<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended December 31, 1997
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to ________
Commission File Number 0-21447
ADVANCE PARADIGM, INC.
(Exact name of registrant as specified in its charter)
Delaware 75-2493381
(State of Incorporation) (IRS Employer Identification Number)
545 E. John Carpenter Freeway, Suite 1570, Irving, Texas 75062
(Address of principal executive offices) (ZIP Code)
(972) 830-6199
(Registrant's Telephone Number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
--- ---
Common stock, $.01 par value: 8,814,156
outstanding as of February 13, 1998
<PAGE> 2
ADVANCE PARADIGM, INC.
INDEX TO QUARTERLY REPORT FORM 10-Q
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION PAGE
<S> <C> <C> <C> <C>
Item 1. Financial Statements
A. Condensed Consolidated Balance Sheets as of
December 31, 1997 and March 31, 1997 2
B. Condensed Consolidated Statements of Operations
for the Three Months and Nine Months Ended
December 31, 1997 and 1996 3
C. Condensed Consolidated Statements of Cash
Flows for the Nine Months Ended
December 31, 1997 and 1996 4
D. Notes to Condensed Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
PART II. OTHER INFORMATION 13
SIGNATURES 15
</TABLE>
<PAGE> 3
ADVANCE PARADIGM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
March 31, 1997 December 31, 1997
-------------- -----------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 51,086,000 $ 55,074,000
Accounts receivable, net of allowance for doubtful accounts of
$142,000 and $141,000, respectively 35,343,000 59,933,000
Inventories 1,859,000 2,614,000
Prepaid expenses and other 426,000 1,624,000
------------- -------------
Total current assets 88,714,000 119,245,000
PROPERTY AND EQUIPMENT, net of accumulated depreciation
and amortization of $3,292,000 and $4,641,000, respectively 5,576,000 9,648,000
INTANGIBLE ASSETS, net of accumulated amortization of
$1,154,000 and $1,414,000, respectively 12,699,000 12,439,000
OTHER ASSETS 484,000 1,163,000
------------- -------------
Total assets $ 107,473,000 $ 142,495,000
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 59,782,000 $ 89,054,000
Accrued salaries and benefits 1,991,000 1,992,000
Income taxes payable 712,000 --
Other accrued expenses 1,365,000 2,586,000
------------- -------------
Total current liabilities 63,850,000 93,632,000
NONCURRENT LIABILITIES:
Deferred income taxes 755,000 763,000
Other noncurrent liabilities 340,000 354,000
------------- -------------
Total liabilities 64,945,000 94,749,000
------------- -------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Series B preferred stock, $.01 par value; 5,000 shares
authorized, 4,444 shares issued and
outstanding -- --
Common stock, $.01 par value; 25,000,000
shares authorized; 7,800,817 and 7,938,078
shares issued and outstanding, respectively 78,000 79,000
Additional paid-in capital 42,891,000 43,031,000
Retained earnings (accumulated deficit) (441,000) 4,636,000
------------- -------------
Total stockholders' equity 42,528,000 47,746,000
------------- -------------
Total liabilities and stockholders' equity $ 107,473,000 $ 142,495,000
============= =============
</TABLE>
See accompanying notes to financial statements.
-2-
<PAGE> 4
ADVANCE PARADIGM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended December 31, Nine Months Ended December 31,
-------------------------------- ------------------------------
1996 1997 1996 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues $ 70,025,000 $ 125,812,000 $ 177,854,000 $ 317,953,000
------------- ------------- ------------- -------------
Cost of operations:
Cost of revenues 67,186,000 120,342,000 170,180,000 304,330,000
Selling, general and
administrative expenses 1,890,000 2,725,000 5,386,000 7,252,000
------------- ------------- ------------- -------------
Total cost of operations 69,076,000 123,067,000 175,566,000 311,582,000
------------- ------------- ------------- -------------
Operating income 949,000 2,745,000 2,288,000 6,371,000
Interest income 488,000 667,000 993,000 2,066,000
Interest expense (21,000) -- (379,000) --
------------- ------------- ------------- -------------
Income before income taxes 1,416,000 3,412,000 2,902,000 8,437,000
Provision for income taxes 538,000 1,300,000 849,000 3,210,000
------------- ------------- ------------- -------------
Net income $ 878,000 $ 2,112,000 $ 2,053,000 $ 5,227,000
============= ============= ============= =============
Basic
Net income per share $ 0.11 $ 0.26 $ 0.33 $ 0.65
============= ============= ============= =============
Weighted average
shares outstanding 7,488,953 7,937,592 4,584,318 7,848,075
============= ============= ============= =============
Diluted
Net income per share $ 0.09 $ 0.20 $ 0.27 $ 0.50
============= ============= ============= =============
Weighted average
shares outstanding 9,468,319 10,638,161 7,659,935 10,392,687
============= ============= ============= =============
</TABLE>
See accompanying notes to financial statements.
-3-
<PAGE> 5
ADVANCE PARADIGM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended December 31,
-----------------------------------
1996 1997
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 2,053,000 $ 5,227,000
Adjustments to reconcile net income to
net cash provided by operating activities -
Depreciation and amortization 1,249,000 1,610,000
Provision for doubtful accounts 6,000 18,000
Change in certain assets and liabilities -
Accounts receivable (15,376,000) (24,608,000)
Inventories (372,000) (755,000)
Prepaid expenses
and other assets (42,000) (1,877,000)
Accounts payable, accrued expenses
and other noncurrent liabilities 15,302,000 29,653,000
------------ ------------
Net cash provided by operating activities 2,820,000 9,268,000
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (2,224,000) (5,421,000)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from sale of preferred stock 10,000,000 --
Net proceeds from issuance of Common Stock 19,304,000 141,000
Net payments on long-term obligations (7,044,000) --
------------ ------------
Net cash provided by financing activities 22,260,000 141,000
------------ ------------
INCREASE IN CASH 22,856,000 3,988,000
CASH AND CASH EQUIVALENTS, beginning of period 16,457,000 51,086,000
------------ ------------
CASH AND CASH EQUIVALENTS, end of period $ 39,313,000 $ 55,074,000
============ ============
</TABLE>
See accompanying notes to financial statements.
-4-
<PAGE> 6
ADVANCE PARADIGM, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying unaudited condensed consolidated financial statements have
been prepared by the Company in accordance with generally accepted accounting
principles for interim financial information and substantially in the form
prescribed by the Securities and Exchange Commission (the "Commission") in
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of the
Company's management, the December 31, 1997 and 1996 unaudited interim financial
statements include all adjustments, consisting of normal recurring adjustments,
necessary for a fair presentation of results for this interim period. In the
opinion of the Company's management, the disclosures contained in this Form 10-Q
are adequate to make the information presented not misleading when read in
conjunction with the Notes to Consolidated Financial Statements included in the
Company's Form 10-K for the year ended March 31, 1997. The results of operations
for the three month and nine month periods ended December 31, 1997 are not
necessarily indicative of the results to be expected for the full year or for
any future period.
2. NET INCOME PER SHARE
Net income per share is computed using the weighted average number of
common and common equivalent shares outstanding during the period.
In February 1997, the Financial Accounting Standards Board issued Statement
128, "Earnings Per Share" (SFAS 128). SFAS 128 is effective for financial
statements for both interim and annual periods ending after December 15, 1997.
SFAS 128 requires the calculation of "Basic" earnings per share which is
computed by dividing net income by the weighted average number of shares of
Common Stock outstanding during the period. In addition, SFAS 128 requires the
calculation of "Diluted" earnings per common share which is computed using the
weighted average number of shares of Common Stock and common stock equivalents.
A reconciliation of the numerators and denominators of the basic and diluted
per-share computations follows:
-5-
<PAGE> 7
<TABLE>
<CAPTION>
THREE MONTHS ENDED DECEMBER 31, NINE MONTHS ENDED DECEMBER 31,
1996 1997 1996 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
BASIC
Numerator:
Net income $ 878,000 $ 2,112,000 $ 2,053,000 $ 5,227,000
Preferred stock dividends 68,000 50,000 521,000 150,000
----------- ----------- ----------- -----------
$ 810,000 $ 2,062,000 $ 1,532,000 $ 5,077,000
=========== =========== =========== ===========
Denominator:
Weighted average common
stock outstanding 7,488,953 7,937,592 4,584,318 7,848,075
=========== =========== =========== ===========
Net income per share $ 0.11 $ 0.26 $ 0.33 $ 0.65
=========== =========== =========== ===========
DILUTED
Numerator:
----------- ----------- ----------- -----------
Net income $ 878,000 $ 2,112,000 $ 2,053,000 $ 5,227,000
=========== =========== =========== ===========
Denominator:
Weighted average common 7,488,953 7,937,592 4,584,318 7,848,075
stock outstanding
Common stock equivalents:
Series A preferred stock -- -- 1,666,667 --
Series B preferred stock 1,111,111 1,111,111 740,741 1,111,111
Options and warrants using the
treasury stock method 868,255 1,589,458 668,209 1,433,501
----------- ----------- ----------- -----------
Weighted average shares outstanding 9,468,319 10,638,161 7,659,935 10,392,687
=========== =========== =========== ===========
Net income per share $ 0.09 $ 0.20 $ 0.27 $ 0.50
=========== =========== =========== ===========
</TABLE>
-6-
<PAGE> 8
3. INCOME TAXES
In the three months and nine months ended December 31, 1997, the Company
recorded a provision for income taxes of $1,300,000 and $3,210,000,
respectively. The Company has recorded its tax provision based upon an
estimated, effective tax rate of 38%.
4. SUBSEQUENT EVENT
On February 9, 1998, the Company announced the acquisition of Innovative
Medical Research, Inc. (IMR), a privately held clinical trial and survey
research firm based in Towson, Maryland. The transaction is structured as a
merger under which the Company issued 876,078 shares and options to purchase
23,922 shares of its Common Stock in exchange for all the outstanding shares and
options of IMR. It is expected that the acquisition will be accounted for as a
tax-free pooling of interests. Accordingly, at March 31, 1998, all prior period
consolidated financial statements of the Company will be restated to include the
results of operations, financial position and cash flow of IMR as though it had
always been a part of the Company. Financial statements of IMR for the year
ended December 31, 1997 are not available.
-7-
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following table sets forth certain consolidated financial data of the
Company, for the periods indicated, as a percentage of total revenues.
<TABLE>
<CAPTION>
Three Months Nine Months
Ended December 31, Ended December 31,
------------------ ------------------
1996 1997 1996 1997
----- ----- ----- -----
<S> <C> <C> <C> <C>
Data Services 59.1% 69.7% 54.6% 67.4%
Mail Services 22.2 15.0 24.6 17.0
Clinical Services 18.7 15.3 20.8 15.6
----- ----- ----- -----
Total Revenues 100.0 100.0 100.0 100.0
----- ----- ----- -----
Cost of operations:
Cost of revenues 95.9 95.7 95.7 95.7
Selling, general and administrative
expenses 2.7 2.1 3.0 2.3
----- ----- ----- -----
Total cost of operations 98.6 97.8 98.7 98.0
----- ----- ----- -----
Operating income 1.4 2.2 1.3 2.0
Interest income, net of expense .6 .5 .3 .7
----- ----- ----- -----
Net income before taxes 2.0% 2.7% 1.6% 2.7%
===== ===== ===== =====
</TABLE>
THREE MONTHS ENDED DECEMBER 31, 1997 COMPARED TO THREE MONTHS ENDED
DECEMBER 31, 1996
REVENUES. Revenues for the three months ended December 31, 1997 increased
$55.8 million, or 80%, compared to revenues for the three months ended December
31, 1996. Approximately 83% of the increase in revenues was attributable to a
33% increase in the number of pharmacy claims processed during the period.
Substantially all of the additional business from new clients utilize the
Company's pharmacy network. In cases in which the Company has an independent
obligation to pay its network pharmacy providers, the Company includes payments
from its plan sponsors for these benefits as revenues and payments to its
pharmacy providers as cost of revenues. Therefore, new clients that utilize the
Company's network will generate higher revenues than new business where the
Company merely administers the client's network. The increase in claims resulted
from strong growth in new clients and from an increase in member lives from
existing clients. Approximately 11% of the increase in revenues resulted from an
increase in clinical services revenues derived from formulary and disease
management services. The remaining increase was attributable to additional sales
of the Company's mail pharmacy services.
-8-
<PAGE> 10
COST OF REVENUES. Cost of revenues for the three months ended December 31,
1997 increased by $53.2 million, or 79%, compared to the same period in 1996.
This increase was attributable primarily to the additional costs associated with
the Company's claims processing growth. As a percentage of revenues, cost of
revenues was approximately 96% in the three months ended December 31, 1996 and
1997.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expense for the three months ended December 31, 1997 increased by
$835,000, or 44%, compared to the same period in 1996. This increase was the
result of the Company's expansion of its sales and marketing activities, as well
as increases in administrative and support staff levels and salaries and
benefits in response to volume growth in all services. In spite of the increase,
selling, general and administrative expenses as a percentage of revenues
decreased from 2.7% for the three months ended December 31, 1996 to 2.1% in the
same period in 1997 as the result of greater economies of scale and due to the
increase in revenues associated with the Company's claims processing services.
Additional revenues generated by clients utilizing the Company's network
pharmacy providers do not result in an increase in selling, general and
administrative expenses.
INTEREST INCOME AND INTEREST EXPENSE. Interest income, net of interest
expense, for the three months ended December 31, 1997 increased $200,000
compared to the same period in 1996. The increase resulted from cash management
programs which utilized the Company's short-term excess cash to generate
interest income through investment in money market funds and high-grade
commercial paper.
INCOME TAXES. For the three months ended December 31, 1996 and 1997 the
Company recorded income tax expense based upon an estimated, effective tax rate
of 38%.
NET INCOME PER SHARE. The Company reported diluted net income per share of
$.20 per share for the three months ended December 31, 1997 compared to $.09 per
share for the same period in 1996. The weighted average shares outstanding were
9.5 million and 10.6 million for the three months ended December 31, 1996 and
1997, respectively. The increase in the weighted average shares resulted
primarily from the the increase in the Company's stock price which has resulted
in more options and warrants becoming common stock equivalents and from the
issuance of 2.4 million shares in connection with the Company's initial public
offering in October 1996. (See Note 2 for calculation.)
-9-
<PAGE> 11
NINE MONTHS ENDED DECEMBER 31, 1997 COMPARED TO NINE MONTHS ENDED
DECEMBER 31, 1996
REVENUES. Revenues for the nine months ended December 31, 1997 increased
$140.1 million, or 79%, compared to revenues for the nine months ended December
31, 1996. Approximately 84% of the increase in revenues was attributable to a
49% increase in the number of pharmacy claims processed during the period.
Substantially all of the additional business from new clients utilize the
Company's pharmacy network. In cases in which the Company has an independent
obligation to pay its network pharmacy providers, the Company includes payments
from its plan sponsors for these benefits as revenues and payments to its
pharmacy providers as cost of revenues. Therefore, new clients that utilize the
Company's network will generate higher revenues than new business where the
Company merely administers the client's network. The increase in claims resulted
from strong growth in new clients and from an increase in member lives from
exisitng clients. Approximately 9% of the increase in revenues resulted from an
increase in clinical services revenues derived from formulary and disease
management services. The remaining increase was attributable to additional sales
of the Company's mail pharmacy services.
COST OF REVENUES. Cost of revenues for the nine months ended December 31,
1997 increased by $134.2 million, or 79%, compared to the same period in 1996.
This increase was attributable primarily to the additional costs associated with
the Company's claims processing growth. As a percentage of revenues, cost of
revenues was approximately 96% in the nine months ended December 31, 1996 and
1997.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expense for the nine months ended December 31, 1997 increased by
$1.9 million, or 35%, compared to the same period in 1996. This increase was the
result of the Company's expansion of its sales and marketing activities, as well
as increases in administrative and support staff levels and salaries and
benefits in response to volume growth in all services. In spite of the increase,
selling, general and administrative expenses as a percentage of revenues
decreased from 3.0% for the nine months ended December 31, 1996 to 2.3% in the
same period in 1997 as the result of greater economies of scale and due to the
increase in revenues associated with the Company's claims processing services.
Additional revenues generated by clients utilizing the Company's network
pharmacy providers do not result in an increase in selling, general and
administrative expenses.
-10-
<PAGE> 12
INTEREST INCOME AND INTEREST EXPENSE. Interest income, net of interest
expense, for the nine months ended December 31, 1997 increased $1.5 million
compared to the same period in 1996. The increase resulted from cash management
programs which utilized the Company's short-term excess cash to generate
interest income through investment in money market funds and high-grade
commercial paper. In addition, the Company's cash balance throughout the nine
months ended December 31, 1997 included the $10.0 million proceeds from the June
1996 issuance of its Series B Preferred Stock and the $19.3 million proceeds
from its October 1996 initial public offering (IPO). These offerings were
completed during the nine months ended December 31, 1996, therefore the proceeds
were not fully invested throughout the 1996 period. A portion of the proceeds
from the IPO were used to retire the Whitney Note and as a result interest
expense decreased $379,000.
INCOME TAXES. For the nine months ended December 31, 1996 and 1997 the
Company recorded income tax expense based upon an estimated, effective tax rate
of 29% and 38%, respectively. The Company had income tax loss carryforwards
available to partially offset income generated in fiscal year ended March 31,
1997, and as a result, lowered the Company's effective tax rate for the nine
months ended December 31, 1996.
NET INCOME PER SHARE. The Company reported diluted net income per share of
$.50 per share for the nine months ended December 31, 1997 compared to $.27 per
share for the same period in 1996. The weighted average shares outstanding were
7.7 million and 10.4 million for the nine months ended December 31, 1996 and
1997, respectively. The increase in the weighted average shares resulted
primarily from the issuance of 2.4 million shares in connection with the
Company's initial public offering in October 1996 and the issuance of Series B
preferred stock in June 1996. The Series B preferred stock is convertible into
1.1 million shares of Common Stock. (See Note 2 for calculation.)
LIQUIDITY AND CAPITAL RESOURCES
As of December 31, 1997, the Company had working capital of $25.6
million. The Company's net cash provided by operating activities was $9.3
million for the nine months ended December 31, 1997 resulting primarily from the
Company's net income of $5.2 million for the period and due to the timing of
receivables and payables resulting from the Company's continued growth. During
the nine months ended December 31, 1997 the Company used cash of $5.4 million
for purchases of property, plant and equipment associated with the growth and
expansion of the Company's systems and facilities. In particular, $2.1 million
was used to expand the automation and capacity of the Company's mail pharmacy
facility. In addition, the mail pharmacy facility, previously leased, was
purchased for $1.5 million during the quarter. The Company anticipates that cash
from operations, combined with the proceeds remaining from its initial public
offering will be sufficient to meet the Company's internal operating
requirements and expansion programs, including capital expenditures, for at
least the next 18 months.
-11-
<PAGE> 13
SUBSEQUENT EVENT
On February 9, 1998, the Company announced the acquisition of
Innovative Medical Research Inc. (IMR), a privately-held clinical trial and
survey research firm based in Towson, Maryland. The transaction is structured as
a merger under which the Company issued 876,078 shares and options to purchase
23,922 shares of its Common Stock in exchange for all the outstanding shares and
options of IMR. It is expected that the acquisition will be accounted for as a
tax-free pooling of interests. Accordingly, at March 31, 1998, all prior period
consolidated financial statements of the Company will be restated to include the
results of operations, financial position and cash flow of IMR as though it had
always been a part of the Company. Financial statements of IMR for the year
ended December 31, 1997 are not available.
FORWARD-LOOKING STATEMENTS
This report contains or may contain forward-looking statements within the
meaning of Section 21E of the Securities Exchange Act of 1934 including
statements of the Company's and management's expectations, intentions, plans and
beliefs, including those contained in or implied by "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the Notes to
Condensed Consolidated Financial Statements. These forward-looking statements,
as defined in Section 21E of the Securities Exchange Act of 1934, are dependent
on certain events, risks and uncertainties that may be outside the Company's
control. These forward-looking statements may include statements of management's
plans and objectives for the Company's future operations and statements of
future economic performance; the Company's capital budget and future capital
requirements, and the Company's meeting its future capital needs; and the
assumptions described in this report underlying such forward-looking statements.
Actual results and developments could differ materially from those expressed in
or implied by such statements due to a number of factors, including, without
limitation, those described in the context of such forward-looking statements,
and the factors set forth in the Company's Form 10-K under the caption "Risk
Factors."
-12-
<PAGE> 14
PART II. OTHER INFORMATION
Items 1-5 are not applicable.
-13-
<PAGE> 15
Item 6. Exhibits and reports on Form 8-K.
No reports on Form 8-K were filed during the quarter ended December 31, 1997.
Exhibits required by Item 601 of S-K:
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBITS
- ----------- --------
<S> <C>
3.1* --- Amended and Restated Certificate of Incorporation of the Company
3.2* --- Amended and Restated Bylaws of the Company
27** --- Financial Data Schedule
</TABLE>
* Previously filed in connection with the Company's Registration Statement on
Form S-1 filed October 8, 1996 (No. 333-06931).
** Filed herewith.
-14-
<PAGE> 16
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, thereunto duly authorized.
ADVANCE PARADIGM, INC.
(Registrant)
Date: February 13, 1998 By: /s/ David D. Halbert
-----------------------
David D. Halbert, Chief Executive Officer,
Chairman of the Board and President
Date: February 13, 1998 By: /s/ Danny Phillips
----------------------
Danny Phillips, Chief Financial Officer,
Senior Vice President, Secretary and
Treasurer (Principal Financial and
Accounting Officer)
-15-
<PAGE> 17
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBITS
- ----------- --------
<S> <C>
3.1* --- Amended and Restated Certificate of Incorporation of the Company
3.2* --- Amended and Restated Bylaws of the Company
27** --- Financial Data Schedule
</TABLE>
* Previously filed in connection with the Company's Registration Statement on
Form S-1 filed October 8, 1996 (No. 333-06931).
** Filed herewith.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE ADVANCE
PARADIGM, INC. FORM 10-Q FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1997 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 55,074
<SECURITIES> 0
<RECEIVABLES> 60,074
<ALLOWANCES> 141
<INVENTORY> 2,614
<CURRENT-ASSETS> 119,245
<PP&E> 14,289
<DEPRECIATION> 4,641
<TOTAL-ASSETS> 142,495
<CURRENT-LIABILITIES> 93,632
<BONDS> 0
0
0
<COMMON> 79
<OTHER-SE> 47,667
<TOTAL-LIABILITY-AND-EQUITY> 142,495
<SALES> 0
<TOTAL-REVENUES> 317,953
<CGS> 0
<TOTAL-COSTS> 304,330
<OTHER-EXPENSES> 7,252
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (2,066)
<INCOME-PRETAX> 8,437
<INCOME-TAX> 3,210
<INCOME-CONTINUING> 5,227
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,227
<EPS-PRIMARY> .65
<EPS-DILUTED> .50
</TABLE>
