Neoforma (NASDAQ:NEOF)
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SAN JOSE, Calif., Feb. 23 /PRNewswire-FirstCall/ -- Neoforma, Inc. (NASDAQ:NEOF), a leading provider of supply chain management solutions for the healthcare industry, generated total revenue of $35.2 million on a generally accepted accounting principles (GAAP) basis in the year ended December 31, 2005, an increase over the $12.7 million generated in the previous year due to a reduction in the level of amortization that was offset against revenue as required under Emerging Issues Task Force Abstract No. 01-9 (EITF No. 01-9). Excluding the impact of EITF No. 01-9, Neoforma generated total adjusted revenue of $72.8 million in fiscal 2005, a decrease from the $74.4 million reported in 2004.
(Photo: http://www.newscom.com/cgi-bin/prnh/20030226/NEOFORMALOGO )
In 2005, in accordance with GAAP, Neoforma's net loss and net loss per share were $35.9 million and $1.81, respectively, an improvement from the $61.2 million net loss and $3.17 net loss per share recorded in the prior year. On an adjusted basis, Neoforma's net income and net income per share were $16.6 million and $0.84, respectively, a decrease as compared to the $21.2 million net income and $1.10 net income per share recorded in 2004.
Neoforma's adjusted financial information, which is not in accordance with GAAP, excludes the application of EITF No. 01-9 and certain expenses, gains and losses. Adjusted financial information serves as a measure of the performance of Neoforma's ongoing core operations. A description of the adjusted financial information for the periods presented and a reconciliation of these results to GAAP financial information are included in the attached financial statements and are available in the investor relations section of Neoforma's Web site at http://www.neoforma.com/.
GHX Transaction
On October 10, 2005, Neoforma entered into a definitive merger agreement with Global Healthcare Exchange, LLC (GHX) for GHX to acquire Neoforma. Neoforma has scheduled a vote of its stockholders regarding the proposed transaction for March 2, 2006. If the majority of the shares that are cast and that are not held by VHA Inc., University HealthSystem Consortium (UHC) or their affiliates are voted in favor of adopting the merger agreement with GHX, the transaction is expected to close shortly thereafter, pending GHX's receipt of anticipated debt financing. On January 23, 2006, Neoforma filed a definitive proxy statement with the Securities and Exchange Commission (SEC) in connection with the proposed transaction; the definitive proxy statement and other information filed with the SEC are available on Neoforma's Web site at http://www.neoforma.com/.
Fiscal Year 2005 Financial Results
For the year ended December 31, 2005, on a GAAP basis, Neoforma generated $35.2 million in total revenue, comprised of $24.1 million in related party revenue and $11.1 million in non-related party revenue. The Company's total revenue increased $22.5 million from the $12.7 million recognized in the previous year; in 2004, Neoforma's total revenue was comprised entirely of non-related party revenue. The increase in related party revenue in 2005 was primarily the result of a decrease in the level of amortization that was offset against revenue as required under EITF No. 01-9.
In accordance with EITF No. 01-9, Neoforma classifies non-cash amortization of partnership costs as an offset against related party revenue, up to the lesser of the two amounts each quarter. As the reductions to operating expenses and revenue are equal within each period, the application of EITF No. 01-9 has no impact within a particular period on income or loss from operations, net income or loss, net income or loss per share or total cash flow.
In the third quarter of 2005, the amortization of partnership costs resulting from the initial shares granted to VHA and UHC in July 2000 was completed. As a result, gross amortization of partnership costs decreased to $39.1 million in 2005, a $29.1 million decrease from the $68.2 million in gross amortization of partnership costs recorded in the previous year. This decrease resulted in a reduction of $24.3 million in the amortization of partnership costs offset against related party revenue in 2005 as compared to 2004. Primarily as a result of this reduced offset, related party revenue and total revenue on a GAAP basis increased $24.1 million and $22.5 million, respectively, as compared to the prior year.
On an adjusted basis, excluding the impact of EITF No. 01-9, Neoforma generated total revenue of $72.8 million in 2005, consisting of $61.5 million in related party revenue and $11.2 million in non-related party revenue. The Company's total, related party and non-related party revenue results, on an adjusted basis, represent decreases from the $74.4 million, $61.8 million and $12.7 million, respectively, recorded in 2004. The $1.4 million decrease in adjusted non-related party revenue, the principal cause of the decline in total adjusted revenue, was due to an $859,000 decrease in revenue from suppliers and a $561,000 decrease in other revenue. The decline in revenue from suppliers was primarily due to the cancellation, in late 2004, of a significant pharmaceutical market intelligence services contract. The decline in other revenue was due to the expiration, in the third quarter of 2004, of the ratable revenue being recognized related to a 2001 technology license sale.
In 2005, Neoforma's GAAP operating expenses totaled $72.1 million, an improvement from the $74.3 million recorded in the previous year. The reduction in operating expenses was primarily the result of a $4.7 million decrease in amortization of partnership costs classified as an operating expense. In addition, while the Company recorded a $4.1 million write-off of stockholder notes receivable in 2004, there was no such expense recorded in 2005. These reductions in operating expenses in 2005 were partially offset by a $2.2 million increase in depreciation and amortization of property and equipment, $2.0 million in costs incurred for third-party services in connection with Neoforma's evaluation of strategic alternatives and its proposed merger with GHX, a $1.9 million decrease in software development costs capitalized and $1.0 million of other charges incurred in 2005, including $723,000 in restructuring charges and a $284,000 write-off of software.
In fiscal 2005, adjusted operating expenses equaled $57.2 million, an increase from the $53.6 million recorded in the prior year. This increase was primarily due to $2.0 million in costs incurred with the evaluation of strategic alternatives, a $1.9 million reduction in software development costs capitalized and a $1.2 million increase in cost of services. These increases were partially offset by a $1.9 million decrease in selling and marketing expenses.
On a GAAP basis, in 2005, Neoforma's loss from operations totaled $36.9 million, an improvement from the $61.6 million loss in the previous year. The $24.7 million improvement in the Company's loss from operations was primarily a result of the $29.1 million decrease in gross amortization of partnership costs in 2005, as compared to 2004.
On an adjusted basis, in 2005, Neoforma generated $15.6 million in EBITDA, a decrease from the $20.8 million generated in the prior year.
As of December 31, 2005, Neoforma's cash, cash equivalents and short-term investments totaled $44.4 million, a $5.1 million increase from the total as of the end of the third quarter of 2005 and an $18.6 million increase from the total as of year-end 2004. Neoforma remains debt-free.
Neoforma's free cash flow in 2005 totaled $16.9 million. Free cash flow is calculated as net cash used in operating activities, plus amortization of partnership costs offset against related party revenue, minus purchases of property and equipment and capitalization of software development costs.
Fourth Quarter 2005 Financial Results
In the fourth quarter ended December 31, 2005, Neoforma generated total revenue of $17.0 million on a GAAP basis, consisting of $14.6 million in related party revenue and $2.5 million in non-related party revenue. In comparison to the same quarter of the prior year, the Company's total revenue results increased $13.6 million from the $3.4 million recognized in the fourth quarter of 2004; Neoforma's total revenue was comprised entirely of non-related party revenue in the fourth quarter of 2004. The increase in related party revenue in the fourth quarter of 2005 was due to the decrease in the level of amortization that was offset against revenue as required under EITF No. 01-9.
Because the amortization of partnership costs resulting from the initial shares granted to VHA and UHC in July 2000 was completed in the third quarter of 2005, gross amortization of partnership costs decreased by $16.2 million in the fourth quarter of 2005, as compared to the same quarter in the previous year. This decrease resulted in a $14.7 million reduction in the amortization of partnership costs offset against related party revenue and was the principal reason for the $14.6 million and $13.6 million increases in Neoforma's related party and total revenue, respectively, on a GAAP basis in the fourth quarter of 2005, as compared to the same quarter in 2004.
On an adjusted basis, excluding the impact of EITF No. 01-9, Neoforma generated total revenue of $17.8 million in the fourth quarter of 2005, consisting of $15.3 million in related party revenue and $2.5 million in non- related party revenue and representing decreases from the $18.9 million in total revenue, $15.4 million in related party revenue and $3.4 million in non-related party revenue recorded in the same period in the previous year. The $984,000 decrease in adjusted non-related party revenue, the primary reason for the $1.1 million decline in total adjusted revenue, was due to a $604,000 decrease in revenue from hospitals and group purchasing organizations, predominantly for Neoforma Data Management Solution(TM) (Neoforma DMS), and a $459,000 decrease in revenue from suppliers.
In the fourth quarter of 2005, Neoforma's total GAAP operating expenses were $16.6 million, an improvement from the $18.6 million recorded in the same quarter in the prior year. Adjusted operating expenses for the fourth quarter totaled $13.6 million, an improvement from the $14.0 million in adjusted operating expenses recorded in the same quarter in 2004. In the fourth quarter of 2005, Neoforma incurred approximately $1.1 million in expenses for third-party services in connection with its proposed transaction with GHX.
On a GAAP basis, in the fourth quarter of 2005, Neoforma generated income from operations equaling $421,000, an improvement from the $15.2 million loss from operations recorded in the fourth quarter of 2004.
Neoforma generated $4.2 million in EBITDA in the fourth quarter of 2005, a decrease from the $4.9 million generated in the same period in 2004.
In accordance with GAAP, in the fourth quarter of 2005, Neoforma's net income was $753,000, and both basic and diluted net income per share were $0.04, representing improvements from the $15.1 million net loss and $0.78 net loss per share reported in the same quarter in the previous year. In the fourth quarter of 2005, Neoforma achieved its first profit on a GAAP basis. On an adjusted basis, the Company's net income and net income per share equaled $4.5 million and $0.22, respectively, decreasing from the $5.0 million in net income and $0.26 in net income per share recorded in the fourth quarter of 2004.
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 1,800 hospitals and suppliers, supporting approximately $15 billion in annualized marketplace 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, but are not limited to, the expected timing of the close of the proposed transaction with GHX. 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 of the proposed transaction with GHX not closing or being delayed. Some of these risks and other risks are described in Neoforma's periodic reports filed with the SEC, including its Form 10-Q for the quarter ended September 30, 2005, and the definitive proxy statement filed on January 23, 2006. 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.
NEOFORMA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
Three Months Ended Year Ended
December 31, December 31,
2004 2005 2004 2005
REVENUE:
Related party, net of
amortization of partnership
costs of $15,427, $775,
$61,787 and $37,457 for the
three months ended December 31,
2004 and 2005 and the twelve
months ended December 31, 2004
and 2005, respectively $-- $14,572 $-- $24,068
Non-related party, net of
write-off of purchase option
of $140 for the twelve months
ended December 31, 2005 3,437 2,453 12,659 11,100
Total revenue 3,437 17,025 12,659 35,168
OPERATING EXPENSES:
Cost of services 3,119 3,028 10,620 11,961
Operations 2,842 3,317 11,485 12,832
Product development 4,587 4,205 16,889 19,106
Selling and marketing 3,750 2,751 14,407 12,715
General and administrative 2,616 3,230 9,787 12,230
Amortization of intangibles 147 117 588 538
Amortization of
partnership costs 1,573 -- 6,365 1,630
Write-off of stockholder
notes receivable -- -- 4,115 --
Write-down of note receivable -- -- -- 38
Write-off of software -- -- -- 284
Restructuring -- (44) -- 723
Total operating expenses 18,634 16,604 74,256 72,057
Income (loss) from
operations (15,197) 421 (61,597) (36,889)
OTHER INCOME (EXPENSE) 133 365 367 1,058
Income (loss) before
income taxes (15,064) 786 (61,230) (35,831)
Provision for income taxes -- (33) -- (33)
Net income (loss) $(15,064) $753 $(61,230) $(35,864)
NET INCOME (LOSS) PER SHARE:
Basic $(0.78) $0.04 $(3.17) $(1.81)
Weighted average
shares - basic 19,400 20,038 19,297 19,838
Diluted $(0.78) $0.04 $(3.17) $(1.81)
Weighted average
shares - diluted 19,400 20,592 19,297 19,838
In addition to our consolidated financial statements presented in accordance with GAAP, Neoforma, Inc. uses non-GAAP, or adjusted, measures of operating results, net income and net income per share, which are adjusted from results based on GAAP to exclude the application of EITF No. 01-9 and certain expenses, gains and losses. Neoforma management believes that the non-GAAP adjusted results provide added insight into the Company's performance by focusing on results generated by the Company's ongoing core operations. Neoforma management uses the non-GAAP adjusted results when assessing the performance of its ongoing core operations, in making resource allocation decisions and for planning and forecasting. Additionally, incentive compensation for the Company, including management, is based on results on this basis. In addition, because we historically have reported adjusted results, we believe the inclusion of comparative numbers provides consistency in our financial reporting. The non-GAAP financial measures should be considered in addition to, not as a substitute for, or superior to, the measures of financial performance prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of the non-GAAP financial measures to their most directly comparable GAAP financial measures.
NEOFORMA, INC.
ADJUSTED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (1)
(in thousands, except per share amounts)
(unaudited)
Three Months Ended Year Ended
December 31, December 31,
2004 2005 2004 2005
REVENUE:
Related party $15,427 $15,347 $61,787 $61,525
Non-related party 3,437 2,453 12,659 11,240
Total adjusted revenue 18,864 17,800 74,446 72,765
OPERATING EXPENSES:
Cost of services 2,628 2,499 8,583 9,791
Operations 2,123 2,585 9,126 9,964
Product development 3,897 3,478 14,951 16,148
Selling and marketing 3,252 2,337 12,841 10,986
General and administrative 2,071 2,740 8,132 10,269
Adjusted operating expenses 13,971 13,639 53,633 57,158
EBITDA 4,893 4,161 20,813 15,607
OTHER INCOME (EXPENSE) 133 365 367 1,058
Adjusted income
before income taxes 5,026 4,526 21,180 16,665
Provision for income taxes -- (33) -- (33)
Adjusted net income $5,026 $4,493 $21,180 $16,632
ADJUSTED NET INCOME PER SHARE:
Basic $0.26 $0.22 $1.10 $0.84
Weighted average
shares - basic 19,400 20,038 19,297 19,838
(1) These adjusted condensed consolidated statements of operations exclude the impact of EITF No. 01-9 and certain expenses, gains and losses. Under EITF No. 01-9, the Company offsets non-cash amortization of partnership costs against related party revenue in an amount equal to the lesser of the two in any period. Any amortization of partnership costs in excess of related party revenue in any period is classified as an operating expense. As a result of the adoption of EITF No. 01-9, the Company offset $15,427, $775, $61,787 and $37,457 of amortization of partnership costs against related party revenue in its GAAP condensed consolidated statements of operations for the three months ended December 31, 2004 and 2005 and the twelve months ended December 31, 2004 and 2005, respectively. In addition, under EITF 01-9 the Company offset a $140 write-off of a purchase option acquired from a vendor against non-related party revenue in its GAAP condensed consolidated statements of operations for the twelve months ended December 31, 2005. As reclassifications, the application of EITF No. 01-9 had no impact on income (loss) from operations, net income (loss) or net income (loss) per share. The excluded expenses, gains and losses consisted of depreciation and amortization of property and equipment, amortization of intangibles, amortization of deferred compensation, amortization of partnership costs, write-down of note receivable, write-off of stockholder notes receivable, write-off of software and restructuring.
NEOFORMA, INC.
RECONCILIATION OF ADJUSTED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS TO
GAAP
(in thousands, except per share amounts)
(unaudited)
Three Months Ended December 31, 2005
Excluded Application of
Adjusted Expenses, Gains EITF
Results and Losses No. 01-9
REVENUE:
Related party $15,347 $-- $(775)
Non-related party 2,453 -- --
Total revenue 17,800 -- (775)
OPERATING EXPENSES:
Cost of services 2,499 -- --
Operations 2,585 -- --
Product development 3,478 -- --
Selling and marketing 2,337 -- --
General and administrative 2,740 -- --
Adjusted operating expenses 13,639
EBITDA 4,161
Depreciation and amortization
of property and equipment -- 2,081 --
Amortization of intangibles -- 117 --
Amortization of deferred
compensation -- 811 --
Amortization of partnership costs -- 775 (775)
Restructuring -- (44) --
Total operating expenses 3,740 (775)
Income from operations (3,740) --
OTHER INCOME (EXPENSE) 365 -- --
Income before income taxes 4,526 (3,740) --
Provision for income taxes (33) -- --
Net income $4,493 $(3,740) $--
NET INCOME PER SHARE:
Basic $0.22
Weighted average
shares - basic 20,038
Three Months Ended December 31, 2005
GAAP Allocations
Depreciation and Amortization of
Amortization of Deferred GAAP Results
Property and Equipment Compensation As Reported
REVENUE:
Related party $-- $-- $14,572
Non-related party -- -- 2,453
Total revenue -- -- 17,025
OPERATING EXPENSES:
Cost of services 363 166 3,028
Operations 629 103 3,317
Product development 548 179 4,205
Selling and marketing 264 150 2,751
General and administrative 277 213 3,230
Adjusted operating expenses
EBITDA
Depreciation and amortization
of property and equipment (2,081) -- --
Amortization of intangibles -- -- 117
Amortization of
deferred compensation -- (811) --
Amortization of partnership costs -- -- --
Restructuring -- -- (44)
Total operating expenses -- -- 16,604
Income from operations -- -- 421
OTHER INCOME (EXPENSE) -- -- 365
Income before income taxes -- -- 786
Provision for income taxes -- -- (33)
Net income $-- $-- $753
NET INCOME PER SHARE:
Basic $0.04
Weighted average
shares - basic 20,038
Three Months Ended December 31, 2004
Excluded Application of
Adjusted Expenses, Gains EITF
Results and Losses No. 01-9
REVENUE:
Related party $15,427 $-- $(15,427)
Non-related party 3,437 -- --
Total revenue 18,864 -- (15,427)
OPERATING EXPENSES:
Cost of services 2,628 -- --
Operations 2,123 -- --
Product development 3,897 -- --
Selling and marketing 3,252 -- --
General and administrative 2,071 -- --
Adjusted operating expenses 13,971
EBITDA 4,893
Depreciation and amortization
of property and equipment -- 1,728 --
Amortization of intangibles -- 147 --
Amortization of deferred
compensation -- 1,215 --
Amortization of partnership costs -- 17,000 (15,427)
Total operating expenses 20,090 (15,427)
Loss from operations (20,090) --
OTHER INCOME (EXPENSE) 133 -- --
Net income (loss) $5,026 $(20,090) $--
NET INCOME (LOSS) PER SHARE:
Basic $0.26
Weighted average
shares - basic 19,400
Three Months Ended December 31, 2004
GAAP Allocations
Depreciation and Amortization of
Amortization of Deferred GAAP Results
Property and Equipment Compensation As Reported
REVENUE:
Related party $-- $-- $--
Non-related party -- -- 3,437
Total revenue -- -- 3,437
OPERATING EXPENSES:
Cost of services 274 217 3,119
Operations 565 154 2,842
Product development 433 257 4,587
Selling and marketing 242 256 3,750
General and administrative 214 331 2,616
Adjusted operating expenses
EBITDA
Depreciation and amortization
of property and equipment (1,728) -- --
Amortization of intangibles -- -- 147
Amortization of deferred
compensation -- (1,215) --
Amortization of partnership costs -- -- 1,573
Total operating expenses -- -- 18,634
Loss from operations -- -- (15,197)
OTHER INCOME (EXPENSE) -- -- 133
Net income (loss) $-- $-- $(15,064)
NET INCOME (LOSS) PER SHARE:
Basic $(0.78)
Weighted average
shares - basic 19,400
NEOFORMA, INC.
RECONCILIATION OF ADJUSTED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
TO GAAP
(in thousands, except per share amounts)
(unaudited)
Year Ended December 31, 2005
Excluded Application of
Adjusted Expenses, Gains EITF
Results and Losses No. 01-9
REVENUE:
Related party $61,525 $-- $(37,457)
Non-related party 11,240 -- (140)
Total revenue 72,765 -- (37,597)
OPERATING EXPENSES:
Cost of services 9,791 -- --
Operations 9,964 -- --
Product development 16,148 -- --
Selling and marketing 10,986 -- --
General and administrative 10,269 -- --
Adjusted operating expenses 57,158
EBITDA 15,607
Depreciation and amortization
of property and equipment -- 7,710 --
Amortization of intangibles -- 538 --
Amortization of deferred
compensation -- 3,976 --
Amortization of partnership costs -- 39,087 (37,457)
Restructuring -- 723 --
Write-down of note receivable -- 38 --
Write-off of software -- 284 --
Write-off of purchase option -- 140 (140)
Total operating expenses 52,496 (37,597)
Loss from operations (52,496) --
OTHER INCOME (EXPENSE) 1,058 -- --
Income (loss) before
income taxes 16,665 (52,496) --
Provision for income taxes (33) -- --
Net income (loss) $16,632 $(52,496) $--
NET INCOME (LOSS) PER SHARE:
Basic $0.84
Weighted average
shares - basic 19,838
Year Ended December 31, 2005
GAAP Allocations
Depreciation and Amortization of
Amortization of Deferred GAAP Results
Property and Equipment Compensation As Reported
REVENUE:
Related party $-- $-- $24,068
Non-related party -- -- 11,100
Total revenue -- -- 35,168
OPERATING EXPENSES:
Cost of services 1,420 750 11,961
Operations 2,347 521 12,832
Product development 1,994 964 19,106
Selling and marketing 975 754 12,715
General and administrative 974 987 12,230
Adjusted operating expenses
EBITDA
Depreciation and amortization
of property and equipment (7,710) -- --
Amortization of intangibles -- -- 538
Amortization of deferred
compensation -- (3,976) --
Amortization of partnership costs -- -- 1,630
Restructuring -- -- 723
Write-down of note receivable -- -- 38
Write-off of software -- -- 284
Write-off of purchase option -- -- --
Total operating expenses -- -- 72,057
Loss from operations -- -- (36,889)
OTHER INCOME (EXPENSE) -- -- 1,058
Income (loss) before
income taxes -- -- (35,831)
Provision for income taxes -- -- (33)
Net income (loss) $-- $-- $(35,864)
NET INCOME (LOSS) PER SHARE:
Basic $(1.81)
Weighted average
shares - basic 19,838
Year Ended December 31, 2004
Excluded Application of
Adjusted Expenses, Gains EITF
Results and Losses No. 01-9
REVENUE:
Related party $61,787 $-- $(61,787)
Non-related party 12,659 -- --
Total revenue 74,446 -- (61,787)
OPERATING EXPENSES:
Cost of services 8,583 -- --
Operations 9,126 -- --
Product development 14,951 -- --
Selling and marketing 12,841 -- --
General and administrative 8,132 -- --
Adjusted operating expenses 53,633
EBITDA 20,813
Depreciation and amortization
of property and equipment -- 5,539 --
Amortization of intangibles -- 588 --
Amortization of deferred
compensation -- 4,016 --
Amortization of partnership costs -- 68,152 (61,787)
Write-off of stockholder
notes receivable -- 4,115 --
Total operating expenses 82,410 (61,787)
Loss from operations (82,410) --
OTHER INCOME (EXPENSE) 367 -- --
Net income (loss) $21,180 $(82,410) $--
NET INCOME (LOSS) PER SHARE:
Basic $1.10
Weighted average
shares - basic 19,297
Year Ended December 31, 2004
GAAP Allocations
Depreciation and Amortization of
Amortization of Deferred GAAP Results
Property and Equipment Compensation As Reported
REVENUE:
Related party $-- $-- $--
Non-related party -- -- 12,659
Total revenue -- -- 12,659
OPERATING EXPENSES:
Cost of services 1,387 650 10,620
Operations 1,936 423 11,485
Product development 1,040 898 16,889
Selling and marketing 622 944 14,407
General and administrative 554 1,101 9,787
Adjusted operating expenses
EBITDA
Depreciation and amortization
of property and equipment (5,539) -- --
Amortization of intangibles -- -- 588
Amortization of deferred
compensation -- (4,016) --
Amortization of partnership costs -- -- 6,365
Write-off of stockholder
notes receivable -- -- 4,115
Total operating expenses -- -- 74,256
Loss from operations -- -- (61,597)
OTHER INCOME (EXPENSE) -- -- 367
Net income (loss) $-- $-- $(61,230)
NET INCOME (LOSS) PER SHARE:
Basic $(3.17)
Weighted average
shares - basic 19,297
NEOFORMA, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
(unaudited)
ASSETS
December 31, December 31,
2004 2005
CURRENT ASSETS:
Cash and cash equivalents $13,277 $31,115
Short-term investments 12,593 13,312
Accounts receivable, net of allowance
for doubtful accounts 2,898 2,546
Related party accounts receivable 5,250 --
Prepaid expenses and other current assets 2,983 2,674
Total current assets 37,001 49,647
PROPERTY AND EQUIPMENT, net 11,501 9,268
INTANGIBLES, net 1,434 896
GOODWILL 1,652 1,652
CAPITALIZED PARTNERSHIP COSTS, net 40,996 1,909
RESTRICTED CASH 1,020 1,020
OTHER ASSETS 845 366
Total assets $94,449 $64,758
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $3,994 2,468
Accrued payroll 3,974 5,523
Other accrued liabilities 2,839 3,729
Deferred revenue, current portion 1,564 1,424
Total current liabilities 12,371 13,144
DEFERRED RENT 387 94
DEFERRED REVENUE, less current portion 326 190
Total liabilities 13,084 13,428
STOCKHOLDERS' EQUITY:
Common Stock $0.001 par value:
Authorized -- 300,000 shares at
December 31, 2005
Issued and outstanding: 20,244 and
20,733 shares at December 31, 2004
and 2005, respectively 20 21
Additional paid-in capital 839,307 842,936
Notes receivable from stockholders (225) (93)
Deferred compensation (3,775) (1,656)
Unrealized loss on available-for-sale securities (25) (77)
Accumulated deficit (753,937) (789,801)
Total stockholders' equity 81,365 51,330
Total liabilities and stockholders' equity $94,449 $64,758
NEOFORMA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(all items unaudited)
Year Ended December 31,
2004 2005
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(61,230) $(35,864)
Adjustments to reconcile net loss to net
cash used in operating activities:
Provision for doubtful accounts 122 188
Accrued interest receivable on
stockholder notes receivable (15) (7)
Depreciation and amortization of
property and equipment 5,539 7,710
Amortization of intangibles 588 538
Amortization of partnership costs
classified as an operating expense 6,365 1,630
Amortization of deferred compensation 4,016 3,976
Write-off of stockholder notes receivable 4,115 --
Write-down of note receivable -- 38
Restructuring -- 723
Write-off of software -- 284
Change in assets and liabilities:
Accounts receivable (4,038) 5,414
Prepaid expenses and other current assets (208) 271
Other assets 614 479
Accounts payable 648 (907)
Accrued liabilities and accrued payroll (759) 1,613
Deferred revenue (1,315) (276)
Deferred rent (80) (190)
Net cash used in operating activities (45,638) (14,380)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of marketable investments (15,512) (8,658)
Proceeds from the sale or maturity
of marketable investments 9,531 7,887
Purchases of property and equipment (3,239) (2,394)
Capitalization of software development costs (5,656) (3,805)
Net cash used in investing activities (14,876) (6,970)
CASH FLOWS FROM FINANCING ACTIVITIES:
Amortization of partnership costs offset
against related party revenue 61,787 37,457
Cash received related to options exercised 836 598
Proceeds from the issuance of common stock
under the employee stock purchase plan 1,090 961
Common stock repurchased, net of notes
receivable issued to common stockholders (177) --
Collections of notes receivable from stockholders 274 172
Net cash provided by financing activities 63,810 39,188
Net increase in cash and cash equivalents 3,296 17,838
Cash and cash equivalents, beginning of period 9,981 13,277
Cash and cash equivalents, end of period $13,277 $31,115
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DATASOURCE: Neoforma, Inc.
CONTACT: investors, Amanda Mogin of Neoforma, +1-408-468-4251, or
Web site: http://www.neoforma.com/