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MedAssets Reports Second Quarter and Six Month 2012 Financial Results

MedAssets Reports Second Quarter and Six Month 2012 Financial Results

MedAssets, Inc. has announced results for its second quarter and six-month periods ended June 30, 2012. Second quarter results are summarized in the table below:

($ in millions, except per share)

2Q-12

2Q-11

% Change

Net Revenue:

Spend and Clinical Resource Mgmt (SCM)

$

102.1

$

91.1

12.1

%

Revenue Cycle Management (RCM)

60.9

56.3

8.2

Total Net Revenue

163.0

147.4

10.6

%

Non-GAAP acquisition-related purchase

accounting revenue adjustments a

--

0.5

nm

Total non-GAAP Net Revenue

163.0

147.9

10.2

%

Net income (loss)

2.3

(2.5

)

nm

Earnings (loss) per share (EPS) — diluted

0.04

(0.04

)

nm

Non-GAAP adjusted EBITDA

49.0

44.3

10.7

%

Non-GAAP adjusted EPS - diluted

$

0.28

$

0.23

21.7

Weighted average shares - diluted b

58.7

57.4

2.3

%

(a) Non-GAAP acquisition-related purchase accounting revenue adjustments reflect net revenue that would have been recognized after completion of the Broadlane acquisition if not for the GAAP-related purchase accounting revenue adjustments. A detailed explanation is provided under "Use of Non-GAAP Financial Measures" following the accompanying financial schedules.

(b) Given the Company's net loss for the three months ended June 30, 2011, basic and fully diluted weighted average shares are the same for EPS and non-GAAP adjusted EPS.

Net Revenue

Second Quarter

Total net revenue for the second quarter of 2012 increased 10.6% to $163.0 million from $147.4 million in the second quarter of 2011. Comparing period-over-period organic growth, total net revenue of $163.0 million in the second quarter of 2012 increased 10.2% from total non-GAAP net revenue of $147.9 million (including non-GAAP acquisition-related purchase accounting revenue adjustments) in the second quarter of 2011. Net revenue in the SCM segment grew 11.5% to $102.1 million from non-GAAP net revenue of $91.6 million in the second quarter of 2011 primarily due to continued growth in group purchasing-related net administrative fees as well as earlier-than-expected recognition of certain guarantee-related revenue and performance fees. Net revenue in the RCM segment increased 8.2% to $60.9 million from $56.3 million in the second quarter of 2011 as technology-related revenue grew 14.4% and was slightly offset by a 3.8% decline in services-related revenue.

Six-Month Period

Total net revenue for the first half of 2012 increased 12.6% to $312.9 million from $277.9 million in the first half of 2011. Comparing period-over-period organic growth, total net revenue of $312.9 million in the first half of 2012 increased 10.2% from non-GAAP total net revenue of $284.0 million in the first half of 2011. Net revenue in the SCM segment grew 10.7% to $195.4 million from non-GAAP net revenue of $176.5 million in the first half of 2011. Net revenue from the RCM segment increased 9.3% to $117.5 million from $107.5 million in the first half of 2011 as technology-related revenue grew 12.2% and services-related revenue increased 3.0%.

Non-GAAP Adjusted EBITDA

Second Quarter

Total non-GAAP adjusted EBITDA was $49.0 million, or 30.1% of total net revenue, in the second quarter of 2012, a 10.7% increase over total non-GAAP adjusted EBITDA of $44.3 million, or 29.9% of total non-GAAP net revenue, in the second quarter of 2011.

Six-Month Period

In the first half of 2012, total non-GAAP adjusted EBITDA was $95.4 million, or 30.5% of total net revenue, a 12.0% increase over total non-GAAP adjusted EBITDA of $85.2 million, or 30.0% of total non-GAAP net revenue, in the first half of 2011.

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

Second Quarter

Net income in the second quarter of 2012 was $2.3 million, or $0.04 per share, versus a net loss of $2.5 million, or a loss of $0.04 per share, in the second quarter of 2011. The second quarter of 2011 was impacted by acquisition and integration-related expenses associated with the purchase of Broadlane in November 2010.

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 21.7% to $0.28 per share in the second quarter of 2012, versus non-GAAP adjusted EPS of $0.23 per share in the second quarter of 2011.

Six-Month Period

Net income in the first half of 2012 was $2.0 million, or $0.03 per share, versus a net loss of $18.7 million, or a loss of $0.33 per share, in the first half of 2011. 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 adjusted EPS was $0.51 per share in the first half of 2012, a 27.5% increase over non-GAAP adjusted EPS of $0.40 per share in the first half of 2011.

Cash Flow and Capital Resources

Cash provided by operating activities in the first six months of 2012 was $62.7 million, a 68.0% increase from $37.3 million in the first half of 2011. The Company's balance sheet at June 30, 2012 included $925.1 million in total bank and bond debt, net of cash and cash equivalents. The Company prepaid approximately $25 million of bank debt in the second quarter in addition to scheduled principal payments. The total net debt equates to leverage of approximately 4.8 times non-GAAP adjusted EBITDA for the trailing twelve-month period.

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