HMS (HMSY) 8-K HMS Holdings Corp. Announces Third Quarter 2010 Results, 2010 Revised Guidance and Initial 2011 Guidance

Exhibit 99.1

Contacts: Christine Rogers Saenz (investor relations)
(212) 857-5986
csaenz@hms.com Francesca Marraro (media relations)
(212) 857-5442
fmarraro@hms.com

HMS HOLDINGS CORP. ANNOUNCES THIRD QUARTER 2010 RESULTS, 2010 REVISED
GUIDANCE AND INITIAL 2011 GUIDANCE

• Q3 2010 Revenue of $80.0 million (+35.3%y/y), EPS $0.39 (+30.0% y/y)

• 2010 EPS Guidance Increased to $1.40 (+28.4% y/y) from $1.38

• 2011 Initial Revenue Guidance of $370 million (+23.3% y/y)and EPS Guidance of $1.74 (+24.3% y/y)

NEW YORK, N.Y., October 29, 2010—HMS Holdings Corp. (NASDAQ: HMSY) today announced its financial results for the third quarter of 2010.

For the quarter ended September 30, 2010 revenue increased 35.3% to $80.0 million, compared with $59.2 million for the same period a year ago. Net income for the quarter was $11.0 million or $0.39 per diluted common share compared to net income of $8.4 million or $0.30 per diluted common share for the same period a year ago.

For the nine months ended September 30, 2010, HMS reported revenue of $215.7 million, an increase of $52.8 million or 32.4% from the $162.9 million for the same period a year ago. HMS reported net income of $27.7 million (+33.8%) or $0.98 (+30.7%) per diluted common share for the nine months ended September 30, 2010, compared to net income of $20.7 million or $0.75 per diluted common share for the same period a year ago.

“HMS continues to make steady progress against our strategic objectives,” said Bill Lucia, Chief Executive Officer. “Our success this quarter demonstrates our ability to execute on our multi-year plan. The important decisions incorporated in that plan—including investing in program integrity and the employer market— together with the advent this year of healthcare reform, have placed us on a continuum of growth that we believe will carry us through the next several years.”

Guidance for 2010 and 2011

The Company has increased its 2010 guidance from $290.0 million in revenue and $1.38 in fully diluted EPS to $300 million (+30.9%) in revenue and $1.40 (+28.4%) in fully diluted EPS.

The Company also announced its initial guidance for 2011. Revenue is projected to grow to $370 million (+23.3% over revised 2010 guidance) and fully diluted EPS is projected to increase to $1.74 (+24.3% over 2010 revised guidance).

HMS will be hosting its third quarter 2010 conference call and webcast with the investment community on Friday, October 29, 2010 at 9:00 am Eastern Time. Individuals can access the webcast athttp://investor.hms.com or listen to the call at 1-866-293-8970. International participants can listen to the call at 1-913-312-6696.

The webcast will be archived on the website. Individuals can access the webcast athttp://investor.hms.com or listen to the replay at 1-888-203-1112. International participants can listen to the replay at 1-719-457-0820. The passcode is 1056454. The replay will be available at 12 p.m. ET on October 29 through midnight on November 5, 2010.

1

The HMS Form 10-Q for the quarter September 30, 2010 will be filed and available on our website on http://investor.hms.com or about November 10, 2010, and will contain additional information about our results of operations for the fiscal year-to-date. This press release and the interim financial statements herein will be available at http://investor.hms.com for at least a 12-month period. Shareholders and interested investors are welcome to contact Investor Relations at 212-857-5986.

HMS (NASDAQ: HMSY) is the nation’s leader in coordination of benefits and program integrity services for payors of healthcare services. HMS’s clients include health and human services programs in more than 40 states; commercial programs, including commercial plans, employers, and over 100 Medicaid managed care plans; the Centers for Medicare & Medicaid Services (CMS); and Veterans Administration facilities. As a result of the Company’s services, clients recover over $1 billion annually, and save billions of dollars more in erroneous payments.

###

Use of Non-GAAP Financials

This press release includes presentations of earnings before interest, taxes, depreciation and amortization (EBITDA) and adjusted EBITDA. Adjusted EBITDA represents EBITDA adjusted for share-based compensation expense. EBITDA is a measure commonly used by the capital markets to value enterprises. EBITDA is a non-GAAP financial measure and is reconciled to income before income taxes, which the Company’s management believes to be the most comparable generally accepted accounting principles (“GAAP”) measure. Adjusted EBITDA results are calculated by adjusting GAAP income before income taxes to exclude the effects of depreciation, amortization of intangible assets, stock-based compensation expense, and net interest expense.

The Company uses these non-GAAP financial measures for internal management purposes, when publicly providing guidance on possible future results, and as a means to evaluate period-to-period comparisons. The Company’s management believes that these non-GAAP financial measures are a common measure used by investors and analysts to evaluate its performance. These non-GAAP financial measure are used in addition to and in conjunction with results presented in accordance with GAAP and reflect an additional way of viewing aspects of the Company’s operations that, when viewed with GAAP results and the accompanying reconciliations to corresponding GAAP financial measures, provides a more complete understanding of the results of operations and trends affecting the Company’s business. These non-GAAP financial measures should be considered as a supplement to, and not as a substitute for, or superior to, income before income taxes in accordance with GAAP.

Safe Harbor Statement

This Press Release contains “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Such statements give our expectations or forecasts of future events; they do not relate strictly to historical or current facts. Forward-looking statements can be identified by words such as “anticipates,” “estimates,” “expects,” “projects,” “intends,” “plans,” “believes,” “will,” “target,” “seeks,” “forecast” and similar expressions. In particular, these include statements relating to future actions, business plans, objects and prospects, and future operating or financial performance. Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Should known or unknown risks or uncertainties materialize, or should underlying assumptions prove inaccurate, actual results could differ materially from past results and those anticipated, estimated or projected. We caution you therefore against relying on any of these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to: the development by competitors of new or superior services or products or the entry into the market of new competitors; all the risks inherent in the development, introduction, and implementation of new products and services; the loss of a major customer, customer dissatisfaction or early termination of customer contracts triggering significant costs or liabilities; variations in our results of operations; negative results of government reviews, audits or investigations to verify our compliance with contracts and applicable laws and regulations; changing conditions in the healthcare industry which could simplify the reimbursement process and reduce the need for and price of our services; government regulatory, political and budgetary pressures that could affect the procurement practices and operations of healthcare organizations, reducing the demand for our services; our failure to comply with laws and regulations governing health data or to protect such data from theft and misuse. A further description of risks, uncertainties, and other matters can be found in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2009, a copy of which may be obtained from the Company’s website at www.hms.com under the “Investor Relations” tab. Any forward-looking statements made by us in this Press Release speak only as of the date of this Press Release. Factors or events that could cause actual results to differ may emerge from time to time and it is not possible for us to predict all of them. We undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by law.

2

HMS HOLDINGS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
For the Three and Nine-Months Ended September 30, 2010 and 2009
(In thousands, except per share amounts)
(unaudited)

	Three months ended Sept 30,						Nine months ended Sept 30,
	2010			2009			2010			2009
Revenue	$	80,022		$	59,164		$	215,700		$	162,920
Cost of services:
Compensation		28,013			19,191			78,723			54,537
Data processing		4,600			3,476			12,749			10,113
Occupancy		3,560			2,540			9,882			7,769
Direct project costs		9,818			7,446			25,596			21,170
Other operating costs		4,664			3,617			12,085			9,829
Amortization of acquisition related software and intangibles		1,665			1,211			4,566			3,643
Total cost of services		52,320			37,481			143,601			107,061
Selling, general & administrative expenses		9,424			7,322			25,920			20,196
Total operating expenses		61,744			44,803			169,521			127,257
Operating income		18,278			14,361			46,179			35,663
Interest expense		(24	)		(254	)		(70	)		(820	)
Other expense		(31	)		—			(31	)		—
Interest income		32			46			73			199
Income before income taxes		18,255			14,153			46,151			35,042
Income taxes		7,209			5,774			18,414			14,319
Net income	$	11,046		$	8,379		$	27,737		$	20,723
Basic income per common share data:
Net income per basic share	$	0.40		$	0.32		$	1.02		$	0.80
Weighted average common shares outstanding, basic		27,336			26,228			27,122			25,953
Diluted income per share data:
Net income per diluted share	$	0.39		$	0.30		$	0.98		$	0.75
Weighted average common shares, diluted		28,483			27,697			28,347			27,476

3

HMS HOLDINGS CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
(unaudited)

	September 30,			December 31,
	2010			2009
Assets
Current assets:
Cash and cash equivalents	$	66,035		$	64,863
Accounts receivable, net of allowance of $1,078 at September 30, 2010 and $614 at December 31, 2009		75,267			64,750
Prepaid expenses, including prepaid income taxes of $5,846 at September 30, 2010 and $4,234 at December 31, 2009		11,325			9,956
Other current assets, including net deferred tax assets of $101 at September 30, 2010 and $804 at December 31, 2009		239			872
Total current assets		152,866			140,441
Property and equipment, net		39,007			20,902
Goodwill, net		117,997			91,520
Intangible assets, net		22,376			16,798
Other assets		309			983
Total assets	$	332,555		$	270,644
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable, accrued expenses and other liabilities	$	26,888		$	26,474
Contingent payment to AMG-SIU		4,169			—
Total current liabilities		31,057			26,474
Long-term liabilities:
Contingent payment to AMG-SIU		8,808			—
Accrued deferred rent		1,714			3,675
Other liabilities		2,113			1,876
Deferred tax liabilities		3,710			326
Total long-term liabilities		16,345			5,877
Total liabilities		47,402			32,351
Shareholders’ equity:
Preferred stock — $.01 par value; 5,000,000 shares authorized; none issued		—			—
Common stock — $.01 par value; 45,000,000 shares authorized; 29,148,709 shares issued and 27,485,863 shares outstanding at September 30, 2010; 28,533,406 shares issued and 26,870,560 shares outstanding at December 31, 2009		292			285
Capital in excess of par value		194,911			175,795
Retained earnings		99,347			71,610
Treasury stock, at cost; 1,662,846 shares at September 30, 2010 and December 31, 2009		(9,397	)		(9,397	)
Total shareholders’ equity		285,153			238,293
Total liabilities and shareholders’ equity	$	332,555		$	270,644

4

HMS HOLDINGS CORP. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the Nine Months Ended September 30, 2010 and 2009
(in thousands)
(unaudited)

	Nine months ended September 30,
	2010			2009
Operating activities:
Net income	$	27,737		$	20,723
Adjustments to reconcile net income to net cash provided by operating activities:
Loss on disposal of fixed assets		22			6
Depreciation and amortization		11,478			10,014
Share-based compensation expense		5,334			4,482
Decrease in deferred tax asset		546			1,649
Increase in allowance for doubtful accounts		464			—
Changes in assets and liabilities:
Increase in accounts receivable		(10,020	)		(10,195	)
Increase in prepaid expenses and other current assets		(1,138	)		(2,653	)
Decrease/(Increase) in other assets		685			(6	)
(Decrease)/Increase in accounts payable, accrued expenses and other liabilities		(43	)		669
Net cash provided by operating activities		35,065			24,689
Investing activities:
Purchases of property and equipment		(10,488	)		(6,544	)
Purchase of building and land		(9,886	)		—
Acquisition of Chapman Kelly		(13,001	)		—
Acquisition of AMG-SIU, net of cash		(12,795	)
Acquisition of IntegriGuard		—			(5,217	)
Investment in capitalized software		(1,512	)		(1,193	)
Net cash used in investing activities		(47,682	)		(12,954	)
Financing activities:
Proceeds from exercise of stock options		5,486			5,733
Repayment of long-term debt		—			(4,725	)
Excess tax benefit from exercised stock options		8,303			7,573
Net cash provided by financing activities		13,789			8,581
Net increase in cash and cash equivalents		1,172			20,316
Cash and cash equivalents at beginning of period		64,863			49,216
Cash and cash equivalents at end of period	$	66,035		$	69,532
Supplemental disclosure of cash flow information:
Cash paid for income taxes	$	11,269		$	7,165
Cash paid for interest	$	46		$	674
Supplemental disclosure of noncash investing activities:
AMG-SIU acquisition-related contingent payments	$	12,977		$	—
Accrued property and equipment purchases	$	674		$	774

5

HMS HOLDINGS CORP. AND SUBSIDIARIES
Reconciliation of net income to EBITDA and adjusted EBITDA
(In thousands, except share and per share amounts)
(unaudited)

As summarized in the following table, earnings before interest, taxes, depreciation and amortization, and share-based compensation expense (adjusted EBITDA) was $24.3 million for the third quarter of 2010, an increase of 27.1% over the same period a year ago. For the nine months ended September 30, 2010, adjusted EBITDA was $63.0 million, an increase of 25.8% over the nine months ended September 30, 2009.

Reconciliation of net income to EBITDA and adjusted EBITDA

	Three Months Ended					Nine months Ended
	September 30,					September 30,
	2010			2009		2010			2009
Net Income	$	11,046		$	8,379	$	27,737		$	20,723
Net interest (income)/expense		(8	)		208		(3	)		621
Income taxes		7,209			5,774		18,414			14,319
Depreciation and amortization, net of deferred financing costs included in net interest expense		4,171			3,211		11,478			9,889
Earnings before interest, taxes, depreciation and amortization (EBITDA)		22,418			17,572		57,626			45,552
Share-based compensation expense		1,906			1,562		5,334			4,482
Adjusted EBITDA	$	24,324		$	19,134	$	62,960		$	50,034

6