(Source: Business Wire)
Eclipsys Corporation® (NASDAQ: ECLP), The Outcomes Company®, today announced results for the quarter ended June 30, 2009.
GAAP Results
Revenues for the quarter ended June 30, 2009 were $129.8 million, compared to revenues of $132.1 million for the quarter ended June 30, 2008.
GAAP net loss for the second quarter of 2009 was $4.1 million, or $0.07 per diluted common share, compared to GAAP net income of $8.5 million, or $0.15 per share on a diluted basis for the second quarter of 2008.
Non-GAAP Results
Non-GAAP net income for the second quarter of 2009 was $8.9 million, or $0.16 per diluted common share, compared to second quarter 2008 non-GAAP net income of $13.2 million, or $0.24 per diluted share.
Non-GAAP net income excludes stock-based compensation expense, acquisition related amortization, and certain additional items that the company does not consider to be indicative of its underlying business performance. For second quarter 2008, these additional items were costs associated with the relocation of the corporate headquarters from Boca Raton, FL, to Atlanta, GA; a gain resulting from completion of post-closing milestones associated with the sale of the Clinical Practice Model Resource Center business, which was completed in December 2007; and a reduction in general and administrative expenses associated with insurance recoveries from our previously disclosed derivative litigation that was ultimately settled in September 2008.
For second quarter 2009, these additional items were severance costs primarily associated with the resignation of the company's former chief executive officer; and exclusion of tax expense related to discrete tax items in the quarter, primarily deferred tax asset adjustments for Canadian research and development credits, and non-GAAP tax adjustments to reflect the non-GAAP annual effective tax rate. Additionally, we excluded the effect of purchase accounting adjustments in connection with the acquisition of Premise Corporation, which was completed in December 2008.
A reconciliation of GAAP to non-GAAP results is included in the attached tables.
"In reviewing our operations and market potential over the last three months, it is clear that we have a significant opportunity to grow revenues while also increasing profitability," said Philip M. Pead, Eclipsys president and chief executive officer. "The American Recovery and Reinvestment Act of 2009 (ARRA) is driving increased activity with both clients and prospects. We expect this activity to accelerate as hospitals and physician practices gain a clearer understanding of what constitutes 'meaningful use.' In addition, we have several initiatives underway that will enable us to be more cost efficient, and we expect the positive effects on margins from these initiatives to become apparent in 2010 and beyond."
Change to Projected Non-GAAP Tax Rate and 2009 Financial Guidance
Eclipsys now anticipates that the full year 2009 non-GAAP income tax rate will be in the range of 37 to 38 percent, compared to the 33 to 35 percent tax rate previously communicated on the company's first quarter 2009 conference call. This increase is primarily due to lower estimates of available research and development tax credits and revisions in projected income taxes related to foreign earnings.
Due to this anticipated increase in the company's effective income tax rate for 2009, Eclipsys non-GAAP EPS for 2009 is now expected to range from $0.55 to $0.60.
Conference call
Eclipsys executives will discuss the second-quarter results on a teleconference scheduled for 4:30 p.m. Eastern time on August 6. Persons interested in participating in the teleconference should call (800) 230-1059 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 June 30, 2009 and June 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 second quarter 2009 financial results, 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 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 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 Non-GAAP Income Statements (in thousands, except per share amounts) Non-GAAP Non-GAAP Non-GAAP Non-GAAP Three Months Ended June 30, 2009 Three Months Ended June 30, 2008 $ Change % Change Year-to-date June 30, 2009 Year-to-date June 30, 2008 $ Change % Change Revenues: Systems and services $ 131,185 $ 126,308 $ 4,877 3.9 % $ 261,048 $ 245,446 $ 15,602 6.4 % Hardware 2,275 5,834 (3,559 ) -61.0 % 4,317 11,076 (6,759 ) -61.0 % Total revenues 133,460 132,142 1,318 1.0 % 265,365 256,522 8,843 3.4 % Cost and expenses: Costs of systems and services 68,334 67,413 921 1.4 % 134,916 133,072 1,844 1.4 % Costs of hardware 1,979 3,615 (1,636 ) -45.3 % 3,679 7,951 (4,272 ) -53.7 % Sales and marketing 21,016 20,916 100 0.5 % 41,272 40,242 1,030 2.6 % Research and development 13,326 15,465 (2,139 ) -13.8 % 26,365 32,158 (5,793 ) -18.0 % General and administrative 9,908 7,051 2,857 40.5 % 20,962 14,879 6,083 40.9 % Depreciation and amortization 4,993 4,619 374 8.1 % 9,904 8,961 943 10.5 % Restructuring - - - - - - In-process research and development charge - - - - - - Total costs and expenses 119,556 119,079 477 0.4 % 237,098 237,263 (165 ) -0.1 % Income (loss) from operations 13,904 13,063 841 6.4 % 28,267 19,259 9,008 46.8 % Gain (loss) on sale of assets 838 - 838 * N/M 1,237 33 1,204 * N/M Gain (loss) on ARS 691 - 691 * N/M 533 - 533 * N/M Interest expense (961 ) (457 ) (504 ) 110.3 % (2,105 ) (720 ) (1,385 ) 192.4 % Interest income 681 1,285 (604 ) -47.0 % 1,528 3,667 (2,139 ) -58.3 % Income (loss) before income taxes 15,153 13,891 1,262 9.1 % 29,460 22,239 7,221 32.5 % Provision for income taxes 6,265 737 5,528 * N/M 10,989 971 10,018 * N/M Net income (loss) $ 8,888 $ 13,154 $ (4,266 ) -32.4 % $ 18,471 $ 21,268 $ (2,797 ) -13.2 % Income allocated to participating securities 147 175 (28 ) -16.0 % 288 253 35 13.8 % Net income (loss) available to common stockholders $ 8,741 $ 12,979 $ (4,238 ) -32.7 % $ 18,183 $ 21,015 $ (2,832 ) -13.5 % Diluted income (loss) common per share $ 0.16 $ 0.24 $ (0.08 ) -33.3 % $ 0.33 $ 0.39 $ (0.06 ) -15.4 % Shares used in computing earnings (loss) per common share Basic 55,710 53,657 2,053 3.8 % 55,588 53,595 1,993 3.7 % Diluted 56,346 54,468 1,878 3.4 % 55,914 54,481 1,433 2.6 % -------------------------------------------------------------------------------
Eclipsys Corporation GAAP Income Statements (in thousands, except per share amounts) GAAP GAAP GAAP GAAP Three Months Ended June 30, 2009 Three Months Ended June 30, 2008 $ Change % Change Year-to-date June 30, 2009 Year-to-date June 30, 2008 $ Change % Change Revenues: Systems and services $ 127,675 $ 126,308 $ 1,367 1.1 % $ 255,812 $ 245,446 $ 10,366 4.2 % Hardware 2,173 5,834 (3,661 ) -62.8 % 4,202 11,076 (6,874 ) -62.1 % Total revenues 129,848 132,142 (2,294 ) -1.7 % 260,014 256,522 3,492 1.4 % Cost and expenses: Costs of systems and services 68,315 69,316 (1,001 ) -1.4 % 135,189 136,876 (1,687 ) -1.2 % Costs of hardware 1,950 3,615 (1,665 ) -46.1 % 3,606 7,951 (4,345 ) -54.6 % Sales and marketing 27,394 22,781 4,613 20.2 % 50,144 43,652 6,492 14.9 % Research and development 13,872 15,753 (1,881 ) -11.9 % 27,364 32,907 (5,543 ) -16.8 % General and administrative 12,429 7,713 4,716 61.1 % 24,451 18,676 5,775 30.9 % Depreciation and amortization 8,117 5,740 2,377 41.4 % 16,152 10,506 5,646 53.7 % Restructuring - - - 5,434 - 5,434 In-process research and development charge - - - - 850 (850 ) -100.0 % Total costs and expenses 132,077 124,918 7,159 5.7 % 262,340 251,418 10,922 4.3 % Income (loss) from operations (2,229 ) 7,224 (9,453 ) -130.9 % (2,326 ) 5,104 (7,430 ) -145.6 % Gain (loss) on sale of assets 838 1,451 (613 ) -42.2 % 1,237 3,515 (2,278 ) -64.8 % Gain (loss) on ARS 691 - 691 533 - 533 Interest expense (961 ) (457 ) (504 ) 110.3 % (2,105 ) (720 ) (1,385 ) 192.4 % Interest income 681 1,285 (604 ) -47.0 % 1,528 3,667 (2,139 ) -58.3 % Income (loss) before income taxes (980 ) 9,503 (10,483 ) -110.3 % (1,133 ) 11,566 (12,699 ) -109.8 % Provision for income taxes 3,120 992 2,128 214.5 % 3,834 2,766 1,068 38.6 % Net income (loss) $ (4,100 ) $ 8,511 $ (12,611 ) -148.2 % $ (4,967 ) $ 8,800 $ (13,767 ) -156.4 % Basic EPS: Net income (loss) $ (4,100 ) $ 8,511 (12,611 ) -148.2 % $ (4,967 ) $ 8,800 (13,767 ) -156.4 % Less: Income allocated to participating securities - 115 (115 ) -100.0 % - 107 (107 ) -100.0 % Net income (loss) available to common shareholders $ (4,100 ) $ 8,396 (12,496 ) -148.8 % $ (4,967 ) $ 8,693 (13,660 ) -157.1 % Basic weighted average common shares outstanding 55,710 53,657 2,053 3.8 % 55,588 53,595 1,993 3.7 % Basic net income (loss) per common share $ (0.07 ) $ 0.16 $ (0.23 ) -143.8 % $ (0.09 ) $ 0.16 $ (0.25 ) -156.3 % Diluted EPS: Net income (loss) (4,100 ) 8,511 (12,611 ) -148.2 % (4,967 ) 8,800 (13,767 ) -156.4 % Less: Income allocated to participating securities - 113 (113 ) -100.0 % - 105 (105 ) -100.0 % Net income (loss) available to common shareholders $ (4,100 ) $ 8,398 (12,498 ) -148.8 % $ (4,967 ) $ 8,695 (13,662 ) -157.1 % Basic weighted average common shares outstanding 55,710 53,657 2,053 3.8 % 55,588 53,595 1,993 3.7 % Dilutive effect of potential common shares - 811 (811 ) -100.0 % - 886 (886 ) -100.0 % Diluted weighted average shares common outstanding 55,710 54,468 1,242 2.3 % 55,588 54,481 1,107 2.0 % Diluted earnings (loss) per common share $ (0.07 ) $ 0.15 $ (0.22 ) -146.7 % $ (0.09 ) $ 0.16 $ (0.25 ) -156.3 % -------------------------------------------------------------------------------
ECLIPSYS CORPORATION AND SUBSIDIARIES Consolidated Balance Sheets (in thousands, except share and per share amounts) June 30, December 31, 2009 2008 (Unaudited) Assets Current assets: Cash $ 120,925 $ 108,304 Marketable securities 154 Accounts receivable, net of allowance for doubtful accounts of $3,499and $4,912, respectively 111,258 121,811 Prepaid expenses 24,197 23,975 Deferred tax asset 343 2,643 Other current assets 4,181 5,712 Total current assets 260,904 262,599 Long-term investments 108,806 107,215 Property and equipment, net 58,436 53,996 Capitalized software development costs, net 44,908 37,718 Acquired technology, net 34,570 39,710 Intangible assets, net 8,834 10,258 Deferred tax asset 88,789 89,063 Goodwill 98,030 96,973 Other assets 14,862 11,343 Total assets $ 718,139 $ 708,875 Liabilities and Stockholders' Equity Current liabilities: Deferred revenue $ 119,534 $ 123,733 Accounts payable 14,452 20,924 Accrued compensation costs 25,080 16,457 Deferred tax liability 2,939 Other current liabilities 21,159 22,481 Total current liabilities 183,164 183,595 Deferred revenue 3,724 5,743 Long term debt & capital leases 105,917 105,000 Other long-term liabilities 15,403 16,540 Total liabilities 308,208 310,878 Stockholders' equity: Common stock, $0.01 par value, 200,000,000 shares authorized;issued and outstanding, 56,512,071 and 56,126,674, respectively 565 561 Additional paid-in capital 584,317 569,717 Accumulated deficit (169,679 ) (164,712 ) Accumulated other comprehensive income (5,272 ) (7,569 ) Total stockholders' equity 409,931 397,997 Total liabilities and stockholders' equity $ 718,139 $ 708,875 -------------------------------------------------------------------------------
Exception caught in main.
Eclipsys Corporation Reconciliation of GAAP to Non-GAAP Pro Forma Results (in thousands, except per share amounts) GAAP Non-GAAP Three Months Ended June 30, 2009 (Unaudited) Stock-based comp expense (1) Restructuring (2) Amortization (3) Premise (4) Tax (5) Three Months Ended June 30, 2009 (Unaudited) Revenues: Systems and services $ 127,675 $ 3,510 $ 131,185 Hardware 2,173 102 2,275 Total revenues 129,848 - - - 3,612 - 133,460 Cost and expenses: Costs of systems and services 68,315 (506 ) 525 68,334 Costs of hardware 1,950 29 1,979 Sales and marketing 27,394 (4,237 ) (2,141 ) 21,016 Research and development 13,872 (546 ) 13,326 General and administrative 12,429 (1,470 ) (1,051 ) 9,908 Depreciation and amortization 8,117 (3,124 ) 4,993 Restructuring - In-process research and development charge - Total costs and expenses 132,077 (6,759 ) (3,192 ) (3,124 ) 554 - 119,556 Income (loss) from operations (2,229 ) 6,759 3,192 3,124 3,058 - 13,904 Gain/(loss) on sale of assets 838 838 Gain (loss) on ARS 691 691 Interest expense (961 ) (961 ) Interest income 681 681 Income (loss) before income taxes (980 ) 6,759 3,192 3,124 3,058 - 15,153 Provision for income taxes 3,120 2,623 1,549 1,377 1,248 (3,652 ) 6,265 Net income (loss) A service of YellowBrix, Inc.
