Exhibit 99.1
Per-Se Technologies Reports Second Quarter 2006 Results;
Adjusted EPS of $0.24 Exceeds Guidance
ALPHARETTA, Ga.--(BUSINESS WIRE)--Aug. 8, 2006--Per-Se
Technologies, Inc. (Nasdaq: PSTI), the leader in Connective Healthcare
solutions that help physicians, pharmacies, hospitals and healthcare
organizations realize their financial goals, today reported its
financial results for the second quarter and six-month period ended
June 30, 2006. The financial results of the NDCHealth businesses
acquired on January 6, 2006, are included in the Company's current
year results.
The following highlights include non-GAAP measures that are
reconciled to their most directly comparable GAAP measures later in
this press release:
Second Quarter Highlights
-- On a GAAP basis, second quarter revenue was $152.7 million,
operating income was $21.4 million, and income from continuing
operations was $7.9 million or $0.18 per share.
-- Revenue increased 63.6% in the second quarter from $93.3
million a year ago, driven by the addition of the acquired
NDCHealth businesses and by organic growth.
-- Adjusted operating income in the second quarter increased to
$25.8 million, or 16.9% of revenue, from $8.9 million, or 9.5%
of revenue, a year ago.
-- Second quarter adjusted earnings per share were $0.24 on
approximately 44.1 million diluted shares, compared to
guidance of $0.17 to $.0.19.
-- Adjusting the income tax rate to reflect Per-Se's estimated
cash tax paying rate to facilitate comparison to published
analyst expectations, adjusted earnings were approximately
$0.38 per diluted share.
Year-to-Date Highlights
-- Adjusted cash flow from continuing operations more than
doubled to $56.9 million in the first six months of 2006,
compared to cash flow from continuing operations of $22.6
million in the same period last year.
-- The Company repaid a total of $50 million of its Term Loan
debt during the first six months of 2006.
2006 Full-Year Guidance
-- The Company raised guidance for new business sold for its
Hospital Solutions and Pharmacy Solutions divisions, and
reaffirmed net new business sold guidance for the Physician
Solutions division.
-- The Company reaffirmed:
-- Adjusted cash flow guidance in a range of $100 million to
$110 million;
-- Adjusted EBITDA range of $142 million to $147 million;
-- Adjusted diluted earnings per share range of $0.81 to
$0.87; and
-- The Company lowered its revenue guidance to a range of $615
million to $620 million.
On a GAAP basis, the Company reported revenue for the second
quarter ended June 30, 2006 of $152.7 million, operating income of
$21.4 million, and income from continuing operations of $7.9 million,
or $0.18 per diluted share. Excluding stock-based compensation expense
and NDCHealth transition and integration-related expenses, on a
non-GAAP basis the Company reported second quarter adjusted operating
income of $25.8 million, or 16.9% of revenue, and adjusted income from
continuing operations of $10.5 million, or $0.24 per diluted share.
These adjusted results include an income tax provision at an income
tax rate of approximately 41%.
During the second quarter of 2006, the Company incurred pre-tax,
non-cash stock-based compensation expense of approximately $1.8
million. The Company also recorded transition and integration expenses
of approximately $2.6 million related to the NDCHealth acquisition.
For comparison purposes, in the second quarter of 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 $0.23 per diluted share, which included an income tax
rate of approximately 3.0%.
"Our second quarter financial results significantly exceeded our
expectations in all three divisions," said Philip M. Pead, chairman,
president and chief executive officer of Per-Se Technologies. "I am
excited about the momentum that has been created within our business
units and the strong demand for our products and services. The breadth
of our offerings and the leadership position we have in helping
providers improve their revenue cycle is having a very positive impact
on our Company performance."
Six-Month Results
On a GAAP basis, the Company reported revenue for the six months
ended June 30, 2006 of $298.9 million, operating income of $21.6
million, or 7.2% of revenue, and a loss from continuing operations of
$0.7 million, or $0.02 per share. On a non-GAAP basis, excluding
stock-based compensation expense, NDCHealth acquisition and
integration-related expenses, and the non-cash tax benefit from the
partial release of the tax asset valuation allowance, the Company had
adjusted income from continuing operations of $16.8 million, or $0.38
per diluted share.
For comparison purposes, in the first half of 2005 on a GAAP
basis, the Company reported revenue of $185.3 million and income from
continuing operations of $17.0 million, or $0.52 per diluted share,
which included an income tax rate of approximately 3.0%.
Cash flow from continuing operations for the six months ended June
30, 2006, was $29.9 million. During the six-month period, the Company
used approximately $27.0 million in operating cash for NDCHealth
transition and integration-related activities. Excluding these
transition and integration costs, adjusted cash flow from continuing
operations was $56.9 million for the first six months of 2006,
compared to $22.6 million in the same period last year.
Business Segment Performance
The following business segment review references adjusted
operating income for the second quarter of 2006, which excludes
stock-based compensation expense.
Physician Solutions Division
The Physician Solutions division reported revenue of $80.2 million
and adjusted operating income of $12.4 million, or 15.5% of revenue,
for the second quarter of 2006, compared to revenue and operating
income of $69.1 million and $7.5 million, respectively, or 10.8% of
revenue, for the same quarter of 2005.
This division's outsourced receivables management business had net
new business sold in the second quarter of approximately $6 million,
which compares to net new business sold of approximately $10 million
in the same quarter a year ago. In July 2006, this division closed
more than $5 million in net new sales in its outsourced receivables
management business, bringing its year-to-date total of net new
business sold to approximately $14 million.
"Our physician outsourcing business generated organic revenue
growth of over 6% during the quarter as compared to last year's second
quarter. The incremental revenue contributed to a strong margin
performance for our outsourcing business, with margins increasing over
the first quarter," commented Pead. "While our net new business sold
for the quarter was below our expectations due to the timing of new
business closings, our performance through July is on track and I am
confident that we will achieve our full-year net new business sold
range of $25 million to $35 million."
Hospital Solutions Division
The Hospital Solutions division reported revenue of $44.6 million
and adjusted operating income of $12.3 million, or 27.7% of revenue,
for the second quarter of 2006. This compares to revenue of $27.8
million and operating income of $5.3 million, or 18.9% of revenue, in
the same quarter of 2005.
New business sold in the Hospital Solutions division was
approximately $9 million in the second quarter, compared to new
business sold of approximately $3 million in the same quarter a year
ago. The Company raised its expectations of new business sold for 2006
to a range of $25 million to $35 million on a full year basis from
previous expectations of $20 million to $30 million.
"We are raising our new business sold expectations for the
division as a result of the increased demand for our revenue cycle
management solutions in the marketplace," stated Pead. "With hospitals
continuing to face a challenging financial environment, our full suite
of products and outsourcing services enhances cash flow while
improving operating efficiencies."
Pharmacy Solutions Division
The Pharmacy Solutions division reported revenue of $32.1 million
and adjusted operating income of $6.9 million, or 21.5% of revenue,
for the second quarter of 2006. Pharmacy Solutions' new business sold
in the second quarter of 2006 was approximately $12 million. The
Company raised its expectations of new business sold for 2006 to a
range of $30 million to $40 million on a full year basis from previous
expectations of $25 million to $35 million.
"Our Pharmacy Solutions division delivered better than expected
second quarter performance," Pead said. "We have built solid momentum
through strong network transaction volume and continued penetration in
the pharmacy systems market. Raising our new business sold
expectations for 2006 is a direct reflection of our confidence in the
pharmacy business."
2006 Financial Guidance
Excluding acquisition-related costs and stock compensation
expenses, the Company maintained full year 2006 expectations for
consolidated adjusted operating income in the range of $90 million to
$96 million, or 14.5% to 15.5% of revenue. Consolidated adjusted
EBITDA for full year 2006 is expected to be in the range of $142
million to $147 million. The Company lowered its consolidated 2006
revenue guidance to a range of $615 million to $620 million due to the
timing of new business sold in its physician outsourcing business and
the revision or termination of certain lower margin contracts in its
hospital operations.
The Company continues to expect full year 2006 adjusted cash flow
from continuing operations to be in the range of $100 million to $110
million, excluding expected NDCHealth transition and
acquisition-related costs.
The Company is maintaining its adjusted diluted earnings per share
guidance range for full year 2006 of $0.81 to $0.87. Adjusted diluted
earnings per share guidance excludes acquisition-related costs
associated with the NDCHealth acquisition, the impact of stock-based
compensation expense, and the partial release of the Company's
deferred tax asset valuation allowance in the first quarter.
On a quarterly basis, the Company expects adjusted diluted
earnings per share from continuing operations of $0.18 to $0.21 for
the third quarter. For the fourth quarter, adjusted diluted earnings
per share from continuing operations are expected to be in the range
of $0.25 to $0.28.
The revised quarterly expectations are due to the timing of
certain expenses previously anticipated to be incurred in the second
quarter, as well as the expected delay of $0.02 to $0.03 in earnings
per share from the third quarter to the fourth quarter related to
Medicare reimbursement. The federal government will hold Medicare
reimbursement payments that should be funded during the last nine days
of September until October as mandated by the Deficit Reduction Act of
2005.
"With strong momentum in each of our divisions, we have raised new
business sold expectations in both our Pharmacy and Hospital Solutions
divisions, and are on track to achieve another record year for net new
business in our Physician outsourcing business. With the significant
margin improvement and strong cash flow in our businesses, combined
with our low cash tax paying rate, we are well positioned for the
second half of 2006 and to carry this strong momentum into 2007," Pead
concluded.
Conference Call
Per-Se will host a conference call for institutional investors and
security analysts at 10:00 a.m. Eastern time today, August 8, 2006.
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 "Investor Relations" section by selecting the webcast link. 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 is the leader in Connective Healthcare,
providing solutions that enable physicians, pharmacies and hospitals
to achieve their income potential by streamlining and simplifying 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: 2006 projections, costs and revenue growth, margin and other
financial projections; full year 2006 new business sold forecasts; the
Company's ability to successfully integrate and capitalize on
synergies associated with the acquisition of NDCHealth; and the impact
of adopting SFAS 123 (R). 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 losses;
technical issues in processing claims through the Company's
clearinghouses; failure to gain integration synergies from the
NDCHealth acquisition; any benefit from an additional release of the
tax valuation allowance; outcome of pending legal matters; 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 Risk Factor disclosures in its Form 10-K for
the year ended December 31, 2005. The Company disclaims any
responsibility to update any forward-looking statements.
PER-SE TECHNOLOGIES, INC.
CONDENSED SEGMENT REPORTING
(unaudited) ($ in thousands)
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- ---------------------
2006 2005 2006 2005
--------- -------- --------- ---------
Revenue
Physician Solutions $ 80,183 $ 69,068 $ 157,509 $ 136,258
Hospital Solutions 44,563 27,808 88,090 56,172
Pharmacy Solutions 32,066 n/a 61,467 n/a
Eliminations (4,139) (3,576) (8,152) (7,100)
--------- -------- --------- ---------
Consolidated $ 152,673 $ 93,300 $ 298,914 $ 185,330
========= ======== ========= =========
Adjusted Operating Income
(a non-GAAP measure)(1)
Physician Solutions $ 12,422 $ 7,487 $ 22,729 $ 16,055
Hospital Solutions 12,330 5,261 22,924 11,690
Pharmacy Solutions 6,886 n/a 11,095 n/a
Corporate (5,839) (3,892) (12,417) (8,036)
--------- -------- --------- ---------
Consolidated $ 25,799 $ 8,856 $ 44,331 $ 19,709
========= ======== ========= =========
(1) Operating income for the second quarter and six months of 2006 is
adjusted to exclude NDCHealth integration and transition-related
expenses, the write-off of in-process research & development, and
stock-based compensation expense. See the reconciliation of
adjusted operating income to GAAP operating income by business
segment provided in this release for further information.
PER-SE TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited) ($ in thousands)
June 30, December 31,
2006 2005
------------- ------------
Assets
Cash and cash equivalents $ 26,867 $ 61,161
Accounts receivable, net 96,158 54,397
Other current assets 16,889 6,559
Property and equipment, net 41,669 16,843
Goodwill 382,952 38,199
Other intangible assets, net 303,030 21,946
Deferred income taxes, net 33,658 30,294
Other 20,330 10,124
------------- ------------
$ 921,553 $ 239,523
============= ============
Liabilities and Stockholders' Equity
Current liabilities $ 82,089 $ 38,249
Deferred revenue 48,080 25,821
Long-term debt, including current portion 510,688 125,625
Other long-term obligations 22,122 5,312
Stockholders' equity 258,574 44,516
------------- ------------
$ 921,553 $ 239,523
============= ============
PER-SE TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited) ($ in thousands, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
2006 2005 2006 2005
-------- -------- -------- --------
Revenue $152,673 $ 93,300 $298,914 $185,330
-------- -------- -------- --------
Cost of services 86,746 62,470 188,351 122,507
Selling, general and
administrative 44,530 21,974 88,990 43,114
-------- -------- -------- --------
Operating income 21,397 8,856 21,573 19,709
Interest expense, net 8,080 1,112 15,961 2,281
-------- -------- -------- --------
Income before income taxes 13,317 7,744 5,612 17,428
Income tax expense 5,460 198 6,321 451
-------- -------- -------- --------
Income (loss) from continuing
operations 7,857 7,546 (709) 16,977
Loss from discontinued
operations, net of tax (49) -- (74) --
-------- -------- -------- --------
Net income (loss) $ 7,808 $ 7,546 $ (783) $ 16,977
======== ======== ======== ========
Diluted net income (loss) per
common share:
Adjusted income from
continuing operations $ 0.24 $ 0.23 $ 0.38 $ 0.52
Stock-based
compensation expense,
net of tax (0.02) -- (0.04) --
Write-off of In-process
research & development -- -- (0.30) --
NDCHealth transition
and integration-
related
expenses, net of tax (0.04) -- (0.09) --
Partial release of
deferred tax valuation
allowance -- -- 0.03 --
-------- -------- -------- --------
Income (loss) from
continuing operations (1) 0.18 0.23 (0.02) 0.52
Loss from discontinued
operations, net of tax -- -- -- --
-------- -------- -------- ---------
Net income (loss) -
diluted (1) $ 0.18 $ 0.23 $ (0.02) $ 0.52
======== ======== ======== ========
Weighted average shares used
in computing diluted earnings
per share (1) 44,078 32,410 43,699 32,480
======== ======== ======== ========
(1) As the Company had a loss from continuing operations for the six
months ended June 30, 2006, diluted earnings per share for the
six month period ended June 30, 2006, calculated on a GAAP
basis, would be the same as basic earnings per share. The
weighted average shares calculation would exclude approximately
5.8 million shares related to dilutive options and other equity-
based awards 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,
-------------------------
2006 2005
---------- ----------
Cash Flows From Operating Activities:
Net (loss) income $ (783) $ 16,977
Adjustments to reconcile net (loss) income to
cash provided by operating activities:
Depreciation and amortization 37,396 7,539
Amortization of deferred financing
costs 1,108 683
Stock-based compensation expense 2,703 --
Deferred income taxes 5,385 --
Changes in assets and liabilities,
excluding effects of acquisitions
and divestitures (15,934) (2,587)
---------- ----------
Net cash provided by operating activities 29,875 22,612
---------- ----------
Cash Flows From Investing Activities:
Acquisitions, net of cash acquired (429,835) --
Purchases of property and equipment (6,312) (4,529)
Software development costs (8,595) (3,373)
Other -- (163)
---------- ----------
Net cash used for investing activities (444,742) (8,065)
---------- ----------
Cash Flows From Financing Activities:
Proceeds from the exercise of stock options 2,897 4,600
Proceeds from borrowings 435,000 --
Treasury stock purchase -- (15,404)
Deferred financing costs (7,662) --
Payments of debt (50,134) (9)
Other 472 10
---------- ----------
Net cash provided by (used for) financing
activities 380,573 (10,803)
---------- ----------
Cash and Cash Equivalents:
Net change in cash (34,294) 3,744
Balance at beginning of period 61,161 42,422
---------- ----------
Balance at end of period $ 26,867 $ 46,166
========== ==========
PER-SE TECHNOLOGIES, INC.
RECONCILIATION OF ADJUSTED OPERATING INCOME (A NON-GAAP MEASURE)
TO GAAP OPERATING INCOME BY BUSINESS SEGMENT
(unaudited) ($ in thousands)
Three months Six months
ended ended
June 30, Operating June 30, Operating
2006 Margin 2006 Margin
------------ --------- ---------- ---------
Physician Solutions:
Adjusted operating
income (a non-GAAP
measure) $12,422 15.5% $22,729 14.4%
Non-cash stock-based
compensation expense (225) (402)
NDCHealth transition and
integration-related
expenses -- (83)
Non-cash write-off of
in-process research &
development -- (1,900)
------------ --------- ---------- ---------
Operating income $12,197 15.2% $20,344 12.9%
------------ --------- ---------- ---------
Hospital Solutions:
Adjusted operating
income (a non-GAAP
measure) $12,330 27.7% $22,924 26.0%
Non-cash stock-based
compensation expense (170) (287)
NDCHealth transition and
integration-related
expenses -- (146)
Non-cash write-off of
in-process research &
development -- (2,800)
------------ --------- ---------- ---------
Operating income $12,160 27.3% $19,691 22.4%
------------ --------- ---------- ---------
Pharmacy Solutions:
Adjusted operating
income (a non-GAAP
measure) $6,886 21.5% $11,095 18.1%
Non-cash stock-based
compensation expense (192) (306)
NDCHealth transition and
integration-related
expenses -- --
Non-cash write-off of
in-process research &
development -- (8,600)
------------ --------- ---------- ---------
Operating income $6,694 20.9% $2,189 3.6%
------------ --------- ---------- ---------
Corporate:
Adjusted operating loss
(a non-GAAP measure) $(5,839) $(12,417)
Non-cash stock-based
compensation expense (1,185) (1,708)
NDCHealth transition and
integration-related
expenses (2,630) (6,526)
------------ --------- ---------- ---------
Operating loss $(9,654) $(20,651)
------------ --------- ---------- ---------
Consolidated:
Adjusted operating
income (a non-GAAP
measure) $25,799 16.9% $44,331 14.8%
Non-cash stock-based
compensation expense (1,772) (2,703)
NDCHealth transition and
integration-related
expenses (2,630) (6,755)
Non-cash write-off of
in-process research &
development -- (13,300)
------------ --------- ---------- ---------
Operating income $21,397 14.0% $21,573 7.2%
============ ========= ========== =========
The Company believes adjusted operating income, which excludes
non-cash write-off of in-process research & development, non-cash
stock-based compensation expense and NDCHealth acquisition-related
expenses is a meaningful measure of operating performance and
facilitates comparisons to previously issued guidance that excluded
these items. Internally, the Company uses these measures to evaluate
its operational performance. The presentation of such non-GAAP
measures enables investors to focus on expected period-over-period
operating performance, without the impact of these items, and thereby
enhances the user's overall understanding of the Company's current
financial performance and provides a better baseline for modeling
future earnings expectations. The Company believes the inclusion of
such non-GAAP measures provides consistency and comparability in its
financial reporting and is provided in order to enable investors to
evaluate how management views its business and to more thoroughly
evaluate its current performance compared to past performance.
However, this information may be different from comparable information
provided by other companies and should not be used in isolation or as
an alternative to the Company's operating and other financial
information as determined under U.S. generally accepted accounting
principles.
PER-SE TECHNOLOGIES, INC.
RECONCILIATION OF ADJUSTED OPERATING INCOME AND EPS FROM CONTINUING
OPERATIONS (A NON-GAAP MEASURE) TO GAAP INCOME AND EPS FROM CONTINUING
OPERATIONS
(unaudited) ($ in thousands, except per share data)
Three months Six months
ended ended
June 30, June 30,
2006 EPS 2006 EPS
------------ ------ ---------- -------
Adjusted operating income (a
non-GAAP measure) $25,799 $44,331
Interest, net (8,080) (15,961)
Income taxes at approximately
5.5% cash-paying tax rate (975) (1,560)
----------- ----------
Adjusted income from continuing
operations before full income
tax rate (a non-GAAP measure) 16,744 $0.38 26,810 $0.61
Non-cash increase in income
tax rate (6,234) (0.14) (10,047) (0.23)
----------- -------------------------
Adjusted income from continuing
operations (a non-GAAP measure) 10,510 0.24 16,763 0.38
Non-cash write-off of in-
process research &
development -- -- (13,300) (0.30)
Non-cash stock-based
compensation expense, net of
tax (1,102) (0.02) (1,661) (0.04)
NDCHealth transition and
integration-related expenses,
net of tax (1,551) (0.04) (4,026) (0.09)
Tax benefit from partial
release of deferred tax asset
valuation allowance -- -- 1,515 0.03
----------- ------ ---------- -------
Income (loss) from continuing
operations (diluted and basic
EPS for GAAP purposes) $7,857 $0.18 $(709) $(0.02)
=========== ====== ========== =======
As the Company had a loss from continuing operations for the six
months ended June 30, 2006, diluted earnings per share for the six
month period ended June 30, 2006, calculated on a GAAP basis, would be
the same as basic earnings per share. The weighted average shares
calculation would exclude approximately 5.8 million shares related to
dilutive options and other equity-based awards that are included in
the weighted average shares used in computing EPS above. The Company
has provided fully diluted earnings per share from continuing
operations to facilitate comparisons to previously issued guidance.
The Company believes adjusted operating income and adjusted earnings
per share from continuing operations, which excludes NDCHealth
transition and integration-related expenses, non-cash stock-based
compensation expense and non-cash write-off of in-process research &
development are additional meaningful measures of operating
performance and facilitate comparisons to previously issued guidance
that excluded these items. Internally, the Company uses these measures
to evaluate its operational performance. The presentation of such
non-GAAP measures enables investors to focus on period-over-period
operating performance, without the impact of these items, and thereby
enhances the user's overall understanding of the Company's 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
evaluate how management views its business and to more thoroughly
evaluate its current performance compared to past performance.
However, this information may 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.
PER-SE TECHNOLOGIES, INC.
RECONCILIATION OF ADJUSTED CASH FLOW FROM OPERATING ACTIVITIES
(A NON-GAAP MEASURE) TO GAAP CASH FLOW FROM OPERATING ACTIVITIES AND
GUIDANCE
(unaudited) ($ in millions)
Six Months
ended 2006
June 30, 2006 Guidance
------------- ------------
Adjusted cash flow from operating activities
(a non-GAAP measure) $56.9 $100 - 110
Cash used for non-recurring acquisition-
related costs (27.0) (37 - 33)
------------- ------------
Cash flow from operating activities $29.9 $63 - 77
============= ============
The Company believes adjusted cash flow from operating activities,
which excludes NDCHealth acquisition-related costs, is a meaningful
measure of operating cash flow generated from the "base business" and
facilitates comparisons to previously issued guidance that excluded
these items. Internally, the Company uses these measures to evaluate
its operational performance. The presentation of such non-GAAP
measures enables investors to focus on expected period-over-period
operating performance, without the impact of these non-recurring
items, and thereby enhances the user's overall understanding of the
Company's expected financial performance and provides a better
baseline for modeling future cash flow expectations. The Company
believes the inclusion of such non-GAAP measures provides consistency
and comparability in its financial reporting and is provided in order
to enable investors to evaluate how management views its business and
to more thoroughly evaluate its expected performance compared to past
performance. However, this information may be different from
comparable information provided by other companies and should not be
used in isolation or as an alternative to the Company's operating and
other financial information as determined under U.S. generally
accepted accounting principles.
PER-SE TECHNOLOGIES, INC.
RECONCILIATION OF 2006 ADJUSTED EBITDA (A NON-GAAP MEASURE)
TO OPERATING INCOME
(unaudited) ($ in millions)
2006
Guidance
------------
Adjusted EBITDA (a non-GAAP measure) $142 - 147
Depreciation & amortization expense 52 - 51
------------
Adjusted operating income (a non-GAAP measure) 90 - 96
Non-cash write-off of in-process research & development 13 -13
Non-cash stock-based compensation expense 9 - 8
NDCHealth transition and integration-related expenses 12 -10
------------
Operating income $56 - 65
============
The Company believes earnings before interest, taxes, depreciation
and amortization expense (EBITDA), which excludes NDCHealth
acquisition-related expenses, write-off of in-process research &
development, and stock-based compensation expense is a meaningful
measure of operating performance and facilitates comparisons to
previously issued guidance that excluded these items. Internally, the
Company uses these measures to evaluate its operational performance.
The presentation of such non-GAAP measures enables investors to focus
on expected period-over-period operating performance, without the
impact of these items, and thereby enhances the user's overall
understanding of the Company's expected 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
expected performance compared to past performance. However, this
information may 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.
PER-SE TECHNOLOGIES, INC.
RECONCILIATION OF 2006 ADJUSTED INCOME PER SHARE FROM
CONTINUING OPERATIONS (A NON-GAAP MEASURE) TO INCOME PER SHARE
FROM CONTINUING OPERATIONS
(unaudited)
2006 Guidance
-------------
Adjusted income per share from continuing operations
(a non-GAAP measure) $0.81 - 0.87
Non-cash write-off of in-process research &
development (0.30)-(0.30)
Non-cash stock-based compensation expense, net of tax (0.12)-(0.11)
NDCHealth transition and integration-related expenses,
net of tax (0.17)-(0.14)
Tax benefit from partial reversal of deferred tax
asset valuation allowance 0.03 - 0.03
-------------
Income per share from continuing operations $0.25 - 0.35
=============
The Company believes adjusted income (earnings) per share from
continuing operations, excluding NDCHealth transition and
integration-related expenses, stock-based compensation expense,
write-off of in-process research & development, and the tax benefit
from the partial release of the deferred tax asset valuation
allowance, is a meaningful measure of operating performance and
facilitates comparisons to previously issued guidance that excluded
these items. Internally, the Company uses these measures to evaluate
its operational performance. The presentation of such non-GAAP
measures enables investors to focus on expected period-over-period
operating performance, without the impact of these items, and thereby
enhances the user's overall understanding of the Company's expected
financial performance and provides a better baseline for modeling
future earnings expectations. The Company believes the inclusion of
such non-GAAP measures provides consistency and comparability in its
financial reporting and is provided in order to enable investors to
evaluate how management views its business and to more thoroughly
evaluate its expected performance compared to past performance.
However, this information may be different from comparable information
provided by other companies and should not be used in isolation or as
an alternative to the Company's operating and other financial
information as determined under U.S. generally accepted accounting
principles.
PER-SE TECHNOLOGIES, INC.
SUMMARY OF NET DEFERRED INCOME TAX ASSET
(unaudited) ($ in millions)
At December 31, At June 30,
2005 2006
------------------ -----------------
Pre-tax After-tax Pre-tax After-tax
-------- --------- ------- ---------
Estimated Federal Net Operating
Loss Carryforward $375.4 $131.4 $360.4 $126.1
Estimated Deferred Tax Liabilities
for step-up in NDCHealth Other
Intangible Assets -- -- (289.4) (111.2)
Tax basis in NDCHealth Other
Intangible Assets -- -- 42.2 16.2
Tax basis in NDCHealth Goodwill -- -- 125.0 47.5
Tax basis of Other Assets 28.6 10.9 52.6 20.0
Other Tax Benefits -- 13.3 -- 13.8
-------- --------- ------- ---------
Total Deferred Income Tax
Asset 155.6 112.4
Valuation Allowance (125.3) (31.2)
Unrecorded Deferred Tax Asset -
NDCHealth Goodwill -- (47.5)
--------- ---------
Net Deferred Income Tax Asset $30.3 $33.7
========= =========
Estimated Federal Net Operating
Loss Utilization for the six
months ended June 30, 2006 $15.0
=======
Note: The Company expects to utilize the Estimated Federal Net
Operating Loss Carryforward as a reduction from Federal Taxable
income for the foreseeable future.
CONTACT: Per-Se Technologies, Inc.
Robert P. Borchert, 770-237-7539
investors@per-se.com
www.per-se.com