The Advisory Board Company Reports Results for Quarter Ended September 30, 2010

WASHINGTON, Nov. 4, 2010 /PRNewswire-FirstCall/ -- The Advisory Board Company (Nasdaq: ABCO) today announced financial results for the quarter ended September 30, 2010, the second quarter of its 2011 fiscal year.  Revenue for the quarter increased 21.9% to $71.1 million, from $58.3 million in the quarter ended September 30, 2009.  Contract value increased 19.8% to $284.7 million as of September 30, 2010, up from $237.6 million as of September 30, 2009. For the quarter ended September 30, 2010, net income was $4.9 million, or $0.30 per diluted share, and EBITDA was $9.4 million.  For the quarter ended September 30, 2009, net loss was $2.1 million, or $0.14 per diluted share, and, excluding certain non-cash charges, adjusted net income was $4.0 million, non-GAAP earnings per diluted share were $0.26, and adjusted EBITDA was $7.5 million.

For the six months ended September 30, 2010, revenue increased 19.8% to $137.8 million, from $115.0 million for the six months ended September 30, 2009. Net income was $9.5 million, or $0.59 per diluted share, and EBITDA was $19.0 million.  For the six months ended September 30, 2009, net income was $2.1 million, or $0.13 per diluted share, and, excluding certain non-cash charges, adjusted net income was $8.2 million, non-GAAP earnings per diluted share were $0.53, and adjusted EBITDA was $15.0 million.

Robert Musslewhite, Chief Executive Officer of The Advisory Board Company, commented, "We are pleased with our performance for the quarter.  As health systems seek to navigate this period of enormous change in the industry, we are seeing strong attachment in the market to our agendas, tools, and services, as well as tremendous utilization by current members.  Perhaps most importantly, members also continue to credit our work with specific improvements to their bottom lines, cementing our sustained relationships with them and providing the foundation for additional relationship expansion.  It is this strong value that we provide our members that has driven the ongoing momentum that we have seen across the year, as well as our return to solid top and bottom line growth."

Mr. Musslewhite continued, "I am also pleased to announce today two new program launches. The first, the Employee Health Performance Program, provides hospitals the key tools necessary to improve care while reducing waste and avoidable benefits costs for their employee populations.  Through best practice research, peer networking, and access to a robust, web-based software tool, the renewable program helps members increase appropriate care for their employees, resulting in improved outcomes, reduced costs of care, and a strong track record to help member health systems succeed under new payment models that entail the assumption of additional risk.  We have established a strong charter membership for the program, including Yale New Haven Health System, Stanford Hospital and Clinics, Scripps Health, Johns Hopkins Health System, and Sutter Health. The program is off to a good start, and we are very excited about its potential."

Mr. Musslewhite concluded, "Our second launch, the Community College Executive Program, builds on our growing portfolio in the higher education market.  As highlighted by the October 5 White House Summit on Community Colleges, these institutions are critical in preparing the country's future work force and enhancing U.S. competitiveness in a global economy.  Yet, while the community college mission has perhaps never been more important, these institutions face tremendous complexity.  Record enrollments coupled with severe funding pressure create a host of challenges across community college finances, campus management, academic affairs, and student services. The Community College Executive Program is a renewable research membership program that provides best practice research, peer networking, and benchmarking tools to help community college presidents and their leadership teams address these key operational and strategic issues.  As always, we have established a strong charter membership for the program, including Houston Community College District, Northern Virginia Community College, and Ivy Tech Community College System.  These institutions are providing valuable input on program design, and we are working intensely with them and our other charter members to build a successful program."

Share Repurchase

During the three months ended September 30, 2010, the Company repurchased 59,427 shares of its common stock at a total cost of approximately $2.5 million.  To date, the Company repurchased 7,443,508 shares of its common stock at a total cost of approximately $312.5 million.

Outlook for Calendar Year 2010  

The Company is updating its calendar year 2010 guidance for revenue growth to at least 17% over calendar year 2009.  The Company is also updating its calendar year 2010 guidance for adjusted EBITDA, which excludes costs associated with the acquisition of Concuity that were incurred in the quarter ended March 31, 2010, to a range of approximately $38 million to $40 million, and for non-GAAP earnings per diluted share to a range of approximately $1.20 to $1.28.

Non-GAAP Financial Measures

This press release and the accompanying tables include a discussion of EBITDA, adjusted EBITDA, adjusted net income, and non-GAAP earnings per diluted share, which are non-GAAP financial measures provided as a complement to the results provided in accordance with accounting principles generally accepted in the United States of America ("GAAP").  As used in this release, the term "EBITDA" refers to a financial measure that we define as earnings before other income, net, which includes interest income and foreign currency losses and gains; income taxes; depreciation and amortization; and amortization of acquisition-related intangibles included in cost of services. The term "adjusted EBITDA" refers to a financial measure that we define as earnings before other income, net, which includes interest income and foreign currency losses and gains; income taxes; depreciation and amortization; amortization of acquisition-related intangibles included in cost of services; non-cash charges associated with the write-off of capitalized software and the cancellation of certain stock options that occurred in the quarter ending September 30, 2009; and costs associated with the acquisition of Concuity that occurred in the quarter ended March 31,2010.  The term "adjusted net income" refers to net income excluding the net of tax effect of non-cash charges associated with the write-off of capitalized software and the cancellation of certain stock options, and costs associated with the acquisition of Concuity.  "Non-GAAP earnings per diluted share" refers to net income per share excluding the per share effect, net of tax, of non-cash charges associated with the write-off of capitalized software and the cancellation of certain stock options, and the costs associated with the acquisition of Concuity.  These non-GAAP measures may be calculated differently from similarly titled measures used by other companies and should be considered in addition to financial measures prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP measures or results. We use these non-GAAP financial measures for internal budgeting and other managerial purposes because it enables the Company's management to evaluate projected operating results on a basis that allows for comparability without regard to changes arising from applicable tax rates, variability in interest income and foreign currency exchange rates, periodic costs of certain capitalized tangible and intangible assets, and certain non-cash and special charges.

There are limitations associated with EBITDA and adjusted EBITDA, including that they do not reflect all changes in applicable tax rates, foreign currency exchange rates, or the periodic costs of certain capitalized tangible and intangible assets used in generating revenue in our business.  A reconciliation of these non-GAAP measures to GAAP results is provided below.

Web and Conference Call Information

The Company will hold a conference call to discuss its second quarter performance this evening, November 4, 2010 at 5:30 p.m. Eastern Time.  The conference call will be available via live web cast on the Company's web site at www.advisoryboardcompany.com/IR.  To participate by telephone, the dial-in number is 866.761.0749 and the access code is 10095334.  Investors are advised to dial-in at least five minutes prior to the call to register.  The web cast will be archived for seven days from 8:30 p.m. Thursday, November 4, until 8:30 p.m. Thursday, November 11, 2010.

About The Advisory Board Company

The Advisory Board Company provides best practices research and analysis, business intelligence and software tools, and installation support and management and advisory services to approximately 2,985 organizations, including hospitals, health systems, pharmaceutical and biotech companies, health care insurers, medical device companies, colleges, universities, and other educational institutions.  Members of each program typically are charged a fixed fee and have access to an integrated set of services that may include best practice research studies, executive education seminars, customized research briefs, web-based access to the program's content database, and software tools.

Forward-Looking Statements

This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  These statements are based on information available to the Company as of November 4, 2010, the date of this news release, as well as the Company's current projections, forecasts, and assumptions, and involve risks and uncertainties.  You are hereby cautioned that these statements may be affected by certain factors, including those set forth below.  Consequently, actual operations and results may differ materially from the results discussed in the forward-looking statements, and reported results should not be considered as an indication of future performance.  Factors that could cause actual results to differ materially from those indicated by forward-looking statements include, among others, changes in the financial condition of the health care industry, our dependence on renewal of membership-based services, the need to attract new business and retain current members and qualified personnel, new product development, competition, risks associated with our software tools and installation support tools, our ability to license technology from third parties, risks associated with anticipating market trends, industry consolidation, variability of quarterly operating results, possible volatility in the Company's stock price, and various factors related to income and other taxes, including whether the District of Columbia withdraws the Company's status as a Qualified High-Tech Company, as well as those risks and uncertainties described in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2010 and also disclosed from time to time in its subsequent reports on Form 10-Q and Form 8-K, which are available on the Company's website at www.advisoryboardcompany.com/IR and at the SEC's website at www.sec.gov.  Additional information will also be set forth in the Company's report on Form 10-Q for the quarter ended September 30, 2010, which will be filed with the SEC in November 2010.  

Accordingly, readers are cautioned not to place undue reliance on forward-looking statements made in this news release, which speak only as of the date of this news release, and the Company does not undertake to update these statements, whether as a result of circumstances or events that arise after the date they are made, new information, or otherwise.

SOURCE The Advisory Board Company