Acquisitions give FINEOS a boost

FINEOS Corporation jumped 15% on Thursday after the provider of systems for life, accident and health insurance carriers announced its financial results for FY21.

Total revenue achieved for the fiscal year was €108.3 million, representing a 23.3% increase on the prior year, driven by higher-margin subscription revenue which grew by 48.6% to €40.1 million. Organic growth was strong following two acquisitions made during the year being Limelight Health and Spraoi.

Despite the challenges brought on by the global pandemic and lengthening sales cycles, FINEOS said its sales team continued to execute on pipeline opportunities and closed four new name deals in the second half of the year.

Gross profit was €72.0 million, up 23% on the prior year of €58.5 million. Proforma EBITDA of €7.9 million, as adjusted for non-recurring costs, was down from €15.7 million reflecting an increase in operating expenses of 50%, driven by increased headcount as a result of the acquisitions and investment spend in R&D, in line with the company’s growth strategy. R&D investment was €41.3 million, up 45.0% reflecting increased client demand, which ultimately translated into subscription revenue growth.

A statutory net loss after tax for the year of €12.5 million was reported, up from a €0.2 million loss in FY20.

FINEOS guidance for this coming fiscal year assumes another year of strong growth. FY22 revenue is expected to be in the range of €125-130 million, with subscription revenue anticipated to grow at approximately 30%. The company said its growth expectations are supported by a robust pipeline of significant cross-sell and up-sell opportunities with existing clients in addition to some new name opportunities.

Commenting on the results, Chief Executive Officer Michael Kelly said: “FINEOS’ growth journey continued into 2021 as we grew revenue, clients, headcount and product offering. We’re now positioned as the number one player for group employee benefits in the North American market, measured by revenue, by number of clients and by the end-to-end “quote to claim” product that we provide.”