Revenue during the quarter went down marginally by 0.42 percent to $105.01 million from $105.46 million in the previous year period. Gross margin for the quarter expanded 267 basis points over the previous year period to 66.26 percent. Total expenses were 91.40 percent of quarterly revenues, up from 82.10 percent for the same period last year. That has resulted in a contraction of 930 basis points in operating margin to 8.60 percent.

Operating income for the quarter was $9.03 million, compared with $18.87 million in the previous year period.

However, the adjusted EBITDA for the quarter stood at $26.30 million compared with $29.02 million in the prior year period. At the same time, adjusted EBITDA margin contracted 248 basis points in the quarter to 25.04 percent from 27.52 percent in the last year period.

"Third quarter results demonstrate further progress against our long-term strategic plan. We continued the expansion of our platform capabilities, our connectivity reach, and our engagements in the adjacent pharmaceutical and provider markets. Additionally, our ongoing achievements in interoperability, automation, and cloud-based architectures enabled increasing flexibility and efficiencies within our platform, which translated into further value for our clients and increased gross margins for our business," said Keith Dunleavy, M.D., Inovalons chief executive officer and chairman of the Board. "Further, we saw good progress within the initiative to transition our core payor retrospective risk score accuracy product to a more modular offering. Finally, the continued expansion of our data, analytics, and product offerings, combined with a growing addressable client base and our ongoing investments in sales and marketing, resulted in continued strong expansion in our sales pipeline."

Inovalon Holdings projects revenue to be in the range of $470 million to $490 million for financial year 2016. For fiscal year 2016, Inovalon Holdings expects net income to be in the range of $43 million to $53 million. For the fiscal year 2016, Inovalon Holdings forecasts adjusted net income to be in the range of $60 million to $70 million. For financial year 2016, the company forecasts diluted earnings per share to be in the range of $0.28 to $0.35. For financial year 2016, the company forecasts diluted earnings per share to be in the range of $0.39 to $0.46 on adjusted basis.

Cash flow from investing activities was $90.32 million for the nine month period as against cash outgo of $691.36 million in the last year period.

The company has spent $58.59 million cash to carry out financing activities during the nine month period as against cash inflow of $651.15 million in the last year period.

Cash and cash equivalents stood at $214.39 million as on Sep. 30, 2016, up 28.75 percent or $47.88 million from $166.51 million on Sep. 30, 2015.

Working capital decreases marginally
Inovalon Holdings has witnessed a decline in the working capital over the last year. It stood at $745.18 million as at Sep. 30, 2016, down 2.08 percent or $15.84 million from $761.02 million on Sep. 30, 2015. Current ratio was at 11.86 as on Sep. 30, 2016, up from 9.69 on Sep. 30, 2015.

Days sales outstanding went down to 78 days for the quarter compared with 89 days for the same period last year.

At the same time, days payable outstanding went down to 31 days for the quarter from 35 for the same period last year.