HMS Holdings Corp. Announces Q3 2008 Results, 2008 Revised Guidance and Initial 200...(ting to the PrudentRx acquisitio...),Health

the PrudentRx acquisition $466 $-

HMS HOLDINGS CORP. AND SUBSIDIARIES

Reconciliation of net income to EBITDA and adjusted EBITDA

(In thousands, except share and per share amounts)

(unaudited)

As summarized in the following table, earnings before interest, taxes, depreciation and amortization, and share-based compensation expense (adjusted EBITDA) was $14.6 million for the third quarter of 2008, an increase of 36.6% over the same period a year ago.

Reconciliation of net income to Three Months Nine months

EBITDA and adjusted EBITDA Ended Ended

September 30, September 30,

2008 2007 2008 2007

Net Income $6,143 $4,141 $14,317 $10,920

Net interest expense 180 326 617 1,361

Income taxes 4,448 3,202 10,368 8,443

Depreciation and amortization,

net of deferred financing costs

included in net interest expense 2,993 2,599 8,662 7,402

Earnings before interest,

taxes, depreciation

and amortization (EBITDA) 13,764 10,268 33,964 28,126

Share-based compensation expense 833 417 2,351 1,420

Adjusted EBITDA $14,597 $10,685 $36,315 $29,546