One company's announcement that it is planning an initial public offering of stock is expected to throw a new wrinkle into a competitive group purchasing market.
MedAssets Inc, an Alpharetta, Ga-based company offering a variety of solutions for healthcare organizations, announced its IPO last week.
MedAssets' business lines include revenue cycle management, decision support and operations improvement, but it also has a footprint in group purchasing through its MedAssets Supply Chain Systems.
MedAsset product lines also include supply chain analytics. It competes for market share in the group purchasing arena with several large not-for-profit organizations, including Premier Inc. and VHA.
Premier issued a brief statement regarding the MedAssets IPO, saying Premier was fully owned by its member hospitals and health systems and that all benefits of its operations were intended to accrue to its members. Other GPOs did not comment on the MedAssets announcement.
In its S-1 filing with the Securities and Exchange Commission on August 24, MedAssets indicated that it plans to sell an undetermined number of shares to raise as much as $230 million. Morgan Stanley, Lehman Brothers, Deutsche Bank Securities, Goldman Sachs & Co., Piper Jaffray, William Blair & Co. and Wachovia Securities are listed as underwriters on the filing.
MedAssets said it had net revenue of $146.2 million in the year ended December 31, 2006. It splits its products into two general categories, revenue management and spend management. Two-thirds of its revenue in 2006 was related to "spend management," it reported.
"Our customer base currently includes over 125 health systems and, including those that are part of our health system customers, more than 2,500 acute care hospitals and approximately 30,000 ancillary or non-acute provider locations," the MedAssets filing stated. "We estimate the total addressable market for our revenue cycle management and spend management solutions to be $6.5 billion."
MedAssets' filing said net proceeds of the offering would be used to repay an unspecified amount of debt and for general corporate purposes. Proceeds also might be used to fund potential acquistions of "complementary businesses, technologies or (for) other assets."
In detailing risks for potential investors, MedAssets highlights that "intense competition" could limit its ability to maintain or expand marketshare.