EX-99.1 2 a5903268-ex991.htm EXHIBIT 99.1

Exhibit 99.1

Eclipsys Announces Fourth-Quarter and Year-End 2008 Results

ATLANTA--(BUSINESS WIRE)--February 24, 2009--Eclipsys Corporation® (NASDAQ: ECLP), The Outcomes Company®, today announced results for the fourth quarter and year ended December 31, 2008.

Revenues

Revenues for the quarter ended December 31, 2008 were $126.8 million, compared to revenues of $124.4 million for the quarter ended December 31, 2007. Revenues for the year ended 2008 were $515.8 million, compared to $477.5 million for the year ended 2007.

GAAP Net Income

On a GAAP basis, net income for the fourth quarter of 2008 was $3.3 million, or $0.06 per diluted common share, compared to net income of $24.2 million, or $0.44 per diluted common share in the fourth quarter of 2007. GAAP net income for the year ended December 31, 2008 was $99.5 million, or $1.81 per diluted common share, compared to $41.1 million, or $0.76 per diluted common share in 2007.

Non-GAAP Net Income

Non-GAAP net income for the fourth quarter 2008 was $4.1 million, or $0.07 per diluted common share, compared to non-GAAP net income for the fourth quarter 2007 of $15.8 million, or $0.29 per diluted common share. Non-GAAP net income for the year ended December 31, 2008 was $41.7 million, or $0.76 per diluted common share, compared to $43.3 million, or $0.80 per diluted common share in 2007. A reconciliation of GAAP to non-GAAP results is included in the attached tables.

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 fourth quarter and year-end 2007 non-GAAP net income, these additional items were costs associated with restructuring activities and the derivative litigation settled in 2008, a gain associated with the sale of a business and an income tax benefit from the partial reversal of the valuation allowance for Canadian net operating losses.

Non-GAAP net income for the fourth quarter 2008 excludes stock-based compensation, amortization of intangible assets associated the acquisitions of EPSi and MediNotes, and the release of the remaining portion of the company’s deferred tax valuation allowance. In addition, Non-GAAP net income for year-ended 2008 excludes costs associated with the corporate reorganization and relocation, the derivative litigation, the reorganization of the professional services organization, a charge resulting from a change in the company’s estimate for uncertainties in income taxes, a reduction in earnings resulting from nonrecurring adjustments from prior periods, a gain associated with the sale of a business and the release of the company’s U.S. deferred tax valuation allowance.

The following table summarizes selected financial data:


In thousands, except per share data     In thousands, except per share data
           
Three months ended December 31 Twelve months ended December 31

 

(unaudited)

 

(unaudited)

2008 2007 $ Change   % Change   2008 2007 $ Change   % Change  
Revenues

$126,816

$124,404

$2,412

  2 % $515,762 $477,533 $38,229   8 %
 
GAAP Results:                
Net income $3,310 $24,182 ($20,872 ) -86 % $99,506 $41,141 $58,365   142 %
Earnings per common share, diluted $0.06 $0.44 ($0.38 ) -86 % $1.81 $0.76 $1.05   138 %
 
Non-GAAP Results:                
Net income* $4,075

$15,751

($11,676

)

-74 % $41,689 $43,300 ($1,611 ) -4 %
Earnings per common share, diluted* $0.07 $0.29 ($0.22 ) -76 % $0.76 $0.80 ($0.04 ) -5 %

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

“While our fourth-quarter financial results fell short of our projections, we moved the business forward considerably in key areas in the past year,” said R. Andrew Eckert, Eclipsys president and chief executive officer. “We completed three acquisitions that help improve our competitive position and expand our market reach, executed successfully our first activation outside of North America at SingHealth, and advanced our core clinical solution to the number two position in KLAS rankings for Acute Care EMRs.”

Continued Eckert, “The combination of EPSi, Premise and Sunrise Clinical Analytics enables us to market a superior suite of performance management solutions that help hospitals optimize existing resources while also driving improved clinical outcomes and reporting. These are the type of solutions hospitals most need in today’s challenging economic climate.”

Other Notable Accomplishments in the Past Year

  • Completed more than 200 successful solution activations, including Sunrise Clinical Manager implementations at Yale New Haven Health System, Cancer Treatment Centers of America, North Shore-Long Island Jewish Health System, University of Michigan Health System, and Robert Wood Johnson University Hospital.
  • Signed renewal contracts with several of our largest clients.
  • Grew Eclipsys India to more than 600 employees.
  • Established an International management team, with representatives now in both the Middle East and Asia Pacific regions.
  • Added three highly-accomplished new members to our Board of Directors.
  • Implemented Total Quality Management programs that have already had a positive impact on several important functions and processes.

Today’s Conference Call

Eclipsys executives will discuss the final results for the fourth quarter and year ended December 31, 2008 on a teleconference scheduled for 4:30 p.m. Eastern time on February 24, 2009. Persons interested in participating in the teleconference should dial (888) 428-4474 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 conference 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 financial results reported in this press release on a GAAP basis reflect accounting principles generally accepted in the United States (“GAAP”). In addition, the company has provided net income and earnings per share information on a non-GAAP basis for the three months and year ended December 31, 2008, as well as non-GAAP net income and earnings per share information for the three months and year ended December 31, 2007, which exclude non-cash stock-based compensation expenses, amortization expense associated with acquisitions, and certain items incurred 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. For example, omitting the stock-based compensation expense facilitates review by the majority of the company’s analysts, who model the company’s earnings excluding stock-based compensation charges. 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 fourth quarter and year-end 2008 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’ plans to adjust its cost structure and business practices 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 be slower than expected due to market conditions, competition, and other factors. Costs may be greater than anticipated due to the potential need to increase spending to ensure performance in accordance with commitments to clients 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 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)

(in thousands, except per share amounts)

                   
GAAP GAAP GAAP GAAP

Three Months Ended December 31, 2008

Three Months Ended December 31, 2007

$ Change

% Change

Year-to-date December 31, 2008

Year-to-date December 31, 2007

$ Change

% Change
               
Revenues:
Systems and services $ 122,622 $ 119,874 $ 2,748 2.3 % $ 495,643 $ 460,853 $ 34,790 7.5 %
Hardware   4,194     4,530     (336 ) -7.4 %   20,119     16,680     3,439   20.6 %
Total revenues   126,816     124,404     2,412   1.9 %   515,762     477,533     38,229   8.0 %
 
Cost and expenses:
Cost of systems and services 70,652 66,055 4,597 7.0 % 280,694 263,557 17,137 6.5 %
Cost of hardware 3,537 2,894 643 22.2 % 16,945 12,230 4,715 38.6 %
Sales and marketing 22,761 21,957 804 3.7 % 85,911 76,172 9,739 12.8 %
Research and development 14,333 14,344 (11 ) -0.1 % 61,435 56,480 4,955 8.8 %
General and administrative 11,580 8,727 2,853 32.7 % 38,457 32,677 5,780 17.7 %
Depreciation and amortization 6,447 4,479 1,968 43.9 % 22,098 17,924 4,174 23.3 %
Restructuring - 1,175 (1,175 ) -100.0 % - 1,175 (1,175 ) -100.0 %
In-process research and development charge   -     -     -   * N/M   850     -     850   * N/M
Total costs and expenses   129,310     119,630     9,680   8.1 %   506,390     460,215     46,175   10.0 %
 
Income (loss) from operations (2,494 ) 4,774 (7,268 ) -152.2 % 9,372 17,318 (7,946 ) -45.9 %
Gain/(loss) on sale of assets 170 12,761 (12,591 ) * N/M 4,370 12,761 (8,391 ) * N/M
Gain (loss) on ARS (609 ) - (609 ) * N/M (609 ) - (609 ) * N/M
Interest income, net   376     2,154     (1,778 ) -82.5 %   3,957     7,070     (3,113 ) -44.0 %
Income (loss) before income taxes (2,557 ) 19,689 (22,246 ) -113.0 % 17,090 37,149 (20,059 ) -54.0 %
Provision for income taxes   (5,867 )   (4,493 )   (1,374 ) * N/M   (82,416 )   (3,992 )   (78,424 ) * N/M
Net income (loss) $ 3,310   $ 24,182   $ (20,872 ) -86.3 % $ 99,506   $ 41,141   $ 58,365   141.9 %
Net income (loss) per share:
Basic net income (loss) per common share $ 0.06   $ 0.45   $ (0.39 ) -86.7 % $ 1.84   $ 0.78   $ 1.06   135.9 %
Diluted net income (loss) per common share $ 0.06   $ 0.44   $ (0.38 ) -86.4 % $ 1.81   $ 0.76   $ 1.05   138.2 %
Weighted average common shares outstanding:
Basic   55,292     53,296     1,996   3.7 %   54,089     52,737     1,352   2.6 %
Diluted   55,735     54,621     1,114   2.0 %   54,953     54,004     949   1.8 %
 
* Not Meaningful

ECLIPSYS CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands, except share and per share amounts)
   
 
 
December 31, December 31,
  2008     2007  
(Unaudited)
Assets
Current assets:
Cash $ 108,304 $ 22,510
Marketable securities 154 168,925
Accounts receivable, net of allowance for doubtful accounts of $4,912 and $4,240, respectively 121,811 99,260
Prepaid expenses 23,975 27,289
Deferred tax asset 2,643

4,668

Other current assets   5,712     1,759  
Total current assets 262,599

324,411

 
Long-term investments 107,215 -
Property and equipment, net 53,996 45,657
Capitalized software development costs, net 37,718 38,206
Acquired technology, net 39,710 594
Intangible assets, net 10,258 1,376
Deferred tax asset 89,063

5,331

Goodwill 96,973 7,772
Other assets   11,343     13,374  
Total assets $ 708,875   $ 436,721  
 
 
 
Liabilities and Stockholders’ Equity
Current liabilities:
Deferred revenue $ 123,733 $ 105,115
Accounts payable 20,924 11,679
Accrued compensation costs 16,457 24,473
Other current liabilities   22,481     19,381  
Total current liabilities 183,595 160,648
 
Deferred revenue 5,743 9,860
Deferred tax liability 4,300
Long term debt 105,000
Other long-term liabilities   16,540     3,899  
Total liabilities 310,878 178,707
 
Stockholders’ equity:
Common stock, $0.01 par value, 200,000,000 shares authorized; issued and outstanding, 56,126,674 and 53,806,742, respectively 561 538
Additional paid-in capital 569,717 519,112
Accumulated deficit (164,712 ) (264,218 )
Accumulated other comprehensive income   (7,569 )   2,582  
Total stockholders’ equity   397,997     258,014  
Total liabilities and stockholders’ equity $ 708,875   $ 436,721  

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

For the Year Ended

December 31,

   

For the Three Months Ended

December 31,

 
  2008     2007     2008     2007  
 
Operating activities:
Net income $ 99,506 $ 41,141 $ 3,310 $ 24,182
Adjustments to reconcile net income to net cash

 

provided by operating activities:
Depreciation and amortization 41,376 35,603 11,558 8,213
Provision for bad debt 5,995 2,078 3,340 700
In-process research and development charge 850 - - -
Deferred income taxes (93,031 ) (5,285 ) (14,843 ) (5,614 )
 
Stock compensation expense 17,282 11,267 4,189 3,006
Gain on sale of assets (4,370 ) (12,761 ) (169 ) (12,761 )
Changes in operating assets and liabilities, excluding the effect of acquisitions and dispositions:
Accounts receivable (20,881 ) (5,695 ) 730 (687 )
Prepaid expenses and other current assets 2,054 (4,559 ) 1,299 1,638
Inventory - 1,031 - 182
Other assets (329 ) 1,421 (40 ) 1,084
Deferred revenue 13,528 1,441 16,906 7,728
Accrued compensation (10,562 ) 11,115 (5,533 ) 1,452
Accounts payable and other current liabilities

8,955

(9,071 )

3,015

587
Long-term liabilities

12,480

2,470

8,509

1,394
Other reconciling items  

548

    28     (418 )   12  
Total adjustments   (26,105 )   29,083     28,543     6,934  
Net cash provided by operating activities   73,401     70,224     31,853     31,116  
Investing activities:
Purchases of property and equipment (25,092 ) (16,596 ) (4,660 ) (3,531 )
Purchase of marketable securities (102,000 ) (162,358 ) - (82,654 )
Proceeds from sales of marketable securities 151,100 82,977 - 38,704
Proceeds from sale of assets 835 22,616 137 22,616
Proceeds from sale of debt and equity securities 2,541 - -

-

Capitalized software development costs (18,176 ) (20,943 ) (5,759 ) (5,665 )
Restricted Cash 1,964 (1,950 ) 1 19
Earnout out on disposition 3,578 - - -
Cash paid for acquisitions, net of cash acquired   (111,522 )   (6,372 )   (56,929 )   (5,219 )
Net cash used in investing activities (96,772 ) (102,626 ) (67,210 ) (35,730 )
Financing activities:
Proceeds from stock options exercised 6,254 12,549 971 2,216
Proceeds from employee stock purchase plan 822 310 207 310
Cash paid for debt issuance costs (1,440 )

-

(10 )

-

Repayment of secured financing (95,000 )

-

-

-

Proceeds from secured financing   200,000  

-

    54,000  

-

 
Net cash provided by financing activities 110,636 12,859 55,168 2,526
 
Effect of exchange rates on cash and cash equivalents   (1,471 )   789     (883 )   86  
Net increase (decrease) in cash and cash equivalents 85,794 (18,754 ) 18,928 (2,002 )
Cash and cash equivalents — beginning of period   22,510     41,264     89,376     24,512  
Cash and cash equivalents — end of period $ 108,304   $ 22,510   $ 108,304   $ 22,510  

  ECLIPSYS CORPORATION AND SUBSIDIARIES
Reconciliation of GAAP to Non-GAAP Results
(in millions, except per share amounts)
           
  Three Months Ended   Year Ended
December 31, 2008 December 31, 2008
 
GAAP net income $ 3,310 $ 99,506
 
Add back:
Stock-based compensation expense1 4,190 17,281
Acquisition amortization - EPSi2 1,121 4,637
Acquisition amortization - MediNotes3 1,043 1,043
Valuation allowance reversal4 (5,589 ) (85,544 )
Derivative Litigation5 1,353
Gain on sale of assets6 (3,227 )
Headquarter relocation7 2,940
Tax provision8 1,540
Professional services reorganization9 1,378
Non-recurring prior year amounts10 782
   
Non-GAAP net income $ 4,075   $ 41,689  
 
GAAP diluted earnings per share $ 0.06 $ 1.81
 
Add back:
Stock-based compensation expense1 0.08 0.31
Acquisition amortization - EPSi2 0.02 0.08
Acquisition amortization - MediNotes3 0.02 0.02
Valuation allowance reversal4 (0.10 ) (1.56 )
Derivative Litigation5 0.02
Gain on sale of assets6 (0.06 )
Headquarter relocation7 0.05
Tax provision8 0.03
Professional services reorganization9 0.03
Non-recurring prior year amounts10 0.01
   
Non-GAAP diluted earnings per share $ 0.07   $ 0.76  

2008 GAAP to non-GAAP reconciliation footnotes

 
(1) Represents stock-based compensation expense.
 
(2) These amounts relate to a charge for a write off of in-process research and development and amortization of intangible assets associated with the February 2008 acquisition of EPSi.
 
(3) This amount is the amortization of intangible assets associated with the October 2008 acquisition of MediNotes.
 
(4) Income tax benefit associated with the reversal of our deferred tax valuation allowance. The third quarter 2008 valuation allowance release was based on annual 2008 projections. The fourth quarter actual results were lower than anticipated resulting in release of additional valuation allowance in the fourth quarter of 2008.
 
(5) These charges were 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.
 
(6) This gain resulted from the achievement of certain post-closing milestones associated with the December sale of the Clinical Practice Model Resource Center business.
 
(7) This cost was related primarily to amounts incurred to relocate the corporate headquarters from Boca Raton to Atlanta. These include salaries and benefits associated with termination of employees not relocating and other administrative costs associated with the move.
 
(8) FASB Interpretation 48 "Accounting for Uncertainty in Income Taxes" clarifies the criteria for recognizing income tax benefits. This charge was recorded as a result of the review of uncertain state tax positions.
 
(9) This expense reflects severance costs associated with the reorganization of our professional services organization.
 
(10) These amounts represent nonrecurring adjustments from prior years.

  ECLIPSYS CORPORATION AND SUBSIDIARIES
Reconciliation of GAAP to Non-GAAP Results
(in millions, except per share amounts)
   
Three Months Ended Year Ended
December 31, 2007 December 31, 2007
 
 
GAAP net income $ 24,182 $ 41,141
 
Add back:
Stock-based compensation expense1 3,019 11,279
Restructuring and other related expense2 1,984 1,984
Stock option review3 735 3,065
Gain on sale of assets4 (9,022 ) (9,022 )
Partial reversal of tax valuation allowance5 (5,147 ) (5,147 )
   
Non-GAAP net income $ 15,751   $ 43,300  
 
 
GAAP diluted earnings per share $ 0.44 $ 0.76
 
Add back:
Stock-based compensation expense1 0.06 0.21
Restructuring and other related expense2 0.04 0.04
Stock option review3 0.01 0.06
Gain on sale of assets4 (0.17 ) (0.17 )
Partial reversal of tax valuation allowance5 (0.09 ) (0.10 )
   
Non-GAAP diluted earnings per share $ 0.29   $ 0.80  
         
 
(1) Represents stock-based compensation expense.
 
(2) The charge includes restructuring expenses as well as other related non-recurring costs in connection with the move of the corporate headquarters from Boca Raton to Atlanta as well as costs incurred to exit the network business.
 
(3) This charge was incurred as a result of the voluntary stock option review completed in the second quarter of 2007 and relates to legal and accounting fees as well as subsequent derivative litigation expenses related to such review.
 
(4) This gain was incurred in conjunction with the sale of CPM Resource Center assets to Elsevier. For the purpose of this reconciliation, the gain on sale of assets of $12.8 million was reduced by related state tax impact of $0.3 million, and incremental employee incentive compensation expense of $3.5 million, incurred as a result of this transaction.
 
(5) This income tax benefit was recorded as a result of the partial reversal of the Canadian subsidiary tax valuation allowance on its net operating losses.

CONTACT:
Eclipsys
Jason Cigarran, 404-847-5965
Vice President, Investor Relations
jason.cigarran@eclipsys.com
or
Dave Morgan, 404-847-5980
Interim Chief Financial Officer
investor.relations@eclipsys.com