MedAssets is cutting costs after several quarters of falling profits.
The Alpharetta, Ga.-based healthcare group purchasing and performance improvement company will cut 180 full-time jobs, about 5% of its workforce, by year-end 2015, according to a recent regulatory filing.
It also plans to eliminate a number of open full-time positions, close an office location and reduce non-employee expenses, including professional services and vendor fees.
Cuts to non-employee expenses will come from the company's human resources, information technology, legal and marketing departments.
But while the layoffs alone are expected to save the company about $21 million annually, the restructuring will cost MedAssets about $11 million, with about $5 million attributed to the third quarter and $6 million to the fourth.
Over 80% of the restructuring costs are related to termination benefits.
MedAssets also said it would cut certain products from its Revenue Cycle Management offerings to “reallocate its resources to invest for future growth.” Those changes are expected to result in a non-cash “software impairment expense” of $11 million.
Baird Analyst Eric Coldwell said in a note Wednesday that the restructuring program is “an expected step in the right direction” as new leaders at MedAssets begin to implement a turnaround plan. He said he views it as a “cushion rather than upside” for expectations for 2016.
Profits fell 4.3% in the second quarter ended June 30, as $556,000 in restructuring, acquisition and integration-related costs contributed to a 9% increase in expenses. In the first quarter of the year, profits were down 56.3%, with 15% higher expenses, again because of the restructuring and M&A.
Restructuring and M&A-related expenses have cost MedAssets $5 million between the first and second quarter.
MedAssets didn't update its previous guidance for fiscal 2015, which it lowered in the second quarter.
Excluding contributions from its new consulting arm, Sg2, the company had said that it expects revenue growth of 0.1% to 1.8%.
