Attached files
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| 8-K - MEDASSETS, INC. 8K - MEDASSETS INC | a50363004.htm |
Exhibit 99.1
MedAssets Reports Second Quarter and Six Month 2012 Financial Results
ATLANTA--(BUSINESS WIRE)--August 1, 2012--MedAssets, Inc. (NASDAQ: MDAS) today 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 $25 million of bank debt in the second quarter in addition to scheduled principal payments. The total net debt equates to leverage of approximately 4.8 times non-GAAP adjusted EBITDA for the trailing twelve-month period.
Updated 2012 Financial Guidance
MedAssets raised its full-year 2012 financial guidance, as follows:
|
($ in millions, except per share) |
FY 2012 |
Y-Y % change |
|||||||||||
| Net Revenue: | |||||||||||||
| SCM segment | $ | 386 - 394 | 4.3 - 6.4 | % | |||||||||
| RCM segment | 231 - 239 | 7.8-11.5 | |||||||||||
| Total Net Revenue |
620 - 630 |
6.1 - 7.8 |
|||||||||||
| Non-GAAP adjusted EBITDA | 198 – 206 | 7.6-11.9 | % | ||||||||||
| GAAP EPS – diluted | 0.13 - 0.21 | nm | |||||||||||
| Non-GAAP adjusted EPS – diluted | $ | 1.05 - 1.13 | 6.1-14.1 | % | |||||||||
Non-GAAP Contracted Revenue
At June 30, 2012, MedAssets rolling 12-month non-GAAP contracted revenue estimate was $603.4 million (SCM segment - $373.1 million; RCM segment - $230.3 million), a year-over-year increase of 8.1%. 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.
Conference Call Information
| Time/Date: | 5:00 p.m. ET today, Wednesday, August 1, 2012 | ||
| Phone: | 866-200-6965 (or 646-216-7221 for international/local callers), PIN code 63642908 | ||
| Webcast: |
http://ir.medassets.com, “Events & Presentations” page; Archive will be available for over 30 days |
||
| Replay: | Call 866-206-0173 or 646-216-7204 (PIN code 274355) |
About MedAssets
MedAssets (NASDAQ: MDAS) partners with healthcare providers to improve their financial strength by implementing revenue cycle, spend and clinical resource management solutions that help capture revenue, control cost, improve margins and cash flow, increase regulatory compliance, and optimize operational efficiency. MedAssets serves more than 4,200 hospitals and 100,000 non-acute healthcare providers. The company currently manages $48 billion in supply spend and touches over $340 billion in gross patient revenue annually through its revenue cycle solutions. For more information, go to www.medassets.com.
Use of Non-GAAP Financial Information
In order to provide investors with greater insight, promote transparency and allow for a more comprehensive understanding of the information used by management and the board of directors in their financial and operational decision-making, the Company supplements its consolidated financial statements presented on a GAAP basis herein with the following non-GAAP financial information: gross fees; gross administrative fees; revenue share obligation; acquisition-related purchase accounting revenue adjustments; EBITDA; adjusted EBITDA; adjusted EBITDA margin; adjusted net income; diluted adjusted EPS; and contracted revenue. Reconciliations of these non-GAAP measures to their most directly comparable GAAP measures, where possible, are included in the accompanying financial schedules. Also, see "Use of Non-GAAP Financial Measures" following the financial schedules for more information.
Safe Harbor Statement
This Press Release contains forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, as amended by the Private Securities Litigation Reform Act of 1995, and include the intent, belief or current expectations of the Company and its management team with respect to the Company’s future business operations that include, but are not limited to: 2012 financial guidance, revenue growth and other financial projections and forecasts; and the Company’s ability to successfully integrate and capitalize on synergies associated with acquisitions. Any forward-looking statements are not guarantees of future performance, involve risks and uncertainties, and actual results may differ materially from those contemplated by such forward-looking statements. Important factors currently known to management that could cause actual results to differ materially from those contemplated by the forward-looking statements in this Press Release include, but are not limited to: failure to realize improvements in performance, efficiency and profitability; failure to complete anticipated sales under negotiations; failure to successfully implement revenue backlog; lack of revenue growth; client losses; and adverse developments with respect to the operation or performance of the Company’s business units or the market price of its common stock. Additional factors that could cause actual results to differ materially from those contemplated within this Press Release can also be found in the Company’s Risk Factor disclosures in its Form 10-K for the year ended December 31, 2011 filed with the Securities and Exchange Commission and available at http://ir.medassets.com. The Company disclaims any responsibility to update any forward-looking statements.
mdas/F
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||||||||||||||||||
| (UNAUDITED) | |||||||||||||||||||||||||||||||||
| In 000s, except per share data | Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||
| June 30, | June 30, | ||||||||||||||||||||||||||||||||
| 2012 | 2011 | % Change | 2012 | 2011 | % Change | ||||||||||||||||||||||||||||
| Revenue: | |||||||||||||||||||||||||||||||||
| Administrative fees, net | $ | 66,695 | $ | 59,815 | 11.5 | % | $ | 132,111 | $ | 116,397 | 13.5 | % | |||||||||||||||||||||
| Other service fees | 96,315 | 87,559 | 10.0 | % | 180,789 | 161,536 | 11.9 | % | |||||||||||||||||||||||||
| Total net revenue | 163,010 | 147,374 | 10.6 | % | 312,900 | 277,933 | 12.6 | % | |||||||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||||||||||||
| Cost of revenue | 34,730 | 30,488 | 13.9 | % | 66,013 | 61,043 | 8.1 | % | |||||||||||||||||||||||||
| Product development expenses | 6,638 | 6,202 | 7.0 | % | 13,560 | 12,875 | 5.3 | % | |||||||||||||||||||||||||
| Selling and marketing expenses | 19,178 | 18,000 | 6.5 | % | 33,726 | 30,601 | 10.2 | % | |||||||||||||||||||||||||
| General and administrative expenses | 56,574 | 46,770 | 21.0 | % | 110,410 | 95,911 | 15.1 | % | |||||||||||||||||||||||||
| Acquisition and integration-related expenses | 2,028 | 6,828 | -70.3 | % | 3,277 | 18,971 | -82.7 | % | |||||||||||||||||||||||||
| Depreciation | 7,281 | 5,228 | 39.3 | % | 13,695 | 10,907 | 25.6 | % | |||||||||||||||||||||||||
| Amortization of intangibles | 18,481 | 20,232 | -8.7 | % | 37,411 | 40,472 | -7.6 | % | |||||||||||||||||||||||||
| Total operating expenses | 144,910 | 133,748 | 8.3 | % | 278,092 | 270,780 | 2.7 | % | |||||||||||||||||||||||||
| Operating income | 18,100 | 13,626 | 32.8 | % | 34,808 | 7,153 | 386.6 | % | |||||||||||||||||||||||||
| Other (expense) income: | |||||||||||||||||||||||||||||||||
| Interest (expense) | (16,871 | ) | (18,075 | ) | -6.7 | % | (34,050 | ) | (36,124 | ) | -5.7 | % | |||||||||||||||||||||
| Other income | 228 | 109 | 109.2 | % | 335 | 280 | 19.6 | % | |||||||||||||||||||||||||
| Income (loss) before income taxes | 1,457 | (4,340 | ) | 133.6 | % | 1,093 | (28,691 | ) | 103.8 | % | |||||||||||||||||||||||
| Income tax benefit | (794 | ) | (1,852 | ) | -57.1 | % | (919 | ) | (10,033 | ) | -90.8 | % | |||||||||||||||||||||
| Net income (loss) | 2,251 | (2,488 | ) | 190.5 | % | 2,012 | (18,658 | ) | 110.8 | % | |||||||||||||||||||||||
| Basic net income (loss) per share | 0.04 | (0.04 | ) | 200.0 | % | 0.04 | (0.33 | ) | 112.1 | % | |||||||||||||||||||||||
| Diluted net income (loss) per share | $ | 0.04 | $ | (0.04 | ) | 200.0 | % | $ | 0.03 | $ | (0.33 | ) | 109.1 | % | |||||||||||||||||||
| Weighted average shares — basic | 57,174 | 57,357 | -0.3 | % | 57,102 | 57,295 | -0.3 | % | |||||||||||||||||||||||||
| Weighted average shares — diluted | 58,678 | 57,357 | 2.3 | % | 58,637 | 57,295 | 2.3 | % | |||||||||||||||||||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||||
| (UNAUDITED) | |||||||||||
| June 30, | December 31, | ||||||||||
| In 000s, except share and per share amounts | 2012 | 2011 | |||||||||
| ASSETS | |||||||||||
| Current assets | |||||||||||
| Cash and cash equivalents | $ | 5,382 | $ | 62,947 | |||||||
| Accounts receivable, net of allowances of $3,475 and $3,891 as of June 30, 2012 and | |||||||||||
| December 31, 2011 | 93,779 | 104,039 | |||||||||
| Deferred tax asset, current | 15,462 | 15,434 | |||||||||
| Prepaid expenses and other current assets | 21,624 | 18,488 | |||||||||
| Total current assets | 136,247 | 200,908 | |||||||||
| Property and equipment, net | 113,504 | 101,471 | |||||||||
| Other long term assets | |||||||||||
| Goodwill | 1,027,847 | 1,027,847 | |||||||||
| Intangible assets, net | 365,682 | 403,371 | |||||||||
| Other | 57,112 | 61,381 | |||||||||
| Other long term assets | 1,450,641 | 1,492,599 | |||||||||
| Total assets | $ | 1,700,392 | $ | 1,794,978 | |||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
| Current liabilities | |||||||||||
| Accounts payable | $ | 16,099 | $ | 21,185 | |||||||
| Accrued revenue share obligation and rebates | 71,434 | 70,906 | |||||||||
| Accrued payroll and benefits | 26,772 | 33,265 | |||||||||
| Other accrued expenses | 17,913 | 17,811 | |||||||||
| Current portion of deferred revenue | 51,160 | 48,459 | |||||||||
| Deferred purchase consideration | - | 120,136 | |||||||||
| Current portion of notes payable | 6,350 | 6,350 | |||||||||
| Current portion of finance obligation | 223 | 213 | |||||||||
| Total current liabilities | 189,951 | 318,325 | |||||||||
| Notes payable, less current portion | 599,125 | 572,300 | |||||||||
| Bonds payable | 325,000 | 325,000 | |||||||||
| Finance obligation, less current portion | 9,169 | 9,287 | |||||||||
| Deferred revenue, less current portion | 14,057 | 14,148 | |||||||||
| Deferred tax liability | 128,357 | 129,635 | |||||||||
| Other long term liabilities | 8,955 | 7,670 | |||||||||
| Total liabilities | 1,274,614 | 1,376,365 | |||||||||
| Commitments and contingencies | |||||||||||
| Stockholders’ equity | |||||||||||
| Common stock, $0.01 par value, 150,000,000 shares authorized; 58,366,000 and 57,857,000 | |||||||||||
| shares issued and outstanding as of June 30, 2012 and December 31, 2011 | 584 | 579 | |||||||||
| Additional paid in capital | 676,509 | 670,618 | |||||||||
| Accumulated other comprehensive loss | (4,804 | ) | (4,061 | ) | |||||||
| Accumulated deficit | (246,511 | ) | (248,523 | ) | |||||||
| Total stockholders’ equity | 425,778 | 418,613 | |||||||||
| Total liabilities and stockholders’ equity | $ | 1,700,392 | $ | 1,794,978 | |||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||
| (UNAUDITED) | |||||||||||
| Six Months Ended | |||||||||||
| In 000s | June 30, | June 30, | |||||||||
| 2012 | 2011 | ||||||||||
| Operating activities: | |||||||||||
| Net income (loss) | $ | 2,012 | $ | (18,658 | ) | ||||||
| Adjustments to reconcile net income (loss) from continuing operations to net cash provided by operating activities: | |||||||||||
| Bad debt expense | 275 | 240 | |||||||||
| Depreciation | 14,512 | 11,417 | |||||||||
| Amortization of intangibles | 37,689 | 40,751 | |||||||||
| Loss on sale of assets | 338 | - | |||||||||
| Non-cash stock compensation expense | 5,015 | 822 | |||||||||
| Excess tax benefit from exercise of equity awards | (295 | ) | (943 | ) | |||||||
| Amortization of debt issuance costs | 3,791 | 3,724 | |||||||||
| Noncash interest expense, net | 270 | 2,034 | |||||||||
| Deferred income tax benefit | (1,384 | ) | (17,987 | ) | |||||||
| Changes in assets and liabilities | 470 | 15,907 | |||||||||
| Cash provided by operating activities | 62,693 | 37,307 | |||||||||
| Investing activities: | |||||||||||
| Purchases of property, equipment, and software | (7,892 | ) | (5,361 | ) | |||||||
| Capitalized software development costs | (20,208 | ) | (10,677 | ) | |||||||
| Cash used in investing activities | (28,100 | ) | (16,038 | ) | |||||||
| Financing activities: | |||||||||||
| Borrowings from revolving credit facility | 55,000 | - | |||||||||
| Repayment of notes payable | (28,175 | ) | (28,175 | ) | |||||||
| Repayment of finance obligation | (338 | ) | (329 | ) | |||||||
| Payment of deferred purchase consideration | (120,136 | ) | - | ||||||||
| Excess tax benefit from exercise of equity awards | 295 | 943 | |||||||||
| Issuance of common stock | 1,796 | 1,615 | |||||||||
| Purchase of treasury shares | (600 | ) | - | ||||||||
| Cash used in financing activities | (92,158 | ) | (25,946 | ) | |||||||
| Net decrease in cash and cash equivalents | (57,565 | ) | (4,677 | ) | |||||||
| Cash and cash equivalents, beginning of period | 62,947 | 46,836 | |||||||||
| Cash and cash equivalents, end of period | $ | 5,382 | $ | 42,159 | |||||||
| SUPPLEMENTAL REVENUE REPORTING | |||||||||||||||||||||||||||
| RECONCILIATION OF GROSS FEES (A NON-GAAP MEASURE) TO NET REVENUE | |||||||||||||||||||||||||||
| (UNAUDITED) | |||||||||||||||||||||||||||
| In 000s | Three Months Ended June 30, | ||||||||||||||||||||||||||
| 2012 |
2011 c |
|
% Change | ||||||||||||||||||||||||
| Non-GAAP gross administrative fees | $ | 107,512 | $ | 94,343 | 14.0 | % | |||||||||||||||||||||
| Other service fees | 96,315 | 87,737 | 9.8 | % | |||||||||||||||||||||||
| Non-GAAP gross fees | 203,827 | RSO % | 182,080 | RSO % | 11.9 | % | |||||||||||||||||||||
| Non-GAAP RSO | (40,817 | ) | 38.0 | % | (34,207 | ) | 36.3 | % | 19.3 | % | |||||||||||||||||
| Total net revenue | $ | 163,010 | $ | 147,873 | 10.2 | % | |||||||||||||||||||||
| In 000s | |||||||||||||||||||||||||||
| Six Months Ended June 30, | |||||||||||||||||||||||||||
| 2012 |
2011 d |
% Change | |||||||||||||||||||||||||
| Non-GAAP gross administrative fees | $ | 212,016 | $ | 193,281 | 9.7 | % | |||||||||||||||||||||
| Other service fees | 180,789 | 163,108 | 10.8 | % | |||||||||||||||||||||||
| Non-GAAP gross fees | 392,805 | RSO % | 356,389 | RSO % | 10.2 | % | |||||||||||||||||||||
| Non-GAAP RSO | (79,905 | ) | 37.7 | % | (72,393 | ) | 37.5 | % | 10.4 | % | |||||||||||||||||
| Total net revenue | $ | 312,900 | $ | 283,996 | 10.2 | % | |||||||||||||||||||||
| SUPPLEMENTAL SEGMENT REPORTING | |||||||||||||||||||||||||||
| RECONCILIATION OF SELECTED NON-GAAP MEASURES TO GAAP MEASURES | |||||||||||||||||||||||||||
| (UNAUDITED) | |||||||||||||||||||||||||||
| In 000s | Three Months Ended June 30, | ||||||||||||||||||||||||||
| 2012 | 2011 | % Change | |||||||||||||||||||||||||
| Net revenue | |||||||||||||||||||||||||||
| Spend and Clinical Resource Management ("SCM") | $ | 102,115 | $ | 91,112 | 12.1 | % | |||||||||||||||||||||
| Revenue Cycle Management ("RCM") | 60,895 | 56,262 | 8.2 | % | |||||||||||||||||||||||
| Total net revenue | 163,010 | 147,374 | 10.6 | % | |||||||||||||||||||||||
| Non-GAAP acquisition-related purchase accounting | |||||||||||||||||||||||||||
| revenue adjustments c | - | 499 | |||||||||||||||||||||||||
| Total non-GAAP net revenue | $ | 163,010 | $ | 147,873 | 10.2 | % | |||||||||||||||||||||
| Non-GAAP Adjusted EBITDA | % margin | % margin | |||||||||||||||||||||||||
| SCM | $ | 44,558 | 43.6 | % | $ | 37,355 | 40.8 | % | 19.3 | % | |||||||||||||||||
| RCM | 12,079 | 19.8 | % | 14,251 | 25.3 | % | -15.2 | % | |||||||||||||||||||
| Corporate | (7,631 | ) | (7,328 | ) | 4.1 | % | |||||||||||||||||||||
| Total non-GAAP Adjusted EBITDA | 49,006 | 30.1 | % | 44,278 | 29.9 | % | 10.7 | % | |||||||||||||||||||
| In 000s | Six Months Ended June 30, | ||||||||||||||||||||||||||
| 2012 | 2011 | % Change | |||||||||||||||||||||||||
| Net revenue | |||||||||||||||||||||||||||
| SCM | $ | 195,380 | $ | 170,446 | 14.6 | % | |||||||||||||||||||||
| RCM | 117,520 | 107,487 | 9.3 | % | |||||||||||||||||||||||
| Total net revenue | 312,900 | 277,933 | 12.6 | % | |||||||||||||||||||||||
| Non-GAAP acquisition-related purchase accounting | |||||||||||||||||||||||||||
| revenue adjustments d | - | 6,063 | |||||||||||||||||||||||||
| Total non-GAAP net revenue | $ | 312,900 | $ | 283,996 | 10.2 | % | |||||||||||||||||||||
| Non-GAAP Adjusted EBITDA | % margin | % margin | |||||||||||||||||||||||||
| SCM | $ | 86,506 | 44.3 | % | $ | 73,505 | 41.6 | % | 17.7 | % | |||||||||||||||||
| RCM | 23,697 | 20.2 | % | 25,721 | 23.9 | % | -7.9 | % | |||||||||||||||||||
| Corporate | (14,791 | ) | (14,003 | ) | 5.6 | % | |||||||||||||||||||||
| Total non-GAAP Adjusted EBITDA | 95,412 | 30.5 | % | 85,223 | 30.0 | % | 12.0 | % | |||||||||||||||||||
| (c) Figures for the three months ended June 30, 2011 include acquisition-related purchase accounting revenue adjustments of $0.5 million, which represents the net amount of: (i) approximately $0.5 million in gross administrative fees and $0.2 million in other service fees primarily based on vendor reporting received from April 1, 2011 through June 30, 2011 relating to purchases made prior to the acquisition date, and (ii) a corresponding revenue share obligation of $0.2 million relating to the same period. There were no related adjustments for the three month period ended June 30, 2012. | |||||||||||||||||||||||||||
| (d) Figures for the six months ended June 30, 2011 include acquisition-related purchase accounting revenue adjustments of $6.1 million, which represents the net amount of: (i) approximately $9.2 million in gross administrative fees and $1.6 million in other service fees primarily based on vendor reporting received from January 1, 2011 through June 30, 2011 relating to purchases made prior to the acquisition date, and (ii) a corresponding revenue share obligation of $4.7 million relating to the same period. There were no related adjustments for the six month period ended June 30, 2012. | |||||||||||||||||||||||||||
| See "Use of Non-GAAP Financial Measures" following financial schedules for more information on non-GAAP measures. | |||||||||||||||||||||||||||
| SUPPLEMENTAL REPORTING OF ADJUSTED EBITDA | |||||||||||||||||||||||
| RECONCILIATION OF SELECTED NON-GAAP MEASURES TO GAAP MEASURES | |||||||||||||||||||||||
| (UNAUDITED) | |||||||||||||||||||||||
| In 000s | Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||
| 2012 | 2011 | 2012 | 2011 | ||||||||||||||||||||
| Net income (loss) | $ | 2,251 | $ | (2,488 | ) | $ | 2,012 | $ | (18,658 | ) | |||||||||||||
| Depreciation | 7,281 | 5,228 | 13,695 | 10,907 | |||||||||||||||||||
| Depreciation (included in cost of revenue) | 407 | 254 | 817 | 509 | |||||||||||||||||||
| Amortization of intangibles, acquisition-related | 18,481 | 20,232 | 37,411 | 40,472 | |||||||||||||||||||
| Amortization of intangibles, acquisition-related (included in cost of revenue) | 139 | 139 | 278 | 278 | |||||||||||||||||||
| Interest expense, net | 16,866 | 18,068 | 34,045 | 36,110 | |||||||||||||||||||
| Income tax benefit | (794 | ) | (1,852 | ) | (919 | ) | (10,033 | ) | |||||||||||||||
| Non-GAAP EBITDA | $ | 44,631 | $ | 39,581 | $ | 87,339 | $ | 59,585 | |||||||||||||||
| Share-based compensation | 2,456 | (2,521 | ) | 5,015 | 822 | ||||||||||||||||||
| Rental income from capitalized building lease | (109 | ) | (109 | ) | (219 | ) | (218 | ) | |||||||||||||||
| Purchase accounting revenue adjustments | - | 499 | - | 6,063 | |||||||||||||||||||
| Acquisition and integration-related expenses | 2,028 | 6,828 | 3,277 | 18,971 | |||||||||||||||||||
| Non-GAAP Adjusted EBITDA | $ | 49,006 | $ | 44,278 | $ | 95,412 | $ | 85,223 | |||||||||||||||
| See "Use of Non-GAAP Financial Measures" following financial schedules for more information on non-GAAP measures. | |||||||||||||||||||||||
| SUPPLEMENTAL NET INCOME AND EARNINGS PER SHARE REPORTING | |||||||||||||||||||||||
| RECONCILIATION OF SELECTED NON-GAAP MEASURES TO GAAP MEASURES | |||||||||||||||||||||||
| (UNAUDITED) | |||||||||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| In 000s, except per share data | 2012 | 2011 | 2012 | 2011 | |||||||||||||||||||
| Net income (loss) | $ | 2,251 | $ | (2,488 | ) | $ | 2,012 | $ | (18,658 | ) | |||||||||||||
| Pre-tax non-cash, acquisition-related intangible amortization and depreciation | 19,093 | 20,917 | 38,635 | 41,841 | |||||||||||||||||||
| Pre-tax non-cash, share-based compensation | 2,456 | (2,521 | ) | 5,015 | 822 | ||||||||||||||||||
| Pre-tax acquisition and integration-related expenses |
2,028 |
6,828 |
3,277 |
18,971 | |||||||||||||||||||
| Pre-tax purchase accounting revenue adjustments | - | 499 | - | 6,063 | |||||||||||||||||||
| Pre-tax deferred payment interest expense accretion | - | 837 | - | 1,654 | |||||||||||||||||||
| Tax effect on pre-tax adjustments e |
(9,430 |
) | (10,624 | ) |
(18,770 |
) | (27,740 | ) | |||||||||||||||
| Non-GAAP adjusted net income | $ | 16,398 | $ | 13,448 | $ | 30,169 | $ | 22,953 | |||||||||||||||
| Income (Loss) Per Share (EPS) - diluted | $ | 0.04 | $ | (0.04 | ) | $ | 0.03 | $ | (0.33 | ) | |||||||||||||
| Pre-tax non-cash, acquisition-related intangible amortization and depreciation | 0.33 | 0.36 | 0.66 | 0.73 | |||||||||||||||||||
| Pre-tax non-cash, share-based compensation | 0.04 | (0.04 | ) | 0.09 | 0.02 | ||||||||||||||||||
| Pre-tax acquisition and integration-related expenses | 0.03 | 0.12 | 0.06 | 0.33 | |||||||||||||||||||
| Pre-tax purchase accounting revenue adjustments | - | 0.01 | - | 0.11 | |||||||||||||||||||
| Pre-tax deferred payment interest expense accretion | - | 0.01 | - | 0.02 | |||||||||||||||||||
| Tax effect on pre-tax adjustments e | (0.16 | ) | (0.19 | ) | (0.33 | ) | (0.48 | ) | |||||||||||||||
| Non-GAAP adjusted EPS - diluted | $ | 0.28 | $ | 0.23 | $ | 0.51 | $ | 0.40 | |||||||||||||||
| Weighted average shares - diluted (in 000s) f | 58,678 | 57,357 | 58,637 | 57,295 | |||||||||||||||||||
| (e) The Company used a 40% tax rate to calculate the tax effect of each adjustment since it believes 40.0% will be the Company's normalized long-term tax rate. | |||||||||||||||||||||||
| (f) Given the Company’s net loss for the three and six months ended June 30, 2011, basic and fully diluted weighted average shares are the same for EPS and non-GAAP adjusted EPS. | |||||||||||||||||||||||
| See "Use of Non-GAAP Financial Measures" following financial schedules for more information on non-GAAP measures. | |||||||||||||||||||||||
| SUPPLEMENTAL 2012 ADJUSTED EBITDA GUIDANCE | ||||||||||||
| RECONCILIATION OF SELECTED NON-GAAP MEASURES TO GAAP MEASURES | ||||||||||||
| (UNAUDITED) | ||||||||||||
| Guidance Range for | ||||||||||||
| Twelve Months Ending | ||||||||||||
| In 000s | December 31, 2012 | |||||||||||
| (Low) | (High) | |||||||||||
| Net Income | $ | 7,500 | $ | 12,600 | ||||||||
| Depreciation | 30,900 | 30,900 | ||||||||||
| Depreciation (included in cost of revenue) | 1,600 | 1,600 | ||||||||||
| Amortization of intangibles, acquisition-related | 72,700 | 72,700 | ||||||||||
| Amortization of intangibles, acquisition-related (included in cost of revenue) | 600 | 600 | ||||||||||
| Interest expense, net | 66,200 | 66,400 | ||||||||||
| Income tax expense | 4,100 | 6,800 | ||||||||||
| Non-GAAP EBITDA | 183,600 | 191,600 | ||||||||||
| Share-based compensation | 10,300 | 10,300 | ||||||||||
| Acquisition and integration-related expenses | 4,500 | 4,500 | ||||||||||
| Rental income from capitalized building lease | (400 | ) | (400 | ) | ||||||||
| Non-GAAP adjusted EBITDA | $ | 198,000 | $ | 206,000 | ||||||||
| SUPPLEMENTAL 2012 EARNINGS PER SHARE GUIDANCE | ||||||||||||
| RECONCILIATION OF SELECTED NON-GAAP MEASURES TO GAAP MEASURES | ||||||||||||
| (UNAUDITED) | ||||||||||||
| Guidance Range for | ||||||||||||
| Twelve Months Ending | ||||||||||||
| In 000s, except per share data | December 31, 2012 | |||||||||||
| (Low) | (High) | |||||||||||
| Net Income | $ | 7,500 | $ | 12,600 | ||||||||
| EPS - diluted | 0.13 | 0.21 | ||||||||||
| Pre-tax non-cash, acquisition-related intangible amortization and depreciation | 1.28 | 1.28 | ||||||||||
| Pre-tax non-cash, share-based compensation | 0.17 | 0.17 | ||||||||||
| Pre-tax acquisition and integration-related expenses | 0.08 | 0.08 | ||||||||||
| Tax effect on pre-tax adjustments g | (0.61 | ) | (0.61 | ) | ||||||||
| Non-GAAP cash EPS - diluted | $ | 1.05 | $ | 1.13 | ||||||||
| Fully diluted weighted average shares outstanding | 59,000 | 59,000 | ||||||||||
| (g) The Company used a 40% tax rate to calculate the tax effect of each adjustment since it believes 40.0% will be the Company's normalized long-term tax rate. | ||||||||||||
| See "Use of Non-GAAP Financial Measures" following financial schedules for more information on non-GAAP measures. | ||||||||||||
| SUPPLEMENTAL NON-GAAP CONTRACTED REVENUE ESTIMATES | ||||||||||||||||
| (UNAUDITED) | ||||||||||||||||
| 6.30.11 | 9.30.11 | 12.31.11 | 3.31.12 | 6.30.12 | ||||||||||||
| SCM segment | 344.1 | 348.3 | 350.3 | 356.5 | 373.1 | |||||||||||
| RCM segment | 214.2 | 213.0 | 218.4 | 222.7 | 230.3 | |||||||||||
| Total | 558.3 | 561.3 | 568.7 | 579.2 | 603.4 | |||||||||||
| SUPPLEMENTAL REPORTING OF SHARE-BASED COMPENSATION | ||||||||||||||||
| EXPENSE INCLUDED IN OPERATING EXPENSES | ||||||||||||||||
| (UNAUDITED) | ||||||||||||||||
| In 000s | Three Months Ended | Six Months Ended | ||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2012 | 2011 h | 2012 | 2011 | |||||||||||||
| Amount of share-based compensation included in: | ||||||||||||||||
| Cost of revenue | 362 | (425 | ) | 863 | 594 | |||||||||||
| Product development expense | (4 | ) | 25 | 89 | 80 | |||||||||||
| Selling & marketing expense | 329 | (540 | ) | 787 | (250 | ) | ||||||||||
| General & administrative expense | 1,769 | (1,581 | ) | 3,276 | 398 | |||||||||||
| Total | $ | 2,456 | $ | (2,521 | ) | $ | 5,015 | $ | 822 | |||||||
| (h) During the three months ended June 30, 2011, we recorded an adjustment of ($6,537) to share-based compensation expense based on our probability assessment of performance achievement relating to certain performance-based restricted stock grants and SSAR grants. | ||||||||||||||||
| See "Use of Non-GAAP Financial Measures" following financial schedules for more information on non-GAAP measures. | ||||||||||||||||
| Use of Non-GAAP Financial Measures |
| In order to provide investors with greater insight, promote transparency and allow for a more comprehensive understanding of the information used by management and the board of directors in their financial and operational decision-making, the Company supplements its condensed consolidated financial statements presented on a GAAP basis herein with the following non-GAAP financial information: gross fees; gross administrative fees; revenue share obligation; EBITDA; adjusted EBITDA; adjusted EBITDA margin; acquisition-related purchase accounting revenue adjustment; adjusted net income; diluted adjusted EPS; and contracted revenue. |
| These non-GAAP financial measures may have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of the Company’s results as reported under GAAP. The Company compensates for such limitations by relying primarily on the Company’s GAAP results and using non-GAAP financial measures only supplementally. Where possible, the Company provides reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures. Investors are encouraged to carefully review those reconciliations. In addition, because these non-GAAP measures are not measures of financial performance under GAAP and are susceptible to varying calculations, these measures, as defined by the Company, may differ from and may not be comparable to similarly titled measures used by other companies. |
| Gross fees include gross administrative fees the Company receives pursuant to its vendor contracts and all other fees the Company receives from clients. The Company's revenue share obligation represents the portion of the gross administrative fees the Company is contractually obligated to share with certain of its GPO clients. Net administrative fees (a GAAP measure) are the Company's gross administrative fees net of its revenue share obligation. Total net revenue (a GAAP measure) reflects the Company's gross fees net of its revenue share obligation. These non-GAAP measures assist management and the board of directors and may be helpful to investors in analyzing the Company's growth in its Spend and Clinical Resource Management segment given that administrative fees constitute a material portion of the Company's revenue and are paid to the Company by approximately 1,150 suppliers and other vendors contracted by its GPO, and that the Company's revenue share obligation constitutes a significant outlay to certain of its GPO clients. |
| The Company defines: EBITDA as net income (loss) before net interest expense, income tax expense (benefit), depreciation and amortization; and adjusted EBITDA as net income (loss) before net interest expense, income tax expense (benefit), depreciation and amortization and other non-recurring, non-cash or non-operating items. EBITDA and adjusted EBITDA are used by the Company to facilitate a comparison of its operating performance on a consistent basis from period to period and provides for a more complete understanding of factors and trends affecting our business. These measures assist management and the board of directors and may be useful to investors in comparing the Company's operating performance consistently over time as it removes the impact of its capital structure (primarily interest charges and amortization of debt issuance costs), asset base (primarily depreciation and amortization) and items outside the control of the management team (taxes), as well as other non-cash (purchase accounting adjustments and imputed rental income) and non-recurring items, from the Company’s operational results. Adjusted EBITDA also removes the impact of non-cash share-based compensation expense and certain acquisition-related charges. EBITDA and adjusted EBITDA are not measures of liquidity under GAAP, or otherwise, and are not alternatives to cash flow from continuing operating activities. |
| Acquisition-related purchase accounting revenue adjustments reflect an estimated reduction of net administrative fee revenue. Under the Company’s revenue recognition policies, administrative fees are recorded as revenue when reported to the Company by vendors. GAAP relating to business combinations required that the Company estimate the amount of client supply purchases (the driver of administrative fee revenue) occurring prior to the Broadlane acquisition closing date and to record the fair value of the administrative fees (the asset) to be received from those purchases as an account receivable and any corresponding revenue share obligation as a liability. As vendor reports were received and cash was collected, the Company did not recognize revenue for these acquisition-related purchase accounting revenue adjustments. |
| The Company defines adjusted net income as net income excluding non-cash acquisition-related intangible amortization and depreciation, and non-recurring expense items on a tax-adjusted basis, non-cash shared-based compensation and certain acquisition and integration-related expenses on a tax-adjusted basis and diluted adjusted EPS as earnings per share excluding non-cash acquisition-related intangible amortization and depreciation, and non-recurring expense items, non-cash shared-based compensation and certain acquisition and integration-related expenses on a tax-adjusted basis. Adjusted net income and diluted adjusted EPS are not measures of liquidity under GAAP, or otherwise, and are not alternatives to cash flow from continuing operating activities. Use of this measure for this purpose allows management and the board of directors to analyze the Company’s operating performance on a consistent basis by removing the impact of certain non-cash and non-recurring items from the Company's operations, and by assessing organic growth and accretive business transactions. As a significant portion of senior management’s incentive based compensation historically has been based on the achievement of certain diluted adjusted EPS growth over time, investors may find such information useful. |
| Contracted revenue is a forward-looking operating measure used by management and the board of directors to better understand revenue growth trends within the Company's business segments as it reflects the Company’s current estimate of contractually committed revenue to be generated under existing client contracts in the forward 12-month period. Such information may be useful to investors in their analysis of the Company's revenue growth trends. A reconciliation to the most directly comparable GAAP measure cannot be performed without unreasonable effort. |
CONTACT:
MedAssets
Robert Borchert, 678-248-8194
rborchert@medassets.com