12.	Stock-Based Compensation

(a)	Stock-Based Compensation Expense

Total stock-based compensation expense in the Company’s unaudited Consolidated Statements of Income related to the Company’s long-term incentive award plans was as follows

(in thousands)

	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
Cost of services-compensation	$	1,673	$	1,462	$	4,236	$	3,503
Selling, general and administrative		3,041		2,532		9,972		5,877
Total	$	4,714	$	3,994	$	14,208	$	9,380

(b)	Stock Options

Stock-based compensation expense related to stock options was approximately

$2.1

million and

$1.7

million for the

three

months ended

June 30, 2018

and

2017,

respectively. Stock-based compensation expense related to stock options was approximately

$6.1

million and

$3.9

million for the

six

months ended

June 30, 2018

and

2017,

respectively.

Presented below is a summary of stock option activity for the

six

months ended

June 30, 2018 (

in thousands except for weighted average exercise price and weighted average remaining contractual terms

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Terms		Aggregate Intrinsic Value
Outstanding balance at December 31, 2017		5,554		$	17.35
Granted		1,010			19.58
Exercised		(151	)		15.81
Forfeitures		(26	)		16.43
Expired		(27	)		22.14
Outstanding balance at June 30, 2018		6,360			17.78		5.37		26,785
Expected to vest at June 30, 2018		1,633			17.68		8.00		6,449
Exercisable at June 30, 2018		3,877		$	17.87		3.72		16,929

During the

three

months ended

June 30, 2018

and

2017,

the Company issued

87,230

and

132,128

shares, respectively, of the Company’s common stock upon the exercise of outstanding stock options and received proceeds of

$2.2

million and

$2.0

million, respectively. The total intrinsic value of stock options exercised during the

three

months ended

June 30, 2018

and

2017

was

$0.8

million and

$0.6

million, respectively. During the

six

months ended

June 30, 2018

and

2017,

the Company issued

151,034

and

132,805

shares, respectively, of the Company’s common stock upon the exercise of outstanding stock options and received proceeds of

$2.4

million and

$2.0

million, respectively. The total intrinsic value of stock options exercised during the

six

months ended

June 30, 2018

and

2017

was

$0.8

million and

$0.6

million, respectively.

As of

June 30, 2018,

there was approximately

$9.6

million of total unrecognized compensation cost related to stock options outstanding, which is expected to be recognized over a weighted average period of

2.3

years.

The weighted-average grant date fair value per share of the stock options granted during the

six

months ended

June 30, 2018

and

2017

was

$7.52

and

$7.73,

respectively. HMS estimated the fair value of each stock option grant on the date of grant using a Black-Scholes option pricing model and weighted–average assumptions set forth in the following table:

	Six Months Ended June 30,
	2018		2017
Expected dividend yield		0%		0%
Risk-free interest rate		2.68%		1.74%
Expected volatility		42.43%		44.23%
Expected life (years)		6.00		5.00

The total tax benefits recognized on stock-based compensation for the

three

and

six

months ended

June 30, 2018

and

2017

was

$2.5

million and

$3.6

million, respectively.

(c)

Restricted Stock Units

Stock-based compensation expense related to restricted stock units was approximately

$2.6

million and

$2.2

million for the

three

months ended

June 30, 2018

and

2017,

respectively. Stock-based compensation expense related to restricted stock units was approximately

$8.1

million and

$5.5

million for the

six

months ended

June 30, 2018

and

2017,

respectively.

Presented below is a summary of restricted stock units activity for the

six

months ended

June 30, 2018

(in thousands, except for weighted average grant date fair value per unit):

	Number of Units			Weighted Average Grant Date Fair Value per Unit
Outstanding balance at December 31, 2017		1,346		$	17.65
Granted		761			16.72
Vesting of restricted stock units, net of units withheld for taxes		(364	)		16.93
Units withheld for taxes		(161	)		16.93
Forfeitures		(26	)		16.89
Outstanding balance at June 30, 2018		1,556		$	19.98

For the

three

months ended

June 30, 2018

and

2017,

HMS granted

62,259

and

536,023

restricted stock units, respectively, with an aggregate fair market value of

$0.9

million and

$10.2

million, respectively. For the

six

months ended

June 30, 2018

and

2017,

HMS granted

761,083

and

539,657

restricted stock units, respectively, with an aggregate fair market value of

$12.7

million and

$10.3

million, respectively.

As of

June 30, 2018,

1,330,734

restricted stock units remained unvested and there was approximately

$13.9

million of unrecognized compensation cost related to restricted stock units, which is expected to be recognized over a weighted average vesting period of

1.38

years.