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703.742.5393
InvestorRelations@quadramed.com
Brooke Kane
Marketing Manager
703.989.7020
press@quadramed.com
QuadraMed Corporation Announces Q3 2008 Results
Reston, VA — November 6, 2008 —
RESTON, Va.--(BUSINESS WIRE)--Nov. 6, 2008--QuadraMed Corporation (NASDAQ: QDHC) announced today that it will report net income of $2.5 million before preferred stock dividends for the three months ended September 30, 2008, compared to $1.5 million for the same period in 2007. For the nine months ended September 30, 2008, the Company had net income before preferred stock dividends of $4.6 million, compared to $6.3 million for the nine months ended September 30, 2007.
The Company began recording deferred income tax expense at its statutory effective tax rate during the fourth quarter of 2007; therefore, where there was non-cash deferred income tax expense included in the three and nine month periods ended September 30, 2008, there was no comparable deferred income tax expense in the corresponding 2007 periods. Income before income taxes was $4.1 million for the three months ended September 30, 2008, compared to $1.6 million for the same period in 2007. For the nine months ended September 30, 2008, the Company had income before income taxes of $7.5 million, compared to $6.7 million for the nine months ended September 30, 2007. In addition, included in the nine month period ended September 30, 2008 was a $1.1 million loss on the sale of the Company's Australia-based lab and radiology assets, as well as severance costs of $0.7 million. No amounts of this nature were recorded in the corresponding 2007 periods.
The Company recorded revenue of $38.6 million for the quarter ended September 30, 2008, compared to $32.9 million for the same period last year, an increase of 17.3%. For the nine months ended September 30, 2008, revenue increased 16.0% to $111.9 million, from $96.5 million for the comparable 2007 period. The majority of the increase in revenue between periods was attributable to the addition of the acquired QCPR product to the Company's portfolio, resulting from the integration of the Computerized Patient Record (CPR) business assets during the fourth quarter of 2007.
Income from operations was $4.0 million and $1.0 million for the three month periods ended September 30, 2008 and 2007, and $7.2 million and $4.4 million for the nine month periods ended September 30, 2008 and 2007, respectively. Adjusted Non-GAAP EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization, adjusted for stock based compensation, severance and loss on the sale of assets) was $5.9 million for the three months ended September 30, 2008, compared to adjusted Non-GAAP EBITDA of $2.6 million for the same period in 2007. For the nine months ended September 30, 2008, the Company had adjusted Non-GAAP EBITDA of $14.9 million, compared to $10.1 million for the nine months ended September 30, 2007. The increases in income from operations and Non-GAAP adjusted EBITDA for the 2008 periods, when compared to the corresponding 2007 periods, were due to the stronger amounts of gross margin on revenue which increased primarily due to the addition of the acquired QCPR product to the Company's portfolio.
The Company also reported net income to common shareholders of $1.1 million, or $0.12 income per basic and diluted share for the three months ended September 30, 2008, and net income to common shareholders of $0.4 million, or $0.05 per basic and diluted share for the nine months ended September 30, 2008. This is compared to a net loss to common shareholders of $(0.5) million, or loss per share of $(0.06) basic and diluted, and net income to common shareholders of $1.7 million, or income per share of $0.19 basic and $0.18 diluted for the corresponding periods in 2007. The primary reasons for the decline in earnings per share for the 2008 nine month period were the aforementioned severance and loss on the sale of assets ($0.12 per share), as well as the recording of deferred income tax expense during 2008 at the Company's effective rate ($0.28 per share), where there were no such expenses in the 2007 periods.
Included in the quarter and nine month period ended September 30, 2008 is revenue of $1.5 million and $2.1 million respectively, related to contracts that were completed in periods prior to 2008. The costs related to these contracts were recognized in the periods of origin; consequently, the reported gross margin, net income and adjusted Non-GAAP EBITDA and other measures also include the $1.5 million and $2.1 million for the quarter and nine month period respectively. Were these revenues not recorded in the current periods, revenue which was reported as $38.6 million for the quarter and $111.9 million for the nine month period would have been $37.1 million and $109.8 million respectively; gross margin which was reported as 60% for the quarter and 58% for the nine month period would have been 58% and 57% respectively; net income which was reported as $2.5 million for the quarter and $4.6 million for the nine month period would have been $1.6 million and $3.3 million respectively; adjusted Non-GAAP EBITDA as presented on Exhibits 4 and 5 of this press release as $5.9 million or 15% of revenue for the quarter and $14.9 million or 13% of revenue for the nine month period would have been $4.4 million or 12% of revenue and $12.8 million or 12% of revenue respectively.
Cash provided by operating activities was $2.8 million for the quarter ended September 30, 2008, compared to $4.0 million for the same period last year, and for the nine months ended September 30, 2008, cash provided by operating activities was $15.0 million, compared to cash from operations of $17.8 million for the comparable 2007 period. Overall, cash, cash equivalents and investments increased to $23.8 million at September 30, 2008, from $23.2 million at June 30, 2008 and from $17.5 million at December 31, 2007. This $6.3 million increase since year-end occurred despite the Company's use of $3.7 million to repurchase its own common stock during the period.
"We are continuing to successfully perform against our internal forecasts for revenues, earnings, and product development through the third quarter of this year. We have also reported the signing of several significant QCPR deals during the quarter. However, given the uncertainty in the financial markets, and their uncertain effect on our sector, we now expect our 2008 revenue to be at the lower end of our previously announced range," said Keith B. Hagen, QuadraMed's President and Chief Executive Officer.
Management will review these results in an investment community conference call at 5:00 PM Eastern (2:00 PM Pacific) on Thursday, November 6, 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 888-300-2324 domestic and 719-325-2452 international. Callers should dial in by 4:45 PM Eastern (1:45 PM Pacific) to register. The call will also be webcast live and is 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 4:45 PM Eastern (1:45 PM Pacific) to register and to download and install any necessary audio software. The webcast replay will be available shortly after the live call is completed and will be available until November 14, 2008. Replay telephone numbers are 719-457-0820 or 888-203-1112; the replay passcode is 7408235.
Attachments Exhibit 1 Condensed Consolidated Balance Sheets
(unaudited) as of September 30, 2008 and
December 31, 2007
Exhibit 2 Condensed Consolidated Statements of Operations
(unaudited) for the Three Months Ended
September 30, 2008 and 2007 and the Nine Months
Ended September 30, 2008 and 2007
Exhibit 3 Condensed Consolidated Statements of Cash Flows
(unaudited) for the Three Months Ended
September 30, 2008 and 2007 and the Nine Months
Ended September 30, 2008 and 2007
Exhibit 4 Reconciliation of EBITDA and Non-GAAP
Measurements (unaudited) for the Three Months
Ended September 30, 2008, June 30, 2008, March
31, 2008, December 31, 2007, September 30,
2007, June 30, 2007 and March 31, 2007.
Exhibit 5 Reconciliation of EBITDA and Non-GAAP
Measurements (unaudited) for the Nine Months
Ended September 30, 2008 and September 30, 2007
About Adjusted Non-GAAP EBITDA and other Non-GAAP Measurements
The Company's use and presentation of the terms EBITDA, Adjusted Non-GAAP EBITDA and other Non-GAAP Measurements included in this press release and Exhibits 4 and 5 attached hereto, 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 as 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 Non-GAAP 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 Non-GAAP EBITDA and 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 March 31, 2008, and in connection
with the sale of the Company's Australian-based lab and
radiology assets in April 2008 (see Loss on Sale of Assets);
-- Loss on Sale of Assets - a one-time loss for accounting
purposes recorded in connection with the Company's April 2008
sale of its Australia-based lab and radiology business, with
operations in Australia, New Zealand and the United Kingdom;
-- Non-Cash Compensation - the costs of employee stock options
and restricted stock;
-- Tax Benefit, Net - the amount recorded during the three months
ended December 31, 2007 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
periods ended June 30, 2007 and December 31, 2007;
-- Employment Matters - the cost of the Company's review of
wage/hour classifications for certain employees during the
three-month periods ended December 31, 2007 and September 30,
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 600 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 http://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 Affinity and Care-based Revenue Cycle are registered trademarks of QuadraMed Corporation. QuadraMed Corporation's trademark: "Quality Care. Financial Health" is pending registration. All other trademarks are the property of their respective holders.
Exhibit 1
QUADRAMED CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
(unaudited)
September 30, December 31,
ASSETS 2008 2007
------------- -------------
Current assets
Cash and cash equivalents $ 15,410 $ 7,119
Short-term investments 5,210 9,169
Accounts receivable, net of allowance
for doubtful accounts of $1,088 and
$1,449, respectively 20,402 26,088
Unbilled receivables 9,679 5,183
Deferred contract expenses 5,608 6,060
Prepaid expenses and other current
assets, net of allowance of $919 and
$1,229, respectively 4,880 5,367
Deferred tax asset, net of valuation
allowance 7,376 7,376
------------- -------------
Total current assets 68,565 66,362
Restricted cash 1,556 2,389
Long-term investments 3,218 1,197
Property and equipment, net of
accumulated depreciation and
amortization of $22,723, and $22,855,
respectively 3,166 3,778
Goodwill 35,632 33,942
Other amortizable intangible assets,
net of accumulated amortization of
$29,110 and $31,119, respectively 10,177 11,768
Other long-term assets 3,043 3,182
Deferred tax asset, net of valuation
allowance 49,729 49,758
------------- -------------
Total assets $ 175,086 $ 172,376
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses $ 5,477 $ 4,910
Accrued payroll and related benefits 5,997 9,602
Accrued exit cost of facility closing 872 1,178
Other accrued liabilities 6,908 7,537
Dividends payable 1,375 1,375
Deferred revenue 44,733 36,111
------------- -------------
Total current liabilities 65,362 60,713
Accrued exit cost of facility closing 227 888
Other long-term liabilities 1,883 2,722
------------- -------------
Total liabilities 67,472 64,323
Commitments and Contingencies
Stockholders' equity
Preferred stock, $0.01 par, 5,000
shares authorized, 4,000 shares
issued and outstanding, respectively 96,144 96,144
Common stock, $0.01 par, 30,000 shares
authorized; 9,451 and 9,178 shares
issued and 8,954 and 9,057
outstanding, respectively 99 459
Shares held in treasury, 497 and 121,
respectively (4,020) (292)
Additional paid-in-capital 314,183 310,557
Accumulated other comprehensive loss (504) (80)
Accumulated deficit (298,288) (298,735)
------------- -------------
Total stockholders' equity 107,614 108,053
------------- -------------
Total liabilities and stockholders'
equity $ 175,086 $ 172,376
============= =============
Exhibit 2
QUADRAMED CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
Three months ended, Nine months ended,
September 30, September 30,
--------------------- ---------------------
2008 2007 2008 2007
---------- ---------- ---------- ----------
Revenue
Services $ 5,930 $ 4,348 $ 17,102 $ 12,887
Maintenance 18,205 14,115 51,734 42,274
Installation and other 3,153 3,081 9,614 8,323
---------- ---------- ---------- ----------
Services and other
revenue 27,288 21,544 78,450 63,484
Term licenses 8,099 8,485 23,651 22,093
Perpetual licenses 3,127 2,455 9,260 7,036
---------- ---------- ---------- ----------
License revenue 11,226 10,940 32,911 29,129
Hardware 75 424 505 3,863
---------- ---------- ---------- ----------
Total revenue 38,589 32,908 111,866 96,476
---------- ---------- ---------- ----------
Cost of revenue
Cost of services and
other revenue 11,487 9,722 34,324 25,434
Royalties and other 3,671 4,237 11,365 11,273
Amortization of
acquired technology
and capitalized
software 245 - 756 825
---------- ---------- ---------- ----------
Cost of license
revenue 3,916 4,237 12,121 12,098
Cost of hardware
revenue 64 146 328 3,533
---------- ---------- ---------- ----------
Total cost of
revenue 15,467 14,105 46,773 41,065
---------- ---------- ---------- ----------
Gross margin 23,122 18,803 65,093 55,411
---------- ---------- ---------- ----------
Operating expense
General and
administration 5,027 4,464 14,907 12,916
Software development 8,328 8,144 25,362 23,218
Sales and marketing 4,968 4,536 14,105 12,345
Loss on sale of assets 46 - 1,161 -
Amortization of
intangible assets and
depreciation 761 707 2,400 2,505
---------- ---------- ---------- ----------
Total operating
expenses 19,130 17,851 57,935 50,984
---------- ---------- ---------- ----------
Income from operations 3,992 952 7,158 4,427
---------- ---------- ---------- ----------
Other income (expense)
Interest expense,
includes non-cash
charges of $18, $20
and $54, $104 (26) (24) (99) (107)
Interest income 136 699 460 1,916
Other income, net 1 17 9 503
---------- ---------- ---------- ----------
Other income, net 111 692 370 2,312
---------- ---------- ---------- ----------
Income from operations
before income taxes $ 4,103 $ 1,644 $ 7,528 $ 6,739
Provision for income
taxes (1,634) (142) (2,963) (413)
---------- ---------- ---------- ----------
Net Income 2,469 1,502 4,565 6,326
Preferred stock
accretion, dividend
premium, and dividend
declared (1,375) (2,024) (4,125) (4,657)
---------- ---------- ---------- ----------
Net income (loss)
attributable to common
shareholders $ 1,094 $ (522) $ 440 $ 1,669
========== ========== ========== ==========
Income (loss) per share
Basic $ 0.12 $ (0.06) $ 0.05 $ 0.19
Diluted $ 0.12 $ (0.06) $ 0.05 $ 0.18
Weighted average shares
outstanding
Basic 8,931 8,769 8,930 8,776
Diluted 8,962 8,769 8,963 9,464
Exhibit 3
QUADRAMED CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Three months ended Nine months ended
September 30, September 30,
--------------------- ---------------------
2008 2007 2008 2007
---------- ---------- ---------- ----------
Cash flows from operating
activities
Net income $ 2,469 $ 1,502 $ 4,565 $ 6,326
Adjustments to
reconcile net income
to net cash provided
by operating
activities:
Depreciation and
amortization 1,006 707 3,157 3,331
Deferred
compensation
amortization 85 95 273 287
Dividend discount
amortization - 2 - 50
Stock-based
compensation 805 807 2,445 1,546
Provision for bad
debts 34 - 164 181
Loss on sale of
assets 46 - 1,161 -
Other 18 57 (16) (32)
Changes in operating
assets and
liabilities:
Accounts receivable (1,835) 1,650 (3,861) 4,798
Prepaid expenses and
other 3,583 (249) 1,247 2,935
Accounts payable and
accrued liabilities 2,695 3,465 (5,294) (1,035)
Deferred revenue (6,081) (4,013) 11,155 (539)
---------- ---------- ---------- ----------
Cash provided by
operating
activities 2,825 4,023 14,996 17,848
Cash flows from investing
activities
Decrease (increase) in
restricted cash 173 56 833 (38)
Purchases of available-
for-sale securities (190) (13,278) (4,220) (46,691)
Proceeds from sale of
available-for-sale
securities 190 23,608 6,049 44,224
Payment of acquisition
costs (10) - (56) -
Purchases of property
and equipment (575) (933) (1,418) (1,471)
Cash paid in the
acquisition of the
Computerized Patient
Record business - (33,674) - (33,674)
Proceeds from sale of
assets - - 106 -
---------- ---------- ---------- ----------
Cash (used in)
provided by
investing
activities (412) (24,221) 1,294 (37,650)
Cash flows from financing
activities
Payment of preferred
stock dividends (1,375) (1,375) (4,125) (4,253)
Proceeds from issuance
of common stock and
other 395 759 545 2,194
Repurchase of common
stock - - (3,727) -
---------- ---------- ---------- ----------
Cash used in
financing
activities (980) (616) (7,307) (2,059)
Effect of exchange rate
changes on cash (626) 71 (692) (6)
Net increase (decrease) in
cash and cash equivalents 807 (20,743) 8,291 (21,867)
Cash and cash equivalents,
beginning of period 14,603 31,472 7,119 32,596
---------- ---------- ---------- ----------
Cash and cash equivalents,
end of period $ 15,410 $ 10,729 $ 15,410 $ 10,729
========== ========== ========== ==========
Exhibit 4
QUADRAMED CORPORATION
RECONCILIATION OF EBITDA AND NON-GAAP MEASUREMENTS
(in thousands)
(unaudited)
For the Three Month Periods Ended
--------------------------------------------------------
9/30/08 6/30/08 3/31/08 12/31/07 9/30/07 6/30/07 3/31/07
------- ------- ------- -------- ------- ------- -------
EBITDA
(Earnings
Before
Interest,
Taxes,
Depreciation
and
Amortization)
--------------
Net income, as
reported $2,469 $1,787 $309 $56,674 $1,502 $2,200 $2,624
Adjustments to
Net Income
for EBITDA
Interest
Expense 26 42 31 20 24 33 50
Interest
Income (136) (158) (166) (364) (699) (644) (573)
(Provision)
benefit for
Income Taxes 1,634 1,151 178 (52,821) 142 162 109
Depreciation
and
Amortization 1,091 1,159 1,180 1,323 802 1,326 1,490
------- ------- ------- -------- ------- ------- -------
Subtotal Non-
GAAP
Adjustments
for EBITDA 2,615 2,194 1,223 (51,842) 269 877 1,076
------- ------- ------- -------- ------- ------- -------
EBITDA $5,084 $3,981 $1,532 $4,832 $1,771 $3,077 $3,700
======= ======= ======= ======== ======= ======= =======
EBITDA % to
Revenue 13.2% 10.5% 4.3% 11.8% 5.4% 9.0% 12.7%
Non-GAAP
Adjustments
to EBITDA
Non-cash
Compensation 805 841 799 928 807 356 383
Cash Severance - 161 561 - - - -
Loss on Sale
of Assets - 1,115 - - - - -
------- ------- ------- -------- ------- ------- -------
Subtotal Non-
GAAP
Adjustments
to EBITDA 805 2,117 1,360 928 807 356 383
------- ------- ------- -------- ------- ------- -------
Adjusted Non-
GAAP EBITDA $5,889 $6,098 $2,892 $5,760 $2,578 $3,433 $4,083
======= ======= ======= ======== ======= ======= =======
Adjusted Non-
GAAP EBITDA %
to Revenue 15.3% 16.1% 8.2% 14.1% 7.8% 10.0% 14.0%
Non-GAAP Net
Income before
Preferred
Stock
Accretion
--------------
Net income, as
reported $2,469 $1,787 $309 $56,674 $1,502 $2,200 $2,624
Non-GAAP
adjustments
to Net income
Non-cash
Compensation 805 841 799 928 807 356 383
Cash Severance - 161 561 - - - -
Strategic
Initiatives - - - 57 - 412 -
Tax benefit,
Net - - - (52,898) - - -
Employment
Matters - - - (374) 1,544 - -
Loss on Sale
of Assets - 1,115 - - - - -
------- ------- ------- -------- ------- ------- -------
Subtotal Non-
GAAP
adjustments 805 2,117 1,360 (52,287) 2,351 768 383
------- ------- ------- -------- ------- ------- -------
Non-GAAP Net
income $3,274 $3,904 $1,669 $4,387 $3,853 $2,968 $3,007
======= ======= ======= ======== ======= ======= =======
Other
Information
--------------
Revenue $38,589 $37,986 $35,291 $40,874 $32,908 $34,362 $29,206
Costs of
Revenue $15,467 $15,760 $15,546 $16,167 $14,105 $15,991 $10,969
------- ------- ------- -------- ------- ------- -------
Gross Margin $23,122 $22,226 $19,745 $24,707 $18,803 $18,371 $18,237
======= ======= ======= ======== ======= ======= =======
Gross Margin % 60% 59% 56% 60% 57% 53% 62%
About Adjusted Non-GAAP EBITDA and other Non-GAAP Measurements
The Company's use and presentation of the terms EBITDA, Adjusted Non-GAAP EBITDA and other Non-GAAP Measurements included in this press release and on 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 as 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 Non-GAAP 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 Non-GAAP EBITDA and other Non-GAAP reconciliations represent specific events or items as follows:
-- Cash Severance -- costs associated with restructuring and
downsizing of the Company's employee base during the
three-month periods ended March 31, 2008, and in connection
with the sale of the Company's lab and radiology assets in
April 2008 (see Loss on Sale of Assets);
-- Loss on Sale of Assets - a one-time loss for accounting
purposes recorded in connection with the Company's April 2008
sale of its Australia-based lab and radiology business with
operations in Australia, New Zealand and the United Kingdom;
-- Non-cash Compensation - the costs of employee stock options
and restricted stock;
-- Tax benefit, Net - the amount recorded during the three months
ended December 31, 2007 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
periods ended June 30, 2007 and December 31, 2007;
-- Employment Matters - the cost of the Company's review of
wage/hour classifications for certain employees during the
three-month periods ended December 31, 2007 and September 30,
2007.
Exhibit 5
QUADRAMED CORPORATION
Reconciliation of EBITDA and Non-GAAP Measurements
(in thousands)
(unaudited)
For the Nine Months Ended
----------------------------
9/30/2008 9/30/2007
------------- -------------
EBITDA (Earnings Before Interest, Taxes,
Depreciation and Amortization)
-----------------------------------------
Net income, as reported $ 4,565 $ 6,326
Adjustments to Net Income for EBITDA
Interest Expense 99 107
Interest Income (460) (1,916)
Provision for Income Taxes 2,963 413
Depreciation and Amortization 3,430 3,618
------------- -------------
Subtotal Non-GAAP Adjustments for EBITDA 6,032 2,222
------------- -------------
EBITDA $ 10,597 $ 8,548
============= =============
EBITDA % to Revenue 9.5% 8.9%
Non-GAAP Adjustments to EBITDA
Non-cash Compensation 2,445 1,546
Cash Severance 722 -
Loss on Sale of Assets 1,115 -
------------- -------------
Subtotal Non-GAAP Adjustments to EBITDA 4,282 1,546
------------- -------------
Adjusted Non-GAAP EBITDA $ 14,879 $ 10,094
============= =============
Adjusted Non-GAAP EBITDA % to Revenue 13.3% 10.5%
Non-GAAP Net Income before Preferred
Stock Accretion
-----------------------------------------
Net income, as reported $ 4,565 $ 6,326
Non-GAAP adjustments to Net income
Non-cash Compensation 2,445 1,546
Cash Severance 722 -
Strategic Initiatives - 412
Tax benefit, Net - -
Employment Matters - 1,544
Loss on Sale of Assets 1,115 -
------------- -------------
Subtotal Non-GAAP adjustments 4,282 3,502
------------- -------------
Non-GAAP net income $ 8,847 $ 9,828
============= =============
Other Information
-----------------------------------------
Revenue $ 111,866 $ 96,476
Costs of Revenue $ 46,773 $ 41,065
------------- -------------
Gross Margin $ 65,093 $ 55,411
============= =============
Gross Margin % 58% 57%
About Adjusted Non-GAAP EBITDA and other Non-GAAP Measurements
The Company's use and presentation of the terms EBITDA, Adjusted Non-GAAP EBITDA and other Non-GAAP Measurements included in this press release and on 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 as 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 Non-GAAP 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 Non-GAAP EBITDA and other Non-GAAP reconciliations represent specific events or items as follows:
-- Cash Severance -- costs associated with restructuring and
downsizing of the Company's employee base during the
three-month period ended March 31, 2008, and in connection
with the sale of the Company's lab and radiology assets in
April 2008 (see Loss on Sale of Assets);
-- Loss on Sale of Assets - a one-time loss for accounting
purposes recorded in connection with the Company's April 2008
sale of its Australia-based lab and radiology business with
operations in Australia, New Zealand and the United Kingdom;
-- Non-cash Compensation - the costs of employee stock options
and restricted stock;
-- Strategic Initiatives - the expenses recorded in connection
with merger and acquisition activities during the three-month
periods ended June 30, 2007 and December 31, 2007;
-- Employment Matters - the cost of the Company's review of
wage/hour classifications for certain employees during the
three-month periods ended December 31, 2007 and September 30,
2007.
CONTACT: QuadraMed CorporationInvestor Relations
David L. Piazza, 703-742-5393
InvestorRelations@quadramed.com
SOURCE: QuadraMed Corporation
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