Exhibit 99.1
Per-Se Reports Strong Profitability with Q3 Results; Provides 2004
Guidance for Continuing Operations EPS of $.85 to $.95
ATLANTA--(BUSINESS WIRE)--Oct. 28, 2003--Per-Se Technologies, Inc.
(Nasdaq: PSTI), a leader in delivering comprehensive business
management outsourcing services, financial and administrative software
solutions, and Internet-enabled connectivity to the healthcare
industry, today released its results for the third quarter ended
September 30, 2003.
The Company reported revenue of $84.5 million; operating income,
excluding restructuring expenses, of $10.0 million, or 11.8% of
revenue; and income from continuing operations, excluding debt
refinancing expenses, of $6.0 million, or $.18 per share on a fully
diluted basis, for the third quarter. The Company also announced today
that it has initiated a process to sell its patient financial
management product line for hospitals, Business1-PFM(R). The Business1
product line has been classified as discontinued operations for all
periods presented. For comparison purposes, the Company's fully
diluted earnings per share in the quarter including the Business1
operations were $.15, which is in line with previously issued guidance
of $.14 to $.16 per share.
During the third quarter, the Company incurred approximately $6.0
million in expenses associated with its refinancing initiative
completed during September as well as approximately $0.2 million in
restructuring expenses associated with the Company's divestiture of
Patient1 and subsequent reorganization. Including the restructuring
expenses, the Company had operating income of $9.8 million, or 11.6%
of revenue. Including both these expenses, the Company had a loss from
continuing operations of $0.2 million or a negative $.01 per share.
Including income from discontinued operations of $0.3 million, the
Company had net income of $0.1 million in the third quarter of 2003.
For comparison purposes, in the third quarter of 2002, the Company
reported revenue of $82.8 million and operating income of $7.2
million, or 8.7% of revenue. Income from continuing operations in the
third quarter of 2002 was $2.5 million, or $.08 per share on a fully
diluted basis.
"Our profitability more than doubled over our prior year third
quarter performance," stated Philip M. Pead, Per-Se's chairman,
president and chief executive officer. "This represents the eleventh
consecutive quarter we have met our external earnings per share
guidance."
Year-To-Date Results
Revenue and operating income, excluding restructuring expenses,
for the nine months ended September 30, 2003, were $251.8 million and
$27.2 million, or 10.8% of revenue, respectively, compared with
revenue of $243.6 million and operating income of $21.2 million, or
8.7% of revenue, for the nine months ended September 30, 2002. The
Company reported income from continuing operations, excluding
restructuring and debt refinancing expenses, on a year-to-date basis
of $14.0 million, or $.43 per share on a fully diluted basis, compared
with income from continuing operations of $7.1 million, or $.22 per
share on a fully diluted basis, in the prior year period. Including
restructuring expenses of $0.2 million, the Company had operating
income of $27.0 million, or 10.7% of revenue. Including restructuring
expenses as well as debt refinancing and retirement expenses of $6.3
million, the Company had income from continuing operations of $7.6
million, or $.23 per share on a fully diluted basis for the first nine
months of 2003.
Cash flow from continuing operations for the nine months ended
September 30, 2003, was $12.8 million compared to $9.5 million for the
nine months ended September 30, 2002. "Our improvement in operating
cash flow is attributable primarily to better operational earnings as
well as to our refinancing initiative completed during the third
quarter," stated Pead.
Segment Performance
The Physician Services division reported revenue and operating
income of $63.5 million and $7.4 million, respectively, for the third
quarter of 2003 compared to revenue and operating income of $62.7
million and $7.2 million, respectively, for the third quarter of 2002.
"Two primary factors impacted third quarter revenue. First, same-store
growth - or the growth in our revenue from our existing client base -
was lower than we had anticipated in the quarter," stated Pead. "And,
second, revenue from terminated business ramped down faster than
expected during the quarter."
"2003 new sales momentum continues to be positive, with new sales
closed increasing more than 20% on a year-to-date basis over the prior
year," stated Pead.
The division had operating margins of 11.7% in the third quarter
of 2003 compared to 11.5% in the prior year period. Margins were
negatively impacted in the current year quarter by approximately $1.0
million in costs associated with the conversion of customers to a new,
Web-based platform for the division's ASP-based physician practice
management solution. Excluding these costs, third quarter operating
income was $8.5 million, or 13.3% of revenue, for the division. "The
conversion process was negatively impacted during the quarter,
primarily due to the HIPAA-readiness of a key payer in the region in
which the product operates. The conversion process is progressing, and
we expect the margins for this business to improve in future periods,"
stated Pead.
Physician Services had a net backlog of approximately $2 million
as of September 30, 2003. Net backlog represents the annualized
revenue related to new contracts signed with the business still to be
implemented, less the annualized revenue related to existing contracts
where discontinuance notification has been received. "We had a record
implementation of new business during the third quarter that resulted
in a $3 million reduction of our net backlog from second quarter
levels," stated Pead.
The Hospital Services division reported revenue and operating
income of $24.4 million and $5.9 million, or 24.1% of revenue,
respectively, for the third quarter of 2003 compared to revenue and
operating income of $23.5 million and $4.2 million, or 18.0% of
revenue, respectively, for the third quarter of 2002.
As reported, revenue in the division increased approximately 4% in
the third quarter over the third quarter of 2002. As discussed in
previous quarters, the phasing out of a large print and mail customer,
whose business was not related to medical claims, began in the second
half of 2002. The loss of this client negatively impacted
year-over-year revenue comparisons. Revenue in the Hospital Services
division increased approximately 8% on a year-over-year basis
excluding the impact of this client. Medical-related transaction
volume increased approximately 11% in the third quarter compared to
the prior year period.
"As previously reported, we expected to have a higher sales volume
of license-based revenue cycle management products in the second half
of this year. With the recently issued transitional guidance on HIPAA,
noncompliant electronic transactions may continue to be processed
after the October 16th compliance deadline. As a result, we continue
to see longer sales cycles as hospitals continue to focus on the
testing and implementation for standard electronic transactions.
Consequently, we do not expect to see an increase in our license-based
product sales until the first half of 2004," stated Pead.
Refinancing Initiative Completed
The refinancing initiative announced by the Company in the second
quarter earnings release was completed during September. The Company
used existing cash and the proceeds from the Patient1 divestiture to
permanently retire $35 million in debt and refinanced the remaining
$125 million of outstanding debt through a new senior credit facility.
These actions yielded annualized cash interest expense savings of
approximately $8 million, based on current rates.
During the third quarter, the Company incurred expenses related to
the refinancing transactions of approximately $6.0 million, including
the write-off of unamortized deferred financing costs associated with
the original $175 million 9 1/2% senior notes issue, the call and
tender offer premiums, and other costs.
Business1 Product Line Classified as Discontinued Operations
The Company has initiated a process to sell its Business1 patient
financial management product line and has classified the product line
as discontinued operations for all periods presented. "The
discontinuance of Business1 allows us to better focus our resources on
solutions that provide meaningful, strategic returns for our
customers, our Company and our shareholders," stated Pead.
During the third quarter of 2003, the Business1 product line had
revenue of $0.2 million and an operating loss, excluding the
write-down of net assets associated with the disposal, of $1.0
million, or a negative $.03 per share on a fully diluted basis. In
accordance with FAS 144, Accounting for the Impairment or Disposal of
Long-Lived Assets, the Company incurred a write-down of Business1 net
assets in the quarter of $7.7 million. Including the write-down of net
assets, Business1 had an operating loss of $8.7 million, or a negative
$.26 per share on a fully diluted basis. For comparison purposes, in
the third quarter 2002 Business1 had revenue of $0.6 million and an
operating loss of $0.5 million, or a negative $.02 per share on a
fully diluted basis.
On a year-to-date basis, the Business1 product line had revenue of
$0.3 million and an operating loss, excluding the write-down of net
assets, of $2.9 million compared to revenue of $2.1 million and an
operating loss of $1.2 million for the first nine months of 2002.
Including the write-down of net assets, Business1 had an operating
loss of $10.6 million for the first nine months of 2003.
Gain on Patient1 Sale
On July 28, 2003, the Company announced it had completed the sale
of its Patient1 clinical product line to Misys Healthcare Systems, a
division of Misys plc (London: MSY.L). Patient1 is classified as
discontinued operations for all periods presented. The sales price of
Patient1 was $30 million in cash. During the third quarter, the
Company recognized a gain on the sale of approximately $9.4 million.
The Company and Misys are still in the process of finalizing the
closing balance sheet, and a purchase price adjustment may result
during the fourth quarter.
Status of Lloyd's of London Matter
As previously reported, the Company is in litigation with Lloyd's
of London (Lloyd's) following its attempt in May 2002 to rescind
certain Errors & Omissions Liability Policies ("E&O" policies) and
Directors and Officers Liability Policies ("D&O" policies) issued by
Lloyd's to the Company for the period December 31, 1998, to June 30,
2002.
During October, the Company and Lloyd's commenced the non-binding
mediation process ordered by the Court in June. The Company
anticipates that the mediation process will continue. The discovery
process continues with the trial scheduled to begin February 17, 2004,
the date previously set by the Court.
"We remain hopeful that this matter can be resolved amicably with
Lloyd's," stated Pead. "However, we strongly believe in the merits of
our case and continue to expect to prevail if the matter goes to
trial."
During the third quarter, the Company incurred approximately $0.3
million, or $.01 per share on a fully diluted basis, in litigation
expenses related to the Company's matter with Lloyd's. By comparison,
in the third quarter of 2002, the Company incurred approximately $1.3
million, or $.04 per share on a fully diluted basis, in increased
insurance premiums and litigation expenses related to the Lloyd's
matter.
Cash flow on a year-to-date basis in 2003 was negatively impacted
by approximately $4.7 million related to the dispute with Lloyd's
compared to $5.4 million on a year-to-date basis in 2002. As of
September 30, 2003, the Company had a $10.1 million receivable from
Lloyd's associated with the interim funding of legal costs and
litigation settlements in excess of the Lloyd's E&O policies'
deductible. These costs are expected to be recovered from Lloyd's.
Full Year 2003 Continuing Operations EPS Guidance of $.63 to $.68
The Company's fourth quarter 2003 earnings per share guidance from
continuing operations is $.20 to $.25 on a fully diluted basis. For
the full year 2003, the Company's earnings per share guidance from
continuing operations is now $.63 to $.68 per share on a fully diluted
basis, compared to previous guidance of $.50 to $.60 per share. This
guidance includes net interest expense savings resulting from the
Company's refinancing initiative completed in September, and excludes
restructuring expenses related to the Company's Patient1 divestiture
and subsequent reorganization as well as debt refinancing expenses and
the impact of discontinued operations.
The Company now expects full year 2003 revenue to increase 3% to
4% over 2002 levels, compared to previous guidance of approximately
8%. By segment, the Company expects revenue growth in the Physician
Services division to be 3% to 4%, versus previous expectations of at
or slightly below 8%, over prior year levels due to the impact of same
store growth and the faster than expected ramp down of terminated
business in the third quarter. Operating margins are expected to be
approximately 12%, at the low end of previous guidance due to lower
revenue and the extended conversion of the ASP-based physician
practice management solution. For the Hospital Services division, the
Company expects revenue growth of approximately 5%, versus previous
guidance of 8% to 10%, due to lower than anticipated new bookings of
license-based revenue cycle management products. Operating margins for
the division are expected to be approximately 22%, up from previous
guidance of 19% to 20% driven by better cost control and the positive
impact of the Business1 product line disposal.
The Company forecasts generating free cash flow (a non-GAAP
measure defined as net cash provided by continuing operations less
investments in capitalized software development costs and capital
expenditures) in excess of $15 million for the full year 2003.
2004 Continuing Operations EPS Projected to Increase 35% to 40%
For the full year 2004, the Company expects fully diluted earnings
per share guidance of $.85 to $.95, a 35% to 40% increase over the
Company's 2003 anticipated earnings per share performance from
continuing operations. The Company expects consolidated revenue growth
in 2004 of 7% to 9% over the prior year.
By segment, the Company expects revenue growth in the Physician
Services division to be between 6% and 8%. Operating margins for the
division are expected to be between 12.5% and 13.0%. "With solid
client retention rates and the strong new bookings momentum generated
by our sales force, we are excited about our revenue and earnings
growth potential for 2004," stated Pead.
For the Hospital Services division, the Company expects full year
revenue growth of 8% to 10% and operating margins in the range of 20%
to 21%. "Our Hospital Services division's strategic focus is ensuring
that hospitals are financially successful through our unique
combination of revenue cycle management and resource management tools.
There is a very large market opportunity for products and services
that improve revenue for hospitals, and we are positive in our outlook
for the division," stated Pead.
The Company forecasts generating free cash flow for the full year
2004 in excess of $25 million. This excludes an anticipated positive
cash flow impact resulting from the resolution of the Company's matter
with Lloyd's.
"We expect earnings per share from continuing operations in 2003
to almost double over 2002 levels driven by our strong operational
model, the improvement in our capital structure and the disposal of
unprofitable product lines," stated Pead. "In 2004, we expect to
continue this strong performance with earnings increasing 35% to 40%
driven by revenue growth and improved profitability. I am very excited
about our prospects for 2004."
Conference Call
Per-Se will host a conference call for institutional investors and
security analysts at 11:00 a.m. Eastern time today. All interested
investors are invited to access a live audio broadcast of the call via
Webcast. The Webcast can be accessed at www.per-se.com in the
Investors section by selecting the Webcast link. Listeners should go
to the website at least 15 minutes before the scheduled start time of
the conference call to download and install any necessary audio
software. For those unable to listen to the live broadcast of the
call, a replay will be available shortly after completion of the call
and will be archived on Per-Se's website for approximately 60 days.
Historical Financial Information on www.per-se.com
Additional historical financial information, including the
presentation by quarter with the Business1 product line classified as
discontinued operations, is available on the Company's website at
www.per-se.com in the Investors section under the Webcasts and
Supplemental Information links.
About Per-Se Technologies
Per-Se Technologies (Nasdaq: PSTI) is a leader in delivering
comprehensive business management outsourcing services, financial and
administrative software solutions, and Internet-enabled connectivity
for the healthcare industry. Atlanta-based Per-Se enables integrated
delivery systems and physician practices to optimize the profitability
of business operations. The leading provider of business management
outsourcing services to physicians, Per-Se supports approximately
47,000 physicians and 2,000 healthcare organizations. Per-Se processes
more than 240 million medical transactions annually. Additional
information is available at www.per-se.com.
Safe Harbor Statement
This Press Release contains statements that 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 contained in this Press Release include the intent, belief
or current expectations of the Company and members of its management
team with respect to the Company's future business operations and the
costs or outcome of litigation as well as the assumptions upon which
such statements are based. Forward-looking statements include
specifically, but are not limited to, revenue backlog projections,
revenue projections, operating income projections, operating margin
projections, earnings per share from continuing operations
projections, cash flow projections, gain on sale of assets, the fair
market value of assets held for sale and the outcome, costs and
earnings and cash flow impact of litigation. Prospective investors are
cautioned that any such forward-looking statements are not guarantees
of future performance, and involve risks and uncertainties, and that
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 this Press
Release include, but are not limited to, failure to realize
improvements in performance, efficiency and profitability, failure to
complete anticipated sales under negotiations, failure to successfully
implement sales backlog, lack of revenue growth, client
discontinuances and adverse developments or increased costs with
respect to litigation and adverse developments with respect to the
operation or performance of the Company's business units or the market
price of its common stock. 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 included in the Company's Form 10-Q for the quarter ended
June 30, 2003 and Form 10-K for the year ended December 31, 2002. The
Company disclaims any responsibility to update any forward-looking
statements.
The Company believes that operating income and operating margins
excluding restructuring expenses, Physician Services segment operating
income and operating margin, excluding ASP-based conversion costs, and
income from continuing operations and earnings per share from
continuing operations excluding restructuring expenses and debt
refinancing costs are additional meaningful measures of operating
performance. However, this information will necessarily be different
from comparable information provided by other companies and should not
be used as an alternative to our operating and other financial
information as determined under U.S. generally accepted accounting
principles.
PER-SE TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
SEGMENT REPORTING - PREVIOUS OPERATING STRUCTURE
(unaudited, in thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
----------------- -------------------
2003 2002 2003 2002
------- ------- -------- --------
Revenue
Physician Services $63,517 $62,683 $189,475 $183,935
Hospital Services (1) 24,411 23,486 72,381 69,097
Eliminations (3,417) (3,327) (10,030) (9,400)
------- ------- -------- --------
Consolidated $84,511 $82,842 $251,826 $243,632
======= ======= ======== ========
Operating Income (2)
Physician Services $ 7,440 $ 7,225 $ 22,282 $ 18,169
Hospital Services (1) (3) 5,884 4,216 16,228 13,734
Corporate (3) (3,331) (4,246) (11,319) (10,688)
------- ------- -------- --------
Consolidated $ 9,993 $ 7,195 $ 27,191 $ 21,215
======= ======= ======== ========
(1) The Patient1 and Business1 product lines have been classified
as discontinued operations for all periods presented and, therefore,
are not included in the Hospital Services division segment.
(2) Operating income on a GAAP basis is revenue less salaries and
wages, other operating expenses, depreciation and amortization and
restructuring expenses.
(3) Hospital Services and Corporate exclude restructuring expenses
of $96 and $81, respectively, for the three and nine months
ended September 30, 2003.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands)
September 30, December 31,
2003 2002
-------------- --------------
Assets
Cash and cash equivalents $ 18,481 $ 46,748
Restricted cash 96 4,296
Accounts receivable, net 48,386 43,478
Other current assets 14,378 10,560
Property and equipment 16,998 19,493
Other intangible assets 20,330 22,902
Goodwill 32,549 32,549
Other 6,215 3,486
Net assets of discontinued operations(4) 840 26,338
------------- -------------
$ 158,273 $ 209,850
============= =============
Liabilities and Stockholders' Deficit
Current liabilities $ 39,464 $ 46,002
Deferred revenue 19,509 18,002
Current portion of long-term debt 12,500 15,020
Long-term debt 112,500 160,000
Other long-term obligations 1,719 2,140
Net liabilities of discontinued
operations (4) 65 7,938
Stockholders' deficit (27,484) (39,252)
------------- -------------
$ 158,273 $ 209,850
============= =============
(4) Net assets and net liabilities of discontinued operations
include Business1 at September 30, 2003, and included Patient1 and
Business1 at December 31, 2002.
PER-SE TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands except per share data)
Three months ended Nine months ended
September 30, September 30,
------------------ ------------------
2003 2002 2003 2002
-------- -------- -------- --------
Revenue $ 84,511 $ 82,842 $251,826 $243,632
-------- -------- -------- --------
Salaries and wages 49,846 46,976 146,119 140,125
Other operating expenses 20,534 23,986 65,805 68,029
Depreciation 2,352 2,643 7,315 8,342
Amortization 1,786 2,042 5,396 5,921
Interest expense, net 3,830 4,503 12,400 13,466
Interest expense - debt
retirement costs 6,034 -- 6,255 --
Restructuring expenses 177 -- 177 --
-------- -------- -------- --------
Total expenses 84,559 80,150 243,467 235,883
-------- -------- -------- --------
(Loss) income before income
taxes (48) 2,692 8,359 7,749
Income tax expense 143 218 805 643
-------- -------- -------- --------
(Loss) income from continuing
operations (191) 2,474 7,554 7,106
-------- -------- -------- --------
(Loss) income from discontinued
operations, net of tax
- Patient1 (228) 197 (1,337) (310)
Gain on sale of Patient1 9,436 -- 9,436 --
Loss from discontinued
operations, net of tax
- Business1 (977) (527) (2,851) (1,230)
Loss from discontinued
operations, net of tax
- Business1 write-down of net
assets (7,708) -- (7,708) --
Loss from discontinued
operations, net of tax
- Other (258) (857) (492) (958)
-------- -------- -------- --------
Net income $ 74 $ 1,287 $ 4,602 $ 4,608
======== ======== ======== ========
Diluted net income (loss)
per common share:
Income from continuing
operations excluding
restructuring expenses
and debt retirement costs $ 0.18 $ 0.08 $ 0.43 $ 0.22
Restructuring expenses (0.01) -- (0.01) --
Debt retirement costs (0.18) -- (0.19) --
-------- -------- -------- --------
(Loss) income from continuing
operations (0.01) 0.08 0.23 0.22
(Loss) income from discontinued
operations, net of tax
- Patient1 (0.01) 0.01 (0.04) (0.01)
Gain on sale of Patient1 0.28 -- 0.29 --
Loss from discontinued
operations, net of tax
- Business1 (0.03) (0.02) (0.09) (0.04)
Loss from discontinued
operations, net of tax
- Business1 write-down of
net assets (0.23) -- (0.24) --
Loss from discontinued
operations, net of tax - Other -- (0.03) (0.01) (0.03)
-------- --------- --------- ---------
Net income $ -- $ 0.04 $ 0.14 $ 0.14
======== ======== ======== ========
Weighted average shares used
in computing diluted earnings
per share (5) 33,688 31,258 32,199 32,092
======== ======== ======== ========
(5) As the Company had a loss from continuing operations for the
three months ended September 30, 2003, diluted earnings per share
calculated on a GAAP basis would be the same as basic earnings per
share. The Company has provided fully diluted earnings per share from
continuing operations to facilitate comparisons to previously issued
guidance.
PER-SE TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
Nine Months Ended
September 30,
---------------------
2003 2002
---------- ---------
Cash Flows From Operating Activities:
Net income $ 4,602 $ 4,608
Adjustments to reconcile net income to cash
provided by (used for) operating activities:
Depreciation and amortization 12,711 14,263
Write-off of unamortized deferred
financing costs 1,957 --
Loss from discontinued operations 2,952 2,498
Changes in assets and liabilities,
excluding effects of acquisitions
and divestitures (9,466) (11,912)
--------- ---------
Net cash provided by continuing operations 12,756 9,457
Net cash used for discontinued operations (9,672) (4,961)
--------- ---------
Net cash provided by operating activities 3,084 4,496
--------- ---------
Cash Flows From Investing Activities:
Acquisitions, net of cash acquired (57) (1,620)
Purchases of property and equipment (4,850) (5,137)
Software development costs (2,821) (2,841)
Proceeds from sale of subsidiaries 27,092 --
Other 3 48
--------- ---------
Net cash provided by (used for) continuing
operations 19,367 (9,550)
Net cash used for discontinued operations (2,289) (3,228)
--------- ---------
Net cash provided by (used for) investing
activities 17,078 (12,778)
--------- ---------
Cash Flows From Financing Activities:
Proceeds from the exercise of stock options 7,012 681
Proceeds from borrowings 125,000 --
Deferred financing costs related to new
borrowings (5,421) --
Repayments of debt (175,020) (53)
--------- ---------
Net cash (used for) provided by financing
activities (48,429) 628
--------- ---------
Cash and Cash Equivalents:
Net change in cash (28,267) (7,654)
Balance at beginning of period 46,748 36,493
--------- ---------
Balance at end of period $ 18,481 $ 28,839
========= =========
PER-SE TECHNOLOGIES, INC. AND SUBSIDIARIES
RECONCILIATION OF CONSOLIDATED OPERATING INCOME AND MARGIN,
AND INCOME FROM CONTINUING OPERATIONS AND EPS
(unaudited, in thousands)
For the period ended
September 30, 2003
----------------------------------
QTD YTD
------- --------
% of % of
Revenue Revenue
-------- --------
Operating income excluding
restructuring expenses $9,993 11.8% $27,191 10.8%
Restructuring expenses 177 177
------ -------- ------- --------
Consolidated operating income $9,816 11.6% $27,014 10.7%
====== ======= ======= =======
EPS EPS
Income from continuing operations -------- --------
excluding debt refinancing costs
and restructuring expenses $6,020 $ 0.18 $13,986 $ 0.43
Debt refinancing costs 6,034 $ (0.18) 6,255 $ (0.19)
Restructuring expenses 177 $ (0.01) 177 $ (0.01)
------ ------- ------- -------
(Loss) income from continuing
operations $ (191) $ (0.01) $ 7,554 $ 0.23
====== ======= ======= =======
Operating income and income from continuing operations, excluding
restructuring expenses and debt refinancing costs
The Company believes operating income, excluding restructuring,
and income from continuing operations and related earnings per share
from continuing operations, excluding restructuring expenses and debt
refinancing costs, are additional meaningful measures of operating
performance to facilitate comparisons to previously issued guidance
that excluded these items. These measures represent the earnings
generated from the "base business" excluding (1) the costs associated
with reorganization of the Company's operating structure following the
Patient1 divestiture, and (2) the costs associated with the
refinancing and retirement of the Company's debt. These expenses are
special in nature. Internally, the Company uses these measures to
evaluate the operational performance of the Company. While the Company
believes these measures are meaningful and useful to the readers of
the financial statements, these measures will necessarily be different
from comparable information provided by other companies and should not
be used as an alternative to our operating and other financial
information as determined under U.S. generally accepted accounting
principles.
PER-SE TECHNOLOGIES, INC. AND SUBSIDIARIES
RECONCILIATION OF EPS FROM CONTINUING OPERATIONS,
INCLUDING BUSINESS1
Three Months Ended
Sept. 30, 2003
----------
Diluted net income per common share
Income from continuing operations, excluding debt
refinancing and restructuring expenses $0.18
Income from discontinued operations - Business1,
excluding write-down of net assets (0.03)
----------
Income from continuing operations, including Business1 $0.15
==========
EPS from continuing operations, including Business1
The Company has provided earnings per share from continuing
operations, excluding restructuring and debt refinancing costs, and
including Business1, to facilitate comparisons to previously issued
guidance that included the Business1 product line, whose disposal was
announced in this press release. In accordance with generally accepted
accounting principles, the Business1 product line was classified as
discontinued operations for all periods presented. While the Company
has provided this measure to facilitate comparisons to previously
issued guidance, it will necessarily be different from comparable
information provided by other companies and should not be used as an
alternative to our operating and other financial information as
determined under U.S. generally accepted accounting principles.
PER-SE TECHNOLOGIES, INC. AND SUBSIDIARIES
RECONCILIATION OF SEGMENT OPERATING INCOME AND MARGIN
(unaudited, in thousands)
For the period ended
September 30, 2003
---------------------
% of
Physician Services, excluding conversion costs Revenue
-----------
Operating income excluding conversion costs $ 8,470 13.3%
Conversion costs 1,030
--------------------
Operating income $ 7,440 11.7%
====================
Hospital Services, excl. restructuring expenses
Operating income excluding restructuring
expenses $ 5,884 24.1%
Restructuring expenses 96
--------------------
Operating income $ 5,788 23.7%
====================
Corporate, excluding restructuring expenses
Operating income excluding restructuring
expenses $ (3,331)
Restructuring expenses 81
---------
Operating income $ (3,412)
=========
Operating income, excluding ASP conversion costs, for Physician
Services division
The Company believes operating income, excluding ASP conversion
costs, for the Physician Services division is an additional meaningful
measure of operating performance as it represents the earnings
generated from the "base business" excluding the significant costs
associated with converting the division's physician practice
management customers onto a new Web-based platform. These expenses are
special in nature and will be cease upon completion of the project.
Internally, the Company uses this measure to evaluate the operational
performance of the division. While the Company believes this measure
is meaningful and useful, it will necessarily be different from
comparable information provided by other companies and should not be
used as an alternative to our operating and other financial
information as determined under U.S. generally accepted accounting
principles.
Operating income, excluding restructuring expenses, for Hospital
Services and Corporate
The Company believes operating income, excluding restructuring,
for both the Hospital Services and Corporate segments are additional
meaningful measures of operating performance to facilitate comparisons
to previously issued guidance that excluded restructuring. These
measures represent the earnings generated or expenses associated with
the "base business" excluding the costs associated with the
reorganization of the Company's operating structure following the
Patient1 divestiture. These expenses are special in nature.
Internally, the Company uses these measures to evaluate the
operational performance of the Company. While the Company believes
these measures are meaningful and useful to the readers of the
financial statements, these measures will necessarily be different
from comparable information provided by other companies and should not
be used as an alternative to our operating and other financial
information as determined under U.S. generally accepted accounting
principles.
PER-SE TECHNOLOGIES, INC. AND SUBSIDIARIES
RECONCILIATION OF GUIDANCE
(unaudited, in thousands)
Year Ended
2003 EPS Guidance December 31, 2003
------------------
EPS from continuing operations excluding
debt refinancing costs and restructuring
expenses $ 0.63 - $0.68
Debt refinancing costs (0.19)
Restructuring expenses (0.01)
-----------------
EPS from continuing operations $ 0.43 - $0.48
=================
2003 Free Cash Flow Year Ended
December 31, 2003
------------------
Free Cash Flow $ 15,000+
Purchases of property and equipment and software
development costs 13,000 - 15,000
-----------------
Net cash provided by continuing operations $28,000 - 30,000+
=================
2004 Free Cash Flow Year Ended
December 31, 2004
------------------
Free Cash Flow $ 25,000+
Purchases of property and equipment and software
development costs 15,000 - 16,000
-----------------
Net cash provided by continuing operations $40,000 - 41,000+
=================
EPS from continuing operations, excluding debt refinancing costs
and restructuring expenses - guidance
The Company believes earnings per share from continuing
operations, excluding debt refinancing costs and restructuring
expenses, is an additional meaningful measure of operating performance
as it represents the earnings generated from the "base business"
excluding (1) the costs associated with the reorganization of the
Company's operating structure following with the divestiture of the
Patient1 product line, and (2) the costs associated with the
refinancing and retirement of the Company's debt. These expenses are
special in nature. Internally, the Company uses this measure to
evaluate the operational performance of the Company. While this
measure is a meaningful and useful, it will necessarily be different
from comparable information provided by other companies and should not
be used as an alternative to our operating and other financial
information as determined under U.S. generally accepted accounting
principles.
Free Cash Flow - 2003 and 2004 guidance
The Company believes free cash flow is a meaningful measure of
operating performance. Defined as net cash provided by continuing
operations less investments in capitalized software development costs
and capital expenditures, free cash flow illustrates the operating
cash flow generated by the business after investments in the Company's
infrastructure and products have been made. Internally, the Company
uses this measure to evaluate the operational performance of the
business on a consolidated basis. Free cash flow is also used in the
determination of incentive compensation for various of the Company's
management personnel. While the Company believes free cash flow is a
meaningful, useful measure, it will necessarily be different from
comparable information provided by other companies and should not be
used as an alternative to our operating and other financial
information as determined under U.S. generally accepted accounting
principles.
CONTACT: Per-Se Technologies, Atlanta
Michele Howard, 770/444-5603
michele.howard@per-se.com