Why MedAssets, Inc. Shares Spiked Higher

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of MedAssets (NASDAQ: MDAS  ) , a cloud-based provider of clinical resource management and revenue cycle management solutions for the health-care industry, spiked higher by as much as 15% after reporting its fourth-quarter earnings results after the bell last night.

So what: For the quarter, MedAssets reported a relatively tame 4% increase in revenue to $170.5 million, highlighted by a 7% increase in its clinical resource management segment and a 1% decline in its revenue cycle management segment. Adjusted income for the quarter came in at $0.30 per share, handily reversing a year-ago loss. By comparison, Wall Street expected a $0.28-per-share profit on just $165.7 million in revenue. Looking toward 2014, MedAssets is forecasting revenue growth of 2.9%-4.9%, with adjusted EPS of $1.33-$1.43, or 0.8%-8.3% growth. Both figures are in line with the current consensus estimate. To boot, MedAssets' board also authorized the repurchase of $75 million of its own shares over the next 12 months.

Now what: Compared to Wall Street's expectations, this was a pretty stable quarter, but as a shareholder, you have to be at least a bit concerned, I believe, at this lack of top- and bottom-line growth. The rollout of Obamacare has caused a number of clinical segments, including hospitals and biopharmaceutical companies that contract out their research, to tighten their belts. One way these sectors can reduce spending is by utilizing MedAssets solutions to improve operating efficiency. Apparently, that's not happening at the moment and it's a bit confusing -- almost as confusing as why the company would buy back shares when it could instead initiate a dividend. MedAssets still appears fairly inexpensive on a forward P/E basis, but I'd suggest it's fully valued here with growth middling in the low-to-mid-single digits.

MedAssets may be soaring today, but it'll probably have a hard time keeping up with this top stock in 2014
There's a huge difference between a good stock and a stock that can make you rich. The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it's one of those stocks that could make you rich. You can find out which stock it is in the special free report "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2857488, ~/Articles/ArticleHandler.aspx, 9/30/2014 8:17:54 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement