Health Insurance Innovations, Inc. (Nasdaq:HIIQ) ("HII" or
"Company"), a leading developer and administrator of affordable,
cloud-based individual health insurance plans and ancillary
products, today reported financial and operating results for the
first quarter ended March 31, 2013. The Company will host a
conference call and webcast at 8:30 a.m. EDT, Tuesday, May 14.
Company highlights for the first quarter of 2013 include the
following:
- Record quarterly revenue of $12.5 million, representing 47.0%
growth from the first quarter of 2012
- Record quarterly premium equivalents of $22.1 million,
representing 40.7% growth from the first quarter of 2012
- Pre-tax loss for the first quarter of $6.3 million (including
certain one-time expenses discussed below)
- Policies in force as of March 31, 2013, totaled 59,545, a 52.5%
increase from 39,045 at March 31, 2012
- Completion of the Company's Initial Public Offering (IPO),
which raised approximately $60 million of new capital
- Hiring of the principal of TSG Agency, LLC ("TSG") as Vice
President of Sales in connection with the termination of certain
contract rights with TSG
- Addition of eight new call centers and 690 new licensed agents
who sell Company insurance products
"The first quarter of 2013 has been a period of multiple
important achievements for Health Insurance Innovations," said
Michael Kosloske, Chairman, President and Chief Executive Officer
of HII. "We successfully completed HII's IPO while making
significant progress in expanding our core business of providing
affordable health insurance solutions through our team of insurance
professionals, licensed sales agents, carriers and other partners,
all working together to provide products that meet the evolving
demands of the health insurance industry."
Q1 2013 Operational Highlights
Policies in force have expanded by 52.5% in the first quarter of
2013 to 59,545 compared to 39,045 in the first quarter of 2012. The
growth in policy count is driven both by continuous improvement of
our products, based upon industry expertise and an acute
understanding of customer needs, and by the growth of HII's
distribution network. The vast majority of the Company's policies
are distributed by independent licensed insurance sales agents.
During the current quarter, HII has added eight new call centers
and 690 new licensed agents. The effort to expand and support
this distribution network is a major Company focus, and, by forging
these relationships with independent agents, HII can achieve rapid
expansion of our sales efforts with limited capital and operating
cost investments.
On February 8, 2013, the Company completed its IPO of 4,666,667
shares of Class A common stock priced at $14 per share, which
provided approximately $60 million of new equity capital (net of
the underwriters' fees) which HII plans to use to accelerate
business growth. In early March 2013, the underwriters
purchased 100,000 additional shares in connection with their
over-allotment option.
In March 2013, HII terminated certain contract rights with TSG,
for an aggregate cash price of $5.5 million. The termination of
these contract rights is expected to reduce commissions expense and
increase earnings by approximately $1.0 million for a full year, a
savings that is expected to increase as policy applications from
call centers grow. Simultaneously, Ivan Spinner, founder of
TSG, joined HII as Vice President of Sales, expanding HII's team
and capabilities. Since his employment, Mr. Spinner has been
involved in establishing new call centers and helping existing call
centers in their sales efforts.
"The addition of Ivan Spinner to the HII team, together with the
resources provided by our IPO, has put HII on firm footing to
continue its near-term growth and to prepare for the implementation
of the Patient Protection and Affordable Care Act, PPACA,
legislation in January 2014," added Mr. Kosloske. "All
industry participants are focused on the significant changes to
health insurance regulations that will be taking place in just
under eight months. Given the pervasive nature of the changes
and the economics involved, some level of confusion and potential
disruptive actions by industry participants is
unavoidable. Although these actions by HII competitors are
likely to result in headwinds for us for much of 2013, we still
expect very positive organic growth in core medical policies on a
year over year basis. Beyond 2013, we are confident that the
solutions that we offer health insurance consumers will be in
demand by a growing portion of the individual health insurance
market that is expected to expand dramatically under PPACA."
HII's team of seasoned health insurance professionals is
continuing daily to work with customers, policy carriers and
licensed sales agents to provide the health insurance products,
support services and information needed in the current complex and
rapidly changing industry marketplace. Although the Company's
share of the estimated 14 million individual major medical policy
market is small, it is rapidly growing in large part due to the
affordability of the short-term medical, hospital indemnity and
ancillary products that the Company offers.
Depending upon the coverage selected by the customer, the cost
of family coverage is often thousands of dollars per year less than
traditional major medical plans. Although our short-term
medical plans are not automatically renewable, with the
implementation of health insurance reform, our customers now have
an alternative if an illness prevents them from re-applying for an
HII short-term policy – they will be able to access the guaranteed
issue health plans that will be offered by health insurance
exchanges under PPACA beginning in January 2014.
Q1 2013 Financial
Highlights
Revenue increased 47.0% on a period over period basis to $12.5
million during the first quarter ended March 31, 2013, compared to
$8.5 million in the same period in 2012. Premium equivalents
increased 40.7% to $22.1 million in the first quarter of 2013,
compared to $15.7 million in the same period in 2012. A
reconciliation of premium equivalents to revenues for the three
months ended March 31, 2013, and 2012 is included in the financial
supplement included in this press release. By policy type, the
make-up of revenues was as follows: 57.2% short-term medical;
24.5% hospital indemnity and 18.3% ancillary products.
During the first quarter of 2013, the Company reported a pre-tax
loss of $6.3 million in comparison to pre-tax income of $0.8
million in the first quarter of 2012. The primary driver of
this quarter's loss was the TSG transaction. Due to the
structure of the transaction, the $5.6 million paid to Ivan Spinner
and for related transaction costs were expensed in the first
quarter of 2013. In addition, expenses related to the
Company's IPO, including certain share-based compensation expenses,
professional fees, and a charge to record a liability triggered by
the underwriter's exercise of the overallotment option, together
added approximately $1.9 million in the first
quarter. Excluding these charges, the Company would have
reported income before tax of approximately $1.2 million.
EBITDA (earnings before interest, taxes, depreciation and
amortization) was a loss of $6.1 million for the three months ended
March 31, 2013 (without excluding the charges as noted in the
paragraph above), compared to $1.2 million of EBITDA in the same
period in 2012. A reconciliation of net (loss) income to
EBITDA for the three months ended March 31, 2013, and 2012 is
included in the financial supplement included in this press
release.
Cash used in operations in the first quarter of 2013 was $5.5
million, compared to cash provided by operations of $1.1 million in
the first quarter of 2012. The negative cash flow in the first
quarter of 2013 was primarily due to the contract termination costs
of the TSG transaction discussed above in addition to the IPO
related costs that were expensed during the quarter.
2013 Full Year Financial Guidance
For all of 2013, the Company expects its premium equivalents to
grow 25% to 35% compared to 2012.
Conference Call and Webcast
The conference call may be accessed by dialing (877) 312-8797
for domestic callers and (678) 825-8236 for international callers.
Please specify to the operator that you would like to join the
"Health Insurance Innovations First Quarter 2013 Financial Results
Call, conference ID#: 48355784." The conference call will be
webcast live under the investor relations section of HII's website
at www.hiiquote.com. The webcast will be archived there for 30 days
following the call. Please visit HII's website 15 minutes prior to
the start of the broadcast to ensure adequate time for any software
download that may be necessary.
About Health Insurance Innovations, Inc.
Headquartered in Tampa, Florida, Health Insurance Innovations,
Inc., is a leading developer and administrator of affordable,
cloud-based, individual health insurance plans and ancillary
products. We are an industry leader in the sale of 12-month
short-term medical insurance plans, which provide an economical
alternative to Individual Major Medical plans, while offering
similar benefits. Our highly-scalable, proprietary, cloud-based
technology platform allows for mass distribution of and online
enrollment in our large and diverse portfolio of affordable health
insurance offerings, providing customers immediate access to our
products through our distribution partners. Anywhere. Anytime.
Additional information about HII can be found at www.hiiquote.com.
The reference to our website is not intended to incorporate our
website into this press release.
Forward-Looking Statements
This press release contains "forward-looking statements" within
the meaning of the U.S. Private Securities Litigation Reform Act of
1995. Forward-looking statements are statements other than
historical fact, and may include statements relating to goals,
plans and projections regarding new markets, products, services,
growth strategies, anticipated trends in our business and
anticipated changes and developments in the United States health
insurance system and laws. Forward-looking statements are based on
management's current expectations and beliefs and involve
significant risks and uncertainties that could cause actual
results, developments and business decisions to differ materially
from those contemplated by these statements. These risks and
uncertainties include, among other things, our ability to maintain
relationships and develop new relationships with health insurance
carriers and distributors, our ability to retain our members, the
demand for our products, the amount of commissions paid to us or
changes in health insurance plan pricing practices, competition,
changes and developments in the United States health insurance
system and laws, the ability to maintain and enhance our name
recognition and our ability to build the necessary infrastructure
and processes to maintain effective controls over financial
reporting. These and other risk factors that could cause actual
results to differ materially from those expressed or implied in our
forward-looking statements are and will be discussed in HII's most
recent Annual Report on Form 10-K filed with the Securities and
Exchange Commission as well as other documents that may be filed by
HII from time to time with the Securities and Exchange
Commission.
Any forward-looking statement made by us in this press release
is based only on information currently available to us and speaks
only as of the date on which it is made. You should not rely on the
statement as representing our views in the future. We undertake no
obligation to publicly update any forward-looking statement,
whether written or oral, that may be made from time to time,
whether as a result of new information, future developments or
otherwise.
HEALTH INSURANCE
INNOVATIONS, INC. |
(Prior to February 13,
2013 Health Plan Intermediaries, LLC and
Subsidiaries) |
|
|
|
Consolidated Balance
Sheets (unaudited) |
($ in 000's, except
share amounts) |
|
|
|
|
March 31,
2013 |
December 31,
2012 |
Assets |
|
|
Current assets: |
|
|
Cash and cash equivalents |
$ 31,062 |
$ 750 |
Cash held on behalf of
others |
4,016 |
3,839 |
Credit card transactions
receivable |
661 |
588 |
Short-term investments |
18,906 |
— |
Accounts receivable |
164 |
273 |
Advanced commissions |
539 |
297 |
Prepaid expenses and other
assets |
612 |
217 |
|
|
|
Total current assets |
55,960 |
5,964 |
|
|
|
Property and equipment, net of accumulated
depreciation |
245 |
213 |
Capitalized offering costs |
— |
1,819 |
Goodwill |
5,906 |
5,906 |
Intangible assets, net of accumulated
amortization |
3,734 |
3,959 |
Deferred tax assets |
1,266 |
— |
Other assets |
28 |
100 |
|
|
|
Total assets |
$ 67,139 |
$ 17,961 |
|
|
|
Liabilities and
stockholders'/member's equity |
|
|
Current liabilities: |
|
|
Accounts payable and accrued
expenses |
$ 1,482 |
$ 2,062 |
Carriers and vendors
payable |
2,993 |
2,790 |
Commissions payable |
1,553 |
1,533 |
Current portion of long-term
debt |
— |
813 |
Current portion of noncompete
obligation |
142 |
155 |
Income taxes payable |
2,319 |
— |
Due to member of Health Plan
Intermediaries, LLC |
— |
773 |
Other current liabilities |
301 |
345 |
|
|
|
Total current liabilities |
8,790 |
8,471 |
|
|
|
Long-term debt, less current portion |
— |
2,481 |
Noncompete obligation |
613 |
626 |
Due to related parties pursuant to tax
receivable agreement |
377 |
— |
Other liabilities |
54 |
45 |
|
|
|
Total liabilities |
9,834 |
11,623 |
|
|
|
Stockholders'/member's equity: |
|
|
Class A common stock (par value $0.001 per
share, 100,000,000 |
|
|
Shares authorized; 5,295,167
shares issued and outstanding) |
5 |
— |
Class B common stock (par value $0.001 per
share, 20,000,000 |
|
|
Shares authorized; 8,566,667
shares issued and outstanding) |
9 |
— |
Preferred stock (par value $0.001 per share,
5,000,000 shares |
|
|
Authorized; 0 shares issued and
outstanding) |
— |
— |
Additional paid-in capital |
23,374 |
— |
Accumulated deficit |
(4,059) |
— |
Member's equity of Health Plan
Intermediaries, LLC |
— |
6,335 |
Noncontrolling interests |
37,976 |
3 |
|
|
|
Total stockholders'/member's
equity |
57,305 |
6,338 |
|
|
|
Total liabilities and stockholders'/member's
equity |
$ 67,139 |
$ 17,961 |
|
HEALTH INSURANCE
INNOVATIONS, INC. |
(Prior to February 13,
2013 Health Plan Intermediaries, LLC and
Subsidiaries) |
|
CONSOLIDATED STATEMENTS
OF OPERATIONS (unaudited) |
($ in 000's, except per
share data) |
|
|
|
|
Three Months Ended |
Three Months
Ended |
|
March 31, |
March 31, |
|
2013 |
2012 |
|
|
|
Revenues (premium equivalents of $22,084 and
$15,733 for the three months ended March 31, 2013 and 2012,
respectively) |
$12,471 |
$8,523 |
Third-party commissions |
8,037 |
5,740 |
Credit cards and ACH fees |
265 |
210 |
Contract termination expense |
5,500 |
— |
General and administrative expenses |
4,308 |
1,423 |
Depreciation and amortization |
244 |
271 |
|
|
|
Total operating costs and expenses |
18,354 |
7,644 |
|
|
|
(Loss) income from operations |
(5,883) |
879 |
|
|
|
Other expenses (income): |
|
|
Interest expense |
38 |
65 |
Other expense (income) |
428 |
(6) |
|
|
|
Net loss (income) before income taxes |
$(6,349) |
$820 |
Provision for Income taxes |
1,053 |
— |
|
|
|
Net (loss) income |
(7,402) |
820 |
Net loss attributable to noncontrolling
interests |
(3,343) |
— |
|
|
|
Net (loss) income attributable to Health
Insurance Innovations, Inc. and Health Plan Intermediaries,
LLC |
$(4,059) |
$820 |
|
|
|
Per share data: |
|
|
Net loss per share
attributable to Health Insurance Innovations, Inc. |
Basic |
$(0.86) |
|
Diluted |
$(0.86) |
|
|
|
|
Weighted average shares
outstanding |
|
Basic |
4,717,731 |
|
Diluted |
4,717,731 |
|
|
Reconciliation of Net
(Loss) Income to EBITDA |
For the Three Months
Ended March 31, 2013 and 2012 |
(in
thousands) |
Unaudited |
|
|
|
|
Three Months
Ended March 31, |
|
2013 |
2012 |
|
(in
thousands) |
|
|
|
Net (loss) income |
$(7,402) |
$820 |
Interest expense |
38 |
65 |
Provision for income taxes |
1,053 |
— |
Depreciation and
amortization |
244 |
271 |
EBITDA (1) |
$(6,067) |
$1,156 |
|
|
|
(1) "EBITDA" is defined as net
income before interest expense, income tax expense and depreciation
and amortization. EBITDA does not represent, and should not be
considered as, an alternative to net income or cash flows from
operations, each as determined in accordance with U.S. generally
accepted accounting principles, or U.S. GAAP. We have presented
EBITDA because we consider it an important supplemental measure of
our performance and believe that it is frequently used by analysts,
investors and other interested parties in the evaluation of
companies. Other companies may calculate EBITDA differently than we
do. EBITDA has limitations as an analytical tool, and you should
not consider it in isolation or as a substitute for analysis of our
results as reported under U.S. GAAP. |
|
Reconciliation of
Premium Equivalents to Revenues |
For the Three Months
Ended March 31, 2013 and 2012 |
(in
thousands) |
Unaudited |
|
|
|
|
Three Months
Ended March 31, |
|
2013 |
2012 |
|
(in
thousands) |
|
|
|
Premium equivalents (1) |
$22,084 |
$15,733 |
Less risk premium |
(9,100) |
(6,889) |
Less amounts earned by third
party obligors |
(513) |
(321) |
Revenues |
$12,471 |
$8,523 |
|
|
|
(1) "Premium equivalents" is
defined as the combination of premiums, fees for discount benefit
plans, fees for distributors and our enrollment fees. Premium
equivalents does not represent, and should not be considered as, an
alternative to revenues, as determined in accordance with U.S.
GAAP. We have included premium equivalents in this press release
because it is a key measure used by our management to understand
and evaluate our core operating performance and trends, to prepare
and approve our annual budget and to develop short- and long-term
operational plans. In particular, the inclusion of premium
equivalents can provide a useful measure for period-to-period
comparisons of our business. Premium equivalents has limitations as
an analytical tool, and you should not consider it in isolation or
as a substitute for analysis of our results as reported under U.S.
GAAP. |
CONTACT: Health Insurance Innovations, Inc.:
Michael Hershberger
Chief Financial Officer
(877) 376 5831 ext.313
mhershberger@hiiquote.com
Investor Contact:
Susan Noonan
S.A. Noonan Communications, LLC
(212) 966 3650
susan@sanoonan.com
Media Contact:
Andreas Marathovouniotis
Russo Partners, LLC
(212) 845-4235
andreas.marathis@russopartnersllc.com
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