) have demonstrated a declining trend following the Oct 30
release of its third-quarter 2013 results and a weak outlook for
the rest of the year. The company's adjusted earnings of 27 cents
per share declined 6.9% from 29 cents per share reported in the
year-ago period. However, adjusted earnings beat the Zacks
Consensus Estimate by a penny.
On a reported basis, net earnings surged 26.3% to $6.9 million or
11 cents per share, from $5.5 million or 9 cents in the year-ago
Revenues in the quarter inched up 1.8% to $166.4 million but
slightly missed the Zacks Consensus Estimate of $167 million.
Revenues from the Spend and Clinical Resource Mgmt (SCM) segment
grew 4.2% to $103.2 million. The year-over-year growth was driven
by higher consulting and other service fees as well as group
purchasing net administrative fees, partially offset by a drop in
On the other hand, revenues from the smaller Revenue Cycle
Management (RCM) segment declined 1.8% to $63.1 million due to
15.8% fall in service-related revenues, partially offset by 5.3%
gain in technology-related revenues.
Adjusted selling and marketing expenses dipped 6.1% to $11.9
million, while adjusted general and administrative charges
increased 6.2% to $56.7 million. MDAS' adjusted operating margin
was 36.3% in the third quarter, 255 basis points lower than the
year-ago figure of 38.8%.
MedAssets exited the third quarter of 2013 with nil cash and cash
equivalents against $9.8 million at the end of 2012. As of Sep
30, 2013, the company's balance sheet included $793.4 million in
total bank and bond debt, net of cash and cash equivalents.
Cash provided by operating activities in the first nine months of
2013 was $109.8 million versus $13.7 million at the end of 2012.
Adjusted free cash flow (operating cash flow less purchases of
property, equipment and software and capitalized software
development costs) declined 2.3% to $63.4 million for the first
nine months of 2013 versus $64.9 million generated in the
year-ago comparable period.
MDAS tweaked its guidance for 2013, as management expects
performance-related fees to decline further and also incur higher
expenses related to IT, infrastructure and other related
investments in the fourth quarter. The company has reduced
expected sales for the full year to the band of $671.0-$677.0
million from $673.0-$683.0 million guided earlier. The Zacks
Consensus Estimate for 2013 revenues of $676 million lies within
the guided range.
The decline is mainly on account of soft revenue anticipation
from the RCM segment, which is now expected in the range of
$253.0-$257.0 million compared to the earlier guidance of
$255.0.0-$261.0 million. However, on a positive note, management
raised its outlook for the SCM segment to $417.0-$421.0 million
from the earlier guided range of $416.0-$424.0 million.
Reported net earnings are forecast in the range of 39 cents to 43
cents versus the earlier guidance of 38 cents to 44 cents.
Adjusted earnings are now anticipated in the range of $1.27 to
$1.31, narrower than the earlier guided range of $1.26 to $1.32
for the year. The Zacks Consensus Estimate for 2013 adjusted
earnings of $1.15 lies below the guided range.
We remain on the sidelines regarding the mixed third-quarter
results posted by MedAssets. Although the company's bottom line
beat the Zacks Consensus Estimate, management's bleak outlook for
the rest of the year raises concerns regarding the company's
future performance. Moreover, higher expenses are likely to keep
margins under pressure going forward.
Shares of this provider of web-based workflow technology for the
healthcare industry have been declining ever since it reported
its third quarter results. Following the earnings release, shares
dropped a whopping 13.6% to close at $22.52 on Nov 1.
MDAS currently has a Zacks Rank #3 (Hold). While we choose to
remain on the sidelines regarding the future trend of this
company, other stocks from the medical services industry include
Charles River Laboratories International, Inc.
ICON Public Limited Company
). All these stocks carry a Zacks Rank #2 (Buy).
CHARLES RVR LAB (CRL): Free Stock Analysis
COVANCE INC (CVD): Free Stock Analysis Report
ICON PLC (ICLR): Free Stock Analysis Report
MEDASSETS INC (MDAS): Free Stock Analysis
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