MedAssets (MDAS) 8-K MedAssets Reports Second Quarter and Six-Month 2010 Financial Results

Exhibit 99.1

MedAssets Reports Second Quarter and Six-Month 2010 Financial Results

ATLANTA--(BUSINESS WIRE)--August 4, 2010--MedAssets, Inc. (NASDAQ: MDAS) today announced results for its second quarter and six-month period ended June 30, 2010, as summarized below:

(In millions, except per share)	2Q-10		2Q-09		6 mos-10		6 mos-09
Net Revenue:
Revenue Cycle Management (RCM)	$	57.2	$	50.8	$	115.9	$	97.8
Spend Management (SM)		37.9		33.4		72.6		65.4
Total Net Revenue		95.1		84.2		188.5		163.2
Net Income		3.3		2.2		8.8		4.1
Earnings per share (EPS) - diluted		0.06		0.04		0.15		0.07
Non-GAAP adjusted EBITDA		25.4		23.5		53.2		46.8
Non-GAAP cash EPS - diluted	$	0.17	$	0.17	$	0.36	$	0.32
Weighted average shares - diluted		59.5		57.0		59.1		56.7

Net Revenue

Second Quarter

Total net revenue for the second quarter of 2010 increased 13.0% to $95.1 million from $84.2 million in the second quarter of 2009. RCM segment growth of 12.7% was driven primarily by an increase in transformational or comprehensive revenue cycle services and technology solutions, offset by a decline in decision support license fees. Revenue growth of 13.4% in the SM segment was generated by continued strong demand for medical device consulting and strategic sourcing services as well as 10.2% growth in net administrative fees in its group purchasing organization.

Six-month Period

Total net revenue for the six-month period ended June 30, 2010 increased 15.5% to $188.5 million from $163.2 million in the first six months of 2009.

Non-GAAP Adjusted EBITDA

Second Quarter

In the second quarter of 2010, non-GAAP total adjusted EBITDA was $25.4 million, or 26.7% of total net revenue, an 8.0% increase over non-GAAP total adjusted EBITDA of $23.5 million, or 27.9% of total net revenue, in the second quarter of 2009.

Six-month Period

In the first six months of 2010, non-GAAP total adjusted EBITDA was $53.2 million, or 28.2% of total net revenue, a 13.6% increase over non-GAAP total adjusted EBITDA of $46.8 million, or 28.7% of total net revenue, in the first six months of 2009.

Net Income and Earnings per Share

Second Quarter

Net income in the second quarter of 2010 was $3.3 million, or $0.06 per diluted share, versus net income of $2.2 million, or $0.04 per diluted share, in the second quarter of 2009. Non-GAAP cash EPS, defined as EPS excluding acquisition-related intangible amortization, share-based compensation and other acquisition-related expense items on a tax-adjusted basis, was $0.17 per diluted share in the second quarter of 2010, compared to non-GAAP cash EPS of $0.17 per diluted share in the second quarter of 2009.

Six-month Period

Net income in the first six months of 2010 was $8.8 million, or $0.15 per diluted share, versus net income of $4.1 million, or $0.07 per diluted share, in the first six months of 2009. Non-GAAP cash EPS was $0.36 per diluted share in the first six months of 2010, compared to non-GAAP cash EPS of $0.32 per diluted share in the first six months of 2009.

Cash Flow and Capital Resources

Net cash provided by operating activities in the first six months of 2010 increased 56.1% to $35.8 million from $22.9 million in the first half of 2009. During the second quarter of 2010, the Company repaid $19.1 million of bank debt. The Company’s balance sheet at June 30, 2010 included $184.1 million in total bank debt, which represents leverage of approximately 1.6 times trailing 12-month non-GAAP adjusted EBITDA.

2010 Financial Guidance

The Company reiterated its 2010 financial guidance, as follows:

(In millions, except EPS)	12 Months
Net Revenue:	ending 12/31/10
Revenue Cycle Management	$ 245 – 251
Spend Management	144 – 150
Total Net Revenue	390 – 400
EPS – diluted	0.45 - 0.55
Non-GAAP adjusted EBITDA	120 – 128
Non-GAAP cash EPS - diluted	$ 0.86 - 0.96

At June 30, 2010, the Company’s rolling 12-month non-GAAP contracted revenue was an estimated $367.5 million ($229.7 million from the RCM segment and $137.8 million from the SM segment). This is a year-over-year increase of 10.6% on a consolidated basis, and a 1.1% increase when compared to the rolling 12-month total of $363.4 million as of March 31, 2010.

Conference Call Information

Time/Date:	5:00 p.m. ET today, Wednesday, August 4, 2010
Phone:	866-811-1812 (or 702-696-4559 international/local), conference code 89060248
Webcast:	http://ir.medassets.com, “Events & Presentations” page
Replay:	Webcast will be archived for at least 30 days, or call 800-642-1687 (conf code 89060248)

The Company intends to file its Form 10-Q for the three and six-month periods ended June 30, 2010 with the Securities and Exchange Commission on or before August 9, 2010, and this filing will contain additional information about the Company’s results of operations.

About MedAssets

MedAssets (NASDAQ: MDAS) partners with healthcare providers to improve their financial strength by implementing spend management and revenue cycle solutions that help control cost, improve margins and cash flow, increase regulatory compliance, and optimize operational efficiency. MedAssets serves more than 125 health systems, 3,300 hospitals and 40,000 non-acute healthcare providers. For more information, go to www.medassets.com.

Use of Non-GAAP Financial Information

In order to provide investors with greater insight, promote transparency and allow for a more comprehensive understanding of the information used by management in its financial and operational decision-making, the Company supplements its consolidated financial statements presented on a GAAP basis with non-GAAP financial information, including: gross fees; gross administrative fees; revenue share obligation; EBITDA; adjusted EBITDA; diluted cash EPS; and contracted revenue. Reconciliations of these non-GAAP measures to their most directly comparable GAAP measures, where possible, are included in the accompanying financial schedules. Also, see “Use of Non-GAAP Financial Measures” following these financial schedules for more information.

Safe Harbor Statement

This Press Release contains forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, as amended by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include the intent, belief or current expectations of the Company and its management team with respect to the Company’s future business operations that include, but are not limited to: 2010 financial guidance, costs and revenue growth, margin and other financial projections; and contracted revenue forecasts. Investors are cautioned that any forward-looking statements are not guarantees of future performance, and involve risks and uncertainties, and that actual results may differ materially from those contemplated by such forward-looking statements. Important factors currently known to management that could cause actual results to differ materially from those contemplated by the forward-looking statements in this Press Release include, but are not limited to: failure to realize improvements in performance, efficiency and profitability; failure to complete anticipated sales under negotiations; failure to successfully implement revenue backlog; lack of revenue growth; client losses; and adverse developments with respect to the operation or performance of the Company’s business units or the market price of its common stock. Additional factors that could cause actual results to differ materially from those contemplated within this Press Release can also be found in the Company’s Risk Factor disclosures in its Form 10-K for the year ended December 31, 2009 filed with the Securities and Exchange Commission and available at http://ir.medassets.com. The Company disclaims any responsibility to update any forward-looking statements.

mdas/F

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
In 000s, except per share data	Three Months Ended								Six Months Ended
	June 30,								June 30,
		2010			2009		% Change			2010			2009		% Change
Revenue:
Administrative fees, net	$	27,964		$	25,378		10.2	%	$	56,554		$	52,864		7.0	%
Other service fees		67,163			58,831		14.2	%		131,979			110,329		19.6	%
Total net revenue		95,127			84,209		13.0	%		188,533			163,193		15.5	%
Operating expenses:
Cost of revenue		22,757			17,613		29.2	%		44,479			34,358		29.5	%
Product development expenses		4,823			5,250		-8.1	%		10,193			11,268		-9.5	%
Selling and marketing expenses		16,009			15,595		2.7	%		26,677			26,491		0.7	%
General and administrative expenses		31,947			27,481		16.3	%		64,098			54,932		16.7	%
Depreciation		4,540			2,985		52.1	%		8,833			5,895		49.8	%
Amortization of intangibles		6,026			7,000		-13.9	%		12,110			14,011		-13.6	%
Total operating expenses		86,102			75,924		13.4	%		166,390			146,955		13.2	%
Operating income		9,025			8,285		8.9	%		22,143			16,238		36.4	%
Other income (expense):
Interest (expense)		(3,807	)		(4,763	)	-20.1	%		(7,739	)		(9,756	)	-20.7	%
Other income (expense)		135			(33	)	-509.1	%		202			181		11.6	%
Income before income taxes		5,353			3,489		53.4	%		14,606			6,663		119.2	%
Income tax expense		2,059			1,314		56.7	%		5,792			2,583		124.2	%
Net income		3,294			2,175		51.4	%		8,814			4,080		116.0	%
Basic net income per share		0.06			0.04					0.16			0.08
Diluted net income per share	$	0.06		$	0.04		50.0	%	$	0.15		$	0.07		114.3	%
Weighted average shares — basic		56,169			54,527					55,994			54,316
Weighted average shares — diluted		59,456			56,968		4.4	%		59,148			56,699		4.3	%

CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
	June 30,			December 31,
In 000s, except shares		2010			2009
ASSETS
Current
Cash and cash equivalents	$	-		$	5,498
Accounts receivable, net of allowances of $3,275 and $4,189 as of June 30, 2010 and December 31, 2009		70,916			67,617
Deferred tax asset, current		14,742			14,423
Prepaid expenses and other current assets		12,608			8,442
Total current assets		98,266			95,980
Property and equipment, net		61,245			54,960
Other long term assets
Goodwill		512,866			511,861
Intangible assets, net		85,264			95,589
Other		18,721			20,154
Other long term assets		616,851			627,604
Total assets	$	776,362		$	778,544
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	8,201		$	8,680
Accrued revenue share obligation and rebates		31,588			31,948
Accrued payroll and benefits		12,108			12,874
Other accrued expenses		10,518			7,410
Deferred revenue, current portion		26,435			24,498
Current portion of notes payable		2,499			13,771
Current portion of finance obligation		170			163
Total current liabilities		91,519			99,344
Notes payable, less current portion		181,641			201,390
Finance obligation, less current portion		9,606			9,694
Deferred revenue, less current portion		9,035			7,380
Deferred tax liability		19,640			19,239
Other long term liabilities		2,711			4,125
Total liabilities		314,152			341,172
Stockholders’ equity
Common stock, $0.01 par value, 150,000,000 shares authorized; 57,522,000 and 56,715,000 shares issued and outstanding as of June 30, 2010 and December 31, 2009		575			567
Additional paid in capital		654,786			639,315
Accumulated other comprehensive loss		(1,060	)		(1,605	)
Accumulated deficit		(192,091	)		(200,905	)
Total stockholders’ equity		462,210			437,372
Total liabilities and stockholders’ equity	$	776,362		$	778,544

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
	Six Months Ended,
In 000s	June 30,			June 30,
		2010			2009
Operating activities:
Net income	$	8,814		$	4,080
Adjustments to reconcile net income from continuing operations to net cash provided by operating activities:
Bad debt expense		437			2,524
Depreciation		10,274			7,115
Amortization of intangibles		12,480			14,382
Loss on sale of assets		1			193
Non-cash stock compensation expense		6,511			8,960
Excess tax benefit from exercise of equity awards		(3,061	)		(3,313	)
Amortization of debt issuance costs		915			922
Noncash interest expense, net		267			913
Deferred income tax (benefit)		(247	)		(57	)
Changes in assets and liabilities		(607	)		(12,802	)
Cash provided by operating activities		35,784			22,917
Investing activities:
Purchases of property, equipment, and software		(8,021	)		(6,186	)
Capitalized software development costs		(7,719	)		(7,071	)
Acquisitions, net of cash acquired		(3,160	)		(18,275	)
Cash used in investing activities		(18,900	)		(31,532	)
Financing activities:
Proceeds from notes payable		-			60,932
Repayment of notes payable		(31,021	)		(65,206	)
Repayment of finance obligation		(329	)		(329	)
Excess tax benefit from exercise of equity awards		3,061			3,313
Issuance of common stock		5,907			4,476
Cash (used in) provided by financing activities		(22,382	)		3,186
Net decrease in cash and cash equivalents		(5,498	)		(5,429	)
Cash and cash equivalents, beginning of period		5,498			5,429
Cash and cash equivalents, end of period	$	-		$	-

SUPPLEMENTAL SEGMENT REPORTING
(UNAUDITED)
In 000s	Three Months Ended
	June 30,					June 30,
	2010					2009					% Change
Net revenue
Revenue Cycle Management	$	57,206				$	50,770				12.7	%
Spend Management		37,921					33,439				13.4	%
Total net revenue	$	95,127				$	84,209				13.0	%
Non-GAAP Adjusted EBITDA				% margin					% margin
Revenue Cycle Management	$	17,057		29.8	%	$	14,495		28.6	%	17.7	%
Spend Management		14,985		39.5	%		14,173		42.4	%	5.7	%
Corporate		(6,648	)				(5,154	)			29.0	%
Total non-GAAP Adjusted EBITDA	$	25,394		26.7	%	$	23,514		27.9	%	8.0	%
In 000s	Six Months Ended
	June 30,					June 30,
	2010					2009					% Change
Net revenue
Revenue Cycle Management	$	115,890				$	97,790				18.5	%
Spend Management		72,643					65,403				11.1	%
Total net revenue	$	188,533				$	163,193				15.5	%
Non-GAAP Adjusted EBITDA				% margin					% margin
Revenue Cycle Management	$	34,539		29.8	%	$	26,821		27.4	%	28.8	%
Spend Management		31,942		44.0	%		30,425		46.5	%	5.0	%
Corporate		(13,275	)				(10,403	)			27.6	%
Total non-GAAP Adjusted EBITDA	$	53,206		28.2	%	$	46,843		28.7	%	13.6	%
SUPPLEMENTAL REVENUE REPORTING
RECONCILIATION OF GROSS FEES (A NON-GAAP MEASURE) TO NET REVENUE
(UNAUDITED)
In 000s	Three Months Ended
	June 30,
	2010					2009
Non-GAAP gross administrative fees	$	42,873				$	39,344
Other service fees		67,163					58,831
Non-GAAP gross fees		110,036		RSO %			98,175		RSO %
Non-GAAP revenue share obligation (RSO)		(14,909	)	34.8	%		(13,966	)	35.5	%
Net revenue	$	95,127				$	84,209
In 000s	Six Months Ended
	June 30,
	2010					2009
Non-GAAP gross administrative fees	$	85,902				$	80,276
Other service fees		131,979					110,329
Non-GAAP gross fees		217,881		RSO %			190,605		RSO %
Non-GAAP revenue share obligation (RSO)		(29,348	)	34.2	%		(27,412	)	34.1	%
Net revenue	$	188,533				$	163,193
See "Use of Non-GAAP Financial Measures" following financial schedules for more information on non-GAAP measures.

SUPPLEMENTAL REPORTING OF ADJUSTED EBITDA
RECONCILIATION OF SELECTED NON-GAAP MEASURES TO GAAP MEASURES
(UNAUDITED)
In 000s	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2010			2009			2010			2009
Net Income	$	3,294		$	2,175		$	8,814		$	4,080
Depreciation		4,540			2,985			8,833			5,895
Depreciation (included in cost of revenue)		719			617			1,441			1,220
Amortization of intangibles, acquisition-related		6,026			7,000			12,110			14,011
Amortization of intangibles, acquisition-related (included in cost of revenue)		185			185			370			370
Interest expense, net		3,772			4,758			7,685			9,739
Income tax expense		2,059			1,314			5,792			2,583
Non-GAAP EBITDA	$	20,595		$	19,034		$	45,045		$	37,898
Share-based compensation		3,039			4,574			6,511			8,960
Rental income from capitalized building lease		(109	)		(109	)		(219	)		(219	)
Purchase accounting adjustments		-			15			-			204
Acquisition-related charges		1,869			-			1,869			-
Non-GAAP Adjusted EBITDA	$	25,394		$	23,514		$	53,206		$	46,843
SUPPLEMENTAL REPORTING OF SHARE-BASED COMPENSATION
EXPENSE INCLUDED IN OPERATING EXPENSES
(UNAUDITED)
In 000s	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2010			2009			2010			2009
Amount of share-based compensation included in:
Cost of revenue		661			769			1,227			1,629
Product development expense		136			296			333			605
Selling & marketing expense		802			764			1,416			1,562
General & administrative expense		1,440			2,745			3,535			5,164
Total	$	3,039		$	4,574		$	6,511		$	8,960
See "Use of Non-GAAP Financial Measures" following financial schedules for more information on non-GAAP measures.

SUPPLEMENTAL EARNINGS PER SHARE REPORTING
RECONCILIATION OF SELECTED NON-GAAP MEASURES TO GAAP MEASURES
(UNAUDITED)
	Three Months Ended						Six Months Ended
Per share data	June 30,						June 30,
	2010			2009			2010			2009
EPS - diluted	$	0.06		$	0.04		$	0.15		$	0.07
Pre-tax non-cash, acquisition-related intangible amortization		0.10			0.13			0.21			0.25
Pre-tax non-cash, share-based compensation		0.05			0.08			0.11			0.16
Pre-tax, acquisition-related charges		0.03			-			0.03			-
Tax effect on pre-tax adjustments a		(0.07	)		(0.08	)		(0.14	)		(0.16	)
Non-GAAP cash EPS - diluted	$	0.17		$	0.17		$	0.36		$	0.32
Weighted average shares - diluted (in 000s)		59,456			56,968			59,148			56,699
(a) This amount reflects the tax impact on the adjustments used to derive Non-GAAP cash EPS - diluted. The Company utilizes its effective tax rate for each respective period to calculate the tax effect of each adjustment. The effective tax rate for the three months ended June 30, 2010 and 2009 was 38.5% and 37.7%, respectively, and the effective tax rate for the six months ended June 30, 2010 and 2009 was 39.7% and 38.8%, respectively.
SUPPLEMENTAL 2010 ADJUSTED EBITDA GUIDANCE
RECONCILIATION OF SELECTED NON-GAAP MEASURES TO GAAP MEASURES
(UNAUDITED)
				Guidance Range for
				Twelve Months Ending
In 000s				December 31, 2010
				(Low)			(High)
Net Income				$	26,600		$	32,600
Depreciation					18,600			18,000
Depreciation (included in cost of revenue)					2,900			2,900
Amortization of intangibles, acquisition-related					23,200			23,200
Amortization of intangibles, acquisition-related (included in cost of revenue)					600			600
Interest expense, net					14,600			14,100
Income tax expense					17,000			20,800
Non-GAAP EBITDA					103,500			112,200
Share-based compensation					13,400			13,200
Acquisition-related charges					3,500			3,000
Rental income from capitalized building lease					(400	)		(400	)
Non-GAAP adjusted EBITDA				$	120,000		$	128,000
SUPPLEMENTAL 2010 EARNINGS PER SHARE GUIDANCE
RECONCILIATION OF SELECTED NON-GAAP MEASURES TO GAAP MEASURES
(UNAUDITED)
				Guidance Range for
				Twelve Months Ending
In 000s, except per share data				December 31, 2010
				(Low)			(High)
Net Income				$	26,600		$	32,600
EPS - diluted					0.45			0.55
Pre-tax non-cash, acquisition-related intangible amortization					0.40			0.40
Pre-tax non-cash, share-based compensation					0.22			0.22
Pre-tax acquisition-related charges					0.05			0.06
Tax effect on pre-tax adjustments b					(0.26	)		(0.27	)
Non-GAAP cash EPS - diluted				$	0.86		$	0.96
Fully diluted weighted average shares outstanding					59,600			59,600
(b) This amount reflects the tax impact to the adjustments used to derive estimated Non-GAAP cash EPS - diluted. The Company uses its estimated effective tax rate for each guidance range to tax effect the adjustments. The estimated effective tax rate for the guidance range above is 39.0%.
See "Use of Non-GAAP Financial Measures" following financial schedules for more information on non-GAAP measures.

Use of Non-GAAP Financial Measures

In order to provide investors with greater insight, promote transparency and allow for a more comprehensive understanding of the information used by management and the board of directors in their financial and operational decision-making, the Company supplements its consolidated financial statements presented on a GAAP basis with the following non-GAAP financial information: gross fees; gross administrative fees; revenue share obligation; EBITDA; adjusted EBITDA; diluted cash EPS; and contracted revenue.

These non-GAAP financial measures may have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of the Company’s results as reported under GAAP. The Company compensates for such limitations by relying primarily on the Company’s GAAP results and using non-GAAP financial measures only supplementally. Where possible, the Company provides reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures. Investors are encouraged to carefully review those reconciliations. In addition, because these non-GAAP measures are not measures of financial performance under GAAP and are susceptible to varying calculations, these measures, as defined by the Company, may differ from and may not be comparable to similarly titled measures used by other companies.

Gross fees include gross administrative fees the Company receives pursuant to its vendor contracts and all other fees the Company receives from customers. The Company's revenue share obligation represents the portion of the gross administrative fees the Company is contractually obligated to share with certain of its GPO customers. Net administrative fees (a GAAP measure) are the Company's gross administrative fees net of its revenue share obligation. Total net revenue (a GAAP measure) reflects the Company's gross fees net of its revenue share obligation. These non-GAAP measures assist management and the board of directors and may be helpful to investors in analyzing the Company's growth in its Spend Management segment given that administrative fees constitute a material portion of the Company's revenue and are paid to the Company by approximately 1,150 vendors contracted by its GPO, and that the Company's revenue share obligation constitutes a significant outlay to certain of its GPO customers.

The Company defines: EBITDA as net income (loss) before net interest expense, income tax expense (benefit), depreciation and amortization; and adjusted EBITDA as net income (loss) before net interest expense, income tax expense (benefit), depreciation and amortization and other non-recurring, non-cash or non-operating items. EBITDA and adjusted EBITDA are used by the Company to facilitate a comparison of its operating performance on a consistent basis from period to period and provides for a more complete understanding of factors and trends affecting our business. These measures assist management and the board of directors and may be useful to investors in comparing the Company's operating performance consistently over time as it removes the impact of its capital structure (primarily interest charges and amortization of debt issuance costs), asset base (primarily depreciation and amortization) and items outside the control of the management team (taxes), as well as other non-cash (purchase accounting adjustments and imputed rental income) and non-recurring items, from the Company’s operational results. Adjusted EBITDA also removes the impact of non-cash share-based compensation expense and certain acquisition-related charges. EBITDA and adjusted EBITDA are not measures of liquidity under GAAP, or otherwise, and are not alternatives to cash flow from continuing operating activities.

The Company defines diluted cash EPS as earnings per share excluding non-cash acquisition-related intangible amortization and non-recurring expense items on a tax-adjusted basis, non-cash tax-adjusted shared-based compensation expense and certain acquisition-related charges on a tax-adjusted basis. Diluted cash EPS is not a measure of liquidity under GAAP, or otherwise, and is not an alternative to cash flow from continuing operating activities. Diluted cash EPS growth is used by the Company as the financial performance metric tied to the vesting of certain equity awards granted pursuant to the Company’s Long-Term Performance Incentive Plan. Use of this measure for this purpose allows management and the board of directors to analyze the Company’s operating performance on a consistent basis by removing the impact of certain non-cash and non-recurring items from our operations, and by rewarding organic growth and accretive business transactions. As a significant portion of senior management’s incentive based compensation is based on the achievement of certain diluted cash EPS growth over time, investors may find such information useful.

Contracted revenue is a forward-looking operating measure used by management and the board of directors to better understand revenue growth trends within the Company's business segments as it reflects the Company’s current estimate of contractually committed revenue to be generated under existing customer contracts in the forward 12-month period. Such information may be useful to investors in their analysis of the Company's revenue growth trends. A reconciliation to the most directly comparable GAAP measure cannot be performed without unreasonable effort.

CONTACT:
MedAssets, Inc.
Robert P. Borchert, 678-248-8194
rborchert@medassets.com