Netsmart Announces Record First Quarter Results

Health and Human Services Software Provider Reports 31st Consecutive Quarter of Profitability 


GREAT RIVER, N.Y., May 11  /PRNewswire-FirstCall/ -- Netsmart Technologies, Inc. (NASDAQ:NTST), a leading provider of enterprise-wide software for health and human services organizations, today reported results for the first quarter ended March 31, 2006.

Revenue for the quarter was $13,856,000, an 87 percent increase from $7,429,000 for the quarter ended March 31, 2005. Net income for the first quarter was $510,000 or $.08 per share basic and diluted, as compared to $363,000 or $.07 per share basic and diluted for the same quarter in 2005. Backlog of orders, including ongoing maintenance and data center contracts for behavioral health information systems, was $43.3 million at March 31, 2006 compared to $24.9 million at March 31, 2005.

Recurring revenue for the quarter ended March 31, 2006 was nearly $7.6 million, compared to approximately $3.2 million for the quarter ended March 31, 2005.

"We're pleased with another very strong first quarter that reflects return from our investments last year from scaling sales, marketing and business development efforts and the ongoing integration of CMHC Systems and other acquisitions made in 2005, "said James L. Conway, chairman and chief executive officer, Netsmart Technologies. "Of special note is that EBITDA for the quarter increased 106 percent to more than $1.9 million compared with $948,000 for the same quarter last year. The significant positive impact of the CMHC Systems acquisition can also be seen in the 137 percent increase in recurring revenue compared with the same quarter last year. When recurring revenue for the first quarter is annualized, recurring revenue for this year is nearly $30.2 million."

Reconciliation of Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA) to Net Income

EBITDA is calculated for any period as the sum of net income, plus net interest expense, income tax expense, and depreciation and amortization expense. We consider EBITDA to be a widely accepted financial indicator of a company's ability to service debt, fund capital expenditures and expand its business. EBITDA is not calculated in the same way by all companies and therefore may not be comparable to similarly titled measures reported by other companies. EBITDA is not a measure in accordance with accounting principles generally accepted in the United States.

EBITDA should not be considered as an alternative to net income, as an indicator of operating performance or as an alternative to cash flow as a measure of liquidity. The funds depicted by this measure may not be available for management's discretionary use due to legal or functional requirements, debt service, or other commitments and uncertainties.

                                       Three Months Ended
                                           March 31,
                                        2006       2005

  EBITDA                            $1,950,000   $948,000
  Less: Depreciation
   and Amortization                 (1,063,000)  (407,000)
  Interest Income (expense), net        35,000     38,000
  Income Taxes                        (412,000)  (216,000)
  Net Income                          $510,000   $363,000



                       NETSMART TECHNOLOGIES, INC.

    Comparative Operating Results for the Three Months Ended March 31,

                                         Three Months
                                      2006          2005

  Revenue                         $13,856,000    $7,429,000

  Net Income                         $510,000      $363,000

  Net Income
   Per Share Basic                      $0.08         $0.07

  Weighted Average Shares of
   Common Stock Outstanding
   Basic                            6,494,477     5,342,489

  Net Income Per Share Diluted          $0.08         $0.07

  Weighted Average Shares of
   Common Stock Outstanding
   Diluted                          6,781,100     5,551,848


  About Netsmart Technologies, Inc.


Netsmart Technologies, Inc., based in Great River, N.Y., is an established, leading supplier of enterprise-wide software solutions for health and human services providers, with more than 1,250 clients, including 30 systems with state agencies. Netsmart's clients include health and human services organizations, public health agencies, mental health and substance abuse clinics, psychiatric hospitals, and managed care organizations. Netsmart's products are full-featured information systems that operate on a variety of operating systems, hardware platforms, and mobile devices, and offer unlimited scalability.

Statement on Behalf of Netsmart Technologies, Inc.

Statements in this press release may be "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as "anticipate," "believe," "estimate," "expect," "intend" and similar expressions, as they relate to the company or its management, identify forward-looking statements. These statements are based on current expectations, estimates and projections about the company's business based, in part, on assumptions made by management. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may, and probably will, differ materially from what is expressed or forecasted in such forward-looking statements due to numerous factors, including those described above and those risks discussed from time to time in Netsmart's filings with the Securities and Exchange Commission. In addition, such statements could be affected by risks and uncertainties related to product demand, market and customer acceptance, competition, pricing and development difficulties, as well as general industry and market conditions and growth rates, and general economic conditions. Any forward-looking statements speak only as of the date on which they are made, and the company does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this release. Information on Netsmart's website does not constitute a part of this release. 

DATASOURCE: Netsmart Technologies, Inc.



CONTACT:  Anthony Grisanti, Executive Vice President and CFO, Netsmart

Technologies, 1-800-451-7503



Web site:  http://www.netsmartech.com/ 

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