Exhibit 99.1
Per-Se Technologies Reports a First Quarter Record for Revenue Growth, Earnings
and Cash Flow
ALPHARETTA, Ga.--(BUSINESS WIRE)--May 3, 2005--Per-Se Technologies, Inc.
(Nasdaq: PSTI), the leader in Connective Healthcare solutions that
help physicians and hospitals realize their financial goals, today
released its results for the first quarter ended March 31, 2005.
The Company reported revenue of $92.0 million, operating income of
$10.9 million, or 11.8% of revenue, and income from continuing
operations of $9.4 million, or $.29 per share on a diluted basis
during the first quarter. Cash flow from continuing operations for the
quarter was $13.2 million compared to a use of $0.7 million for the
first quarter of 2004.
"We achieved our best first quarter performance to date. We
generated consolidated revenue growth of 9%, operating income growth
of 40% and income from continuing operations growth of 71% compared to
the prior year comparable non-GAAP measures," stated Philip M. Pead,
Per-Se's chairman, president and chief executive officer. "Our strong
operational performance drove unprecedented operational cash flow
generation in a quarter that has historically been a use of cash."
For comparison purposes, in the first quarter of 2004 on a GAAP
basis, the Company reported revenue of $84.6 million, operating income
of $3.9 million, or 4.6% of revenue, and income from continuing
operations of $1.6 million, or $.05 per share on a diluted basis. On a
non-GAAP basis, excluding expenses of approximately $3.9 million
incurred related to the additional procedures requested by the
Company's external auditors in 2004, the Company had operating income
of $7.8 million, or 9.2% of revenue, and income from continuing
operations of $5.5 million, or $.16 per share on a diluted basis for
the first quarter of 2004.
Segment Performance
The Physician Services division reported revenue and operating
income of $67.2 million and $8.6 million, respectively, or 12.8% of
revenue, for the first quarter of 2005, compared to revenue and
operating income of $63.2 million and $6.0 million, respectively, or
9.4% of revenue, for the first quarter of 2004. As expected, the
current year quarter included approximately $1.5 million of revenue
and operating income that was delayed from the fourth quarter of 2004
due to the timing of electronic claims transmission for the division.
"Physician Services revenue increased 6% over our prior year
performance primarily due to the implementation of the record net new
business sold in 2004 into our recurring revenue model. We expect
revenue growth to continue to drive profitability in the business,"
stated Pead.
The division had net new business sold in the first quarter of $5
million, compared to the record net new business sold of $12 million
in the first quarter of 2004. The Company defines net new business
sold as the annualized revenue value of new contracts signed in a
period, less the annualized revenue value of terminated business in
that same period.
"Our sales and client retention for the first quarter were in line
to achieve our full year 2005 net new business sold target," stated
Pead. "Our pipeline of new business opportunities continues to grow
across all specialties."
The division had a net backlog of approximately $5 million as of
March 31, 2005, compared to a net backlog of $5 million as of March
31, 2004. 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.
The Hospital Services division reported revenue and operating
income of $28.4 million and $6.4 million, respectively, or 22.7% of
revenue, for the first quarter of 2005, compared to revenue of $24.8
million and operating income of $5.8 million, or 23.4% of revenue for
the first quarter of 2004. In the current year quarter, the division
expensed $0.3 million related to its project to enhance its physician
claims clearinghouse.
New business sold in the Hospital Services division during the
first quarter of 2005 was approximately $6 million, compared to new
business sold of approximately $7 million during the first quarter of
2004. Medical-related transaction volume increased approximately 26%
in the first quarter compared to the prior year period.
"The Hospital Services division's record new business sold in 2004
drove the 15% year-over-year revenue increase in the first quarter and
will continue to contribute to revenue growth throughout 2005," stated
Pead. "Margins were slightly impacted during the quarter by our
investment in the physician claims clearinghouse infrastructure."
Enhancements to Physician Claims Clearinghouse
During the latter part of 2004, the Company initiated a project
with IBM to enhance its physician claims clearinghouse functionality.
The Company expects that the improved platform will provide
significant efficiencies and competitive advantages for its Physician
Services division.
During the first quarter of 2005, the Company incurred
approximately $0.3 million of expenses related to the project, or $.01
per diluted share, which are reflected in the Hospital Services
division, and invested approximately $0.9 million in capital
expenditures and capitalized software development costs. Cash flow in
the quarter related to the project was a use of approximately $0.9
million.
Share Repurchase Program Completed
During the first quarter of 2005, the Company's board of directors
authorized the repurchase of up to 1 million shares of the Company's
common stock. As of March 31, 2005, the Company had repurchased
810,000 shares for a total of $12.4 million. The share repurchase
program was completed in early April with the Company repurchasing a
total of 1 million shares for $15.4 million.
Outlook
For the full year 2005, the Company continues to expect
consolidated revenue growth of 6.5% to 7.5% over 2004 revenue,
consolidated operating income margins in the range of 11% to 12%, and
diluted earnings per share from continuing operations of $1.05 to
$1.15. This guidance includes expenses related to the claims
clearinghouse enhancement of approximately $2.0 million to $2.5
million, or $.05 to $.07 per diluted share.
For the second quarter of 2005, the Company expects diluted
earnings per share from continuing operations of $.21 to $.24. For the
third quarter of 2005, the Company expects diluted earnings per share
from continuing operations of $.25 to $.28. This guidance includes
costs related to the clearinghouse enhancement of $.02 per diluted
share in the second quarter and $.02 per diluted share in the third
quarter.
By segment, the Company continues to forecast revenue growth for
the Physician Services division of 6% to 6.5% and operating margins of
12% to 13% for the full year 2005. The Company continues to expect to
achieve net new business sold during 2005 in the Physician Services
division of $20 million to $30 million.
For the Hospital Services division, the Company continues to
forecast full year revenue growth of 8% to 10% and operating margins
of 20% to 20.5%, including the clearinghouse enhancement costs. The
Company continues to expect to achieve new business sold in the
Hospital Services division of $20 million to $25 million.
The Company continues to expect cash flow from continuing
operations for the full year 2005 to be in excess of $47 million,
which includes the impact of its clearinghouse enhancement. The
Company also expects capital expenditures and capitalized software
development costs to be between $17 million and $19 million, which
includes approximately $5 million related to the clearinghouse
enhancement.
"Our strong first quarter performance positions us well to achieve
our goals for 2005," stated Pead. "We remain focused on continuing to
build on our new business momentum and are excited about our
opportunities for revenue growth in 2005."
Conference Call
Per-Se will host a conference call for institutional investors and
security analysts at 10:00 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.
About Per-Se Technologies
Per-Se Technologies (Nasdaq: PSTI) is the leader in Connective
Healthcare. Connective Healthcare solutions from Per-Se enable
physicians and hospitals to achieve their income potential by creating
an environment that streamlines and simplifies the complex
administrative burden of providing healthcare.
Per-Se's Connective Healthcare solutions help reduce
administrative expenses, increase revenue and accelerate the movement
of funds to benefit providers, payers and patients. More 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 as well
as the assumptions upon which such statements are based.
Forward-looking statements include specifically, but are not limited
to, revenue projections, operating income projections, operating
margin projections, earnings per share from continuing operations
projections, cash flow projections, capital expenditure and
capitalized software projections, full year 2005 new business sold
forecasts, and the cost, timing and results of the physician claims
clearinghouse enhancement. 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 implement
successfully sales backlog, lack of revenue growth, client losses,
technical issues in processing claims through the clearinghouse, 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 could 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 and Factors
That May Affect Future Results of Operations, Financial Condition or
Business included in the Company's Form 10-K for the year ended
December 31, 2004. The Company disclaims any responsibility to update
any forward-looking statements.
The Company believes that the non-GAAP measures of operating
income, operating margins, income from continuing operations and
earnings per share from continuing operations excluding additional
procedures expenses are additional meaningful measures of operating
performance. The presentation of such non-GAAP measures enables
investors to focus on period-over-period operating performance,
without the impact of significant special items, and thereby enhances
the user's overall understanding of the Company's current financial
performance and provides a better baseline for modeling future
earnings expectations. The Company believes the inclusion of such
non-GAAP measures provides consistency and comparability in its
financial reporting and is provided in order to enable investors to
more thoroughly evaluate our current performance compared to past
performance. However, this information will necessarily be different
from comparable information provided by other companies and should not
be used in isolation or as an alternative to our operating and other
financial information as determined under U.S. generally accepted
accounting principles.
Condensed Consolidated Statements of Income Segment Reporting
(unaudited, in thousands)
Three Months Ended
March 31,
-----------------------------------
2005 2004
----------- -----------
Revenue
Physician Services $ 67,190 $ 63,183
Hospital Services 28,364 24,771
Eliminations (3,524) (3,353)
----------- -----------
Consolidated $ 92,030 $ 84,601
=========== ===========
Operating Income
Physician Services $ 8,568 $ 5,953
Hospital Services 6,429 5,802
Corporate (1) (4,144) (3,980)
----------- -----------
10,853 7,775
Other expenses (1) -- (3,914)
----------- -----------
Consolidated $ 10,853 $ 3,861
=========== ===========
(1) Corporate excludes other expenses of approximately $3.9
million related to the additional procedures for the three months
ended March 31, 2004.
Condensed Consolidated Balance Sheets
(unaudited, in thousands)
March 31, Dec. 31,
2005 2004
---------- ----------
Assets
Cash and cash equivalents $ 42,463 $ 42,422
Restricted cash 63 51
Accounts receivable, net 54,309 49,407
Other current assets 8,000 7,729
Property and equipment 16,105 15,512
Goodwill 32,549 32,549
Other intangible assets 20,866 20,784
Deferred income tax asset, net 28,115 28,115
Other 7,595 6,122
---------- ----------
$ 210,065 $ 202,691
========== ==========
Liabilities and Stockholders' Equity
Current liabilities $ 41,093 $ 34,480
Deferred revenue 26,397 24,127
Current portion of long-term debt 107 98
Long-term debt 125,517 125,527
Other long-term obligations 5,742 5,484
Stockholders' equity 11,209 12,975
---------- ----------
$ 210,065 $ 202,691
========== ==========
Per-Se Technologies, Inc. and Subsidiaries
Condensed Consolidated Statements of Income
(unaudited, in thousands except per share data)
Three months ended
March 31,
-------------------------
2005 2004
----------- ----------
Revenue $ 92,030 $ 84,601
----------- ----------
Cost of services 60,037 55,397
Selling, general and administrative 21,140 21,382
Other expenses -- 3,961
----------- ----------
Operating income 10,853 3,861
Interest expense 1,481 2,074
Interest income (312) (52)
----------- ----------
Income before income taxes 9,684 1,839
Income tax expense 253 232
----------- ----------
Income from continuing operations 9,431 1,607
----------- ----------
Loss from discontinued operations, net of
tax - Patient1 -- (18)
Loss on sale of Patient1, net of tax -- (66)
Loss from discontinued operations, net of
tax - Business1 -- (303)
Loss on sale of Business1, net of tax -- (130)
Loss from discontinued operations, net of
tax - Other -- (63)
----------- ----------
Net income $ 9,431 $ 1,027
=========== ==========
Diluted net income per common share:
Income from continuing operations
excluding other expenses $ 0.29 $ 0.16
Other expenses -- (0.11)
----------- ----------
Income from continuing
operations 0.29 0.05
Loss from discontinued operations, net of
tax - Business1 -- (0.01)
Loss on sale of Business1, net of tax -- (0.01)
-------------------------
Net income $ 0.29 $ 0.03
=========== ==========
Weighted average shares used in computing
diluted earnings per share 32,552 34,200
=========== ==========
Per-Se Technologies, Inc.
Condensed Consolidated Statements of Cash Flows
(unaudited, in thousands)
Three Months Ended
March 31,
---------------------
2005 2004
-------- -------
Cash Flows From Operating Activities:
Net income $ 9,431 $ 1,027
Adjustments to reconcile net income to cash
provided by (used for) operating activities:
Depreciation and amortization 3,752 3,894
Loss on sale of discontinued operations
and other -- 196
Loss from discontinued operations -- 384
Amortization of deferred financing
costs 343 340
Changes in assets and liabilities,
excluding effects of acquisitions and
divestitures (364) (6,537)
-------- -------
Net cash provided by (used for) continuing
operations 13,162 (696)
Net cash used for discontinued operations -- (483)
-------- -------
Net cash provided by (used for) operating
activities 13,162 (1,179)
-------- -------
Cash Flows From Investing Activities:
Purchases of property and equipment (2,552) (1,629)
Software development costs (2,073) (1,135)
Other (50) (213)
-------- -------
Net cash used for investing activities (4,675) (2,977)
-------- -------
Cash Flows From Financing Activities:
Proceeds from the exercise of stock options 1,402 2,529
Treasury stock purchase (9,890) --
Repayments of debt -- (3,125)
Other 42 (17)
-------- -------
Net cash used for financing activities (8,446) (613)
-------- -------
Cash and Cash Equivalents:
Net change in cash 41 (4,769)
Balance at beginning of period 42,422 25,271
-------- -------
Balance at end of period $ 42,463 $20,502
======== =======
Reconciliation of Consolidated Operating Income and Margin,
Income from Continuing Operations and EPS
(unaudited, in thousands)
Three Months Ended
March 31,
---------------------------------------
2005 2004
----------------- ----------------
% Increase % of
over 2004 Revenue
---------- --------
Operating income excluding
additional procedures expenses
(a non-GAAP measure) $10,853 39.6% $ 7,775 9.2%
Additional procedures
expenses - (3,914)
------- -------
Consolidated operating income
(a GAAP measure) $10,853 181.1% $ 3,861 4.6%
======= =======
Income from continuing
operations excluding EPS
additional procedures -------
expenses (a non-GAAP measure) $ 9,431 70.8% $ 5,521 $ .16
Additional procedures
expenses - (3,914) .11
------- ------- -------
Income from continuing
operations (a GAAP measure) $ 9,431 486.9% $ 1,607 $ .05
======= ======= =======
Operating income and income from continuing operations, excluding
additional procedures expenses
The Company believes operating income and operating margins,
excluding additional procedures expenses, and income from continuing
operations and related earnings per share from continuing operations,
excluding additional procedures expenses, 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
the costs associated with the additional procedures requested by the
Company's external auditors in 2004. These expenses are special in
nature. Internally, the Company uses these measures to evaluate its
operational performance. While the Company believes these measures are
meaningful and useful to the readers of the financial statements,
these measures will 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
Michele Howard, 770/237-7827
investors@per-se.com