NEOF already reported tonight rather than on 2/14:
Neoforma Reports Strong Close to Successful Year; EBITDA Profitability Remains On Track for First Quarter 2002
Fourth Quarter Revenue Increases 51% Over Prior Quarter
SAN JOSE, Calif., Feb 13, 2002 /PRNewswire-FirstCall via COMTEX/ -- Neoforma, Inc. (Nasdaq: NEOF chart, msgs), the leading healthcare supply chain solutions company, today announced record financial results for the fourth quarter and year ended December 31, 2001. The Company's strong financial growth continued in the fourth quarter, with an increase in revenue of 51% to a record high of $12.1 million and a decrease in cash operating expenses of 22% from the previous quarter. In the fourth quarter, Neoforma continued to focus on driving toward EBITDA profitability, as described in the table below, and the Company reiterates its confidence in reaching this important milestone during the current quarter, as projected.
(Photo:http://www.newscom.com/cgi-bin/prnh/20010420/NEOFORMALOGO )
During the fourth quarter, based on a review of certain long-lived assets, the Company recorded a non-cash, non-recurring charge of $100 million related to the write-down of intangibles and a non-marketable investment. The intangibles consist primarily of goodwill and other intangible assets resulting from acquisitions made during the first half of fiscal year 2000 using the Company's common stock. The Company has adjusted the carrying value of these assets to their estimated fair market value. On a GAAP basis, including these non-recurring charges as well as non-cash expenses, the Company reported a total net loss of $133.8 million for the fourth quarter.
Neoforma's Results* (in millions, except per share data):
Current Quarter Prior Quarters
Q4 2001 Q3 2001 Q2 2001 Q1 2001 Q4 2000
Marketplace
Volume: $636.0 $395.9 $150.2 $80.8 $33.9
Net Revenue: $12.1 $8.0 $4.1 $2.4 $0.6
Cash
Operating
Expenses: $12.2 $15.6 $16.6 $18.8 $19.3
Cash Operating
Income
(EBITDA)**: ($0.1) ($7.6) ($12.5) ($16.4) ($18.7)
Cash EPS,
Adjusted for
Reverse
Split: ($0.07) ($0.45) ($0.81) ($1.11) ($1.43)
* All results exclude depreciation, amortization and non-recurring charges and gains, as well as the results of Auction and U.S. Lifeline.
** The Company defines EBITDA as earnings before interest, taxes, depreciation and amortization, as well as non-recurring charges and gains
"Neoforma's fourth quarter results illustrate the enormous progress we made in 2001," says Bob Zollars, chairman and chief executive officer of Neoforma. "For four consecutive quarters, we have driven increasing revenue and marketplace volume, delivered several valuable product updates and enhancements to our customers and significantly reduced our cash operating expenses."
Fourth Quarter Financial Results
Neoforma's net revenue for the fourth quarter was $12.1 million, an increase of 51% over the $8.0 million generated in the third quarter. Two revenue streams comprise Neoforma's net revenue: Marketplace Services revenue and Trading Partner Services revenue. Marketplace Services revenue increased 52% from $7.7 million to $11.7 million during the fourth quarter. Over the same period, Trading Partner Services revenue increased 58% from $295,000 to $466,000.
Total marketplace volume increased 61% to $636.0 million in the fourth quarter from $395.9 million in the third quarter.
Neoforma's cash operating expenses of $12.2 million in the fourth quarter declined for the fourth consecutive quarter. The fourth quarter cash operating expense results represent a decrease of 22%, or $3.4 million, from $15.6 million in the third quarter.
The difference between total net revenue and cash operating expenses, or the cash operating loss, for the fourth quarter was $106,000, a significant improvement over the previous quarter's cash operating loss of $7.6 million.
Neoforma's chief financial officer, Andrew Guggenhime, comments, "We are extremely focused on building a profitable business for the long-term for both our customers and stockholders, and EBITDA profitability represents a significant milestone for us. In the fourth quarter, we continued to devote ourselves to that goal and reduced our cash operating loss to $106,000. This was significantly better than our previous estimate of a loss of between $1.0 and $2.5 million. With the results we achieved in the fourth quarter and the scalability of our business, we are well positioned to achieve EBITDA profitability this quarter, as projected, and to increase our margins going forward."
The net loss for the fourth quarter, excluding non-cash expenses and non-recurring charges, was $1.1 million, or $0.07 per share, compared to a net loss of $7.2 million, or $0.45 per share, in the prior quarter. All per share results contained in this press release reflect the reverse split implemented in August 2001.
For the fourth quarter, including non-cash expenses but excluding non-recurring charges, the net loss was $33.8 million, or $2.10 per share, compared to a net loss, on the same basis, of $39.8 million, or $2.50 per share, in the prior quarter.
During the fourth quarter, Neoforma conducted a review of the carrying value of certain long-lived assets, including goodwill and other acquired intangible assets resulting from acquisitions made during the first half of fiscal year 2000. The Company's common stock was the primary consideration for these acquisitions. As a result of the review, Neoforma recorded non-recurring charges totaling $100.0 million, or $6.23 per share, to adjust the carrying value of these assets to their estimated fair market value. The non-recurring charges include an $81.5 million charge related to the previously announced anticipated divestiture of the Company's non-acute care NeoMD(TM) marketplace, which consists primarily of a write-down of the intangibles recorded in connection with the acquisition of EquipMD, Inc. in May 2000, a $13.1 million charge to write-down intangibles recorded in the acquisition of Pharos Technologies, Inc. in January 2000 and a $5.4 million charge for the write-down of the Company's investment made in 1999 and 2000 in a privately held, non-acute care healthcare services company.
"Throughout the year, we continued to sharpen our focus on Neoforma's core marketplace business and divested or announced our intent to divest those business units that were not directly aligned with our strategy," says Guggenhime. "The non-recurring charges that we recorded this quarter are largely a result of these strategic decisions to exit market segments unrelated to our core acute care business. With the divestitures now substantially completed, we continue to strengthen our focus on investing in and driving the growth of our core marketplace business."
The total net loss for the fourth quarter on a GAAP basis, including non-cash expenses and non-recurring charges, was $133.8 million, or $8.33 per share, compared to a total net loss of $42.0 million, or $2.64 per share, for the prior quarter.
The Company expects its non-cash operating expenses to be between approximately $105 and $110 million in 2002, including depreciation of $16 to $17 million, deferred compensation amortization of $7 to $8 million and partnership costs amortization of $82 to $85 million.
In addition, the Company has extended the maturity date of its line of credit from VHA Inc. for an additional year until May 31, 2003. All other terms of the line of credit remain unchanged. As of December 31, 2001, Neoforma's cash, cash equivalents and investments totaled $15.7 million. With the cash on hand and access to additional capital through this line of credit, the Company has access to sufficient capital to meet its anticipated needs for fiscal year 2002.
Year-End Financial Results
For the year ended December 31, 2001, total net revenue was $27.6 million, four times the total net revenue of $6.9 million in the previous year. Total marketplace volume for 2001 was approximately $1.3 billion, up from $68.3 million in the prior year.
Total cash operating expenses for the full year were $65.4 million, compared to $83.0 million in 2000, a decrease of more than 21%. Neoforma's cash operating loss for 2001 was $37.8 million, less than half the $76.1 million loss generated in 2000. Neoforma expects to generate positive cash operating income, or EBITDA, for 2002.
On a GAAP basis, cost of equipment sold of $216,000 in 2001 and $3.5 million in 2000, which relates to Neoforma's divested Auction business, is reported as an operating expense. On this basis, Neoforma's net revenue in 2001 and 2000 was $27.8 million and $10.4 million, respectively.
The net loss for fiscal year 2001, excluding non-cash expenses and non-recurring charges and gains, was $38.8 million, or $2.48 per share, compared to a net loss of $72.9 million, or $8.41 per share on a pro forma basis for 2000. The net loss for 2001, including non-cash expenses but excluding non-recurring charges and gains, was $173.9 million, or $11.09 per share, compared to $171.5 million, or $19.81 per share on a pro forma basis for 2000. The total net loss for fiscal year 2001 on a GAAP basis, including non-cash expenses and non-recurring charges and gains, was $276.6 million, or $17.65 per share, compared to $208.8 million, or $24.12 per share on a pro forma basis in 2000.
Pro Forma Year-End Financial Results
Neoforma's pro forma results for 2001 exclude the results of the Auction and U.S. Lifeline operations, which have been divested. On this basis, Neoforma recorded total net revenue of $26.6 million in fiscal year 2001. On the same basis, cash operating expenses were $63.3 million, resulting in a cash operating loss of $36.7 million. Excluding the results of these operations as well as non-cash expenses and non-recurring charges and gains, the net loss for the year was $37.6 million, or $2.40 per share.
Year 2001 Milestones
"When we entered 2001," continues Zollars, "there were five key things that we wanted to accomplish. First, we intended to connect 75 hospitals per quarter; second, to contract with the 'big' suppliers; third, to demonstrate the value of our solutions; fourth, to strengthen our balance sheet; and fifth, to position Neoforma for EBITDA profitability in the first quarter of 2002. I am very proud and pleased to report that we accomplished all of these things, and more, in 2001."
Neoforma achieved a number of strategic, operational and financial milestones in 2001, which are detailed in the attached fact sheet.
"We have an enormous opportunity in front of us to become the industry standard for supply chain solutions in the $200 billion U.S. market for medical supplies," says Zollars. "In 2001, we built a solid operating foundation and achieved the goals that we had set for the year. Building on this foundation, in 2002, we intend to continue to drive adoption of our solutions, deliver enhancements and upgrades to our technology and launch new Trading Partner Services to our large connected base of buyers and suppliers. We also will pursue new marketplaces outside our existing customer base with our proven products and solutions."
About Neoforma
Neoforma builds and operates Internet marketplaces that empower healthcare trading partners to optimize supply chain performance. Neoforma uses proven, scalable technologies to provide customized marketplace solutions and services that enable customers to maximize their existing technology and supply chain relationships. Healthcare providers, leading group purchasing organizations, manufacturers and distributors choose Neoforma as their e-commerce partner. For more information, visit the Company's Web site at www.neoforma.com.
This news release contains forward-looking statements 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 statements related to the Company's future growth and success, the Company's anticipated breakeven date, a planned divestiture, the Company's access to sufficient capital to meet its anticipated needs through fiscal 2002, anticipated results of fourth quarter 2001 and first quarter 2002 operations, the Company's market opportunity and the Company's focus on its core business. These forward-looking statements are based on current expectations, forecasts and assumptions and involve a number of risks and uncertainties that could cause actual results to differ materially from those anticipated by these forward-looking statements. These risks include the volatility and unpredictability of the Company's quarterly operating results; the ability of the Company to expand the breadth of products and services offered through its e-commerce marketplaces; the willingness of buyers and sellers of medical products to accept the Company's business model of providing an e-commerce marketplace for the purchase and sale of medical products; the ability of the Company to manage its growth and related technological challenges; and the ability of the Company to successfully manage its changing relationships with its strategic partners, suppliers and customers. These risks and other risks are described in the Company's periodic reports filed with the SEC including its Form 10-K for the year ended December 31, 2000 and its Form 10-Q for the quarter ended September 30, 2001. The Company assumes no obligation to update the forward-looking information contained in this news release.
NOTE: Neoforma and Neoforma.com are trademarks 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 MILESTONES FOR 2001
Neoforma achieved a number of strategic, operational and financial milestones in 2001, including:
Strategic
-- Strengthened focus on core business
-- Divested non-aligned business units
-- Entered joint technology solutions development agreement with
i2 Technologies, Inc.
-- Formed strategic alliance with Global Healthcare Exchange, LLC
-- Co-sponsored healthcare e-commerce value study
Operational
-- Contracted 360 hospitals
-- Year-end total: 657 contracted hospitals
-- Connected 349 hospitals
-- Year-end total: 414 live hospitals
-- Developed implementation "tool kits" and reduced implementation costs
-- Contracted 108 suppliers
-- Year-end total: 171 suppliers, including Abbott Laboratories,
Allegiance, Bard, GE Medical Systems, Johnson & Johnson, McKesson
and Owens & Minor
-- Launched Trading Partner Services
-- Delivered six new product and ten upgrade releases to existing
customers
Financial
-- Generated compounded quarterly net revenue growth of over 100% in core
business
-- Reduced cash operating expenses for four consecutive quarters
-- Strengthened balance sheet through line of credit and equity financing
NEOFORMA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
For the Quarter Ended For the Year Ended
December 31, December 31,
2000 2001 2000 2001
REVENUE:
Marketplace
revenue $379 $11,668 $ 1,338 $25,697
Trading partner
services & other:
Trading partner
services 974 466 4,882 1,877
Sales of used
equipment 920 -- 4,226 250
Cost of used
equipment sold (982) -- (3,544) (216)
Total trading
partner services
& other 912 466 5,564 1,911
Total revenue 1,291 12,134 6,902 27,608
OPERATING EXPENSES:
Cost of services 3,911 1,989 6,707 11,752
Operations 2,828 2,997 10,657 13,124
Product development 4,948 2,849 19,834 14,717
Selling and marketing 6,508 2,331 34,509 16,363
General and
administrative 2,690 2,074 11,312 9,486
Total cash
operating
expenses 20,885 12,240 83,019 65,442
Cash loss from
operations (19,594) (106) (76,117) (37,834)
Depreciation and
amortization 10,496 9,806 33,892 39,855
Amortization of
deferred
compensation 6,922 3,301 34,290 17,957
Amortization of
partnership costs 18,533 19,573 30,491 77,271
Write off of
acquired in-process
research and
development -- -- 18,000 --
Abandoned
acquisition costs -- -- 2,742 --
Restructuring -- -- 2,100 --
Impairment of
intangibles -- 13,116 -- 13,116
Cost of anticipated
divestitures 14,446 81,486 14,446 81,486
Write down of
non-marketable
investments -- 5,400 -- 8,400
(Gain)/loss on
divested businesses - - - (258)
Total operating
expenses 71,282 144,922 218,980 303,269
Total loss from
operations (69,991) (132,788) (212,078) (275,661)
OTHER INCOME (EXPENSE):
Interest income 560 70 4,464 609
Interest expense (393) (871) (1,289) (1,826)
Other income
(expense) 67 (188) 88 253
Net loss $(69,757) $(133,777) $(208,815) $(276,625)
NET LOSS PER SHARE:
Basic and
diluted $(5.40) $(8.33) $(24.87) $(17.65)
Weighted average
shares --
basic and diluted 12,918 16,058 8,395 15,674
PRO FORMA NET LOSS
PER SHARE:
Basic and
diluted $(5.40) $(8.33) $(24.12) $ (17.65)
Weighted-average
shares --
basic and diluted 12,918 16,058 8,658 15,674
PRO FORMA NET LOSS
PER SHARE EXCLUDING
NON-CASH AND
NON-RECURRING
CHARGES*
Basic and
diluted $(1.50) $(0.07) $(8.41) $(2.48)
Weighted-average
shares --
basic and diluted 12,918 16,058 8,658 15,674
* Pro forma net loss per share excluding non-cash and non-recurring
charges specifically excludes depreciation and amortization, amortization
of deferred compensation and partnership costs, write off of acquired
in-process research and development, abandoned acquisition costs,
restructuring, impairment of intangibles, cost of anticipated
divestitures, write down of non-marketable investments and the (gain)/loss
on divested businesses.
NEOFORMA, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
Dec. 31, Dec. 31,
2000 2001
Cash, cash equivalents and investments $29,760 $15,663
Working capital (947) (336)
Total assets 513,938 296,236
Notes payable, less current portion 7,958 20,635
Total stockholders' equity 468,791 251,582 |
