WageWorks, Inc. (WAGE) has reported a 91.48 percent jump in profit for the quarter ended Mar. 31, 2017. The company has earned $11.10 million, or $0.29 a share in the quarter, compared with $5.80 million, or $0.16 a share for the same period last year. On the other hand, adjusted net income for the quarter stood at $17.60 million, or $0.46 a share compared with $11.90 million or $0.33 a share, a year ago. Revenue during the quarter surged 43.68 percent to $125.01 million from $87 million in the previous year period. Gross margin for the quarter contracted 183 basis points over the previous year period to 62.24 percent. Total expenses were 87.54 percent of quarterly revenues, down from 88.59 percent for the same period last year. This has led to an improvement of 104 basis points in operating margin to 12.46 percent.
Operating income for the quarter was $15.57 million, compared with $9.93 million in the previous year period.
However, the adjusted operating income for the quarter stood at $30.80 million compared to $20.20 million in the prior year period. At the same time, adjusted operating margin improved 142 basis points in the quarter to 24.64 percent from 23.22 percent in the last year period.
"I am pleased with our first quarter results. We achieved strong financial metrics across the board that all exceeded our guidance. Our sales pipeline has doubled year over year and our 2017 selling season is off to a terrific start as we continue to see substantial interest in our full suite of Consumer Directed Benefit offerings. The integration of ADP’s CHSA and COBRA businesses is progressing ahead of schedule, we continue to expand our reach in the commuter space, and we are seeing increased activity from our many revenue generating channel partners and carrier relationships" said Joe Jackson, chairman and chief executive officer of WageWorks.
Operating cash flow turns negative
WageWorks, Inc. has spent $60.57 million cash to meet operating activities during the quarter as against cash inflow of $79.04 million in the last year period. The company has spent $5.97 million cash to meet investing activities during the quarter as against cash outgo of $10.96 million in the last year period.
The company has spent $2.34 million cash to carry out financing activities during the quarter as against cash outgo of $6.56 million in the last year period.
Cash and cash equivalents stood at $609.42 million as on Mar. 31, 2017, up 8.35 percent or $46.98 million from $562.44 million on Mar. 31, 2016.
Working capital increases
WageWorks, Inc. has recorded an increase in the working capital over the last year. It stood at $141.10 million as at Mar. 31, 2017, up 18.23 percent or $21.76 million from $119.34 million on Mar. 31, 2016. Current ratio was at 1.23 as on Mar. 31, 2017, up from 1.22 on Mar. 31, 2016.
Days sales outstanding went down to 75 days for the quarter compared with 85 days for the same period last year.
Debt increases substantially
WageWorks, Inc. has witnessed an increase in total debt over the last one year. It stood at $246.40 million as on Mar. 31, 2017, up 211.77 percent or $167.36 million from $79.03 million on Mar. 31, 2016. Total debt was 18.87 percent of total assets as on Mar. 31, 2017, compared with 8.09 percent on Mar. 31, 2016. Debt to equity ratio was at 0.58 as on Mar. 31, 2017, up from 0.23 as on Mar. 31, 2016. Interest coverage ratio deteriorated to 11.41 for the quarter from 24.52 for the same period last year.
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