ATLANTA, Aug. 9 /PRNewswire-FirstCall/ -- NDCHealth Corporation today announced financial results for its fourth quarter and fiscal year ended May 28, 2004. In addition, the company announced its intention to sell its European operations, which are now reported as discontinued operations.
For the fiscal year, total revenue increased to $436.3 million from $416.0 million in the fiscal year ended May 30, 2003. Adjusted EBITDA(1), a non-GAAP measure, was $118.3 million. Income from continuing operations was $26.3 million, or $0.74 per diluted share, compared to income of $32.8 million, or $0.94 per diluted share, in fiscal 2003. Fiscal 2004 and 2003 net income each included restructuring and other charges of $5.1 million, or $0.09 per diluted share. The fiscal 2004 charges primarily related to severance and office consolidations. Fiscal 2004 results also included a non- cash charge of $4.5 million, or $0.12 per diluted share, to write down a company investment described below. Fiscal 2003 results included pre-tax charges of approximately $16.8 million, or $0.40 per diluted share after tax, related to early extinguishment of debt and investment losses related to the sale of MedUnite.
Full-year net cash provided by operating activities was $102.9 million. Free cash flow(2), a non-GAAP measure, was $54.9 million in fiscal 2004. The company reduced its outstanding debt by $26.0 million during the year.
In the fourth quarter of fiscal 2004, total revenue was $111.5 million, versus $111.3 million in the same period of fiscal 2003, and adjusted EBITDA was $20.5 million. Loss from continuing operations was $1.7 million, or $(0.05) per share, compared to net income of $10.9 million, or $0.31 per diluted share, in the fourth quarter last fiscal year. As noted above, the fourth quarter of fiscal 2004 included a non-cash charge of $4.5 million, or $0.12 per diluted share, to write down an investment in a company providing e-prescribing software and connectivity to physicians. NDCHealth will focus its e-prescribing efforts on connecting pharmacies to physician interface providers. The fourth quarter also included restructuring and other charges of $1.8 million, or $0.03 per diluted share, primarily related to severance and office consolidations.
Other expenses adversely affecting Income from continuing operations in the fourth quarter of fiscal 2004 included $1.1 million in corporate expenses resulting from the independent review of physician software sales; $1.0 million in non-cash product termination costs; and $1.5 million in ArcLight-related expenses.
Fourth quarter results were impacted by revenue declines, compared to the prior year, in the company’s physician software product line and Information Management segment, as well as transitions to next-generation hospital and pharmacy systems. In the physician product line, NDCHealth changed its business practice to require sales to value added resellers (VARs) to be on a cash basis rather than credit terms. While this change increased the rate of cash collections, it also had the temporary effect of reducing the rate of new physician software sales. The Information Management segment generated lower revenue from non-recurring consulting and legacy services to pharmaceutical manufacturers due to a weak environment for discretionary spending in the pharmaceutical industry. The decline in revenue in the physician product line and in Information Management services totaled approximately $10.2 million from the fourth quarter of fiscal 2003. In addition, the company experienced a slowing revenue trend from certain mature system products as customers anticipate the sale and installation of new products such as NDC ePREMIS(TM) for hospitals and T-Rex One(R) and Enterprise for pharmacies.
“Our management and board, aided by outside advisors, have thoroughly reviewed our strategy, performance and outlook, and have considered a wide range of steps to deliver shareholder value,” said Walter Hoff, chairman and CEO, NDCHealth. “We will enhance shareholder value over the coming quarters by exiting the European market; terminating certain product initiatives that do not offer sufficient near-term returns; and focusing on the acceleration of sales, installations and revenue growth with our core customer groups. We expect these actions to deliver improving results over the course of fiscal 2005, and we will continue to consider additional steps to maximize shareholder value.
“We believe we made significant progress in fiscal 2004 as we launched several new Network Services and Systems products, increased the installation backlog for our pharmacy and hospital system solutions, and introduced a number of unique, next-generation pharma information products that are gaining market acceptance. We also have built a strong, high-quality pipeline of new sales for all of these solutions,” Mr. Hoff continued. “We believe we are well positioned to deliver revenue and profit growth beginning in the second quarter of fiscal 2005. Most importantly, our strong line-up of product offerings continues to generate substantial levels of cash flow that enable us to repay debt and invest in future growth.
“This time last year, we knew we were moving into a period of substantial business transition, and we set a series of financial targets to provide a path toward future performance and success. While we have not yet delivered the revenue growth and margin expansion that we are targeting, we have already generated $54.9 million against our goal to deliver $100 million in free cash flow during the two-year period ending May 2005,” Mr. Hoff commented. “We have continued to pay down debt, and have lowered our debt-to-capital ratio from a year ago by 475 basis points to 47.5%.”
Business Focus
In order to focus on its significant U.S. market opportunities and eliminate its net losses in Europe, NDCHealth’s board of directors has authorized the sale of the company’s European operations in Germany and the United Kingdom, which are now recorded as discontinued operations. Revenue from discontinued operations was $5.0 million and $20.4 million in the 2004 fourth quarter and fiscal year, respectively, and $3.9 million and $13.6 million in the fourth quarter and fiscal year ended May 30, 2003, respectively. In recording these businesses as discontinued operations, the company incurred an after-tax charge of $7.2 million or $0.20 per diluted share to write down the carrying value of the assets.
As it narrows its focus on the best, near-term growth opportunities in its Network Services and Systems and Information Management segments, the company incurred a non-cash charge of $4.5 million, or $0.12 per diluted share, to write down an investment in a physician system electronic prescribing company. The company also incurred a non-cash charge of $1.0 million, or $0.02 per diluted share, to write off its investment in a new information product that no longer offered prospects for an appropriate financial return.
Business Highlights
The company is now reporting as a separate segment its emerging Pharmacy Benefit Services business, which was historically small and considered a part of its pharmacy-oriented products and services in the Network Services and Systems segment. During the second half of fiscal 2004, the company expanded these pharmacy services beyond claims adjudication into a broader array of administrative services, and given its increased revenue contribution, it is now reported separately. The past 12 months included the following developments:
- Network Services and Systems segment revenue, excluding Pharmacy Benefit Services, increased 1.2% in fiscal 2004 but declined 10.8% in the fourth quarter from the same periods last year. This decrease was primarily caused by lower physician software sales and the transition to next-generation systems for hospitals and pharmacies. - Physician-related revenue in the fourth quarter declined $7.4 million or 54.4% when compared to the same period in fiscal 2003. This decline was due primarily to the change in selling software on a cash basis instead of with credit terms, which led to significantly fewer system sales in the fourth quarter. The company expects fiscal 2005 revenue to improve to more normal levels beginning in the second quarter as VARs again begin to purchase systems. New upgrades scheduled for release beginning in October 2004 will contain a number of new features, including the recent HIPAA security requirements, which are expected to generate increased demand. - Pharmacy systems and services revenue increased 5.1% in the fourth quarter of fiscal 2004 compared to the fourth quarter of fiscal 2003, and 8.5% for the year, due primarily to increases in Network services, such as pre- and post-editing services, information and analytic product sales to pharmacy customers. While network transactions grew, transaction revenue growth lagged volume growth due to an increasing share of transactions from larger pharmacy chains where pricing is lower than average due to volume rate structures. Overall, pharmacy systems revenue declined modestly as legacy systems revenue decreased while revenue from new T-Rex One system sales showed initial acceleration as part of the recurring revenue model. NDCHealth sold more than 65 T-Rex One solutions to regional and independent pharmacies during the fourth quarter and more than 300 during the year. Approximately 250 T-Rex One installations were completed through fiscal 2004. - Hospital revenue decreased 6.6% in the fourth quarter and 0.2% in fiscal 2004 compared to the same periods in fiscal 2003 due to a transition to the new hospital system that resulted in lower, non- recurring training and support services revenue related to the company’s legacy system product. Revenue from its newest revenue cycle management offering, NDC ePREMIS, partially offset this decline and continues to experience significant sales and installation momentum. The company sold approximately 100 ePREMIS units during the fourth quarter and more than 600 for the year. More than 70 units were installed during the fourth quarter and 270 units during the year, with over 330 units already scheduled for installation during fiscal 2005. Approximately 70% of the units scheduled for installation in fiscal 2005 will be in new customer facilities. - Other revenue, which includes data processing services provided to Global Payments, Inc. and third-party paper claims and statement printing services, decreased 12.3% in fiscal 2004 to $14.3 million. - Network services’ transaction volume totaled more than 4.9 billion, up 24.1% from fiscal 2003 as the company continued to gain market share by growing its base healthcare claims volume and increasing penetration of its value-adding transaction services. Fourth quarter Network transaction volume totaled 1.29 billion, up 11.5% from the same period last year. - Information Management revenue in the U.S. decreased $2.8 million or 7.1% in the fourth quarter compared to the same quarter last year. Lower revenue from non-recurring consulting and legacy services in a weak discretionary spending environment for pharmaceutical manufacturers more than offset a doubling in emerging, new product revenue to $3.7 million from the company’s new Insight and Impact product suites. - Pharmacy Benefit Services revenue more than doubled in both the fourth quarter and fiscal year due to the rapid expansion of the administrative services component, and comprised more than 10% of total company revenue in the fourth quarter. This segment provides primarily health plans and self-insured employers with tools and resources to manage their pharmacy benefit plans more efficiently, such as claims processing and adjudication, consulting on clinical guidelines, formulary management, pharmacy network development and administration, and various reporting services. Because revenue from administrative services includes the underlying prescription drug cost, margins are low and reported revenue growth did not contribute notably to profits.
Cost of Service increased $9.4 million from the fourth quarter a year ago to $64.4 million, reflecting growth in Pharmacy Benefit Services segment. Cost of Service declined slightly in each of the Network Services and Systems and Information Management segments.
Sales, General and Administrative expenses in the fourth quarter rose 13.2% or $3.1 million from a year ago, primarily due to expenses and professional fees related to the independent review of physician system sales, increased personnel and professional costs in response to corporate and regulatory requirements, and higher audit and insurance expenses.
Outlook
The company expects first quarter revenue to be similar to the fourth quarter just ended. Moderate growth in Pharmacy Benefit Services is likely to be offset by the typical seasonal decline experienced during the summer months in NDCHealth’s other businesses. Diluted Earnings Per Share from continuing operations should be between breakeven and earnings of $0.05. The company expects revenue and earnings per share to accelerate each quarter sequentially through the remainder of the year, beginning in the second quarter, reflecting growth in revenue from the sale and implementation of newer services for the company’s information, pharmacy and hospital customers and a recovery in revenue from physician products and services.
Conference Call for Analysts and Investors
Management will host a conference call to discuss these results today, August 9, 2004 beginning at 5:00 pm ET. The conference call can be accessed by dialing 877-421-3895 (706-679-0822 for international/local callers), or by webcast through the Investor Relations page at http://www.ndchealth.com/ . A replay of the conference call will be available through 11:59 pm ET on August 20, 2004, and can be accessed either through the webcast or by dialing 800-642-1687 (706-645-9291 for international/local callers) and entering conference ID 8793683.
Cautionary Information Regarding Forward-Looking Statements
This press release contains forward-looking statements related to the company’s expected business outlook for fiscal year 2005 and guidance for the first fiscal quarter of 2005. These statements involve risks and uncertainties that may cause actual results to differ materially. The company’s business outlook and the projected results for future periods are based on preliminary estimates, assumptions and projections that management believes to be reasonable at this time, but are beyond management’s control. Forward-looking statements are only predictions and are not guarantees of performance, and include statements preceded by, followed by or that include the words “may,” “could,” “would,” “should,” “believe,” “expect,” “anticipate,” “plan,” “estimate,” “target,” “project,” “intend,” or similar expressions. These statements include, among others, statements regarding the company’s expected business outlook, anticipated financial and operating results, its business strategy and means to implement the strategy, the company’s objectives, the amount and timing of future capital expenditures, the likelihood of the company’s success in developing and introducing new products and expanding its business, the timing of the introduction of new and modified products or services, financing plans, working capital needs and sources of liquidity. These forward-looking statements are based on management’s beliefs and assumptions, which in turn are based on currently available information. Important risks and assumptions relating to the forward-looking statements include, without limitation: (1) the company’s ability to expand in new and existing markets; (2) demand for the company’s products and services; (3) the cost of product development; (4) the timely completion, market demand and acceptance of the company’s new pharmacy and information products; (5) competitive forces; (6) gains in market share; (7) industry conditions affecting the company’s customers; (8) expected pricing levels; (9) expected growth of revenue and net income; (10) the timing and cost of planned capital expenditures; (11) the availability of capital to invest in business growth and expansion; (12) the timing of recognition of certain revenue; (13) access to data from suppliers; (14) the potential for information or network services interruptions; (15) adequate protection of proprietary technology; (16) unanticipated changes in accounting rules and/or interpretations; (17) complex state and federal regulations and its impact on the demand for information products or availability of certain data; (18) expected outcomes and cost of pending litigation; (19) expected synergies relating to acquisitions, joint ventures and strategic alliances; (20) expected proceeds from disposition of certain assets; (21) the company’s ability to maintain compliance with certain restrictive debt covenants or obtain a waiver and/or amendments to its credit agreements; and (22) the company’s substantial indebtedness, which could adversely affect its financial condition, results of operations and liquidity. Many of these risk factors and assumptions are beyond the company’s ability to control or predict, and are not intended to represent a complete list of all risks and uncertainties inherent in the company’s business, and should be read in conjunction with the more detailed cautionary statements included in NDCHealth’s Current Report on Form 8-K filed today and Annual Report on Form 10-K for the fiscal year ended May 28, 2004 that will be filed with the Securities and Exchange Commission as well as other SEC filings by the company. The company believes its forward-looking statements are reasonable; however, you should not place undue reliance on any forward-looking statements, which are based on the company’s current assumptions and expectations. Further, forward-looking statements speak only as of the date they are made, and the company undertakes no obligation to update publicly any of them in light of new information or future events.
About NDCHealth
NDCHealth is a leading provider of health information solutions that add value to pharmacy, hospital, physician, pharmaceutical and payer businesses.
(1) Adjusted EBITDA, a non-GAAP measure, can be derived from the company’s Statement of Operations, and is defined as Operating Income before Depreciation and Amortization, Restructuring and Other Charges, and amortization of non-cash equity compensation. Reconciliation of adjusted EBITDA to the most directly comparable GAAP financial measure is provided in the accompanying tables. (2) Free cash flow, a non-GAAP measure, can be derived from the company’s Statement of Cash Flows, and is defined as net cash provided by operating activities less capital expenditures and dividends paid. Reconciliation of free cash flow to the most directly comparable GAAP financial measure is provided in the accompanying table. CONSOLIDATED STATEMENTS OF OPERATIONS NDCHealth Corporation and Subsidiaries (In thousands, except per share data) Quarter Ended May 28, May 30, 2004 2003 Revenue: Network Services and Systems $60,881 $68,247 Information Management 36,708 39,487 Pharmacy Benefits Services 13,879 3,558 111,468 111,292 Operating Expenses: Cost of Service 64,377 55,024 Sales, General and Administrative 26,670 23,561 Depreciation and Amortization 9,668 7,744 Restructuring and Other Charges 1,818 2,775 102,533 89,104 Operating Income 8,935 22,188 Other Income (Expense): Interest and Other Income 99 411 Interest and Other Expense (6,328) (7,138) Minority Interest in Losses 63 1,088 Early Extinguishment of Debt (143) - Gain (Loss) Related to Investments (4,475) 500 (10,784) (5,139) Income (Loss) from Continuing Operations before Income Taxes (1,849) 17,049 Provision (Benefit) for Income Taxes (132) 6,138 Income (Loss) from Continuing Operations (1,717) 10,911 Loss from Discontinued Operations (14,014) (451) Net Income (Loss) $(15,731) $10,460 Basic Earnings (Loss) Per Share: Continuing Operations $(0.05) $0.31 Discontinued Operations $(0.39) $(0.01) Basic Earnings (Loss) Per Share $(0.44) $0.30 Shares 35,603 34,682 Diluted Earnings (Loss) Per Share: Continuing Operations $(0.05) $0.31 Discontinued Operations $(0.39) $(0.01) Diluted Earnings (Loss) Per Share $(0.44) $0.30 Shares 35,603 34,992 CONSOLIDATED STATEMENTS OF OPERATIONS NDCHealth Corporation and Subsidiaries (In thousands, except per share data) Year Ended May 28, May 30, 2004 2003 Revenue: Network Services and Systems $257,046 $254,077 Information Management 149,329 149,200 Pharmacy Benefits Services 29,908 12,693 436,283 415,970 Operating Expenses: Cost of Service 223,046 203,861 Sales, General and Administrative 96,852 84,709 Depreciation and Amortization 35,868 30,146 Restructuring and Other Charges 5,115 5,058 360,881 323,774 Operating Income 75,402 92,196 Other Income (Expense): Interest and Other Income 470 1,192 Interest and Other Expense (27,781) (21,159) Minority Interest in (Earnings) Losses (435) 815 Early Extinguishment of Debt (143) (2,359) Loss Related to Investments (4,475) (14,455) (32,364) (35,966) Income from Continuing Operations before Income Taxes 43,038 56,230 Provision for Income Taxes 16,690 23,447 Income from Continuing Operations 26,348 32,783 Loss from Discontinued Operations (16,715) (2,181) Net Income $9,633 $30,602 Basic Earnings (Loss) Per Share: Continuing Operations $0.75 $0.95 Discontinued Operations $(0.48) $(0.07) Basic Earnings Per Share $0.27 $0.88 Shares 35,101 34,591 Diluted Earnings (Loss) Per Share: Continuing Operations $0.74 $0.94 Discontinued Operations $(0.47) $(0.06) Diluted Earnings Per Share $0.27 $0.88 Shares 35,847 34,941 CONSOLIDATED STATEMENTS OF CASH FLOWS NDCHealth Corporation and Subsidiaries (In thousands) Year Ended May 28, May 30, 2004 2003 Cash flows from operating activities: Net Income $9,633 $30,602 Adjustments to reconcile net income to cash provided by operating activities: Loss on discontinued operations 16,715 2,181 Loss related to investments 4,475 14,455 Non-cash early extinguishment of debt charges - 1,217 Non-cash restructuring and other charges 453 2,283 Depreciation and amortization 35,868 30,146 Deferred income taxes 15,740 19,366 Provision for bad debts 9,332 6,381 Other 5,007 4,959 Total adjustments 87,590 80,988 Changes in assets and liabilities net of the effects of acquisitions: Accounts receivable, net (12,744) (7,311) Prepaid expenses and other assets 1,540 (23,205) Accounts payable and accrued liabilities 10,490 (7,920) Accrued interest on long- term debt (2,358) 12,269 Deferred revenue 8,715 12,330 Net cash provided by operating activities 102,866 97,753 Cash flows from investing activities: Capital expenditures (42,267) (42,590) Proceeds from the sale of equipment 3,187 - Acquisitions and other investing activities (21,346) (112,679) Net cash used in investing activities (60,426) (155,269) Cash flows from financing activities: Net (repayments) borrowings under lines of credit - (91,000) Net principal payments under long- term debt arrangements (26,016) (7,799) Net cash (used in) provided by refinancing activities (399) 168,006 Net issuances related to stock activities 9,273 4,634 Dividends paid (5,694) (5,568) Net cash (used in) provided by financing activities (22,836) 68,273 Net cash used in discontinued operations (7,137) (8,396) Increase in cash and cash equivalents 12,467 2,361 Cash and cash equivalents, beginning of period 15,150 12,789 Cash and cash equivalents, end of period $27,617 $15,150 CONDENSED CONSOLIDATED BALANCE SHEETS NDCHealth Corporation and Subsidiaries (In thousands, except share data) May 28, May 30, 2004 2003 (As Restated) ASSETS Current Assets: Cash and Cash Equivalents $27,617 $15,150 Accounts Receivable 76,678 74,071 Allowance for Doubtful Accounts (7,612) (6,432) Accounts Receivable, Net 69,066 67,639 Deferred Income Taxes 28,441 26,024 Prepaid Expenses 22,063 16,648 Other Current Assets 15,667 15,870 Total Assets of Discontinued Operations 70,459 66,794 Total Current Assets 233,313 208,125 Property and Equipment, Net 77,052 84,921 Capitalized External Use Software, Net 64,038 49,220 Goodwill 364,743 358,708 Intangible Assets, Net 71,760 52,099 Deferred Income Taxes - 5,018 Debt Issuance Cost 12,963 12,756 Investments and Other Assets 22,683 19,770 Total Assets $846,552 $790,617 LIABILITIES AND STOCKHOLDERS’ EQUITY Current Liabilities: Current Portion of Long-term Debt $33,656 $7,472 Trade Accounts Payable 29,693 18,967 Accrued Compensation and Benefits 6,205 7,542 Accrued Interest 10,923 13,281 Deferred Revenue 45,981 35,056 Other Accrued Liabilities 35,212 28,494 Total Liabilities of Discontinued Operations 24,761 18,686 Total Current Liabilities 186,431 129,498 Deferred Revenue 7,208 9,461 Deferred Income Taxes 18,414 - Other Non-current Liabilities 27,949 28,084 Long-term Debt 269,619 321,819 Total Liabilities 509,621 488,862 Commitments and Contingencies - - Minority Interest in Equity of Subsidiaries 1,313 878 Stockholders’ Equity: Preferred Stock, par value $1.00 per share; 1,000,000 shares authorized, none issued Common Stock, par value $.125 per share; 200,000,000 shares authorized; 36,106,641 and 34,888,753 shares issued, respectively. 4,513 4,361 Capital in excess of par value 245,301 216,156 Retained Earnings 87,532 83,593 Deferred Compensation and Other (7,694) (4,301) Accumulated Other Comprehensive Income 5,966 1,068 Total Stockholders’ Equity 335,618 300,877 Total Liabilities and Stockholders’ Equity $846,552 $790,617 ADJUSTED EBITDA RECONCILIATION NDCHealth Corporation and Subsidiaries Adjusted EBITDA is defined as Operating Income before Depreciation and Amortization, Restructuring and Other Charges, and amortization of non-cash equity compensation. Adjusted EBITDA is not a Generally Accepted Accounting Principles (GAAP) measurement and may not be comparable to EBITDA reported by other companies. Management believes adjusted EBITDA provides investors with additional useful information to measure the company’s performance as it excludes certain items that either do not impact the company’s cash flows or which management believes are not reflective of the company’s core operating results over time. Reconciliation to the most directly comparable GAAP financial measure for the fourth quarter and fiscal years ended May 28, 2004 and May 30, 2003 to our results determined under GAAP are provided in the accompanying tables. (In thousands) Quarter Ended May 28, May 30, 2004 2003 Operating Income $8,935 $22,188 Depreciation and Amortization 9,668 7,744 Restructuring and Other Charges 1,818 2,775 Amortization of non-cash equity compensation (1) 80 169 Adjusted EBITDA $20,501 $32,876 Year Ended May 28, May 30, 2004 2003 Operating Income $75,402 $92,196 Depreciation and Amortization 35,868 30,146 Restructuring and Other Charges 5,115 5,058 Amortization of non-cash equity compensation (1) 1,878 1,161 Adjusted EBITDA $118,263 $128,561 (1) Amortization of non-cash equity compensation appears in the Consolidated Statements of Changes in Stockholders’ Equity in the company’s Form 10-K for the fiscal year ended May 28, 2004 that will be filed with the Securities and Exchange Commission. FREE CASH FLOW RECONCILIATION NDCHealth Corporation and Subsidiaries Free cash flow is defined as net cash provided by operating activities less capital expenditures and dividends paid. Free cash flow is not a Generally Accepted Accounting Principles (GAAP) measurement and may not be comparable to free cash flow reported by other companies. In light of the company’s goal to reduce its levels of senior debt and interest expense, management believes free cash flow is a meaningful measure of its ability to generate cash for the payment of debt. Reconciliation to the most directly comparable GAAP financial measure for the fiscal years ended May 28, 2004 and May 30, 2003 to our results determined under GAAP are provided in the accompanying table. (In thousands) Year Ended May 28, May 30, 2004 2003 Net cash provided by operating activities $102,866 $97,753 Capital expenditures (42,267) (42,590) Dividends paid (5,694) (5,568) Free cash flow $54,905 $49,595 NDCHealth Corporation Income Statement Summary (GAAP) (Unaudited) (in thousands) Fiscal 2004 Qtr 1 Qtr 2 Qtr 3 Qtr 4 YTD Revenue: Network Services and Systems $63,058 $66,859 $66,248 $60,881 $257,046 Information Management 35,941 38,762 37,918 36,708 149,329 Pharmacy Benefit Services 4,642 4,802 6,585 13,879 29,908 103,641 110,423 110,751 111,468 436,283 Operating Expenses: Cost of Service 51,426 53,049 54,194 64,377 223,046 Sales, General and Administrative 22,055 23,538 24,589 26,670 96,852 Depreciation and Amortization 8,579 8,694 8,927 9,668 35,868 Restructuring and Other Charges 1,499 1,798 - 1,818 5,115 83,559 87,079 87,710 102,533 360,881 Operating Income 20,082 23,344 23,041 8,935 75,402 Other Income (Expense) Interest and Other Income 102 155 114 99 470 Interest and Other Expense (7,413) (7,320) (6,720) (6,328) (27,781) Minority Interest in (Earnings) Losses (151) (267) (80) 63 (435) Early Extinguishment of Debt - - - (143) (143) Gain (Loss) Related to Investments - - - (4,475) (4,475) Other Income (Expense) (7,462) (7,432) (6,686) (10,784) (32,364) Income (Loss) from Continuing Operations before Income Taxes 12,620 15,912 16,355 (1,849) 43,038 Income Taxes 4,732 5,957 6,133 (132) 16,690 Income (Loss) from Continuing Operations 7,888 9,955 10,222 (1,717) 26,348 Loss from Discontinued Operations (534) (1,221) (946) (14,014) (16,715) Net Income $7,354 $8,734 $9,276 $(15,731) $9,633 Income (Loss) from Continuing operations 0.23 0.29 0.29 (0.05) 0.75 Loss from Discontinued Operations (0.02) (0.04) (0.03) (0.39) (0.48) Basic Earnings (Loss) per Share 0.21 0.25 0.26 (0.44) 0.27 Shares 34,746 34,824 35,232 35,603 35,101 Income (Loss) from Continuing Operations 0.22 0.28 0.28 (0.05) 0.74 Loss from Discontinued Operations (0.02) (0.03) (0.03) (0.39) (0.47) Diluted Earnings (Loss) per Share 0.21 0.25 0.26 (0.44) 0.27 Shares 35,114 35,619 36,284 35,603 35,847 NDCHealth Corporation Income Statement Summary (GAAP) (Unaudited) (in thousands) Fiscal 2003 Qtr 1 Qtr 2 Qtr 3 Qtr 4 YTD Revenue: Network Services and Systems $59,270 $63,128 $63,432 $68,247 $254,077 Information Management 34,589 36,045 39,079 39,487 149,200 Pharmacy Benefit Services 3,049 3,050 3,036 3,558 12,693 96,908 102,223 105,547 111,292 415,970 Operating Expenses: Cost of Service 49,120 49,341 50,376 55,024 203,861 Sales, General and Administrative 19,035 20,936 21,177 23,561 84,709 Depreciation and Amortization 7,311 7,206 7,885 7,744 30,146 Restructuring and Other Charges - - 2,283 2,775 5,058 75,466 77,483 81,721 89,104 323,774 Operating Income 21,442 24,740 23,826 22,188 92,196 Other Income (Expense) Interest and Other Income 256 214 311 411 1,192 Interest and Other Expense (3,131) (3,387) (7,503) (7,138) (21,159) Minority Interest in (Earnings) Losses (139) 60 (194) 1,088 815 Early Extinguishment of Debt - (921) (1,438) - (2,359) Gain (Loss) Related to Investments - - (14,955) 500 (14,455) Other Income (Expense) (3,014) (4,034) (23,779) (5,139) (35,966) Income (Loss) from Continuing Operations before Income Taxes 18,428 20,706 47 17,049 56,230 Income Taxes 6,636 7,455 3,218 6,138 23,447 Income (Loss) from Continuing Operations 11,792 13,251 (3,171) 10,911 32,783 Loss from Discontinued Operations (627) (574) (529) (451) (2,181) Net Income $11,165 $12,677 $(3,700) $10,460 $30,602 Income (Loss) from Continuing operations 0.34 0.38 (0.09) 0.31 0.95 Loss from Discontinued Operations (0.02) (0.02) (0.02) (0.01) (0.06) Basic Earnings (Loss) per Share 0.32 0.37 (0.11) 0.30 0.88 Shares 34,474 34,559 34,623 34,682 34,591 Income (Loss) from Continuing Operations 0.33 0.37 (0.09) 0.31 0.94 Loss from Discontinued Operations (0.02) (0.01) (0.02) (0.01) (0.06) Diluted Earnings (Loss) per Share 0.32 0.36 (0.11) 0.30 0.88 Shares 39,196 38,856 34,623 34,992 34,941 NETWORK SERVICES AND SYSTEMS SEGMENT REVENUE BY CUSTOMER GROUP NDCHealth Corporation and Subsidiaries (from continuing operations) ($ in millions) Fiscal 2004 Q1 Q2 Q3 Q4 YTD Pharmacy $34.9 $36.5 $38.8 $37.2 $147.4 Hospital $14.4 $14.4 $13.2 $14.1 $56.1 Physician $9.9 $12.4 $10.8 $6.2 $39.3 Other $3.9 $3.6 $3.4 $3.4 $14.3 Total $63.1 $66.9 $66.2 $60.9 $257.1 NETWORK SERVICES AND SYSTEMS SEGMENT REVENUE BY CUSTOMER GROUP NDCHealth Corporation and Subsidiaries (from continuing operations) ($ in millions) Fiscal 2003 Q1 Q2 Q3 Q4 YTD Pharmacy $32.5 $33.7 $34.3 $35.4 $135.9 Hospital $13.5 $13.4 $14.2 $15.1 $56.2 Physician $9.3 $12.0 $10.8 $13.6 $45.7 Other $4.0 $4.0 $4.1 $4.2 $16.3 Total $59.3 $63.1 $63.4 $68.3 $254.1 SEGMENT FINANCIAL SUMMARY NDCHealth Corporation and Subsidiaries (from continuing operations) ($ in millions) Fiscal 2004 Q1 Q2 Q3 Q4 YTD Network Services and Systems: Revenue $63.1 $66.9 $66.2 $60.9 $257.1 Cost of Service $28.0 $29.7 $28.4 $30.4 $116.5 Gross Profit $35.1 $37.2 $37.8 $30.5 $140.6 % margin 55.6% 55.6% 57.1% 50.1% 54.7% Operating Income $15.0 $15.7 $15.1 $7.3 $53.1 % margin 23.8% 23.5% 22.8% 12.0% 20.7% Information Management: Revenue $35.9 $38.8 $37.9 $36.7 $149.3 Cost of Service $19.7 $19.7 $20.1 $21.0 $80.5 Gross Profit $16.2 $19.1 $17.8 $15.7 $68.8 % margin 45.1% 49.2% 47.0% 42.8% 46.1% Operating Income $6.3 $8.6 $7.7 $2.4 $25.0 % margin 17.5% 22.2% 20.3% 6.5% 16.7% Pharmacy Benefit Services: Revenue $4.6 $4.8 $6.6 $13.9 $29.9 Cost of Service $3.7 $3.7 $5.7 $13.0 $26.1 Gross Profit $0.9 $1.1 $0.9 $0.9 $3.9 % margin 19.8% 22.9% 13.6% 6.5% 13.0% Operating Income $0.3 $0.5 $0.2 $(0.1) $0.9 % margin 6.5% 10.4% 3.0% -0.7% 2.9% Other: Operating Income $(1.50) $(1.40) $- $(0.60) $(3.50) NDCHealth - Total Revenue $103.6 $110.5 $110.7 $111.5 $436.3 Cost of Service $51.4 $53.1 $54.2 $64.4 $223.0 Gross Profit $52.2 $57.4 $56.5 $47.1 $213.2 % margin 50.4% 51.9% 51.0% 42.2% 48.9% Operating Income $20.1 $23.3 $23.0 $8.9 $75.4 % margin 19.4% 21.1% 20.8% 8.1% 17.3% SEGMENT FINANCIAL SUMMARY NDCHealth Corporation and Subsidiaries (from continuing operations) ($ in millions) Fiscal 2003 Q1 Q2 Q3 Q4 YTD Network Services and Systems: Revenue $59.3 $63.1 $63.4 $68.3 $254.1 Cost of Service $28.8 $29.0 $28.4 $30.6 $116.8 Gross Profit $30.5 $34.1 $35.0 $37.7 $137.3 % margin 51.4% 54.1% 55.2% 55.2% 54.0% Operating Income $15.1 $16.3 $14.1 $13.5 $59.0 % margin 25.5% 25.8% 22.2% 19.8% 23.2% Information Management: Revenue $34.6 $36.0 $39.1 $39.5 $149.2 Cost of Service $17.9 $18.0 $19.4 $21.4 $76.7 Gross Profit $16.7 $18.0 $19.7 $18.1 $72.5 % margin 48.3% 50.0% 50.4% 45.8% 48.6% Operating Income $6.3 $8.3 $9.7 $8.7 $33.0 % margin 18.2% 23.1% 24.8% 22.0% 22.1% Pharmacy Benefit Services: Revenue $3.0 $3.1 $3.0 $3.6 $12.7 Cost of Service $2.5 $2.3 $2.6 $3.0 $10.4 Gross Profit $0.5 $0.8 $0.4 $0.6 $2.3 % margin 16.7% 25.8% 13.3% 16.7% 18.1% Operating Income $- $0.2 $0.1 $- $0.3 % margin -% 6.5% 3.3% -% 1.6% Other: Operating Income $- $- $- $- $- NDCHealth - Total Revenue $96.9 $102.2 $105.5 $111.4 $416.0 Cost of Service $49.2 $49.3 $50.4 $55.0 $203.9 Gross Profit $47.7 $52.9 $55.1 $56.4 $212.1 % margin 49.2% 51.8% 52.3% 50.6% 51.0% Operating Income $21.4 $24.8 $23.9 $22.2 $92.2 % margin 22.1% 24.3% 22.7% 19.9% 22.2%
NDCHealth Corporation
CONTACT: Robert Borchert of NDCHealth Corporation, +1-404-728-2906, orrobert.borchert@ndchealth.com
Web site: http://www.ndchealth.com/