Company Reports Revenue and Contract Value Growth of 18%, Earnings per Diluted Share of $0.29, and Raises Revenue and Earnings Guidance

WASHINGTON, July 29 /PRNewswire-FirstCall/ -- The Advisory Board Company (Nasdaq: ABCO) today announced financial results for the quarter ended June 30, 2010, the first quarter of its fiscal year.  Revenue for the quarter increased 17.6% to $66.7 million, from $56.7 million in the quarter ended June 30, 2009.  Contract value increased 17.8% to $274.4 million as of June 30, 2010, up from $232.8 million as of June 30, 2009. Net income was $4.6 million, or $0.29 per diluted share for the quarter ended June 30, 2010, compared to net income of $4.2 million, or $0.27 per diluted share, for the same period a year ago.  EBITDA was $9.5 million for the quarter, compared to $7.5 million in the first quarter of fiscal 2010.

Robert Musslewhite, Chief Executive Officer of The Advisory Board Company, commented, "We are pleased with our performance for the quarter and with the continuation of our good start to 2010, as we see an ongoing return from the investment strategy we pursued last year.  While our members face a unique period of tremendous change and uncertainty, they are attaching more value than ever to our agendas, tools, and services, and we continue to deliver strong and measurable bottom-line impact to them through our work.  We are gratified that we are able to sustain both our stable financial performance and our position as trusted advisor and leading service provider to the health care industry through the meaningful impact we consistently have on our members' most critical—and most complex—problems."

Mr. Musslewhite continued, "One area of tremendous complexity for our members is the Information Technology terrain, and I am pleased to announce today the launch of our Applications and Technologies Collaborative.  This renewable research program provides member CIOs and professional IT staff with detailed research on emerging and disruptive technologies, delivering the information required to choose and implement these technologies to achieve health system goals while minimizing risk.  Through our team of expert analysts, the Applications and Technologies Collaborative provides guidance on how to work with IT vendors to achieve necessary capabilities, along with ongoing coverage of such evergreen areas as Electronic Medical Records and Computerized Physician Order Entry adoption, clinical decision support systems, and data interoperability.  Member reaction has been extremely positive thus far, with much excitement about the program's focus on key enterprise applications that impact critical operations, as well as support tailored to the specific stage of EMR adoption as measured by the HIMSS Analytics 7-stage EMR Adoption Model(SM). We have assembled a fantastic roster of charter members, including Rush University Medical Center, University of Maryland Medical Center, Banner Health, Scripps Health, and University of Texas MD Anderson Cancer Center.  Because the program delivers the information that each member institution needs to make sound investments in IT and to achieve health system objectives, we are confident in its prospects for future growth."

Share Repurchase

During the three months ended June 30, 2010, the Company repurchased 52,340 shares of its common stock at a total cost of approximately $2.0 million.  To date the Company has repurchased 7,384,081 shares of its common stock at a total cost of approximately $310.0 million.

Outlook for Calendar Year 2010  

The Company is raising its revenue growth guidance for calendar year 2010 to a range of approximately 15% to 17% over calendar year 2009, up from 13% to 15% growth over calendar year 2009.  The Company is also raising its guidance for calendar year 2010 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 $37 million to $41 million, up from a range of $35.5 million to $40.5 million.  For calendar year 2010, the Company is increasing its non-GAAP earnings per diluted share, which excludes the per share effect, net of tax, of the costs associated with the acquisition of Concuity that were incurred in the quarter ended March 31, 2010, to a range of approximately $1.15 to $1.30, up from a range of $1.11 to $1.27.  For the remainder of calendar year 2010, the Company expects an effective tax rate of approximately 35.5% to 36.5%.

Non-GAAP Financial Measures

This press release and the accompanying tables include a discussion of EBITDA, adjusted EBITDA 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; and depreciation and amortization. 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; and costs associated with the acquisition of Concuity that were incurred in the quarter ended March 31, 2010.  The term "Non-GAAP earnings per diluted share" refers to net income per share excluding the per share effect, net of tax, of 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 first quarter performance this evening, July 29, 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 866.362.4831 and the access code is 35958435.  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, July 29, until 8:30 p.m. Thursday, August 5, 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 July 29, 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 June 30, 2010, which will be filed with the SEC in August 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