NEW YORK, May 1, 2009 /PRNewswire-FirstCall via COMTEX/ ----HMS (Nasdaq: HMSY) today announced financial results for its first quarter ended March 31, 2009.

For the first quarter of 2009, revenue increased 28.2% to $49.9 million, compared with $38.9 million for the same period a year ago. Net income for the quarter was $5.7 million or $0.21 per fully diluted share compared to net income of $3.2 million or $0.12 per fully diluted share for the same period a year ago. Adjusted EBITDA for the quarter increased 54.9% to $14.5 million versus $9.3 million for the first quarter of 2008.

"HMS's first quarter represents a strong start to what we expect will be an excellent 2009," said Bill Lucia, CEO. "We are seeing revenue growth and new business in each of the markets we serve."

HMS will be hosting its first quarter 2009 conference call and webcast with the investment community on Friday, May 1, 2009 at 9:00 am Eastern Time. The conference call number is US/Canada: (866) 394-8630 Int'l/Local Dial-In: (706) 758-0082 Conference ID: 90944724. A slide presentation will accompany the conference call and may be accessed through our website at http://www.hms.com/investor_relations/investors_quarterly_results.asp.

A conference call replay will be available beginning May 1, 2009 10:00 AM ET through May 7, 2009 11:59 PM ET. To listen to the replay of the call, dial: US/Canada: (800) 642-1687 Int'l/Local Dial-In: (706) 645-9291 Conference ID: 90944724 or visit our website at http://www.hms.com/investor_relations/investors_quarterly_results.asp.

The HMS Holdings Corp. Form 10-Q for the quarter ended March 31, 2009 will be filed and available on our website http://www.hms.com/investor_relations/investors_sec_filings.asp on or about May 12, 2009, and will contain additional information about our results of operations for the fiscal year-to-date. This press release and the interim financial statements herein will be available at http://www.hms.com for at least a 12-month period. Shareholders and interested investors are welcome to contact Investor Relations at 212-857-5986.

About HMS (Nasdaq:HMSY)

HMS is the leader in coordination of benefits and program integrity services for government healthcare programs. The company's clients include health and human services programs in more than 40 states, over 90 Medicaid managed care plans, the Centers for Medicare and Medicaid Services (CMS), and Veterans Administration facilities. HMS helps ensure that healthcare claims are paid correctly and by the responsible party. As a result of the company's services, government healthcare programs recover over $1 billion annually, and avoid billions of dollars more in erroneous payments.

This press release includes presentations of earnings before interest, taxes, depreciation and amortization (EBITDA) and adjusted EBITDA. Adjusted EBITDA represents EBITDA adjusted for share-based compensation expense. EBITDA is a measure commonly used by the capital markets to value enterprises. Interest, taxes, depreciation and amortization can vary significantly between companies due in part to differences in accounting policies, tax strategies, levels of indebtedness and interest rates. Excluding these items provides insight into the underlying results of operations and facilitates comparisons between HMSY and other companies. EBITDA is also a useful measure of the Company's ability to service debt and is one of the measures used for determining debt covenant compliance. In addition, because of the varying methodologies for determining share-based compensation expense, and the subjective assumptions involved in those determinations, we believe excluding share-based compensation expense from EBITDA enhances the ability of management and investors to compare our core operating results over multiple periods with those of other companies. Management believes EBITDA and adjusted EBITDA information is useful to investors for these reasons. Both EBITDA and adjusted EBITDA are non-GAAP financial measures and should not be viewed as an alternative to GAAP measures of performance. Management believes the most directly comparable GAAP financial measure is net income and has provided a reconciliation of EBITDA and adjusted EBITDA to net income in this press release.

Certain statements in this press release constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Reform Act"). Such forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause the actual results, performance, or achievements of HMSY, or industry results, to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements. The important factors that could cause actual results to differ materially from those indicated by such forward-looking statements include, but are not limited to: (i) the information being of a preliminary nature and therefore subject to further adjustment; (ii) the uncertainties of litigation; (iii) HMSY's dependence on significant customers; (iv) changing conditions in the healthcare industry which could simplify the reimbursement process and adversely affect HMSY's business; (v) government regulatory and political pressures which could reduce the rate of growth of healthcare expenditures and/or discourage the assertion of claims for reimbursement against and delay the ultimate receipt of payment from third party payors; (vi) competitive actions by other companies, including the development by competitors of new or superior services or products or the entry into the market of new competitors; (vii) all the risks inherent in the development, introduction, and implementation of new products and services; and (viii) other risk factors described from time to time in HMSY's filings with the Securities and Exchange Commission, including HMSY's Annual Report on Form 10-K for the year ended December 31, 2008. HMSY assumes no responsibility to update the forward-looking statements contained in this release as a result of new information, future events or otherwise. When/if used in this release, the words "focus", "believe", "confident", "anticipate", "expected", "strong", "potential", and similar expressions are intended to identify forward-looking statements, and the above described risks inherent therein.

   HMS HOLDINGS CORP. AND SUBSIDIARIES
   Consolidated Statements of Income
   (In Thousands, Except Per Share Amounts)
   (unaudited)
   
   
   Three months ended March 31,
   
   2009               2008
   -------            -------
   Revenue                                       $49,941            $38,943
   
   Cost of services:
   Compensation                          17,531             13,724
   Data processing                        3,146              2,717
   Occupancy                              2,734              2,361
   Direct project costs                   6,325              6,044
   Other operating costs                  2,998              2,145
   Amortization of acquisition
   related software and intangibles     1,216              1,163
   -------            -------
   Total cost of services          33,950             28,154
   
   Selling, general & administrative expenses      6,131              5,100
   -------            -------
   Total operating expenses        40,081             33,254
   -------            -------
   Operating income                       9,860              5,689
   
   Interest expense                                 (287)             (415)
   Interest income                                    97                197
   -------            -------
   Income before income taxes             9,670              5,471
   Income taxes                                    3,965              2,298
   -------            -------
   Net Income                                     $5,705             $3,173
   =======            =======
   Net income per common share:
   Basic                                  $0.22              $0.13
   Diluted                                $0.21              $0.12
   
   Weighted average shares:
   Basic                                 25,614             24,826
   =======            =======
   Diluted                               27,205             26,834
   =======            =======
   
   
   
   HMS HOLDINGS CORP. AND SUBSIDIARIES
   Consolidated Balance Sheets
   (In Thousands, Except Share and Per Share Amounts)
   (unaudited)
   
   
   March 31,     December 31,
   Assets                                          2009            2008
   Current Assets:                                 --------        --------
   Cash and cash equivalents                  $53,134         $49,216
   Accounts receivable, net of
   allowance of $664 at March 31, 2009
   and December 31, 2008, respectively       46,547          45,155
   Prepaid expenses and other current
   assets, including deferred tax assets
   of $1,495 and $1,697 at March 31, 2009
   and December 31, 2008, respectively        5,319           5,541
   --------        --------
   Total current assets                     105,000          99,912
   
   Property and equipment, net                       17,502          17,757
   Goodwill, net                                     82,342          82,342
   Deferred income taxes, net                         1,971           2,040
   Intangible assets, net                            18,759          19,823
   Other assets                                         593             639
   --------        --------
   Total assets                            $226,167        $222,513
   ========        ========
   Liabilities and Shareholders' Equity
   Current Liabilities:
   Accounts payable, accrued expenses
   and other liabilities                  $15,718         $22,859
   Current portion of long term-debt          6,300           6,300
   --------        --------
   Total current liabilities               22,018          29,159
   --------        --------
   Long-term liabilities:
   Long-term debt                             9,450          11,025
   Other liabilities                          3,830           3,967
   --------        --------
   Total long-term liabilities             13,280          14,992
   --------        --------
   Total liabilities                            35,298          44,151
   --------        --------
   
   Shareholders' Equity:
   Preferred Stock - $. 01 par value;
   5,000,000 shares authorized; none issued          -               -
   Common Stock - $.01 par value; 45,000,000
   shares authorized;
   27,510,912 shares issued and 25,848,066
   shares outstanding at March 31, 2009;
   27,174,875 shares issued and 25,512,029
   shares outstanding at December 31, 2008;     275             272
   Capital in excess of par value                   152,875         146,145
   Retained earnings                                 47,267          41,562
   Treasury stock, at cost; 1,662,846 shares
   at March 31, 2009 and December 31, 2008         (9,397)         (9,397)
   Accumulated other comprehensive loss                (151)           (220)
   --------         --------
   Total shareholders' equity                     190,869          178,362
   --------         --------
   Total liabilities and
   shareholders' equity                     $226,167         $222,513
   --------         --------
   
   
   
   HMS HOLDINGS CORP. AND SUBSIDIARIES
   Consolidated Statements of Cash Flows
   For the Three months ended March 31, 2009 and 2008
   (in Thousands)
   (unaudited)
   
   
   Three months ended March 31,
   2009             2008
   -------          -------
   Operating activities:
   Net income                                     $5,705           $3,173
   Adjustments to reconcile net income
   to net cash provided by
   operating activities:
   Loss on disposal of fixed assets              1                -
   Depreciation and amortization             3,359            2,911
   Share-based compensation expense          1,308              798
   Decrease in deferred tax asset              271               47
   Changes in assets and liabilities:
   Increase in accounts receivable        (1,392)          (2,252)
   Decrease in prepaid expenses and
   other current assets                    751              677
   Decrease (increase) in other assets         1               (4)
   Decrease in accounts payable, accrued
   expenses and other liabilities*      (5,845)          (8,855)
   -------           -------
   Net cash provided by (used in)
   operating activities                4,159           (3,505)
   -------           -------
   Investing activities:
   Purchases of property and equipment            (3,005)          (2,044)
   Investment in capitalized software               (355)            (180)
   -------           -------
   Net cash used in investing
   activities                          (3,360)          (2,224)
   -------           -------
   Financing activities:
   Proceeds from exercise of stock options         1,586              754
   Repayment of long-term debt                    (1,575)          (1,575)
   Tax benefit of disqualifying dispositions*      3,108            1,979
   -------           -------
   Net cash provided by financing
   activities                           3,119            1,158
   -------           -------
   Net increase (decrease) in cash and
   cash equivalents                            3,918           (4,571)
   
   Cash and cash equivalents at beginning
   of period                                      49,216           21,275
   -------           -------
   Cash and cash equivalents at end of period      $53,134           $16,704
   =======           =======
   Supplemental disclosure of cash flow
   information:
   Cash paid for income taxes                      $75               $38
   =======           =======
   Cash paid for interest                         $232              $383
   =======           =======
   Supplemental disclosure of noncash
   investing activities:
   Accrued property and equipment purchases       $534               $-
   =======           =======
   
   * March 2008 presentation was modified to conform with a revised 2009 reporting format.
   
   
   
   HMS HOLDINGS CORP. AND SUBSIDIARIES
   Reconciliation of net income to EBITDA and adjusted EBITDA
   (In Thousands, Except Share and Per Share Amounts)
   (unaudited)
   
   As summarized in the following table, earnings before interest, taxes, depreciation and amortization, and share based compensation
   expense (adjusted EBITDA) was $14.5 million for the first quarter of 2009, an increase of 54.9% over the same period a year
   ago.
   
   
   Reconciliation of net income to
   EBITDA and adjusted EBITDA                   Three Months Ended
   March 31,
   2009         2008
   ----         ----
   Net Income                                     $5,705       $3,173
   
   Net interest expense                              190          218
   Income taxes                                    3,965        2,298
   Depreciation and amortization, net
   of deferred financing costs, included
   in net interest expense (income)              3,314        2,860
   -------      -------
   Earnings before interest, taxes,
   depreciation and amortization (EBITDA)     13,174        8,549
   Share-based compensation expense                1,308          798
   -------      -------
   Adjusted EBITDA                           $14,482       $9,347
   =======      =======
   
   

SOURCE HMS Holdings Corp.

http://www.hmsholdings.com
   

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