Netsmart Announces Second Quarter Results

Netsmart Announces Second Quarter Results
Revenues increase 9% from Second Quarter Fiscal 2003 


GREAT RIVER, N.Y., Aug. 10  /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, 2004.

James Conway, CEO of Netsmart Technologies, Inc. stated, "We are very pleased
with our 24th consecutive quarter of profitability.  Our income before taxes
was $644,000 for the quarter ended June 30, 2004 as compared to $506,000 for
the comparable quarter last year. This represents a 27% increase over last
year, before any provision for taxes. While we accrued taxes at an effective
tax rate of 31% of pre-tax income for the six months ended June 30, 2004, we
actually expect to pay taxes at a rate of 6% due to the application of net
operating loss deductions on our tax returns."

Revenue for the quarter ended June 30, 2004 was $7,189,000 as compared to
$6,589,000 for the quarter ended June 30, 2003, representing an increase of 9
percent. Net income for the quarter ended June 30, 2004 was $493,000, or $0.09
per share (basic and diluted), as compared to $521,000 or $0.13 per share
(basic) and $.12 per share (diluted), for the same period last year.  The
reduction in net income and earnings per share was due to the fact that the
provision for taxes in the quarter ended June 30, 2004 was $151,000 as compared
to a tax benefit of $15,000 for the same period last year. Additionally, there
were approximately 1.2 million additional shares outstanding for the quarter
ended June 30, 2004 as compared to the same period last year.

Revenue for the six months ended June 30, 2004 was $14,012,000 as compared to
$12,708,000 for the six months ended June 30, 2003, representing an increase of
10 percent. Net income for the six months ended June 30, 2004 was $818,000, or
$.15 per share (basic and diluted), as compared to $793,000, or $.20 per share
(basic) and $.18 per share (diluted) for the same period last year.

Working capital increased to $15,628,000 at June 30, 2004 from $14,714,000 at
December 31, 2003.  Recurring revenue for the quarter ended June 30, 2004 was
$2,948,000, an increase of 30% from the $2,274,000 for the comparable quarter
last year.  The gross profit margin for the quarter was 54% as compared to 42%
for the comparable quarter in 2003.  Our firm order backlog at June 30, 2004
was $25.4 million as compared to $25.3 million at June 30, 2003. The recurring
revenue component of the June 30, 2004 backlog is equal to 55% of the total
backlog.

Netsmart Technologies, Inc. of Great River, N.Y., through Creative
Socio-Medics, 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
                         2004           2003        2004          2003


  Revenue              $7,189,000   $6,589,000  $14,012,000  $12,708,000

  Net Income(1)          $493,000     $521,000     $818,000     $793,000

  Net Income
   Per Share Basic           $.09         $.13         $.15         $.20

  Weighted
   Average Shares of
   Common Stock
   Outstanding Basic    5,336,000    4,077,000    5,326,000    4,008,000

  Net Income Per
   Share Diluted             $.09         $.12         $.15         $.18

  Weighted
   Average Shares of
   Common Stock and
   Common Stock
   Equivalents
   Outstanding Diluted  5,562,000    4,417,000    5,558,000    4,377,000

  (1) The Company's tax provision for 2003 has been reduced in all periods
      as a result of available net operating loss carry-forwards. In
      addition, the Company recognized a $100,000 tax benefit during the
      June 2003 Quarter as a result of a further reduction in its deferred
      tax asset valuation allowance.


DATASOURCE: Netsmart Technologies, Inc.



CONTACT:  James Conway, CEO of Netsmart Technologies, Inc.,

1-800-451-7503 ; or Stuart Fine, Carpe DM, Inc.,

[phone], , for Netsmart Technologies, Inc. 



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

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