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MedAssets Updates 2010 Financial Guidance Following Acquisition of Broadlane

^{Published on 2010-11-30 04:11:28 - Market Wire}
 

ATLANTA--([ BUSINESS WIRE ])--With the completion of its acquisition of The Broadlane Group on November 16, 2010, MedAssets, Inc.(NASDAQ: MDAS) today provided updated financial guidance for the full-year ending December 31, 2010, as follows:

Purchase Accounting Revenue Adjustment

The $15-16 million acquisition-related purchase accounting adjustment reflects an estimated reduction of net administrative fee revenue. Under the Companya™s revenue recognition policies, administrative fees are recorded as revenue when reported to the Company by vendors. Generally Accepted Accounting Principles (aGAAPa) relating to business combinations require that the Company estimate the amount of customer supply purchases (the driver of administrative fee revenue) occurring prior to the acquisition closing date and to record the fair value of the administrative fees (the asset) to be received from those purchases, as an account receivable and any corresponding revenue share obligation as a liability. As vendor reports are received and cash is collected, the Company will not recognize revenue for this acquisition-related purchase accounting revenue adjustment.

Cost Savings and Accretion

As part of the integration of the Broadlane acquisition, the Company expects to achieve in excess of $20 million of cost savings in 2011. When combined with expected business growth and increased interest expense, the Company now expects this transaction will be approximately $0.08 to $0.10 accretive to non-GAAP cash earnings per share in 2011, excluding acquisition-related amortization, restructuring expenses and purchase accounting revenue adjustments, as well as share-based compensation.

Acquisition-related Costs, including Restructuring Charges

MedAssets expects to incur certain expenses and charges in conjunction with the integration of Broadlane over the next twelve months related to the elimination of redundant staff, write-off of debt issuance costs, transaction-related investment banking, audit, legal and credit rating agency fees, the impairment of certain duplicative assets and write-off of technology, as well as other costs to achieve targeted synergies. These charges are expected to total about $23 million in the fourth quarter of 2010.

Abnormal Effective Tax Rate in 2010 due to Acquisition

The Company expects to incur an abnormally high tax rate in the fourth quarter of 2010 due to the purchase accounting adjustments and significant, nondeductible restructuring expenses related to the acquisition. However, the Company expects its tax rate to return to a normalized rate of approximately 40-41% in 2011.

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 180 health systems, 4,000 hospitals and 75,000 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: acquisition-affected net revenue; EBITDA; adjusted EBITDA; and diluted cash EPS.Reconciliations of these non-GAAP measures to their most directly comparable GAAP measures, where possible, are included in the accompanying financial schedules. Also, see aUse of Non-GAAP Financial Measuresa 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. Forward-looking statements include the intent, belief or current expectations of the Company and its management team with respect to the Companya™s future business operations that include, but are not limited to:2010 financial guidance, costs and revenue growth, margin and other financial projections; and the Companya™s ability to successfully integrate and capitalize on synergies associated with the acquisition of The Broadlane Group and any other future acquisitions. 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 Companya™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 Companya™s Risk Factor disclosures in its Form 10-K and Form 10-Q filed with the Securities and Exchange Commission on March 1 and October 28, 2010, respectively, and available at [ http://ir.medassets.com ]. The Company disclaims any responsibility to update any forward-looking statements.

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