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
April 21, 1999
(Date of Report)
April 21, 1999
(Date of earliest event reported)
-------------------------
Commission File Number 0-26816
IDX SYSTEMS CORPORATION
(Exact name of registrant as specified in its charter)
Vermont 03-0222230
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1400 Shelburne Road
South Burlington, VT 05403
(Address of principal executive offices)
Registrant's telephone number, including area code: (802-862-1022)
Exhibit Index on Page 2 of 10
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ITEM 5. OTHER EVENTS
On April 21, 1999, the Company announced the results of operations for
the first quarter of 1999 and discussed expected results for the balance of
1999. In addition, the Company announced the purchase of 80% of the stock of
ChannelHealth, Inc.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits.
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EXHIBIT NO. DESCRIPTION PAGE
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<S> <C> <C>
99A IDX News Release dated 4
April 21, 1999
99B IDX News Release dated 9
April 21, 1999
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Page 2 of 10
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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.
IDX SYSTEMS CORPORATION
(Registrant)
Date: April 21, 1999 /S/ JOHN A. KANE
____________________________________
John A. Kane
Vice President, Finance and Administration
Chief Financial Officer, and Treasurer
Page 3 of 10
EXHIBIT 99A
IDX Systems Corporation
1400 Shelburne Road
P.O. Box 1070
Burlington, VT 05402-1070
- --------------------------------------------------------------------------------
Contact: Jack Kane
Chief Financial Officer
802-862-1022
FOR IMMEDIATE RELEASE
IDX SYSTEMS CORPORATION REPORTS
FIRST QUARTER 1999 RESULTS
BURLINGTON, VT, April 21, 1999--IDX Systems Corporation (Nasdaq: IDXC) reported
financial results today for the first quarter ended March 31, 1999.
Revenue in the first quarter was $60.2 million, compared with $72.7 million in
the first quarter of last year. The company reported a first quarter net loss of
($6.9) million or ($0.26) per share, compared with net income of $4.4 million or
$0.16 per share in the same quarter last year.
"As we announced on March 5, 1999, our first quarter financial results are below
expectation due to the unexpected deferral of purchasing decisions by our
customers and prospects," said Richard E. Tarrant, Chief Executive Officer. "We
believe that our business is fundamentally sound and that the performance of our
core business (excluding Internet initiatives) will improve as the year
progresses. We anticipate reporting positive net income in the second quarter
and increasing the profitability of our core business during the balance of the
year. We expect our Internet tracking division, IDX.com, to lose approximately
$9.0 million pretax in 1999, which will result in a pretax loss of approximately
$7.0 million for the Company overall.
Revenue for the year is expected to reach approximately $310 million."
"It is difficult to fully estimate the impact of deferred purchasing decisions
on our financial results in 2000," Mr. Tarrant continued. "Given the information
currently available, we expect to grow revenue by 15-20% in 2000 and to increase
net income substantially in our core business. Once our customers have reached
the other side of Y2K computer problems, we may see an increase in sales orders
that would help offset the longer sales cycle. We also plan to continue to keep
a tight rein on discretionary spending during the year. "
Page 4 of 10
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As part of its Internet strategy, the Company reported that it purchased 80% of
ChannelHealth, Inc. on April 1, 1999. ChannelHealth, based in Bedford,
Massachusetts, develops Internet services that provide consumers with extensive
health-related information and the ability to purchase medical products on-line.
IDX paid $6.5 million in cash for its ownership interest in ChannelHealth, and
may pay an additional $3.0 million, contingent upon certain performance goals. A
substantial portion of the projected loss for the IDX.com tracking division in
1999 is attributable to ChannelHealth.
"We believe the successful healthcare information technology company of the
future will combine software expertise with Internet capabilities," Mr. Tarrant
said. "Given our established customer base, comprehensive system solutions and
our investments in Internet products and services, IDX has solidly defined its
position as a leader in the industry."
Founded in 1969, IDX Systems Corporation provides complete healthcare
information solutions for integrated delivery networks including group
practices, MSOs, health plans, and hospitals. To connect systems and sites
across the enterprise, IDX offers the IDXtendR @ the Site Series--products and
services designed to align physicians and hospitals, streamline patient flow,
enhance quality, and reduce costs. IDX products are used by or are under
contract to be used by more than 110,000 physicians and are installed at over
1,650 client sites, including more than 250 large group practices, each having
75 physicians or more, 270 multi-entity hospital systems, and over 200
integrated delivery networks.
This material contains forward-looking statements that involve a number of risks
and uncertainties. Among the important factors that could cause actual results
to differ materially from those indicated by such forward-looking statements are
the possible deferral, delay or cancellation by customers of computer system
purchase decisions, variations in the volume and timing of systems sales and
installations, timing and quality of development and implementation of year 2000
ready solutions for customers, the potential disruption of customers' purchasing
plans due to work on their own year 2000 problems, development and
implementation of year 2000 ready products for the Company's internal use,
possible delay, varying lengths of sales cycles and installation processes,
seasonal patterns of sales and customer buying behaviors, development by
competitors of new or superior technologies, possible delays in product
development, undetected errors or bugs in software, potential product liability,
changing economic, political and regulatory influences on the healthcare
industry, changes in product pricing policies, possible regulation of the
Company's software by the U.S. Food and Drug Administration, general economic
conditions, and the risk factors detailed from time to time in the Company's
periodic reports and registration statements filed with the Securities and
Exchange Commission, which important factors are incorporated herein by
reference.
- tables follow -
This release is also available on the Internet at:
www.idx.com
Page 5 of 10
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IDX SYSTEMS CORPORATION
Consolidated Statements of Operations and Comprehensive Income (Loss)
(in thousands, except for per share data)
Three Months Ended
March 31
1999 1998
---- ----
(Unaudited)
Revenues
Systems sales $ 22,851 $38,966
Maintenance and service fees 37,330 33,771
-------- -------
Total revenues 60,181 72,737
Operating expenses
Cost of sales 39,961 37,248
Selling, general, and administrative 18,538 13,752
Research and development 13,548 10,316
Nonrecurring charge - 3,201
-------- -------
Total operating expenses 72,047 64,517
-------- -------
Operating income (loss) (11,866) 8,220
Other (income) expense (1,108) (1,122)
Loss on impairment of asset 1,642 -
--------- --------
Income (loss) before taxes (12,400) 9,342
Income tax provision (benefit) (5,500) 4,940
--------- --------
Net income (loss) $ (6,900) $ 4,402
========= ========
Unrealized gain (loss) on securities
available-for-sale (58) (3)
--------- --------
Comprehensive income (loss) $ (6,958) $ 4,399
========== ========
Basic earnings (loss) per share $ (0.26) $ 0.17
========= ========
Basic weighted average shares outstanding 26,654 26,155
========= ========
Diluted earnings (loss) per share $ (0.26) $ 0.16
========= ========
Diluted weighted average shares outstanding 26,654 27,007
========= ========
Page 6 of 10
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IDX SYSTEMS CORPORATION
Highlights of Consolidated Balance Sheets
(in thousands)
Unaudited
March 31 December 31,
1999 1998
---- ----
Assets
Cash and short term investments $ 113,845 $ 124,517
Accounts receivable, net 85,580 99,345
Other current assets 9,789 4,997
Deferred tax asset 4,720 4,720
---------- ----------
Total current assets 213,934 233,579
---------- ----------
Property & equipment, net 35,342 31,905
Capitalized software costs, net 591 665
Other assets 18,426 15,868
Deferred tax asset 2,307 2,307
---------- -----------
Total assets $ 270,600 $ 284,324
========== ===========
Liabilities and stockholders' equity
Accounts payable and accrued
expenses $ 29,535 $ 31,162
Income taxes - 5,429
Deferred revenue 15,931 18,239
--------- -----------
Total current liabilities 45,466 54,830
--------- -----------
Minority interest 9,259 8,988
Stockholders' equity 215,875 220,506
--------- -----------
Total liabilities and
stockholders' equity $ 270,600 $ 284,324
========= ===========
Page 7 of 10
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IDX SYSTEMS CORPORATION
Statements of Cash Flows
(in thousands)
Quarter Ended
March 31,
1999 1998
---- ----
OPERATING ACTIVITIES
Net Income (loss) $ (6,900) $ 4,402
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization 3,065 2,490
Deferred tax benefit, net of business
acquisitions - (517)
Increase in allowance for doubtful accounts 356 31
Minority interest 270 741
Loss on investment 1,642 -
Write-off of acquired in-process
research & development costs - 3,201
Changes in operating assets and liabilities,
net of business acquisitions:
Accounts receivable 13,409 (4,522)
Prepaid expenses and other assets (4,791) 1,688
Accounts payable 4,270 5,410
Accrued expenses (5,888) (9,270)
Federal and state taxes payable (5,429) -
Deferred revenue (2,308) (2,008)
---------- ---------
Net cash provided by (used in) operating (2,304) 1,646
activities
INVESTING ACTIVITIES
Purchase of property and equipment, net (6,428) (4,156)
Purchase of securities available-for-sale (59,179) (36,076)
Sale of securities available-for-sale 78,659 33,178
Business acquisitions - (4,000)
Other assets (4,200) -
---------- ---------
Net cash provided by (used in) investing 8,852 (11,054)
activities
FINANCING ACTIVITIES
Proceeds from sale of common stock 2,327 6,060
Contributions to affiliates, net - 6,000
Principal repayments of debt (9) (6,066)
---------- ---------
Net cash provided by financing 2,318 5,994
activities ---------- ---------
Increase (decrease) in cash and cash equivalents 8,866 (3,414)
Cash and cash equivalents at beginning of period 10,953 14,061
--------- ---------
Cash and cash equivalents at end of period 19,819 10,647
Short term investments 94,026 104,721
--------- ---------
Cash and short term investments $ 113,845 $ 115,368
========= ==========
Page 8 of 10
EXHIBIT 99B
IDX News Release
IDX Systems Corporation Contacts: IDX Systems Corporation
1400 Shelburne Road Nina Fraley, Public Relations
P.O. Box 1070 (206) 689-1378
Burlington, VT [email protected]
95402-1070 Debbie Drewniak, Investor Relations
www.idx.com (802) 862 - 1022
- ----------- [email protected]
FOR IMMEDIATE RELEASE
IDX Systems Corporation Announces Acquisition of ChannelHealth
Physician connectivity tools improving the healthcare delivery process
Burlington, VT, April 21, 1999--IDX Systems Corporation (Nasdaq: IDXC) today
announced that on April 1, 1999 IDX purchased 80 percent of ChannelHealth of
Bedford, Massachusetts. IDX paid $6.5 million in cash for its interest and
committed an additional $16 million in cash to fund operations over the next
three years. IDX has also agreed to pay an additional $3 million, contingent on
achieving certain performance goals. ChannelHealth develops Web-based services
designed to provide healthcare consumers with comprehensive drug information,
extensive disease, health, and wellness information, and e-commerce for ordering
and fulfillment of medical products. ChannelHealth's Web services, expected to
be available to consumers by midyear, is designed to enhance the traditional
physician-patient and pharmacy-patient relationships by pointcasting custom
tailored healthcare information and product offerings to patients and physicians
through a secure and confidential private community network.
According to IDX Chief Executive Officer Richard E. Tarrant, "Our Internet track
record began three years ago with the launch of OutReach, our Web-based product
that connects physicians and other healthcare providers to data from IDX
systems. We are building on this success to improve healthcare by integrating
patient access to the healthcare system through our Web initiative. We believe
patients will want to go to their physicians' websites to request a scheduled
visit, view lab results, and interact with IDX transaction and clinical systems.
And once online, we expect that patients will demand information on medical
conditions, drugs and other health products. Through acquisitions such as
ChannelHealth, IDX is positioned to push health information and e-commerce
anywhere on the value chain. With this capability, IDX expects to continue the
lead in transforming healthcare on the Internet."
David R. Page, a pharmacist and expert in direct marketing for healthcare
products, founded True Channel Communications in 1996. Mr. Page will remain with
ChannelHealth. "It is an exciting opportunity to be aligned with a corporate
leader in the HCIS industry. This acquisition validates the ChannelHealth
solution for physicians, patients and healthcare plans," said Page. "With the
IDX and ChannelHealth combination, we expect physicians and pharmacists to
extend their capabilities for patient education with online healthcare
information in a way that will be easily accessible and meaningful to the
patient."
Page 9 of 10
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- more -
IDX/Channel Health...Page 2
The ChannelHealth acquisition is a key component of a comprehensive Web
initiative for IDX that includes the use of browser technology on existing IDX
products, and the use of the Internet as a connectivity tool for content
delivery and e-commerce capabilities. With the ChannelHealth acquisition, IDX is
adding a critical building block in the IDX Web strategy.
About IDX
Founded in 1969, IDX Systems Corporation provides complete healthcare
information solutions for integrated delivery networks including group
practices, MSOs and hospitals. To connect systems and sites across the
enterprise, IDX offers IDXtendR(TM) @ the Site Series. The IDXtendR product line
provides comprehensive, integrated products and services to manage costs and
contracts, measure utilization, capture clinical data and monitor patient
outcomes - while streamlining patient flow and automating business processes.
IDX is the company of choice at more than 1,600 customer sites nationwide.
***
This press release contains forward-looking statements that involve a number of
risks and uncertainties, including statements regarding the expected development
of IDX's Web-based strategy and the future benefits IDX expects to derive as a
result of that strategy. Among the important factors that could cause actual
results to differ materially from those indicated by such forward-looking
statements are the satisfaction of various closing conditions, volume and timing
of systems sales and installations, length of sales cycles and installation
process, seasonal patterns of sales and customer buying behaviors, procurement,
development and implementation of year 2000 ready products for internal use,
procurement, development and implementation of year 2000 ready solutions for
customers, the potential disruption of customer's purchasing plans due to work
on their own year 2000 problems, development by competitors of new or superior
technologies, delays in product development, undetected errors or bugs in
software, product liability, changing economic, political and regulatory
influences on the healthcare industry, changes in product pricing policies,
competitive pressures, possible regulation of the Company's software by the U.S.
Food and Drug Administration, general economic conditions, and the risk factors
detailed from time to time in the Company's periodic reports and registration
statements filed with the Securities and Exchange Commission, which important
factors are incorporated herein by reference.
Page 10 of 10
