HMS (HMSY) 10-Q 11 May 20 2020 Q1 Quarterly report Financial data

COVER PAGE

COVER PAGE - shares	3 Months Ended
	Mar. 31, 2020	May 04, 2020
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2020
Document Transition Report	false
Entity File Number	000-50194
Entity Registrant Name	HMS HOLDINGS CORP
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	11-3656261
Entity Address, Address Line One	5615 High Point Drive
Entity Address, City or Town	Irving,
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	75038
City Area Code	214
Local Phone Number	453-3000
Title of 12(b) Security	Common Stock $0.01 par value
Trading Symbol	HMSY
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding (in shares)		88,414,262
Entity Central Index Key	0001196501
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q1
Amendment Flag	false

Consolidated Balance Sheets

Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Current assets:
Cash and cash equivalents	$ 148,033	$ 139,268
Accounts receivable, net	234,901	223,443
Prepaid expenses and other current assets	22,231	30,925
Income tax receivable	524	3,210
Deferred financing costs, net	564	564
Total current assets	406,253	397,410
Property and equipment, net	86,764	86,947
Goodwill	597,803	599,351
Intangible assets, net	128,170	131,849
Operating lease right-of-use assets	16,544	17,493
Deferred financing costs, net	968	1,109
Other assets	14,586	10,117
Total assets	1,251,088	1,244,276
Current liabilities:
Accounts payable, accrued expenses and other liabilities	81,242	97,747
Liability for appeals	3,906	3,570
Total current liabilities	85,148	101,317
Long-term liabilities:
Revolving credit facility	240,000	240,000
Operating lease liabilities	13,839	14,881
Net deferred tax liabilities	26,527	25,587
Other liabilities	7,727	7,626
Total long-term liabilities	288,093	288,094
Total liabilities	373,241	389,411
Commitments and contingencies
Shareholders' equity:
Preferred stock -- $0.01 par value; 5,000,000 shares authorized; none issued	0	0
Common stock -- $0.01 par value; 175,000,000 shares authorized;102,073,527 shares issued and 88,410,333 shares outstanding at March 31, 2020; 101,766,468 shares issued and 88,103,566 shares outstanding at December 31, 2019	1,021	1,018
Capital in excess of par value	490,261	479,964
Retained earnings	522,141	509,459
Treasury stock, at cost: 13,663,194 shares at March 31, 2020 and December 31, 2019	(135,576)	(135,576)
Total shareholders' equity	877,847	854,865
Total liabilities and shareholders' equity	$ 1,251,088	$ 1,244,276

Consolidated Balance Sheets (Pa

Consolidated Balance Sheets (Parenthetical) - $ / shares	Mar. 31, 2020	Dec. 31, 2019
Statement of Financial Position [Abstract]
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	5,000,000	5,000,000
Preferred stock, shares issued (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	175,000,000	175,000,000
Common stock, shares issued (in shares)	102,073,527	101,766,468
Common stock, shares outstanding (in shares)	88,410,333	88,103,566
Treasury cost, shares (in shares)	13,663,194	13,663,194

Consolidated Statements of Inco

Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Income Statement [Abstract]
Revenue	$ 171,412	$ 147,953
Cost of services:
Compensation	67,455	57,452
Direct project and other operating expenses	24,895	20,199
Information technology	14,903	13,105
Occupancy	4,362	4,079
Amortization of acquisition related software and intangible assets	5,505	4,166
Total cost of services	117,120	99,001
Selling, general and administrative expenses	35,839	29,246
Total operating expenses	152,959	128,247
Operating income	18,453	19,706
Interest expense	(2,262)	(2,849)
Interest income	234	1,114
Other income	652	0
Income before income taxes	17,077	17,971
Income taxes	4,395	(1,671)
Net income	$ 12,682	$ 19,642
Basic income per common share:
Net income per common share -- basic (in dollars per share)	$ 0.14	$ 0.23
Diluted income per common share:
Net income per common share -- diluted (in dollars per share)	$ 0.14	$ 0.22
Weighted average shares:
Basic (in shares)	88,202	85,853
Diluted (in shares)	89,601	88,614

Consolidated Statement of Share

Consolidated Statement of Shareholders' Equity - USD ($) $ in Thousands	Total	Common Stock and paid-in capital	Retained earnings	Treasury stock	Shares issued
Balance, beginning of period at Dec. 31, 2018		$ 426,737	$ 422,235	$ (135,576)
Balance, beginning of period (in shares) at Dec. 31, 2018				13,663,194	98,924,501
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Exercise of stock options		23,139
Stock-based compensation expense		10,979
Vesting of restricted stock units, net of shares withheld for employee tax		(6,768)
Net income	$ 19,642		19,642
Exercise of stock options (in shares)	1,443,685				1,443,685
Vesting of restricted stock units, net of shares withheld for employee tax (in shares)					376,891
Balance, end of period at Mar. 31, 2019	$ 760,388	454,087	441,877	$ (135,576)
Balance, end of period (in shares) at Mar. 31, 2019				13,663,194	100,745,077
Balance, beginning of period at Dec. 31, 2019	854,865	480,982	509,459	$ (135,576)
Balance, beginning of period (in shares) at Dec. 31, 2019				13,663,194	101,766,468
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Exercise of stock options		125
Stock-based compensation expense		13,510
Vesting of restricted stock units, net of shares withheld for employee tax		(3,335)
Net income	$ 12,682		12,682
Exercise of stock options (in shares)	13,561				13,561
Vesting of restricted stock units, net of shares withheld for employee tax (in shares)					293,498
Balance, end of period at Mar. 31, 2020	$ 877,847	$ 491,282	$ 522,141	$ (135,576)
Balance, end of period (in shares) at Mar. 31, 2020				13,663,194	102,073,527

Consolidated Statements of Cash

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Operating activities:
Net income	$ 12,682	$ 19,642
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of property, equipment and software	8,024	7,930
Amortization of intangible assets	3,679	2,339
Amortization of deferred financing costs	141	141
Stock-based compensation expense	13,510	10,979
Deferred income taxes	940	1,225
Noncash lease expense	949	1,196
Changes in operating assets and liabilities:
Accounts receivable	(9,910)	1,977
Prepaid expenses and other current assets	8,694	(2,136)
Other assets	(4,469)	(766)
Income taxes receivable	2,686	1,189
Accounts payable, accrued expenses and other liabilities	(19,126)	(15,995)
Operating lease liabilities	(1,042)	(1,519)
Liability for appeals	336	2,320
Net cash provided by operating activities	17,094	28,522
Investing activities:
Purchases of property and equipment	(1,678)	(369)
Investment in capitalized software	(3,339)	(3,621)
Net cash used in investing activities	(5,017)	(3,990)
Financing activities:
Proceeds from exercise of stock options	125	23,139
Payments of tax withholdings on behalf of employees for net-share settlements	(3,335)	(6,768)
Payments on capital lease obligations	(102)	8
Net cash (used in)/provided by financing activities	(3,312)	16,379
Net increase in cash and cash equivalents	8,765	40,911
Cash and Cash Equivalents
Cash and cash equivalents at beginning of year	139,268	178,946
Cash and cash equivalents at end of period	148,033	219,857
Supplemental disclosure of cash flow information:
Cash paid for income taxes/(refunds received), net of refunds	585	(4,288)
Cash paid for interest	2,134	2,771
Supplemental disclosure of non-cash activities:
Change in balance of accrued property and equipment purchases	$ (2,824)	$ (201)

Business and Summary of Signifi

Business and Summary of Significant Accounting Policies	3 Months Ended
	Mar. 31, 2020
Accounting Policies [Abstract]
Business and Summary of Significant Accounting Policies	Business and Summary of Significant Accounting Policies (a) Business The terms “HMS,” “Company,” “we,” “us,” and “our” refer to HMS Holdings Corp. and its consolidated subsidiaries unless the context clearly indicates otherwise. HMS is an industry-leading provider of cost containment and analytical solutions in the healthcare marketplace. Our mission is to make healthcare work better for everyone. We use data, technology and analytics to deliver payment accuracy and population health management solutions that help healthcare organizations reduce costs, improve health outcomes and enhance consumer experiences. We currently operate as one business segment with a single management team that reports to the Chief Executive Officer. The Consolidated Financial Statements and accompanying Notes in this Form 10-Q are unaudited. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles (“U.S. GAAP”) for complete financial statements. The results reported in these unaudited Consolidated Financial Statements are not necessarily indicative of the results that may be expected for any subsequent interim period or the entire year. These unaudited Consolidated Financial Statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 (“2019 Form 10-K”). The consolidated balance sheet as of December 31, 2019 included herein was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. The preparation of the Company’s unaudited Consolidated Financial Statements requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the unaudited Consolidated Financial Statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates. These statements include all adjustments (which include only normal recurring adjustments, except as disclosed) that management considers necessary to present a fair statement of the Company’s results for such interim periods. These unaudited Consolidated Financial Statements include HMS accounts and transactions and those of the Company’s wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. (b) Summary of Significant Accounting Policies There have been no material changes to the Company’s significant accounting policies that are referenced in the 2019 Form 10-K. Recently Adopted Accounting Pronouncements In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (“ASU 2016-13”). ASU 2016-13 introduces the current expected credit losses methodology for estimating allowances for credit losses. ASU 2016-13 applies to all financial instruments carried at amortized cost and off-balance-sheet credit exposures not accounted for as insurance, including loan commitments, standby letters of credit, and financial guarantees. The new accounting standard does not apply to trading assets, loans held for sale, financial assets for which the fair value option has been elected, or loans and receivables between entities under common control. ASU 2016-13 is effective for public entities for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company adopted this guidance on January 1, 2020. When developing an estimate of the Company's expected credit losses, the Company considers all relevant information regarding the collectability of cash flows including historical information, customers' credit history and current financial conditions, industry trends and reasonable and supportable forecasts of future economic conditions over the contractual life of the receivable. The adoption of this guidance did not have a material effect on the Company’s consolidated financial statements. In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract ("ASU 2018-15"). The standard aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal use software. ASU 2018-15 is effective for public business entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The Company adopted this guidance on January 1, 2020. The adoption of this guidance did not have a material effect on the Company’s consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurements ("ASU 2018-13"). The objective of the ASU is to improve the disclosures related to fair value measurement by removing, modifying, or adding disclosure requirements related to recurring and non-recurring fair value measurements. ASU 2018-13 is effective for public business entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The Company adopted this guidance on January 1, 2020. The adoption of this guidance did not have a material effect on the Company’s consolidated financial statements. Recently Issued Accounting Pronouncements Not Yet Adopted In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes ("ASU 2019-12"). The guidance eliminates certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, and the recognition of deferred tax liabilities for outside basis differences related to changes in ownership of equity method investments and foreign subsidiaries. The guidance also simplifies aspects of accounting for franchise taxes and enacted changes in tax laws or rates, and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. ASU 2019-12 is effective for public business entities for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. Early adoption is permitted, including adoption in any interim period for which financial statements have not

Revenue Recognition

Revenue Recognition	3 Months Ended
	Mar. 31, 2020
Revenue from Contract with Customer [Abstract]
Revenue Recognition	Revenue Recognition The Company’s revenue disaggregated by solution for the three months ended March 31, 2020 and 2019 was as follows (in thousands) : Three Months Ended 2020 2019 Coordination of Benefits $ 118,056 $ 105,851 Payment Integrity 39,308 27,726 Population Health Management 14,048 14,376 Total $ 171,412 $ 147,953 Coordination of benefits revenue is derived from contracts with state governments, Medicaid managed care plans, and commercial entities that can span years with the option to renew. Types of service contracts could include: (a) the identification of erroneously paid claims; (b) the delivery of verified commercial insurance coverage information; (c) the identification of paid claims where another third party is liable; and (d) the identification and enrollment of Medicaid members who have access to employer insurance. Most of these types of service contracts contain multiple promises, all of which are not distinct within the context of the contract. Therefore, the promises represent a single, distinct performance obligation for the types of services we offer. Revenue derived from these performance obligations is largely based on variable consideration where, based on the number of claims or amount of findings the Company identified, a contingent or fixed transaction price/recovery percentage is allocated to each distinct performance obligation. The Company utilizes the expected value method to estimate the variable consideration related to the transaction price for its service contracts. Key inputs and assumptions in determining variable consideration include identified pricing and expected recoveries and/or savings. The expected recoveries and/or savings are based on historical experience of information received from our customers. Revenue is primarily recognized at a point in time when our customers realize economic benefits from our services when our services are completed. However, we have a limited number of fixed fee arrangements where revenue is recognized over time as performance obligations are satisfied within one Payment integrity services revenue is derived from contracts with federal and state governments, commercial health plans and other at-risk entities that can span years with the option to renew. Types of service contracts could include: (a) services designed to ensure that healthcare payments are accurate and appropriate; and (b) the identification of over/under payments or inaccurate charges based on a review of medical records. Most of these types of service contracts contain multiple promises, all of which are not distinct within the context of the contract. Therefore, the promises represent a single, distinct performance obligation for the types of services we offer. Revenue derived from these performance obligations is largely based on variable consideration where, based on the amount of recovery findings the Company identifies, a contingent or fixed transaction price/recovery percentage is allocated to each distinct performance obligation. The Company utilizes the expected value method to estimate the variable consideration related to the transaction price for its service contracts. Key inputs and assumptions in determining variable consideration include identified pricing and expected recoveries and/or savings. The expected recoveries and/or savings are based on historical experience of information received from our customers. Revenue is primarily recognized at a point in time when our customers realize economic benefits from our services when our services are completed. However, we have a limited number of fixed fee arrangements where revenue is recognized over time as performance obligations are satisfied within one Payment accuracy revenue consists of revenue for our coordination of benefits and payment integrity services. Population health management revenue is derived from contracts with health plans and other risk-bearing entities that can span years with the option to renew. Types of service contracts could include: (a) programs designed to improve member engagement; and (b) outreach services designed to improve clinical outcomes. Most of these types of service contracts contain multiple promises, all of which are not distinct within the context of the contract. Therefore, the promises represent a single, distinct performance obligation for the types of services we offer. Revenue derived from these services is largely based on consideration associated with prices per order/transfer and PMPM/PMPY fees. The Company believes the output method is a reasonable measure of progress for the satisfaction of our performance obligations, which are satisfied over time, as it provides a faithful depiction of (1) our performance toward complete satisfaction of the performance obligation under the contract and (2) the value transferred to the customer of the services performed under the contract. The Company has elected the right to invoice practical expedient for recognition of revenue related to its performance obligations when the amount we have the right to invoice the customer corresponds directly with the value to the customer. Additionally, we have a limited number of fixed fee arrangements where revenue is recognized over time as performance obligations are satisfied within one The Company's accounts receivable balance is net of estimated variable consideration of $18.8 million and $17.1 million as of March 31, 2020 and December 31, 2019, respectively, related to revenue recognized based on expected recoveries and/or savings. The Company’s revenue disaggregated by market for the three months ended March 31, 2020 and 2019 was as follows ( in thousands ): Three Months Ended 2020 2019 Commercial $ 88,750 $ 76,259 State 68,669 61,742 Federal 13,993 9,952 Total $ 171,412 $ 147,953 A portion of the Company’s services are deferred and revenue is recognized at a later time. Deferred revenue was approximately $6.4 million and $4.2 million as of March 31, 2020 and December 31, 2019, respectively, and is included in Accounts payable, accrued expenses and other liabilities in the Consolidated Balance Sheets. Approximately $1.0 million of the December 31, 2019 balance was recognized in revenue during the three months ended March 31, 2020. Contract modifications are routine in nature and often done to account for changes in the contract specifications or requirements. In most instances, contract modifications are for services that are not distinct, and, therefore, modifications are accounted for as part of the existing contract. The Company has elected to use the practical expedient to expense the incremental costs of obtaining a contract if the amortization period of the asset that the Company would have otherwise recognized is one year or less.

Acquisitions

Acquisitions	3 Months Ended
	Mar. 31, 2020
Business Combinations [Abstract]
Acqusitions	Acquisitions (a) Accent On December 23, 2019, HMS acquired West Claims Recovery Services, LLC (“Accent”), a payment accuracy and cost containment business, for aggregate consideration of cash in the amount of $158.6 million, which was funded through cash on hand. The purchase price is subject to certain post-closing purchase price adjustments and the initial purchase price allocation as of the date of acquisition was based on a preliminary valuation. Estimates and assumptions for which the Company is still obtaining or evaluating information are subject to change up to one year from the acquisition date as additional information becomes available and adjustments may require a change in the amounts allocated to goodwill during the periods in which the adjustments are determined. As of March 31, 2020, HMS has not finalized the determination of fair values allocated to various assets and liabilities, including, but not limited to: receivables; intangible assets; accounts payable and accrued liabilities; potential loss contracts; and goodwill. The intangible assets are valued using various methods which require several judgments, including growth rates, discount rates, customer attrition rates, and expected levels of revenues, earnings, cash flows and tax rates. The intangible assets are amortized over their estimated useful lives on a straight-line basis. Goodwill was determined based on the difference between the purchase price and the fair values of the tangible and intangible assets acquired. Goodwill recognized from the acquisition was the result of synergies to be realized from future revenue growth. Goodwill is deductible for tax purposes, has an indefinite useful life and will be included in the Company’s annual impairment testing or between annual tests if an indicator of impairment exists. The preliminary allocation of the purchase price to the fair value of the assets acquired and the liabilities assumed as of December 23, 2019, the effective date of the acquisition, was as follows ( in thousands ): Cash and cash equivalents $ 9,400 Accounts receivable 10,736 Prepaid expenses 129 Property and equipment 2,878 Intangible assets 68,400 Goodwill 79,997 Other assets 489 Accounts payable and accrued liabilities (13,395) Total purchase price $ 158,634 As of the period ended March 31, 2020, the Company made refinements to the December 23, 2019 preliminary purchase price allocation as reported at December 31, 2019. These refinements resulted in an increase in accounts receivable and a decrease to goodwill of approximately $1.5 million. Substantially all the receivables acquired are expected to be collectible. The purchase price allocated to the intangible assets acquired was as follows ( in thousands, except for useful life ): Useful Life Customer relationships 12 $ 67,000 Trade name 3 1,400 Fair value of intangibles acquired $ 68,400 We incurred $2.1 million of acquisition related costs related to the Accent acquisition for the year ended December 31, 2019. The costs include consulting, legal and transaction costs, and have been recorded in selling, general and administrative expenses. The financial results of Accent's operations since the date of acquisition have been included in the Company’s consolidated financial statements. Accent contributed approximately $10.9 million in revenue to HMS results of operations for the three months ended March 31, 2020. (b) VitreosHealth On September 16, 2019, HMS acquired VitreosHealth, Inc. ("VitreosHealth"), a company that offers predictive and prescriptive health insights utilized by population risk models, for aggregate consideration of $36.6 million, which was funded with cash on hand. The purchase price was subject to certain post-closing purchase price adjustments and the initial purchase price allocation as of the date of acquisition was based on a preliminary valuation. The Company's allocation of consideration exchanged to the net tangible and intangible assets acquired and liabilities assumed in the acquisition is based on estimated fair values as of September 16, 2019. The Company allocated the purchase price, net of cash acquired, to the following significant assets: intellectual property subject to amortization of $6.0 million, and goodwill of $30.2 million which represents the excess purchase price over the net identifiable tangible and intangible assets. There were no additional material allocations to assets and liabilities. The intangible assets are valued using various methods which require several judgments, including growth rates, discount rates, expected levels of revenues, earnings, cash flows and tax rates. The intangible assets are amortized over their estimated useful lives on a straight-line basis and are not expected to be deductible for tax purposes. The goodwill recognized from the acquisition was a result of expected synergies to be realized from future revenue growth, is not expected to be deductible for tax purposes, has an indefinite useful life and will be included in the Company’s annual impairment testing. The results of VitreosHealth's operations since the date of acquisition have been included in the Company's consolidated financial statements and are not considered material.

Intangible Assets, Goodwill and

Intangible Assets, Goodwill and Other Assets	3 Months Ended
	Mar. 31, 2020
Goodwill and Intangible Assets Disclosure [Abstract]
Intangible Assets, Goodwill and Other Assets	Intangible Assets, Goodwill and Other Assets (a) Intangible Assets Intangible assets consisted of the following ( in thousands, except for weighted average amortization period ): Gross Carrying Amount Accumulated Net Carrying Amount Weighted Average Amortization Period in Years March 31, 2020 Customer relationships $ 125,423 $ (14,172) $ 111,251 11.8 Trade names 1,400 (128) 1,272 2.7 Intellectual property 27,700 (12,053) 15,647 3.8 Total $ 154,523 $ (26,353) $ 128,170 Gross Carrying Amount Accumulated Net Carrying Amount Weighted Average Amortization Period in Years December 31, 2019 Customer relationships $ 135,290 $ (21,637) $ 113,653 12.1 Trade names 1,536 (147) 1,389 3.0 Intellectual property 27,700 (10,893) 16,807 3.7 Total $ 164,526 $ (32,677) $ 131,849 Amortization expense of intangible assets is expected to approximate the following (in thousands): Year ending December 31, Amortization 2020 (excluding the three months ended March 31, 2020) $ 11,016 2021 14,247 2022 14,197 2023 11,405 2024 10,330 Thereafter 66,975 Total $ 128,170 For the three months ended March 31, 2020 and 2019, amortization expense related to intangible assets was $3.7 million and $2.3 million, respectively. (b) Goodwill As a result of the Accent acquisition, the changes in the carrying amount of goodwill were as follows ( in thousands ): Balance at December 31, 2019 $ 599,351 Accent acquisition (1,548) Balance at March 31, 2020 $ 597,803 (c) Other Assets Included in Other assets are Level 1 equity investments with a cost basis of $7.4 million. As of March 31, 2020 and December 31, 2019, the fair value measurement of the equity instrument was $8.6 million and $7.9 million, respectively. There were no sales, settlements issuances or transfers related to this level 1 instrument. The Company recorded net unrealized gains of $0.7 million for the three months ended March 31, 2020. There were no realized or unrealized gains in the three months ended March 31, 2019. These gains are reflected as a component of Other income in the accompanying Consolidated Statements of Income.

Accounts Payable, Accrued Expen

Accounts Payable, Accrued Expenses and Other Liabilities	3 Months Ended
	Mar. 31, 2020
Payables and Accruals [Abstract]
Accounts Payable, Accrued Expenses and Other Liabilities	Accounts Payable, Accrued Expenses and Other Liabilities Accounts payable, accrued expenses and other liabilities consisted of the following (in thousands) : March 31, December 31, Accounts payable, trade $ 14,474 $ 12,246 Accrued compensation and other 19,533 36,827 Accrued operating expenses 40,704 42,045 Current portion of lease liabilities 6,531 6,629 Total accounts payable, accrued expenses and other liabilities $ 81,242 $ 97,747

Income Taxes

Income Taxes	3 Months Ended
	Mar. 31, 2020
Income Tax Disclosure [Abstract]
Income Taxes	Income Taxes The Company’s effective tax rate increased to 25.7% for the three months ended March 31, 2020 from (9.3)% for the three months ended March 31, 2019. The effective tax rate for the three months ended March 31, 2020 includes immaterial discrete tax benefits related to net equity compensation deductions. For the three months ended March 31, 2020, the differences between the federal statutory rate and our effective tax rate are tax expense items related to state taxes, equity compensation impacts, unrecognized tax benefits, including interest, officer compensation deduction limits, research and development tax credits, and other permanent differences. The Company has current period foreign income tax expense and includes global intangible low-taxed income as current period income tax expense, both of which are not material to the overall financial statements. Included in Other liabilities on the Consolidated Balance Sheets, are the total amount of unrecognized tax benefits (net of the federal benefit for state issues) of approximately $4.4 million and $4.2 million, as of March 31, 2020 and December 31, 2019, respectively, that, if recognized, would favorably affect the Company’s future effective tax rate. Also included in Other liabilities on the Consolidated Balance Sheets, are accrued liabilities for interest expense and penalties related to unrecognized tax benefits of $0.8 million and $0.7 million as of March 31, 2020 and December 31, 2019, respectively. HMS includes interest expense and penalties in the provision for income taxes in the unaudited Consolidated Statements of Income. The amount of interest expense (net of federal and state income tax benefits) and penalties in the unaudited Consolidated Statements of Income for the three months ended March 31, 2020 and 2019 was $0.1 million and $0.2 million, respectively. The Company believes it is reasonably possible that the amount of unrecognized tax benefits may decrease by $1.6 million over the next twelve months, due to the expiration of the statute of limitations in federal and various state jurisdictions.

Liability for Appeals

Liability for Appeals	3 Months Ended
	Mar. 31, 2020
Other Liabilities Disclosure [Abstract]
Liability for Appeals	Liability For AppealsUnder the Company’s contracts with certain commercial health plan customers and its Medicare Recovery Audit Contractor (“RAC”) contract with the Centers for Medicare & Medicaid Services (“CMS”) (included within the Company’s payment integrity services revenue), providers have the right to appeal HMS claim findings and to pursue additional appeals if the initial appeal is found in favor of HMS’s customer. To the extent the amount to be returned to providers following a successful appeal exceeds or is less than the amount recorded, revenue in the applicable period would be reduced or increased by such amount. The liability for appeals balance was approximately $3.9 million and $3.6 million as of March 31, 2020 and December 31, 2019, respectively.

Credit Agreement

Credit Agreement	3 Months Ended
	Mar. 31, 2020
Debt Disclosure [Abstract]
Credit Agreement	Credit Agreement In May 2013, we entered into a credit agreement (as amended and restated, the "Credit Agreement") with certain lenders and Citibank, N.A. as administrative agent. The Credit Agreement originally provided for an initial $500 million five On December 19, 2017, the Company entered into an amendment to the Credit Agreement, which, among other things, extended the maturity of its then existing $500 million revolving credit facility by five years to December 2022 (the "Amended Revolving Facility").The availability of funds under the Amended Revolving Facility includes sublimits for (a) up to $50 million for the issuance of letters of credit and (b) up to $25 million for swingline loans. In addition, the Company may increase the commitments under the Amended Revolving Facility and/or add one or more incremental term loan facilities, provided that such incremental facilities do not exceed in the aggregate the sum of (i) the greater of $120 million and 100% of Consolidated EBITDA (as defined in the Credit Agreement) and (ii) an additional amount so long as our first lien leverage ratio (as defined in the Credit Agreement) on a pro forma basis is not greater than 3.00:1.00, subject to obtaining commitments from the lenders and meeting certain other conditions. As of March 31, 2020 and December 31, 2019, the outstanding principal balance due on the Amended Revolving Facility was $240 million. No principal payments were made against the Amended Revolving Facility during the three months ended March 31, 2020. Borrowings under the Amended Revolving Facility bear interest at a rate equal to, at the Company’s election (except with respect to swingline borrowings, which will accrue interest based only at the base rate), either: ▪ a base rate determined by reference to the greatest of (a) the prime or base commercial lending rate of the administrative agent as in effect on the relevant date, (b) the federal funds effective rate plus 0.50% and (c) the one-month London Interbank Offered Rate (or any successor rate determined in accordance with the Credit Agreement) (“LIBO Rate”) plus 1.00%, plus an interest margin ranging from 0.50% to 1.00% based on the Company’s consolidated leverage ratio for the applicable period; or ▪ an adjusted LIBO Rate, equal to the LIBO Rate for the applicable interest period multiplied by the statutory reserve rate (equal to (x) one divided by (y) one minus the aggregate of the maximum reserve percentage (including any marginal, special, emergency or supplemental reserves) established by the Board of Governors of the Federal Reserve System of the United States), plus an interest margin ranging from 1.50% to 2.00% based on the Company’s consolidated leverage ratio for the applicable period. In addition to paying interest on the outstanding principal, the Company is required to pay unused commitment fees on the Amended Revolving Facility during the term of the Credit Agreement ranging from 0.375% to 0.250% per annum based on the Company’s consolidated leverage ratio and letter of credit fees equal to 0.125% per annum on the aggregate face amount of each letter of credit, as well as customary agency fees. As part of a contractual agreement with a customer, the Company has an outstanding irrevocable letter of credit for $6.5 million, which is issued against the Amended Revolving Facility and expires June 30, 2020. The Amended Revolving Facility is secured, subject to certain customary carve-outs and exceptions, by a first priority lien and security interest in substantially all tangible and intangible assets of the Company and certain subsidiaries of the Company. The Amended Revolving Facility contains certain restrictive covenants, which affect, among other things, the ability of the Company and its subsidiaries to incur indebtedness, create liens, make investments, sell or otherwise dispose of assets, engage in mergers or consolidations with other entities, and pay dividends or repurchase stock. The Company is also required to comply, on a quarterly basis, with two financial covenants: (i) a minimum interest coverage ratio of 3:00:1:00, and (ii) a maximum consolidated leverage ratio of 4.25:1.00 from and after January 2020. The consolidated leverage ratio is subject to a step-up to 5.25:1.00 for four full consecutive fiscal quarters following a permitted acquisition or similar investment. As of March 31, 2020, the Company was in compliance with all terms of the Credit Agreement. Interest expense and the commitment fees on the unused portion of the Company’s Amended Revolving Facility were as follows ( in thousands ): Three Months Ended 2020 2019 Interest expense $ 1,925 $ 2,526 Commitment fees 160 156 As of March 31, 2020 and December 31, 2019, the unamortized balance of deferred origination fees and debt issuance costs was $1.6 million and $1.7 million, respectively. For the three month

Earnings Per Share

Earnings Per Share	3 Months Ended
	Mar. 31, 2020
Earnings Per Share [Abstract]
Earnings Per Share	Earnings Per Share The following table reconciles the basic to diluted weighted average common shares outstanding using the treasury stock method (in thousands, except per share amounts) : Three Months Ended 2020 2019 Net income $ 12,682 $ 19,642 Weighted average common shares outstanding-basic 88,202 85,853 Plus: net effect of dilutive stock options and restricted stock units 1,399 2,761 Weighted average common shares outstanding-diluted 89,601 88,614 Net income per common share -- basic $ 0.14 $ 0.23 Net income per common share -- diluted $ 0.14 $ 0.22

Stock-Based Compensation

Stock-Based Compensation	3 Months Ended
	Mar. 31, 2020
Share-based Payment Arrangement [Abstract]
Stock-Based Compensation	Stock-Based Compensation (a) Long-Term Incentive Award Plans The Company grants stock options and restricted stock units to HMS employees and non-employee directors of the Company under the HMS Holdings Corp. 2019 Omnibus Incentive Plan (the “2019 Omnibus Plan”), as approved by the Company’s shareholders on May 22, 2019. The 2019 Omnibus Plan replaces and supersedes the HMS Holdings Corp. 2016 Omnibus Incentive Plan. (b) Stock-Based Compensation Expense Total stock-based compensation expense in the Company’s unaudited Consolidated Statements of Income related to the Company’s long-term incentive award plans was as follows (in thousands): Three Months Ended 2020 2019 Cost of services-compensation $ 3,849 $ 4,124 Selling, general and administrative 9,661 6,855 Total $ 13,510 $ 10,979 (c) Stock Options For the three months ended March 31, 2020 and 2019, stock-based compensation expense related to stock options was approximately $5.6 million and $4.8 million, respectively. Presented below is a summary of stock option activity for the three months ended March 31, 2020 ( in thousands, except for weighted average exercise price and weighted average remaining contractual terms ): Number of Options Weighted Weighted Aggregate Outstanding balance at December 31, 2019 2,411 $ 23.43 Granted 1,028 27.34 Exercised (14) 8.97 Forfeitures — — Expired — — Outstanding balance at March 31, 2020 3,425 $ 24.68 7.93 $ 12,430 Expected to vest at March 31, 2020 1,363 $ 28.72 9.34 $ 1,267 Exercisable at March 31, 2020 1,613 $ 20.31 6.42 $ 10,612 During the three months ended March 31, 2020 and 2019, the Company received proceeds of $0.1 million and $23.1 million, respectively, for the issuance of 13,561 and 1,443,685 shares of common stock upon the exercise of outstanding stock options, respectively. The total intrinsic value of stock options exercised during the three months ended March 31, 2020 and 2019 was $0.2 million and $25.8 million, respectively. As of March 31, 2020, there was approximately $7.9 million of total unrecognized compensation cost related to stock options outstanding, which is expected to be recognized over a weighted average period of 1.6 years. The weighted-average grant date fair value per share of the stock options granted during the three months ended March 31, 2020 and 2019 was $8.91 and $13.82, respectively. HMS estimated the fair value of each stock option grant on the date of grant using a Black-Scholes option pricing model and weighted–average assumptions set forth in the following table: Three Months Ended 2020 2019 Expected dividend yield 0 % 0 % Risk-free interest rate 1.2 % 2.5 % Expected volatility 41.1 % 40.9 % Expected life (years) 6.3 6.4 The total tax benefits recognized on stock-based compensation related to stock options for the three months ended March 31, 2020 and 2019 was $2.6 million and $11.3 million, respectively. (d) Restricted Stock Units For the three months ended March 31, 2020 and 2019, stock-based compensation expense related to restricted stock units was approximately $7.9 million and $6.1 million, respectively. Presented below is a summary of restricted stock units activity for the three months ended March 31, 2020 (in thousands, except for weighted average grant date fair value per unit): Number of Weighted Average Outstanding balance at December 31, 2019 1,239 $ 21.37 Granted 693 23.78 Vesting of restricted stock units, net of units withheld for taxes (293) 22.67 Units withheld for taxes (141) 22.67 Forfeitures (1) 24.36 Outstanding balance at March 31, 2020 1,497 $ 21.60 As of March 31, 2020, 1,224,176 restricted stock units remained unvested and there was approximately $18.3 million of unrecognized compensation cost related to restricted stock units, which is expected to be recognized over a weighted average vesting period of 1.6 years.

Commitments and Contingencies

Commitments and Contingencies	3 Months Ended
	Mar. 31, 2020
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Commitments and Contingencies In February 2018, the Company received a Civil Investigative Demand (“CID”) from the Texas Attorney General, purporting to investigate possible unspecified violations of the Texas Medicaid Fraud Prevention Act. In March 2018, the Company provided certain documents and information in response to the CID. HMS has not received any further requests from the government in connection with this CID. In September 2018, a former employee filed an action in the New York County Supreme Court entitled Christopher Frey v. Health Management Systems, Inc. alleging retaliation under New York law. The complaint seeks recovery of an unspecified amount of monetary damages, including back pay and other compensatory and equitable relief. In May 2019, the Court heard oral arguments on the Company's motion to dismiss. The motion remains pending before the Court. The Company continues to believe that this claim is without merit and intends to vigorously defend this matter. From time to time, HMS may be subject to investigations, legal proceedings and other disputes arising in the ordinary course of the Company’s business, including but not limited to regulatory audits, billing and contractual disputes, employment-related matters and post-closing disputes related to acquisitions. Due to the Company’s contractual relationships, including those with federal and state government entities, HMS’s operations, billing and business practices are subject to scrutiny and audit by those entities and other multiple agencies and levels of government, as well as to frequent transitions and changes in the personnel responsible for oversight of the Company’s contractual performance. HMS may have contractual disputes with its customers arising from differing interpretations of contractual provisions that define the Company’s rights, obligations, scope of work or terms of payment, and with associated claims of liability for inaccurate or improper billing for reimbursement of contract fees, or for sanctions or damages for alleged performance deficiencies. Resolution of such disputes may involve litigation or may require that HMS accept some amount of loss or liability in order to avoid customer abrasion, negative marketplace perceptions and other disadvantageous results that could affect the Company’s business, financial condition, results of operations and cash flows. HMS records accruals for outstanding legal matters when it believes it is probable that a loss will be incurred and the amount can be reasonably estimated. The Company evaluates, on a quarterly basis, developments in legal matters that could affect the amount of any accrual and developments that would make a loss contingency both probable and reasonably estimable. If a loss contingency is not both probable and estimable, HMS does not establish an accrued liability.

Subsequent Events

Subsequent Events	3 Months Ended
	Mar. 31, 2020
Subsequent Events [Abstract]
Subsequent Events	Subsequent EventsIn connection with the preparation of these unaudited Consolidated Financial Statements, an evaluation of subsequent events was performed through the date of filing and there were no events that have occurred that would require adjustments to the financial statements or disclosures.

Business and Summary of Signi_2

Business and Summary of Significant Accounting Policies (Policies)	3 Months Ended
	Mar. 31, 2020
Accounting Policies [Abstract]
Basis of Accounting	The Consolidated Financial Statements and accompanying Notes in this Form 10-Q are unaudited. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles (“U.S. GAAP”) for complete financial statements. The results reported in these unaudited Consolidated Financial Statements are not necessarily indicative of the results that may be expected for any subsequent interim period or the entire year. These unaudited Consolidated Financial Statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 (“2019 Form 10-K”). The consolidated balance sheet as of December 31, 2019 included herein was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP.
Use of Estimates	The preparation of the Company’s unaudited Consolidated Financial Statements requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the unaudited Consolidated Financial Statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates. These statements include all adjustments (which include only normal recurring adjustments, except as disclosed) that management considers necessary to present a fair statement of the Company’s results for such interim periods.
Recently Adopted Accounting Pronouncements and Recently Issued Accounting Pronouncements Not Yet Adopted	Recently Adopted Accounting Pronouncements In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (“ASU 2016-13”). ASU 2016-13 introduces the current expected credit losses methodology for estimating allowances for credit losses. ASU 2016-13 applies to all financial instruments carried at amortized cost and off-balance-sheet credit exposures not accounted for as insurance, including loan commitments, standby letters of credit, and financial guarantees. The new accounting standard does not apply to trading assets, loans held for sale, financial assets for which the fair value option has been elected, or loans and receivables between entities under common control. ASU 2016-13 is effective for public entities for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company adopted this guidance on January 1, 2020. When developing an estimate of the Company's expected credit losses, the Company considers all relevant information regarding the collectability of cash flows including historical information, customers' credit history and current financial conditions, industry trends and reasonable and supportable forecasts of future economic conditions over the contractual life of the receivable. The adoption of this guidance did not have a material effect on the Company’s consolidated financial statements. In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract ("ASU 2018-15"). The standard aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal use software. ASU 2018-15 is effective for public business entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The Company adopted this guidance on January 1, 2020. The adoption of this guidance did not have a material effect on the Company’s consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurements ("ASU 2018-13"). The objective of the ASU is to improve the disclosures related to fair value measurement by removing, modifying, or adding disclosure requirements related to recurring and non-recurring fair value measurements. ASU 2018-13 is effective for public business entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The Company adopted this guidance on January 1, 2020. The adoption of this guidance did not have a material effect on the Company’s consolidated financial statements. Recently Issued Accounting Pronouncements Not Yet Adopted In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes ("ASU 2019-12"). The guidance eliminates certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, and the recognition of deferred tax liabilities for outside basis differences related to changes in ownership of equity method investments and foreign subsidiaries. The guidance also simplifies aspects of accounting for franchise taxes and enacted changes in tax laws or rates, and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. ASU 2019-12 is effective for public business entities for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. Early adoption is permitted, including adoption in any interim period for which financial statements have not

Revenue Recognition (Tables)

Revenue Recognition (Tables)	3 Months Ended
	Mar. 31, 2020
Revenue from Contract with Customer [Abstract]
Disaggregation of Revenue by Solution	The Company’s revenue disaggregated by solution for the three months ended March 31, 2020 and 2019 was as follows (in thousands) : Three Months Ended 2020 2019 Coordination of Benefits $ 118,056 $ 105,851 Payment Integrity 39,308 27,726 Population Health Management 14,048 14,376 Total $ 171,412 $ 147,953
Disaggregation Of Revenue by Market	The Company’s revenue disaggregated by market for the three months ended March 31, 2020 and 2019 was as follows ( in thousands ): Three Months Ended 2020 2019 Commercial $ 88,750 $ 76,259 State 68,669 61,742 Federal 13,993 9,952 Total $ 171,412 $ 147,953

Acquisitions (Tables)

Acquisitions (Tables)	3 Months Ended
	Mar. 31, 2020
Business Combinations [Abstract]
Allocation of Purchase Price	The preliminary allocation of the purchase price to the fair value of the assets acquired and the liabilities assumed as of December 23, 2019, the effective date of the acquisition, was as follows ( in thousands ): Cash and cash equivalents $ 9,400 Accounts receivable 10,736 Prepaid expenses 129 Property and equipment 2,878 Intangible assets 68,400 Goodwill 79,997 Other assets 489 Accounts payable and accrued liabilities (13,395) Total purchase price $ 158,634
Purchase Price Allocated to Intangibles Acquired	The purchase price allocated to the intangible assets acquired was as follows ( in thousands, except for useful life ): Useful Life Customer relationships 12 $ 67,000 Trade name 3 1,400 Fair value of intangibles acquired $ 68,400

Intangible Assets, Goodwill a_2

Intangible Assets, Goodwill and Other Assets (Tables)	3 Months Ended
	Mar. 31, 2020
Goodwill and Intangible Assets Disclosure [Abstract]
Intangible Assets	Intangible assets consisted of the following ( in thousands, except for weighted average amortization period ): Gross Carrying Amount Accumulated Net Carrying Amount Weighted Average Amortization Period in Years March 31, 2020 Customer relationships $ 125,423 $ (14,172) $ 111,251 11.8 Trade names 1,400 (128) 1,272 2.7 Intellectual property 27,700 (12,053) 15,647 3.8 Total $ 154,523 $ (26,353) $ 128,170 Gross Carrying Amount Accumulated Net Carrying Amount Weighted Average Amortization Period in Years December 31, 2019 Customer relationships $ 135,290 $ (21,637) $ 113,653 12.1 Trade names 1,536 (147) 1,389 3.0 Intellectual property 27,700 (10,893) 16,807 3.7 Total $ 164,526 $ (32,677) $ 131,849
Amortization Expense of Intangible Assets	Amortization expense of intangible assets is expected to approximate the following (in thousands): Year ending December 31, Amortization 2020 (excluding the three months ended March 31, 2020) $ 11,016 2021 14,247 2022 14,197 2023 11,405 2024 10,330 Thereafter 66,975 Total $ 128,170
Goodwill	As a result of the Accent acquisition, the changes in the carrying amount of goodwill were as follows ( in thousands ): Balance at December 31, 2019 $ 599,351 Accent acquisition (1,548) Balance at March 31, 2020 $ 597,803

Accounts Payable, Accrued Exp_2

Accounts Payable, Accrued Expenses and Other Liabilities (Tables)	3 Months Ended
	Mar. 31, 2020
Payables and Accruals [Abstract]
Accounts Payable, Accrued Expenses, and Other Liabilities	Accounts payable, accrued expenses and other liabilities consisted of the following (in thousands) : March 31, December 31, Accounts payable, trade $ 14,474 $ 12,246 Accrued compensation and other 19,533 36,827 Accrued operating expenses 40,704 42,045 Current portion of lease liabilities 6,531 6,629 Total accounts payable, accrued expenses and other liabilities $ 81,242 $ 97,747

Credit Agreement (Tables)

Credit Agreement (Tables)	3 Months Ended
	Mar. 31, 2020
Debt Disclosure [Abstract]
Schedule of Interest Expense and Commitment Fees	Interest expense and the commitment fees on the unused portion of the Company’s Amended Revolving Facility were as follows ( in thousands ): Three Months Ended 2020 2019 Interest expense $ 1,925 $ 2,526 Commitment fees 160 156

Earnings Per Share (Tables)

Earnings Per Share (Tables)	3 Months Ended
	Mar. 31, 2020
Earnings Per Share [Abstract]
Schedule of Earnings Per Share	The following table reconciles the basic to diluted weighted average common shares outstanding using the treasury stock method (in thousands, except per share amounts) : Three Months Ended 2020 2019 Net income $ 12,682 $ 19,642 Weighted average common shares outstanding-basic 88,202 85,853 Plus: net effect of dilutive stock options and restricted stock units 1,399 2,761 Weighted average common shares outstanding-diluted 89,601 88,614 Net income per common share -- basic $ 0.14 $ 0.23 Net income per common share -- diluted $ 0.14 $ 0.22

Stock-Based Compensation (Table

Stock-Based Compensation (Tables)	3 Months Ended
	Mar. 31, 2020
Share-based Payment Arrangement [Abstract]
Total Stock-Based Compensation Expense	Total stock-based compensation expense in the Company’s unaudited Consolidated Statements of Income related to the Company’s long-term incentive award plans was as follows (in thousands): Three Months Ended 2020 2019 Cost of services-compensation $ 3,849 $ 4,124 Selling, general and administrative 9,661 6,855 Total $ 13,510 $ 10,979
Summary of Stock Option Activity	Presented below is a summary of stock option activity for the three months ended March 31, 2020 ( in thousands, except for weighted average exercise price and weighted average remaining contractual terms ): Number of Options Weighted Weighted Aggregate Outstanding balance at December 31, 2019 2,411 $ 23.43 Granted 1,028 27.34 Exercised (14) 8.97 Forfeitures — — Expired — — Outstanding balance at March 31, 2020 3,425 $ 24.68 7.93 $ 12,430 Expected to vest at March 31, 2020 1,363 $ 28.72 9.34 $ 1,267 Exercisable at March 31, 2020 1,613 $ 20.31 6.42 $ 10,612
Schedule of Estimated Fair Value of Stock Option Grants	HMS estimated the fair value of each stock option grant on the date of grant using a Black-Scholes option pricing model and weighted–average assumptions set forth in the following table: Three Months Ended 2020 2019 Expected dividend yield 0 % 0 % Risk-free interest rate 1.2 % 2.5 % Expected volatility 41.1 % 40.9 % Expected life (years) 6.3 6.4
Summary of Restricted Stock Units Activity	Presented below is a summary of restricted stock units activity for the three months ended March 31, 2020 (in thousands, except for weighted average grant date fair value per unit): Number of Weighted Average Outstanding balance at December 31, 2019 1,239 $ 21.37 Granted 693 23.78 Vesting of restricted stock units, net of units withheld for taxes (293) 22.67 Units withheld for taxes (141) 22.67 Forfeitures (1) 24.36 Outstanding balance at March 31, 2020 1,497 $ 21.60

Business and Summary of Signi_3

Business and Summary of Significant Accounting Policies (Details)	3 Months Ended
	Mar. 31, 2020Segment
Accounting Policies [Abstract]
Number of business segments	1

Revenue Recognition (Details)

Revenue Recognition (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Dec. 31, 2019
Disaggregation of Revenue [Line Items]
Accounts receivable allowance	$ 18,800	$ 17,100
Deferred revenue	6,400	4,200
Revenue recognized	1,000
Customer cash held in company bank accounts	$ 18,000	$ 21,900
Minimum
Disaggregation of Revenue [Line Items]
Term, contracts with customers	1 year
Amortization period	1 year
Maximum
Disaggregation of Revenue [Line Items]
Term, contracts with customers	3 years

Revenue Recognition - Revenues

Revenue Recognition - Revenues Disaggregated by Revenue Source and Market (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Disaggregation of Revenue [Line Items]
Revenue from contract with customer	$ 171,412	$ 147,953
Commercial
Disaggregation of Revenue [Line Items]
Revenue from contract with customer	88,750	76,259
State
Disaggregation of Revenue [Line Items]
Revenue from contract with customer	68,669	61,742
Federal
Disaggregation of Revenue [Line Items]
Revenue from contract with customer	13,993	9,952
Coordination of Benefits
Disaggregation of Revenue [Line Items]
Revenue from contract with customer	118,056	105,851
Payment Integrity
Disaggregation of Revenue [Line Items]
Revenue from contract with customer	39,308	27,726
Population Health Management
Disaggregation of Revenue [Line Items]
Revenue from contract with customer	$ 14,048	$ 14,376

Acquisitions (Details)

Acquisitions (Details) - USD ($) $ in Thousands	Dec. 23, 2019	Sep. 16, 2019	Mar. 31, 2020	Dec. 31, 2019
Business Acquisition [Line Items]
Goodwill			$ 597,803	$ 599,351
Accent acquisition
Business Acquisition [Line Items]
Acquisition of a business, net of cash acquired	$ 158,600
Increase in accounts receivable			1,500
Change in carrying value of goodwill			(1,500)
Acquisition related costs				$ 2,100
Revenue contributed			$ 10,900
Intangible assets	68,400
Goodwill	$ 79,997
VitreosHealth, Inc.
Business Acquisition [Line Items]
Aggregate consideration		$ 36,600
Intangible assets		6,000
Goodwill		$ 30,200

Acquisitions - Allocation of Pu

Acquisitions - Allocation of Purchase Price (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019	Dec. 23, 2019
Business Acquisition [Line Items]
Goodwill	$ 597,803	$ 599,351
Accent acquisition
Business Acquisition [Line Items]
Cash and cash equivalents			$ 9,400
Accounts receivable			10,736
Prepaid expenses			129
Property and equipment			2,878
Intangible assets			68,400
Goodwill			79,997
Other assets			489
Accounts payable and accrued liabilities			(13,395)
Total purchase price			$ 158,634

Acquisitions - Purchase Price A

Acquisitions - Purchase Price Allocated to Intangibles Acquired (Details) - Accent acquisition $ in Thousands	Dec. 23, 2019USD ($)
Business Acquisition [Line Items]
Purchase price allocated to intangibles acquired	$ 68,400
Customer relationships
Business Acquisition [Line Items]
Useful Life (in years)	12 years
Purchase price allocated to intangibles acquired	$ 67,000
Trade name
Business Acquisition [Line Items]
Useful Life (in years)	3 years
Purchase price allocated to intangibles acquired	$ 1,400

Intangible Assets, Goodwill a_3

Intangible Assets, Goodwill and Other Assets - Summary of Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2020	Dec. 31, 2019
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 154,523	$ 164,526
Accumulated Amortization	(26,353)	(32,677)
Net Carrying Amount	128,170	131,849
Customer relationships
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	125,423	135,290
Accumulated Amortization	(14,172)	(21,637)
Net Carrying Amount	$ 111,251	$ 113,653
Weighted Average Amortization Period in Years	11 years 9 months 18 days	12 years 1 month 6 days
Trade names
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 1,400	$ 1,536
Accumulated Amortization	(128)	(147)
Net Carrying Amount	$ 1,272	$ 1,389
Weighted Average Amortization Period in Years	2 years 8 months 12 days	3 years
Intellectual property
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 27,700	$ 27,700
Accumulated Amortization	(12,053)	(10,893)
Net Carrying Amount	$ 15,647	$ 16,807
Weighted Average Amortization Period in Years	3 years 9 months 18 days	3 years 8 months 12 days

Intangible Assets, Goodwill a_4

Intangible Assets, Goodwill and Other Assets - Estimated Amortization Expense of Intangible Assets (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Goodwill and Intangible Assets Disclosure [Abstract]
2020 (excluding the three months ended March 31, 2020)	$ 11,016
2021	14,247
2022	14,197
2023	11,405
2024	10,330
Thereafter	66,975
Total	$ 128,170	$ 131,849

Intangible Assets, Goodwill a_5

Intangible Assets, Goodwill and Other Assets (Details) - USD ($)	3 Months Ended		12 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Business Acquisition [Line Items]
Amortization of intangible assets	$ 3,679,000	$ 2,339,000
Sales related to financial instrument	0		$ 0
Settlements related to financial instrument	0		0
Issuances related to financial instrument	0		0
Net unrealized gains	700,000	0
Realized gains		$ 0
Fair Value, Inputs, Level 1
Business Acquisition [Line Items]
Cost basis of investment	7,400,000
Fair value measurement in relation to equity instrument	$ 8,600,000		$ 7,900,000

Intangible Assets, Goodwill a_6

Intangible Assets, Goodwill and Other Assets - Goodwill (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2020USD ($)
Business Acquisition [Line Items]
Goodwill, beginning balance	$ 599,351
Goodwill, ending balance	597,803
Accent acquisition
Business Acquisition [Line Items]
Change in carrying amount of goodwill	$ (1,548)

Accounts Payable, Accrued Exp_3

Accounts Payable, Accrued Expenses and Other Liabilities (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Payables and Accruals [Abstract]
Accounts payable, trade	$ 14,474	$ 12,246
Accrued compensation and other	19,533	36,827
Accrued operating expenses	40,704	42,045
Current portion of lease liabilities	6,531	6,629
Total accounts payable, accrued expenses and other liabilities	$ 81,242	$ 97,747

Income Taxes (Details)

Income Taxes (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Income Tax Disclosure [Abstract]
Effective income tax rate, percent	25.70%	(9.30%)
Unrecognized tax benefits that would impact effective tax rate	$ 4.4		$ 4.2
Unrecognized tax benefits, income tax penalties and interest accrued	0.8		$ 0.7
Unrecognized tax benefits, income tax penalties and interest expense	0.1	$ 0.2
Possible decrease in unrecognized tax benefits	$ 1.6

Liability for Appeals (Details)

Liability for Appeals (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Other Liabilities Disclosure [Abstract]
Liability for appeals	$ 3,906	$ 3,570

Credit Agreement (Details)

Credit Agreement (Details)	1 Months Ended	3 Months Ended
	Dec. 31, 2017USD ($)	Mar. 31, 2020USD ($)	Mar. 31, 2019USD ($)	Dec. 31, 2019USD ($)
Line of Credit Facility [Line Items]
Letters of credit outstanding, amount		$ 6,500,000
Amortization of interest expense		141,000	$ 141,000
Credit Agreement
Line of Credit Facility [Line Items]
Line of credit facility, maximum borrowing capacity	$ 500,000,000
Line of credit facility, expiration period	5 years
Debt agreement, maximum borrowing capacity	$ 120,000,000
Debt agreement, maximum borrowing capacity percent of consolidated EBITDA	100.00%
Credit Agreement | Letter of Credit
Line of Credit Facility [Line Items]
Line of credit facility, maximum borrowing capacity	$ 50,000,000
Line of credit facility, unused capacity, commitment fee percentage	0.125%
Credit Agreement | Swingline Loans
Line of Credit Facility [Line Items]
Line of credit facility, maximum borrowing capacity	$ 25,000,000
Credit Agreement | Revolving Credit Facility
Line of Credit Facility [Line Items]
Debt instrument, covenant, interest coverage ratio	5.25
Long-term line of credit, total		240,000,000		$ 240,000,000
Repayments of long-term lines of credit		0
Debt issuance costs, net		1,600,000		$ 1,700,000
Amortization of interest expense		$ 100,000	$ 100,000
Credit Agreement | Revolving Credit Facility | Fed Funds Effective Rate Overnight Index Swap Rate
Line of Credit Facility [Line Items]
Debt instrument, basis spread on variable rate	0.50%
Credit Agreement | Revolving Credit Facility | London Interbank Offered Rate (LIBOR)
Line of Credit Facility [Line Items]
Debt instrument, basis spread on variable rate	1.00%
Credit Agreement | Revolving Credit Facility | Minimum
Line of Credit Facility [Line Items]
Line of credit facility, unused capacity, commitment fee percentage	0.375%
Debt instrument, secured leverage ratio	3
Credit Agreement | Revolving Credit Facility | Minimum | London Interbank Offered Rate (LIBOR)
Line of Credit Facility [Line Items]
Debt instrument, basis spread on variable rate	0.50%
Credit Agreement | Revolving Credit Facility | Minimum | One-month LIBOR Rate
Line of Credit Facility [Line Items]
Debt instrument, basis spread on variable rate	1.50%
Credit Agreement | Revolving Credit Facility | Maximum
Line of Credit Facility [Line Items]
Debt instrument, covenant, interest coverage ratio	3
Line of credit facility, unused capacity, commitment fee percentage	0.25%
Credit Agreement | Revolving Credit Facility | Maximum | From and After January 2020
Line of Credit Facility [Line Items]
Debt instrument, covenant, interest coverage ratio	4.25
Credit Agreement | Revolving Credit Facility | Maximum | London Interbank Offered Rate (LIBOR)
Line of Credit Facility [Line Items]
Debt instrument, basis spread on variable rate	1.00%
Credit Agreement | Revolving Credit Facility | Maximum | One-month LIBOR Rate
Line of Credit Facility [Line Items]
Debt instrument, basis spread on variable rate	2.00%

Credit Agreement - Summary of I

Credit Agreement - Summary of Interest Expense and Commitment Fees on Unused Portion of Revolving Credit Facility (Details) - Revolving Credit Facility - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Line of Credit Facility [Line Items]
Interest expense	$ 1,925	$ 2,526
Commitment fees	$ 160	$ 156

Earnings Per Share - Summary of

Earnings Per Share - Summary of Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Earnings Per Share [Abstract]
Net income	$ 12,682	$ 19,642
Weighted average common shares outstanding-basic (in shares)	88,202	85,853
Plus: net effect of dilutive stock options and restricted stock units (in shares)	1,399	2,761
Weighted average common shares outstanding-diluted (in shares)	89,601	88,614
Net income per common share-basic (in dollars per share)	$ 0.14	$ 0.23
Net income per common share -- diluted (in dollars per share)	$ 0.14	$ 0.22

Earnings Per Share (Details)

Earnings Per Share (Details) - shares	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Share-based Payment Arrangement, Option
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (in shares)	1,015,141	215,353
Restricted Stock
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (in shares)	5,053	120,516

Stock-Based Compensation - Summ

Stock-Based Compensation - Summary of Stock-based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	$ 13,510	$ 10,979
Cost of services-compensation
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	3,849	4,124
Selling, general and administrative
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	$ 9,661	$ 6,855

Stock-Based Compensation (Detai

Stock-Based Compensation (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	$ 13,510	$ 10,979
Proceeds from stock options exercised	$ 125	$ 23,139
Shares issued upon exercise of stock options (in shares)	13,561	1,443,685
Total intrinsic value of stock options exercised	$ 200	$ 25,800
Unrecognized compensation cost related to stock options outstanding	$ 7,900
Recognition period for compensation cost related to awards outstanding	1 year 7 months 6 days
Weighted-average grant date fair value per share of stock options (in dollars per share)	$ 8.91	$ 13.82
Total income tax benefits	$ 4,395	$ (1,671)
Share-based Payment Arrangement, Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	5,600	4,800
Total income tax benefits	2,600	11,300
Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	$ 7,900	$ 6,100
Recognition period for compensation cost related to awards outstanding	1 year 7 months 6 days
Restricted stock units granted (in shares)	693,000
Number of unvested restricted stock units (in shares)	1,224,176
Unrecognized compensation cost related to restricted stock units	$ 18,300

Stock-Based Compensation - Stoc

Stock-Based Compensation - Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Number of Options
Outstanding, beginning balance (in shares)	2,411,000
Granted (in shares)	1,028,000
Exercised (in shares)	(13,561)	(1,443,685)
Forfeitures (in shares)	0
Expired (in shares)	0
Outstanding, ending balance (in shares)	3,425,000
Number of options, expected to vest (in shares)	1,363,000
Number of options, exercisable (in shares)	1,613,000
Weighted Average Exercise Price
Outstanding, beginning balance (in dollars per share)	$ 23.43
Granted (in dollars per share)	27.34
Exercised (in dollars per share)	8.97
Forfeitures (in dollars per share)	0
Expired (in dollars per share)	0
Outstanding, ending balance (in dollars per share)	24.68
Weighted average exercise price, expected to vest (in dollars per share)	28.72
Weighted average exercise price, exercisable (in dollars per share)	$ 20.31
Weighted Average- Remaining Contractual Terms
Outstanding, ending balance	7 years 11 months 4 days
Vested and expected to vest	9 years 4 months 2 days
Exercisable	6 years 5 months 1 day
Aggregate Intrinsic Value
Outstanding, ending balance	$ 12,430
Vested and expected to vest	1,267
Exercisable	$ 10,612

Stock-Based Compensation - Weig

Stock-Based Compensation - Weighted Average Assumptions Used in Valuation of Stock Options (Details) - Black Scholes Model - Share-based Payment Arrangement, Option	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected dividend yield	0.00%	0.00%
Risk-free interest rate	1.20%	2.50%
Expected volatility	41.10%	40.90%
Expected life (years)	6 years 3 months 18 days	6 years 4 months 24 days

Stock-Based Compensation - Su_2

Stock-Based Compensation - Summary of Restricted Stock Units (Details) - Restricted Stock Units (RSUs) shares in Thousands	3 Months Ended
	Mar. 31, 2020$ / sharesshares
Number of Units
Outstanding, beginning balance (in shares) | shares	1,239
Granted (in shares) | shares	693
Vesting of restricted stock units, net of units withheld for taxes (in shares) | shares	(293)
Units withheld for taxes (in shares) | shares	(141)
Forfeitures (in shares) | shares	(1)
Outstanding, ending balance (in shares) | shares	1,497
Weighted Average Grant Date Fair Value per Unit
Outstanding, beginning balance (in dollars per share) | $ / shares	$ 21.37
Granted (in dollars per share) | $ / shares	23.78
Vesting of restricted stock units, net of units withheld for taxes (in dollars per share) | $ / shares	22.67
Units withheld for taxes (in dollars per share) | $ / shares	22.67
Forfeitures (in dollars per share) | $ / shares	24.36
Outstanding, ending balance (in dollars per share) | $ / shares	$ 21.60