WageWorks (NYSE:WAGE) reported first-quarter results on May 4. The administrator of health, commuter, and other employee benefits is enjoying sharply higher sales and profits, aided in part by its recent acquisitions.

WageWorks results: The raw numbers

Metric 

Q1 2017

Q1 2016

Year-Over-Year Change

Revenue

$125.007 million

$87.002 million

44%

Net Income

$11.098 million

$5.796 million

91%

Earnings Per Share

$0.29

$0.16

81%

Data source: WageWorks Q1 2017 earnings press release.

Computer keyboard with a red "Benefits" button.

Image source: Getty Images.

What happened with WageWorks this quarter?

WageWorks' healthcare sales surged 47% to $74 million, boosted by a 55% year-over-year increase in flexible spending accounts. COBRA revenue rose an even more impressive 84%, to $28.3 million, fueled by the Consumer Health Spending Account and Consolidated Omnibus Reconciliation Act businesses WageWorks acquired from Automatic Data Processing (NASDAQ:ADP) in November. And commuter revenue was $18.4 million, an increase of 6%. Together, this helped drive WageWorks' total revenue higher by 44%, to $125 million.

"Our selling season is off to another record setting pace, the pipeline is strong, as is the demand across all of our products," said CEO Joe Jackson during a conference call with analysts. "We're making excellent progress integrating ADP, CHSA, and COBRA businesses and expanding our reach in the commuter space."

Jackson also noted that WageWorks' has strengthened its relationship with ADP since the closing of the deal.

We are extremely pleased with the number of sales leads from the ongoing partnership we established with ADP, as part of the acquisition last November. We're currently pursuing close to 500 new business opportunities from this relationship alone, representing several million dollars in revenue.

WageWorks is also becoming more profitable as it grows. EBITDA (earnings before interest, taxes, depreciation, and amortization) -- adjusted to exclude stock-based compensation, acquisition-related expenses, and certain other items -- jumped 44% to $36.1 million. Adjusted operating income was $30.8 million, signifying growth of 52%. And adjusted net income surged 48%, to $17.6 million, or $0.46 per share.

Looking forward

WageWorks expects second-quarter revenue in the range of $117.5 million to $119.5 million, with adjusted EBITDA of $34 million to $35.6 million and non-GAAP EPS of $0.40 to $0.42.

WageWorks also raised its 2017 full-year sales and EBITDA guidance, including:

  • Revenue of $478 million to $484 million, up from previous estimates of $476 million to $484 million
  • Adjusted EBITDA of $141 million to $145 million, up from $139 million to $143 million

Additionally, WageWorks reiterated its guidance for full-year adjusted EPS of $1.75 to $1.80.

"In summary, we are pleased with our first-quarter performance and believe we're well positioned for continued success in 2017 and beyond," said CFO Colm Callan.

Joe Tenebruso has no position in any stocks mentioned. The Motley Fool recommends Automatic Data Processing and WageWorks. The Motley Fool has a disclosure policy.