NEW YORK (TheStreet) -- Shares of MedAssets (MDAS) were falling 9.2% to $21.42 Tuesday after activist investor Starboard Value disclosed a stake in the healthcare technology company.

Starboard disclosed that it now owns 5.2 million shares of MedAssets, giving it an 8.7% stake in the company, according to The Wall Street Journal. In a letter to the company, Starboard called for an overhaul of MedAssets' operations and board of directors.

"We question the independence of these directors and believe some directors may have been on the board too long to view certain strategic and managerial decisions objectively or to fairly consider alternative perspectives," Starboard managing member Peter A. Feld said in the letter

The activist investor called for the company to give shareholders greater control, including the ability to call special meetings and act by written consent, which would let shareholders replace members of the board of directors or change bylaws, according to the Journal.

Staboard said it views MedAssets' stock as "deeply undervalue." The activist investor hopes to bring the company's stock price to about $37 or as high as $46 by the end of 2016.

TheStreet Ratings team rates MEDASSETS INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate MEDASSETS INC (MDAS) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally higher debt management risk and disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • MDAS's revenue growth trails the industry average of 33.8%. Since the same quarter one year prior, revenues slightly increased by 8.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has increased to $46.64 million or 41.09% when compared to the same quarter last year. In addition, MEDASSETS INC has also modestly surpassed the industry average cash flow growth rate of 33.17%.
  • The gross profit margin for MEDASSETS INC is currently very high, coming in at 75.77%. Regardless of MDAS's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, MDAS's net profit margin of 3.31% is significantly lower than the industry average.
  • Currently the debt-to-equity ratio of 1.85 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. To add to this, MDAS has a quick ratio of 0.53, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Health Care Technology industry and the overall market, MEDASSETS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • You can view the full analysis from the report here: MDAS Ratings Report