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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended April 30, 1996
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
---------------------- --------------------------
Commission File Number 0-20946
HEALTH MANAGEMENT SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
New York 13-2770433
- ------------------------------- ------------------------------------------
State of Incorporation (I.R.S. Employer Identification Number)
401 Park Avenue South, New York, New York 10016
- --------------------------------------------------------------------------------
(Address of principal executive offices, zip code)
(212) 685-4545
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Not Applicable
- --------------------------------------------------------------------------------
(Former name, former address, and former fiscal year, if changed since last
report.)
Indicate by check /x/ whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes x No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at May 31, 1996
- ----------------------------------- ----------------------------------
Common Stock, $.01 Par Value 17,056,199 Shares
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HEALTH MANAGEMENT SYSTEMS, INC.
INDEX TO FORM 10-Q
QUARTER ENDED APRIL 30, 1996
PART I FINANCIAL INFORMATION Page No.
Item 1 Financial Statements
Consolidated Balance Sheets as of April 30, 1996 (unaudited) 1
and October 31, 1995
Consolidated Statements of Operations (unaudited) for the 2
three month and six month periods ended April 30, 1996 and
April 30, 1995
Consolidated Statement of Shareholders' Equity (unaudited) 3
for the six month period ended April 30, 1996
Consolidated Statements of Cash Flows (unaudited) for the 4
three month and six month periods ended April 30, 1996 and
April 30, 1995
Notes to Interim Consolidated Financial Statements 5
(unaudited)
Item 2 Management's Discussion and Analysis of Results of Operations 7
and Financial Condition
PART II OTHER INFORMATION 10
SIGNATURES 12
EXHIBIT INDEX 13
3
HEALTH MANAGEMENT SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
($ IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
April 30, October 31,
1996 1995
----------- -----------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 6,744 10,801
Short-term investments 19,790 19,287
Accounts receivable, net:
Trade 43,455 31,517
Affiliates 1,591 113
------- ------
45,046 31,630
Other current assets 5,296 4,328
------- ------
Total current assets 76,876 66,046
Property and equipment, net 6,207 5,874
Intangible assets, net 5,351 5,461
Capitalized software costs, net 1,170 865
Investments in affiliates 8,027 7,673
Other assets 846 1,465
------- ------
Total assets $98,477 87,384
======= ======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $11,671 14,842
Deferred revenue 4,523 3,941
Deferred income taxes 6,274 5,620
------- ------
Total current liabilities 22,468 24,403
Other liabilities 2,077 1,739
Deferred income taxes 1,974 2,018
------- ------
Total liabilities 26,519 28,160
------- ------
Shareholders' equity:
Preferred stock - $.01 par value; 5,000,000 shares authorized;
none issued and outstanding 0 0
Common stock - $.01 par value; 45,000,000 shares authorized;
17,015,215 shares issued and outstanding at April 30, 1996;
16,390,762 shares issued and outstanding at October 31, 1995 170 164
Capital in excess of par value 54,262 48,481
Retained earnings 17,196 10,115
Unrealized appreciation on short-term investments 330 464
------- ------
Total shareholders' equity 71,958 59,224
------- ------
Commitments and contingencies
Total liabilities and shareholders' equity $98,477 87,384
======= ======
See accompanying notes to interim consolidated financial statements.
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HEALTH MANAGEMENT SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Three months ended Six months ended
April 30, April 30,
-------------------- -----------------
1996 1995 1996 1995
------- ------ ------ ------
Revenue:
Trade $23,361 18,587 46,599 37,357
Affiliates 2,216 2,454 4,368 4,669
------- ------ ------ ------
25,577 21,041 50,967 42,026
Cost of services:
Compensation 11,690 10,217 23,249 20,194
Data processing 2,107 1,865 4,262 3,578
Occupancy 1,737 1,591 3,407 3,212
Other 4,338 3,079 8,512 6,239
------- ------ ------ ------
19,872 16,752 39,430 33,223
------- ------ ------ ------
Operating margin before amortization of intangibles 5,705 4,289 11,537 8,803
Amortization of intangibles 55 55 110 135
------- ------ ------ ------
Operating income 5,650 4,234 11,427 8,668
Other income (expense):
Interest income, net 228 161 479 352
Merger related costs (489) (58) (489) (1,026)
Equity in earnings of affiliate 174 0 297 0
------- ------ ------ ------
(87) 103 287 (674)
Income before income tax expense 5,563 4,337 11,714 7,994
Income tax expense (2,225) (1,920) (4,633) (3,770)
------- ------ ------ ------
Net income $ 3,338 2,417 7,081 4,224
======= ====== ====== ======
Earnings per share data:
Net income per weighted average share of common stock outstanding $ 0.18 0.14 0.39 0.25
======= ====== ====== ======
Weighted average shares outstanding 18,305 17,362 18,157 17,214
======= ====== ====== ======
See accompanying notes to interim consolidated financial statements.
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HEALTH MANAGEMENT SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (UNAUDITED)
($ IN THOUSANDS)
Unrealized
Common Stock Appreciation
-------------------- Capital In (Depreciation) Total
Par Excess Of Retained on Short-term Shareholders'
Shares Value Par Value Earnings Investments Equity
----------- ------- ----------- --------- --------------- ------------
Balance at October 31, 1995 16,390,762 $164 48,481 10,115 464 59,224
Net income 0 0 0 7,081 0 7,081
Stock option activity 488,250 5 3,235 0 0 3,240
Employee Stock Purchase Plan activity 136,203 1 1,766 0 0 1,767
Disqualifying dispositions 0 0 780 0 0 780
Depreciation on
short-term investments 0 0 0 0 (134) (134)
========== ==== ====== ====== ==== ======
Balance at April 30, 1996 17,015,215 $170 54,262 17,196 330 71,958
========== ==== ====== ====== ==== ======
See accompanying notes to interim consolidated financial statements.
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HEALTH MANAGEMENT SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(IN THOUSANDS)
Three months ended Six months ended
April 30, April 30,
------------------ ------------------
1996 1995 1996 1995
------- ------ ------- ------
Operating activities:
Net income $ 3,338 2,417 7,081 4,224
Adjustments to reconcile net income to net cash used in
operating activities:
Depreciation and amortization 791 689 1,511 1,381
Amortization of intangibles 55 55 110 135
Amortization of unearned compensation 0 4 0 7
Gain on disposal of assets 0 0 0 (19)
Deferred tax expense 65 179 610 401
Equity in earnings of affiliate (175) 0 (298) 0
Disqualifying dispositions 373 0 780 0
Unrealized appreciation on short-term investments 0 0 0 8
Other 0 0 0 (3)
Changes in assets and liabilities:
Increase in accounts receivable (8,281) (4,881) (13,416) (8,654)
Decrease (increase) in other current assets 97 (710) (968) (257)
(Decrease) increase in accounts payable and accrued expenses (1,051) 715 (3,171) 199
(Decrease) increase in deferred revenue (661) 295 582 1
Increase in other assets and liabilities, net 189 31 957 764
------- ------ ------- ------
Total adjustments (8,598) (3,623) (13,303) (6,037)
------- ------ ------- ------
Net cash used in operating activities (5,260) (1,206) (6,222) (1,813)
------- ------ ------- ------
Investing activities:
Capital asset expenditures (1,043) (216) (1,598) (516)
Software capitalization (272) (190) (551) (444)
Investment in affiliates (56) 0 (56) (522)
Purchase of short-term investments (393) 0 (637) (4,958)
Proceeds from sale of short-term investments 0 1,103 0 1,788
------- ------ ------- ------
Net cash (used in) provided by investing activities (1,764) 697 (2,842) (4,652)
------- ------ ------- ------
Financing activities:
Proceeds from issuance of common stock 194 46 1,767 892
Proceeds from exercise of stock options 1,731 487 3,240 813
Repayment of notes payable 0 0 0 (342)
------- ------ ------- ------
Net cash provided by financing activities 1,925 533 5,007 1,363
------- ------ ------- ------
Net (decrease) increase in cash and cash equivalents (5,099) 24 (4,057) (5,102)
Cash and cash equivalents at beginning of period 11,843 9,209 10,801 14,082
Adjustment to cash to reflect change in Health Care
microsystems, Inc. fiscal year 0 0 0 253
======= ====== ======= ======
Cash and cash equivalents at end of period $ 6,744 9,233 6,744 9,233
======= ====== ======= ======
See accompanying notes to interim consolidated financial statements.
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HEALTH MANAGEMENT SYSTEMS, INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. INTERIM UNAUDITED FINANCIAL INFORMATION
Health Management Systems, Inc. ("HMS" or the "Company") management is
responsible for the accompanying unaudited interim consolidated financial
statements and the related information included in these notes to the
interim consolidated financial statements. In the opinion of management, the
interim consolidated financial statements reflect normal recurring
adjustments, necessary for the fair presentation of the Company's financial
position and results of operations and cash flows for the periods presented.
Results of operations of interim periods are not necessarily indicative of
the results to be expected for the entire year.
These interim consolidated financial statements should be read in
conjunction with the audited supplemental consolidated financial statements
of the Company as of and for the year ended October 31, 1995 included in the
Company's current report on Form 8-K dated April 29, 1996 as filed with the
Securities and Exchange Commission (the "Commission").
2. MERGER WITH CDR ASSOCIATES, INC.
Effective April 29, 1996 (the "CDR Effective Time"), the Company consummated
a merger with CDR Associates, Inc. ("CDR"), in accordance with an Agreement
and Plan of Merger (the "CDR Merger Agreement") among the Company, CDR
Acquisition Corp. ("CDR Sub"), a wholly-owned subsidiary of the Company,
CDR, and all Shareholders of CDR (the "CDR Principals"). CDR is a supplier
of third-party liability recovery services to the healthcare industry.
Pursuant to the CDR Merger Agreement, CDR merged with CDR Sub (the "CDR
Merger"), with the result that CDR became a wholly-owned subsidiary of the
Company. Each share of CDR capital stock issued and outstanding immediately
prior to the CDR Effective Time of the CDR Merger was converted into 460
shares of the Company's common stock, or an aggregate of 460,000 shares. The
CDR Merger has been accounted for using the pooling of interests method of
accounting.
The CDR Merger Agreement provides that the Company will undertake to
register the common stock issued to effect the CDR Merger with the
Commission for resale under the Securities Act of 1933. Moreover, the CDR
Merger Agreement contains not-to-compete provisions which prohibit the CDR
Principals from competing with the businesses of CDR and the Company during
their employment and for a period of three years thereafter.
3. SUPPLEMENTAL CASH FLOW DISCLOSURES
Cash paid for income taxes during the quarters ended April 30, 1996 and 1995
was $2,570,000 and $2,645,000, respectively. Cash paid for income taxes
during the six months ended April 30, 1996 and 1995 was $4,444,000 and
$2,892,000, respectively.
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4. SUBSEQUENT EVENTS
On May 28, 1996, the Company entered into an agreement with HHL Financial
Services ("HHL"), an affiliated company, which allowed the Company to offset
its receivables and payables with HHL through May 28, 1996. Such amounts at
April 30, 1996 netted to $1,802,000 receivable to the Company from HHL.
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ITEM 2--MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION--THREE MONTH AND SIX MONTH PERIODS ENDED APRIL 30, 1996 AND
1995
OPERATING RESULTS
THREE MONTHS ENDED APRIL 30, 1996
Revenue for the quarter ended April 30, 1996 was $25,577,000, an increase of
$4,536,000 or 22% over the comparable period in 1995, and represented the
Company's ninth consecutive quarterly revenue increase. The Company's
proprietary services, Retroactive Claims Reprocessing (RCR)sm, Comprehensive
Account Management Services (CAMS)sm, and Third Party Liability Recovery
(TPLR)sm, collectively comprise the most significant of the Company's services,
accounting for $18,988,000 or 74% of the Company's consolidated revenue for the
second quarter of 1996, compared to $15,796,000 or 75% of consolidated revenue
for the comparable prior year quarter. Revenue from proprietary services
increased 20% over the second quarter of the prior year principally due to
revenue generated by the Company's RCR engagements. The Company's Managed Care
Support (MCS) services revenue, rendered by the Company's Health Care
microsystems, Inc. subsidiary ("HCm"), was $4,341,000, an increase of $1,174,000
or 37% over the comparable prior year period. The Company's Electronic Data
Interchange (EDI) services revenue remained stable at $2,248,000 for the second
quarter of 1996, an increase of $170,000 or 8% over the second quarter of 1995.
Cost of services for the second quarter of 1996 was $19,872,000, an increase of
$3,120,000 or 19% over the comparable period in 1995. Compensation expense, the
Company's largest expense component, totalled $11,690,000, an increase of
$1,473,000 or 14% over the comparable prior period. The increase in compensation
expense reflected (a) a 16% increase in the average number of employees in
support of business growth and expansion, and (b) routine salary and benefit
cost increases.
Data processing expense for the second quarter of 1996 was $2,107,000, an
increase of $242,000 or 13% over the comparable period in 1995. This increase
was attributable to investments in purchased software associated with the
continuing enhancement of the Company's various data processing environments.
Occupancy expense for the second quarter of 1996 was $1,737,000, an increase of
$146,000 or 9% over the comparable period in 1995. This increase was primarily
due to expansion of the Company's facilities across the country. Other operating
expense for the second quarter of 1996 was $4,338,000, an increase of $1,259,000
or 41% over the comparable prior period. This increase was principally
attributable to higher levels of costs directly associated with employee related
expenses and professional fees.
Operating margin before amortization of intangible assets for the quarter ended
April 30, 1996 was $5,705,000, an increase of $1,416,000 or 33% over the
$4,289,000 amount realized in the comparable period in 1995. This represents an
operating margin rate during the second quarter of 1996 of 22.3% compared to the
20.4% rate experienced in the second quarter of 1995. This increase is a result
of revenue increasing at a higher rate than total operating expenses.
Amortization of intangible assets for the second quarter of 1996 was $55,000,
equal to the second quarter of 1995.
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Net interest and other income of $228,000 in the second quarter of 1996
increased by $67,000 from $161,000 in the second quarter of 1995, primarily as a
function of a higher interest rate environment. Merger related costs of $489,000
were incurred in the second quarter of 1996 in connection with the CDR Merger in
April 1996. Equity in the earnings of affiliate was $174,000 for the second
quarter of 1996. There was no comparable investment during the second quarter of
1995.
The Company's income tax expense for the second quarter of 1996 was $2,225,000,
resulting in an effective tax rate of approximately 40%. This compares to income
tax expense of $1,920,000 and an effective tax rate of approximately 44% for the
second quarter of 1995. The 16% increase in income tax expense was primarily
driven by the Company's improved pre-tax profitability. The decrease in
effective tax rate was primarily due to the increased contribution to income
before taxes from CDR and equity in earnings of affiliate which are both
non-taxable. Prior to the acquisition of CDR, CDR was an S Corporation.
Therefore, CDR's net income was not taxable at the corporate level.
As a result of the Company's expanded revenue base and improved operating
results, net income for the three month period ended April 30, 1996 rose to
$3,338,000, a 38% increase when compared to $2,417,000 reported in the
comparable prior year period.
SIX MONTHS ENDED APRIL 30, 1996
Revenue for the six months ended April 30, 1996 was $50,967,000, an increase of
$8,941,000 or 21% over the 1995 period. Revenue from proprietary services grew
$7,280,000 or 23%, to $38,373,000, principally due to revenue generated by the
Company's TPLR and RCR engagements. Revenue from MCS services was $8,349,000, an
increase of $1,449,000 or 21% over the comparable prior year period. Revenue
from EDI services was $4,245,000, an increase of $212,000 or 5% from last year.
Cost of services for the six months ended April 30, 1996 was $39,430,000, an
increase of $6,207,000 or 19% over the 1995 period. Compensation expense of
$23,249,000 increased $3,055,000 or 15% compared to 1995. This increase
reflected (a) a 15% increase in the average number of employees in support of
business growth and expansion, and (b) routine salary and benefit cost
increases.
Data processing expense was $4,262,000, an increase of $684,000 or 19% over the
comparable period in 1995. This increase was attributable to costs associated
with the continuing enhancement of the Company's data processing environments.
Occupancy expense was $3,407,000, an increase of $195,000 or 6% over the
comparable period in 1995. This increase related primarily to the expansion of
the Company's satellite facilities. Other operating expense was $8,512,000, an
increase of $2,273,000 or 36% over 1995. This increase was principally
attributable to higher levels of costs directly associated with professional
fees, recruiting and training costs for new employees, and bad debt expense.
Operating margin before amortization of intangible assets for the six months
ended April 30, 1996 was $11,537,000, an increase of $2,734,000 or 31% over the
$8,803,000 amount realized in the comparable period in 1995. The Company's
operating margin rate before amortization of intangible assets was 22.6%, as
compared to 20.9% in 1995. This increase is the result of revenue increasing at
a higher rate than total operating expenses.
Amortization of intangible assets for the six months ended April 30, 1996 was
$110,000, a decrease of $25,000 compared to the same period in 1995.
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Net interest and other income of $479,000 in the six months ended April 30, 1996
increased by $127,000 from $352,000 in the comparable period in 1995, primarily
due to the investment in higher interest yielding securities and the
implementation of an enhanced cash management system. Merger related costs of
$489,000 were incurred in the six months ended April 30, 1996 related to the
merger with CDR in April 1996. Merger related costs of $1,026,000 were incurred
in the six months ended April 30, 1995 related to the merger with HCm in
February 1995.
The Company's income tax expense for the six months ended April 30, 1996 was
$4,633,000, resulting in an effective tax rate of approximately 40%. This
compares to income tax expense of $3,770,000 and an effective tax rate of
approximately 47% for the prior year. The 23% increase in income tax expense was
primarily driven by the Company's improved pre-tax profitability. The effective
tax rate has decreased due to an increase of non taxable income as a result of
CDR and the equity in the earnings of affiliate. This was offset by a decrease
in non-deductible merger related costs for the six months ended April 30, 1996.
As a result of the Company's expanded revenue base, improved operating results,
and increased interest income, net income for the six months ended April 30,
1996 rose to $7,081,000, a 68% increase when compared to $4,224,000 reported in
the comparable prior year period.
LIQUIDITY AND CAPITAL RESOURCES
At April 30, 1996, the Company had $54,408,000 in net working capital, an
increase of $12,765,000 over the level at October 31, 1995. The Company's
principal sources of liquidity at April 30, 1996 consisted of cash, cash
equivalents, and short-term investments aggregating $26,534,000 and net accounts
receivable of $45,046,000. Accounts receivable at April 30, 1996 reflected an
increase of $13,416,000 or 42% over the October 31, 1995 balance. This increase
is due to changes in the Company's product revenue mix which create a longer
liquidation cycle. Management does not believe that this increase reflects
adversely on the quality or collectibility of the Company's accounts receivable.
The Company anticipates that its current working capital position, funds
generated from operations, and credit facility will be sufficient to meet
ongoing working capital, debt service, capital expenditure, and acquisition
needs in the foreseeable future. Nonetheless, expansion of the Company's
business through acquisitions may require the Company to seek additional
financing on relatively short notice. As of April 30, 1996, the Company was
involved in discussions to renegotiate the credit facility which was due to
expire.
* * * * *
This document contains forward-looking statements. Such statements by their
nature entail various risks, reflecting the dynamic, complex, and rapidly
changing nature of the healthcare industry. Results actually achieved may
differ materially from those currently anticipated. The various risks include
but are not necessarily limited to: (i) the continued ability of HMS to grow
internally or by acquisition, (ii) the success experienced in integrating
acquired businesses into the HMS group of companies, (iii) changing conditions
in the healthcare industry which could simplify the reimbursement process
and/or data management requirements associated with the healthcare transfer
payment process and adversely affect HMS's business, (iv) government regulatory
and political pressures which could reduce the rate of growth of healthcare
expenditures, (v) competitive actions by other companies, and (vi) other risks,
as noted in HMS's registration statements and periodic reports filed with the
Commission.
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HEALTH MANAGEMENT SYSTEMS, INC. AND SUBSIDIARIES
PART II--OTHER INFORMATION
Item 1 Legal Proceedings--No material legal proceedings are pending.
Item 2 Changes in Securities--On March 5, 1996, the shareholders of the
Company approved an amendment to the Company's Certificate of
Incorporation which:
i. Reduced the shares of preferred stock authorized for
issuance from 5,015,000 to 5,000,000 shares; and
ii. Increased the shares of common stock authorized for
issuance from 20,000,000 to 45,000,000 shares.
Item 3 Defaults Upon Senior Securities--None
Item 4 Submission of Matters to a Vote of Security Holders
The Annual Meeting ("the Meeting") of the shareholders of the Company
was held on March 5, 1996. The 13,532,888 shares of common stock (the
"Common Stock") present at the Meeting out of a total of 16,145,192
shares outstanding and entitled to vote acted as follows with respect
to the following proposals:
i. Approved, by a vote of 13,081,768 shares for Russell L.
Carson, 13,067,046 shares for Robert M. Holster, 13,067,046
shares for John W. McIntyre and 13,081,090 shares for Galen
D. Powers, the election of the foregoing individuals as
directors of the Company, to serve for terms expiring at
the 1998 annual meeting of shareholders. In addition, the
vote of 451,120 shares was withheld with respect to the
election of all of the nominees;
ii. Approved, by a vote of 10,389,328 shares for, 2,899,959
shares against, and 243,601 shares abstained, an amendment
of the Company's Certificate of Incorporation to increase
the number of authorized shares of Common Stock and
decrease the number of authorized shares of preferred
stock;
iii. Approved, by a vote of 8,689,322 shares for, 3,889,411
shares against, and 954,175 shares abstained, a proposal to
amend the Company's Stock Option and Restricted Stock
Purchase Plan to increase the number of shares of Common
Stock available for issuance thereunder; and
iv. Ratified, by a vote of 13,520,065 shares for, 9,553 shares
against, and 3,271 shares abstained, the selection of KPMG
Peat Marwick LLP as the Company's independent certified
public accountants for fiscal year 1996.
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Item 5 Other Information--Condensed Consolidated Statement of Operations,
including CDR Associates, Inc., for the Month ended May 31, 1996.
Health Management Systems, Inc.
Condensed Consolidated Statement of Operations
For the month ended May 31, 1996
Total Revenue $8,289,000
==========
Net Income $1,059,000
==========
Item 6 Exhibits and Reports on Form 8-K
(a) Exhibits--See Exhibit Index
(b) Reports on Form 8-K
Current Report on Form 8-K, dated April 29, 1996 - Item 2.
Acquisition or Disposition of Assets; Item 7. Financial
Statements and Exhibits.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: June 13, 1996 HEALTH MANAGEMENT SYSTEMS, INC.
--------------------------------
(Registrant)
/s/ Phillip Siegel
------------------------------
Phillip Siegel
Vice President and
Chief Financial Officer
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HEALTH MANAGEMENT SYSTEMS, INC. AND SUBSIDIARIES
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
11 Computation of Earnings Per Share
27 Financial Data Schedule, which is submitted electronically to the Securities
and Exchange Commission for informational purposes only and not filed
13