Revenue during the quarter grew 5.20 percent to $124.60 million from $118.44 million in the previous year period. Gross margin for the quarter expanded 145 basis points over the previous year period to 81.66 percent. Total expenses were 89.85 percent of quarterly revenues, up from 89.01 percent for the same period last year. That has resulted in a contraction of 84 basis points in operating margin to 10.15 percent.

Operating income for the quarter was $12.65 million, compared with $13.02 million in the previous year period.

However, the adjusted EBITDA for the quarter stood at $25.86 million compared with $28.45 million in the prior year period. At the same time, adjusted EBITDA margin contracted 327 basis points in the quarter to 20.75 percent from 24.02 percent in the last year period.

"Record commercial health plan revenue in the third quarter resulted in year-to-date growth of 18% compared to the comparable period in 2015. New business and incremental product sales to existing customers have been extremely strong throughout 2016 and new product implementations are up nearly 20% year-over-year through the first three quarters, compared to the same period last year. We believe we are well-positioned, therefore, for a strong fourth-quarter," said Bill Lucia, HMS chairman and chief executive officer. "Early reaction to our acquisition of Essette has been very encouraging. We see meaningful cross-sell opportunities with existing customers for the web-based Essette care management and care coordination platform, particularly with the heightened focus among risk-bearing healthcare entities on identifying, engaging and better managing their members to improve outcomes while controlling costs," added Lucia.

The company has spent $32.12 million cash to meet investing activities during the nine month period as against cash outgo of $7.89 million in the last year period.

Cash flow from financing activities was $3.66 million for the nine month period as against cash outgo of $20.88 million in the last year period.

Cash and cash equivalents stood at $171.52 million as on Sep. 30, 2016, up 18.45 percent or $26.72 million from $144.80 million on Sep. 30, 2015.

Working capital increases
HMS Holdings Corp. has recorded an increase in the working capital over the last year. It stood at $291.86 million as at Sep. 30, 2016, up 14.41 percent or $36.76 million from $255.10 million on Sep. 30, 2015. Current ratio was at 4.94 as on Sep. 30, 2016, up from 4.09 on Sep. 30, 2015.

Days sales outstanding went down to 121 days for the quarter compared with 133 days for the same period last year.