Insperity (NYSE: NSP) reported Q4 EPS of $0.57, $0.02 better than the analyst estimate of $0.55. Revenue for the quarter came in at $1.08 billion versus the consensus estimate of $1.05 billion.

• 2019 revenue increased 13% on worksite employee growth of 13%
• 2019 diluted EPS and adjusted EPS increased 15% and 11% to $3.70 and $4.15, respectively
• 2019 net income and adjusted EBITDA increased 12% and 4% to $151.1 million and $250.0 million, respectively
• 2019 repurchase of 2.1 million shares; Q4 repurchase of 643,000 shares
• Q4 revenue increased 11% on worksite employee growth of 10%
• Q4 diluted EPS and adjusted EPS of $0.51 and $0.57, respectively
• Q4 net income and adjusted EBITDA of $20.4 million and $40.7 million, respectively
• New health insurance policy feature added to help mitigate large claim risk in 2020

“In 2019, we made important progress on key strategic initiatives that will allow us to continue to capitalize on our vast and dynamic market opportunity in the years ahead,” said Paul J. Sarvadi, Insperity chairman and chief executive officer. “At the same time, we have experienced some unusual and unexpected challenges over the past year. We have responded decisively and have a plan in place to regain our momentum in growth and profitability as we move through 2020.”

“We recently added a new feature in our health plan with our national health insurance carrier to limit our exposure on our largest claims. Beginning in 2020, we will not have financial responsibility for any amount of a participant’s annual claim costs that exceed $1 million,” said Douglas S. Sharp, senior vice president of finance, chief financial officer and treasurer. “Although this type of coverage does not address an increase in frequency of large claims below $1 million, it does provide a level of protection against significant large claims and helps to mitigate the overall risk in our health plan.”

GUIDANCE:

Insperity sees Q1 2020 EPS of $1.61-$1.70, versus the consensus of $1.77.

Insperity sees FY2020 EPS of $3.73-$4.16, versus the consensus of $4.64.

• Please note that 2020 adjusted EPS guidance includes a full year effective tax rate of 28% compared to 20% in 2019 due primarily to less tax benefit associated with the vesting of long-term incentive plan and time-vested restricted shares. The higher effective tax rate is expected to reduce both our Q1 and full year 2020 earnings by approximately $0.28 per share.

For earnings history and earnings-related data on Insperity (NSP) click here.