MedAssets Reports Third Quarter and Nine-Month 2009 Financial Results
http://www.businesswire.com/news/home/20091028006418/en
ATLANTA--(Business Wire)--
MedAssets, Inc. (NASDAQ: MDAS) today announced results for its third quarter and
nine-month period ended September 30, 2009, as summarized below:
(In millions, except per share) 3Q-09 3Q-08 9 mos-09 9 mos-08*
Net Revenue:
Revenue Cycle Management $ 51.6 $ 45.8 $ 149.4 $ 102.2
Spend Management 30.8 30.2 96.2 93.7
Total Net Revenue 82.4 76.0 245.6 196.0
Net Income 5.9 3.7 10.0 4.8
Diluted earnings per share (EPS) 0.10 0.07 0.17 0.09
Non-GAAP adjusted EBITDA 28.5 25.2 75.4 60.3
Non-GAAP cash diluted EPS $ 0.22 $ 0.18 $ 0.54 $ 0.44
Weighted average shares - diluted 57.9 56.1 57.2 51.0
* Column amounts may not add to total amount due to rounding
Net Revenue
Third Quarter
Total net revenue for the third quarter of 2009 increased 8.5% to $82.4 million
from $76.0 million in the third quarter of 2008. The Revenue Cycle Management
segment growth was driven primarily by increased demand for the Company`s
reimbursement and compliance technology tools, as well as growth from its
revenue cycle services and decision support capabilities. The Spend Management
segment experienced growth in its medical device consulting services as well as
its analytics solutions.
Nine-month Period
Total net revenue for the nine-month period ended September 30, 2009 increased
25.3% to $245.6 million from $196.0 million in the first nine months of 2008.
Comparing period-over-period organic growth, the Company`s total net revenue for
the first nine months of 2009 increased 9.4% to $245.6 million from non-GAAP
acquisition-affected total net revenue of $224.5 million in the same period of
2008.
Non-GAAP Adjusted EBITDA
Third Quarter
In the third quarter of 2009, non-GAAP total adjusted EBITDA was $28.5 million,
or 34.6% of total net revenue, a 13.3% increase over non-GAAP total adjusted
EBITDA of $25.2 million, or 33.2% of total net revenue, in the third quarter of
2008.
Nine-month Period
For the nine-month period ended September 30, 2009, non-GAAP total adjusted
EBITDA increased 25.1% to $75.4 million, or 30.7% of total net revenue, versus
non-GAAP total adjusted EBITDA of $60.3 million, or 30.8% of total net revenue,
in the first nine months of 2008.
Comparing period-over-period organic growth, the nine-month 2009 non-GAAP total
adjusted EBITDA of $75.4 million increased 7.1% from non-GAAP
acquisition-affected adjusted EBITDA of $70.4 million, or 31.3% of non-GAAP
acquisition-affected total net revenue, in the same period of 2008.
Net Income and Earnings per Share
Third Quarter
Net income in the third quarter of 2009 was $5.9 million, or $0.10 per diluted
share, versus net income of $3.7 million, or $0.07 per diluted share, in the
third quarter of 2008.
Non-GAAP cash EPS, which is defined as EPS excluding acquisition-related
intangible amortization, share-based compensation expense and non-recurring
expense items on a tax-adjusted basis, was $0.22 per diluted share in the third
quarter of 2009, compared to non-GAAP cash EPS of $0.18 per diluted share in the
third quarter of 2008.
Nine-month Period
For the first nine months of 2009, net income was $10.0 million, or $0.17 per
diluted share, versus net income of $4.8 million, or $0.09 per diluted share, in
the first nine months of 2008. Non-GAAP cash EPS was $0.54 per diluted share in
the first nine months of 2009, compared to non-GAAP cash EPS of $0.44 per
diluted share in the same period of 2008.
Cash Flow and Capital Resources
Net cash provided by operating activities in the first nine months of 2009 was
$40.0 million, compared to net cash provided by operating activities of $31.1
million in the first nine months of last year. During the third quarter of 2009,
the Company repaid $10.6 million of its long-term bank debt. The Company`s
balance sheet as of September 30, 2009 included $230.8 million in total bank
debt, which is leverage of approximately 2.2 times trailing 12-month non-GAAP
adjusted EBITDA.
2009 Financial Guidance
The Company refined its 2009 financial guidance, as follows:
(In millions, except EPS) 12 Months ended 12/31/09
Net Revenue: Updated Previous
Revenue Cycle Management $ 206 - 209 $ 210 - 216
Spend Management 133 - 136 134 - 140
Total Net Revenue 341 - 345 346 - 354
Diluted EPS 0.31 - 0.37 0.29 - 0.37
Non-GAAP adjusted EBITDA 110 - 114 111 - 117
Non-GAAP cash diluted EPS $ 0.78 - 0.84 $ 0.76 - 0.84
At September 30, 2009, the Company`s rolling 12-month non-GAAP contracted
revenue was an estimated $356.0 million ($222.4 million from the Revenue Cycle
Management segment and $133.6 million from the Spend Management segment). This
is a year-over-year increase of 19.5% on a consolidated basis, and a 7.1%
increase when compared to the rolling 12-month total of $332.4 million as of
June 30, 2009.
Conference Call Information
Time/Date: 5:00 p.m. ET today, Wednesday, October 28, 2009
Phone: 866-811-1812 (or 702-696-4559 international/local), conference code
33693258
Webcast: http://ir.medassets.com, "Events & Presentations" page
Replay: Webcast will be archived for at least 30 days, or call 800-642-1687
(conf code 33693258)
The Company intends to file its Form 10-Q for the third quarter and nine-month
period ended September 30, 2009 with the Securities and Exchange Commission on
or before November 9, 2009, and this filing will contain additional information
about the Company`s results of operations.
About MedAssets
MedAssets (NASDAQ: MDAS) partners with healthcare providers to improve their
financial strength by implementing spend management and revenue cycle solutions
that help control cost, improve margins and cash flow, increase regulatory
compliance, and optimize operational efficiency. MedAssets serves more than 125
health systems, 3,300 hospitals and 30,000 non-acute care healthcare providers.
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 in its financial and operational decision-making, the Company
supplements its consolidated financial statements presented on a GAAP basis with
non-GAAP financial information, including: gross fees; revenue share obligation;
EBITDA; adjusted EBITDA; cash diluted EPS; acquisition-affected net revenue;
acquisition-affected EBITDA; acquisition-affected adjusted EBITDA; 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 these
financial schedules for more information.
Safe Harbor Statement
This Press Release contains statements that constitute 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. Forward-looking statements contained in this Press Release 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:2009 projections, costs and revenue growth, margin and other
financial projections; contracted revenue forecasts; and the Company`s ability
to successfully integrate and capitalize on synergies associated with its past
acquisitions. Investors are cautioned that any such forward-looking statements
are not guarantees of future performance, and involve risks and uncertainties,
and that 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, 2008filed
with the Securities and Exchange Commission and available at
http://ir.medassets.com. The Company disclaims any responsibility to update any
forward-looking statements.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
In 000s, except per share data Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 % Change 2009 2008 % Change
Revenue:
Administrative fees, net $ 25,631 $ 25,663 -0.1 % $ 78,495 $ 78,355 0.2 %
Other service fees 56,762 50,309 12.8 % 167,091 117,610 42.1 %
Total net revenue 82,393 75,972 8.5 % 245,586 195,965 25.3 %
Operating expenses:
Cost of revenue 21,472 17,101 55,830 36,252
Product development expenses 4,156 4,719 15,424 11,027
Selling and marketing expenses 10,038 9,641 36,529 32,096
General and administrative expenses 23,039 22,779 77,971 66,054
Depreciation 3,125 2,581 9,020 7,051
Amortization of intangibles 7,018 7,324 21,029 16,117
Impairment of property and equipment, intangibles and in process research and development
- - - 2,079
Total operating expenses 68,848 64,145 7.3 % 215,803 170,676 26.4 %
Operating income 13,545 11,827 14.5 % 29,783 25,289 17.8 %
Other income (expense):
Interest (expense ) (4,259 ) (5,803 ) -26.6 % (14,015 ) (15,120 ) -7.3 %
Other income (expense) 223 228 404 (2,101 )
Income before income taxes 9,509 6,252 16,172 8,068
Income tax expense 3,613 2,566 6,196 3,259
Net income 5,896 3,686 60.0 % 9,976 4,809 107.4 %
Basic net income per share 0.11 0.07 0.18 0.10
Diluted net income per share $ 0.10 $ 0.07 42.9 % $ 0.17 $ 0.09 88.9 %
Weighted average shares - basic 54,792 53,715 54,589 48,493
Weighted average shares - diluted 57,855 56,136 3.1 % 57,223 51,035 12.1 %
CONSOLIDATED BALANCE SHEETS
September 30, December 31,
In 000s, except shares 2009 2008
Unaudited Audited
ASSETS
Current
Cash and cash equivalents $ 4,675 $ 5,429
Accounts receivable, net of allowances of $1,898 and $2,247 as of
September 30, 2009 and December 31, 2008
55,638 55,048
Deferred tax asset, current 13,780 13,780
Prepaid expenses and other current assets 7,476 5,997
Total current assets 81,569 80,254
Property and equipment, net 53,123 42,417
Other long term assets
Goodwill 511,861 508,748
Intangible assets, net 102,756 124,340
Other 19,586 18,101
Other long term assets 634,203 651,189
Total assets $ 768,895 $ 773,860
LIABILITIES AND STOCKHOLDERS` EQUITY
Current liabilities
Accounts payable $ 6,954 $ 6,725
Accrued revenue share obligation and rebates 24,700 29,698
Accrued payroll and benefits 17,851 21,837
Other accrued expenses 7,846 6,981
Deferred revenue, current portion 25,886 24,280
Deferred purchase consideration - 19,361
Current portion of notes payable 2,499 30,277
Current portion of finance obligation 159 149
Total current liabilities 85,895 139,308
Notes payable, less current portion 228,287 215,349
Finance obligation, less current portion 9,737 9,860
Deferred revenue, less current portion 5,483 6,411
Deferred tax liability 13,834 15,817
Other long term liabilities 5,296 4,176
Total liabilities 348,532 390,921
Stockholders` equity
Common stock, $0.01 par value, 150,000,000 shares authorized; 56,488,000 and 53,917,000
shares issued and outstanding as of September 30, 2009 and December 31, 2008, respectively
565 539
Additional paid in capital 632,631 605,340
Accumulated other comprehensive loss (1,957 ) (2,088 )
Accumulated deficit (210,876 ) (220,852 )
Total stockholders` equity 420,363 382,939
Total liabilities and stockholders` equity $ 768,895 $ 773,860
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended
In 000s September 30, September 30,
2009 2008
Operating activities:
Net income $ 9,976 $ 4,809
Adjustments to reconcile net income from continuing operations to net cash provided by operating activities:
Bad debt expense 3,823 1,457
Depreciation 10,858 7,359
Amortization of intangibles 21,585 16,806
Loss (gain) on sale of assets 147 (119 )
Non-cash stock compensation expense 12,911 6,591
Excess tax benefit from exercise of stock options (6,073 ) (1,697 )
Amortization of debt issuance costs 1,382 895
Noncash interest expense, net 1,049 906
Deferred income tax (benefit) expense (36 ) 937
Impairment of intangibles - 2,079
Changes in assets and liabilities (15,671 ) (8,918 )
Cash provided by operating activities 39,951 31,105
Investing activities:
Purchases of property, equipment, and software (9,233 ) (3,891 )
Capitalized software development costs (12,268 ) (8,378 )
Acquisitions, net of cash acquired (18,275 ) (209,423 )
Cash used in investing activities (39,776 ) (221,692 )
Financing activities:
Proceeds from notes payable 71,797 142,629
Repayment of notes payable and capital lease obligations (86,638 ) (85,615 )
Repayment of finance obligation (494 ) (483 )
Debt issuance costs - (6,167 )
Interest accrued on note receivable from stockholders - (18 )
Payment on note receivable from stockholders - 69
Excess tax benefit from exercise of stock options 6,073 1,697
Issuance of common stock, net of offering costs 8,333 1,523
Cash (used in) provided by financing activities (929 ) 53,635
Net decrease in cash and cash equivalents (754 ) (136,952 )
Cash and cash equivalents, beginning of period 5,429 136,952
Cash and cash equivalents, end of period $ 4,675 $ -
SUPPLEMENTAL SEGMENT REPORTING
RECONCILIATION OF SELECTED NON-GAAP MEASURES TO GAAP MEASURES
(UNAUDITED)
In 000s Three Months Ended September 30,
2009 2008 % Change
Net revenue
Revenue Cycle Management ("RCM") $ 51,635 $ 45,791 12.8 %
Spend Management 30,758 30,181 1.9 %
Total net revenue 82,393 75,972 8.5 %
Non-GAAP Adjusted EBITDA % margin % margin
Revenue Cycle Management $ 17,964 34.8 % $ 14,003 30.6 % 28.3 %
Spend Management 15,710 51.1 % 15,207 50.4 % 3.3 %
Corporate (5,126 ) (4,009 ) 27.9 %
Total non-GAAP Adjusted EBITDA $ 28,548 34.6 % $ 25,201 33.2 % 13.3 %
Nine Months Ended September 30,
2009 2008 % Change
Net revenue
Revenue Cycle Management ("RCM") $ 149,425 $ 102,218 46.2 %
Spend Management 96,161 93,747 2.6 %
Total net revenue 245,586 195,965 25.3 %
Non-GAAP acquisition-related RCM adjustments a - 28,540
Total non-GAAP acquisition-affected net revenue $ 245,586 $ 224,505 9.4 %
Non-GAAP Adjusted EBITDA % margin % margin
Revenue Cycle Management $ 44,785 30.0 % $ 26,043 25.5 % 72.0 %
Spend Management 46,135 48.0 % 46,547 49.7 % -0.9 %
Corporate (15,529 ) (12,323 ) 26.0 %
Total non-GAAP Adjusted EBITDA $ 75,391 30.7 % $ 60,267 30.8 % 25.1 %
Non-GAAP acquisition-related RCM adjustments a - 10,103
Total non-GAAP acquisition-affected Adjusted EBITDA $ 75,391 30.7 % $ 70,370 31.3 % 7.1 %
(a) Acquisition-related RCM adjustments include the historical results of Accuro's operations from January 1, 2008 through June 2, 2008 (the date of acquisition), inclusive of certain purchase accounting adjustments.
See "Use of Non-GAAP Financial Measures" following financial schedules for more information on non-GAAP measures.
SUPPLEMENTAL REVENUE REPORTING
RECONCILIATION OF GROSS FEES (A NON-GAAP MEASURE) TO NET REVENUE
(UNAUDITED)
In 000s Three Months Ended
September 30,
ACTUAL 2009 2008
Non-GAAP gross administrative fees $ 39,222 $ 39,867
Other service fees 56,762 50,309
Non-GAAP gross fees 95,984 RSO % 90,176 RSO %
Non-GAAP revenue share obligation (RSO) (13,591 ) 34.7 % (14,204 ) 35.6 %
Net revenue $ 82,393 $ 75,972
Nine Months Ended
September 30,
ACTUAL 2009 2008
Non-GAAP gross administrative fees $ 119,498 $ 117,634
Other service fees 167,091 117,610
Non-GAAP gross fees 286,589 RSO % 235,244 RSO %
Non-GAAP revenue share obligation (RSO) (41,003 ) 34.3 % (39,279 ) 33.4 %
Net revenue $ 245,586 $ 195,965
NON-GAAP ACQUISITION-AFFECTED RESULTS
Non-GAAP gross administrative fees $ 117,634
Other service fees 117,610
Non-GAAP acquisition-related RCM adjustments b 28,540
Non-GAAP gross fees b 263,784 RSO %
Non-GAAP revenue share obligation (39,279 ) 33.4 %
Net revenue b $ 224,505
(b) Non-GAAP, acquisition-affected adjustments include the historical results of Accuro's operations from January 1, 2008 through June 2, 2008 (the date of acquisition), inclusive of certain purchase accounting adjustments.
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 Nine Months Ended
September 30, September 30,
ACTUAL RESULTS 2009 2008 2009 2008
Net Income $ 5,896 $ 3,686 $ 9,976 $ 4,809
Depreciation 3,125 2,581 9,020 7,051
Amortization of intangibles 7,018 7,324 21,029 16,117
Amortization of intangibles (included in cost of revenue) 801 233 2,391 995
Interest expense, net 4,255 5,761 13,994 13,715
Income tax expense 3,613 2,566 6,196 3,259
Non-GAAP EBITDA 24,708 22,151 62,606 45,946
Impairment of intangibles - - - 2,079
Share-based compensation 3,951 2,452 12,911 6,591
Rental income from capitalized building lease (110 ) (109 ) (329 ) (329 )
Purchase accounting adjustments (1 ) 707 203 2,066
Interest rate swap cancellation - - - 3,914
Non-GAAP Adjusted EBITDA $ 28,548 $ 25,201 $ 75,391 $ 60,267
NON-GAAP ACQUISITION-AFFECTED RESULTS
Net Income $ 9,976 $ 4,809
Non-GAAP acquisition-related net income - (1,674 )
Non-GAAP acquisition-affected net income 9,976 3,135
Depreciation c 9,020 7,673
Amortization of intangibles c 21,029 22,321
Amortization of intangibles (included in cost of revenue) c 2,391 995
Interest expense, net c 13,994 18,004
Income tax expense c 6,196 2,226
Non-GAAP acquisition-affected EBITDA 62,606 54,354
Impairment of intangibles - 2,079
Share-based compensation c 12,911 7,108
Rental income from capitalized building lease (329 ) (329 )
Purchase accounting adjustments c 203 3,244
Interest rate swap cancellation - 3,914
Non-GAAP acquisition-affected Adjusted EBITDA $ 75,391 $ 70,370
(c) Non-GAAP, acquisition-affected adjustments include the historical results of Accuro's operations from January 1, 2008 through June 2, 2008 (the date of acquisition), inclusive of certain purchase accounting adjustments.
See "Use of Non-GAAP Financial Measures" following financial schedules for more information on non-GAAP measures.
SUPPLEMENTAL EARNINGS PER SHARE REPORTING
RECONCILIATION OF SELECTED NON-GAAP MEASURES TO GAAP MEASURES
(UNAUDITED)
Three Months Ended Nine Months Ended
Per share data September 30, September 30,
2009 2008 2009 2008
Diluted EPS attributable to common stockholders $ 0.10 $ 0.07 $ 0.17 $ 0.09
Non-cash, tax-adjusted acquisition-related intangible amortization 0.08 0.08 0.23 0.20
Non-cash, tax-adjusted share-based compensation 0.04 0.03 0.14 0.08
Tax-adjusted interest rate swap cancellation - - - 0.05
Non-cash, tax-adjusted impairment of intangibles - - - 0.02
Non-GAAP cash diluted EPS $ 0.22 $ 0.18 $ 0.54 $ 0.44
Weighted average shares - diluted (in 000s) 57,855 56,136 57,223 51,035
SUPPLEMENTAL 2009 ADJUSTED EBITDA GUIDANCE
RECONCILIATION OF SELECTED NON-GAAP MEASURES TO GAAP MEASURES
(UNAUDITED)
Guidance Range for
Twelve Months Ending
In 000s December 31,
2009
(Low) (High)
Net Income $ 18,100 $ 21,200
Depreciation 12,700 12,300
Amortization of intangibles 28,000 28,000
Amortization of intangibles (included in cost of revenue) 3,200 3,200
Interest expense, net 18,200 17,800
Income tax expense 12,200 14,300
Non-GAAP EBITDA 92,400 96,800
Share-based compensation 17,500 17,100
Rental income from capitalized building lease (400 ) (400 )
Purchase accounting adjustments 500 500
Non-GAAP adjusted EBITDA $ 110,000 $ 114,000
SUPPLEMENTAL 2009 EARNINGS PER SHARE GUIDANCE
RECONCILIATION OF SELECTED NON-GAAP MEASURES TO GAAP MEASURES
(UNAUDITED)
Guidance Range for
Twelve Months Ending
December 31,
In 000s, except per share data 2009
(Low) (High)
Net Income $ 18,100 $ 21,200
Diluted EPS 0.31 0.37
Non-cash, tax-adjusted acquisition-related intangible amortization 0.29 0.29
Non-cash, tax-adjusted share-based compensation 0.18 0.18
Non-GAAP cash diluted EPS $ 0.78 $ 0.84
Fully diluted weighted average shares outstanding 57,400 57,400
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 consolidated condensed financial statements presented on a GAAP basis with the following non-GAAP financial information: gross fees, revenue share obligation, EBITDA, adjusted EBITDA; cash diluted EPS; acquisition-affected net revenue,
acquisition-affected adjusted EBITDA 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 all administrative fees the Company receives pursuant to its vendor contracts and all other fees the Company receives from customers. The Company's revenue share obligation represents the portion of the administrative fees the Company is contractually obligated to share with certain of its GPO customers. 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 Management segment given that administrative fees constitute a material portion of the Company's revenue and are paid to the Company by over 1,200 vendors contracted by its GPO, and that the Company's revenue share obligation constitutes a significant outlay to certain of its GPO customers.
The Company defines: EBITDA as net income (loss) before net interest expense, income tax expense (benefit), depreciation and amortization; 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; and adjusted diluted EPS as earnings per share excluding non-cash acquisition-related intangible amortization and non-recurring expense items on a tax-adjusted basis. EBITDA, adjusted
EBITDA and adjusted diluted EPS 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. EBITDA, adjusted EBITDA and adjusted diluted EPS are not measures of liquidity under GAAP, or otherwise, and are not alternatives to cash
flow from continuing operating activities.
The Company defines cash diluted EPS as earnings per share excluding non-cash acquisition-related intangible amortization and non-recurring expense items on a tax-adjusted basis and non-cash tax-adjusted shared-based compensation expense. Cash diluted EPS is not a measure of liquidity under GAAP, or otherwise, and is not an alternative to cash flow from continuing operating activities. Cash diluted EPS growth is used by the Company as the financial performance metric tied to the vesting of certain equity
awards granted pursuant to the Company`s Long-Term Performance Incentive Plan. 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 our operations, and by rewarding organic growth and accretive business transactions. As a significant portion of senior management`s incentive based compensation is based on the achievement of certain cash
diluted EPS growth over time, investors may find such information useful.
Acquisition-affected results include the activity of Accuro prior to the Company`s actual ownership. The Accuro acquisition was consummated on June 2, 2008. These results assume the acquisition of Accuro occurred on January 1, 2008. Acquisition-affected net revenue and adjusted EBITDA are used by management and the board of directors to better understand the extent of growth of the Revenue Cycle Management segment. Given the significant impact that this transaction had on the Company during the fiscal
year ended December 31, 2008 and the nine months ended September 30, 2009, the Company believes such acquisition-affected measures may be useful and meaningful to investors in their analysis of such growth. Non-GAAP acquisition-affected measures are for illustrative and informational purposes only and are not intended to represent or be indicative of what the Company's results of operations would have been if this transaction had occurred at the beginning of 2008. These measures also should not be
considered representative of the Company's future results of operations.
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 customer 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.
mdas/F
MedAssets, Inc.
Robert P. Borchert, 678-248-8194
VP, Investor Relations
rborchert@medassets.com
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