HMS Holdings (HMSY) Q2 Earnings And Revenues Top Estimates

HMS Holdings Corp. (NASDAQ:HMSY) reported adjusted earnings of 34 cents per share in second-quarter 2019, which surpassed the Zacks Consensus Estimate of 26 cents by 30.8%. The bottom line also surged 36% from the year-ago quarter.

Revenues totaled $168.2 million, which beat the Zacks Consensus Estimate by 5.5%. Moreover, the top line improved 14.6% on a year-over-year basis.

Q2 Segmental Analysis by Product

Analytical Services

Revenues at this segment were $63.1 million in the second quarter, up 37.2% year over year.

Within Analytical Services, PI revenues (excluding Medicare RAC) amounted to $38.6 million, up 23.7% year over year.

PHM revenues totaled $14 million in the quarter under review, down 5.4% on a year-over-year basis.

COB

Revenues at the COB segment grossed $105.1 million in the second quarter, up 4.3% year over year.

Margin Analysis

Total cost of services in the reported quarter was $99.6 million, down 1.4% year over year.

Gross profit came in at $68.6 million, which surged 49.9% from the prior-year quarter figure. Gross margin was 40.8% of net revenues, up 960 bps year over year.

Selling, general and administrative expenses totaled $28 million, up 5.7% year over year. Operating income in the second quarter was $40.5 million, against operating loss of $0.8 million in the year-ago quarter.

Financial Update

Cash and cash equivalents amounted to $268.7 million, up 50.1% from the year-end 2018.

Net cash provided by operating activities for the six months ended Jun 30, 2019, came in at $78.1 million, compared with $23.7 million from the year-ago quarter.

Guidance Raised

For 2019, the company now anticipates revenues between $650 million and $660 million (up from the previously guided range of $640-$650 million). This depicts year-over-year growth in the band of 8.6-10.3%. The mid-point of $655 million is above the Zacks Consensus Estimate of $646.9 million.

Net income is expected in the band of $85-$90 million (up from the prior band of $64-$70 million), indicating growth in the range of 54.5-63.6% year over year.

Adjusted EBITDA is expected in the range of $185-$190 million (up from the previously guided range of $170-$175 million), suggesting improvement of 14-17%.

Summing Up

HMS Holdings ended the second quarter of 2019 on a solid note, beating the Zacks Consensus Estimate on both counts. The stock continues to benefit from Analytical Services and COB units. Additionally, gross margin expansion is a positive. Raised 2019 outlook also buoys optimism for the stock.

However, cut throat competition in the U.S. medical cost containment space remains a concern.

Zacks Rank

Currently, HMS Holdings carries a Zacks Rank #3 (Hold).

Earnings of Other MedTech Majors at a Glance

Some better-ranked stocks which reported solid results this earning season are Stryker Corporation (NYSE:SYK) , Baxter International Inc. (NYSE:BAX) and Intuitive Surgical, Inc. (NASDAQ:ISRG) .

Stryker delivered second-quarter 2019 adjusted earnings per share of $1.98, beating the Zacks Consensus Estimate by 2.6%. Revenues of $3.65 billion surpassed the Zacks Consensus Estimate by 1.4%. The company carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Baxter delivered second-quarter 2019 adjusted earnings of 89 cents per share, which surpassed the Zacks Consensus Estimate of 81 cents by 9.9%. Revenues of $2.84 billion outpaced the Zacks Consensus Estimate of $2.79 billion by 1.9%. The company carries a Zacks Rank #2.

Intuitive Surgical reported second-quarter 2019 adjusted earnings per share of $3.25, which beat the Zacks Consensus Estimate of $2.85. Revenues were $1.1 billion, surpassing the Zacks Consensus Estimate of $1.03 billion. The company sports a Zacks Rank #1.

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