Health Insurance Innovations, Inc. (NASDAQ:HIIQ) (“HIIQ” or “the
Company”), a leading cloud-based technology platform and
distributor of affordable health insurance, life insurance and
supplemental plans, today announced the acquisition of all of the
outstanding equity of the businesses known as TogetherHealth, a
premier direct-to-consumer platform connecting individuals with
U.S. insurance carriers through consumer acquisition and engagement
primarily serving the over 65 insurance market. The transaction was
consummated using a mix of cash, HIIQ stock and contingent
consideration and is expected to be immediately accretive to the
Company’s earnings. The purchase consideration, subject to certain
adjustments, includes approximately $50 million of cash and 630,000
shares of HIIQ Class A common stock, and a five-year earnout
provision based on the future performance of the acquired
businesses.
“This transformative acquisition offers
immediate scale for us in the large and growing over-65 insurance
market. This segment of the market continues to benefit from the
strong, multi-dimensional tailwinds of changing demographics, as
over 10,000 Americans a day turn 65 and age into Medicare.
TogetherHealth broadens our product offering, expands our market
opportunity, and further diversifies our business, while
significantly enhancing our consumer acquisition and engagement
capabilities,” said Gavin Southwell, HIIQ's Chief Executive
Officer and President.
“The acquired businesses further allow us to
leverage our scalable, industry-leading technology platform and
complements our diverse customer-centric strategies to build upon
HIIQ’s core mission of enabling consumer access to appropriate
health insurance coverage that meets their individual needs,” Mr.
Southwell added.
“I’m excited about the synergies of our
expertise in the over 65 market and HIIQ’s exceptional customer
service and technology platform. We believe we can quickly leverage
their resources to capitalize on this opportunity and continue to
build our presence in this market,” said Robert Gregg, the CEO of
TogetherHealth.
2019 Financial Outlook
Update
The Company expects that the acquisition will
contribute at least $10 million of adjusted earnings before
interest, taxes, depreciation and amortization (adjusted EBITDA)
during the remainder of fiscal year 2019, which assumes any
incremental upside to earnings will be reinvested back into
building a market-leading position in the over-65 health insurance
and supplemental insurance markets. Accordingly, the Company is
raising its previously announced 2019 outlook to account for the
expected contribution of the acquired businesses and now expects
full year 2019 revenues in the range of $450 million to $460
million, up from $430 million to $440 million, adjusted EBITDA
guidance in the range of $82 million to $87 million, up from $72
million to $77 million and adjusted net income per share guidance
in the range of $3.80 to $4.05, up from $3.50 to $3.75. The Company
looks forward to providing more commentary on the progress of the
integration of TogetherHealth when it reports its second quarter
2019 financial results in early August.
New $215 Million Credit
Facility
HIIQ also announced that it has entered into a
new $215 million credit agreement dated June 5, 2019 with a
syndicate of banks, with Bank of America, N.A. as Administrative
Agent and BofA Securities, Inc. and SunTrust Robinson Humphrey,
Inc. as Joint Lead Arrangers and Joint Bookrunners. The credit
agreement will mature in June 2022 and includes a $150 million
funded term loan and $65 million in available revolving loans. The
Company intends to use the net proceeds from the term loan to
refinance $65 million of outstanding debt, fund the $50 million
cash portion of the acquisition, and for other corporate purposes.
More detailed information regarding the new credit facility will be
included in the Company’s Current Report on Form 8-K to be filed
with the Securities and Exchange Commission.
Commenting on the new credit facility, Mr.
Southwell said, “We are pleased with the expansion of our available
bank facility to $215 million. When combined with our expectation
for meaningful cash flow from operations, HIIQ will maintain
significant financial flexibility to continue to invest in organic
and acquisition driven product and platform diversification
strategies while also providing the opportunity to further execute
on the Company’s previously authorized common stock repurchases. To
date, under the $200 million share repurchase authorization, the
Company has repurchased $106 million, or approximately 18% of the
Company’s shares of common stock.”
Conference Call and Webcast
The Company will provide additional commentary
on the transactions today, June 6, 2019 at 9:00 A.M. Eastern time.
All interested parties can listen by dialing (877) 451-6152 or
(201) 389-0879; the conference ID is 13691566. An archive of the
remarks will be available from Thursday, June 6, 2019, 12:00 PM ET
until Thursday, June 13, 2019, 11:59 PM ET by dialing (844)
512-2921 or (412) 317-6671; the conference ID is 13691566. A
transcript of the conference call will be made available on the
Investors page of the Company’s website at HIIQ.com following the
call.
About Health Insurance Innovations, Inc.
(HIIQ)
HIIQ is a market leading cloud-based technology
platform and distributor of innovative health and life insurance
products that are affordable and meet the needs of consumers. HIIQ
helps develop insurance products through our relationships with
best-in-class insurance companies and markets them via its broad
distribution network of third-party licensed insurance agents
across the nation, its call center network and its unique online
capability. Additional information about HIIQ can be found at
HIIQ.com. HIIQ’s Consumer Division includes
AgileHealthInsurance.com, a website for researching, comparing and
purchasing short-term health insurance products online and
HealthPocket.com, a free website that compares and ranks all health
insurance plans, and uses objective data to publish unbiased health
insurance market analyses and other consumer advocacy research.
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 HIIQ’s current assumptions, expectations and beliefs
are generally identifiable by use of words “may,” “might,” “will,”
“should,” “expects,” “plans,” “anticipates,” “believes,”
“estimates,” “predicts,” “potential” or “continue,” or similar
expressions 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 products offered through our
platform, regulatory oversight and examinations of us and our
carriers and distributors, legal and regulatory compliance by our
carriers and distributors, 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, and HIIQ’s ability to adapt to them, the ability
to maintain and enhance our name recognition, integration
challenges and other difficulties arising from acquisitions or
other strategic transactions, 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 will be
discussed in HIIQ's Annual Report on Form 10-K filed with the
Securities and Exchange Commission (SEC) as well as other documents
that may be filed by HIIQ from time to time with the Securities and
Exchange Commission, which are available at www.sec.gov. 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 any
forward-looking 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.
Non-GAAP Financial
Information
To supplement HIIQ’s financial information
presented in accordance with generally accepted accounting
principles in the United States of America, or GAAP, HIIQ presents
certain financial measures that are not prepared in accordance with
GAAP, including adjusted EBITDA and adjusted earnings per share
(adjusted EPS), which are defined below. These non-GAAP financial
measures should not be considered in isolation from, or as a
substitute for, financial information prepared in accordance with
GAAP. These non-GAAP financial measures are not based on any
standardized methodology prescribed by GAAP and are not necessarily
comparable to similarly-titled measures presented by other
companies.
HIIQ presents these non-GAAP financial measures
to assist investors in seeing HIIQ’s operating results through the
eyes of management and because HIIQ’s believes that these measures
provide a useful tool for investors to use in assessing HIIQ’s
operating performance against prior period operating results and
against business objectives. HIIQ uses the non-GAAP financial
measures in evaluating its operating results and for financial and
operational decision-making purposes.
HIIQ defines adjusted EBITDA as EBITDA adjusted
for items such as stock-based compensation and related costs, and
items that are not generally a part of regular operating
activities, including tax receivable adjustments, indemnity and
other related legal costs, and severance, restructuring, and
acquisition costs.
HIIQ defines adjusted net income as net income
then add back amortization (but not depreciation), interest, tax
expense, items such as stock-based compensation and related costs,
and other items that are not generally a part of regular operating
activities, including, tax receivable adjustments, indemnity and
other related legal costs, severance, restructuring, and
acquisition costs. From adjusted pre-tax net income we apply a pro
forma tax expense calculated at an assumed rate of 24%, which
consists of the maximum federal corporate rate of 21%, with an
assumed 3% state tax rate.
HIIQ calculates adjusted EPS by dividing
adjusted net income by the total number of weighted-average diluted
Class A and weighted-average Class B shares of our common stock for
each period.
HIIQ has not reconciled adjusted EBITDA guidance
or adjusted EPS guidance to GAAP net income or GAAP net income per
diluted share, respectively, because HIIQ does not provide guidance
for the reconciling items between these measures and GAAP net
income or GAAP net income per diluted share, respectively. As
certain of the items that impact GAAP net income and/or GAAP net
income per diluted share cannot be reasonably predicted at this
time, HIIQ is unable to provide such guidance. Accordingly, a
reconciliation to GAAP net income or GAAP net income per diluted
share is not available without unreasonable effort.
Contacts:
Health Insurance Innovations, Inc.: |
|
Michael
Hershberger |
|
Chief Financial Officer |
|
(813) 397-1187 |
|
mhershberger@hiiq.com |
Investor Contact: |
|
Westwicke |
|
Bob East |
|
Jordan Kohnstam |
|
Asher Dewhurst |
|
(443) 213-0500 |
|
hiiq@westwicke.com |
Media Contact: |
|
Westwicke
PR |
|
James Heins |
|
(203) 682-8251 |
|
james.heins@icrinc.com |
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