QuadraMed Corporation (Amex:QD) announced today that it will report
net income of $6.0 million before preferred stock accretion for the
three months ended September 30, 2006, compared to a net loss of
$(4.0) million for the same period in 2005. Income from operations
was $5.6 million for the three months ended September 30, 2006,
compared to a loss from operations of $(2.8) million for the same
period in 2005. On a year-to-date basis, net income was $8.0
million in 2006 compared to a net loss of $(5.2) million for the
corresponding nine month period in 2005. Cash and investments
increased to $41.9 during the nine months ended September 30, 2006,
from $34.4 million at December 31, 2005. Cash from operations was
$3.0 million for three months and $12.4 million for the nine months
ended September 30, 2006 compared to $2.9 million and $11.0 million
for the corresponding periods in 2005. Revenues of $33.0 million,
gross margin of 67% and operating expenses of $16.4 million
combined to produce the achieved operating results for the quarter.
These compare to revenues of $30.0 million, gross margin of 62% and
operating expenses of $21.5 million of the same period in 2005. The
increase in revenues to $33.0 million for the 2006 quarter is due
in part to management initiatives enacted as a part of the
Company�s strategic plan to install products and provide services
in a timely manner, resolve outstanding implementation issues, and
collect cash from past due receivables. The success of these
initiatives is reflected in both the quarter and year-to-date
periods. Revenues for the nine month periods ended September 30,
2006 and 2005 were $94.0 million and $91.1 million respectively.
Total operating expenses of $16.4 million for the three months
ended and $52.6 million for the nine months ended September 30,
2006 compare to $21.5 million and $59.5 million for the comparable
2005 periods. After removing the effects of severance, exit costs
on facility closings and settlement of litigation from the figures,
operating expenses decreased approximately $0.8 million between the
three month periods, and decreased $3.1 million between the nine
month periods. The Company�s reorganization during the first
quarter of 2006, as well as other management initiatives enacted in
connection with the Company�s strategic plan, have accounted for
the majority of these operating expense declines. EBITDA (Earnings
Before Interest, Taxes, Depreciation and Amortization) was $7.4
million or 22% of revenues for the three months ended September 30,
2006, compared to negative EBITDA of $(0.6) million for the same
period in 2005. On a year-to-date basis, EBITDA was $13.2 million
or 14% of revenues, compared to $4.0 million or 4% of revenues for
the nine months ended September 30, 2005. The Company will also
report net income attributable to common shareholders of $4.7
million, or $0.11 basic per share and $0.08 per fully diluted share
for the three months ended September 30, 2006; this is compared to
a net loss attributable to common shareholders of $(5.2) million,
or $(0.13) basic and fully diluted per share for the same period in
2005. For the nine month period ended September 30, 2006, net
income attributable to common shareholders was $4.2 million, or
$0.10 basic per share and $0.10 per fully diluted share. The
calculation of net income per fully diluted share for the three
months and nine months ended September 30, 2006 was based on net
income before preferred stock accretion. In our Quarterly Report on
Form 10-Q for the six months ended June 30, 2006, as filed with the
SEC on August 9, 2006, net income per fully diluted share was based
on net income attributable to common shareholders, which reflects a
deduction for the preferred stock accretion. If the calculation of
net income per fully diluted share for the second quarter of 2006
were made using the same approach as in the current quarter, net
income per fully diluted share would have been $0.05 and $0.03 for
the three months and six months ended June 30, 2006 instead of
$0.03 and $(0.01) as previously reported. �We continue to make
progress on effectively managing and operating our business by
installing products, delivering services, identifying and resolving
customer issues in a timely manner, and collecting old
receivables,� said Keith Hagen, QuadraMed�s president and chief
executive officer. �As a result, our revenues and EBITDA have
increased this quarter and our cash position continues to increase.
This year, we have signed two new name Affinity contracts. This
most recent contract includes our revenue cycle management,
identity management, electronic document management and enterprise
scheduling products, allowing us to build a new long term
relationship with a large healthcare delivery system. Looking
ahead, we will continue to execute on the fundamental business
principles that have been successful over the last year. We�ll
continue to focus on building our reputation in the market,
communicating our vision, managing our expenses and implementing
initiatives designed to grow and improve our business,� added Mr.
Hagen. Management will review these results in an investment
community conference call at 4:00 PM Eastern (1:00 PM Pacific) on
Thursday, November 9, 2006. To ensure fair dissemination of
information, no inquiries of management should be made regarding
QuadraMed�s results until after the conference call. A brief
question and answer period will follow management�s presentation.
The dial-in number for the conference call is 800-862-9098
domestic, and 785-424-1051 international. Callers should dial in by
3:45 PM Eastern (12:45 PM Pacific) to register. The call will also
be webcast live and available to the public via the Investor
Relations section of QuadraMed�s webpage at www.quadramed.com.
Please note that the webcast is listen-only. Listeners should
access the website at 3:45 PM Eastern (12:45 PM Pacific) to
register and to download and install any necessary audio software.
The webcast replays will be available until 12:00 AM ET on November
15, 2006 by dialing 719-457-0820 or 888-203-1112. The replay
passcode is 9406656. Attachments Exhibit 1 Condensed Consolidated
Balance Sheets as of September 30, 2006 and December 31, 2005 �
Exhibit 2 Condensed Consolidated Statements of Operations for the
Three Months Ended September 30, 2006 and 2005 and Nine Months
Ended September 30, 2006 and 2005 � Exhibit 3 Condensed
Consolidated Statements of Cash Flows for the Three Months Ended
September 30, 2006 and 2005 and Nine Months Ended September 30,
2006 and 2005 � Exhibit 4 Reconciliation of EBITDA and Non-GAAP
Measurements for the Three Months Ended September 30, 2006, June
30, 2006, March 31, 2006, December 31, 2005, September 30, 2005,
June 30, 2005 and March 31, 2005 � Exhibit 5 Reconciliation of
EBITDA and Non-GAAP Measurements for the Nine Months Ended
September 30, 2006 and September 30, 2005 and the Twelve Months
Ended September 30, 2006 About QuadraMed Corporation QuadraMed
Corporation advances the success of healthcare organizations
through IT solutions that leverage quality care into positive
financial outcomes. As evolving reimbursement scenarios challenge
healthcare organizations to leverage quality of care into payment,
clients committing to QuadraMed�s care-based solutions can realize
market leading financial performance. Using QuadraMed�s end-to-end
solutions to optimize the patient experience and leverage quality
of care into payment, our clients can receive the proper
reimbursement, in the shortest time, at the lowest administrative
cost. Behind our products and services is a staff of almost 600
professionals whose experience and dedication to service have
earned QuadraMed the trust and loyalty of customers at
approximately 2,000 healthcare provider facilities. To find out
more about QuadraMed, visit www.quadramed.com. Cautionary Statement
on Risks Associated with QuadraMed�s Forward-Looking Statements
This press release contains forward-looking statements, as defined
in Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934, by QuadraMed that are subject to
risks and uncertainties. The words "believe," "expect,"
"anticipate," "intend," "plan," "estimate," "may," "should,"
"could," and similar expressions are intended to identify such
statements. Forward-looking statements are not guarantees of future
performance and are to be interpreted only as of the date on which
they are made. QuadraMed undertakes no obligation to update or
revise any forward-looking statement except as required by law.
QuadraMed advises investors that it discusses risk factors and
uncertainties that could cause QuadraMed�s actual results to differ
from forward-looking statements in its periodic reports filed with
the Securities and Exchange Commission ("SEC"). QuadraMed�s SEC
filings can be accessed through the Investor Relations section of
our website, www.quadramed.com, or through the SEC�s EDGAR Database
at www.sec.gov (QuadraMed has EDGAR CIK No. 0001018833). QuadraMed
Affinity and Care-based Revenue Cycle are registered trademarks of
QuadraMed Corporation. All other trademarks are the property of
their respective holders. � Exhibit 1 � QUADRAMED CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except per
share amounts) (unaudited) � � September 30, December 31, ASSETS
2006� 2005� � Current assets Cash and cash equivalents $ 36,485� $
33,042� Short-term investments 4,185� -� Accounts receivable, net
of allowance for doubtful accounts of $2,953 and $4,177,
respectively 19,347� 27,089� Unbilled and other receivables 4,375�
3,387� Notes and other receivables, net of allowance for doubtful
accounts of $822 and $715, respectively 50� Prepaid expenses and
other current assets � 9,947� � 12,092� Total current assets
74,339� 75,660� � Restricted cash 2,286� 2,391� Long-term
investments 1,241� 1,334� Property and equipment, net of
accumulated depreciation and amortization of $20,666 and $19,052,
respectively 2,800� 3,737� Goodwill 25,983� 25,983� Other
intangible assets, net of accumulated amortization of $40,230 and
$35,905, respectively 3,279� 7,624� Other long-term assets � 3,167�
� 3,167� Total assets $ 113,095� $ 119,896� � LIABILITIES AND
STOCKHOLDERS� EQUITY Current liabilities Accounts payable and
accrued expenses $ 3,479� $ 3,551� Accrued payroll and related
7,904� 7,422� Other accrued liabilities 5,395� 10,114� Dividends
payable 5,181� 9,054� Deferred revenue � 45,695� � 52,169� Total
current liabilities 67,654� 82,310� � Accrued exit cost of facility
closing 2,437� 3,613� Other long-term liabilities � 3,132� � 2,781�
Total liabilities 73,223� 88,704� � Stockholders� equity Preferred
stock, $0.01 par, 5,000 shares authorized; 4,000 shares issued and
outstanding 92,000� 88,231� Common stock, $0.01 par, 150,000 shares
authorized; 42,255 and 41,245 shares issued and outstanding,
including 457 and 457 shares of treasury stock, respectively 422�
412� Additional paid-in-capital 303,897� 302,324� Accumulated other
comprehensive loss (154) (89) Accumulated deficit � (356,293) �
(359,686) Total stockholders� equity � 39,872� � 31,192� Total
liabilities and stockholders� equity $ 113,095� $ 119,896� � �
Exhibit 2 � � QUADRAMED CORPORATION CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS (in thousands, except per share amounts)
(unaudited) � � Three months ended, Nine months ended, September
30, September 30, 2006� 2005� 2006� 2005� Revenue Services $ 3,859�
$ 2,824� $ 9,480� $ 9,448� Maintenance 14,802� 13,767� 42,605�
41,152� Installation and other � 2,893� � 3,196� � 9,048� � 8,300�
Services and other revenue 21,554� 19,787� 61,133� 58,900� Licenses
11,151� 10,009� 31,713� 30,143� Hardware � 327� � 250� � 1,142� �
2,061� Total revenue � 33,032� � 30,046� � 93,988� � 91,104� � Cost
of revenue Cost of services and other revenue 6,846� 7,326� 21,497�
21,764� Royalties and other 3,034� 2,385� 8,824� 6,811�
Amortization of acquired technology and capitalized software � 748�
� 1,014� � 2,699� � 3,073� Cost of license revenue 3,782� 3,399�
11,523� 9,884� Cost of hardware revenue � 347� � 682� � 1,131� �
2,190� Total cost of revenue � 10,975� � 11,407� � 34,151� �
33,838� Gross margin � 22,057� � 18,639� � 59,837� � 57,266� �
Operating expense General and administration 4,370� 8,340� 15,299�
20,625� Software development 7,298� 7,812� 23,254� 23,253� Sales
and marketing 3,730� 3,160� 10,849� 10,727� Amortization of
intangible assets and depreciation 1,035� 1,087� 3,239� 3,793� Exit
cost of facility closing � -� � 1,066� � -� � 1,066� Total
operating expenses � 16,433� � 21,465� � 52,641� � 59,464� Income
(loss) from operations � 5,624� � (2,826) � 7,196� � (2,198) �
Other income (expense) Interest expense, includes non-cash charges
of $85, $383, $306 and $740, respectively (85) (403) (311) (763)
Interest income 501� 223� 1,266� 444� Other income (expense), net �
40� � (21) � 94� � (37) Other income (expense) � 456� � (201) �
1,049� � (356) � Income (loss) from continuing operations before
income taxes $ 6,080� $ (3,027) $ 8,245� $ (2,554) Provision for
income taxes � (101) � (114) � (262) � (128) Income (loss) from
continuing operations 5,979� (3,141) 7,983� (2,682) Loss from
discontinued operations � -� � (817) � -� � (2,503) Net income
(loss) $ 5,979� $ (3,958) $ 7,983� $ (5,185) Preferred stock
accretion � (1,273) � (1,207) � (3,769) � (3,573) � Net income
(loss) attributable to common shareholders $ 4,706� $ (5,165) $
4,214� $ (8,758) � Income (loss) per share-basic Continuing
operations $ 0.11� $ (0.11) $ 0.10� $ (0.15) Discontinued
operations � -� � (0.02) � -� � (0.07) Net income (loss) $ 0.11� $
(0.13) $ 0.10� $ (0.22) � Income (loss) per share-diluted
Continuing operations $ 0.08� $ (0.11) $ 0.10� $ (0.15)
Discontinued operations � -� � (0.02) � -� � (0.07) Net income
(loss) $ 0.08� $ (0.13) $ 0.10� $ (0.22) � Weighted average shares
outstanding Basic � 42,156� � 40,684� � 41,788� � 40,407� Diluted �
78,093� � 40,684� � 77,932� � 40,407� � Exhibit 3 � � QUADRAMED
CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in
thousands) (unaudited) � � Three months ended Nine months ended
September 30, September 30, 2006� 2005� 2006� 2005� Cash flows from
operating activities Net income (loss) attributable to common
shareholders $ 4,706� $ (5,165) $ 4,214� $ (8,758) Adjustments to
reconcile net income (loss) to net cash provided by operating
activities: Depreciation and amortization 1,851� 3,465� 6,191�
9,478� Preferred stock accretion 1,273� 1,207� 3,769� 3,573� Exit
cost of facility closing -� 1,066� -� 1,066� Impairment and other
charges for Financial Services Division -� 817� -� 1,731� Provision
for bad debts -� 879� 820� 1,704� Stock-based compensation expense
324� -� 985� -� Gain on sale of assets -� (383) -� (383) Other -�
-� (21) -� � Changes in assets and liabilities: Accounts receivable
3,494� 4,447� 6,923� (2,170) Prepaid expenses and other 869�
(1,372) 1,229� 1,618� Accounts payable and accrued liabilities
(626) 3,410� (5,199) 219� Deferred revenue (8,858) (2,331) (6,473)
6,065� Payment to former executive out of trust � -� � (3,100) � -�
� (3,100) Cash provided by operating activities 3,033� 2,940�
12,438� 11,043� � Cash flows from investing activities Decrease
(increase) in restricted cash 82� (8) 105� 1,539� Capital
expenditures (231) (297) (731) (1,101) Proceeds from the sale of
assets and available-for-sale securities, net 1,951� 462� 2,609�
345� Purchases of available-for-sale securities (6,030) -� (6,707)
-� Termination of trust -� 3,100� -� 3,100� Other � (30) � -� � 5�
� -� Cash provided by (used in) by investing activities (4,258)
3,257� (4,719) 3,883� � Cash flows from financing activities
Proceeds from issuance of common stock and other 181� 239� 599�
845� Payment of preferred stock dividends � (1,625) � (1,458) �
(4,875) � (4,208) Cash used in financing activities (1,444) (1,219)
(4,276) (3,363) � Net increase (decrease) in cash and cash
equivalents (2,669) 4,978� 3,443� 11,563� � Cash and cash
equivalents, beginning of period � 39,154� � 29,014� � 33,042� �
22,429� � Cash and cash equivalents, end of period $ 36,485� $
33,992� � 36,485� $ 33,992� � � Exhibit 4 � � QUADRAMED CORPORATION
Reconciliation of EBITDA and Non-GAAP Measurements (in thousands)
(unaudited) � For the Three Months Ended 9/30/06� 6/30/06� 3/31/06�
12/31/05� 9/30/05� 6/30/05� 3/31/05� � � EBITDA (Earnings Before
Interest, Taxes, Depreciation and Amortization) � Net income
(loss), as reported $5,979� $3,847� ($1,843) $1,247� ($3,958)
$1,293� ($2,520) � Adjustments to Net Income for EBITDA Interest
Expense 85� 103� 123� (156) 403� 191� 169� Interest Income (501)
(399) (366) (305) (223) (120) (101) Benefit (provision) for Income
Taxes 101� 63� 98� 149� 114� 3� 11� Depreciation and Amortization
1,781� 2,060� 2,094� � 2,137� � 3,082� � 2,280� � 3,377� Subtotal
Adjustments for EBITDA 1,466� 1,827� 1,949� 1,825� 3,376� 2,354�
3,456� � � � � � � � � � � � EBITDA $7,445� $5,674� $106� � $3,072�
� ($582) � $3,647� � $936� � Proforma Net Income (Loss) before
Preferred Stock Accretion � Net income (loss), as reported $5,979�
$3,847� ($1,843) $1,247� ($3,958) $1,293� ($2,520) � Exit Cost on
Facility Closing (San Rafael) -� -� -� -� 1,066� -� -� Exit Cost on
Facility Closing (Discontinued Operation) -� -� -� -� 817� -�
1,032� Cash Severance -� 142� 315� -� 2,344� -� 500� Non-Cash
Severance -� -� -� -� 850� -� 592� Costs of Litigation -� 27�
1,124� -� -� -� -� Gain on Sale of EDI Division -� -� -� -� (383)
-� -� Loss from Discontinued Operation -� -� -� � (68) � -� � -� �
654� Subtotal Proforma adjustments -� 169� 1,439� (68) 4,694� -�
2,778� � � � � � � � � � � � Proforma net income (loss) $5,979�
$4,016� ($404) � $1,179� � $736� � $1,293� � $258� � Proforma
Income (Loss) from Operations � Income (loss) from operations, as
reported $5,624� $3,578� ($2,006) $817� ($2,826) $1,229� ($601)
Exit Cost on Facility Closing (San Rafael) -� -� -� -� 1,066� -� -�
Cash Severance -� 142� 315� -� 2,344� -� 500� Non-Cash Severance -�
-� -� -� 850� -� 592� Costs of Litigation -� 27� 1,124� -� -� -� -�
Gain on Sale of EDI Division -� -� -� � -� � (383) � -� � -�
Subtotal Proforma adjustments -� 169� 1,439� -� 3,877� -� 1,092� �
� � � � � � � � � � Proforma Income (loss) from operations $5,624�
$3,747� ($567) � $817� � $1,051� � $1,229� � $491� � Other
Information � Revenue $33,032� $32,028� $28,928� $31,209� $30,046�
$30,683� $30,375� Costs of Revenue $10,975� $11,592� $11,584� �
$11,806� � $11,407� � $10,945� � $11,485� Gross Margin $22,057�
$20,436� $17,344� � $19,403� � $18,639� � $19,738� � $18,890� Gross
Margin % 67% 64% 60% 62% 62% 64% 62% � Exhibit 5 � � Reconciliation
of EBITDA and Non-GAAP Measurements (in thousands) (unaudited) � �
For the Nine Months Ended Last 12 Months Ended 9/30/06� 9/30/05�
9/30/06� � � EBITDA (Earnings Before Interest, Taxes, Depreciation
and Amortization) � Net income (loss), as reported $7,983� ($5,185)
$9,230� � Adjustments to Net Income for EBITDA Interest Expense
$311� $763� $155� Interest Income ($1,266) ($444) ($1,571) Benefit
(provision) for Income Taxes $262� $128� $411� Depreciation and
Amortization $5,935� $8,739� $8,072� Subtotal Adjustments for
EBITDA 5,242� 9,186� 7,067� � � � EBITDA $13,225� $4,001� $16,297�
� Proforma Net Income (Loss) before Preferred Stock Accretion � Net
income (loss), as reported $7,983� ($5,185) $9,230� � Exit Cost on
Facility Closing (San Rafael) -� 1,066� -� Exit Cost on Facility
Closing (Discontinued Operation) -� 1,849� -� Cash Severance 457�
2,844� 457� Non-Cash Severance -� 1,442� -� Costs of Litigation
1,151� -� 1,151� Gain on Sale of EDI Division -� (383) -� Loss from
Discontinued Operation -� 654� (68) Subtotal Proforma adjustments
1,608� 7,472� 1,540� � � � Proforma net income (loss) $9,591�
$2,287� $10,770� � Proforma Income (Loss) from Operations � Income
(loss) from operations, as reported $7,196� ($2,198) $8,013� � Exit
Cost on Facility Closing (San Rafael) -� 1,066� -� Cash Severance
457� 2,844� 457� Non-Cash Severance -� 1,442� -� Costs of
Litigation 1,151� -� 1,151� Gain on Sale of EDI Division -� (383)
-� Subtotal Proforma adjustments 1,608� 4,969� 1,608� � � �
Proforma Income (loss) from operations $8,804� $2,771� $9,621� �
Other Information � Revenue $93,988� $91,104� $125,197� Costs of
Revenue $34,151� $33,837� $45,957� Gross Margin $59,837� $57,267�
$79,240� Gross Margin % 64% 63% 63% QuadraMed Corporation (Amex:QD)
announced today that it will report net income of $6.0 million
before preferred stock accretion for the three months ended
September 30, 2006, compared to a net loss of $(4.0) million for
the same period in 2005. Income from operations was $5.6 million
for the three months ended September 30, 2006, compared to a loss
from operations of $(2.8) million for the same period in 2005. On a
year-to-date basis, net income was $8.0 million in 2006 compared to
a net loss of $(5.2) million for the corresponding nine month
period in 2005. Cash and investments increased to $41.9 during the
nine months ended September 30, 2006, from $34.4 million at
December 31, 2005. Cash from operations was $3.0 million for three
months and $12.4 million for the nine months ended September 30,
2006 compared to $2.9 million and $11.0 million for the
corresponding periods in 2005. Revenues of $33.0 million, gross
margin of 67% and operating expenses of $16.4 million combined to
produce the achieved operating results for the quarter. These
compare to revenues of $30.0 million, gross margin of 62% and
operating expenses of $21.5 million of the same period in 2005. The
increase in revenues to $33.0 million for the 2006 quarter is due
in part to management initiatives enacted as a part of the
Company's strategic plan to install products and provide services
in a timely manner, resolve outstanding implementation issues, and
collect cash from past due receivables. The success of these
initiatives is reflected in both the quarter and year-to-date
periods. Revenues for the nine month periods ended September 30,
2006 and 2005 were $94.0 million and $91.1 million respectively.
Total operating expenses of $16.4 million for the three months
ended and $52.6 million for the nine months ended September 30,
2006 compare to $21.5 million and $59.5 million for the comparable
2005 periods. After removing the effects of severance, exit costs
on facility closings and settlement of litigation from the figures,
operating expenses decreased approximately $0.8 million between the
three month periods, and decreased $3.1 million between the nine
month periods. The Company's reorganization during the first
quarter of 2006, as well as other management initiatives enacted in
connection with the Company's strategic plan, have accounted for
the majority of these operating expense declines. EBITDA (Earnings
Before Interest, Taxes, Depreciation and Amortization) was $7.4
million or 22% of revenues for the three months ended September 30,
2006, compared to negative EBITDA of $(0.6) million for the same
period in 2005. On a year-to-date basis, EBITDA was $13.2 million
or 14% of revenues, compared to $4.0 million or 4% of revenues for
the nine months ended September 30, 2005. The Company will also
report net income attributable to common shareholders of $4.7
million, or $0.11 basic per share and $0.08 per fully diluted share
for the three months ended September 30, 2006; this is compared to
a net loss attributable to common shareholders of $(5.2) million,
or $(0.13) basic and fully diluted per share for the same period in
2005. For the nine month period ended September 30, 2006, net
income attributable to common shareholders was $4.2 million, or
$0.10 basic per share and $0.10 per fully diluted share. The
calculation of net income per fully diluted share for the three
months and nine months ended September 30, 2006 was based on net
income before preferred stock accretion. In our Quarterly Report on
Form 10-Q for the six months ended June 30, 2006, as filed with the
SEC on August 9, 2006, net income per fully diluted share was based
on net income attributable to common shareholders, which reflects a
deduction for the preferred stock accretion. If the calculation of
net income per fully diluted share for the second quarter of 2006
were made using the same approach as in the current quarter, net
income per fully diluted share would have been $0.05 and $0.03 for
the three months and six months ended June 30, 2006 instead of
$0.03 and $(0.01) as previously reported. "We continue to make
progress on effectively managing and operating our business by
installing products, delivering services, identifying and resolving
customer issues in a timely manner, and collecting old
receivables," said Keith Hagen, QuadraMed's president and chief
executive officer. "As a result, our revenues and EBITDA have
increased this quarter and our cash position continues to increase.
This year, we have signed two new name Affinity contracts. This
most recent contract includes our revenue cycle management,
identity management, electronic document management and enterprise
scheduling products, allowing us to build a new long term
relationship with a large healthcare delivery system. Looking
ahead, we will continue to execute on the fundamental business
principles that have been successful over the last year. We'll
continue to focus on building our reputation in the market,
communicating our vision, managing our expenses and implementing
initiatives designed to grow and improve our business," added Mr.
Hagen. Management will review these results in an investment
community conference call at 4:00 PM Eastern (1:00 PM Pacific) on
Thursday, November 9, 2006. To ensure fair dissemination of
information, no inquiries of management should be made regarding
QuadraMed's results until after the conference call. A brief
question and answer period will follow management's presentation.
The dial-in number for the conference call is 800-862-9098
domestic, and 785-424-1051 international. Callers should dial in by
3:45 PM Eastern (12:45 PM Pacific) to register. The call will also
be webcast live and available to the public via the Investor
Relations section of QuadraMed's webpage at www.quadramed.com.
Please note that the webcast is listen-only. Listeners should
access the website at 3:45 PM Eastern (12:45 PM Pacific) to
register and to download and install any necessary audio software.
The webcast replays will be available until 12:00 AM ET on November
15, 2006 by dialing 719-457-0820 or 888-203-1112. The replay
passcode is 9406656. -0- *T Attachments Exhibit 1 Condensed
Consolidated Balance Sheets as of September 30, 2006 and December
31, 2005 Exhibit 2 Condensed Consolidated Statements of Operations
for the Three Months Ended September 30, 2006 and 2005 and Nine
Months Ended September 30, 2006 and 2005 Exhibit 3 Condensed
Consolidated Statements of Cash Flows for the Three Months Ended
September 30, 2006 and 2005 and Nine Months Ended September 30,
2006 and 2005 Exhibit 4 Reconciliation of EBITDA and Non-GAAP
Measurements for the Three Months Ended September 30, 2006, June
30, 2006, March 31, 2006, December 31, 2005, September 30, 2005,
June 30, 2005 and March 31, 2005 Exhibit 5 Reconciliation of EBITDA
and Non-GAAP Measurements for the Nine Months Ended September 30,
2006 and September 30, 2005 and the Twelve Months Ended September
30, 2006 *T About QuadraMed Corporation QuadraMed Corporation
advances the success of healthcare organizations through IT
solutions that leverage quality care into positive financial
outcomes. As evolving reimbursement scenarios challenge healthcare
organizations to leverage quality of care into payment, clients
committing to QuadraMed's care-based solutions can realize market
leading financial performance. Using QuadraMed's end-to-end
solutions to optimize the patient experience and leverage quality
of care into payment, our clients can receive the proper
reimbursement, in the shortest time, at the lowest administrative
cost. Behind our products and services is a staff of almost 600
professionals whose experience and dedication to service have
earned QuadraMed the trust and loyalty of customers at
approximately 2,000 healthcare provider facilities. To find out
more about QuadraMed, visit www.quadramed.com. Cautionary Statement
on Risks Associated with QuadraMed's Forward-Looking Statements
This press release contains forward-looking statements, as defined
in Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934, by QuadraMed that are subject to
risks and uncertainties. The words "believe," "expect,"
"anticipate," "intend," "plan," "estimate," "may," "should,"
"could," and similar expressions are intended to identify such
statements. Forward-looking statements are not guarantees of future
performance and are to be interpreted only as of the date on which
they are made. QuadraMed undertakes no obligation to update or
revise any forward-looking statement except as required by law.
QuadraMed advises investors that it discusses risk factors and
uncertainties that could cause QuadraMed's actual results to differ
from forward-looking statements in its periodic reports filed with
the Securities and Exchange Commission ("SEC"). QuadraMed's SEC
filings can be accessed through the Investor Relations section of
our website, www.quadramed.com, or through the SEC's EDGAR Database
at www.sec.gov (QuadraMed has EDGAR CIK No. 0001018833). QuadraMed
Affinity and Care-based Revenue Cycle are registered trademarks of
QuadraMed Corporation. All other trademarks are the property of
their respective holders. -0- *T Exhibit 1 QUADRAMED CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except per
share amounts) (unaudited) September 30, December 31, ASSETS 2006
2005 ------------- ------------- Current assets Cash and cash
equivalents $ 36,485 $ 33,042 Short-term investments 4,185 -
Accounts receivable, net of allowance for doubtful accounts of
$2,953 and $4,177, respectively 19,347 27,089 Unbilled and other
receivables 4,375 3,387 Notes and other receivables, net of
allowance for doubtful accounts of $822 and $715, respectively 50
Prepaid expenses and other current assets 9,947 12,092
------------- ------------- Total current assets 74,339 75,660
Restricted cash 2,286 2,391 Long-term investments 1,241 1,334
Property and equipment, net of accumulated depreciation and
amortization of $20,666 and $19,052, respectively 2,800 3,737
Goodwill 25,983 25,983 Other intangible assets, net of accumulated
amortization of $40,230 and $35,905, respectively 3,279 7,624 Other
long-term assets 3,167 3,167 ------------- ------------- Total
assets $ 113,095 $ 119,896 ============= ============= LIABILITIES
AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable and
accrued expenses $ 3,479 $ 3,551 Accrued payroll and related 7,904
7,422 Other accrued liabilities 5,395 10,114 Dividends payable
5,181 9,054 Deferred revenue 45,695 52,169 -------------
------------- Total current liabilities 67,654 82,310 Accrued exit
cost of facility closing 2,437 3,613 Other long-term liabilities
3,132 2,781 ------------- ------------- Total liabilities 73,223
88,704 Stockholders' equity Preferred stock, $0.01 par, 5,000
shares authorized; 4,000 shares issued and outstanding 92,000
88,231 Common stock, $0.01 par, 150,000 shares authorized; 42,255
and 41,245 shares issued and outstanding, including 457 and 457
shares of treasury stock, respectively 422 412 Additional
paid-in-capital 303,897 302,324 Accumulated other comprehensive
loss (154) (89) Accumulated deficit (356,293) (359,686)
------------- ------------- Total stockholders' equity 39,872
31,192 ------------- ------------- Total liabilities and
stockholders' equity $ 113,095 $ 119,896 =============
============= *T -0- *T Exhibit 2 QUADRAMED CORPORATION CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per
share amounts) (unaudited) Three months ended, Nine months ended,
September 30, September 30, ---------------------
--------------------- 2006 2005 2006 2005 ---------- ----------
---------- ---------- Revenue Services $ 3,859 $ 2,824 $ 9,480 $
9,448 Maintenance 14,802 13,767 42,605 41,152 Installation and
other 2,893 3,196 9,048 8,300 ---------- ---------- ----------
---------- Services and other revenue 21,554 19,787 61,133 58,900
Licenses 11,151 10,009 31,713 30,143 Hardware 327 250 1,142 2,061
---------- ---------- ---------- ---------- Total revenue 33,032
30,046 93,988 91,104 ---------- ---------- ---------- ----------
Cost of revenue Cost of services and other revenue 6,846 7,326
21,497 21,764 Royalties and other 3,034 2,385 8,824 6,811
Amortization of acquired technology and capitalized software 748
1,014 2,699 3,073 ---------- ---------- ---------- ---------- Cost
of license revenue 3,782 3,399 11,523 9,884 Cost of hardware
revenue 347 682 1,131 2,190 ---------- ---------- ----------
---------- Total cost of revenue 10,975 11,407 34,151 33,838
---------- ---------- ---------- ---------- Gross margin 22,057
18,639 59,837 57,266 ---------- ---------- ---------- ----------
Operating expense General and administration 4,370 8,340 15,299
20,625 Software development 7,298 7,812 23,254 23,253 Sales and
marketing 3,730 3,160 10,849 10,727 Amortization of intangible
assets and depreciation 1,035 1,087 3,239 3,793 Exit cost of
facility closing - 1,066 - 1,066 ---------- ---------- ----------
---------- Total operating expenses 16,433 21,465 52,641 59,464
---------- ---------- ---------- ---------- Income (loss) from
operations 5,624 (2,826) 7,196 (2,198) ---------- ----------
---------- ---------- Other income (expense) Interest expense,
includes non-cash charges of $85, $383, $306 and $740, respectively
(85) (403) (311) (763) Interest income 501 223 1,266 444 Other
income (expense), net 40 (21) 94 (37) ---------- ----------
---------- ---------- Other income (expense) 456 (201) 1,049 (356)
---------- ---------- ---------- ---------- Income (loss) from
continuing operations before income taxes $ 6,080 $ (3,027) $ 8,245
$ (2,554) Provision for income taxes (101) (114) (262) (128)
---------- ---------- ---------- ---------- Income (loss) from
continuing operations 5,979 (3,141) 7,983 (2,682) Loss from
discontinued operations - (817) - (2,503) ---------- ----------
---------- ---------- Net income (loss) $ 5,979 $ (3,958) $ 7,983 $
(5,185) Preferred stock accretion (1,273) (1,207) (3,769) (3,573)
---------- ---------- ---------- ---------- Net income (loss)
attributable to common shareholders $ 4,706 $ (5,165) $ 4,214 $
(8,758) ========== ========== ========== ========== Income (loss)
per share- basic Continuing operations $ 0.11 $ (0.11) $ 0.10 $
(0.15) Discontinued operations - (0.02) - (0.07) ----------
---------- ---------- ---------- Net income (loss) $ 0.11 $ (0.13)
$ 0.10 $ (0.22) ========== ========== ========= ========== Income
(loss) per share- diluted Continuing operations $ 0.08 $ (0.11) $
0.10 $ (0.15) Discontinued operations - (0.02) - (0.07) ----------
---------- ---------- ---------- Net income (loss) $ 0.08 $ (0.13)
$ 0.10 $ (0.22) ========== ========== ========== ==========
Weighted average shares outstanding Basic 42,156 40,684 41,788
40,407 ========== ========== ========== ========== Diluted 78,093
40,684 77,932 40,407 ========== ========== ========== ========== *T
-0- *T Exhibit 3 QUADRAMED CORPORATION CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (in thousands) (unaudited) Three months
ended Nine months ended September 30, September 30,
--------------------- --------------------- 2006 2005 2006 2005
---------- ---------- ---------- ---------- Cash flows from
operating activities Net income (loss) attributable to common
shareholders $ 4,706 $ (5,165) $ 4,214 $ (8,758) Adjustments to
reconcile net income (loss) to net cash provided by operating
activities: Depreciation and amortization 1,851 3,465 6,191 9,478
Preferred stock accretion 1,273 1,207 3,769 3,573 Exit cost of
facility closing - 1,066 - 1,066 Impairment and other charges for
Financial Services Division - 817 - 1,731 Provision for bad debts -
879 820 1,704 Stock-based compensation expense 324 - 985 - Gain on
sale of assets - (383) - (383) Other - - (21) - Changes in assets
and liabilities: Accounts receivable 3,494 4,447 6,923 (2,170)
Prepaid expenses and other 869 (1,372) 1,229 1,618 Accounts payable
and accrued liabilities (626) 3,410 (5,199) 219 Deferred revenue
(8,858) (2,331) (6,473) 6,065 Payment to former executive out of
trust - (3,100) - (3,100) ---------- ---------- ----------
---------- Cash provided by operating activities 3,033 2,940 12,438
11,043 Cash flows from investing activities Decrease (increase) in
restricted cash 82 (8) 105 1,539 Capital expenditures (231) (297)
(731) (1,101) Proceeds from the sale of assets and
available-for-sale securities, net 1,951 462 2,609 345 Purchases of
available- for-sale securities (6,030) - (6,707) - Termination of
trust - 3,100 - 3,100 Other (30) - 5 - ---------- ----------
---------- ---------- Cash provided by (used in) by investing
activities (4,258) 3,257 (4,719) 3,883 Cash flows from financing
activities Proceeds from issuance of common stock and other 181 239
599 845 Payment of preferred stock dividends (1,625) (1,458)
(4,875) (4,208) ---------- ---------- ---------- ---------- Cash
used in financing activities (1,444) (1,219) (4,276) (3,363) Net
increase (decrease) in cash and cash equivalents (2,669) 4,978
3,443 11,563 Cash and cash equivalents, beginning of period 39,154
29,014 33,042 22,429 ---------- ---------- ---------- ----------
Cash and cash equivalents, end of period $ 36,485 $ 33,992 36,485 $
33,992 ========== ========== ========== ========== *T -0- *T
Exhibit 4 QUADRAMED CORPORATION Reconciliation of EBITDA and
Non-GAAP Measurements (in thousands) (unaudited) For the Three
Months Ended -------------------------------- 9/30/06 6/30/06
3/31/06 ---------- ---------- ---------- EBITDA (Earnings Before
Interest, Taxes, Depreciation and Amortization)
----------------------------------------------------------- Net
income (loss), as reported $5,979 $3,847 ($1,843) Adjustments to
Net Income for EBITDA Interest Expense 85 103 123 Interest Income
(501) (399) (366) Benefit (provision) for Income Taxes 101 63 98
Depreciation and Amortization 1,781 2,060 2,094 ----------
---------- ---------- Subtotal Adjustments for EBITDA 1,466 1,827
1,949 ---------- ---------- ---------- EBITDA $7,445 $5,674 $106
========== ========== ========== Proforma Net Income (Loss) before
Preferred Stock Accretion
----------------------------------------------------------- Net
income (loss), as reported $5,979 $3,847 ($1,843) Exit Cost on
Facility Closing (San Rafael) - - - Exit Cost on Facility Closing
(Discontinued Operation) - - - Cash Severance - 142 315 Non-Cash
Severance - - - Costs of Litigation - 27 1,124 Gain on Sale of EDI
Division - - - Loss from Discontinued Operation - - - ----------
---------- ---------- Subtotal Proforma adjustments - 169 1,439
---------- ---------- ---------- Proforma net income (loss) $5,979
$4,016 ($404) ========== ========== ========== Proforma Income
(Loss) from Operations
----------------------------------------------------------- Income
(loss) from operations, as reported $5,624 $3,578 ($2,006) Exit
Cost on Facility Closing (San Rafael) - - - Cash Severance - 142
315 Non-Cash Severance - - - Costs of Litigation - 27 1,124 Gain on
Sale of EDI Division - - - ---------- ---------- ----------
Subtotal Proforma adjustments - 169 1,439 ---------- ----------
---------- Proforma Income (loss) from operations $5,624 $3,747
($567) ========== ========== ========== Other Information
----------------------------------------------------------- Revenue
$33,032 $32,028 $28,928 Costs of Revenue $10,975 $11,592 $11,584
---------- ---------- ---------- Gross Margin $22,057 $20,436
$17,344 ========== ========== ========== Gross Margin % 67% 64% 60%
For the Three Months Ended
------------------------------------------- 12/31/05 9/30/05
6/30/05 3/31/05 ---------- ---------- ---------- ---------- EBITDA
(Earnings Before Interest, Taxes, Depreciation and Amortization)
------------------------- Net income (loss), as reported $1,247
($3,958) $1,293 ($2,520) Adjustments to Net Income for EBITDA
Interest Expense (156) 403 191 169 Interest Income (305) (223)
(120) (101) Benefit (provision) for Income Taxes 149 114 3 11
Depreciation and Amortization 2,137 3,082 2,280 3,377
-------------------------------------------- Subtotal Adjustments
for EBITDA 1,825 3,376 2,354 3,456
-------------------------------------------- EBITDA $3,072 ($582)
$3,647 $936 ============================================ Proforma
Net Income (Loss) before Preferred Stock Accretion
------------------------- Net income (loss), as reported $1,247
($3,958) $1,293 ($2,520) Exit Cost on Facility Closing (San Rafael)
- 1,066 - - Exit Cost on Facility Closing (Discontinued Operation)
- 817 - 1,032 Cash Severance - 2,344 - 500 Non-Cash Severance - 850
- 592 Costs of Litigation - - - - Gain on Sale of EDI Division -
(383) - - Loss from Discontinued Operation (68) - - 654
-------------------------------------------- Subtotal Proforma
adjustments (68) 4,694 - 2,778
-------------------------------------------- Proforma net income
(loss) $1,179 $736 $1,293 $258
============================================ Proforma Income (Loss)
from Operations ------------------------- Income (loss) from
operations, as reported $817 ($2,826) $1,229 ($601) Exit Cost on
Facility Closing (San Rafael) - 1,066 - - Cash Severance - 2,344 -
500 Non-Cash Severance - 850 - 592 Costs of Litigation - - - - Gain
on Sale of EDI Division - (383) - -
-------------------------------------------- Subtotal Proforma
adjustments - 3,877 - 1,092
-------------------------------------------- Proforma Income (loss)
from operations $817 $1,051 $1,229 $491
============================================ Other Information
------------------------- Revenue $31,209 $30,046 $30,683 $30,375
Costs of Revenue $11,806 $11,407 $10,945 $11,485
-------------------------------------------- Gross Margin $19,403
$18,639 $19,738 $18,890
============================================ Gross Margin % 62% 62%
64% 62% *T -0- *T Exhibit 5 Reconciliation of EBITDA and Non-GAAP
Measurements (in thousands) (unaudited) Last 12 Months For the Nine
Months Ended Ended ------------------------- ------------ 9/30/06
9/30/05 9/30/06 ------------ ------------ ------------ EBITDA
(Earnings Before Interest, Taxes, Depreciation and Amortization)
--------------------------------------------------------- Net
income (loss), as reported $7,983 ($5,185) $9,230 Adjustments to
Net Income for EBITDA Interest Expense $311 $763 $155 Interest
Income ($1,266) ($444) ($1,571) Benefit (provision) for Income
Taxes $262 $128 $411 Depreciation and Amortization $5,935 $8,739
$8,072 ------------ ------------ ------------ Subtotal Adjustments
for EBITDA 5,242 9,186 7,067 ------------ ------------ ------------
EBITDA $13,225 $4,001 $16,297 ============ ============
============ Proforma Net Income (Loss) before Preferred Stock
Accretion ---------------------------------------------------------
Net income (loss), as reported $7,983 ($5,185) $9,230 Exit Cost on
Facility Closing (San Rafael) - 1,066 - Exit Cost on Facility
Closing (Discontinued Operation) - 1,849 - Cash Severance 457 2,844
457 Non-Cash Severance - 1,442 - Costs of Litigation 1,151 - 1,151
Gain on Sale of EDI Division - (383) - Loss from Discontinued
Operation - 654 (68) ------------ ------------ ------------
Subtotal Proforma adjustments 1,608 7,472 1,540 ------------
------------ ------------ Proforma net income (loss) $9,591 $2,287
$10,770 ============ ============ ============ Proforma Income
(Loss) from Operations
--------------------------------------------------------- Income
(loss) from operations, as reported $7,196 ($2,198) $8,013 Exit
Cost on Facility Closing (San Rafael) - 1,066 - Cash Severance 457
2,844 457 Non-Cash Severance - 1,442 - Costs of Litigation 1,151 -
1,151 Gain on Sale of EDI Division - (383) - ------------
------------ ------------ Subtotal Proforma adjustments 1,608 4,969
1,608 ------------ ------------ ------------ Proforma Income (loss)
from operations $8,804 $2,771 $9,621 ============ ============
============ Other Information
--------------------------------------------------------- Revenue
$93,988 $91,104 $125,197 Costs of Revenue $34,151 $33,837 $45,957
------------ ------------ ------------ Gross Margin $59,837 $57,267
$79,240 ============ ============ ============ Gross Margin % 64%
63% 63% *T
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