QuadraMed Posts 3Q 2009 Results

In a release on November 5, the Company noted that for the nine months ended September 30, it had net income before preferred stock dividends of $3.8 million, compared to $4.6 million for the same period in 2008.

For the three months ended September 30, the Company had revenues of $35.8 million, gross margin of 59 percent and operating expenses of $19.3 million. These compare to revenues of $38.6 million, gross margin of 60 percent and operating expenses of $19.1 million for the same period in 2008. For the nine months ended September 30, the Company had revenues of $106.7 million, gross margin of 59 percent and operating expenses of $58.1 million. These compare to revenues of $111.9 million, gross margin of 58 percent and operating expenses of $57.9 million for the same period in 2008.

Income from operations was $2.0 million for the three months ended September 30, compared to $4.0 million for the three months ended September 30, 2008, and $5.0 million and $7.2 million for the nine-month periods ended September 30, and 2008, respectively. Adjusted Non-GAAP EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization, before stock-based compensation, severance and loss on sale of assets) was $3.5 million for the three months ended September 30, compared to $5.9 million for the same period in 2008. For the nine months ended September 30, the Company had adjusted Non-GAAP EBITDA of $11.4 million, compared to $14.9 million for the nine months ended September 30, 2008.

The three month and nine month periods ended September 30, 2008 included revenue of $1.5 million and $2.5 million respectively, related to contracts that were completed in periods prior to 2008. The costs related to these contracts were recognized in the periods of origin; consequently, the reported gross margins, net income and adjusted Non-GAAP EBITDA and other measures also include the $1.5 million and $2.5 million, respectively for the quarterly and year-to-date periods ended September 30, 2008. The nine-month period ended September 30, 2008 also includes a $1.1 million loss on the sale of the Company's Australia-based lab and radiology assets and the nine-month period ended September 30, included severance of $1.7 million associated with executive management changes. In addition to the above, the decreases in income from operations and Adjusted Non-GAAP EBITDA for the 2009 periods when compared to the corresponding 2008 periods were primarily driven by lower revenue and resultant gross margins in the 2009 periods.

The Company will also report net income attributable to common shareholders of $0.1 million, or $0.02 per basic and diluted share for the three months ended September 30, compared to net income attributable to common shareholders of $1.1 million, or $0.12 per basic and diluted share for the same period in 2008. The Company will also report a net loss attributable to common shareholders of $0.4 million, or $(0.05) per basic and diluted share for the nine months ended September 30, compared to net income attributable to common shareholders of $0.4 million, or $0.05 per basic and diluted share during the nine month period ended September 30, 2008.

Cash used in operations was $2.0 million for the three months ended September 30, compared to cash provided by operations of $2.4 million for the three months ended September 30, 2008; the difference between the three-month periods was due primarily to a decrease in net income during the 2009 period compared to 2008, and a decrease in working capital between periods. Cash used in operations was $3.7 million for the nine months ended September 30, compared to cash provided by operations of $14.5 million for the nine months ended September 30, 2008; the difference between nine-month periods was primarily attributable to the timing of payments related to our Veterans Health Administration contract and the payment of executive severance costs in 2009. Cash and investments decreased by $8.9 million during the nine months ended September 30, to $19.0 million, from $27.9 million at December 31, 2008. During October 2009, the Company invoiced the Department of Veterans Affairs for the $20.5 million annual license fee associated with the Task Order renewal for the Department of Veterans Affairs' 2010 fiscal year, and payment has been received in full for this license.

"We are pleased with the extension of our relationship with the Department of Veterans Affairs and our four new QCPR agreements. However, the economic environment continues to provide a headwind for our performance," said Duncan W. James, QuadraMed's Chief Executive Officer. "We have increased our product development initiatives during 2009 to provide our customers with a platform to meet the criteria for meaningful use in order to maximize the benefits available to them from ARRA. In addition, we remain focused on our product roadmap so that we will be well positioned to provide solutions to our customers in 2010 and future years," added James.

QuadraMed is a provider of healthcare technologies and services.

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