ATLANTA, Aug. 10 /PRNewswire-FirstCall/ -- NDCHealth Corporation
(NYSE:NDC), a leading provider of healthcare technology and
information solutions, today announced financial and operating
results for its fourth quarter and fiscal year ended May 27, 2005.
Financial results for all periods are presented to reflect certain
business operations sold or discontinued during fiscal 2005. Total
revenue from continuing operations was $99.8 million, a 5.8%
increase from $94.3 million in the fourth quarter of fiscal 2004.
Income from continuing operations for the fourth quarter was $0.4
million, or $0.01 per diluted share. This compared to a loss from
continuing operations of $3.2 million, or ($0.09) per diluted
share, in the same period in fiscal 2004. Net income after
discontinued operations for the fourth quarter of fiscal 2005 was
$0.3 million, or $0.01 per diluted share, compared to a net loss of
$16.6 million, or ($0.47) per diluted share, in the fourth quarter
of fiscal 2004. Because management believes Restructuring, Special
Governance and Other Charges, which include severance and corporate
governance-related expenses and the settlement of certain
litigation, are not reflective of the company's core operating
results over time, these charges are excluded from the calculation
of adjusted EBITDA (1) and adjusted income (loss) from continuing
operations (2). Adjusted EBITDA (1), a non-GAAP measure, in the
fourth quarter was $24.1 million, versus $20.1 million in the same
period of fiscal 2004. Adjusted income from continuing operations
(2), also a non-GAAP measure, for the fourth quarter of fiscal 2005
was $0.16 per diluted share, compared to an adjusted loss from
continuing operations in the fourth quarter of fiscal 2004 of
($0.04) per diluted share. "We are encouraged by this quarter's
performance as we are making financial progress in each of our
business units. Our execution improvements, combined with our
increasing market penetration, are helping to deliver a sustainable
financial and operating recovery," said Walter Hoff, NDCHealth
chairman and chief executive officer. "Over the last twelve months,
we implemented a number of actions to streamline NDCHealth and
focus on what we believe are our best business operations and
market opportunities. We accomplished this by selling certain
businesses, simplifying our management structure and gaining market
penetration with our newer products," Hoff added. "However, our
fourth quarter operating results were somewhat overshadowed by the
restructuring, legal settlement and corporate governance costs that
we believe should decrease over time. Therefore, we continue to
believe our improving operating fundamentals and the results of our
business actions point to clear signs that we can achieve
long-term, sustainable growth in revenue and profit." For the full
year of fiscal 2005, total revenue from continuing operations was
$387.6 million compared to $395.8 million in fiscal 2004. Income
from continuing operations in fiscal 2005 was $5.9 million, or
$0.16 per diluted share, compared to income from continuing
operations of $21.5 million, or $0.60 per diluted share, in fiscal
2004. Total net loss after discontinued operations was $6.6
million, or ($0.18) per diluted share, compared to net income of
$6.9 million, or $0.19 per diluted share, in fiscal 2004. Adjusted
EBITDA (1) for the full year was $88.3 million, versus $109.6
million for fiscal 2004. Adjusted income from continuing operations
(2) for fiscal 2005 was $0.41 per diluted share, compared to $0.71
per diluted share, a year ago. Fourth Quarter Financial Review
Following the sale of certain business operations and interests
during fiscal 2005, NDCHealth is now reporting four segments, which
are Pharmacy Services and Systems, Hospital Solutions, Physician
Solutions and Information Management. On a business segment basis:
- Pharmacy Services and Systems revenue decreased $1.8 million, or
5.4%, in the fourth quarter compared to the same quarter of fiscal
2004 as the $1.1 million, or 5.9%, increase in pharmacy transaction
services revenue was more than offset by a decline in retail
information sales and lower revenue from legacy system customers.
Pharmacy Services and Systems revenue for the full year declined
$1.7 million, or 1.3%, from fiscal 2004 as the $6.6 million, or
9.7%, increase in transaction services revenue was more than offset
by lower systems and retail information revenue noted above. -
Hospital Solutions revenue in the fourth quarter of fiscal 2005
increased $0.1 million, or 0.4%, from the fourth quarter of fiscal
2004, and increased $1.1 million or 7.2% from the most recent third
quarter. The conversion to a recurring revenue model with the NDC
ePREMIS(R) revenue cycle management solution is now delivering
sequential revenue growth from increased sales and installations of
NDC ePREMIS, which is increasing its share of NDCHealth transaction
volumes and generating higher average revenue per transaction. -
Physician Solutions has recovered from its change to cash terms in
software sales as revenue increased $1.0 million, or 15.0%, in the
fourth quarter of fiscal 2005 compared to the same period in fiscal
2004 due to higher system sales. The $3.1 million, or 29.5%,
decline in revenue from the most recent third quarter reflects
normal seasonality in sales as the company does not launch a new
software solution upgrade during the fourth quarter as well as $1.6
million in revenue benefit recognized in the most recent third
quarter related to discontinuing a software returns reserve that
was no longer required. - Information Management revenue in the
fourth quarter of fiscal 2005 increased $6.2 million, or 16.5%,
compared to the same quarter last year, driven by new product
growth from the company's newer, advanced longitudinal and
patient-level analytical solutions. This growth more than offset
declines in legacy product offerings and revenue compression from
certain pharmaceutical manufacturer customers. On a consolidated
basis: - Cost of Service decreased $0.6 million or 1.1% from the
fourth quarter of fiscal 2004, reflecting lower data center,
telecommunications and data costs as well as reduced personnel.
These cost reduction initiatives were partially offset by a higher
level of software development expense. For the full year, Cost of
Service increased $6.2 million, or 3.2%, from the comparable period
in fiscal 2004 due to increased net software development expense in
the Pharmacy Services and Systems segment, higher implementation
costs related to growth of NDC ePREMIS in the Hospital Solutions
segment and increased data costs in the Information Management
segment. - Sales, General and Administrative expense in the fourth
quarter of fiscal 2005 rose $2.0 million, or 8.2%, from a year ago
due to increased legal and audit-related professional fees, which
offset a decrease in personnel costs. For the full year, Sales,
General and Administrative expense increased $6.8 million, or 7.4%
from the comparable period in fiscal 2004 due to increased
corporate staff and professional fees as well as higher audit,
insurance and litigation expenses. - Restructuring, Special
Governance and Other Charges in the quarter increased $5.9 million
from the fourth quarter of fiscal 2004, primarily due to a $4.7
million settlement of certain commercial litigation, as well as
higher legal and governance-related expenses associated with
stockholder litigation, the SEC investigation and professional fees
associated with the strategic review initiated by the NDCHealth
Board of Directors. For the full year, Restructuring, Special
Governance and Other Charges were $15.0 million, versus $6.1
million in fiscal 2004. - Free cash flow (3), a non-GAAP measure,
was $17.2 million and $5.9 million in the fourth quarter and full
year of fiscal 2005, respectively. - Total outstanding debt at May
27, 2005 was $270.8 million, down from $302.9 million at the end of
fiscal 2004. Business Highlights - Pharmacy network services volume
totaled more than 1.51 billion transactions in the fourth quarter
of fiscal 2005, a 23.1% increase from the same period last year as
NDCHealth continued to gain market share in core claims processing
and increase penetration of its pre- and post-edit (PPE)
transaction services. - In May 2005, NDCHealth was awarded a
contract to provide electronic services to calculate Medicare
beneficiaries' True Out-Of-Pocket (TrOOP) costs following the drug
benefit implementation starting January 1, 2006 as part of the
Medicare Modernization Act of 2003. NDCHealth will provide routing
of claims for benefits paid by entities other than Medicare back to
the prescription drug plans to ensure that what seniors pay at
pharmacy counters takes into account the proper level of their
Medicare coverage. NDCHealth also will be responsible for
facilitating retail pharmacy inquiries on Medicare enrollee benefit
eligibility to their designated Medicare Part D insurance plan. -
The company sold 101 PharmacyRx systems to regional and independent
pharmacies during the fourth quarter, and a total of 268 during
fiscal 2005. NDCHealth ended the period with an installed base of
383 pharmacies, and a scheduled installation backlog of 71
PharmacyRx systems heading into fiscal 2006. In addition, the
company is progressing with its plan to roll out the NDC
EnterpriseRx(TM) pharmacy management solution for regional and
national chains, with live in- store use proceeding in one retail
pharmacy location and an agreement to go into live testing in an
additional store with another customer in the near future. - During
the fourth quarter, the NDC ePREMIS revenue cycle management
solution handled 26.8% of the hospital claims transactions
processed for customers by NDCHealth, compared to 9.1% of the total
hospital claims transactions processed by NDCHealth in the fourth
quarter of fiscal 2004. - NDCHealth sold an additional 81 NDC
ePREMIS units and installed 87 units during the fourth quarter of
fiscal 2005, increasing the total NDC ePREMIS installed base to
558. The scheduled installation backlog moving into fiscal 2006 was
194 units. - As previously disclosed, NDCHealth is pursuing the
potential sale of the company. The Blackstone Group L.P. and
Goldman, Sachs & Co., acting as the company's financial
advisors, continue to work with NDCHealth to present the company's
business assets, strategy, market position and business outlook to
a number of interested parties. A definitive decision has not been
reached at this time, and NDCHealth notes there can be no assurance
regarding the outcome of this process. Financial Outlook For the
first quarter of fiscal 2006, management expects revenue to be in
the range of $96.5 million to $98.5 million, a normal sequential
trend for this seasonally low quarter. Adjusted EBITDA (1) is
expected to be in the range of $21.0 million to $23.0 million,
excluding approximately $3.0 million in estimated Restructuring,
Special Governance and Other Charges. This would compare to
adjusted EBITDA of $18.2 million in the first quarter last year.
Adjusted income per share from continuing operations (2), excluding
Restructuring, Special Governance and Other Charges, is expected to
be in the range of $0.07 to $0.10 in the first quarter of fiscal
2006, versus $0.03 per diluted share in the same period of fiscal
2005. Conference Call and Webcast NDCHealth will host a conference
call to discuss its financial results and business outlook
beginning at 5:00 pm ET today, August 10, 2005. To listen to the
conference call, please dial 877-421-3895 (706-679-0822 for
international callers), or access the webcast through the Investor
Relations page at http://www.ndchealth.com/. A replay of the
conference call will be available via webcast or by dialing
800-642-1687 (706-645-9291 for international callers) and entering
conference ID 8072813. Cautionary Information Regarding
Forward-Looking Statements This press release contains
forward-looking statements related to the company's expected
business outlook for fiscal year 2006 and financial guidance for
the first quarter of fiscal 2006. 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 may be 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 potential sale of the company; (2) the
company's ability to comply with the Sarbanes-Oxley Act of 2002;
(3) demand for the company's products and services; (4) the
company's ability to expand in new and existing markets; (5) the
cost of product development; (6) the timely completion, market
demand and acceptance of the company's products; (7) competitive
forces; (8) industry conditions affecting NDCHealth's customers;
(9) expected pricing levels; (10) expected growth of revenue and
net income; (11) access to data from suppliers; (12) complex state
and federal regulations and their impact on the demand for
information products or availability of certain data; (13) the
timing and cost of planned capital expenditures; (14) the
availability of capital to invest in business growth and expansion;
(15) the timing of recognition of certain revenue; (16) the
potential for information or network services interruptions; (17)
adequate protection of proprietary technology; (18) unanticipated
changes in accounting rules and/or interpretations; (19) outcomes
and cost of litigation and/or the Securities and Exchange
Commission investigation; (20) the company's ability to maintain
compliance with certain restrictive debt covenants; and (21) 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 Annual
Report on Form 10-K for the fiscal year ended May 27, 2005 and
other company filings with the Securities and Exchange Commission.
The company believes its forward-looking statements are reasonable;
however, undue reliance should not be placed on any forward-looking
statements, which are based on the company's current assumptions
and expectations. 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 information
solutions company serving all sectors of healthcare. Its network
solutions automate the exchange of information among pharmacies,
payers, hospitals and physicians. Its systems and information
management solutions help improve operational efficiencies and
business decision making for providers, retail pharmacy and
pharmaceutical manufacturers. Headquartered at Atlanta, Ga.,
NDCHealth provides information vital to the delivery of healthcare
every day. For more information, visit http://www.ndchealth.com/.
NDCHealth is a trademark of NDCHealth Corporation. All other
company and product names mentioned may be trademarks of the
company. 1. Adjusted EBITDA, a non-GAAP measure, can be derived
from the company's Condensed Consolidated Statements of Operations,
and is defined as Operating Income before Depreciation and
Amortization, and Restructuring, Special Governance and Other
Charges. Reconciliation of adjusted EBITDA to Operating Income, the
most directly comparable GAAP financial measure, is provided in an
accompanying table. 2. Adjusted income from continuing operations,
a non-GAAP measure, can be derived from the company's Condensed
Consolidated Statements of Operations, and is defined as Income
from Continuing Operations before Restructuring, Special Governance
and Other Charges. Reconciliation of adjusted income from
continuing operations to Income from Continuing Operations, the
most directly comparable GAAP financial measure, is provided in an
accompanying table. 3. Free cash flow, a non-GAAP measure, can be
derived from the company's Condensed Consolidated Statements of
Cash Flows, and is defined as net cash (used in) provided by
operating activities less capital expenditures and dividends paid.
Reconciliation of free cash flow to net cash provided by operating
activities, the most directly comparable GAAP financial measure, is
provided in an accompanying table. CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS NDCHealth Corporation and Subsidiaries
(Unaudited) (In Thousands, Except Per Share Data) Three Months
Ended May 27, May 28, 2005 2004 Revenue $99,755 $94,311 Operating
Expenses: Cost of Service 49,546 50,100 Sales, General and
Administrative 26,084 24,102 Depreciation and Amortization 9,720
9,715 Restructuring, Special Governance and Other Charges 8,640
2,771 93,990 86,688 Operating Income 5,765 7,623 Other Income
(Expense): Interest and Other Income 230 96 Interest and Other
Expense (6,582) (6,317) Loss Related to Investments - (4,475) Early
Extinguishment of Debt - (143) (6,352) (10,839) Loss from
Continuing Operations before Income Taxes (587) (3,216) Provision
for Income Taxes (Benefit) (997) (58) Income (Loss) from Continuing
Operations 410 (3,158) Loss from Discontinued Operations (154)
(13,393) Net Income (Loss) $256 $(16,551) Basic Earnings (Loss) Per
Share: Income (Loss) from Continuing Operations $0.01 $(0.09)
Discontinued Operations $- $(0.38) Total $0.01 $(0.47) Weighted
Average Shares Outstanding 35,800 35,569 Diluted Earnings (Loss)
Per Share: Income (Loss) from Continuing Operations $0.01 $(0.09)
Discontinued Operations $- $(0.38) Total $0.01 $(0.47) Weighted
Average Shares Outstanding 35,947 35,569 CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS NDCHealth Corporation and Subsidiaries (In
Thousands, Except Per Share Data) Year Ended May 27, May 28, 2005
2004 Revenue $387,558 $395,815 Operating Expenses: Cost of Service
200,441 194,206 Sales, General and Administrative 98,828 92,013
Depreciation and Amortization 39,902 35,598 Restructuring, Special
Governance and Other Charges 14,977 6,068 354,148 327,885 Operating
Income 33,410 67,930 Other Income (Expense): Interest and Other
Income 460 467 Interest and Other Expense (25,406) (27,567) Loss
Related to Investments - (4,475) Early Extinguishment of Debt -
(143) (24,946) (31,718) Income from Continuing Operations before
Income Taxes 8,464 36,212 Provision for Income Taxes 2,534 14,709
Income from Continuing Operations 5,930 21,503 Loss from
Discontinued Operations (12,569) (14,652) Net Income (Loss)
$(6,639) $6,851 Basic Earnings (Loss) Per Share: Income from
Continuing Operations $0.17 $0.61 Discontinued Operations $(0.35)
$(0.42) Total $(0.19) $0.20 Weighted Average Shares Outstanding
35,708 35,101 Diluted Earnings (Loss) Per Share: Income from
Continuing Operations $0.16 $0.60 Discontinued Operations $(0.35)
$(0.41) Total $(0.18) $0.19 Weighted Average Shares Outstanding
35,957 35,847 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
NDCHealth Corporation and Subsidiaries (In Thousands) Year Ended
May 27, May 28, 2005 2004 Cash flows from operating activities: Net
income (loss) $(6,639) $6,851 Adjustments to reconcile net income
(loss) to cash provided by operating activities: Loss on
discontinued operations 12,569 14,652 Loss related to investments -
4,475 Non-cash restructuring and other charges 547 453 Depreciation
and amortization 39,902 35,598 Deferred income taxes 2,417 15,346
Allowance for doubtful accounts 7,224 8,926 Other, net 5,300 4,877
Total 61,320 91,178 Changes in assets and liabilities, net of the
effects of acquisitions: Accounts receivable, net 4,397 (7,834)
Prepaid expenses and other assets 4,272 (2,756) Accounts payable
and accrued liabilities (6,957) 8,928 Accrued interest on long-term
debt (399) (2,550) Deferred revenue (22,673) 11,453 Total (21,360)
7,241 Net cash provided by operating activities 39,960 98,419 Cash
flows from investing activities: Capital expenditures-Property
Acquisitions (15,626) (15,435) Capital expenditures-Capitalized
External Use Software (15,574) (23,006) Proceeds from the sale of
equipment 1,966 3,187 Acquisitions and other investing activities
(2,919) (20,446) Net cash used in investing activities (32,153)
(55,700) Cash flows from financing activities: Net Repayments/
borrowings under lines of credit 29,100 - Principal payments under
long-term debt arrangements (61,174) (26,433) Net cash used in
refinancing activities - (399) Net issuances related to stock
activities 415 9,273 Dividends paid (2,880) (5,694) Net cash used
in financing activities (34,539) (23,253) Cash provided by
divestiture of discontinued operations 28,274 - Net cash used in
discontinued operations (8,337) (8,061) Decrease in cash and cash
equivalents (6,795) 11,405 Cash and cash equivalents, beginning of
period 24,585 13,180 Cash and cash equivalents, end of period
$17,790 $24,585 CONDENSED CONSOLIDATED BALANCE SHEETS NDCHealth
Corporation and Subsidiaries (In Thousands, Except Per Share Data)
May 27, May 28, 2005 2004 ASSETS Current Assets: Cash and Cash
Equivalents $17,790 $24,585 Accounts Receivable (Less Allowance of
$6,603 and $7,236, respectively) 50,977 62,169 Prepaid Expenses
22,777 25,287 Deferred Income Taxes 6,214 3,476 Other Current
Assets 8,843 11,759 Total Assets of Discontinued Operations 36,245
89,611 Total Current Assets 142,846 216,887 Property and Equipment,
Net 69,842 77,757 Capitalized External Use Software Held For Sale,
Net 68,474 61,567 Goodwill 351,474 356,928 Intangible Assets, Net
61,886 71,760 Debt Issuance Cost 11,496 12,963 Deferred Income
Taxes 18,350 15,092 Other Assets 25,299 22,561 Total Assets
$749,667 $835,515 LIABILITIES AND STOCKHOLDERS' EQUITY Current
Liabilities: Current Portion of Long-term Debt $31,529 $33,511
Trade Accounts Payable 24,033 29,334 Accrued Compensation and
Benefits 9,901 6,034 Accrued Interest 10,524 10,923 Other Accrued
Liabilities 34,772 30,403 Deferred Revenue 33,795 53,801 Total
Liabilities of Discontinued Operations 11,967 37,894 Total Current
Liabilities 156,521 201,900 Deferred Revenue 4,602 7,208 Other
Non-current Liabilities 26,789 29,225 Long-term Debt 239,255
269,347 Total Liabilities 427,167 507,680 Commitments and
Contingencies - - 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; 36,210,808 and 36,006,641 shares issued, respectively.
4,526 4,501 Capital in excess of par value 248,446 245,314 Retained
Earnings 70,907 80,426 Deferred Compensation (5,039) (7,694) Other
Comprehensive Income 3,660 5,288 Total Stockholders' Equity 322,500
327,835 Total Liabilities and Stockholders' Equity $749,667
$835,515 ADJUSTED EBITDA RECONCILIATION NDCHealth Corporation and
Subsidiaries Adjusted EBITDA is defined as Operating Income before
Depreciation and Amortization, and Restructuring, Special
Governance and Other Charges. 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 is useful to investors, analysts and
others because it provides a more meaningful representation of 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 of Adjusted EBITDA to Operating Income, the
most directly comparable GAAP financial measure, for the
three-month and twelve-month periods ended May 27, 2005 and May 28,
2004 is provided below. Non-GAAP measures should be evaluated in
conjunction with, and are not a substitute for, GAAP financial
measures. (In Thousands) Three Months Ended Twelve Months Ended May
27, May 28, May 27, May 28, 2005 2004 2005 2004 Operating Income
$5,765 $7,623 $33,410 $67,930 Depreciation and Amortization 9,720
9,715 39,902 35,598 Restructuring, Special Governance and Other
Charges 8,640 2,771 14,977 6,068 Adjusted EBITDA $24,125 $20,109
$88,289 $109,596 ADJUSTED EPS FROM CONTINUING OPERATIONS
RECONCILIATION NDCHealth Corporation and Subsidiaries (Continuing
Operations) Adjusted Diluted Earnings Per Share from Continuing
Operations (Adjusted EPS) is defined as Diluted Earnings Per Share
from Continuing Operations before Restructuring, Special Governance
and Other Charges. Adjusted EPS is not a Generally Accepted
Accounting Principles (GAAP) measurement and may not be comparable
to Earnings Per Share reported by other companies. Management
believes Adjusted EPS is useful to investors, analysts and others
because it provides a meaningful representation of the company's
ongoing operating earnings performance as it excludes certain items
that management believes are not reflective of the company's core
operating results over time. Reconciliation of Adjusted EPS to
Diluted Earnings Per Share from Continuing Operations, the most
directly comparable GAAP financial measure, for the three-month and
twelve-month periods ended May 27, 2005 and May 28, 2004 is
provided below. Non-GAAP measures should be evaluated in
conjunction with, and are not a substitute for, GAAP financial
measures. Three Months Ended Twelve Months Ended May 27, May 28,
May 27, May 28, 2005 2004 2005 2004 Diluted EPS from Continuing
Operations $0.01 $(0.09) $0.16 $0.60 Restructuring, Special
Governance and Other Charges $0.15 $0.05 $0.25 $0.11 Adjusted EPS
from Continuing Operations $0.16 $(0.04) $0.41 $0.71 FREE CASH FLOW
RECONCILIATION NDCHealth Corporation and Subsidiaries Free cash
flow is defined as net cash from operations 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 useful to
investors, analysts and others because it provides a meaningful
measure of the company's ability to generate cash and reduce its
debt. Reconciliation of free cash flow to Net Cash Provided by
Operating Activities, the most directly comparable GAAP financial
measure, for the three-month and twelve-month periods ended May 27,
2005 and the twelve- month period ended May 28, 2004 is provided
below. Non-GAAP measures should be evaluated with, and are not a
substitute for, GAAP financial measures. (In Thousands) Three
Months Ended May 27, 2005 Net Cash Provided by Operating Activities
$23,994 Capital Expenditures $(6,783) Dividends Paid $- Free Cash
Flow $17,211 Fiscal Year Ended May 27, May 28, 2005 2004 Net Cash
Provided by Operating Activities $39,960 $98,419 Capital
Expenditures $(31,200) $(38,441) Dividends Paid $(2,880) $(5,694)
Free Cash Flow $5,880 $54,284 SEGMENT FINANCIAL SUMMARY NDCHealth
Corporation and Subsidiaries (Continuing Operations) (In Thousands)
Fiscal 2004 Qtr 1 Qtr 2 Qtr 3 Qtr 4 FY 2004 Pharmacy Services and
Systems: Revenue $31,270 $31,697 $33,952 $33,453 $130,372 Operating
Income before Charges $7,636 $6,981 $9,180 $6,959 $30,756 % margin
24.4% 22.0% 27.0% 20.8% 23.6% Restructuring, Special Governance and
Other Charges $(568) $(600) $- $(1,133) $(2,301) Operating Income
after Charges $7,068 $6,381 $9,180 $5,826 $28,455 Hospital
Solutions: Revenue $17,137 $17,302 $15,862 $16,790 $67,091
Operating Income before Charges $6,410 $6,217 $5,239 $6,108 $23,974
% margin 37.4% 35.9% 33.0% 36.4% 35.7% Restructuring, Special
Governance and Other Charges $(101) $- $- $(158) $(259) Operating
Income after Charges $6,309 $6,217 $5,239 $5,950 $23,715 Physician
Solutions: Revenue $9,217 $11,722 $12,197 $6,504 $39,640 Operating
Income before Charges $1,552 $2,398 $2,008 $(227) $5,731 % margin
16.8% 20.5% 16.5% -3.5% 14.5% Restructuring, Special Governance and
Other Charges (Benefit) $- $(157) $- $521 $364 Operating Income
after Charges $1,552 $2,241 $2,008 $294 $6,095 Information
Management: Revenue $38,606 $41,782 $40,760 $37,564 $158,712
Operating Income before Charges $3,665 $6,612 $5,706 $(2,446)
$13,537 % margin 9.5% 15.8% 14.0% -6.5% 8.5% Restructuring, Special
Governance and Other Charges $(555) $(58) $- $(426) $(1,039)
Operating Income after Charges $3,110 $6,554 $5,706 $(2,872)
$12,498 Other: (1) Operating Expense $(275) $(983) $- $(1,575)
$(2,833) NDCHealth - Total Revenue $96,230 $102,503 $102,771
$94,311 $395,815 Operating Income before Charges $19,263 $22,208
$22,133 $10,394 $73,998 % margin 20.0% 21.7% 21.5% 11.0% 18.7%
Restructuring, Special Governance and Other Charges $(1,499)
$(1,798) $- $(2,771) $(6,068) Operating Income after Charges
$17,764 $20,410 $22,133 $7,623 $67,930 18.5% 19.9% 21.5% 8.1% 17.2%
(1) Includes Restructuring, Special Governance and Other Charges
not directly identified to an Operating Segment. SEGMENT FINANCIAL
SUMMARY NDCHealth Corporation and Subsidiaries (Continuing
Operations) (In Thousands) Fiscal 2005 Qtr 1 Qtr 2 Qtr 3 Qtr 4 FY
2005 Pharmacy Services and Systems: Revenue $31,154 $32,717 $33,143
$31,650 $128,664 Operating Income before Charges $3,159 $2,364
$4,916 $4,878 $15,317 % margin 10.1% 7.2% 14.8% 15.4% 11.9%
Restructuring, Special Governance and Other Charges $- $- $(1,162)
$(4,910) $(6,072) Operating Income after Charges $3,159 $2,364
$3,754 $(32) $9,245 Hospital Solutions: Revenue $16,144 $15,535
$15,730 $16,856 $64,265 Operating Income before Charges $4,279
$3,336 $3,876 $4,798 $16,289 % margin 26.5% 21.5% 24.6% 28.5% 25.3%
Restructuring, Special Governance and Other Charges $- $(265)
$(501) $(115) $(881) Operating Income after Charges $4,279 $3,071
$3,375 $4,683 $15,408 Physician Solutions: Revenue $6,477 $7,943
$10,610 $7,480 $32,510 Operating Income before Charges $556 $1,522
$3,964 $2,096 $8,138 % margin 8.6% 19.2% 37.4% 28.0% 25.0%
Restructuring, Special Governance and Other Charges (Benefit) $-
$(646) $(45) $(23) $(714) Operating Income after Charges $556 $876
$3,919 $2,073 $7,424 Information Management: Revenue $37,233
$40,485 $40,632 $43,769 $162,119 Operating Income before Charges
$(22) $2,635 $3,397 $2,633 $8,643 % margin -0.1% 6.5% 8.4% 6.0%
5.3% Restructuring, Special Governance and Other Charges $- $(433)
$(140) $- $(573) Operating Income after Charges $(22) $2,202 $3,257
$2,633 $8,070 Other: (1) Operating Expense $(388) $(1,535) $(1,222)
$(3,592) $(6,737) NDCHealth - Total Revenue $91,008 $96,680
$100,115 $99,755 $387,558 Operating Income before Charges $7,972
$9,857 $16,153 $14,405 $48,387 % margin 8.8% 10.2% 16.1% 14.4%
12.5% Restructuring, Special Governance and Other Charges $(388)
$(2,879) $(3,070) $(8,640) $(14,977) Operating Income after Charges
$7,584 $6,978 $13,083 $5,765 $33,410 8.3% 7.2% 13.1% 5.8% 8.6% (1)
Includes Restructuring, Special Governance and Other Charges not
directly identified to an Operating Segment. SEGMENT FINANCIAL
SUMMARY NDCHealth Corporation and Subsidiaries (Continuing
Operations) (In Thousands) Q4/Q4 Q3/Q4 FY05/FY04 Y-Y Sequential Y-Y
% Change % Change % Change Pharmacy Services and Systems: Revenue
-5.4% -4.5% -1.3% Operating Income before Charges -29.9% -0.8%
-50.2% % margin Restructuring, Special Governance and Other Charges
Operating Income after Charges -100.5% -100.9% -67.5% Hospital
Solutions: Revenue 0.4% 7.2% -4.2% Operating Income before Charges
-21.4% 23.8% -32.1% % margin Restructuring, Special Governance and
Other Charges Operating Income after Charges -21.3% 38.8% -35.0%
Physician Solutions: Revenue 15.0% -29.5% -18.0% Operating Income
before Charges nm -47.1% 42.0% % margin Restructuring, Special
Governance and Other Charges (Benefit) Operating Income after
Charges nm -47.1% 21.8% Information Management: Revenue 16.5% 7.7%
2.1% Operating Income before Charges nm -22.5% -36.2% % margin
Restructuring, Special Governance and Other Charges Operating
Income after Charges nm -19.2% -35.4% Other: (1) Operating Expense
nm nm nm NDCHealth - Total Revenue 5.8% -0.4% -2.1% Operating
Income before Charges 38.6% -10.8% -34.6% % margin Restructuring,
Special Governance and Other Charges 211.8% 181.4% 146.8% Operating
Income after Charges -24.4% -55.9% -50.8% (1) Includes
Restructuring, Special Governance and Other Charges not directly
identified to an Operating Segment. DATASOURCE: NDCHealth
Corporation CONTACT: Robert Borchert, VP-Investor Relations of
NDCHealth Corporation, +1-404-728-2906, or Web site:
http://www.ndchealth.com/
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