Exhibit 99.1
| | |
| | CONTACT: |
| FOR IMMEDIATE RELEASE | | Investor Relations |
| | 703-742-5393 |
| | InvestorRelations@quadramed.com |
QUADRAMED CORPORATION ANNOUNCES Q3 2008 RESULTS
Revenue of $38.6 million
Net income of $2.5 million
Cash Flow from Operations of $2.8 million
RESTON, VA – (November 6, 2008) — QuadraMed Corporation (NASDAQ: QDHC) announced today that it will report net income of $2.5 million before preferred stock dividends for the three months ended September 30, 2008, compared to $1.5 million for the same period in 2007. For the nine months ended September 30, 2008, the Company had net income before preferred stock dividends of $4.6 million, compared to $6.3 million for the nine months ended September 30, 2007.
The Company began recording deferred income tax expense at its statutory effective tax rate during the fourth quarter of 2007; therefore, where there was non-cash deferred income tax expense included in the three and nine month periods ended September 30, 2008, there was no comparable deferred income tax expense in the corresponding 2007 periods. Income before income taxes was $4.1 million for the three months ended September 30, 2008, compared to $1.6 million for the same period in 2007. For the nine months ended September 30, 2008, the Company had income before income taxes of $7.5 million, compared to $6.7 million for the nine months ended September 30, 2007. In addition, included in the nine month period ended September 30, 2008 was a $1.1 million loss on the sale of the Company’s Australia-based lab and radiology assets, as well as severance costs of $0.7 million. No amounts of this nature were recorded in the corresponding 2007 periods.
The Company recorded revenue of $38.6 million for the quarter ended September 30, 2008, compared to $32.9 million for the same period last year, an increase of 17.3%. For the nine months ended September 30, 2008, revenue increased 16.0% to $111.9 million, from $96.5 million for the comparable 2007 period. The majority of the increase in revenue between periods was attributable to the addition of the acquired QCPR product to the Company’s portfolio, resulting from the integration of the Computerized Patient Record (CPR) business assets during the fourth quarter of 2007.
Income from operations was $4.0 million and $1.0 million for the three month periods ended September 30, 2008 and 2007, and $7.2 million and $4.4 million for the nine month periods ended September 30, 2008 and 2007, respectively. Adjusted Non-GAAP EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization, adjusted for stock based compensation, severance and loss on the sale of assets) was $5.9 million for the three months ended September 30, 2008, compared to adjusted Non-GAAP EBITDA of $2.6 million for the same period in 2007. For the nine months ended September 30, 2008, the Company had adjusted Non-GAAP EBITDA of $14.9 million, compared to $10.1 million for the nine months ended September 30, 2007. The increases in income from operations and Non-GAAP adjusted EBITDA for the 2008 periods, when compared to the corresponding 2007 periods, were due to the stronger amounts of gross margin on revenue which increased primarily due to the addition of the acquired QCPR product to the Company’s portfolio.
The Company also reported net income to common shareholders of $1.1 million, or $0.12 income per basic and diluted share for the three months ended September 30, 2008, and net income to common shareholders of $0.4 million, or $0.05 per basic and diluted share for the nine months ended September 30, 2008. This is compared to a net loss to common shareholders of $(0.5) million, or loss per share of $(0.06) basic and diluted, and net income to common shareholders of $1.7 million, or income per share of $0.19 basic and $0.18 diluted for the corresponding periods in 2007. The primary reasons for the decline in earnings per share for the 2008 nine month period were the aforementioned severance and loss on the sale of assets ($0.12 per share), as well as the recording of deferred income tax expense during 2008 at the Company’s effective rate ($0.28 per share), where there were no such expenses in the 2007 periods.
Included in the quarter and nine month period ended September 30, 2008 is revenue of $1.5 million and $2.1 million respectively, related to contracts that were completed in periods prior to 2008. The costs related to these contracts were recognized in the periods of origin; consequently, the reported gross margin, net income and adjusted Non-GAAP EBITDA and other measures also include the $1.5 million and $2.1 million for the quarter and nine month period respectively. Were these revenues not recorded in the current periods, revenue which was reported as $38.6 million for the quarter and $111.9 million for the nine month period
would have been $37.1 million and $109.8 million respectively; gross margin which was reported as 60% for the quarter and 58% for the nine month period would have been 58% and 57% respectively; net income which was reported as $2.5 million for the quarter and $4.6 million for the nine month period would have been $1.6 million and $3.3 million respectively; adjusted Non-GAAP EBITDA as presented on Exhibits 4 and 5 of this press release as $5.9 million or 15% of revenue for the quarter and $14.9 million or 13% of revenue for the nine month period would have been $4.4 million or 12% of revenue and $12.8 million or 12% of revenue respectively.
Cash provided by operating activities was $2.8 million for the quarter ended September 30, 2008, compared to $4.0 million for the same period last year, and for the nine months ended September 30, 2008, cash provided by operating activities was $15.0 million, compared to cash from operations of $17.8 million for the comparable 2007 period. Overall, cash, cash equivalents and investments increased to $23.8 million at September 30, 2008, from $23.2 million at June 30, 2008 and from $17.5 million at December 31, 2007. This $6.3 million increase since year-end occurred despite the Company’s use of $3.7 million to repurchase its own common stock during the period.
“We are continuing to successfully perform against our internal forecasts for revenues, earnings, and product development through the third quarter of this year. We have also reported the signing of several significant QCPR deals during the quarter. However, given the uncertainty in the financial markets, and their uncertain effect on our sector, we now expect our 2008 revenue to be at the lower end of our previously announced range,” said Keith B. Hagen, QuadraMed’s President and Chief Executive Officer.
Management will review these results in an investment community conference call at 5:00 PM Eastern (2:00 PM Pacific) on Thursday, November 6, 2008. 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 888-300-2324 domestic and 719-325-2452 international. Callers should dial in by 4:45 PM Eastern (1:45 PM Pacific) to register. The call will also be webcast live and is 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 4:45 PM Eastern (1:45 PM Pacific) to register and to download and install any necessary audio software. The webcast replay will be available shortly after the live call is completed and will be available until November 14, 2008. Replay telephone numbers are 719-457-0820 or 888-203-1112; the replay passcode is 7408235.
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| Attachments | | Exhibit 1 | | Condensed Consolidated Balance Sheets (unaudited) as of September 30, 2008 and December 31, 2007 |
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| | Exhibit 2 | | Condensed Consolidated Statements of Operations (unaudited) for the Three Months Ended September 30, 2008 and 2007 and the Nine Months Ended September 30, 2008 and 2007 |
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| | Exhibit 3 | | Condensed Consolidated Statements of Cash Flows (unaudited) for the Three Months Ended September 30, 2008 and 2007 and the Nine Months Ended September 30, 2008 and 2007 |
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| | Exhibit 4 | | Reconciliation of EBITDA and Non-GAAP Measurements (unaudited) for the Three Months Ended September 30, 2008, June 30, 2008, March 31, 2008, December 31, 2007, September 30, 2007, June 30, 2007 and March 31, 2007. |
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| | Exhibit 5 | | Reconciliation of EBITDA and Non-GAAP Measurements (unaudited) for the Nine Months Ended September 30, 2008 and September 30, 2007 |
About Adjusted Non-GAAP EBITDA and other Non-GAAP Measurements
The Company’s use and presentation of the terms EBITDA, Adjusted Non-GAAP EBITDA and other Non-GAAP Measurements included in this press release and Exhibits 4 and 5 attached hereto, and the reconciliations of those items to the most directly comparable GAAP financial measure with equal or greater prominence as the Non-GAAP financial measures, have been prepared in direct response to questions from its investors and other interested parties. Although the Company has frequently discussed these reconciling items when they occur, both in its filings as well as in investment community conference calls that are open to the public at large, many inquiries are still made as to the nature of these items, and the impact of removing these items from the GAAP financial results. As a result, the Company believes it is important to provide these reconciliations, so that the requesting investors will not have to perform the arithmetic themselves and so that all interested parties will benefit from the disclosures and reconciliations, through a straightforward and unambiguous presentation. The Company believes that the use and presentation of the terms EBITDA, Adjusted Non-GAAP EBITDA and the other Non-GAAP financial measures is useful because it allows readers of its financial information to evaluate its performance for different periods on a more comparable basis by excluding items that are unique in nature such as non-cash compensation, or do not relate to the ongoing operation of its core business. The items presented in calculating Adjusted Non-GAAP EBITDA and other Non-GAAP reconciliations represent specific events or items as follows (please see Exhibits 4 and 5 to this press release):
| | • | | Cash Severance – costs associated with restructuring and downsizing of the Company’s employee base during the three-month periods ended March 31, 2008, and in connection with the sale of the Company’s Australian-based lab and radiology assets in April 2008 (see Loss on Sale of Assets); |
| | • | | Loss on Sale of Assets – a one-time loss for accounting purposes recorded in connection with the Company’s April 2008 sale of its Australia-based lab and radiology business, with operations in Australia, New Zealand and the United Kingdom; |
| | • | | Non-Cash Compensation – the costs of employee stock options and restricted stock; |
| | • | | Tax Benefit, Net – the amount recorded during the three months ended December 31, 2007 resulting from the release of a portion of the reserve against the Company’s deferred tax assets, net of deferred income tax expense recorded in the period; |
| | • | | Strategic Initiatives – the expenses recorded in connection with merger and acquisition activities during the three-month periods ended June 30, 2007 and December 31, 2007; |
| | • | | Employment Matters – the cost of the Company’s review of wage/hour classifications for certain employees during the three-month periods ended December 31, 2007 and September 30, 2007. |
About QuadraMed Corporation
QuadraMed Corporation advances the success of healthcare organizations through IT solutions that leverage quality care into positive financial outcomes. QuadraMed provides real world solutions that help healthcare professionals deliver outstanding patient care efficiently and cost effectively. Behind the Company’s products and services is a staff of 600 professionals whose experience and dedication have earned QuadraMed the trust and loyalty of clients at over 2,000 healthcare provider facilities. For more information about QuadraMed, visithttp://www.quadramed.com
Cautionary Statement on Risks Associated with QuadraMed Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 by QuadraMed 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’s SEC filings can be accessed through the Investor Relations section of our website,www.quadramed.com, or through the SEC’s EDGAR Database atwww.sec.gov (QuadraMed has EDGAR CIK No. 0001018833).
QuadraMed Affinity and Care-based Revenue Cycle are registered trademarks of QuadraMed Corporation. QuadraMed Corporation’s trademark: “Quality Care. Financial Health” is pending registration. All other trademarks are the property of their respective holders.
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Exhibit 1
QUADRAMED CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
(unaudited)
| | | | | | | | |
| | | September 30,
2008 | | | December 31,
2007 | |
ASSETS | | | | | | | | |
Current assets | | | | | | | | |
Cash and cash equivalents | | $ | 15,410 | | | $ | 7,119 | |
Short-term investments | | | 5,210 | | | | 9,169 | |
Accounts receivable, net of allowance for doubtful accounts of $1,088 and $1,449, respectively | | | 20,402 | | | | 26,088 | |
Unbilled receivables | | | 9,679 | | | | 5,183 | |
Deferred contract expenses | | | 5,608 | | | | 6,060 | |
Prepaid expenses and other current assets, net of allowance of $919 and $1,229, respectively | | | 4,880 | | | | 5,367 | |
Deferred tax asset, net of valuation allowance | | | 7,376 | | | | 7,376 | |
| | | | | | | | |
Total current assets | | | 68,565 | | | | 66,362 | |
Restricted cash | | | 1,556 | | | | 2,389 | |
Long-term investments | | | 3,218 | | | | 1,197 | |
Property and equipment, net of accumulated depreciation and amortization of $22,723, and $22,855, respectively | | | 3,166 | | | | 3,778 | |
Goodwill | | | 35,632 | | | | 33,942 | |
Other amortizable intangible assets, net of accumulated amortization of $29,110 and $31,119, respectively | | | 10,177 | | | | 11,768 | |
Other long-term assets | | | 3,043 | | | | 3,182 | |
Deferred tax asset, net of valuation allowance | | | 49,729 | | | | 49,758 | |
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Total assets | | $ | 175,086 | | | $ | 172,376 | |
| | | | | | | | |
| | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | |
Current liabilities | | | | | | | | |
Accounts payable and accrued expenses | | $ | 5,477 | | | $ | 4,910 | |
Accrued payroll and related benefits | | | 5,997 | | | | 9,602 | |
Accrued exit cost of facility closing | | | 872 | | | | 1,178 | |
Other accrued liabilities | | | 6,908 | | | | 7,537 | |
Dividends payable | | | 1,375 | | | | 1,375 | |
Deferred revenue | | | 44,733 | | | | 36,111 | |
| | | | | | | | |
Total current liabilities | | | 65,362 | | | | 60,713 | |
Accrued exit cost of facility closing | | | 227 | | | | 888 | |
Other long-term liabilities | | | 1,883 | | | | 2,722 | |
| | | | | | | | |
Total liabilities | | | 67,472 | | | | 64,323 | |
| | |
Commitments and Contingencies | | | | | | | | |
| | |
Stockholders’ equity | | | | | | | | |
Preferred stock, $0.01 par, 5,000 shares authorized, 4,000 shares issued and outstanding, respectively | | | 96,144 | | | | 96,144 | |
Common stock, $0.01 par, 30,000 shares authorized; 9,451 and 9,178 shares issued and 8,954 and 9,057 outstanding, respectively | | | 99 | | | | 459 | |
Shares held in treasury, 497 and 121, respectively | | | (4,020 | ) | | | (292 | ) |
Additional paid-in-capital | | | 314,183 | | | | 310,557 | |
Accumulated other comprehensive loss | | | (504 | ) | | | (80 | ) |
Accumulated deficit | | | (298,288 | ) | | | (298,735 | ) |
| | | | | | | | |
Total stockholders’ equity | | | 107,614 | | | | 108,053 | |
| | | | | | | | |
Total liabilities and stockholders’ equity | | $ | 175,086 | | | $ | 172,376 | |
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Exhibit 1 to Press Release dated November 6, 2008
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, | |
| | | 2008 | | | 2007 | | | 2008 | | | 2007 | |
Revenue | | | | | | | | | | | | | | | | |
Services | | $ | 5,930 | | | $ | 4,348 | | | $ | 17,102 | | | $ | 12,887 | |
Maintenance | | | 18,205 | | | | 14,115 | | | | 51,734 | | | | 42,274 | |
Installation and other | | | 3,153 | | | | 3,081 | | | | 9,614 | | | | 8,323 | |
| | | | | | | | | | | | | | | | |
Services and other revenue | | | 27,288 | | | | 21,544 | | | | 78,450 | | | | 63,484 | |
Term licences | | | 8,099 | | | | 8,485 | | | | 23,651 | | | | 22,093 | |
Perpetual licenses | | | 3,127 | | | | 2,455 | | | | 9,260 | | | | 7,036 | |
| | | | | | | | | | | | | | | | |
License revenue | | | 11,226 | | | | 10,940 | | | | 32,911 | | | | 29,129 | |
Hardware | | | 75 | | | | 424 | | | | 505 | | | | 3,863 | |
| | | | | | | | | | | | | | | | |
Total revenue | | | 38,589 | | | | 32,908 | | | | 111,866 | | | | 96,476 | |
| | | | | | | | | | | | | | | | |
Cost of revenue | | | | | | | | | | | | | | | | |
Cost of services and other revenue | | | 11,487 | | | | 9,722 | | | | 34,324 | | | | 25,434 | |
Royalties and other | | | 3,671 | | | | 4,237 | | | | 11,365 | | | | 11,273 | |
Amortization of acquired technology and capitalized software | | | 245 | | | | — | | | | 756 | | | | 825 | |
| | | | | | | | | | | | | | | | |
Cost of license revenue | | | 3,916 | | | | 4,237 | | | | 12,121 | | | | 12,098 | |
Cost of hardware revenue | | | 64 | | | | 146 | | | | 328 | | | | 3,533 | |
| | | | | | | | | | | | | | | | |
Total cost of revenue | | | 15,467 | | | | 14,105 | | | | 46,773 | | | | 41,065 | |
| | | | | | | | | | | | | | | | |
Gross margin | | | 23,122 | | | | 18,803 | | | | 65,093 | | | | 55,411 | |
| | | | | | | | | | | | | | | | |
Operating expense | | | | | | | | | | | | | | | | |
General and administration | | | 5,027 | | | | 4,464 | | | | 14,907 | | | | 12,916 | |
Software development | | | 8,328 | | | | 8,144 | | | | 25,362 | | | | 23,218 | |
Sales and marketing | | | 4,968 | | | | 4,536 | | | | 14,105 | | | | 12,345 | |
Loss on sale of assets | | | 46 | | | | — | | | | 1,161 | | | | — | |
Amortization of intangible assets and depreciation | | | 761 | | | | 707 | | | | 2,400 | | | | 2,505 | |
| | | | | | | | | | | | | | | | |
Total operating expenses | | | 19,130 | | | | 17,851 | | | | 57,935 | | | | 50,984 | |
| | | | | | | | | | | | | | | | |
Income from operations | | | 3,992 | | | | 952 | | | | 7,158 | | | | 4,427 | |
| | | | | | | | | | | | | | | | |
Other income (expense) | | | | | | | | | | | | | | | | |
Interest expense, includes non-cash charges of $18, $20 and $54, $104 | | | (26 | ) | | | (24 | ) | | | (99 | ) | | | (107 | ) |
Interest income | | | 136 | | | | 699 | | | | 460 | | | | 1,916 | |
Other income, net | | | 1 | | | | 17 | | | | 9 | | | | 503 | |
| | | | | | | | | | | | | | | | |
Other income, net | | | 111 | | | | 692 | | | | 370 | | | | 2,312 | |
| | | | | | | | | | | | | | | | |
Income from operations before income taxes | | $ | 4,103 | | | $ | 1,644 | | | $ | 7,528 | | | $ | 6,739 | |
Provision for income taxes | | | (1,634 | ) | | | (142 | ) | | | (2,963 | ) | | | (413 | ) |
| | | | | | | | | | | | | | | | |
Net Income | | | 2,469 | | | | 1,502 | | | | 4,565 | | | | 6,326 | |
Preferred stock accretion, dividend premium, and dividend declared | | | (1,375 | ) | | | (2,024 | ) | | | (4,125 | ) | | | (4,657 | ) |
| | | | | | | | | | | | | | | | |
Net income (loss) attributable to common shareholders | | $ | 1,094 | | | $ | (522 | ) | | $ | 440 | | | $ | 1,669 | |
| | | | | | | | | | | | | | | | |
Income (loss) per share | | | | | | | | | | | | | | | | |
Basic | | $ | 0.12 | | | $ | (0.06 | ) | | $ | 0.05 | | | $ | 0.19 | |
Diluted | | $ | 0.12 | | | $ | (0.06 | ) | | $ | 0.05 | | | $ | 0.18 | |
Weighted average shares outstanding | | | | | | | | | | | | | | | | |
Basic | | | 8,931 | | | | 8,769 | | | | 8,930 | | | | 8,776 | |
Diluted | | | 8,962 | | | | 8,769 | | | | 8,963 | | | | 9,464 | |
Exhibit 2 to Press Release dated November 6, 2008
Exhibit 3
QUADRAMED CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
| | | | | | | | | | | | | | | | |
| | | Three months ended
September 30, | | | Nine months ended
September 30, | |
| | | 2008 | | | 2007 | | | 2008 | | | 2007 | |
Cash flows from operating activities | | | | | | | | | | | | | | | | |
Net income | | $ | 2,469 | | | $ | 1,502 | | | $ | 4,565 | | | $ | 6,326 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | | | | | | | | | | |
Depreciation and amortization | | | 1,006 | | | | 707 | | | | 3,157 | | | | 3,331 | |
Deferred compensation amortization | | | 85 | | | | 95 | | | | 273 | | | | 287 | |
Dividend discount amortization | | | — | | | | 2 | | | | — | | | | 50 | |
Stock-based compensation | | | 805 | | | | 807 | | | | 2,445 | | | | 1,546 | |
Provision for bad debts | | | 34 | | | | — | | | | 164 | | | | 181 | |
Loss on sale of assets | | | 46 | | | | — | | | | 1,161 | | | | — | |
Other | | | 18 | | | | 57 | | | | (16 | ) | | | (32 | ) |
Changes in operating assets and liabilities: | | | | | | | | | | | | | | | | |
Accounts receivable | | | (1,835 | ) | | | 1,650 | | | | (3,861 | ) | | | 4,798 | |
Prepaid expenses and other | | | 3,583 | | | | (249 | ) | | | 1,247 | | | | 2,935 | |
Accounts payable and accrued liabilities | | | 2,695 | | | | 3,465 | | | | (5,294 | ) | | | (1,035 | ) |
Deferred revenue | | | (6,081 | ) | | | (4,013 | ) | | | 11,155 | | | | (539 | ) |
| | | | | | | | | | | | | | | | |
Cash provided by operating activities | | | 2,825 | | | | 4,023 | | | | 14,996 | | | | 17,848 | |
Cash flows from investing activities | | | | | | | | | | | | | | | | |
Decrease (increase) in restricted cash | | | 173 | | | | 56 | | | | 833 | | | | (38 | ) |
Purchases of available-for-sale securities | | | (190 | ) | | | (13,278 | ) | | | (4,220 | ) | | | (46,691 | ) |
Proceeds from sale of available-for-sale securities | | | 190 | | | | 23,608 | | | | 6,049 | | | | 44,224 | |
Payment of acquisition costs | | | (10 | ) | | | — | | | | (56 | ) | | | — | |
Purchases of property and equipment | | | (575 | ) | | | (933 | ) | | | (1,418 | ) | | | (1,471 | ) |
Cash paid in the acquisition of the Computerized Patient Record business | | | — | | | | (33,674 | ) | | | — | | | | (33,674 | ) |
Proceeds from sale of assets | | | — | | | | — | | | | 106 | | | | — | |
| | | | | | | | | | | | | | | | |
Cash (used in) provided by investing activities | | | (412 | ) | | | (24,221 | ) | | | 1,294 | | | | (37,650 | ) |
Cash flows from financing activities | | | | | | | | | | | | | | | | |
Payment of preferred stock dividends | | | (1,375 | ) | | | (1,375 | ) | | | (4,125 | ) | | | (4,253 | ) |
Proceeds from issuance of common stock and other | | | 395 | | | | 759 | | | | 545 | | | | 2,194 | |
Repurchase of common stock | | | — | | | | — | | | | (3,727 | ) | | | — | |
| | | | | | | | | | | | | | | | |
Cash used in financing activities | | | (980 | ) | | | (616 | ) | | | (7,307 | ) | | | (2,059 | ) |
Effect of exchange rate changes on cash | | | (626 | ) | | | 71 | | | | (692 | ) | | | (6 | ) |
Net increase (decrease) in cash and cash equivalents | | | 807 | | | | (20,743 | ) | | | 8,291 | | | | (21,867 | ) |
Cash and cash equivalents, beginning of period | | | 14,603 | | | | 31,472 | | | | 7,119 | | | | 32,596 | |
| | | | | | | | | | | | | | | | |
Cash and cash equivalents, end of period | | $ | 15,410 | | | $ | 10,729 | | | $ | 15,410 | | | $ | 10,729 | |
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Exhibit 3 to Press Release dated November 6, 2008
Exhibit 4
QUADRAMED CORPORATION
Reconciliation of EBITDA and Non-GAAP Measurements
(in thousands)
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | For the Three Month Periods Ended | |
| | | 9/30/08 | | | 6/30/08 | | | 3/31/08 | | | 12/31/07 | | | 9/30/07 | | | 6/30/07 | | | 3/31/07 | |
| EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
Net income, as reported | | $ | 2,469 | | | $ | 1,787 | | | $ | 309 | | | $ | 56,674 | | | $ | 1,502 | | | $ | 2,200 | | | $ | 2,624 | |
| | | | | | | |
Adjustments to Net Income for EBITDA | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest Expense | | | 26 | | | | 42 | | | | 31 | | | | 20 | | | | 24 | | | | 33 | | | | 50 | |
Interest Income | | | (136 | ) | | | (158 | ) | | | (166 | ) | | | (364 | ) | | | (699 | ) | | | (644 | ) | | | (573 | ) |
(Provision) benefit for Income Taxes | | | 1,634 | | | | 1,151 | | | | 178 | | | | (52,821 | ) | | | 142 | | | | 162 | | | | 109 | |
Depreciation and Amortization | | | 1,091 | | | | 1,159 | | | | 1,180 | | | | 1,323 | | | | 802 | | | | 1,326 | | | | 1,490 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Subtotal Non-GAAP Adjustments for EBITDA | | | 2,615 | | | | 2,194 | | | | 1,223 | | | | (51,842 | ) | | | 269 | | | | 877 | | | | 1,076 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
EBITDA | | $ | 5,084 | | | $ | 3,981 | | | $ | 1,532 | | | $ | 4,832 | | | $ | 1,771 | | | $ | 3,077 | | | $ | 3,700 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
EBITDA % to Revenue | | | 13.2 | % | | | 10.5 | % | | | 4.3 | % | | | 11.8 | % | | | 5.4 | % | | | 9.0 | % | | | 12.7 | % |
| | | | | | | |
Non-GAAP Adjustments to EBITDA | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Non-cash Compensation | | | 805 | | | | 841 | | | | 799 | | | | 928 | | | | 807 | | | | 356 | | | | 383 | |
Cash Severance | | | — | | | | 161 | | | | 561 | | | | — | | | | — | | | | — | | | | — | |
Loss on Sale of Assets | | | — | | | | 1,115 | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Subtotal Non-GAAP Adjustments to EBITDA | | | 805 | | | | 2,117 | | | | 1,360 | | | | 928 | | | | 807 | | | | 356 | | | | 383 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Adjusted Non-GAAP EBITDA | | $ | 5,889 | | | $ | 6,098 | | | $ | 2,892 | | | $ | 5,760 | | | $ | 2,578 | | | $ | 3,433 | | | $ | 4,083 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Adjusted Non-GAAP EBITDA % to Revenue | | | 15.3 | % | | | 16.1 | % | | | 8.2 | % | | | 14.1 | % | | | 7.8 | % | | | 10.0 | % | | | 14.0 | % |
| | | | | | | |
| Non-GAAP Net Income before Preferred Stock Accretion | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
Net income, as reported | | $ | 2,469 | | | $ | 1,787 | | | $ | 309 | | | $ | 56,674 | | | $ | 1,502 | | | $ | 2,200 | | | $ | 2,624 | |
| | | | | | | |
Non-GAAP adjustments to Net income | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Non-cash Compensation | | | 805 | | | | 841 | | | | 799 | | | | 928 | | | | 807 | | | | 356 | | | | 383 | |
Cash Severance | | | — | | | | 161 | | | | 561 | | | | — | | | | — | | | | — | | | | — | |
Strategic Initiatives | | | — | | | | — | | | | — | | | | 57 | | | | — | | | | 412 | | | | — | |
Tax benefit, Net | | | — | | | | — | | | | — | | | | (52,898 | ) | | | — | | | | — | | | | — | |
Employment Matters | | | — | | | | — | | | | — | | | | (374 | ) | | | 1,544 | | | | — | | | | — | |
Loss on Sale of Assets | | | — | | | | 1,115 | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Subtotal Non-GAAP adjustments | | | 805 | | | | 2,117 | | | | 1,360 | | | | (52,287 | ) | | | 2,351 | | | | 768 | | | | 383 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Non-GAAP Net income | | $ | 3,274 | | | $ | 3,904 | | | $ | 1,669 | | | $ | 4,387 | | | $ | 3,853 | | | $ | 2,968 | | | $ | 3,007 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
| Other Information | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
Revenue | | $ | 38,589 | | | $ | 37,986 | | | $ | 35,291 | | | $ | 40,874 | | | $ | 32,908 | | | $ | 34,362 | | | $ | 29,206 | |
Costs of Revenue | | $ | 15,467 | | | $ | 15,760 | | | $ | 15,546 | | | $ | 16,167 | | | $ | 14,105 | | | $ | 15,991 | | | $ | 10,969 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Gross Margin | | $ | 23,122 | | | $ | 22,226 | | | $ | 19,745 | | | $ | 24,707 | | | $ | 18,803 | | | $ | 18,371 | | | $ | 18,237 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Gross Margin % | | | 60 | % | | | 59 | % | | | 56 | % | | | 60 | % | | | 57 | % | | | 53 | % | | | 62 | % |
About Adjusted Non-GAAP EBITDA and other Non-GAAP Measurements
The Company’s use and presentation of the terms EBITDA, Adjusted Non-GAAP EBITDA and other Non-GAAP Measurements included in this press release and on Exhibits 4 and 5 thereto, and the reconciliations of those items to the most directly comparable GAAP financial measure with equal or greater prominence as the Non-GAAP financial measures, have been prepared in direct response to questions from its investors and other interested parties. Although the Company has frequently discussed these reconciling items when they occur, both in its filings as well as in investment community conference calls that are open to the public at large, many inquiries are still made as to the nature of these items, and the impact of removing these items from the GAAP financial results. As a result, the Company believes it is important to provide these reconciliations, so that the requesting investors will not have to perform the arithmetic themselves and so that all interested parties will benefit from the disclosures and reconciliations, through a straightforward and unambiguous presentation. The Company believes that the use and presentation of the terms EBITDA, Adjusted Non-GAAP EBITDA and the other Non-GAAP financial measures is useful because it allows readers of its financial information to evaluate its performance for different periods on a more comparable basis by excluding items that are unique in nature such as non-cash compensation, or do not relate to the ongoing operation of its core business. The items presented in calculating Adjusted Non-GAAP EBITDA and other Non-GAAP reconciliations represent specific events or items as follows:
| | • | | Cash Severance — costs associated with restructuring and downsizing of the Company’s employee base during the three-month periods ended March 31, 2008, and in connection with the sale of the Company’s lab and radiology assets in April 2008 (see Loss on Sale of Assets); |
| | • | | Loss on Sale of Assets – a one-time loss for accounting purposes recorded in connection with the Company’s April 2008 sale of its Australia-based lab and radiology business with operations in Australia, New Zealand and the United Kingdom; |
| | • | | Non-cash Compensation – the costs of employee stock options and restricted stock; |
| | • | | Tax benefit, Net – the amount recorded during the three months ended December 31, 2007 resulting from the release of a portion of the reserve against the Company’s deferred tax assets, net of deferred income tax expense recorded in the period; |
| | • | | Strategic Initiatives – the expenses recorded in connection with merger and acquisition activities during the three-month periods ended June 30, 2007 and December 31, 2007; |
| | • | | Employment Matters – the cost of the Company’s review of wage/hour classifications for certain employees during the three-month periods ended December 31, 2007 and September 30, 2007. |
Exhibit 4 to Press Release dated November 6, 2008
Exhibit 5
QUADRAMED CORPORATION
Reconciliation of EBITDA and Non-GAAP Measurements
(in thousands)
(unaudited)
| | | | | | | | |
| | | For the Nine Months Ended | |
| | | 9/30/2008 | | | 9/30/2007 | |
| EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) | | | | | | | | |
| | |
Net income, as reported | | $ | 4,565 | | | $ | 6,326 | |
| | |
Adjustments to Net Income for EBITDA | | | | | | | | |
Interest Expense | | | 99 | | | | 107 | |
Interest Income | | | (460 | ) | | | (1,916 | ) |
Provision for Income Taxes | | | 2,963 | | | | 413 | |
Depreciation and Amortization | | | 3,430 | | | | 3,618 | |
| | | | | | | | |
Subtotal Non-GAAP Adjustments for EBITDA | | | 6,032 | | | | 2,222 | |
| | | | | | | | |
EBITDA | | $ | 10,597 | | | $ | 8,548 | |
| | | | | | | | |
EBITDA % to Revenue | | | 9.5 | % | | | 8.9 | % |
| | |
Non-GAAP Adjustments to EBITDA | | | | | | | | |
Non-cash Compensation | | | 2,445 | | | | 1,546 | |
Cash Severance | | | 722 | | | | — | |
Loss on Sale of Assets | | | 1,115 | | | | — | |
| | | | | | | | |
Subtotal Non-GAAP Adjustments to EBITDA | | | 4,282 | | | | 1,546 | |
| | | | | | | | |
Adjusted Non-GAAP EBITDA | | $ | 14,879 | | | $ | 10,094 | |
| | | | | | | | |
Adjusted Non-GAAP EBITDA % to Revenue | | | 13.3 | % | | | 10.5 | % |
| | |
| Non-GAAP Net Income before Preferred Stock Accretion | | | | | | | | |
| | |
Net income, as reported | | $ | 4,565 | | | $ | 6,326 | |
| | |
Non-GAAP adjustments to Net income | | | | | | | | |
Non-cash Compensation | | | 2,445 | | | | 1,546 | |
Cash Severance | | | 722 | | | | — | |
Strategic Initiatives | | | — | | | | 412 | |
Tax benefit, Net | | | — | | | | — | |
Employment Matters | | | — | | | | 1,544 | |
Loss on Sale of Assets | | | 1,115 | | | | — | |
| | | | | | | | |
Subtotal Non-GAAP adjustments | | | 4,282 | | | | 3,502 | |
| | | | | | | | |
Non-GAAP net income | | $ | 8,847 | | | $ | 9,828 | |
| | | | | | | | |
| | |
| Other Information | | | | | | | | |
| | |
Revenue | | $ | 111,866 | | | $ | 96,476 | |
Costs of Revenue | | $ | 46,773 | | | $ | 41,065 | |
| | | | | | | | |
Gross Margin | | $ | 65,093 | | | $ | 55,411 | |
| | | | | | | | |
Gross Margin % | | | 58 | % | | | 57 | % |
About Adjusted Non-GAAP EBITDA and other Non-GAAP Measurements
The Company’s use and presentation of the terms EBITDA, Adjusted Non-GAAP EBITDA and other Non-GAAP Measurements included in this press release and on Exhibits 4 and 5 thereto, and the reconciliations of those items to the most directly comparable GAAP financial measure with equal or greater prominence as the Non-GAAP financial measures, have been prepared in direct response to questions from its investors and other interested parties. Although the Company has frequently discussed these reconciling items when they occur, both in its filings as well as in investment community conference calls that are open to the public at large, many inquiries are still made as to the nature of these items, and the impact of removing these items from the GAAP financial results. As a result, the Company believes it is important to provide these reconciliations, so that the requesting investors will not have to perform the arithmetic themselves and so that all interested parties will benefit from the disclosures and reconciliations, through a straightforward and unambiguous presentation. The Company believes that the use and presentation of the terms EBITDA, Adjusted Non-GAAP EBITDA and the other Non-GAAP financial measures is useful because it allows readers of its financial information to evaluate its performance for different periods on a more comparable basis by excluding items that are unique in nature such as non-cash compensation, or do not relate to the ongoing operation of its core business. The items presented in calculating Adjusted Non-GAAP EBITDA and other Non-GAAP reconciliations represent specific events or items as follows:
| | • | | Cash Severance — costs associated with restructuring and downsizing of the Company’s employee base during the three-month period ended March 31, 2008, and in connection with the sale of the Company’s lab and radiology assets in April 2008 (see Loss on Sale of Assets); |
| | • | | Loss on Sale of Assets – a one-time loss for accounting purposes recorded in connection with the Company’s April 2008 sale of its Australia-based lab and radiology business with operations in Australia, New Zealand and the United Kingdom; |
| | • | | Non-cash Compensation – the costs of employee stock options and restricted stock; |
| | • | | Strategic Initiatives – the expenses recorded in connection with merger and acquisition activities during the three-month periods ended June 30, 2007 and December 31, 2007; |
| | • | | Employment Matters – the cost of the Company’s review of wage/hour classifications for certain employees during the three-month periods ended December 31, 2007 and September 30, 2007. |
Exhibit 5 to Press Release dated November 6, 2008
