[February 20, 2013] |
|
MedAssets Reports Fourth Quarter and Full-Year 2012 Financial Results
ATLANTA --(Business Wire)--
MedAssets, Inc. (NASDAQ: MDAS) today announced results for its
fourth quarter and full year ended December 31, 2012. Fourth quarter
results are summarized in the table below:
|
($ in millions, except per share)
|
|
|
|
4Q-12
|
|
|
4Q-11
|
|
|
% Change
|
|
Net Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
Spend and Clinical Resource Mgmt (SCM)
|
|
|
|
$
|
99.1
|
|
|
|
$
|
103.1
|
|
|
- 3.9
|
%
|
|
Revenue Cycle Management (RCM)
|
|
|
|
|
64.7
|
|
|
|
|
53.7
|
|
|
20.6
|
|
|
Total Net Revenue
|
|
|
|
|
163.8
|
|
|
|
|
156.8
|
|
|
4.5
|
%
|
|
Net (loss) income
|
|
|
(14.4
|
)
|
|
|
|
4.1
|
|
|
nm
|
|
|
(Loss) earnings per share (EPS) - diluted
|
|
|
(0.25
|
)
|
|
|
|
0.07
|
|
|
nm
|
|
|
Non-GAAP adjusted EBITDA
|
|
|
55.0
|
|
|
|
|
53.7
|
|
|
2.4
|
%
|
|
Non-GAAP adjusted EPS - diluted
|
|
|
$ 0.27
|
|
|
|
$
|
0.32
|
|
|
- 15.6
|
|
|
Weighted average shares - diluted a
|
|
|
58.1
|
|
|
|
|
58.5
|
|
|
- 0.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Given the Company's net loss for the three months ended
December 31, 2012, basic and fully diluted weighted average shares are
the same for EPS and non-GAAP adjusted EPS.
Net Revenue
Fourth Quarter
Total net revenue for the fourth quarter of 2012 increased 4.5% to
$163.8 million from $156.8 million for the fourth quarter of 2011. Net
revenue in the SCM segment decreased 3.9% to $99.1 million from net
revenue of $103.1 million for the fourth quarter of 2011, due primarily
to an expected year-over-year decline in performance fee revenue,
partially offset by growth in embedded management services, workforce
management and Service Line Analytics. Net revenue in the RCM segment
increased 20.6% to $64.7 million from $53.7 million for the fourth
quarter of 2011 as services-related revenue increased 50.8% due
primarily to growth from the implementation of a number of customers,
and technology-related revenue grew 10.6% due to growth in subscription
fees from multiple products.
Full Year
Total net revenue for full-year 2012 increased 10.7% to $640.1 million
from $578.3 million for full-year 2011. Comparing period-over-period
organic growth, total net revenue of $640.1 million for full-year 2012
increased 9.5% from total non-GAAP net revenue of $584.5 million
(including non-GAAP acquisition-related purchase accounting revenue
adjustments) for full-year 2011. Net revenue in the SCM segment grew
6.3% to $393.6 million from non-GAAP net revenue of $370.2 million for
full-year 2011. Net revenue from the RCM segment increased 15.1% to
$246.5 million from $214.3 million for full-year 2011 as
services-related revenue increased 21.6% and technology-related revenue
grew 12.3%.
Non-GAAP Adjusted EBITDA
Fourth Quarter
Total non-GAAP adjusted EBITDA was $55.0 million, or 33.6% of total net
revenue, for the fourth quarter of 2012, a 2.4% increase from total
non-GAAP adjusted EBITDA of $53.7 million, or 34.2% of total non-GAAP
net revenue, for the fourth quarter of 2011. This year-over-year
increase was due to consolidated net revenue growth offset by a
year-over-year decline in performance fee revenue.
Full Year
For full-year 2012, total non-GAAP adjusted EBITDA was $207.3 million,
or 32.4% of total net revenue, a 12.6% increase over total non-GAAP
adjusted EBITDA of $184.1 million, or 31.5% of total non-GAAP net
revenue, for full-year 2011.
Net Income and Non-GAAP Adjusted Earnings Per Share (EPS)
Fourth Quarter
The Company reported a net loss for the fourth quarter of 2012 of $14.4
million, or a loss of $0.25 per share, due to debt extinguishment
charges to write off $20.0 million of non-cash deferred financing costs
and original issue discount, as well as an $8.2 million swap termination
expense concurrent with its new debt agreement completed in December
2012. For the fourth quarter of 2011, the Company reported net income of
$4.1 million, or earnings of $0.07 per share.
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) decreased
15.6% to $0.27 per share for the fourth quarter of 2012, versus non-GAAP
adjusted EPS of $0.32 per share for the fourth quarter of 2011.
Full Year
For full-year 2012, the Company reported a net loss of $6.9 million, or
a loss of $0.12 per share, due to the debt extinguishment charges
referenced earlier. For full-year 2011, the Company reported a net loss
of $15.5 million, or a loss of $0.27 per share, due to acquisition and
integration-related expenses associated with the acquisition of The
Broadlane Group in November 2010 and subsequent integration.
Non-GAAP adjusted EPS was $1.13 per share for full-year 2012, a 14.1%
increase over non-GAAP adjusted EPS of $0.99 per share for full-year
2011.
Cash Flow and Capital Resources
Cash provided by operating activities was $157.9 million for full-year
2012, a 27.1% increase from $124.2 million in 2011. Non-GAAP free cash
flow (defined as cash provided by operating activities less purchases of
property, equipment and software and capitalized software development
costs) for full-year 2012 was $91.4 million, up 21.6% from non-GAAP free
cash flow of $75.2 million for full-year 2011.
The Company's balance sheet at December 31, 2012 included $871.3 million
in total bank and bond debt, net of cash and cash equivalents. Total net
debt equates to leverage of approximately 4.2 times non-GAAP adjusted
EBITDA for the trailing twelve-month period.
2013 Financial Guidance
MedAssets introduced full-year 2013 financial guidance, as follows:
($ in millions, except per share)
|
|
|
|
FY 2013
|
|
|
|
Y-Y % change
|
Net Revenue:
|
|
|
|
|
|
|
|
|
|
SCM segment
|
|
|
|
$
|
414.0 - 422.0
|
|
|
|
5.2 - 7.2
|
%
|
RCM segment
|
|
|
|
|
255.0 - 263.0
|
|
|
|
3.4 - 6.7
|
|
Total Net Revenue
|
|
|
|
|
670.0 - 684.0
|
|
|
|
4.7 - 6.9
|
|
Non-GAAP adjusted EBITDA
|
|
|
215.0 - 225.0
|
|
|
|
3.7 - 8.5
|
%
|
GAAP EPS - diluted
|
|
|
0.33 - 0.43
|
|
|
|
nm
|
|
Non-GAAP adjusted EPS - diluted
|
|
|
$1.22 - 1.32
|
|
|
|
8.0-16.8
|
%
|
|
|
|
|
|
|
|
|
|
Non-GAAP Contracted Revenue
At December 31, 2012, MedAssets rolling 12-month non-GAAP contracted
revenue estimate was $600.7 million (SCM segment - $364.7 million; RCM
segment - $236.0 million), a year-over-year increase of 5.6%. Non-GAAP
contracted revenue is the Company's estimate of contractually committed
revenue to be generated under existing customer contracts in the forward
12-month period.
Conference Call Information
Time/Date:
|
|
5:00 p.m. ET today, Wednesday, February 20, 2013
|
Phone:
|
|
866-200-6965 (or 646-216-7221 for international/local callers), PIN
code 10489277
|
Webcast:
|
|
http://ir.medassets.com,
"Events & Presentations" page; Archive will be available for over
30 days
|
Replay:
|
|
Call 866-206-0173 or 646-216-7204 (PIN code 279334)
|
|
|
|
Note: The live webcast will include a PowerPoint presentation.
A PDF copy of the slide presentation is available on the "Events &
Presentations" page at http://ir.medassets.com
in conjunction with today's event.
About MedAssets
MedAssets (NASDAQ: MDAS) partners with healthcare providers to improve
their financial strength by implementing revenue cycle, spend and
clinical resource management solutions that help capture revenue,
control cost, improve margins and cash flow, increase regulatory
compliance, and optimize operational efficiency. MedAssets serves more
than 4,200 hospitals and 122,000 non-acute healthcare providers. The
company currently manages more than $50 billion in supply spend and
touches over $365 billion in gross patient revenue annually through its
revenue cycle solutions. 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 and the board of directors in their
financial and operational decision-making, the Company supplements its
consolidated financial statements presented on a GAAP basis herein with
the following non-GAAP financial information: gross fees; gross
administrative fees; revenue share obligation; acquisition-related
purchase accounting revenue adjustments; 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, 2011 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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In 000s, except per share data
|
Three Months Ended
|
|
|
|
|
|
Twelve Months Ended
|
|
|
|
December 31,
|
|
|
|
|
|
December 31,
|
|
|
|
2012
|
|
2011
|
|
|
% Change
|
|
|
|
2012
|
|
2011
|
|
|
% Change
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Administrative fees, net
|
$
|
66,163
|
|
|
$
|
70,567
|
|
|
|
-6.2
|
%
|
|
|
|
$
|
266,915
|
|
|
$
|
249,599
|
|
|
|
6.9
|
%
|
Other service fees
|
|
97,617
|
|
|
|
86,214
|
|
|
|
13.2
|
%
|
|
|
|
|
373,206
|
|
|
|
328,673
|
|
|
|
13.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net revenue
|
|
163,780
|
|
|
|
156,781
|
|
|
|
4.5
|
%
|
|
|
|
|
640,121
|
|
|
|
578,272
|
|
|
|
10.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue
|
|
38,035
|
|
|
|
31,200
|
|
|
|
21.9
|
%
|
|
|
|
|
138,618
|
|
|
|
121,771
|
|
|
|
13.8
|
%
|
Product development expenses
|
|
7,706
|
|
|
|
7,177
|
|
|
|
7.4
|
%
|
|
|
|
|
28,483
|
|
|
|
26,823
|
|
|
|
6.2
|
%
|
Selling and marketing expenses
|
|
13,729
|
|
|
|
13,543
|
|
|
|
1.4
|
%
|
|
|
|
|
60,438
|
|
|
|
56,997
|
|
|
|
6.0
|
%
|
General and administrative expenses
|
|
52,617
|
|
|
|
53,994
|
|
|
|
-2.6
|
%
|
|
|
|
|
218,194
|
|
|
|
203,101
|
|
|
|
7.4
|
%
|
Acquisition and integration-related expenses
|
|
1,536
|
|
|
|
1,838
|
|
|
|
-16.4
|
%
|
|
|
|
|
6,348
|
|
|
|
24,551
|
|
|
|
-74.1
|
%
|
Depreciation
|
|
8,774
|
|
|
|
5,988
|
|
|
|
46.5
|
%
|
|
|
|
|
30,190
|
|
|
|
22,402
|
|
|
|
34.8
|
%
|
Amortization of intangibles
|
|
17,401
|
|
|
|
19,810
|
|
|
|
-12.2
|
%
|
|
|
|
|
72,652
|
|
|
|
80,510
|
|
|
|
-9.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
139,798
|
|
|
|
133,550
|
|
|
|
4.7
|
%
|
|
|
|
|
554,923
|
|
|
|
536,155
|
|
|
|
3.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
23,982
|
|
|
|
23,231
|
|
|
|
3.2
|
%
|
|
|
|
|
85,198
|
|
|
|
42,117
|
|
|
|
102.3
|
%
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
(15,323
|
)
|
|
|
(17,141
|
)
|
|
|
-10.6
|
%
|
|
|
|
|
(66,045
|
)
|
|
|
(71,083
|
)
|
|
|
-7.1
|
%
|
Loss on debt extinguishment
|
|
(28,196
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
(28,196
|
)
|
|
|
-
|
|
|
|
|
Other income
|
|
236
|
|
|
|
851
|
|
|
|
nm
|
|
|
|
|
685
|
|
|
|
3,621
|
|
|
|
nm
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income before income taxes
|
|
(19,301
|
)
|
|
|
6,941
|
|
|
|
nm
|
|
|
|
|
(8,358
|
)
|
|
|
(25,345
|
)
|
|
|
nm
|
Income tax (benefit) expense
|
|
(4,947
|
)
|
|
|
2,794
|
|
|
|
nm
|
|
|
|
|
(1,480
|
)
|
|
|
(9,851
|
)
|
|
|
nm
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
|
|
(14,354
|
)
|
|
|
4,147
|
|
|
|
nm
|
|
|
|
|
(6,878
|
)
|
|
|
(15,494
|
)
|
|
|
nm
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net (loss) income per share
|
|
(0.25
|
)
|
|
|
0.07
|
|
|
|
nm
|
|
|
|
|
(0.12
|
)
|
|
|
(0.27
|
)
|
|
|
nm
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net (loss) income per share
|
$
|
(0.25
|
)
|
|
$
|
0.07
|
|
|
|
nm
|
|
|
|
$
|
(0.12
|
)
|
|
$
|
(0.27
|
)
|
|
|
nm
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares - basic
|
|
58,087
|
|
|
|
57,189
|
|
|
|
|
|
|
|
|
57,452
|
|
|
|
57,298
|
|
|
|
|
Weighted average shares - diluted
|
|
58,087
|
|
|
|
58,451
|
|
|
|
-0.6
|
%
|
|
|
|
|
57,452
|
|
|
|
57,298
|
|
|
|
0.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED BALANCE SHEETS
|
(UNAUDITED)
|
|
|
|
|
|
December 31,
|
|
December 31,
|
In 000s, except share and per share amounts
|
2012
|
|
2011
|
|
|
|
|
ASSETS
|
|
|
|
Current assets
|
|
|
|
Cash and cash equivalents
|
$
|
13,734
|
|
|
$
|
62,947
|
|
Accounts receivable, net of allowances of $3,046 and $3,891 as of
December 31, 2012 and
|
|
|
|
December 31, 2011, respectively
|
|
96,346
|
|
|
|
104,039
|
|
Deferred tax asset, current
|
|
11,126
|
|
|
|
15,434
|
|
Prepaid expenses and other current assets
|
|
21,791
|
|
|
|
18,488
|
|
|
|
|
|
Total current assets
|
|
142,997
|
|
|
|
200,908
|
|
|
|
|
|
Property and equipment, net
|
|
134,361
|
|
|
|
101,471
|
|
Other long term assets
|
|
|
|
Goodwill
|
|
1,027,847
|
|
|
|
1,027,847
|
|
Intangible assets, net
|
|
330,163
|
|
|
|
403,371
|
|
Other
|
|
42,869
|
|
|
|
61,381
|
|
Other long term assets
|
|
1,400,879
|
|
|
|
1,492,599
|
|
|
|
|
|
Total assets
|
$
|
1,678,237
|
|
|
$
|
1,794,978
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
Current liabilities
|
|
|
|
Accounts payable
|
$
|
25,487
|
|
|
$
|
21,185
|
|
Accrued revenue share obligation and rebates
|
|
74,274
|
|
|
|
70,906
|
|
Accrued payroll and benefits
|
|
40,085
|
|
|
|
33,265
|
|
Other accrued expenses
|
|
14,145
|
|
|
|
17,811
|
|
Current portion of deferred revenue
|
|
55,756
|
|
|
|
48,459
|
|
Deferred purchase consideration
|
|
-
|
|
|
|
120,136
|
|
Current portion of notes payable
|
|
15,500
|
|
|
|
6,350
|
|
Current portion of finance obligation
|
|
233
|
|
|
|
213
|
|
|
|
|
|
Total current liabilities
|
|
225,480
|
|
|
|
318,325
|
|
|
|
|
|
Notes payable, less current portion
|
|
544,500
|
|
|
|
572,300
|
|
Bonds payable
|
|
325,000
|
|
|
|
325,000
|
|
Finance obligation, less current portion
|
|
9,046
|
|
|
|
9,287
|
|
Deferred revenue, less current portion
|
|
14,393
|
|
|
|
14,148
|
|
Deferred tax liability
|
|
125,394
|
|
|
|
129,635
|
|
Other long term liabilities
|
|
801
|
|
|
|
7,670
|
|
|
|
|
|
Total liabilities
|
|
1,244,614
|
|
|
|
1,376,365
|
|
|
|
|
|
Stockholders' equity
|
|
|
|
Common stock, $0.01 par value, 150,000,000 shares authorized;
59,324,000 and 57,857,000
|
|
|
|
shares issued and outstanding as of December 31, 2012 and December
31, 2011, respectively
|
|
593
|
|
|
|
579
|
|
Additional paid in capital
|
|
688,431
|
|
|
|
670,618
|
|
Accumulated other comprehensive loss
|
|
-
|
|
|
|
(4,061
|
)
|
Accumulated deficit
|
|
(255,401
|
)
|
|
|
(248,523
|
)
|
|
|
|
|
Total stockholders' equity
|
|
433,623
|
|
|
|
418,613
|
|
|
|
|
|
Total liabilities and stockholders' equity
|
$
|
1,678,237
|
|
|
$
|
1,794,978
|
|
|
|
|
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(UNAUDITED)
|
|
Twelve Months Ended
|
In 000s
|
December 31,
|
|
|
December 31,
|
|
2012
|
|
|
2011
|
|
|
|
|
|
Operating activities:
|
|
|
|
|
Net loss
|
$
|
(6,878
|
)
|
|
|
$
|
(15,494
|
)
|
|
|
|
|
|
Adjustments to reconcile net loss from continuing operations to net
cash provided by operating activities:
|
|
|
|
|
Bad debt expense
|
|
735
|
|
|
|
|
181
|
|
Depreciation
|
|
32,049
|
|
|
|
|
23,627
|
|
Amortization of intangibles
|
|
73,209
|
|
|
|
|
81,067
|
|
Loss on sale of assets
|
|
370
|
|
|
|
|
418
|
|
Non-cash stock compensation expense
|
|
10,291
|
|
|
|
|
5,023
|
|
Excess tax benefit from exercise of equity awards
|
|
(1,495
|
)
|
|
|
|
(956
|
)
|
Amortization of debt issuance costs
|
|
7,390
|
|
|
|
|
7,445
|
|
Loss on debt extinguishment
|
|
19,987
|
|
|
|
|
-
|
|
Non-cash interest expense, net
|
|
514
|
|
|
|
|
3,784
|
|
Deferred income tax benefit
|
|
(3,212
|
)
|
|
|
|
(12,734
|
)
|
|
|
|
|
|
Changes in assets and liabilities
|
|
24,913
|
|
|
|
|
31,835
|
|
|
|
|
|
|
Cash provided by operating activities
|
|
157,873
|
|
|
|
|
124,196
|
|
|
|
|
|
|
Investing activities:
|
|
|
|
|
Purchases of property, equipment, and software
|
|
(26,221
|
)
|
|
|
|
(16,976
|
)
|
Capitalized software development costs
|
|
(40,205
|
)
|
|
|
|
(31,997
|
)
|
|
|
|
|
|
Cash used in investing activities
|
|
(66,426
|
)
|
|
|
|
(48,973
|
)
|
|
|
|
|
|
Financing activities:
|
|
|
|
|
Proceeds from notes payable
|
|
550,000
|
|
|
|
|
-
|
|
Borrowings from revolving credit facility
|
|
140,000
|
|
|
|
|
-
|
|
Repayment of notes payable
|
|
(578,650
|
)
|
|
|
|
(56,350
|
)
|
Repayment of revolving credit facility
|
|
(130,000
|
)
|
|
|
|
-
|
|
Repayment of finance obligations
|
|
(676
|
)
|
|
|
|
(665
|
)
|
Payment of deferred purchase consideration
|
|
(120,136
|
)
|
|
|
|
-
|
|
Debt issuance costs
|
|
(9,777
|
)
|
|
|
|
-
|
|
Excess tax benefit from exercise of equity awards
|
|
1,495
|
|
|
|
|
956
|
|
Issuance of common stock, net of offering costs
|
|
7,684
|
|
|
|
|
1,975
|
|
Purchase of treasury shares
|
|
(600
|
)
|
|
|
|
(5,028
|
)
|
|
|
|
|
|
Cash used in financing activities
|
|
(140,660
|
)
|
|
|
|
(59,112
|
)
|
|
|
|
|
|
Net (decrease) increase in cash and cash equivalents
|
|
(49,213
|
)
|
|
|
|
16,111
|
|
Cash and cash equivalents, beginning of period
|
|
62,947
|
|
|
|
|
46,836
|
|
|
|
|
|
|
Cash and cash equivalents, end of period
|
$
|
13,734
|
|
|
|
$
|
62,947
|
|
|
|
|
|
|
SUPPLEMENTAL REVENUE REPORTING
|
RECONCILIATION OF GROSS FEES (A NON-GAAP MEASURE) TO NET REVENUE
|
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
In 000s
|
|
Three Months Ended December 31,
|
|
|
|
|
|
|
2012
|
|
|
|
2011 b
|
|
|
|
% Change
|
Non-GAAP gross administrative fees
|
|
$
|
106,347
|
|
|
|
|
$
|
104,082
|
|
|
|
|
2.2
|
%
|
Other service fees
|
|
|
97,617
|
|
|
|
|
|
86,214
|
|
|
|
|
13.2
|
%
|
Non-GAAP gross fees
|
|
|
203,964
|
|
|
RSO %
|
|
|
190,296
|
|
|
RSO %
|
|
7.2
|
%
|
Non-GAAP revenue share obligation (RSO)
|
|
|
(40,184
|
)
|
|
37.8
|
%
|
|
|
(33,515
|
)
|
|
32.2
|
%
|
|
19.9
|
%
|
Net revenue
|
|
$
|
163,780
|
|
|
|
|
$
|
156,781
|
|
|
|
|
4.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
In 000s
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended December 31,
|
|
|
|
|
|
|
2012
|
|
|
|
2011 b
|
|
|
|
% Change
|
Non-GAAP gross administrative fees
|
|
$
|
427,698
|
|
|
|
|
$
|
384,560
|
|
|
|
|
11.2
|
%
|
Other service fees
|
|
|
373,206
|
|
|
|
|
|
328,673
|
|
|
|
|
13.5
|
%
|
Non-GAAP gross fees
|
|
|
800,904
|
|
|
RSO %
|
|
|
713,233
|
|
|
RSO %
|
|
12.3
|
%
|
Non-GAAP RSO
|
|
|
(160,783
|
)
|
|
37.6
|
%
|
|
|
(134,961
|
)
|
|
35.1
|
%
|
|
19.1
|
%
|
Net revenue
|
|
$
|
640,121
|
|
|
|
|
$
|
578,272
|
|
|
|
|
10.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL SEGMENT REPORTING
|
RECONCILIATION OF SELECTED NON-GAAP MEASURES TO GAAP MEASURES
|
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
In 000s
|
|
Three Months Ended December 31,
|
|
|
|
|
|
|
2012
|
|
|
|
2011
|
|
|
% Change
|
|
Net revenue
|
|
|
|
|
|
|
|
|
|
|
Spend and Clinical Resource Management ("SCM")
|
|
$
|
99,079
|
|
|
|
|
$
|
103,113
|
|
|
|
-3.9
|
%
|
|
Revenue Cycle Management ("RCM")
|
|
|
64,701
|
|
|
|
|
|
53,668
|
|
|
|
20.6
|
%
|
|
Total net revenue
|
|
|
163,780
|
|
|
|
|
|
156,781
|
|
|
|
4.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Adjusted EBITDA
|
|
|
|
% margin
|
|
|
|
% margin
|
|
|
SCM
|
|
$
|
44,047
|
|
|
44.5
|
%
|
|
$
|
49,624
|
|
|
48.1
|
%
|
-11.2
|
%
|
|
RCM
|
|
|
17,919
|
|
|
27.7
|
%
|
|
|
13,986
|
|
|
26.1
|
%
|
28.1
|
%
|
|
Corporate
|
|
|
(7,005
|
)
|
|
|
|
|
(9,933
|
)
|
|
|
-29.5
|
%
|
|
Total non-GAAP Adjusted EBITDA
|
|
|
54,961
|
|
|
33.6
|
%
|
|
|
53,677
|
|
|
34.2
|
%
|
2.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
In 000s
|
|
Twelve Months Ended December 31,
|
|
|
|
|
|
|
2012
|
|
|
|
2011
|
|
|
% Change
|
|
Net revenue
|
|
|
|
|
|
|
|
|
|
|
SCM
|
|
$
|
393,571
|
|
|
|
|
$
|
363,997
|
|
|
|
8.1
|
%
|
|
RCM
|
|
|
246,550
|
|
|
|
|
|
214,275
|
|
|
|
15.1
|
%
|
|
Total net revenue
|
|
|
640,121
|
|
|
|
|
|
578,272
|
|
|
|
10.7
|
%
|
|
Non-GAAP acquisition-related purchase accounting
|
|
|
|
|
|
|
|
|
|
|
revenue adjustments b
|
|
|
-
|
|
|
|
|
|
6,245
|
|
|
|
|
|
Total non-GAAP net revenue
|
|
$
|
640,121
|
|
|
|
|
$
|
584,517
|
|
|
|
9.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Adjusted EBITDA
|
|
|
|
% margin
|
|
|
|
% margin
|
|
|
SCM
|
|
$
|
176,893
|
|
|
44.9
|
%
|
|
$
|
165,672
|
|
|
45.5
|
%
|
6.8
|
%
|
|
RCM
|
|
|
59,451
|
|
|
24.1
|
%
|
|
|
49,635
|
|
|
23.2
|
%
|
19.8
|
%
|
|
Corporate
|
|
|
(29,006
|
)
|
|
|
|
|
(31,202
|
)
|
|
|
-7.0
|
%
|
|
Total non-GAAP Adjusted EBITDA
|
|
|
207,338
|
|
|
32.4
|
%
|
|
|
184,105
|
|
|
31.5
|
%
|
12.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
(b) Figures for the twelve months ended December 31, 2011 include
acquisition-related purchase accounting revenue adjustments of $6.2
million, which represents the net amount of: (i) approximately $9.4
million in gross administrative fees and $1.6 million in other
service fees primarily based on vendor reporting received relating
to purchases made prior to the acquisition date, and (ii) a
corresponding revenue share obligation of $4.8 million relating to
the same period. There were no related adjustments for the 2012
periods.
|
|
|
|
|
|
|
|
|
|
|
|
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 December 31,
|
|
|
Twelve Months Ended December 31,
|
|
2012
|
|
2011
|
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
|
|
Net (loss) income
|
$
|
(14,354
|
)
|
|
$
|
4,147
|
|
|
|
$
|
(6,878
|
)
|
|
$
|
(15,494
|
)
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
8,774
|
|
|
|
5,988
|
|
|
|
|
30,190
|
|
|
|
22,402
|
|
Depreciation (included in cost of revenue)
|
|
506
|
|
|
|
410
|
|
|
|
|
1,859
|
|
|
|
1,225
|
|
Amortization of intangibles
|
|
17,401
|
|
|
|
19,810
|
|
|
|
|
72,652
|
|
|
|
80,510
|
|
Amortization of intangibles (included in cost of revenue)
|
|
140
|
|
|
|
140
|
|
|
|
|
557
|
|
|
|
557
|
|
Interest expense, net
|
|
15,324
|
|
|
|
17,141
|
|
|
|
|
66,041
|
|
|
|
71,069
|
|
Income tax (benefit) expense
|
|
(4,947
|
)
|
|
|
2,794
|
|
|
|
|
(1,480
|
)
|
|
|
(9,851
|
)
|
|
|
|
|
|
|
|
|
|
Non-GAAP EBITDA
|
$
|
22,844
|
|
|
$
|
50,430
|
|
|
|
$
|
162,941
|
|
|
$
|
150,418
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation
|
|
2,495
|
|
|
|
2,078
|
|
|
|
|
10,291
|
|
|
|
5,023
|
|
RCM management restructuring expenses
|
|
-
|
|
|
|
442
|
|
|
|
|
-
|
|
|
|
1,646
|
|
Rental income from capitalized building lease
|
|
(110
|
)
|
|
|
(111
|
)
|
|
|
|
(438
|
)
|
|
|
(438
|
)
|
Purchase accounting adjustments
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
6,245
|
|
Acquisition and integration-related expenses
|
|
1,536
|
|
|
|
1,838
|
|
|
|
|
6,348
|
|
|
|
24,551
|
|
Loss on debt extinguishment
|
|
28,196
|
|
|
|
-
|
|
|
|
|
28,196
|
|
|
|
-
|
|
Insurance settlement
|
|
-
|
|
|
|
(1,000
|
)
|
|
|
|
-
|
|
|
|
(3,340
|
)
|
|
|
|
|
|
|
|
|
|
Non-GAAP Adjusted EBITDA
|
$
|
54,961
|
|
|
$
|
53,677
|
|
|
|
$
|
207,338
|
|
|
$
|
184,105
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See "Use of Non-GAAP Financial Measures" following financial
schedules for more information on non-GAAP measures.
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL NET (LOSS) INCOME AND (LOSS) EARNINGS PER SHARE
REPORTING
|
RECONCILIATION OF SELECTED NON-GAAP MEASURES TO GAAP MEASURES
|
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31,
|
|
|
Twelve Months Ended December 31,
|
In 000s, except per share data
|
|
2012
|
|
2011
|
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
|
|
$
|
(14,354
|
)
|
|
$
|
4,147
|
|
|
|
$
|
(6,878
|
)
|
|
$
|
(15,494
|
)
|
|
|
|
|
|
|
|
|
|
|
Pre-tax non-cash, acquisition-related intangible amortization and
depreciation
|
|
|
18,015
|
|
|
|
20,473
|
|
|
|
|
75,103
|
|
|
|
83,226
|
|
Pre-tax non-cash, share-based compensation
|
|
|
2,495
|
|
|
|
2,078
|
|
|
|
|
10,291
|
|
|
|
5,023
|
|
Pre-tax acquisition and integration-related expenses
|
|
|
1,536
|
|
|
|
1,838
|
|
|
|
|
6,348
|
|
|
|
24,551
|
|
Pre-tax RCM management restructuring expenses
|
|
|
-
|
|
|
|
442
|
|
|
|
|
-
|
|
|
|
1,646
|
|
Pre-tax purchase accounting adjustments
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
6,245
|
|
Pre-tax deferred payment interest expense accretion
|
|
|
-
|
|
|
|
679
|
|
|
|
|
-
|
|
|
|
3,082
|
|
Pre-tax loss on debt extinguishment
|
|
|
28,196
|
|
|
|
-
|
|
|
|
|
28,196
|
|
|
|
-
|
|
Pre-tax insurance settlement
|
|
|
-
|
|
|
|
(1,000
|
)
|
|
|
|
-
|
|
|
|
(3,340
|
)
|
Tax effect on pre-tax adjustments c
|
|
|
(20,097
|
)
|
|
|
(9,804
|
)
|
|
|
|
(47,975
|
)
|
|
|
(48,173
|
)
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP adjusted net income
|
|
$
|
15,791
|
|
|
$
|
18,853
|
|
|
|
$
|
65,085
|
|
|
$
|
56,766
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) Income Per Share (EPS) - diluted
|
|
$
|
(0.25
|
)
|
|
$
|
0.07
|
|
|
|
$
|
(0.12
|
)
|
|
$
|
(0.27
|
)
|
|
|
|
|
|
|
|
|
|
|
Pre-tax non-cash, acquisition-related intangible amortization and
depreciation
|
|
|
0.31
|
|
|
|
0.35
|
|
|
|
|
1.31
|
|
|
|
1.45
|
|
Pre-tax non-cash, share-based compensation
|
|
|
0.04
|
|
|
|
0.04
|
|
|
|
|
0.18
|
|
|
|
0.09
|
|
Pre-tax acquisition and integration-related expenses
|
|
|
0.03
|
|
|
|
0.03
|
|
|
|
|
0.11
|
|
|
|
0.43
|
|
Pre-tax RCM management restructuring expenses
|
|
|
-
|
|
|
|
0.01
|
|
|
|
|
-
|
|
|
|
0.03
|
|
Pre-tax purchase accounting adjustments
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
0.11
|
|
Pre-tax deferred payment interest expense accretion
|
|
|
-
|
|
|
|
0.01
|
|
|
|
|
-
|
|
|
|
0.05
|
|
Pre-tax loss on debt extinguishment
|
|
|
0.49
|
|
|
|
-
|
|
|
|
|
0.49
|
|
|
|
-
|
|
Pre-tax insurance settlement
|
|
|
-
|
|
|
|
(0.02
|
)
|
|
|
|
-
|
|
|
|
(0.06
|
)
|
Tax effect on pre-tax adjustments c
|
|
|
(0.35
|
)
|
|
|
(0.17
|
)
|
|
|
|
(0.84
|
)
|
|
|
(0.84
|
)
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP adjusted EPS - diluted
|
|
|
0.27
|
|
|
$
|
0.32
|
|
|
|
|
1.13
|
|
|
$
|
0.99
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares - diluted (in 000s) d
|
|
|
58,087
|
|
|
|
58,451
|
|
|
|
|
57,452
|
|
|
|
57,298
|
|
|
|
|
|
|
|
|
|
|
|
(c) The Company used a tax rate of 40.0% for the three and twelve
months ended December 31, 2012 and 2011 to calculate the tax effect
of each adjustment since it believes 40.0% will be the Company's
normalized long-term tax rate.
|
|
|
|
|
|
|
|
|
|
|
(d) Given the Company's net loss for the three and twelve months
ended December 31, 2012 and for the twelve months ended December 31,
2011, basic and fully diluted weighted average shares are the same
for EPS and non-GAAP adjusted EPS.
|
|
|
|
|
|
|
|
|
|
|
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
|
|
$
|
20,000
|
|
|
$
|
26,000
|
|
|
|
|
|
|
Depreciation
|
|
|
41,700
|
|
|
|
41,700
|
|
Depreciation (included in cost of revenue)
|
|
|
1,500
|
|
|
|
1,500
|
|
Amortization of intangibles, acquisition-related
|
|
|
62,700
|
|
|
|
62,700
|
|
Interest expense, net
|
|
|
51,700
|
|
|
|
51,700
|
|
Income tax expense
|
|
|
13,400
|
|
|
|
17,400
|
|
|
|
|
|
|
Non-GAAP EBITDA
|
|
|
191,000
|
|
|
|
201,000
|
|
|
|
|
|
|
Share-based compensation
|
|
|
14,400
|
|
|
|
14,400
|
|
Acquisition and integration-related expenses
|
|
|
10,000
|
|
|
|
10,000
|
|
Rental income from capitalized building lease
|
|
|
(400
|
)
|
|
|
(400
|
)
|
|
|
|
|
|
Non-GAAP adjusted EBITDA
|
|
$
|
215,000
|
|
|
$
|
225,000
|
|
|
|
|
|
|
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
|
|
$
|
20,000
|
|
|
$
|
26,000
|
|
|
|
|
|
|
EPS - diluted
|
|
|
0.33
|
|
|
|
0.43
|
|
|
|
|
|
|
Pre-tax non-cash, acquisition-related intangible amortization and
depreciation
|
|
|
1.07
|
|
|
|
1.07
|
|
Pre-tax non-cash, share-based compensation
|
|
|
0.24
|
|
|
|
0.24
|
|
Pre-tax acquisition and integration-related expenses
|
|
|
0.17
|
|
|
|
0.17
|
|
|
|
|
|
|
Tax effect on pre-tax adjustments e
|
|
|
(0.59
|
)
|
|
|
(0.59
|
)
|
|
|
|
|
|
Non-GAAP adjusted EPS - diluted
|
|
$
|
1.22
|
|
|
$
|
1.32
|
|
|
|
|
|
|
Fully diluted weighted average shares outstanding
|
|
|
60,200
|
|
|
|
60,200
|
|
|
|
|
|
|
(e) The Company uses a tax rate of 40.0% to calculate the tax effect
of each adjustment for its 2013 EPS guidance 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
|
12.31.11
|
|
3.31.12
|
|
6.30.12
|
|
9.30.12
|
|
12.31.12
|
|
|
|
|
|
|
|
|
|
|
SCM segment
|
|
350.3
|
|
|
|
356.5
|
|
|
|
373.1
|
|
|
370.6
|
|
364.7
|
RCM segment
|
|
218.4
|
|
|
|
222.7
|
|
|
|
230.3
|
|
|
232.8
|
|
236.0
|
Total
|
|
568.7
|
|
|
|
579.2
|
|
|
|
603.4
|
|
|
603.4
|
|
600.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL REPORTING OF SHARE-BASED COMPENSATION
|
EXPENSE INCLUDED IN OPERATING EXPENSES
|
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
In 000s
|
Three Months Ended
|
|
Twelve Months Ended
|
|
|
|
December 31,
|
|
December 31,
|
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011 f
|
|
|
Amount of share-based compensation included in:
|
|
|
|
|
|
|
|
|
|
Cost of revenue
|
|
630
|
|
|
|
309
|
|
|
|
2,165
|
|
|
1,362
|
|
|
Product development expense
|
|
58
|
|
|
|
90
|
|
|
|
181
|
|
|
267
|
|
|
Selling & marketing expense
|
|
420
|
|
|
|
317
|
|
|
|
1,489
|
|
|
559
|
|
|
General & administrative expense
|
|
1,387
|
|
|
|
1,362
|
|
|
|
6,456
|
|
|
2,835
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
$
|
2,495
|
|
|
$
|
2,078
|
|
|
$
|
10,291
|
|
$
|
5,023
|
|
|
(f) During the three months ended June 30, 2011, we recorded an
adjustment of ($6,537) to share-based compensation expense based on
our probability assessment of performance achievement relating to
certain performance-based restricted stock grants and SSAR grants.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL REPORTING OF FREE CASH FLOW
|
RECONCILIATION OF SELECTED NON-GAAP MEASURES TO GAAP MEASURES
|
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
In 000s
|
Twelve Months Ended
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
|
|
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash provided by operating activities
|
$
|
157,873
|
|
|
$
|
124,196
|
|
|
|
|
|
|
|
Purchases of property, equipment and software
|
|
(26,221
|
)
|
|
|
(16,976
|
)
|
|
|
|
|
|
|
Capitalized software development costs
|
|
(40,205
|
)
|
|
|
(31,997
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP free cash flow
|
$
|
91,447
|
|
|
$
|
75,223
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
herein with the following non-GAAP financial information: gross
fees; gross administrative fees; revenue share obligation; EBITDA;
adjusted EBITDA; adjusted EBITDA margin; acquisition-related
purchase accounting revenue adjustments; 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.
|
|
Acquisition-related purchase accounting revenue adjustments reflect
an estimated reduction of net administrative fee revenue. Under the
Company's revenue recognition policies, administrative fees are
recorded as revenue when reported to the Company by vendors. GAAP
relating to business combinations require that the Company estimate
the amount of client supply purchases (the driver of administrative
fee revenue) occurring prior to the Broadlane 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 were received and cash was collected, the Company did
not recognize revenue for these acquisition-related purchase
accounting revenue adjustments.
|
|
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.
|
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