QD Quadramed Corp.

QuadraMed Corporation (Amex:QD) announced today that it will report net income of $2.6 million before preferred stock accretion for the three months ended March 31, 2007, compared to a net loss of $(1.8) million for the same period in 2006. Income from operations was $2.1 million for the three months ended March 31, 2007, compared to a loss from operations of $(2.0) million for the same period in 2006. Cash and investments increased by $8.3 million during the three months ended March 31, 2007, to $52.8 million from $44.5 million at December 31, 2006. Cash flow from operations was $8.9 million for three months ended March 31, 2007, compared to $5.3 million for the corresponding three months in 2006. Cash flow in both periods was significantly influenced by the collection of annual maintenance billings which are billed early in the first quarter. Revenues of $29.2 million, gross margin of 62% and operating expenses of $16.1 million combined to produce the achieved operating results for the quarter. These are compared to revenues of $28.9 million, gross margin of 62% and operating expenses of $19.9 million for the same period in 2006. Total operating expenses of $16.1 million for the three months ended March 31, 2007 are compared to $19.9 million for the three months ended March 31, 2006. After removing the effect of $1.4 million of severance and settlement of litigation costs from the 2006 figures, operating expenses decreased approximately $2.4 million between the three month periods. The Company�s reorganization during the first quarter of 2006, as well as other management initiatives enacted in connection with the Company�s strategic plan, have accounted for the majority of these operating expense declines. EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) was $3.7 million or 13% of revenues for the three months ended March 31, 2007, compared to EBITDA of $0.2 million for the same period in 2006. The Company will also report net income attributable to common shareholders of $1.3 million, or $0.03 per basic and diluted share for the three months ended March 31, 2007; this is compared to a net loss attributable to common shareholders of $(3.3) million, or $(0.08) per basic and diluted share for the same period in 2006. �I am pleased that we are reporting a fourth consecutive quarter with strong positive net income from operations. We were able to keep operating expenses in check during the quarter even while incurring investment expenses tied to the rebranding roll-out of our new corporate tagline 'Quality Care. Financial Health' and an increased presence at HIMSS�07, the largest tradeshow in the HIT industry. EBITDA performance, growing cash and investments and positive cash flow continue to be core strengths of our business,� said Keith Hagen, QuadraMed president and chief executive officer. The Company also reported that on April 19, 2007 it finalized a new AffinityTM revenue cycle management contract with an acute care community hospital. The Affinity contract has a three year total value of approximately $1.0 million and includes the full line of QuadraMed revenue cycle products. Management will review these results in an investment community conference call at 4:00 PM Eastern (1:00 PM Pacific) on Tuesday, May 8, 2007. To ensure fair dissemination of information, no inquiries of management should be made regarding QuadraMed�s results until after the conference call. A brief question and answer period will follow management�s presentation. The dial-in number for the conference call is 800-361-0912 domestic and 913-981-5559 international. Callers should dial in by 3:45 PM Eastern (12:45 PM Pacific) to register. The call will also be webcast live and available to the public via the Investor Relations section of QuadraMed�s webpage at www.quadramed.com. Please note that the webcast is listen-only. Listeners should access the website at 3:45 PM Eastern (12:45 PM Pacific) to register and to download and install any necessary audio software. Webcast replays will be available shortly after the live call is completed. Replay will be available until May 14, 2007. Replay telephone numbers are 719-457-0820 or 888-203-1112; replay passcode is 7462316. Attachments Exhibit 1 Condensed Consolidated Balance Sheets as of March 31, 2007 and December 31, 2006 Exhibit 2 Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2007 and 2006 Exhibit 3 Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2007 and 2006 Exhibit 4 Reconciliation of EBITDA and Non-GAAP Measurements for the Three Months Ended March 31, 2007, December 31, 2006, September 30, 2006, June 30, 2006, March 31, 2006, and December 31, 2005 Exhibit 5 Reconciliation of EBITDA and Non-GAAP Measurements for the Three Months Ended March 31, 2007 and March 31, 2006 and the Twelve Months Ended March 31, 2007 About QuadraMed Corporation QuadraMed Corporation advances the success of healthcare organizations through IT solutions that leverage quality care into positive financial outcomes. As evolving reimbursement scenarios challenge healthcare organizations to leverage quality of care into payment, clients committing to QuadraMed�s care-based solutions can realize market leading financial performance. Using QuadraMed�s end-to-end solutions to optimize the patient experience and leverage quality of care into payment, our clients can receive the proper reimbursement, in the shortest time, at the lowest administrative cost. Behind our products and services is a staff of almost 600 professionals whose experience and dedication to service have earned QuadraMed the trust and loyalty of customers at approximately 2,000 healthcare provider facilities. To find out more about QuadraMed, visit www.quadramed.com. Cautionary Statement on Risks Associated with QuadraMed�s Forward-Looking Statements This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 by QuadraMed that are subject to risks and uncertainties. The words "believe," "expect," "anticipate," "intend," "plan," "estimate," "may," "should," "could," and similar expressions are intended to identify such statements. Forward-looking statements are not guarantees of future performance and are to be interpreted only as of the date on which they are made. QuadraMed undertakes no obligation to update or revise any forward-looking statement except as required by law. QuadraMed advises investors that it discusses risk factors and uncertainties that could cause QuadraMed�s actual results to differ from forward-looking statements in its periodic reports filed with the Securities and Exchange Commission ("SEC"). QuadraMed�s SEC filings can be accessed through the Investor Relations section of our website, www.quadramed.com, or through the SEC�s EDGAR Database at www.sec.gov (QuadraMed has EDGAR CIK No. 0001018833). QuadraMed Affinity and Care-based Revenue Cycle are registered trademarks of QuadraMed Corporation. All other trademarks are the property of their respective holders. QUADRAMED CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except per share amounts) (unaudited) � March 31, December 31, ASSETS 2007� 2006� � Current assets Cash and cash equivalents $ 28,499� $ 32,596� Short-term investments 23,181� 10,703� Accounts receivable, net of allowance for doubtful accounts of $1,876 and $2,612, respectively 21,373� 20,358� Unbilled and other receivables 2,807� 4,253� Prepaid expenses and other current assets, net of allowance on other receivable of $909 and $833, respectively � 11,109� � 10,848� Total current assets 86,969� 78,758� � Restricted cash 2,287� 2,341� Long-term investments 1,109� 1,244� Property and equipment, net of accumulated depreciation and amortization of $21,604 and $21,131, respectively 2,302� 2,557� Goodwill 25,983� 25,983� Other intangible assets, net of accumulated amortization of $29,266 and $28,354, respectively 1,220� 2,132� Other long-term assets � 3,180� � 3,183� Total assets $ 123,050� $ 116,198� LIABILITIES AND STOCKHOLDERS� EQUITY � Current liabilities Accounts payable and accrued expenses $ 2,375� $ 3,493� Accrued payroll and related 5,479� 8,720� Other accrued liabilities 5,829� 5,666� Dividends payable 2,305� 3,775� Deferred revenue � 55,171� � 46,347� Total current liabilities 71,159� 68,001� � Accrued exit cost of facility closing 1,567� 2,066� Deferred Income Taxes 1,117� 1,042� Other long-term liabilities � 2,599� � 2,618� Total liabilities 76,442� 73,727� � Stockholders� equity Preferred stock, $0.01 par, 5,000 shares authorized, 4,000 shares issued and outstanding, respectively 94,598� 93,290� Common stock, $0.01 par, 150,000 shares authorized; 44,300 and 43,678 shares issued and 43,843 and 43,221 outstanding, respectively 443� 437� Shares held in treasury (5) (5) Additional paid-in-capital 306,012� 304,504� Accumulated other comprehensive loss (50) (49) Accumulated deficit � (354,390) � (355,706) Total stockholders� equity � 46,608� � 42,471� Total liabilities and stockholders� equity $ 123,050� $ 116,198� QUADRAMED CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(in thousands, except per share amounts)(unaudited) � Three months ended, March 31, 2007� 2006� Revenue Services $ 3,313� $ 2,915� Maintenance 13,924� 13,562� Installation and other � 2,414� � 2,872� Services and other revenue 19,651� 19,349� Licenses 9,057� 9,182� Hardware � 498� � 397� Total revenue � 29,206� � 28,928� � Cost of revenue Cost of services and other revenue 7,027� 6,867� Royalties and other 2,979� 2,764� Amortization of acquired technology and capitalized software � 471� � 995� Cost of license revenue 3,450� 3,759� Cost of hardware revenue � 492� � 363� Total cost of revenue � 10,969� � 10,989� Gross margin � 18,237� � 17,939� � Operating expense General and administration 3,873� 6,557� Software development 7,412� 8,569� Sales and marketing 3,896� 3,696� Amortization of intangible assets and depreciation � 923� � 1,123� Total operating expenses � 16,104� � 19,945� Income (loss) from operations � 2,133� � (2,006) � Other income (expense) Interest expense, includes non-cash charges of $85, $383, $306 and $740, respectively (50) (123) Interest income 573� 366� Other income (expense), net � 77� � 18� Other income (expense) � 600� � 261� � Income (loss) from continuing operations before income taxes $ 2,733� $ (1,745) Provision for income taxes � (109) � (98) Income (loss) from continuing operations 2,624� (1,843) � Net income (loss) $ 2,624� $ (1,843) Preferred stock accretion � (1,308) � (1,489) � Net income (loss) attributable to common shareholders $ 1,316� $ (3,332) � Income (loss) per share-basic Basic $ 0.03� $ (0.08) Diluted $ 0.03� $ (0.08) Weighted average shares outstanding Basic � 43,540� � 41,319� Diluted � 79,355� � 41,319� QUADRAMED CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) � Three months ended March 31, 2007� 2006� Cash flows from operating activities Net income (loss) attributable to common shareholders $ 1,316� $ (3,332) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 1,394� 2,118� Deferred compensation amortization 96� 96� Dividend discount amortization 33� 101� Provision for bad debts 156� 386� Stock-based compensation expense 384� 271� Loss (gain) on sales of investments (11) -� Interest expense on note payable 18� 18� Preferred stock accretion and dividend premium 1,308� 1,489� � Changes in assets and liabilities: Accounts receivable 290� (1,373) Prepaid expenses and other (230) 1,172� Accounts payable and accrued liabilities (4,671) (3,903) Deferred revenue � 8,824� � 8,246� Cash provided by operating activities 8,907� 5,289� � Cash flows from investing activities Decrease in restricted cash 54� 80� Purchases of available-for-sale securities (17,412) (115) Proceeds from the sale of assets and available-for-sale securities, net 5,046� 100� Purchases of property and equipment (228) (255) Other � 5� � 24� Cash used in investing activities (12,535) (166) � Cash flows from financing activities Payment of preferred stock dividends (1,503) (1,625) Proceeds from issuance of common stock and other � 1,034� � 246� Cash used in financing activities (469) (1,379) � Net increase (decrease) in cash and cash equivalents (4,097) 3,744� � Cash and cash equivalents, beginning of period � 32,596� � 33,042� � Cash and cash equivalents, end of period $ 28,499� $ 36,786� QUADRAMED CORPORATIONReconciliation of EBITDA and Non-GAAP Measurements(in thousands, except percentages)(unaudited) � � For the Three Months Ended 3/31/07� 12/31/06� 9/30/06� 6/30/06� 3/31/06� 12/31/05� � � EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) � Net income (loss), as reported $2,624� $3,962� $5,979� $3,847� ($1,843) $1,247� � Adjustments to Net Income for EBITDA Interest Expense 50� 68� 85� 103� 123� (156) Interest Income (573) (480) (501) (399) (366) (305) Benefit (provision) for Income Taxes 109� 80� 101� 63� 98� 149� Depreciation and Amortization 1,490� � 1,756� 1,878� 2,133� 2,215� 2,141� Subtotal Adjustments for EBITDA 1,076� 1,424� 1,563� 1,900� 2,070� 1,829� � � � � � � � EBITDA $3,700� � $5,386� $7,542� $5,747� $227� $3,076� � Proforma Net Income (Loss) before Preferred Stock Accretion � Net income (loss), as reported $2,624� $3,962� $5,979� $3,847� ($1,843) $1,247� � Exit Cost on Facility Closing (San Rafael) -� -� -� -� -� -� Exit Cost on Facility Closing (Discontinued Operation) -� -� -� -� -� -� Cash Severance -� -� -� 142� 315� -� Non-Cash Severance -� -� -� -� -� -� Costs of Litigation -� -� -� 27� 1,124� -� Gain on Sale of EDI Division -� -� -� -� -� -� Loss from Discontinued Operation -� � -� -� -� -� (68) Subtotal Proforma adjustments -� -� -� 169� 1,439� (68) � � � � � � � Proforma net income (loss) $2,624� � $3,962� $5,979� $4,016� ($404) $1,179� � Proforma Income (Loss) from Operations � Income (loss) from operations, as reported $2,133� $3,623� $5,624� $3,578� ($2,006) $817� � Proforma adjustments to Income (loss) from Operations -� Exit Cost on Facility Closing (San Rafael) -� -� -� -� -� -� Cash Severance -� -� -� 142� 315� -� Non-Cash Severance -� -� -� -� -� -� Costs of Litigation -� -� -� 27� 1,124� -� Gain on Sale of EDI Division -� � -� -� -� -� -� Subtotal Proforma adjustments -� -� -� 169� 1,439� -� � � � � � � � Proforma Income (loss) from operations $2,133� � $3,623� $5,624� $3,747� ($567) $817� � Other Information � Revenue $29,206� $31,213� $33,032� $32,028� $28,928� $31,209� Costs of Revenue $10,969� $12,171� $10,975� $11,592� $10,989� $11,806� Gross Margin $18,237� $19,042� $22,057� $20,436� $17,939� $19,403� Gross Margin % 62% 61% 67% 64% 62% 62% QUADRAMED CORPORATIONReconciliation of EBITDA and Non-GAAP Measurements(in thousands, except percentages)(unaudited) � � For the Three MonthsEnded Last 12MonthsEnded 3/31/07� 3/31/06� 3/31/07� � � EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) � � Net income (loss), as reported $2,624� ($1,843) $16,412� � Adjustments to Net Income for EBITDA Interest Expense 50� 123� 306� Interest Income (573) (366) (1,953) Benefit (provision) for Income Taxes 109� 98� 353� Depreciation and Amortization 1,490� 2,215� 7,282� Subtotal Adjustments for EBITDA 1,076� 2,070� 5,988� � � � EBITDA $3,700� $227� $22,400� � Proforma Net Income (Loss) before Preferred Stock Accretion � Net income (loss), as reported $2,624� ($1,843) $16,412� � Exit Cost on Facility Closing (San Rafael) -� -� -� Exit Cost on Facility Closing (Discontinued Operation) -� -� -� Cash Severance -� 315� 142� Non-Cash Severence -� -� -� Costs of Litigation -� 1,124� 27� Gain on Sale of EDI Division -� -� -� Loss from Discontinued Operation -� -� -� Subtotal Proforma adjustments -� 1,439� 169� � � � Proforma net income (loss) $2,624� ($404) $16,581� � Proforma Income (Loss) from Operations � Income (loss) from operations, as reported $2,133� ($2,006) $14,958� � Exit Cost on Facility Closing (San Rafael) -� -� -� Cash Severance -� 315� 142� Non-Cash Severence -� -� -� Costs of Litigation -� 1,124� 27� Gain on Sale of EDI Division -� -� -� Subtotal Proforma adjustments -� 1,439� 169� � � � Proforma Income (loss) from operations $2,133� ($567) $15,127� � Other Information � Revenue $29,206� $28,928� $125,479� Costs of Revenue $10,969� $10,989� $45,707� Gross Margin $18,237� $17,939� $79,772� Gross Margin % 62% 62% 64%