MedAssets (MDAS) operates a cloud platform that helps hospitals find ways to mitigate costs and boost revenues. Some of the capabilities include clinical documentation, pricing analysis, supply chain optimization, claims processing, accounts receivable services, and charge capture.
As one might imagine, the market demand for this technology is massive. Drivers include government pressure to lower reimbursements; the complexities of regulations; the negotiating leverage from managed-care organizations; and the impact of Obamacare, which is likely to result in a surge in hospital stays.
Since hospitals already have to get by on small operating margins (often around 3%), they have turned increasingly to automation — a trend that has certainly benefited MedAssets.
From 2008 to 2012, MedAssets’ revenues have zoomed from $280 million to $640 million — and that’s out of a total market opportunity that MDAS estimates at $13 billion. Plus, operating income has doubled in that time. as operating income doubled to $85 million. Meanwhile, MDAS is outperforming the market by a few percentage points with 22% year-to-date gains.
Considering the megatrends pushing the industry forward, you can expect this growth ramp and stock performance to continue for the long haul.