Quadramed 8-K Quadramed Corporation Announces Third Quarter Results

Exhibit 99.1

FOR IMMEDIATE RELEASE

CONTACT:

Investor Relations

703-742-5393

InvestorRelations@quadramed.com

QUADRAMED CORPORATION ANNOUNCES THIRD QUARTER RESULTS

Net (Loss) of $(4.0) million includes cash and non-cash charges of $4.7 million

RESTON, VA – (November 9, 2005) — QuadraMed Corporation (Amex:QD) announced today that it will report a Net Loss of $(4.0) million before preferred stock accretion for the third quarter of 2005, compared to a loss of $(16.3) million for the same period in 2004. For the nine months ended September 30, 2005, Net Loss before preferred stock accretion is $(5.2) million compared to a Net Loss of $(30.5) million for the nine months ended September 30, 2004.

Loss from operations is $(2.8) million for the third quarter of 2005 compared to a Loss from operations of $(3.7) million for the same period in 2004. For the nine months ended September 30, 2005 Loss from operations is $(2.2) million, compared to a loss of $(8.6) million for the nine months ended September 30, 2004.

Included in the three month and nine month periods ended September 30, 2005, are certain cash and non-cash charges totaling $4.7 million and $6.3 million, respectively, as follows:

• non-cash charges of $1.1 million related to the Company’s abandoned San Rafael, CA headquarters;

• non-cash charges of $.8 million during the three month period related to the Company’s abandoned San Marcos, CA facility, the former home of its Financial Services division that was closed in February 2005; at that time, an additional $1.0 million non cash charge was recorded in connection with this lease, for a total of $1.8 million for the nine month period ended;

• executive severance expense of $3.2 million in the three month period ended September 30, 2005, of which $2.3 million is cash, and $.9 million is non-cash, all due to the recently announced departures of three executives; in addition, $.6 million of non-cash severance expense was recorded in January 2005 related to the departure of another executive, for a total of $3.8 million for the nine month period ended September 30, 2005;

• gain on the sale of the EDI division of $.4 million;

On a pro forma basis, excluding the effects of the items above,Pro forma Net Income (Loss) before preferred stock accretion would have beenPro forma Net Income of $.7 million for the three months ended September 30, 2005, andPro forma Net Income of $1.1 million for the nine months ended September 30, 2005. Further on a pro forma basis, excluding the effects of certain of the items above,Pro forma Income (Loss) from operationswould have beenPro forma Income from operations of $1.1 million for the three months ended September 30, 2005, andPro forma Income from operations of $2.3 million for the nine months ended September 30, 2005.

The Company will also report Net Loss attributable to common shareholders of $(5.2) million for the third quarter of 2005 compared to $(17.6) million for the same period in 2004. For the nine months ended September 30 2005, the Company will report a Net Loss attributable to common shareholders of $(8.8) million compared to $(31.9) million for the nine months ended September 30, 2004.

EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) was negative $(.2) million for the third quarter of 2005 compared to EBITDA of negative $(2.0) million for the same period in 2004 after further giving effect to the loss on retirement of debt in that 2004 period. EBITDA for the nine months ended September 30, 2005 was positive $4.7 million, compared to EBITDA of negative $(3.1) million for the same period in 2004 after further giving effect to the loss on retirement of debt in that 2004 period.

The period to period improvements in the noted measurements are primarily a result of significantly lower operating expenses and non-operating expenses for the periods ended September 30, 2005.

Cash provided by operating activities was $6.0 million for the third quarter of 2005 compared to cash used in operations of $(2.0) million for the same period in 2004. For the nine months ended September 30 2005, cash provided by operating activities was $14.1 million compared to cash used in operating activities of $(9.7) million for the nine months ended September 30, 2004.

Management will review these results in an investment community conference call at 4:00 PM Eastern (1:00 PM Pacific) on Wednesday, November 9th. 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 800-967-7141 domestic, and 719-457-2630 international. Callers should dial in by 3:45 PM Eastern (12:45 PM 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 3:45 PM Eastern (12:45 PM Pacific) to register and to download and install any necessary audio software. Webcast replays will be available shortly after the live call is completed.

Attachments	Exhibit 1	Condensed Consolidated Balance Sheets as of September 30, 2005 (unaudited) and December 31, 2004
	Exhibit 2	Condensed Consolidated Statements of Operations (unaudited) for the Three and Nine months ended September 30, 2005 and 2004
	Exhibit 3	Condensed Consolidated Statements of Cash Flows (unaudited) for the Three and Nine months ended September 30, 2005 and 2004
	Exhibit 4	Reconciliation of EBITDA and Non-GAAP Measurements

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 almost 700 professionals whose experience and dedication to service has earned QuadraMed the trust and loyalty of customers at approximately 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 as defined in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 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”).

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

###

Exhibit 1

QUADRAMED CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)

(unaudited)

	September 30, 2005			December 31, 2004
ASSETS
Current assets
Cash and cash equivalents	$	33,992		$	22,429
Accounts receivable, net of allowance for doubtful accounts of $4,597 and $3,303, respectively		26,062			25,550
Unbilled and other receivables		3,092			6,603
Notes and other receivables		563			832
Prepaid expenses and other current assets		9,425			8,001
Total current assets		73,134			63,415
Restricted cash		2,350			3,889
Property and equipment, net		4,122			5,129
Capitalized software development costs, net		698			1,427
Goodwill		25,983			25,983
Other intangible assets, net		8,413			12,451
Other long-term assets		4,631			7,116
Total assets	$	119,331		$	119,410
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable and accrued expenses	$	4,017		$	4,501
Accrued payroll and related		9,624			7,637
Other accrued liabilities		8,728			8,549
Dividends payable		10,311			13,780
Deferred revenue		50,025			44,040
Total current liabilities		82,705			78,507
Accrued exit cost of facility closing		4,021			2,898
Other long-term liabilities		2,482			5,366
Total liabilities		89,208			86,771
Stockholders’ equity
Preferred stock, $ 0.01 par, 5,000 shares authorized, 4,000 shares issued and outstanding		87,008			83,412
Common stock, $ 0.01 par, 150,000 shares authorized; 40,683 and 40,043 shares issued and outstanding, respectively		407			400
Additional paid-in-capital		302,044			301,231
Deferred compensation		—			(1,870	)
Accumulated other comprehensive loss		(168	)		(124	)
Accumulated deficit		(359,168	)		(350,410	)
Total stockholders’ equity		30,123			32,639
Total liabilities and stockholders’ equity	$	119,331		$	119,410

Exhibit 1 to Press Release dated November 9, 2005

Exhibit 2

QUADRAMED CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(unaudited)

	Three months ended, September 30,						Nine months ended September 30,
	2005			2004			2005			2004
Revenue
Services	$	2,824		$	2,924		$	9,448		$	8,947
Maintenance		13,767			12,839			41,152			36,149
Installation and other		3,196			3,276			8,300			9,837
Services and other revenue		19,787			19,039			58,900			54,933
Licenses		10,009			9,562			30,143			33,236
Hardware		250			2,175			2,061			7,723
Total revenue		30,046			30,776			91,104			95,892
Cost of revenue
Cost of services and other revenue		7,326			7,670			21,764			22,976
Royalties and other		2,385			2,173			6,811			7,637
Amortization of acquired technology and capitalized software		1,014			791			3,073			2,142
Cost of license revenue		3,399			2,964			9,884			9,779
Cost of hardware revenue		682			1,829			2,190			5,435
Total cost of revenue		11,407			12,463			33,838			38,190
Gross margin		18,639			18,313			57,266			57,702
Operating expense
General and administration		8,340			7,765			20,625			24,328
Software development		7,812			7,137			23,253			21,082
Sales and marketing		3,160			5,962			10,727			17,787
Amortization of intangible assets and depreciation		1,087			1,106			3,793			3,132
Loss on lease obligation		1,066			—			1,066			—
Total operating expenses		21,465			21,970			59,464			66,329
Loss from operations		(2,826	)		(3,657	)		(2,198	)		(8,627	)
Other income (expense)
Interest expense, includes non-cash charges of $383, $235 and $740, $1,717		(403	)		(283	)		(763	)		(4,662	)
Interest income		223			107			444			351
Other income (expense), net		(21	)		17			(37	)		134
Loss on retirement of debt		—			(11,726	)		—			(14,871	)
Benefit (provision) for income taxes		(114	)		(1	)		(128	)		161
Other income (expense)		(315	)		(11,886	)		(484	)		(18,887	)
Net loss from continuing operations	$	(3,141	)	$	(15,543	)	$	(2,682	)	$	(27,514	)
Loss from discontinued operations		(817	)		(748	)		(2,503	)		(2,988	)
Net loss	$	(3,958	)	$	(16,291	)	$	(5,185	)	$	(30,502	)
Preferred stock accretion		(1,207	)		(1,348	)		(3,573	)		(1,348	)
Net loss attributable to common shareholders	$	(5,165	)	$	(17,639	)	$	(8,758	)	$	(31,850	)
Income (loss) per share-basic and diluted
Continuing operations		(0.11	)		(0.42	)		(0.15	)		(0.83	)
Discontinued operations		(0.02	)		(0.02	)		(0.06	)		(0.09	)
Net income (loss)	$	(0.13	)	$	(0.44	)	$	(0.22	)	$	(0.92	)
Weighted average shares outstanding
Basic and diluted		40,684			39,779			40,407			34,621

Exhibit 2 to Press Release dated November 9, 2005

Exhibit 3

QUADRAMED CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

	Three months ended September 30,						Nine months ended September 30,
	2005			2004			2005			2004
Cash flows from operating activities
Net loss attributable to common shareholders	$	(5,165	)	$	(17,639	)	$	(8,758	)	$	(31,850	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		3,465			2,398			9,478			8,044
Preferred stock accretion		1,207			—			3,573			—
Loss on retirement of debt		—			12,569			—			14,871
Exit cost of facility closing and other costs		1,066			—			1,066			—
Impairment and other charges for Financial Services Division		817			—			1,731			—
Gain on sale of assets		(383	)		—			(383	)		—
Provision for bad debts and other		879			1,923			1,704			3,015
Changes in assets and liabilities:
Accounts receivable		4,447			620			(2,170	)		4,728
Prepaid expenses and other		1,728			559			4,718			957
Accounts payable and accrued liabilities		310			2,395			(2,881	)		(3,687	)
Deferred revenue		(2,331	)		(4,852	)		6,065			(5,796	)
Cash provided by (used in) operating activities		6,040			(2,027	)		14,143			(9,718	)
Cash flows from investing activities
Proceeds from sale of assets and available-for-sale securities		446			38			345			114
Decrease in restricted cash		8			3			1,539			1,560
Acquisition of Détente		—			—			—			(4,074	)
Acquisition of Tempus		—			(96	)		—			(5,148	)
Capital expenditures		(297	)		(1,176	)		(1,101	)		(3,469	)
Cash provided by (used in) investing activities		157			(1,231	)		783			(11,017	)
Cash flows from financing activities
Proceeds from issuance of common stock and other		239			193			845			1,763
Proceeds from issuance of preferred stock, net of issuance cost		—			(11	)		—			96,120
Payment of preferred stock dividends		(1,458	)		—			(4,208	)		—
Repayments under notes and subordinated debentures		—			(62,322	)		—			(88,090	)
Foreign currency translation effect on cash equivalents		—			30			—			30
Cash provided by (used in) financing activities		(1,219	)		(62,110	)		(3,363	)		9,823
Net increase (decrease) in cash and cash equivalents		4,978			(65,368	)		11,563			(10,912	)
Cash and cash equivalents, beginning of period		29,014			91,400			22,429			36,944
Cash and cash equivalents, end of period	$	33,992		$	26,032		$	33,992		$	26,032
Supplemental disclosure of cash flow information
Cash paid for interest		—			1,767			—			4,249
Net cash (refunded) paid for taxes		—			2			—			(161	)
Supplemental disclosure of non cash flow information
Issuance of common stock upon acquisition of Tempus		—			(1	)		—			7,650

Exhibit 3 to Press Release dated November 9, 2005

Exhibit 4

QUADRAMED CORPORATION

Reconciliation of EBITDA and Non-GAAP Measurements

(in thousands)

(unaudited)

	Three months ended September 30,						Nine months ended September 30,
	2005			2004			2005			2004
EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization)
Net income (loss), as reported	($	3,958	)	($	16,291	)	($	5,185	)	($	30,502	)
Adjustments to Net Income for EBITDA
Interest Expense		403			283			763			4,662
Interest Income		(223	)		(107	)		(444	)		(351	)
Benefit (provision) for Income Taxes		114			1			128			161
Depreciation and Amortization		3,465			2,398			9,478			8,044
Loss on Retirement of Debt					11,726						14,871
Subtotal Adjustments for EBITDA		3,759			14,301			9,925			27,387
EBITDA		($199	)		($1,990	)	$	4,740			($3,115	)
Proforma Net Income (Loss) before Preferred Stock Accretion
Net income (loss), as reported		($3,958	)		($16,291	)		($5,185	)		($30,502	)
Proforma adjustments to Net income (loss)
Loss on Lease Obligation (San Rafael)		1,066			—			1,066			—
Loss on Lease Obligation (Discontinued Operations)		817						1,849
Cash Executive Severance		2,344			—			2,344			—
Non-Cash Executive Severance		850						1,442
Loss on Retirement of Debt					11,726						14,871
Gain on Sale of EDI Division		(383	)		—			(383	)		—
Subtotal Proforma adjustments		4,694			11,726			6,318			14,871
Proforma Net (Loss) before Preferred Stock Accretion	$	736			($4,565	)	$	1,133			($15,631	)
Proforma Income (Loss) from Operations
Income (loss) from operations, as reported		($2,826	)		($3,657	)		($2,198	)		($8,627	)
Proforma adjustments to Income (loss) from Operations
Loss on Lease Obligation (San Rafael)		1,066			—			1,066			—
Cash Executive Severance		2,344			—			2,344
Non-Cash Executive Severance		850						1,442			—
Gain on Sale of EDI Division		(383	)		—			(383	)		—
Subtotal Proforma adjustments		3,877			—			4,469			—
Proforma Income (loss) from operations	$	1,051			($3,657	)	$	2,271			($8,627	)

Exhibit 4 to Press Release dated November 9, 2005