MedAssets Reports First Quarter 2013 Financial Results

MedAssets Reports First Quarter 2013 Financial Results

ATLANTA--(BUSINESS WIRE)-- MedAssets, Inc. (NAS: MDAS) today announced results for its first quarter ended March 31, 2013. First quarter results are summarized in the table below:

($ in millions, except per share)

1Q'13

1Q'12

% Change

Net Revenue:

Spend and Clinical Resource Mgmt (SCM)

$

109.5

$

93.3

17.4

%

Revenue Cycle Management (RCM)

63.3

56.6

11.8

Total Net Revenue

172.8

149.9

15.3

%

Net income (loss)

7.7

(0.2

)

nm

Earnings (loss) per share (EPS) - diluted

0.13

(0.00

)

nm

Non-GAAP adjusted EBITDA

61.6

46.4

32.8

%

Non-GAAP adjusted EPS - diluted

$

0.41

$

0.24

70.8

Weighted average shares - diluted a

60.4

57.0

5.9

%

(a)

Given the Company's net loss for the three months ended March 31, 2012, basic and fully diluted weighted average shares are the same for EPS and non-GAAP adjusted EPS in that period.

Net Revenue


Total net revenue for the first quarter of 2013 increased 15.3% to $172.8 million from $149.9 million for the first quarter of 2012. Net revenue in the SCM segment increased 17.4% to $109.5 million from net revenue of $93.3 million for the first quarter of 2012, due primarily to a better-than-expected, year-over-year increase in performance-related fees, and group purchasing net administrative fee growth. Net revenue in the RCM segment increased 11.8% to $63.3 million from $56.6 million for the first quarter of 2012 as services-related revenue increased 20.8% while technology-related revenue grew 8.2%.

Non-GAAP Adjusted EBITDA

Total non-GAAP adjusted EBITDA was $61.6 million, or 35.7% of total net revenue, for the first quarter of 2013, a 32.8% increase from total non-GAAP adjusted EBITDA of $46.4 million, or 31.0% of total net revenue, for the first quarter of 2012. This growth was due to a year-over-year increase in performance-related fees as well as operating leverage from group purchasing net administrative fees and fully-ramped RCM Services clients.

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

The Company reported net income for the first quarter of 2013 of $7.7 million, or $0.13 per share, compared to a net loss of $0.2 million, or a loss of $0.00 per share, for the first 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) increased 70.8% to $0.41 per share for the first quarter of 2013, versus non-GAAP adjusted EPS of $0.24 per share for the first quarter of 2012.

Cash Flow and Capital Resources

For the first quarter of 2013, cash provided by operating activities was $17.5 million versus $18.8 million in 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 89.7% to $8.5 million versus $4.5 million for the first quarter of 2012. The Company prepaid $15.0 million of its Term Loan B in the first quarter of 2013 along with its scheduled principal payments. Its balance sheet at March 31, 2013 included $857.6 million in total bank and bond debt, net of cash and cash equivalents. Total net debt equates to leverage of approximately 3.9 times non-GAAP adjusted EBITDA for the trailing twelve-month period.

Non-GAAP Contracted Revenue

At March 31, 2013, MedAssets rolling 12-month non-GAAP contracted revenue estimate was $601.7 million (SCM segment - $374.0 million; RCM segment - $227.7 million), a year-over-year increase of 3.9%. 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

MedAssets confirmed its 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

0.32 - 0.42

nm

Non-GAAP adjusted EPS - diluted

$1.22 - 1.32

8.0-16.8%

Conference Call Information

Time/Date:

5:00 p.m. ET today, Wednesday, May 1, 2013

Phone:

855-410-0553 (or 646-583-7389 for international/local callers), PIN code 466302

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 337482)

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 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 at http://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 data

Three Months Ended

March 31,

2013

2012

% Change

Revenue:

Administrative fees, net

$

76,519

$

65,416

17.0%

Other service fees

96,318

84,474

14.0%

Total net revenue

172,837

149,890

15.3%

Operating expenses:

Cost of revenue

34,268

31,283

9.5%

Product development expenses

8,501

6,922

22.8%

Selling and marketing expenses

13,742

14,548

-5.5%

General and administrative expenses

58,620

53,836

8.9%

Acquisition and integration-related expenses

8,030

1,249

542.9%

Depreciation

9,177

6,414

43.1%

Amortization of intangibles

16,501

18,930

-12.8%

Total operating expenses

148,839

133,182

11.8%

Operating income

23,998

16,708

43.6%

Other income (expense):

Interest expense

(11,349)

(17,179)

-33.9%

Other income

41

107

nm

Income (loss) before income taxes

12,690

(364)

nm

Income tax expense (benefit)

4,986

(125)

nm

Net income (loss)

7,704

(239)

nm

Basic net income (loss) per share

0.13

(0.00)

nm

Diluted net income (loss) per share

$

0.13

$

(0.00)

nm

Weighted average shares — basic

59,006

57,029

Weighted average shares — diluted

60,404

57,029

5.9%

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

March 31,

December 31,

In 000s, except share and per share amounts

2013

2012

ASSETS

Current assets

Cash and cash equivalents

$

8,532

$

13,734

Accounts receivable, net of allowances of $2,685 and $3,046 as of March 31, 2013 and December 31, 2012, respectively

93,660

96,346

Deferred tax asset, current

10,795

11,126

Prepaid expenses and other current assets

25,589

21,791

Total current assets

138,576

142,997

Property and equipment, net

141,369

134,361

Other long term assets

Goodwill

1,027,847

1,027,847

Intangible assets, net

313,662

330,163

Other

41,846

42,869

Other long term assets

1,383,355

1,400,879

Total assets

$

1,663,300

$

1,678,237

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities

Accounts payable

$

19,144

$

25,487

Accrued revenue share obligation and rebates

72,878

74,274

Accrued payroll and benefits

17,143

40,085

Other accrued expenses

21,801

14,145

Current portion of deferred revenue

52,329

55,756

Current portion of notes payable

15,500

15,500

Current portion of finance obligation

238

233

Total current liabilities

199,033

225,480

Notes payable, less current portion

525,625

544,500

Bonds payable

325,000

325,000

Finance obligation, less current portion

8,982

9,046

Deferred revenue, less current portion

15,537

14,393

Deferred tax liability

124,720

125,394

Other long term liabilities

15,368

801

Total liabilities

1,214,265

1,244,614

Stockholders' equity

Common stock, $0.01 par value, 150,000,000 shares authorized; 60,901,000 and 59,324,000 shares issued and outstanding as of March 31, 2013 and December 31, 2012, respectively

609

593

Additional paid in capital

696,123

688,431

Accumulated deficit

(247,697)

(255,401)

Total stockholders' equity

449,035

433,623

Total liabilities and stockholders' equity

$

1,663,300

$

1,678,237

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

Three Months Ended

In 000s

March 31,

March 31,

2013

2012

Operating activities:

Net income (loss)

$

7,704

$

(239

)

Adjustments to reconcile net income (loss) from continuing operations to net cash provided by operating activities:

Bad debt expense

-

150

Depreciation

9,775

6,824

Amortization of intangibles

16,501

19,069

Impairment of assets

2,015

-

Loss on sale of assets

46

-

Non-cash stock compensation expense

3,411

2,559

Excess tax benefit from exercise of equity awards

(2,612

)

(269