Exhibit 99.1
NDCHEALTH REPORTS SECOND QUARTER RESULTS
ATLANTA, January 7, 2004 – NDCHealth Corporation (NYSE: NDC) today announced financial results for its second quarter ended November 28, 2003. Revenue increased to $115.2 million from $105.3 million in the second quarter of fiscal 2003.
Net income in the second quarter of fiscal 2004 was $8.7 million, or $0.25 per diluted per share, compared with net income of $12.7 million, or $0.36 per diluted share, in the same quarter of fiscal 2003. As previously disclosed, the fiscal 2004 second quarter results included a restructuring charge of $2.5 million, or $0.04 per diluted share primarily related to organizational consolidation. The First Call consensus analyst expectation was $0.27, but does not include the $0.04 restructuring charge.
For the six-month period ended November 28, 2003, net cash provided by operating activities grew to $54.6 million, from the $40.6 million reported in the same period of fiscal 2003.
As expected, net income and earnings per share results in the second quarter of fiscal 2004 were reduced 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. On December 19, 2003, NDCHealth completed the renegotiation of its $225 million Credit Facility, which increases the company’s financial flexibility and will lower its future net interest expense by approximately $525,000 per quarter. This reduction is before any loan prepayments the company may make in future periods.
“We delivered another solid quarter of progress in executing against our eight quarter plan, highlighted by consistent growth in revenue and net cash from operating activities,” commented Walter Hoff, chairman and chief executive officer, NDCHealth. “Our strategy of selling solutions to increase our revenue per claim by improving customer cash flow and profitability is working. Our sales to hospitals have increased dramatically, and we are continuing to pursue a number of pharmacy solution sales, which lead us to believe we will achieve our goals and objectives in the second half of fiscal 2004.
“We also experienced strong growth in our German Information Management business during the quarter, and were successful in selling additional base compensation and targeting and our new Insight and Impact solutions domestically. In addition, our Physician product sales showed good sequential growth, physician claims transactions increased and electronic prescription volume continues to rise,” Mr. Hoff continued. “We remain focused on delivering new products and services that create value for our customers and generate additional revenue streams in both of our business segments, as well as controlling our corporate costs and leveraging the scale of our largely fixed cost infrastructure to drive a sustainable trend in margin improvement.”
Based on the company’s first half results and its current outlook, management’s financial guidance is unchanged for fiscal 2004. Full-year revenue is estimated to be approximately $475 to $490 million, and NDCHealth will continue to be a strong generator of cash, with net cash provided by operating activities expected to be in the range of $105 to $115 million for the current fiscal year. In addition, management estimates that diluted earnings per share will be in the range of $1.08 to $1.25, including the first half restructuring charges of $0.07 per diluted share but excluding the impact of lower interest expense and any additional restructuring charges that may occur in the second half of fiscal 2004.
For additional information on NDCHealth’s strategies and financial and business outlook, please refer to the Current Report on Form 8-K, Quarterly Report on Form 10-Q and 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.
Conference Call and Web Cast
Management will host a conference call to discuss these results on Thursday, January 8, 2004 beginning at 8:30 a.m. ET. The conference call can be accessed by dialing 877-421-3895 (706-679-0822 for international and local callers), or by web cast at www.ndchealth.com. A replay of the conference call will be available through 11:59 p.m. ET on Friday, January 16, 2004, and can be accessed either via archived web cast at our corporate web site, or by dialing 800-642-1687 (706-645-9291 for international and local callers) and enter conference ID 4151880.
About NDCHealth
NDCHealth is a leading provider of health information solutions that add value to pharmacy, hospital, physician, pharmaceutical and payer businesses.
Safe Harbor
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 or amend these statements in light of new information, future events or otherwise. Forward-looking statements are only predictions and are not guarantees of performance.
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Contact:
Robert Borchert
VP, Investor Relations
404-728-2906
robert.borchert@ndchealth.com
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
NDCHealth Corporation and Subsidiaries
Three Months Ended | ||||||||
(In thousands, except per share data) | November 28, 2003 | November 29, 2002 | ||||||
Revenues: | ||||||||
Information management | $ | 42,163 | $ | 37,592 | ||||
Network services and systems | 73,071 | 67,694 | ||||||
115,234 | 105,286 | |||||||
Operating expenses: | ||||||||
Cost of service | 57,182 | 51,950 | ||||||
Sales, general and administrative | 24,822 | 22,061 | ||||||
Depreciation and amortization | 9,444 | 7,501 | ||||||
Restructuring, impairment and other charges | 2,500 | — | ||||||
93,948 | 81,512 | |||||||
Operating income | 21,286 | 23,774 | ||||||
Other income (expense): | ||||||||
Interest and other income | 189 | 467 | ||||||
Interest and other expense | (7,603 | ) | (3,676 | ) | ||||
Minority interest in losses | 471 | 653 | ||||||
Early extinguishment of debt charges | — | (921 | ) | |||||
(6,943 | ) | (3,477 | ) | |||||
Income before income taxes and equity in losses of affiliated companies: | ||||||||
Information management | 5,297 | 6,848 | ||||||
Network services and systems | 10,468 | 14,370 | ||||||
Other | (1,422 | ) | (921 | ) | ||||
14,343 | 20,297 | |||||||
Provision for income taxes | 5,369 | 7,307 | ||||||
Income before equity in losses of affiliated companies | 8,974 | 12,990 | ||||||
Equity in losses of affiliated companies, net of income taxes | (240 | ) | (313 | ) | ||||
Net income | $ | 8,734 | $ | 12,677 | ||||
Basic earnings per share: | $ | 0.25 | $ | 0.37 | ||||
Shares | 34,824 | 34,559 | ||||||
Diluted earnings per share: | $ | 0.25 | $ | 0.36 | ||||
Shares | 35,619 | 38,856 |
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
NDCHealth Corporation and Subsidiaries
Six Months Ended | ||||||||
(In thousands, except per share data) | November 28, 2003 | November 29, 2002 | ||||||
Revenues: | ||||||||
Information management | $ | 81,651 | $ | 73,674 | ||||
Network services and systems | 142,474 | 131,694 | ||||||
224,125 | 205,368 | |||||||
Operating expenses: | ||||||||
Cost of service | 112,334 | 103,751 | ||||||
Sales, general and administrative | 48,008 | 42,214 | ||||||
Depreciation and amortization | 18,758 | 15,110 | ||||||
Restructuring, impairment and other charges | 3,999 | — | ||||||
183,099 | 161,075 | |||||||
Operating income | 41,026 | 44,293 | ||||||
Other income (expense): | ||||||||
Interest and other income | 324 | 745 | ||||||
Interest and other expense | (15,316 | ) | (6,916 | ) | ||||
Minority interest in losses | 623 | 1,031 | ||||||
Early extinguishment of debt charges | — | (921 | ) | |||||
(14,369 | ) | (6,061 | ) | |||||
Income before income taxes and equity in losses of affiliated companies: | ||||||||
Information management | 8,735 | 11,605 | ||||||
Network services and systems | 20,843 | 27,548 | ||||||
Other | (2,921 | ) | (921 | ) | ||||
26,657 | 38,232 | |||||||
Provision for income taxes | 9,986 | 13,765 | ||||||
Income before equity in losses of affiliated companies | 16,671 | 24,467 | ||||||
Equity in losses of affiliated companies, net of income taxes | (583 | ) | (625 | ) | ||||
Net income | $ | 16,088 | $ | 23,842 | ||||
Basic earnings per share: | $ | 0.46 | $ | 0.69 | ||||
Shares | 34,785 | 34,529 | ||||||
Diluted earnings per share: | $ | 0.45 | $ | 0.68 | ||||
Shares | 35,367 | 39,039 |
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CONDENSED CONSOLIDATED BALANCE SHEETS
NDCHealth Corporation and Subsidiaries
(In thousands, except share data) | November 28, 2003 | May 30, 2003 | ||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 38,584 | $ | 16,103 | ||||
Accounts receivable | 80,761 | 78,988 | ||||||
Allowance for doubtful accounts | (7,730 | ) | (6,785 | ) | ||||
Accounts receivable, net | 73,031 | 72,203 | ||||||
Income tax receivable | 639 | 1,199 | ||||||
Deferred income taxes | 15,377 | 21,663 | ||||||
Prepaid expenses and other current assets | 33,888 | 34,304 | ||||||
Total current assets | 161,519 | 145,472 | ||||||
Property and equipment, net | 124,493 | 116,678 | ||||||
Intangible assets, net | 475,941 | 479,234 | ||||||
Deferred income taxes | 2,312 | 5,018 | ||||||
Debt issuance cost | 12,269 | 12,756 | ||||||
Investments | 17,345 | 15,662 | ||||||
Other | 13,757 | 12,432 | ||||||
Total Assets | $ | 807,636 | $ | 787,252 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Current portion of long-term debt | $ | 6,590 | $ | 6,558 | ||||
Current portion of obligations under capital leases | 921 | 1,028 | ||||||
Accounts payable and accrued liabilities | 63,473 | 61,211 | ||||||
Accrued interest | 13,259 | 13,281 | ||||||
Deferred revenue | 37,042 | 38,137 | ||||||
Total current liabilities | 121,285 | 120,215 | ||||||
Long-term debt | 319,598 | 321,262 | ||||||
Obligations under capital leases | 266 | 558 | ||||||
Deferred revenue | 12,049 | 9,461 | ||||||
Other long-term liabilities | 31,513 | 30,225 | ||||||
Total liabilities | 484,711 | 481,721 | ||||||
Commitments and contingencies | — | — | ||||||
Minority interest in equity of subsidiaries | 8,396 | 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; 35,314,078 and 34,888,753 shares issued, respectively. | 4,414 | 4,361 | ||||||
Capital in excess of par value | 223,705 | 216,156 | ||||||
Retained earnings | 92,496 | 79,228 | ||||||
Deferred compensation and other | (7,731 | ) | (4,301 | ) | ||||
Other comprehensive income | 1,645 | 1,068 | ||||||
Total stockholders’ equity | 314,529 | 296,512 | ||||||
Total Liabilities and Stockholders’ Equity | $ | 807,636 | $ | 787,252 | ||||
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
NDCHealth Corporation and Subsidiaries
Six Months Ended | ||||||||
(In thousands) | November 28, 2003 | November 29, 2002 | ||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 16,088 | $ | 23,842 | ||||
Adjustments to reconcile net income to cash provided by operating activities: | ||||||||
Equity in losses of affiliated companies | 583 | 625 | ||||||
Non-cash portion of restructuring, impairment and other charges | 1,049 | — | ||||||
Non-cash early extinguishment of debt charges | — | 805 | ||||||
Depreciation and amortization | 18,758 | 15,110 | ||||||
Deferred income taxes | 9,300 | 5,342 | ||||||
Provision for bad debts | 1,791 | 1,544 | ||||||
Other, net | 1,597 | 2,300 | ||||||
Changes in assets and liabilities which provided (used) cash, net of the effects of acquisitions: | ||||||||
Accounts receivable, net | (3,540 | ) | (4,029 | ) | ||||
Prepaid expenses and other assets | (245 | ) | 370 | |||||
Accounts payable and accrued liabilities | 7,212 | (4,275 | ) | |||||
Accrued interest on long term debt | (22 | ) | 862 | |||||
Deferred revenue | 1,449 | (3,922 | ) | |||||
Income taxes | 560 | 2,059 | ||||||
Net cash provided by operating activities | 54,580 | 40,633 | ||||||
Cash flows from investing activities: | ||||||||
Capital expenditures | (23,721 | ) | (20,804 | ) | ||||
Proceeds from the sale of equipment | 2,148 | — | ||||||
Investing activities and other non-current assets | (7,067 | ) | (10,244 | ) | ||||
Net cash used in investing activities | (28,640 | ) | (31,048 | ) | ||||
Cash flows from financing activities: | ||||||||
Net repayments under lines of credit | — | (91,000 | ) | |||||
Net principal payments under capital lease arrangements and other long-term debt | (2,030 | ) | (1,625 | ) | ||||
Net cash from refinancing activities | (395 | ) | 165,945 | |||||
Net proceeds from stock activities | 2,645 | 1,227 | ||||||
Dividends paid | (2,820 | ) | (2,778 | ) | ||||
Net cash (used in) provided by financing activities | (2,600 | ) | 71,769 | |||||
Cash flows from discontinued operations: | ||||||||
Cash provided by tax benefits of discontinued operations | — | 6,106 | ||||||
Cash used in discontinued operations | (859 | ) | (3,519 | ) | ||||
Net cash (used in) provided by discontinued operations | (859 | ) | 2,587 | |||||
Increase in cash and cash equivalents | 22,481 | 83,941 | ||||||
Cash and cash equivalents, beginning of period | 16,103 | 13,447 | ||||||
Cash and cash equivalents, end of period | $ | 38,584 | $ | 97,388 | ||||
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