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Wachovia Nantucket ConferenceJune 23, 2008
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This presentation contains forward-looking statements that are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. These statements speak only as of
the dates on which they are made, are based upon current assumptions and expectations, and involve
a number of risks and uncertainties. Investors are hereby cautioned not to place undue reliance on
these forward-looking statements, including, but not limited to, statements about MedAssets’ business
and prospects, statements about the company’s ability to maintain or expand market share within its
industry, statements about the integration of recent or proposed acquisitions, and statements about
the market acceptance of its products and services. These statements are subject to significant
business, economic, regulatory, competitive and other risks and uncertainties identified in MedAssets’
Form 10-K filed with the Securities and Exchange Commission on March 24, 2008. Consequently,
actual financial and operating results may differ materially from those expressed in these forward-
looking statements. MedAssets undertakes no obligation to update or revise any such forward-looking
statements.
The MedAssets SEC filings can be accessed for free by visiting the Investor Relations section of the
Company’s corporate website at www.medassets.com, or the SEC Web site at www.sec.gov.
Safe Harbor
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Leading provider of revenue cycle and spend management solutions focused entirely on delivering measurable, sustainable financial
improvement for hospitals & health systems
Serving 125+ health systems, 3,300+ hospitals and over 30,000+ alternate site providers
Founded in 1999; headquartered in Alpharetta, GA (metro Atlanta); approx. 1,600 employees
Major offices: Dallas, TX; El Segundo, CA; Englewood, CO; Cape Girardeau & St. Louis, MO; Mahwah, NJ; Seattle & Yakima, WA
Demonstrated consistent growth, with 2007 net revenue* reaching $209.5 million
40.6% compounded annual growth rate from 2004 (~70% derived from organic growth)
2007 adjusted EBITDA* was $66.2 million
No single customer or GPO vendor accounts for more than 4% of total net revenue
Overview
* Gives effect to the acquisitions of MD-X and XactiMed, and the 2006 and 2007 Financings as if they had occurred at the beginning of the period
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Business / Investment Highlights
Compelling value proposition for hospitals: improve margins and operating cash flow
Comprehensive, customer-centric solutions deliver measurable and sustainable financial improvement through increased revenue capture and reduced supply cost trends
$6.5 billion opportunity in underpenetrated market with strong growth potential
Underlying 4-6% growth in hospital supply expenses
Complex and ever-changing reimbursement environment drives need for RCM expertise
Strong organic growth profile with recurring and predictable annual revenues
Highly visible due to multi-year contracts and 85+% contractually-recurring revenue
Organic growth driven by share gains and successful growth of acquired businesses
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Consistently higher growth in hospital costs
versus overall inflation Complexities inherent in procuring the vast
number and quantity of supplies 35,000 SKUs used by a typical hospital MedAssets maintains unique 4MM SKU
master item file with 40MM price points Historically profitable procedures are
becoming less profitable
Spend Management
Cost Pressures
Source: Orthopedic Network News, January 2006
(%)
Hospital Industry – Financial Challenges
Joint Implant Cost as % of ReimbursementMS DRG 470 Total Joint Replacement – Lower Extremities
(1) Source: America’s Health Insurance Plans
Complex payor mix
Declining reimbursement growth
Denied claims, partial payments Approximately 14% of hospital invoices were
rejected by payors in 2006 (1)
Changing gov’t reimbursement requirements Medicare: Increase in number of DRGs from
538 to 745 (with medical-severity tiers)
Rise of consumer-directed healthcare / high-deductible health plans
“Retail” model vs traditional “wholesale” model
Ten-fold increase in individuals covered by consumer-directed accounts since 2004
Hospitals’ existing information infrastructure are poorly equipped to adapt
Medicare Recovery Audit Contracts (RAC)
Revenue Integrity Pressures
Revenue Cycle Management
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The MedAssets Solution
MedAssets can improve customer operating margins by 1.5% to 5.0%
MedAssets successfully
mitigates hospitals’ trend of
declining revenue growth /
increasing supply cost growth
ASP-based solutions with
minimal or no capital expense
ROI-driven consultative sales
Improved cash flow measured
in months, not years
Behavior change measured
through financial targets
Enterprise ImplementationEnterprise Implementation
Flexible ASP-based TechnologyFlexible ASP-based TechnologyStrategic Sales and Account ManagementStrategic Sales and Account Management
Enterprise Financial Performance TargetsEnterprise Financial Performance Targets
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Product/Service Overview
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Front End Scheduling, Pre-Registration,
Patient Admission
Clinical OperationsCharging, Coding, Utilization
Back EndBilling, Follow-up, Collections
Hospital Revenue Cycle Solutions
The MedAssets RCM solution set can increase net patient revenue by 1-3%
Partnered Solution / In Development
Current MedAssets Solutions
Insurance Eligibility & Verification Financial
Counseling
Scheduling, Registration,
Bill Estimation& POS Cash Collection
ClaimsScrubbing &
ElectronicBilling
Expected Reimbursement,
Contract Modeling
DenialsMgmt,
Payment Collections
A/R Mgmt, Cash Posting
ChargeCapture
Coding andDocumentation
Case MgmtUtilization Review
Business Intelligence (Revenue / Margin Analytics & Decision Support)
Data ManagementChargemaster and Strategic Pricing
Consulting & Transformational Services / Software Tools & Workflow
Product / Service Offerings
Scheduling,Registration
Medical Necessity
Hospital Revenue Cycle Operations
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Accuro Significantly Enhances MedAssets’ total RCM Solution Offerings
Contract Manager ranked #1 and CodeCorrect CDM ranked #2 in charge master by KLAS
CarePricer (patient bill estimator) is an important product currently not offered by MedAssets
Expanded Customer Base in a Fragmented Market
Accuro is a leading RCM player in a highly fragmented industry
Combined install base now includes 3,300+ hospital customers
Underpenetrated customer base offers significant cross selling opportunities for MedAssets’ comprehensive RCM and Spend Management solutions
Additional RCM Sales Force Should Accelerate Growth
Combined national sales team should accelerate penetration of expanded customer base
Substantial Number of Growth and Synergy Opportunities
Leverage sales force to win new business and cross-sell comprehensive RCM and Spend Management capabilities to existing customers
Create EBITDA margin expansion through coordination of product development resources, segmentation of overlapping products, and elimination of duplicative
corporate overhead
Accuro: Highly Strategic & Complementary
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Front End Scheduling, Pre-Registration,
Patient Admission
Clinical OperationsCharging, Coding, Utilization
Back EndBilling, Follow-up, Collections
Hospital RCM Solution Sets
Claims & Denial Management
Claims & Denial Management
Collections & A/R Services
Collections & A/R Services
Revenue Capture Solutions
Revenue Capture Solutions
Patient Access Management
Patient Access Management
• Claims Management• Medicare Direct
Claims Management• Remittance
Management• Denial Management• Reports Management• Claims Status• Payer Contract
Management (underpayment analysis)
• Claims Management• Medicare Direct
Claims Management• Remittance
Management• Denial Management• Reports Management• Claims Status• Payer Contract
Management (underpayment analysis)
• Accounts Receivable Services
• A/R Valuation• Silent PPO Recovery
Services• Underpayment
Recovery Services• Denials Management
Services• Medicare RAC Services• Collections
Management
• Accounts Receivable Services
• A/R Valuation• Silent PPO Recovery
Services• Underpayment
Recovery Services• Denials Management
Services• Medicare RAC Services• Collections
Management
• Charge Capture Audit, Claims Audit & Recovery Services
• Clinical Documentation Improvement
• Coding and Compliance
• Case Management Workflow
• Concurrent Denials Recovery
• Charge Capture Audit, Claims Audit & Recovery Services
• Clinical Documentation Improvement
• Coding and Compliance
• Case Management Workflow
• Concurrent Denials Recovery
• Patient Access Workflow
• Patient Bill Estimation
• Point-of-Service Collections
• Medicare Advanced Beneficiary Notification (ABN)
• Medicaid Eligibility and Charity Screening
• Patient Access Workflow
• Patient Bill Estimation
• Point-of-Service Collections
• Medicare Advanced Beneficiary Notification (ABN)
• Medicaid Eligibility and Charity Screening
Charge Data Integrity Solutions
Charge Data Integrity Solutions
• Chargemaster Management
• Pricing Management• Billing and Coding
Research Tools• Comparative Rate
Modeling • Defensible Pricing
Modeling • Supply and Revenue
Linkage
• Chargemaster Management
• Pricing Management• Billing and Coding
Research Tools• Comparative Rate
Modeling • Defensible Pricing
Modeling • Supply and Revenue
Linkage
Hospital Revenue Cycle Operations
Decision Support and Performance Analytics
• Budgeting• Contract Management• Key Indicators
• Budgeting• Contract Management• Key Indicators
• Cost Accounting• Clinical Analytics• Performance Management
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MedAssets Spend Management
Commodities Medical Devices Capital Equipment
Data-enabled group buys Proprietary market research and
demand forecasting Transparency of provider data
enhances basis for pricing negotiations
Small but important ancillary component of GPO offering
Routinely saves providers 5% to 18% on physician preference items (PPI)
Clinical outcomes-driven, fact-based approach to achieve physician ownership and behavior change
Local, customized contracting and solutions enabled by proprietary technology and data
Spend Management Solutions
MedAssets’ Spend Management solutions can save 3-10% of total supply expenses
Software Tools and Workflow
Business Intelligence
Consulting Services
3rd largest and fastest growing GPO Customized solutions and flexible
contracting model Data mgmt & transparency delivers
additional savings of 200-400 bps Programs: med/surg, pharma, lab,
dietary, purchased services Portfolio consists of 1,300+ contracts
with 1,000+ manufacturers, distributors and other vendors
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CD
M In
teg
rity
CrossWalk®
The leading industry data solution that efficiently integrates a hospital’s supply chain and the revenue cycle
Revenue Cycle Management Solutions
Revenue Cycle Management Solutions
Spend ManagementSolutions
Spend ManagementSolutions
CrossWalk ® 1641$6478%140754673657#3146598795%21558
1641$6478%140754673657#3146598795%21558
• Automatically and continuously links providers’ supply cost data to charge data
• Critical to hospitals’ ability to assess the true profitability of their services
• Automatically and continuously links providers’ supply cost data to charge data
• Critical to hospitals’ ability to assess the true profitability of their services
ChargemasterData
MasterItem File
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Sales Organization
Sales cycle ranges from 3-12 months
Long-term customer relationship management
Allows for sustainable financial improvement
Customer development costs efficiently applied
Innovation input on key unsolved issues
Barriers to competitive entry include:
Broad, demonstrated customer value
C-suite credibility and access in a single partner
National sales infrastructure
Flexible technology and service platform
Sales Team
SVPof Sales
(Enterprise)
VP of New CustomerDevelopment
(New Customers)
SM Sales Specialists
VP of Existing CustomerDevelopment
(Upsell and Cross-sell)
RCM Sales Specialists
130+ Person National Sales Force
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MedAssets’ Unique Value Proposition – Case Studies
Revenue cycle management solutions improved net patient
revenue by $8.3mm (vs. prior year), and Spend management
savings totaling $6.5mm, or 3.2%, of annual supply spend of
$200mm.
Spend management savings (vs. prior year) totaling $24mm, or
5.5%, of annual supply spend of $434mm.
Revenue cycle management solutions improved net patient revenue by $1.2mm, or 1.1%, over prior year.
– $110mm not-for-profit hospital in the Southeast
Expanding Penetration & Value Over TimeFinancial Improvement Examples
2006
2004 Engaged MedAssets for group purchasing
2005Added revenue cycle management solutions – chargemaster management, charge capture and pricing tools
2007Added additional revenue cycle management tools, spend management consulting, decision support solutions and CrossWalk
100% Success Rate in Meeting Guarantees
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Competitive Landscape
Revenue Cycle Management
Spend Management Consulting
MedAssets’ Competitive Strengths:
Comprehensive and flexible suite of solutions
Long-term and expanding customer relationships
Superior proprietary data & technology
Claims management software ranked #1 by KLAS
Payer contract management software ranked #1 by KLAS
Decision support software ranked #1 by KLAS in 5 of last 8 years
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Financial Overview
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Key Financial Characteristics
Highly recurring revenue base
Very high customer retention
Strong organic growth
Strategic acquisition-based growth
Minimal capital expenditure or working capital needs
High free cash flow conversion
No direct reimbursement risk
Highly profitable
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Annual Net Revenue – excluding Accuro
Net Revenue Contribution by Segment
($MM) Organic growth driven primarily by increased penetration of existing customers and addition of new customers
Highly recurring and visible due to long-term customer contracts
Acquisitions primarily focused on product and service expansion
Balanced revenue contribution from RCM and SM
% RCM
% SM
18%
82%
21%
79%
45%
55%
As Reported Pro Forma* (unaudited)
48%
52%
* Gives effect to the acquisitions of MD-X and XactiMed, and the 2006 and 2007 Financings as if they had occurred at the beginning of the period
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Revenue Predictability
Annual revenue is highly visible…
Source Recurring
ASP-Subscription fees (RCM / SM)
Administrative fees (SM)
Per-transaction fees (RCM)
Contingent fees (RCM / SM)
Implementation fees (RCM / SM)
Consulting / Professional fees (RCM / SM)
…but may exhibit some quarter-to-quarter variability
GPO vendor reporting of hospital purchases
Financial improvement acceptance
Software acceptance (ASP and installed applications)
(1) Adjusted EBITDA is not a measurement of financial performance under GAAP and should not be considered in isolation or as an alternative to income from operations, net income (loss), cash flows from continuing operating activities or any other measure of performance or liquidity derived in accordance with GAAP. Investors are strongly urged to review the reconciliation of net income (loss) to Adjusted EBITDA, along with the Company’s consolidated financial statements included in its Form 10-K filed with the SEC on 3/24/08. In addition, because Adjusted EBITDA is not a measure of financial performance under GAAP and is susceptible to varying calculations, the Adjusted EBITDA measure, as presented, may differ from and may not be comparable to similarly titled measures used by other companies.
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Adjusted EBITDA (1) – excluding Accuro
Adjusted EBITDA
($MM) Scalable, ASP-based technology model
Highly fixed-cost business
Leverage infrastructure to deliver new products and services
Ability to expand Adjusted EBITDA margins over the long term
33.0% 31.7%
As Reported Pro Forma (unaudited)
% EBITDA Margin (As Reported)
% EBITDA Margin (Pro Forma)
34.7%
31.6% 31.6%
32.1%
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Accuro – Revenue & EBITDA Growth
Highly-predictable business on a forward 12-month basis
Nearly 90% of Accuro’s revenue is recurring due to ASP-related subscription fees, which is
very comparable to MDAS’s current trends
Accuro is expected to deliver $37-40 million in revenue in 2H-08, with adjusted EBITDA
margins 200 bps higher than consolidated 2007 Medassets adjusted EBITDA margin
Assumed a 7.1.08 transaction close; not adjusted for potential deferred revenue discounts
Consolidated adjusted EBITDA margins is expected to increase 75-100 bps in 2009 due to
potential Accuro revenue/operating synergies and reduced risk of operating strategy
(excluding any acquisition-based charges)
Transaction expected to be break-even to slightly dilutive to 2008 adjusted EPS
Expected to be accretive to 2009 adjusted EPS, including synergies and exclusive of
purchase accounting adjustments
Transaction details: MedAssets paid ~ $207 million in cash and 8.85 million shares of MDAS
common stock, plus a deferred, non-contingent payment of $20 million (in cash or stock) due
on the 1st anniversary of transaction closing
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Capitalization Table
(In $000s) At 3.31.08 Pro forma
(estimated)
Cash and Cash Equivalents$ 127,977
Debt
Revolving Credit Facility (Capacity: current $110MM; pro forma $125MM) –
Notes Payable, Including Current Portion197,779
Finance Obligation, Including Current Portion10,108
Total Long-Term Debt, Including Current Portion207,887
Total Stockholders' Equity231,960
Total Capitalization439,847
Debt / LTM Adj. EBITDA 3.3x 3.5x
Net Debt / LTM Adj. EBITDA 1.3x 3.3x
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Investment Highlights
Compelling value proposition for hospitals
Best-of-breed technology-enabled solutions
$6.5 billion opportunity in underpenetrated market with strong growth potential
Strong organic growth
Highly recurring revenue base
Very high customer retention
Strategic acquisition-based growth
Minimal capital expenditure or working capital needs
High free cash flow conversion
Our Mission
To partner with hospitals and health systems to enhance their financial strength through improved operating margins and cash flow