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MedAssets reports improved Q2 & 6 month results

Three-Month Period

 

 

(In millions, except per share)

2Q'15

2Q'14

% Change

Net Revenue:

 

Spend and Clinical Resource Mgmt (SCM)

$119.9

$105.9

13.2%

Revenue Cycle Management (RCM)

70.5

69.5

1.4

Total Net Revenue

190.4

175.4

8.6

Net income

6.3

6.6

(4.3)

Earnings per share (EPS) - diluted

0.10

0.11

(9.1)

Non-GAAP adjusted EBITDA

59.1

54.3

8.9

Non-GAAP adjusted EPS - diluted

$0.31

$0.30

3.3

Weighted average shares - diluted

61.1

60.9

0.2%

Net Revenue

Total net revenue for the second quarter of 2015 increased 8.6% to $190.4 millionfrom $175.4 million for the second quarter of 2014. Excluding the revenue contribution from Sg2 (acquired on September 22, 2014), total net revenue growth was 1.8% on a year-over-year basis.

Net revenue in the SCM segment increased 13.2% to $119.9 million from $105.9 millionfor the second quarter of 2014 due to the contribution from Sg2 and growth in advisory solutions consulting fees, partially offset by a slight decline in group purchasing net administrative fees. Excluding Sg2, second quarter SCM net revenue increased 2.0% on a year-over-year basis. Net revenue in the RCM segment increased 1.4% to $70.5 million from $69.5 million for the second quarter of 2014 as technology-related revenue (67.4% of RCM segment revenue) was flat while services-related revenue increased 4.4%.

Non-GAAP Adjusted EBITDA

Total non-GAAP adjusted EBITDA was $59.1 million, or 31.1% of total net revenue, for the second quarter of 2015, an 8.9% increase from total non-GAAP adjusted EBITDA of$54.3 million, or 31.0% of total net revenue, for the second quarter of 2014. The increase was due to growth in net revenue in addition to improved operating efficiencies in revenue cycle services.

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

Net income for the second quarter of 2015 was $6.3 million, or $0.10 per share, compared with net income of $6.6 million, or $0.11 per share, for the second 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 second quarter of 2015, compared with non-GAAP adjusted EPS of $0.30 per share for the second quarter of 2014.

Six-Month Period

 

 

(In millions, except per share)

6 mos. '15

6 mos. '14

% Change

Net Revenue:

 

Spend and Clinical Resource Mgmt (SCM)

$239.3

$214.5

11.6%

Revenue Cycle Management (RCM)

136.7

131.8

3.7

Total Net Revenue

376.0

346.3

8.6

Net income

9.7

14.3

(32.3)

Earnings per share (EPS) - diluted

0.16

0.23

(30.4)

Non-GAAP adjusted EBITDA

116.5

111.0

4.9

Non-GAAP adjusted EPS - diluted

$0.62

$0.62

0.0

Weighted average shares - diluted

60.8

61.4

(1.0)%

Net Revenue

Total net revenue for the six months ended June 30, 2015 increased 8.6% to $376.0 million from $346.3 million for the first six months of 2014. Excluding the contribution from Sg2, full-year total net revenue growth was 2.1% when compared with the first six months of 2014. Net revenue in the SCM segment grew 11.6% to $239.3 millionfrom $214.5 million for the first six months of 2014. Excluding the contribution from Sg2, year-to-date SCM net revenue growth was 1.1%. Net revenue in the RCM segment improved 3.7% to $136.7 million from $131.8 million for the first six months of 2014 as technology-related revenue (68.4% of RCM segment revenue) increased 2.0% while services-related revenue increased 7.7%.

Non-GAAP Adjusted EBITDA

For the first six months of 2015, total non-GAAP adjusted EBITDA was $116.5 million, or 31.0% of total net revenue, a 4.9% increase from total non-GAAP adjusted EBITDA of $111.0 million, or 32.1% of total net revenue, for the first six months of 2014.

Net Income and Non-GAAP Adjusted EPS

Net income for the first six months of 2015 was $9.7 million, or $0.16 per share, compared with net income of $14.3 million, or $0.23 per share, for the first six months of 2014. Non-GAAP adjusted EPS was $0.62 per share for the first six months of 2015, compared with $0.62 per share for the first six months of 2014.

Cash Flow and Capital Resources

Cash provided by operating activities in the first six months of 2015 was $81.2 million, up 60.0% from $50.8 million for the first six months 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 156.5% to $58.3 million from $22.7 million for the first six months of 2014 due to improvements in working capital during the first half of 2015. The company's balance sheet at June 30, 2015 included $822.0 million in total bank and bond debt, net of cash and cash equivalents. Total net debt equates to a leverage ratio of approximately 3.4 times non-GAAP adjusted EBITDA for the trailing twelve-month period.

Non-GAAP Contracted Revenue

At June 30, 2015, MedAssets' rolling 12-month non-GAAP contracted revenue estimate was $690.8 million (SCM segment - $431.5 million RCM segment - $259.3 million), a year-over-year increase of 10.0% (an increase of 4.2% 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.

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