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MedAssets reports 8.6% net revenue increase

($ in millions, except per share)

 1Q'15

 1Q'14

 % Change

Net Revenue: 

Spend and Clinical Resource Mgmt (SCM)

$119.4

$108.6

 9.9%

Revenue Cycle Management (RCM)

 66.2

 62.3

  6.3

Total Net Revenue

 185.6

 170.9

 8.6

Net income

 3.4

 7.7

 (56.3)

Earnings per share (EPS) - diluted

 0.06

 0.12

 (50.0)

Non-GAAP adjusted EBITDA

 57.4

 56.7

 1.2

Non-GAAP adjusted EPS - diluted 

$ 0.31 

$ 0.32 

 (3.1) 

Weighted average shares - diluted

 60.5

 61.7

 (1.9)%

 

 

 

 

Net Revenue

Total net revenue for the first quarter of 2015 increased 8.6% to $185.6 million from$170.9 million for the first quarter of 2014. Excluding the revenue contribution from Sg2 (acquired on September 22, 2014), total net revenue growth was 2.4% on a year-over-year basis.

Net revenue in the SCM segment increased 9.9% to $119.4 million from $108.6 millionfor the first quarter of 2014 due to the contribution from Sg2 and growth in group purchasing net administrative fees, partially offset by a slight decline in advisory solutions consulting fees. Excluding Sg2, first quarter SCM net revenue increased 0.1%. Net revenue in the RCM segment increased 6.3% to $66.2 million from $62.3 million for the first quarter of 2014 as technology-related revenue (69.5% of RCM segment revenue) increased 4.0% while services-related revenue increased 11.8%.

Non-GAAP Adjusted EBITDA

Total non-GAAP adjusted EBITDA was $57.4 million, or 30.9% of total net revenue, for the first quarter of 2015, a 1.2% increase from total non-GAAP adjusted EBITDA of$56.7 million, or 33.2% of total net revenue, for the first quarter of 2014. The dollar increase was due to growth in net revenue noted above, partially offset by a higher proportion of revenue from lower-margin advisory, consulting and revenue cycle services.

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

Net income for the first quarter of 2015 was $3.4 million, or $0.06 per share, compared with net income of $7.7 million, or $0.12 per share, for the first quarter of 2014. Non-GAAP adjusted EPS (defined as EPS excluding non-cash acquisition-related intangible amortization and depreciation, non-cash share-based compensation, certain restructuring, acquisition and integration-related expenses and non-recurring items on a tax-adjusted basis) was $0.31 per share for the first quarter of 2015, compared with non-GAAP adjusted EPS of $0.32 per share for the first quarter of 2014.

Cash Flow and Capital Resources

Cash provided by operating activities in the first quarter of 2015 was $34.6 million, up 95.1% from $17.7 million for the first quarter of 2014. 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 205.5% to $23.2 million from $7.6 million for the first quarter of 2014 due to improvements in working capital during the first quarter of 2015. The company's balance sheet at March 31, 2015 included $848.8 million in total bank and bond debt, net of cash and cash equivalents. Total net debt equates to a leverage ratio of approximately 3.6 times non-GAAP adjusted EBITDA for the trailing twelve-month period.

Non-GAAP Contracted Revenue

At March 31, 2015, MedAssets' rolling 12-month non-GAAP contracted revenue estimate was $696.6 million (SCM segment - $446.5 million RCM segment - $250.1 million), a year-over-year increase of 9.2% (an increase of 3.5% excluding Sg2). 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.

2015 Financial Guidance

MedAssets reaffirmed its full-year 2015 financial guidance ranges, as follows:

(In millions, except per share)

 FY'15

FY'14

Guidance

Actual

Net Revenue: 

 SCM Segment a

 $ 488.0 - 496.0

$ 445.6

 RCM Segment b

 264.0 - 272.0

 274.6

Total Net Revenue c

 753.0 - 767.0

 720.2

Non-GAAP adjusted EBITDA

 $ 227.0 - 237.0

$ 234.0

 Adjusted EBITDA margin %

 29.9 - 31.2%

 32.5%

GAAP EPS - diluted

 $ 0.24 - 0.34

$ (0.34)

Non-GAAP adjusted EPS - diluted 

 $ 1.13 - 1.23

$ 1.35 

(a)  Excluding the contribution from Sg2, SCM segment revenue growth is expected to be 1.4 - 3.3% in FY'15

(b)  Excluding $28 million in revenue from a large revenue cycle outsourcing agreement that ended December 31,2014, the RCM segment revenue growth is expected to be 7.0 - 10.3% in FY'15

(c)  Excluding the contribution from Sg2 and $28 million in revenue from a large revenue cycle outsourcing agreement that ended December 31, 2014, total net revenue growth is expected to be 1.8 - 3.9% in FY'15

 

 

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