MedAssets (MDAS) 8-K MedAssets Reports Third Quarter and Nine-Month 2013 Financial Results

Exhibit 99.1

MedAssets Reports Third Quarter and Nine-Month 2013 Financial Results

ATLANTA--(BUSINESS WIRE)--October 30, 2013--MedAssets, Inc. (NASDAQ: MDAS) today announced results for its third quarter and nine-month periods ended September 30, 2013. Third quarter results are summarized in the table below:

($ in millions, except per share)	3Q’13		3Q’12		% Change
Net Revenue:
Spend and Clinical Resource Mgmt (SCM)	$	103.2	$	99.1	4.2	%
Revenue Cycle Management (RCM)		63.1		64.3	(1.8	)
Total Net Revenue a		166.4		163.4	1.8
Net income		6.9		5.5	26.3
Earnings per share (EPS) – diluted		0.11		0.09	22.2
Non-GAAP adjusted EBITDA		53.9		57.0	(5.4	)
Non-GAAP adjusted EPS - diluted	$	0.31	$	0.32	(3.1	)
Weighted average shares - diluted		61.5		59.5	3.3	%

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

Net Revenue

Third Quarter

Total net revenue for the third quarter of 2013 increased 1.8% to $166.4 million from $163.4 million for the third quarter of 2012. Net revenue in the SCM segment increased 4.2% to $103.2 million from net revenue of $99.1 million for the third quarter of 2012, due to growth in consulting and other service fees as well as group purchasing net administrative fees, partially offset by an expected year-over-year decrease in performance-related fees. Net revenue in the RCM segment decreased 1.8% to $63.1 million from $64.3 million for the third quarter of 2012 as technology-related revenue increased 5.3% while services-related revenue declined 15.8%.

Nine-Month Period

Total net revenue for the first nine months of 2013 increased 7.1% to $510.0 million from $476.3 million for the first nine months of 2012. Net revenue in the SCM segment grew 8.0% to $318.0 million from net revenue of $294.5 million for the first nine months of 2012. Net revenue in the RCM segment increased 5.5% to $191.9 million from $181.8 million for the first nine months of 2012 as technology-related revenue grew 6.6% and services-related revenue increased 3.1%.

Non-GAAP Adjusted EBITDA

Third Quarter

Total non-GAAP adjusted EBITDA was $53.9 million, or 32.4% of total net revenue, for the third quarter of 2013, a 5.4% decrease from total non-GAAP adjusted EBITDA of $57.0 million, or 34.9% of total net revenue, for the third quarter of 2012. This decline was due to an expected year-over-year decrease in performance-related fees, a higher proportion of revenue from SCM consulting and other service fees, as well as higher one-time or non-recurring revenue in the RCM segment in the third quarter last year.

Nine-Month Period

For the first nine months of 2013, total non-GAAP adjusted EBITDA was $168.1 million, or 33.0% of total net revenue, a 10.3% increase over total non-GAAP adjusted EBITDA of $152.4 million, or 32.0% of total net revenue, for the first nine months of 2012.

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

Third Quarter

Net income for the third quarter of 2013 was $6.9 million, or $0.11 per share, a 26.3% increase when compared with net income of $5.5 million, or $0.09 per share, for the third quarter of 2012.

Non-GAAP adjusted EPS (defined as EPS excluding non-cash acquisition-related intangible amortization and depreciation, non-cash share-based compensation, certain acquisition and integration-related expenses and non-recurring items on a tax-adjusted basis) was $0.31 per share for the third quarter of 2013, a 3.1% decrease when compared with non-GAAP adjusted EPS of $0.32 per share for the third quarter of 2012.

Nine-Month Period

Net income for the first nine months of 2013 was $19.7 million, or $0.32 per share, versus net income of $7.5 million, or $0.13 per share, for the first nine months of 2012. Non-GAAP adjusted EPS was $1.02 per share for the first nine months of 2013, a 21.4% increase over non-GAAP adjusted EPS of $0.84 per share for the first nine months of 2012.

Cash Flow and Capital Resources

Cash provided by operating activities in the first nine months of 2013 was $109.8 million versus $107.7 million for the same period of 2012. Non-GAAP free cash flow (defined as cash provided by operating activities less purchases of property, equipment and software and capitalized software development costs) decreased 2.3% to $63.4 million versus $64.9 million for the first nine months of 2012. The Company prepaid an additional $25.0 million of its Term Loan B in the third quarter of 2013 along with its scheduled principal payments. Its balance sheet at September 30, 2013 included $793.4 million in total bank and bond debt, net of cash and cash equivalents. Total net debt equates to leverage of approximately 3.6 times non-GAAP adjusted EBITDA for the trailing twelve-month period.

Non-GAAP Contracted Revenue

At September 30, 2013, MedAssets rolling 12-month non-GAAP contracted revenue estimate was $625.1 million (SCM segment - $391.0 million; RCM segment - $234.1 million), a year-over-year increase of 3.6%. Non-GAAP contracted revenue is the Company’s estimate of contractually committed revenue to be generated under existing client contracts in the forward 12-month period.

2013 Financial Guidance

MedAssets updated its full-year 2013 financial guidance ranges, as follows:

($ in millions, except per share)	FY 2013	Y-Y % change
Net Revenue:
SCM segment	$417.0 - 421.0	6.0 - 7.0%
RCM segment	253.0 - 257.0	2.6 - 4.2
Total Net Revenue	671.0 - 677.0	4.8 - 5.8
Non-GAAP adjusted EBITDA	216.0 - 222.0	4.2 - 7.1%
GAAP EPS – diluted	0.39 - 0.43	nm
Non-GAAP adjusted EPS – diluted	$1.27 - 1.31	12.4 -15.9%

Conference Call Information

Time/Date:	5:00 p.m. ET today, Wednesday, October 30, 2013
Phone:	800-774-6070 (or 630-691-2753 for international/local callers), PIN code 9449943
Webcast:	http://ir.medassets.com, “Events & Presentations” page; Archive will be available for at least 30 days
Replay:	Call 888-843-7419 or 630-652-3042 (PIN code 9449943)

Note: The live webcast will include a slide presentation, a copy of which is available on http://ir.medassets.com in the “Events & Presentations” section in conjunction with today’s event.

About MedAssets

MedAssets (NASDAQ: MDAS) is a healthcare performance improvement company focused on helping providers realize financial and operational gains so that they can sustainably serve the needs of their community. More than 4,200 hospitals and 122,000 non-acute healthcare providers currently use the company’s evidence-based solutions, best practice processes and analytics to help reduce the total cost of care, enhance operational efficiency, align clinical delivery, and improve revenue performance across the care continuum. For more information, please visit www.medassets.com.

Use of Non-GAAP Financial Information

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

Safe Harbor Statement

This Press Release contains forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, as amended by the Private Securities Litigation Reform Act of 1995, and include the intent, belief or current expectations of the Company and its management team with respect to the Company’s future business operations that include, but are not limited to: 2013 financial guidance, revenue growth and other financial projections and forecasts; and the Company’s ability to successfully integrate and capitalize on synergies associated with acquisitions. Any forward-looking statements are not guarantees of future performance, involve risks and uncertainties, and actual results may differ materially from those contemplated by such forward-looking statements. Important factors currently known to management that could cause actual results to differ materially from those contemplated by the forward-looking statements in this Press Release include, but are not limited to: failure to realize improvements in performance, efficiency and profitability; failure to complete anticipated sales under negotiations; failure to successfully implement revenue backlog; lack of revenue growth; customer 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, 2012 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								Nine Months Ended
	September 30,								September 30,
		2013			2012		% Change			2013			2012		% Change
Revenue:
Administrative fees, net	$	69,426		$	68,641		1.1	%	$	216,447		$	200,752		7.8	%
Other service fees		96,945			94,800		2.3	%		293,503			275,589		6.5	%
Total net revenue		166,371			163,441		1.8	%		509,950			476,341		7.1	%
Operating expenses:
Cost of revenue (inclusive of certain amortization expense)		38,246			34,570		10.6	%		110,010			100,583		9.4	%
Product development expenses		7,173			7,217		-0.6	%		23,649			20,777		13.8	%
Selling and marketing expenses		12,898			12,983		-0.7	%		46,925			46,709		0.5	%
General and administrative expenses		59,095			55,167		7.1	%		174,914			165,577		5.6	%
Acquisition and integration-related expenses		111			1,535		-92.8	%		9,576			4,812		99.0	%
Depreciation		10,926			7,721		41.5	%		29,979			21,416		40.0	%
Amortization of intangibles		15,341			17,840		-14.0	%		47,957			55,251		-13.2	%
Total operating expenses		143,790			137,033		4.9	%		443,010			415,125		6.7	%
Operating income		22,581			26,408		-14.5	%		66,940			61,216		9.4	%
Other income (expense):
Interest expense		(11,814	)		(16,672	)	-29.1	%		(35,544	)		(50,722	)	-29.9	%
Other income		118			114		3.5	%		435			449		-3.1	%
Income before income taxes		10,885			9,850		10.5	%		31,831			10,943		190.9	%
Income tax expense		3,983			4,386		-9.2	%		12,141			3,467		250.2	%
Net income		6,902			5,464		26.3	%		19,690			7,476		163.4	%
Basic net income per share		0.12			0.09		33.3	%		0.33			0.13		153.8	%
Diluted net income per share	$	0.11		$	0.09		22.2	%	$	0.32		$	0.13		146.2	%
Weighted average shares — basic		59,936			57,693		3.9	%		59,446			57,239		3.9	%
Weighted average shares — diluted		61,476			59,513		3.3	%		60,912			58,896		3.4	%

CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
	September 30,			December 31,
In 000s, except share and per share amounts		2013			2012
ASSETS
Current assets
Cash and cash equivalents	$	-		$	13,734
Accounts receivable, net of allowances of $2,518 and $3,046 as of September 30, 2013
and December 31, 2012, respectively		91,152			96,346
Deferred tax asset, current		10,579			11,126
Prepaid expenses and other current assets		24,906			21,791
Total current assets		126,637			142,997
Property and equipment, net		155,485			134,361
Other long term assets
Goodwill		1,027,847			1,027,847
Intangible assets, net		282,206			330,163
Other		42,431			42,869
Other long term assets		1,352,484			1,400,879
Total assets	$	1,634,606		$	1,678,237
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	17,028		$	25,487
Accrued revenue share obligation and rebates		78,379			74,274
Accrued payroll and benefits		32,734			40,085
Other accrued expenses		23,562			14,145
Current portion of deferred revenue		51,758			55,756
Current portion of notes payable		15,500			15,500
Current portion of finance obligation		249			233
Total current liabilities		219,210			225,480
Notes payable, less current portion		452,875			544,500
Bonds payable		325,000			325,000
Finance obligation, less current portion		8,849			9,046
Deferred revenue, less current portion		14,960			14,393
Deferred tax liability		124,778			125,394
Other long term liabilities		10,119			801
Total liabilities		1,155,791			1,244,614
Commitments and contingencies
Stockholders’ equity
Common stock, $0.01 par value, 150,000,000 shares authorized; 61,826,000 and 59,324,000
shares issued and outstanding as of September 30, 2013 and December 31, 2012,
respectively		618			593
Additional paid in capital		713,908			688,431
Accumulated deficit		(235,711	)		(255,401	)
Total stockholders’ equity		478,815			433,623
Total liabilities and stockholders’ equity	$	1,634,606		$	1,678,237

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
	Nine Months Ended
In 000s	September 30,			September 30,
		2013			2012
Operating activities:
Net income	$	19,690		$	7,476
Adjustments to reconcile net income from continuing operations to net cash provided by operating activities:
Bad debt expense		-			485
Depreciation		31,719			22,769
Amortization of intangibles		47,957			55,668
Impairment of assets		2,403			-
(Gain) loss on sale of assets		(123	)		370
Noncash stock compensation expense		11,783			7,796
Excess tax benefit from exercise of equity awards		(5,091	)		(1,191	)
Amortization of debt issuance costs		2,858			5,705
Noncash interest expense, net		349			392
Deferred income tax benefit		(69	)		(441	)
Changes in assets and liabilities		(1,653	)		8,652
Cash provided by operating activities		109,823			107,681
Investing activities:
Purchases of property, equipment, and software		(16,259	)		(11,779	)
Capitalized software development costs		(30,168	)		(31,045	)
Cash used in investing activities		(46,427	)		(42,824	)
Financing activities:
Borrowings from revolving credit facility		-			90,000
Repayment of notes payable		(91,625	)		(94,763	)
Repayment of finance obligations		(507	)		(507	)
Payment of deferred purchase consideration		-			(120,136	)
Excess tax benefit from exercise of equity awards		5,091			1,191
Issuance of common stock, net of offering costs		9,911			5,245
Purchase of treasury shares		-			(600	)
Cash used in financing activities		(77,130	)		(119,570	)
Net decrease in cash and cash equivalents		(13,734	)		(54,713	)
Cash and cash equivalents, beginning of period		13,734			62,947
Cash and cash equivalents, end of period	$	-		$	8,234

SUPPLEMENTAL REVENUE REPORTING
RECONCILIATION OF GROSS FEES (A NON-GAAP MEASURE) TO NET REVENUE
(UNAUDITED)
In 000s	Three Months Ended September 30,
		2013					2012				% Change
Non-GAAP gross administrative fees	$	115,478				$	109,335				5.6	%
Other service fees		96,945					94,800				2.3	%
Non-GAAP gross fees		212,423		RSO %			204,135		RSO %		4.1	%
Non-GAAP revenue share obligation (RSO)		(46,052	)	39.9	%		(40,694	)	37.2	%	13.2	%
Net revenue	$	166,371				$	163,441				1.8	%
In 000s
	Nine Months Ended September 30,
		2013					2012				% Change
Non-GAAP gross administrative fees	$	351,602				$	321,351				9.4	%
Other service fees		293,503					275,589				6.5	%
Non-GAAP gross fees		645,105		RSO %			596,940		RSO %		8.1	%
Non-GAAP RSO		(135,155	)	38.4	%		(120,599	)	37.5	%	12.1	%
Net revenue	$	509,950				$	476,341				7.1	%
SUPPLEMENTAL SEGMENT REPORTING
RECONCILIATION OF SELECTED NON-GAAP MEASURES TO GAAP MEASURES
(UNAUDITED)
In 000s	Three Months Ended September 30,
		2013					2012				% Change
Net revenue
Spend and Clinical Resource Management (SCM)	$	103,227				$	99,112				4.2	%
Revenue Cycle Management (RCM)		63,144					64,329				-1.8	%
Total net revenue		166,371					163,441				1.8	%
Non-GAAP Adjusted EBITDA				% margin					% margin
SCM	$	47,387		45.9	%	$	46,340		46.8	%	2.3	%
RCM		15,349		24.3	%		17,835		27.7	%	-13.9	%
Corporate		(8,837	)				(7,210	)			22.6	%
Total non-GAAP Adjusted EBITDA		53,899		32.4	%		56,965		34.9	%	-5.4	%
In 000s	Nine Months Ended September 30,
		2013					2012				% Change
Net revenue
SCM	$	318,043				$	294,492				8.0	%
RCM		191,907					181,849				5.5	%
Total net revenue		509,950					476,341				7.1	%
Non-GAAP Adjusted EBITDA				% margin					% margin
SCM	$	144,041		45.3	%	$	132,846		45.1	%	8.4	%
RCM		47,061		24.5	%		41,532		22.8	%	13.3	%
Corporate		(23,020	)				(22,001	)			4.6	%
Total non-GAAP Adjusted EBITDA		168,082		33.0	%		152,377		32.0	%	10.3	%
See "Use of Non-GAAP Financial Measures" following financial schedules for more information on non-GAAP measures.

SUPPLEMENTAL REPORTING OF ADJUSTED EBITDA
RECONCILIATION OF SELECTED NON-GAAP MEASURES TO GAAP MEASURES
(UNAUDITED)
In 000s	Three Months Ended September 30,						Nine Months Ended September 30,
		2013			2012			2013			2012
Net income	$	6,902		$	5,464		$	19,690		$	7,476
Depreciation		10,926			7,721			29,979			21,416
Depreciation (included in cost of revenue)		571			536			1,740			1,353
Amortization of intangibles		15,341			17,840			47,957			55,251
Amortization of intangibles (included in cost of revenue)		-			139			-			417
Interest expense, net		11,813			16,672			35,544			50,717
Income tax expense		3,983			4,386			12,141			3,467
Non-GAAP EBITDA	$	49,536		$	52,758		$	147,051		$	140,097
Share-based compensation		4,361			2,781			11,783			7,796
Rental income from capitalized building lease		(109	)		(109	)		(328	)		(328	)
Acquisition and integration-related expenses		111			1,535			9,576			4,812
Non-GAAP Adjusted EBITDA	$	53,899		$	56,965		$	168,082		$	152,377
SUPPLEMENTAL NET INCOME AND EARNINGS PER SHARE REPORTING
RECONCILIATION OF SELECTED NON-GAAP MEASURES TO GAAP MEASURES
(UNAUDITED)
In 000s, except per share data	Three Months Ended September 30,						Nine Months Ended September 30,
		2013			2012			2013			2012
Net income	$	6,902		$	5,464		$	19,690		$	7,476
Pre-tax non-cash, acquisition-related intangible amortization and depreciation		15,814			18,453			49,378			57,088
Pre-tax non-cash, share-based compensation		4,361			2,781			11,783			7,796
Pre-tax acquisition and integration-related expenses		111			1,535			9,576			4,812
Tax effect on pre-tax adjustments b		(8,115	)		(9,108	)		(28,295	)		(27,878	)
Non-GAAP adjusted net income	$	19,073		$	19,125		$	62,132		$	49,294
Income Per Share (EPS) - diluted	$	0.11		$	0.09		$	0.32		$	0.13
Pre-tax non-cash, acquisition-related intangible amortization and depreciation		0.26			0.30			0.81			0.97
Pre-tax non-cash, share-based compensation		0.07			0.05			0.19			0.13
Pre-tax acquisition and integration-related expenses		-			0.03			0.16			0.08
Tax effect on pre-tax adjustments b		(0.13	)		(0.15	)		(0.46	)		(0.47	)
Non-GAAP adjusted EPS - diluted	$	0.31		$	0.32		$	1.02		$	0.84
Weighted average shares - diluted (in 000s)		61,476			59,513			60,912			58,896
(b) The Company used a tax rate of 40.0% for the three and nine months ended September 30, 2013 and 2012 to calculate the tax effect of each adjustment since it believes 40.0% will be the Company's normalized long-term tax rate.
See "Use of Non-GAAP Financial Measures" following financial schedules for more information on non-GAAP measures.

SUPPLEMENTAL 2013 ADJUSTED EBITDA GUIDANCE
RECONCILIATION OF SELECTED NON-GAAP MEASURES TO GAAP MEASURES
(UNAUDITED)
	Guidance Range for
	Twelve Months Ending
In 000s	December 31, 2013
	(Low)			(High)
Net Income	$	23,900		$	26,400
Depreciation		41,200			42,000
Depreciation (included in cost of revenue)		2,200			2,200
Amortization of intangibles, acquisition-related		62,700			62,700
Interest expense, net		46,600			47,600
Income tax expense		15,100			16,800
Non-GAAP EBITDA		191,700			197,700
Share-based compensation		15,100			15,100
Acquisition and integration-related expenses		9,600			9,600
Rental income from capitalized building lease		(400	)		(400	)
Non-GAAP adjusted EBITDA	$	216,000		$	222,000
SUPPLEMENTAL 2013 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, 2013
	(Low)			(High)
Net Income	$	23,900		$	26,400
EPS - diluted		0.39			0.43
Pre-tax non-cash, acquisition-related intangible amortization and depreciation		1.05			1.05
Pre-tax non-cash, share-based compensation		0.25			0.25
Pre-tax acquisition and integration-related expenses		0.16			0.16
Tax effect on pre-tax adjustments c		(0.58	)		(0.58	)
Non-GAAP adjusted EPS - diluted	$	1.27		$	1.31
Fully diluted weighted average shares outstanding		61,000			61,000
(c) The Company used a tax rate of 40.0% for the full year ending December 31, 2013 to calculate the tax effect of each adjustment since it believes 40.0% will be the Company's normalized long-term tax rate.
See "Use of Non-GAAP Financial Measures" following financial schedules for more information on non-GAAP measures.

SUPPLEMENTAL NON-GAAP CONTRACTED REVENUE ESTIMATES
(UNAUDITED)
In Millions	Sept. 30,			June 30,			March 31,		Dec. 31,		Sept. 30,
		2013			2013			2013		2012		2012
SCM segment	$	391.0		$	378.4		$	374.0	$	364.7	$	370.6
RCM segment		234.1			238.4			227.7		236.0		232.8
Total	$	625.1		$	616.8		$	601.7	$	600.7	$	603.4
SUPPLEMENTAL REPORTING OF SHARE-BASED COMPENSATION
EXPENSE INCLUDED IN OPERATING EXPENSES
(UNAUDITED)
In 000s	Three Months Ended						Nine Months Ended
	September 30,						September 30,
		2013			2012			2013		2012
Amount of share-based compensation included in:
Cost of revenue	$	864		$	672		$	3,040	$	1,535
Product development expense		130			34			473		123
Selling & marketing expense		975			282			1,944		1,069
General & administrative expense		2,392			1,793			6,326		5,069
Total	$	4,361		$	2,781		$	11,783	$	7,796
SUPPLEMENTAL REPORTING OF FREE CASH FLOW
RECONCILIATION OF SELECTED NON-GAAP MEASURES TO GAAP MEASURES
(UNAUDITED)
In 000s	Nine Months Ended
	September 30,
		2013			2012
Cash provided by operating activities	$	109,823		$	107,681
Purchases of property, equipment and software		(16,259	)		(11,779	)
Capitalized software development costs		(30,168	)		(31,045	)
Non-GAAP free cash flow	$	63,396		$	64,857
See "Use of Non-GAAP Financial Measures" following financial schedules for more information on non-GAAP measures.

Use of Non-GAAP Financial Measures

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

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

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

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

The Company defines adjusted net income as earnings 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 and integration-related expenses on a tax-adjusted basis and diluted adjusted EPS as earnings per share excluding non-cash acquisition-related intangible amortization and non-recurring expense items on a tax-adjusted basis, non-cash tax-adjusted shared-based compensation expense and certain acquisition and integration-related expenses on a tax-adjusted basis. Adjusted net income and diluted adjusted EPS are not measures of liquidity under GAAP, or otherwise, and are not alternatives to cash flow from continuing operating activities. Use of this measure for this purpose allows management and the board of directors to analyze the Company’s operating performance on a consistent basis by removing the impact of certain non-cash and non-recurring items from our operations, and by rewarding organic growth and accretive business transactions. As a significant portion of senior management’s incentive based compensation has historically been based on the achievement of certain diluted adjusted EPS growth over time, investors may find such information useful.

The Company defines free cash flow as cash provided by operating activities less purchases of property, equipment and software and capitalized software development costs. Management believes free cash flow is an important measure because it represents the cash that the Company is able to generate after spending capital on infrastructure to maintain its business and investing in new and upgraded products and services to support future growth. Free cash flow is important because it allows the Company to pursue opportunities that are intended to enhance shareholder value, which could include debt reduction, share repurchases, partnerships, alliances and acquisitions, and/or dividend payments. The Company's definition of free cash flow does not consider non-discretionary cash payments, such as debt.

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

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