Hms Holdings Corp 8-k (events Or Changes Between Quarterly Reports) 2009-02-20

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549

FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): February 20, 2009

HMS Holdings Corp. (Exact Name of Registrant as Specified in Charter) New York (State or Other Jurisdiction of Incorporation

0-50194 (Commission File Number)

11-3656261 (IRS Employer Identification No.)

401 Park Avenue South, New York, New York 10016 (Address of Principal Executive Offices, Zip Code) Registrant’s telephone number, including area code: (212) 725-7965 Not applicable. (Former Name or Former Address, if Changed Since Last Report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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TABLE OF CONTENTS Item 2.02. Result of Operations and Financial Condition Item 7.01 Regulation FD Disclosure Item 9.01. Financial Statements and Exhibits Signatures Exhibit Index Exhibit 99.1 Press Release dated February 20, 2009 Exhibit 99.2 Slide presentation from February 20, 2009 earnings conference call Exhibit 99.3 Income Statement Presentation Reconciliation Analysis

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Table of Contents

Section 2 — Financial Information Item 2.02 Results of Operations and Financial Condition. On February 20, 2009, HMS Holdings Corp. (the “Company”) issued a press release announcing its financial results for the fourth quarter and full year 2008. A copy of the press release is furnished as Exhibit 99.1. As announced in the press release on February 20, 2008, the Company will host its fourth quarter and full year 2008 earnings conference call on February 20, 2009 at 9 am ET. A slide presentation and Income Statement Presentation Reconciliation Analysis of which are furnished as Exhibit 99.2 and Exhibit 99.3 respectively hereto. These exhibits are incorporated herein by reference. In accordance with general instruction B-2 to Form 8-K, the information (including Exhibits 99.1 and 99.2 furnished herewith) in this report is “furnished” pursuant to item 2.02 and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing. Section 7 — Regulation FD Item 7.01 Regulation FD Disclosure. The press release referenced in Item 2.02 is furnished pursuant to Item 7.01 as Exhibit 99.1. The slide presentation of the conference call referenced in Item 2.02 is furnished pursuant to Item 7.01 as Exhibit 99.2 hereto. The Income Statement Presentation Reconciliation Analysis referenced in Item 2.02 is furnished pursuant to Item 7.01 as Exhibit 99.3 hereto. The filing of this current report on Form 8-K is not an admission as to the materiality of any information in this report that is required to be disclosed solely by Regulation FD. Section 9 — Financial Statements and Exhibits Item 9.01 Financial Statements and Exhibits. (c)

Exhibits: This exhibit is furnished pursuant to Items 2.02 and 7.01 hereof and should not be deemed to be “filed” under the Exchange Act.

Exh ibit No.

Exh ibit De scription

99.1

Press Release dated February 20, 2009

99.2

Slide presentation from February 20, 2009 earnings conference call

99.3

Income Statement Presentation Reconciliation Analysis

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SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: February 20, 2009 HMS HOLDINGS CORP. By: /s/ Walter D. Hosp Walter D. Hosp Chief Financial Officer (Principal Financial Officer and Accounting Officer)

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Table of Contents

INDEX TO EXHIBITS Exh ibit No.

De scription

99.1

Press Release dated February 20, 2009

99.2

Slide presentation from February 20, 2009 earnings conference call

99.3

Income Statement Presentation Reconciliation Analysis

Exhibit 99.1 (HMS LOGO)

Contacts:

Christine Rogers Saenz (investor relations) (212) 857-5986 [email protected]

Francesca Marraro (media relations) (212) 857-5442 [email protected]

HMS HOLDINGS CORP. ANNOUNCES Q4 AND FULL YEAR 2008 RESULTS AND MANAGEMENT TRANSITION; RAISES 2009 EPS GUIDANCE TO $1.00 William C. Lucia to become CEO; Robert M. Holster continues as Chairman NEW YORK, N.Y., February 20, 2009—HMS Holdings Corp. (NASDAQ: HMSY) today announced financial results for its fourth quarter and full year ended December 31, 2008. Revenue for the fourth quarter of 2008 increased 26% to $52.4 million, compared with $41.7 million for the same period a year ago. HMSY reported net income of $7.1 million or $0.26 per diluted common share for the fourth quarter of 2008, compared to net income of $4.0 million or $0.15 per diluted common share during the fourth quarter of the prior year. For the full year 2008, the Company reported revenue of $184.5 million, a 26% increase over 2007 revenue of $146.7 million. Also for the full year, the Company reported net income of $21.4 million or $0.80 per diluted common share, versus net income of $15.0 million or $0.57 per diluted common share in the prior year. Earnings per diluted common share increased 73% and 40% for the fourth quarter and full year, respectively. The Company raised 2009 guidance to $218 million in revenue and $1.00 in fully diluted earnings per share. The Company also announced that current President and Chief Operating Officer William C. Lucia will become Chief Executive Officer on March 1, 2009. Current Chairman and CEO Robert M. Holster will continue as Chairman. “HMS is reporting another year of record revenue growth and profitability, and expects continuing strong performance given the expansion of the government healthcare programs we serve,” said Holster. “So we believe it is the right time to initiate a management transition for which the Company has been preparing for several years. Within weeks of returning to HMS in 2001, I asked Bill Lucia to take responsibility for our government healthcare cost containment division. In the years since, his strategic vision, capacity for product innovation and extraordinary attention to client service has led to an almost ten-fold increase in the size of that business, which had become by late 2005 HMS’s sole focus.” Lucia added, “Bob and I and our Board of Directors are confident that HMS has the management structure, product pipeline and technology in place to drive the company forward. We will continue to focus on delivering consistent, predictable growth to our investors.” Lucia, 51, joined HMS in 1996 after more than a decade of senior management experience in the insurance industry. He was appointed President of the Company’s Health Management Systems, Inc subsidiary in 2001 and was appointed President and Chief Operating Officer of the parent company in May 2005. Holster, 62, rejoined HMS in April of 2001 as President and Chief Operating Officer. He was appointed Chief Executive Officer in May 2005 and elected Chairman in April 2006. He will continue to serve as Chairman until March of 2011. In addition to his duties as Chairman, he will be assisting the Company with corporate development, legal and regulatory affairs, and investor relations. HMS will be hosting its fourth quarter 2008 conference call and webcast with the investment community on Friday, February 20, 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: 82192441. A slide presentation will accompany the conference call and may be accessed through our website at http://www.hmsholdings.com/news/quarterly_reports.asp.

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A conference call replay will be available beginning February 20, 2009 10:00 AM ET through February 27, 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: 82192441 or visit our website at http://www.hmsholdings.com/news/quarterly_reports.asp. The HMS Holdings Corp. Form 10-K for the year ended December 31, 2008 will be filed and available on our website www.hmsholdings.com on or about March 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 www.hmsholdings.com for at least a 12-month period. Shareholders and interested investors are welcome to contact Investor Relations at 212-857-5986.. About HMS Holdings Corp. HMS Holdings Corp. 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, 90 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. HMS is headquartered in New York and operates offices nationwide. ### 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 SEC, including HMSY’s Form 10-K for the year ended December 31, 2007. 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 forwardlooking statements, and the above described risks inherent therein.

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HMS HOLDINGS CORP. AND SUBSIDIARIES Consolidated Statements of Income (In Thousands, Except Per Share Amounts) (unaudited) Th re e m on ths e n de d De c. 31, 2008 2007

Revenue

$

52,404

$

Ye ar e n de d De c. 31, 2008 2007

41,668

$ 184,495

$ 146,651

Cost of services: Compensation Data processing Occupancy Direct project costs Other operating costs Amortization of acquisition related software and intangibles Total cost of services

15,577 2,977 2,793 8,680 2,861 1,185 34,073

12,900 2,675 2,720 6,405 1,953 1,162 27,815

60,571 10,999 10,079 28,429 10,831 4,714 125,623

46,185 9,298 8,431 22,774 6,540 4,642 97,870

Selling, general & administrative expenses Total operating expenses Operating income

6,903 40,976 11,428

6,296 34,111 7,557

22,142 147,765 36,730

20,500 118,370 28,281

Interest expense Interest income Income before income taxes Income taxes

(356) 200 11,272 4,214

(464) 93 7,186 3,150

(1,491) 719 35,958 14,583

(2,207) 475 26,549 11,593

$ 21,375

$ 14,956

$ $

$ $

Net Income

$

7,058

$

4,036

Net income per common share: Basic Diluted

$ $

0.28 0.26

$ $

0.17 0.15

Weighted average shares: Basic Diluted

0.85 0.80

0.63 0.57

25,292

24,471

25,048

23,904

26,934

26,646

26,816

26,249

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HMS HOLDINGS CORP. AND SUBSIDIARIES Consolidated Balance Sheets (In Thousands, Except Share and Per Share Amounts) (unaudited)

Assets Current Assets: Cash and cash equivalents Accounts receivable, net of allowance of $664 and $662 at December 31, 2008 and 2007, respectively Prepaid expenses and other current assets, including deferred tax assets of $1,696 and $657 at December 31, 2008 and 2007 respectively Total current assets Property and equipment, net Goodwill, net Deferred income taxes, net Intangible assets, net Other assets Total assets Liabilities and Shareholders’ Equity Current Liabilities: Accounts payable, accrued expenses and other liabilities Current portion of long term-debt Total current liabilities

De ce m be r 31, 2008

De ce m be r 31, 2007

$

$

$

$

Long-term liabilities: Long-term debt Other liabilities Total long-term liabilities Total liabilities Shareholders’ Equity: Preferred Stock — $. 01 par value; 5,000,000 shares authorized; none issued Common Stock — $ .01 par value; 45,000,000 shares authorized; 27,174,875 shares issued and 25,512,029 shares outstanding at December 31, 2008; 26,409,035 shares issued and 24,746,189 shares outstanding at December 31, 2007; Capital in excess of par value Retained earnings Treasury stock, at cost; 1,662,846 shares at December 31, 2008 and December 31, 2007 Accumulated other comprehensive loss Total Shareholders’ Equity Total liabilities and shareholders’ equity

$

49,216

21,275

45,155

39,704

5,541 99,912

3,970 64,949

17,757 82,342 2,040 19,823 639 222,513

16,496 80,242 3,111 22,495 807 188,100

22,859 6,300 29,159

$

$

21,539 6,300 27,839

11,025 3,967 14,992 44,151

17,325 4,187 21,512 49,351

—

—

272 146,145 41,562 (9,397) (220) 178,362 222,513

$

264 127,887 20,187 (9,397) (192) 138,749 188,100

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HMS HOLDINGS CORP. AND SUBSIDIARIES Consolidated Statements of Cash Flows For the Years ended December 31, 2008 and 2007 (in Thousands) (unaudited) Ye ar e n de d De ce m be r 31, 2008 2007

Operating activities: Net income Adjustments to reconcile net income to net cash provided by operating activities: Loss on disposal of fixed assets Depreciation and amortization Share-based compensation expense Decrease in deferred tax asset Changes in assets and liabilities: Increase in accounts receivable Increase in prepaid expenses and other current assets Increase in other assets Increase (decrease) in accounts payable, accrued expenses and other liabilities Net cash provided by operating activities

$

21,375

$

14,956

90 11,967 3,498 32

370 10,558 2,173 3,445

(4,531) (504) (21) (1,037) 30,869

(8,197) (1,185) (171) 4,649 26,598

Investing activities: Purchases of property and equipment Acquisition of PrudentRx Acquisition of Permedion Acquisition of BSPA Investment in capitalized software Net cash used in investing activities

(5,988) (4,496) — — (912) (11,396)

(8,594) — (627) (15,000) (606) (24,827)

Financing activities: Proceeds from exercise of stock options Repayment of long-term debt Tax benefit of disqualifying dispositions Net cash provided by financing activities

4,226 (6,300) 10,542 8,468

6,577 (7,875) 8,275 6,977

Net increase in cash and cash equivalents

27,941

8,748

Cash and cash equivalents at beginning of year

21,275

12,527

Cash and cash equivalents at end of year

$

49,216

$

21,275

Supplemental disclosure of cash flow information: Cash paid for income taxes

$

3,823

$

56

$

1,299

$

1,945

$

208

$

1,635

$

1,898

$

—

Cash paid for interest Supplemental disclosure of noncash investing activities: Tenant improvement allowance Accrued property and equipment purchases

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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 $15.7 million for the fourth quarter of 2008, an increase of 41% over the same period a year ago. Reconciliation of net income to EBITDA and adjusted EBITDA Th re e Mon ths En de d De ce m be r 31, 2008 2007

Net Income

$

Net interest (income) expense Income taxes Depreciation and amortization, net of deferred financing costs, included in net interest expense (income) Earnings before interest, taxes, depreciation and amortization (EBITDA) Share-based compensation expense Adjusted EBITDA

7,058

$

Ye ar En de d De ce m be r 31, 2008 2007

4,036

$ 21,375

$ 14,956

156 4,214

371 3,150

772 14,583

1,732 11,593

3,087

2,796

11,766

10,210

14,515 1,147 $ 15,662

10,353 753 $ 11,106

48,496 3,498 $ 51,994

38,491 2,173 $ 40,664

Exhibit 99.2 F YQ4

2008

I nves t or

Ca l l

Fe br ua r y

20,

2009

Ro b e r t

Ho l s t e r ,

Ch a i r m a n

and

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Lu c i a ,

Pr e s i de nt

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COO W a l t e r

Ho s p ,

S VP a n d

CF O

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3 S a f e Ha r b o r S t a t e m e n t Ce r t a i n s t a t e m e n t s i n t h i s p r e s e n t a t i o n c o n s t i t u t e " f o r wa r d - l o o k i n g s t a t e m e n t s " wi t h i n t h e m e a n i n g o f t h e P r i v a t e S e c u r i t i e s L i t i g a t i o n Re f o r m Ac t o f 1 9 9 5 ( t h e " Re f o r m Ac t " ) . S u c h f o r wa r d - l o o k i n g s t a t e m e n t s i n v o l v e k n o wn a n d u n k n o wn r i s k s , u n c e r t a i n t i e s , a n d o t h e r f a c t o r s t h a t m a y c a u s e t h e a c t u a l r e s u l t s , p e r f o r m a n c e , o r a c h i e v e m e n t s o f HM S Y, o r i n d u s t r y r e s u l t s , t o b e m a t e r i a l l y d i f f e r e n t f r o m a n y f u t u r e r e s u l t s , p e r f o r m a n c e , o r a c h i e v e m e n t s e x p r e s s e d o r i m p l i e d b y s u c h f o r wa r d - l o o k i n g s t a t e m e n t s . T h e i m p o r t a n t f a c t o r s t h a t c o u l d c a u s e a c t u a l r e s u l t s t o d i f f e r m a t e r i a l l y f r o m t h o s e i n d i c a t e d b y s u c h f o r wa r d - l o o k i n g s t a t e m e n t s i n c l u d e , b u t a r e n o t l i m i t e d t o ( i ) t h e i n f o r m a t i o n b e i n g o f a p r e l i m i n a r y n a t u r e a n d t h e r e f o r e s u b j e c t t o f u r t h e r a d j u s t m e n t ; ( i i ) t h e u n c e r t a i n t i e s o f l i t i g a t i o n ; ( i i i ) HM S Y's d e p e n d e n c e o n s i g n i f i c a n t c u s t o m e r s ; ( i v ) c h a n g i n g c o n d i t i o n s i n t h e h e a l t h c a r e i n d u s t r y wh i c h c o u l d s i m p l i f y t h e r e i m b u r s e m e n t p r o c e s s a n d a d v e r s e l y a f f e c t HM S Y's b u s i n e s s ; ( v ) g o v e r n m e n t r e g u l a t o r y a n d p o l i t i c a l p r e s s u r e s wh i c h c o u l d r e d u c e t h e r a t e o f g r o wt h o f h e a l t h c a r e e x p e n d i t u r e s a n d / o r d i s c o u r a g e t h e a s s e r t i o n o f c l a i m s f o r r e i m b u r s e m e n t a g a i n s t a n d d e l a y t h e u l t i m a t e r e c e i p t o f p a y m e n t f r o m t h i r d p a r t y p a y o r s ; ( v i ) c o m p e t i t i v e a c t i o n s b y o t h e r c o m p a n i e s , i n c l u d i n g t h e d e v e l o p m e n t b y c o m p e t i t o r s o f n e w o r s u p e r i o r s e r v i c e s o r p r o d u c t s o r t h e e n t r y i n t o t h e m a r k e t o f n e w c o m p e t i t o r s ; ( v i i ) a l l t h e r i s k s i n h e r e n t i n t h e d e v e l o p m e n t , i n t r o d u c t i o n , a n d i m p l e m e n t a t i o n o f n e w p r o d u c t s a n d s e r v i c e s ; a n d ( v i i i ) o t h e r r i s k f a c t o r s d e s c r i b e d f r o m t i m e t o t i m e i n HM S Y's f i l i n g s wi t h t h e S E C, i n c l u d i n g HM S Y's F o r m 1 0 - K f o r t h e y e a r e n d e d De c e m b e r 3 1 , 2 0 0 7 . HM S Y a s s u m e s n o r e s p o n s i b i l i t y t o u p d a t e t h e f o r wa r d - l o o k i n g s t a t e m e n t s c o n t a i n e d i n t h i s r e l e a s e a s a r e s u l t o f n e w i n f o r m a t i o n , f u t u r e e v e n t s o r o t h e r wi s e . W h e n / i f u s e d i n t h i s p r e s e n t a t i o n , t h e wo r d s " f o c u s , " " b e l i e v e , " " c o n f i d e n t , " " a n t i c i p a t e , " " e x p e c t e d , " " s t r o n g , " " p o t e n t i a l , " a n d s i m i l a r e x p r e s s i o n s a r e i n t e n d e d t o i d e n t i f y f o r wa r d - l o o k i n g s t a t e m e n t s , a n d t h e a b o v e d e s c r i b e d r i s k s i n h e r e n t t h e r e i n .

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5

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23

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Al a b a m a

Pe nns yl va ni a

Am e r i h e a l t h :

Sout h

Ca r o l i n a

Ca r e 1 s t :

Ar i z o n a

Ve t e r a n s :

Co m m e r c i a l

Cl a i m s

Re c o v e r y

*

r epr ocur em ent

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25

Hi g h l i g h t s :

Pr ogr a m

I nt egr i t y

Sa l e s

Pr ovi de r

Au d i t s

Cl i n i c a l

Re v i e ws

Pha r m a c y

Au d i t s

Go v e r n m e n t

Ca l i f o r n i a

I daho

Ne v a d a

Ne w Yo r k

Ne w J e r s e y

I ndi ana

Co m m e r c i a l

Ae t n a

M edi cai d

Ro y a l

He a l t h

Ci t r u s

He a l t h

W el l car e

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27

27

2009

M acr o

En v i r o n m e n t

Un e m p l o y m e n t

and

uni ns ur ed

i ncr eas i ng

Fe de r a l

s t i m ul us

expands

M edi cai d

and

S CHI P Ag g r e s s i v e

f ocus

on

cos t

cont ai nm ent

and

paym ent

accur acy

W or s eni ng

st at e

def i ci t s

f uel s

dem and

f or

cos t

cont ai nm ent

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29

Ho w W e

Ta p

t he

Op p o r t u n i t y

29

Ri d e

M edi cai d

g r o wt h

wa v e

Ca p t u r e

m or e

M edi cai d

l i ves

I nt r oduce

new pr oduct s

and

s er vi ces

Up s e l l

t o

exi s t i ng

cus t om er s

29

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31

31

EP S $ 0 . 2 1

2009

Gu i d a n c e

EP S $ 0 . 5 7

EP S $ 0 . 8 0

EP S $ 1 . 0 0

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3 3 Ap p e n d i x : E BI T DA E BI T DA i s d e f i n e d a s e a r n i n g s b e f o r e i n t e r e s t , t a x e s , d e p r e c i a t i o n a n d a m o r t i z a t i o n a n d a d j u s t e d E BI T DA r e p r e s e n t s E BI T DA a d j u s t e d abi l i t y t o s er vi ce debt and i s one of t he m eas ur es us ed f or det er m i ni ng debt covenant com pl i ance. I n addi t i on, becaus e of t he var yi ng m et hodol ogi es v i e we d a s a n a l t e r n a t i v e t o GAAP m e a s u r e s o f p e r f o r m a n c e . M a n a g e m e n t b e l i e v e s t h e m o s t d i r e c t l y c o m p a r a b l e GAAP f i n a n c i a l m e a s u r e i s n e t i n c o m e

f or f or and

s h a r e b a s e d c o m p e n s a t i o n e x p e n s e . E BI T DA i s a m e a s u r e c o m m o n l y det er m i ni ng s t ock- bas ed com pens at i on expens e, and t he s ubj ect i ve h a s p r o v i d e d a r e c o n c i l i a t i o n o f E BI T DA a n d a d j u s t e d E BI T DA t o n e t

us ed by t he capi t al m ar ket s t o val ue ent er pr i s es . a s s u m p t i o n s i n v o l v e d i n t h o s e d e t e r m i n a t i o n s , we i ncom e i n t hi s pr es ent at i on.

I nt er es t , t axes , depr eci at i on bel i eve excl udi ng s t ock- bas ed

and am or t i zat i on can com pens at i on expens e

v a r y s i g n i f i c a n t l y b e t we e n c o m p a n i e s d u e i n p a r t f r o m E BI T DA e n h a n c e s t h e a b i l i t y o f m a n a g e m e n t

t o d i f f e r e n c e s i n a c c o u n t i n g p o l i c i e s , t a x s t r a t e g i e s , l e v e l s o f i n d e b t e d n e s s a n d i n t e r e s t r a t e s . Ex c l u d i n g a n d i n v e s t o r s t o c o m p a r e o u r c o r e o p e r a t i n g r e s u l t s o v e r m u l t i p l e p e r i o d s wi t h t h o s e o f o t h e r c o m p a n i e s .

t hes e i t em s M anagem ent

pr ovi des bel i eves

i ns i ght i nt o t he under l yi ng r es ul t s of oper at i ons E BI T DA a n d a d j u s t e d E BI T DA i n f o r m a t i o n i s u s e f u l

a n d f a c i l i t a t e s c o m p a r i s o n s b e t we e n t o i n v e s t o r s f o r t h e s e r e a s o n s . Bo t h

HM S Y a n d o t h e r c o m p a n i e s . E BI T DA i s a l s o a u s e f u l m e a s u r e o f E BI T DA a n d a d j u s t e d E BI T DA a r e n o n - GAAP f i n a n c i a l m e a s u r e s a n d

t h e c o m p a n y 's s houl d not be

Exhibit 99.3 HMS Holdings Inc. New Income Statement Presentation Format Reconciliation as of December 31, 2008 2008

Re ve n u e

Pre viously Re porte d 184,495

73,783 12,039 11,010

2007

Adj’s —

As Re vise d 184,495

Pre viously Re porte d 146,651

(13,212) (1,040) (931)

60,571 10,999 10,079

57,137 10,026 9,411

28,429

22,774

10,831

14,380

4,714

4,642

(22,142)

125,623

118,370

—

22,142

22,142

147,765

—

36,730

—

2006

Adj’s —

As Re vise d 146,651

Pre viously Re porte d 87,940

Adj’s —

As Re vise d 87,940

(10,952) (728) (980)

46,185 9,298 8,431

38,547 6,812 6,322

(7,970) (264) (1,105)

30,577 6,548 5,217

22,774

13,849

6,540

8,165

4,642

6,420

(20,500)

97,870

80,115

—

20,500

20,500

147,765

118,370

—

36,730

28,281

—

O pe ratin g Expe n se s: Cost of Services Compensation Data P rocessing Occupancy Direct P roject Cost Other Operating Cost Amort of Intangibles T otal Cost of Services Selling General & Admin Expenses T otal Operating Expenses O pe ratin g In com e

28,429 17,790 4,714 147,765

— (6,959) —

— (7,840) —

— (3,637) —

13,849 4,528 6,420

(12,976)

67,139

—

12,976

12,976

118,370

80,115

—

80,115

28,281

7,825

—

7,825

SGA as a % to Rev

12.00%

13.98%

14.76%

Cost of Ser as a % to Rev

68.09%

66.74%

76.35%

SGA as a % to T otal Exp’s

14.98%

17.32%

16.20%

Cost of Rev as a % to T otal Exp’s

85.02%

82.68%

83.80%

Operating Inc as a % to Rev

19.91%

19.28%

8.90%

% of Revenue

Processed and formatted by SEC Watch - Visit SECWatch.com 2008 Pre viously Re porte d

Adj’s

2007 As Re vise d

Pre viously Re porte d

Adj’s

2006 As Re vise d

Pre viously Re porte d

Adj’s

As Re vise d

O pe ratin g Expe n se s: Compensation Data P rocessing Occupancy Direct P roject Cost Other Operating Cost Amort of Intangibles

40.0% 6.5% 6.0%

7.2% 0.6% 0.5%

32.8% 6.0% 5.5%

39.0% 6.8% 6.4%

7.5% 0.5% 0.7%

31.5% 6.3% 5.7%

43.8% 7.7% 7.2%

9.1% 0.3% 1.3%

34.8% 7.4% 5.9%

15.4%

0.0%

15.4%

15.5%

0.0%

15.5%

15.7%

0.0%

15.7%

9.6%

3.8%

5.9%

9.8%

5.3%

4.5%

9.3%

4.1%

5.1%

2.6%

0.0%

2.6%

3.2%

0.0%

3.2%

7.3%

0.0%

7.3%

T otal Cost of Services

80.1%

12.0%

68.1%

80.7%

14.0%

66.7%

91.1%

14.8%

76.3%

Selling General & Admin Expenses

0.0%

-12.0%

12.0%

0.0%

-14.0%

14.0%

0.0%

-14.8%

14.8%

80.1%

0.0%

80.1%

80.7%

0.0%

80.7%

91.1%

0.0%

91.1%

19.9%

0.0%

19.9%

19.3%

0.0%

19.3%

8.9%

0.0%

8.9%

T otal Operating Expenses O pe ratin g In com e

% of Total Expense 2008 Pre viously Re porte d

Adj’s

2007 As Re vise d

Pre viously Re porte d

Adj’s

2006 As Re vise d

Pre viously Re porte d

Adj’s

As Re vise d

O pe ratin g Expe n se s: Compensation Data P rocessing Occupancy Direct P roject Cost Other Operating Cost Amort of Intangibles T otal Cost of Services Selling General & Admin Expenses T otal Operating Expenses O pe ratin g In com e

49.9% 8.1% 7.5%

8.9% 0.7% 0.6%

41.0% 7.4% 6.8%

48.3% 8.5% 8.0%

9.3% 0.6% 0.8%

39.0% 7.9% 7.1%

48.1% 8.5% 7.9%

9.9% 0.3% 1.4%

38.2% 8.2% 6.5%

19.2%

0.0%

19.2%

19.2%

0.0%

19.2%

17.3%

0.0%

17.3%

12.0%

4.7%

7.3%

12.1%

6.6%

5.5%

10.2%

4.5%

5.7%

3.2%

0.0%

3.2%

3.9%

0.0%

3.9%

8.0%

0.0%

8.0%

100.0%

15.0%

85.0%

100.0%

17.3%

82.7%

100.0%

16.2%

83.8%

0.0%

-15.0%

15.0%

0.0%

-17.3%

17.3%

0.0%

-16.2%

16.2%

100.0%

0.0%

100.0%

100.0%

0.0%

100.0%

100.0%

0.0%

100.0%

24.9%

0.0%

24.9%

23.9%

0.0%

23.9%

9.8%

0.0%

9.8%