HIIQ’s $50 million Stock BuyBack Program, Record Preliminary Unaudited Q3 Results, & Update on Florida TPA Application Process
Health Insurance Innovations, Inc. (HIIQ) is a market leader in developing innovative health insurance products that are affordable and meet the needs of millions of health insurance plan shoppers. HIIQ develops insurance products through partnerships with best-in-class insurance companies and markets them via its broad distribution network of licensed insurance agents across the nation. HIIQ’s data-centric paperless business model is facilitated by its Consumer Division that provides real-time data used to identify opportunities and underserved needs in the health insurance market. HIIQ’s Consumer Division includes AgileHealthInsurance.com, a website for researching, comparing and purchasing Term Health insurance products, and HealthPocket.com, an independently managed 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. The company also continues to develop and distribute supplemental insurance products i.e pharmacy benefit cards, dental plans, vision plans, cancer/critical illness plans, deductible and gap protection plans and life insurance policies. HIIQ continues to benefit in the marketplace with the current insurance issues in the U.S that face consumers, where they are experiencing increasing premiums of individual exchange-based products so demand for short-term medical and limited indemnity products continue to grow.
The Company announced that its Board of Directors has authorized the repurchase of up to $50 million of the Company’s Class A common stock through October 2019. The new share repurchase authorization permits the Company to periodically repurchase shares for cash for a period of 24 months in open market purchases, block transactions and privately negotiated transactions in accordance with applicable federal securities laws. The actual timing, number and value of shares repurchased under the program will be determined by management at its discretion and will depend on a number of factors, including the market price of the Company’s common stock, general market and economic conditions, regulatory requirements, capital availability and compliance with the terms of the Company’s credit facility. Repurchases under the program will be funded from one or a combination of existing cash balances, future free cash flow, and indebtedness. There is no guarantee as to the number of shares that will be repurchased, and the repurchase program may be extended, suspended or discontinued at any time without notice at the Company’s discretion. Under the stock repurchase program, the Company may elect to adopt a Rule 10b5-1 share repurchase plan under the Securities Exchange Act of 1934 (the “Plan”). The Plan would allow the Company to repurchase its shares at times when it otherwise might be prevented from doing so under insider trading laws or because of self-imposed trading blackout periods. Because repurchases under the Plan are anticipated to be subject to certain pricing parameters, there is no guarantee as to the exact number of shares that will be repurchased under the Plan or that there will be any repurchases pursuant to the Plan. Subject to applicable regulations, HIIQ may elect to amend or cancel the Plan at its discretion.
Gavin Southwell, HIIQ’s Chief Executive Officer, and President, stated, “The new share repurchase program underscores our confidence in our business strategy, financial performance, and the long-term prospects of our company while also allowing us the financial flexibility to continue to invest in our business. We believe that in view of our current and anticipated cash position, this buy-back is both an effective use of our capital at this time and a benefit to our shareholders. The HIIQ team continues to make significant progress in executing our strategy to support essential consumer needs.”
HIIQ also announced preliminary results for its Q3 of 2017 as follows:
HIIQ’s record preliminary unaudited results from continuing operations were reported that they indicate that revenue for the third quarter 2017 is expected to be in the range of $62.3 million to $63.3 million, an increase of approximately 35% to 37% over the comparable prior year period.
The Company stated that it expects to report GAAP net income in the range of $5.5 million to $6.0 million for the three months ended September 30, 2017, and adjusted net income of $7.3 million to $7.6 million. Additionally, the Company expects to report EBITDA in the range of $9.4 million to $9.9 million and adjusted EBITDA of $12.3 million to $12.8 million for the same period. The expected range in GAAP net income represents an increase of approximately 8% to 18%, and the expected range in EBITDA represents an increase of approximately 27% to 34%, over the comparable prior year period. The expected range in adjusted EBITDA represents an increase of approximately 52% to 58% over the comparable prior year period. Adjusted EBITDA is calculated as EBITDA, adjusted for items that are not part of regular operating activities, including restructuring costs, tax receivable adjustments and other non-cash items such as stock-based compensation. A reconciliation of net income to EBITDA and adjusted EBITDA for the three months and nine months ended September 30, 2017 is included within there press release provided via the link below.
The Company also expects to report GAAP diluted earnings per share in the range of $0.26 to $0.30 and adjusted earnings per share in the range of $0.44 to $0.46. The expected range in GAAP diluted earnings per share represents an increase of approximately 4% to 20% over the comparable prior year period. The expected range in adjusted earnings per share represents an increase of approximately 33% to 39% over the comparable prior year period. A reconciliation of net income to adjusted net income per share for the three months and nine months ended September 30, 2017, is included in today’s press release and via the link below. Cash and cash equivalents totaled approximately $43.1 million at September 30, 2017, an increase of $30.9 million from December 31, 2016 and an increase of $15.5 million from June 30, 2017.
The Company plans to report financial results for its third quarter ended September 30, 2017 on November 1, 2017. A conference call is scheduled for November 2, 2017 at 8:30am EDT, during which the Company will discuss these results and its outlook for the remainder of fiscal 2017. Note that the company recently spoke to their presentation which highlighted among other progress that they have achieved (see Slide 14) “9 Straight Quarters of Record Revenue & Adjusted Earnings”. I guess this next report would make 10 straight quarters. Their latest presentation that was recently filed via 8k can be accessed via the SEC website: www.sec.gov.
HIIQ also provided the following update on their Florida TPA Application Process:
On September 29, 2017, the Company and the Florida Office of Insurance Regulation (“OIR”) entered into a mutual consent order relating to the Company’s Third-Party Insurance Administrator (“TPA”) application in Florida. Pursuant to the consent order, on October 2, 2017, the Florida Division of Administrative Hearings granted a motion to dismiss the Company’s petition contesting the OIR’s prior TPA license denial and cancelling the hearing on the Company’s appeal of the denial, and on October 4, 2017, the OIR withdrew its prior denial of the Company’s TPA license application. The mutual consent order between the Company and the OIR specifies details regarding the information to be included in the Company’s new TPA application and certain procedural steps, such as a pre-submission meeting with the OIR.
Sell side sentiment: Canaccord Genuity has a price target of $39 a share for HIIQ. Cantor Fitzgerald also maintains their $38 target price. Northland Securities has a price target of $37 a share. HIIQ shares closed today’s trading up 11.64% at $21.10 a share which is a ~45% discount to the Cantor Fitzgerald mid-range target price. HIIQ’s 52-week low is $4 and the 52-week high is $37.38.
To learn more about Health Insurance Innovations, Inc. (NasdaqGM: HIIQ) and to track its progress please visit the Vista Partners Company Dedicated Coverage Page.