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MedAssets reports Q3 & 9 month results

MedAssets today announced results for its third quarter and nine-month periods ended September 30, 2013.

Third quarter results are summarized below:

($ in millions, except per share)

 3Q'13

 3Q'12

 % Change

 Net Revenue:

 Spend and Clinical Resource Mgmt (SCM)

  $

 103.2

  $

 99.1

  4.2

 %

 Revenue Cycle Management (RCM)

   

 63.1

   

 64.3

  (1.8

 )

 Total Net Revenue a

  166.4

  163.4

  1.8

 Net income

  6.9

  5.5

  26.3

 Earnings per share (EPS) — diluted

  0.11

  0.09

  22.2

 Non-GAAP adjusted EBITDA

  53.9

  57.0

  (5.4

 )

 Non-GAAP adjusted EPS - diluted

  $

 0.31

  $

 0.32

  (3.1

 )

 Weighted average shares - diluted

 61.5

 59.5

 3.3

 %                        

(a) Column amounts may not add to total due to rounding.

Net Revenue

Third Quarter

Total net revenue for the third quarter of 2013 increased 1.8% to $166.4 million from $163.4 million for the third quarter of 2012. Net revenue in the SCM segment increased 4.2% to $103.2 million from net revenue of $99.1 million for the third quarter of 2012, due to growth in consulting and other service fees as well as group purchasing net administrative fees, partially offset by an expected year-over-year decrease in performance-related fees. Net revenue in the RCM segment decreased 1.8% to $63.1 million from $64.3 million for the third quarter of 2012 as technology-related revenue increased 5.3% while services-related revenue declined 15.8%.

Nine-Month Period

Total net revenue for the first nine months of 2013 increased 7.1% to $510.0 million from $476.3 million for the first nine months of 2012. Net revenue in the SCM segment grew 8.0% to $318.0 million from net revenue of $294.5 million for the first nine months of 2012. Net revenue in the RCM segment increased 5.5% to $191.9 million from $181.8 million for the first nine months of 2012 as technology-related revenue grew 6.6% and services-related revenue increased 3.1%.

Non-GAAP Adjusted EBITDA

Third Quarter

Total non-GAAP adjusted EBITDA was $53.9 million, or 32.4% of total net revenue, for the third quarter of 2013, a 5.4% decrease from total non-GAAP adjusted EBITDA of $57.0 million, or 34.9% of total net revenue, for the third quarter of 2012. This decline was due to an expected year-over-year decrease in performance-related fees, a higher proportion of revenue from SCM consulting and other service fees, as well as higher one-time or non-recurring revenue in the RCM segment in the third quarter last year.

Nine-Month Period

For the first nine months of 2013, total non-GAAP adjusted EBITDA was $168.1 million, or 33.0% of total net revenue, a 10.3% increase over total non-GAAP adjusted EBITDA of $152.4 million, or 32.0% of total net revenue, for the first nine months of 2012.

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

Third Quarter

Net income for the third quarter of 2013 was $6.9 million, or $0.11 per share, a 26.3% increase when compared with net income of $5.5 million, or $0.09 per share, for the third 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 $0.31 per share for the third quarter of 2013, a 3.1% decrease when compared with non-GAAP adjusted EPS of $0.32 per share for the third quarter of 2012.

Nine-Month Period

Net income for the first nine months of 2013 was $19.7 million, or $0.32 per share, versus net income of $7.5 million, or $0.13 per share, for the first nine months of 2012. Non-GAAP adjusted EPS was $1.02 per share for the first nine months of 2013, a 21.4% increase over non-GAAP adjusted EPS of $0.84 per share for the first nine months of 2012.

Cash Flow and Capital Resources

Cash provided by operating activities in the first nine months of 2013 was $109.8 million versus $107.7 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) decreased 2.3% to $63.4 million versus $64.9 million for the first nine months of 2012. The Company prepaid an additional $25.0 million of its Term Loan B in the third quarter of 2013 along with its scheduled principal payments. Its balance sheet at September 30, 2013 included $793.4 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 September 30, 2013, MedAssets rolling 12-month non-GAAP contracted revenue estimate was $625.1 million (SCM segment - $391.0 million RCM segment - $234.1 million), a year-over-year increase of 3.6%. 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. 

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