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MedAssets Beats on Q4 Earnings, Shares Up

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MedAssets, Inc. posted a 12.0% rise in adjusted earnings per share to 28 cents for the fourth quarter of 2013 from 25 cents in the same quarter of 2012. With this, earnings significantly beat the Zacks Consensus Estimate by 4 cents per share.

Adjusted net earnings rose 19.6% to $17.1 million from $14.3 million in the year-ago quarter. Following the favorable earnings announcement, shares of the company rose 10.8% till the last closing date.


Net revenues went up 4.1% to $170.5 million, exceeding the Zacks Consensus Estimate of $166.0 million. Administrative fees (net) rose 10.4% to $73.0 million but Other service fees fell 0.2% to $97.4 million in the quarter.

Net revenues in the Spend and Clinical Resource Management (SCM) segment grew 7.4% to $106.4 million, driven by a rise in group purchasing net administrative fees as well as consulting and other service fees, partially offset by an anticipated year-over-year decline in performance-related fees.

However, net revenues in the Revenue Cycle Management (RCM) segment dipped 1.0% to $64.0 million in the quarter as technology-related revenues (comprising about 73.0% of RCM segment revenues) rose 4.9% while services-related revenues fell 14.2% due to lower fees and the loss of two clients in early 2013.

Full-Year Results

For full year 2013, MedAssets reported a 14.6% rise in adjusted earnings per share to $1.18 per share from $1.03 in 2012. Adjusted net earnings rose 22.5% to $72.2 million from $58.9 million a year ago.

Net revenues went up 6.3% to $680.4 million. Revenues increased 7.8% to $424.5 million in the SCM segment and grew 3.8% to $256.0 million in the RCM segment as technology-related revenues (comprising about 70.5% of RCM segment revenues) escalated 6.2% and services-related revenues slid 1.4%.

Financial Position

MedAssets had cash and cash equivalents of $2.8 million as of Dec 31, 2013, down significantly by 79.7% from $13.7 million as of Dec 31, 2012. Finance obligation declined 2.6% to $9.0 million as of Dec 31, 2013 compared with $9.3 million as of Dec 31, 2012.

In 2013, cash flow from operating activities went down 3.1% to $152.9 million from $157.9 million in 2012. Capital expenditure fell 32.7% to $17.6 million compared with $26.2 million in 2012.

Share Repurchase

The board of directors authorized the repurchase of up to $75 million of MedAssets’ common stock over the next 12 months. As of Feb 24, 2014, MedAssets had approximately 61.8 million of outstanding common stock.

2014 Guidance

For 2014, MedAssets anticipates revenues in the band of $700.0–$714.0 million, reflecting a growth of 2.9–4.9% over 2013. Total revenues for the year include SCM revenues of $438.0–446.0 million (implying a growth of 3.2–5.1%) and RCM revenues of $261.0–$269.0 million (indicating a growth of 2.0–5.1%). The current Zacks Consensus Estimate of $707 million lies within the guided range.
MedAssets also expects adjusted earnings per share in the range of $1.13 to $1.23 for the year. The current Zacks Consensus Estimate of $1.22 lies within the guided range.

Our Take

Headquartered in Alpharetta, GA, MedAssets is a financial and performance improvement company, providing innovative solutions to healthcare providers. It uses proprietary technology to increase visibility and allows hospitals to assess profitability.

Currently, MedAssets retains a Zacks Rank #3 (Hold). Some better-ranked stocks in the medical services industry include ICON Public Limited Co. (ICLR - Free Report) , Quintiles Transnational Holdings Inc. , and Covance Inc. . ICON Public Limited and Quintiles Transnational Holdings carry a Zacks Rank #1 (Strong Buy), while Covance carries a Zacks Rank #2 (Buy).

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