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HMS Holdings Acquires Nebraska-Based Intrado's Accent Unit

Zacks Equity Research

HMS Holdings Corp HMSY closed the acquisition of Accent, the payment accuracy and cost-containment business of Intrado Corporation, for $155 million. The deal, announced last month, is expected to boost HMS Holdings’ Payment Integrity solutions business.

For investors’ notice, Nebraska-based Intrado is an innovative, cloud-based, global technology partner to clients worldwide, while Accent operates as a healthcare payment accuracy and cost-containment company. Accent’s offerings include comprehensive prospective and retrospective claims accuracy solutions.

Rationale Behind the Deal

With the acquisition of Accent, HMS Holdings is likely to witness customer base expansion and gain further financial efficiency. Per management, the deal will help expand the breadth of the company’s Prospective and Retrospective Claims Accuracy Services to Commercial and Medicare Advantage Health Plans.

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Notably, Accent’s offerings will help HMS Holdings incorporate both cost avoidance and overpayment recovery services. This will likely result in immediate market expansion and growth opportunities for HMS Holdings.

Payment Integrity solutions in Focus

The deal will also boost the company’s Payment Integrity solutions business, which comes under HMS Holdings’ unique suite of Analytical Services apart from Population Health Management solutions.

It is encouraging to note that in recent times, the business grew 11.1% year over year. The business is also expected to see an upside in the fourth quarter of 2019 on both year-over-year and sequential basis. Notably, management at HMS Holdings believes that the payment integrity market represents tremendous opportunities, worth $5-$6 billion.

Reflective of this, the company expects fourth-quarter revenues of $167-$177 million.

 

 

Price Performance

We believe that positive developments such as these are likely to cushion the Zacks Rank #3 (Hold) stock, which has rallied 6.2% compared with the industry’s 28.7% growth in a year.

Key Picks

A few better-ranked stocks from the broader medical space are CONMED Corporation CNMD, HealthEquity HQY and West Pharmaceutical Services WST. While HealthEquity sports a Zacks Rank #1 (Strong Buy) at present, CONMED and West Pharmaceutical each carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Conmed has a long-term earnings growth rate of 17%.

HealthEquity has a long-term earnings growth rate of 25%.

West Pharmaceuticals has a long-term earnings growth rate of 14%.

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Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

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HMS Holdings Corp (HMSY) : Free Stock Analysis Report
 
CONMED Corporation (CNMD) : Free Stock Analysis Report
 
West Pharmaceutical Services, Inc. (WST) : Free Stock Analysis Report
 
HealthEquity, Inc. (HQY) : Free Stock Analysis Report
 
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Zacks Investment Research