Insperity(US:NSP)2023-08-01 17:14Financial Data and Key Metrics Changes - The company reported adjusted EPS of $0.64 and adjusted EBITDA of $51 million for Q2 2023, with a 7.2% increase in the average number of paid worksite employees compared to Q2 2022 [47][48] - Healthcare costs were approximately $42 million higher than expected, primarily due to a number and severity of large claims, with large claim activity accounting for about 75% of the increase [35][47] - The company is now forecasting full year 2023 adjusted EBITDA in the range of $300 million to $350 million and adjusted EPS in the range of $4.35 to $5.32 [8] Business Line Data and Key Metrics Changes - The number of high business performance advisors (BPAs) increased by 15%, leading to a nearly 30% increase in discovery calls compared to Q2 of the previous year [37] - Workforce optimization (WX) sales have gained traction, coming in well above budget and booked sales, contributing to lower BPA turnover [37][38] Market Data and Key Metrics Changes - The company anticipates a worksite employee growth of 6.5% to 7% for the full year 2023, slightly lower than previous guidance due to lower hiring trends [39][64] - The company is experiencing higher pharmacy costs driven by increased utilization of specialty drugs, including diabetes and weight loss medications [35][27] Company Strategy and Development Direction - The company is in the second year of a five-year plan, focusing on growth drivers such as BPA hiring, training, and marketing to drive sales [7][49] - The strategic planning and development organization is focused on adapting to changing HR environments and enhancing employee engagement through various wellness offerings [38][49] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in managing healthcare cost trends despite the forecasted higher costs, indicating a long-term growth and profitability outlook [10][63] - The company plans to implement a modest price increase of approximately 1% to 1.5% in 2024 to align pricing with market trends [7][17] Other Important Information - The company repurchased 98,000 shares at a cost of $11 million and paid out $22 million in cash dividends during the quarter [48] - The board has increased share repurchase authorization by 2 million shares, indicating a willingness to be more aggressive in repurchases [48][42] Q&A Session Summary Question: Can you provide more detail on the benefits cost trend, particularly on large claims? - Management indicated that there was no higher concentration of large claims from new clients, and the types of claims were varied, including cancer and heart attacks [10] Question: What impact will the modest price increase have on sales? - Management stated that the pricing adjustments are in line with market trends and should not disadvantage the company [17] Question: Will the new service offering for small businesses incur additional charges? - The company plans to evaluate each service and may charge separately for certain offerings, while others will be included in the workforce optimization product [30][61]