MedAssets, Inc. (MDAS) reported adjusted earnings per share (EPS) of 29 cents in the third quarter of 2014, beating the Zacks Consensus Estimate by couple of cents. Adjusted EPS increased 6.9% from the year-ago quarter.
Quarter Details
Revenues grossed $176 million and steered ahead of the Zacks Consensus Estimate of $172 million. It also increased 5.5% from the year-ago quarter.
Spend and Clinical Resource Management (SCM) revenues increased 2.5% on a year-over-year basis to $106 million. The increase was primarily driven by higher group purchasing (GPO) net administrative fees. Sg2, the recent acquisition contributed $1.1 million to SCM and total revenue.
Net revenue in the Revenue Cycle Management (RCM) segment increased 9.6% year over year to $70 million. Around 68% of this segment’s revenues can be attributed to SaaS-based Revenue Cycle Technology Tools.
Operating expenses increased 5.1% on a year-over year basis to $151.2 million primarily due to 13%, 10.7% and 8.4% growth in product development, selling and marketing and depreciation expenses.
Nevertheless, operating income expanded 40 bps on a year-over-year basis to 14%, due to higher revenue base, which fully offset increasing operating expenses.
Financial Position
Cash and cash equivalents were $13.9 million, compared with $6.0 million at the end of the previous quarter. In the first nine months of 2014, cash flow from operating activities were $96.1 million, while free cash flow was $55.7 million.
Guidance
MedAssets expects revenues for fiscal 2014 in the band of $715– $721 million. Adjusted EPS is expected to lie in the range of $1.34–$1.38.
Zacks Rank
Currently, MedAssets carries a Zacks Rank #2 (Buy). Other well-placed medical service stocks that warrant a look include BioTelemetry, Inc. (BEAT), ICON Public Limited Co. (ICLR) and BG Medicine, Inc. (BGMD). While BioTelemetry and ICON Public sport a Zacks Rank #1 (Strong Buy), BG Medicine carries the same Zacks Rank as MedAssets.
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