WageWorks, Inc. (NYSE:WAGE) Files An 8-K Results of Operations and Financial ConditionItem 2.02
As previously disclosed, WageWorks, Inc. (the “Company”) is continuing its review of its financial statements and internal controls over financial reporting for the fiscal year ended December31, 2017. The Company believes its previous guidance with respect to the adjustments to the Company’s financial statements for fiscal year 2016 is materially correct. The Company, to date, has not identified any material adjustments to its financial statements that would be expected to cause revenue or adjusted EBITDA for fiscal year 2017 to differ materially from the information disclosed on November8, 2017.
The Company’s view on financial results for the fiscal year ended December31, 2017 are based upon the Company’s estimates and subject to completion of its financial closing procedures. The statements are not a comprehensive statement of the Company’s financial results for this period, and its actual results may differ materially from these estimates due to the completion of financial closing procedures, final adjustments, and other developments that may arise between now and the time the Company’s financial statements are filed with the Securities and Exchange Commission (“SEC”).
The restatement process includes a detailed review of the Company’s accounting policies and processes. Due to the high volume of transactions processed by the Company and multiple platforms, the effort is extensive but the Company believes the effort is manageable. The Company continues to work diligently to conclude the process as expeditiously as possible.
Additionally, in connection with the above, the Audit Committee of the Company’s Board of Directors conducted an independent investigation of the Company’s accounting practices, financial statement reporting and internal control over financial reporting for fiscal 2016 and 2017. As previously disclosed, among other matters, the investigation included a review of certain issues, including revenue recognition, related to the accounting for a government contract during fiscal 2016 and associated issues with whether there was an open flow of information and appropriate tone at the top for an effective control environment. The Audit Committee engaged independent professionals to assist its investigation throughout the process. The Audit Committee has concluded its investigation. Among its other findings, the Audit Committee has determined that no illegal acts occurred.
The Company expects to report material weaknesses in its internal control over financial reporting as of December31, 2017 related to managing change and assessing risk in the areas of non-routine and complex transactions, tone at the top, and commitment to competencies in the areas of non-routine and complex transactions. As a result of the material weaknesses, the Board, upon recommendation of the Audit Committee, concluded that the Company’s internal control over financial reporting and disclosure controls and procedures were ineffective as of December31, 2017.
The Company voluntarily contacted the San Francisco office of the SEC regarding the restatement and independent investigation and will cooperate with any inquiries regarding the matter.
Cautionary Statement Concerning Forward Looking Statements
This Form 8-K contains forward-looking statements within the meaning of Section27A of the Securities Act of 1933, as amended, and Section21E of the Securities Exchange Act of 1934, as amended. Statements that include the words “believes,” “expects,” “anticipates,” “intends,” and similar expressions or future or conditional verbs such as “will,” “should,” “would,” “may” and “could” are generally forward-looking in nature and not historical facts. Forward-looking statements are based on management’s current expectations or beliefs about the Company’s future plans, expectations and objectives. These forward-looking statements are not historical facts and are subject to risks and uncertainties that could cause the actual results to differ materially from those projected in these forward-looking statements including, but not limited to: the risks and uncertainties that the Company’s review of the matters described above is ongoing and the amounts at issue and the periods to which they relate have not been definitively determined; the amounts at issue and the periods to which they relate are preliminary, unaudited estimates that are subject to change; the final amounts and adjustments may differ materially from the Company’s estimated amounts; additional adjustments may be identified, the impact of which may be material; the impact of the internal investigation on the Company, its management and operations, including financial impact as well as any litigation or regulatory action that may arise from the investigation, any of which may result in a material adverse effect on the Company; the impact of control deficiencies, including disclosure controls as well as any material weaknesses in internal control over financial reporting, and the associated costs in remediating those control deficiencies; the Company’s inability to file its Form 10-K and Form 10-Q within the cure period required by the NYSE; the reputational damage that the Company may suffer as a result of the matters discussed in this filing; and those risks and uncertainties described in the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the most recent Annual Report on Form 10-K filed with the SEC and similar disclosures in subsequent periodic and current reports filed with the SEC. Readers of this Form 8-K are cautioned not to place undue reliance on forward-looking statements contained herein, which speak only as of the date of this Form 8-K.
About WageWorks, Inc. (NYSE:WAGE)
WageWorks, Inc. is engaged in administering Consumer-Directed Benefits (CDBs). The Company administers CBDs, including pre-tax spending accounts, such as Health Savings Accounts (HSAs), health and dependent care Flexible Spending Accounts (FSAs), and Health Reimbursement Arrangements (HRAs), as well as Commuter Benefit Services, including transit and parking programs, wellness programs, Consolidated Omnibus Budget Reconciliation Act and other employee benefits. Its CDB programs assist employees and their families in saving money by using pre-tax dollars to pay for certain of their healthcare, dependent care and commuter expenses. Employers financially benefit from its programs through reduced payroll taxes. Under its FSA, HSA and commuter programs, employee participants contribute funds from their pre-tax income to pay for qualified out-of-pocket healthcare expenses not covered by insurance, such as co-pays, deductibles and over-the-counter medical products, or for commuting costs.
