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EXHIBIT 99.1
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
SAFE HARBOR COMPLIANCE STATEMENT
FOR FORWARD-LOOKING STATEMENTS
In passing the Private Securities Litigation Reform Act of 1995 (the
"Reform Act"), Congress encouraged public companies to make "forward-looking
statements" by creating a safe harbor to protect companies from securities law
liability in connection with forward-looking statements. Per-Se Technologies,
Inc. intends to qualify both its written and oral forward-looking statements
for protection under the Reform Act and any other similar safe harbor
provisions.
"Forward-looking statements" are defined by the Reform Act. Generally,
forward-looking statements include expressed expectations of future events and
the assumptions on which the expressed expectations are based. All
forward-looking statements are inherently uncertain because they are based on
various expectations and assumptions concerning future events and they are
subject to numerous known and unknown risks and uncertainties which could cause
actual events or results to differ materially from those projected. Due to
those uncertainties and risks, the investment community is urged not to place
undue reliance on written or oral forward-looking statements of Per-Se
Technologies, Inc. We undertake no obligation to update or revise this Safe
Harbor Compliance Statement for Forward-Looking Statements to reflect future
developments. In addition, we undertake no obligation to update or revise
forward-looking statements to reflect changed assumptions, the occurrence of
unanticipated events or changes to future operating results over time.
We are providing the following risk factor disclosure in connection
with our continuing effort to qualify our written and oral forward-looking
statements for the safe harbor protection of the Reform Act and any other
similar safe harbor provisions. Important factors currently known to management
that could cause actual results to differ materially from those in
forward-looking statements include the disclosures contained in the Form 10-Q
to which this statement is appended as an exhibit and also include the
following:
OUR SUBSTANTIAL INDEBTEDNESS COULD ADVERSELY AFFECT OUR FINANCIAL PERFORMANCE.
We have a significant amount of indebtedness and, as a result,
significant obligations to make payments on our debt. If we are unable to make
the required debt payments, we could be required to reduce or delay capital
expenditures, sell certain of our assets, restructure or refinance our
indebtedness, or seek additional equity capital. Our ability to make payments
on our debt obligations will depend on our future operating performance, which
will be affected by certain conditions that are beyond our control.
Our substantial indebtedness could have important consequences to our
financial performance. For example:
- - our ability to obtain additional financing in the future may be
impaired;
- - if a substantial portion of our cash flow from operations is dedicated
to the payment of debt, we may have reduced funds available for
operations;
- - the terms of our existing debt places restrictions on us, including
our ability to incur additional debt or pay dividends; and
- - we may be more leveraged than our competitors, which may limit our
flexibility to respond to changes in the marketplace and may place us
at a competitive disadvantage.
WE ARE SUBJECT TO ONGOING LITIGATION AND A GOVERNMENT INVESTIGATION WHICH MAY
ADVERSELY AFFECT OUR BUSINESS.
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We are involved in several lawsuits which may expose us to material
loss contingencies. These lawsuits include, but are not limited to, claims
brought by former shareholders of companies that we acquired. We have also
received written demands from customers and former customers that have not yet
resulted in legal action and may receive demands with respect to the operation
of our business and actions we have taken, including modifications made to a
computerized coding tool to assist in healthcare reimbursement used by one of
our subsidiaries and the transition from the computerized coding tool to manual
coding. We are also subject to a formal, non-public investigation by the
Securities and Exchange Commission into, among other things, trading and other
issues relating to restatements of our financial statements.
We may not be able to successfully defend any of these lawsuits. In
addition, other lawsuits may be filed and other governmental investigations may
be commenced against us. Existing or new lawsuits or new government
investigations could have a material adverse effect on us. The ongoing
governmental investigation against us may result in significant fines, damages
or other penalties and the Commission could require further restatements of our
financial statements. The investigation could have a material adverse effect on
us. Also, in the event of an adverse outcome with respect to pending lawsuits,
there is the risk that our insurance coverage may not fully cover any damages
assessed against us. The litigation with which we are involved (as well as
future litigation) could have a disruptive effect upon the operations of the
business and consume the time and attention of our senior management.
WE HAVE INCURRED SIGNIFICANT LOSSES IN RECENT YEARS.
We had losses in each of 1995, 1996, 1997, 1998 and 1999. Most of
these losses result from restructuring and other charges, litigation
settlements, intangible asset impairment and acquisition costs. We cannot
assure you when or if we will become profitable in the future.
WE HAVE SUFFERED SIGNIFICANT SETBACKS IN RECENT YEARS AND MAY NOT BE ABLE TO
TURNAROUND SUCCESSFULLY.
We have suffered several setbacks in recent years, including:
- - government investigations;
- - the failure successfully to integrate acquired companies;
- - restatements of our 1994, 1995, 1996 and interim 1997 financial
statements;
- - the discontinuance of the operations of one of the businesses we
acquired;
- - the abandonment of an extensive reengineering program that failed;
- - a steep drop in the price of our common stock; and
- - the filing of various lawsuits and claims against us.
As a result of these setbacks, we have been operating in what is
commonly described as a "turnaround" situation. In addition to risks associated
with "turnaround" situations, we face certain challenges more specific to our
operations, including:
- - successfully integrating acquired companies;
- - shifting our strategic focus from acquiring compatible businesses to
running our existing businesses efficiently and profitably;
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- - managing our customers' perceptions of our continued viability and
focusing on customer service;
- - combating employee turnover;
- - reducing costs and increasing efficiencies; and
- - reevaluating the efficiency of our operations following our
abandonment of the reengineering initiative in 1996.
WE MAY NOT BE ABLE TO KEEP UP WITH CHANGES IN OUR INDUSTRY.
The markets for our software products and services are characterized
by rapidly changing technology, evolving industry standards and frequent new
product introductions. We may not be able to keep pace with changes in our
industry. Our success depends in part upon our ability to:
- - enhance our existing products and services;
- - introduce new products and services quickly and cost effectively;
- - achieve market acceptance for new products and services; and
- - respond to emerging industry standards and other technological
changes.
Also, our competitors may develop competitive products that could adversely
affect our operating results. In addition, it is possible that:
- - we will be unsuccessful in refining, enhancing and developing our
software and billing systems going forward;
- - the costs associated with refining, enhancing and developing our
software and systems may increase significantly in the future; or
- - our existing software and technology will become obsolete as a result
of ongoing technological developments in the marketplace.
WE COULD LOSE CERTAIN CUSTOMERS IF WE ARE NOT SUCCESSFUL ON SEVERAL MAJOR
CLIENT PROJECTS.
Our client/server information technology business involves projects
designed to reengineer customer operations through the strategic use of
imaging, client/server and other advanced technologies. Failure to meet our
customers' expectations with respect to a major project could have the
following consequences:
- - damage our reputation and standing in this marketplace;
- - impairment of our ability to attract new client/server information
technology business;
- - the payment of damages to a customer; and
- - the inability to collect for services already performed on the
project.
WE MAY INCUR ADDITIONAL COSTS BECAUSE OF POTENTIAL "YEAR 2000" PROBLEMS.
Many existing computer programs use only two digits to identify a year
in the date field. These programs were designed and developed without
considering the impact of the upcoming change in the
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century. If not corrected, many computer applications could fail or create
erroneous results as we approach or when we reach the Year 2000.
We have undertaken an assessment of our Year 2000 issues. We have
identified some older computer systems that we will replace with more efficient
processing systems, rather than attempting to make all these older systems Year
2000 compliant. Until we have replaced all these older systems, we cannot be
sure that our efforts to address Year 2000 issues are appropriate, adequate or
complete. In addition, we cannot be sure that we have identified all Year 2000
problems in the computer systems of our customers, vendors or resellers, or
that we will be able to successfully remedy any future problems that are
discovered.
As a result of Year 2000 issues and the replacement of older computer
systems, we may suffer the following consequences:
- - we may incur a significant amount of additional expenses to remedy
Year 2000 issues and we may experience a significant loss of revenues;
- - our existing customers may be adversely impacted by Year 2000
problems, which could cause fluctuations in our revenue; and
- - our failure to identify and remedy all Year 2000 problems could put us
at a competitive disadvantage relative to companies that have
corrected such problems.
WE MAY NOT BE ABLE TO COMPETE SUCCESSFULLY WITH OTHER MANAGEMENT SERVICES
COMPANIES.
The medical management services business is highly competitive. We
compete with national and regional physician and hospital reimbursement
organizations and collection businesses, national information and data
processing organizations, and physician groups and hospitals that provide their
own business management services. We are uncertain whether we can continue to
compete successfully with all of these competitors.
Potential industry and market changes that could adversely affect our
ability to compete for billing and collection business include:
- - an increase in the number of managed care providers compared to
fee-for-service providers; and
- - new alliances between healthcare providers and third-party payors in
which healthcare providers are employed by such third-party payors.
WE MAY NOT BE ABLE TO COMPETE SUCCESSFULLY WITH OTHER INFORMATION TECHNOLOGY
COMPANIES.
The business of providing application software, information technology
and consulting services is also highly competitive. We compete with national
and regional companies in this regard. Certain of our competitors have longer
operating histories and greater financial, technical and marketing resources
than we do. We are uncertain whether we can continue to compete successfully
with these competitors.
OUR REVENUE AND OPERATIONS MAY BE ADVERSELY AFFECTED BY PRICING PRESSURES WHICH
ADVERSELY AFFECT OUR CUSTOMERS.
We believe that the revenue growth rate experienced by our healthcare
clients continues to be adversely affected by managed care pricing and
declining government reimbursement levels. At the same time, the process of
submitting healthcare claims for reimbursement to third-party payors in
accordance with applicable industry and regulatory standards grows in
complexity and cost. We believe that these
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trends have adversely affected and could continue to adversely affect our
customers' revenues and profitability and, therefore, adversely affect us too.
CHANGES IN THE HEALTHCARE MARKETPLACE MAY DECREASE DEMAND FOR OUR BILLING
SERVICES.
In general, consolidation initiatives in the healthcare marketplace
may result in fewer potential customers for our services. Some of these types
of initiatives include:
- - employer initiatives such as creating purchasing cooperatives, like
HMOs;
- - provider initiatives, such as risk-sharing among healthcare providers
and managed care companies through capitated contracts; and
- - integration among hospitals and physicians into comprehensive delivery
systems.
We believe that the continued consolidation of management and billing
services through integrated delivery systems could result in a decrease in
demand for our billing and collection services for particular physician
practices.
FUTURE INVESTIGATIONS OF HEALTHCARE BILLING AND COLLECTION PRACTICES MAY
ADVERSELY AFFECT OUR BUSINESS.
Our medical billing and collection activities are governed by numerous
federal and state civil and criminal laws. Federal and state regulators
increasingly use these laws to investigate healthcare providers and companies,
like us, that provide billing and collection services. In connection with these
laws:
- - we may be subjected to federal or state government investigation and
possible civil or criminal fines;
- - we may ultimately be required to defend a false claims action;
- - we may be sued by private payors; or
- - we may be excluded from Medicare, Medicaid and/or other government
funded healthcare programs.
We have been the subject of several federal investigations, and we may
become the subject of false claims litigation or additional investigations
relating to our billing and collection activities. Any such proceeding or
investigation could have a material adverse effect on our business.
The ownership and operation of hospitals is also subject to
comprehensive regulation by federal and state governments which may adversely
affect hospital reimbursement. This regulation could have an adverse effect on
the operations of hospitals in general, and consequently reduce the amount of
our revenues related to hospital clients. Current or future government
regulations or healthcare reform measures may have a material adverse effect
upon our business.
OUR STOCK PRICE HAS BEEN VOLATILE AND COULD CONTINUE TO FLUCTUATE
SUBSTANTIALLY.
Our common stock is listed on the Nasdaq National Market. The market
price of our common stock has been volatile and could fluctuate substantially,
based on a variety of factors, including the following:
- - announcements relating to governmental investigations;
- - our liquidity and financial resources;
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- - our divestiture of businesses;
- - the status of lawsuits or other demands;
- - healthcare reform measures;
- - quarter-to-quarter and year-to-year variations in financial results;
and
- - failure to continue to meet Nasdaq National Market listing
requirements.
Furthermore, stock prices for many companies fluctuate widely for
reasons that may be unrelated to their operating results. These fluctuations
and general economic, political and market conditions may adversely affect the
market price of our common stock.
LISTING ON NASDAQ NATIONAL MARKET.
Our common stock is currently traded on the Nasdaq National Market.
Nasdaq has notified us that we are out of compliance with the Nasdaq National
Market's continued listing requirements of a minimum bid price of $5.00 or net
tangible assets of $4 million. Nasdaq has notified us that our situation is
being reviewed, and that a decision by Nasdaq is likely to be issued in
December 1999. We expect that we have until that time to:
- - meet the requirements;
- - file an appeal with Nasdaq; or
- - make an application to have our common stock traded on the Nasdaq
SmallCap Market or other exchange.
We have formulated plans, including a possible reverse stock split,
that we could implement to avoid a change in our Nasdaq National Market
listing.
In addition, since we currently meet all listing requirements for the
Nasdaq SmallCap Market, we are prepared to make an application for listing of
our common stock on that market, if necessary.
There can be no assurance that we will be able to implement these
plans successfully. If our stock price does not otherwise regain compliance
with the Nasdaq National Market requirements then our common stock could
potentially be de-listed from the Nasdaq National Market depending upon our
ability to implement certain of these plans. In that event, our common stock
would then be traded in the over-the-counter market. Such a result could
adversely impact the liquidity of our common stock.