QD Quadramed Corp.

QuadraMed Corporation (Amex:QD) announced today that it will report net income of $2.2 million before preferred stock accretion for the three months ended June 30, 2007, compared to a net income of $3.8 million before preferred stock accretion for the same period in 2006. Income from operations was $1.3 million for the three months ended June 30, 2007, compared to income from operations of $3.6 million for the same period in 2006. Cash and investments increased by $3.4 million during the three months ended June 30, 2007, to $56.2 million, and have increased $11.7 million since December 31, 2006. Cash flow from operations was $4.9 million for three months ended June 30, 2007, compared to $4.1 million for the corresponding three months in 2006. Revenues of $34.4 million (including a $3.7 million sale of hardware to a single customer), gross margin of 53% and operating expenses of $17.0 million combined to produce the achieved operating results for the quarter. These are compared to revenues of $32.0 million, gross margin of 65% and operating expenses of $17.3 million for the same period in 2006. Total operating expenses of $17.0 million for the three months ended June 30, 2007 are compared to $17.3 million for the three months ended June 30, 2006. After removing the effect of $0.4 million of acquisition related expenses from the 2007 figures, operating expenses decreased approximately $0.7 million between the three month periods. EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) was $3.1 million or 9% of revenues for the three months ended June 30, 2007, compared to EBITDA of $5.7 million or 18% of revenues for the same period in 2006. The Company will also report net income attributable to common shareholders of $0.9 million, or $0.02 per basic and diluted share, for the three months ended June 30, 2007; this is compared to a net income attributable to common shareholders of $2.3 million, or $0.06 per basic and $0.05 per diluted share, for the same period in 2006. �These second quarter results continue our string of profitable quarters, now five in a row and six out of the last seven. Our sales bookings for the first half of the year are ahead of the internal targets we set coming into this year. We believe this market success is beginning to validate the changes we made in the sales structure at the beginning of the year, as well as our new product strategy focused on the Care-based Revenue Cycle process. With the recent announcement of our plans to acquire the CPR product line, we are now positioning QuadraMed to actively compete in the large hospital market, which is the next logical step in our strategic plan targeted at long term success,� said Keith Hagen, QuadraMed�s President and Chief Executive Officer. The Company reported on July 22, 2007 that it had signed a definitive agreement to acquire the Computerized Patient Record (CPR) assets and related business of Misys Healthcare, a division of Misys plc (FTSE: MSY.L), for $33 million in cash, and that the transaction is expected to close within sixty days from the date of the announcement. Misys CPR is a leading enterprise-wide computerized patient record and electronic health record system. Management will review these results in an investment community conference call at 4:00 PM Eastern (1:00 PM Pacific) on Wednesday, August 8, 2007. 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 800-263-8506 domestic and 719-457-2681 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. Webcast replays will be available shortly after the live call is completed. Replay will be available until August 14, 2007. Replay telephone numbers are 719/457-0820 or 888/203-1112; replay passcode is 2711945. Attachments Exhibit 1 � Condensed Consolidated Balance Sheets (unaudited) as of June 30, 2007 and December 31, 2006 � Exhibit 2 Condensed Consolidated Statements of Operations (unaudited) for the Three Months Ended June 30, 2007 and 2006 and Six Months Ended June 30, 2007 and 2006 � Exhibit 3 Condensed Consolidated Statements of Cash Flows (unaudited) for the Three Months Ended June 30, 2007 and 2006 and Six Months Ended June 30, 2007 and 2006 � Exhibit 4 Reconciliation of EBITDA and Non-GAAP Measurements (unaudited) for the Three Months Ended June 30, 2007, March 31, 2007, December 31, 2006, September 30, 2006, June 30, 2006 and March 31, 2006 � Exhibit 5 Reconciliation of EBITDA and Non-GAAP Measurements (unaudited) for the Six Months Ended June 30, 2007 and June 30, 2006 and the Twelve Months Ended June 30, 2007 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 within the meaning of the Private Securities Litigation Reform Act of 1995 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. QuadraMed Corporation�s trademark: �Quality Care. Financial Health� is pending registration. 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) � June 30, December 31, ASSETS 2007 2006 � Current assets Cash and cash equivalents $ 31,472 $ 32,596 Short-term investments 23,537 10,703 Accounts receivable, net of allowance for doubtful accounts of $1,374 and $2,612, respectively 20,188 20,358 Unbilled and other receivables 1,170 4,253 Prepaid expenses and other current assets, net of allowance on other receivable of $910 and $833, respectively � 7,704 � � 10,848 � Total current assets 84,071 78,758 � Restricted cash 2,435 2,341 Long-term investments 1,209 1,244 Property and equipment, net of accumulated depreciation and amortization of $22,009 and $21,131, respectively 2,175 2,557 Goodwill 25,983 25,983 Other intangible assets, net of accumulated amortization of $30,055 and $28,354, respectively 430 2,132 Other long-term assets � 3,185 � � 3,183 � Total assets $ 119,488 � $ 116,198 � LIABILITIES AND STOCKHOLDERS� EQUITY � Current liabilities Accounts payable and accrued expenses $ 2,519 $ 3,493 Accrued payroll and related 6,539 8,720 Other accrued liabilities 5,003 5,666 Dividends payable 945 3,775 Deferred revenue � 49,821 � � 46,347 � Total current liabilities 64,827 68,001 � Accrued exit cost of facility closing 1,307 2,066 Deferred Income Taxes 1,192 1,042 Other long-term liabilities � 2,580 � � 2,618 � Total liabilities 69,906 73,727 � Stockholders� equity Preferred stock, $0.01 par, 5,000 shares authorized, 4,000 shares issued and outstanding, respectively 95,923 93,290 Common stock, $0.01 par, 150,000 shares authorized; 44,486 and 43,678 shares issued and 44,029 and 43,221 outstanding, respectively 445 437 Shares held in treasury (5 ) (5 ) Additional paid-in-capital 306,863 304,504 Accumulated other comprehensive loss (129 ) (49 ) Accumulated deficit � (353,515 ) � (355,706 ) Total stockholders� equity � 49,582 � � 42,471 � Total liabilities and stockholders� equity $ 119,488 � $ 116,198 � Exhibit 2 � QUADRAMED CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) (unaudited) � Three months ended, Six months ended, June 30, � June 30, 2007 2006 2007 2006 Revenue Services $ 5,011 $ 2,823 $ 8,539 $ 5,738 Maintenance 14,234 14,241 28,159 27,803 Installation and other � 2,684 � � 3,284 � � 5,242 � � 6,156 � Services and other revenue 21,929 20,348 41,940 39,697 Licenses 9,515 11,252 18,189 20,385 Hardware � 2,918 � � 428 � � 3,439 � � 874 � Total revenue � 34,362 � � 32,028 � � 63,568 � � 60,956 � � Cost of revenue Cost of services and other revenue 8,685 6,803 15,712 13,933 Royalties and other 4,057 2,991 7,036 5,663 Amortization of acquired technology and capitalized software � 354 � � 956 � � 825 � � 1,951 � Cost of license revenue 4,411 3,947 7,861 7,614 Cost of hardware revenue � 2,895 � � 383 � � 3,387 � � 575 � Total cost of revenue � 15,991 � � 11,133 � � 26,960 � � 22,122 � Gross margin � 18,371 � � 20,895 � � 36,608 � � 38,834 � � Operating expense General and administration 4,579 4,261 8,452 10,818 Software development 7,662 8,432 15,074 17,001 Sales and marketing 3,913 3,543 7,809 7,239 Amortization of intangible assets and depreciation 875 � � 1,081 � 1,798 � � 2,204 � Total operating expenses � 17,029 � � 17,317 � � 33,133 � � 37,262 � Income (loss) from operations � 1,342 � � 3,578 � � 3,475 � � 1,572 � � Other income (expense) Interest expense, includes non-cash charges of $33, $102, $84 and $221, respectively (33 ) (103 ) (83 ) (226 ) Interest income 644 399 1,217 765 Other income (expense), net � 409 � � 36 � � 486 � � 54 � Other income (expense) � 1,020 � � 332 � � 1,620 � � 593 � � Income (loss) from continuing operations before income taxes $ 2,362 $ 3,910 $ 5,095 $ 2,165 Provision for income taxes � (162 ) � (63 ) � (271 ) � (161 ) Income (loss) from continuing operations 2,200 3,847 4,824 2,004 � Net income (loss) $ 2,200 $ 3,847 $ 4,824 $ 2,004 Preferred stock accretion � (1,325 ) � (1,507 ) � (2,633 ) � (2,996 ) � Net income (loss) attributable to common shareholders $ 875 � $ 2,340 � $ 2,191 � $ (992 ) � Income (loss) per share-basic Basic $ 0.02 $ 0.06 $ 0.05 $ (0.02 ) Diluted 0.02 0.05 0.05 (0.02 ) Weighted average shares outstanding Basic � 43,665 � � 41,864 � � 43,735 � � 41,602 � Diluted � 43,665 � � 78,072 � � 43,735 � � 41,602 � Exhibit 3 � QUADRAMED CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) � Three months ended Six months ended June 30, June 30, 2007 2006 2007 2006 Cash flows from operating activities Net income (loss) attributable to common shareholders $ 875 $ 2,340 $ 2,191 $ (992 ) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 1,230 2,037 2,624 4,155 Deferred compensation amortization 96 97 192 193 Dividend discount amortization 15 84 48 185 Provision for bad debts 25 434 181 820 Stock-based compensation expense 356 196 739 467 Gain on sales of investments (18 ) - (29 ) - Interest expense on note payable 18 18 36 36 Preferred stock accretion and dividend premium 1,325 1,506 2,633 2,995 Other - (21 ) - (21 ) � Changes in assets and liabilities: Accounts receivable 1,160 4,855 1,450 3,482 Prepaid expenses and other 5,103 (886 ) 4,873 286 Accounts payable and accrued liabilities 97 (683 ) (4,576 ) (4,586 ) Deferred revenue (5,350 ) (5,861 ) 3,474 � 2,385 � Cash provided by operating activities 4,932 4,116 13,836 9,405 � Cash flows from investing activities Decrease in restricted cash (148 ) (57 ) (94 ) 23 Purchases of available-for-sale securities (16,157 ) (562 ) (33,569 ) (677 ) Proceeds from the sale of assets and available-for-sale securities, net 15,649 558 20,695 658 Purchases of property and equipment (313 ) (245 ) (540 ) (500 ) Other � (16 ) � 11 � � (9 ) � 35 � Cash used in investing activities (985 ) (295 ) (13,517 ) (461 ) � Cash flows from financing activities Payment of preferred stock dividends (1,375 ) (1,625 ) (2,878 ) (3,250 ) Proceeds from issuance of common stock and other � 401 � � 172 � � 1,435 � � 418 � Cash used in financing activities (974 ) (1,453 ) (1,443 ) (2,832 ) � Net increase (decrease) in cash and cash equivalents 2,973 2,368 (1,124 ) 6,112 � Cash and cash equivalents, beginning of period � 28,499 � � 36,786 � � 32,596 � � 33,042 � � Cash and cash equivalents, end of period $ 31,472 � $ 39,154 � $ 31,472 � $ 39,154 � Exhibit 4 � QUADRAMED CORPORATION Reconciliation of EBITDA and Non-GAAP Measurements (in thousands) (unaudited) � � For the Three Months Ended 6/30/07 3/31/07 12/31/06 9/30/06 6/30/06 3/31/06 � � EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) � � Net income (loss), as reported $ 2,200 $ 2,624 $ 3,962 $ 5,979 $ 3,847 ($1,843 ) � Adjustments to Net Income for EBITDA Interest Expense 33 50 68 85 103 123 Interest Income (644 ) (573 ) (480 ) (501 ) (399 ) (366 ) Benefit (provision) for Income Taxes 162 109 80 101 63 98 Depreciation and Amortization � 1,326 � � 1,490 � � 1,756 � � 1,878 � � 2,133 � � 2,215 � Subtotal Adjustments for EBITDA 877 1,076 1,424 1,563 1,900 2,070 � � � � � � � � � � � � EBITDA $ 3,077 � $ 3,700 � $ 5,386 � $ 7,542 � $ 5,747 � $ 227 � � Proforma Net Income (Loss) before Preferred Stock Accretion � � Net income (loss), as reported $ 2,200 $ 2,624 $ 3,962 $ 5,979 $ 3,847 ($1,843 ) � Proforma adjustments to Net income (loss) Cash Severance 110 - - - 142 315 Non-Cash Severance - - - - - - Costs of Litigation - - - - 27 1,124 Strategic Initiatives � 412 � � - � � - � � - � � - � � - � Subtotal Proforma adjustments 522 - - - 169 1,439 � � � � � � � � � � � � Proforma net income (loss) $ 2,722 � $ 2,624 � $ 3,962 � $ 5,979 � $ 4,016 � � ($404 ) � Proforma Income (Loss) from Operations � � � Income (loss) from operations, as reported $ 1,342 $ 2,133 $ 3,623 $ 5,624 $ 3,578 ($2,006 ) � Proforma adjustments to Income (loss) from Operations - Cash Severance 110 - - - 142 315 Non-Cash Severance - - - - - - Costs of Litigation - - - - 27 1,124 Strategic Initiatives � 412 � � - � � - � � - � � - � � - � Subtotal Proforma adjustments 522 - - - 169 1,439 � � � � � � � � � � � � Proforma Income (loss) from operations $ 1,864 � $ 2,133 � $ 3,623 � $ 5,624 � $ 3,747 � � ($567 ) � Other Information � Revenue $ 34,362 $ 29,206 $ 31,213 $ 33,032 $ 32,028 $ 28,928 Costs of Revenue $ 15,991 � $ 10,969 � $ 12,171 � $ 10,975 � $ 11,133 � $ 10,989 � Gross Margin $ 18,371 � $ 18,237 � $ 19,042 � $ 22,057 � $ 20,895 � $ 17,939 � Gross Margin % 53 % 62 % 61 % 67 % 65 % 62 % Exhibit 5 � QUADRAMED CORPORATION Reconciliation of EBITDA and Non-GAAP Measurements (in thousands) (unaudited) � � For the Six Months Ended Last 12 Months Ended 6/30/07 6/30/06 6/30/07 � � EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) � Net income (loss), as reported $ 4,824 $ 2,004 $ 14,765 � Adjustments to Net Income for EBITDA Interest Expense 83 226 236 Interest Income (1,217 ) (765 ) (2,198 ) Benefit (provision) for Income Taxes 271 161 452 Depreciation and Amortization � 2,816 � � 4,348 � � 6,450 � Subtotal Adjustments for EBITDA 1,953 3,970 4,940 � � � � � � EBITDA $ 6,777 � $ 5,974 � $ 19,705 � � Proforma Net Income (Loss) before Preferred Stock Accretion � Net income (loss), as reported $ 4,824 $ 2,004 $ 14,765 � Cash Severance 110 457 110 Non-Cash Severence - - - Costs of Litigation - 1,151 - Strategic Initiatives � 412 � � - � � 412 � Subtotal Proforma adjustments 522 1,608 522 � � � � � � Proforma net income (loss) $ 5,346 � $ 3,612 � $ 15,287 � � Proforma Income (Loss) from Operations � Income (loss) from operations, as reported $ 3,475 $ 1,572 $ 12,722 � Cash Severance 110 457 110 Non-Cash Severence - - - Costs of Litigation - 1,151 - Strategic Initiatives � 412 � � - � � 412 � Subtotal Proforma adjustments 522 1,608 522 � � � � � � Proforma Income (loss) from operations $ 3,997 � $ 3,180 � $ 13,244 � � Other Information � Revenue $ 63,568 $ 60,956 $ 127,813 Costs of Revenue $ 26,960 � $ 22,122 � $ 50,106 � Gross Margin $ 36,608 � $ 38,834 � $ 77,707 � Gross Margin % 58 % 64 % 61 %