Quadramed 8-K Results of Operations and Financial Condition

EXHIBIT 99.2

FOR IMMEDIATE RELEASE

CONTACT:

Benjamin K. Stephen

Director, Investor Relations

703-904-5539

bstephen@quadramed.com

David L. Piazza

Vice President, Finance

703-742-5312

dpiazza@quadramed.com

QUADRAMED ANNOUNCES 2^nd QUARTER 2004 RESULTS

RESTON, VA – (August 4, 2004) – QuadraMed Corporation (OTCBB: QMDC.OB) announced today its second quarter 2004 financial results. Revenues were $31.9 million for the second quarter, representing an increase of 8% over the same period in 2003. Net Loss for the quarter was $(9.7) million, which includes a $3.1 million loss in connection with the early retirement of debt; not including this early retirement loss, the loss was $(6.6) million compared to a Net Loss of $(6.3) million for the second quarter of 2003.

Other second quarter highlights include:

• the acquisition of Tempus Software, Inc., a Jacksonville, Florida based enterprise scheduling software vendor;

• a sale of a comprehensive Affinity HIS, including access and care and financial management products to Gillette Children’s Specialty Healthcare in St. Paul, Minnesota;

• the issuance of $100 million, 5.5% Cumulative Mandatory Convertible Preferred Stock, the proceeds from which were substantially used to repay all of the Company’s outstanding debt;

• a tender offer to repurchase all of the 10% Senior Secured Notes due 2008, and a redemption call of all of the 5.25% Convertible Subordinated Notes due 2005. (Since only a portion of these Notes were actually retired as of June 30, 2004, we have included a pro forma balance sheet as of June 30, 2004 presenting as if the full retirement of both Notes issues had been completed by June 30, 2004. The remaining Notes were retired subsequent to June 30, 2004 at a loss of $11.9 million. Please see Exhibit 4.)

QuadraMed’s Report on Form 10-Q for the Quarterly Period Ended June 30, 2004 which was filed on August 4, 2004, and other SEC filings can be accessed through the Investor Relations section of our website, www.quadramed.com, or through the SEC’s EDGAR Database at www.sec.gov (QuadraMed has EDGAR CIK No. 0001018833).

Management will review these results in an investment community conference call at 8:00 AM Eastern (5:00 AM Pacific) on Tuesday, August 10^th. To ensure fair dissemination of information, no inquiries of management should be made regarding QuadraMed’s results until after the conference call. A brief question and answer period will follow management’s presentation. The dial-in number for the conference call is 800-289-0468 for domestic participants, and 913-981-5517 for international. Callers should dial in by 7:45 AM Eastern (4:45 AM Pacific) to register. The call will also be webcast live and available to the public via the Investor Relations section of QuadraMed’s Webpage at www.quadramed.com. Please note that the webcast is listen-only. Listeners should access the website at 7:45 AM Eastern (4:45 AM Pacific) to register and to download and install any necessary audio software. Webcast replays will be available shortly after the live call’s completion.

Attachments	Exhibit 1	Condensed Consolidated Balance Sheets as of June 30, 2004 Pro Forma; June 30, 2004; and December 31, 2003
	Exhibit 2	Condensed Consolidated Statements of Operations for Three months ended June 30, 2004 and June 30, 2003; and for Six months ended June 30, 2004 and June 30, 2003
	Exhibit 3	Condensed Consolidated Statements of Cash Flows for Six months ended June 30, 2004 and June 30, 2003
	Exhibit 4	Note 15. Subsequent Events

About QuadraMed Corporation

QuadraMed is dedicated to improving healthcare delivery by providing innovative healthcare information technology and services. From clinical and patient information management to revenue cycle and health information management, QuadraMed delivers real-world solutions that help healthcare professionals deliver outstanding patient care with optimum efficiency. Behind our products and services is a staff of more than 900 professionals whose experience and dedication to service has earned QuadraMed the trust and loyalty of customers at more than 2,000 healthcare provider facilities. To find out more about QuadraMed, visit www.quadramed.com.

Cautionary Statement on Risks Associated with QuadraMed’s Forward-Looking Statements

This press release contains forward-looking statements by QuadraMed within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to risks and uncertainties. The words “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” “may,” “should,” “could,” and similar expressions are intended to identify such statements. Forward-looking statements are not guarantees of future performance and are to be interpreted only as of the date on which they are made. QuadraMed undertakes no obligation to update or revise any forward-looking statement except as required by law. QuadraMed advises investors that it discusses risk factors and uncertainties that could cause QuadraMed’s actual results to differ from forward-looking statements in its periodic reports filed with the Securities and Exchange Commission (“SEC”).

Note to editors: QuadraMed is a registered trademark of QuadraMed Corporation. All other trademarks are the property of their respective owners.

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Exhibit 1

QUADRAMED CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except percentages and per share amounts)

	Pro Forma June 30, 2004 (See Exhibit 4)			June 30, 2004			December 31, 2003
	(unaudited)			(unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	28,230		$	91,400		$	36,944
Accounts receivable, net		27,584			27,584			30,872
Unbilled and other receivables		7,582			7,582			6,218
Prepaid expenses and other current assets		10,129			10,129			11,268
Total current assets		73,525			136,695			85,302
Restricted cash		3,889			3,889			5,523
Property and equipment, net		6,867			6,867			5,643
Capitalized software development costs, net		2,128			2,128			3,219
Goodwill		32,340			32,340			18,445
Other intangible assets, net		10,032			10,032			6,992
Other long-term assets		7,115			7,852			8,031
Total assets	$	135,896		$	199,803		$	133,155
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities
Accounts payable and accrued expenses	$	2,815		$	2,815		$	2,914
Accrued payroll and related		9,156			9,156			11,100
Accrued interest		—			1,126			1,912
Accrued dividends payable		14,051			14,051			—
Other accrued liabilities		6,103			6,103			7,866
Deferred revenue		50,325			50,325			48,502
Total current liabilities		82,450			83,576			72,294
10% Senior Secured Notes due 2008, net		—			50,783			61,233
5.25% Convertible Subordinated Notes due 2005		—			56			11,931
Other long-term liabilities		4,667			4,667			4,580
Total liabilities		87,117			139,082			150,038
Stockholders’ equity (deficit)
Preferred stock, $0.01 par, 5,000 shares authorized, 4,000 and 0 shares issued and outstanding, respectively		82,080			82,080			—
Common stock, $0.01 par, 150,000 shares authorized; 39,657 and 28,871 shares issued, respectively		397			397			290
Treasury stock at cost, 0 and 200 shares, respectively		—			—			(822	)
Additional paid-in-capital		301,007			301,007			292,716
Deferred compensation and accumulated other comprehensive loss		(2,437	)		(2,437	)		(2,951	)
Accumulated deficit		(332,268	)		(320,326	)		(306,116	)
Total stockholders’ equity (deficit)		48,779			60,721			(16,883	)
Total liabilities and stockholders’ equity (deficit)	$	135,896		$	199,803		$	133,155

Exhibit 1 to Press Release dated August 4, 2004

Exhibit 2

QUADRAMED CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(unaudited)

	Three months ended June 30,						Six months ended June 30,
	2004			2003			2004			2003
Revenue
Services	$	4,849		$	4,716		$	9,276		$	9,461
Maintenance		10,126			9,192			20,229			17,766
Installation and other		4,706			4,382			9,642			8,556
Services and other revenue		19,681			18,290			39,147			35,783
Licenses		11,182			10,161			23,673			19,717
Hardware		1,035			985			5,548			3,171
Total revenues		31,898			29,436			68,368			58,671
Cost of revenue
Cost of services and other revenue		9,541			11,133			19,156			21,786
Cost of licenses revenue		3,497			1,772			6,555			3,610
Cost of hardware revenue		775			622			3,606			2,437
Total cost of revenue		13,813			13,527			29,317			27,833
Gross margin		18,085			15,909			39,051			30,838
Operating expenses
General and administration		8,217			8,714			17,528			20,811
Software development		6,835			5,032			13,945			10,325
Sales and marketing		6,029			4,810			11,855			10,522
Amortization of intangible assets and depreciation		1,154			1,498			2,409			3,028
Total operating expenses		22,235			20,055			45,737			44,686
Loss from operations		(4,150	)		(4,146	)		(6,686	)		(13,848	)
Other income (expense)
Interest expense		(2,416	)		(3,042	)		(4,904	)		(4,105	)
Interest income		127			130			244			287
Other income (expense), net		(85	)		784			118			714
Loss on retirement of debt		(3,145	)		—			(3,145	)		—
Other income (expense)		(5,519	)		(2,128	)		(7,687	)		(3,104	)
Loss before income taxes		(9,669	)		(6,274	)		(14,373	)		(16,952	)
Provision for income taxes		—			—			163			—
Net loss	$	(9,669	)	$	(6,274	)	$	(14,210	)	$	(16,952	)
Loss per share
Basic and diluted	$	(0.28	)	$	(0.23	)	$	(0.44	)	$	(0.63	)
Weighted average shares outstanding
Basic and diluted		34,872			27,171			32,014			27,094

Exhibit 2 to Press Release dated August 4, 2004

Exhibit 3

QUADRAMED CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

	Six months ended June 30,
	2004			2003
Cash flows from operating activities
Net loss	$	(14,210	)	$	(16,952	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		5,646			6,023
Provision for bad debts and other		1,092			176
Loss on retirement of debt		2,302			—
Changes in assets and liabilities, net of effects of acquisition:
Accounts receivable		4,108			(417	)
Prepaid expenses and other		398			(1,173	)
Accounts payable and accrued liabilities		(6,083	)		(618	)
Deferred revenue		(944	)		7,563
Cash used in operating activities		(7,691	)		(5,398	)
Cash flows from investing activities
Proceeds from sale of assets and available-for-sale securities		76			4,249
Decrease in restricted cash		1,557			221
Acquisition of Détente		(4,074	)		—
Acquisition of Tempus		(5,052	)		—
Capitalized software development costs		—			(578	)
Capital expenditures		(2,293	)		(1,270	)
Cash provided by (used in) investing activities		(9,786	)		2,622
Cash flows from financing activities
Proceeds from issuance of common and treasury stock		1,570			107
Proceeds from issuance of preferred stock, net of issuance cost		96,131			—
Issuances (repayments) of Notes, net		(25,768	)		8,480
Cash provided by financing activities		71,933			8,587
Net increase in cash and cash equivalents		54,456			5,811
Cash and cash equivalents, beginning of period		36,944			23,663
Cash and cash equivalents, end of period	$	91,400		$	29,474
Supplemental disclosure of cash flow information
Cash paid for interest	$	2,482		$	1,854
Net cash refunded for taxes		(163	)		(4	)
Supplemental disclosure of non cash flow information
Issuance of common stock upon acquisition of Tempus	$	7,651		$	—

Exhibit 3 to Press Release dated August 4, 2004

Exhibit 4

QUADRAMED CORPORATION

EXCERPT FROM REPORT ON FORM 10-Q

FOR THE QUARTER ENDED JUNE 30, 2004

NOTE 15. SUBSEQUENT EVENTS

Subsequent to June 30, 2004, the Company retired all of its remaining $58.7 million of the 2008 Notes and $56,000 of the 2005 Notes. Total cash payment was $63.2 million, which includes additional interest expense of $54,000 subsequent to June 2004. Total loss recorded on the retirement of debt in July 2004 was approximately $11.9 million, which includes premiums of $2.9 million and write-offs of remaining balances of debt offering costs of $737,000, discount to the 2008 Notes of $7.9 million and effective interest rate adjustment of $339,000.

The following is a pro forma balance sheet presenting the effect of the retirement as if the remaining Notes had been retired as of June 30, 2004 and the related loss recorded as of June 30, 2004 (in thousands, unaudited):

	June 30, 2004			Debt retirement subsequent to June 30, 2004			Pro Forma June 30, 2004
Assets
Current assets
Cash and cash equivalents	$	91,400		$	(63,170	)	$	28,230
Other current assets		45,295			—			45,295
Total current assets		136,695			(63,170	)		73,525
Long-term assets		63,108			(737	)		62,371
Total assets	$	199,803		$	(63,907	)	$	135,896
Liabilities and stockholders’ equity (deficit)
Current liabilities
Accounts payable and accrued expenses	$	11,971		$	—		$	11,971
Accrued interest		1,126			(1,126	)		—
Accrued dividends payable		14,051			—			14,051
Deferred revenue and other accrued liabilities		56,428			—			56,428
Total current liabilities		83,576			(1,126	)		82,450
10% Senior Secured Notes due 2008		50,783			(50,783	)		—
5.25% Convertible Subordinated Notes due 2005		56			(56	)		—
Other long-term liabilities		4,667			—			4,667
Total liabilities		139,082			(51,965	)		87,117
Stockholders’ equity (deficit)
Preferred stock		82,080			—			82,080
Common stock		397			—			397
Additional paid-in-capital		301,007			—			301,007
Deferred compensation and accumulated other comprehensive loss		(2,437	)		—			(2,437	)
Accumulated deficit		(320,326	)		(11,942	)		(332,268	)
Total stockholders’ equity (deficit)		60,721			(11,942	)		48,779
Total liabilities and stockholders’ equity (deficit)	$	199,803		$	(63,907	)	$	135,896

Exhibit 4 to Press Release dated August 4, 2004