William Blair & Company Initiates Coverage of HMS Holdings Corp. With Outperform Rating

Business Wire, Oct 21, 2008

CHICAGO -- William Blair & Company initiated research coverage of HMS Holdings Corp. (HMSY $21.99), a leading provider of coordination-of-benefit and program-integrity solutions for government-sponsored healthcare programs, with an Outperform rating and an Aggressive Growth company profile.

Analyst Corey Tobin estimated the company, whose services help clients identify, avoid, and recover healthcare expenditures that were paid in error, overpaid, or should have been paid by another party, would generate revenue of $175.4 million in 2008 and $205.9 million in 2009.

"We believe the end-market for HMS Holdings' services is favorable, as healthcare spending and federal/state budget pressures continue to escalate in the face of a challenging macroeconomic environment," Tobin said. "In addition, the company's positive investment attributes include a clear value proposition for clients (validated by $1.2 billion in Medicaid cost recoveries in 2007); a strong competitive position that we believe is evident by an impressive customer footprint and is supported by the company's proprietary eligibility database; an attractive revenue growth opportunity, driven by healthcare spending growth, new client wins, and existing-client scope expansion; and a healthy adjusted EBITDA margin, which today exceeds 25% and will likely expand over time, by our estimate."

William Blair & Company, L.L.C. intends to seek or expects to receive compensation for investment banking services from this company in the next 3 months.

William Blair & Company, L.L.C. is a market maker in the security of this company and may have a long or short position.

William Blair & Company, L.L.C. (www.williamblair.com) is a global investment firm offering investment banking, asset management, equity research, institutional and private brokerage, and private capital to individual, institutional, and issuing clients. Since 1935, we have been committed to helping clients achieve their financial objectives. As an independent, employee-owned firm, our philosophy is to serve our clients' interests first and foremost. We place a high value on the enduring nature of our client relationships, the quality of our products and services, and the continuity and integrity of our people.

For important disclosures and information regarding the firm's rating system, valuation methods and potential conflicts of interest, please visit: http://www.williamblair.com/Pages/news_story_dept.asp?uid=1426&depID=4

Additional information is available upon request.