Neoforma Reports First Quarter 2005 Financial Results SAN JOSE,
Calif., April 25 /PRNewswire-FirstCall/ -- Neoforma, Inc.
(NASDAQ:NEOF), a leading provider of supply chain management
solutions for the healthcare industry, generated total revenue of
$2.6 million on a generally accepted accounting principles (GAAP)
basis in the quarter ended March 31, 2005, a decrease from the $2.9
million reported in the same quarter in the previous year.
Excluding the impact of Emerging Issues Task Force Abstract No.
01-9 (EITF No. 01-9), Neoforma generated total adjusted revenue of
$18.0 million in the first quarter of 2005, a decrease from the
$18.4 million reported in the same quarter of the prior year.
(Logo: http://www.newscom.com/cgi-bin/prnh/20030226/NEOFORMALOGO )
In accordance with GAAP, Neoforma's net loss and net loss per share
were $17.0 million and $0.87, respectively, in the first quarter of
2005, increasing from the $13.2 million net loss and $0.69 net loss
per share reported in the same quarter of 2004. On an adjusted
basis, net income and net income per share were $3.5 million and
$0.18, respectively, decreasing from the $5.5 million net income
and $0.29 net income per share reported in the first quarter of
2004. Neoforma's adjusted financial information, which is not in
accordance with GAAP, excludes the application of EITF No. 01-9 and
certain expenses, gains and losses. Adjusted financial information
serves as a measure of the performance of Neoforma's ongoing core
operations. A description of the adjusted financial information for
the periods presented and a reconciliation of these results to GAAP
financial information are included in the attached financial
statements and are available in the investor relations section of
Neoforma's Web site at http://investor.neoforma.com/ . "While we
are exploring strategic alternatives, we continue to maintain our
focus on serving our customers with a high level of passion and
commitment to their success," says Bob Zollars, chairman and chief
executive officer. First Quarter 2005 Highlights In the first
quarter, Neoforma made significant progress in several key areas,
including: * Forged a strategic relationship with Consorta, Inc. to
provide order and data management solutions to Consorta members; *
Renewed contracts for all eight of the hospitals up for renewal
during the first quarter and signed seven new hospitals to
Marketplace@Novation(R); * Implemented approximately 700
connections, up nearly 50% over the same quarter of 2004; *
Supported $3.0 billion in volume, representing a 25% increase from
the same quarter in the previous year and comprised of $1.2 billion
in gross transaction volume and $1.8 billion in supply chain data;
and * Ended the quarter with $30.5 million in cash, cash
equivalents and short-term investments. First Quarter 2005
Financial Results For the quarter ended March 31, 2005, on a GAAP
basis, Neoforma generated $2.6 million in total revenue, entirely
comprised of non-related party revenue and decreasing from the $2.9
million in both total revenue and non-related party revenue
recognized in the same quarter in the prior year. The primary
reason for this decline was an anticipated $282,000 decrease in
revenue related to a technology license sale that occurred in 2001.
The revenue from this license sale was recognized over the
three-year life of the underlying agreement through August 2004. As
a result, the Company recognized $282,000 in revenue in the first
quarter of 2004 and no revenue in the first quarter of 2005 related
to this license sale. On an adjusted basis, excluding the impact of
EITF No. 01-9, Neoforma generated total revenue of $18.0 million in
the first quarter of 2005, consisting of $15.4 million in related
party revenue and $2.6 million in non- related party revenue. These
revenue results represented a decrease from the $18.4 million in
total revenue, $15.5 million in related party revenue and $2.9
million in non-related party revenue reported in the same quarter
of the previous year. Under EITF No. 01-9, Neoforma classifies
non-cash amortization of partnership costs as an offset against
related party revenue. Because the reductions to operating expenses
and revenue are equal, this accounting treatment has no impact on
Neoforma's loss from operations, net loss, net loss per share or
total cash flow. In the first quarter of 2005, Neoforma's total
operating expenses, on a GAAP basis, were $19.7 million, increasing
from the $16.2 million reported in the same quarter in 2004. The
increase in GAAP operating expenses in the first quarter of 2005,
as compared to the same quarter in the previous year, was primarily
the result of a $1.4 million increase in depreciation and
amortization of property and equipment and amortization of deferred
compensation, a $1.1 million decrease in software development costs
capitalized and a $767,000 restructuring charge recorded in the
first quarter of 2005. The restructuring charge represented
anticipated costs for idle facilities, net of expected sublease
income, in the Company's headquarters building. Adjusted operating
expenses for the first quarter of 2005 totaled $14.8 million,
increasing from the $12.9 million in adjusted operating expenses
reported in the same period in the prior year. The increase in
adjusted operating expenses was primarily due to the previously
mentioned $1.1 million decrease in software development costs
capitalized as well as an increase in employee-related costs due
principally to an increase in headcount. On a GAAP basis, in the
first quarter of 2005, Neoforma's loss from operations equaled
$17.1 million, an increase from the $13.3 million reported in the
same quarter in the previous year. In the first quarter of 2005,
Neoforma generated $3.3 million in EBITDA, decreasing from the $5.5
million generated in the first quarter of 2004. As of March 31,
2005, Neoforma's cash, cash equivalents and short-term investments
totaled $30.5 million, a $4.7 million increase from the $25.9
million reported as of year-end 2004. Neoforma continues to remain
debt-free. Neoforma's free cash flow in the first quarter of 2005
totaled $4.0 million. Free cash flow is calculated as net cash used
in operating activities, plus amortization of partnership costs
offset against related party revenue, minus purchases of property
and equipment and capitalization of software development costs. The
free cash flow results for the first quarter included the January
receipt of the delayed December $5.25 million payment from Novation
for the services that Neoforma provides. "Neoforma's financial
performance in the first quarter generally met our expectations,"
says Andrew Guggenhime, chief financial officer of Neoforma. "We
met our revenue guidance and increased the strength of our balance
sheet. Our expenses increased largely due to planned investments in
our business to support our strategy and a reduction in software
development costs capitalized. Our expense results will continue to
be impacted by the amount of software development costs
capitalized, which we expect will fluctuate based on the timing and
nature of certain development projects. We believe our first
quarter software development costs capitalized were lower than they
will be going forward and are not necessarily indicative of our
full year expectations." Second Quarter 2005 Revenue Outlook
Neoforma expects to generate approximately $2.8 million in GAAP
revenue and $18.2 million in adjusted revenue in the second quarter
of 2005. 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 1,600 hospitals and
suppliers, supporting more than $11 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 but are not limited to statements related to
Neoforma's business and financial outlook for part of calendar
2005. 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 ongoing process
of exploring strategic alternatives and the risks associated with
the previously announced desire of Novation, LLC to lower the fees
it pays to Neoforma under its outsourcing agreement, and the
willingness of customers to accept Neoforma's business model of
providing supply chain management solutions for the healthcare
industry. Some of these risks and other risks are described in
Neoforma's periodic reports filed with the SEC, including its Form
10-K for the year ended December 31, 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. NEOFORMA, INC. CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS (in thousands, except per share amounts) (unaudited)
Three Months Ended March 31, 2004 2005 REVENUE: Related party, net
of amortization of partnership costs of $15,478 and $15,421 for the
three months ended March 31, 2004 and 2005, respectively $-- $--
Non-related party 2,928 2,620 Total revenue 2,928 2,620 OPERATING
EXPENSES: Cost of services 2,061 2,968 Operations 2,998 3,168
Product development 3,638 5,062 Selling and marketing 3,656 3,544
General and administrative 2,238 3,046 Amortization of intangibles
147 147 Amortization of partnership costs 1,472 1,042 Restructuring
-- 767 Total operating expenses 16,210 19,744 Loss from operations
(13,282) (17,124) OTHER INCOME (EXPENSE) 68 167 Net loss $(13,214)
$(16,957) NET LOSS PER SHARE: Basic and diluted $(0.69) $(0.87)
Weighted average shares -- basic and diluted 19,069 19,586 In
addition to our consolidated financial statements presented in
accordance with GAAP, Neoforma, Inc. uses non-GAAP, or adjusted,
measures of operating results, net income and net income per share,
which are adjusted from results based on GAAP to exclude the
application of EITF No. 01-9 and certain expenses, gains and
losses. Neoforma management believes that the non-GAAP adjusted
results provide added insight into the Company's performance by
focusing on results generated by the Company's ongoing core
operations. Neoforma management uses the non-GAAP adjusted results
when assessing the performance of its ongoing core operations, in
making resource allocation decisions and for planning and
forecasting. Additionally, incentive compensation for the Company,
including management, is based on results on this basis. In
addition, because we historically have reported adjusted results,
we believe the inclusion of comparative numbers provides
consistency in our financial reporting. The non-GAAP financial
measures should be considered in addition to, not as a substitute
for, or superior to, the measures of financial performance prepared
in accordance with GAAP. Investors are encouraged to review the
reconciliation of the non-GAAP financial measures to their most
directly comparable GAAP financial measures. NEOFORMA, INC.
ADJUSTED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (1) (in
thousands, except per share amounts) (unaudited) Three Months Ended
March 31, 2004 2005 REVENUE: Related party $15,478 $15,421
Non-related party 2,928 2,620 Total adjusted revenue 18,406 18,041
OPERATING EXPENSES: Cost of services 1,686 2,464 Operations 2,485
2,450 Product development 3,348 4,312 Selling and marketing 3,407
3,017 General and administrative 2,007 2,510 Adjusted operating
expenses 12,933 14,753 EBITDA 5,473 3,288 OTHER INCOME (EXPENSE) 68
167 Adjusted net income $5,541 $3,455 ADJUSTED NET INCOME PER
SHARE: Basic $0.29 $0.18 Weighted average shares -- basic 19,069
19,586 (1) These adjusted condensed consolidated statements of
operations exclude the impact of EITF No. 01-9 and certain
expenses, gains and losses. Under EITF No. 01-9, the Company
offsets non-cash amortization of partnership costs against related
party revenue in an amount equal to the lesser of the two in any
period. Any amortization of partnership costs in excess of related
party revenue in any period is classified as an operating expense.
As a result of the adoption of EITF No. 01-9, the Company offset
$15,478 and $15,421 of amortization of partnership costs against
related party revenue in its GAAP condensed consolidated statements
of operations for the three months ended March 31, 2004 and 2005,
respectively. As reclassifications, the application of EITF No.
01-9 had no impact on loss from operations, net loss or net loss
per share. The excluded expenses, gains and losses consisted of
depreciation and amortization of property and equipment,
amortization of intangibles, amortization of deferred compensation,
amortization of partnership costs and restructuring. NEOFORMA, INC.
RECONCILIATION OF ADJUSTED CONDENSED CONSOLIDATED STATEMENT OF
OPERATIONS TO GAAP (in thousands, except per share amounts)
(unaudited) Three Months Ended March 31, 2005 Application Excluded
of Expenses, EITF Adjusted Gains No. Results and Losses 01-9
REVENUE: Related party $15,421 $-- $(15,421) Non-related party
2,620 -- -- Total revenue 18,041 -- (15,421) OPERATING EXPENSES:
Cost of services 2,464 -- -- Operations 2,450 -- -- Product
development 4,312 -- -- Selling and marketing 3,017 -- -- General
and administrative 2,510 -- -- Adjusted operating expenses 14,753
EBITDA 3,288 Depreciation and amortization of property and
equipment -- 1,863 -- Amortization of intangibles -- 147 --
Amortization of deferred compensation -- 1,172 -- Amortization of
partnership costs 16,463 (15,421) Restructuring -- 767 -- Total
operating expenses 20,412 (15,421) Loss from operations (20,412) --
OTHER INCOME (EXPENSE) 167 -- -- Net income (loss) $3,455 $(20,412)
$-- NET INCOME (LOSS) PER SHARE: Basic $0.18 Weighted average
shares - basic 19,586 Three Months Ended March 31, 2005 GAAP
Allocations Depreciation Amortization GAAP and of Results
Amortization Deferred As Reported of Compensation Property and
Equipment REVENUE: Related party $-- $-- $-- Non-related party --
-- 2,620 Total revenue -- -- 2,620 OPERATING EXPENSES: Cost of
services 307 197 2,968 Operations 570 148 3,168 Product development
480 270 5,062 Selling and marketing 258 269 3,544 General and
administrative 248 288 3,046 Adjusted operating expenses EBITDA
Depreciation and amortization of property and equipment (1,863) --
-- Amortization of intangibles -- -- 147 Amortization of deferred
compensation -- (1,172) -- Amortization of partnership costs -- --
1,042 Restructuring -- -- 767 Total operating expenses -- -- 19,744
Loss from operations -- -- (17,124) OTHER INCOME (EXPENSE) -- --
167 Net income (loss) $-- $-- $(16,957) NET INCOME (LOSS) PER
SHARE: Basic $(0.87) Weighted average shares - basic 19,586 Three
Months Ended March 31, 2004 Application Excluded of Expenses, EITF
Adjusted Gains No. Results and Losses 01-9 REVENUE: Related party
$15,478 $-- $(15,478) Non-related party 2,928 -- -- Total revenue
18,406 -- (15,478) OPERATING EXPENSES: Cost of services 1,686 -- --
Operations 2,485 -- -- Product development 3,348 -- -- Selling and
marketing 3,407 -- -- General and administrative 2,007 -- --
Adjusted operating expenses 12,933 EBITDA 5,473 Depreciation and
amortization of property and equipment -- 1,191 -- Amortization of
intangibles -- 147 -- Amortization of deferred compensation -- 467
-- Amortization of partnership costs -- 16,950 (15,478) Total
operating expenses 18,755 (15,478) Loss from operations (18,755) --
OTHER INCOME (EXPENSE) 68 -- -- Net income (loss) $5,541 $(18,755)
$-- NET INCOME (LOSS) PER SHARE: Basic $0.29 Weighted average
shares - basic 19,069 Three Months Ended March 31, 2004 GAAP
Allocations Depreciation Amortization GAAP and of Results
Amortization Deferred As Reported of Compensation Property and
Equipment REVENUE: Related party $-- $-- $-- Non-related party --
-- 2,928 Total revenue -- -- 2,928 OPERATING EXPENSES: Cost of
services 305 70 2,061 Operations 464 49 2,998 Product development
190 100 3,638 Selling and marketing 129 120 3,656 General and
administrative 103 128 2,238 Adjusted operating expenses EBITDA
Depreciation and amortization of property and equipment (1,191) --
-- Amortization of intangibles -- -- 147 Amortization of deferred
compensation -- (467) -- Amortization of partnership costs -- --
1,472 Total operating expenses -- -- 16,210 Loss from operations --
-- (13,282) OTHER INCOME (EXPENSE) -- -- 68 Net income (loss) $--
$-- $(13,214) NET INCOME (LOSS) PER SHARE: Basic $(0.69) Weighted
average shares - basic 19,069 NEOFORMA, INC. CONDENSED CONSOLIDATED
BALANCE SHEETS (in thousands, except per share amounts) (unaudited)
ASSETS December 31, March 31, 2004 2005 CURRENT ASSETS: Cash and
cash equivalents $13,277 $17,523 Short-term investments 12,593
13,021 Accounts receivable, net of allowance for doubtful accounts
2,898 2,644 Related party accounts receivable 5,250 -- Prepaid
expenses and other current assets 2,983 3,668 Total current assets
37,001 36,856 PROPERTY AND EQUIPMENT, net 11,501 10,950
INTANGIBLES, net 1,434 1,287 GOODWILL 1,652 1,652 CAPITALIZED
PARTNERSHIP COSTS, net 40,996 24,532 RESTRICTED CASH 1,020 1,020
OTHER ASSETS 845 782 Total assets $94,449 $77,079 LIABILITIES AND
STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $3,994
$2,361 Accrued payroll 3,974 2,884 Other accrued liabilities 2,839
3,561 Deferred revenue, current portion 1,564 1,358 Total current
liabilities 12,371 10,164 DEFERRED RENT 387 320 DEFERRED REVENUE,
less current portion 326 286 Total liabilities 13,084 10,770
STOCKHOLDERS' EQUITY: Common Stock $0.001 par value: Authorized --
300,000 shares at March 31, 2005 Issued and outstanding: 20,244 and
20,558 shares at December 31, 2004 and March 31, 2005, respectively
20 21 Additional paid-in capital 839,307 841,973 Notes receivable
from stockholders (225) (213) Deferred compensation (3,775) (4,503)
Unrealized loss on available-for-sale securities (25) (75)
Accumulated deficit (753,937) (770,894) Total stockholders' equity
81,365 66,309 Total liabilities and stockholders' equity $94,449
$77,079 NEOFORMA, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in
thousands) (all items unaudited) Three Months Ended March 31, 2004
2005 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $(13,214)
$(16,957) Adjustments to reconcile net loss to net cash used in
operating activities: Provision for doubtful accounts 96 -- Accrued
interest receivable on stockholder notes receivable (6) (2)
Depreciation and amortization of property and equipment 1,191 1,863
Amortization of intangibles 147 147 Amortization of partnership
costs classified as an operating expense 1,472 1,042 Amortization
of deferred compensation 467 1,172 Restructuring -- 767 Change in
assets and liabilities: Accounts receivable 212 5,504 Prepaid
expenses and other current assets (22) (685) Other assets 67 63
Accounts payable (581) (1,014) Accrued liabilities and accrued
payroll (1,598) (1,160) Deferred revenue (569) (246) Deferred rent
(14) (42) Net cash used in operating activities (12,352) (9,548)
CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of marketable
investments (1,347) (2,356) Proceeds from the sale or maturity of
marketable investments 3,206 1,878 Purchases of property and
equipment (1,236) (1,165) Capitalization of software development
costs (1,768) (714) Net cash used in investing activities (1,145)
(2,357) CASH FLOWS FROM FINANCING ACTIVITIES: Amortization of
partnership costs offset against related party revenue 15,478
15,421 Cash received related to options exercised 250 242 Proceeds
from the issuance of common stock under the employee stock purchase
plan 526 474 Common stock repurchased, net of notes receivable
issued to common stockholders (177) -- Collections of notes
receivable from stockholders 44 14 Net cash provided by financing
activities 16,121 16,151 Net increase in cash and cash equivalents
2,624 4,246 Cash and cash equivalents, beginning of period 9,981
13,277 Cash and cash equivalents, end of period $12,605 $17,523
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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