Exhibit 99.1
Eclipsys Releases Financial Results for Quarter Ended September 30, 2006
BOCA RATON, Fla., Oct. 30 /PRNewswire-FirstCall/ -- Eclipsys Corporation(R) (Nasdaq: ECLP), The Outcomes Company(R), today released results for the quarter ended September 30, 2006.
Third-quarter Results
Revenues for the quarter ended September 30, 2006 increased $10.7 million to $108.6 million, compared to revenues of $97.9 million for the quarter ended September 30, 2005. On a GAAP basis, the third-quarter 2006 earnings were $5.1 million or $0.10 per common share on a basic and diluted basis compared to a net income of $5.1 million, or $0.11 per basic common share and $0.10 per diluted common share in the third-quarter of 2005. Third-quarter 2006 earnings include $3.4 million of expense, or $0.07 per basic common share and $0.06 per diluted common share, associated with adopting Statement of Financial Accounting Standards 123R, Share-Based Payment (SFAS 123R), which requires the expensing of stock options.
For comparative purposes, excluding the expense associated with SFAS 123R adoption, non-GAAP net income for the third-quarter 2006 was $8.5 million, or $0.16 per common share on a basic and diluted basis. For year-over-year comparisons, it should be noted that SFAS 123R was first implemented for the quarter ended March 31, 2006, and prior periods do not include its effect.
The following table summarizes selected financial data:
|
| In thousands, except per share data |
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| Three months |
| Nine months |
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|
|
| ||||||||||||||||
|
| 2006 |
| 2005 |
| $ Change |
| 2006 |
| 2005 |
| $ Change |
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|
|
|
|
|
|
|
| ||||||||||||
Revenues |
| $ | 108,566 |
| $ | 97,852 |
| $ | 10,714 |
| $ | 311,680 |
| $ | 278,151 |
| $ | 33,529 |
|
Net income (loss) |
|
| 5,111 |
|
| 5,099 |
|
| 12 |
|
| (1,790 | ) |
| (4,547 | ) |
| 2,757 |
|
Earnings (loss) per common share, basic |
| $ | 0.10 |
| $ | 0.11 |
| $ | (0.01 | ) | $ | (0.03 | ) | $ | (0.10 | ) | $ | 0.07 |
|
Earnings (loss) per common share, diluted |
| $ | 0.10 |
| $ | 0.10 |
| $ | 0.00 |
| $ | (0.03 | ) | $ | (0.10 | ) | $ | 0.07 |
|
|
| Non-GAAP Results* |
| Non-GAAP Results* |
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|
| 2006 |
| 2005 |
| $ Change |
| 2006 |
| 2005 |
| $ Change |
| ||||||
|
|
|
|
|
|
|
| ||||||||||||
Revenues |
| $ | 108,566 |
| $ | 97,852 |
| $ | 10,714 |
| $ | 311,680 |
| $ | 278,151 |
| $ | 33,529 |
|
Net income (loss)* |
|
| 8,473 |
|
| 5,099 |
|
| 3,374 |
|
| 16,340 |
|
| (4,547 | ) |
| 20,887 |
|
Earnings (loss) per common share, basic |
| $ | 0.16 |
| $ | 0.11 |
| $ | 0.05 |
| $ | 0.32 |
| $ | (0.10 | ) | $ | 0.42 |
|
Earnings (loss) per common share, diluted |
| $ | 0.16 |
| $ | 0.10 |
| $ | 0.06 |
| $ | 0.31 |
| $ | (0.10 | ) | $ | 0.41 |
|
* | Three-month and nine-month 2006 results exclude the effect of the implementation of SFAS 123R, adopted as of January 1, 2006, and nine-month results also exclude charges of $7.2 million in the first quarter 2006 and $1.3 million in the second quarter 2006 associated with a previously announced restructuring undertaken in the first quarter and completed in the second quarter to reduce costs and redirect spending into client related functions. A reconciliation of GAAP to non-GAAP results is included in the attached tables. |
Cash provided from operations improved to $10.8 million for the quarter, compared to $8.8 million in third-quarter 2005. Cash, cash equivalents and marketable securities were $123.2 million as of September 30, 2006. Days sales outstanding (DSOs) were 69 days, a sequential increase of 3 days. Deferred revenue (including current and long-term) was $113.8 million as of September 30, 2006, compared to $111.6 million as of June 30, 2006.
“The third quarter was a very positive step in building momentum at Eclipsys,” said Andy Eckert, president and chief executive officer, Eclipsys. “We won several major new clients and generated meaningful business within our growing installed base. Additionally, with more than 20 Eclipsys customers live on Sunrise Clinical Manager 4.5, and Children’s Hospital of Omaha successfully activating Sunrise Pharmacy, our integrated pharmacy information system, we now have the necessary reference sites to continue to attract new Sunrise Clinical Manager customers.”
Added Eckert, “Sunrise Ambulatory Care, which recently received CCHIT Certification, continues to receive market acceptance and is now being implemented at some of the nation’s largest healthcare organizations. Our success selling Sunrise Ambulatory Care demonstrates our ability to transform our proven solutions for the most complex care areas of the acute care facility to the outpatient environment.”
Continued Eckert, “Our recent Eclipsys User Network provided a great showcase for our customers who have achieved positive outcomes using Eclipsys solutions. The event was an affirmation that we are cementing our reputation as the healthcare information technology vendor that healthcare organizations turn to when they want to achieve improved outcomes.”
Investor Teleconference October 30
Eclipsys senior executives will discuss the results during an investor community teleconference scheduled for 4:30 p.m. Eastern time on Monday, October 30. Persons interested in participating in the teleconference should call (888) 428-4471 approximately 15 minutes before the conference is slated to begin. For listen-only mode, participants should go to www.eclipsys.com prior to the conference call to register and download the necessary audio software. An audio replay will be available in the investor relations section of www.eclipsys.com for approximately 48 hours beginning at 7:00 p.m. Eastern on October 30.
Non-GAAP Measures
The financial results reported in this press release have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). In addition to the GAAP results, the Company has provided net income and earnings per share information on a non-GAAP basis for the three months ended September 30, 2006 to exclude the effect of the implementation of SFAS 123R, and for the nine months ended September 30, 2006 to exclude the effect of implementation of SFAS 123R and the charge incurred in the first and second quarters in connection with the restructuring undertaken to reduce costs and redirect spending into client related functions. These non-GAAP financial measures should not be considered a substitute for, or superior to, any measure derived in accordance with GAAP. These non-GAAP financial measures may also be inconsistent with the manner in which similar measures are derived or used by other companies. The restructuring charge and implementation of FAS 123R make comparison of the Company’s results with prior periods more difficult and investors have indicated that they consider this supplemental non-GAAP information useful in evaluating our results of operations and future prospects. The Company believes that the non-GAAP financial measures provided, when considered in conjunction with comparable GAAP financial measures, facilitate understanding and evaluation of the Company’s operating performance and future prospects, as well as comparisons of our results with our prior period results that did not include these charges and with results of other companies on a more consistent basis. Internally, the Company uses this non- GAAP information for forecasting and to help make management decisions, as an indicator of business performance, and to evaluate management’s effectiveness and help determine bonuses for management and others. The Company has provided reconciling information in the attachment to this release.
About Eclipsys
Eclipsys is a leading provider of advanced integrated information software, clinical content and professional services that help healthcare organizations improve clinical, financial, operational and customer- satisfaction outcomes. For more information, see www.eclipsys.com or email info@eclipsys.com.
Statements in this news release or the investor call referenced herein concerning the company’s sales, marketing and operational initiatives, future financial results, operating performance, development efforts, and the benefits provided by Eclipsys software and services are forward-looking statements and actual results may differ from those projected due to a variety of risks and uncertainties. Future performance expectations are predicated upon achievement of various sales and performance targets that may be difficult to meet. Sales may be slower than expected due to market conditions, competition, and other factors. Costs may be greater than anticipated due to the potential need to increase spending to ensure performance in accordance with commitments to clients and other factors. Software development may take longer and cost more than expected, and incorporation of anticipated features and functionality may be delayed, due to various factors including programming and integration challenges and resource constraints. The market is highly competitive. Implementation and customization of Eclipsys software is complex and time-consuming. Results depend upon a variety of factors and can vary by client. Each client’s circumstances are unique and may include unforeseen issues that make it more difficult than anticipated to implement or derive benefit from software, implementation or consulting services. The success and timeliness of the company’s services will depend at least in part upon client involvement, which can be difficult to control. Eclipsys is required to meet specified performance standards, and clients can terminate contracts, assess penalties or reduce contract scope under certain circumstances. More information about company risks is available in recent Form 10-K and other filings made by Eclipsys from time to time with the Securities and Exchange Commission. Special attention is directed to the portions of those documents entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Eclipsys Corporation and The Outcomes Company are registered trademarks of Eclipsys Corporation. Sunrise and XA are trademarks of Eclipsys Corporation. Other product and company names in this news release are trademarks and/or registered trademarks of their respective companies.
| Eclipsys |
| Jason Cigarran |
| Director of Media Relations (media) |
| (561) 322-4355 |
| jason.cigarran@eclipsys.com |
|
|
| Robert J. Colletti |
| Chief Financial Officer (investors) |
| (561) 322-4655 |
| investor.relations@eclipsys.com |
ECLIPSYS CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Operations (Unaudited)
(In thousands, except per share amounts)
|
| Three Months Ended |
| Nine Months Ended |
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|
| 2006 |
| 2005 |
| 2006 |
| 2005 |
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Revenues: |
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|
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|
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|
Systems and services |
| $ | 104,266 |
| $ | 94,806 |
| $ | 298,243 |
| $ | 269,491 |
|
Hardware |
|
| 4,300 |
|
| 3,046 |
|
| 13,437 |
|
| 8,660 |
|
Total revenues |
|
| 108,566 |
|
| 97,852 |
|
| 311,680 |
|
| 278,151 |
|
Costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of systems and services |
|
| 61,518 |
|
| 56,776 |
|
| 177,073 |
|
| 165,601 |
|
Cost of hardware |
|
| 3,489 |
|
| 2,575 |
|
| 10,991 |
|
| 7,233 |
|
Sales and marketing |
|
| 16,024 |
|
| 14,076 |
|
| 46,766 |
|
| 47,136 |
|
Research and development |
|
| 13,166 |
|
| 12,726 |
|
| 44,424 |
|
| 39,276 |
|
General and administrative |
|
| 6,762 |
|
| 3,840 |
|
| 17,961 |
|
| 14,707 |
|
Depreciation and amortization |
|
| 3,885 |
|
| 3,625 |
|
| 11,581 |
|
| 10,891 |
|
Restructuring charge |
|
| — |
|
| — |
|
| 8,547 |
|
| — |
|
Total costs and expenses |
|
| 104,844 |
|
| 93,618 |
|
| 317,343 |
|
| 284,844 |
|
Income (loss) from operations before interest and taxes |
|
| 3,722 |
|
| 4,234 |
|
| (5,663 | ) |
| (6,693 | ) |
Interest income, net |
|
| 1,389 |
|
| 865 |
|
| 3,873 |
|
| 2,146 |
|
Income (loss) before taxes |
|
| 5,111 |
|
| 5,099 |
|
| (1,790 | ) |
| (4,547 | ) |
Provision for income taxes |
|
| — |
|
| — |
|
| — |
|
| — |
|
Net income (loss) |
| $ | 5,111 |
| $ | 5,099 |
| $ | (1,790 | ) | $ | (4,547 | ) |
Income (loss) per common share: |
|
|
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|
|
|
|
|
Basic income (loss) per common share |
| $ | 0.10 |
| $ | 0.11 |
| $ | (0.03 | ) | $ | (0.10 | ) |
Diluted income (loss) per common share |
| $ | 0.10 |
| $ | 0.10 |
| $ | (0.03 | ) | $ | (0.10 | ) |
Weighted average shares outstanding: |
|
|
|
|
|
|
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|
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|
Basic |
|
| 51,712 |
|
| 48,304 |
|
| 51,312 |
|
| 47,751 |
|
Diluted |
|
| 52,791 |
|
| 51,316 |
|
| 52,930 |
|
| 47,751 |
|
ECLIPSYS CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets (Unaudited)
(In thousands)
|
| September 30, |
| December 31, |
| ||
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Assets |
|
|
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|
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Current assets: |
|
|
|
|
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|
Cash and cash equivalents |
| $ | 34,278 |
| $ | 76,693 |
|
Marketable securities |
|
| 88,956 |
|
| 37,455 |
|
Accounts receivable, net of allowance for doubtful accounts of $4,721 and $5,676, respectively |
|
| 83,320 |
|
| 80,833 |
|
Inventory |
|
| 1,794 |
|
| 2,289 |
|
Prepaid expenses |
|
| 24,407 |
|
| 17,909 |
|
Other current assets |
|
| 594 |
|
| 2,184 |
|
Total current assets |
|
| 233,349 |
|
| 217,363 |
|
Property and equipment, net |
|
| 42,967 |
|
| 40,500 |
|
Capitalized software development costs, net |
|
| 31,950 |
|
| 35,690 |
|
Acquired technology, net |
|
| 984 |
|
| 584 |
|
Intangibles assets, net |
|
| 3,222 |
|
| 2,940 |
|
Deferred tax asset |
|
| 6,756 |
|
| 4,124 |
|
Goodwill |
|
| 9,589 |
|
| 6,624 |
|
Other assets |
|
| 16,676 |
|
| 20,964 |
|
Total assets |
| $ | 345,493 |
| $ | 328,789 |
|
Liabilities and Stockholders’ Equity |
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
Deferred revenue |
| $ | 100,563 |
| $ | 107,960 |
|
Accounts payable |
|
| 12,857 |
|
| 26,103 |
|
Accrued compensation costs |
|
| 17,187 |
|
| 15,974 |
|
Deferred tax liability |
|
| 6,756 |
|
| 4,124 |
|
Other current liabilities |
|
| 15,873 |
|
| 10,413 |
|
Total current liabilities |
|
| 153,236 |
|
| 164,574 |
|
Deferred revenue |
|
| 13,283 |
|
| 16,772 |
|
Other long-term liabilities |
|
| 143 |
|
| 1,252 |
|
Total liabilities |
|
| 166,662 |
|
| 182,598 |
|
Stockholders’ equity: |
|
|
|
|
|
|
|
Total stockholders’ equity |
|
| 178,831 |
|
| 146,191 |
|
Total liabilities and stockholders’ equity |
| $ | 345,493 |
| $ | 328,789 |
|
ECLIPSYS CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
|
| Nine Months Ended |
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| |||||
|
| 2006 |
| 2005 |
| ||
|
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Operating activities: |
|
|
|
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|
|
Net loss |
| $ | (1,790 | ) | $ | (4,547 | ) |
Adjustments to reconcile net loss to net case used in operating activities: |
|
|
|
|
|
|
|
Depreciation and amortization |
|
| 26,641 |
|
| 24,425 |
|
Provision for bad debt |
|
| 1,568 |
|
| 1,500 |
|
Stock compensation expense |
|
| 10,568 |
|
| 1,720 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
Increase in accounts receivable |
|
| (4,353 | ) |
| (11,832 | ) |
Increase in prepaid expenses and other current assets |
|
| (5,017 | ) |
| (2,787 | ) |
(Increase) / Decrease in inventory |
|
| 479 |
|
| (490 | ) |
(Increase) / Decrease in other assets |
|
| 2,752 |
|
| (9,882 | ) |
(Decrease) / Increase in deferred revenue |
|
| (10,856 | ) |
| 1,567 |
|
Increase in accrued compensation |
|
| 1,179 |
|
| 1,998 |
|
(Decrease) / Increase in accounts payable and other current liabilities |
|
| (10,655 | ) |
| 600 |
|
(Decrease) / Increase in other long-term liabilities |
|
| (1,108 | ) |
| 1,135 |
|
Total adjustments |
|
| 11,198 |
|
| 7,954 |
|
Net cash provided by operating activities |
|
| 9,408 |
|
| 3,407 |
|
Investing activities: |
|
|
|
|
|
|
|
Purchases of property and equipment |
|
| (10,254 | ) |
| (12,809 | ) |
Purchase of marketable securities |
|
| (99,358 | ) |
| (93,554 | ) |
Proceeds from sales of marketable securities |
|
| 47,856 |
|
| 9,930 |
|
Capitalized software development costs |
|
| (9,535 | ) |
| (14,637 | ) |
Cash paid for acquisitions |
|
| (3,930 | ) |
| (946 | ) |
Net cash used in investing activities |
|
| (75,221 | ) |
| (112,016 | ) |
Financing activities: |
|
|
|
|
|
|
|
Proceeds from stock options exercised |
|
| 22,685 |
|
| 9,919 |
|
Proceeds from issuance of common stock in employee stock purchase plan |
|
| 496 |
|
| — |
|
Net cash provided by financing activities |
|
| 23,181 |
|
| 9,919 |
|
Effect of exchange rates on cash and cash equivalents |
|
| 217 |
|
| 117 |
|
Net decrease in cash and cash equivalents |
|
| (42,415 | ) |
| (98,573 | ) |
Cash and cash equivalents - beginning of period |
|
| 76,693 |
|
| 122,031 |
|
Cash and cash equivalents - end of period |
| $ | 34,278 |
| $ | 23,458 |
|
ECLIPSYS CORPORATION AND SUBSIDIARIES
Reconciliation of GAAP to Non-GAAP Pro Forma Results
(In thousands, except per share amounts)
|
| Three Months Ended |
| ||||
|
|
| |||||
|
| 2006 |
| 2005 |
| ||
|
|
|
| ||||
GAAP net income |
| $ | 5,111 |
| $ | 5,099 |
|
Deduct: |
|
|
|
|
|
|
|
Share-based compensation expense(1) |
|
| (3,362 | ) |
| — |
|
Non-GAAP net income(2) |
| $ | 8,473 |
| $ | 5,099 |
|
GAAP diluted earnings per share |
| $ | 0.10 |
| $ | 0.10 |
|
Deduct: |
|
|
|
|
|
|
|
Share-based compensation expense(1) |
|
| (0.06 | ) |
| — |
|
Non-GAAP diluted earnings per share(2) |
| $ | 0.16 |
| $ | 0.10 |
|
(1) | On January 1, 2006, we adopted SFAS 123R and applied the modified prospective transition method. Under this method, we did not restate any prior periods. During the third-quarter of 2006, we recorded share-based compensation expense of $3.4 million. |
|
| Three Months Ended |
| |
|
|
| ||
Costs of systems & services |
| $ | 1,415 |
|
Sales and marketing |
|
| 676 |
|
Research and development |
|
| 570 |
|
General and administrative |
|
| 701 |
|
Total share-based compensation expense |
| $ | 3,362 |
|
(2) | These non-GAAP measures exclude the effect of the implementation of SFAS 123R, and are provided to facilitate evaluation of the company’s operating performance and comparisons with prior period results that did not include the impact of SFAS 123R. |
ECLIPSYS CORPORATION AND SUBSIDIARIES
Reconciliation of GAAP to Non-GAAP Pro Forma Results
(In thousands, except per share amounts)
|
| Nine Months Ended |
| ||||
|
|
| |||||
|
| 2006 |
| 2005 |
| ||
|
|
|
| ||||
GAAP net loss |
| $ | (1,790 | ) | $ | (4,547 | ) |
Deduct: |
|
|
|
|
|
|
|
Share-based compensation expense(1) |
|
| (9,583 | ) |
| — |
|
Restructuring charge(2) |
|
| (8,547 | ) |
| — |
|
Non-GAAP net income (loss)(3) |
| $ | 16,340 |
| $ | (4,547 | ) |
GAAP loss per share |
| $ | (0.03 | ) | $ | (0.10 | ) |
Deduct: |
|
|
|
|
|
|
|
Share-based compensation expense(1) |
|
| (0.18 | ) |
| — |
|
Restructuring charge(2) |
|
| (0.16 | ) |
| — |
|
Non-GAAP diluted earnings (loss) per share(3) |
| $ | 0.31 |
| $ | (0.10 | ) |
(1) | On January 1, 2006, we adopted SFAS 123R and applied the modified prospective transition method. Under this method, we did not restate any prior periods. For the nine months ended September 30, 2006, we recorded share-based compensation expense of $9.6 million. |
|
| Nine Months Ended |
| |
|
|
| ||
Costs of systems & services |
| $ | 3,778 |
|
Sales and marketing |
|
| 2,241 |
|
Research and development |
|
| 1,492 |
|
General and administrative |
|
| 2,072 |
|
Total share-based compensation expense |
| $ | 9,583 |
|
(2) | This charge is associated with certain headcount reductions made in the first quarter 2006 and completed in the second quarter 2006 to reduce costs and redirect spending into client related functions including customer support and professional services. |
|
|
(3) | These non-GAAP measures exclude the effect of first and second quarter 2006 restructuring charges and implementation of SFAS 123R, and are provided to facilitate evaluation of the company’s operating performance and comparisons with prior period results that did not include restructuring charges or the impact of SFAS 123R. |
SOURCE Eclipsys Corporation
-0- 10/30/2006
/CONTACT: Media, Jason Cigarran, Director of Media Relations, +1-561-322-4355, or jason.cigarran@eclipsys.com, or Investors, Robert J. Colletti, Chief Financial Officer, +1-561-322-4655, or investor.relations@eclipsys.com, both of Eclipsys/
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/Web site: http://www.eclipsys.com/
(ECLP)