MedAssets 8K Regulation FD Disclosure | MDAS 15 Nov 10

Exhibit 99.1

Summary historical and pro forma financial data

MedAssets summary historical and pro forma financial data

The following tables set forth our summary historical consolidated financial data as of December 31, 2009 and 2008, for the fiscal years ended December 31, 2009, 2008 and 2007, as of September 30, 2010 and for the nine months ended September 30, 2010 and 2009, as well as our pro forma combined financial data as of September 30, 2010, for the fiscal year ended December 31, 2009, for the nine months ended September 30, 2010 and the twelve months ended September 30, 2010. The summary consolidated financial data as of December 31, 2009 and 2008 and for the fiscal years ended December 31, 2009, 2008 and 2007 should be read together with our audited consolidated financial statements and the related notes included elsewhere in this offering memorandum. The summary consolidated financial data for the nine months ended September 30, 2010 and September 30, 2009 and as of September 30, 2010 should be read together with our unaudited condensed consolidated financial statements and the related notes included elsewhere in this offering memorandum. The unaudited condensed consolidated financial statements have been prepared on the same basis as our audited consolidated financial statements and, in the opinion of our management, reflect all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the financial information for the periods presented.

The unaudited pro forma condensed combined statement of operations for the fiscal year ended December 31, 2009, the nine months ended September 30, 2010 and the twelve months ended September 30, 2010 give effect to the Transactions as if they had occurred on January 1, 2009. The pro forma information for the twelve months ended September 30, 2010 has been derived by adding the consolidated financial data for the fiscal year ended December 31, 2009 and the nine months ended September 30, 2010 and subtracting the consolidated financial data for the nine months ended September 30, 2009. The unaudited pro forma condensed combined balance sheet as of September 30, 2010 gives effect to the Transactions as if they had occurred on September 30, 2010. The unaudited pro forma condensed combined financial statements are derived from MedAssets’ consolidated financial statements for the periods and dates indicated, and Broadlane’s consolidated statement of operations for the year ended December 31, 2009, unaudited consolidated statement of operations for the nine months ended September 30, 2010 and unaudited consolidated balance sheet as of September 30, 2010. The unaudited pro forma condensed combined financial information has been derived from estimates and financial information that are likely to change materially between the date of this offering memorandum and the closing date of the Broadlane Acquisition. Accordingly, the unaudited pro forma condensed combined financial information should not be considered illustrative of what our financial condition or results of operations would have been had the Transactions been completed on the dates indicated and does not purport to project our future financial condition and results of operations following the consummation of the Transactions.

The pro forma financial information does not include management’s estimate of expected cost savings related to the combination of the operations of the businesses (other than Adjusted EBITDA with expected cost savings) or the related costs to achieve those cost savings. In addition, the pro forma information does not include transaction-related costs and transaction fees expected to be incurred in connection with the consummation of the Transactions.

We therefore caution you not to place undue reliance on the unaudited pro forma condensed combined financial information.

The results presented below are not necessarily indicative of the results to be expected for any future period, and the results for any interim period are not necessarily indicative of the results that may be expected for a full year. You should read the following tables together with “Management’s discussion and analysis of financial condition and results of operations of MedAssets, ” “Management’s discussion and analysis of financial condition and results of operations of Broadlane,” “Unaudited pro forma condensed combined financial information” and MedAssets’ and Broadlane’s respective historical consolidated financial statements and the related notes included elsewhere in this offering memorandum.



																Pro forma			Pro forma			Pro forma
																for fiscal			for nine			for twelve
	Fiscal year ended									Nine months ended						year ended			months ended			months ended
(Unaudited and in	December 31,									September 30,			September 30,			December 31,			September 30,			September 30,
thousands)	2007			2008			2009			2009			2010			2009			2010			2010


Consolidated statement of operations data:
Revenue:
Administrative fees, net	$	94,792		$	105,765		$	108,223		$	78,495		$	84,437		$	225,953		$	172,558		$	233,215
Other service fees		93,726			173,891			233,058			167,091			199,948			282,852			242,473			322,344


Total net revenue		188,518			279,656			341,281			245,586			284,385			508,805			415,031			555,559
Operating expenses:
Cost of revenue		27,983			51,548			74,651			55,830			67,176			143,978			125,953			163,332
Product development expenses		7,785			16,393			18,994			15,424			14,859			32,269			24,393			31,699
Selling and marketing expenses		35,748			43,205			45,282			36,529			35,348			52,219			41,257			52,113
General and administrative expenses		64,817			91,481			110,661			77,971			91,425			141,483			114,223			157,118
Acquisition related expenses		–			–			–			–			4,351			–			2,805			2,805
Depreciation		7,115			9,793			13,211			9,020			14,068			17,008			17,241			22,238
Amortization of intangibles		15,778			23,442			28,012			21,029			17,706			90,829			63,044			85,731
Impairment of property and equipment, intangibles and in process research and development		1,204			2,272			–			–			–			–			–			–


Total operating expense		160,430			238,134			290,811			215,803			244,933			477,786			388,916			515,036
Operating income (loss)		28,088			41,522			50,470			29,783			39,452			31,019			26,115			40,523
Other income (expense):
Interest (expense)		(20,391	)		(21,271	)		(18,114	)		(14,015	)		(10,986	)		(73,176	)		(51,629	)		(69,884	)
Other income (expense)		3,115			(1,921	)		417			404			286			472			446			458


Income (loss) before income taxes		10,812			18,330			32,773			16,172			28,752			(41,685	)		(25,068	)		(28,903	)
Income tax expense (benefit)		4,516			7,489			12,826			6,196			11,477			(14,504	)		(8,187	)		(8,890	)


Net income (loss)	$	6,296		$	10,841		$	19,947		$	9,976		$	17,275		$	(27,182	)	$	(16,881	)	$	(20,013	)



										Nine months ended
	Fiscal year ended December 31,									September 30,			September 30,
(Unaudited and in thousands)	2007			2008			2009			2009			2010


Consolidated cash flows and other financial data:
Net cash provided by operating activities	$	41,624		$	52,128		$	60,303		$	39,951		$	47,105
Net cash used in investing activities		(107,654	)		(227,996	)		(46,462	)		(39,776	)		(24,634	)
Net cash provided by (used in) financing activities		179,523			44,345			(13,772	)		(929	)		(27,961	)



							Pro forma
	As of		As of		As of		as of
	December		December		September 30,		September
(Unaudited and in thousands)	31, 2008		31, 2009		2010		30, 2010


Consolidated balance sheet data:
Cash and cash equivalents	$	5,429	$	5,498	$	8	$	15,659
Accounts receivable, net		55,048		67,617		75,692		122,573
Property and equipment, net		42,417		54,960		61,318		68,630
Total assets		773,860		778,544		782,334		1,896,306
Existing line of credit		–		–		–		–
New Credit Facility		–		–		–		635,000
Notes offered hereby		–		–		–		325,000
Total liabilities		390,921		341,172		304,279		1,429,521
Total stockholders’ equity		382,939		437,372		478,055		466,785



													Pro forma
											Twelve		for twelve
											months		months
							Nine months ended				ended		ended
	Fiscal year ended December 31,						September 30,		September 30,		September 30,		September 30,
(Unaudited and in thousands)	2007		2008		2009		2009		2010		2010		2010


Other financial data:
EBITDA(1)	$	53,063	$	72,969	$	95,249	$	62,606	$	74,088	$	106,731	$	152,292
Adjusted EBITDA(1)		60,571		89,716		111,438		75,391		86,763		122,810		169,767
Adjusted EBITDA with expected cost savings(1)														189,767
Total capital expenditures(2)		16,691		18,024		28,187		21,501		21,474		28,160		39,020
Total cash interest expense(3)														60,138
Total debt(4)														960,000
Ratio of total debt to twelve month Adjusted EBITDA with expected cost savings														5.1
Ratio of Adjusted EBITDA with expected cost savings to total cash interest expense														3.2

(1) EBITDA represents net income before interest, taxes, depreciation and amortization. Adjusted EBITDA represents EBITDA adjusted to exclude the effects of non-cash stock-based compensation expense, certain acquisition-related expenses and other non-recurring, non-cash or non-operating items. Adjusted EBITDA with expected cost savings is Adjusted EBITDA adjusted to reflect management’s estimates of expected cost savings related to the combination of the operations of MedAssets and Broadlane. Adjusted EBITDA with expected cost savings does not include any one-time charges to be incurred in order to realize the expected cost savings. We currently estimate such one-time charges to be between approximately $15.0 million and $20.0 million. These estimates reflect our current beliefs and expectations and are based on information currently available to us. As such, no assurance can be given that the expected cost savings can be achieved in whole or at all or that our future growth, results of operations and performance in light of such expected cost savings will be achieved. We believe that the presentation of EBITDA, Adjusted EBITDA and Adjusted EBITDA with expected cost savings included in this offering memorandum provides useful information to investors with which to analyze our operating trends and performance and ability to service and incur debt. Further, we believe EBITDA, Adjusted EBITDA and Adjusted EBITDA with expected cost savings facilitatecompany-to-company operating performance comparisons by backing out potential differences caused by variations in capital structures (affecting net interest expense), taxation and the age and book depreciation of property, plant and equipment (affecting relative depreciation expense), which may vary for different companies for reasons unrelated to operating performance. In addition, we believe that EBITDA is frequently used by securities analysts, investors and other interested parties in their evaluation of companies, many of which present an EBITDA measure when reporting their results. EBITDA, Adjusted EBITDA and Adjusted EBITDA with expected cost savings are not measurements of financial performance under GAAP and should not be considered as an alternative to net income as a measure of performance or to net cash flows provided by (used in) operations as a measure of liquidity. In addition, other companies may define EBITDA, Adjusted EBITDA and Adjusted EBITDA with expected cost savings differently and, as a result, our measures of EBITDA, Adjusted EBITDA and Adjusted EBITDA with expected cost savings may not be directly comparable to EBITDA, Adjusted EBITDA or Adjusted EBITDA with expected cost savings of other companies. Furthermore, EBITDA, Adjusted EBITDA and Adjusted EBITDA with expected cost savings each has limitations as an analytical tool, and you should not consider them in isolation, or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:

• EBITDA, Adjusted EBITDA and Adjusted EBITDA with expected cost savings do not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments,

• EBITDA, Adjusted EBITDA and Adjusted EBITDA with expected cost savings do not reflect changes in, or cash requirements for, our working capital needs,

• EBITDA, Adjusted EBITDA and Adjusted EBITDA with expected cost savings do not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on our debt,

• EBITDA, Adjusted EBITDA and Adjusted EBITDA with expected cost savings do not reflect our provision for income taxes, which may vary significantly from period to period (see “Management’s discussion and analysis of financial condition and results of operations of MedAssets”), and

• Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA, Adjusted EBITDA and Adjusted EBITDA with expected cost savings do not reflect any cash requirements for such replacements.

Because of these limitations, EBITDA, Adjusted EBITDA and Adjusted EBITDA with expected cost savings should not be considered as a measure of discretionary cash available to us to invest in the growth of our business. We compensate for these limitations by relying primarily on our GAAP results and using EBITDA and Adjusted EBITDA only supplementally. You are cautioned not to place undue reliance on EBITDA, Adjusted EBITDA or Adjusted EBITDA with expected cost savings.

(2) Total capital expenditures includes purchases of property, equipment and software and capitalized software development costs.

(3) Amount represents the cash paid on our indebtedness and excludes non-cash interest associated with our finance obligation, deferred financing costs and deferred payment amount.

(4) Excludes the $125.0 million deferred payment. Also excludes the finance obligation as this obligation is not included in the calculation of outstanding indebtedness for purposes of satisfying the covenants contained in the New Credit Facility. See Note 6 of the Notes to our Consolidated Financial Statements, under the sub-heading “Finance Obligation” for additional information regarding this transaction and the related obligation.

The following table reconciles EBITDA and Adjusted EBITDA to net income attributable to MedAssets, which we consider to be the most directly comparable GAAP financial measure to EBITDA and Adjusted EBITDA:



																			Pro forma
																Twelve			for twelve
																months			months
	Fiscal year ended December 31,									Nine months ended						ended			ended
(Unaudited and in										September			September			September			September
thousands)	2007			2008			2009			30, 2009			30, 2010			30, 2010			30, 2010


Net income	$	6,296		$	10,841		$	19,947		$	9,976		$	17,275		$	27,246		$	(20,013	)
Depreciation		7,115			9,793			13,211			9,020			14,068			18,259			22,238
Depreciation (included in cost or revenue)		353			709			2,426			1,836			2,167			2,757			2,757
Amortization of intangibles		15,778			23,442			28,012			21,029			17,706			24,689			85,731
Amortization of intangibles (included in cost of revenue)		792			872			740			555			509			694			694
Interest expense, net of interest amount⁽¹⁾		18,213			19,823			18,087			13,994			10,886			14,979			69,775
Income tax expense (benefit)		4,516			7,489			12,826			6,196			11,477			18,107			(8,890	)


EBITDA		53,063			72,969			95,249			62,606			74,088			106,731			152,292
Impairment of intangibles⁽²⁾		1,204			2,272			–			–			–			–			–
Share-based compensation expense⁽³⁾		5,611			8,550			16,652			12,911			8,653			12,394			13,081
Other (gains) losses⁽⁴⁾		–			–			–			–			–			–			(156	)
Rental income from capitalizing building lease⁽⁵⁾		(438	)		(438	)		(439	)		(329	)		(329	)		(439	)		(439	)
Purchase accounting adjustments⁽⁶⁾		1,131			2,449			(24	)		203			–			(227	)		2,184
Interest rate swap cancellation⁽⁷⁾		–			3,914			–			–			–			–			–
Acquisition related expenses⁽⁸⁾		–			–			–			–			4,351			4,351			2,805


Adjusted EBITDA	$	60,571		$	89,716			111,438		$	75,391		$	86,763		$	122,810		$	169,767
Plus: Expected cost savings⁽⁹⁾																				20,000
Adjusted EBITDA with expected cost savings																			$	189,767

(1) Interest income is included in other income (expense) and is not netted against interest expense in MedAssets’ Consolidated Statement of Operations.

(2) Impairment of intangibles during the fiscal year ended December 31, 2008 primarily relates to acquired developed technology from prior acquisitions, revenue cycle management tradename and internally developed software products, mainly due to the integration of Accuro’s operations and products. Impairment of intangibles during fiscal year ended December 31, 2007 represents the write-off of in-process research and development from the XactiMed, Inc. (“XactiMed”) acquisition in May 2007.

(3) Represents non-cash share-based compensation expense for both employees and directors. The increase in 2009 is due to share-based grants made under our 2008 Long-Term Performance Incentive Plan. The increase in 2008 is due to share-based grants made subsequent to our initial public offering. The significant increase in 2007 is due to the adoption of SFAS No. 123(R). We believe

excluding this non-cash expense allows us to compare our operating performance without regard to the impact of share-based compensation expense, which varies from period to period based on the amount and timing of grants.

(4) Other (gains) losses consist primarily of (gains) losses from interest rate derivative financial instruments.

(5) The imputed rental income recognized with respect to a capitalized building lease is deducted from net income (loss) due to its non-cash nature. We believe this income is not a useful measure of continuing operating performance. See Note 6 to MedAssets’ Consolidated Financial Statements for further discussion of this rental income.

(6) The MedAssets adjustments include the effect on revenue of adjusting acquired deferred revenue balances, net of any reduction in associated deferred costs, to fair value as of the respective acquisition dates for Accuro and XactiMed. The reduction of the deferred revenue balances materially affectsperiod-to-period financial performance comparability and revenue and earnings growth in future periods subsequent to the acquisition and is not indicative of changes in underlying results of operations. In 2010, these adjustments will no longer be reconciling items related to acquired deferred revenue balances because the amounts were fully amortized in 2009. In addition, the pro forma amounts include certain purchase accounting adjustments related to Broadlane’s historical acquisitions.

(7) During the fiscal year ended December 31, 2008, we recorded an expense associated with the cancellation of our interest rate swap arrangements. In connection with the cancellation, we paid the counterparty $3.9 million in termination fees. We believe such expense is infrequent in nature and is not indicative of continuing operating performance.

(8) These charges reflect the due diligence and acquisition-related expenses pertaining to merger and acquisition activities. We consider these charges to be non-operating expenses and unrelated to our underlying results of operations.

(9) Expected cost savings by type are as follows (in thousands):


Salaries, bonus and benefits⁽ⁱ⁾	$	16,200
Facilities⁽ⁱⁱ⁾		1,700
Professional fees and other⁽ⁱⁱⁱ⁾		2,100
Total expected cost savings	$	20,000

(i) Represents the elimination of salaries, bonus and benefits of certain senior executives of Broadlane and certain administrative, back office and operational employees who are in redundant positions with positions currently existing at MedAssets. These positions will be eliminated following the consummation of the Broadlane Acquisition.

(ii) Represents savings expected from office space consolidation at certain of our facilities.

(iii) Represents reductions in outsourced professional services, reduction in employee travel related expenses and reductions of other duplicative costs.

Use of proceeds

We intend to use the net proceeds from this offering to fund a portion of the purchase price of the Broadlane Acquisition and to repay any outstanding indebtedness of MedAssets and Broadlane, with the balance to be paid using borrowings under the New Credit Facility. Assuming the Broadlane Acquisition is consummated and this offering is completed, we expect to pay the total initial purchase consideration of $725.0 million in cash (net of cash acquired from Broadlane).

The completion of this offering is contingent upon the consummation of the Broadlane Acquisition, and there can be no assurance that the Broadlane Acquisition will be consummated.

We intend to enter into the New Credit Facility in connection with the Broadlane Acquisition. Pending application of the net proceeds as described above, we intend to use a portion of the borrowings under the New Credit Facility to repay all of our outstanding borrowings under our existing credit facility.

We expect affiliates of the initial purchasers will be lenders and/or agents under the New Credit Facility and may receive a portion of the proceeds from this offering. See “Plan of distribution.”

The table below sets forth our estimate of the sources and uses of funds for this offering and the related repayment and refinancing of our existing debt, assuming gross proceeds of $325 million from this offering and debt balances as of September 30, 2010, excluding the $125 million Deferred Payment Amount:



Sources


New revolving credit facility⁽¹⁾	$	–
New senior secured term loan facility⁽²⁾	$	635,000
Gross proceeds from the notes offered hereby	$	325,000
Cash and cash equivalents of MedAssets and Broadlane	$	32,494

	$	992,494

Uses:
Seller cash consideration	$	580,379
Repayment of MedAssets existing senior credit facility⁽³⁾	$	175,171
Repayment of Broadlane’s existing indebtedness⁽⁴⁾	$	184,140
Estimated transaction fees and expenses⁽⁵⁾	$	52,804

	$	992,494

(1) In connection with the Broadlane Acquisition, we will enter into a $150.0 million revolving credit facility with a five-year maturity. We do not expect to borrow any amount under the new revolving credit facility at the closing of the Broadlane Acquisition and we expect to issue a $1.0 million letter of credit to replace an existing letter of credit. See “Description of other indebtedness.”

(2) In connection with the Broadlane Acquisition, we will enter into a $635.0 million senior secured term loan facility with a six-year maturity. The entire amount of the new senior term loan facility Term B facility will be drawn at the closing of the Broadlane Acquisition. See “Description of other indebtedness.”

(3) Reflects the outstanding principal amount of MedAssets’ existing senior credit facility of $173.5 million, which will be repaid in full at the closing of the Broadlane Acquisition, together with an approximate $1.7 million estimated amount payable to terminate a related interest rate swap.

(4) Reflects the face amount (gross of original issue discount of $2.3 million) of Broadlane’s existing indebtedness of $179.1 million plus accrued interest of approximately $2.0 million, together with an approximate net $3.0 million estimated amount payable to terminate a related interest rate swap and interest rate cap.

(5) Reflects the estimated fees and expenses associated with the Transactions.

Capitalization

The following table sets forth our unaudited consolidated cash and cash equivalents and capitalization as of September 30, 2010:

• on an actual basis, and

• on a pro forma basis to give effect to the Transactions (after deducting estimated discounts, commissions and offering expenses), the application of net proceeds from this offering and the consummation of the Broadlane Acquisition as if they had occurred on such date.

You should read this table together with “Use of proceeds,” “The Broadlane Acquisition,” “Selected historical consolidated financial data of MedAssets,” “Unaudited pro forma condensed combined financial information” and “Management’s discussion and analysis of financial condition and results of operations of MedAssets” and MedAssets’ consolidated financial statements and the related notes included elsewhere in this offering memorandum.



	As of September 30, 2010
(Unaudited and in thousands)	Actual		Pro forma⁽¹⁾


Cash and cash equivalents⁽²⁾	$	8	$	15,659


Debt:
Existing Credit Facility		173,515		–
Finance obligation⁽³⁾		9,734		9,734
New Credit Facility⁽⁴⁾		–		635,000
Notes offered hereby		–		325,000


Total debt⁽⁵⁾		183,249		969,734
Total stockholders’ equity		478,055		466,785


Total capitalization	$	661,304	$	1,436,519

(1) Assumes that the consideration of $725.0 million (excluding the $125.0 million Deferred Payment Amount) for the Broadlane Acquisition will be paid in cash at the closing of the Broadlane Acquisition. See “The Broadlane Acquisition” and “Unaudited pro forma condensed combined financial information.” This offering is conditioned on the closing of the Broadlane Acquisition.

(2) Assumes that we will acquire $48.1 million in cash and cash equivalents relating to the Broadlane business at the closing of the Broadlane Acquisition, which is based on Broadlane’s consolidated cash and cash equivalents of $48.1 million set forth on its unaudited consolidated balance sheet as of September 30, 2010.

(3) Represents a capital lease obligation incurred in a sale and subsequent leaseback transaction of an office building in August 2003. The amount represents the net present value of the obligation. See Note 6 of the Notes to Consolidated Financial Statements, under thesub-heading “Finance Obligation” for additional information regarding this transaction and the related obligation.

(4) Assumes that we borrow $635.0 million under the New Credit Facility to finance the purchase price for the Broadlane Acquisition and the related payment of indebtedness. As of September 30, 2010, after giving pro forma effect to the Transactions, we would have had $635.0 million of secured debt outstanding. In addition, we have assumed $149.0 million of available secured borrowings under the revolving credit facility (netted for a $1.0 million letter of credit).

(5) Total Debt does not include the $125.0 million Deferred Payment Amount payable in January 2012 in connection with the Broadlane Acquisition.

Unaudited pro forma condensed combined financial
information

Cautionary note

The unaudited pro forma condensed combined financial information set forth below contains preliminary adjustments that are based on preliminary estimates, many of which are inherently uncertain. We believe that some of these estimates and the Broadlane financial information from which the unaudited pro forma condensed combined financial information has been derived are likely to change materially between the date of this offering memorandum and the closing date of the Broadlane Acquisition. The actual results reported in periods following the Transactions may differ significantly from that reflected in these pro forma condensed combined financial statements for a number of reasons, including but not limited to: differences between the assumptions used to prepare these unaudited pro forma condensed combined financial statements and actual amounts, cost savings from operating efficiencies, differences resulting from potential synergies and cost savings, the impact of the incremental costs incurred in integrating the Broadlane business, or MedAssets’ or Broadlane’s results of operations, financial condition or other transactions or developments since September 30, 2010. In addition, no adjustments have been made for certain non-recurring items related to the Broadlane Acquisition. Accordingly, the following unaudited pro forma condensed combined financial information should not be considered illustrative of what our financial condition or results of operations would have been had the Transactions been completed on the dates indicated in the unaudited pro forma condensed combined financial information and does not purport to project our future financial condition and results of operations after giving effect to these transactions. We therefore caution you not to place undue reliance on the following unaudited pro forma condensed combined financial information.

The following unaudited pro forma condensed consolidated financial information is based on historical audited and unaudited consolidated financial statements of MedAssets and Broadlane appearing elsewhere in this offering memorandum, as adjusted to illustrate the estimated pro forma effects of the Transactions, as described earlier in the offering memorandum. The unaudited pro forma condensed combined financial information should be read in conjunction with the consolidated financial statements and related notes of MedAssets and Broadlane and other financial information appearing elsewhere in this offering memorandum, including “The proposed Broadlane Acquisition and financing,” “Use of proceeds,” “Selected historical consolidated financial information of MedAssets,” “Management’s discussion and analysis of financial condition and results of operations of MedAssets,” “Selected historical consolidated financial information of Broadlane,” and “Management’s discussion and analysis of financial condition and results of operations of Broadlane.”

The unaudited pro forma condensed combined balance sheet gives effect to the Transactions as if they had occurred on September 30, 2010. The unaudited pro forma condensed combined statements of operations give effect to the Transactions as if they had occurred on January 1, 2009.

We derived the unaudited pro forma condensed combined statement of operations data for the twelve months ended September 30, 2010 by adding the unaudited pro forma condensed combined statement of operations data for the year ended December 31, 2009 to the unaudited pro forma condensed combined of operations data for the nine months ended September 30, 2010 and subtracting the unaudited pro forma condensed combined statement of operations data for the nine months ended September 30, 2009.

The unaudited pro forma adjustments are based upon available information and certain assumptions and estimates. For example, our acquisition of Broadlane will be accounted for, and is presented in the unaudited pro forma condensed consolidated financial information, using the authoritative guidance for the acquisition method of accounting. Under these standards, the excess of the purchase price over the fair value of net assets acquired and liabilities assumed is recorded as goodwill. The pro forma adjustments reflect our preliminary estimates of the purchase price allocation related to our acquisition of Broadlane. We have made significant assumptions and estimates in determining the preliminary purchase price and the preliminary allocation of the estimated purchase price in the unaudited pro forma financial statements contained herein. These preliminary estimates and assumptions are likely to change materially during the measurement period (up to one year from the acquisition date) as we finalize the valuations of the net tangible assets identified intangible assets, and resultant goodwill. As of the date of this offering memorandum, we have not performed the valuation studies necessary to determine with any certainty the fair values of the assets that we will acquire and the liabilities that we will assume and the related allocation of purchase price. The preliminary estimated allocation is likely to change based upon finalization of the appraisals and other valuation studies that we will arrange to obtain, and the amounts contained in the final purchase price allocation will likely differ materially from our preliminary estimates. For purposes of computing pro forma adjustments, we have assumed that historical values of certain assets acquired and liabilities assumed reflect fair value. The pro forma balance sheet includes a preliminary estimate of fair value adjustments for certain administrative fee receivables and related revenue share obligations; identifiable intangible assets such as a non-compete agreement, developed technology assets, tradenames and customer relationship assets; additional long-term debt and certain other adjustments. The pro forma condensed consolidated statements of operations include preliminary estimates of incremental amortization expenses associated with these identifiable intangible assets, additional interest expense, income tax adjustments and certain other adjustments. However, these pro forma amounts will likely change materially as we have not completed the appraisal process and necessary valuation studies as of the date of this offering memorandum.

Pro forma adjustments do not include adjustments to deferred tax assets or liabilities other than with respect to Broadlane’s historical goodwill and our preliminary estimate of the purchase price to be allocated to identifiable intangible assets and goodwill. The structure of the Transactions (inclusive of tax matters described in section 6.3 of the Purchase Agreement) and certain elections that we may make in connection with our acquisition of Broadlane and subsequent tax filings may impact the amount of deferred tax liabilities that are due and the realization of deferred tax assets.

The unaudited pro forma condensed combined financial information contained in this offering memorandum is for informational purposes only and is not intended to represent or be indicative of the consolidated results of operations or financial position that we would have reported had the Transactions been completed as of the dates presented and should not be taken as representative of our future consolidated results of operations of financial position.

In connection with our plan to integrate the operations of MedAssets and Broadlane, management anticipates that certain material non-recurring charges, such as severance, relocation expenses, facility consolidation expense, technology and other infrastructure integration expenses will be incurred. Management cannot yet determine the timing, nature and extent of such charges and has not made any adjustment for them in the accompanying unaudited pro forma condensed combined financial statements.

Unaudited pro forma condensed combined
balance sheet as of September 30, 2010



							Pro forma
(In thousands, except share and per share amounts)	MedAssets			Broadlane			adjustments			Pro forma


Assets
Current Assets
Cash and cash equivalents	$	8		$	48,145		$	(32,494	)^(a)	$	15,659
Accounts receivable, net		75,692			11,881			35,000	^(c)		122,573
Deferred tax assets		19,846			7,212			(4,542	)^(m)		22,516
Prepaid expenses and other current assets		14,599			4,861			–			19,460


Total current assets		110,145			72,099			(2,036	)		180,208
Property and equipment, net		61,318			26,068			(18,756	)^(d)		68,630
Other long term assets
Goodwill		512,485			184,115			357,069	^(e)		1,053,669
Intangible assets, net		79,529			177,840			277,660	^(f)		535,029
Other		18,857			2,264			37,649	^(g)		58,770


Other long term assets		610,871			364,219			672,378			1,647,468


Total Assets		782,334			462,386			651,586			1,896,306


Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable		7,325			12,070			(10,057	)^(h)		9,338
Accrued revenue share obligations and rebates		25,153			24,448			17,500	⁽ⁱ⁾		67,101
Accrued payroll and benefits		6,867			6,243			5,906	^(h)		19,016
Other accrued expenses		11,409			–			1,542	^(j)		12,951
Deferred revenue, current portion		30,514			915			(915	)^(k)		30,514
Current portion of notes payable		2,499			10,228			(6,727	)^(l)		6,000
Current portion of finance obligation		177			–			–			177


Total current liabilities		83,944			53,904			7,249			145,097
Notes payable, less current portion		171,016			166,532			616,452	^(l)		954,000
Finance obligation, less current portion		9,557			–			–			9,557
Deferred revenue, less current portion		9,057			–			–			9,057
Deferred tax liability		28,037			59,057			101,228	^(m)		188,322
Deferred payment liability		–			–			121,250	⁽ⁿ⁾		121,250
Other long term liabilities		2,668			4,243			(4,673	)^(o)		2,238


Total liabilities		304,279			283,736			841,506			1,429,521
Commitments and contingencies
Stockholders’ equity
Common stock, $0.01 par value, 150,000,000 shares authorized; 57,964,000 issued and outstanding on an actual and pro forma basis at September 30, 2010		580			–			–			580
Additional paid in capital		662,133			203,391			(203,391	)^(p)		662,133
Accumulated other comprehensive loss		(1,028	)		–			1,028	^(p)		–
Accumulated deficit		(183,630	)		(24,741	)		12,443	^(p)		(195,928	)


Total stockholders’ equity		478,055			178,650			(189,920	)^(p)		466,785


Total liabilities and stockholders’ equity	$	782,334		$	462,386		$	651,586		$	1,896,306

See notes to unaudited pro forma condensed combined balance sheet

Notes to unaudited pro forma condensed combined balance sheet

(a) The following table sets forth the estimated sources and uses of cash in the Transactions, assuming they had occurred on September 30, 2010 excluding the $125 million Deferred Payment Amount (in thousands):



Sources


New revolving credit facility⁽¹⁾	$	–
New senior secured term loan facility⁽²⁾	$	635,000
Gross proceeds from the notes offered hereby, assuming sold at par	$	325,000
Cash and cash equivalents of MedAssets and Broadlane	$	32,494

	$	992,494

Uses:
Seller cash consideration	$	580,379
Repayment of MedAssets existing senior credit facility⁽³⁾	$	175,171
Repayment of Broadlane’s existing indebtedness⁽⁴⁾	$	184,140
Estimated transaction fees and expenses⁽⁵⁾	$	52,804

	$	992,494

(5) Reflects the estimated fees and expenses associated with the Transactions, as described in the table below (in thousands):



Deferred financing costs:
Financing fees⁽ⁱ⁾	$	41,418
Other financing costs⁽ⁱⁱ⁾		2,945

Total deferred financing costs	$	44,363
Costs to be expensed by MedAssets:
Other financing and transaction costs⁽ⁱⁱ⁾		8,441

Total estimated transaction costs	$	52,804

(i) Reflects estimated financing fees we will incur in connection with the new senior secured credit facility and the notes offered hereby, which will be capitalized and amortized over the terms of the applicable indebtedness.

(ii) Represents estimated remaining transaction costs, other than those costs included in (i) above, including fees attributable to professional advisors and other fees associated with the completion of the Transactions, which will be allocated between deferred financing costs and expenses associated with the Transactions, based on a study which is not yet complete. Accordingly, the actual amounts incurred and allocated to deferred financing costs and transaction expenses, and the corresponding amount of amortization and current expense, respectively, may be different from the amounts presented herein. The tax deductibility of these costs will be determined based upon a study which is not yet complete. Therefore no estimated tax effect related to these costs has been reflected in the pro forma financial information presented herein.

(b) Reflects our preliminary estimates of the preliminary purchase price and the preliminary estimated purchase price allocation related to the Broadlane acquisition. We have made significant assumptions and estimates in determining the preliminary purchase price and the preliminary allocation of the estimated purchase price in the unaudited pro forma financial statements contained herein. These preliminary estimates and assumptions will likely change materially during the measurement period (up to one year from the acquisition date) as we finalize the estimates of the net tangible assets, identified intangible assets, and resultant goodwill. As of the date of this offering memorandum, we have not performed the valuation studies necessary to determine with any certainty the fair values of the assets that we will acquire and the liabilities that we will assume and the related allocation of purchase price. The allocation is subject to change based upon finalization of appraisals and valuation studies that we will arrange to obtain and the final purchase price allocation will likely differ materially from the preliminary estimates included in the pro forma statements included herein. The following reflects the preliminary estimated purchase price and preliminary estimated purchase price allocation to the fair value of assets acquired and liabilities assumed (in thousands)(1):



Consideration:⁽²⁾
Cash payments:
Cash to sellers				$	580,379
Less: cash acquired					(48,145	)


Net cash to sellers					532,234
Repayment of Broadlane indebtedness					184,140
Present value of deferred payment @ 2.6% (Item (n))					121,250


Net consideration				$	837,624
Allocated to:
Administrative fees receivable (Item (c))	$	35,000
Accounts receivable		11,881
Deferred tax asset (Item (m))		941
Prepaid and other assets		4,861
Fixed assets		7,312
Other long-term assets		110
Accounts payable		(2,015	)
Accrued revenue share obligations on administrative fees receivable (Item (i))		(17,500	)
Accrued revenue share obligations and rebates		(24,448	)
Accrued payroll and benefits		(12,149	)
Other accrued expenses		(1,542	)
Other long-term liabilities		(1,226	)
Deferred tax liabilities (Item (m))	$	(160,285	)


Net liabilities assumed					(159,060	)
Intangible assets (Item (f))					455,500


Unallocated excess purchase price (Item (e))				$	541,184

(1) For purposes of computing pro forma adjustments, we have assumed that the historical values of tangible assets acquired and liabilities assumed reflect fair value. We have estimated a fair value adjustment for certain accounts receivables as described in Item (c) and related accrued revenue share obligations as described in Item (i) and identifiable intangible assets such as a non-compete agreement, developed technology assets, tradenames, and customer relationship assets as described in Item (f) using a preliminary valuation study estimate. The remaining excess of the preliminary estimated purchase price over the fair value of tangible and identifiable intangible assets acquired and liabilities assumed is recorded as goodwill as noted in Item (e).

(2) We may be required to make certain payments to the seller related to tax benefits associated with costs incurred prior to the Transaction date. See section 6.2(f) Transaction Tax Deductions of the Purchase Agreement. We have not included an estimate of these amounts, if any, in computing our preliminary estimated purchase price.

(c) Reflects the preliminary fair value of administrative fees related to customer purchases that occurred prior to the Transaction date but were reported to us subsequent to the Transaction date. Under our accounting policies, these administrative fees would be recorded as revenue when reported to us; however, acquisition accounting requires us to estimate the amount of purchases occurring prior to the Transaction date and to record the fair value of the administrative fees to be received from those purchases as an account receivable (as opposed to recognizing revenue when these transactions are reported to us) and record any corresponding revenue share obligation as described in Item (i) as a liability.

(d) Reflects the elimination of Broadlane’s historical cost basis of capitalized software. A preliminary fair value estimate of developed technology assets has been included in the estimated intangibles in Item (f) below.

(e) Reflects the preliminary estimated excess of purchase price over the fair values of assets acquired and liabilities assumed as a result of the assumed purchase price allocation (in thousands):



Unallocated excess purchase price (Item (b))	$	541,184
Less: Broadlane’s historical goodwill		(184,115	)

Net adjustment to goodwill	$	357,069

(f) Reflects the preliminary estimated fair value of intangible assets acquired (in thousands):




Non-compete agreement	1.5 yr life	$	2,900
Tradename	3 yr life		4,500
Developed technology	5 yr life		24,000
Customer relationship	10 yr life		424,100

Total identified intangible assets acquired		$	455,500
Less Elimination of Broadlane’s existing intangible assets, net			(177,840	)

Net adjustment to intangible assets		$	277,660

The non-compete agreement, tradename, and developed technology assets are being amortized using the straight-line method over assumed estimated useful lives of one and one-half, three, and five years, respectively. The customer relationship identified intangible asset is being amortized over an estimated useful life of ten years based on the estimated pattern of economic benefit that is expected to be realized from the acquired customer relationships.

As noted above in Item (b), the amounts allocated to identified intangible assets and the assumed useful lives are based on estimates and the estimated amounts and useful lives will

likely change materially based upon the finalization of appraisals and valuation studies and will likely differ materially from the pro forma amounts presented herein.

(g) Reflects the capitalization of estimated financing costs in connection with the indebtedness we will incur in the Transactions consisting of the new senior secured credit facilities and notes offered hereby, which will be amortized over the terms of the applicable indebtedness, less the elimination of MedAssets and Broadlane’s historical unamortized debt issuance costs and original issue discount, as follows (in thousands):



Estimated deferred financing costs related to the Transactions	$	44,363
Write-off of MedAssets debt issuance costs (Item (p))		(4,558	)
Write-off of Broadlane debt issuance costs		(2,131	)
Termination of Broadlane interest rate cap (Item (a)(4))		(25	)

Net adjustment to other assets	$	37,649

(h) Reflects the net adjustment to accounts payable as a result of reclassification of accrued payroll and benefits and other accrued expenses to conform to MedAssets’ presentation format (in thousands):



Accrued bonuses and employee benefits	$	(5,906	)
Other accrued expenses (Item (j))		(4,151	)

Net adjustment to accounts payable	$	(10,057	)

(i) Reflects the estimated preliminary fair value of accrued revenue share obligations related to the administrative fees receivable described in Item (c) above.

(j) Reflects net adjustment to other accrued expenses as a result of the reclassification of certain current liabilities and adjustments as a result of the Transactions as follows (in thousands):



Other accrued expenses (Item (h))	$	4,151
Accrued interest payments (Item (a)(4))		(2,048	)
Adjustment to record preliminary fair value of accrued rent		(561	)

Net adjustment to other accrued expenses	$	1,542

(k) Reflects adjustment to record the estimated preliminary fair value of deferred revenue.

(l) Reflects the estimated net adjustments to long-term debt assuming the completion of the currently structured Transactions as follows (in thousands):



	Current			Long-term
	portion			portion			Total debt


New senior secured term loan facility	$	6,000		$	629,000		$	635,000
Notes offered hereby		–			325,000			325,000
New revolving credit facility borrowings		–			–			–
Write-off of Broadlane term loan original issue discount		–			2,340			2,340
Repayment of Broadlane existing credit facility		(10,228	)		(168,872	)		(179,100	)
Repayment of MedAssets existing indebtedness		(2,499	)		(171,016	)		(173,515	)
Net adjustments to long-term debt	$	(6,727	)	$	616,452		$	609,725

(m) Reflects the preliminary estimated adjustments to net current deferred tax assets and net non-current deferred tax liabilities as follows (in thousands):



Reduction of Broadlane historical current deferred tax assets	$	(7,212	)
Estimated increase in current deferred tax assets as a result of the Transactions		941
Estimated increase in current deferred tax assets as a result the write-off MedAssets debt issuance costs (Item(p))		1,729

Net adjustments to current deferred tax assets	$	(4,542	)


Reduction of Broadlane historical non-current deferred tax liabilities	$	(59,057	)
Estimated increase in non-current deferred tax liabilities as a result of the Transactions		160,285

Net adjustments to non-current deferred tax liabilities	$	101,228

(n) Reflects the preliminary estimated present value of the $125.0 million Deferred Payment Amount, discounted at 2.6%. The Deferred Payment Amount is payable on January 4, 2012. The seller is entitled to certain remedies as described by section 2.5 and 2.6 of the Purchase Agreement in the event we are unable to pay the Deferred Payment Amount on the due date. For purposes of the pro forma adjustments presented herein, we have assumed that the Deferred Payment Amount will be paid in the form of a cash payment.

(o) Reflects the net adjustments to other long term liabilities as a result of the Transactions as follows (in thousands):



Termination of Broadlane’s interest rate swap agreement (Item(a)(4))	$	(3,017	)
Termination of MedAssets’ interest rate swap agreement (Item(a)(3))		(1,656	)

Net adjustments to other long term liabilities	$	(4,673	)

(p) Reflects the net adjustment to shareholders’ equity, as follows (in thousands):



Elimination of Broadlane’s historical additional paid in capital				$	(203,391	)
Reclassification into earnings of MedAssets interest rate swap, net of tax⁽¹⁾					1,028
Elimination of Broadlane’s historical accumulated deficit	$	24,741
Reclassification into earnings of MedAssets interest rate swap, net of tax⁽¹⁾		(1,028	)
Write-off of MedAssets debt issuance costs, net of tax (Item (g))⁽²⁾		(2,829	)
Other financing and transactions costs (Item (a)(5))⁽³⁾	$	(8,441	)


Net adjustments to accumulated deficit					12,443


Net adjustments to shareholders’ equity				$	(189,920	)

(1) MedAssets’ interest rate swap is designated as a highly effective cash flow hedge and is recorded at fair value net of tax in accumulated comprehensive loss. As a result of the estimated termination in connection with the Transaction, the fair value of the interest rate swap, net of tax has been reclassified into earnings.

(2) The estimated $4.6 million write-off of MedAssets’ historical debt issuance costs has been tax effected using the blended statutory rate of approximately 38% resulting in an estimated $2.8 million net of tax charge to earnings.

(3) The other financing and transaction costs have not been tax effected as the tax deductibility of these costs will be determined based upon a study which is not yet complete. Therefore no estimated tax effect related to these costs has been reflected in the pro forma financial information presented herein.

Unaudited pro forma condensed combined
statement of operations for the year ended
December 31, 2009



							Pro forma
(In thousands, except per share amounts)	MedAssets			Broadlane			adjustments^(a)			Pro forma


Revenue
Administrative fees, net	$	108,223		$	117,730		$	–		$	225,953
Service fees		233,058			49,794			–			282,852


Total net revenue		341,281			167,524			–			508,805
Operating expenses
Cost of revenue		74,651			69,327			–			143,978
Product development expenses		18,994			13,275			–			32,269
Selling and marketing expenses		45,282			6,937			–			52,219
General and administrative expenses		110,661			30,822			–			141,483
Depreciation		13,211			9,169			(5,372	)^(b)		17,008
Amortization of intangibles		28,012			15,950			46,867	^(c)		90,829


Total operating expense		290,811			145,480			41,495			477,786
Operating income (loss)		50,470			22,044			(41,495	)		31,019
Other income (expense)
Interest (expense)		(18,114	)		(24,721	)		(30,341	)^(d)		(73,176	)
Loss on extinguishment of debt		–			(3,074	)		3,074	^(e)		–
Other income (expense)		417			811			(756	)^(f)		472


Income (loss) before income taxes		32,773			(4,940	)		(69,518	)		(41,685	)
Income tax expense (benefit)		12,826			(1,017	)		(26,313	)^(g)		(14,504	)


Net income (loss)		19,947			(3,923	)		(43,205	)		(27,181	)
Income (loss) per share—basic	$	0.36			–			–		$	(0.50	)
Income (loss) per share—diluted	$	0.34			–			–		$	(0.50	)
Shares used in per share calculation—basic		54,841			–			–			54,841
Shares used in per share calculation—diluted		57,865			–			–			54,841

See notes to unaudited pro forma condensed combined statements of operations

Unaudited pro forma condensed combined
statement of operations for the nine months
ended September 30, 2009



							Pro forma
(In thousands, except per share amounts)	MedAssets			Broadlane			adjustments^(a)			Pro forma


Revenue
Administrative fees, net	$	78,495		$	86,801		$	–		$	165,296
Service fees		167,091			35,890			–			202,981


Total net revenue		245,586			122,691			–			368,277
Operating expenses
Cost of revenue		55,830			50,769			–			106,599
Product development expenses		15,424			9,539			–			24,963
Selling and marketing expenses		36,529			4,834			–			41,363
General and administrative expenses		77,971			20,617			–			98,588
Depreciation		9,020			6,721			(3,730	)^(b)		12,011
Amortization of intangibles		21,029			11,962			35,151	^(c)		68,142


Total operating expense		215,803			104,442			31,421			351,666
Operating income (loss)		29,783			18,249			(31,421	)		16,611
Other income (expense)
Interest (expense)		(14,015	)		(18,936	)		(21,970	)^(d)		(54,921	)
Other income (expense)		404			506			(450	)^(f)		460


Income (loss) before income taxes		16,172			(181	)		(53,841	)		(37,850	)
Income tax expense (benefit)		6,196			368			(20,368	)^(g)		(13,804	)


Net income (loss)		9,976			(549	)		(33,473	)		(24,046	)
Income (loss) per share—basic	$	0.18			–			–		$	(0.44	)
Income (loss) per share—diluted	$	0.17			–			–		$	(0.44	)
Shares used in per share calculation—basic		54,589			–			–			54,589
Shares used in per share calculation—diluted		57,223			–			–			54,589

See notes to unaudited pro forma condensed combined statements of operations

Unaudited pro forma condensed combined
statement of operations for the nine months
ended September 30, 2010



							Pro forma
(In thousands, except per share amounts)	MedAssets			Broadlane			adjustments^(a)			Pro forma


Revenue
Administrative fees, net	$	84,437		$	88,121		$	–		$	172,558
Service fees		199,948			42,525			–			242,473


Total net revenue		284,385			130,646			–			415,031
Operating expenses
Cost of revenue		67,176			58,777			–			125,953
Product development expenses		14,859			9,534			–			24,393
Selling and marketing expenses		35,348			5,909			–			41,257
General and administrative expenses		91,425			22,798			–			114,223
Acquisition related expenses		4,351			–			(1,546	)^(h)		2,805
Depreciation		14,068			7,938			(4,765	)^(b)		17,241
Amortization of intangibles		17,706			11,962			33,376	^(c)		63,044


Total operating expense		244,933			116,918			27,065			388,916
Operating income (loss)		39,452			13,728			(27,065	)		26,115
Other income (expense)
Interest (expense)		(10,986	)		(11,922	)		(28,721	)^(d)		(51,629	)
Loss on extinguishment of debt		–			(11,754	)		11,754	^(e)		–
Other income		286			87			73	(f)		446


Income (loss) before income taxes		28,752			(9,861	)		(43,959	)		(25,068	)
Income tax expense (benefit)		11,477			(2,986	)		(16,678	)^(g)		(8,187	)


Net income (loss)		17,275			(6,875	)		(27,281	)		(16,881	)
Income (loss) per share—basic	$	0.31			–			–		$	(0.30	)
Income (loss) per share—diluted	$	0.29			–			–		$	(0.30	)
Shares used in per share calculation—basic		56,238			–			–			56,238
Shares used in per share calculation—diluted		59,340			–			–			56,238

See notes to unaudited pro forma condensed combined statements of operations

Unaudited pro forma condensed combined
statement of operations for the twelve months
ended September 30, 2010



							Pro forma
(In thousands, except per share amounts)	MedAssets			Broadlane			adjustments^(a)			Pro forma


Revenue
Administrative fees, net	$	114,165		$	119,050		$	–		$	233,215
Service fees		265,915			56,429			–			322,344


Total net revenue		380,080			175,479			–			555,559
Operating expenses
Cost of revenue		85,997			77,335			–			163,332
Product development expenses		18,429			13,270			–			31,699
Selling and marketing expenses		44,101			8,012			–			52,113
General and administrative expenses		124,115			33,003			–			157,118
Acquisition related expenses		4,351			–			(1,546	)^(h)		2,805
Depreciation		18,259			10,386			(6,407	)^(b)		22,238
Amortization of intangibles		24,689			15,950			45,092	^(c)		85,731


Total operating expense		319,941			157,956			37,139			515,036
Operating income (loss)		60,139			17,523			(37,139	)		40,523
Other income (expense)
Interest (expense)		(15,085	)		(17,707	)		(37,092	)^(d)		(69,884	)
Loss on extinguishment of debt		–			(14,828	)		14,828	^(e)		–
Other income		299			392			(233	)^(f)		458


Income (loss) before income taxes		45,353			(14,620	)		(59,636	)		(28,903	)
Income tax expense (benefit)		18,107			(4,371	)		(22,626	)		(8,890	)


Net income (loss)		27,246			(10,249	)		(37,010	)		(20,013	)
Income (loss) per share—basic	$	0.49			–			–		$	(0.36	)
Income (loss) per share—diluted	$	0.46			–			–		$	(0.36	)
Shares used in per share calculation—basic		56,074			–			–			56,074
Shares used in per share calculation—diluted		59,176			–			–			56,074

See notes to unaudited pro forma condensed combined statements of operations

Notes to unaudited pro forma condensed combined
statements of operations

(a) Certain of the pro forma adjustments reflect our preliminary estimates of the purchase price allocation related to the Broadlane Acquisition. We have made significant assumptions and estimates in determining the preliminary purchase price and the preliminary allocation of the estimated purchase price in the unaudited pro forma financial statements contained herein. These preliminary estimates and assumptions will likely change materially during the measurement period (up to one year from the acquisition date) as we finalize the valuations of the net tangible assets, identified intangible assets, and resultant goodwill. As of the date of this offering memorandum, we have not performed the valuation studies necessary to determine with any certainty the fair values of the assets that we will acquire and the liabilities that we will assume and the related allocation of purchase price. The allocation is subject to change based upon finalization of appraisals and valuation studies that we will arrange to obtain and the final purchase price allocation will likely differ materially from the preliminary estimates included in the pro forma statements included herein. The pro forma adjustments do not reflect the following material items that are expected to result directly from the Transactions and which are expected to impact our statement of operations within twelve months following the Transactions:

i) An estimated reduction of approximately $17.5 million of net administrative fee revenue (net of accrued revenue share obligations) related to administrative fees generated from customer purchases that occurred prior to the Transaction date but were reported to us subsequent to the Transaction date. Under our revenue recognition accounting policies, these administrative fees would be recorded as revenue when reported to us; however, acquisition accounting requires us to estimate the amount of purchases occurring prior to the Transaction date and to record the fair value of the administrative fees to be received from those purchases as an account receivable and any corresponding revenue share obligation as a liability;

ii) Remaining transaction costs currently estimated at approximately $8.4 million relating to fees to investment bankers, attorneys, accountants and other professional advisors and other Transaction-related costs that will likely not be capitalized as deferred financing costs; and

iii) The effect of anticipated cost savings or operating efficiencies expected to be realized and related restructuring charges which will be material such as severance, relocation expenses, facility consolidation expense, technology and infrastructure integration expenses, impairment of duplicative assets and other costs related to the integration of Broadlane into MedAssets.

(b) For purposes of computing pro forma adjustments, we have assumed that the historical values of tangible fixed assets acquired reflect fair value and have recorded those amounts as part of the preliminary estimated purchase price allocation. These tangible fixed assets are being amortized using the straight-line method over their historical estimated remaining useful lives of between three and fifteen years. As a result, we have not included a pro forma depreciation adjustment for tangible fixed assets in the Pro Forma Condensed Combined Statements of Operations. However, Broadlane’s historical depreciation expense includes depreciation of capitalized software. We have estimated the value of the acquired developed technology assets (software) and included depreciation expense for the fair value of the software in footnote (c). As a result, we have recorded a pro forma adjustment to remove the effect of Broadlane’s

historical software amortization included in depreciation expense. The Pro Forma Condensed Combined Statements of Operations include the following adjustments to reduce depreciation expense (in thousands):



				Nine months			Nine months			Twelve months
	Year ended			ended			ended			ended
	December 31,			September 30,			September 30,			September 30,
	2009			2009			2010			2010


Depreciation expense	$	(5,372	)	$	(3,730	)	$	(4,765	)	$	(6,407	)

(c) For purposes of computing pro forma adjustments, we have estimated a fair value adjustment for identifiable assets such as a non-compete agreement; developed technology assets, tradenames and customer relationship assets of $455.5 million based on a preliminary valuation study. The non-compete agreement, tradenames and developed technology assets are being amortized using the straight-line method over assumed estimated useful lives of one and one-half, three, and five years, respectively. Cost related to the customer relationship identified intangible asset is being amortized over an estimated useful life of ten years based on the estimated pattern of economic benefit that is expected to be realized from the customer relationships. As a result, the pro forma condensed consolidated statements of operations includes the following incremental adjustments to amortization expense (in thousands):

Nine months

Twelve months

Year ended

ended

December 31,

September 30,

2009

2010

Amortization expense

46,867

35,151

33,376

45,092

The estimated five year impact on operating results using the expected pattern of economic benefit of the customer relationship identified intangible asset is as follows (in thousands):



Expected five year customer
relationship amortization


Year 1	$	54,584
Year 2		52,862
Year 3		50,623
Year 4		48,213
Year 5	$	45,802

The remaining excess of the estimated preliminary purchase price over the fair value of tangible and identifiable intangible assets acquired and liabilities assumed is recorded as goodwill. Goodwill is not amortized but will be subject to annual impairment tests in accordance with generally accepted accounting principles. As noted, the estimated amounts allocated to identified intangible assets and the assumed useful lives are based on preliminary valuation studies and the amounts and useful lives are subject to change based upon the finalization of appraisals and valuation study estimates and will likely differ materially from the pro forma amounts presented herein.

(d) For purposes of computing pro forma adjustments for interest expense, we have made certain assumptions regarding our debt structure at the closing of the Transactions (including assuming that the notes are issued at par), interest rates on our outstanding debt and the yield

and expected maturity dates on the notes offered herein. We have preliminarily assumed there are no specific embedded features in the debt instruments, including embedded derivatives. These estimates are preliminary and actual results could differ materially from the pro forma amounts presented herein. The following reflects pro forma adjustments to estimated interest expense (in thousands):



				Nine months			Nine months			Twelve months
	Year ended			ended			ended			ended
	December 31,			September 30,			September 30,			September 30,
	2009			2009			2010			2010


New senior secured term loan facility⁽¹⁾	$	33,218		$	24,944		$	24,708		$	32,982
Notes offered hereby⁽²⁾		26,000			19,500			19,500			26,000
New revolving credit facility borrowings⁽³⁾		–			–			–			–
Fees on outstanding letters of credit⁽⁴⁾		38			28			28			38
Commitment fees⁽⁵⁾		1,118			838			838			1,118


Total pro forma cash interest expense related to new borrowings		60,374			45,310			45,074			60,138
Amortization of capitalized debt issuance costs⁽⁶⁾		7,822			5,872			5,828			7,778
Interest accretion on Deferred Payment Amount⁽⁷⁾		4,000			3,000			–			1,000


Total pro forma interest expense related to new borrowings		72,196			54,182			50,902			68,916
Less: Reduction of MedAssets’ existing interest expense and fees⁽⁸⁾		(17,134	)		(13,276	)		(10,259	)		(14,117	)
Less: Broadlane’s historical interest expense and fees⁽⁹⁾		(24,721	)		(18,936	)		(11,922	)		(17,707	)


Total pro forma adjustment to interest expense	$	30,341		$	21,970		$	28,721		$	37,092

(1) Reflects estimated pro forma interest expense on the new $635.0 million senior secured term loan facility at an assumed minimum LIBOR rate of 1.50% plus an applicable margin of 3.75%. The calculation of the estimated pro forma interest expense is inclusive of estimated required quarterly principal repayments as per the terms of the senior secured credit facility. A 0.125% increase in the interest rate on the floating rate debt would result in an increase in total annual pro forma interest expense of approximately $0.8 million.

(2) Reflects pro forma interest expense on the $325.0 million of notes offered hereby estimated at 8.0% per annum.

(3) Reflects no assumed borrowings under the new revolving credit facility. Interest on any borrowings under the new revolving credit facility would be based on our minimum LIBOR floor of 1.50% for each period plus an applicable margin of 3.75%.

(4) Reflects pro forma annual fees of 3.75% on average assumed outstanding letters of credit of $1.0 million.

(5) Reflects pro forma commitment fees of 0.75% on the unused portion of the new revolving credit facility.

(6) Reflects non-cash amortization of estimated capitalized deferred financing costs related to the Transactions over the term of the related facilities.

(7) Reflects non-cash interest to accrete Deferred Payment Amount to face value.

(8) Reflects MedAssets’ historical interest expense on its existing term loan, letter of credit fees and commitment fees on its unused revolving credit facility. Excludes interest expense on our finance obligation.

(9) Reflects Broadlane’s historical interest expense on its existing senior term loan and commitment fees on its unused revolving credit facility.

(e) Reflects the pro forma adjustment to eliminate the loss on extinguishment of debt from Broadlane’s historical statements of operations relating to Broadlane’s refinancing of their senior term loan, as discussed elsewhere in this offering memorandum. Broadlane’s refinancing would not have occurred had the Transactions been completed as of the beginning of the period as the recorded loss was directly impacted by the Transactions; therefore, the loss was eliminated in the pro forma condensed consolidated statements of operations.

(f) Reflects the pro forma adjustment to eliminate the effect of Broadlane’s interest rate swap and interest rate cap from Broadlane’s historical statements of operations. These transactions would not have occurred had the Transactions been completed as of the beginning of the period as the recorded amounts were directly impacted by the Transactions; therefore, they were eliminated in the pro forma condensed consolidated statements of operations.

(g) Represents the estimated pro forma tax adjustment resulting from the combination of the consolidated tax groups of MedAssets and Broadlane, consideration of their resulting tax attributes and the impact of the pro forma adjustments. The amount was calculated using the MedAssets blended statutory tax rate for each applicable period. The adjustment is preliminary and may change materially based upon a study that is not yet complete.

(h) Represents the elimination of approximately $1.5 million of transaction costs attributable to professional advisors and other fees directly associated with the completion of the Acquisition which were recorded in MedAssets’ historical statement of operations for the nine months ended September 30, 2010.

MedAssets (MDAS) Inactive 8-KRegulation FD Disclosure