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HMS Q2 Profit Up; Backs FY10 EPS View - Update

(RTTNews) - HMS Holdings Corp. (HMSY), a cost management services provider for government sponsored health programs, reported Friday a rise in profit for the second quarter, driven by higher revenues. Earnings per share met Street estimates, while revenues surpassed expectations. The company also reaffirmed its earnings per share outlook for the full year of 2010, which is expected to come in below Street estimates.

Net income rose to $9.1 million from $6.6 million a year ago. On a per share basis, earnings were higher 33.3% at $0.32, compared with $0.24 the prior year.

On average, 8 analysts polled by Thomson Reuters expected earnings per share of $0.32 for the quarter. Analysts' estimates typically exclude special items.

Chief Executive Officer Bill Lucia said, "Along with a very strong sales quarter, HMS made strategic advances in both product development with the acquisition of AMG-SIU, and in our long-range planning with the purchase of our operations center in Irving, Texas. AMG brings us analytical expertise coupled with a powerful and scalable fraud, waste, and abuse engine that we will leverage across our entire Program Integrity portfolio. Combined, these transactions strengthen our already solid foundation and better position us for the coming expansion of government entitlement programs."

Revenue increased 31.4% to $70.7 million from $53.8 million a year ago.

Eight Wall Street analysts expected revenues of $68.88 million for the quarter.

Recently, on July 2, HMS agreed to acquire privately-held Allied Management Group or AMG-SIU, a provider of fraud, waste, and abuse prevention and detection solutions for healthcare payors, in an all-cash transaction. The purchase price for the transaction was $26.2 million, including an upfront payment of $13 million and additional estimated future payments valued at $13.2 million contingent upon future financial performance. HMS expects the transaction to have no impact to earnings per share for the fiscal 2010, and to be accretive to earnings per share in 2011.

Looking ahead, the company reiterated its outlook for the full year, expecting earnings per share of $1.38.

Wall Street analysts are looking out for earnings per share of $1.42, on revenues of $290.87 million for the full year.

HSMY is currently trading at $54.91, up $0.17 or 0.31%, on the Nasdaq.