MedAssets Reports Second Quarter and Six-Month 2013 Financial Results

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MedAssets Reports Second Quarter and Six-Month 2013 Financial Results

ATLANTA--(BUSINESS WIRE)-- MedAssets, Inc. (NAS: MDAS) today announced results for its second quarter and six-month periods ended June 30, 2013. Second quarter results are summarized in the table below:

 ($ in millions, except per share)  2Q'13  2Q'12 % Change 
Net Revenue:
Spend and Clinical Resource Mgmt (SCM)$105.3$102.13.1%
Revenue Cycle Management (RCM) 65.4 60.97.5 
Total Net Revenue170.7163.04.7
Net income5.12.3125.9
Earnings per share (EPS) - diluted0.080.04100.0
Non-GAAP adjusted EBITDA52.549.07.2
Non-GAAP adjusted EPS - diluted$0.30$0.287.1
Weighted average shares - diluted60.758.73.4%

Net Revenue


Second Quarter

Total net revenue for the second quarter of 2013 increased 4.7% to $170.7 million from $163.0 million for the second quarter of 2012. Net revenue in the SCM segment increased 3.1% to $105.3 million from net revenue of $102.1 million for the second quarter of 2012, due primarily to group purchasing net administrative fee growth, partially offset by an expected year-over-year decrease in performance-related fees. Net revenue in the RCM segment increased 7.5% to $65.4 million from $60.9 million for the second quarter of 2012 as technology-related revenue increased 6.5% while services-related revenue grew 9.7%.

Six-Month Period

Total net revenue for the first half of 2013 increased 9.8% to $343.6 million from $312.9 million for the first half of 2012. Net revenue in the SCM segment grew 9.9% to $214.8 million from net revenue of $195.4 million for the first half of 2012. Net revenue in the RCM segment increased 9.6% to $128.8 million from $117.5 million for the first half of 2012 as technology-related revenue grew 7.3% and services-related revenue increased 14.9%.

Non-GAAP Adjusted EBITDA

Second Quarter

Total non-GAAP adjusted EBITDA was $52.5 million, or 30.8% of total net revenue, for the second quarter of 2013, a 7.2% increase from total non-GAAP adjusted EBITDA of $49.0 million, or 30.1% of total net revenue, for the second quarter of 2012. The 71 basis point margin increase was due to higher RCM segment margin and relatively flat corporate expenses, partially offset by an expected year-over-year decrease in performance-related fees.

Six-Month Period

For the first half of 2013, total non-GAAP adjusted EBITDA was $114.2 million, or 33.2% of total net revenue, a 19.7% increase over total non-GAAP adjusted EBITDA of $95.4 million, or 30.5% of total net revenue, for the first half of 2012.

Net Income and Non-GAAP Adjusted Earnings Per Share (EPS)

Second Quarter

The Company reported net income for the second quarter of 2013 of $5.1 million, or $0.08 per share, compared to net income of $2.3 million, or $0.04 per share, for the second quarter of 2012.

Non-GAAP adjusted EPS (defined as EPS excluding non-cash acquisition-related intangible amortization and depreciation, non-cash share-based compensation, certain acquisition and integration-related expenses and non-recurring items on a tax-adjusted basis) was $0.30 per share for the second quarter of 2013, a 7.1% increase when compared with non-GAAP adjusted EPS of $0.28 per share for the second quarter of 2012.

Six-Month Period

Net income for the first half of 2013 was $12.8 million, or $0.21 per share, versus net income of $2.0 million, or $0.03 per share, for the first half of 2012. Non-GAAP adjusted EPS was $0.71 per share for the first half of 2013, a 39.2% increase over non-GAAP adjusted EPS of $0.51 per share for the first half of 2012.

Cash Flow and Capital Resources

Cash provided by operating activities in the first half of 2013 was $67.6 million versus $62.7 million for the same period of 2012. Non-GAAP free cash flow (defined as cash provided by operating activities less purchases of property, equipment and software and capitalized software development costs) increased 25.4% to $43.4 million versus $34.6 million for the first six months of 2012. The Company prepaid an additional $40.0 million of its Term Loan B in the second quarter of 2013 along with its scheduled principal payments. Its balance sheet at June 30, 2013 included $821.5 million in total bank and bond debt, net of cash and cash equivalents. Total net debt equates to leverage of approximately 3.6 times non-GAAP adjusted EBITDA for the trailing twelve-month period.

Non-GAAP Contracted Revenue

At June 30, 2013, MedAssets rolling 12-month non-GAAP contracted revenue estimate was $616.8 million (SCM segment - $378.4 million; RCM segment - $238.4 million), a year-over-year increase of 2.2%. Non-GAAP contracted revenue is the Company's estimate of contractually committed revenue to be generated under existing client contracts in the forward 12-month period.

2013 Financial Guidance Updated

MedAssets updated its full-year 2013 financial guidance ranges, as follows:

($ in millions, except per share) FY 2013  Y-Y % change
Net Revenue:
SCM segment$416.0 - 424.05.7 - 7.7%
RCM segment255.0 - 261.03.4 - 5.9
Total Net Revenue673.0 - 683.05.1 - 6.7
Non-GAAP adjusted EBITDA217.0 - 225.04.7 - 8.5%
GAAP EPS - diluted0.38 - 0.44nm
Non-GAAP adjusted EPS - diluted$1.26 - 1.3211.5 -16.8%

Conference Call Information

Time/Date: 5:00 p.m. ET today, Wednesday, July 31, 2013
Phone:855-410-0553 (or 646-583-7389 for international/local callers), PIN code 816274
Webcast:

http://ir.medassets.com, "Events & Presentations" page; Archive will be available for at least 30 days

Replay:Call 877-764-8714 or 646-583-7395 (PIN code 338589)

Note:The live webcast will include a slide presentation, a copy of which is available onhttp://ir.medassets.comin the "Events & Presentations" section in conjunction with today's event.

About MedAssets

MedAssets (NAS: MDAS) partners with healthcare providers to improve their financial strength by implementing revenue cycle, spend and clinical resource management solutions that help capture revenue, control cost, improve margins and cash flow, increase regulatory compliance, and optimize operational efficiency. MedAssets serves more than 4,200 hospitals and 122,000 non-acute healthcare providers. The company currently manages more than $50 billion in supply spend and touches over $365 billion in gross patient revenue annually through its revenue cycle solutions. For more information, go to www.medassets.com.

Use of Non-GAAP Financial Information

In order to provide investors with greater insight, promote transparency and allow for a more comprehensive understanding of the information used by management and the board of directors in their financial and operational decision-making, the Company supplements its condensed consolidated financial statements presented on a GAAP basis herein with the following non-GAAP financial information: gross fees; gross administrative fees; revenue share obligation; EBITDA; adjusted EBITDA; adjusted EBITDA margin; adjusted net income; diluted adjusted EPS; free cash flow; and contracted revenue.Reconciliations of these non-GAAP measures to their most directly comparable GAAP measures, where possible, are included in the accompanying financial schedules. Also, see "Use of Non-GAAP Financial Measures" following the financial schedules for more information.

Safe Harbor Statement

This Press Release contains forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, as amended by the Private Securities Litigation Reform Act of 1995, and include the intent, belief or current expectations of the Company and its management team with respect to the Company's future business operations that include, but are not limited to:2013 financial guidance, revenue growth and other financial projections and forecasts; and the Company's ability to successfully integrate and capitalize on synergies associated with acquisitions. Any forward-looking statements are not guarantees of future performance, involve risks and uncertainties, and actual results may differ materially from those contemplated by such forward-looking statements. Important factors currently known to management that could cause actual results to differ materially from those contemplated by the forward-looking statements in this Press Release include, but are not limited to:failure to realize improvements in performance, efficiency and profitability; failure to complete anticipated sales under negotiations; failure to successfully implement revenue backlog; lack of revenue growth; customer losses; and adverse developments with respect to the operation or performance of the Company's business units or the market price of its common stock. Additional factors that could cause actual results to differ materially from those contemplated within this Press Release can also be found in the Company's Risk Factor disclosures in its Form 10-K for the year ended December 31, 2012 filed with the Securities and Exchange Commission and available athttp://ir.medassets.com. The Company disclaims any responsibility to update any forward-looking statements.

mdas/F

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
            
In 000s, except per share dataThree Months EndedSix Months Ended
June 30,June 30,
20132012% Change20132012% Change
Revenue:
Administrative fees, net$70,502$66,6955.7%$147,021$132,11111.3%
Other service fees 100,240 96,3154.1% 196,558 180,7898.7%
 
Total net revenue 170,742 163,0104.7% 343,579 312,9009.8%
 
Operating expenses:
Cost of revenue (inclusive of certain amortization expense)37,49634,7308.0%71,76466,0138.7%
Product development expenses7,9756,63820.1%16,47613,56021.5%
Selling and marketing expenses20,28519,1785.8%34,02733,7260.9%
General and administrative expenses57,19956,5741.1%115,819110,4104.9%
Acquisition and integration-related expenses1,4352,028-29.2%9,4653,277188.8%
Depreciation9,8767,28135.6%19,05313,69539.1%
Amortization of intangibles 16,115 18,481-12.8% 32,616 37,411-12.8%
 
Total operating expenses 150,381 144,9103.8% 299,220 278,0927.6%
 
Operating income20,36118,10012.5%44,35934,80827.4%
Other income (expense):
Interest expense(12,381)(16,871)-26.6%(23,730)(34,050)-30.3%
Other income 276 22821.1% 317 335-5.4%
 
Income before income taxes8,2561,457466.6%20,9461,0931816.4%
Income tax expense (benefit) 3,172 (794)nm 8,158 (919)nm
 
Net income5,0842,251125.9%12,7882,012535.6%
 
Basic net income per share 0.09 0.04125.0% 0.22 0.04450.0%
 
Diluted net income per share$0.08$0.04100.0%$0.21$0.03600.0%
 
Weighted average shares — basic59,38757,17459,19857,102
Weighted average shares — diluted60,66558,6783.4%60,62858,6373.4%
 
 

CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
    
June 30,December 31,
In 000s, except share and per share amounts20132012
 
ASSETS
Current assets
Cash and cash equivalents$716$13,734

Accounts receivable, net of allowances of $2,458 and $3,046 as of June 30, 2013 and December 31, 2012, respectively

95,56996,346
Deferred tax asset, current5,11311,126
Prepaid expenses and other current assets 21,545 21,791
 
Total current assets122,943142,997
 
Property and equipment, net151,994134,361
Other long term assets
Goodwill1,027,8471,027,847
Intangible assets, net297,547330,163
Other 41,626 42,869
Other long term assets 1,367,020 1,400,879
 
Total assets$1,641,957$1,678,237
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable$28,808$25,487
Accrued revenue share obligation and rebates78,08774,274
Accrued payroll and benefits29,81940,085
Other accrued expenses15,42714,145
Current portion of deferred revenue52,29255,756
Current portion of notes payable15,50015,500
Current portion of finance obligation 244 233
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