MedAssets Reports Third Quarter and Nine Month 2012 Financial Results

  MedAssets Reports Third Quarter and Nine Month 2012 Financial Results

Business Wire

ATLANTA -- October 30, 2012

MedAssets, Inc. (NASDAQ: MDAS) today announced results for its third quarter
and nine-month periods ended September 30, 2012. Third quarter results are
summarized in the table below:

 ($ in millions, except per share)        3Q-12    3Q-11      % Change
  Net Revenue:
  Spend and Clinical Resource Mgmt (SCM)     $ 99.1    $ 90.4      9.6      %
  Revenue Cycle Management (RCM)              64.3     53.1     21.1     
  Total Net Revenue                            163.4     143.6     13.9     %
  Non-GAAP acquisition-related purchase
  accounting revenue adjustments ^a           --       0.2      nm
  Total non-GAAP Net Revenue ^b                163.4     143.7     13.7     %
  Net income (loss)                            5.5       (1.0  )   nm
  Earnings (loss) per share (EPS) –            0.09      (0.02 )   nm
  diluted
  Non-GAAP adjusted EBITDA                     57.0      45.2      26.0     %
  Non-GAAP adjusted EPS - diluted            $ 0.32    $ 0.26      23.1
  Weighted average shares - diluted ^c         59.5      57.4      3.7      %



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

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

Net Revenue

Third Quarter

Total net revenue for the third quarter of 2012 increased 13.9% to $163.4
million from $143.6 million in the third quarter of 2011. Comparing
period-over-period organic growth, total net revenue of $163.4 million in the
third quarter of 2012 increased 13.7% from total non-GAAP net revenue of
$143.7 million (including non-GAAP acquisition-related purchase accounting
revenue adjustments) in the third quarter of 2011. Net revenue in the SCM
segment grew 9.4% to $99.1 million from non-GAAP net revenue of $90.6 million
in the third quarter of 2011 primarily due to continued growth in group
purchasing-related net administrative fees as well as the recognition of
certain guarantee-related revenue and performance fees. Net revenue in the RCM
segment increased 21.1% to $64.3 million from $53.1 million in the third
quarter of 2011 as technology-related revenue grew 14.5%, due to growth in
subscription fees from multiple products, while services-related revenue
increased 36.8% from growth in both new and existing clients.

Nine-Month Period

Total net revenue for the first nine months of 2012 increased 13.0% to $476.3
million from $421.5 million in the first nine months of 2011. Comparing
period-over-period organic growth, total net revenue of $476.3 million in the
first nine months of 2012 increased 11.4% from total non-GAAP net revenue of
$427.7 million in the first nine months of 2011. Net revenue in the SCM
segment grew 10.2% to $294.5 million from non-GAAP net revenue of $267.1
million in the first nine months of 2011. Net revenue from the RCM segment
increased 13.2% to $181.8 million from $160.6 million in the first nine months
of 2011 as technology-related revenue grew 13.0% and services-related revenue
increased 13.8%.

Non-GAAP Adjusted EBITDA

Third Quarter

Total non-GAAP adjusted EBITDA was $57.0 million, or 34.9% of total net
revenue, in the third quarter of 2012, a 26.0% increase over total non-GAAP
adjusted EBITDA of $45.2 million, or 31.4% of total non-GAAP net revenue, in
the third quarter of 2011.

Nine-Month Period

In the first nine months of 2012, total non-GAAP adjusted EBITDA was $152.4
million, or 32.0% of total net revenue, a 16.8% increase over total non-GAAP
adjusted EBITDA of $130.4 million, or 30.5% of total non-GAAP net revenue, in
the first nine months of 2011.

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

Third Quarter

Net income in the third quarter of 2012 was $5.5 million, or $0.09 per share,
versus a net loss of $1.0 million, or a loss of $0.02 per share, in the third
quarter of 2011.

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 23.1% to $0.32 per share in the third
quarter of 2012, versus non-GAAP adjusted EPS of $0.26 per share in the third
quarter of 2011.

Nine-Month Period

Net income in the first nine months of 2012 was $7.5 million, or $0.13 per
share, versus a net loss of $19.6 million, or a loss of $0.34 per share, in
the first nine months of 2011. The first nine months of 2011 was impacted by
acquisition and integration-related expenses associated with the purchase of
Broadlane in November 2010.

Non-GAAP adjusted EPS was $0.84 per share in the first nine months of 2012, a
27.3% increase over non-GAAP adjusted EPS of $0.66 per share in the first nine
months of 2011.

Cash Flow and Capital Resources

Cash provided by operating activities in the first nine months of 2012 was
$107.7 million, a 42.3% increase from $75.7 million in the first nine months
of 2011. The Company’s balance sheet at September 30, 2012 included $890.7
million in total bank and bond debt, net of cash and cash equivalents. The
Company prepaid $30 million of bank debt in the third quarter along with its
scheduled principal payments, in addition to $25 million in prepayments
earlier in the year. Total net debt equates to leverage of approximately 4.3
times non-GAAP adjusted EBITDA for the trailing twelve-month period.

Updated 2012 Financial Guidance

MedAssets raised its full-year 2012 net revenue guidance and narrowed its
adjusted EBITDA and EPS guidance, as follows:

($ in millions, except per share)  FY 2012          Y-Y % change
Net Revenue:
SCM segment                         $ 389.5 – 394.5   5.2 - 6.6  %
RCM segment                          241.5 – 244.5   12.7-14.1  
Total Net Revenue                     633.0 - 637.0   8.3 - 9.0
Non-GAAP adjusted EBITDA              200.0 - 206.0   8.6-11.9   %
GAAP EPS – diluted                    0.14 - 0.21     nm
Non-GAAP adjusted EPS – diluted     $ 1.07 - 1.13     8.1-14.1   %

Non-GAAP Contracted Revenue

At September 30, 2012, MedAssets rolling 12-month non-GAAP contracted revenue
estimate was $603.4 million (SCM segment - $370.6 million; RCM segment -
$232.8 million), a year-over-year increase of 7.5%. 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, Tuesday, October 30, 2012
Phone: 866-200-6965 (or 646-216-7221 for international/local callers), PIN
code 77897238
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 276968)

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 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; 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   Three Months Ended                                 Nine Months Ended
share data
                      September 30,                                      September 30,
                       2012            2011           %              2012            2011           %      
                                                          Change                                             Change
Revenue:
Administrative        $ 68,641          $ 62,635          9.6    %       $ 200,752         $ 179,032         12.1   %
fees, net
Other service fees     94,800          80,923         17.1   %        275,589         242,459        13.7   %
                                                                                                                      
Total net revenue      163,441         143,558        13.9   %        476,341         421,491        13.0   %
                                                                                                                      
Operating expenses:
Cost of revenue         34,570            29,528          17.1   %         100,583           90,571          11.1   %
Product development     7,217             6,771           6.6    %         20,777            19,646          5.8    %
expenses
Selling and             12,983            12,853          1.0    %         46,709            43,454          7.5    %
marketing expenses
General and
administrative          55,167            53,196          3.7    %         165,577           149,107         11.0   %
expenses
Acquisition and
integration-related     1,535             3,742           -59.0  %         4,812             22,713          -78.8  %
expenses
Depreciation            7,721             5,507           40.2   %         21,416            16,414          30.5   %
Amortization of        17,840          20,228         -11.8  %        55,251          60,700         -9.0   %
intangibles
                                                                                                                      
Total operating        137,033         131,825        4.0    %        415,125         402,605        3.1    %
expenses
                                                                                                                      
Operating income        26,408            11,733          125.1  %         61,216            18,886          224.1  %
Other income
(expense):
Interest expense        (16,672 )         (17,818 )       -6.4   %         (50,722 )         (53,942 )       -6.0   %
Other income           114             2,490          nm              449             2,770          nm
                                                                                                                      
Income (loss)           9,850             (3,595  )       nm               10,943            (32,286 )       nm
before income taxes
Income tax expense     4,386           (2,612  )       nm              3,467           (12,645 )       nm
(benefit)
                                                                                                                      
Net income (loss)       5,464             (983    )       nm               7,476             (19,641 )       nm
                                                                                                                      
Basic net income       0.09            (0.02   )       nm              0.13            (0.34   )       nm
(loss) per share
                                                                                                                      
Diluted net income    $ 0.09           $ (0.02   )       nm             $ 0.13           $ (0.34   )       nm
(loss) per share
                                                                                                                      
Weighted average        57,693            57,410                           57,239            57,334
shares — basic
Weighted average        59,513            57,410          3.7    %         58,896            57,334          2.7    %
shares — diluted
                                                                                                                      
                                                                                                                      

CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
                                                          
                                           September 30,       December 31,
In 000s, except share and per share         2012              2011      
amounts
                                                                             
ASSETS
Current assets
Cash and cash equivalents                  $ 8,234             $ 62,947
Accounts receivable, net of allowances
of $3,258 and $3,891 as of September 30,
2012 and                                     94,884              104,039
December 31, 2011
Deferred tax asset, current                  16,291              15,434
Prepaid expenses and other current          21,088            18,488    
assets
                                                                             
Total current assets                         140,497             200,908
                                                                             
Property and equipment, net                  119,909             101,471
Other long term assets
Goodwill                                     1,027,847           1,027,847
Intangible assets, net                       347,703             403,371
Other                                       55,027            61,381    
Other long term assets                      1,430,577         1,492,599 
                                                                             
Total assets                               $ 1,690,983        $ 1,794,978 
                                                                             
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable                           $ 15,779            $ 21,185
Accrued revenue share obligation and         71,477              70,906
rebates
Accrued payroll and benefits                 28,971              33,265
Other accrued expenses                       22,870              17,811
Current portion of deferred revenue          51,179              48,459
Deferred purchase consideration              -                   120,136
Current portion of notes payable             6,350               6,350
Current portion of finance obligation       228               213       
                                                                             
Total current liabilities                    196,854             318,325
                                                                             
Notes payable, less current portion          567,538             572,300
Bonds payable                                325,000             325,000
Finance obligation, less current portion     9,108               9,287
Deferred revenue, less current portion       14,038              14,148
Deferred tax liability                       130,263             129,635
Other long term liabilities                 10,378            7,670     
                                                                             
Total liabilities                            1,253,179           1,376,365
                                                                             
Stockholders’ equity
Common stock, $0.01 par value,
150,000,000 shares authorized;
58,841,000 and 57,857,000
shares issued and outstanding as of          588                 579
September 30, 2012 and December 31, 2011
Additional paid in capital                   683,245             670,618
Accumulated other comprehensive loss         (4,982    )         (4,061    )
Accumulated deficit                         (241,047  )        (248,523  )
                                                                             
Total stockholders’ equity                  437,804           418,613   
                                                                             
Total liabilities and stockholders’        $ 1,690,983        $ 1,794,978 
equity
                                                                             
                                                                             

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
                                          Nine Months Ended
In 000s                                    September 30,    September 30,
                                             2012              2011     
                                                                             
Operating activities:
Net income (loss)                          $  7,476            $  (19,641  )
                                                                             
Adjustments to reconcile net income
(loss) from continuing
operations to net cash provided by
operating activities:
Bad debt expense                              485                 781
Depreciation                                  22,769              17,231
Amortization of intangibles                   55,668              61,117
Loss on sale of assets                        370                 116
Non-cash stock compensation expense           7,796               2,945
Excess tax benefit from exercise of           (1,191   )          (1,814   )
equity awards
Amortization of debt issuance costs           5,705               5,583
Noncash interest expense, net                 392                 2,974
Deferred income tax benefit                   (441     )          (17,203  )
                                                                             
Changes in assets and liabilities            8,652             23,598   
                                                                             
Cash provided by operating activities        107,681           75,687   
                                                                             
Investing activities:
Purchases of property, equipment, and         (11,779  )          (7,592   )
software
Capitalized software development costs       (31,045  )         (18,847  )
                                                                             
Cash used in investing activities            (42,824  )         (26,439  )
                                                                             
Financing activities:
Borrowings from revolving credit              90,000              -
facility
Repayment of notes payable                    (94,763  )          (54,763  )
Repayment of finance obligation               (507     )          (496     )
Payment of deferred purchase                  (120,136 )          -
consideration
Excess tax benefit from exercise of           1,191               1,814
equity awards
Issuance of common stock, net of              5,245               1,796
offering costs
Purchase of treasury shares                  (600     )         (781     )
                                                                             
Cash used in financing activities            (119,570 )         (52,430  )
                                                                             
Net decrease in cash and cash                 (54,713  )          (3,182   )
equivalents
Cash and cash equivalents, beginning of      62,947            46,836   
period
                                                                             
Cash and cash equivalents, end of period   $  8,234           $  43,654   
                                                                             
                                                                             

SUPPLEMENTAL REVENUE REPORTING
RECONCILIATION OF GROSS FEES (A NON-GAAP MEASURE) TO NET REVENUE
(UNAUDITED)
                                                       
In 000s             Three Months Ended September 30,
                     2012                 2011 ^d                       %      
                                                                           Change
Non-GAAP gross      $ 109,335               $ 96,649                       13.1   %
administrative fees
Other service fees   94,800                80,933                      17.1   %
Non-GAAP gross fees   204,135      RSO %      177,582      RSO %           15.0   %
Non-GAAP revenue
share obligation     (40,694  )   37.2 %    (33,842  )   35.0 %          20.2   %
(RSO)
Total net revenue   $ 163,441               $ 143,740                      13.7   %
                                                                           
In 000s
                    Nine Months Ended September 30,
                     2012                 2011 ^e                       %      
                                                                           Change
Non-GAAP gross      $ 321,351               $ 289,929                      10.8   %
administrative fees
Other service fees   275,589               244,042                     12.9   %
Non-GAAP gross fees   596,940      RSO %      533,971      RSO %           11.8   %
Non-GAAP RSO         (120,599 )   37.5 %    (106,235 )   36.6 %          13.5   %
Total net revenue   $ 476,341               $ 427,736                      11.4   %
                                                                           
SUPPLEMENTAL SEGMENT REPORTING
RECONCILIATION OF SELECTED NON-GAAP MEASURES TO GAAP MEASURES
(UNAUDITED)
                                                                           
In 000s             Three Months Ended September 30,
                     2012                  2011               %      
                                                                  Change
Net revenue
Spend and Clinical
Resource Management $ 99,112                $ 90,438              9.6    %
("SCM")
Revenue Cycle        64,329                53,120             21.1   %
Management ("RCM")
Total net revenue     163,441                 143,558             13.9   %
Non-GAAP
acquisition-related
purchase accounting
revenue adjustments  -                     182      
^d
Total non-GAAP net  $ 163,441               $ 143,740             13.7   %
revenue
                                                                           
Non-GAAP Adjusted                  %                       %
EBITDA                             margin                  margin
SCM                 $ 46,340       46.8 %   $ 42,543       46.9 % 8.9    %
RCM                   17,835       27.7 %     9,928        18.7 % 79.6   %
Corporate            (7,210   )             (7,266   )          -0.8   %
Total non-GAAP        56,965       34.9 %     45,205       31.4 % 26.0   %
Adjusted EBITDA
                                                                           
In 000s             Nine Months Ended September 30,
                     2012                  2011               %      
                                                                  Change
Net revenue
SCM                 $ 294,492               $ 260,884             12.9   %
RCM                  181,849               160,607            13.2   %
Total net revenue     476,341                 421,491             13.0   %
Non-GAAP
acquisition-related
purchase accounting
revenue adjustments  -                     6,245    
^e
Total non-GAAP net  $ 476,341               $ 427,736             11.4   %
revenue
                                                                           
Non-GAAP Adjusted                  %                       %
EBITDA                             margin                  margin
SCM                 $ 132,846      45.1 %   $ 116,048      44.5 % 14.5   %
RCM                   41,532       22.8 %     35,649       22.2 % 16.5   %
Corporate            (22,001  )             (21,269  )          3.4    %
Total non-GAAP        152,377      32.0 %     130,428      30.5 % 16.8   %
Adjusted EBITDA
                                                                           
(d) Figures for the three months ended September 30, 2011 include
acquisition-related purchase accounting revenue adjustments of $0.2 million, which
represents the net amount of: (i) approximately $0.3 million in gross
administrative fees primarily based on vendor reporting received from July 1, 2011
through September 30, 2011 relating to purchases made prior to the acquisition
date, and (ii) a corresponding revenue share obligation of $0.1 million relating to
the same period. There were no related adjustments for the three month period ended
September 30, 2012.
                                                                           
(e) Figures for the nine months ended September 30, 2011 include
acquisition-related purchase accounting revenue adjustments of $6.2 million, which
represents the net amount of: (i) approximately $9.4 million in gross
administrative fees and $1.6 million in other service fees primarily based on
vendor reporting received from January 1, 2011 through September 30, 2011 relating
to purchases made prior to the acquisition date, and (ii) a corresponding revenue
share obligation of $4.8 million relating to the same period. There were no related
adjustments for the nine month period ended September 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 September    Nine Months Ended
                     30,                             September 30,
                       2012           2011        2012        2011    
                                                                   
Net income (loss)    $  5,464         $  (983    )   $ 7,476       $ (19,641 )
                                                                   
Depreciation            7,721            5,507         21,416        16,414
Depreciation
(included in cost of    536              306           1,353         815
revenue)
Amortization of
intangibles,            17,840           20,228        55,251        60,700
acquisition-related
Amortization of
intangibles,
acquisition-related     139              139           417           417
(included in cost of
revenue)
Interest expense,       16,672           17,818        50,717        53,928
net
Income tax expense     4,386          (2,612  )    3,467       (12,645 )
(benefit)
                                                                   
Non-GAAP EBITDA      $  52,758        $  40,403      $ 140,097     $ 99,988
                                                                   
Share-based             2,781            2,123         7,796         2,945
compensation
RCM management
restructuring           -                1,204         -             1,204
expenses
Rental income from
capitalized building    (109    )        (109    )     (328    )     (327    )
lease
Purchase accounting     -                182           -             6,245
revenue adjustments
Acquisition and
integration-related     1,535            3,742         4,812         22,713
expenses
Insurance settlement   -              (2,340  )    -           (2,340  )
                                                                   
Non-GAAP Adjusted    $  56,965        $  45,205      $ 152,377     $ 130,428
EBITDA

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 September     Nine Months Ended September
                      30,                               30,
In 000s, except per    2012        2011          2012         2011    
share data
                                                                                      
Net income (loss)     $ 5,464          $ (983    )      $ 7,476           $ (19,641 )
                                                                                      
Pre-tax non-cash,
acquisition-related
intangible              18,453           20,912           57,088            62,753
amortization and
depreciation
Pre-tax non-cash,
share-based             2,781            2,123            7,796             2,945
compensation
Pre-tax non-cash,
acquisition and         1,535            3,742            4,812             22,713
integration-related
expenses
Pre-tax, RCM
management              -                1,204            -                 1,204
restructuring
expenses
Pre-tax, purchase
accounting              -                182              -                 6,245
adjustments
Pre-tax, deferred
payment interest        -                749              -                 2,403
expense accretion
Pre-tax, insurance     -              (2,340  )       -               (2,340  )
settlement
Tax effect on
pre-tax adjustments    (9,108 )        (10,629 )       (27,878 )        (38,369 )
^f
                                                                                      
Non-GAAP adjusted     $ 19,125        $ 14,960        $ 49,294         $ 37,913  
net income
                                                                                      
Income (Loss) Per
Share (EPS) -         $ 0.09             (0.02   )      $ 0.13              (0.34   )
diluted
                                                                                      
Pre-tax non-cash,
acquisition-related
intangible              0.30             0.36             0.97              1.09
amortization and
depreciation
Pre-tax non-cash,
share-based             0.05             0.04             0.13              0.06
compensation
Pre-tax non-cash,
acquisition and         0.03             0.07             0.08              0.40
integration-related
expenses
Pre-tax, RCM
management              -                0.02             -                 0.02
restructuring
expenses
Pre-tax, purchase
accounting              -                -                -                 0.11
adjustments
Pre-tax, deferred
payment interest        -                0.01             -                 0.03
expense accretion
Pre-tax, insurance     -              (0.04   )       -               (0.04   )
settlement
Tax effect on
pre-tax adjustments    (0.15  )        (0.18   )       (0.47   )        (0.67   )
^f
                                                                                      
Non-GAAP adjusted      0.32          $ 0.26           0.84           $ 0.66    
EPS - diluted
                                                                                      
Weighted average
shares - diluted        59,513           57,410           58,896            57,334
(in 000s) ^g
                                                                                      
                                                                                      
(f) The Company used a tax rate of 40.0% for the three and nine months ended
September 30, 2012 and 2011 to calculate the tax effect of each adjustment since it
believes 40.0% will be the Company's normalized long-term tax rate.
                                                                                      
(g) Given the Company’s net loss for the three and nine months ended September 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                          $    8,600               $   12,400
                                                             
Depreciation                             29,900                  29,900
Depreciation (included in cost           1,800                   1,800
of revenue)
Amortization of intangibles,             72,700                  72,700
acquisition-related
Amortization of intangibles,
acquisition-related (included            600                     600
in cost of revenue)
Interest expense, net                    66,200                  66,400
Income tax expense                      4,700                 6,700     
                                                             
Non-GAAP EBITDA                          184,500                 190,500
                                                             
Share-based compensation                 10,300                  10,300
Acquisition and                          5,600                   5,600
integration-related expenses
Rental income from capitalized          (400       )           (400      )
building lease
                                                             
Non-GAAP adjusted EBITDA            $    200,000            $   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                          $    8,600               $   12,400
                                                             
EPS - diluted                            0.14                    0.21
                                                             
Pre-tax non-cash,
acquisition-related intangible           1.23                    1.23
amortization and depreciation
Pre-tax non-cash,
acquisition-related intangible           0.04                    0.04
depreciation
Pre-tax non-cash, share-based            0.17                    0.17
compensation
Pre-tax acquisition and                 0.09                  0.09      
integration-related expenses
                                                             
Tax effect on pre-tax                   (0.61      )           (0.61     )
adjustments ^h
                                                             
Non-GAAP adjusted EPS -             $    1.07                $   1.13
diluted ^i
                                                             
Fully diluted weighted average           59,500                  59,500
shares outstanding
                                                             
                                                             
(h) The Company used a tax rate of 40.0% for the twelve months ended December
31, 2012 to calculate the tax effect of each adjustment since it believes
40.0% will be the Company's normalized long-term tax rate.
                                                             
(i) Column amounts may not add to total amount due to rounding.
                                                             
                                                             
See "Use of Non-GAAP Financial Measures" following financial schedules for
more information on non-GAAP measures.



SUPPLEMENTAL NON-GAAP CONTRACTED REVENUE ESTIMATES
(UNAUDITED)
                                                                
In millions         9.30.11      12.31.11     3.31.12     6.30.12     9.30.12
                                                                      
SCM segment         $ 348.3      $ 350.3      $ 356.5     $ 373.1     $ 370.6
RCM segment         213.0        218.4        222.7       230.3       232.8
Total               $ 561.3      $ 568.7      $ 579.2     $ 603.4     $ 603.4
                                                                      
                                                                      
                                                                      
SUPPLEMENTAL REPORTING OF SHARE-BASED COMPENSATION
EXPENSE INCLUDED IN OPERATING EXPENSES
(UNAUDITED)
In 000s             Three Months Ended        Nine Months Ended
                    September 30,             September 30,
                    2012         2011         2012        2011 ^j
Amount of
share-based
compensation
included in:
Cost of revenue     672          459          1,535       1,053
Product development 34           97           123         177
expense
Selling & marketing 282          492          1,069       242
expense
General &
administrative      1,793        1,075        5,069       1,473
expense
                                                                      
Total               $ 2,781      $ 2,123      $ 7,796     $ 2,945

(j) 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 adjustments; 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, Inc.
Robert Borchert, 678-248-8194
rborchert@medassets.com
 
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