NEOF Neoforma Inc. (MM)

Independent Consultants Engaged to Assess Neoforma's Offering to Novation SAN JOSE, Calif., Jan. 26 /PRNewswire-FirstCall/ -- In connection with Neoforma, Inc.'s (NASDAQ:NEOF) decision to evaluate strategic alternatives, Neoforma, a leading provider of supply chain management solutions for the healthcare industry, and Novation, LLC, Neoforma's principal customer, each have engaged independent consultants to assess the technology, information, services and pricing provided by Neoforma to Novation and its owners, VHA Inc. and University HealthSystem Consortium (UHC), and their member hospitals under an exclusive outsourcing agreement. Neoforma announced on January 11, 2005 that it had retained Merrill Lynch & Co. as its financial advisor to assist the Company in evaluating strategic alternatives, including a possible sale or merger of the Company, to achieve greater stockholder value. VHA and UHC own 42.4% and 10.5%, respectively, of Neoforma's outstanding common stock. (Logo: http://www.newscom.com/cgi-bin/prnh/20030226/NEOFORMALOGO ) The current 10-year exclusive outsourcing agreement, which was originally entered into in March 2000, was most recently amended in August 2003 as a result of negotiations between the parties to the contract. Under the terms of that amendment, the quarterly maximum payment from Novation to Neoforma was established at $15.25 million, or $61.0 million per year, beginning in 2004. Since that time, Neoforma has documented significant value delivered by its offering to VHA and UHC hospitals. In 2004, approximately 280 VHA and UHC hospitals, representing a subset of Neoforma's customer base, documented approximately $100 million in value by using Neoforma's solutions to drive supply chain improvements within their organizations. Based on the value of its offering to Novation and to VHA and UHC hospitals, Neoforma believes that it is a valuable contributor to Novation, VHA and UHC maintaining their competitive position in the industry and to their hospitals' efforts to improve supply chain efficiency. Neoforma believes that the current quarterly maximum payment from Novation is reasonable. Novation has advised the Company, however, that its assessment could result in a formal request to reduce the quarterly maximum payment. Each of the consultants independently will assess the current technology, information, services and pricing that Neoforma develops and delivers under the outsourcing agreement. At this time, none of the parties to the outsourcing agreement have requested that the formal benchmarking process allowed under the terms of the agreement be undertaken; however, no assurances can be given that this process will not be requested by any of the parties at a later date. While the actual results of these assessments, which are expected to be completed within 45 days, or of any formal benchmarking process cannot be determined at this time, either process could have an impact on the structure and financial terms of the outsourcing agreement. About Neoforma Neoforma is a leading supply chain management solutions provider for the healthcare industry. Through a unique combination of technology, information and services, Neoforma provides innovative solutions to over 1,500 hospitals and suppliers, supporting more than $10 billion in annualized transaction volume. By bringing together contract information and order data, Neoforma's integrated solution set delivers a comprehensive view of an organization's supply chain, driving significant cost savings and better decision-making for both hospitals and suppliers. For more information, point your browser to http://www.neoforma.com/ . This news release contains forward-looking information within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements include statements related to Neoforma's consideration of strategic alternatives, the likelihood of a formal benchmarking process, the potential impact of the third party assessments being conducted of the services Neoforma provides to Novation, VHA and UHC and the timing for the completion of such third-party assessments. There are a number of risks that could cause actual results to differ materially from those anticipated by these forward-looking statements. These risks include the risk that no strategic alternative will ultimately be considered and that the results of the third-party assessments or formal benchmarking process could result in a revision of the outsourcing agreement that would negatively impact Neoforma's business. Other risks are described in Neoforma's periodic reports filed with the SEC, including its Quarterly Report on Form 10-Q for the quarter ended September 30, 2004. These statements are current as of the date of this release and Neoforma assumes no obligation to update the forward-looking information contained in this news release. NOTE: Neoforma is a trademark of Neoforma, Inc. Other Neoforma logos, product names and service names are also trademarks of Neoforma, Inc., which may be registered in other countries. Other product and brand names are trademarks of their respective owners. http://www.newscom.com/cgi-bin/prnh/20030226/NEOFORMALOGO http://photoarchive.ap.org/ DATASOURCE: Neoforma, Inc. CONTACT: media, Rebecca Oles, +1-408-468-4363, or , or investors, Amanda Mogin, +1-408-468-4251, or , both of Neoforma, Inc. Web site: http://www.neoforma.com/

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