FIS™, the world’s largest global provider of banking and payments technology, today announced it has signed a definitive agreement to sell its Healthcare Benefit Solutions business to Lightyear Capital for $335 million. The all-cash transaction is expected to close by the end of the third quarter of 2012, subject to required regulatory approvals and customary closing conditions.
The sale includes FIS’ Consumer Driven Healthcare Solutions and Health and Financial Network Solutions, which provide benefits administration, multi-purse debit card and benefit account processing and payment fulfillment services to consumers, healthcare providers and payers. FIS will retain its state and federal government- sponsored electronic benefits transfer (EBT) businesses and programs which serve clients in more than 25 states.
“FIS has built a market leading position in healthcare account processing and payment services, and this business has performed very well,” said Frank Martire, chairman and chief executive officer, FIS. “The divestiture is consistent with our primary focus to serve financial institutions, as well as our strategy to maintain leadership positions in markets where we have meaningful scale.”
“We are pleased to have partnered with FIS in this transaction,” said Donald B. Marron, chairman of Lightyear Capital. “We believe that this transaction will bring many benefits to the customers of both businesses including new independent resources focused on the healthcare benefit administration and payments market.”
Anticipated Impact to 2012 Results
In accordance with generally accepted accounting principles, the Healthcare Benefit Solutions business will be classified as a discontinued operation for all periods presented effective in the second quarter of 2012. FIS expects the sale and related reclassification to reduce adjusted earnings per share from continuing operations by approximately $0.02 in the second quarter of 2012. The company expects to receive after-tax proceeds of approximately $220 million in conjunction with the transaction. FIS expects the sale to reduce full year 2012 earnings from continuing operations by up to $0.07 per share, before the benefit of any reinvestment of the net proceeds, and expects no material impact to adjusted earnings per share in 2013. The business generated approximately $120 million in revenue, $34 million in earnings before interest, taxes, depreciation and amortization (“EBITDA”) and $0.05 in adjusted earnings per share in 2011.
In addition, FIS anticipates that it will incur an after-tax GAAP loss of approximately $55 million, or $0.19 per share, upon completion of the sale in the third quarter which will also be included in discontinued operations. The Company plans to furnish additional detail per an 8-K filing regarding historical financial results for the Healthcare Benefit Solutions business as soon as is practicable.
Use of Non-GAAP Financial Information
Generally Accepted Accounting Principles (GAAP) is the term used to refer to the standard framework of guidelines for financial accounting. GAAP includes the standards, conventions, and rules accountants follow in recording and summarizing transactions and in the preparation of financial statements. In addition to reporting financial results in accordance with GAAP, the Company has provided non-GAAP financial measures, which it believes are useful to help investors better understand its financial performance, competitive position and prospects for the future.
These non-GAAP measures include adjusted net earnings. Adjusted net earnings (2012 comparative data) exclude the after-tax impact of acquisition related amortization, debt refinancing costs, accelerated vesting of certain stock options and restricted stock grants and for a non-compete and change in role payment. Adjusted net earnings (2011 comparative data) exclude the after-tax impact of acquisition related amortization, a non-cash charge related to an other than temporary decline in the market value of investments, debt refinancing costs and a net benefit related to adjustments from the Capco acquisition.
Any non-GAAP measures should be considered in context with the GAAP financial presentation and should not be considered in isolation or as a substitute for GAAP net earnings. Further, FIS’ non-GAAP measures may be calculated differently from similarly titled measures of other companies. Reconciliations of these non-GAAP measures to related GAAP measures are provided on the Investor Relations section of the FIS Website.
FIS (NYSE: FIS) is the world’s largest global provider dedicated to banking and payments technologies. With a long history deeply rooted in the financial services sector, FIS (fisglobal.com) serves more than 14,000 institutions in over 100 countries. Headquartered in Jacksonville, Fla., FIS employs more than 32,000 people worldwide and holds leadership positions in payment processing and banking solutions, providing software, services and outsourcing of the technology that drives financial institutions. First in financial technology, FIS tops the annual FinTech 100 list, is 425 on the Fortune 500 and is a member of Standard & Poor’s 500® Index.
This news release contains forward-looking statements that involve a number of risks and uncertainties. Statements that are not historical facts, including statements about our beliefs and expectations, are forward- looking statements. Forward-looking statements are based on management's beliefs, as well as assumptions made by, and information currently available to, management. Because such statements are based on expectations as to future economic performance and are not statements of fact, actual results may differ materially from those projected. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. The risks and uncertainties which forward-looking statements are subject to include, but are not limited to: changes in general economic, business and political conditions, the completion of the sale of the healthcare business and reinvestment of the net proceeds and other risks detailed in the “Statement Regarding Forward-Looking Information,” “Risk Factors” and other sections of the Company’s Form 10-K and other filings with the Securities and Exchange Commission.
For More Information:
Mary Waggoner, SVP, FIS Investor Relations
P: 904.438.6282 - E: mary.waggoner[.]fisglobal.com.
Elliot Sloane, Lightyear Capital LLC
Sloane & Company