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05.11.2009 21:01:00
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Eclipsys Announces Third-Quarter 2009 Results
Eclipsys Corporation® (NASDAQ: ECLP), The Outcomes Company®, today announced results for the quarter ended September 30, 2009.
Revenues for the quarter ended September 30, 2009 were $125.5 million, compared to revenues of $132.4 million for the quarter ended September 30, 2008.
GAAP net income for the third quarter of 2009 was $3.9 million, or $0.07 per diluted common share, compared to GAAP net income of $87.4 million, or $1.58 per share on a diluted basis for the third quarter of 2008. GAAP net income in the third quarter of 2008 included a one-time income tax benefit of $80.0 million associated with the reversal of the company’s deferred tax valuation allowance.
Non-GAAP Results
Non-GAAP net income for the third quarter of 2009 was $8.2 million, or $0.14 per diluted common share, compared to third quarter 2008 non-GAAP net income of $16.3 million, or $0.30 per diluted share. A detailed reconciliation of GAAP to non-GAAP results is included in the attached tables.
"Our third-quarter performance was in-line with our expectations,” said Philip M. Pead, Eclipsys president and chief executive officer. "I was very pleased with our bookings in the third quarter, particularly the amount of new enterprise business we signed.”
The non-GAAP earnings per share guidance range remains $0.55 to $0.60 for 2009, and the company will provide 2010 financial guidance in its fourth quarter earnings release.
Balance Sheet Update
In the quarter, Eclipsys repaid $45 million of debt on its credit facility. These payments were funded through available cash, operating cash flows and $23.6 million in proceeds from the sale of auction rate securities. Eclipsys ended the quarter with $122.1 million of cash and $86.0 million in long-term investments.
Through the third quarter of 2009, Eclipsys has generated $29.9 million in free cash flows, compared to $8.7 million through the third quarter of 2008. The company defines free cash flow as operating cash flows less capitalized software development costs and capital expenditures.
Conference Call
Eclipsys executives will discuss the third-quarter results on a teleconference at 4:30 p.m. Eastern time on November 5. Persons interested in participating in the teleconference should call (800) 288-8968 approximately 15 minutes before the conference call is slated to begin. For listen-only mode, participants can go to www.eclipsys.com prior to the conference call to register and download the necessary audio software.
Replay
About two hours after its completion, an audio replay of the call will be available on www.eclipsys.com for approximately 48 hours.
About Eclipsys
Eclipsys is a leading provider of advanced integrated clinical, revenue cycle and performance management software, clinical content and professional services that help healthcare organizations improve clinical, financial and operational outcomes. For more information, see www.eclipsys.com or email info@eclipsys.com.
Non-GAAP Measures
The company has provided net income and earnings per share financial measures on a non-GAAP basis for the three months ended September 30, 2009 and September 30, 2008, which exclude non-cash stock-based compensation expenses, amortization expense associated with acquisitions, and certain additional items that the company does not consider to be indicative of its underlying business performance, as listed on the attached GAAP to non-GAAP reconciliation tables. Because of the significance of the GAAP components excluded, these non-GAAP financial measures should not be considered a substitute for, or superior to, any measure derived in accordance with GAAP. These non-GAAP financial measures may also be inconsistent with the manner in which similar measures are derived or used by other companies. Management believes that the non-GAAP financial measures provided, when considered in conjunction with comparable GAAP financial measures, facilitate the understanding and evaluation of the company’s operating performance and future prospects, as well as comparisons of the company’s results with its prior period results that did not include these gains and/or charges, and with results of other companies on a more consistent basis. Internally, management uses non-GAAP net income and earnings for forecasting and to help make management decisions, as an indicator of business performance, and to evaluate management’s effectiveness and help determine bonuses for management and others.
The economic substance of omitting non-cash stock-based compensation expense in presenting non-GAAP earnings derives from providing investors with consistent measures of performance both before and after including non-cash stock-based compensation charges. The economic substance of omitting the other items incurred that the company does not consider to be indicative of its underlying business performance derives from the fact that such episodic gains and/or charges make it more difficult to compare operating results of different periods, not all of which include such gains and/or charges. However, the omission of non-cash stock-based compensation expense may mask an economic cost incurred by the company in connection with stock-based compensation, and the omission of the charges related to the company’s other non-GAAP adjustments may mask actual and expected future costs associated with such matters. Management compensates for these limitations by using both the GAAP and non-GAAP measures.
The company has provided reconciling tables attached to this release.
Caution Regarding Forward-Looking Statements
Certain statements in this news release or the investor call referenced herein, including those concerning the company’s operational initiatives, future performance expectations, and effects of economic conditions are forward-looking statements and actual results may differ materially from those projected or implied by the forward-looking statements due to a variety of risks and uncertainties. Future performance expectations are predicated upon achievement of various sales and performance targets that may be difficult to meet. Economic conditions are unstable and may cause hospitals and other healthcare providers to curtail HIT system spending. Eclipsys’ cost reduction and other initiatives in response to the challenging economic environment, including initiatives designed to improve operational efficiencies, may not be effective, and it is difficult to predict what the company may be able to achieve. Eclipsys sales may fall below expectations due to market conditions, competition, and other factors, including client demands for pricing and financing concessions. Costs may be greater than anticipated due to the potential need to increase spending to ensure performance in accordance with commitments to clients, regulatory requirements, and other factors. Software development may take longer and cost more than expected, and incorporation of anticipated features and functionality (including as required to comply with ARRA and related regulations, as well as other certification standards) may be delayed, due to various factors including programming and integration challenges and resource constraints. The market is highly competitive. Implementation and customization of Eclipsys software is complex and time-consuming. Results depend upon a variety of factors and can vary by client. Each client’s circumstances are unique and may include unforeseen issues that make it more difficult than anticipated to implement or derive benefit from software, implementation or consulting services. The success and timeliness of the company’s services will depend at least in part upon client involvement, which can be difficult to control. Eclipsys is required to meet specified performance standards and regulatory requirements, and clients can terminate contracts, assess penalties or reduce contract scope under certain circumstances. More information about company risks is available in recent Form 10-K and other filings made by Eclipsys from time to time with the Securities and Exchange Commission. Special attention is directed to the portions of those documents entitled "Risk Factors” and "Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
| Eclipsys Corporation | ||||||||||||||||||||||||||||||||||||||||||
| GAAP Income Statements (Unaudited) | ||||||||||||||||||||||||||||||||||||||||||
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(in thousands, except per share amounts) |
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Three Months Ended |
Three Months Ended |
$ | Change | % Change |
Year-to-date |
Year-to-date |
$ | Change | % Change | |||||||||||||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||||||||||||||||||
| Systems and services | $ | 123,471 | $ | 127,575 | $ | (4,104 | ) | -3.2 | % | $ | 379,283 | $ | 373,021 | $ | 6,262 | 1.7 | % | |||||||||||||||||||||||||
| Hardware | 2,015 | 4,849 | (2,834 | ) | -58.4 | % | 6,217 | 15,925 | (9,708 | ) | -61.0 | % | ||||||||||||||||||||||||||||||
| Total revenues | 125,486 | 132,424 | (6,938 | ) | -5.2 | % | 385,500 | 388,946 | (3,446 | ) | -0.9 | % | ||||||||||||||||||||||||||||||
| Cost and expenses: | ||||||||||||||||||||||||||||||||||||||||||
| Costs of systems and services | 66,455 | 73,166 | (6,711 | ) | -9.2 | % | 201,644 | 210,042 | (8,398 | ) | -4.0 | % | ||||||||||||||||||||||||||||||
| Costs of hardware | 1,672 | 5,457 | (3,785 | ) | -69.4 | % | 5,278 | 13,408 | (8,130 | ) | -60.6 | % | ||||||||||||||||||||||||||||||
| Sales and marketing | 20,876 | 19,498 | 1,378 | 7.1 | % | 71,020 | 63,150 | 7,870 | 12.5 | % | ||||||||||||||||||||||||||||||||
| Research and development | 13,204 | 14,195 | (991 | ) | -7.0 | % | 40,568 | 47,102 | (6,534 | ) | -13.9 | % | ||||||||||||||||||||||||||||||
| General and administrative | 10,772 | 8,202 | 2,570 | 31.3 | % | 35,223 | 26,877 | 8,346 | 31.1 | % | ||||||||||||||||||||||||||||||||
| Depreciation and amortization | 7,980 | 5,145 | 2,835 | 55.1 | % | 24,132 | 15,651 | 8,481 | 54.2 | % | ||||||||||||||||||||||||||||||||
| Restructuring | - | - | - | 5,434 | - | 5,434 | * N/M | |||||||||||||||||||||||||||||||||||
| In-process research and development charge | - | - | - | 850 | (850 | ) | -100.0 | % | ||||||||||||||||||||||||||||||||||
| Total costs and expenses | 120,959 | 125,663 | (4,704 | ) | -3.7 | % | 383,299 | 377,080 | 6,219 | 1.6 | % | |||||||||||||||||||||||||||||||
| Income (loss) from operations | 4,527 | 6,761 | (2,234 | ) | -33.0 | % | 2,201 | 11,866 | (9,665 | ) | -81.5 | % | ||||||||||||||||||||||||||||||
| Gain (loss) on sale of assets | 809 | 685 | 124 | 18.1 | % | 2,046 | 4,200 | (2,154 | ) | -51.3 | % | |||||||||||||||||||||||||||||||
| Gain (loss) on ARS | (871 | ) | - | (871 | ) | * N/M | (338 | ) | - | (338 | ) | * N/M | ||||||||||||||||||||||||||||||
| Interest expense | (716 | ) | (499 | ) | (217 | ) | 43.5 | % | (2,821 | ) | (1,219 | ) | (1,602 | ) | 131.4 | % | ||||||||||||||||||||||||||
| Interest income | 316 | 1,133 | (817 | ) | -72.1 | % | 1,844 | 4,800 | (2,956 | ) | -61.6 | % | ||||||||||||||||||||||||||||||
| Income (loss) before income taxes | 4,065 | 8,080 | (4,015 | ) | -49.7 | % | 2,932 | 19,647 | (16,715 | ) | -85.1 | % | ||||||||||||||||||||||||||||||
| Provision for income taxes | 185 | (79,316 | ) | 79,501 |
* N/M |
4,019 | (76,549 | ) | 80,568 |
* N/M |
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| Net income (loss) | $ | 3,880 | $ | 87,396 | $ | (83,516 | ) | -95.6 | % | $ | (1,087 | ) | $ | 96,196 | $ | (97,283 | ) | -101.1 | % | |||||||||||||||||||||||
| Basic EPS: | ||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | $ | 3,880 | $ | 87,396 | $ | (83,516 | ) | -95.6 | % | $ | (1,087 | ) | $ | 96,196 | $ | (97,283 | ) | -101.1 | % | |||||||||||||||||||||||
| Less: Income allocated to participating securities | 34 | 971 | (937 | ) | -96.5 | % | - | 1,133 | (1,133 | ) | -100.0 | % | ||||||||||||||||||||||||||||||
| Net income (loss) available to common shareholders | $ | 3,846 | $ | 86,425 | $ | (82,579 | ) | -95.5 | % | $ | (1,087 | ) | $ | 95,063 | $ | (96,150 | ) | -101.1 | % | |||||||||||||||||||||||
| Basic weighted average common shares outstanding | 56,036 | 53,861 | 2,175 | 4.0 | % | 55,739 | 53,684 | 2,055 | 3.8 | % | ||||||||||||||||||||||||||||||||
| Basic net income (loss) per common share | $ | 0.07 | $ | 1.60 | $ | (1.53 | ) | -95.6 | % | $ | (0.02 | ) | $ | 1.77 | $ | (1.79 | ) | -101.1 | % | |||||||||||||||||||||||
| Diluted EPS: | ||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | 3,880 | 87,396 | (83,516 | ) | -95.6 | % | (1,087 | ) | 96,196 | (97,283 | ) | -101.1 | % | |||||||||||||||||||||||||||||
| Less: Income allocated to participating securities | 34 | 956 | (922 | ) | -96.5 | % | - | 1,115 | (1,115 | ) | -100.0 | % | ||||||||||||||||||||||||||||||
| Net income (loss) available to common shareholders | $ | 3,846 | $ | 86,440 | $ | (82,594 | ) | -95.6 | % | $ | (1,087 | ) | $ | 95,081 | $ | (96,168 | ) | -101.1 | % | |||||||||||||||||||||||
| Basic weighted average common shares outstanding | 56,036 | 53,861 | 2,175 | 4.0 | % | 55,739 | 53,684 | 2,055 | 3.8 | % | ||||||||||||||||||||||||||||||||
| Dilutive effect of potential common shares | 946 |
855 |
91 |
10.6 |
% | - | 875 | (875 | ) | -100.0 | % | |||||||||||||||||||||||||||||||
| Diluted weighted average shares common outstanding | 56,982 |
54,716 |
2,266 |
4.1 | % | 55,739 | 54,559 | 1,180 | 2.2 | % | ||||||||||||||||||||||||||||||||
| Diluted earnings (loss) per common share | $ | 0.07 | $ | 1.58 | $ | (1.51 | ) | -95.7 | % | $ | (0.02 | ) | $ | 1.74 | $ | (1.76 | ) | -101.1 | % | |||||||||||||||||||||||
| * N/M - not meaningful | ||||||||||||||||||||||||||||||||||||||||||
| ECLIPSYS CORPORATION AND SUBSIDIARIES | ||||||||||
| Consolidated Balance Sheets | ||||||||||
| (in thousands, except share and per share amounts) | ||||||||||
|
September 30, 2009 |
December 31, 2008 |
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| (Unaudited) | ||||||||||
| Assets | ||||||||||
| Current assets: | ||||||||||
| Cash | $ | 122,106 | $ | 108,304 | ||||||
| Marketable securities | - | 154 | ||||||||
|
Accounts receivable, net of allowance for doubtful accounts of
$3,244 |
106,010 | 121,811 | ||||||||
| Prepaid expenses | 25,490 | 23,975 | ||||||||
| Deferred tax asset | 259 | 2,643 | ||||||||
| Other current assets | 4,629 | 5,712 | ||||||||
| Total current assets | 258,494 | 262,599 | ||||||||
| Long-term investments | 85,964 | 107,215 | ||||||||
| Property and equipment, net | 57,919 | 53,996 | ||||||||
| Capitalized software development costs, net | 48,923 | 37,718 | ||||||||
| Acquired technology, net | 32,060 | 39,710 | ||||||||
| Intangible assets, net | 8,122 | 10,258 | ||||||||
| Goodwill | 98,394 | 96,973 | ||||||||
| Deferred tax asset | 88,272 | 89,063 | ||||||||
| Other assets | 14,059 | 11,343 | ||||||||
| Total assets | $ | 692,207 | $ | 708,875 | ||||||
| Liabilities and Stockholders’ Equity | ||||||||||
| Current liabilities: | ||||||||||
| Deferred revenue | $ | 120,049 | $ | 123,733 | ||||||
| Accounts payable | 11,191 | 20,924 | ||||||||
| Accrued compensation costs |
33,302 |
16,457 | ||||||||
| Deferred tax liability | 3,318 | - | ||||||||
| Other current liabilities | 18,846 | 22,481 | ||||||||
| Total current liabilities |
186,706 |
183,595 | ||||||||
| Deferred revenue | 6,012 | 5,743 | ||||||||
| Long term debt and capital lease obligations | 60,842 | 105,000 | ||||||||
| Other long-term liabilities | 15,783 | 16,540 | ||||||||
| Total liabilities |
269,343 |
310,878 | ||||||||
| Stockholders’ equity: | ||||||||||
|
Common stock, $0.01 par value, 200,000,000 shares authorized; |
567 | 561 | ||||||||
| Additional paid-in capital | 591,345 | 569,717 | ||||||||
| Accumulated deficit |
(165,799 |
) | (164,712 | ) | ||||||
| Accumulated other comprehensive income | (3,249 | ) | (7,569 | ) | ||||||
| Total stockholders’ equity |
422,864 |
397,997 | ||||||||
| Total liabilities and stockholders’ equity | $ | 692,207 | $ | 708,875 | ||||||
| ECLIPSYS CORPORATION AND SUBSIDIARIES | |||||||||||||||||||||||
| Consolidated Statements of Cash Flows (Unaudited) | |||||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
|
For the Nine Months Ended |
For the Three Months Ended |
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| 2009 | 2008 | 2009 | 2008 | ||||||||||||||||||||
| Operating activities: | |||||||||||||||||||||||
| Net income | $ | (1,087 | ) | $ | 96,196 | $ | 3,880 | $ | 87,396 | ||||||||||||||
| Adjustments to reconcile net income to net cash | |||||||||||||||||||||||
| provided by operating activities: | |||||||||||||||||||||||
| Depreciation and amortization | 37,014 | 29,818 | 12,181 | 9,267 | |||||||||||||||||||
| Provision for bad debt | 2,446 | 2,655 | 450 | 1,255 | |||||||||||||||||||
| In-process research and development charge | - | 850 | - | - | |||||||||||||||||||
| Deferred income taxes | 3,777 | (78,184 | ) | 103 | (78,551 | ) | |||||||||||||||||
| Gain on sale of marketable securities | (30 | ) | |||||||||||||||||||||
| Stock compensation expense | 14,768 | 13,093 | 3,599 | 5,627 | |||||||||||||||||||
| Gain on sale of assets | (2,046 | ) | (4,168 | ) | (809 | ) | (683 | ) | |||||||||||||||
| Foreign Currency (gain) /loss | 924 | (317 | ) | 413 | (125 | ) | |||||||||||||||||
| Interest Income Received, net | - | 588 | - | 64 | |||||||||||||||||||
|
Changes in operating assets and liabilities, excluding the |
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| Accounts receivable | 7,066 | (21,611 | ) | 5,118 | (2,803 | ) | |||||||||||||||||
| Prepaid expenses and other current assets | 1,420 | 755 | (160 | ) | 4,823 | ||||||||||||||||||
| Inventory | - | - | - | 18 | |||||||||||||||||||
| Other assets | 59 | (289 | ) | 556 | (1,336 | ) | |||||||||||||||||
| Deferred revenue | (1,217 | ) | (3,378 | ) | 2,414 | 5,127 | |||||||||||||||||
| Accrued compensation | 16,964 | (5,029 | ) | 8,331 | 1,678 | ||||||||||||||||||
| Accounts payable and other current liabilities | (12,375 | ) | 5,936 | (5,487 | ) | 2,038 | |||||||||||||||||
| Long-term liabilities | 1,739 | 3,971 | 174 | 1,033 | |||||||||||||||||||
| Other reconciling items | 745 | 692 | 1,681 | 162 | |||||||||||||||||||
| Total adjustments | 71,284 | (54,648 | ) | 28,564 | (52,406 | ) | |||||||||||||||||
| Net cash provided by operating activities | 70,197 | 41,548 | 32,444 | 34,990 | |||||||||||||||||||
| Investing activities: | |||||||||||||||||||||||
| Purchases of property and equipment | (17,556 | ) | (20,432 | ) | (5,002 | ) | (7,117 | ) | |||||||||||||||
| Purchase of marketable securities | (102,000 | ) | |||||||||||||||||||||
| Proceeds from sales of marketable securities | 24,061 | 151,100 | 23,911 | ||||||||||||||||||||
| Proceeds from sale of assets | 698 | ||||||||||||||||||||||
| Proceeds from sale of debt and equity securities | 2,541 | ||||||||||||||||||||||
| Capitalized software development costs | (22,728 | ) | (12,417 | ) | (8,076 | ) | (5,476 | ) | |||||||||||||||
| Restricted Cash | 1,963 | 1,963 | |||||||||||||||||||||
| Earnout out on disposition | 2,079 | 3,578 | 838 | 996 | |||||||||||||||||||
| Cash paid for acquisitions, net of cash acquired | (2,984 | ) | (54,593 | ) | (165 | ) | (223 | ) | |||||||||||||||
| Net cash used in investing activities | (17,128 | ) | (29,562 | ) | 11,506 | (9,857 | ) | ||||||||||||||||
| Financing activities: | |||||||||||||||||||||||
| Proceeds from stock options exercised | 5,587 | 5,283 | 2,281 | 2,844 | |||||||||||||||||||
| Proceeds from employee stock purchase plan | 666 | 615 | 212 | 240 | |||||||||||||||||||
| Cash paid for debt issuance costs | (1,430 | ) | (1,009 | ) | |||||||||||||||||||
| Repayment of secured financing | (45,000 | ) | (95,000 | ) | (45,000 | ) | (50,000 | ) | |||||||||||||||
| Proceeds from secured financing | 146,000 | 51,000 | |||||||||||||||||||||
| Other | (80 | ) | (21 | ) | |||||||||||||||||||
| Net cash provided by financing activities | (38,827 | ) | 55,468 | (42,528 | ) | 3,075 | |||||||||||||||||
| Effect of exchange rates on cash and cash equivalents | (440 | ) | (588 | ) | (241 | ) | (352 | ) | |||||||||||||||
| Net increase (decrease) in cash and cash equivalents | 13,802 | 66,866 | 1,181 | 27,856 | |||||||||||||||||||
| Cash and cash equivalents — beginning of period | 108,304 | 22,510 | 120,925 | 61,520 | |||||||||||||||||||
| Cash and cash equivalents — end of period | $ | 122,106 | $ | 89,376 | $ | 122,106 | $ | 89,376 | |||||||||||||||
| Eclipsys Corporation | |||||||||||||||||||||||||
| Reconciliation of GAAP (Unaudited) to Non-GAAP Items | |||||||||||||||||||||||||
| (in thousands, except per share amounts) | |||||||||||||||||||||||||
|
Three Months Ended |
Three Months Ended |
Year-to-date |
Year-to-date |
||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||||
| GAAP Revenues | $ | 125,486 | $ | 132,424 | $ | 385,500 | $ | 388,946 | |||||||||||||||||
| Premise acquisition accounting (1) | 594 | 5,945 | |||||||||||||||||||||||
| Non-GAAP revenues | $ | 126,080 | $ | 132,424 | $ | 391,445 | $ | 388,946 | |||||||||||||||||
| GAAP Recurring revenues | $ | 89,425 | $ | 84,757 | $ | 267,435 | $ |
248,963 |
|||||||||||||||||
| Premise acquisition accounting (1) | 154 | 882 | |||||||||||||||||||||||
| Non-GAAP Recurring revenues | $ | 89,579 | $ | 84,757 | $ | 268,317 | $ |
248,963 |
|||||||||||||||||
| GAAP Professional services revenues | $ | 25,468 | $ | 34,028 | $ | 84,616 | $ | 96,042 | |||||||||||||||||
| Premise acquisition accounting (1) | 160 | 1,082 | |||||||||||||||||||||||
| Non-GAAP Professional services revenues | $ | 25,628 | $ | 34,028 | $ | 85,698 | $ | 96,042 | |||||||||||||||||
| GAAP Periodic revenues | $ | 8,577 | $ | 8,809 | $ | 27,230 | $ | 28,116 | |||||||||||||||||
| Premise acquisition accounting (1) | 261 | 3,847 | |||||||||||||||||||||||
| Non-GAAP Periodic revenues | $ | 8,838 | $ | 8,809 | $ | 31,077 | $ | 28,116 | |||||||||||||||||
| GAAP Hardware revenues | $ | 2,015 | $ | 4,849 | $ | 6,217 | $ | 15,925 | |||||||||||||||||
| Premise acquisition accounting (1) | 19 | 134 | |||||||||||||||||||||||
| Non-GAAP Hardware revenues | $ | 2,034 | $ | 4,849 | $ | 6,351 | $ | 15,925 | |||||||||||||||||
| Gross Margin | |||||||||||||||||||||||||
| Revenues | $ | 125,486 | $ | 132,424 | $ | 385,500 | $ | 388,946 | |||||||||||||||||
| Costs of systems and services | (66,455 | ) | (73,166 | ) | (201,644 | ) | (210,042 | ) | |||||||||||||||||
| Cost of hardware | (1,672 | ) | (5,457 | ) | (5,278 | ) | (13,408 | ) | |||||||||||||||||
| GAAP Gross margin (A) | 57,359 | 53,801 | 178,578 | 165,496 | |||||||||||||||||||||
| Adjustments | |||||||||||||||||||||||||
| Premise acquisition accounting (1) | 486 | 5,038 | |||||||||||||||||||||||
| Stock-based compensation expense (2) | 501 | 2,433 | 1,500 | 5,818 | |||||||||||||||||||||
| Headquarter relocation (3) | 419 | ||||||||||||||||||||||||
| Restructuring (4) | 585 | 585 | |||||||||||||||||||||||
| Professional Services Reorganization (5) | 1,080 | 1,080 | |||||||||||||||||||||||
| Non-recurring items (6) | 782 | 782 | |||||||||||||||||||||||
| Non-GAAP gross margin | $ | 58,931 | $ | 58,096 | $ | 185,701 | $ | 173,595 | |||||||||||||||||
| Operating Expenses | |||||||||||||||||||||||||
| GAAP operating expenses (B) | $ | 52,832 | $ | 47,040 | $ | 176,377 | $ | 153,630 | |||||||||||||||||
| Adjustments | |||||||||||||||||||||||||
| Stock-based compensation expense (2) | (3,098 | ) | (3,191 | ) | (13,266 | ) | (7,273 | ) | |||||||||||||||||
| Headquarter relocation (3) | (2,521 | ) | |||||||||||||||||||||||
| Restructuring (4) | (556 | ) | (9,182 | ) | |||||||||||||||||||||
| Professional Services Reorganization (5) | (298 | ) | (298 | ) | |||||||||||||||||||||
| Derivative litigation (7) | (1,353 | ) | |||||||||||||||||||||||
| Amortization (8) | (3,124 | ) | (1,121 | ) | (9,372 | ) | (2,666 | ) | |||||||||||||||||
| EPSI research and development charge (9) | (850 | ) | |||||||||||||||||||||||
| Valuation allowance reversal (10) | (177 | ) | (177 | ) | |||||||||||||||||||||
| Non-GAAP operating expenses | $ | 46,054 | $ | 42,253 | $ | 144,557 | $ | 138,492 | |||||||||||||||||
| Eclipsys Corporation | |||||||||||||||||||||||||
| Reconciliation of GAAP (Unaudited) to Non-GAAP Items | |||||||||||||||||||||||||
| (in thousands, except per share amounts) | |||||||||||||||||||||||||
|
Three Months Ended |
Three Months Ended |
Year-to-date |
Year-to-date |
||||||||||||||||||||||
| Gross Research and Development Expenses | |||||||||||||||||||||||||
| GAAP research and development | $ | 13,204 | $ | 14,195 | $ | 40,568 | $ | 47,102 | |||||||||||||||||
| Adjustments | |||||||||||||||||||||||||
| Stock-based compensation expense (2) | (565 | ) | (401 | ) | (1,564 | ) | (991 | ) | |||||||||||||||||
| Headquarter relocation (3) | (159 | ) | |||||||||||||||||||||||
| Restructuring (4) | (40 | ) | (40 | ) | |||||||||||||||||||||
| Non-GAAP research and development | 12,599 | 13,794 | 38,964 | 45,952 | |||||||||||||||||||||
| Capitalized software and development costs | 8,076 |
|
5,281 |
|
22,728 |
|
12,417 | ||||||||||||||||||
| Non-GAAP gross research and development expenses | $ | 20,675 | $ | 19,075 | $ | 61,692 | $ | 58,369 | |||||||||||||||||
| Operating Income | |||||||||||||||||||||||||
| GAAP operating income | $ | 4,527 | $ | 6,761 | $ | 2,201 | $ | 11,866 | |||||||||||||||||
| Adjustments | |||||||||||||||||||||||||
| Premise acquisition accounting (1) | 486 | 5,038 | |||||||||||||||||||||||
| Stock-based compensation expense (2) | 3,599 | 5,624 | 14,766 | 13,091 | |||||||||||||||||||||
| Headquarter relocation (3) | 2,940 | ||||||||||||||||||||||||
| Restructuring (4) | 1,141 | 9,767 | |||||||||||||||||||||||
| Professional Services Reorganization (5) | 1,378 | 1,378 | |||||||||||||||||||||||
| Non-recurring items (6) | 782 | 782 | |||||||||||||||||||||||
| Derivative litigation (7) | 1,353 | ||||||||||||||||||||||||
| Amortization (8) | 3,124 | 1,121 | 9,372 | 2,666 | |||||||||||||||||||||
| EPSI research and development charge (9) | 850 | ||||||||||||||||||||||||
|
Valuation allowance reversal (10) |
177 | 177 | |||||||||||||||||||||||
| Non-GAAP operating income | $ | 12,877 | $ | 15,843 | $ | 41,144 | $ | 35,103 | |||||||||||||||||
| Pre-tax income | |||||||||||||||||||||||||
| GAAP pre-tax income | $ | 4,065 | $ | 8,080 | $ | 2,932 | $ | 19,647 | |||||||||||||||||
| Adjustments | |||||||||||||||||||||||||
| Premise acquisition accounting (1) | 486 | 5,038 | |||||||||||||||||||||||
| Stock-based compensation expense (2) | 3,599 | 5,624 | 14,766 | 13,091 | |||||||||||||||||||||
| Headquarter relocation (3) | 2,940 | ||||||||||||||||||||||||
| Restructuring (4) | 1,141 | 9,767 | |||||||||||||||||||||||
| Professional Services Reorganization (5) | 1,378 | 1,378 | |||||||||||||||||||||||
| Non-recurring items (6) | 782 | 782 | |||||||||||||||||||||||
| Derivative litigation (7) | 1,353 | ||||||||||||||||||||||||
| Amortization (8) | 3,124 | 1,121 | 9,372 | 2,666 | |||||||||||||||||||||
| EPSI research and development charge (9) | 850 | ||||||||||||||||||||||||
|
Valuation allowance reversal (10) |
177 |
177 |
|||||||||||||||||||||||
| Gain on sale of assets (11) | (3,482 | ) | |||||||||||||||||||||||
| ARS Sale (12) | 1,114 | 1,114 | |||||||||||||||||||||||
| Non-GAAP pre-tax income | $ | 13,529 | $ | 17,162 | $ | 42,989 | $ | 39,402 | |||||||||||||||||
| Eclipsys Corporation | |||||||||||||||||||||||||
| Reconciliation of GAAP (Unaudited) to Non-GAAP Items | |||||||||||||||||||||||||
| (in thousands, except per share amounts) | |||||||||||||||||||||||||
|
Three Months Ended |
Three Months Ended |
Year-to-date |
Year-to-date |
||||||||||||||||||||||
| Net Income | |||||||||||||||||||||||||
| GAAP net income | $ | 3,880 | $ | 87,396 | $ | (1,087 | ) | $ | 96,196 | ||||||||||||||||
| Adjustments | |||||||||||||||||||||||||
| Premise acquisition accounting (1) | 288 | 3,129 | |||||||||||||||||||||||
| Stock-based compensation expense (2) | 2,488 | 5,624 | 10,153 | 13,091 | |||||||||||||||||||||
| Headquarter relocation (3) | 2,940 | ||||||||||||||||||||||||
| Restructuring (4) | 684 | 6,066 | |||||||||||||||||||||||
| Professional Services Reorganization (5) | 1,378 | 1,378 | |||||||||||||||||||||||
| Non-recurring items (6) | 782 | 782 | |||||||||||||||||||||||
| Derivative litigation (7) | 1,353 | ||||||||||||||||||||||||
| Amortization (8) | 1,923 | 1,121 | 5,821 | 2,666 | |||||||||||||||||||||
| EPSI research and development charge (9) | 850 | ||||||||||||||||||||||||
| Valuation allowance reversal (10) | (79,954 | ) | (79,954 | ) | |||||||||||||||||||||
| Gain on sale of assets (11) | (3,227 | ) | |||||||||||||||||||||||
| ARS Sale (12) | 692 | 692 | |||||||||||||||||||||||
| State tax provision (13) | 1,540 | ||||||||||||||||||||||||
| Taxes (14) | (1,727 | ) | 1,925 | ||||||||||||||||||||||
| Non-GAAP net income | $ | 8,228 | $ | 16,347 | $ | 26,699 | $ | 37,615 | |||||||||||||||||
| Diluted earnings per share | |||||||||||||||||||||||||
| Diluted earnings per share | $ | 0.07 | $ | 1.58 | $ | (0.02 | ) | $ | 1.74 | ||||||||||||||||
| Adjustments | |||||||||||||||||||||||||
| Premise acquisition accounting (1) | 0.01 | 0.05 | |||||||||||||||||||||||
| Stock-based compensation expense (2) | 0.04 | 0.10 | 0.18 | 0.24 | |||||||||||||||||||||
| Headquarter relocation (3) | 0.05 | ||||||||||||||||||||||||
| Restructuring (4) | 0.01 | 0.11 | |||||||||||||||||||||||
| Professional Services Reorganization (5) | 0.02 | 0.02 | |||||||||||||||||||||||
| Non-recurring items (6) | 0.01 | 0.01 | |||||||||||||||||||||||
| Derivative litigation (7) | 0.02 | ||||||||||||||||||||||||
| Amortization (8) | 0.03 | 0.02 | 0.10 | 0.04 | |||||||||||||||||||||
| EPSI research and development charge (9) | 0.02 | ||||||||||||||||||||||||
| Valuation allowance reversal (10) | (1.45 | ) | (1.45 | ) | |||||||||||||||||||||
| Gain on sale of assets (11) | (0.06 | ) | |||||||||||||||||||||||
| ARS Sale (12) | 0.01 | 0.01 | |||||||||||||||||||||||
| State tax provision (13) | 0.03 | ||||||||||||||||||||||||
| Taxes (14) | (0.03 | ) | 0.03 | ||||||||||||||||||||||
| Non-GAAP diluted earnings per share | $ | 0.14 | $ | 0.30 | $ | 0.47 | $ | 0.68 | |||||||||||||||||
| Eclipsys Corporation | |||
| Reconciliation NOTES of GAAP (Unaudited) to Non-GAAP Items | |||
| 1 | Deferred revenue adjustments net of deferred costs adjustments related to the Company's December 2008 acquisition of Premise Corporation. The amounts represent the reduction of deferred revenue and related deferred costs acquired from Premise as a result of purchase accounting adjustments. | ||
| 2 | Represents stock based compensation expense. | ||
| 3 | Amounts incurred to relocate the corporate headquarters from Boca Raton to Atlanta, including salaries and benefits associated with the termination of employees not relocating and other administrative costs associated with the move. | ||
| 4 | Severance related activity primarily in the Company's professional services organization. Also includes severance costs in the second quarter of 2009 associated with the departure of the Company's CEO. | ||
| 5 | Severance costs associated with the reorganization of the Company's professional services organization in the third quarter of 2008. | ||
| 6 | Nonrecurring adjustments from prior years. | ||
| 7 | Charges incurred as a result of the voluntary stock option review completed in the second quarter 2007 and are related primarily to legal fees associated with the subsequent derivative litigation. These costs are net of insurance recoveries in the second quarter 2008. | ||
| 8 | Amortization of intangible assets associated with 2008 acquisitions. | ||
| 9 | Write off of in-process research and development associated with our acquisition of EPSI. | ||
| 10 | Income tax benefit associated with the reversal of the Company's deferred tax valuation allowance. | ||
| 11 | Gain resulted from the achievement of certain post-closing milestones associated with the December 2007 sale of the Clinical Practice Model Resource Center (CPMRC) business. | ||
| 12 | Realized loss on the sale of one of the Company's auction rate securities for $23.6 million. | ||
| 13 | Accounting rule issued related to Uncertainty in Income Taxes clarified the criteria for recognizing income tax benefits. This charge was recorded as a result of the review of uncertain state tax positions. | ||
| 14 | Represents a combination of discrete tax items, primarily deferred tax asset adjustments for Canadian research and development credits in the second quarter and non-GAAP tax adjustments to reflect the non-GAAP annual effective tax rate. | ||
| Notes | |||
| A |
GAAP gross margin equals revenue less costs of systems and services and costs of hardware. |
||
| B | GAAP operating expenses include sales and marketing expense, research and development expense , general and administrative expense, depreciation and amortization expense, restructuring charge, and in process research and development charge. | ||
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