MedAssets Reports Fourth Quarter and Full-Year 2012 Financial Results

MedAssets Reports Fourth Quarter and Full-Year 2012 Financial Results

ATLANTA--(BUSINESS WIRE)-- MedAssets, Inc. (NAS: MDAS) today announced results for its fourth quarter and full year ended December 31, 2012. Fourth quarter results are summarized in the table below:

($ in millions, except per share)

4Q-12

4Q-11

% Change

Net Revenue:

Spend and Clinical Resource Mgmt (SCM)

$

99.1

$

103.1

- 3.9

%

Revenue Cycle Management (RCM)

64.7

53.7

20.6

Total Net Revenue

163.8

156.8

4.5

%

Net (loss) income

(14.4

)

4.1

nm

(Loss) earnings per share (EPS) - diluted

(0.25

)

0.07

nm

Non-GAAP adjusted EBITDA

55.0

53.7

2.4

%

Non-GAAP adjusted EPS - diluted

$ 0.27

$

0.32

- 15.6

Weighted average shares - diluted a

58.1

58.5

- 0.6

%

(a)Given the Company's net loss for the three months ended December 31, 2012, basic and fully diluted weighted average shares are the same for EPS and non-GAAP adjusted EPS.


Net Revenue

Fourth Quarter

Total net revenue for the fourth quarter of 2012 increased 4.5% to $163.8 million from $156.8 million for the fourth quarter of 2011. Net revenue in the SCM segment decreased 3.9% to $99.1 million from net revenue of $103.1 million for the fourth quarter of 2011, due primarily to an expected year-over-year decline in performance fee revenue, partially offset by growth in embedded management services, workforce management and Service Line Analytics. Net revenue in the RCM segment increased 20.6% to $64.7 million from $53.7 million for the fourth quarter of 2011 as services-related revenue increased 50.8% due primarily to growth from the implementation of a number of customers, and technology-related revenue grew 10.6% due to growth in subscription fees from multiple products.

Full Year

Total net revenue for full-year 2012 increased 10.7% to $640.1 million from $578.3 million for full-year 2011. Comparing period-over-period organic growth, total net revenue of $640.1 million for full-year 2012 increased 9.5% from total non-GAAP net revenue of $584.5 million (including non-GAAP acquisition-related purchase accounting revenue adjustments) for full-year 2011. Net revenue in the SCM segment grew 6.3% to $393.6 million from non-GAAP net revenue of $370.2 million for full-year 2011. Net revenue from the RCM segment increased 15.1% to $246.5 million from $214.3 million for full-year 2011 as services-related revenue increased 21.6% and technology-related revenue grew 12.3%.

Non-GAAP Adjusted EBITDA

Fourth Quarter

Total non-GAAP adjusted EBITDA was $55.0 million, or 33.6% of total net revenue, for the fourth quarter of 2012, a 2.4% increase from total non-GAAP adjusted EBITDA of $53.7 million, or 34.2% of total non-GAAP net revenue, for the fourth quarter of 2011. This year-over-year increase was due to consolidated net revenue growth offset by a year-over-year decline in performance fee revenue.

Full Year

For full-year 2012, total non-GAAP adjusted EBITDA was $207.3 million, or 32.4% of total net revenue, a 12.6% increase over total non-GAAP adjusted EBITDA of $184.1 million, or 31.5% of total non-GAAP net revenue, for full-year 2011.

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

Fourth Quarter

The Company reported a net loss for the fourth quarter of 2012 of $14.4 million, or a loss of $0.25 per share, due to debt extinguishment charges to write off $20.0 million of non-cash deferred financing costs and original issue discount, as well as an $8.2 million swap termination expense concurrent with its new debt agreement completed in December 2012. For the fourth quarter of 2011, the Company reported net income of $4.1 million, or earnings of $0.07 per share.

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) decreased 15.6% to $0.27 per share for the fourth quarter of 2012, versus non-GAAP adjusted EPS of $0.32 per share for the fourth quarter of 2011.

Full Year

For full-year 2012, the Company reported a net loss of $6.9 million, or a loss of $0.12 per share, due to the debt extinguishment charges referenced earlier. For full-year 2011, the Company reported a net loss of $15.5 million, or a loss of $0.27 per share, due to acquisition and integration-related expenses associated with the acquisition of The Broadlane Group in November 2010 and subsequent integration.

Non-GAAP adjusted EPS was $1.13 per share for full-year 2012, a 14.1% increase over non-GAAP adjusted EPS of $0.99 per share for full-year 2011.

Cash Flow and Capital Resources

Cash provided by operating activities was $157.9 million for full-year 2012, a 27.1% increase from $124.2 million in 2011. Non-GAAP free cash flow (defined as cash provided by operating activities less purchases of property, equipment and software and capitalized software development costs) for full-year 2012 was $91.4 million, up 21.6% from non-GAAP free cash flow of $75.2 million for full-year 2011.

The Company's balance sheet at December 31, 2012 included $871.3 million in total bank and bond debt, net of cash and cash equivalents. Total net debt equates to leverage of approximately 4.2 times non-GAAP adjusted EBITDA for the trailing twelve-month period.

2013 Financial Guidance

MedAssets introduced full-year 2013 financial guidance, as follows:

($ in millions, except per share)

FY 2013

Y-Y % change

Net Revenue:

SCM segment

$

414.0 - 422.0

5.2 - 7.2

%

RCM segment

255.0 - 263.0

3.4 - 6.7

Total Net Revenue

670.0 - 684.0

4.7 - 6.9

Non-GAAP adjusted EBITDA

215.0 - 225.0

3.7 - 8.5

%

GAAP EPS - diluted

0.33 - 0.43

nm

Non-GAAP adjusted EPS - diluted

$1.22 - 1.32

8.0-16.8

%

Non-GAAP Contracted Revenue

At December 31, 2012, MedAssets rolling 12-month non-GAAP contracted revenue estimate was $600.7 million (SCM segment - $364.7 million; RCM segment - $236.0 million), a year-over-year increase of 5.6%. Non-GAAP contracted revenue is the Company's estimate of contractually committed revenue to be generated under existing customer contracts in the forward 12-month period.

Conference Call Information

Time/Date:

5:00 p.m. ET today, Wednesday, February 20, 2013

Phone:

866-200-6965 (or 646-216-7221 for international/local callers), PIN code 10489277

Webcast:

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

Replay:

Call 866-206-0173 or 646-216-7204 (PIN code 279334)

Note:The live webcast will include a PowerPoint presentation. A PDF copy of the slide presentation is available on the "Events & Presentations" page athttp://ir.medassets.comin 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 consolidated financial statements presented on a GAAP basis herein with the following non-GAAP financial information: gross fees; gross administrative fees; revenue share obligation; acquisition-related purchase accounting revenue adjustments; 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, 2011 filed with the Securities and Exchange Commission and available athttp://ir.medassets.com.TheCompany disclaims any responsibility to update any forward-looking statements.

mdas/F

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

In 000s, except per share data

Three Months Ended

Twelve Months Ended

December 31,

December 31,

2012

2011

% Change

2012

2011

% Change

Revenue:

Administrative fees, net

$

66,163

$

70,567

-6.2

%

$

266,915

$

249,599

6.9

%

Other service fees

97,617

86,214

13.2

%

373,206

328,673

13.5

%

Total net revenue

163,780

156,781

4.5

%

640,121

578,272

10.7

%

Operating expenses:

Cost of revenue

38,035

31,200

21.9

%

138,618

121,771

13.8

%

Product development expenses

7,706

7,177

7.4

%

28,483

26,823

6.2

%

Selling and marketing expenses

13,729

13,543

1.4

%

60,438

56,997

6.0

%

General and administrative expenses

52,617

53,994

-2.6

%

218,194

203,101

7.4

%

Acquisition and integration-related expenses

1,536

1,838

-16.4

%

6,348

24,551

-74.1

%

Depreciation

8,774

5,988

46.5

%

30,190

22,402

34.8

%

Amortization of intangibles

17,401

19,810

-12.2

%

72,652

80,510

-9.8

%

Total operating expenses

139,798

133,550

4.7

%

554,923

536,155

3.5

%

Operating income

23,982

23,231

3.2

%

85,198

42,117

102.3

%

Other income (expense):

Interest expense

(15,323

)

(17,141

)

-10.6

%

(66,045

)

(71,083

)

-7.1

%

Loss on debt extinguishment

(28,196

)

-

(28,196

)

-

Other income

236

851

nm

685

3,621

nm

(Loss) income before income taxes

(19,301

)

6,941

nm

(8,358

)

(25,345

)

nm

Income tax (benefit) expense

(4,947

)

2,794

nm

(1,480

)

(9,851

)

nm

Net (loss) income

(14,354

)

4,147

nm

(6,878

)

(15,494

)

nm

Basic net (loss) income per share

(0.25

)

0.07

nm

(0.12

)

(0.27

)

nm

Diluted net (loss) income per share

$

(0.25

)

$

0.07

nm

$

(0.12

)

$

(0.27

)

nm

Weighted average shares — basic

58,087

57,189

57,452

57,298

Weighted average shares — diluted

58,087

58,451

-0.6

%

57,452

57,298

0.3

%

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

December 31,

December 31,

In 000s, except share and per share amounts

2012

2011

ASSETS

Current assets

Cash and cash equivalents

$

13,734

$

62,947

Accounts receivable, net of allowances of $3,046 and $3,891 as of December 31, 2012 and

December 31, 2011, respectively

96,346

104,039

Deferred tax asset, current

11,126

15,434

Prepaid expenses and other current assets

21,791

18,488

Total current assets

142,997

200,908

Property and equipment, net

134,361

101,471