MEDE Medecision (MM)

MEDecision, Inc. (NASDAQ: MEDE), a leading provider of collaborative health care management solutions, today reported total revenues of $10.8 million for the first quarter of 2008, compared to $9.8 million for the same period last year, and a net loss of $2.5 million, or $0.15 per basic and diluted share, for the first quarter of 2008, compared to a net loss of $2.5 million, or $0.16 per basic and diluted share, for the same period last year. Significant items during the first quarter included: Total revenue was $10.8 million for the first quarter of 2008 compared to $9.8 million in the first quarter of 2007; Gross margins were 50.9% in the first quarter of 2008, a decline from the 54.7% reported in the first quarter of 2007, reflecting the decline in gross margin for term licenses; Total operating expense as a percent of revenue declined to 73.5% in the first quarter of 2008 from 80.7% in the first quarter of 2007, a decrease primarily attributable to declines in sales and marketing expenses as a percentage of revenue and general and administrative expenses as a percentage of revenue, partially offset by a modest increase in research and development expenses as a percentage of revenue; and Introduced Alineo(TM) Clinical Programs and Alineo Care Management Analytics, new components of the recently released Alineo collaborative health care management platform. �Now that we successfully launched Alineo and after spending most of last year developing this simple, smart, state-of-the-art solution, our focus as a company now turns to strengthening and streamlining certain key functions that will determine the future of our Alineo and Nexalign(TM) solutions and our ability to capitalize on the significant collaborative health care market opportunities,� said David St.Clair, Founder and Chief Executive Officer of MEDecision. �We still have work to do, but we are well on our way to improving our internal organization and fundamentally transforming how we approach clients, particularly after bringing in the seasoned professionals that we announced over the last couple of weeks.� Total revenue for the quarter ended March 31, 2008 was $10.8 million, a 9.6% increase compared to $9.8 million for the quarter ended March 31, 2007. The revenue by category for quarter ended March 31, 2008 was as follows: Subscription, maintenance and transactions fees of $6.9 million; term license revenue of $0.3 million and professional services revenue of $3.6 million. Gross margin for the first quarter 2008 was $5.5 million with gross margin as a percentage of revenue of 50.9%, compared to gross margin of $5.4 million with gross margin as a percentage of revenue of 54.7% in the first quarter of 2007. Total operating expenses for the first quarter 2008 were $7.9 million, resulting in a loss from operations of $2.4 million, compared to $7.9 million in total operating expenses in the first quarter of 2007, resulting in a loss from operations of $2.5 million. For the three months ended March 31, 2008, the company reported a net loss to common shareholders of $2.5 million, or $0.15 per basic and diluted share based on weighted average shares outstanding of 16.3 million shares. Net loss available to common shareholders for the three-month period ended March 31, 2007 was $2.5 million, or $0.16 per basic and diluted share based on 15.2 million weighted average shares outstanding. Conference Call Information MEDecision will also host a Web cast and conference call at 8:30 am ET on April 24, 2008 to discuss results for the first quarter of 2008 and the outlook for 2008. A live Web cast of the conference call will be available online from the investor relations page of MEDecision's corporate Web site at www.MEDecision.com. The dial-in numbers are (877) 407-0784 for domestic callers and (201) 689-8560 for international callers. After the live Web cast, the call will remain available on MEDecision's Web site until May 8, 2008. In addition, a telephonic replay of the call will be available until May 1, 2008. The replay dial-in numbers are (877) 660-6853 for domestic callers and (201) 612-7415 for international callers. Please use account number 3055 and conference ID number 281279. About MEDecision MEDecision offers collaborative health care management solutions that provide a simplified and smart way to manage the health of members and member populations which can improve the quality and affordability of care. Based on state-of-the-art technology, MEDecision's solutions include Alineo(TM), a collaborative health care management platform for managing case, disease and utilization management and Nexalign(TM), a collaborative health care information exchange service. MEDecision believes that, in the aggregate, its health care payer customers insure or manage care for approximately one in every six people in the U.S. with health insurance. For more information, please visit www.MEDecision.com. Forward-Looking Statement This release contains, and the conference call will contain, forward-looking statements within the meaning of the "safe harbor" provisions of the federal securities laws, including, without limitation, estimates of revenue, the impact on revenue derived from recurring fees and services, and statements concerning the company's term license deal pipeline and the company's expectations regarding its subscriptions and transactions business, Collaborative Health Care Management solutions and Clinical Summaries. These forward-looking statements are subject to risks and uncertainties that could cause actual events or results to differ materially from such statements. The company's actual results could differ materially from those expressed or implied by these forward-looking statements as a result of various factors, including, but not limited to, the company's completion of its quarter closing process and the completion of the year-end audit by the company's independent auditors and the various risks described in the "Risk Factors" section and elsewhere in the company's Annual Report on Form 10-K as filed with the Securities and Exchange Commission (SEC) on March 28, 2008. MEDecision undertakes no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other events occur in the future. MEDecision is a trademark of MEDecision, Inc. The MEDecision logo and product names are also trademarks or registered trademarks of MEDecision, Inc. MEDE-E MEDecision, Inc. Consolidated Statements of Operations (in thousands except per share data) � � Three Months Ended March 31, 2008 � 2007 (unaudited) Revenue Subscription, maintenance & transaction fees $ 6,906 $ 5,711 Term licenses 249 1,567 Professional services � 3,607 � � 2,539 � Total revenue 10,762 9,817 � Costs of revenue Subscription, maintenance & transaction fees 2,764 2,365 Term licenses 592 601 Professional services � 1,927 � � 1,478 � Total cost of revenue 5,283 4,444 � Gross margin Subscription, maintenance & transaction fees 4,142 3,346 Term licenses (343 ) 966 Professional services � 1,680 � � 1,061 � Total gross margin 5,479 5,373 � � Operating expenses Sales and marketing 1,939 2,241 Research and development 2,098 1,728 General and administrative � 3,869 � � 3,949 � Total operating expenses 7,906 7,918 � Loss from operations (2,427 ) (2,545 ) � Interest (expense) income, net � (82 ) � 44 � � Loss available to common shareholders $ (2,509 ) $ (2,501 ) � Loss per share available to common shareholders, basic and diluted $ (0.15 ) $ (0.16 ) � Weighted average shares used to compute loss available to common shareholders per common share, basic and diluted 16,282,936 15,183,004 MEDecision, Inc. Consolidated Balance Sheets (in thousands) � � March 31, � December 31, 2008 2007 (unaudited) Assets Current assets Cash and cash equivalents $ 6,101 $ 9,857 Accounts receivable, net of allowance for doubtful accounts of $81 (unaudited) and $72, respectively 9,562 9,991 Prepaid expenses 1,444 1,572 Other current assets � 100 � � 225 � Total current assets � 17,207 � � 21,645 � � Property and equipment Computer equipment and software 10,642 10,328 Leasehold improvements 3,389 3,389 Office equipment and furniture 2,073 � 1,918 � 16,104 15,635 Less: accumulated depreciation and amortization (7,096 ) (6,522 ) Net property and equipment 9,008 9,113 � Capitalized software, net of accumulated amortization of $8,528 (unaudited) and $8,054, respectively 7,492 7,475 Other non-current assets � 997 � � 995 � Total assets $ 34,704 � $ 39,228 � � Liabilities and Stockholders' Equity Current liabilities Current portion of capital lease obligations $ 1,974 $ 1,899 Notes payable and current portion of long-term note payable 448 587 Accounts payable 2,852 3,934 Accrued payroll and related costs 807 867 Other accrued expenses 1,058 1,338 Deferred license and maintenance revenue 8,324 8,554 Deferred professional services revenue � 1,038 � � 1,495 � Total current liabilities � 16,501 � � 18,674 � � Long-term liabilities Capital lease obligations 2,552 2,642 Note payable 435 472 Deferred rent 2,427 2,428 Deferred license and maintenance revenue � 256 � � 323 � Total long-term liabilities � 5,670 � � 5,865 � � Commitments and contingencies � Stockholders' equity Common stock 106,662 106,309 Accumulated deficit � (94,129 ) � (91,620 ) Total stockholders' equity � 12,533 � � 14,689 � � Total liabilities and stockholders' equity $ 34,704 � $ 39,228 � MEDecision, Inc. Consolidated Statements of Cash Flows (in thousands) � � Three Months Ended March 31, 2008 � 2007 (unaudited) Cash flows from operating activities Net loss $ (2,509 ) $ (2,501 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 745 666 Amortization of capitalized software 474 284 Stock-based compensation expense 323 212 Amortization of deferred financing cost 16 23 Provision for (recovery of) doubtful accounts 9 (4 ) Loss on disposal of asset 1 - Decrease (increase) in assets: Accounts receivable 420 1,304 Prepaid expenses and other assets 214 (363 ) (Decrease) increase in liabilities: Accounts payable (1,082 ) (202 ) Accrued payroll and related costs (54 ) (227 ) Other accrued expenses (280 ) (122 ) Deferred revenue � (755 ) � (156 ) Net cash used in operating activities (2,478 ) (1,086 ) � Cash flows from investing activities Capitalized software (491 ) (859 ) Purchase of property and equipment � (146 ) � (281 ) Net cash used in investing activities (637 ) (1,140 ) � Cash flows from financing activities Proceeds from exercise of common stock options 48 260 Repurchase of common stock to satisfy tax obligations (3 ) - Repayment of capital lease obligations (510 ) (448 ) Repayment of insurance note payable (89 ) (103 ) Repayment on equipment note payable - (25 ) Repayment on maintenance notes payable � (87 ) � - � Net cash used in financing activities � (641 ) � (316 ) � Net decrease in cash and cash equivalents (3,756 ) (2,542 ) Cash and cash equivalents, beginning of period � 9,857 � � 17,408 � Cash and cash equivalents, end of period $ 6,101 � $ 14,866 � � Supplemental disclosures of cash flow information: Cash paid during the period for interest $ 133 � $ 133 � � Supplemental disclosures of noncash investing and financing activities: Property and equipment acquired under capital leases $ 495 � $ - �