Exhibit 99.1
Per-Se Technologies Reports Second Quarter Earnings;
$10 million of Net New Business Sold in Physician Services division
ALPHARETTA, Ga.--(BUSINESS WIRE)--xx--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 second quarter ended June 30, 2005.
The Company reported revenue of $93.3 million, operating income of
$8.9 million, or 9.5% of revenue, and income from continuing
operations of $7.5 million, or $.23 per share on a diluted basis
during the second quarter.
"We achieved our second highest net new business sold performance
in our Physician Services division and are on target to achieve our
full year consolidated revenue, profitability and cash flow
expectations," stated Philip M. Pead, Per-Se's chairman, president and
chief executive officer.
For comparison purposes, in the second quarter of 2004 on a GAAP
basis, the Company reported revenue of $88.1 million, operating income
of $6.3 million, or 7.1% of revenue, and a loss from continuing
operations of $1.4 million, or $.04 per share. On a non-GAAP basis,
excluding debt refinancing expenses of approximately $5.9 million and
expenses related to the additional procedures requested by the
Company's external auditors in 2004 of approximately $2.5 million, the
Company had operating income of $8.8 million, or 10.0% of revenue, and
income from continuing operations of $7.0 million, or $.21 per share
on a diluted basis for the second quarter of 2004.
Year-to-Date Results
On a year-to-date basis, the Company reported revenue of $185.3
million, operating income of $19.7 million, or 10.6% of revenue, and
income from continuing operations of $17.0 million, or $.52 per share
on a diluted basis.
Cash flow from continuing operations for the six months ended June
30, 2005, was $22.6 million compared to $10.5 million for the six
months ended June 30, 2004. Cash flow from continuing operations for
2004 includes a use of cash of approximately $6.0 million related to
the additional procedures.
"Both divisions contributed to our year-to-date consolidated
revenue growth of 7%," stated Pead. "Our recurring revenue business
model continues to generate strong cash flow."
For comparison purposes, in the prior year period on a GAAP basis,
the Company had revenue of $172.7 million, operating income of $10.2
million, or 5.9% of revenue, and income from continuing operations of
$0.2 million, or $.00 per share on a diluted basis. On a non-GAAP
basis, excluding debt refinancing expenses of $5.9 million and
additional procedures expenses of $6.5 million, the Company had
operating income of $16.6 million, or 9.6% of revenue, and income from
continuing operations of $12.6 million, or $.37 per share on a diluted
basis.
Segment Performance
The Physician Services division reported revenue and operating
income of $69.1 million and $7.5 million, respectively, or 10.8% of
revenue, for the second quarter of 2005, compared to revenue and
operating income of $66.1 million and $7.1 million, respectively, or
10.8% of revenue, for the second quarter of 2004.
The division had net new business sold in the second quarter of
$10 million, compared to net new business sold of $2 million in the
second 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.
"Revenue for the Physician Services division increased
approximately 5% over our prior year performance," stated Pead. "With
our outstanding net new business sold performance in the quarter, we
are on course to meet both our revenue growth and net new business
sold targets for the division for 2005."
The division had a net backlog of approximately $10 million as of
June 30, 2005, compared to a net backlog of approximately $3 million
as of June 30, 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 $27.8 million and $5.3 million, respectively, or 18.9% of
revenue, for the second quarter of 2005, compared to revenue of $25.4
million and operating income of $6.4 million, or 25.0% of revenue, for
the second quarter of 2004. In the current year quarter, the division
expensed approximately $0.4 million related to its project to enhance
its physician claims clearinghouse.
New business sold in the Hospital Services division during the
second quarter of 2005 was approximately $3 million, compared to new
business sold of approximately $15 million during the second quarter
of 2004. New business sold in the prior year quarter included a large,
five-year contract for print and mail services. Medical-related
transaction volume increased approximately 16% in the second quarter
compared to the prior year period.
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. All clearinghouse assets for the Company are part
of the Hospital Services division.
During the second quarter of 2005, the Company incurred
approximately $0.4 million of expenses related to the project, or $.01
per diluted share, which are reflected in the Hospital Services
division, and invested approximately $0.4 million in capital
expenditures and capitalized software development costs. Cash flow in
the quarter related to the project was a use of approximately $0.6
million.
The Company expects the project to be completed in mid-year 2006,
versus the previous target of year-end 2005. For full year 2005,
project expenses are forecasted to be approximately $1.5 million, or
$.04 per diluted share, and capital expenditures and capitalized
software are expected to be approximately $3 million. The Company
continues to expect no change in total project expenses.
Share Repurchase Program Completed
As discussed in our first quarter earnings release, in 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.
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 expects consolidated revenue
growth of 6.5% to 7.5% over 2004 revenue, and expects consolidated
operating income margins in the range of 11% to 11.5%. The Company has
narrowed its expected range for diluted earnings per share from
continuing operations to $1.07 to $1.12, versus previous expectations
of $1.05 to $1.15. This guidance includes expenses related to the
claims clearinghouse enhancement of approximately $1.5 million, or
$.04 per diluted share, for full year 2005. Guidance also includes a
projected increase in weighted average diluted shares outstanding in
the second half of 2005, which reduces diluted earnings per share by
approximately $.03 compared to previous guidance. This projected
increase in diluted shares outstanding relates to common share
equivalents added for the convertible debentures and stock options due
to the recent increase in the Company's stock price.
For the third quarter of 2005, the Company expects diluted
earnings per share from continuing operations of $.25 to $.27. For the
fourth quarter of 2005, the Company expects diluted earnings per share
from continuing operations of $.30 to $.33.
By segment, the Company forecasts revenue growth for the Physician
Services division of 6% to 6.5% and operating margins of 12% to 12.5%
for the full year 2005. The Company expects 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 forecasts full
year revenue growth of 8% to 10% and operating margins of 21% to
21.5%, including the clearinghouse enhancement costs. The Company
expects to achieve new business sold in the Hospital Services division
of $20 million to $25 million.
The Company maintains its previous expectations for full year 2005
cash flow from continuing operations to be in excess of $47 million,
which includes the impact of its clearinghouse enhancement project.
The Company also expects capital expenditures and capitalized software
development costs to be between $15 million and $17 million, which
includes approximately $3 million related to the clearinghouse
enhancement.
"With our strong first half performance, we remain confident in
delivering on our financial and new business goals for 2005 and are
excited about our prospects for 2006," stated Pead.
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 margin projections, earnings
per share from continuing operations projections, impact of diluted
share count, 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-Q for the quarter ended
March 31, 2005, and its 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 debt
refinancing expenses and additional procedures expenses, and diluted
weighted average shares outstanding and diluted earnings per share for
the quarter ended June 30, 2004, 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 its 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
the company's operating and other financial information as determined
under U.S. generally accepted accounting principles.
CONSOLIDATED STATEMENTS OF INCOME
SEGMENT REPORTING
(unaudited, in thousands)
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- ----------------------
2005 2004 2005 2004
-------- -------- -------- --------
Revenue
Physician Services $ 69,068 $ 66,075 $136,258 $129,258
Hospital Services 27,808 25,446 56,172 50,217
Eliminations (3,576) (3,380) (7,100) (6,733)
-------- -------- -------- --------
Consolidated $ 93,300 $ 88,141 $185,330 $172,742
======== ======== ======== ========
Operating Income
Physician Services $ 7,487 $ 7,117 $ 16,055 $ 13,070
Hospital Services 5,261 6,368 11,690 12,123
Corporate (1) (3,892) (4,651) (8,036) (8,584)
-------- -------- -------- --------
$ 8,856 $ 8,834 $ 19,709 $ 16,609
Other Expenses (1) -- (2,538) -- (6,452)
-------- -------- -------- --------
Consolidated $ 8,856 $ 6,296 $ 19,709 $ 10,157
======== ======== ======== ========
(1) Corporate excludes other expenses of approximately $2.5
million and $6.5 million related to the additional procedures for the
three and six months ended June 30, 2004, respectively.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands)
June 30, Dec. 31,
2005 2004
----------- -----------
Assets
Cash and cash equivalents $ 46,166 $ 42,422
Restricted cash 44 51
Accounts receivable, net 54,958 49,407
Other current assets 9,766 7,729
Property and equipment 16,309 15,512
Goodwill 32,549 32,549
Other intangible assets 20,135 20,784
Deferred income tax asset, net 28,115 28,115
Other 7,071 6,122
----------- -----------
$ 215,113 $ 202,691
=========== ===========
Liabilities and Stockholders' Equity
Current liabilities $ 39,065 $ 34,480
Deferred revenue 25,766 24,127
Current portion of long-term debt 118 98
Long-term debt 125,498 125,527
Other long-term obligations 5,491 5,484
Stockholders' equity 19,175 12,975
----------- -----------
$ 215,113 $ 202,691
=========== ===========
PER-SE TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(unaudited, in thousands except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
2005 2004 2005 2004
-------- -------- -------- --------
Revenue $ 93,300 $ 88,141 $185,330 $172,742
-------- -------- -------- --------
Cost of services 62,470 56,939 122,507 112,337
Selling, general and
administrative 21,974 22,368 43,114 43,796
Other expenses --- 2,538 --- 6,452
-------- -------- -------- --------
Operating income 8,856 6,296 19,709 10,157
Interest expense 1,448 1,999 2,929 4,073
Interest income (336) (192) (648) (244)
Loss on extinguishment of debt --- 5,896 --- 5,896
-------- -------- -------- --------
Income (loss) before income
taxes 7,744 (1,407) 17,428 432
Income tax expense (benefit) 198 (20) 451 212
-------- -------- -------- --------
Income (loss) from continuing
operations 7,546 (1,387) 16,977 220
-------- -------- -------- --------
Loss from discontinued
operations, net of tax -
Patient1 --- -- --- (18)
Gain on sale of Patient1, net
of tax --- 3,821 --- 3,755
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 --- (30) --- (93)
-------- -------- -------- --------
Net income $ 7,546 $ 2,404 $ 16,977 $ 3,431
======== ======== ======== ========
Diluted net income per common
share:
Income from continuing
operations excluding other
expenses and debt
retirement costs $ 0.23 $ 0.21 $ 0.52 $ 0.37
Other expenses --- (0.07) --- (0.19)
Debt retirement costs --- (0.18) --- (0.18)
-------- -------- -------- --------
Income (loss) from
continuing operations 0.23 (0.04) 0.52 0.00
Gain on sale of Patient1, net
of tax -- 0.11 --- 0.11
Loss from discontinued
operations, net of tax -
Business1 --- --- --- (0.01)
--------------------------------------
Net income $ 0.23 $ 0.07 $ 0.52 $ 0.10
======== ======== ======== ========
Weighted average shares used in
computing diluted earnings per
share (2) 32,410 33,462 32,480 33,831
======== ======== ======== ========
(2) As the Company had a loss from continuing operations for the
three months ended June 30, 2004, diluted earnings per share
calculated on a GAAP basis would be the same as basic earnings per
share. The weighted average shares calculation would exclude
approximately 1.9 million shares related to dilutive options and
warrants that are included above. 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)
Six Months Ended
June 30,
---------------------
2005 2004
--------- ---------
Cash Flows From Operating Activities:
Net income $ 16,977 $ 3,431
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation and amortization 7,539 7,737
Loss on extinguishment of debt --- 5,896
Gain on sale of Patient1 --- (3,755)
Loss from discontinued operations --- 544
Changes in assets and liabilities,
excluding effects of acquisitions and
divestitures (1,904) (3,387)
--------- ---------
Net cash provided by continuing operations 22,612 10,466
Net cash used for discontinued operations --- (512)
--------- ---------
Net cash provided by operating activities 22,612 9,954
--------- ---------
Cash Flows From Investing Activities:
Acquisitions, net of cash acquired --- (1,141)
Purchases of property and equipment (4,529) (3,000)
Software development costs (3,373) (2,529)
Proceeds from sale of subsidiaries --- 3,625
Other (163) (35)
--------- ---------
Net cash used for investing activities (8,065) (3,080)
--------- ---------
Cash Flows From Financing Activities:
Proceeds from the exercise of stock options 4,600 5,258
Proceeds from borrowings --- 125,000
Treasury stock purchase (15,404) (24,999)
Deferred financing costs --- (5,723)
Other 10 (108)
Repayments of debt (9) (121,875)
--------- ---------
Net cash used for financing activities (10,803) (22,447)
--------- ---------
Cash and Cash Equivalents:
Net change in cash 3,744 (15,573)
Balance at beginning of period 42,422 25,271
--------- ---------
Balance at end of period $ 46,166 $ 9,698
========= =========
RECONCILIATION OF CONSOLIDATED OPERATING INCOME AND MARGIN,
AND INCOME FROM CONTINUING OPERATIONS AND EPS - 2004
(unaudited, in thousands)
For the period ended June 30, 2004
----------------------------------
QTD YTD
-------- --------
% of % of
Revenue Revenue
-------- --------
Operating income excluding
additional procedures expenses
(non-GAAP measure) $ 8,834 10.0% $16,609 9.6%
Additional procedures expenses (2,538) (6,452)
----------------------------------
Consolidated operating income (GAAP
measure) $ 6,296 7.1% $10,157 5.9%
==================================
QTD EPS YTD EPS
----------------------------------
Income from continuing operations
excluding additional procedures and
extinguishment of debt (non-GAAP
measure) $ 7,047 $ .21 $12,568 $ .37
Additional procedures expenses (2,538) ($.07) (6,452) ($.19)
Loss on extinguishment of debt (5,896) ($.18) (5,896) ($.18)
----------------------------------
(Loss) Income from continuing
operations (GAAP measure) $(1,387) ($.04) $ 220 --
==================================
NOTE: Additional procedures expenses are classified as other
expenses in the consolidated income statement.
Operating income and income from continuing operations, excluding
additional procedures and loss on extinguishment of debt: The Company
believes operating income, excluding additional procedures expenses,
and income from continuing operations and related earnings per share
from continuing operations, excluding additional procedures expenses
and the loss on extinguishment of debt, 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 the additional procedures requested by
the Company's external auditors in 2004, 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 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 the company's 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