ALPHARETTA, GA – MedAssets Inc., which became a publicly owned company in mid-December through an initial public offering of stock, is making some noise.
That’s quite a contrast to the quiet period that the company went through after it filed documents with the Securities and Exchange Commission on August 24, 2007, registering to sell its stock publicly.
The company is now making most of its commotion with a variety of announcements involving contracts with provider organizations and groups. Most recently, in late February, MedAssets signed an agreement with the American Association of Homes & Services for the Aged to align the organization’s group purchasing program with MedAssets’ supply chain business line.
Through the agreement, AAHSA’s 5,800 members in the long-term care field will have access to more than 400 MedAssets vendor contracts for products and services.
MedAssets splits itself almost equally between its two business lines, said John Bardis, CEO of the company. About 51 percent comes from its “spend management” side, which includes group purchasing operations, while 49 percent is related to its revenue management services.
“The combination has worked well for us,” said Bardis, who has been chairman, president and CEO of the company since its founding in 1999. “Combining supply and revenue management makes sense to our customers.”
Bardis acknowledged that the company’s timing for its IPO was fortunate. Its offering of 13 million shares sold for $16 per share on December 13, and it closed the day at $20.50, up 28 percent. As of March 3, the stock was trading for about $18 per share.
There was heavy shareholder demand for the stock, and the issue was oversubscribed, Bardis said. Underwriters had received orders for about 103 million shares.
The company will use the proceeds to pay off some existing debt and to seek further acquisitions.
MedAssets’ IPO announcement drew negative comment from at least one of the nation’s group purchasing organizations, and that chafes Bardis. He says the group purchasing organizations of the large alliances are for-profit operations, and he contends they’re in the conflicted position of having to make profits at member hospitals’ expense.
“At the end of the day, the shareholders are the hospitals you are supposed to be serving,” he said. “What comes first, the hospitals or the (GPO’s) administrative fees? It’s hypocrisy.”
MedAssets works with local systems and aims to get them on the same page with supply order. That’s important in gaining the largest discounts possible from medical device companies, which often benefit from disorganized markets. Bardis contends that large national GPO approaches are ineffective in getting the lowest prices from device manufacturers.