Verisk Reports Solid 1Q Results

Led by a strong performance from its decision analytics business, Verisk Analytics VRSK reported solid first-quarter results with revenue up 10.7% to $347 million and EBITDA up 14.5% to $159 million. Decision analytics revenue increased 17% year over year to $202 million and now accounts for 59% of the company's total business, up 4 percentage points compared to last year. Given the limited growth opportunities in its risk assessment business (40% of total revenue), we think management's strategy to focus more on fast growing decision analytics should handsomely repay it in the long run. Revenue growth in decision analytics is driven by continued momentum in its health care and insurance solutions, partly offset by weakness in its mortgage business. Health care remains a bright spot for the company and we think the recent MediConnect acquisition and unified health care technology platform should help Verisk further penetrate the health care analytics market. The outlook for mortgage products continues to remain negative, but we think Verisk should be able to absorb it, as the company derives less than 10% of its revenue from its mortgage business.