 | 2,316 | 4,474 | n.m. | 16,381 | 8,103 | 8,278 | n.m. | |||||||||||||||||||||
Other services fees | 3,430 | 5,643 | (2,213 | ) | (39.2 | )% | 14,313 | 24,647 | (10,334 | ) | (41.9 | )% | |||||||||||||||||
Total net services revenue | 68,341 | 47,456 | 20,885 | 44.0 | % | 117,239 | 210,140 | (92,901 | ) | (44.2 | )% | ||||||||||||||||||
Change in deferred customer billings | 4,337 | 13,238 | (8,901 | ) | (67.2 | )% | 112,938 | 23,427 | 89,511 | n.m. | |||||||||||||||||||
Gross cash generated from customer contracting activities | $ | 72,678 | $ | 60,694 | $ | 11,984 | 19.7 | % | $ | 230,177 | $ | 233,567 | $ | (3,390 | ) | (1.5 | )% | ||||||||||||
Components of Gross Cash Generated from Customer Contracting Activities: | |||||||||||||||||||||||||||||
RCM services: net operating fee | $ | 34,424 | $ | 31,046 | $ | 3,378 | 10.9 | % | $ | 123,185 | $ | 121,730 | $ | 1,455 | 1.2 | % | |||||||||||||
RCM services: incentive fee | 20,155 | 19,841 | 314 | 1.6 | % | 67,656 | 77,239 | (9,583 | ) | (12.4 | )% | ||||||||||||||||||
RCM services: other | 14,669 | 5,805 | 8,864 | n.m. | 25,023 | 9,952 | 15,071 | n.m. | |||||||||||||||||||||
Total RCM services fees | 69,248 | 56,692 | 12,556 | 22.1 | % | 215,864 | 208,921 | 6,943 | 3.3 | % | |||||||||||||||||||
Other services fees | 3,430 | 4,002 | (572 | ) | (14.3 | )% | 14,313 | 24,646 | (10,333 | ) | (41.9 | )% | |||||||||||||||||
Gross cash generated from customer contracting activities | $ | 72,678 | $ | 60,694 | $ | 11,984 | 19.7 | % | $ | 230,177 | $ | 233,567 | $ | (3,390 | ) | (1.5 | )% | ||||||||||||
*n.m. – not meaningful
Table 5 | |||||||||||||||||||||||||||||
Accretive Health, Inc. | |||||||||||||||||||||||||||||
Reconciliation of GAAP Net Income (Loss) to Non-GAAP Net Cash Generated from Customer Contracting Activities | |||||||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||||
Three Months Ended December 31, | 2015 vs. 2014 Change | Year Ended December 31, | 2015 vs. 2014 Change | ||||||||||||||||||||||||||
2015 | 2014 | Amount | % | 2015 | 2014 | Amount | % | ||||||||||||||||||||||
Net income (loss) | $ | 5,447 | $ | (17,651 | ) | $ | 23,098 | n.m. | $ | (84,256 | ) | $ | (79,620 | ) | $ | (4,636 | ) | 5.8 | % | ||||||||||
Net interest income | (84 | ) | (50 | ) | (34 | ) | 68.0 | % | (231 | ) | (302 | ) | 71 | (23.5 | )% | ||||||||||||||
Income tax provision (benefit) | 5,555 | (13,869 | ) | 19,424 | n.m. | (51,557 | ) | (48,731 | ) | (2,826 | ) | 5.8 | % | ||||||||||||||||
Depreciation and amortization expense | 1,906 | 1,768 | 138 | 7.8 | % | 8,462 | 6,047 | 2,415 | 39.9 | % | |||||||||||||||||||
Share-based compensation expense | 6,353 | 4,481 | 1,872 | 41.8 | % | 31,671 | 20,172 | 11,499 | 57.0 | % | |||||||||||||||||||
Restatement and other | 3,493 | 18,859 | (15,366 | ) | (81.5 | )% | 9,343 | 86,766 | (77,423 | ) | (89.2 | )% | |||||||||||||||||
Adjusted EBITDA | 22,670 | (6,462 | ) | 29,132 | n.m. | (86,568 | ) | (15,668 | ) | (70,900 | ) | n.m. | |||||||||||||||||
Change in deferred customer billings | 4,337 | 13,238 | (8,901 | ) | (67.2 | )% | 112,938 | 23,427 | 89,511 | n.m. | |||||||||||||||||||
Net cash generated from customer contracting activities | $ | 27,007 | $ | 6,776 | $ | 20,231 | n.m. | $ | 26,370 | $ | 7,759 | $ | 18,611 | n.m. | |||||||||||||||
*n.m. – not meaningful
Table 6 | |||||||||||||||
Accretive Health, Inc. | |||||||||||||||
Share-Based Compensation Expense Allocation Details | |||||||||||||||
(In thousands) | |||||||||||||||
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Cost of services | $ | 1,452 | $ | 1,054 | $ | 7,208 | $ | 6,668 | |||||||
Selling, general and administrative | 4,901 | 3,426 | 24,463 | 13,503 | |||||||||||
Restatement and other | — | 712 | — | 8,761 | |||||||||||
Total share-based compensation expense | $ | 6,353 | $ | 5,192 | $ | 31,671 | $ | 28,932 |
Table 7 | |||||||||||||||
Accretive Health, Inc. | |||||||||||||||
Depreciation and Amortization Expense Allocation Details | |||||||||||||||
(In thousands) | |||||||||||||||
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Cost of services | $ | 1,737 | $ | 1,461 | $ | 7,536 | $ | 4,603 | |||||||
Selling, general and administrative | 169 | 307 | 926 | 1,444 | |||||||||||
Total depreciation and amortization | $ | 1,906 | $ | 1,768 | $ | 8,462 | $ | 6,047 |
Table 8 | |||||||||||||||
Accretive Health, Inc. | |||||||||||||||
Condensed Consolidated Non-GAAP Financial Information | |||||||||||||||
(In thousands) | |||||||||||||||
Three Months Ended December 31, | Year ended December 31, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
GAAP net services revenue | $ | 68,341 | $ | 47,456 | $ | 117,239 | $ | 210,140 | |||||||
Increase in deferred customer billings | 4,337 | 13,238 | 112,938 | 23,427 | |||||||||||
Gross cash generated from customer contracting activities (non-GAAP) | 72,678 | 60,694 | 230,177 | 233,567 | |||||||||||
Operating Expenses1: | |||||||||||||||
Cost of services | 35,504 | 41,377 | 154,233 | 170,872 | |||||||||||
Selling, general and administrative | 10,167 | 12,541 | 49,574 | 54,936 | |||||||||||
Sub-total | 45,671 | 53,918 | 203,807 | 225,808 | |||||||||||
Net cash generated from customer contracting activities (non-GAAP) | $ | 27,007 | $ | 6,776 | $ | 26,370 | $ | 7,759 | |||||||
Net cash generated margin (non-GAAP) | 37.2 | % | 11.2 | % | 11.5 | % | 3.3 | % | |||||||
1Excludes share-based compensation, depreciation and amortization, and restatement and other costs