Neoforma Reports Third Quarter 2004 Financial Results SAN JOSE,
Calif., Oct. 25 /PRNewswire-FirstCall/ -- Neoforma, Inc.
(NASDAQ:NEOF), a leading provider of supply chain management
solutions to the healthcare industry, generated total revenue of
$3.0 million on a generally accepted accounting principles (GAAP)
basis in the quarter ended September 30, 2004. Excluding the impact
of Emerging Issues Task Force Abstract No. 01-9 (EITF No. 01-9),
Neoforma generated total adjusted revenue of $18.4 million in the
third quarter of 2004. (Logo:
http://www.newscom.com/cgi-bin/prnh/20030226/NEOFORMALOGO ) In
accordance with GAAP, Neoforma's net loss and net loss per share
were $14.5 million and $0.75, respectively, during the third
quarter of 2004. These results represent an improvement over the
$15.6 million and $0.85 net loss and net loss per share,
respectively, reported in the third quarter of 2003. On an adjusted
basis, net income and net income per share for the third quarter of
2004 were $5.1 million and $0.27, respectively, decreasing from the
$5.6 million and $0.30, respectively, in the same quarter in the
prior year. This decrease was primarily due to the scheduled
reduction in the Company's quarterly maximum payment from Novation
in 2004, as compared to 2003, and the resulting $2.1 million
decrease in adjusted related party revenue. 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/ . "Neoforma made good
operational progress during the third quarter, increasing our
connectivity rate and documenting significant value for our
customers," says Bob Zollars, chairman and chief executive officer
of Neoforma. "We also continued to strengthen our balance sheet as
a result of strong cash flow. We did not meet our revenue
expectations in the quarter, which was disappointing. However,
based on the increasing value we are delivering to our hospital
customers, we believe we are on the right track." Third Quarter
2004 Highlights During the third quarter, Neoforma made progress in
several key areas, including: -- Documented $26.7 million in
customer value, which brings Neoforma's year-to-date documented
customer value to $46.5 million as of September 30, 2004; --
Implemented 715 connections, more than double the average quarterly
connection rate in 2003, and exited the quarter at a rate in excess
of 800 connections per quarter; -- Delivered upgrades to
Marketplace@Novation(R), including enhancements to order management
and contract management capabilities; -- Generated market
intelligence reports for pharmaceutical manufacturers; and --
Supported $2.8 billion in volume, an increase of 27% from the same
period in the prior year, comprised of $1.0 billion in gross
transaction volume and $1.8 billion in supply chain data. Third
Quarter 2004 Financial Results On a GAAP basis, for the quarter
ended September 30, 2004, Neoforma generated $3.0 million in total
revenue, comprised entirely of non-related party revenue, and
representing a slight increase from the $2.9 million in both total
revenue and non-related party revenue recorded in the same period
in the prior year. In both the third quarter of 2004 and the same
period in the prior year, related party revenue was zero as a
result of the application of EITF No. 01-9. On an adjusted basis,
excluding the impact of EITF No. 01-9, Neoforma generated total
revenue of $18.4 million in the third quarter, consisting of $15.4
million in related party revenue and $3.0 million in non-related
party revenue. Neoforma's related party revenue for the quarter
represents a decrease from the $17.5 million generated in the same
quarter in 2003, due to a $2.1 million decline in the Company's
revenue from Novation in the third quarter of 2004, as compared to
the same quarter in the prior year. The decline in revenue was
based on a scheduled reduction in the quarterly maximum payment
from Novation under the terms of Neoforma's outsourcing agreement
with Novation. Beginning in 2004, the quarterly maximum payment
from Novation is fixed at $15.25 million. On both a GAAP basis and
an adjusted basis, the $42,000 increase in non-related party
revenue in the third quarter as compared to the same period in the
prior year was primarily the result of increases in revenue from
the Company's HPIS market intelligence and pharmaceutical market
intelligence services for suppliers, which more than offset
decreases related to data cleansing and categorization services for
hospitals and the expiration during the third quarter of the
ratable revenue being recognized related to a license sale made in
2001. Neoforma classifies non-cash amortization of partnership
costs as an offset against related party revenue under EITF No.
01-9. This accounting treatment has no impact on Neoforma's loss
from operations, net loss, net loss per share or total cash flow,
as the reductions to operating expenses and revenue are equal. In
the third quarter of 2004, Neoforma's total GAAP operating expenses
were $17.6 million, lower than the $18.3 million recorded in the
same period in the prior year. As compared to the third quarter of
2003, this variance was primarily the result of a $2.0 million
increase in capitalized software development costs, a $1.9 million
decrease in depreciation and amortization of property and
equipment, most of which was allocated to the operations group, and
reductions in selling and marketing expenses. These changes were
partially offset by increases in amortization of partnership costs
and expenses related to product development and cost of services.
Adjusted operating expenses equaled $13.3 million in the third
quarter of 2004, lower than the $14.7 million result in the same
quarter of the prior year. The variance in total adjusted operating
expenses was primarily due to the $2.0 million increase in
capitalized software development costs and a $1.2 million reduction
in selling and marketing expenses. These reductions were partially
offset by increases in product development and cost of services
expenses. In the third quarter, on a GAAP basis, Neoforma recorded
a $14.7 million loss from operations, representing an improvement
from the $15.4 million loss in the same period in 2003. The
improvement in the Company's loss from operations was due to the
decrease in total operating expenses. Neoforma generated $5.0
million in EBITDA during the third quarter, representing a decrease
from the $5.8 million generated in the third quarter of 2003. This
decrease was due to the decline in related party revenue as a
result of the scheduled $2.1 million reduction in the quarterly
maximum payment from Novation, and was partially offset by a
decrease in Neoforma's adjusted operating expenses. As of September
30, 2004, Neoforma's cash, cash equivalents and short-term
investments totaled $23.6 million, an increase from the $22.5
million balance as of the end of the prior quarter. In addition,
the Company had $2.0 million in long-term marketable investments as
of September 30, 2004, as a result of investments it made during
the quarter. Neoforma remains debt-free. Neoforma's free cash flow
equaled $2.5 million during the third quarter. 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. "Neoforma continues
to generate strong cash flow, and our balance sheet remains very
solid," says Andrew Guggenhime, chief financial officer of
Neoforma. "We were not pleased with our revenue results for the
quarter, however, and we are updating our guidance primarily to
reflect our revised revenue outlook, as well as to update our
current expectations in other areas for which we had previously
issued guidance." Updated 2004 Financial Outlook Based on the
Company's 2004 financial performance through the third quarter of
2004 and its expectations for the fourth quarter, Neoforma is
updating its guidance for the year. Neoforma's 2004 Financial
Outlook (in millions, except per share data): FY 2004 Previous
Updated GAAP Basis Related Party Revenue -- -- Non-related Party
Revenue $13.3 $11.8 - $13.3 Total Revenue $13.3 $11.8 - $13.3 Total
Operating Expenses $76.2 $75.5 Loss from Operations ($62.9) ($63.7)
- ($62.2) Net Loss per Share ($3.23) ($3.27) - ($3.19) Adjusted
Basis Related Party Revenue(a) $61.7 $61.7 Non-related Party
Revenue $13.3 $11.8 - $13.3 Total Revenue(a) $75.0 $73.5 - $75.0
Operating Expenses(b) $55.6 $54.3 EBITDA(c) $19.4 $19.2 - $20.7 Net
Income per Share(d) $0.99 $1.01 - $1.08 Free Cash Flow(e) $9.0 $9.0
Purchases of Property and Equipment $6.0 $5.0 Capitalization of
Software Development Costs $4.4 $6.2 Weighted Average Shares
Outstanding 19.5 19.4 (a) Adjusted related party revenue and
adjusted total revenue exclude the offset of amortization of
partnership costs against related party revenue resulting from the
application of EITF No. 01-9. (b) Adjusted operating expenses
exclude depreciation and amortization, as well as certain expenses,
gains and losses, which, in 2004, consist of a $4.1 million
write-off of stockholder notes receivable in the second quarter. In
2004, the Company expects depreciation and total amortization
expenses, including amortization offset against related party
revenue, to equal approximately $78.7 million. (c) The Company
defines EBITDA as earnings before interest, taxes, depreciation and
amortization (including amortization offset against related party
revenue) as well as certain expenses, gains and losses. (d) The
Company defines adjusted net income per share as EBITDA plus the
impact of interest expense, interest income and other income and
expense divided by the weighted average shares outstanding. (e) The
Company defines free cash flow 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. 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 but are not limited to all
statements made under the caption "Updated 2004 Financial Outlook"
and statements related to Neoforma's business and financial outlook
for 2004, as well as statements related to the continued value
realized by our customers. 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
willingness of customers to accept Neoforma's business model of
providing supply chain management solutions for the healthcare
industry and the ability of Neoforma to manage its anticipated
growth and related technological challenges. These risks and other
risks are described in Neoforma's periodic reports filed with the
SEC, including its Form 10-Q for the quarter ended June 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. NEOFORMA, INC. CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per
share amounts) (unaudited) Three Months Ended Nine Months Ended
September 30, September 30, 2003 2004 2003 2004 REVENUE: Related
party, net of amortization of partnership costs of $17,539,
$15,423, $52,070 and $46,360 for the three months ended Spetember
30, 2003 and 2004, and for the nine months ended September 30, 2003
and 2004, respectively $-- $-- $539 $-- Non-related party 2,912
2,954 7,494 9,222 Total revenue 2,912 2,954 8,033 9,222 OPERATING
EXPENSES: Cost of services 1,895 2,758 4,754 7,501 Operations 4,947
2,834 14,888 8,643 Product development 4,451 4,261 13,377 12,302
Selling and marketing 4,648 3,488 14,258 10,657 General and
administrative 2,242 2,465 8,339 7,171 Amortization of intangibles
147 147 441 441 Amortization of partnership costs 14 1,651 847
4,792 Write-off of stockholder notes receivable -- -- -- 4,115
Total operating expenses 18,344 17,604 56,904 55,622 Loss from
operations (15,432) (14,650) (48,871) (46,400) OTHER INCOME
(EXPENSE) (202) 112 (762) 234 Net loss $(15,634) $(14,538)
$(49,633) $(46,166) NET LOSS PER SHARE: Basic and diluted $(0.85)
$(0.75) $(2.76) $(2.40) Weighted average shares -- basic and
diluted 18,445 19,361 17,990 19,263 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 Nine Months Ended September 30, September 30,
2003 2004 2003 2004 REVENUE: Related party $17,539 $15,423 $52,609
$46,360 Non-related party 2,912 2,954 7,494 9,222 Total adjusted
revenue 20,451 18,377 60,103 55,582 OPERATING EXPENSES: Cost of
services 1,744 2,372 4,301 5,955 Operations 2,638 2,250 7,199 7,003
Product development 4,068 3,703 12,066 11,054 Selling and marketing
4,244 3,038 12,930 9,589 General and administrative 1,999 1,980
6,852 6,061 Adjusted operating expenses 14,693 13,343 43,348 39,662
EBITDA 5,758 5,034 16,755 15,920 OTHER INCOME (EXPENSE) (202) 112
(762) 234 Adjusted net income $5,556 $5,146 $15,993 $16,154
ADJUSTED NET INCOME PER SHARE: Basic $0.30 $0.27 $0.89 $0.84
Weighted average shares -- basic 18,445 19,361 17,990 19,263 (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
$17,539, $15,423, $52,070 and $46,360 of amortization of
partnership costs against related party revenue in its GAAP
condensed consolidated statements of operations for the three
months ended September 30, 2003 and 2004, and for the nine months
ended September 30, 2003 and 2004, 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 write-off of stockholder notes receivable.
NEOFORMA, INC. RECONCILIATION OF ADJUSTED CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS TO GAAP (in thousands, except per share
amounts) (unaudited) Three Months Ended September 30, 2004 Excluded
Application Expenses, of Adjusted Gains EITF Results and Losses No.
01-9 REVENUE: Related party $15,423 $-- $(15,423) Non-related party
2,954 -- -- Total revenue 18,377 -- (15,423) OPERATING EXPENSES:
Cost of services 2,372 -- -- Operations 2,250 -- -- Product
development 3,703 -- -- Selling and marketing 3,038 -- -- General
and administrative 1,980 -- -- Adjusted operating expenses 13,343
EBITDA 5,034 Depreciation and amortization of property and
equipment -- 1,328 -- Amortization of intangibles -- 147 --
Amortization of deferred compensation -- 1,135 -- Amortization of
partnership costs -- 17,074 (15,423) Write-off of stockholder notes
receivable -- -- -- Total operating expenses 19,684 (15,423) Loss
from operations (19,684) -- OTHER INCOME (EXPENSE) 112 -- -- Net
income (loss) $5,146 $(19,684) $-- NET INCOME (LOSS) PER SHARE:
Basic $0.27 Weighted average shares - basic 19,361 Three Months
Ended September 30, 2004 GAAP Allocations Depreciation Amortization
and of GAAP Amortization of Deferred Results Property and Equipment
Compensation As Reported REVENUE: Related party $-- $-- $--
Non-related party -- -- 2,954 Total revenue -- -- 2,954 OPERATING
EXPENSES: Cost of services 200 186 2,758 Operations 498 86 2,834
Product development 291 267 4,261 Selling and marketing 175 275
3,488 General and administrative 164 321 2,465 Adjusted operating
expenses EBITDA Depreciation and amortization of property and
equipment (1,328) -- -- Amortization of intangibles -- -- 147
Amortization of deferred compensation -- (1,135) -- Amortization of
partnership costs -- -- 1,651 Write-off of stockholder notes
receivable -- -- -- Total operating expenses -- -- 17,604 Loss from
operations -- -- (14,650) OTHER INCOME (EXPENSE) -- -- 112 -- --
Net income (loss) $-- $-- $(14,538) NET INCOME (LOSS) PER SHARE:
Basic $(0.75) Weighted average shares - basic 19,361 Three Months
Ended September 30, 2003 Excluded Application Expenses, of Adjusted
Gains EITF Results and Losses No. 01-9 REVENUE: Related party
$17,539 $-- $(17,539) Non-related party 2,912 -- -- Total revenue
20,451 -- (17,539) OPERATING EXPENSES: Cost of services 1,744 -- --
Operations 2,638 -- -- Product development 4,068 -- -- Selling and
marketing 4,244 -- -- General and administrative 1,999 -- --
Adjusted operating expenses 14,693 EBITDA 5,758 Depreciation and
amortization of property and equipment -- 3,246 -- Amortization of
intangibles -- 147 -- Amortization of deferred compensation -- 244
-- Amortization of partnership costs -- 17,553 (17,539) Total
operating expenses 21,190 (17,539) Loss from operations (21,190) --
OTHER INCOME (EXPENSE) (202) -- -- Net income (loss) $5,556
$(21,190) $-- NET INCOME (LOSS) PER SHARE: Basic $0.30 Weighted
average shares - basic 18,445 Three Months Ended September 30, 2003
Depreciation Amortization and of GAAP Amortization of Deferred
Results Property and Equipment Compensation As Reported REVENUE:
Related party $-- $-- $-- Non-related party -- -- 2,912 Total
revenue -- -- 2,912 OPERATING EXPENSES: Cost of services 126 25
1,895 Operations 2,299 10 4,947 Product development 324 59 4,451
Selling and marketing 312 92 4,648 General and administrative 185
58 2,242 Adjusted operating expenses EBITDA Depreciation and
amortization of property and equipment (3,246) -- -- Amortization
of intangibles -- -- 147 Amortization of deferred compensation --
(244) -- Amortization of partnership costs -- -- 14 Total operating
expenses -- -- 18,344 Loss from operations -- -- (15,432) OTHER
INCOME (EXPENSE) -- -- (202) Net income (loss) $-- $-- $(15,634)
NET INCOME (LOSS) PER SHARE: Basic $(0.85) Weighted average shares
- basic 18,445 NEOFORMA, INC. RECONCILIATION OF ADJUSTED CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS TO GAAP (in thousands, except
per share amounts) (unaudited) Nine Months Ended September 30, 2004
Excluded Application Expenses, of Adjusted Gains EITF Results and
Losses No. 01-9 REVENUE: Related party $46,360 $-- $(46,360)
Non-related party 9,222 -- -- Total revenue 55,582 -- (46,360)
OPERATING EXPENSES: Cost of services 5,955 -- -- Operations 7,003
-- -- Product development 11,054 -- -- Selling and marketing 9,589
-- -- General and administrative 6,061 -- -- Adjusted operating
expenses 39,662 EBITDA 15,920 Depreciation and amortization of
property and equipment -- 3,811 -- Amortization of intangibles --
441 -- Amortization of deferred compensation -- 2,801 --
Amortization of partnership costs -- 51,152 (46,360) Write-off of
stockholder notes receivable -- 4,115 -- Total operating expenses
62,320 (46,360) Loss from operations (62,320) -- OTHER INCOME
(EXPENSE) 234 -- -- -- Net income (loss) $16,154 $(62,320) $-- NET
INCOME (LOSS) PER SHARE: Basic $0.84 Weighted average shares -
basic 19,263 Nine Months Ended September 30, 2004 GAAP Allocations
Depreciation Amortization and of Amortization of Deferred GAAP
Results Property and Equipment Compensation As Reported REVENUE:
Related party $-- $-- $-- Non-related party -- -- 9,222 Total
revenue -- -- 9,222 OPERATING EXPENSES: Cost of services 1,113 433
7,501 Operations 1,371 269 8,643 Product development 607 641 12,302
Selling and marketing 380 688 10,657 General and administrative 340
770 7,171 Adjusted operating expenses EBITDA Depreciation and
amortization of property and equipment (3,811) -- -- Amortization
of intangibles -- -- 441 Amortization of deferred compensation --
(2,801) -- Amortization of partnership costs -- -- 4,792 Write-off
of stockholder notes receivable -- -- 4,115 Total operating
expenses -- -- 55,622 Loss from operations -- -- (46,400) OTHER
INCOME (EXPENSE) -- -- 234 -- -- Net income (loss) $-- $--
$(46,166) NET INCOME (LOSS) PER SHARE: Basic $(2.40) Weighted
average shares - basic 19,263 Nine Months Ended September 30, 2003
Excluded Application Adjusted Expenses, Gains of EITF Results and
Losses No. 01-9 REVENUE: Related party $52,609 $-- $(52,070)
Non-related party 7,494 -- -- Total revenue 60,103 -- (52,070)
OPERATING EXPENSES: Cost of services 4,301 -- -- Operations 7,199
-- -- Product development 12,066 -- -- Selling and marketing 12,930
-- -- General and administrative 6,852 -- -- Adjusted operating
expenses 43,348 EBITDA 16,755 Depreciation and amortization of
property and equipment -- 10,307 -- Amortization of intangibles --
441 -- Amortization of deferred compensation -- 1,961 --
Amortization of partnership costs -- 52,917 (52,070) Total
operating expenses 65,626 (52,070) Loss from operations (65,626) --
OTHER INCOME (EXPENSE) (762) -- -- -- Net income (loss) $15,993
$(65,626) $-- NET INCOME (LOSS) PER SHARE: Basic $0.89 Weighted
average shares - basic 17,990 Nine Months Ended September 30, 2003
GAAP Allocations Depreciation Amortization and of Amortization of
Deferred GAAP Results Property and Equipment Compensation As
Reported REVENUE: Related party $-- $-- $539 Non-related party --
-- 7,494 Total revenue -- -- 8,033 OPERATING EXPENSES: Cost of
services 336 117 4,754 Operations 7,540 149 14,888 Product
development 995 316 13,377 Selling and marketing 896 432 14,258
General and administrative 540 947 8,339 Adjusted operating
expenses EBITDA Depreciation and amortization of property and
equipment (10,307) -- -- Amortization of intangibles -- -- 441
Amortization of deferred compensation -- (1,961) -- Amortization of
partnership costs -- -- 847 Total operating expenses -- -- 56,904
Loss from operations -- -- (48,871) OTHER INCOME (EXPENSE) -- --
(762) -- -- Net income (loss) $-- $-- $(49,633) NET INCOME (LOSS)
PER SHARE: Basic $(2.76) Weighted average shares - basic 17,990
NEOFORMA, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands,
except per share amounts) (unaudited) ASSETS December 31, September
30, 2003 2004 CURRENT ASSETS: Cash and cash equivalents $13,481
$23,578 Short-term investments 3,138 -- Accounts receivable, net of
allowance for doubtful accounts 3,776 3,595 Related party accounts
receivable 456 -- Prepaid expenses and other current assets 2,775
2,611 Total current assets 23,626 29,784 PROPERTY AND EQUIPMENT,
net 7,432 11,067 INTANGIBLES, net 2,022 1,581 GOODWILL 1,652 1,652
CAPITALIZED PARTNERSHIP COSTS, net 106,003 57,996 NON-MARKETABLE
INVESTMENTS 83 83 RESTRICTED CASH 1,020 1,020 LONG-TERM INVESTMENTS
-- 2,048 OTHER ASSETS 1,376 996 Total assets $143,214 $106,227
LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts
payable $2,727 $1,591 Accrued payroll 4,199 3,648 Other accrued
liabilities 3,183 3,193 Deferred revenue, current portion 2,651
1,897 Total current liabilities 12,760 10,329 DEFERRED RENT 657 414
DEFERRED REVENUE, less current portion 554 386 Total liabilities
13,971 11,129 STOCKHOLDERS' EQUITY: Common Stock $0.001 par value:
Authorized -- 300,000 shares at September 30, 2004 Issued and
outstanding: 18,943 and 20,020 shares at December 31, 2003 and
September 30, 2004, respectively 19 20 Additional paid-in capital
827,570 837,767 Notes receivable from stockholders (5,422) (213)
Deferred compensation (218) (3,604) Unrealized gain on
available-for-sale securities 1 1 Accumulated deficit (692,707)
(738,873) Total stockholders' equity 129,243 95,098 Total
liabilities and stockholders' equity $143,214 $106,227 NEOFORMA,
INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (all
items unaudited) Nine Months Ended September 30, 2003 2004 CASH
FLOWS FROM OPERATING ACTIVITIES: Net loss $(49,633) $(46,166)
Adjustments to reconcile net loss to net cash used in operating
activities: Restricted common stock issued to employees and
officers 10 -- Provision for doubtful accounts 271 110 Accrued
interest receivable on stockholder notes receivable (19) (13)
Depreciation and amortization of property and equipment 10,307
3,811 Amortization of intangibles 441 441 Amortization of
partnership costs classified as an operating expense 847 4,792
Amortization of deferred compensation 1,962 2,798 Write-off of
stockholder notes receivable -- 4,115 Change in assets and
liabilities: Accounts receivable (2,333) 527 Prepaid expenses and
other current assets 256 164 Other assets 5 380 Accounts payable
(1,596) (1,136) Accrued liabilities and accrued payroll (4,246)
(538) Deferred revenue 1,319 (922) Deferred rent 27 (243) Accrued
interest payable on related party notes payable (2,271) -- Net cash
used in operating activities (44,653) (31,880) CASH FLOWS FROM
INVESTING ACTIVITIES: Purchases of marketable investments (2,789)
(4,941) Proceeds from the sale or maturity of marketable
investments 2,659 6,031 Capitalization of software development
costs -- (5,221) Purchases of property and equipment (3,286)
(2,155) Net cash used in investing activities (3,416) (6,286) CASH
FLOWS FROM FINANCING ACTIVITIES: Amortization of partnership costs
offset against related party revenue 52,070 46,360 Repayments of
notes payable (3,713) -- Cash received related to options exercised
805 716 Proceeds from the issuance of common stock under the
employee stock purchase plan 1,087 1,090 Common stock repurchased,
net of notes receivable issued to common stockholders (2) (177)
Collections of notes receivable from stockholders 1,064 274 Net
cash provided by financing activities 51,311 48,263 Net increase in
cash and cash equivalents 3,242 10,097 Cash and cash equivalents,
beginning of period 23,277 13,481 Cash and cash equivalents, end of
period $26,519 $23,578 NEOFORMA, INC. RECONCILIATION OF 2004
ADJUSTED GUIDANCE TO GAAP GUIDANCE UPDATED OCTOBER 25, 2004 (in
thousands, except per share amounts) (unaudited) Twelve Months
Ended December 31, 2004 Adjusted Excluded Guidance Expenses, Range
Gains Low High and Losses REVENUE: Related party $61,700 $61,700
$-- Non-related party 11,800 13,300 -- Total revenue 73,500 75,000
-- OPERATING EXPENSES: Adjusted operating expenses 54,300 54,300 --
EBITDA 19,200 20,700 Depreciation and amortization of property and
equipment -- -- 5,700 Amortization of intangibles -- -- 588
Amortization of deferred compensation -- -- 4,300 Amortization of
partnership costs -- -- 68,152 Write-off of stockholder notes
receivable -- -- 4,115 Total operating expenses 82,855 Loss from
operations OTHER INCOME (EXPENSE) 300 300 Net income (loss) $19,500
$21,000 $(82,855) NET INCOME (LOSS) PER SHARE: Basic $1.01 $1.08
Weighted average shares - basic 19,400 19,400 Twelve Months Ended
December 31, 2004 Application of GAAP Guidance EITF Range No. 01-9
Low High REVENUE: Related party $(61,700) $-- $-- Non-related party
-- 11,800 13,300 Total revenue (61,700) 11,800 13,300 OPERATING
EXPENSES: Adjusted operating expenses -- 54,300 54,300 EBITDA
Depreciation and amortization of property and equipment -- 5,700
5,700 Amortization of intangibles -- 588 588 Amortization of
deferred compensation -- 4,300 4,300 Amortization of partnership
costs (61,700) 6,452 6,452 Write-off of stockholder notes
receivable -- 4,115 4,115 Total operating expenses (61,700) 75,455
75,455 Loss from operations -- (63,655) (62,155) OTHER INCOME
(EXPENSE) 300 300 Net income (loss) $-- $(63,355) $(61,855) NET
INCOME (LOSS) PER SHARE: Basic $(3.27) $(3.19) Weighted average
shares - basic 19,400 19,400
http://www.newscom.com/cgi-bin/prnh/20030226/NEOFORMALOGO
http://photoarchive.ap.org/ DATASOURCE: Neoforma, Inc. CONTACT:
media, Jen Reidy, +1-415-891-8300, or ; or investors, Amanda Mogin,
+1-408-468-4251, or , both for Neoforma Web site:
http://www.neoforma.com/
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