Netsmart Announces Second Quarter Results Revenues Increase 8% From Second Quarter Fiscal 2004

GREAT RIVER, N.Y., Aug. 11  /PRNewswire-FirstCall/ -- Netsmart Technologies, Inc. (NASDAQ:NTST), a leading supplier of enterprise-wide software solutions for health and human services providers, today reported results for the second quarter ended June 30, 2005.

Revenue for the quarter ended June 30, 2005 was $7,759,000 as compared to $7,189,000 for the quarter ended June 30, 2004, representing an increase of 8%.  Recurring revenue for the quarter was $3,336,000, an increase of 13% from the $2,948,000 for the comparable quarter last year.  The gross profit margin for the quarter was 50% as compared to 48% for the comparable quarter in 2004. The firm order backlog at June 30, 2005, was $27.7 million with a recurring revenue component of $14.8 million as compared to a firm order backlog of $25.4 million at June 30, 2004, which included a recurring revenue component of $13.2 million.  Net income for the quarter ended June 30, 2005 was $449,000 or $0.08 per share (basic and diluted) as compared to $493,000 or $0.09 per share (basic and diluted) for the same period last year.  Our earnings for this quarter included a significant charge to bad debts in the amount of $305,000 as a result of a bankruptcy filing by one client.

Revenue for the six months ended June 30, 2005, was $15,188,000 as compared to $14,012,000 for the six months ended June 30, 2004, representing an increase of 8%. Net income for the six months ended June 30, 2005, was $813,000, or $.15 per share (basic and diluted), as compared to $818,000, or $.15 per share (basic and diluted) for the same period last year.

James Conway, CEO of Netsmart Technologies, Inc. stated, "We are very pleased to report our 28th consecutive quarter of profitability as well as a record high backlog of $27.7 million.  During the quarter we acquired both ContinuedLearning and Addictions Management Systems and expect our profitability in future periods to improve as a result of those acquisitions. Our earnings before interest, taxes, depreciation and amortization, or "EBITDA", were $1,038,000 for the quarter ended June 30, 2005, after absorption of a $305,000 charge to bad debt referred to above as compared to $1,040,000 for the comparable quarter in 2004."

Reconciliation of Earnings before Interest, Taxes, Depreciation and Amortization ("EBITDA") to Net Income. (1)

(1) 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       Six Months Ended
                                      June, 30                 June 30,
                                 2005         2004        2005        2004

  EBITDA                     $1,038,000   $1,040,000  $1,988,000  $1,981,000
  Less:  Depreciation and
   Amortization                (446,000)    (394,000)   (853,000)  (782,000)
  Interest income
   (expense) ,net                71,000       (2,000)    108,000    (12,000)
  Income taxes                 (214,000)    (151,000)   (430,000)  (369,000)
  Net Income                   $449,000     $493,000    $813,000   $818,000

  About Netsmart Technologies, Inc.


Netsmart Technologies, Inc. of Great River, N.Y., through Creative Socio- Medics, its wholly owned subsidiary ("Creative"), is an established, leading supplier of enterprise-wide software solutions for health and human services providers with over 580 clients, including 25 systems with state agencies. Creative's clients include health and human services organizations, public health agencies, mental health and substance abuse clinics, psychiatric hospitals, and managed care organizations.  Avatar Practice Management and the Avatar Clinician Work Station, Creative's core 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 or Creative's website does not constitute a part of this release.

                       NETSMART TECHNOLOGIES, INC.

Comparative Operating Results for the Three and Six Months Ended June 30,

                                  Three Months            Six Months
                                2005       2004        2005         2004

  Revenue                   $7,759,000  $7,189,000  $15,188,000  $14,012,000

  Net Income                  $449,000    $493,000     $813,000     $818,000

  Net Income Per Share Basic      $.08        $.09         $.15         $.15

  Weighted Average Shares of
   Common Stock Outstanding
   Basic                     5,372,000   5,336,000    5,355,000    5,326,000

  Net Income Per
   Share Diluted                  $.08        $.09         $.15         $.15

  Weighted Average Shares
   of Common Stock and Common
   Stock Equivalents
   Outstanding Diluted       5,584,000   5,563,000    5,571,000    5,558,000


DATASOURCE: Netsmart Technologies, Inc.



CONTACT:  James Conway, CEO of Netsmart Technologies, Inc, 800-451-7503,

; or Stuart Fine of Carpe DM, Inc. for Netsmart

Technologies, Inc., [phone], 



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

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