MedAssets being bought out for $2.7 billion

Just more than a month after layoffs were announced at MedAssets' Cape Girardeau office, it was announced Pamplona Capital Management will acquire the company for $2.7 billion.

On Monday, the companies announced Pamplona will buy MedAssets for $31.35 per share in cash, according to a release from MedAssets.

"Since February, our executive leadership team has been developing and implementing our business transformation and value creation plan to prepare MedAssets for a growth-oriented future within a value-based healthcare world," MedAssets' R. Halsey Wise, chairman and chief executive officer, said in the release. "We have been making substantial progress, and our third-quarter 2015 financial performance is a testament to our employees' commitment, dedication and hard work to execute our plan."

Health Service Corp. of America, which eventually became MedAssets, was founded by Earl Norman of Cape Girardeau in 1969. He sold it in 2001 to focus on his real-estate business, Lorimont Place Ltd.

The company's total net revenue for the third quarter increased 8.1 percent to $190 million from $175.7 million for the third quarter of 2014.

MedAssets' net loss for the third quarter of 2015 was $2.2 million, or $0.04 per share, compared with a net income of $7.7 million, or $0.13 per share in the third quarter of 2014. The loss was due to $5 million in restructuring charges related to MedAssets' expense reduction program announced in September, and $10.3 million in non-cash capitalized software impairments related to revenue cycle management products, according to information released Monday by MedAssets.

Cost-reduction measures implemented in September included reducing the company's workforce by about 5 percent, or about 180 full-time positions, by the end of the year. Those layoffs are projected to save more than $20 million annually.

MedAssets' Securities and Exchange Commission filings indicate one of the company's locations will be shut down. Earlier this month, an employee of the company's Cape Girardeau office said some employees here were laid off, but that the location wouldn't be dissolved entirely. The Cape Girardeau office employs about 140 people.

The company's filed plans indicate about $9 million will be spent on one-time termination benefits, likely as severance packages, benefit continuation and outplacement services.

"Over the last year, our progress captured the attention of outside parties, and we received a number of unsolicited inquiries expressing interest in acquiring MedAssets," Wise said. "Our board of directors and executive leadership team conducted a thorough review of strategic alternatives and, after careful consideration, we determined an acquisition by Pamplona is the best course of action for our shareholders, customers and employees."

The deal with Pamplona is expected to close in the first quarter of 2016. Morgan Stanley, Barclays, Macquarie Group and GCI have committed financing to Pamplona for the transaction.

Pamplona partner Dr. Jeremy Gelber said the company plans to combine MedAssets' revenue cycle management segment with Pamplona's Percyse business to create an "end-to-end revenue cycle technology and services business." MedAssets' spend and clinical resource management business will be sold to VHA-UHC Alliance.

A call to MedAssets' vice president of brand and public relations went unanswered Monday.

kwebster@semissourian.com

(573) 388-3646

Pertinent address:

280 S Mount Auburn Rd, Cape Girardeau, MO 63703