Quadramed (AMEX:QD)
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QuadraMed Corporation (Amex:QD) announced today that it will report net
income of $0.3 million before preferred stock accretion and dividends
declared for the three months ended March 31, 2008, compared to a net
income of $2.6 million for the same period in 2007. Included in the
current period results is approximately $0.6 million of severance costs
related to the change in the Company’s product
development strategy announced in February 2008.
Revenues of $35.3 million, gross margin of 56% and operating expenses of
$19.4 million combined to produce the achieved operating results for the
quarter. These are compared to revenues of $29.2 million, gross margin
of 62% and operating expenses of $16.1 million for the same period in
2007. The increases in revenues and expenses are primarily attributable
to the September 2007 acquisition of the CPR business assets from Misys
plc.
EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization)
was $1.5 million for the three months ended March 31, 2008, compared to
EBITDA of $3.7 million for the same period in 2007. EBITDA adjusted for
non-cash compensation of $0.8 million and $0.4 million respectively, and
severance costs of $0.6 million and zero respectively, was $2.9 million
for the three months ended March 31, 2008 and $4.1 million for the three
months ended March 31, 2007.
Cash and investments increased by $4.6 million during the three months
ended March 31, 2008, to $22.1 million from $17.5 million at December
31, 2007. Cash flow from operations was $7.9 million for three months
ended March 31, 2008, compared to $8.9 million for the corresponding
three months in 2007. Cash flow in both periods was significantly
influenced by the collection of annual maintenance billings which are
billed early in the first quarter.
The Company will also report net loss attributable to common
shareholders of $(1.1) million, or $(0.02) per basic and diluted share
for the three months ended March 31, 2008; this is compared to a net
income attributable to common shareholders of $1.3 million, or $0.03 per
basic and diluted share for the same period in 2007.
“Achieving a 20% revenue growth in our Q1
year-over-year results was an important step toward hitting our 2008
revenue target. This success, the QCPR win at Sibley Hospital and the
successful QCPR conversion and live operation of InterSystem’s
Cache are all important execution steps for our business. These
accomplishments demonstrate progress toward the operational improvements
and market success outlined in our strategic plan.”
said Keith Hagen, QuadraMed president and chief executive officer.
The Company also reported that on February 13, 2008 Washington,
D.C.-based Sibley Memorial Hospital
selected QuadraMed's Computerized Patient Record (QCPR) as part of its
initiative to build a longitudinal electronic health record (EHR) to
further drive its patient safety and care delivery. Sibley concluded
that the selection of QuadraMed’s
enterprise-wide computer-based patient record system would leverage its
previous investment in QuadraMed’s solutions
while also contributing to its goal of vendor consolidation to integrate
and streamline data flow within the enterprise. Additionally, QCPR met
the hospital’s functionality requirements
including computerized physician order entry, clinical decision support
tools and electronic medication administration. Sibley, which is
upgrading from QuadraMed’s Affinity to QCPR,
plans to integrate that solution with QuadraMed’s
Patient Registration, Revenue Cycle Management and Electronic Document
Management applications.
Management will review these results in an investment community
conference call at 5:00 PM Eastern (2:00 PM Pacific) on Thursday, May 8,
2008. To ensure fair dissemination of information, no inquiries of
management should be made regarding QuadraMed’s
results until after the conference call. A brief question and answer
period will follow management’s presentation.
The dial-in number for the conference call is 877-718-5099 domestic and
719-325-4746 international. Callers should dial in by 4:45 PM Eastern
(1:45 PM Pacific) to register. The call will also be webcast live and
available to the public via the Investor Relations section of QuadraMed’s
webpage at www.quadramed.com.
Please note that the webcast is listen-only. Listeners should access the
website at 4:45 PM Eastern (1:45 PM Pacific) to register and to download
and install any necessary audio software. Webcast replays will be
available shortly after the live call is completed. The replay will be
available until midnight, May 15, 2008. Replay telephone numbers are
719-457-0820 or 888-203-1112; replay passcode is 1535400.
Attachments
Exhibit 1
Condensed Consolidated Balance Sheets as of March 31, 2008 and
December 31, 2007
Exhibit 2
Condensed Consolidated Statements of Operations for the Three Months
Ended March 31, 2008 and 2007
Exhibit 3
Condensed Consolidated Statements of Cash Flows for the Three Months
Ended March 31, 2008 and 2007
Exhibit 4
Reconciliation of EBITDA and Non-GAAP Measurements for the Three
Months Ended March 31, 2008, December 31, 2007, September 30, 2007,
June 30, 2007, March 31, 2007, December 31, 2006, September 30,
2006, and June 30, 2006
About Adjusted EBITDA and other
Non-GAAP Measurements
The Company’s use and presentation of the
terms EBITDA, Adjusted EBITDA and other Non-GAAP Measurements included
in this press release and Exhibit 4 thereto, and the reconciliations of
those items to the most directly comparable GAAP financial measure with
equal or greater prominence as the non-GAAP financial measures, have
been prepared in direct response to questions from its investors and
other interested parties. Although the Company has frequently discussed
these reconciling items when they occur, both in its filings as well as
in investment community conference calls that are open to the public at
large, many inquiries are still made as to the nature of these items,
and the impact of removing these items from the GAAP financial results.
As a result, the Company believes it is important to provide these
reconciliations, so that the requesting investors will not have to
perform the arithmetic themselves and so that all interested parties
will benefit from the disclosures and reconciliations, through a
straightforward and unambiguous presentation. The Company believes that
the use and presentation of the terms EBITDA, Adjusted EBITDA and the
other non-GAAP financial measures is useful because it allows readers of
its financial information to evaluate its performance for different
periods on a more comparable basis by excluding items that are unique in
nature such as non-cash compensation, or do not relate to the ongoing
operation of its core business. The items presented in calculating
Adjusted EBITDA and other Non-GAAP reconciliations represent specific
events or items as follows (please see Exhibit 4 to this press release):
Cash Severance -- costs associated with restructuring and downsizing
of the Company’s employee base during the
three-month periods ended March 31, 2008;
Non-cash Compensation – the costs of
employee stock options and restricted stock;
Tax benefit, Net – the amount recorded in
the period resulting from the release of a portion of the reserve
against the Company’s deferred tax assets,
net of deferred income tax expense recorded in the period;
Strategic Initiatives – the expenses
recorded in connection with merger and acquisition activities during
the three- month period ended June 30, 2007 and December 31, 2007;
Employment Matters – the cost of the Company’s
review of wage/hour classifications for certain employees during the
three-month periods ended December 31, 2007 and September 30, 2007.
About QuadraMed Corporation
QuadraMed Corporation advances the success of healthcare organizations
through IT solutions that leverage quality care into positive financial
outcomes. QuadraMed provides real world solutions that help healthcare
professionals deliver outstanding patient care efficiently and cost
effectively. Behind the company’s products
and services is a staff of 650 professionals whose experience and
dedication have earned QuadraMed the trust and loyalty of clients at
over 2,000 healthcare provider facilities. For more information about
QuadraMed, visit http://www.quadramed.com
Cautionary Statement on Risks Associated with QuadraMed
Forward-Looking Statements
This press release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995 by
QuadraMed that are subject to risks and uncertainties. The words
"believe," "expect," "anticipate," "intend," "plan," "estimate," "may,"
"should," "could," and similar expressions are intended to identify such
statements. Forward-looking statements are not guarantees of future
performance and are to be interpreted only as of the date on which they
are made. QuadraMed undertakes no obligation to update or revise any
forward-looking statement except as required by law. QuadraMed advises
investors that it discusses risk factors and uncertainties that could
cause QuadraMed’s actual results to differ
from forward-looking statements in its periodic reports filed with the
Securities and Exchange Commission ("SEC"). QuadraMed’s
SEC filings can be accessed through the Investor Relations section of
our website, www.quadramed.com,
or through the SEC’s EDGAR Database at www.sec.gov
(QuadraMed has EDGAR CIK No. 0001018833).
QuadraMed is a registered trademark of QuadraMed Corporation. All other
trademarks are the property of their respective holders.
Exhibit 1
QUADRAMED CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
(unaudited)
March 31,
December 31,
ASSETS
2008
2007
Current assets
Cash and cash equivalents
$
15,796
$
7,119
Short-term investments
2,910
9,169
Accounts receivable, net of allowance for doubtful accounts of
$1,495 and $1,449, respectively
28,887
26,088
Unbilled receivables
9,051
5,183
Deferred contract expenses
6,311
6,060
Prepaid expenses and other current assets, net of allowance on
other receivable of $1,229 and $1,229, respectively
9,497
5,367
Deferred tax asset, net of valuation allowance
7,376
7,376
Total current assets
79,828
66,362
Restricted cash
1,947
2,389
Long-term investments
3,372
1,197
Property and equipment, net of accumulated depreciation and
amortization of $23,209, and $22,855, respectively
3,401
3,778
Goodwill
33,878
33,942
Other amortizable intangible assets, net of accumulated
amortization of $31,737 and $31,119, respectively
11,150
11,768
Other long-term assets
3,177
3,182
Deferred tax asset, net of valuation allowance
49,724
49,758
Total assets
$
186,477
$
172,376
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable and accrued expenses
$
4,863
$
4,910
Accrued payroll and related benefits
4,870
9,602
Accrued exit cost of facility closing
896
1,178
Other accrued liabilities
4,926
7,537
Dividends payable
1,375
1,375
Deferred revenue
60,874
36,111
Total current liabilities
77,804
60,713
Accrued exit cost of facility closing
671
888
Other long-term liabilities
2,608
2,722
Total liabilities
81,083
64,323
Commitments and Contingencies
Stockholders’ equity
Preferred stock, $0.01 par, 5,000 shares authorized, 4,000 shares
issued and outstanding, respectively
96,144
96,144
Common stock, $0.01 par, 150,000 shares authorized; 45,985 and
45,891 shares issued and 44,120 and 45,284 outstanding,
respectively
460
459
Shares held in treasury, 1,408 and 607, respectively
(2,802
)
(292
)
Additional paid-in-capital
311,575
310,557
Accumulated other comprehensive loss
(182
)
(80
)
Accumulated deficit
(299,801
)
(298,735
)
Total stockholders’ equity
105,394
108,053
Total liabilities and stockholders’
equity
$
186,477
$
172,376
Exhibit 2
QUADRAMED CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
Three months ended,
March 31,
2008
2007
Revenue
Services
$
5,567
$
3,528
Maintenance
16,856
13,924
Installation and other
3,329
2,558
Services and other revenue
25,752
20,010
Term licenses
7,767
6,397
Perpetual licenses
1,631
2,278
Licenses
9,398
8,675
Hardware
141
521
Total revenue
35,291
29,206
Cost of revenue
Cost of services and other revenue
11,334
7,027
Royalties and other
3,817
2,979
Amortization of acquired technology and capitalized software
259
471
Cost of license revenue
4,076
3,450
Cost of hardware revenue
136
492
Total cost of revenue
15,546
10,969
Gross margin
19,745
18,237
Operating expense
General and administration
5,114
3,873
Software development
8,493
7,412
Sales and marketing
4,960
3,896
Amortization of intangible assets and depreciation
827
923
Total operating expenses
19,394
16,104
Income from operations
351
2,133
Other income (expense)
Interest expense, includes non-cash charges of $18 and $50
(31
)
(50
)
Interest income
166
573
Other income, net
1
77
Other income, net
136
600
Income from operations before income taxes
$
487
$
2,733
Provision for income taxes
(178
)
(109
)
Net income
$
309
$
2,624
Preferred stock accretion and dividends declared
(1,375
)
(1,308
)
Net (loss) income attributable to common shareholders
$
(1,066
)
$
1,316
(Loss) income per share
Basic
$
(0.02
)
$
0.03
Diluted
$
(0.02
)
$
0.03
Weighted average shares outstanding
Basic
44,680
43,540
Diluted
46,371
47,097
Exhibit 3
QUADRAMED CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
For the three months ended
March 31, 2008
March 31, 2007
Cash flows from operating activities
Net income attributable to common shareholders
$
(1,066
)
$
1,316
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization
1,086
1,394
Deferred compensation amortization
94
96
Stock-based compensation
799
383
Preferred Stock accretion and dividend premium
1,375
1,308
Dividend discount amortization
-
33
Provision for bad debts
130
156
Gain on sale of investments
-
(11
)
Interest income on investments
(20
)
(25
)
Interest expense on note payable
18
18
Deferred income taxes
1
-
Changes in assets and liabilities:
Accounts receivable
(6,797
)
351
Prepaid expenses and other
(4,376
)
(292
)
Accounts payable and accrued liabilities
(8,128
)
(4,668
)
Deferred revenue
24,763
8,824
Cash provided by operating activities
7,879
8,883
Cash flows from investing activities
Decrease in restricted cash
442
54
Purchases of available-for-sale securities
(821
)
(17,359
)
Proceeds from the sale of available-for-sale securities
4,964
5,021
Payment of acquisition costs
64
-
Purchases of property and equipment
(91
)
(227
)
Cash provided by (used in) investing activities
4,558
(12,511
)
Cash flows from financing activities
Payment of preferred stock dividends
(1,375
)
(1,503
)
Proceeds from issuance of common stock and other
125
1,034
Repurchase of common stock
(2,510
)
-
Cash used in financing activities
(3,760
)
(469
)
Net increase (decrease) in cash and cash equivalents
8,677
(4,097
)
Cash and cash equivalents, beginning of period
7,119
32,596
Cash and cash equivalents, end of period
$
15,796
$
28,499
Exhibit 4
QUADRAMED CORPORATION
RECONCILIATION OF EBITDA AND NON-GAAP MEASUREMENTS
(in thousands)
(unaudited)
For the Three Months Ended
3/31/08
12/31/07
9/30/07
6/30/07
3/31/07
12/31/06
9/30/06
6/30/06
EBITDA (Earnings Before
Interest, Taxes, Depreciation and Amortization)
Net income, as reported
$309
$56,674
$1,502
$2,200
$2,624
$3,962
$5,979
$3,847
Adjustments to Net Income for EBITDA
Interest Expense
31
20
24
33
50
68
85
103
Interest Income
(166
)
(364
)
(699
)
(644
)
(573
)
(480
)
(501
)
(399
)
(Provision) benefit for Income Taxes
178
(52,821
)
142
162
109
80
101
63
Depreciation and Amortization
1,180
1,323
802
1,326
1,490
1,757
1,878
2,133
Subtotal Non-GAAP Adjustments for EBITDA
1,223
(51,842
)
269
877
1,076
1,425
1,563
1,900
EBITDA
$1,532
$4,832
$1,771
$3,077
$3,700
$5,387
$7,542
$5,747
Non-cash Compensation
799
928
807
356
383
182
229
196
Cash Severance
561
-
-
-
-
-
-
142
Adjusted Non-GAAP EBITDA
2,892
5,760
2,578
3,433
4,083
5,569
7,771
6,085
Non-GAAP Net Income before
Preferred Stock Accretion
Net income, as reported
$309
$56,674
$1,502
$2,200
$2,624
$3,962
$5,979
$3,847
Non-GAAP adjustments to Net income
Non-cash Compensation
799
928
807
356
383
182
229
196
Cash Severance
561
-
-
-
-
-
-
142
Strategic Initiatives
-
57
-
412
-
-
-
-
Tax benefit, Net
-
(52,898
)
-
-
-
-
-
-
Employment Matters
-
(374
)
1,544
-
-
-
-
-
Subtotal Non-GAAP adjustments
1,360
(52,287
)
2,351
768
383
182
229
338
Non-GAAP net income
$1,669
$4,387
$3,853
$2,968
$3,007
$4,144
$6,208
$4,185
Other Information
Revenue
$35,291
$40,874
$32,908
$34,362
$29,206
$31,213
$33,032
$32,028
Costs of Revenue
$15,546
$16,167
$14,105
$15,991
$10,969
$11,401
$10,436
$11,133
Gross Margin
$19,745
$24,707
$18,803
$18,371
$18,237
$19,812
$22,596
$20,895
Gross Margin %
56
%
60
%
57
%
53
%
62
%
63
%
68
%
65
%
About Adjusted EBITDA and other Non-GAAP
Measurements
The Company’s use and presentation of the
terms EBITDA, Adjusted EBITDA and other Non-GAAP Measurements included
in this press release and on this Exhibit 4 thereto, and the
reconciliations of those items to the most directly comparable GAAP
financial measure with equal or greater prominence as the non-GAAP
financial measures, have been prepared in direct response to questions
from its investors and other interested parties. Although the Company
has frequently discussed these reconciling items when they occur, both
in its filings as well as in investment community conference calls that
are open to the public at large, many inquiries are still made as to the
nature of these items, and the impact of removing these items from the
GAAP financial results. As a result, the Company believes it is
important to provide these reconciliations, so that the requesting
investors will not have to perform the arithmetic themselves and so that
all interested parties will benefit from the disclosures and
reconciliations, through a straightforward and unambiguous presentation.
The Company believes that the use and presentation of the terms EBITDA,
Adjusted EBITDA and the other non-GAAP financial measures is useful
because it allows readers of its financial information to evaluate its
performance for different periods on a more comparable basis by
excluding items that are unique in nature such as non-cash compensation,
or do not relate to the ongoing operation of its core business. The
items presented in calculating Adjusted EBITDA and other Non-GAAP
reconciliations represent specific events or items as follows:
Cash Severance -- costs associated with restructuring and downsizing
of the Company’s employee base during the
three-month periods ended March 31, 2008;
Non-cash Compensation – the costs of
employee stock options and restricted stock;
Tax benefit, Net – the amount recorded in
the period resulting from the release of a portion of the reserve
against the Company’s deferred tax assets,
net of deferred income tax expense recorded in the period;
Strategic Initiatives – the expenses
recorded in connection with merger and acquisition activities during
the three-month period ended June 30, 2007 and December 31, 2007;
Employment Matters – the cost of the Company’s
review of wage/hour classifications for certain employees during the
three-month periods ended December 31, 2007 and September 30, 2007.