| [February 22, 2017] |
 |
Cotiviti Announces Fourth Quarter and Full Year 2016 Results
Cotiviti Holdings Inc. (NYSE:COTV) ("Cotiviti"), a leading provider of
analytics-driven payment accuracy solutions primarily focused on the
healthcare industry, today announced financial results for the three
months and year ended December 31, 2016. The Company will host a
conference call on February 23, 2017 at 8:30 a.m. Eastern Time to
discuss results.
"2016 was a milestone year for Cotiviti and we are extremely pleased
with our continued demonstrated ability to deliver significant value to
our clients and generate strong financial results," said Doug Williams,
Chief Executive Officer. "Specifically this year, we delivered a record
$3.7 billion in savings to our commercial healthcare and retail clients.
In turn, we grew our total revenue 15% to $625.2 million and adjusted
EBITDA 18% to $239.7 million."
"The strategic investments we made to enhance our technology and
analytics capabilities resulted in strengthened client relationships and
an increase in the value we delivered to them," continued Williams. "We
also expanded the number of clients we serve to include 20 of the 25
largest health plans. Our demonstrated ability to expand client
engagements through cross-selling and broadening adoption of our
solutions, and to add new clients to our roster is a key part of
Cotiviti's success in generating predictable, ongoing revenue growth.
Cotiviti is well-positioned to adapt, innovate and succeed. "
"As a result of our strong EBITDA growth, cash flow generation, and the
successful debt refinancing we completed in the third quarter of 2016,
we were able to further reduce our net debt leverage ratio to 2.9 times
as of December 31, 2016 from 3.3 times as of September 30 creating
additional flexibility and strength to our balance sheet," said Steve
Senneff, Chief Financial Officer. "As we continue to grow our top line
and expand margins, we expect to continue to de-lever naturally. We plan
to deploy excess capital to invest in innovation and new solutions to
fuel organic growth, as well as to consider any potential strategic
additions to strengthen our portfolio."
Fourth Quarter 2016 Financial Results
-
Total revenue for the quarter increased 11% to $167.9 million,
compared to $151.5 million in the fourth quarter a year ago. Revenue
growth was driven by a 14% increase to $148.4 million in the
Healthcare segment, with the Global Retail and Other segment
contributing $19.5 million, a decrease of 8% compared to the same
period a year ago. Healthcare revenue was favorably impacted in the
quarter by an increase in volume and expanded adoption of our
solutions within existing healthcare clients. The decline in retail
was primarily driven by a difficult comparison to the year ago quarter
in which we experienced the highest, single claim savings amount for a
client in the history of the company.
-
Net income increased 175% to $25.3 million, or $0.27 per diluted share
for the fourth quarter, compared to a $9.2 million in the prior year
quarter, or $0.12 per diluted share. The increase was driven by
revenue growth and lower interest expense.
-
Non-GAAP Adjusted EBITDA for the quarter increased 14% to $64.4
million, compared to $56.4 million for the quarter a year ago.
-
Non-GAAP Adjusted Net Income for the quarter increased 51% to $37.2
million, or $0.39 per diluted share, compared to $24.7 million, or
$0.32 per diluted share a year ago.
Full-Year 2016 Financial Results
-
Total revenue for the full-year 2016 increased 15% to $625.2 million,
compared to $541.3 million for the full-year 2015. Revenue growth was
driven by an 18% increase in the Healthcare segment to $552.0 million,
with the Global Retail and Other segment contributing $73.1 million,
essentially flat from year ended 2015 excluding the foreign exchange
impact.
-
Net income increased 252% to $48.9 million, or $0.55 per diluted share
for the year-ended 2016, compared to a $13.9 million in the prior
year, or $0.18 per diluted share.
-
Non-GAAP Adjusted EBITDA increased 18% to $239.7 million, compared to
$203.4 million for the same period a year ago.
-
Non-GAAP Adjusted Net Income increased 34% to $124.3 million, or $1.40
per diluted share, compared to $92.7 million, or $1.19 per diluted
share in 2015.
Guidance
Cotiviti is providing full-year 2017 guidance as follows:
-
Total revenue in a range of $688 - $700 million
-
Adjusted EBITDA in a range of $266 - $272 million, and
-
Fully diluted weighted average shares of approximately 97 million.
1Adjusted EBITDA, Adjusted Net Income, and Adjusted
Net Income per Share are non-GAAP financial measures. For an
explanation of these as measures of the Company's operating performance,
refer to the reconciliation in "Non-GAAP Financial Measures."
Conference Call Information
To participate in the conference call, domestic callers can dial (877)
883-0383 and international callers can dial (412) 902-6506 and provide
the following conference passcode: 3271911. The call will also be
webcast and be accessible on the Investor page of Cotiviti's website at http://investors.cotiviti.com.
Supplemental Financial Information
Supplemental financial information that is not part of this press
release is available on the Investor page of Cotiviti's website at http://investors.cotiviti.com.
About Cotiviti
Cotiviti is a leading payment accuracy provider that helps healthcare
payers and retailers achieve their business objectives by unlocking
value from the incongruities the company discovers in the complex
interactions customers have with stakeholders. Cotiviti helps clients
capture over $3.5 billion annually through improved payment accuracy.
Cotiviti provides services to twenty of the top twenty-five U.S.
healthcare payers and eight of the top ten U.S. retailers.
Forward-Looking Statements
This press release contains forward-looking statements within the
meaning of the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995. These statements are subject to risks and
uncertainties. All statements other than statements of historical fact
or relating to present facts or current conditions included in this
press release are forward-looking statements. Forward-looking statements
give our current expectations and projections relating to our financial
condition, results of operations, plans, objectives, future performance
and business. You can identify forward-looking statements by the fact
that they do not relate strictly to historical or current facts. These
statements may include words such as "anticipate," "estimate," "expect,"
"project," "seek," "plan," "intend," "believe," "will," "may," "could,"
"continue," "likely," "should," and other words.
The forward-looking statements contained in this press release are based
on assumptions that we have made in light of our industry experience and
our perceptions of historical trends, current conditions, expected
future developments and other factors that we believe are appropriate
under the circumstances. These statements are not guarantees of
performance or results. These assumptions and our future performance or
results involve risks and uncertainties (many of which are beyond our
control). Important factors that could cause actual results to differ
materially from those in the forward-looking statements include
regional, national or global political, economic, business, competitive,
market and regulatory conditions and the following: our inability to
successfully leverage our existing client base by expanding the volume
of claims reviewed and cross-selling additional solutions; improvements
to healthcare claims and retail billing processes reducing the demand
for our solutions or rendering our solutions unnecessary; healthcare
spending fluctuations; our clients declining to renew their agreements
with us or renewing at lower performance fee levels; inability to
develop new clients; delays in implementing our solutions; system
interruptions or failures, including cyber-security breaches, identity
theft or other disruptions that could compromise our information; our
failure to innovate and develop new solutions for our clients; our
failure to comply with applicable privacy, security and data laws,
regulations and standards; changes in regulations governing healthcare
administration and policies, including governmental restrictions on the
outsourcing of functions such as those that we provide; loss of a large
client; consolidation among healthcare payers or retailers; slow
development of the healthcare payment accuracy market; negative
publicity concerning the healthcare payment industry or patient
confidentiality and privacy; significant competition for our solutions;
our inability to protect our intellectual property rights, proprietary
technology, information, processes and know-how; compliance with current
and future regulatory requirements; declines in contracts awarded
through competitive bidding or our inability to re-procure contracts
through the competitive bidding process; our failure to accurately
estimate the factors upon which we base our contract pricing; our
inability to manage our growth; our inability to successfully integrate
and realize synergies from the merger of Connolly Superholdings, Inc.
and iHealth Technologies, Inc. in May 2014 or any future acquisitions or
strategic partnerships; our failure to maintain or upgrade our
operational platforms; our failure to reprocure our Medicare Recovery
Audit Contractor program contract; our rebranding may not be successful;
litigation, regulatory or dispute resolution proceedings, including
claims or proceedings related to intellectual property infringements;
our inability to expand our retail business; our inability to manage our
relationships with information suppliers, software vendors or utility
providers; fluctuation in our results of operations; changes in tax
rules; risks associated with international operations; our inability to
realize the book value of intangible assets; our success in attracting
and retaining qualified employees and key personnel; and general
economic, political and market forces and dislocations beyond our
control; risks related to our substantial indebtedness and holding
company structure; volatility in bank and capital markets; our status as
a controlled company and as an emerging growth company; and provisions
in our amended and restated certificate of incorporation. Additional
factors or events that could cause our actual performance to differ from
these forward-looking statements may emerge from time to time, and it is
not possible for us to predict all of them. Should one or more of these
risks or uncertainties materialize, or should any of our assumptions
prove incorrect, our actual financial condition, results of operations,
future performance and business may vary in material respects from the
performance projected in these forward-looking statements.
Any forward-looking statement made by us in this press release speaks
only as of the date on which it is made. We undertake no obligation to
publicly update or revise any forward-looking statement, whether as a
result of new information, future developments or otherwise, except as
may be required by law.
Non-GAAP Financial Measures
The Company defines Adjusted EBITDA as net income (loss) before
depreciation and amortization, impairment of intangible assets, interest
expense, other non-operating (income) expense such as foreign currency
translation, income tax expense (benefit), gain on discontinued
operations, transaction-related expenses and other, stock-based
compensation and loss on extinguishment of debt. The Company defines
Adjusted Net Income as net income adjusted for non-cash and other
non-recurring items.
Management believes Adjusted EBITDA is useful because it provides
meaningful supplemental information about our operating performance and
facilitates period-to-period comparisons without regard to our financing
methods, capital structure or other items that we believe are not
indicative of our ongoing operating performance. Management believes
Adjusted Net Income is useful because it provides meaningful
supplemental information about our operating performance and facilitates
period-to-period comparisons without regard to non-cash expenses and
other items that are one-time in nature. In order to assure that all
investors have access to similar data the Company has determined that it
is appropriate to provide these non-GAAP financial measures. Management
believes we are enhancing investors' understanding of our business and
our results of operations, as well as assisting them in evaluating how
well we are executing our strategic initiatives. Adjusted EBITDA and
Adjusted Net Income are intended as supplemental measures of our
performance that is not required by, or presented in accordance with
U.S. generally accepted accounting principles, or GAAP. Adjusted EBITDA
and Adjusted Net Income are not determined in accordance with GAAP, and
should not be considered in isolation or as an alternative to net
income, income from operations, net cash provided by operating,
investing or financing activities or other financial statement data
presented as indicators of financial performance or liquidity, each as
presented in accordance with GAAP.
|
|
|
|
|
Cotiviti Holdings, Inc.
Consolidated Balance Sheets
(Unaudited, in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
|
2016
|
|
|
2015
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
110,635
|
|
|
|
$
|
149,365
|
|
|
Restricted cash
|
|
|
|
9,103
|
|
|
|
|
10,741
|
|
|
Accounts receivable, net of allowance for doubtful accounts of $851
and $1,053 at December 31, 2016 and 2015, respectively; and net of
estimated allowance for refunds and appeals of $41,020 and $33,406
at December 31, 2016 and 2015, respectively
|
|
|
|
67,735
|
|
|
|
|
78,856
|
|
|
Prepaid expenses and other current assets
|
|
|
|
14,957
|
|
|
|
|
24,044
|
|
|
Total current assets
|
|
|
|
202,430
|
|
|
|
|
263,006
|
|
|
Property and equipment, net
|
|
|
|
67,640
|
|
|
|
|
57,452
|
|
|
Goodwill
|
|
|
|
1,196,024
|
|
|
|
|
1,197,044
|
|
|
Intangible assets, net
|
|
|
|
533,305
|
|
|
|
|
594,410
|
|
|
Other long-term assets
|
|
|
|
2,864
|
|
|
|
|
2,176
|
|
|
TOTAL ASSETS
|
|
|
$
|
2,002,263
|
|
|
|
$
|
2,114,088
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
Current maturities of long-term debt
|
|
|
$
|
18,000
|
|
|
|
$
|
21,099
|
|
|
Customer deposits
|
|
|
|
9,103
|
|
|
|
|
10,741
|
|
|
Accounts payable and accrued other expenses
|
|
|
|
23,162
|
|
|
|
|
29,521
|
|
|
Accrued compensation costs
|
|
|
|
58,589
|
|
|
|
|
42,902
|
|
|
Estimated liability for refunds and appeals
|
|
|
|
62,539
|
|
|
|
|
67,775
|
|
|
Total current liabilities
|
|
|
|
171,393
|
|
|
|
|
172,038
|
|
|
Long-term liabilities:
|
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
|
|
762,202
|
|
|
|
|
1,012,971
|
|
|
Other long-term liabilities
|
|
|
|
8,799
|
|
|
|
|
12,199
|
|
|
Deferred tax liabilities
|
|
|
|
120,533
|
|
|
|
|
129,284
|
|
|
Total long-term liabilities
|
|
|
|
891,534
|
|
|
|
|
1,154,454
|
|
|
Total liabilities
|
|
|
|
1,062,927
|
|
|
|
|
1,326,492
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
Stockholders' equity:
|
|
|
|
|
|
|
|
|
|
Common stock ($0.001 par value; 600,000,000 and 122,000,000 shares
authorized, 90,748,740 and 77,237,711 issued, and 90,741,340 and
77,230,311 outstanding at December 31, 2016 and 2015, respectively)
|
|
|
|
91
|
|
|
|
|
77
|
|
|
Additional paid-in capital
|
|
|
|
911,582
|
|
|
|
|
807,419
|
|
|
Retained earnings (deficit)
|
|
|
|
33,917
|
|
|
|
|
(14,935
|
)
|
|
Accumulated other comprehensive loss
|
|
|
|
(6,156
|
)
|
|
|
|
(4,867
|
)
|
|
Treasury stock, at cost (7,400 shares at December 31, 2016 and 2015)
|
|
|
|
(98
|
)
|
|
|
|
(98
|
)
|
|
Total stockholders' equity
|
|
|
|
939,336
|
|
|
|
|
787,596
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
$
|
2,002,263
|
|
|
|
$
|
2,114,088
|
|
|
|
|
|
|
Cotiviti Holdings, Inc.
Consolidated Statements of Comprehensive Income
(Unaudited, in thousands except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Year Ended
|
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
|
2016
|
|
2015
|
|
|
2016
|
|
2015
|
|
Net revenue
|
|
|
$
|
167,912
|
|
|
$
|
151,463
|
|
|
|
$
|
625,162
|
|
|
$
|
541,343
|
|
|
Cost of revenue (exclusive of depreciation and amortization, stated
separately below):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation
|
|
|
|
62,338
|
|
|
|
50,889
|
|
|
|
|
229,601
|
|
|
|
183,817
|
|
|
Other costs of revenue
|
|
|
|
4,836
|
|
|
|
6,171
|
|
|
|
|
22,167
|
|
|
|
20,800
|
|
|
Total cost of revenue
|
|
|
|
67,174
|
|
|
|
57,060
|
|
|
|
|
251,768
|
|
|
|
204,617
|
|
|
Selling, general and administrative expenses (exclusive of
depreciation and amortization, stated separately below):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation
|
|
|
|
22,341
|
|
|
|
18,216
|
|
|
|
|
97,123
|
|
|
|
70,802
|
|
|
Other selling, general and administrative expenses
|
|
|
|
15,409
|
|
|
|
21,520
|
|
|
|
|
59,561
|
|
|
|
65,943
|
|
|
Total selling, general and administrative expenses
|
|
|
|
37,750
|
|
|
|
39,736
|
|
|
|
|
156,684
|
|
|
|
136,745
|
|
|
Depreciation and amortization of property and equipment
|
|
|
|
5,287
|
|
|
|
3,425
|
|
|
|
|
20,151
|
|
|
|
12,695
|
|
|
Amortization of intangible assets
|
|
|
|
15,200
|
|
|
|
15,211
|
|
|
|
|
60,818
|
|
|
|
61,467
|
|
|
Transaction-related expenses
|
|
|
|
879
|
|
|
|
1,115
|
|
|
|
|
1,788
|
|
|
|
1,469
|
|
|
Impairment of intangible assets
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
27,826
|
|
|
Total operating expenses
|
|
|
|
126,290
|
|
|
|
116,547
|
|
|
|
|
491,209
|
|
|
|
444,819
|
|
|
Operating income
|
|
|
|
41,622
|
|
|
|
34,916
|
|
|
|
|
133,953
|
|
|
|
96,524
|
|
|
Other expense (income):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
|
8,308
|
|
|
|
15,706
|
|
|
|
|
48,653
|
|
|
|
65,561
|
|
|
Loss on extinguishment of debt
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
16,417
|
|
|
|
4,084
|
|
|
Other non-operating (income) expense
|
|
|
|
(168
|
)
|
|
|
(442
|
)
|
|
|
|
(939
|
)
|
|
|
(826
|
)
|
|
Total other expense (income)
|
|
|
|
8,140
|
|
|
|
15,264
|
|
|
|
|
64,131
|
|
|
|
68,819
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before income taxes
|
|
|
|
33,482
|
|
|
|
19,652
|
|
|
|
|
69,822
|
|
|
|
27,705
|
|
|
Income tax expense
|
|
|
|
8,190
|
|
|
|
10,469
|
|
|
|
|
20,970
|
|
|
|
14,401
|
|
|
Income from continuing operations
|
|
|
|
25,292
|
|
|
|
9,183
|
|
|
|
|
48,852
|
|
|
|
13,304
|
|
|
Gain on discontinued operations, net of tax
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
559
|
|
|
Net income
|
|
|
$
|
25,292
|
|
|
$
|
9,183
|
|
|
|
$
|
48,852
|
|
|
$
|
13,863
|
|
|
Other comprehensive (loss) income, net of tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments
|
|
|
|
(266
|
)
|
|
|
617
|
|
|
|
|
(923
|
)
|
|
|
(667
|
)
|
|
Change in available-for-sale securities
|
|
|
|
-
|
|
|
|
3
|
|
|
|
|
-
|
|
|
|
3
|
|
|
Change in fair value of derivative instruments
|
|
|
|
249
|
|
|
|
284
|
|
|
|
|
(366
|
)
|
|
|
(2,345
|
)
|
|
Total other comprehensive (loss) income
|
|
|
|
(17
|
)
|
|
|
904
|
|
|
|
|
(1,289
|
)
|
|
|
(3,009
|
)
|
|
Comprehensive income
|
|
|
$
|
25,275
|
|
|
$
|
10,087
|
|
|
|
$
|
47,563
|
|
|
$
|
10,854
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share from continuing operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
$
|
0.28
|
|
|
$
|
0.12
|
|
|
|
$
|
0.57
|
|
|
$
|
0.17
|
|
|
Diluted
|
|
|
|
0.27
|
|
|
|
0.12
|
|
|
|
$
|
0.55
|
|
|
$
|
0.17
|
|
|
Earnings per share from discontinued operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
$
|
0.01
|
|
|
Diluted
|
|
|
|
-
|
|
|
|
-
|
|
|
|
$
|
-
|
|
|
$
|
0.01
|
|
|
Total earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
$
|
0.28
|
|
|
$
|
0.12
|
|
|
|
$
|
0.57
|
|
|
$
|
0.18
|
|
|
Diluted
|
|
|
|
0.27
|
|
|
|
0.12
|
|
|
|
$
|
0.55
|
|
|
$
|
0.18
|
|
|
|
|
|
|
Cotiviti Holdings, Inc.
Consolidated Statements of Cash Flows
(Unaudited, in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
|
|
|
December 31,
|
|
|
|
|
|
2016
|
|
|
2015
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
$
|
48,852
|
|
|
|
$
|
13,863
|
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
|
|
|
|
|
|
Deferred income taxes
|
|
|
|
|
(7,735
|
)
|
|
|
|
(11,832
|
)
|
|
Depreciation and amortization
|
|
|
|
|
80,969
|
|
|
|
|
74,162
|
|
|
Stock-based compensation expense
|
|
|
|
|
22,954
|
|
|
|
|
3,399
|
|
|
Amortization of debt issuance costs
|
|
|
|
|
4,278
|
|
|
|
|
5,565
|
|
|
Accretion of asset retirement obligations
|
|
|
|
|
186
|
|
|
|
|
166
|
|
|
Loss on impairment of intangible assets
|
|
|
|
|
-
|
|
|
|
|
27,826
|
|
|
Loss on extinguishment of debt
|
|
|
|
|
16,417
|
|
|
|
|
4,084
|
|
|
Gain on discontinued operations
|
|
|
|
|
-
|
|
|
|
|
(900
|
)
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
Restricted cash
|
|
|
|
|
1,638
|
|
|
|
|
9,486
|
|
|
Accounts receivable
|
|
|
|
|
11,121
|
|
|
|
|
(18,641
|
)
|
|
Other current assets
|
|
|
|
|
7,905
|
|
|
|
|
(12,265
|
)
|
|
Other long-term assets
|
|
|
|
|
(688
|
)
|
|
|
|
98
|
|
|
Customer deposits
|
|
|
|
|
(1,638
|
)
|
|
|
|
(9,486
|
)
|
|
Accrued compensation
|
|
|
|
|
15,687
|
|
|
|
|
263
|
|
|
Accounts payable and accrued other expenses
|
|
|
|
|
(4,821
|
)
|
|
|
|
(14,831
|
)
|
|
Estimated liability for refunds and appeals
|
|
|
|
|
(5,236
|
)
|
|
|
|
(7,166
|
)
|
|
Other long-term liabilities
|
|
|
|
|
109
|
|
|
|
|
(115
|
)
|
|
Other
|
|
|
|
|
(827
|
)
|
|
|
|
(522
|
)
|
|
Net cash provided by operating activities
|
|
|
|
|
189,171
|
|
|
|
|
63,154
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
Expenditures for property and equipment
|
|
|
|
|
(35,213
|
)
|
|
|
|
(22,982
|
)
|
|
Other investing activities
|
|
|
|
|
1,181
|
|
|
|
|
401
|
|
|
Net cash used in investing activities
|
|
|
|
|
(34,032
|
)
|
|
|
|
(22,581
|
)
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
Net proceeds from issuance of common stock
|
|
|
|
|
226,963
|
|
|
|
|
-
|
|
|
Proceeds from exercise of stock options
|
|
|
|
|
4,243
|
|
|
|
|
210
|
|
|
Proceeds from issuance of debt
|
|
|
|
|
800,000
|
|
|
|
|
-
|
|
|
Dividends paid
|
|
|
|
|
(150,000
|
)
|
|
|
|
-
|
|
|
Payment of debt issuance costs
|
|
|
|
|
(7,131
|
)
|
|
|
|
(1,086
|
)
|
|
Repayment of debt
|
|
|
|
|
(1,067,350
|
)
|
|
|
|
(8,100
|
)
|
|
Net cash used in financing activities
|
|
|
|
|
(193,275
|
)
|
|
|
|
(8,976
|
)
|
|
Effect of foreign exchanges on cash and cash equivalents
|
|
|
|
|
(594
|
)
|
|
|
|
(844
|
)
|
|
Net (decrease) increase in cash and cash equivalents
|
|
|
|
|
(38,730
|
)
|
|
|
|
30,753
|
|
|
Cash and cash equivalents at beginning of period
|
|
|
|
|
149,365
|
|
|
|
|
118,612
|
|
|
Cash and cash equivalents at end of the period
|
|
|
|
$
|
110,635
|
|
|
|
$
|
149,365
|
|
|
Supplemental disclosures of cash flow information:
|
|
|
|
|
|
|
|
|
|
|
Cash paid for income taxes
|
|
|
|
$
|
25,359
|
|
|
|
$
|
41,119
|
|
|
Cash paid for interest
|
|
|
|
|
43,227
|
|
|
|
|
60,238
|
|
|
Noncash investing activities (accrued property and equipment
purchases)
|
|
|
|
|
8,163
|
|
|
|
|
12,949
|
|
|
|
|
|
|
Reconciliation of Net Income to Adjusted EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
|
Year Ended
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
Percent
|
|
|
|
December 31,
|
|
|
Percent
|
|
|
(unaudited, in thousands)
|
|
|
2016
|
|
|
2015
|
|
|
Change
|
|
|
|
2016
|
|
|
2015
|
|
|
Change
|
|
|
Net income
|
|
|
$
|
25,292
|
|
|
$
|
9,183
|
|
|
175
|
%
|
|
|
$
|
48,852
|
|
|
$
|
13,863
|
|
|
252
|
%
|
|
Adjustments to net income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
20,487
|
|
|
|
18,636
|
|
|
10
|
%
|
|
|
|
80,969
|
|
|
|
74,162
|
|
|
9
|
%
|
|
Impairment of intangible assets (a)
|
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
|
|
-
|
|
|
|
27,826
|
|
|
(100)
|
%
|
|
Interest expense
|
|
|
|
8,308
|
|
|
|
15,706
|
|
|
(47)
|
%
|
|
|
|
48,653
|
|
|
|
65,561
|
|
|
(26)
|
%
|
|
Other non-operating (income) expense (b)
|
|
|
|
(168)
|
|
|
|
(442)
|
|
|
(62)
|
%
|
|
|
|
(939)
|
|
|
|
(826)
|
|
|
14
|
%
|
|
Income tax expense
|
|
|
|
8,190
|
|
|
|
10,469
|
|
|
(22)
|
%
|
|
|
|
20,970
|
|
|
|
14,401
|
|
|
46
|
%
|
|
Gain on discontinued operations, net of tax (c)
|
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
|
|
-
|
|
|
|
(559)
|
|
|
(100)
|
%
|
|
Transaction-related expenses and other (d)
|
|
|
|
879
|
|
|
|
1,115
|
|
|
(21)
|
%
|
|
|
|
1,788
|
|
|
|
1,469
|
|
|
22
|
%
|
|
Stock-based compensation (e)
|
|
|
|
1,410
|
|
|
|
1,775
|
|
|
(21)
|
%
|
|
|
|
22,954
|
|
|
|
3,399
|
|
|
575
|
%
|
|
Loss on extinguishment of debt (f)
|
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
|
|
16,417
|
|
|
|
4,084
|
|
|
302
|
%
|
|
Adjusted EBITDA
|
|
|
$
|
64,398
|
|
|
$
|
56,442
|
|
|
14
|
%
|
|
|
$
|
239,664
|
|
|
$
|
203,380
|
|
|
18
|
%
|
|
% of revenue
|
|
|
|
38.4
|
%
|
|
|
37.3
|
%
|
|
|
|
|
|
|
38.3
|
%
|
|
|
37.6
|
%
|
|
|
|
|
_________________________
|
|
|
(a)
|
|
Represents an impairment during the quarter ended September 30, 2015
as a result of our rebranding and the related impact to our
trademarks.
|
|
|
(b)
|
|
Represents other non-operating (income) expense that consists
primarily of gains and losses on transactions settled in foreign
currencies. Income received for certain sub-leases is included
herein.
|
|
|
(c)
|
|
Represents payment on a $900 note receivable ($559 net of taxes)
related to a business that was disposed of in 2012. This note
receivable had been reported in the loss on discontinued operations
in 2012 upon the sale of that business. Since the date of sale, we
had elected to fully reserve the note receivable as the
collectability was determined to be uncertain.
|
|
|
(d)
|
|
Represents transaction-related expenses that consist primarily of
certain expenses associated with the preparation for our Initial
Public Offering and other offering costs as well as certain
corporate development activity.
|
|
|
(e)
|
|
Represents expense related to stock-based compensation awards
granted to certain employees, officers and non-employee directors as
long-term incentive compensation. We recognize the related expense
for these awards ratably over the vesting period. During the year
ended December 31, 2016, performance awards vested resulting in
stock compensation expense of $15,898.
|
|
|
(f)
|
|
Represents loss on extinguishment of debt that consists primarily of
fees paid and write-offs of unamortized debt issuance costs and
original issue discount in connection with the repricing of our
long-term debt in 2015, the early repayment of a portion of our
long-term debt in 2016 and the refinancing of our long-term debt in
2016.
|
|
|
|
|
|
|
Reconciliation of Net Income to Adjusted Net Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
Year Ended
|
|
|
|
|
|
|
|
December 31,
|
|
Percent
|
|
|
|
December 31,
|
|
Percent
|
|
|
(unaudited, in thousands)
|
|
|
2016
|
|
2015
|
|
Change
|
|
|
|
2016
|
|
2015
|
|
Change
|
|
|
Net income
|
|
|
$
|
25,292
|
|
|
$
|
9,183
|
|
|
175
|
|
%
|
|
|
$
|
48,852
|
|
|
$
|
13,863
|
|
|
252
|
|
%
|
|
Adjustments to net income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of Acquired Intangible Assets - Non Tax Deductible
|
|
|
|
10,401
|
|
|
|
10,402
|
|
|
NM
|
|
|
|
|
|
41,607
|
|
|
|
42,187
|
|
|
(1
|
)
|
%
|
|
Amortization of Acquired Intangible Assets - Tax Deductible
|
|
|
|
4,799
|
|
|
|
4,809
|
|
|
NM
|
|
|
|
|
|
19,211
|
|
|
|
19,280
|
|
|
NM
|
|
|
|
Impairment of intangible assets (a)
|
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
27,826
|
|
|
(100
|
)
|
%
|
|
Loss on extinguishment of debt(b)
|
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
|
|
|
16,417
|
|
|
|
4,084
|
|
|
302
|
|
%
|
|
Transaction-related expenses and other(c)
|
|
|
|
879
|
|
|
|
1,115
|
|
|
(21
|
)
|
%
|
|
|
|
1,788
|
|
|
|
1,469
|
|
|
22
|
|
%
|
|
Stock-based compensation (d)
|
|
|
|
1,410
|
|
|
|
1,775
|
|
|
(21
|
)
|
%
|
|
|
|
22,954
|
|
|
|
3,399
|
|
|
575
|
|
%
|
|
Gain on discontinued operations(e)
|
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
(900
|
)
|
|
100
|
|
%
|
|
Tax effect of above adjustments (f)
|
|
|
|
(1,624
|
)
|
|
|
(2,634
|
)
|
|
(38
|
)
|
%
|
|
|
|
(22,573
|
)
|
|
|
(18,465
|
)
|
|
22
|
|
%
|
|
Tax benefit related to stock option exercises
|
|
|
|
(4,000
|
)
|
|
|
-
|
|
|
NM
|
|
|
|
|
|
(4,000
|
)
|
|
|
-
|
|
|
NM
|
|
|
|
Adjusted Net Income
|
|
|
$
|
37,157
|
|
|
$
|
24,650
|
|
|
51
|
|
%
|
|
|
$
|
124,256
|
|
|
$
|
92,743
|
|
|
34
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares of common stock - Diluted (000s)
|
|
|
|
94,071
|
|
|
|
77,733
|
|
|
|
|
|
|
|
88,578
|
|
|
|
77,641
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net Income per diluted share
|
|
|
$
|
0.39
|
|
|
$
|
0.32
|
|
|
|
|
|
|
$
|
1.40
|
|
|
$
|
1.19
|
|
|
|
|
|
_________________________
|
|
|
(a)
|
|
Represents an impairment during the quarter ended September 30, 2015
as a result of our rebranding and the related impact to our
trademarks.
|
|
|
(b)
|
|
Represents loss on extinguishment of debt that consists primarily of
fees paid and write-offs of unamortized debt issuance costs and
original issue discount in connection with the repricing of our
long-term debt in 2015, the early repayment of a portion of our
long-term debt in 2016 and the refinancing of our long-term debt in
2016.
|
|
|
(c)
|
|
Represents transaction-related expenses that consist primarily of
certain expenses associated with the preparation for our Initial
Public Offering and other offering costs as well as certain
corporate development activity.
|
|
|
(d)
|
|
Represents expense related to stock-based compensation awards
granted to certain employees, officers and non-employee directors as
long-term incentive compensation. We recognize the related expense
for these awards ratably over the vesting period. During the year
ended December 31, 2016, performance awards vested resulting in
stock compensation expense of $15,898.
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|
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(e)
|
|
Represents payment on a $900 note receivable ($559 net of taxes)
related to a business that was disposed of in 2012. This note
receivable had been reported in the loss on discontinued operations
in 2012 upon the sale of that business. Since the date of sale, we
had elected to fully reserve the note receivable as the
collectability was determined to be uncertain.
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(f)
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This line represents the tax impact of the amortization of acquired
intangible assets - tax deductible, a portion of impairment of
intangible assets, loss on extinguishment of debt, a portion of
transaction-related expenses and other, stock-based compensation and
gain on discontinued operations. The tax rate assumed was 38% and
40% for the year ended December 31, 2016 and 2015, respectively. The
assumed tax rate decreased during the three months ended December
31, 2016 resulting in a lower tax effect for that period.
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|
|
|
|
|
|
Adjusted EBITDA 2017 Guidance Reconciliation
(unaudited, in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
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|
2017 Guidance Range
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Low
|
|
|
High
|
|
|
|
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
$
|
89
|
|
|
$
|
95
|
|
|
|
|
|
Adjustments to net income (1)
|
|
|
|
|
|
|
|
|
|
|
|
177
|
|
|
|
177
|
|
|
|
|
|
Adjusted EBITDA
|
|
|
|
|
|
|
|
|
|
|
$
|
266
|
|
|
$
|
272
|
|
_________________________
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(1)
|
|
Adjustments to net income include depreciation and amortization,
interest expense, other non-operating (income) expense, income tax
expense and stock-based compensation. A 38% tax rate is assumed to
approximate the Company's effective tax rate.
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