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MedAssets to Pay $850M to Acquire Broadlane Group

 |  By John Commins  
   September 15, 2010

Supply chain management company MedAssets, Inc. Tuesday announced that it will pay $850 million in cash to acquire Dallas-based rival The Broadlane Group.

The Broadlane Group serves more than 1,100 acute care hospitals and 50,000 non-acute care facilities nationwide, and MedAssets serves more than 3,300 hospitals and 40,000 non-acute healthcare providers.

Using 2009 figures, the combined MedAssets and The Broadlane Group had estimated net revenue of $508.9 million and estimated combined adjusted EBITDA of $161.8 million, the two companies said in a joint statement.

"We are bringing together some of the best contract pricing in the industry, with highly complementary technology and clinical consulting expertise from both companies," said John Bardis, chairman/president/CEO of Atlanta-based MedAssets. "Our core strategy is to enable broader clinical and operating effectiveness throughout our nation's health system, and this transaction will further enhance our ability to help hospitals and other healthcare providers drive their operating and supply costs lower, while improving patient care."

Bardis said the collective strengths of the two companies will enhance MedAssets' financial profile, with recurring revenue, cash flow and profit expansion opportunities.
Patrick Ryan, chairman/CEO of The Broadlane Group, will join the MedAssets board of directors and become president of the company's Spend Management segment when the deal is finalized by the end of 2010.

"As a combined entity, we offer a strategic opportunity for our clients to drive operating expenses down while improving quality of care," Ryan said. "The collective strengths of The Broadlane Group and MedAssets will provide expanded supply chain capabilities, and further enhance the financial improvement opportunities, both near and long-term, for our healthcare provider clients."

The agreement calls for MedAssets to purchase The Broadlane Group for approximately $850 million in cash, with $725 million to be paid at closing and $125 million to be paid in January 2012. MedAssets has obtained financing from J.P. Morgan and Barclays Capital.

MedAssets said the combined company will offer:

  • An industry leader that can reduce hospital costs with supply chain management operations that include group purchasing, strategic sourcing, medical device or PPI cost management, centralized procurement, supply chain outsourcing, supply chain analytics and data services, lean process consulting expertise, and a clinical workforce or labor management solution;
  • A group purchasing portfolio that gives providers high compliance pricing and flexible contracting for commodity products and purchased services;
  • Software-as-a-Service-based revenue cycle technology and revenue cycle consulting and extended business office services that increase net revenue capture and cash flow improvement for healthcare providers with low upfront cost and a return on investment in months;
  • Approximately 85% recurring revenue with high client retention and minimal client concentration;
  • A national sales force and client service teams to expand use of the combined companies' services to new and existing clients;
  • Strategic support to help healthcare providers stay viable in the anticipation of healthcare reform and related financial/operational challenges.

John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.

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