Initiates Full Year 2018 Guidance; Obtains
extension for continued listing on the New York Stock Exchange
WageWorks, Inc. (NYSE: WAGE), a leader in administering
Consumer-Directed Benefits, announced that as previously disclosed,
the Company’s review of the necessary adjustments to the Company’s
financial statements for fiscal year 2016 is expected to result in
an estimated aggregate decrease in revenue (which was previously
reported as $364.7 million) in the approximate range of $6.5
million to $9.5 million, an estimated aggregate decrease in net
income (which was previously reported as $20.2 million) in the
approximate range of $3.5 million to $5.5 million, and an estimated
aggregate decrease in the non-GAAP financial measure adjusted
EBITDA (which was previously reported as $108.0 million) in the
approximate range of $6.0 million to $9.0 million. Although the
Company’s review of 2017 is ongoing, to date, the Company has not
identified any adjustments to its financial statements that would
be expected to cause revenue for fiscal year 2017 to differ
materially from the Company’s previous guidance.
WageWorks has not yet completed its final
determination and review of its financial statements and internal
controls over financial reporting for the fiscal year ended
December 31, 2017. As previously announced, the Company’s Board
concluded certain financial statements for periods in 2016 and 2017
should be restated and should no longer be relied upon. Therefore,
the amounts described above and the periods to which they relate
are preliminary, unaudited estimates, subject to change. There can
be no assurance that the final amounts and adjustments will not
differ materially from the estimated amounts described above, or
that additional adjustments will not be identified, the impact of
which may be material.
Initiates Full Year 2018 Financial Guidance
With respect to prior disclosure on full year
2017 operating results, the Company currently expects full year
2018 year-over-year revenue growth of 1% to 4% and adjusted EBITDA
margin of 28% to 32%, excluding the impact of costs associated with
the restatement efforts and any accounting adjustments. Full
year 2018 revenue growth is expected to be driven by strong growth
in the HSA product offering, partially offset by lower revenue from
FSA and COBRA products.
“We are pleased with the continued strength of
our HSA business, and the fundamentals of our business overall
remain strong. Our renewal rates across the business remain
in line with historical levels of greater than 90%,” said Edgar
Montes, WageWorks’ President and CEO. “Our FSA and COBRA
revenue are being impacted by higher than expected attrition from
acquired account migration and the loss of a partner as they
transitioned to their own platform. We continue to manage the
business to drive meaningful levels of profitability and believe
there are opportunities to improve the pace of integration of our
consumer-directed benefits platforms.
"I would like to thank the WageWorks teams for
their unwavering focus on engaging new and existing employers and
partners and delivering exceptional customer support. We are
working diligently to complete the 2016 and 2017 audit and report
our results as quickly as possible.”
Obtains extension for continued listing on the
New York Stock Exchange
WageWorks also today announced that the NYSE agreed to provide
the Company with an extension to continue its listing on the NYSE
through March 19, 2019, subject to reassessment on an ongoing
basis.
As previously disclosed, on March 19, 2018, WageWorks received a
notice from the NYSE indicating that the Company is not in
compliance with the NYSE’s continued listing requirements under the
timely filing criteria outlined in Section 802.01E of the NYSE
Listed Company Manual as a result of the Company’s failure to
timely file its Annual Report on Form 10-K for the fiscal year
ended December 31, 2017. WageWorks presented a compliance plan to
the NYSE in July 2018 and requested an additional 6-month extension
period for continued listing of its common stock on the NYSE
through March 19, 2019.
On September 7, 2018, the NYSE granted
WageWorks’ request to continue its listing on the NYSE through
March 19, 2019, subject to ongoing reassessment by the NYSE and
provided that the Company becomes current with its SEC filings by
such date. The NYSE decision also requires that WageWorks promptly
notify the NYSE of any material events and developments that occur
during the Additional Cure Period, including but not limited to,
any event that may affect the Company’s historical financial
information or that may impact the Company’s ability to achieve
interim milestones set forth in its compliance plan or become
current with its SEC filings by March 19, 2019. WageWorks continues
to work diligently to complete and file its Annual Report on Form
10-K and subsequent delinquent SEC quarterly filings as soon as
reasonably practicable, which the Company expects to be in advance
of the timing requirements set forth by the NYSE.
Audit Committee Composition
Following the resignation of Mariann Byerwalter
from the WageWorks’ Board, the Company notified the NYSE that, due
to Ms. Byerwalter’s resignation from the Board, the Company no
longer satisfies the requirements of NYSE Listed Company Manual
Section 303A.07, which requires the audit committee of a company
with NYSE-listed securities to have a minimum of three members. The
Company has commenced a search for an independent director who
meets the NYSE audit committee qualifications. If the Company is
unable to cure this deficiency by September 18, 2018, it will be
deemed noncompliant and the Company’s common stock will trade with
an added designation of “.BC” to indicate the status of the common
stock as “below compliance.”
Non-GAAP Financial Information
To supplement the financial information the Company presents on
a GAAP basis, the Company provides adjusted EBITDA as
a non-GAAP financial measure. Adjusted EBITDA is intended
to focus on what management believes to be its ongoing business
operations. The Company’s management believes it is useful for
itself and investors to review, as applicable, both GAAP
information that includes interest income, interest expense, income
tax provision, depreciation, amortization and change in contingent
consideration, stock-based compensation and employee termination
and other charges, and adjusted EBITDA, which excludes such
information, in order to assess the performance of the Company’s
business for planning and forecasting in subsequent periods. The
Company’s management does not itself, nor does it suggest that
investors should, consider adjusted EBITDA in isolation from, or as
a substitute for, financial information prepared in accordance with
GAAP.
No reconciliation of the forecasted range for adjusted EBITDA
margin for 2018 is included in this press release because the
Company is unable to quantify certain amounts that would be
required to be included in the corresponding GAAP measure without
unreasonable efforts and the Company’s management believes such
reconciliation would imply a degree of precision that would be
confusing or misleading to investors. In particular, the Company is
not able to provide a reconciliation for the forecasted range of
adjusted EBITDA margin because of the uncertainty and variability
of the nature and amount of certain components thereof including
(i) stock-based compensation, (ii) income tax provision and (iii)
amortization. As such, any associated estimate and its impact on
adjusted EBITDA margin could vary materially.
A reconciliation of GAAP net income
to non-GAAP adjusted EBITDA for fiscal year 2016 is set
forth below. Investors are also encouraged to review the Company’s
full financial results for the Non-Reliance Periods and
for the fourth quarter and fiscal year 2017 when the 2017
Form 10-K is filed with the SEC.
Reconciliation of GAAP Net Income to Non-GAAP Adjusted
EBITDA
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Year Ended December 31, 2016 |
|
|
|
AsPreviouslyReported |
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Low |
|
|
High |
|
GAAP net income |
|
$ |
20.2 |
|
|
$ |
14.7 |
|
|
$ |
16.7 |
|
Interest income |
|
|
(0.4 |
) |
|
|
(0.4 |
) |
|
|
(0.4 |
) |
Interest expense |
|
|
2.2 |
|
|
|
2.2 |
|
|
|
2.2 |
|
Income tax
provision |
|
|
12.0 |
|
|
|
8.8 |
|
|
|
9.5 |
|
Depreciation |
|
|
8.5 |
|
|
|
8.5 |
|
|
|
8.5 |
|
Amortization and change
in contingent consideration |
|
|
34.1 |
|
|
|
34.1 |
|
|
|
34.1 |
|
Stock-based
compensation expense |
|
|
30.3 |
|
|
|
30.0 |
|
|
|
30.3 |
|
Employee termination
and other charges |
|
|
1.1 |
|
|
|
1.1 |
|
|
|
1.1 |
|
Adjusted EBITDA |
|
$ |
108.0 |
|
|
$ |
99.0 |
|
|
$ |
102.0 |
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Forward Looking Statements
This press release contains forward-looking statements
within the meaning of Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended. Statements that include the words
“believes,” “expects,” “anticipates,” “intends,” and similar
expressions or future or conditional verbs such as “will,”
“should,” “would,” “may” and “could” are generally forward-looking
in nature and not historical facts. Forward-looking statements are
based on management’s current expectations or beliefs about the
Company’s future plans, expectations and objectives. These
forward-looking statements are not historical facts and are subject
to risks and uncertainties that could cause the actual results to
differ materially from those projected in these forward-looking
statements including, but not limited to: the risks and
uncertainties that the Company’s review of the matters described
above is ongoing and the amounts at issue and the periods to which
they relate have not been definitively determined; the final
amounts and adjustments may differ materially from the Company’s
estimated amounts; additional adjustments may be identified, the
impact of which may be material; the impact of the previously
described internal investigation on the Company, its management and
operations, including financial impact as well as any litigation or
regulatory action that may arise from the investigation, any of
which may result in a material adverse effect on the Company; the
impact of control deficiencies, including disclosure controls as
well as any material weaknesses in internal control over financial
reporting, and the associated costs in remediating those control
deficiencies; the risk that the Company may not file its delinquent
periodic reports prior to the time it would be delisted from the
NYSE which would result in a material adverse effect on the
Company; the reputational damage that the Company may suffer as a
result of the matters discussed in this filing; and those risks and
uncertainties described in the sections entitled “Risk Factors” and
“Management’s Discussion and Analysis of Financial Condition and
Results of Operations” in the most recent Annual Report on
Form 10-K filed with the SEC and similar disclosures in
subsequent periodic and current reports filed with the SEC. Readers
of this press release are cautioned not to place undue
reliance on forward-looking statements contained herein, which
speak only as of the date of this press release.
About WageWorks
WageWorks, Inc. (NYSE: WAGE) is a leader in administering
Consumer-Directed Benefits (CDBs). WageWorks is solely dedicated to
administering CDBs, including pre-tax spending accounts, such as
Health Savings Accounts (HSAs), health and dependent care Flexible
Spending Accounts (FSAs), Health Reimbursement Arrangements (HRAs),
as well as Commuter Benefit Services, including transit and parking
programs, wellness programs, COBRA, and other employee benefits.
WageWorks is headquartered in San Mateo, California, with offices
in major locations throughout the United States. For more
information, visit www.wageworks.com.
Media Contact:
Elizabeth Anderson WageWorks, Inc. 972.984.0800
Elizabeth.Anderson@Wageworks.com
Investor Contact:
Staci Mortenson ICR 203.682.8273
Staci.Mortenson@icrinc.com
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