Exhibit 99.1
MedAssets Reports Fourth Quarter and Full Year 2007 Results
ATLANTA--(BUSINESS WIRE)--MedAssets, Inc. (NASDAQ: MDAS) today announced results for its fourth quarter and year ended December 31, 2007.
“We are very pleased with our 2007 performance, as we continued to experience tremendous demand for our products and services. We also increased the depth and breadth of our revenue cycle management capabilities through two acquisitions and the introduction of several new ASP-based service offerings including CDM Master and CrossWalk 3.0,” said John A. Bardis, chairman, president and chief executive officer of MedAssets, Inc. “We remain focused on becoming the trusted advisor and partner for our customers to help increase their operating margin and cash flow. With the successful completion of our IPO in December 2007, we have taken the next step in our strategy to leverage our business strength and market position to continue to innovate and deliver positive long-term financial results for our customers and shareholders.”
Financial Highlights
- In accordance with Generally Accepted Accounting Principles (GAAP), total net revenue for full year 2007 increased 28.9% to $188.5 million, driven by organic growth and the addition of acquired businesses.
- On a pro forma basis, assuming the acquired XactiMed and MD-X businesses were part of MedAssets as of January 1, 2006, total net revenue was $209.5 million in 2007, an increase of 17.8% from $177.9 million in 2006.
- Total pro forma adjusted EBITDA increased 17.8% to $66.2 million from $56.2 million in 2006; margins remained constant at 31.6%.
- Pro forma diluted earnings per share (EPS) for 2007 was $0.12; pro forma adjusted EPS excluding non-cash acquisition-related intangible amortization on a tax-adjusted basis for 2007 was $0.49.
- MedAssets completed its initial public offering (IPO) on December 18, 2007, received net proceeds totaling $216.6 million, and subsequently reduced bank indebtedness by $120.0 million, or approximately 37.6%, prior to year end.
Reconciliation of non-GAAP measures, including pro forma net revenue, pro forma adjusted EBITDA, pro forma diluted EPS and pro forma adjusted diluted EPS, to their most directly comparable GAAP measure is provided in the attached financial schedules.
“Strong operating results in 2007 and momentum in our business segments should deliver solid results in 2008 and in 2009,” commented Neil Hunn, MedAssets’ chief financial officer. “The integration of our Revenue Cycle Management acquisitions continues to proceed very well. Our revenue cycle sales force is fully integrated, and we expect to release three to five new or enhanced revenue cycle products during this year. In addition, recent enterprise customer wins are validating our strategy of being a trusted advisor to help improve the operating margins and cash flow for our hospital and health system clients.”
Net Revenue
On a GAAP basis, total net revenue for full-year 2007 was $188.5 million, a 28.9% increase from $146.2 million in 2006. Fourth quarter net revenue increased 45.7% to $53.9 million from $37.0 million in the fourth quarter of 2006.
On a pro forma basis, total net revenue increased 17.8% to $209.5 million, compared to total net revenue of $177.9 million in 2006. This growth was driven by a 26.1% revenue increase in the Revenue Cycle Management segment, and a 10.9% revenue increase in the Spend Management segment. Fourth quarter pro forma net revenue increased 20.0% to $53.9 million from $44.9 million in the fourth quarter of 2006.
Adjusted EBITDA
Total adjusted EBITDA in 2007 was $60.6 million, or 32.1% of revenue, versus adjusted EBITDA of $50.8 million, or 34.7% of revenue, in the prior year. On a pro forma basis, total adjusted EBITDA in 2007 was $66.2 million, or 31.6% of revenue, versus adjusted EBITDA of $56.2 million, or 31.6% of revenue, in 2006. For the fourth quarter of 2007, total pro forma adjusted EBITDA was $15.7 million, or 29.2% of revenue, versus pro forma adjusted EBITDA of $14.6 million, or 32.5% of revenue, in the same quarter of 2006.
Profitability
On a GAAP basis, the Company reported a 2007 net loss attributable to common shareholders of $9.8 million, or a loss of $0.75 per diluted share, compared to a net loss attributable to common shareholders of $5.9 million, or a loss of $0.67 per diluted share, in 2006. Excluding non-recurring and terminated dividends accrued for preferred shareholders, net income for 2007 was $6.3 million, or $0.21 per diluted share.
On a pro forma basis, full-year 2007 adjusted diluted EPS, excluding non-cash acquisition-related intangible amortization on a tax-adjusted basis, was $0.49. Excluded from this calculation is $6.2 million in non-cash share-based compensation expense, which equates to $0.12 per diluted share on a tax adjusted basis.
Capital Resources and Cash Flow
At December 31, 2007, MedAssets had cash and cash equivalents of $137.0 million and total bank debt of $198.3 million on its balance sheet, and $109.0 million of additional capacity under its revolving credit facility. Net cash provided by operating activities for 2007 was $41.6 million, compared to $26.1 million in 2006. Capital expenditures for the year were $16.7 million versus $10.7 million in 2006.
2007 Business Segment Highlights
Revenue Cycle Management Segment
The Revenue Cycle Management segment reported full-year 2007 pro forma net revenue of $101.5 million, an increase of 26.1% when compared to pro forma net revenue of $80.5 million in 2006. Pro forma adjusted EBITDA in 2007 was $28.3 million, or 27.9% of revenue, versus $20.4 million, or 25.3% of revenue, in 2006.
Spend Management Segment
Net revenue in the Spend Management segment was $108.0 million, a 10.9% increase over the $97.4 million reported in 2006. Adjusted EBITDA was $50.6 million, or 46.9% of revenue, in full-year 2007, versus $46.7 million, or 48.0% of revenue, in 2006.
Corporate
On a pro forma basis, the impact of corporate operations on total adjusted EBITDA was $12.8 million in 2007, versus $10.9 million in 2006.
Guidance for 2008
For the full-year ending December 31, 2008, MedAssets expects total net revenue in the range of $230 million to $236 million. On a segment basis, the Company expects net revenue in its Revenue Cycle Management segment between $109 million and $113 million, and net revenue in its Spend Management segment between $120 million to $124 million.
At December 31, 2007, MedAssets’ contracted revenue for full-year 2008 totaled an estimated $198.3 million, consisting of $86.2 million from the Revenue Cycle Management segment and $112.1 million from the Spend Management segment. The Company’s contracted revenue is defined as the estimated contractually committed revenue to be generated under existing customer contracts for 2008. Most of the contracted revenue is derived from multi-year customer agreements.
Total adjusted EBITDA for 2008 is expected to be between $71 million and $75 million.
GAAP diluted EPS in 2008 is expected to be in the range of $0.28 to $0.36. Adjusted diluted EPS, excluding non-cash acquisition-related intangible amortization on a tax-adjusted basis, is expected to be in the range of $0.48 to $0.56 for full year 2008. The Company expects to recognize between $8.5 million and $9.0 million in non-cash share-based compensation expense, which would convert to an earnings impact of between $0.10 and $0.11 per diluted share on a tax-adjusted basis.
Conference Call Information
The Company will host a conference call at 5:00 p.m. ET today to discuss its financial and business highlights and management's outlook for future performance. You can access a live audio webcast of the call from the “Events & Presentations” page at http://ir.medassets.com. To access the conference call, dial 866-811-1812 or 706-902-0609 (international), and provide the conference ID #32007816. For those unable to listen to the live broadcast, a webcast replay will be archived on MedAssets’ website for 30 days. A conference call replay will be available for one week by calling 800-642-1687 or 706-645-9291 (international), and entering conference ID #32007816.
About MedAssets
MedAssets (NASDAQ: MDAS) partners with healthcare providers to improve their financial strength by implementing integrated 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, 2,500 hospitals and 30,000 non-acute care healthcare providers. For more information, go to www.medassets.com.
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 members of its management team with respect to the Company’s future business operations as well as the assumptions upon which such statements are based. Forward-looking statements include specifically, but are not limited to: 2008 projections, costs and revenue growth, margin and other financial projections; full-year 2008 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 424B4 filed with the Securities and Exchange Commission on December 13, 2007, or on the Company’s Form 10-K that is expected to be filed prior to March 31, 2008. The Company disclaims any responsibility to update any forward-looking statements.
mdas/F
| CONSOLIDATED STATEMENTS OF OPERATIONS |
| | | | | | |
| In $000s, except per share data | | Three Months Ended | | Year Ended |
| | December 31, | | December 31, |
| | | 2007 | | | 2006 | | | | 2007 | | | 2006 | |
| | (Unaudited) | | | |
| | | | | | |
| Revenue | | | | | | |
| Administrative fees, net | | $ | 23,826 | | $ | 21,557 | | | $ | 94,792 | | $ | 85,778 | |
| Other service fees | | | 30,095 | | | 15,445 | | | | 93,726 | | | 60,457 | |
| | | | | | |
| Total net revenue | | | 53,921 | | | 37,002 | | | | 188,518 | | | 146,235 | |
| | | | | | |
| Operating expenses: | | | | | | |
| Cost of revenue | | | 10,138 | | | 4,558 | | | | 27,983 | | | 15,601 | |
| Product development expenses | | | 2,173 | | | 1,675 | | | | 7,785 | | | 7,163 | |
| Selling and marketing expenses | | | 9,073 | | | 7,481 | | | | 35,748 | | | 32,205 | |
| General and administrative expenses | | | 20,415 | | | 12,769 | | | | 64,817 | | | 55,363 | |
| Depreciation | | | 1,845 | | | 1,336 | | | | 7,115 | | | 4,822 | |
| Amortization of intangibles | | | 4,845 | | | 2,969 | | | | 15,778 | | | 11,738 | |
| Impairment of property and equipment, intangibles and in process research and development | | 9 | | | - | | | | 1,204 | | | 4,522 | |
| | | | | | |
| Total operating expenses | | | 48,498 | | | 30,788 | | | | 160,430 | | | 131,414 | |
| | | | | | |
| Operating income | | | 5,423 | | | 6,214 | | | | 28,088 | | | 14,821 | |
| Other income (expense): | | | | | | |
| Interest expense | | | (6,240 | ) | | (3,558 | ) | | | (20,391 | ) | | (10,921 | ) |
| Other income (expense) | | | 1,014 | | | (1,131 | ) | | | 3,115 | | | (3,917 | ) |
| | | | | | |
| Income (loss) before income taxes | | | 197 | | | 1,525 | | | | 10,812 | | | (17 | ) |
| Income tax (benefit) | | | 323 | | | (420 | ) | | | 4,516 | | | (8,860 | ) |
| | | | | | |
| Net income (loss) | | | (126 | ) | | 1,945 | | | | 6,296 | | | 8,843 | |
| Preferred stock dividends and accretion | | | (3,649 | ) | | (3,615 | ) | | | (16,094 | ) | | (14,713 | ) |
| | | | | | |
| Net loss attributable to common stockholders | $ | (3,775 | ) | $ | (1,670 | ) | | $ | (9,798 | ) | $ | (5,870 | ) |
| | | | | | |
| Basic and diluted net loss per share: | | | | | | |
| Basic net loss per share attributable to common stockholders | $ | (0.20 | ) | $ | (0.16 | ) | | $ | (0.75 | ) | $ | (0.67 | ) |
| | | | | | |
| Diluted net loss per share attributable to common stockholders | $ | (0.20 | ) | $ | (0.16 | ) | | $ | (0.75 | ) | $ | (0.67 | ) |
| | | | | | |
| Weighted average shares — basic | | | 18,761 | | | 10,160 | | | | 12,984 | | | 8,752 | |
| Weighted average shares — diluted | | | 18,761 | | | 10,160 | | | | 12,984 | | | 8,752 | |
| | | | | | |
| Pro Forma earnings (loss) per share - basic (unaudited) a | $ | (0.00 | ) | | | $ | 0.22 | | |
| Pro Forma earnings (loss) per share - diluted (unaudited) a | $ | (0.00 | ) | | | $ | 0.21 | | |
| Pro Forma weighted average shares - basic (unaudited) a | | 32,501 | | | | | 28,624 | | |
| Pro Forma weighted average shares - diluted (unaudited) a | | 32,501 | | | | | 30,581 | | |
| | | | | | |
| (a) Our participating preferred stock converted to common stock on December 18, 2007 as the result of our initial public offering. With this conversion, we are no longer obligated to pay the associated accrued preferred dividends, and all rights to accrued and unpaid preferred dividends were terminated by the former preferred stock shareholders. Since the preferred stock has converted to common and the associated preferred dividends are no longer being accrued, we have presented basic and diluted EPS both inclusive and exclusive of these dividends. We believe the additional disclosure exclusive of the dividends provides more meaningful insight into our earnings per share related to the continuing operations of the Company. |
| CONSOLIDATED STATEMENTS OF OPERATIONS - PRO FORMA 2007 |
| | | | | | |
| In $000s, except per share data | | Actual Year Ended December 31, 2007 | Pro Forma Adjustments b | | Pro Forma Year Ended December 31, 2007 |
| | |
| | |
| | |
| | | | (Unaudited) | | (Unaudited) |
| | | | | | |
| Revenue | | | | | | |
| Administrative fees, net | | $ | 94,792 | | | $ | - | | | $ | 94,792 | |
| Other service fees | | | 93,726 | | | | 21,029 | | | | 114,755 | |
| | | | | | |
| Total net revenue | | | 188,518 | | | | 21,029 | | | | 209,547 | |
| | | | | | |
| Operating expenses: | | | | | | |
| Cost of revenue | | | 27,983 | | | | 7,038 | | | | 35,021 | |
| Product development expenses | | | 7,785 | | | | 720 | | | | 8,505 | |
| Selling and marketing expenses | | | 35,748 | | | | 1,779 | | | | 37,527 | |
| General and administrative expenses | | | 64,817 | | | | 7,506 | | | | 72,323 | |
| Depreciation | | | 7,115 | | | | 282 | | | | 7,397 | |
| Amortization of intangibles | | | 15,778 | | | | 2,481 | | | | 18,259 | |
| Impairment of property and equipment, intangibles and in process research and development | | 1,204 | | | | - | | | | 1,204 | |
| | | | | - | | | |
| Total operating expenses | | | 160,430 | | | | 19,806 | | | | 180,236 | |
| | | | | | |
| Operating income | | | 28,088 | | | | 1,223 | | | | 29,311 | |
| Other income (expense): | | | | | | |
| Interest expense | | | (20,391 | ) | | | (5,948 | ) | | | (26,339 | ) |
| Other income (expense) | | | 3,115 | | | | 37 | | | | 3,152 | |
| | | | | | |
| Income (loss) before income taxes | | | 10,812 | | | | (4,688 | ) | | | 6,124 | |
| Income tax (benefit) | | | 4,516 | | | | (1,958 | ) | | | 2,558 | |
| | | | | | |
| Net income (loss) | | | 6,296 | | | | (2,730 | ) | | | 3,566 | |
| Preferred stock dividends and accretion | | | (16,094 | ) | | | (998 | ) | | | (17,092 | ) |
| | | | | | |
| Net loss attributable to common stockholders | $ | (9,798 | ) | | $ | (3,728 | ) | | $ | (13,526 | ) |
| | | | | | |
| Basic and diluted net loss per share: | | | | | | |
| Basic net loss per share attributable to common stockholders | $ | (0.75 | ) | | | | $ | (1.04 | ) |
| | | | | | |
| Diluted net loss per share attributable to common stockholders | $ | (0.75 | ) | | | | $ | (1.04 | ) |
| | | | | | |
| Weighted average shares — basic | | | 12,984 | | | | | | 12,984 | |
| Weighted average shares — diluted | | | 12,984 | | | | | | 12,984 | |
| | | | | | |
| Pro Forma earnings per share - basic (unaudited) c | $ | 0.22 | | | | | $ | 0.12 | |
| Pro Forma earnings per share - diluted (unaudited) c | $ | 0.21 | | | | | $ | 0.12 | |
| Pro Forma weighted average shares - basic (unaudited) c | | 28,624 | | | | | | 28,624 | |
| Pro Forma weighted average shares - diluted (unaudited) c | | 30,581 | | | | | | 30,581 | |
| | | | | | |
| | | | | | |
| | | | | | |
| (b) Includes all adjustments to include the results of the acquisitions of MD-X and XactiMed as if both companies were acquired on January 1, 2007. Such adjustments include the effect of financing such acquisitions and financing of our 2007 dividend payment, as though obtained on January 1, 2007. Refer to our registration statement filed on Form S-1 with the Securities and Exchange Commission (SEC) for further description of such adjustments. |
| | | | | | |
| (c) Our participating preferred stock converted to common stock on December 18, 2007 as the result of our initial public offering. With this conversion, we are no longer obligated to pay the associated accrued preferred dividends, and all rights to accrued and unpaid preferred dividends were terminated by the former preferred stock shareholders. Since the preferred stock has converted to common and the associated preferred dividends are no longer being accrued, we have presented basic and diluted EPS both inclusive and exclusive of these dividends. We believe the additional disclosure of EPS exclusive of the dividends provides more meaningful insight into our earnings per share related to the continuing operations of the Company. |
| CONSOLIDATED STATEMENTS OF OPERATIONS - PRO FORMA 2006 |
| | | | | | |
| In $000s, except per share data | | Actual
Year Ended
December 31,
2006 | | | | Pro Forma Year Ended
December 31,
2006 |
| | | | |
| | | Pro Forma | |
| | | Adjustments d | |
| | | | (Unaudited) | | (Unaudited) |
| | | | | | |
| Revenue | | | | | | |
| Administrative fees, net | | $ | 85,778 | | | $ | - | | | $ | 85,778 | |
| Other service fees | | | 60,457 | | | | 31,708 | | | | 92,165 | |
| | | | | | |
| Total net revenue | | | 146,235 | | | | 31,708 | | | | 177,943 | |
| | | | | | |
| Operating expenses: | | | | | | |
| Cost of revenue | | | 15,601 | | | | 10,950 | | | | 26,551 | |
| Product development expenses | | | 7,163 | | | | 1,842 | | | | 9,005 | |
| Selling and marketing expenses | | | 32,205 | | | | 4,104 | | | | 36,309 | |
| General and administrative expenses | | | 55,363 | | | | 12,930 | | | | 68,293 | |
| Depreciation | | | 4,822 | | | | 225 | | | | 5,047 | |
| Amortization of intangibles | | | 11,738 | | | | 5,690 | | | | 17,428 | |
| Impairment of property and equipment, intangibles and in process research and development | | | 4,522 | | | | 1,195 | | | | 5,717 | |
| | | | | - | | | |
| Total operating expenses | | | 131,414 | | | | 36,936 | | | | 168,350 | |
| | | | | | |
| Operating income | | | 14,821 | | | | (5,228 | ) | | | 9,593 | |
| Other income (expense): | | | | | | |
| Interest expense | | | (10,921 | ) | | | (16,421 | ) | | | (27,342 | ) |
| Other income (expense) | | | (3,917 | ) | | | 64 | | | | (3,853 | ) |
| | | | | | |
| Income (loss) before income taxes | | | (17 | ) | | | (21,585 | ) | | | (21,602 | ) |
| Income tax (benefit) | | | (8,860 | ) | | | (6,340 | ) | | | (15,200 | ) |
| | | | | | |
| Net income (loss) | | | 8,843 | | | | (15,245 | ) | | | (6,402 | ) |
| Preferred stock dividends and accretion | | | (14,713 | ) | | | (2,460 | ) | | | (17,173 | ) |
| | | | | | |
| Net loss attributable to common stockholders | | $ | (5,870 | ) | | $ | (17,705 | ) | | $ | (23,575 | ) |
| | | | | | |
| Basic and diluted net loss per share: | | | | | | |
| Basic net loss per share attributable to common stockholders | | $ | (0.67 | ) | | | | $ | (2.69 | ) |
| Diluted net loss per share attributable to common stockholders | | $ | (0.67 | ) | | | | $ | (2.69 | ) |
| | | | | | |
| Weighted average shares — basic | | | 8,752 | | | | | | 8,752 | |
| Weighted average shares — diluted | | | 8,752 | | | | | | 8,752 | |
| | | | | | |
| (d) Includes all adjustments to include the results of the acquisitions of MD-X and XactiMed as if both companies were acquired on January 1, 2006. Such adjustments include the effect of financing such acquisitions and the financing of our 2006 and 2007 dividend payments, as though obtained on January 1, 2006. Refer to our registration statement filed on Form S-1 with the Securities and Exchange Commission (SEC) for further description of such adjustments. |
| CONSOLIDATED FOURTH QUARTER STATEMENTS OF OPERATIONS - UNAUDITED |
| |
| | | | | | | | | Pro Forma Three Months Ended
December 31,
2006 |
In $000s, except per share data (Unaudited) | | Three Months Ended
December 31, 2007 | Three Months Ended December 31, 2006 | | |
| | | Pro Forma Adjustments e | |
| | | | | | | | | |
| Revenue: | | | | | | | | | |
| Administrative fees, net | | $ | 23,826 | | | | $ | 21,557 | | | $ | - | | | $ | 21,557 | |
| Other service fees | | | 30,095 | | | | | 15,445 | | | | 7,926 | | | | 23,371 | |
| | | | | | | | | |
| Total net revenue | | | 53,921 | | | | | 37,002 | | | | 7,926 | | | | 44,928 | |
| | | | | | | | | |
| Operating expenses: | | | | | | | | | |
| Cost of revenue | | | 10,138 | | | | | 4,558 | | | | 2,738 | | | | 7,296 | |
| Product development expenses | | | 2,173 | | | | | 1,675 | | | | 461 | | | | 2,136 | |
| Selling and marketing expenses | | | 9,073 | | | | | 7,481 | | | | 1,026 | | | | 8,507 | |
| General and administrative expenses | | | 20,415 | | | | | 12,769 | | | | 3,233 | | | | 16,002 | |
| Depreciation | | | 1,845 | | | | | 1,336 | | | | 56 | | | | 1,392 | |
| Amortization of intangibles | | | 4,845 | | | | | 2,969 | | | | 1,423 | | | | 4,392 | |
Impairment of property and equipment, intangibles and in process research and development | | | 9 | | | | | - | | | | - | | | | - | |
| | | | | | | | - | | | |
| Total operating expenses | | | 48,498 | | | | | 30,788 | | | | 8,937 | | | | 39,725 | |
| | | | | | | | | |
| Operating income | | | 5,423 | | | | | 6,214 | | | | (1,011 | ) | | | 5,203 | |
| Other income (expense): | | | | | | | | | |
| Interest expense | | | (6,240 | ) | | | | (3,558 | ) | | | (4,105 | ) | | | (7,663 | ) |
| Other income (expense) | | | 1,014 | | | | | (1,131 | ) | | | 16 | | | | (1,115 | ) |
| | | | | | | | | |
| Income (loss) before income taxes | | | 197 | | | | | 1,525 | | | | (5,100 | ) | | | (3,575 | ) |
| Income tax (benefit) | | | 323 | | | | | (420 | ) | | | (1,585 | ) | | | (2,005 | ) |
| | | | | | | | | |
| Net income | | | (126 | ) | | | | 1,945 | | | | (3,515 | ) | | | (1,570 | ) |
| Preferred stock dividends and accretion | | | (3,649 | ) | | | | (3,615 | ) | | | (615 | ) | | | (4,230 | ) |
| | | | | | | | | |
| Net loss attributable to common stockholders | | $ | (3,775 | ) | | | $ | (1,670 | ) | | $ | (4,130 | ) | | $ | (5,800 | ) |
| | | | | | | | | |
| Basic and diluted loss per share: | | | | | | | | | |
| Basic net loss attributable to common stockholders | | $ | (0.20 | ) | | | $ | (0.16 | ) | | | | $ | (0.57 | ) |
| | | | | | | | | |
| Diluted net loss attributable to common stockholders | | $ | (0.20 | ) | | | $ | (0.16 | ) | | | | $ | (0.57 | ) |
| | | | | | | | | |
| Weighted average shares — basic | | | 18,761 | | | | | 10,160 | | | | | | 10,160 | |
| Weighted average shares — diluted | | | 18,761 | | | | | 10,160 | | | | | | 10,160 | |
| | | | | | | | | |
| Pro Forma earnings (loss) per share - basic (unaudited) f | $ | (0.00 | ) | | | | | | | |
| Pro Forma earnings (loss) per share - diluted (unaudited) f | $ | (0.00 | ) | | | | | | | |
| Pro Forma weighted average shares - basic (unaudited) f | | 32,501 | | | | | | | | |
| Pro Forma weighted average shares - diluted (unaudited) f | | 32,501 | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| (e) Includes all adjustments to include the results of the acquisitions of MD-X and XactiMed as if both companies were acquired on January 1, 2006. Such adjustments include the effect of financing certain acquisitions and the financing of our 2006 and 2007 dividend payments, as though obtained on January 1, 2006. Refer to our registration statement filed on Form S-1 with the Securities and Exchange Commission (SEC) for further description of such adjustments. |
| | | | | | | | | |
| (f) Our participating preferred stock converted to common stock on December 18, 2007 as the result of our initial public offering. With this conversion, we are no longer obligated to pay the associated accrued preferred dividends, and all rights to accrued and unpaid preferred dividends were terminated by the former preferred stock shareholders. Since the preferred stock has converted to common and the associated preferred dividends are no longer being accrued, we have presented basic and diluted EPS both inclusive and exclusive of these dividends. We believe the additional disclosure of EPS exclusive of the dividends provides more meaningful insight into our earnings per share related to the continuing operations of the Company. |
| CONDENSED SEGMENT REPORTING |
| | | | | | | | |
| In $000s | | Three Months Ended | | Year Ended |
| | December 31, | | December 31, |
| | | 2007 | | | | 2006 | | | | 2007 | | | | 2006 | |
| | (Unaudited) | | | | |
| ACTUAL | | | | | | | | |
| | | | | | | | |
| Net revenue | | | | | | | | |
| Revenue Cycle Management | | $ | 26,118 | | | $ | 13,316 | | | $ | 80,512 | | | $ | 48,834 | |
| Spend Management | | | 27,803 | | | | 23,686 | | | | 108,006 | | | | 97,401 | |
| | | | | | | | |
| Total net revenue | | $ | 53,921 | | | $ | 37,002 | | | $ | 188,518 | | | $ | 146,235 | |
| | | | | | | | |
| | | | | | | | |
Adjusted EBITDA (a non-GAAP measure) g | | | | | | | |
| Revenue Cycle Management | | $ | 6,574 | | | $ | 4,549 | | | $ | 22,711 | | | $ | 14,942 | |
| Spend Management | | | 13,138 | | | | 11,701 | | | | 50,632 | | | | 46,727 | |
| Corporate | | | (3,966 | ) | | | (3,352 | ) | | | (12,772 | ) | | | (10,916 | ) |
| | | | | | | | |
| Total Adjusted EBITDA | | $ | 15,746 | | | $ | 12,898 | | | $ | 60,571 | | | $ | 50,753 | |
| | | | | | | | |
| | | | | | | | |
| PRO FORMA (Unaudited) | | | | | | | | |
| | | | | | | | |
| Net revenue | | | | | | | | |
| Revenue Cycle Management | | $ | 26,118 | | | $ | 21,243 | | | $ | 101,541 | | | $ | 80,542 | |
| Spend Management | | | 27,803 | | | | 23,685 | | | | 108,006 | | | | 97,401 | |
| | | | | | | | |
| Total net revenue | | $ | 53,921 | | | $ | 44,928 | | | $ | 209,547 | | | $ | 177,943 | |
| | | | | | | | |
| | | | | | | | |
| Adjusted EBITDA (a non-GAAP measure) h | | | | | | | |
| Revenue Cycle Management | | $ | 6,574 | | | $ | 6,272 | | | $ | 28,291 | | | $ | 20,351 | |
| Spend Management | | | 13,138 | | | | 11,701 | | | | 50,632 | | | | 46,727 | |
| Corporate | | | (3,966 | ) | | | (3,352 | ) | | | (12,772 | ) | | | (10,916 | ) |
| | | | | | | | |
Total Adjusted EBITDA | | $ | 15,746 | | | $ | 14,621 | | | $ | 66,151 | | | $ | 56,162 | |
| | | | | | | | |
| | | | | | | | |
(g) Adjusted EBITDA is defined by the company 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. Adjusted EBITDA is used by the Company to facilitate a comparison of its operating performance on a consistent basis from period to period that provides a more complete understanding of factors and trends affecting our business than GAAP measures alone. The Company believes Adjusted EBITDA assists its board of directors, management and investors in comparing its operating performance on a consistent basis because it removes the impact of the Company's capital structure (primarily interest charges and amortization of debt issuance costs), asset base (primarily depreciation and amortization) and items outside the control of MedAssets' management team (taxes), as well as other non-cash (impairment of intangibles, purchase accounting adjustments, share-based compensation expense and imputed rental income) and non-recurring (litigation expenses and failed acquisition charges) items, from the Company's operations. See our accompanying reconciliations from consolidated Adjusted EBITDA to consolidated Net Income, our closest comparable GAAP-based metric. Such reconciliations are consistent with that of our segment reporting disclosures to our consolidated financial statements included in our 2007 Form 10-K. |
| | | | | | | | |
| (h) Pro forma Adjusted EBITDA is Adjusted EBITDA after giving effect to the acquisitions of MD-X and XactiMed, and certain financings secured in October 2006 and July 2007 as if these events had been completed on January 1st of each respective year. See our accompanying reconciliations from consolidated Pro Forma Adjusted EBITDA to consolidated Pro Forma Net Income. |
| RECONCILIATION OF NET INCOME TO |
| CONSOLIDATED ADJUSTED EBITDA (A NON-GAAP MEASURE) |
| | | | | | | | |
| In $000s | | Three Months Ended | Year Ended |
| | December 31, | | December 31, |
| | | 2007 | | | | 2006 | | | | 2007 | | | | 2006 | |
| ACTUAL | | (Unaudited) | | | | |
| | | | | | | | |
| Net Income (Loss) | | $ | (126 | ) | | $ | 1,945 | | | $ | 6,296 | | | $ | 8,843 | |
| | | | | | | | |
| Depreciation | | | 1,845 | | | | 1,336 | | | | 7,115 | | | | 4,822 | |
| Amortization of intangibles | | | 4,845 | | | | 2,969 | | | | 15,778 | | | | 11,738 | |
Amortization of intangibles (included in cost of revenue) | | 378 | | | | 235 | | | | 1,145 | | | | 745 | |
| Interest Expense, net | | | 5,717 | | | | 2,795 | | | | 18,213 | | | | 9,545 | |
| Income tax (benefit) | | | 323 | | | | (420 | ) | | | 4,516 | | | | (8,860 | ) |
| | | | | | | | |
| EBITDA | | $ | 12,982 | | | $ | 8,860 | | | $ | 53,063 | | | $ | 26,833 | |
| | | | | | | | |
| Impairment of intangibles | | | 9 | | | | - | | | | 1,204 | | | | 4,522 | |
| Share-based compensation | | | 2,720 | | | | 1,771 | | | | 5,611 | | | | 3,257 | |
| Debt issuance cost extinguishment | | | - | | | | 2,158 | | | | - | | | | 2,158 | |
| Rental income from capitalized building lease | | (109 | ) | | | (109 | ) | | | (438 | ) | | | (438 | ) |
| Litigation fees | | | - | | | | (421 | ) | | | - | | | | 8,629 | |
| Avega & Xactimed purchase accounting adjustments | | 144 | | | | 639 | | | | 1,131 | | | | 4,906 | |
| Failed acquisition charges | | | - | | | | - | | | | - | | | | 886 | |
| | | | | | | | |
| | | | | | | | |
| Adjusted EBITDA i | | $ | 15,746 | | | $ | 12,898 | | | $ | 60,571 | | | $ | 50,753 | |
| | | | | | | | |
| | | | | | | | |
| PRO FORMA (Unaudited) | | | | | | | | |
| | | | | | | | |
| Net Income (Loss) | | $ | (126 | ) | | $ | (1,570 | ) | | $ | 3,566 | | | $ | (6,402 | ) |
| | | | | | | | |
| Depreciation | | | 1,845 | | | | 1,392 | | | | 7,397 | | | | 5,047 | |
| Amortization of intangibles | | | 4,845 | | | | 4,392 | | | | 18,259 | | | | 17,428 | |
Amortization of intangibles (included in cost of revenue) | | 378 | | | | 540 | | | | 1,848 | | | | 2,150 | |
| Interest Expense, net | | | 5,717 | | | | 7,320 | | | | 24,161 | | | | 25,966 | |
| Income tax (benefit) | | | 323 | | | | (2,005 | ) | | | 2,558 | | | | (15,200 | ) |
| | | | | | | | |
| | | | | | | | |
| EBITDA | | $ | 12,982 | | | $ | 10,069 | | | $ | 57,789 | | | $ | 28,989 | |
| | | | | | | | |
| Impairment of intangibles | | | 9 | | | | - | | | | 1,204 | | | | 5,717 | |
| Share-based compensation | | | 2,720 | | | | 2,122 | | | | 6,226 | | | | 4,664 | |
| Debt issuance cost extinguishment | | | - | | | | 2,158 | | | | - | | | | 2,158 | |
| Rental income from capitalized building lease | | (109 | ) | | | (109 | ) | | | (438 | ) | | | (438 | ) |
| Litigation fees | | | - | | | | (421 | ) | | | - | | | | 8,629 | |
| Avega & Xactimed purchase accounting adjustments | | 144 | | | | 802 | | | | 1,370 | | | | 5,557 | |
| Failed acquisition charges | | | - | | | | - | | | | - | | | | 886 | |
| | | | | | | | |
| | | | | | | | |
| Pro Forma Adjusted EBITDA j | | $ | 15,746 | | | $ | 14,621 | | | $ | 66,151 | | | $ | 56,162 | |
| | | | | | | | |
| | | | | | | | |
(i) Adjusted EBITDA is defined by the company 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. Adjusted EBITDA is used by the Company to facilitate a comparison of its operating performance on a consistent basis from period to period that provides a more complete understanding of factors and trends affecting our business than GAAP measures alone. The Company believes Adjusted EBITDA assists its board of directors, management and investors in comparing its operating performance on a consistent basis because it removes the impact of the Company's capital structure (primarily interest charges and amortization of debt issuance costs), asset base (primarily depreciation and amortization) and items outside the control of MedAssets' management team (taxes), as well as other non-cash (impairment of intangibles, purchase accounting adjustments, share-based compensation expense and imputed rental income) and non-recurring (litigation expenses and failed acquisition charges) items, from the Company's operations. |
| | | | | | | | |
| (j) Pro forma Adjusted EBITDA is Adjusted EBITDA after giving effect to the acquisitions of MD-X and XactiMed, and certain financings secured in October 2006 and July 2007 as if these events had been completed on January 1st of each respective year. |
| RECONCILIATION OF GROSS FEES TO NET REVENUE |
| | | | | | |
| In $000s | | | | | | |
| | Pro Forma | | Actual Results |
| | Three Months Ended | | Three Months Ended |
| | December 31, | | December 31, |
| | | 2007 | | | 2006 | | | | 2007 | | | 2006 | |
| | (Unaudited) | | (Unaudited) |
| Gross administrative fees | | $ | 36,440 | | $ | 32,048 | | | $ | 36,440 | | $ | 32,048 | |
| Other service fees | | | 30,095 | | | 23,371 | | | | 30,095 | | | 15,445 | |
| Gross fees | | | 66,535 | | | 55,419 | | | | 66,535 | | | 47,493 | |
| Revenue share obligation | | | (12,614 | ) | | (10,491 | ) | | | (12,614 | ) | | (10,491 | ) |
| Net revenue | | $ | 53,921 | | $ | 44,928 | | | $ | 53,921 | | $ | 37,002 | |
| | | | | | |
| | | | | | |
| | Pro Forma | | Actual Results |
| | Year Ended | | Year Ended |
| | December 31, | | December 31, |
| | | 2007 | | | 2006 | | | | 2007 | | | 2006 | |
| | (Unaudited) | | | |
| Gross administrative fees | | $ | 142,320 | | $ | 125,202 | | | $ | 142,320 | | $ | 125,202 | |
| Other service fees | | | 114,755 | | | 92,165 | | | | 93,726 | | | 60,457 | |
| Gross fees | | | 257,075 | | | 217,367 | | | | 236,046 | | | 185,659 | |
| Revenue share obligation | | | (47,528 | ) | | (39,424 | ) | | | (47,528 | ) | | (39,424 | ) |
| Net revenue | | $ | 209,547 | | $ | 177,943 | | | $ | 188,518 | | $ | 146,235 | |
| CONSOLIDATED BALANCE SHEETS |
| | | | |
| | | | |
| | December 31, | December 31, |
| In $000s | | | 2007 | | | | 2006 | |
| | | | |
| | | | |
| ASSETS | | | | |
| Current | | | | |
| Cash and cash equivalents | | $ | 136,952 | | | $ | 23,459 | |
| Restricted cash | | | 20 | | | | - | |
| Accounts receivable, net of allowances of $3,506 and $964 as of December 31, 2007 and 2006, respectively | | | 33,679 | | | | 21,329 | |
| Deferred tax asset, current | | | 15,049 | | | | 9,154 | |
| Prepaid expenses and other current assets | | | 4,508 | | | | 3,438 | |
| | | | |
| Total current assets | | | 190,208 | | | | 57,380 | |
| | | | |
| Property and equipment | | | 32,490 | | | | 23,494 | |
| Other long term assets | | | | |
| Goodwill | | | 232,822 | | | | 133,884 | |
| Intangible assets, net | | | 62,491 | | | | 42,144 | |
| Deferred tax asset | | | - | | | | 14,456 | |
| Other | | | 8,368 | | | | 5,846 | |
| | | | |
| Other long term assets | | | 303,681 | | | | 196,330 | |
| | | | |
| Total assets | | $ | 526,379 | | | $ | 277,204 | |
| | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | | | | |
| Current liabilities | | | | |
| Accounts payable | | $ | 4,562 | | | $ | 5,096 | |
| Accrued revenue share obligation and rebates | | | 29,998 | | | | 22,588 | |
| Accrued payroll and benefits | | | 13,402 | | | | 11,567 | |
| Other accrued expenses | | | 5,612 | | | | 5,389 | |
| Deferred revenue, current portion | | | 19,791 | | | | 20,605 | |
| Current portion of notes payable | | | 2,020 | | | | 1,916 | |
| Current portion of finance obligation | | | 128 | | | | 226 | |
| | | | |
| Total current liabilities | | | 75,513 | | | | 67,387 | |
| | | | |
| Notes payable, less current portion | | | 196,264 | | | | 168,848 | |
| Finance obligation, less current portion | | | 10,009 | | | | 8,965 | |
| Deferred revenue, less current portion | | | 3,229 | | | | 3,218 | |
| Deferred Tax liability | | | 5,868 | | | | - | |
| Other long term liabilities | | | 5,981 | | | | 128 | |
| | | | |
| Total liabilities | | | 296,864 | | | | 248,546 | |
| | | | |
| Redeemable convertible preferred stock | | | - | | | | 196,030 | |
| | | | |
| Stockholders’ equity (deficit) | | | | |
| Common stock, $0.01 par value, 150,000,000 shares authorized; 44,429,000 and 10,737,000 shares issued and outstanding as of December 31, 2007 and 2006, respectively | | | 444 | | | | 107 | |
| Additional paid in capital | | | 442,417 | | | | - | |
| Notes receivable from stockholders | | | (614 | ) | | | (862 | ) |
| Other comprehensive income | | | (2,935 | ) | | | 56 | |
| Accumulated deficit | | | (209,797 | ) | | | (166,673 | ) |
| | | | |
| Total stockholders’ equity (deficit) | | | 229,515 | | | | (167,372 | ) |
| | | | |
| Total liabilities and stockholders’ equity | | $ | 526,379 | | | $ | 277,204 | |
| CONDENSED STATEMENTS OF CASH FLOWS |
| | | | |
| In $000s | | Year Ended |
| | December 31, |
| | | | |
| | | 2007 | | | | 2006 | |
| Operating activities: | | | | |
| Net income | | $ | 6,296 | | | $ | 8,843 | |
| | | | |
| Adjustments to reconcile income from continuing operations to net cash provided by operating activities: | | | | |
| Bad debt expense | | | 1,076 | | | | 755 | |
| Impairment of property and equipment | | | 9 | | | | 248 | |
| Depreciation | | | 7,469 | | | | 4,907 | |
| Amortization of intangibles | | | 16,571 | | | | 12,398 | |
| (Gain) loss on sale of assets | | | 56 | | | | 41 | |
| Noncash stock compensation expense | | | 5,611 | | | | 4,573 | |
| Excess tax benefit from exercise of stock options | | | (2,894 | ) | | | (3,532 | ) |
| Amortization of debt issuance costs | | | 452 | | | | 520 | |
| Noncash interest expense, net | | | 520 | | | | 487 | |
| Impairment of debt issuance costs | | | - | | | | 2,158 | |
| Impairment of intangibles | | | 1,195 | | | | 4,274 | |
| Deferred income tax expense (benefit) | | | 367 | | | | (13,375 | ) |
| Changes in assets and liabilities, net of acquisitions: | | | 4,896 | | | | 3,829 | |
| | | | |
| Net cash provided by operating activities | | | 41,624 | | | | 26,126 | |
| | | | |
| Investing activities: | | | | |
| Purchases of property and equipment | | | (8,857 | ) | | | (4,050 | ) |
| Capitalized software costs | | | (7,834 | ) | | | (6,698 | ) |
| Acquisitions, net of cash acquired | | | (90,963 | ) | | | (78,552 | ) |
| | | | |
| Cash used in investing activities | | | (107,654 | ) | | | (89,300 | ) |
| | | | |
| Financing activities: | | | | |
| (Increase) decrease in restricted cash | | | - | | | | 3,561 | |
| Proceeds from notes payable | | | 160,188 | | | | 195,271 | |
| Repayment of notes payable and capital lease obligations | | | (132,668 | ) | | | (115,491 | ) |
| Repayment of finance obligation | | | (647 | ) | | | (641 | ) |
| Debt issuance costs | | | (1,590 | ) | | | (2,135 | ) |
| Excess tax benefit from exercise of stock options | | | 2,894 | | | | 3,532 | |
| Payment of dividend | | | (70,000 | ) | | | (70,000 | ) |
| Issuance (payment) of note receivable to stockholders | | | 248 | | | | (25 | ) |
| Issuance of series F preferred stock | | | - | | | | 12 | |
| Issuance of series J preferred stock | | | 1,000 | | | | - | |
| Issuance of common stock | | | 220,098 | | | | 4,218 | |
| | | | |
| Cash (used) in provided by financing activities | | | 179,523 | | | | 18,302 | |
| | | | |
| Net increase (decrease) in cash and cash equivalents | | | 113,493 | | | | (44,872 | ) |
| Cash and cash equivalents, beginning of period | | | 23,459 | | | | 68,331 | |
| | | | |
| Cash and cash equivalents, end of period | | $ | 136,952 | | | $ | 23,459 | |
| RECONCILIATION OF 2007 PRO FORMA ADJUSTED DILUTED EARNINGS PER SHARE |
| (A NON-GAAP MEASURE) TO GAAP EARNINGS PER SHARE |
| | | | |
| | Three Months Ended | Year Ended |
| | December 31, | | December 31, |
| Per share data k | | | 2007 | | | | 2007 | |
| | | | |
| Net loss per diluted share | | $ | (0.20 | ) | | $ | (0.75 | ) |
| Preferred stock dividends and accretion | | | 0.19 | | | | 0.96 | |
| Earnings (loss) per diluted share, excluding dividends | | | (0.01 | ) | | | 0.21 | |
| | | | |
| Pro forma adjustments | | | 0.05 | | | | (0.09 | ) |
| Pro forma earnings (loss) per diluted share | | | 0.04 | | | | 0.12 | |
| | | | |
| Non-cash, tax-adjusted acquisition-related intangible amortization | | | 0.09 | | | | 0.38 | |
| | | | |
| Pro forma adjusted diluted earnings per share | | $ | 0.13 | | | $ | 0.49 | |
| | | | |
| | | | |
| Weighted average shares - diluted | | | 18,761 | | | | 12,984 | |
| Pro forma fully diluted weighted average shares outstanding | | | 32,501 | | | | 30,581 | |
| | | | |
| | | | |
| | | | |
| RECONCILIATION OF 2008 ADJUSTED EBITDA GUIDANCE |
| (A NON-GAAP MEASURE) TO GAAP NET INCOME GUIDANCE |
| | | | |
| | Year Ending |
| In $000s | | December 31, |
| | | 2008 |
| | Guidance Range |
| | | | |
| Net Income | | $ | 13,400 | | | $ | 17,000 | |
| | | | |
| Depreciation | | | 9,600 | | | | 9,400 | |
| Amortization of intangibles | | | 15,100 | | | | 15,100 | |
| Amortization of intangibles (included in cost of revenue) | | | 1,500 | | | | 1,500 | |
| Interest Expense, net | | | 11,800 | | | | 11,200 | |
| Income tax (benefit) | | | 10,200 | | | | 11,900 | |
| | | | |
| EBITDA | | | 61,600 | | | | 66,100 | |
| | | | |
| Share-based compensation | | | 9,000 | | | | 8,500 | |
| Rental income from capitalized building lease | | | (400 | ) | | | (400 | ) |
| Avega & Xactimed purchase accounting adjustments | | | 800 | | | | 800 | |
| | | | |
| Adjusted EBITDA | | $ | 71,000 | | | $ | 75,000 | |
| | | | |
| | | | |
| | | | |
| RECONCILIATION OF 2008 ADJUSTED DILUTED EARNINGS PER SHARE GUIDANCE |
| (A NON-GAAP MEASURE) TO GAAP EARNINGS PER SHARE |
| | | | |
| | Year Ending |
| | December 31, |
| In 000s, except per share data k | | | 2008 |
| | Guidance Range |
| | | | |
| Net Income | | $ | 13,400 | | | $ | 17,000 | |
| | | | |
| Earnings per share (EPS) | | | 0.28 | | | | 0.36 | |
| Non-cash, tax-adjusted acquisition-related intangible amortization | | | 0.20 | | | | 0.20 | |
| | | | |
| Adjusted EPS | | | 0.48 | | | | 0.56 | |
| Non-cash, tax-adjusted share-based compensation | | | 0.10 | | | | 0.11 | |
| | | | |
| Cash EPS | | $ | 0.59 | | | $ | 0.67 | |
| | | | |
| | | | |
| Fully diluted weighted average shares outstanding | | | 47,200 | | | | 47,200 | |
| | | | |
(k) Columns may not add due to rounding. | | | | |
CONTACT:
MedAssets, Inc.
Robert P. Borchert
VP, Investor Relations
678-248-8194
rborchert@medassets.com
