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MedAssets Reports Second Quarter and Six-Month 2011 Financial Results

MedAssets Reports Second Quarter and Six-Month 2011 Financial Results

MedAssets, Inc. the US recruiter has announced its results for its second quarter and six months ended June 30, 2011. Total net revenue for the second quarter of 2011 increased 54.9% to $147.4 million from $95.1 million in the second quarter of 2010.

Second quarter results are summarized in the table below: 

(In millions, except per share)

2Q-11

2Q-10 a

2Q-10 a,b

Net Revenue:

Recast

Non-GAAP Acquisition-
Affected and Recast

Spend and Clinical Resource Mgmt (SCM)

$

91.1

$ 42.6

$

86.4

Revenue Cycle Management (RCM)

56.3

52.5

52.5

Total Net Revenue

147.4

95.1

138.9

Non-GAAP acquisition-related purchase

accounting revenue adjustment c

0.5

--

--

Total non-GAAP Net Revenue

147.9b

95.1

138.9

Net (loss) income

(2.5

)

3.3

(7.5

)

(Loss) earnings per share (EPS) — diluted

(0.04

)

0.06

NA

Non-GAAP adjusted EBITDA

44.3

25.4

37.5

Non-GAAP cash EPS - diluted

$ 0.23

$ 0.17

NA

Weighted average shares — diluted d

57.4

59.5

NA

(a) The Company moved its Decision Support Services (DSS) operating unit from the RCM segment to the SCM segment on January 1, 2011. Recast results assume the DSS operating unit was part of the SCM segment on January 1, 2010.

(b) Non-GAAP acquisition-affected results assume The Broadlane Group (Broadlane) acquisition occurred on January 1, 2010.

(c) Non-GAAP acquisition-related purchase accounting revenue adjustment reflects net revenue that would have been recognized after completion of the Broadlane acquisition if not for the GAAP-related purchase accounting adjustment. A detailed explanation is provided under "Use of Non-GAAP Financial Measures."

(d) Given the Company's net loss in both the second quarter and six months ended June 30, 2011, basic and diluted weighted average shares are the same.

Net Revenue

Second Quarter

Total net revenue for the second quarter of 2011 increased 54.9% to $147.4 million from $95.1 million in the second quarter of 2010, due primarily to the acquisition of Broadlane on November 16, 2010.

Comparing period-over-period organic growth, non-GAAP acquisition-affected total net revenue of $147.9 million in the second quarter of 2011 increased 6.4% from non-GAAP acquisition-affected total net revenue of $138.9 million in the second quarter of 2010. Total non-GAAP acquisition-affected net revenue in the SCM segment grew 6.0% to $91.6 million from non-GAAP acquisition-affected net revenue of $86.4 million in the second quarter of 2010 due to solid growth in group purchasing-related administrative fees, partially offset by lower DSS revenue. Total net revenue from the RCM segment increased 7.2% to $56.3 million from $52.5 million in the second quarter of 2010 as services-related revenue grew 23.3% and technology-related revenue was essentially flat versus the second quarter last year.

Six Month Period

Total net revenue for the first half of 2011 increased 47.4% to $277.9 million from $188.5 million in the first half of 2010, due primarily to the acquisition of Broadlane.

Comparing period-over-period organic growth, non-GAAP acquisition-affected total net revenue of $284.0 million in the first half of 2011 increased 3.3% from non-GAAP acquisition-affected total net revenue of $274.8 million in the first half of 2010. Total non-GAAP acquisition-affected net revenue in the SCM segment grew 3.6% to $176.5 million from non-GAAP acquisition-affected net revenue of $170.4 million in the first half of 2010. Total net revenue from the RCM segment increased 3.0% to $107.5 million from $104.4 million in the first half of 2010 as technology-related revenue grew 4.8% but was offset by a 0.9% decline in services-related revenue.

Non-GAAP Adjusted EBITDA

Second Quarter

In the second quarter of 2011, total non-GAAP adjusted EBITDA was $44.3 million, or 30.0% of total net revenue, a 74.4% increase over total non-GAAP adjusted EBITDA of $25.4 million, or 26.7% of total net revenue, in the second quarter of 2010.

Comparing period-over-period organic growth, total non-GAAP acquisition-affected adjusted EBITDA in the second quarter of 2011 was $44.3 million, or 29.9% of non-GAAP acquisition-affected total net revenue, a 17.9% increase from non-GAAP acquisition-affected adjusted EBITDA of $37.5 million, or 27.0% of non-GAAP acquisition-affected total net revenue, in the second quarter of 2010.

Six Month Period

In the first half of 2011, total non-GAAP adjusted EBITDA was $85.2 million, or 30.7% of total net revenue, a 60.2% increase over total non-GAAP adjusted EBITDA of $53.2 million, or 28.2% of total net revenue, in the first half of 2010.

Comparing period-over-period organic growth, total non-GAAP acquisition-affected adjusted EBITDA in the first half of 2011 was $85.2 million, or 30.0% of non-GAAP acquisition-affected total net revenue, an increase of 12.0% from non-GAAP acquisition-affected adjusted EBITDA of $76.1 million, or 27.7% of non-GAAP acquisition-affected total net revenue, in the first half of 2010.

Net (Loss) Income and Per Share

Second Quarter

Net loss in the second quarter of 2011 was $2.5 million, or a loss of $0.04 per diluted share, versus net income of $3.3 million, or earnings of $0.06 per diluted share, in the second quarter of 2010. The net loss in the second quarter of 2011 was primarily due to acquisition and integration-related costs as well as increased amortization and interest expense related to the acquisition of Broadlane.

Non-GAAP cash EPS, defined as EPS excluding non-cash acquisition-related intangible amortization, share-based compensation, acquisition-related expenses and other non-recurring items on a tax-adjusted basis, was $0.23 per diluted share in the second quarter of 2011, versus non-GAAP cash EPS of $0.17 per diluted share in the second quarter of 2010.

Six Month Period

Net loss in the first half of 2011 was $18.7 million, or a loss of $0.33 per diluted share, versus net income of $8.8 million, or earnings of $0.15 per diluted share, in the first half of 2010. The net loss in the first half of 2011 was primarily due to acquisition and integration-related costs as well as increased amortization and interest expense related to the acquisition of Broadlane.

Non-GAAP cash EPS was $0.40 per diluted share in the first half of 2011, versus non-GAAP cash EPS of $0.36 per diluted share in the first half of 2010.

Cash Flow and Capital Resources

Net cash provided by operating activities in the first six months of 2011 increased 4.2% to $37.3 million from $35.8 million in the first half of 2010. The company's balance sheet at June 30, 2011 included $890.0 million in total bank and bond debt, net of cash and cash equivalents, which represented leverage of approximately 5.0 times trailing 12-month non-GAAP acquisition-affected adjusted EBITDA.

2011 Financial Guidance

MedAssets full-year 2011 non-GAAP acquisition-affected total net revenue guidance was lowered by approximately 2.4% to a range of $575-587 million. SCM segment acquisition-affected net revenue guidance was maintained in the range of $359-367 million, and RCM segment net revenue guidance was reduced by approximately 6.0% to $214-222 million. The company's non-GAAP adjusted EBITDA guidance was narrowed to $185-189 million and non-GAAP diluted cash EPS to $0.96-1.02.

Contracted Revenue Estimates

At June 30, 2011, the Company's rolling 12-month non-GAAP contracted revenue was an estimated $558.3 million ($344.1 million from the SCM segment and $214.2 million from the RCM segment). This is a sequential increase of 0.5% from the first quarter of 2011.

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