UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________________________________
FORM 8-K
________________________________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 5, 2015
________________________________________
Accretive Health, Inc.
(Exact Name of Registrant as Specified in Charter)
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Delaware | | 001-34746 | | 02-0698101 |
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(State or Other Jurisdiction of Incorporation) | | (Commission File Number) | | (IRS Employer Identification No.) |
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401 North Michigan Avenue, Suite 2700, Chicago, Illinois | | 60611 |
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(Address of Principal Executive Offices) | | (Zip Code) |
Registrant's telephone number, including area code: (312) 324-7820
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
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o | | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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o | | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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o | | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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o | | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. Results of Operations and Financial Condition.
On August 5, 2015, Accretive Health, Inc. (the “Company”) announced its financial results for its fiscal quarter ended June 30, 2015. The full text of the press release issued in connection with the announcement is furnished as Exhibit 99.1 to this Current Report on Form 8-K. The slide presentation to be used in conjunction with the investor conference call referenced in the press release is furnished as Exhibit 99.2 to this Current Report on Form 8-K and will be posted on the Company’s website.
The information in this Form 8-K (including Exhibits 99.1 and 99.2) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such a filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
The following exhibits relating to Item 2.02 shall be deemed to be furnished, and not filed:
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99.1 | Press Release issued by the Company on August 5, 2015 |
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99.2 | August 5, 2015 Slide Presentation |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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| ACCRETIVE HEALTH, INC. |
Date: August 5, 2015 | By: /s/ Peter P. Csapo |
| Peter P. Csapo Chief Financial Officer and Treasurer |
EXHIBIT INDEX
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Exhibit No. | Description |
99.1 | Press Release issued by the Company on August 5, 2015 |
99.2 | August 5, 2015 Slide Presentation |
Exhibit 99.1
Accretive Health Reports Second Quarter 2015 Results
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• | Files 10-Q for the quarter ended June 30, 2015 on a timely basis; Company is now current with its SEC filings |
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• | Company serves 79 hospitals with collective net patient revenue of $16.5 billion |
CHICAGO - August 5, 2015 - Accretive Health, Inc. (OTC Pink: ACHI) today announced results for the three months ended June 30, 2015. The Company also filed its Quarterly Report on Form 10-Q for the quarter ended June 30, 2015, with the Securities and Exchange Commission (SEC).
Financial Summary:
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• | For the second quarter of 2015, GAAP net services revenue was $22.1 million, and GAAP net loss was $26.3 million, compared with GAAP net services revenue of $59.0 million and GAAP net loss of $16.8 million reported in the second quarter of 2014. |
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• | Gross cash generated from customer contracting activities for the second quarter of 2015 was $47.2 million, compared to $56.5 million for the second quarter of 2014. |
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• | Net cash generated from customer contracting activities for the second quarter of 2015 was negative $6.6 million, compared to negative $3.8 million for the second quarter of 2014. |
“Accretive Health is now current with its periodic SEC filing requirements and filed its 10-Q for the second quarter of 2015 on a timely basis. This is an important milestone, and reflects tremendous effort by many Accretive Health colleagues. We are pleased to return to the normal reporting cycle for a publicly-traded company,” said Emad Rizk, M.D., President and Chief Executive Officer of Accretive Health.
The Company currently serves 79 hospitals with collective net patient revenue (NPR) of $16.5 billion. NPR represents net revenue collected annually by the Company’s customers from their patients and is not a measure of the revenue the Company recognizes.
2015 Outlook
Accretive Health continues to expect gross cash generated from customer contracting activities of $230 million to $240 million for 2015. The Company also continues to expect net cash generated from customer contracting activities to be at the lower end of the $30 million to $40 million previously communicated guidance range.
Conference Call and Webcast Details
Accretive Health’s management team will host a conference call today at 3:30 p.m. CT (4:30 p.m. ET) to discuss the second quarter 2015 results and business outlook for 2015. To participate, please dial 866-277-1184 (617-597-5360 outside the U.S. and Canada) using conference code number 14514307, or visit the Investor Relations section of Accretive Health’s web site at www.accretivehealth.com to access the live webcast. A replay will be available for one week following the conference call at 888-286-8010 (617-801-6888 outside the U.S. and Canada) using conference code number 42299890. A replay of the conference call will also be available online 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) as 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 Quarterly Report on Form 10-Q for the quarter ended June 30, 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 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, including the Company’s ability to generate specified levels of cash from contracting activities. 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, 2014, filed with the SEC on June 23, 2015, and its Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2015, filed with the SEC on August 5, 2015. 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
At Accretive Health, our mission is to partner with healthcare communities to serve as a catalyst for a healthier future for all. For more information, visit www.accretivehealth.com.
Contact:
Accretive Health, Inc.
Investor and Media Relations:
Atif Rahim
312.324.5476
investorrelations@accretivehealth.com
Table 1
Accretive Health, Inc.
Condensed Consolidated Balance Sheets
($ in thousands)
|
| | | | | | | |
| June 30,
2015 | | December 31,
2014 |
| (Unaudited) | | |
Assets | | | |
Current assets: | |
| | |
|
Cash and cash equivalents | $ | 121,897 |
| | $ | 145,167 |
|
Restricted cash | — |
| | 5,000 |
|
Accounts receivable, net | 3,382 |
| | 4,438 |
|
Prepaid income taxes | 5,665 |
| | 6,138 |
|
Current deferred tax assets | 61,030 |
| | 62,322 |
|
Other current assets | 11,951 |
| | 7,389 |
|
Total current assets | 203,925 |
| | 230,454 |
|
Property, equipment and software, net | 24,347 |
| | 14,594 |
|
Non-current deferred tax assets | 235,817 |
| | 201,163 |
|
Goodwill and other assets, net | 46 |
| | 162 |
|
Total assets | $ | 464,135 |
| | $ | 446,373 |
|
Liabilities and stockholders' equity (deficit) | | | |
Current liabilities: | |
| | |
|
Accounts payable | $ | 10,193 |
| | $ | 12,488 |
|
Current portion of customer liabilities | 228,042 |
| | 219,998 |
|
Accrued compensation and benefits | 12,153 |
| | 14,983 |
|
Other accrued expenses | 11,190 |
| | 15,680 |
|
Total current liabilities | 261,578 |
| | 263,149 |
|
Non-current portion of customer liabilities | 381,925 |
| | 317,065 |
|
Other non-current liabilities | 10,845 |
| | 8,405 |
|
Total liabilities | 654,348 |
| | 588,619 |
|
Stockholders' equity (deficit): | |
| | |
|
Common stock, $0.01 par value, 500,000,000 shares authorized, 102,890,241 shares issued and 97,945,709 shares outstanding at June 30, 2015; 102,890,241 shares issued and 98,112,019 shares outstanding at December 31, 2014 | 1,029 |
| | 1,029 |
|
Additional paid-in capital | 316,631 |
| | 307,075 |
|
Accumulated deficit | (454,250 | ) | | (397,517 | ) |
Accumulative other comprehensive loss | (2,036 | ) | | (1,763 | ) |
Treasury stock | (51,587 | ) | | (51,070 | ) |
Total stockholders' equity (deficit) | (190,213 | ) | | (142,246 | ) |
Total liabilities and stockholders’ equity (deficit) | $ | 464,135 |
| | $ | 446,373 |
|
Table 2
Accretive Health, Inc.
Condensed Consolidated Statements of Operations
($ in thousands, except per share data)
|
| | | | | | | | | | | | | | | |
| Three Months Ended | | Six Months Ended |
| June 30, | | June 30, |
| 2015 | | 2014 | | 2015 | | 2014 |
| (Unaudited) | | (Unaudited) |
Net services revenue | $ | 22,085 |
| | $ | 58,975 |
| | $ | 33,056 |
| | $ | 71,939 |
|
Operating expenses: | | | | | | | |
Costs of services | 42,762 |
| | 47,949 |
| | 84,958 |
| | 92,881 |
|
Selling, general and administrative | 20,969 |
| | 19,458 |
| | 38,331 |
| | 36,824 |
|
Restatement and other | 611 |
| | 18,760 |
| | 1,886 |
| | 54,061 |
|
Total operating expenses | 64,342 |
| | 86,167 |
| | 125,175 |
| | 183,766 |
|
Loss from operations | (42,257 | ) | | (27,192 | ) | | (92,119 | ) | | (111,827 | ) |
Net interest income | 69 |
| | 52 |
| | 74 |
| | 152 |
|
Loss before income tax provision | (42,188 | ) | | (27,140 | ) | | (92,045 | ) | | (111,675 | ) |
Income tax benefit | 15,900 |
| | 10,341 |
| | 35,312 |
| | 40,153 |
|
Net loss | $ | (26,288 | ) | | $ | (16,799 | ) | | $ | (56,733 | ) | | $ | (71,522 | ) |
Net loss per common share: | | | | | | | |
Basic | $ | (0.27 | ) | | $ | (0.18 | ) | | $ | (0.59 | ) | | $ | (0.75 | ) |
Diluted | $ | (0.27 | ) | | $ | (0.18 | ) | | $ | (0.59 | ) | | $ | (0.75 | ) |
Weighted average shares used in calculating net loss per common share: | | |
Basic | 95,941,077 |
| | 95,753,302 |
| | 95,915,255 |
| | 95,738,326 |
|
Diluted | 95,941,077 |
| | 95,753,302 |
| | 95,915,255 |
| | 95,738,326 |
|
Consolidated statements of comprehensive loss | | | | | | | |
Net loss | (26,288 | ) | | (16,799 | ) | | (56,733 | ) | | (71,522 | ) |
Other comprehensive income (loss): | | | | | | | |
Foreign currency translation adjustments | (221 | ) | | 21 |
| | (273 | ) | | 259 |
|
Comprehensive loss | $ | (26,509 | ) | | $ | (16,778 | ) | | $ | (57,006 | ) | | $ | (71,263 | ) |
Table 3
Accretive Health, Inc.
Condensed Consolidated Statements of Cash Flows
($ in thousands)
|
| | | | | | | |
| Six Months Ended
June 30, |
| 2015 | | 2014 |
| (Unaudited) |
Operating activities: | |
| | |
|
Net loss | $ | (56,733 | ) | | $ | (71,522 | ) |
Adjustments to reconcile net loss to net cash provided by (used in) operations: | | |
Depreciation and amortization | 3,818 |
| | 2,876 |
|
Share-based compensation | 12,576 |
| | 18,081 |
|
Loss on disposal | — |
| | 223 |
|
Recoveries for doubtful receivables | (45 | ) | | (494 | ) |
Deferred income taxes | (36,369 | ) | | (39,226 | ) |
Excess tax benefits from share-based awards | — |
| | (176 | ) |
Changes in operating assets and liabilities: | | | |
Accounts receivable | 1,101 |
| | 11,646 |
|
Prepaid income taxes | 445 |
| | (54 | ) |
Other assets | (4,472 | ) | | (2,954 | ) |
Accounts payable | (7,540 | ) | | 1,987 |
|
Accrued compensation and benefits | (2,830 | ) | | (895 | ) |
Other liabilities | (2,038 | ) | | (7,180 | ) |
Customer liabilities | 72,904 |
| | 14,403 |
|
Net cash used in operating activities | (19,183 | ) | | (73,285 | ) |
Investing activities: | | | |
Purchases of property, equipment and software | (8,348 | ) | | (1,650 | ) |
Net cash used in investing activities | (8,348 | ) | | (1,650 | ) |
Financing activities: | | | |
|
Restricted cash released from letter of credit | 5,000 |
| | — |
|
Excess tax benefit from share-based awards | — |
| | 176 |
|
Purchase of treasury stock | (517 | ) | | (217 | ) |
Net cash provided by (used in) financing activities | 4,483 |
| | (41 | ) |
Effect of exchange rate changes on cash | (222 | ) | | 205 |
|
Net decrease in cash and cash equivalents | (23,270 | ) | | (74,771 | ) |
Cash and cash equivalents at beginning of period | 145,167 |
| | 228,891 |
|
Cash and cash equivalents at end of period | $ | 121,897 |
| | $ | 154,120 |
|
| | | |
Supplemental disclosure of non-cash investing activities | | | |
Accounts payable related to purchases of property, equipment and software | $ | 5,250 |
| | $ | — |
|
| | | |
Table 4
Accretive Health, Inc.
Reconciliation of GAAP revenue to Gross Cash Generated from Customer Contracting Activities
($ in thousands)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended June 30, | | 2015 vs. 2014 Change | | Six Months Ended June 30, | | 2015 vs. 2014 Change |
| | 2015 | | 2014 | | Amount | | % | | 2015 | | 2014 | | Amount | | % |
GAAP Net Services Revenue: | | | | | | | | | | |
| | | | | | |
RCM services: net operating fee | | $ | 9,560 |
| | $ | 23,491 |
| | $ | (13,931 | ) | | (59.3)% |
| | $ | 13,170 |
| | $ | 24,956 |
| | $ | (11,786 | ) | | (47.2)% |
RCM services: incentive fee | | 6,105 |
| | 26,964 |
| | (20,859 | ) | | (77.4)% |
| | 8,005 |
| | 29,106 |
| | (21,101 | ) | | (72.5)% |
Other service fees | | 6,420 |
| | 8,520 |
| | (2,100 | ) | | (24.6)% |
| | 11,881 |
| | 17,877 |
| | (5,996 | ) | | (33.5)% |
Net services revenue (GAAP basis) | | 22,085 |
| | 58,975 |
| | (36,890 | ) | | (62.6)% |
| | 33,056 |
| | 71,939 |
| | (38,883 | ) | | (54.0)% |
Change in deferred customer billings | | 25,133 |
| | (2,513 | ) | | 27,646 |
| | n.m. |
| | 69,060 |
| | 42,011 |
| | 27,049 |
| | 64.4% |
Gross cash generated from customer contracting activities | | $ | 47,218 |
| | $ | 56,462 |
| | $ | (9,244 | ) | | (16.4)% |
| | $ | 102,116 |
| | $ | 113,950 |
| | $ | (11,834 | ) | | (10.4)% |
| | |
| | |
| | | | |
| | | | | | | | |
Components of Gross Cash Generated from Customer Contracting Activities: | | | | | | | | |
RCM services: net operating fee | | $ | 27,050 |
| | $ | 29,455 |
| | $ | (2,405 | ) | | (8.2)% |
| | $ | 57,239 |
| | $ | 64,230 |
| | $ | (6,991 | ) | | (10.9)% |
RCM services: incentive fee | | 14,511 |
| | 18,487 |
| | (3,976 | ) | | (21.5 | )% | | 32,642 |
| | 31,842 |
| | 800 |
| | 2.5% |
Total RCM services fees | | 41,561 |
| | 47,942 |
| | (6,381 | ) | | (13.3 | )% | | 89,881 |
| | 96,072 |
| | (6,191 | ) | | (6.4)% |
Other service fees | | 5,657 |
| | 8,520 |
| | (2,863 | ) | | (33.6 | )% | | 12,235 |
| | 17,878 |
| | (5,643 | ) | | (31.6)% |
Gross cash generated from customer contracting activities | | $ | 47,218 |
| | $ | 56,462 |
| | $ | (9,244 | ) | | (16.4)% |
| | $ | 102,116 |
| | $ | 113,950 |
| | $ | (11,834 | ) | | (10.4)% |
*n.m. - not meaningful
Table 5
Accretive Health, Inc.
Reconciliation of GAAP Net Loss to Net Cash Generated from Customer Contracting Activities
($ in thousands)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | 2015 vs. 2014 Change | | Six Months Ended June 30, | | 2015 vs. 2014 Change |
| 2015 | | 2014 | | Amount | | % | | 2015 | | 2014 | | Amount | | % |
Net income (loss) | $ | (26,288 | ) | | $ | (16,799 | ) | | $ | (9,489 | ) | | 56.5 | % | | $ | (56,733 | ) | | $ | (71,522 | ) | | $ | 14,789 |
| | (20.7 | )% |
Net interest income | (69 | ) | | (52 | ) | | $ | (17 | ) | | 32.7 | % | | (74 | ) | | (152 | ) | | $ | 78 |
| | (51.3 | )% |
Income tax benefit | (15,900 | ) | | (10,341 | ) | | $ | (5,559 | ) | | 53.8 | % | | (35,312 | ) | | (40,153 | ) | | $ | 4,841 |
| | (12.1 | )% |
Depreciation and amortization expense | 2,101 | | | 1,471 | | | $ | 630 |
| | 42.8 | % | | 3,818 |
| | 2,876 |
| | $ | 942 |
| | 32.8 | % |
Share-based compensation expense | 7,807 | | | 5,707 | | | $ | 2,100 |
| | 36.8 | % | | 13,003 |
| | 10,467 |
| | $ | 2,536 |
| | 24.2 | % |
Restatement and other | 611 | | | 18,760 | | | $ | (18,149 | ) | | (96.7 | )% | | 1,886 |
| | 54,061 |
| | $ | (52,175 | ) | | (96.5 | )% |
Adjusted EBITDA | (31,738 | ) | | (1,254 | ) | | $ | (30,484 | ) | | n.m. |
| | (73,412 | ) | | (44,423 | ) | | $ | (28,989 | ) | | 65.3 | % |
Change in deferred customer billings | 25,133 | | | (2,513 | ) | | $ | 27,646 |
| | n.m. |
| | 69,060 |
| | 42,011 |
| | $ | 27,049 |
| | 64.4 | % |
Net cash generated from customer contracting activities | $ | (6,605 | ) | | $ | (3,767 | ) | | $ | (2,838 | ) | | 75.3 | % | | $ | (4,352 | ) | | $ | (2,412 | ) | | $ | (1,940 | ) | | 80.4 | % |
*n.m. - not meaningful
Table 6
Accretive Health, Inc.
Share-Based Compensation Expense
($ in thousands)
|
| | | | | | | | | | | | | | | |
| Three Months Ended | | Six Months Ended |
| June 30, | | June 30, |
| 2015 | | 2014 | | 2015 | | 2014 |
Share-based Compensation Expense Allocation Details: | | | | | | | |
Cost of services | $ | 1,204 |
| | $ | 2,209 |
| | $ | 2,604 |
| | $ | 3,878 |
|
Selling, general and administrative | 6,603 |
| | 3,498 |
| | 10,399 |
| | 6,589 |
|
Restatement and other | — |
| | 2,317 |
| | — |
| | 7,905 |
|
Total share-based compensation expense | $ | 7,807 |
| | $ | 8,024 |
| | $ | 13,003 |
| | $ | 18,372 |
|
Table 7
Accretive Health, Inc.
Depreciation and Amortization Expense
($ in thousands)
|
| | | | | | | | | | | | | | | |
| Three Months Ended | | Six Months Ended |
| June 30, | | June 30, |
| 2015 | | 2014 | | 2015 | | 2014 |
Cost of services | $ | 1,826 |
| | $ | 1,115 |
| | $ | 3,308 |
| | $ | 2,089 |
|
Selling, general and administration | 275 |
| | 356 |
| | 510 |
| | 787 |
|
Total depreciation and amortization | $ | 2,101 |
| | $ | 1,471 |
| | $ | 3,818 |
| | $ | 2,876 |
|
Table 8
Accretive Health, Inc.
Condensed Consolidated Non-GAAP Financial Information
($ in thousands)
|
| | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2015 | | 2014 | | 2015 | | 2014 |
| | | | | | | |
GAAP net services revenue | $22,085 | | $58,975 | | $33,056 | | $71,939 |
Increase (decrease) in deferred customer billings | 25,133 | | (2,513) | | 69,060 | | 42,011 |
Gross cash generated from customer contracting activities | 47,218 | | 56,462 | | 102,116 | | 113,950 |
| | | | | | | |
Operating Expenses1: | | | | | | | |
Cost of services | 39,732 | | 44,625 | | 79,046 | | 86,914 |
Selling, general and administrative | 14,091 | | 15,604 | | 27,422 | | 29,448 |
Sub-total | 53,823 | | 60,229 | | 106,468 | | 116,362 |
| | | | | | | |
Net cash generated from customer contracting activities | $(6,605) | | $(3,767) | | $(4,352) | | $(2,412) |
| | | | | | | |
Net cash generated margin | (14.0%) | | (6.7%) | | (4.3%) | | (2.1%) |
1Excludes share-based compensation, depreciation and amortization, and restatement and other costs.
©2015 Accretive Health Inc.1 Financial Results Conference Call Exhibit 99.2 EDITABLE CONTENT August 5, 2015
©2015 Accretive Health Inc.2 Safe Harbor This presentation contains forward-looking statements, including statements regarding the Company’s strategic review process and its ability to generate specified levels of cash from contracting activities. All forward-looking statements contained in this presentation 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, 2014, filed with the SEC on June 23, 2015, and its Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2015, filed with the SEC on August 5, 2015. 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 presentation 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.
©2015 Accretive Health Inc.3 Emad Rizk, M.D. President & CEO
©2015 Accretive Health Inc.4 Executive Summary square4 Company is now current with SEC filings; 2Q’15 10-Q filed on a timely basis square4 Internal performance indicators continue to improve square4 Committed as ever to serving all our customers square4 New shared services center in Michigan square4 On track to deliver at lower end of $30-40 million net cash generated in 2015 square4 Strategic review process
©2015 Accretive Health Inc.5 Peter Csapo Chief Financial Officer & Treasurer
©2015 Accretive Health Inc.6 Non-GAAP Measures Gross Cash Generated from Customer Contracting Activities GAAP revenue plus change in deferred customer billings Net Cash Generated from Customer Contracting Activities GAAP net income less interest, taxes, depreciation and amortization expense, share-based compensation, restatement-related expenses, reorganization-related expenses and certain non-recurring items, plus change in deferred customer billings We use two non-GAAP measures to supplement GAAP measures
©2015 Accretive Health Inc.7 From RCM Contract to Cash to GAAP Revenue Deferred customer billings include the portion of services delivered which have not yet met revenue recognition criteria
©2015 Accretive Health Inc.8 2Q’15 Results (Non-GAAP) ($ in millions) 2Q’15 2Q’14 y/y chg. % Key change driver(s) Gross Cash Generated $47.2 $56.5 (16.4%) • Customer losses last twelve months• $5.5 million credits to customers Cost of Services $39.7 $44.6 (11.0%) • Lower volumes in PAS business • Infused management optimization initiatives SG&A $14.1 $15.6 (9.7%) • Lower support costs for PAS• Corporate expense restructuring Net Cash Generated $(6.6) $(3.8) n.m. • Combination of above factors CapEx $5.0 $0.5 n.m. • IT investments • New shared services center
©2015 Accretive Health Inc.9 2015 Guidance (Non-GAAP) ($ in millions) 2015 Gross Cash Generated $230 - $240 Cost of Services $150 - $160 SG&A $50 - $60 Net Cash Generated $30 - $40(lower end of range) CapEx $12 - $16 Restatement and other costs (excluding costs related to strategic review process) $6 - $9
©2015 Accretive Health Inc.10 Questions and Answers
©2015 Accretive Health Inc.11 Appendix
©2015 Accretive Health Inc.12 Use of 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 presentation. 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) as 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, 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, 2014. Slide 14 presents a reconciliation of GAAP revenue to gross cash generated from customer contracting activities, and slide 15 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.
©2015 Accretive Health Inc.13 Consolidated Statement of Operations - GAAP ($ in thousands, except per share data) Three Months Ended June 30, Six Months Ended June 30, 2015 2014 2015 2014 (Unaudited) (Unaudited) Net services revenue $22,085 $58,975 $33,056 $71,939 Operating expenses: Costs of services 42,762 47,949 84,958 92,881 Selling, general and administrative 20,969 19,458 38,331 36,824 Restatement and other 611 18,760 1,886 54,061 Total operating expenses 64,342 86,167 125,175 183,766 Loss from operations (42,257) (27,192) (92,119) (111,827) Net interest income 69 52 74 152 Loss before income tax provision (42,188) (27,140) (92,045) (111,675) Income tax benefit 15,900 10,341 35,312 40,153 Net loss $(26,288) $(16,799) $(56,733) $(71,522) Net loss per common share: Basic $(0.27) $(0.18) $(0.59) $(0.75) Diluted $(0.27) $(0.18) $(0.59) $(0.75) Weighted average shares used in calculating net loss per common share: Basic 95,941,077 95,753,302 95,915,255 95,738,326 Diluted 95,941,077 95,753,302 95,915,255 95,738,326
©2015 Accretive Health Inc.14 Reconciliation of GAAP revenue to Gross Cash Generated from Customer Contracting Activities ($ in thousands) Three Months Ended June 30, Six Months Ended June 30, 2015 2014 2015 2014 GAAP Net Services Revenue: RCM services: net operating fee $9,560 $23,491 $13,170 $24,956 RCM services: incentive fee 6,105 26,964 8,005 29,106 Other service fees 6,420 8,520 11,881 17,877 Net services revenue (GAAP basis) 22,085 58,975 33,056 71,939 Change in deferred customer billings 25,133 (2,513) 69,060 42,011 Gross cash generated from customer contracting activities $47,218 $56,462 $102,116 $113,950 Components of Gross Cash Generated from Customer Contracting Activities: RCM services: net operating fee $27,050 $29,455 $57,239 $64,230 RCM services: incentive fee 14,511 18,487 32,642 31,842 Total RCM services fees 41,561 47,942 89,881 96,072 Other service fees 5,657 8,520 12,235 17,878 Gross cash generated from customer contracting activities $47,218 $56,462 $102,116 $113,950
©2015 Accretive Health Inc.15 Reconciliation of GAAP net income (loss) to Net Cash Generated from Customer Contracting Activities ($ in thousands) Three Months Ended June 30, Six Months Ended June 30, 2015 2014 2015 2014 Net income (loss) $(26,288) $(16,799) $(56,733) $(71,522) Net interest income (69) (52) (74) (152) Income tax benefit (15,900) (10,341) (35,312) (40,153) Depreciation and amortization expense 2,101 1,471 3,818 2,876 Share-based compensation expense 7,807 5,707 13,003 10,467 Restatement and other 611 18,760 1,886 54,061 Adjusted EBITDA (31,738) (1,254) (73,412) (44,423) Change in deferred customer billings 25,133 (2,513) 69,060 42,011 Net cash generated from customer contracting activities $(6,605) $(3,767) $(4,352) $(2,412)
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