HMS shares rise as 4Q profit grows 80 percent

HMS trades higher as 4th-quarter profit grows 80 percent, beating Wall Street's prediction

Associated Press

NEW YORK (AP) -- Shares of HMS advanced Friday after the medical services company's fourth-quarter net income rose 80 percent, surpassing Wall Street's expectations.

HMS Holdings Corp. coordinates benefits and performs billing audits for government health care programs. It works on Medicaid, the state-federal program that covers the needy and disabled; and Medicare, the federal program that covers the elderly and disabled patients.

Net income increased to $20 million, or 23 cents per share, from $11.1 million, or 13 cents per share. Revenue rose 34 percent, to $133.1 million from $99.7 million.

Analysts were expecting net income of 18 cents per share and $134.1 million in revenue, according to FactSet.

Shares of HMS gained $1.86, or 7.2 percent, to $27.81 in afternoon trading. The stock had dropped 19 percent in 2012, which the company's CEO called a "challenging year." HMS dealt with slower growth in Medicaid expenditures and disruptions from a change in claim transaction formats in the health care sector.

Still, HMS said revenue from its Medicare, Medicaid, and commercial insurance businesses all improved in 2012. Its net income grew 6 percent, to $50.5 million, or 57 cents per share. Revenue rose 30 percent to $473.7 million.

The company expects growth this year. It kept its 2013 forecast of earnings between 63 and 70 cents per share on revenue of $570 million to $600 million. Analysts project net income of 65 cents per share and $575.8 million in revenue on average.

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