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[MEDAPHIS LOGO]
EXHIBIT 99.1
MEDAPHIS
Medaphis Corporation
2700 Cumberland Parkway
Suite 300 Investor Contact: Caryn Dickerson
Atlanta, Georgia 30339 (770) 444-5348
Media Contact: Michael Sitrick
(770) 444-4476
MEDAPHIS REVIEWING 1994-1996 SOFTWARE UNIT REVENUE
RECOGNITION PRACTICE AS PART OF REFINANCING DUE DILIGENCE
Earnings Announcement, Refinancing Package Delayed; Bank Waiver,
Loan Extension Obtained; Company Says It Should Have Sufficient
Liquidity Pending Renegotiation of Financing
ATLANTA, GEORGIA - (October 27, 1997) - Medaphis Corporation (NASDAQ: MEDA)
announced today that, in connection with its $250 million refinancing package,
the Company and its independent auditors are evaluating certain revenue
recognition matters in connection with the Company's Health Data Sciences
Corporation subsidiary relating principally to fiscal years 1994, 1995 and 1996.
The Company said the assessment is expected to be completed prior to the filing
of its Form 10-Q for the quarter ended September 30, 1997. The Company intends
to announce earnings for the third quarter concurrently with the filing of the
Form 10-Q.
As a result of this additional assessment, Medaphis said it does not expect to
complete the closing of the $250 million refinancing package on the previously
announced timetable. The senior bank financing commitment letter, which is
presently scheduled to expire on November 15, 1997, remains contingent upon
customary conditions and completion of an offering of at least $125 million in
senior subordinated notes. Medaphis said it has already obtained an extension
agreement from the requisite lenders under its existing bank and lease finance
facilities that extends its existing financing agreements through January 31,
1998. The Company has commenced discussions with its existing lending syndicate
and other financing sources towards a longer term committed facility and
increased liquidity.
Medaphis said it believes that with the current extension of and unused
availability under its existing credit agreement, and the continuation of
stringent cash management policies, Medaphis should have sufficient liquidity
pending the satisfactory renegotiation prior to January 31, 1998 of the
financing alternatives presently being pursued by the Company to resolve longer
term liquidity needs. The Company noted that while it was hopeful such
negotiations would be concluded on a satisfactory and timely basis, this could
not be assured. Medaphis' existing bank facility has approximately $168 million
in commitments, of which approximately $150 million is currently utilized, is
secured by substantially all of the Company's assets and requires mandatory
reduction of the commitments to $150 million on January 31, 1998 if the facility
is otherwise outstanding on that date.
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Medaphis said it has also obtained a waiver agreement from the requisite lenders
under its existing bank and lease finance facilities that provides for continued
borrowing under the facilities in the event that the Company determines that a
restatement of previously issued financial statements would be required,
provided that the downward restatement in both total consolidated revenues and
for financial periods subsequent to December 31, 1996 do not exceed specified
amounts.
David E. McDowell, who was named Chairman and Chief Executive Officer of
Medaphis in the fourth quarter of 1996, said that current assessment of revenue
recognition matter for the era pre-dating current management's arrival at the
Company is important to moving the Company's turnaround plan forward.
"We need to continue to understand the Company's recent history - its strengths
and weaknesses - if we are to maximize the potential of this Company," Mr.
McDowell said. "At the same time, we are concerned that these historical issues
do not overshadow the progress that we are making on our turnaround plan
including the good work being done by our employees and the support of our
vendors and customers.
Commenting on the business, Mr. McDowell continued, "We have made excellent
progress during 1997 in a number of areas, including our Physicians and Hospital
Services business units. Important work has already been completed on the
integration of the operations of HIT and BSG. However, Medaphis continues to be
affected by a large volume of non-recurring expenses associated with the
Company's recovery process."
Mr. McDowell said that he was grateful for the support of the Company's
employees, customers, vendors and other stakeholders over the past several
months and their continued support is essential to Medaphis achieving its goals.
"We would like to reach a stage in our turnaround efforts where the Company's
improvements in its operating business will be paramount and not diminished by
historical events and non-recurring expenditures," he said.
Medaphis is a leading provider of business management services and information
products to healthcare providers, corporations and other organizations. Based in
Atlanta, Georgia, Medaphis currently services approximately 20,700 physicians
and 2,700 hospitals across the nation and more than 100 systems integration
customers in industries including multi-unit retailing, energy,
telecommunications, financial services, manufacturing and transportation.
This Press Release contains statements which constitute "forward-looking
statements" within the meaning of the Securities Act of 1933 and the Securities
Exchange Act of 1934, as amended by the Private Securities Litigation Reform Act
of 1995. "Forward-looking statements" in this Press Release include the intent,
belief or current expectations of the Company and members of its senior
management team with respect to the timing of, completion of and scope of the
current reassessment of accounting matters, bank financing, and the public or
private offering of debt securities, debt and equity market conditions and the
Company's future liquidity as well as the assumptions upon which such statements
are based. Prospective investors are cautioned that any
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such forward-looking statements are not guarantees of future performance, and
involve risks and uncertainties, and the actual results may differ materially
from those contemplated by such forward-looking statements. Important factors
currently known to management that could cause actual results to differ
materially from those contemplated by the forward-looking statements in the
Press Release include, but are not limited to, adverse developments with respect
to the Company's liquidity position or operations of the Company's various
business units or difficulties in the integration of BSG and HIT, adverse
developments in the Company's efforts to renegotiate its funding and adverse
developments in the bank financing or public or private markets for debt or
equity securities, or adverse developments in the timing or results of the
Company's current reassessment of accounting matters. Additional factors that
would cause actual results to differ materially from those contemplated within
this Press Release can also be found in the Company's Safe Harbor Compliance
Statement filed as Exhibit 99.1 to the Company's Form 10-Q for the quarter ended
June 30, 1997.
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