-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, R75EsLeePRzkcvaLqJkHntaKBJ8pmm8OUyQX47OGOPBBJibxGEI4CWyWMDzLpPD8 A9d/Q8pC/0qzWXD+abM+ww== 0001157523-06-010873.txt : 20061106 0001157523-06-010873.hdr.sgml : 20061106 20061106071419 ACCESSION NUMBER: 0001157523-06-010873 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20061106 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20061106 DATE AS OF CHANGE: 20061106 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PER SE TECHNOLOGIES INC CENTRAL INDEX KEY: 0000878556 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROCESSING & DATA PREPARATION [7374] IRS NUMBER: 581651222 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-19480 FILM NUMBER: 061188659 BUSINESS ADDRESS: STREET 1: 1145 SANCTUARY PARKWAY CITY: ALPHARETTA STATE: GA ZIP: 30004 BUSINESS PHONE: 770-237-4300 MAIL ADDRESS: STREET 1: 1145 SANCTUARY PARKWAY CITY: ALPHARETTA STATE: GA ZIP: 30004 FORMER COMPANY: FORMER CONFORMED NAME: MEDAPHIS CORP DATE OF NAME CHANGE: 19931027 8-K 1 a5266948.txt PER-SE TECHNOLOGIES, 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of report (Date of earliest event reported): November 6, 2006 PER-SE TECHNOLOGIES, INC. (Exact name of registrant as specified in its charter) Delaware 000-19480 58-1651222 (State or other jurisdiction (Commission File No.) (IRS Employer of incorporation) Identification No.) 1145 Sanctuary Parkway, Suite 200, Alpharetta, Georgia 30004 (Address of principal executive offices) (Zip Code) (770) 237-4300 (Registrant's telephone number, including area code) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 2.02 Results of Operations and Financial Condition. On November 6, 2006, Per-Se Technologies, Inc. issued a press release announcing its results of operations for the third quarter and nine-month period ended September 30, 2006. A copy of the press release is furnished as Exhibit 99.1 and is incorporated herein by reference. Item 9.01 Financial Statements and Exhibits. (c) Exhibit 99.1 - Press Release dated November 6, 2006. Signatures Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Date: November 6, 2006 PER-SE TECHNOLOGIES, INC. By: /s/ STEPHEN M. SCHEPPMANN ------------------------------- Stephen M. Scheppmann Executive Vice President and Chief Financial Officer EXHIBIT INDEX Exhibit No. Description ------- ----------- 99.1 Press Release dated November 6, 2006. EX-99.1 2 a5266948ex99_1.txt PER-SE TECHNOLOGIES, EXHIBIT 99.1 Exhibit 99.1 Per-Se Technologies Reports Third Quarter 2006 Financial Results ALPHARETTA, Ga.--(BUSINESS WIRE)--Nov. 6, 2006--Per-Se Technologies, Inc. (Nasdaq: PSTI), the leader in Connective Healthcare solutions that help physicians, pharmacies, hospitals and healthcare organizations realize their financial goals, today reported its financial results for the three and nine-month periods ended September 30, 2006. The financial results of the NDCHealth Corporation businesses acquired on January 6, 2006, are included in the Company's current year results. Financial Highlights The following highlights include non-GAAP measures that are reconciled to their most directly comparable GAAP measures later in this press release: -- Revenue increased 58.4% to $148.9 million from $94.0 million a year ago, driven primarily by the addition of acquired businesses. -- Adjusted operating income more than doubled to $24.4 million, or 16.4% of revenue, from $11.0 million, or 11.7% of revenue, a year ago. -- Adjusted earnings per share were $0.22, compared to guidance of $0.18 to $0.21. -- Adjusted cash flow from continuing operations increased 150% to $89.3 million in the first nine months of 2006, compared to cash flow from continuing operations of $35.5 million in the same period last year. On a GAAP basis, the Company reported revenue of $148.9 million, operating income of $21.4 million, or 14.3% of revenue, and income from continuing operations of $7.0 million, or $0.16 per diluted share, for the three months ended September 30, 2006. On a non-GAAP basis, excluding non-cash stock-based compensation expense of approximately $1.8 million and NDCHealth transition and integration-related expenses of approximately $1.2 million, the Company reported third quarter adjusted operating income of $24.4 million, or 16.4% of revenue, and adjusted income from continuing operations of $9.4 million, or $0.22 per diluted share. For the nine months ended September 30, 2006, on a GAAP basis, the Company reported revenue of $447.8 million, operating income of $42.9 million, or 9.6% of revenue, and income from continuing operations of $6.3 million, or $0.14 per share. On a non-GAAP basis, excluding non-cash stock-based compensation expense, NDCHealth transition and integration-related expenses, write-off of in-process research and development, and the non-cash tax benefit from the partial release of the tax asset valuation allowance, the Company had adjusted operating income of $68.6 million, or 15.3% of revenue, and adjusted income from continuing operations of $26.1 million, or $0.60 per diluted share. The adjusted income from continuing operations for the three and nine-month periods ended September 30, 2006, included an income tax provision at a rate of approximately 41%. The cash paying income tax rate for 2006 is expected to be approximately 5% to 6%. For comparison purposes, in the three months ended September 30, 2005, the Company reported revenue of $94.0 million, operating income of $11.0 million, or 11.7% of revenue, and income from continuing operations of $9.8 million, or $0.29 per diluted share, and in the nine months ended September 30, 2005, the Company reported revenue of $279.3 million, operating income of $30.7 million, or 11.0% of revenue, and income from continuing operations of $26.8 million, or $0.81 per diluted share. The three and nine-month periods ended September 30, 2005, included an income tax provision at a cash paying tax rate of approximately 2%. Cash flow from continuing operations for the nine-month period ended September 30, 2006, was $60.9 million. During this nine-month period, the Company used approximately $28.4 million in operating cash for NDCHealth transition and integration-related activities. Excluding these transition and integration costs, adjusted cash flow from continuing operations was $89.3 million for the nine months ended September 30, 2006, compared to $35.5 million in the same period last year. "All three business divisions continued to execute well during the third quarter, which contributed to strong cash flow and margin improvement in our third quarter and year-to-date results," said Philip M. Pead, chairman, president and chief executive officer of Per-Se Technologies. Business Segment Performance The following business segment review references adjusted operating income for the third quarter of 2006, which excludes non-cash stock-based compensation expense. Physician Solutions Division The Physician Solutions division reported revenue of $77.8 million and adjusted operating income of $12.6 million, or 16.2% of revenue, for the third quarter of 2006, compared to revenue and operating income of $69.8 million and $8.4 million, or 12.0% of revenue, respectively, for the same quarter of 2005. Revenue growth in the division was attributable to the acquired NDCHealth software business. Revenue in the physician outsourcing business was flat year-over-year. Margin expansion in the division year-over-year was due to the NDCHealth business as well as cost structure improvements, primarily in the division's ASP-based software product. Previously, the Company had expected third quarter revenue in the physician outsourcing business to be impacted by the timing of Medicare reimbursement payments. The federal government had announced that they would hold Medicare reimbursement payments that should be funded during the last nine days of September until October as mandated by the Deficit Reduction Act of 2005. The Company had anticipated the negative revenue impact of these actions would be approximately $1.5 million, or approximately $0.02 in diluted earnings per share, in the third quarter 2006 results with a corresponding positive impact in the fourth quarter 2006 results. However, the actual revenue impact in the third quarter was approximately $0.4 million, or approximately $0.00 per diluted share. As a result, third quarter results were higher than expected by approximately $1.1 million, or approximately $0.02 per diluted share. This revenue and income was previously expected to be recognized in the fourth quarter of 2006. This division's outsourced receivables management business had net new business sold in the third quarter of 2006 of approximately $9 million, which compares to net new business sold of approximately $2 million in the same quarter a year ago. Total net new business sold through September 30, 2006, was approximately $18 million. Net backlog for the division at September 30, 2006, was approximately $16 million compared to $12 million at June 30, 2006, and $7 million at September 30, 2005. Hospital Solutions Division The Hospital Solutions division reported revenue of $44.1 million and adjusted operating income of $12.1 million, or 27.5% of revenue, for the third quarter of 2006. This compares to revenue of $27.9 million and operating income of $6.1 million, or 22.0% of revenue, in the same quarter of 2005. Year-over-year revenue growth and margin expansion in the division is due to the acquisition of NDCHealth. New business sold in the Hospital Solutions division was approximately $8 million in the third quarter of 2006, compared to new business sold of approximately $4 million in the same quarter a year ago. Total new business sold year to date through September 30, 2006, was approximately $24 million. Pharmacy Solutions Division The Pharmacy Solutions division reported revenue of $31.0 million and adjusted operating income of $5.2 million, or 16.8% of revenue, for the third quarter of 2006. Pharmacy Solutions' new business sold in the third quarter was approximately $7 million, and approximately $25 million year to date through September 30, 2006. Margins in the division declined on a sequential basis as compared to the second quarter of 2006. Sequential margin improvement in the division's network services business, which continues to benefit from higher transaction volume and new product introductions, was offset by a slight decline in revenue in the division's system business due to the timing of certain implementations of its high volume MailRx product. The Company will not host an investor conference call to discuss its financial and operating results. Per-Se to be Acquired by McKesson Corporation Per-Se separately announced that it has signed a merger agreement with McKesson Corporation (NYSE: MCK) pursuant to which McKesson will acquire all of the outstanding shares of Per-Se for $28 per share in cash. McKesson will also assume Per-Se's outstanding debt. In total, the transaction is valued at approximately $1.8 billion. The transaction is expected to be completed in the first quarter of 2007, and is subject to customary conditions, including regulatory and shareholder approval. Additional Information In connection with the proposed merger and required stockholder approval, Per-Se Technologies, Inc. will file a proxy statement with the U.S. Securities and Exchange Commission (SEC). INVESTORS AND SECURITY HOLDERS ARE ADVISED TO READ THE PROXY STATEMENT AND OTHER RELEVANT MATERIALS WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT PER-SE AND THE MERGER. The final proxy statement will be mailed to the stockholders of Per-Se. Investors and security holders may obtain free copies of these documents (when they are available) and other documents filed with the SEC at the SEC's web site at www.sec.gov. In addition, the documents filed by Per-Se with the SEC may be obtained free of charge by contacting Per-Se Technologies, Inc., Attn: Investor Relations and Corporate Communications, 1145 Sanctuary Parkway, Suite 200, Alpharetta, Georgia 30004, Telephone: 770-237-7539. Per-Se's filings with the SEC are also available from Per-Se's website (www.per-se.com) under the tab "Investor Relations" through the "SEC Filings" link. Participants in This Transaction Per-Se Technologies and its directors, executive officers, and other members of management may be deemed participants in the solicitation of proxies from stockholders in connection with this transaction. Information about the directors and executive officers of Per-Se Technologies and information about other persons who may be deemed participants in this transaction will be included in the proxy statement. Information regarding Per-Se's directors and executive officers is available in Per-Se's proxy statement for its 2006 annual meeting of stockholders, which was filed with the SEC on April 19, 2006. Additional information regarding the interests of such potential participants will be included in the proxy statement and other relevant documents filed with the SEC when they become available. About Per-Se Technologies Per-Se Technologies is the leader in Connective Healthcare, providing solutions that enable physicians, pharmacies and hospitals to achieve their income potential by streamlining and simplifying the complex administrative burden of providing healthcare. Per-Se's Connective Healthcare solutions help reduce administrative expenses, increase revenue and accelerate the movement of funds to benefit providers, payers and patients. More information is available at www.per-se.com. Safe Harbor Statement This Press Release contains statements that constitute forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, as amended by the Private Securities Litigation Reform Act of 1995. Forward-looking statements contained in this Press Release include the intent, belief or current expectations of the Company and members of its management team with respect to the Company's future business operations as well as the assumptions upon which such statements are based. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance, and involve risks and uncertainties, and that actual results may differ materially from those contemplated by such forward-looking statements. Important factors currently known to management that could cause actual results to differ materially from those contemplated by the forward-looking statements in this Press Release include, but are not limited to: the failure to obtain appropriate approvals for, or the failure to otherwise complete, the transaction with McKesson, failure to realize improvements in performance, efficiency and profitability; failure to complete anticipated sales under negotiations; failure to successfully implement sales backlog; lack of revenue growth; client losses; technical issues in processing claims through the Company's clearinghouses; failure to gain integration synergies from the NDCHealth acquisition; any benefit from an additional release of the tax valuation allowance; outcome of pending legal matters; and adverse developments with respect to the operation or performance of the Company's business units or the market price of its common stock. Additional factors that could cause actual results to differ materially from those contemplated within this Press Release can also be found in the Company's Risk Factor disclosures in its Form 10-K for the year ended December 31, 2005 and its Form 10-Q for the period ended June 30, 2006. The Company disclaims any responsibility to update any forward-looking statements. PER-SE TECHNOLOGIES, INC. CONDENSED SEGMENT REPORTING (unaudited) ($ in thousands) Three Months Ended Nine Months Ended September 30, September 30, ------------------- ------------------- 2006 2005 2006 2005 --------- --------- --------- --------- Revenue Physician Solutions $77,835 $69,805 $235,344 $206,063 Hospital Solutions 44,083 27,860 132,173 84,032 Pharmacy Solutions 31,015 n/a 92,482 n/a Eliminations (4,062) (3,659) (12,214) (10,759) --------- --------- --------- --------- Consolidated $148,871 $94,006 $447,785 $279,336 ========= ========= ========= ========= Adjusted Operating Income (a non-GAAP measure)(a) Physician Solutions $12,614 $8,375 $35,343 $24,430 Hospital Solutions 12,144 6,140 35,068 17,830 Pharmacy Solutions 5,207 n/a 16,302 n/a Corporate (5,558) (3,516) (18,064) (11,552) --------- --------- --------- --------- Consolidated $24,407 $10,999 $68,649 $30,708 ========= ========= ========= ========= (a) Operating income for the third quarter and nine months of 2006 is adjusted to exclude NDCHealth integration and transition-related expenses, the write-off of in-process research & development, and stock-based compensation expense. See the reconciliation of adjusted operating income to GAAP operating income by business segment provided in this release for further information. PER-SE TECHNOLOGIES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) ($ in thousands) September 30, 2006 December 31, 2005 ------------------ ------------------ Assets Cash and cash equivalents $52,453 $61,161 Accounts receivable, net 96,768 54,397 Other current assets 20,545 6,559 Property and equipment, net 40,726 16,843 Goodwill 380,656 38,199 Other intangible assets, net 298,496 21,946 Deferred income taxes, net 33,658 30,294 Other 18,036 10,124 ------------------ ------------------ $941,338 $239,523 ================== ================== Liabilities and Stockholders' Equity Current liabilities $87,416 $38,249 Deferred revenue 49,755 25,821 Long-term debt, including current portion 510,620 125,625 Other long-term obligations 21,419 5,312 Stockholders' equity 272,128 44,516 ------------------ ------------------ $941,338 $239,523 ================== ================== PER-SE TECHNOLOGIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) ($ in thousands, except per share data) Three Months Ended Nine Months Ended September 30, September 30, ------------------- ------------------- 2006 2005 2006 2005 --------- --------- --------- --------- Revenue $148,871 $94,006 $447,785 $279,336 --------- --------- --------- --------- Cost of services 86,007 63,089 274,358 185,596 Selling, general and administrative 41,514 19,918 130,504 63,032 --------- --------- --------- --------- Operating income 21,350 10,999 42,923 30,708 Interest, net 8,390 1,004 24,351 3,285 --------- --------- --------- --------- Income before income taxes 12,960 9,995 18,572 27,423 Income tax expense 5,984 172 12,305 623 --------- --------- --------- --------- Income from continuing operations 6,976 9,823 6,267 26,800 Loss from discontinued operations, net of tax 218 -- 292 -- --------- --------- --------- --------- Net income $6,758 $9,823 $5,975 $26,800 ========= ========= ========= ========= Diluted net income per common share: Adjusted income from continuing operations $0.22 $0.29 $0.60 $0.81 Stock-based compensation expense, net of tax (0.03) -- (0.06) -- Write-off of in-process research & development -- -- (0.31) -- NDCHealth transition and integration-related expenses, net of tax (0.02) -- (0.11) -- Partial release of deferred tax valuation allowance (0.01) -- 0.02 -- --------- --------- --------- --------- Income from continuing operations 0.16 0.29 0.14 0.81 Loss from discontinued operations, net of tax -- -- -- -- --------- --------- --------- --------- Net income - diluted $0.16 $0.29 $0.14 $0.81 ========= ========= ========= ========= Weighted average shares used in computing diluted earnings per share 43,203 33,792 43,535 32,917 ========= ========= ========= ========= PER-SE TECHNOLOGIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) ($ in thousands) Nine Months Ended September 30, -------------------------------- 2006 2005 --------------- --------------- Cash Flows From Operating Activities: Net income $5,975 $26,800 Adjustments to reconcile net income to cash provided by operating activities: Depreciation and amortization 49,310 11,233 Stock-based compensation expense 4,525 -- Amortization of deferred financing costs 1,655 1,011 Loss from discontinued operations 292 -- Deferred income taxes 11,009 -- Changes in assets and liabilities, excluding effects of acquisitions and divestitures (11,910) (3,507) --------------- --------------- Net cash provided by continuing operations 60,856 35,537 Net cash used for discontinued operations (484) -- --------------- --------------- Net cash provided by operating activities 60,372 35,537 --------------- --------------- Cash Flows From Investing Activities: Acquisitions, net of cash acquired (429,834) -- Purchases of property and equipment (8,802) (6,098) Software development costs (12,540) (4,544) Other -- (1,700) --------------- --------------- Net cash used for investing activities (451,176) (12,342) --------------- --------------- Cash Flows From Financing Activities: Proceeds from the exercise of stock options 4,312 5,967 Proceeds from borrowings 435,000 -- Treasury stock purchase -- (15,404) Payments of debt (50,202) (32) Deferred financing costs (7,662) -- Other 648 (18) --------------- --------------- Net cash provided by (used for) financing activities 382,096 (9,487) --------------- --------------- Cash and Cash Equivalents: Net change in cash (8,708) 13,708 Balance at beginning of period 61,161 42,422 --------------- --------------- Balance at end of period $52,453 $56,130 =============== =============== PER-SE TECHNOLOGIES, INC. RECONCILIATION OF ADJUSTED OPERATING INCOME (A NON-GAAP MEASURE) TO GAAP OPERATING INCOME BY BUSINESS SEGMENT (unaudited) ($ in thousands) Three months Nine months ended Operating ended Operating Sept. 30, 2006 Margin Sept. 30, 2006 Margin -------------- --------- -------------- --------- Physician Solutions: Adjusted operating income (a non- GAAP measure) $12,614 16.2% $35,343 15.0% Non-cash stock- based compensation expense (357) (759) NDCHealth transition and integration- related expenses -- (83) Non-cash write-off of in-process research & development -- (1,900) -------------- --------- -------------- --------- Operating income $12,257 15.7% $32,601 13.9% -------------- --------- -------------- --------- Hospital Solutions: Adjusted operating income (a non- GAAP measure) $12,144 27.5% $35,068 26.5% Non-cash stock- based compensation expense (278) (565) NDCHealth transition and integration- related expenses -- (146) Non-cash write-off of in-process research & development -- (2,800) -------------- --------- -------------- --------- Operating income $11,866 26.9% $31,557 23.9% -------------- --------- -------------- --------- Pharmacy Solutions: Adjusted operating income (a non- GAAP measure) $5,207 16.8% $16,302 17.6% Non-cash stock- based compensation expense (282) (588) NDCHealth transition and integration- related expenses -- -- Non-cash write-off of in-process research & development -- (8,600) -------------- --------- -------------- --------- Operating income $4,925 15.9% $7,114 7.7% -------------- --------- -------------- --------- Corporate: Adjusted operating loss (a non-GAAP measure) $(5,558) $(18,064) Non-cash stock- based compensation expense (905) (2,613) NDCHealth transition and integration- related expenses (1,235) (7,672) -------------- --------- -------------- --------- Operating loss $(7,698) $(28,349) -------------- --------- -------------- --------- Consolidated: Adjusted operating income (a non- GAAP measure) $24,407 16.4% $68,649 15.3% Non-cash stock- based compensation expense (1,822) (4,525) NDCHealth transition and integration- related expenses (1,235) (7,901) Non-cash write-off of in-process research & development -- (13,300) -------------- --------- -------------- --------- Operating income $21,350 14.3% $42,923 9.6% ============== ========= ============== ========= The Company believes adjusted operating income, which excludes non- cash write-off of in-process research & development, non-cash stock- based compensation expense and NDCHealth acquisition-related expenses is a meaningful measure of operating performance and facilitates comparisons to previously issued guidance that excluded these items. Internally, the Company uses these measures to evaluate its operational performance. The presentation of such non-GAAP measures enables investors to focus on expected period-over-period operating performance, without the impact of these items, and thereby enhances the user's overall understanding of the Company's current financial performance and provides a better baseline for modeling future earnings expectations. The Company believes the inclusion of such non-GAAP measures provides consistency and comparability in its financial reporting and is provided in order to enable investors to evaluate how management views its business and to more thoroughly evaluate its current performance compared to past performance. However, this information may be different from comparable information provided by other companies and should not be used in isolation or as an alternative to the Company's operating and other financial information as determined under U.S. generally accepted accounting principles. PER-SE TECHNOLOGIES, INC. RECONCILIATION OF ADJUSTED INCOME AND EPS FROM CONTINUING OPERATIONS (A NON-GAAP MEASURE) TO GAAP INCOME AND EPS FROM CONTINUING OPERATIONS (unaudited) ($ in thousands, except per share data) Three months Nine months ended ended Sept. 30, 2006 EPS Sept. 30, 2006 EPS -------------- ------ -------------- ------ Adjusted income from continuing operations (a non-GAAP measure) $9,356 $0.22 $26,067 $0.60 Non-cash write-off of in-process research & development -- -- (13,300) (0.31) Non-cash stock-based compensation expense, net of tax (1,133) (0.03) (2,794) (0.06) NDCHealth transition and integration-related expenses, net of tax (726) (0.02) (4,700) (0.11) Tax benefit from partial release of deferred tax asset valuation allowance (521) (0.01) 994 0.02 -------------- ------ -------------- ------ Income from continuing operations $6,976 $0.16 $6,267 $0.14 ============== ====== ============== ====== The Company believes adjusted income and adjusted earnings per share from continuing operations, which excludes NDCHealth transition and integration-related expenses, non-cash stock-based compensation expense and non-cash write-off of in-process research & development are additional meaningful measures of operating performance and facilitate comparisons to previously issued guidance that excluded these items. Internally, the Company uses these measures to evaluate its operational performance. The presentation of such non-GAAP measures enables investors to focus on period-over-period operating performance, without the impact of these items, and thereby enhances the user's overall understanding of the Company's financial performance and provides a better baseline for modeling future earnings expectations. The Company believes the inclusion of such non-GAAP measures provides consistency and comparability in its financial reporting and is provided in order to enable investors to evaluate how management views its business and to more thoroughly evaluate its current performance compared to past performance. However, this information may be different from comparable information provided by other companies and should not be used in isolation or as an alternative to the Company's operating and other financial information as determined under U.S. generally accepted accounting principles. PER-SE TECHNOLOGIES, INC. RECONCILIATION OF ADJUSTED CASH FLOW FROM CONTINUING OPERATIONS (A NON-GAAP MEASURE) TO GAAP CASH FLOW FROM CONTINUING OPERATIONS (unaudited) ($ in millions) Nine Months ended Sept. 30, 2006 -------------- Adjusted cash flow from continuing operations (a non- GAAP measure) $89.3 Cash used for non-recurring acquisition-related costs (28.4) -------------- Cash flow from continuing operations $60.9 ============== The Company believes adjusted cash flow from continuing operations, which excludes NDCHealth acquisition-related costs, is a meaningful measure of operating cash flow generated from the "base business" and facilitates comparisons to previously issued guidance that excluded these items. Internally, the Company uses these measures to evaluate its operational performance. The presentation of such non-GAAP measures enables investors to focus on expected period-over-period operating performance, without the impact of these non-recurring items, and thereby enhances the user's overall understanding of the Company's expected financial performance and provides a better baseline for modeling future cash flow expectations. The Company believes the inclusion of such non-GAAP measures provides consistency and comparability in its financial reporting and is provided in order to enable investors to evaluate how management views its business and to more thoroughly evaluate its expected performance compared to past performance. However, this information may be different from comparable information provided by other companies and should not be used in isolation or as an alternative to the Company's operating and other financial information as determined under U.S. generally accepted accounting principles. CONTACT: Per-Se Technologies, Inc. Robert P. Borchert, 770-237-7539 VP, Investor Relations & Corporate Communications investors@per-se.com -----END PRIVACY-ENHANCED MESSAGE-----