Exhibit 99.1
[LOGO OF NDCHEALTH]
NDCHealth Reports Fiscal First Quarter Results
ATLANTA, October 1, 2003 — NDCHealth Corporation (NYSE: NDC) today announced financial results for its first quarter ended August 29, 2003. Revenue increased to $108.9 million from $100.1 million in the first quarter of fiscal 2003. Net income in the first quarter of fiscal 2004 was $7.4 million, or $0.21 per diluted per share, compared with net income of $11.2 million, or $0.32 per diluted share, in the first three months of fiscal 2003.
Results for the first quarter of fiscal 2004 include a restructuring charge of $1.5 million, or $0.03 per diluted share, primarily related to streamlining the organization, including the integration of the TechRx acquisition into NDCHealth. First quarter results were, and full-year 2004 results are expected to be, affected by increased interest expense related to the company’s debt refinancing completed in November 2002 and a step up in corporate and other costs previously disclosed in its fiscal 2003 year-end report.
Net cash provided by operating activities increased to $19.6 million in the first quarter of fiscal 2004, which was more than triple the $6.0 million reported in the same period of fiscal 2003. EBITDA, a key measurement related to NDCHealth’s debt covenants (defined in the company’s credit agreement as income before equity in losses of affiliated companies, plus income taxes, interest expense, depreciation and amortization, and certain other non-cash charges, less minority interest in income and losses), increased to $30.2 million from $29.0 million in the comparable period in fiscal 2003.
“We showed solid progress in executing against the eight quarter plan we announced at the beginning of our fiscal year, highlighted by the growth in revenue and net cash from operating activities during our seasonally slow first quarter,” commented Walter Hoff, chairman and chief executive officer. “Our strategy to increase revenue per claim by selling value-adding solutions that improve our customers’ cash flow and profitability is showing success. We remain focused on controlling our corporate costs and delivering new products and services that will provide additional revenue streams in both our Network Services & Systems and Information Management businesses.
Based on our first quarter results and our current outlook, we have no changes to our previously issued guidance for fiscal 2004. We estimate that revenue will be approximately $475 to $490 million and diluted earnings per share will be in the range of $1.08 to $1.25, including restructuring charges. As we previously disclosed, we expect to incur restructuring charges totaling $0.05 to $0.07 per share in the first half of this year, which includes the $0.03 restructuring charge in the first fiscal quarter. We expect to continue to be a strong generator of cash, with fiscal 2004 net cash provided by operating activities in the range of $105 to $115 million,” Hoff concluded.
Additional information on NDCHealth’s strategies and outlook is available in a Current Report on Form 8-K, Quarterly Report on Form 10-Q and in the company’s Annual Report on Form 10-K/A filed with the Securities and Exchange Commission (SEC), which can be accessed from the Investor Relations page, SEC Filings section of the company’s website,www.ndchealth.com.
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Conference Call and Webcast
Management will host a conference call for investors to discuss these results on Thursday, October 2, 2003 beginning at 10:00 a.m. Eastern time. The conference call can be accessed by dialing 888-276-9995 and entering ID code 699394. For access via webcast, go tohttp://webmeeting.att.com and enter meeting number 5114686455 and participant code 254084 when prompted. A replay of the conference call will be available through 11:59 p.m. Eastern time on Friday, October 17, 2003, and can be accessed either via archived webcast athttp://webmeeting.att.com, or by dialing 800-475-6701 and entering access code 699394.
About NDCHealth
NDCHealth is a leading provider of health information solutions that add value to pharmacy, hospital, physician, pharmaceutical and payer businesses.
Forward-Looking Statements
This press release contains forward-looking statements. The statements related to the Company’s expected business outlook and the Company’s guidance for fiscal year 2004 are forward-looking statements. These statements involve risks and uncertainties that may cause actual results to differ materially from those set forth in the forward-looking statements. Among other things, the Company’s business outlook and the projected results for the remainder of fiscal year 2004 are based on preliminary estimates, assumptions and projections that management believes to be reasonable at this time, but are beyond management’s control. Some of management’s assumptions that underlie the Company’s forward-looking statements include, among others, assumptions regarding demand for the Company’s products, the cost and timing of product upgrades and new product introductions, gains in market share, industry conditions affecting the Company’s customers, expected pricing levels, expected growth of revenue and net income, the timing and cost of planned capital expenditures, expected outcomes of pending litigation and expected synergies relating to acquisitions, joint ventures and alliances. Additional factors that could cause results to materially differ from current expectations include, but are not limited to, changes in demand for the Company’s services, changes in the U.S. healthcare industry, consolidation within the healthcare industry as well as other factors discussed in NDCHealth’s Annual Report on Form 10-K/A for the fiscal year ended May 30, 2003, filed with the SEC. Forward-looking statements speak only as of the date they are made, and the Company disclaims any obligation to update these statements in light of new information, future events or otherwise. Forward-looking statements are only predictions and are not guarantees of performance.
Contact: |
Robert Borchert |
VP, Investor Relations |
(404) 728-2906 |
robert.borchert@ndchealth.com |
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CONSOLIDATED STATEMENTS OF OPERATIONS
NDCHealth Corporation and Subsidiaries
(In thousands, except per share data)
Three Months Ended | ||||||||
August 29, 2003 | August 30, 2002 | |||||||
Revenues: | ||||||||
Information management | $ | 39,488 | $ | 36,082 | ||||
Network services and systems | 69,403 | 64,000 | ||||||
108,891 | 100,082 | |||||||
Operating expenses: | ||||||||
Cost of service | 55,152 | 51,801 | ||||||
Sales, general and administrative | 23,186 | 20,153 | ||||||
Depreciation and amortization | 9,314 | 7,609 | ||||||
Restructuring, impairment and other charges | 1,499 | — | ||||||
89,151 | 79,563 | |||||||
Operating income | 19,740 | 20,519 | ||||||
Other income (expense): | ||||||||
Interest and other income | 135 | 278 | ||||||
Interest and other expense | (7,713 | ) | (3,240 | ) | ||||
Minority interest in losses | 152 | 378 | ||||||
(7,426 | ) | (2,584 | ) | |||||
Income before income taxes and equity in losses of affiliated companies: | ||||||||
Information management | 3,438 | 4,757 | ||||||
Network services and systems | 10,375 | 13,178 | ||||||
Other | (1,499 | ) | — | |||||
12,314 | 17,935 | |||||||
Provision for income taxes | 4,617 | 6,458 | ||||||
Income before equity in losses of affiliated companies | 7,697 | 11,477 | ||||||
Equity in losses of affiliated companies | (343 | ) | (312 | ) | ||||
Net income | $ | 7,354 | $ | 11,165 | ||||
Basic earnings per share: | $ | 0.21 | $ | 0.32 | ||||
Shares | 34,746 | 34,474 | ||||||
Diluted earnings per share: | $ | 0.21 | $ | 0.32 | ||||
Shares | 35,114 | 39,196 |
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CONSOLIDATED STATEMENTS OF CASH FLOWS
NDCHealth Corporation and Subsidiaries
(In thousands)
Three Months Ended | ||||||||
August 29, 2003 | August 30, 2002 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 7,354 | $ | 11,165 | ||||
Adjustments to reconcile net income to cash provided by operating activities: | ||||||||
Equity in losses of affiliated companies | 343 | 312 | ||||||
Non-cash restructuring, impairment and other charges | 101 | — | ||||||
Depreciation and amortization | 9,314 | 7,609 | ||||||
Deferred income taxes | 4,221 | �� | 286 | |||||
Provision for bad debts | 1,011 | 722 | ||||||
Other, net | 884 | 1,191 | ||||||
Changes in assets and liabilities which provided (used) cash, net of the effects of acquisitions: | ||||||||
Accounts receivable, net | (474 | ) | (5,196 | ) | ||||
Prepaid expenses and other assets | 2,315 | (1,728 | ) | |||||
Accounts payable and accrued liabilities | 2,700 | (11,317 | ) | |||||
Accrued interest on long term debt | (5,530 | ) | 2,625 | |||||
Deferred revenue | (3,079 | ) | 739 | |||||
Income taxes | 459 | (395 | ) | |||||
Net cash provided by operating activities | 19,619 | 6,013 | ||||||
Cash flows from investing activities: | ||||||||
Capital expenditures | (13,950 | ) | (12,902 | ) | ||||
Investing activities and other non-current assets | (4,865 | ) | (5,073 | ) | ||||
Net cash used in investing activities | (18,815 | ) | (17,975 | ) | ||||
Cash flows from financing activities: | ||||||||
Net principal payments under capital lease arrangements and other long-term debt | (602 | ) | (439 | ) | ||||
Net cash from refinancing activities | (154 | ) | — | |||||
Net proceeds from stock activities | 653 | 567 | ||||||
Dividends paid | (1,408 | ) | (1,388 | ) | ||||
Net cash used in financing activities | (1,511 | ) | (1,260 | ) | ||||
Cash flows from discontinued operations: | ||||||||
Cash provided by tax benefits of discontinued operations | — | 5,343 | ||||||
Cash used in discontinued operations | (728 | ) | (290 | ) | ||||
Net cash (used in) provided by discontinued operations | (728 | ) | 5,053 | |||||
Increase in cash and cash equivalents | (1,435 | ) | (8,169 | ) | ||||
Cash and cash equivalents, beginning of period | 16,103 | 13,447 | ||||||
Cash and cash equivalents, end of period | $ | 14,668 | $ | 5,278 | ||||
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CONSOLIDATED BALANCE SHEETS
NDCHealth Corporation and Subsidiaries
(In thousands, except share data)
August 29, 2003 | May 30, 2003 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 14,668 | $ | 16,103 | ||||
Accounts receivable | 79,081 | 78,988 | ||||||
Allowance for doubtful accounts | (7,100 | ) | (6,785 | ) | ||||
Accounts receivable, net | 71,981 | 72,203 | ||||||
Income tax receivable | 745 | 1,199 | ||||||
Deferred income taxes | 17,528 | 21,663 | ||||||
Prepaid expenses and other current assets | 30,791 | 34,304 | ||||||
Total current assets | 135,713 | 145,472 | ||||||
Property and equipment, net | 123,922 | 116,678 | ||||||
Intangible assets, net | 473,422 | 479,234 | ||||||
Deferred income taxes | 5,312 | 5,018 | ||||||
Debt issuance cost | 12,282 | 12,756 | ||||||
Investments | 16,877 | 15,662 | ||||||
Other | 12,338 | 12,432 | ||||||
Total Assets | $ | 779,866 | $ | 787,252 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Current portion of long-term debt | $ | 6,447 | $ | 6,558 | ||||
Current portion of obligations under capital leases | 772 | 1,028 | ||||||
Accounts payable and accrued liabilities | 60,683 | 61,211 | ||||||
Accrued interest | 7,751 | 13,281 | ||||||
Deferred revenue | 34,507 | 38,137 | ||||||
Total current liabilities | 110,160 | 120,215 | ||||||
Long-term debt | 321,212 | 321,262 | ||||||
Obligations under capital leases | 372 | 558 | ||||||
Deferred revenue | 9,906 | 9,461 | ||||||
Other long-term liabilities | 30,119 | 30,225 | ||||||
Total liabilities | 471,769 | 481,721 | ||||||
Commitments and contingencies | — | — | ||||||
Minority interest in equity of subsidiaries | 8,867 | 9,019 | ||||||
Stockholders’ equity: | ||||||||
Preferred stock, par value $1.00 per share; 1,000,000 shares authorized, none issued | ||||||||
Common stock, par value $.125 per share; 200,000,000 shares authorized; 35,192,896 and 34,888,753 shares issued, respectively. | 4,399 | 4,361 | ||||||
Capital in excess of par value | 221,834 | 216,156 | ||||||
Retained earnings | 85,173 | 79,228 | ||||||
Deferred compensation and other | (8,639 | ) | (4,301 | ) | ||||
Other comprehensive income | (3,537 | ) | 1,068 | |||||
Total stockholders’ equity | 299,230 | 296,512 | ||||||
Total Liabilities and Stockholders’ Equity | $ | 779,866 | $ | 787,252 | ||||
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EBITDA Reconciliation
NDCHealth Corporation and Subsidiaries
In light of our significant levels of borrowing and interest expense, we believe that EBITDA is a meaningful measure of our operating performance as it is a key measurement related to our debt covenants. EBITDA is defined in our credit agreement as income before equity in losses of affiliated companies, plus income taxes, interest expense, depreciation and amortization, and certain other non-cash charges, less minority interest in income and losses. EBITDA is not a Generally Accepted Accounting Principles (GAAP) measurement and may not be comparable to EBITDA reported by other companies. The tables below reconcile EBITDA for the three months ended August 29, 2003 and August 30, 2002 to our results determined under GAAP.
(In thousands)
Three Months Ended | ||||||||
August 29, 2003 | August 30, 2002 | |||||||
Net income | $ | 7,354 | $ | 11,165 | ||||
Equity in losses of affiliated companies | 343 | 312 | ||||||
Income taxes | 4,617 | 6,458 | ||||||
Interest expense and related costs | 8,136 | 3,071 | ||||||
Depreciation and amortization | 9,314 | 7,609 | ||||||
Amortization of restricted stock | 495 | 765 | ||||||
Other non-cash charges | 99 | 23 | ||||||
Minority interest in losses | (152 | ) | (378 | ) | ||||
EBITDA | $ | 30,206 | $ | 29,025 | ||||
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