PROXYMED, INC.

EXHIBIT NUMBER

DESCRIPTION

Press Release dated July 21, 2003 reporting financial results for the three and six months ended June 30, 2003.

Transcript of second quarter 2003 financial results teleconference call held on July 22, 2003.

-----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, E0BL6nk7GAHL0vsS4zh3rjQWD7rZ2u9Y/gODYpzv5R6+ErVsqcZFIapQl4Yyx3W3 Zzr66ezOy2JZczLnFCA5yw== 0000950144-03-008856.txt : 20030724 0000950144-03-008856.hdr.sgml : 20030724 20030724155559 ACCESSION NUMBER: 0000950144-03-008856 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20030721 ITEM INFORMATION: Financial statements and exhibits ITEM INFORMATION: Regulation FD Disclosure FILED AS OF DATE: 20030724 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PROXYMED INC /FT LAUDERDALE/ CENTRAL INDEX KEY: 0000906337 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROCESSING & DATA PREPARATION [7374] IRS NUMBER: 650202059 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-22052 FILM NUMBER: 03801021 BUSINESS ADDRESS: STREET 1: 2555 DAVIE ROAD STREET 2: SUITE 110 CITY: FORT LAUDERDALE STATE: FL ZIP: 33317-7424 BUSINESS PHONE: 9544731001 MAIL ADDRESS: STREET 1: 2555 DAVIE ROAD STREET 2: SUITE 110 CITY: FT LAUDERDALE STATE: FL ZIP: 33317 FORMER COMPANY: FORMER CONFORMED NAME: HMO PHARMACY INC DATE OF NAME CHANGE: 19930601 8-K 1 g83956e8vk.htm PROXYMED, INC. PROXYMED, INC.

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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):
July 21, 2003

PROXYMED, INC.

(Exact name of registrant as specified in its charter)


Florida	000-22052	65-0202059

(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)


2555 Davie Road, Suite 110, Ft. Lauderdale, Florida		33317-7424

(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code (954) 473-1001


Item 9.		Regulation FD Disclosure (information furnished pursuant to Item 12, “Disclosure Of Results of Operations and Financial Condition”)

On July 21, 2003, ProxyMed, Inc. (the “Company”) announced its financial results for the three and six months ended June 30, 2003. The full text of the press release issued in connection with the announcement is attached as Exhibit 99.1 to this Current Report on Form 8-K. Additionally, on July 23, 2003, the Company held a teleconference call to report its financial and operating results for the quarter ended June 30, 2003. A transcript of the call, excluding questions from participants and answers from management is attached as Exhibit 99.2 to this Current Report of Form 8-K.

In accordance with the procedural guidance in SEC Release No. 33-8216, the information in this Form 8-K and the Exhibits attached hereto being furnished under “Item 9. Regulation FD Disclosure” are intended to be furnished under “Item 12. Disclosure of Results of Operations and Financial Condition.” The information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in any such filing.

FORWARD LOOKING STATEMENTS — This document contains forward-looking statements that reflect the Company’s current assumptions and expectations regarding future events. While these statements reflect the Company’s current judgment, they are subject to risks and uncertainties. Actual results may differ significantly from projected results due to a number of factors, including, but not limited to, the soundness of our business strategies relative to the perceived market opportunities; our ability to integrate MedUnite into our existing operations, our ability to successfully identify and integrate other acquisition candidates; our ability to successfully develop, market, sell, cross-sell, install and upgrade our clinical and financial transaction services and applications to current and new physicians, payers, medical laboratories and pharmacies; our ability to consummate and integrate any acquisitions successfully; our ability to compete effectively on price and support services; our assessment of the healthcare industry’s need, desire and ability to become technology efficient; and our ability and that of our business associates to comply with various government rules regarding healthcare and patient privacy. These and other risk factors are more fully discussed in the Risk Factor disclosure in our Form 10-K for the year ended December 31, 2002 and our other filings with the Securities and Exchange Commission, which we strongly urge you to read. ProxyMed expressly disclaims any intent or obligation to update any forward-looking statements. When used, the words “believes”, “estimated”, “expects”, “anticipates”, “may” and similar expressions are intended to identify forward-looking statements.


Item 7.		Financial Statements and Exhibits


		Exhibit 99.1		Press Release dated July 21, 2003 reporting financial results for the three and six months ended June 30, 2003.

		Exhibit 99.2		Transcript of second quarter 2003 financial results teleconference call held on July 22, 2003.

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.


		ProxyMed, Inc.


Date: July 24, 2003		/s/ Judson E. Schmid

		Judson E. Schmid, Executive Vice President and Chief Financial Officer

INDEX TO EXHIBITS

5 EX-99.1 3 g83956exv99w1.txt PRESS RELEASE DATED JULY 21, 2003 EXHIBIT 99.1 [PROXY MED LOGO] COMPANY NEWS RELEASE FOR IMMEDIATE RELEASE IMPORTANT NOTE: ProxyMed's live teleconference call to discuss its second quarter 2003 results is accessible by calling 1-888-243-0818 beginning at 10:00 a.m. Eastern Time on Tuesday, July 22, 2003 and will be simultaneously broadcast on the Internet at www.proxymed.com. Replays of the teleconference call will be available at www.proxymed.com after 1:00 p.m. Eastern Time on July 22nd. CONTACT: JUDSON E. SCHMID CHIEF FINANCIAL OFFICER (954) 473-1001, EXT. 353 investorrelations@proxymed.com PROXYMED REPORTS SECOND QUARTER 2003 RESULTS - CONTINUED IMPROVEMENTS AT MEDUNITE CONTRIBUTE TO SIGNIFICANT GAINS IN QUARTERLY FINANCIAL RESULTS - FORT LAUDERDALE, FLORIDA (Business Wire) July 21, 2003 - ProxyMed, Inc. (Nasdaq: PILL), a leading provider of healthcare transaction processing services and the nation's second largest processor of physician-based healthcare transactions, today reported its operating results for the second quarter of 2003. The operations of MedUnite, Inc., which was acquired by ProxyMed on December 31, 2002, are included in the 2003 results. SECOND QUARTER 2003 RESULTS ProxyMed reported revenues of $17.7 million for the second quarter of 2003, an increase of 40% compared to revenues of $12.6 million for the same period of 2002. For the second quarter, net loss applicable to common shareholders and net loss per share were $0.4 million and $0.05, respectively, compared to net income of $0.4 million and diluted net income per share of $0.06 for the second quarter of 2002. Diluted weighted average shares outstanding for the quarters ended June 30, 2003 and 2002 were 6,782,938 and 6,873,585, respectively. The financial results for the second quarter of 2003 include other income of $0.8 million related to the increase in value of a warrant held by the Company. 1 Additionally, for the second quarter of 2003, the Company reported an EBITDA profit (a non-GAAP measure defined as earnings before interest, taxes, depreciation and amortization) of $0.4 million, compared to an EBITDA profit of $0.9 million a year ago. The management of ProxyMed believes that EBITDA is a meaningful measurement of operating performance as it allows for comparison of performance between other competitors in the healthcare IT industry and serves as one of the factors in determining its management performance compensation. "We are very pleased to report a return to EBITDA profitability. By maintaining our focus on the reduction of expenses at MedUnite, we were able to achieve our goal of returning to EBITDA profitability one quarter ahead of our original forecast," said Judson E. Schmid, ProxyMed's Chief Financial Officer. "With MedUnite nearing break-even and all the major acquisition liabilities settled, we can now focus our efforts on exiting the year on a positive EPS run rate." YEAR-TO-DATE 2003 RESULTS ProxyMed reported revenues of $35.1 million for the six months ended 2003, an increase of 46% compared to revenues of $24.1 million for the same period of 2002. For the 2003 period, net loss applicable to common shareholders and net loss per share were $2.8 million and $0.41, respectively, compared to a net loss of $0.1 million and net loss per share of $0.02 for the 2002 period. Diluted weighted average shares outstanding for the six months ended June 30, 2003 and 2002 were 6,782,938 and 5,892,026, respectively. As noted above, the financial results for the six months ended Jun 30, 2003 includes other income of $0.8 million related to the increase in value of a warrant held by the Company. For the six months ended June 30 2003, the Company reported an EBITDA loss of $0.5 million, compared to an EBITDA profit of $1.5 million a year ago. Cash flow used in operations for the six months ended June 30, 2003 was $0.6 million compared to cash flow provided from operations of $0.2 million for the prior year. Total cash at June 30, 2003, including restricted cash, was approximately $8.6 million. SEGMENT PERFORMANCE TRANSACTION SERVICES (FORMERLY CALLED "ELECTRONIC HEALTHCARE TRANSACTION SERVICES") As noted above, since MedUnite was not acquired until December 31, 2002, its operations are not included in the 2002 results reported. Where indicated, ProxyMed has provided comparative information with and without the operations of MedUnite in the discussion of its Transaction Services segment for 2003. The results of operations of MedUnite for the three and six months ended June 30, 2003 used to compute such comparative information is contained in the "Segment and Other Information" tables after the text of this press release. The Transaction Services segment reported revenues of $12.0 million for the second quarter of 2003 (including $4.5 million from MedUnite), an increase of 125% compared to revenues of $5.3 million for the 2002 period. Excluding MedUnite, revenue growth between the periods was 40%. 2 On a sequential basis, revenue increased by 12% over the first quarter of 2003, excluding MedUnite. This strong sequential growth was fueled by an increase in electronic claims and patient statements processed from new sales and implementations and growth from existing customers. For the six months ended June 30, 2003, segment revenues were $23.3 million (including $9.1 million from MedUnite), an increase of 119% compared to revenues of $10.6 million for the 2002 period. Excluding MedUnite, revenue grew by 33% between the periods. As shown in the table below, total healthcare transactions processed during the second quarter were 56.0 million (including 21.0 million from MedUnite), up 97% from the 28.5 million transactions processed in the second quarter of 2002. Excluding MedUnite, overall transaction growth between the periods was 23%. ProxyMed's annual run rate is almost 225 million total healthcare transactions. On a sequential basis, core transactions processed increased by 8%, while overall quarterly transactions declined slightly due to a decrease in the number of lower-priced encounters processed in the quarter. At MedUnite, transaction volumes were down sequentially primarily due to a significant decrease in eligibility transactions as a result of the termination of two vendors submitting non-revenue producing transactions. Management considers the following metrics important to monitor its transaction business:
---------------------------------------- ------------- -------------- -------------- DESCRIPTION Q/E Q/E Q/E 6/30/03 3/31/03 6/30/02 ---------------------------------------- ------------- -------------- -------------- Core transactions (excluding encounters) 29,852,100 27,739,200 21,156,200 Acquired transactions (from MedUnite) 21,024,900 21,862,200 -- Encounters 5,106,100 6,877,900 7,297,600 ---------- ---------- ---------- TOTAL TRANSACTIONS 55,983,100 56,479,300 28,453,800 ========== ========== ==========
ProxyMed continues to make strong progress with the integration of MedUnite's operations with its own. As one significant milestone, the Company is pleased to announce that it has just rolled out the first phase of its new real-time processing web portal, PROXYMED.NET. This portal combines the services formerly available on both PROXYMED.COM and MEDUNITE.NET and is aimed at making real-time transactions more accessible to its providers and partners. ProxyMed has begun the migration of its ProxyMed and MedUnite existing customers and anticipates full migration by the end of the third quarter. During the quarter the Company processed more then 6.7 million real-time transactions. 3 Additionally, ProxyMed took two major steps to increase its ability to offer value-added services built around its core transaction processing business. First the Company announced its new FirstProxy ERA/EFT service for providers and payers in partnership with First Data Corporation. In addition, the Company launched its claims repricing services for payers with Plan Vista Corporation. Finally, the Company continued its HIPAA remediation effort, and among other milestones, completed the systems and process work to support HIPAA-compliant payer interfaces and implemented interfaces for both professional and institutional claims. The process to complete the migration of payers to HIPAA-compliant interfaces will continue through October. SG&A expenses increased by 130% in the second quarter over same period in 2002 primarily due to $3.6 million in SG&A expenses incurred related to MedUnite's operations. Excluding MedUnite, SG&A expenses increased by 9% due to costs related to our HIPAA remediation efforts, implementation staffing, and sales/marketing programs implemented since the first quarter of last year. Sequentially, expenses at MedUnite decreased 20% due to the synergies with existing ProxyMed operations during the quarter and continued focus on operational cost reductions. SG&A expenses for the six months ended June 30, 2003 increased 161% over the 2002 period. Excluding MedUnite, SG&A expenses increased by 16% over the same period. EBITDA in the second quarter was a profit of $0.8 million compared to an EBITDA profit of $0.3 million in the second quarter of 2002. Excluding a $0.3 million EBITDA loss attributable to MedUnite, EBITDA for this segment increased by 349% to a profit of $1.2 million for the second quarter of 2003. Additionally, EBITDA margins for this segment, including MedUnite, continue to rebound and were 7% for the 2003 quarter. Excluding MedUnite, EBITDA margins were 16%, the highest EBITDA margin ever reached by this segment. EBITDA for the six months ended June 30, 2003 was a loss of less than $0.1 million compared to an EBITDA profit of $0.8 million in the 2002 period. Excluding a $1.9 million EBITDA loss attributable to MedUnite, EBITDA for this segment more than doubled to a profit of $1.9 million for the six months ended June 30, 2003. Depreciation and amortization related to ProxyMed's transaction business was $1.1 million for the second quarter of 2003, including a total of $0.6 million for MedUnite. Of the MedUnite amount, $0.5 million is related to the amortization of intangible assets acquired in the acquisition. For the six months ended June 30, 2003, depreciation and amortization was $2.1 million, including a total of $1.3 million for MedUnite with $0.9 million of the MedUnite amount related to the amortization of intangible assets acquired in the acquisition. As a result of the $13.4 million in convertible debt issued to the former owners of MedUnite and the financing of certain liabilities of MedUnite during the 2003 period, the Company incurred net interest expense of $0.2 million during the quarter in the Transaction Services segment. For the six months ended June 30, 2003, net interest expense was $0.4 million for this segment. 4 "We are very pleased at the financial and operational gains we made at MedUnite. Despite this focus, we also grew the core business substantially, with core transactions up 8% and revenue up 12% sequentially," said Nancy J. Ham, ProxyMed's President and Chief Operating Officer. "In addition, we positioned ourselves well for continued future growth with the launching of two new value-added services that represent tremendous cost savings to both our payer and provider customers. We have already launched our sales and marketing efforts around these new services and the reception has been extremely encouraging." LABORATORY COMMUNICATIONS SOLUTIONS The Laboratory Communications Solutions segment reported revenues of $5.7 million for the second quarter of 2003, a decrease of 22% compared to revenues of $7.3 million for 2002. For the six months ended June 30, 2003, segment revenues decreased 12% from the 2002 period. An overall softening in lab device purchases and contract manufacturing orders attributed to the quarterly and year-to-date revenue declines. For the second quarter of 2003, SG&A expenses in the lab segment decreased 8% from the 2002 period. For the six months ended June 30, 2003, SG&A expenses decreased 7% from the 2002 period. These decreases were primarily due to proactive cost controls implemented early in the fourth quarter of 2002. EBITDA profits for the second quarter of 2003 decreased by 65% to $0.5 million from $1.3 million in the second quarter of 2002, with EBITDA margins decreasing to 8% in 2003 from 18% in the 2002 period. For the six months ended June 30, 2003, EBITDA profit decreased 38% to $1.3 million from $2.0 million in the 2002 period. Both the dollar declines in EBITDA profits and the decline in EBITDA margins are as a result of the revenue decline and an increase in material costs resulting from a shift in the revenue mix away from higher margin value-add products. Despite the difficult quarter, ProxyMed did add 17 new accounts and 81 new client locations to its FleetWatch proactive monitoring service. In general, business with national and regional clinical reference labs was on track during and especially exiting the quarter; however, many of the mid-size regional reference and smaller hospital labs saw a slowdown in orders. "The expected slow-down in the first quarter has carried over into the second quarter as the April 14th HIPAA privacy deadline seemed to really affect new deployments as labs focused on internal operations. In addition, we had one large order shift from late second quarter into the third quarter," said Nancy J. Ham. "However, we have a better pipeline going into the third quarter as traditional accounts are picking back up and newer accounts are making a larger contribution." 5 CORPORATE As a result of increased liability insurance premiums, professional fees and personnel costs, corporate SG&A expenses for the second quarter of 2003 increased 31% compared to the second quarter of 2002, and for the six months ended June 30, 2003, increased 35% over the 2002 period. Sequentially, corporate SG&A costs decreased 3% over the first quarter of 2003. In conjunction with its commercial agreement signed with Plan Vista Corporation for claims re-pricing services, ProxyMed received a warrant to purchase up to 15% of Plan Vista. At the end of June 2003, the value of this warrant increased by $0.8 million and such increase is reflected as other income in the Company's statement of operations. "With the successes and accomplishments of this second quarter, we can't lose our focus on making even greater strides in the remaining two quarters of the year. Through our partnerships with First Data and Plan Vista we remain confident that we can achieve our financial and operational goals that we established at the beginning of the year and enter 2004 with positive momentum," said Michael K. Hoover, ProxyMed's Chairman and Chief Operating Officer. ABOUT PROXYMED - WHERE HEALTHCARE CONNECTS(TM) ProxyMed is the nation's second largest physician-based electronic healthcare transaction processing services company providing connectivity services and related value-added products to physicians, payers, pharmacies, medical laboratories, and other healthcare providers and suppliers. ProxyMed's electronic transaction processing services support a broad range of both financial and clinical transactions. To facilitate these services, ProxyMed operates ProxyNet(R), its secure, proprietary national electronic information network, which provides physicians and other primary care providers with direct connectivity to one of the industry's largest list of payers, the largest list of chain and independent pharmacies and the largest list of clinical laboratories. SAFE HARBOR STATEMENT NOTE: THIS PRESS RELEASE CONTAINS FORWARD-LOOKING STATEMENTS, INCLUDING STATEMENTS REGARDING OUR EXPECTATIONS OF FUTURE PROFITABILITY, THAT REFLECT OUR CURRENT ASSUMPTIONS AND EXPECTATIONS REGARDING FUTURE EVENTS. WHILE THESE STATEMENTS REFLECT OUR CURRENT JUDGMENT, THEY ARE SUBJECT TO RISKS AND UNCERTAINTIES. ACTUAL RESULTS MAY DIFFER SIGNIFICANTLY FROM PROJECTED RESULTS DUE TO A NUMBER OF FACTORS, INCLUDING, THE SOUNDNESS OF OUR BUSINESS STRATEGIES RELATIVE TO THE PERCEIVED MARKET OPPORTUNITIES; OUR ABILITY TO INTEGRATE MEDUNITE INTO OUR EXISTING OPERATIONS, OUR ABILITY TO IDENTIFY SUITABLE FUTURE ACQUISITION CANDIDATES; OUR ABILITY TO SUCCESSFULLY INTEGRATE ANY FUTURE ACQUISITIONS; OUR ABILITY TO SUCCESSFULLY DEVELOP, MARKET, SELL, CROSS-SELL, INSTALL AND UPGRADE OUR CLINICAL AND FINANCIAL TRANSACTION SERVICES AND APPLICATIONS TO CURRENT AND NEW PHYSICIANS, PAYERS, MEDICAL LABORATORIES AND PHARMACIES; OUR ABILITY TO COMPETE EFFECTIVELY ON PRICE AND SUPPORT SERVICES; OUR ASSESSMENT OF THE HEALTHCARE INDUSTRY'S NEED, DESIRE AND ABILITY TO BECOME TECHNOLOGY EFFICIENT; AND OUR ABILITY AND THAT OF OUR BUSINESS ASSOCIATES TO COMPLY WITH VARIOUS GOVERNMENT RULES REGARDING HEALTHCARE AND PATIENT PRIVACY. THESE AND OTHER RISK FACTORS ARE MORE FULLY DISCUSSED IN THE RISK FACTORS DISCLOSURE IN OUR FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2002 AND OUR OTHER FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION, WHICH WE STRONGLY URGE YOU TO READ. WE EXPRESSLY DISCLAIM ANY INTENT OR OBLIGATION TO UPDATE ANY FORWARD-LOOKING STATEMENTS. WHEN USED, THE WORDS "BELIEVES," "ESTIMATED," "EXPECTS," "ANTICIPATES," "MAY" AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. MORE INFORMATION ON PROXYMED IS AVAILABLE ON ITS HOME PAGE AT www.proxymed.com. 6 PROXYMED, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, ------------------------------- ------------------------------- 2003 2002 2003 2002 ------------ ------------ ------------ ------------ Revenues $ 17,701,000 $ 12,627,000 $ 35,131,000 $ 24,130,000 ------------ ------------ ------------ ------------ Costs and expenses: Cost of sales 7,425,000 5,785,000 14,918,000 11,164,000 Selling, general and administrative expenses 9,860,000 5,941,000 20,620,000 11,434,000 Depreciation and amortization 1,344,000 583,000 2,674,000 1,152,000 (Gain) loss on disposal of assets (15,000) -- 110,000 -- ------------ ------------ ------------ ------------ Total operating costs and expenses 18,614,000 12,309,000 38,322,000 23,750,000 ------------ ------------ ------------ ------------ Operating income (loss) (913,000) 318,000 (3,191,000) 380,000 Interest income (expense), net (195,000) 128,000 (369,000) 115,000 Other income 752,000 -- 752,000 -- ------------ ------------ ------------ ------------ Net income (loss) (356,000) 446,000 (2,808,000) 495,000 Deemed dividends and other charges -- -- -- 612,000 ------------ ------------ ------------ ------------ Net income (loss) applicable to common shareholders $ (356,000) $ 446,000 $ (2,808,000) $ (117,000) ============ ============ ============ ============ Basic earnings (loss) per share $ (0.05) $ 0.07 $ (0.41) $ (0.02) ============ ============ ============ ============ Basic weighted average shares outstanding 6,782,938 6,660,913 6,782,938 5,892,026 ============ ============ ============ ============ Diluted earnings (loss) per share $ (0.05) $ 0.06 $ (0.41) $ (0.02) ============ ============ ============ ============ Diluted weighted average shares outstanding 6,782,938 6,873,585 6,782,938 5,892,026 ============ ============ ============ ============ EBITDA (1) $ 431,000 $ 901,000 $ (517,000) $ 1,532,000 ============ ============ ============ ============
- --------------- (1) EBITDA is a metric that ProxyMed believes is a meaningful measurement of operating performance as it allows for comparison of performance between other competitors in the healthcare IT industry. Additionally, ProxyMed utilizes EBITDA as one of the factors in determining its management performance rewards. The calculation of EBITDA has no basis in Generally Accepted Accounting Principles ("GAAP"). A reconciliation to Operating income (loss), a corresponding measure under GAAP is as follows: EBITDA $ 431,000 $ 901,000 $ (517,000) $ 1,532,000 Deduct: Depreciation and Amortization 1,344,000 583,000 2,674,000 1,152,000 ----------- ----------- ----------- ----------- Operating income (loss) $ (913,000) $ 318,000 $(3,191,000) $ 380,000 =========== =========== =========== ===========

7 PROXYMED, INC. AND SUBSIDIARIES SEGMENT AND OTHER INFORMATION (UNAUDITED)
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, ------------------------------- ------------------------------- 2003 2002 2003 2002 ------------ ------------ ------------ ------------ Revenues: Transaction services $ 11,982,000 $ 5,332,000 $ 23,273,000 $ 10,610,000 Laboratory communication solutions 5,719,000 7,295,000 11,858,000 13,520,000 ------------ ------------ ------------ ------------ $ 17,701,000 $ 12,627,000 $ 35,131,000 $ 24,130,000 ============ ============ ============ ============ Cost of sales: Transaction services $ 4,258,000 $ 2,067,000 $ 8,524,000 $ 4,199,000 Laboratory communication solutions 3,167,000 3,718,000 6,394,000 6,965,000 ------------ ------------ ------------ ------------ $ 7,425,000 $ 5,785,000 $ 14,918,000 $ 11,164,000 ============ ============ ============ ============ Selling, general and administrative expenses: Transaction services $ 6,908,000 $ 3,004,000 $ 14,695,000 $ 5,634,000 Laboratory communication solutions 2,097,000 2,284,000 4,190,000 4,514,000 Corporate 855,000 653,000 1,735,000 1,286,000 ------------ ------------ ------------ ------------ $ 9,860,000 $ 5,941,000 $ 20,620,000 $ 11,434,000 ============ ============ ============ ============ Depreciation and amortization: Transaction services $ 1,056,000 $ 363,000 $ 2,112,000 $ 727,000 Laboratory communication solutions 240,000 169,000 470,000 324,000 Corporate 48,000 51,000 92,000 101,000 ------------ ------------ ------------ ------------ $ 1,344,000 $ 583,000 $ 2,674,000 $ 1,152,000 ============ ============ ============ ============ Operating income (loss): Transaction services $ (225,000) $ (103,000) $ (2,166,000) $ 49,000 Laboratory communication solutions 215,000 1,125,000 802,000 1,718,000 Corporate (903,000) (704,000) (1,827,000) (1,387,000) ------------ ------------ ------------ ------------ $ (913,000) $ 318,000 $ (3,191,000) $ 380,000 ============ ============ ============ ============ EBITDA: Transaction services $ 831,000 $ 261,000 $ (54,000) $ 777,000 Laboratory communication solutions 455,000 1,293,000 1,272,000 2,041,000 Corporate (855,000) (653,000) (1,735,000) (1,286,000) ------------ ------------ ------------ ------------ $ 431,000 $ 901,000 $ (517,000) $ 1,532,000 ============ ============ ============ ============
MEDUNITE STATEMENT OF OPERATIONS (UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, 2003 JUNE 30, 2003 ------------------ ---------------- Revenues $ 4,517,000 $ 9,145,000 ------------ ------------ Costs and expenses: Cost of sales 1,228,000 2,905,000 Selling, general and administrative expenses 3,627,000 8,172,000 Depreciation and amortization 646,000 1,300,000 ------------ ------------ Total operating costs and expenses 5,501,000 12,377,000 ------------ ------------ Operating loss (984,000) (3,232,000) Interest expense, net (219,000) (433,000) ------------ ------------ Net loss $ (1,203,000) $ (3,665,000) ============ ============ EBITDA $ (338,000) $ (1,932,000) ============ ============
8 PROXYMED, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (UNAUDITED)
JUNE 30, DECEMBER 31, 2003 2002 ------------- ------------- ASSETS Current assets: Cash and cash equivalents $ 8,172,000 $ 16,378,000 Investment 1,298,000 -- Accounts receivable - trade, net 9,752,000 10,060,000 Notes and other receivables 501,000 503,000 Inventory 3,212,000 2,774,000 Other current assets 1,371,000 1,022,000 ------------- ------------- Total current assets 24,306,000 30,737,000 Property and equipment, net 5,529,000 5,719,000 Goodwill, net 31,456,000 32,797,000 Purchased technology, capitalized software and other intangibles, net 17,502,000 18,220,000 Restricted cash 402,000 825,000 Other assets 256,000 406,000 ------------- ------------- Total assets $ 79,451,000 $ 88,704,000 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable and current portion of long-term debt $ 1,840,000 $ -- Accounts payable, accrued expenses and other current liabilities 10,909,000 21,472,000 Deferred revenue 794,000 516,000 ------------- ------------- Total current liabilities 13,543,000 21,988,000 Convertible notes 13,400,000 13,400,000 Other long-term debt 2,748,000 -- Long-term deferred revenue and other long-term liabilities 1,833,000 2,581,000 ------------- ------------- Total liabilities 31,524,000 37,969,000 ------------- ------------- Stockholders' equity: Series C 7% Convertible preferred stock -- -- Common stock 7,000 7,000 Additional paid-in capital 146,187,000 146,187,000 Accumulated deficit (98,081,000) (95,273,000) Note receivable from stockholder (186,000) (186,000) ------------- ------------- Total stockholders' equity 47,927,000 50,735,000 ------------- ------------- Total liabilities and stockholders' equity $ 79,451,000 $ 88,704,000 ============= =============
9 PROXYMED, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
SIX MONTHS ENDED JUNE 30, ------------------------------------- 2003 2002 ------------ ------------ Cash flows from operating activities: Net income (loss) $ (2,808,000) $ 495,000 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 2,674,000 1,152,000 Provision for (recovery of) doubtful accounts 16,000 (18,000) Provision for obsolete inventory 126,000 120,000 Change in value of investment (752,000) -- Loss on disposal of fixed assets 110,000 -- Changes in assets and liabilities, net of effect of acquisitions and dispositions: Accounts and other receivables 75,000 (913,000) Inventory (454,000) 214,000 Other current assets 100,000 (277,000) Accounts payable and accrued expenses (437,000) (569,000) Deferred revenue 262,000 46,000 Other, net 483,000 (26,000) ------------ ------------ Net cash provided by (used in) operating activities (605,000) 224,000 ------------ ------------ Cash flows from investing activities: Acquisition, net of cash acquired -- (2,871,000) Capital expenditures (1,258,000) (690,000) Capitalized software (675,000) (200,000) Collections on notes receivable 194,000 18,000 Proceeds from sale of fixed assets 64,000 -- Decrease in restricted cash 423,000 -- Payments for acquisition-related costs (5,187,000) -- ------------ ------------ Net cash used in investing activities (6,439,000) (3,743,000) ------------ ------------ Cash flows from financing activities: Proceeds from stock offering, net -- 24,886,000 Payment of note payable related to acquisition of business -- (7,000,000) Payment of notes payable, capital leases and long-term debt (1,162,000) (156,000) ------------ ------------ Net cash used in financing activities (1,162,000) 17,730,000 ------------ ------------ Net decrease in cash and cash equivalents (8,206,000) 14,211,000 Cash and cash equivalents at beginning of period 16,378,000 12,601,000 ------------ ------------ Cash and cash equivalents at end of period $ 8,172,000 $ 26,812,000 ============ ============
During the six months ended June 30, 2003, the Company financed a total of $4.9 million in previously existing accounts payable and accrued liabilities at December 31, 2002 for MedUnite through the issuance of notes payable. Additionally, the Company also entered into financing arrangements for $0.5 million for certain liability insurance also through the issuance of notes payable. 10 EX-99.2 4 g83956exv99w2.txt TRANSCRIPT OF TELECONFERENCE CALL EXHIBIT 99.2 PROXYMED, INC. SECOND QUARTER 2003 FINANCIAL RESULTS CONFERENCE CALL MODERATOR: MICHAEL HOOVER JULY 22, 2003 10:00 A.M. ET OPERATOR: I would like to welcome everyone to ProxyMed's conference call to discuss financial results for the second quarter of 2003. At this time, I would like to inform you that all participants are in a listen-only mode. At the request of the Company, we will open the conference call up for questions and answers after the presentation. We would appreciate it if you would limit your questions to one and then get back in queue if you have a follow-up question or another question to ask. Today's conference call is being webcast. Replays of this call will be available on the internet at www.proxymed.com shortly after this call. Leading today's call from ProxyMed are Mike Hoover, CEO; Nancy Ham, President; and Judd Schmid, Chief Financial Officer. Before the discussions begin, please be reminded that statements made by ProxyMed during this call, including answers given in response to questions, are intended to fall within the Safe Harbor Provisions of the securities laws. Actual results might differ materially from those in the statements. Such statements are subject to a variety of risks, many of which are discussed in the company's most recent form 10-K and other SEC filings, which the Company strongly urges you to read. At this time, I will now turn the presentation over to Mr. Mike Hoover. MICHAEL HOOVER: Good morning. Thank you, Operator. Thank you, everyone, for joining us once again. On our call today we will report on our second quarter financial results including our return to EBITDA profitability, which was driven by the continued success of our MedUnite integration. We will also update you on our HIPAA efforts including the rollout of our new HIPAA-compliant transaction platform for batch and real-time transactions, as well as our new PROXYMED.NET physician office web portal. Finally, we'll talk about our exciting new service opportunities arising from new relationships with First Data and PlanVista. Certainly the highlight of the quarter for me was our return to EBITDA profitability, which was a full quarter earlier than we had originally projected. This critical milestone was accomplished by the ability of our dedicated team to focus on 1 and drill down to the most minute cost details in order to reduce or eliminate unnecessary expenditures at MedUnite. In addition, our technology and our operational teams made excellent progress in integrating the two businesses. Despite this focus, we were also able to deliver strong results in our transaction services segment, with core transaction group growth at over eight percent, leading to a 12 percent sequential revenue increase. We expect good revenue growth and continued margin expansion over the balance of the year. While our lab services unit was a bit revenue-challenged in the quarter, they are on a strong trend line for the third and fourth quarters. All-in-all we are very pleased with our performance for the quarter. In addition, we never lost sight of the need to pursue new services and transaction types to drive our future growth. I mentioned to you last quarter that we had some exciting things in the works. I am happy that we were able to bring them to fruition in the quarter. I have already been on the road personally to introduce these services to CEOs of some of our largest customers. I am optimistic as to early response. With this brief overview, let me turn it over to Judd and Nancy for all of the details. Judd... JUDSON SCHMID: Thank you, Mike. Good morning everyone. With my new son, Max, now nine weeks old, I want to thank all of those who have sent their congratulations to my wife and myself. Being a parent for the first time really is everything we hoped it would be and more. As we reported in our press release yesterday afternoon, our overall financial results continue to improve, thanks to the ongoing strength of our transaction services business, which is driven by our cost-reduction and integration efforts at MedUnite and consistent revenue growth in our existing operations. As a result, we reported consolidated revenues of $17.7 million and EBITDA profits of $431,000. With the recording of a $752,000 increase in the value of the PlanVista warrant, which we'll talk about in a few minutes, our net loss was $356,000 or 5 cents per share. This compares to consolidated revenues of $12.6 million, EBITDA profits of $901,000, and diluted EPS of 6 cents per share in the same quarter last year. The point of our successful integration plan is to merge the MedUnite and ProxyMed businesses as quickly as possible. We worked hard to provide you a breakout of MedUnite's results for the quarter so that you can track our progress. But, given the tremendous strides in integration of the MedUnite and ProxyMed operations in the second quarter, we will not be able to break out MedUnite's results in the future. 2 With that, I'd like to turn now to the income statement. Starting with revenues in our transaction business, sequential revenue growth over the first quarter was a solid 12 percent, excluding $4.5 million in revenues from MedUnite. Even including MedUnite, where the initial focus has been on stabilizing and retaining the business rather than growing it, our sequential segment revenue growth was 6 percent. From a transaction standpoint, we processed a total of 56 million total transactions, up 97 percent from the second quarter of last year, but down one percent sequentially. Excluding MedUnite's transactions, while overall transactions grew only 1 percent due to a decrease in lower priced encounters, we are pleased to report that core transactions grew eight percent, fueled by continued growth in both new accounts and existing ones. We've seen significant increases in our claims and statements as a result of our new relationship with AlphaThought as well as growth from our small physician accounts. At MedUnite, transactions were down four percent sequentially due to the decision to terminate two large vendors who are sending us non-revenue producing transactions. However, as a result, our average revenue per real-time transaction increased substantially. In addition, we believe that the introduction of our new web transaction portal, PROXMED.NET, will enable us to grow our real-time transactions. This strong growth in core transactions, combined with opportunities brought forth by our new relationships with PlanVista and First Data, which Mike will address later, continues to give us confidence that we can achieve our internal growth goals for the year 25 percent or more. We remain on a run rate to process over 225 million transactions on an annual basis. Our lab services business continues to lag behind our expectations from a revenue standpoint. While we've seen a sequential decline in revenues of 7 percent from soft lab device and contract manufacturing orders, we do see improvement in the third quarter from existing and new relationships. Shifting now to SG&A expenses, the big news this quarter is the success we've had at MedUnite in reducing the expense run-rate. Since our acquisition on December 31st, we've been able to consistently lower the operating expenses each month. SG&A expenses are now in line with our original expectations on a monthly basis. Some of our specific successes include the moving into a smaller office in San Diego for a 95 percent savings compared to last year's costs; the elimination or renegotiation of substantial unnecessary telecom expenses; and the elimination of duplicative contact management, HR, and CRM systems making for a much more efficient operation. Moving 3 forward, we're also looking to combine the accounting and finance systems as well. We continue to "peel back the onion" to look for the obvious and the not-so-obvious. Expense levels in our other business units remained essentially flat across the board, another indication of our commitment to consistently monitor expenses. As a result our success in curtailing these expenses at MedUnite, we are very pleased to report a return to consolidated EBITDA profits. In one short quarter we were able to go from a loss of $948,000 to a profit of $431,000. While we can slice the EBITDA pie many ways, here are the most important slices. First, EBITDA in transaction services, excluding MedUnite, went from $709,000 to $1.2 million. At almost 16 percent, this is the highest EBITDA margin ever achieved by this business unit, demonstrating that as we grow the business we can achieve operating leverage to drive margin growth. Secondly, MedUnite's EBITDA loss improved significantly from a loss of $1.6 million in the first quarter to an EBITDA loss of only $338,000 in the second quarter. Lastly, our lab services EBITDA declined from $817,000 in the first quarter to $455,000 in the second quarter. Amortization expense was in line with last quarter. As we noted then, we have not yet started amortizing the real-time network platform acquired from MedUnite. With the introduction of PROXYMED.NET, which was based on the MedUnite real-time platform, we will begin amortizing this platform sometime in the third quarter. This amortization should add about $255,000 per quarter for the next five years. Additionally, down the road as we enter the fourth quarter, we'll begin to amortize our HIPAA-compliant platform that we have worked on for the last 18 months to complete. This is expected to add approximately $50,000 per quarter over five years. From a cash perspective, we ended the quarter with $8.6 million in total cash. At this time, we have settled or made arrangements for the payment of all significant liabilities at MedUnite that were reported as part of our acquisition. We settled the original $8.3 million in accrued acquisition and exit costs for at least $1.5 million less than originally estimated due to our negotiations. Additionally, as noted in our last quarter's call, we were successful in entering into financing agreements with MedUnite's vendors for payment of some $4.6 million in liabilities at MedUnite that existed at December 31st. As a result of these financing agreements and the interest that we're paying on our $13.4 million convertible notes to the MedUnite founders, our net interest expense was expected to be about $180,000 per quarter. We're running a little more than that due to lower interest earned on our investments. With $8.6 million in total cash and with the company almost at a positive free cash flow level, I'm comfortable with our 4 current cash resources as compared to our internal needs. Additionally, we've signed a term sheet for a $12.5 million line of credit with our current commercial bank. Documentation and closing of this line is expected to be concluded in the next few weeks. Finally, in conjunction with our commercial agreement with PlanVista to provide claims re-pricing services to our payers, we acquired a warrant to purchase up to 15 percent of PlanVista at $1.95 per share. In the accounting for this warrant we recorded an initial value of $547,000 on June 10th. By June 30, as the market price of PlanVista stock was up significantly, the value of this warrant increased to $1.3 million. The resulting increase of $752,000 was recorded as current period income. Until this warrant gets exercised or expires, we'll have to mark up or down the value of this warrant. If we don't exercise the warrant, we'll have to take a charge for any remaining value on our books. With the momentum in transaction services and the rebound expected in lab services, we plan to continue to improve our operating results in the last two quarters of the year and then beyond. While we have much hard work ahead of us, our goal is to exit the year on a positive EPS run rate. With that, I'd like to turn it over to Nancy, who will be discussing our operations in more detail. Nancy... NANCY HAM: Good morning, everyone. I'd like to start out this morning by sharing with you some of our continued success in completing the integration of MedUnite. Just six months ago, we purchased a business with a cash burn rate of almost $1.6 million a month. Today as we exit the second quarter, that burn rate is less than $100,000 a month. I'm very comfortable that MedUnite will make its first positive EBITDA in the third quarter. I want to thank all of the associates at both the former MedUnite and at ProxyMed for their incredible hard work and dedication in making this happen by executing on our four-step plan of action: First, we immediately moved to eliminate overlapping corporate functions and services such as executive management, human resources, finance, marketing, legal, and real estate. While most of this work was accomplished in the first sixty days, it did take a while for all the savings to show up in the P&L. Second, we started attacking the operations area where it seemed we had two of just about everything. In the first 90 days we made all the decisions about which systems to keep and which to eliminate. In the second 90 days, we have been taking 5 actions on those decisions. The biggest impact here, both operationally and financially, were the move to a single corporate co-location facility for our production systems and the move to one customer-relation management system. This was accomplished in the second quarter and is now allowing us to consolidate all of our front-end customer support into our Norcross facility. Third, we reviewed and re-reviewed every expenditure in the business asking ourselves, do we need it at all? If we needed it, can we renegotiate it, downsize it, or combine it with something here at ProxyMed? This has been especially true in our telecommunications and software license and maintenance areas where our corporate IT department, led by Brian McGannon, has just done an outstanding job. Finally, we're still working on the fourth and final step of the plan, which is to integrate the main production processing platform. We just reached a major milestone here with the launch of PROXYMED.NET, which is our new web portal for providers. This portal combines the former PROXYMED.COM and MEDUNITE.NET in a single HIPAA-compliant portal. Congratulations to the dedicated team who've been heads-down making this happen. We now have a best-of-breed platform combining the real-time transaction suite acquired from MedUnite with ProxyMed's flexible architecture which, among other things, allows us to private-label the portal for our partners. The first users have gone live successfully. We anticipate completing the full migration by the end of September. This will allow us to then shut off the two former platforms and to realize those incremental savings. Over the rest of the year then, our focus at MedUnite is to complete the migration of all of our claims customers on the ProxyMed Phoenix platform. The Phoenix platform is our new redesigned and HIPAA-compliant transaction platform, which processes both claims and real-time transactions. Phoenix is important to us for several reasons. First, it has facilitated the integration of the MedUnite and ProxyMed platforms, allowing us to consolidate all of our customers onto one-batch platforms while eliminating the cost associated with MedUnite's multiple claims platforms. Second, Phoenix provides our HIPAA-compliant processing engine. Third, it provides a new data warehouse, which is needed to support some of our new value-added services. Finally, it provides us with the scalability to support continued aggressive growth in the future. Let's turn now to ProxyMed's core transaction services business, which had a pretty good quarter, growing revenue 12 percent sequentially and core transactions by 8 percent. Our growth comes first from our excellent provider sales force. In the quarter they signed up over 3,000 physicians for over 8,000 services. This translates to 2.6 services per doctor, which shows our efforts at cross-selling are continuing to pay off for us. In addition we were able to bring on several larger new partners, such as AlphaThought, in record time. Finally, strategic relationships, such as HBMA, are beginning to bear fruit. 6 All-in-all we're having a lot of success not only in selling our services, but in getting them implemented more quickly. Of course, we've also been busy with HIPAA this year. We've already met the first major deadline, which was the privacy deadline on April 15th. This involved updating almost of our inbound products to add more robust security and authentication features. We had to sign business associate agreements with our providers and we conducted training for all of our associates. While this was a lot of effort in and of itself, the bigger work effort is around the October 16th deadline for transactions and code sets, which involves changing the formats of all of our transactions to ANSI X.12 4010A. I'm pleased to report that we have hit several major HIPAA milestones so far: we've received full production certification from Clarity that our transactions are HIPAA-compliant; we implemented the production version of our HIPAA claims validator; we implemented our new payer router that allows us to seamlessly handle both compliant and non-compliant transactions, depending on the readiness of our provider and payer partners; we're processing HIPAA-compliant professional and institutional 4010A claims end-to-end in production with multiple payers with the balance of our payers migrating between now and October; we've launched our self-testing tools for our partners; and a lot more. While I'm pleased overall with our readiness, we are not complacent. With only 87 days left until October 16th, we and the entire industry still have much to do. It's certain at this point that there will be both payers and especially providers who will not be ready. Yet, it is still uncertain what CMS plans to do about this. The industry is very engaged in a dialog with CMS around contingency planning for these lagging providers, as no one wants to see you drop the paper. The current expectation seems to be that non-compliant providers will be able to continue to submit their transactions electronically post-October 16th for a defined grace period. ProxyMed has prepared itself for this contingency by architecting our Phoenix platform to handle both compliant and non-compliant transactions even to the same payer. Now a quick note on our prescription services business. Overall there is certainly a renewed interest in the marketplace due to pending federal legislation and the growing number of state statutes regarding the legibility of prescriptions. For example, our home state right here in Florida has already adopted such a statute. While it doesn't specifically mention e-prescribing, it does put pressure on physicians to do something to make prescriptions more consistent and legible. While we hope this macro trend will accelerate our growth, we do continue to make steady day-to-day progress ourselves. Our launch with Rite Aid is going well. We're now active in 12 states. While the transaction count with Rite Aid is still modest, they are very pleased and are rolling this into all of their major markets with quite a bit of attention. On a global basis, our 7 prescription transaction volumes are consistently up 15 percent over the same period last year. Finally, let me turn to our lab business, which continues to feel the effects of the overall economic slowdown in both our contract manufacturing and our lab device business. While our national and regional account business was mostly on track for the quarter, our smaller labs and our hospital labs showed a definite slowdown. IT resources at these customers were consumed in the second quarter with HIPAA privacy efforts and their physician office customers were likewise reluctant to make any changes in the quarter as well. With the April 15th privacy date behind us, we are seeing in the third quarter a definite pickup in orders from all segments of our lab business. We've also taken steps to better leverage our multiple touch points with labs, which includes devices and the latest services from our lab business, real-time transactions from MedUnite, and claims and encounters from our transaction service business. While each of our businesses work with labs everyday, in the past we didn't treat labs as single consolidated customers nor do we do much to cross-sell these customers our full suite of services. Under our new approach, we believe we can use our market-leading position in devices to win more of the lab's recurring transaction business - both claims and real-time. Labs are also key targets customers for our new FirstProxy ERA/EFT offering. With that, I'll turn it back over to Mike. MICHAEL HOOVER: Thanks, Nancy. As we've just discussed, the results for the quarter in our transaction services business have been terrific. While we'll keep our eye on our lab business this next quarter,. we believe that we can exit the year on a positive EPS run-rate. As we mentioned to you in our last call, an integral part of our growth plan is that we are always looking for new products and services that add value to our existing offering. Keeping in line with this strategy, in June we announced a big business relationship with PlanVista Corporation to provide claims re-pricing services to our payer customers. More recently we introduced FirstProxy, our new service offering in conjunction with First Data. I'd like to spend a few moments discussing the significance of both of these important relationships. Leveraging our extensive payer connectivity and PlanVista's state-of-the-art re-pricing capability and other proven cost-containment services, ProxyMed and PlanVista can immediately begin to roll out these services to ProxyMed payers and save them real dollars on out-of-network claims. Payers today usually are not re-pricing all the claims. A payer may be paying that claim at full retail or perhaps at a 8 reasonable and customary rate. If they are re-pricing claims, they are often focused on just high-dollar claims. This means they are leaving potentially tens of millions of dollars on the table annually. Using our new service, we can re-price claims at any dollar level with a guaranteed 24-hour turnaround. For our payer customers, we can typically generate savings of 20 to 30 percent on over half of their out-of-network claims - a very nice savings for the payer. ProxyMed is then paid on a percentage of savings, which translates to well north of a dollar per claim. This service is a great win-win: our payers realize major savings, while we realize enhanced revenues and margins. We've already received positive feedback from some of our larger payer customers and are in active discussions with them about using the new service. Finally, as Judd mentioned, as part of the agreement, ProxyMed received a warrant to acquire 15 percent of PlanVista at a price of $1.95 a share. We are also equally excited about our new relationship with First Data. By leveraging ProxyMed's Phoenix platform and our connectivity to both payers and over 140,000 healthcare providers and First Data's expertise in financial transactions, we can offer a suite with innovative solutions under the FirstProxy name that will streamline and expedite the healthcare claim payment and settlement process. Our first offering together will be for electronic remittance advice and electronic funds transfer. We expect to begin beta testing this service in the fourth quarter. In our relationship with First Data, we granted them a warrant to purchase 600,000 shares of ProxyMed common stock at $16.50 per share, a 36 percent premium to the market price at the time the deal is signed. This warrant, however, is performance-based over a 3-1/2 year period. This means that First Data only has the right to exercise a portion of the warrant if certain revenues are generated by FirstProxy and recognized by ProxyMed. If the targets are not met, First Data loses its ability to exercise each portion. It is essentially the same concept as we entered into the founding members of MedUnite. In my prior business ventures, I worked extensively with First Data and both companies benefiting from the relationship. I am confident that ProxyMed's relationship with First Data will be just as successful. In conclusion, I think it's been a good quarter here at ProxyMed. We are very pleased with our return to EBITDA profitability and with the continued success in our transaction services business. We're excited about our new value-added offerings with PlanVista and First Data, and the impact that they can have on our growth in 2003 and especially in 2004. Now we are focused on delivering our results to you for the rest of the year. Before we leave you today, I just want to clarify two items that were noted in our press release yesterday. First of all, despite the typo, my title is still Chief Executive Officer. Second, I stated that with PlanVista and First Data, we could 9 meet the financial and operational goals established at the beginning of the year. By this, I mean that while we will continue to be challenged to meet analyst consensus on revenues, I am comfortable we will meet or exceed EBITDA guidance, which is currently $4.2 million for the remainder of the year. This is despite absorbing any start-up costs related to PlanVista and First Data offerings. While we have much work to do to get there, including the final stages of the MedUnite migration and avoiding any significant HIPAA problems, I am confident we will be exiting 2003 on a positive EPS run rate. With that, we conclude our formal statements. Operator, we will open the lines for any questions that we may have. [Questions from participants and answers from management omitted] MICHAEL HOOVER: Great, OK. Let's wrap it up. We want to thank you for your time and participation today. Please join us for our next conference call. I am sure we will have some follow-ups via phone. Thank you. OPERATOR: Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may now disconnect. 10 -----END PRIVACY-ENHANCED MESSAGE-----