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Advisory Board Company (ABCO) filed Quarterly Report for the period ended 2011-09-30.
Advisory Board Company has a market cap of $1.17 billion; its shares were traded at around $71.95 with a P/E ratio of 47.6 and P/S ratio of 4.1. Advisory Board Company had an annual average earning growth of 1.4% over the past 10 years.
This is the annual revenues and earnings per share of ABCO over the last 10 years. For detailed 10-year financial data and charts, go to 10-Year Financials of ABCO.
Highlight of Business Operations:
Overview. Net income increased from $4.9 million in the three months ended September 30, 2010 to $5.2 million in the three months ended September 30, 2011. The increase in net income was due to a 30.7% increase in revenues during the quarter, the effect of which was partially offset by $2.3 million in fair value adjustments to our acquisition-related earn-out liabilities, increases of $15.6 million in cost of services due to new and growing programs, increases of $2.4 million in marketing and member relations due to increased sales teams, and increases of $2.2 million in general and administrative expense related to increased new product development costs. Net income decreased from $9.5 million in the six months ended September 30, 2010 to $9.1 million in the six months ended September 30, 2011. The decrease in net income was due primarily to $5.5 million in fair value adjustments to our acquisition-related earn-out liabilities, offset in part by an increase in revenues of 26.7% during the six months ended September 30, 2011.Adjusted Net Income and Adjusted EBITDA. Adjusted net income increased 35.2% from $7.1 million in the three months ended September 30, 2010 to $9.7 million in the three months ended September 30, 2011, and adjusted EBITDA increased 42.2% from $12.1 million in the three months ended September 30, 2010 to $17.2 million in the three months ended September 30, 2011. Adjusted net income increased 26.4% from $14.3 million in the six months ended September 30, 2010 to $18.1 million in the six months ended September 30, 2011, and adjusted EBITDA increased 29.9% from $24.4 million in the six months ended September 30, 2010 to $31.7 million in the six months ended September 30, 2011. The increases in adjusted net income and adjusted EBITDA were due to increased revenue, which was partially offset by increasing new product development costs, including the costs associated with the launch of new programs and with an increase in the number of new sales teams.
Cost of services. Cost of services increased from $36.9 million in the three months ended September 30, 2010 to $52.5 million in the three months ended September 30, 2011. As a percentage of revenue, cost of services was 51.9% for the three months ended September 30, 2010 and 56.5% for the three months ended September 30, 2011. The increase of $15.6 million for the three months ended September 30, 2011 was primarily due to $2.3 million in fair value adjustments to our acquisition-related earn-out liabilities, as well as an increase of $3.5 million from programs launched or acquired in 2011, and an increase of $3.1 million for programs launched or acquired in 2010. Cost of services increased from $71.9 million in the six months ended September 30, 2010 to $98.0 million in the six months ended September 30, 2011. As a percentage of revenue, cost of services was 52.2% for the six months ended September 30, 2010 and 56.1% for the six months ended September 30, 2011. The increase of $26.1 million for the six months ended September 30, 2011 was primarily due to $5.5 million in fair value adjustments to our acquisition-related earn-out liabilities, as well as an increase of $4.5 million from programs launched or acquired in 2011, and an increase of $5.5 million for programs launched or acquired in 2010.
Member relations and marketing. Member relations and marketing expense increased 15.4% from $16.1 million in the three months ended September 30, 2010 to $18.5 million in the three months ended September 30, 2011. As a percentage of revenue, member relations and marketing expense in the three months ended September 30, 2010 and 2011 was 22.6% and 19.9%, respectively. Member relations and marketing expense increased 16.8% from $31.3 million in the six months ended September 30, 2010 to $36.5 million in the six months ended September 30, 2011. As a percentage of revenue, member relations and marketing expense in the six months ended September 30, 2010 and 2011 was 22.7% and 20.9%, respectively. The increases in member relations and marketing expense were primarily due to an increase in sales staff and related travel and other associated costs, as well as an increase in member relations personnel and related costs required to serve the expanding membership base. During the three months ended September 30, 2011 and 2010, we had an average of 145 and 131 new business development teams, respectively.
General and administrative. General and administrative expense increased from $9.7 million in the three months ended September 30, 2010 to $11.9 million in the three months ended September 30, 2011. As a percentage of revenue, general and administrative expense decreased to 12.8% in the three months ended September 30, 2011 from 13.6% in the three months ended September 30, 2010. The increase of $2.2 million in general and administrative costs for the three months ended September 30, 2011 was primarily due an increase in new product development costs of $1.3 million, which includes $0.5 million in legal costs relating to our acquisition of PivotHealth and formation of Evolent Health, Inc., or “Evolent,” and, to a lesser extent, costs incurred to improve our finance and IT infrastructure to support our growing employee base. General and administrative expense increased from $17.9 million in the six months ended September 30, 2010 to $22.7 million in the six months ended September 30, 2011. As a percentage of revenue, general and administrative expense was 13.0% in the six months ended September 30, 2010 and 2011. The increase of $4.8 million in general and administrative costs for the six months ended September 30, 2011 was primarily due an increase in new product development costs of $2.3 million, which includes $0.7 million in legal costs relating to our acquisitions of PivotHealth and Cielo MedSolutions, LLC, or “Cielo,” and formation of Evolent and, to a lesser extent, increased recruiting, human resources, and finance personnel costs incurred to support our growing employee base.
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