ATLANTA--(BUSINESS WIRE)--May 4, 2010--Eclipsys Corporation (NASDAQ: ECLP), The Outcomes Company®, today announced results for the first quarter ended March 31, 2010.

Revenues for the quarter ended March 31, 2010 were $128.4 million, compared to revenues of $130.2 million for the quarter ended March 31, 2009.

On a GAAP basis, net income for the first quarter 2010 was $5.4 million, or $0.09 per diluted common share, compared to net loss of $0.9 million, or $0.02 per diluted common share in the first quarter 2009.

Non-GAAP net income for the first quarter 2010 was $10.7 million, or $0.19 per diluted common share, compared to non-GAAP net income for the first quarter 2009 of $9.6 million, or $0.17 per diluted common share.

A reconciliation of GAAP to non-GAAP results is included in the attached tables.

“We started 2010 with strong earnings and strong new client bookings,” said Philip M. Pead, Eclipsys president and chief executive officer. “With the recent release of Sunrise Enterprise™ 5.5, we have significantly improved our competitive position and our ability to win new business in front of the growing market opportunity resulting from the American Recovery and Reinvestment Act.”

In the first quarter 2010, Eclipsys repaid $14.0 million of debt on its credit facility, reducing the company’s long-term debt to $15.0 million. These payments were funded through available cash and operating cash flows, and Eclipsys ended the quarter with $118.7 million of cash and $81.4 million in long-term investments. On April 30, Eclipsys paid down an additional $15.0 million on its credit facility, reducing the company’s long-term debt to zero.

Eclipsys 2010 projected non-GAAP results exclude stock-based compensation expense and acquisition related amortization. Eclipsys non-GAAP results may also exclude other items that the company does not consider indicative of its underlying business performance.

Eclipsys executives will discuss the first-quarter results on a teleconference at 4:30 p.m. Eastern time on May 4. Persons interested in participating in the teleconference should call (800) 288-8967 (in the U.S.) or (612) 332-0355 (international) 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.

About two hours after its completion, an audio replay of the conference call will be available on www.eclipsys.com for approximately 48 hours.

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.

The company has provided net income and earnings per share financial measures on a non-GAAP basis for the three months ended March 31, 2009 and March 31, 2010, which exclude non-cash stock-based compensation expense, 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. When considered in conjunction with comparable GAAP financial measures, management believes that the non-GAAP financial measures provide useful supplemental information to management and investors to facilitate the understanding and evaluation of the company’s underlying 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 also 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 company omits non-cash stock-based compensation because such expense can vary significantly between periods as a result of the timing (which determines various input assumptions that impacts the compensation expense amount) and number of new equity-based incentive awards in any one period, including grants in connection with acquisitions. The company omits non-cash acquisition-related amortization expense arising from the acquisition of intangible assets in presenting non-GAAP earnings because such expense in any one period may not directly correlate to its underlying business performance and because such expense can vary significantly between periods as a result of new acquisitions and full amortization of previously acquired intangible assets. This adjustment also provides management and investors with consistent measures of performance both before and after including such non-cash acquisition-related amortization 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. Although the company has provided 2010 guidance for non-GAAP diluted earnings per share and non-GAAP operating income margin, a quantitative reconciliation to the equivalent GAAP guidance financial measures is not available given the number of variables that affect the reconciliation.

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, The Outcomes Company, and Sunrise Enterprise are either registered trademarks or trademarks of Eclipsys Corporation (or its subsidiaries) in the United States and certain other countries.



Eclipsys Corporation
GAAP Income Statements (unaudited)
(in thousands, except per share amounts)

		GAAP
		Three Months Ended
		March 31, 2010			March 31, 2009			$ Change			% Change
Revenues:
	Systems and services	$	125,557		$	128,137		$	(2,580	)	-2.0	%
	Hardware		2,803			2,029			774		38.1	%
	Total revenues		128,360			130,166			(1,806	)	-1.4	%

Cost and expenses:
	Costs of systems and services		65,199			66,874			(1,675	)	-2.5	%
	Costs of hardware		2,452			1,656			796		48.1	%
	Sales and marketing		19,748			22,751			(3,003	)	-13.2	%
	Research and development		13,461			13,493			(32	)	-0.2	%
	General and administrative		8,567			12,021			(3,454	)	-28.7	%
	Depreciation and amortization		8,226			8,034			192		2.4	%
	Restructuring		-			5,434			(5,434	)	-100.0	%
	In-process research and development charge		-			-			-
	Total costs and expenses		117,653			130,263			(12,610	)	-9.7	%

Income (loss) from operations			10,707			(97	)		10,804		*
Gain (loss) on sale of assets			-			400			(400	)	-100.0	%
Gain (loss) on ARS			(226	)		(158	)		(68	)	-43.0	%
Interest expense			(344	)		(1,143	)		799		69.9	%
Interest income			417			847			(430	)	-50.8	%
Income (loss) before income taxes			10,554			(151	)		10,705		*
Provision for income taxes			5,128			714			4,414		618.2	%
Net income (loss)		$	5,426		$	(865	)	$	6,291		*

	Basic EPS:
Net income (loss)		$	5,426		$	(865	)	$	6,291		*
Less: Income allocated to participating securities			31			-			31
Net income (loss) available to common shareholders		$	5,395		$	(865	)	$	6,260		*
	Basic weighted average common shares outstanding		56,838			55,470			1,368		2.5	%
	Basic net income (loss) per common share	$	0.09		$	(0.02	)	$	0.11		*

	Diluted EPS:
Net income (loss)		$	5,426		$	(865	)	$	6,291		*
Less: Income allocated to participating securities			30			-			30
Net income (loss) available to common shareholders		$	5,396		$	(865	)	$	6,261		*
	Basic weighted average common shares outstanding		56,838			55,470			1,368		2.5	%
	Dilutive effect of potential common shares		891			-			891
Diluted weighted average shares common outstanding			57,729			55,470			2,259		4.1	%
Diluted earnings (loss) per common share		$	0.09		$	(0.02	)	$	0.11		*

	* - not meaningful

ECLIPSYS CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands, except share and per share amounts)



			As of
			March 31, 2010	December 31, 2009
			Unaudited
Assets
Current assets:
	Cash		$ 118,668	$ 123,160
	Marketable securities		-	-
	Accounts receivable, net of allowance for doubtful accounts of $2,855 and $2,994, respectively		113,141	111,712
	Prepaid expenses		26,895	26,832
	Other current assets		3,484	4,250
		Total current assets	262,188	265,954

Long-term investments			81,395	85,988
Property and equipment, net			58,562	56,579
Capitalized software development costs, net			56,123	51,889
Acquired technology, net			27,079	29,557
Intangible assets, net			6,699	7,411
Goodwill			100,008	100,008
Deferred tax asset			82,200	86,639
Other assets			12,105	13,039
		Total assets	$ 686,359	$ 697,064



Liabilities and Stockholders’ Equity
Current liabilities:
	Deferred revenue		$ 138,790	$ 135,185
	Accounts payable		14,389	14,752
	Accrued compensation costs		24,568	34,034
	Deferred tax liability		6,033	6,033
	Other current liabilities		18,582	20,994
		Total current liabilities	202,362	210,998

	Deferred revenue		3,892	4,896
	Long term debt and capital lease obligations		15,676	29,727
	Other long-term liabilities		15,761	15,616
		Total liabilities	237,691	261,237

Stockholders’ equity:
	Common stock, $0.01 par value, 200,000,000 shares authorized; issued and outstanding, 57,423,573 and 57,162,466, respectively		574	572
	Additional paid-in capital		605,876	599,111
	Accumulated deficit		(156,578)	(162,004)
	Accumulated other comprehensive income		(1,204)	(1,852)
		Total stockholders’ equity	448,668	435,827
		Total liabilities and stockholders’ equity	$ 686,359	$ 697,064

ECLIPSYS CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)
(in thousands)

				For the Three Months Ended March 31,
					2010			2009

Operating activities:
	Net income			$	5,426		$	(865	)
	Adjustments to reconcile net income to net cash
		provided by operating activities:
		Depreciation and amortization			12,336			12,035
		Provision for bad debt			450			1,046
		Unrealized (gain)/loss on investments, net			226			158
		Stock compensation expense			3,681			4,408
		Deferred income taxes			4,545			452
		Gain on sale of assets			-			(400	)
	Changes in operating assets and liabilities, excluding the effect of acquisitions and dispositions:
		Accounts receivable			(1,470	)		3,695
		Prepaid expenses and other current assets			659			(1,454	)
		Other assets			704			(237	)
		Deferred revenue			2,531			(807	)
		Accrued compensation			(9,437	)		7,465
		Accounts payable and other current liabilities			(3,809	)		(6,596	)
		Long-term liabilities			27			751
		Other			8			85
			Total adjustments		10,451			20,601
			Net cash provided by operating activities		15,877			19,736
Investing activities:
		Purchases of property and equipment			(6,661	)		(7,273	)
		Proceeds from sales of marketable securities			4,575			150
		Capitalized software development costs			(8,091	)		(7,216	)
		Earnout out on disposition			-			842
		Cash paid for acquisitions, net of cash acquired			-			(2,763	)
			Net cash used in investing activities		(10,177	)		(16,260	)
Financing activities:
		Proceeds from stock options exercised			3,431			74
		Proceeds from employee stock purchase plan			201			242
		Repayment of secured financing			(14,000	)		-
		Other			(48	)		-
			Net cash provided by (used in) financing activities		(10,416	)		316

Effect of exchange rates on cash and cash equivalents					224			(214	)
Net increase (decrease) in cash and cash equivalents					(4,492	)		3,578
Cash and cash equivalents — beginning of period					123,160			108,304
Cash and cash equivalents — end of period				$	118,668		$	111,882

Eclipsys Corporation
Stock-Based Compensation Expense (unaudited)
(in thousands)


		Three Months		Three Months		Three Months		Three Months				Three Months		Three Months		Three Months		Three Months
		Ended		Ended		Ended		Ended				Ended		Ended		Ended		Ended
		March 31, 2009		June 30, 2009		September 30, 2009		December 31, 2009			2009	March 31, 2010		June 30, 2010		September 30, 2010		December 31, 2010			2010

Cost and expenses:
	Costs of systems and services	$	493	$	506	$	501	$	475	$	1,975	$	465							$	465
	Costs of hardware										-										-
	Sales and marketing		2,494		4,237		1,774		1,373		9,878		1,931								1,931
	Research and development		453		546		565		706		2,270		481								481
	General and administrative		968		1,470		759		840		4,037		804								804
	Total costs and expenses	$	4,408	$	6,759	$	3,599	$	3,394	$	18,160	$	3,681	$	-	$	-	$	-	$	3,681

Eclipsys Corporation
Reconciliation of GAAP (Unaudited) to Non-GAAP Items
(in thousands, except per share amounts)

			Three Months Ended March 31, 2010			Three Months Ended March 31, 2009

Revenues:
	GAAP Revenues		$	128,360		$	130,166
		Premise acquisition accounting ⁽¹⁾		-			1,739
	Non-GAAP revenues		$	128,360		$	131,905

	GAAP Recurring revenues		$	94,309		$	88,101
		Premise acquisition accounting ⁽¹⁾		-			287
	Non-GAAP Recurring revenues		$	94,309		$	88,388

	GAAP Professional services revenues		$	22,747		$	27,346
		Premise acquisition accounting ⁽¹⁾		-			240
	Non-GAAP Professional services revenues		$	22,747		$	27,586

	GAAP Periodic revenues		$	8,501		$	12,690
		Premise acquisition accounting ⁽¹⁾		-			1,199
	Non-GAAP Periodic revenues		$	8,501		$	13,889

	GAAP Hardware revenues		$	2,803		$	2,029
		Premise acquisition accounting ⁽¹⁾		-			13
	Non-GAAP Hardware revenues		$	2,803		$	2,042

Gross Margin
		Revenues	$	128,360		$	130,166
		Costs of systems and services		65,199			66,874
		Costs of hardware		2,452			1,656
	GAAP Gross margin ^(A)			60,709			61,636
		Adjustments
		Premise acquisition accounting ⁽¹⁾					1,494
		Stock-based compensation expense ⁽²⁾		465			493

	Non-GAAP gross margin		$	61,174		$	63,623

	GAAP gross margin percentage			47.3	%		47.4	%
	Non-GAAP gross margin percentage			47.7	%		48.2	%

Operating Expenses
	GAAP operating expenses ^(B)		$	50,002		$	61,733
		Adjustments
		Stock-based compensation expense ⁽²⁾		(3,216	)		(3,915	)
		Restructuring ⁽³⁾					(5,434	)
		Amortization ⁽⁴⁾		(3,124	)		(3,124	)

	Non-GAAP operating expenses		$	43,662		$	49,260

Eclipsys Corporation
Reconciliation of GAAP (Unaudited) to Non-GAAP Items
(in thousands, except per share amounts)

			Three Months Ended March 31, 2010			Three Months Ended March 31, 2009


Gross Research and Development Expenses
	GAAP research and development		$	13,461		$	13,493
		Adjustments
		Stock-based compensation expense ⁽²⁾		(481	)		(453	)

	Non-GAAP research and development			12,980			13,040
	Capitalized software and development costs			8,091			7,216
	Non-GAAP gross research and development expenses		$	21,071		$	20,256


Operating Income
	GAAP operating income		$	10,707		$	(97	)
		Adjustments
		Premise acquisition accounting ⁽¹⁾		-			1,494
		Stock-based compensation expense ⁽²⁾		3,681			4,408
		Restructuring ⁽³⁾	-				5,434
		Amortization ⁽⁴⁾		3,124			3,124

	Non-GAAP operating income		$	17,512		$	14,363

	GAAP Operating Margin			8.3	%		-0.1	%
	Non-GAAP Operating Margin			13.6	%		10.9	%


Pre-tax income
	GAAP pre-tax income		$	10,554		$	(151	)
		Adjustments
		Premise acquisition accounting ⁽¹⁾		-			1,494
		Stock-based compensation expense ⁽²⁾		3,681			4,408
		Restructuring ⁽³⁾		-			5,434
		Amortization ⁽⁴⁾		3,124			3,124

	Non-GAAP pre-tax income		$	17,359		$	14,309

Eclipsys Corporation
Reconciliation of GAAP (Unaudited) to Non-GAAP Items
(in thousands, except per share amounts)

			Three Months Ended March 31, 2010		Three Months Ended March 31, 2009



Net Income
	GAAP net income		$	5,426	$	(865	)
		Adjustments
		Premise acquisition accounting ⁽¹⁾		-		1,031
		Stock-based compensation expense ⁽²⁾		3,387		3,529
		Restructuring ⁽³⁾	-			3,739
		Amortization ⁽⁴⁾		1,934		2,151
				-
	Non-GAAP net income		$	10,747	$	9,585


Diluted earnings per share
	Diluted earnings per share		$	0.09	$	(0.02	)
		Adjustments
		Premise acquisition accounting ⁽¹⁾		-		0.02
		Stock-based compensation expense ⁽²⁾		0.06		0.06
		Restructuring ⁽³⁾		-		0.07
		Amortization ⁽⁴⁾		0.03		0.04

	Non-GAAP diluted earnings per share		$	0.19	$	0.17

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	Stock based compensation expense.

	3	Severance related activity primarily in the Company's professional services organization.

	4	Amortization of intangible assets associated with 2008 acquisitions.

		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.

CONTACT:
Eclipsys
Jason Cigarran, 404-847-5965
Vice President, Investor Relations
jason.cigarran@eclipsys.com