Change Healthcare Inc. Reports Fourth Quarter and Full Year Fiscal 2022 Financial Results
05/25/2022 - 04:15 PM
Strong revenue and cash flow growth driven by continued momentum in core business and investment in expanded capabilities
Total revenue of $920M , including record solutions revenue of $859M ; solutions revenue growth of 6.8% driven by increased volume, COVID-19 activities and new sales
NASHVILLE, Tenn. --(BUSINESS WIRE)--
Change Healthcare Inc. (Nasdaq: CHNG) (the “Company” or “Change Healthcare”), a leading healthcare technology company, today reported financial results for the fourth quarter and fiscal year ended March 31, 2022 .
“The fourth quarter performance demonstrates the execution of our growth strategy, delivering on our financial objectives while continuing to make investments to advance our capabilities and support our customers and employees,” said Neil de Crescenzo , president and chief executive officer. “As we enter fiscal 2023, we remain focused on developing and delivering innovative solutions for healthcare providers, payers, partners and consumers to improve clinical, financial, and care outcomes.”
Fiscal 2022 Fourth Quarter Highlights:
Recent Business Highlights
Signed a strategic partnership with Luma Health that will utilize Luma's KLAS-recognized Healthcare Engagement Engine™ alongside Change Healthcare’s proven revenue cycle capabilities to develop new patient engagement solutions that seamlessly connect every touchpoint across the patient journey.
Integrated predictive analytics into InterQual AutoReview, enabling the solution to apply artificial intelligence to real-time EHR data and provide data-driven predictions on which level of care status is right for each patient.
Awarded “Best in KLAS” for Payer IT Consulting Services for the third time in four years.
Impact of McKesson Exit on Comparability of Results
On March 10, 2020 , Change Healthcare Inc. acquired the interest in Change Healthcare LLC (“the Joint Venture”) previously held by McKesson. The transaction resulted in Change Healthcare Inc. acquiring control of the Joint Venture, which was accounted for as a business combination resulting in fair value adjustments to various assets and liabilities, including deferred revenue, goodwill, and intangible assets.
Financial Results for Fourth Quarter of Fiscal 2022
Q4 2022
Q4 2021
Total Revenue1
$920.1 million
$855.2 million
Solutions Revenue1
$859.2 million
$804.3 million
Net Income (Loss)
$7.1 million
$(13.1) million
Diluted EPS2
$0.02
$(0.04)
Adjusted EBITDA
$282.3 million
$272.0 million
Adjusted Net Income
$130.3 million
$134.0 million
Adjusted Diluted EPS2
$0.39
$0.42
1. Total Revenue and Solutions Revenue for fourth quarter of fiscal 2021 included the impact of fair value adjustments to deferred revenue resulting from the McKesson exit, which reduced revenue recognized by $10.1 million .
2. Diluted EPS and Adjusted Diluted EPS for the current period are based on 331 million shares compared to 321 million shares in the fourth quarter of fiscal 2021.
Solutions revenue in the fourth quarter grew 6.8% compared to the fourth quarter of fiscal 2021, driven by volume growth and incremental revenue from COVID-19 testing and new sales. Adjusted EBITDA grew 3.8% over the same period, reflecting the aforementioned revenue growth, partially offset by investments to support business initiatives.
Cash Flow and Balance Sheet Highlights
Net cash provided by operating activities was $696.9 million and free cash flow was $420.6 million , in each case, for the twelve months ended March 31, 2022 . For the twelve months ended March 31, 2021 , net cash provided by operating activities and free cash flow were $586.2 million and $339.8 million , respectively. Free cash flow increased 23.8% in the current year compared to fiscal 2021.
Net cash provided by operating activities and free cash flow each are affected by pass-thru funds we receive from certain pharmaceutical industry participants in advance of our obligation to remit these funds to participating retail pharmacies. Such pass-thru funds on hand increased by $12.9 million in the twelve months ended March 31, 2022 , increasing free cash flow for the period by that amount, and decreased by $12.8 million for the twelve months ended March 31, 2021 .
The Company ended the quarter with approximately $252.3 million of cash and cash equivalents, and approximately $4,590.1 million of total debt. Subsequent to the end of the quarter, the Company repaid $100.0 million of its Senior Notes.
Guidance
Due to the proposed transaction with OptumInsight , we will no longer be providing financial guidance.
Update on Proposed Merger with OptumInsight
On January 5, 2021 , OptumInsight , a diversified health services company and part of UnitedHealth Group, and Change Healthcare agreed to combine (the “Merger”). Under the terms of the merger agreement, UnitedHealth Group, through a wholly-owned subsidiary, will acquire all of the outstanding shares of Change Healthcare common stock for $25.75 per share in cash. The Boards of Directors of both UnitedHealth Group and Change Healthcare have unanimously approved the terms of the Merger, and Change Healthcare stockholders voted to approve the Merger on April 13, 2021 . The closing of the Merger is subject to applicable regulatory approval and other customary closing conditions.
On February 24, 2022 , the Department of Justice (“DOJ”) and certain other parties commenced litigation to block the Merger, and the Company continues to support UnitedHealth Group in working toward closing the Merger. On April 4, 2022 , the parties to the merger agreement entered into a waiver pursuant to which, among other things, Change Healthcare and UnitedHealth Group each waived its right to terminate the merger agreement until the earlier of (i)the tenth business day following a final order issued by the U.S. District Court for the District of Columbia with respect to the complaint filed by the DOJ that prohibits the consummation of the Merger and (ii) December 31, 2022 . OptumInsight will pay a $650 million fee to Change Healthcare in the event the Merger is unable to be completed because of the decision issued by the U.S. District Court for the District of Columbia upon completion of the trial that is scheduled to begin on August 1, 2022 .
Additionally, the Company will be permitted to declare and pay a one-time special dividend of up to $2.00 in cash per each issued and outstanding share of its common stock, with a record date and payment date to be determined in the sole discretion of the Company’s Board of Directors (or a committee thereof). The Company expects to pay the dividend at or about the time of closing the Merger.
On April 22, 2022 , UnitedHealth Group, as seller, entered into an equity purchase agreement and related agreements relating to the sale of the Company’s claims editing business to an affiliate of investment funds of TPG Capital for a base purchase price in cash equal to $2.2 billion (subject to customary adjustments). Consummation of the transaction is contingent on a number of conditions, including the consummation of the Merger.
Webcast Information
Change Healthcare will host a conference call on Thursday, May 26, 2022 , at 8:00 a.m. ET . Due to the previously announced transaction with OptumInsight , the Company will not be taking questions during the conference call.
Investors and other interested parties are invited to listen to the conference call via the Company's website at https://ir.changehealthcare.com/ . The webcast will be available for on-demand listening at the aforementioned URL until May 26, 2023 .
About Change Healthcare
Change Healthcare (Nasdaq: CHNG) is a leading healthcare technology company, focused on insights, innovation, and accelerating the transformation of the U.S. healthcare system through the power of the Change Healthcare platform. We provide data and analytics-driven solutions to improve clinical, financial, administrative, and patient engagement outcomes in the U.S. healthcare system. Learn more at changehealthcare.com .
CHNG-IR
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the financial condition, results of operations and businesses of Change Healthcare . Some of these statements can be identified by terms and phrases such as “anticipate,” “believe,” “intend,” “estimate,” “expect,” “continue,” “could,” “should,” “may,” “plan,” “project,” “predict” and similar expressions. Change Healthcare cautions readers of this press release that such “forward looking statements,” including without limitation, those relating to the timing of the proposed merger and Change Healthcare’s future business prospects, revenue, working capital, liquidity, capital needs, interest costs and income, wherever they occur in this press release or in other statements attributable to Change Healthcare , are necessarily estimates reflecting the judgment of Change Healthcare’s senior management and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the “forward looking statements.”
Factors that could cause Change Healthcare’s actual results to differ materially from those expressed or implied in such forward-looking statements include, but are not limited to, the inability to complete the proposed merger due to the failure to satisfy the conditions to the completion of the proposed merger, including that a governmental entity may prohibit, delay or refuse to grant approval for the consummation of the transaction; risks related to disruption of management’s attention from Change Healthcare’s ongoing business operations due to the transaction; the effect of the announcement of the proposed merger on Change Healthcare’s operations, results and business generally; the risk that the proposed merger will not be consummated in a timely manner, exceeding the expected costs of the merger; the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement; macroeconomic and industry trends and adverse developments in the debt, consumer credit and financial services markets; uncertainty and risks related to the impact of the COVID-19 pandemic (including the rise of COVID-19 variant strains such as the Delta and Omicron variants) on the national and global economy, Change Healthcare’s business, suppliers, customers, and employees; Change Healthcare’s ability to retain and recruit key management personnel and other talent (including while the proposed merger is pending); Change Healthcare’s ability to retain or renew existing customers and attract new customers; Change Healthcare’s ability to connect a large number of payers and providers; Change Healthcare’s ability to provide competitive services and prices while maintaining its margins; further consolidation in Change Healthcare’s end-customer markets; Change Healthcare’s ability to effectively manage its costs; Change Healthcare’s ability to effectively develop and maintain relationships with its channel partners; Change Healthcare’s ability to timely develop new services and improve existing solutions; Change Healthcare’s ability to deliver services timely without interruption; a decline in transaction volume in the U.S. healthcare industry; Change Healthcare’s ability to maintain access to its data sources; Change Healthcare’s ability to maintain the security and integrity of its data; Change Healthcare’s reliance on key management personnel; Change Healthcare’s ability to manage and expand its operations and keep up with rapidly changing technologies; the ability of outside service providers and key vendors to fulfill their obligations to Change Healthcare ; risks related to international operations; Change Healthcare’s ability to protect and enforce its intellectual property, trade secrets and other forms of unpatented intellectual property; Change Healthcare’s ability to defend its intellectual property from infringement claims by third parties; government regulation and changes in the regulatory environment; changes in local, state, federal and international laws and regulations, including related to taxation; economic and political instability in the U.S. and international markets where Change Healthcare operates; the economic impact of escalating global tensions, including the conflict between Russia and Ukraine , and the adoption or expansion of economic sanctions or trade restrictions; litigation or regulatory proceedings; losses against which Change Healthcare does not insure; Change Healthcare’s ability to make acquisitions and integrate the operations of acquired businesses; Change Healthcare’s ability to make timely payments of principal and interest on its indebtedness; Change Healthcare’s ability to satisfy covenants in the agreements governing its indebtedness; Change Healthcare’s ability to maintain liquidity; the potential dilutive effect of future issuance of shares of Change Healthcare’s common stock; the impact of anti-takeover provisions in Change Healthcare’s organizational documents and under Delaware law, which may discourage or delay acquisition attempts; Change Healthcare’s adoption of new, or amendments to existing, accounting standards, and other risks. For a more detailed discussion of these factors, see the information under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Change Healthcare’s most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on May 27, 2021 as such factors may be updated from time to time in our periodic filings with the SEC .
Change Healthcare’s forward-looking statements speak only as of the date of this press release or as of the date they are made. Change Healthcare disclaims any intent or obligation to update any “forward looking statement” made in this press release to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time.
Non-GAAP Financial Measures
In the Company’s earnings releases, prepared remarks, conference calls, slide presentations and webcasts, there may be use or discussion of non-GAAP financial measures. We believe such measures provide supplemental information to investors with regards to our operating performance and assist investors’ ability to compare our financial results to those of other companies in the same industry. The GAAP financial measure most directly comparable to each non-GAAP financial measure used or discussed, and a reconciliation of the differences between the comparable GAAP financial measure and each non-GAAP financial measure are included in this press release after the consolidated financial statements. These non-GAAP financial measures are calculated and presented on the basis of methodologies other than in accordance with GAAP. These non-GAAP financial measures should be considered only as supplemental to, and not as superior to, financial measures prepared in accordance with GAAP and may be defined and calculated differently by others in the same industry.
Consolidated Statements of Operations
(unaudited and amounts in thousands, except share and per share amounts)
Three Months Ended March 31 ,
2022
2021
Revenue:
Solutions revenue
$
859,194
$
804,299
Postage revenue
60,937
50,861
Total revenue
920,131
855,160
Operating expenses:
Cost of operations (exclusive of depreciation and amortization below)
362,459
357,506
Research and development
72,306
58,926
Sales, marketing, general and administrative
186,288
187,606
Customer postage
60,937
50,861
Depreciation and amortization
179,345
154,495
Accretion and changes in estimate with related parties, net
5,967
2,744
Gain on sale of businesses
—
1,344
Total operating expenses
867,302
813,482
Operating income (loss)
52,829
41,678
Non-operating (income) and expense
Interest expense, net
56,959
59,508
Loss on extinguishment of debt
—
1,289
Other, net
2,078
(2,253)
Total non-operating (income) and expense
59,037
58,544
Income (loss) before income tax provision (benefit)
(6,208)
(16,866)
Income tax provision (benefit)
(13,298)
(3,776)
Net income (loss)
$
7,090
$
(13,090)
Net income (loss) per common share:
Basic
$
0.02
$
(0.04)
Diluted
$
0.02
$
(0.04)
Weighted average common shares outstanding:
Basic
325,002,702
321,393,600
Diluted
330,822,467
321,393,600
Consolidated Statements of Operations
(unaudited and amounts in thousands, except share and per share amounts)
Year Ended March 31 ,
2022
2021
Revenue:
Solutions revenue
$
3,261,203
$
2,893,889
Postage revenue
219,612
196,532
Total revenue
3,480,815
3,090,421
Operating expenses:
Cost of operations (exclusive of depreciation and amortization below)
1,415,267
1,335,075
Research and development
277,930
227,036
Sales, marketing, general and administrative
734,554
686,645
Customer postage
219,612
196,532
Depreciation and amortization
681,808
591,048
Accretion and changes in estimate with related parties, net
14,833
13,158
Gain on sale of businesses
—
(59,143)
Total operating expenses
3,344,004
2,990,351
Operating income (loss)
136,811
100,070
Non-operating (income) and expense
Interest expense, net
234,244
245,241
Loss on extinguishment of debt
3,885
8,924
Other, net
4,683
(6,698)
Total non-operating (income) and expense
242,812
247,467
Income (loss) before income tax provision (benefit)
(106,001)
(147,397)
Income tax provision (benefit)
(48,611)
(35,187)
Net income (loss)
$
(57,390)
$
(112,210)
Net income (loss) per common share:
Basic and diluted
$
(0.18)
$
(0.35)
Weighted average common shares outstanding:
Basic and diluted
323,996,600
320,771,789
Consolidated Balance Sheets
(unaudited and amounts in thousands, except share and per share amounts)
March 31, 2022
March 31, 2021
Assets
Current assets:
Cash and cash equivalents
$
252,298
$
113,101
Accounts receivable, net
720,122
732,614
Contract assets, net
162,828
132,856
Prepaid expenses and other current assets
177,659
140,258
Total current assets
1,312,907
1,118,829
Property and equipment, net
141,340
174,370
Operating lease right-of-use assets, net
65,680
93,412
Goodwill
4,112,904
4,108,792
Intangible assets, net
3,699,603
4,187,072
Other noncurrent assets, net
600,061
430,141
Total assets
$
9,932,495
$
10,112,616
Liabilities
Current liabilities:
Accounts payable
$
104,273
$
57,449
Accrued expenses
461,506
484,293
Deferred revenue
469,098
436,666
Due to related parties, net
13,057
10,766
Current portion of long-term debt
10,006
27,339
Current portion of operating lease liabilities
21,726
30,608
Total current liabilities
1,079,666
1,047,121
Long-term debt, excluding current portion
4,580,087
4,734,775
Long-term operating lease liabilities
52,286
75,396
Deferred income tax liabilities
563,606
605,291
Tax receivable agreement obligations to related parties
104,863
103,151
Tax receivable agreement obligations
202,762
229,082
Other long-term liabilities
73,118
65,572
Total liabilities
6,656,388
6,860,388
Commitments and contingencies
Stockholders' Equity
Common Stock (par value, $0.001 ), 9,000,000,000 and 9,000,000,000 shares authorized and 313,131,714 and 306,796,076 shares issued and outstanding at March 31, 2022 and March 31, 2021 , respectively
313
307
Preferred stock (par value, $0.001 ), 900,000,000 shares authorized and no shares issued and outstanding at both March 31, 2022 and March 31, 2021
—
—
Additional paid-in capital
4,340,759
4,283,391
Accumulated other comprehensive income (loss)
35,116
11,221
Accumulated deficit
(1,100,081)
(1,042,691)
Total stockholders' equity
3,276,107
3,252,228
Total liabilities and stockholders' equity
$
9,932,495
$
10,112,616
Consolidated Statements of Cash Flows
(unaudited and amounts in thousands)
Year Ended March 31 ,
2022
2021
Cash flows from operating activities:
Net income (loss)
$
(57,390)
$
(112,210)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization
681,808
591,048
Amortization of capitalized software developed for sale
3,509
1,326
Accretion and changes in estimate, net
25,276
11,644
Equity compensation
95,730
59,016
Deferred income tax expense (benefit)
(49,060)
(50,114)
Amortization of debt discount and issuance costs
31,284
32,532
Loss on extinguishment of debt
3,885
8,924
Non-cash lease expense
26,648
29,114
Gain on sale of businesses
—
(59,143)
Other, net
17,658
8,257
Changes in operating assets and liabilities:
Accounts receivable, net
12,295
(6,064)
Contract assets, net
(26,114)
158
Prepaid expenses and other assets
(82,507)
(87,540)
Accounts payable
34,825
(21,407)
Accrued expenses and other liabilities
(61,032)
14,178
Deferred revenue
40,063
166,477
Net cash provided by (used in) operating activities
696,878
586,196
Cash flows from investing activities:
Capitalized expenditures
(276,276)
(246,381)
Acquisitions, net of cash acquired
—
(439,483)
Proceeds from sale of businesses
—
115,733
Other, net
(663)
2,099
Net cash provided by (used in) investing activities
(276,939)
(568,032)
Cash flows from financing activities:
Payments on Term Loan Facility
(180,000)
(315,000)
Payments under tax receivable agreements
(21,537)
(20,691)
Receipts (payments) on derivative instruments
(22,709)
(29,538)
Employee tax withholding on vesting of equity compensation awards
(37,751)
(4,108)
Payments on deferred financing obligations
(10,991)
(19,519)
Payment of senior amortizing notes
(16,384)
(15,636)
Proceeds from exercise of equity awards
8,933
17,514
Payments on Revolving Facility
—
(250,000)
Proceeds from issuance of Senior Notes
—
325,000
Other, net
(468)
(6,800)
Net cash provided by (used in) financing activities
(280,907)
(318,778)
Effect of exchange rate changes on cash and cash equivalents
165
3,310
Net increase (decrease) in cash and cash equivalents
139,197
(297,304)
Cash and cash equivalents at beginning of period
113,101
410,405
Cash and cash equivalents at end of period
$
252,298
$
113,101
Reconciliation of Net Income (Loss) to Adjusted EBITDA
(unaudited and amounts in thousands)
Three Months Ended March 31 ,
2022
2021
Net income (loss)
$
7,090
$
(13,090)
Income tax provision (benefit)
(13,298)
(3,776)
Income (loss) before income tax provision (benefit)
(6,208)
(16,866)
Amortization of capitalized software developed for sale
999
776
Depreciation and amortization
179,345
154,495
Interest expense, net
56,959
59,508
Equity compensation
21,012
24,158
Acquisition accounting adjustments
(4,762)
5,917
Acquisition and divestiture-related costs
12,254
9,590
Integration and related costs
3,608
13,094
Strategic initiatives, duplicative and transition costs
7,977
8,671
Severance costs
(4,484)
2,717
Accretion and changes in estimate, net
11,706
3,215
Impairment of long-lived assets and other
728
3,772
Loss on extinguishment of debt
—
1,289
Gain on sale of business
—
1,344
Other non-routine, net
3,189
365
Adjusted EBITDA
$
282,323
$
272,045
Reconciliation of Net Income (Loss) to Adjusted EBITDA
(unaudited and amounts in thousands)
Year Ended March 31 ,
2022
2021
Net income (loss)
$
(57,390)
$
(112,210)
Income tax provision (benefit)
(48,611)
(35,187)
Income (loss) before income tax provision (benefit)
(106,001)
(147,397)
Amortization of capitalized software developed for sale
3,509
1,326
Depreciation and amortization
681,808
591,048
Interest expense, net
234,244
245,241
Equity compensation
95,730
59,016
Acquisition accounting adjustments
(11,839)
109,743
Acquisition and divestiture-related costs
41,120
19,709
Integration and related costs
26,803
40,675
Strategic initiatives, duplicative and transition costs
46,041
21,841
Severance costs
10,178
13,184
Accretion and changes in estimate, net
25,276
11,644
Impairment of long-lived assets and other
4,958
18,190
Loss on extinguishment of debt
3,885
8,924
Gain on sale of business
—
(59,143)
Contingent consideration
—
(3,000)
Other non-routine, net
15,339
3,164
Adjusted EBITDA
$
1,071,051
$
934,165
Reconciliation of Net Income (Loss) to Adjusted Net Income (Loss)
(unaudited and amounts in thousands, except share and per share amounts)
Three Months Ended March 31 ,
2022
2021
Net income (loss)
$
7,090
$
(13,090)
Amortization expense resulting from acquisition method adjustments
125,231
117,362
EBITDA adjustments
51,228
74,132
Tax effect of EBITDA adjustments and amortization expense
(53,254)
(44,413)
Adjusted net income (loss)
$
130,295
$
133,991
Adjusted net income (loss) per diluted share
$
0.39
$
0.42
Year Ended March 31 ,
2022
2021
Net income (loss)
$
(57,390)
$
(112,210)
Amortization expense resulting from acquisition method adjustments
498,843
463,334
EBITDA adjustments
257,491
243,947
Tax effect of EBITDA adjustments and amortization expense
(204,745)
(166,324)
Adjusted net income (loss)
$
494,199
$
428,747
Adjusted net income (loss) per diluted share
$
1.53
$
1.34
Segment Results
(unaudited and amounts in thousands)
Three Months Ended March 31 ,
$
%
2022
2021
Change
Change
Segment revenue
Software and Analytics
$
443,171
$
416,265
$
26,906
6.5
%
Network Solutions
216,402
198,334
18,068
9.1
%
Technology-Enabled Services
234,262
227,311
6,951
3.1
%
Postage and Eliminations (1)
26,296
23,391
2,905
12.4
%
Purchase Accounting Adjustment (2)
—
(10,141)
10,141
(100.0
)%
Net revenue
$
920,131
$
855,160
$
64,971
7.6
%
Segment adjusted EBITDA
Software and Analytics
$
164,180
$
144,025
$
20,155
14.0
%
Network Solutions
103,170
108,147
(4,977)
(4.6
)%
Technology-Enabled Services
14,973
19,873
(4,900)
(24.7
)%
Postage and Eliminations
—
—
—
—
%
Total adjusted EBITDA
$
282,323
$
272,045
$
10,278
3.8
%
Year Ended March 31 ,
$
%
2022
2021
Change
Change
Segment revenue
Software and Analytics
$
1,612,931
$
1,534,926
$
78,005
5.1
%
Network Solutions
868,425
717,843
150,582
21.0
%
Technology-Enabled Services
924,472
869,349
55,123
6.3
%
Postage and Eliminations (1)
82,727
96,533
(13,806)
(14.3
)%
Purchase Accounting Adjustment (2)
(7,740)
(128,230)
120,490
(94.0
)%
Net revenue
$
3,480,815
$
3,090,421
$
390,394
12.6
%
Segment adjusted EBITDA
Software and Analytics
$
561,994
$
526,129
$
35,865
6.8
%
Network Solutions
446,378
377,005
69,373
18.4
%
Technology-Enabled Services
62,679
31,031
31,648
102.0
%
Postage and Eliminations
—
—
—
—
%
Total adjusted EBITDA
$
1,071,051
$
934,165
$
136,886
14.7
%
(1)
Revenue for Postage and Eliminations includes postage revenue of $60.9 million and $50.9 million for the three months ended March 31, 2022 and 2021, respectively. Revenue for Postage and Eliminations includes postage revenue of $219.6 million and $196.5 million for the years ended March 31, 2022 and 2021, respectively.
(2)
Amount reflects the impact to deferred revenue resulting from the McKesson exit which reduced revenue recognized during the three months ended March 31, 2021 as well as the years ended March 31, 2022 and 2021.
Reconciliation of Cash Provided by (Used in) Operating Activities to Free Cash Flow and
Adjusted Free Cash Flow
(unaudited and amounts in thousands)
Year Ended March 31 ,
2022
2021
Cash provided by (used in) operating activities (1)
$
696,878
$
586,196
Capital expenditures
(276,276)
(246,381)
Free cash flow
420,602
339,815
Adjustments to free cash flow (2) :
Integration and related costs
26,803
40,675
Strategic initiatives, duplicative and transition costs
46,041
21,841
Severance costs
10,178
13,184
Integration and strategic capital expenditures
26,166
14,379
Adjusted free cash flow
$
529,790
$
429,894
(1)
Includes cash provided by pass-thru funds of $12.9 million for the year ended March 31, 2022 and cash used by pass-thru funds of $12.8 million for Change Healthcare Inc. for the year ended March 31, 2021 .
(2)
All operating costs and integration and strategic capital expenditures are presented on an as-incurred basis.
View source version on businesswire.com : https://www.businesswire.com/news/home/20220525005117/en/
David Elliott
Enterprise Strategy & Investor Relations
205-907-5540
daelliott@changehealthcare.com
Katherine Wojtecki
External Communications
630-624-9142
Katherine.Wojtecki@changehealthcare.com
Source: Change Healthcare Inc.