Eclipsys Releases Financial Results for Quarter Ended March 31, 2007
Boca Raton, FL -- May 2, 2007 -- Eclipsys Corporation(R) (NASDAQ: ECLP), The
Outcomes Company(R), today released results for the quarter ended March 31,
2007.
First-Quarter Results
Revenues for the quarter ended March 31, 2007, increased by 12.0 percent to
$113.0 million, compared with revenues of $100.9 million for the quarter ended
March 31, 2006. On a GAAP basis, the first-quarter net income was $2.4 million
or $0.05 per common share on a basic and $0.04 per common share on a diluted
basis in 2007 compared to a net loss of ($8.0) million, or ($0.16) per common
share on a basic and diluted basis in the first-quarter of 2006.
Net income for the first-quarter of 2007 included stock-based compensation
expense of $2.8 million. Excluding this charge, the Company's non-GAAP net
income was $5.2 million, resulting in non-GAAP earnings per share of $0.10 on a
basic and diluted basis. Additionally, the Company recorded a $1.0M expense in
the quarter for legal and accounting services related to its voluntary stock
option review. Net income for the first-quarter of 2006 included stock-based
compensation expense of $2.9 million and a restructuring charge of $7.2 million.
Excluding these charges, the Company's first-quarter 2006 non-GAAP net income
was $2.1 million, or $0.04 per common share on a basic and diluted basis.
The following table summarizes (unaudited) select financial data:
--------------------------------------------
In thousands, except per share data
--------------------------------------------
--------------------------------------------
Three months ended March 31, (unaudited)
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2007 2006 $ Change % Change
---- ---- -------- --------
restated
--------
Revenues $113,030 $100,891 $12,139 12.0%
Net income / (loss) 2,401 (7,992) 10,393 N/A
Earnings / (loss) per $0.05 ($0.16) $0.21 N/A
share, basic
Earnings / (loss) per $0.04 ($0.16) $0.20 N/A
share, diluted
--------------------------------------------
Non-GAAP Results*
Three months ended March 31, (unaudited)
--------------------------------------------
2007 2006 $ Change % Change
---- ---- -------- --------
restated
--------
Revenues $113,030 $100,891 $12,139 12.0%
Net income* 5,161 2,086 3,075 147.4%
Earnings per share, basic $0.10 $0.04 $0.06 150.0%
and diluted*
*A reconciliation of GAAP to non-GAAP results is included in the attached table.
The following table summarizes select Cash Flow data:
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In thousands
--------------------------------------------
--------------------------------------------
Three months ended March 31, (unaudited)
--------------------------------------------
2007 2006 $ Change % Change
---- ---- -------- --------
Cash provided by / (used in) $10,343 $(10,104) $20,447 202.4%
Operating Activities
1750 Clint Moore Road, Boca Raton, FL 33487
phone 561.322.4321 o fax 561.322.4320 o info@eclipsys.com
Eclipsys Releases Financial Results for the Quarter Ended March 31, 2007
May 2, 2007
Page 2 of 4
The following table summarizes select Balance Sheet data:
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In thousands
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As of
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March 31, 2007 December 31, $ Change % Change
-------------- ------------ -------- --------
(Unaudited) 2006
-------------- ------------
Cash, cash equivalents & $138,139 $130,813 $7,326 5.6%
marketable securities
Accounts receivables, net 89,675 93,821 -4,146 -4.4%
Deferred revenue 112,364 114,587 -2,223 -1.9%
Days Sales Outstanding 71 72 N/A N/A
"The first quarter was a good start to the year. We won new accounts, activated
many clients with high early clinical adoption and continued to build the senior
management team. A major highlight was the Sunrise Clinical Manager activation
at NYU Medical Center," said R. Andrew Eckert, president and chief executive
officer, Eclipsys Corporation. "As one of the largest `big bang' activations in
the history our industry, it was a defining moment for Eclipsys and demonstrated
the scalability of Sunrise Clinical Manager and our integrated Pharmacy
information system, while also affirming the strides our professional services
organization has made in its ability to successfully deliver on-time and
on-budget implementations in a high-acuity care environment."
Continued Eckert, "The 2007 KLAS CPOE Digest was released this past quarter and,
once again, the report showed that Eclipsys' computerized physician order entry
solutions lead the industry in physician adoption. Eclipsys' Knowledge-Based
CPOE(TM) system includes real-time access to actionable knowledge, with clinical
decision support, including expert levels of checking relative to changes in a
patient's condition. These capabilities give physicians confidence that the
system will help them enhance care delivery and ultimately achieve improved
outcomes in care, cost and satisfaction. I believe this is why the report also
indicates that Eclipsys clients are twice as likely as users of other available
CPOE solutions to cite patient safety as a benefit of implementing CPOE."
Separately, the Company also announced the completion of its voluntary stock
option review. The review did not result in any material increase in
compensation expense for the first quarter, but did result in out-of-pocket
costs incurred during the quarter, which are reflected in the results reported
in this release. For additional information regarding completion of the stock
option review, please refer to the separate release issued by the Company today.
The Company has delayed filing its annual report on Form 10-K for the year ended
December 31, 2006 pending conclusion of the voluntary stock option review. With
the completion of that voluntary review, the Company expects to file its Form
10-K within the next several weeks. The results of the voluntary stock option
review have not resulted in a material change to the preliminary financial
results for 2006 previously disclosed with the Company's 2006 earnings release.
However, unrelated to the voluntary stock option review, our December 31, 2006
financial statements will reflect an aggregate reduction in non-cash stock-based
compensation expense of approximately $1.7 million (or approximately $560,000
per quarter for the second, third and fourth quarters of 2006) compared to
previously disclosed 2006 financial results, because the earlier results
included an over-expensing of non-cash stock-based compensation expense. This
adjustment is the result of an input error that occurred in the second quarter
of 2006 that caused the method of amortization of cost for certain stock grants
to be incorrectly accelerated. Management identified this error in connection
with annual proxy review procedures and does not believe the resulting reduction
in previously recognized 2006 quarterly non-cash stock-based compensation is
material. However, effective controls were not maintained to ensure the accuracy
on a quarterly basis of the compensation expense related to the amortization of
stock options grant costs, including the existence of an effective monitoring
control to detect an input error. Management has determined that this control
deficiency constituted a material weakness. This weakness and remediation of the
control deficiency has been implemented and will be described more fully in our
December 31, 2006 Form 10-K, when filed.
Eclipsys Releases Financial Results for the Quarter Ended March 31, 2007
May 2, 2007
Page 3 of 4
Investor Teleconference May 2
Eclipsys senior executives will discuss the results during an investor community
teleconference scheduled for 4:30 p.m. Eastern time on Wednesday, May 2. Persons
interested in participating in the teleconference should call (800) 230-1951
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 at www.eclipsys.com approximately 2 hours after the
completion of the call on May 2.
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 month
periods ended March 31, 2007 and 2006 to exclude stock-based compensation
expense and restructuring charges. 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. Internally, management 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 economic substance of omitting non-cash stock-based
compensation expense in presenting non-GAAP earnings derives from providing
investors with consistent measures of performance both before and after the
implementation of FAS 123R. The economic substance of omitting restructuring
charges derives from the fact that episodic charges of this kind make it more
difficult to compare operating results of different periods, not all of which
include such restructuring charges. The omission of non-cash stock-based
compensation expense may mask an economic cost incurred by the Company in
connection with stock-based compensation, and the omission of restructuring
charges may mask actual future expected cash expenditures incurred in connection
with the restructuring. Management compensates for these limitations by using
both the GAAP and non-GAAP measures. Management 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 the
Company's results with its prior period results that did not include these
charges and with results of other companies on a more consistent basis. Omitting
the 2006 restructuring charges facilitates comparison between the 2006 and 2007
periods, as no restructuring charges were recorded in the 2007 period. Omitting
the stock-based compensation expense facilitates review by the majority of our
analysts, who model our earnings excluding our stock-based compensation charges.
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.
Eclipsys Releases Financial Results for the Quarter Ended March 31, 2007
May 2, 2007
Page 4 of 4
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, and 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
Jason Cigarran Robert J. Colletti
Director of Media Relations (media) Chief Financial Officer (investors)
(561) 322-4355 (561) 322-4655
jason.cigarran@eclipsys.com investor.relations@eclipsys.com
Eclipsys Corporation and subsidiaries
Consolidated Statements of Operations - Unaudited
(In thousands, except per share data)
Three Months Ended
March 31, March 31,
2007 2006
restated
------------------------
Revenues:
Systems and services $ 109,183 $ 96,330
Hardware 3,847 4,561
--------- ---------
Total revenues 113,030 100,891
--------- ---------
Costs and expenses:
Costs of systems and services revenues 64,707 56,473
Costs of hardware revenues 3,027 3,651
Sales and marketing 18,138 16,269
Research and development 14,408 16,962
General and administrative 7,569 5,677
Depreciation and amortization 4,275 3,802
Restructuring charge -- 7,198
--------- ---------
Total costs and expenses 112,124 110,032
--------- ---------
Income (loss) from operations 906 (9,141)
Interest income, net 1,514 1,149
--------- ---------
Income (loss) before income taxes 2,420 (7,992)
Provision for income taxes 19 --
--------- ---------
Net income (loss) $ 2,401 $ (7,992)
========= =========
Earnings (loss) per share:
Basic earnings (loss) per share $ 0.05 $ (0.16)
========= =========
Diluted earnings (loss) per share $ 0.04 $ (0.16)
========= =========
Weighted average shares outstanding:
Basic 52,328 50,581
========= =========
Diluted 53,544 50,581
========= =========
ECLIPSYS CORPORATION AND SUBSIDIARIES
Reconciliation of GAAP to Non-GAAP Results
(In thousands, except per share amounts)
Three Months Ended
March 31,
------------------------
2007 2006
------- -------
GAAP net earnings (loss) $ 2,401 $(7,992)
Add back:
Stock-based compensation expense(1) 2,760 2,880
Restructuring charge(2) -- 7,198
------- -------
Non-GAAP net income $ 5,161 $ 2,086
======= =======
Non-GAAP basic earnings per share $ 0.10 $ 0.04
======= =======
Non-GAAP diluted earnings per share $ 0.10 $ 0.04
======= =======
(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 first-quarter of 2007, we recorded stock-based compensation
expense of $2.8 million.
Three Months Ended Three Months Ended
March 31, 2007 March 31, 2006
------------------ ------------------
Costs of systems & services $1,076 $ 926
Sales and marketing 970 857
Research and development 529 357
General and administrative 185 740
------ ------
Total share-based compensation expense $2,760 $2,880
------ ------
(2) This charge is associated with certain headcount reductions made in the
first quarter of 2006 to reduce costs and redirect spending into client-related
functions, including customer support and professional services.