Neoforma (NASDAQ:NEOF)
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Independent Consultants Engaged to Assess Neoforma's Offering to
Novation
SAN JOSE, Calif., Jan. 26 /PRNewswire-FirstCall/ -- In connection with
Neoforma, Inc.'s (NASDAQ:NEOF) decision to evaluate strategic alternatives,
Neoforma, a leading provider of supply chain management solutions for the
healthcare industry, and Novation, LLC, Neoforma's principal customer, each
have engaged independent consultants to assess the technology, information,
services and pricing provided by Neoforma to Novation and its owners, VHA Inc.
and University HealthSystem Consortium (UHC), and their member hospitals under
an exclusive outsourcing agreement. Neoforma announced on January 11, 2005
that it had retained Merrill Lynch & Co. as its financial advisor to assist the
Company in evaluating strategic alternatives, including a possible sale or
merger of the Company, to achieve greater stockholder value. VHA and UHC own
42.4% and 10.5%, respectively, of Neoforma's outstanding common stock.
(Logo: http://www.newscom.com/cgi-bin/prnh/20030226/NEOFORMALOGO )
The current 10-year exclusive outsourcing agreement, which was originally
entered into in March 2000, was most recently amended in August 2003 as a
result of negotiations between the parties to the contract. Under the terms of
that amendment, the quarterly maximum payment from Novation to Neoforma was
established at $15.25 million, or $61.0 million per year, beginning in 2004.
Since that time, Neoforma has documented significant value delivered by its
offering to VHA and UHC hospitals. In 2004, approximately 280 VHA and UHC
hospitals, representing a subset of Neoforma's customer base, documented
approximately $100 million in value by using Neoforma's solutions to drive
supply chain improvements within their organizations. Based on the value of
its offering to Novation and to VHA and UHC hospitals, Neoforma believes that
it is a valuable contributor to Novation, VHA and UHC maintaining their
competitive position in the industry and to their hospitals' efforts to improve
supply chain efficiency.
Neoforma believes that the current quarterly maximum payment from Novation is
reasonable. Novation has advised the Company, however, that its assessment
could result in a formal request to reduce the quarterly maximum payment.
Each of the consultants independently will assess the current technology,
information, services and pricing that Neoforma develops and delivers under the
outsourcing agreement. At this time, none of the parties to the outsourcing
agreement have requested that the formal benchmarking process allowed under the
terms of the agreement be undertaken; however, no assurances can be given that
this process will not be requested by any of the parties at a later date.
While the actual results of these assessments, which are expected to be
completed within 45 days, or of any formal benchmarking process cannot be
determined at this time, either process could have an impact on the structure
and financial terms of the outsourcing agreement.
About Neoforma
Neoforma is a leading supply chain management solutions provider for the
healthcare industry. Through a unique combination of technology, information
and services, Neoforma provides innovative solutions to over 1,500 hospitals
and suppliers, supporting more than $10 billion in annualized transaction
volume. By bringing together contract information and order data, Neoforma's
integrated solution set delivers a comprehensive view of an organization's
supply chain, driving significant cost savings and better decision-making for
both hospitals and suppliers. For more information, point your browser to
http://www.neoforma.com/ .
This news release contains forward-looking information within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. These forward-looking statements
include statements related to Neoforma's consideration of strategic
alternatives, the likelihood of a formal benchmarking process, the potential
impact of the third party assessments being conducted of the services Neoforma
provides to Novation, VHA and UHC and the timing for the completion of such
third-party assessments. There are a number of risks that could cause actual
results to differ materially from those anticipated by these forward-looking
statements. These risks include the risk that no strategic alternative will
ultimately be considered and that the results of the third-party assessments or
formal benchmarking process could result in a revision of the outsourcing
agreement that would negatively impact Neoforma's business. Other risks are
described in Neoforma's periodic reports filed with the SEC, including its
Quarterly Report on Form 10-Q for the quarter ended September 30, 2004. These
statements are current as of the date of this release and Neoforma assumes no
obligation to update the forward-looking information contained in this news
release.
NOTE: Neoforma is a trademark of Neoforma, Inc. Other Neoforma logos, product
names and service names are also trademarks of Neoforma, Inc., which may be
registered in other countries. Other product and brand names are trademarks of
their respective owners.
http://www.newscom.com/cgi-bin/prnh/20030226/NEOFORMALOGO
http://photoarchive.ap.org/
DATASOURCE: Neoforma, Inc.
CONTACT: media, Rebecca Oles, +1-408-468-4363, or
, or investors, Amanda Mogin, +1-408-468-4251, or
, both of Neoforma, Inc.
Web site: http://www.neoforma.com/