Netsmart Technologies Announces 2006 Year-End and Fourth Quarter Results

GREAT RIVER, N.Y., March 19  /PRNewswire-FirstCall/ -- Netsmart Technologies, Inc. (NASDAQ:NTST), a leading provider of enterprise-wide software and services for health and human services organizations, today reported results for the fiscal year ended December 2006 and the quarter ended December 31, 2006.

Revenue for the fiscal year ended December 31, 2006 was a record $59,050,000, a 55 percent increase compared with revenue of $37,978,000 for the previous year. Net income for 2006 was $1,853,000, or $.28 per share (basic) and $.27 per share (diluted), compared with $1,590,000, or $.28 per share (basic) and $.27 per share (diluted) for the year ended December 31, 2005.

Backlog of orders, including ongoing maintenance and data center contracts for behavioral health and public health information systems, was $58,800,000 at December 31, 2006 compared to $44,100,000 at December 31, 2005.

Revenue for the fourth quarter ended December 31, 2006 was $15,515,000, a 9 percent increase over $14,273,000 for the same period last year. Net income (loss) for the quarter ended December 31, 2006 was ($417,000) compared to $399,000 for the same period in 2005. Net loss for the fourth quarter 2006 includes $1.6 million in costs related to the definitive merger agreement announced November 20, 2006.

Earnings before interest, taxes, depreciation and amortization (EBITDA), were $1,193,000 for the three months ended December 31, 2006 as compared to $1,870,000 for the same quarter in 2005. EBITDA was $8,455,000 for the year ended December 31, 2006 as compared to $5,008,000 for the year ended December 31, 2005. Included in the fourth quarter EBITDA calculation was $1.6 million in costs related to the proposed merger agreement.

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          Year Ended
                                    December 31             December 31
                                  2006       2005        2006         2005

  EBITDA                    $1,193,000 $1,870,000  $8,455,000   $5,008,000
  Less: Depreciation
   and Amortization         (1,056,000)(1,032,000) (4,317,000)  (2,451,000)
  Interest Income (expense),
   net                          31,000     (2,000)    125,000      192,000
  Income Taxes                (585,000)  (437,000) (2,410,000)  (1,159,000)
  Net Income                 $(417,000)  $399,000  $1,853,000   $1,590,000



                       NETSMART TECHNOLOGIES, INC.


Comparative Operating Results for the Year and Three Months Ended December 31

                                 Year                 Three Months
                         2006(1)        2005     2006(1)           2005

  Revenue             $59,050,000 $37,978,000  $15,515,000     $14,273,000

  Net Income (loss)    $1,853,000  $1,590,000    $(417,000)       $399,000

  Net Income (loss)
   Per Share Basic          $0.28       $0.28       $(0.06)          $0.06

  Weighted Average
   Shares of Common
   Stock Outstanding
   Basic                6,529,000   5,684,000    6,551,000       6,484,000

  Net Income Per
   Share Diluted            $0.27       $0.27       $(0.06)          $0.05

  Weighted Average
   Shares of Common
   Stock Outstanding
   Diluted              6,748,000   5,935,000    6,551,000       6,807,000

  (1) Includes $1,581,000 of costs associated with the proposed merger
      transaction.


  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 1,300 clients, including more than 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.

Forward-Looking Statements

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 subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the forward-looking statements. These factors include, but are not limited to, (1) the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement; (2) the inability to complete the merger due to the failure to obtain stockholder approval or the failure to satisfy other conditions to the completion of the merger; (3) the failure to obtain the necessary debt financing arrangements set forth in commitment letters received in connection with the merger; and other risks that are set forth in Netsmart's filings with the Securities and Exchange Commission at http://www.sec.gov/. Many of the factors that will determine the outcome of the subject matter of this press release are beyond Netsmart's ability to control or predict. 

DATASOURCE: Netsmart Technologies, Inc.



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

Technologies, [phone]



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

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