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Investor Relations
703.742.5393
InvestorRelations@quadramed.com

 

Reston, VA — March 13, 2008 —

QuadraMed® Corporation (Amex:QD) announced today that it will report net income of $53.6 million before preferred stock accretion for the three months ended December 31, 2007, compared to $4.0 million for the same period in 2006. For the twelve months ended December 31, 2007, the Company had net income before preferred stock accretion of $59.9 million compared to $11.9 million for the twelve months ended December 31, 2006. Included in the three month and twelve month periods ended December 31, 2007 is an income tax benefit of $50.0 million, which includes deferred income tax expense of $4.5 million. The Company recorded these items as a result of management's determination that it is now more likely than not that most of its deferred tax assets will in all probability be realized in future periods. Accordingly, a substantial portion of the valuation allowance that the Company had maintained against its deferred tax assets was released, which together with other miscellaneous tax expense of $0.5 million, resulted in the recording of the net income tax benefit for 2007 of $49.4 million. No corresponding amounts of this nature were recorded in 2006. The Company is still reviewing deferred tax assets related to its research credits, and may recognize additional income tax benefit once that review is complete. The Company expects to record book income tax expense in future periods as a function of any reported pretax earnings, but does not expect to pay substantial cash taxes for the next few years.

Income before income taxes was $3.9 million and $4.0 million for the three month periods ended December 31, 2007 and 2006, and $10.6 million and $12.3 million for the twelve month periods ended December 31, 2007 and 2006.

Revenues of $40.9 million for the quarter ended December 31, 2007 exceeded quarterly revenue guidance of $36 million to $39 million, and compares to $31.2 million for the same period in 2006, an increase of 31%. For the twelve months ended December 31, 2007, revenue of $137.4 million, increased 9.7%, compared to revenue of $125.2 million in 2006. Included in both of the 2007 periods is $5.6 million of revenue recognized as a result of the integration of the Computerized Patient Record (CPR) business assets during the fourth quarter. Sales bookings for 2007 amounted to $93 million (including approximately $8 million from CPR for the nine months prior to the acquisition), compared to $84.5 million in 2006.

As previously announced at the UBS Global Healthcare Conference in February, QuadraMed expects 2008 revenues to be between $146 million and $152 million which would represent a 6% to 10% increase over 2007 revenues of $137.4 million.

Income from operations was $3.5 million for the three months ended December 31, 2007, compared to $3.6 million for the same period in 2006. For the twelve months ended December 31, 2007, income from operations was $7.9 million, compared to $10.8 million for the twelve months ended December 31, 2006. Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization, adjusted for stock based compensation) was $15.9 million for the twelve months ended December 31, 2007, compared to adjusted EBITDA of $19.8 million for the same period in 2006. The declines in income from operations and adjusted EBITDA for the 2007 periods from 2006 are due primarily to costs incurred related to the acquisition of the CPR assets on September 23, 2007 from Misys Healthcare, the recording of a $1.3 million expense related to the change in wage/hour classifications of certain employees in the third quarter of 2007, and the inclusion of $3.0 million of additional income in 2006 that was generated from cash basis revenues originated in 2005 but not recognized until 2006.

The Company also reported net income attributable to common shareholders of $53.9 million, or $1.22 income per share basic, and $0.75 income per share diluted for the twelve months ended December 31, 2007. This is compared to a net income attributable to common shareholders of $6.0 million, or income per share of $0.14 basic, and $0.13 diluted for the same period in 2006.

Cash provided by operating activities was $12.8 million in 2007 compared to $16.7 million for 2006. Included in the 2007 period is the effect of paying the $1.3 million expense related to the change in wage/hour classifications of certain employees in the third quarter of 2007, as well as the first full quarter of activities related to the acquired CPR assets, which amounted to a use of cash of $1.2 million. In addition, during the fourth quarter of 2007, no monies were received from the Veterans Administration related to $4.6 million of term licenses earned, pending resolution of contract negotiations and Federal government budget resolutions; however all of the $4.6 million outstanding was subsequently received on January 6, 2008. By contrast, cash flow from operating activities in 2006 included approximately $6 million related to the reduction in DSO that year from 81 to 60. Cash, cash equivalents and investments decreased $27 million during 2007 to $17.5 million, compared to an increase of $11.2 million in 2006. The primary reason for the decline in cash and investments during 2007 was the $33 million cash purchase of the CPR assets during the third quarter.

The 2007 results reflect the execution of the second year tactical initiatives from the three-year strategic plan that was implemented in 2006 by the Company's new management team.

"2007 was a very successful year for QuadraMed. We started growing the top line for the first time in years. Without the acquisition we grew 5.2%, and with it our revenues were up 9.7%, which is growth in line with our peers. While delivering these results we integrated a transformational acquisition of an award winning clinical information system, QCPR. This product will allow us to compete in market opportunities that our previous clinical systems could not," added Mr. Hagen.

Management will review these results in an investment community conference call at 4:00 PM Eastern (1:00 PM Pacific) Thursday, March 13, 2008. To ensure fair dissemination of information, no inquiries of management should be made regarding QuadraMed's results until after the conference call. A brief question and answer period will follow management's presentation. The dial-in number for the conference call is 877-879-6207 domestic, and 719-325-4806 international. Callers should dial in by 3:45 PM Eastern (12:45 PM Pacific) to register. The call will also be webcast live and available to the public via the Investor Relations section of QuadraMed's webpage at www.quadramed.com. Please note that the webcast is listen-only. Listeners should access the website at 3:45 PM Eastern (12:45 PM Pacific) to register and to download and install any necessary audio software. The webcast replays will be available until 12:00 AM CT on March 20, 2008 by dialing 888-203-1112 or 719-457-0820. The replay passcode is 9024044.

Attachments	Exhibit 1	Consolidated Balance Sheets as of December 31, 2007 and December 31, 2006
	Exhibit 2	Consolidated Statements of Operations for the Three Months Ended December 31, 2007 and December 31, 2006 and Years Ended December 31, 2007 and December 31, 2006
	Exhibit 3	Consolidated Statements of Cash Flows for the Three Months Ended December 31, 2007 and December 31, 2006 and the years ended December 31, 2007 and December 31, 2006
	Exhibit 4	Reconciliation of EBITDA and Non-GAAP Measurements for the Three Months Ended December 31, 2007, September 30, 2007, June 30, 2007, March 31, 2007 and December 31, 2006, September 30, 2006, June 30, 2006, and March 31, 2006
	Exhibit 5	Reconciliation of EBITDA and Non-GAAP Measurements for the Years Ended December 31, 2007 and December 31, 2006

About Adjusted EBITDA and other Non-GAAP Measurements
The Company's use and presentation of the terms EBITDA, Adjusted EBITDA and other Non-GAAP Measurements included in this press release and Exhibits 4 and 5 thereto, and the reconciliations of those items to the most directly comparable GAAP financial measure with equal or greater prominence as the non-GAAP financial measures, have been prepared in direct response to questions from its investors and other interested parties. Although the Company has frequently discussed these reconciling items when they occur, both in its filings as well in investment community conference calls that are open to the public at large, many inquiries are still made as to the nature of these items, and the impact of removing these items from the GAAP financial results. As a result, the Company believes it is important to provide these reconciliations, so that the requesting investors will not have to perform the arithmetic themselves and so that all interested parties will benefit from the disclosures and reconciliations, through a straightforward and unambiguous presentation. The Company believes that the use and presentation of the terms EBITDA, Adjusted EBITDA and the other non-GAAP financial measures is useful because it allows readers of its financial information to evaluate its performance for different periods on a more comparable basis by excluding items that are unique in nature such as non-cash compensation, or do not relate to the ongoing operation of its core business. The items presented in calculating Adjusted EBITDA other Non-GAAP reconciliations represent specific events or items as follows (please see Exhibits 4 and 5 to this press release):

• Cash Severance -- costs associated with restructuring and downsizing of the Company's employee base during the three-month periods ended June 30, 2006 and March 31, 2006;
• Costs of Litigation -- costs associated with the settlement of a long standing and fully disclosed litigation proceeding during the three-month periods ended June 30, 2006 and March 31, 2006.
• Non-cash Compensation – the costs of employee stock options and restricted stock;
• Tax benefit, net – the amount recorded in the period resulting from the release of a portion of the reserve against the Company's deferred tax assets, net of deferred income tax expense recorded in the period;
• Strategic Initiatives – the expenses recorded in connection with merger and acquisition activities during the three- month period ended June 30, 2007;
• Employment Matters – the cost of the Company's review of wage/hour classifications for certain employees during the three month periods ended September 30, 2007 and December 31, 2007.

About QuadraMed Corporation
QuadraMed Corporation advances the success of healthcare organizations through IT solutions that leverage quality care into positive financial outcomes. QuadraMed provides real world solutions that help healthcare professionals deliver outstanding patient care efficiently and cost effectively. Behind the company's products and services is a staff of 650 professionals whose experience and dedication have earned QuadraMed the trust and loyalty of clients at over 2,000 healthcare provider facilities. For more information about QuadraMed, visit www.quadramed.com.

Cautionary Statement on Risks Associated with QuadraMed Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 by QuadraMed that are subject to risks and uncertainties. The words "believe," "expect," "anticipate," "intend," "plan," "estimate," "may," "should," "could," and similar expressions are intended to identify such statements. Forward-looking statements are not guarantees of future performance and are to be interpreted only as of the date on which they are made. QuadraMed undertakes no obligation to update or revise any forward-looking statement except as required by law. QuadraMed advises investors that it discusses risk factors and uncertainties that could cause QuadraMed's actual results to differ from forward-looking statements in its periodic reports filed with the Securities and Exchange Commission ("SEC"). QuadraMed's SEC filings can be accessed through the Investor Relations section of our website, www.quadramed.com, or through the SEC's EDGAR Database at www.sec.gov (QuadraMed has EDGAR CIK No. 0001018833).

QuadraMed is a registered trademark of QuadraMed Corporation. All other trademarks are the property of their respective holders.

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