UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
Commission File Number 0-26345
CareInsite, Inc.
(Exact name of registrant as specified in its charter)
DELAWARE 22-3630930
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
669 River Drive, Center Two 07407-1361
Elmwood Park, New Jersey (Zip Code)
(Address of principal
executive offices)
Registrant's telephone number, including area code: (201) 703-3400
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 at least the past 90 days. Yes X No __
The number of shares of the registrant's common stock outstanding at
May 12, 2000 was 74,951,840.
<PAGE>
CAREINSITE, INC.
(a Development Stage Company)
Index
-----
<TABLE>
<CAPTION>
<S> <C> <C>
PART I FINANCIAL INFORMATION:
Item 1. Financial Statements Page
----
Consolidated Balance Sheets - March 31, 2000 and June 30, 1999 3
Consolidated Statements of Operations - Three and nine months ended
March 31, 2000 and 1999 and Cumulative from Inception
(December 24, 1996) through March 31, 2000 5
Consolidated Statements of Changes in Stockholders' Equity - for
the Period from Inception (December 24, 1996) through June 30,
1997, the Years ended June 30, 1998 and June 30, 1999
and the nine months ended March 31, 2000 6
Consolidated Statements of Cash Flows - Nine months ended
March 31, 2000 and 1999 and Cumulative from Inception
(December 24, 1996) through March 31, 2000 7
Notes to Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 15
Item 3. Quantitative and Qualitative Disclosures About Market Risk 21
PART II OTHER INFORMATION:
Item 1. Legal Proceedings 22
Item 2. Changes in Securities and Use of Proceeds 22
Item 6. Exhibits and Reports on Form 8-K 23
</TABLE>
DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS
This report contains certain forward looking statements and
information relating to the Company that are based on the beliefs of the
Company's management as well as assumptions made by and information currently
available to the Company's management. When used in this report, the words
"anticipate", "believe", "estimate", "expect", and similar expressions, as they
relate to the Company or the Company's management, are intended to identify
forward looking statements. Such statements reflect the current view of the
Company with respect to future events, are not guarantees of future performance
and are subject to certain risks and uncertainties. These risks and
uncertainties may include: product demand and market acceptance risks; the
feasibility of developing and deploying commercially profitable products and
services; the effect of economic conditions; user acceptance; success of
transactions with third parties; the impact of competitive products, services
and pricing; product development, commercialization and technological
difficulties; the effect of government regulation of the Internet or healthcare
e-commerce services; the outcome of litigation; risks associated with the
integration and management of acquired businesses; the ability of the Company to
attract and retain qualified personnel; risks associated with the Company's
pending merger with Healtheon/WebMD Corporation; and other risks described
elsewhere herein, including those set forth in "--Management's Discussion and
Analysis of Financial Condition and Results of Operations" below, and in the
Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1999
(the "Company's Form 10-K"). Should one or more of these risks or uncertainties
materialize, or should underlying assumptions prove incorrect, actual results
may vary materially from those described herein as anticipated, believed,
estimated, or expected. The Company does not intend to update these forward
looking statements.
2
<PAGE>
CAREINSITE, INC.
(a Development Stage Company)
CONSOLIDATED BALANCE SHEETS
(in thousands)
ASSETS
<TABLE>
<CAPTION>
March 31, June 30,
2000 1999
------------- ----------------
(unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents ............................................. $ 19,064 $ 64,019
Marketable securites .................................................. 49,524 54,670
Accounts receivable, net of allowances of $70 and $6
at March 31, 2000 and June 30, 1999, respectively .................. 3,018 532
Accounts and notes receivable from affiliate .......................... - 1,591
Current portion of prepaid marketing and licensing agreements ......... 7,709 -
Other current assets .................................................. 4,437 554
------------ ------------
Total current assets ........................................ 83,752 12,366
------------ ------------
PROPERTY, PLANT AND EQUIPMENT:
Leasehold improvements ................................................ 893 732
Equipment ............................................................. 6,514 3,454
Furniture and fixtures ................................................ 899 427
Construction in progress .............................................. 7,690 -
------------ ------------
15,996 4,613
Less: Accumulated depreciation ........................................ (3,476) (2,033)
------------ ------------
Property, plant and equipment, net .......................... 12,520 2,580
------------ ------------
CAPITALIZED SOFTWARE DEVELOPMENT COSTS, net of
accumulated amortization of $2,089 at March 31, 2000 ................. 29,241 31,330
OTHER ASSETS:
Goodwill and other intagible assets, net of accumulated amortization
of $8,004 and $1,903 at March 31, 2000 and June 30, 1999,
respectively ....................................................... 153,368 22,475
Prepaid marketing and licensing agreements ........................... 1,846 -
Other ................................................................ 8,710 2,202
------------ ------------
Total other assets ......................................... 163,924 24,677
------------ ------------
$ 289,437 $ 179,953
============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated statements
3
<PAGE>
CAREINSITE, INC.
(a Development Stage Company)
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
March 31, June 30,
2000 1999
------------------ ------------------
(unaudited)
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable................................................ $ 3,745 $ 764
Payable to Parent............................................... 1,181 853
Obligations under capital leases................................ 905 -
Accrued liabilities............................................. 15,656 4,912
-------------- -----------
Total current liabilities........................... 21,487 6,529
-------------- ------------
LONG-TERM DEBT
Long-Term Debt, net of current portion............................. 2,976 -
Obligations under capital leases, net of current portion........... 668 -
-------------- -----------
3,644 -
-------------- -----------
OTHER LIABILITIES 3,482 -
-------------- -----------
COMMITMENTS AND CONTINGENCIES (NOTE 8)
CONVERTIBLE REDEEMABLE PREFERRED STOCK 5,598 -
-------------- -----------
REDEEMABLE COMMON STOCK 35,744 -
-------------- -----------
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value, 30,000,000 shares authorized;
100 shares of Series A Preferred Stock issued and outstanding
at March 31, 2000............................................... - -
Common stock, $.01 par value, authorized 300,000,000 shares;
74,951,840 and 70,410,134 shares issued and outstanding
at March 31, 2000 and June 30, 1999, respectively................ 749 704
Additional paid-in capital.......................................... 314,562 247,932
Deficit accumulated during the development stage.................... (95,347) (75,490)
Accumulated other comprehensive (loss) income....................... (482) 278
------------------ ------------
Total stockholders' equity.............................. 219,482 173,424
------------------ ------------
$ 289,437 $ 179,953
================== ============
</TABLE>
The accompanying notes are an integral part of these consolidated statements
4
<PAGE>
CAREINSITE, INC.
(a Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
Cumulative
from Inception
Three Months Ended Nine Months Ended (Dec. 24, 1996)
March 31, March 31, Through
--------------------- --------------------
2000 1999 2000 1999 March 31, 2000
-------- -------- -------- ------- ----------------
<S> <C> <C> <C> <C> <C>
Net revenue........................................ $ 1,651 $ - $ 3,236 $ - $ 3,607
Service revenue to affiliates...................... - 213 1,573 213 2,566
-------- -------- -------- ------- ----------------
Total revenues............................. 1,651 213 4,809 213 6,173
-------- -------- -------- ------- ----------------
Costs and Expenses:
Cost of revenues............................... 787 - 1,312 - 1,381
Cost of services to affiliates................. - 213 1,573 213 2,566
Research and development expenses.............. 8,386 1,958 16,287 7,646 39,204
Sales and marketing expenses................... 5,565 813 12,076 1,428 16,869
General and administrative expenses............ 3,450 1,147 9,805 2,855 17,787
Litigation costs............................... 350 2,500 1,450 2,500 5,750
Acquired in-process research and development... - - - - 32,185
Depreciation and amortization.................. 8,924 275 11,609 1,162 15,543
-------- -------- -------- ------- ----------------
Total costs and expenses................... 27,462 6,906 54,112 15,804 131,285
-------- -------- -------- ------- ----------------
Loss from operations............................... (25,811) (6,693) (49,303) (15,591) (125,112)
Other income, net.................................. 1,534 19 4,801 110 5,120
Gain on sale of investment......................... - - 25,511 - 25,511
-------- -------- -------- ------- ----------------
Net loss........................................... (24,277) (6,674) (18,991) (15,481) (94,481)
Accretion on Series A Preferred Stock.............. (433) - (866) - (866)
-------- -------- -------- ------- ----------------
Net loss available to common stockholders.......... $(24,710) $(6,674) $(19,857) $(15,481) $ (95,347)
========= ======= ======== ======== ================
Net loss per share available to common stockholders,
basic and diluted.......................... $ (0.34) $ (0.11) $ (0.28) $ (0.29) $ (1.69)
========= ======= ======== ======== ================
Weighted average shares outstanding, basic and diluted.... 73,489 62,500 71,436 54,208 56,504
========= ======= ======== ======== ================
</TABLE>
The accompanying notes are an integral part of these consolidated statements
5
<PAGE>
CAREINSITE, INC.
(a Development Stage Company)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(in thousands)
<TABLE>
<CAPTION>
Common Stock
--------------------
Number Additional Stock
of Paid- In Subscription
Shares Amount Capital Receivable
------ ------ ------- ----------
<S> <C> <C> <C> <C>
Capitalization at Inception, December 24, 1996 ........... 50,063 $ 501 $ 9,499 $ (10,000)
Contribution of Avicenna assets .................... -- -- 28,817 --
Contribution of CareAgents stock ................... -- -- 3,250 --
Net loss ........................................... -- -- -- --
Capital contributions from Parent .................. -- -- 11,856 --
--------- --------- --------- ---------
Balance at June 30, 1997 ................................. 50,063 501 53,422 (10,000)
--------- --------- --------- ---------
Net loss ........................................... -- -- -- --
Capital contributions from Parent .................. -- -- 16,567 --
--------- --------- --------- ---------
Balance at June 30, 1998 ................................. 50,063 501 69,989 (10,000)
--------- --------- --------- ---------
Net loss ........................................... -- -- -- --
Unrealized gains on marketable securities .......... -- -- -- --
Total comprehensive loss ...................... -- -- -- --
Settlement of stock subscription receivable ........ -- -- -- 10,000
Common stock issued to Cerner ...................... 13,148 131 32,455 --
Issuance of warrants to THINC ...................... -- -- 1,700 --
Issuance of warrants to Horizon .................... -- -- 6,725 --
Sale of common stock in initial public offering, net
of underwriting discount and offering
expenses of $10,509 .............................. 6,498 65 106,381 --
Common stock issued to Parent ...................... 701 7 11,207 --
Capital contributions from Parent .................. -- -- 19,475 --
--------- --------- -- ------- ---------
Balance at June 30, 1999 ................................. 70,410 704 247,932 --
--------- --------- -- ------- ---------
Net loss ........................................... -- -- -- --
Accretion on Series A Preferred Stock .............. -- -- -- --
Unrealized losses on marketable securities ......... -- -- -- --
Total comprehensive loss ...................... -- -- -- --
Issuance of warrants ............................... -- -- 555 --
Discount on issuance of Series A Preferred Stock ... -- -- 5,268 --
Common stock issued for the acquisitions of
THINC, PTG, SCINET EDI Business and Netics ....... 4,542 45 59,357 --
Capital contributions from Parent .................. -- -- 1,450 --
--------- --------- --------- ---------
Balance at March 31, 2000 (unaudited) .................... 74,952 $ 749 $ 314,562 $ --
========= ========= ========= =========
Deficit Accumulated
Accumulated Other Total
During the Comprehensive Stockholders'
Development Stage Income (Loss) Equity
----------------- ------------- ------
<C> <C> <C>
Capitalization at Inception, December 24, 1996 ........... $ -- $ -- $ --
Contribution of Avicenna assets .................... -- -- 28,817
Contribution of CareAgents stock ................... -- -- 3,250
Net loss ........................................... (42,357) -- (42,357)
Capital contributions from Parent .................. -- -- 11,856
--------- --------- ---------
Balance at June 30, 1997 ................................. (42,357) -- 1,566
--------- --------- ---------
Net loss ........................................... (10,335) -- (10,335)
Capital contributions from Parent .................. -- -- 16,567
--------- --------- ---------
Balance at June 30, 1998 ................................. (52,692) -- 7,798
--------- --------- ---------
Net loss ........................................... (22,798) -- (22,798)
Unrealized gains on marketable securities .......... -- 278 278
---------
Total comprehensive loss ...................... (22,520)
Settlement of stock subscription receivable ........ -- -- 10,000
Common stock issued to Cerner ...................... -- -- 32,586
Issuance of warrants to THINC ...................... -- -- 1,700
Issuance of warrants to Horizon .................... -- -- 6,725
Sale of common stock in initial public offering, net
of underwriting discount and offering
expenses of $10,509 .............................. -- -- 106,446
Common stock issued to Parent ...................... -- -- 11,214
Capital contributions from Parent .................. -- -- 19,475
--------- --------- ---------
Balance at June 30, 1999 ................................. (75,490) 278 173,424
--------- --------- ---------
Net loss ........................................... (18,991) -- (18,991)
Accretion on Series A Preferred Stock .............. (866) -- (866)
Unrealized losses on marketable securities ......... -- (760) (760)
---------
Total comprehensive loss ...................... -- -- (20,617)
Issuance of warrants ............................... -- -- 555
Discount on issuance of Series A Preferred Stock ... -- -- 5,268
Common stock issued for the acquisitions of
THINC, PTG, SCINET EDI Business and Netics ....... -- -- 59,402
Capital contributions from Parent .................. -- -- 1,450
--------- --------- ---------
Balance at March 31, 2000 (unaudited) .................... $ (95,347) $ (482) $ 219,482
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated statements
6
<PAGE>
CAREINSITE, INC.
(a Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
March 31, (Dec. 24, 1996)
---------------------- Through
2000 1999 March 31, 2000
--------- ---------- -------------------
<S> <C> <C> <C>
Cash Flows Used In Operating Activities:
Net loss............................................... $(18,991) $ (15,481) $ (94,481)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization................... 11,609 1,162 15,543
Gain on sale of investment...................... (25,511) - (25,511)
Write-off of acquired in-process research
and development costs........................... - - 32,185
Write-off of acquired intellectual property and
software technologies..................... - - 5,228
Write-off of capitalized software costs......... - 2,381 2,381
Net loss from investment in unconsolidated
affiliate....................................... 895 212 1,491
Changes in operating assets and liabilities:
Accounts and affiliate receivable, net...... (3,151) - (4,420)
Prepaid and other current assets............ (10,798) (230) (11,208)
Other assets................................ (3,157) - (3,747)
Accounts and Parent payables................ 2,733 (347) 4,320
Accrued liabilities......................... (522) (144) (1,013)
-------- -------- ---------
Net cash used in operating activities..... (46,893) (12,447) (79,232)
-------- -------- ---------
Cash Flows Used In Investing Activities:
Purchases of property, plant and equipment...... (9,411) (124) (12,807)
Software development costs...................... - (7,769) (12,741)
Purchases of marketable securities.............. (50,000) - (104,392)
Maturities and redemptions of marketable
securities...................................... 54,545 - 54,545
Acquisition of Med-Link, net of cash acquired... - - (13,980)
Acquisition of THINC, PTG, SCINET EDI
Business and Netics, net of cash acquired....... (25,914) - (25,914)
Investment in unconsolidated affiliate.......... - (1,350) (1,350)
Proceeds from sale of investment................ 27,511 - 27,511
Purchase of other investments................... (6,000) - (6,000)
-------- -------- ---------
Net cash used in investing activities........ (9,269) (9,243) (95,128)
-------- -------- ---------
Cash Flows Provided By Financing Activities:
Proceeds from stock subscription receivable..... - 10,000 10,000
Proceeds from sale of Series
A Preferred Stock and Option.................... 10,000 - 10,000
Proceeds from sale of common stock.............. - - 131,366
Contributions from Parent....................... 1,450 16,433 42,301
Payments on long-term debt...................... (243) - (243)
-------- -------- ---------
Net cash provided by financing activities.... 11,207 26,433 193,424
-------- -------- ---------
Change in cash and cash equivalents........................ (44,955) 4,743 19,064
Cash and cash equivalents, beginning of period............. 64,019 315 -
-------- -------- ---------
Cash and cash equivalents, end of period................... $ 19,064 $ 5,058 $ 19,064
========= ======== =========
Supplemental disclosure of non-cash
investing and financing activities:
Contribution of Avicenna assets from Parent............ $ - $ - $ 28,817
========== ========= =========
Contribution of CareAgents stock from Parent........... $ - $ - $ 3,250
========== ========= =========
Contribution of acquired intellectual
property and software
technologies from Parent............................ $ - $ - $ 5,228
========== ========= =========
Contribution of note receivable from Parent............ $ - $ - $ 2,000
========== ========= =========
Issuance of equity for software technology
licensed from Cerner................................... $ - $20,800 $ 20,800
========== ========= =========
Conversion of note receivable into
a stock investment..................................... $ - $ 2,000 $ 2,000
========== ========= =========
Issuance of warrants................................... $ 555 $ 1,700 $ 8,980
========== ========= =========
Interest paid.......................................... $ 54 $ - $ 54
========== ========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated statements
7
<PAGE>
CAREINSITE, INC.
(a Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) Organization and Basis of Presentation
The accompanying unaudited consolidated financial statements include
the accounts of CareInsite, Inc. and its subsidiaries ("CareInsite" or the
"Company"), after elimination of intercompany accounts and transactions. These
statements have been prepared in accordance with the rules and regulations of
the Securities and Exchange Commission and do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. These consolidated financial statements should be read in
conjunction with the audited consolidated financial statements and notes thereto
included in the Company's Form 10-K for the fiscal year ended June 30, 1999. The
results of the interim periods presented herein are not necessarily indicative
of the results to be expected for any other interim period or the full year. In
the opinion of management, the information furnished reflects all adjustments
(consisting only of normal recurring accruals) considered necessary for a fair
presentation of the results for the reported interim periods.
On December 24, 1996, Medical Manager Corporation (formerly known as
Synetic, Inc., herein referred to as "Medical Manager" or the "Parent") acquired
Avicenna Systems Corporation, a privately held, development stage company that
marketed and built Intranets for managed healthcare plans, integrated healthcare
delivery systems and hospitals. The acquisition of Avicenna marked the inception
of the Parent's healthcare electronic commerce business (the "Inception"). On
January 23, 1997, the Parent acquired CareAgents, Inc. ("CareAgents"), a
privately held, development stage company engaged in developing Internet-based
clinical commerce applications. On November 24, 1998, the Parent formed Synetic
Healthcare Communications, Inc., which was subsequently renamed CareInsite, Inc.
On January 2, 1999, the Parent contributed the stock of CareAgents to Avicenna.
Concurrently, Avicenna contributed the stock of CareAgents and substantially all
of Avicenna's other assets and liabilities to the Company (the "Formation"). The
Parent also contributed $10,000,000 in cash to the Company. The Formation has
been accounted for using the carryover basis of accounting and the Company's
financial statements include the accounts and operations of Avicenna and
CareAgents for all periods presented from the date each entity was acquired. As
of March 31, 2000, Medical Manager owned 68.0% of the outstanding common stock
of the Company.
On June 16, 1999, the Company completed its initial public offering of
6,497,500 shares of its common stock (the "Offering"). The net proceeds of the
Offering were $106,446,000.
The Company is in the development stage. The Company intends to
provide a broad range of healthcare electronic commerce services which it
believes will leverage Internet technology to improve communication among
physicians, payers, suppliers and patients. The provision of products and
services using Internet technology in the healthcare electronic commerce
industry is subject to risks, including, but not limited to, those associated
with competition from existing companies offering the same or similar services,
uncertainty with respect to market acceptance of its products and services,
development risks, rapid technological change, management of growth, the ability
of the Company to attract and retain qualified personnel, availability of future
capital and minimal previous record of operations or earnings.
On February 13, 2000, the Company and Medical Manager signed
definitive agreements (the "Healtheon/WebMD Agreements") to be acquired by
Healtheon/WebMD Corporation ("Healtheon/WebMD"). Under the terms of the
agreements, Healtheon/WebMD will pay 1.3 shares of Healtheon/WebMD common stock
for each share of the Company's common stock not owned by Medical Manager and
1.65 shares of Healtheon/WebMD common stock for each share of Medical Manager's
common stock. In light of the Company's pending acquisistion by Healtheon/WebMD,
the Company made certain strategic decisions, including the decision to delay
deployment of certain of its healthcare e-commerce services. During this period
of delay, the Company has been conducting a review of its systems and
applications to determine, among other things, what additional efforts are
required to fully develop certain services for broad deployment to customers. As
part of this review, the Company is also evaluating (i) the possible integration
of its technology with Healtheon/WebMD's techonology if the Company's pending
acquisition by Healtheon/WebMD is completed, (ii) the recently acquired
technology assets of Provider Technology Group and the possible integration of
those assets into the Company's overall technology platform, (iii) the unique
requirements of existing customers and potential customers with whom the Company
is currently in discussions and (iv) the limited availability of cost-effective,
high-speed Internet connections into physicians' offices in our target
geographic markets, to assess any potential impact that they may have on its
development efforts. As a result of these factors and risks and uncertainties
described herin and in the Company's Form 10-K, the Company believes that the
development and deployment of certain services will take longer and cost more
than previously expected.
Certain reclassifications have been made to prior year amounts to
conform to the current year presentation.
(2) Definitive Agreement with Healtheon/WebMD Corporation
8
<PAGE>
On February 13, 2000, Medical Manager and CareInsite signed definitive
agreements to be acquired by Healtheon/WebMD Corporation ("Healtheon/WebMD").
Under the terms of the agreements, Healtheon/WebMD will pay 1.65 shares of
Healtheon/WebMD common stock for each share of Medical Manager's common stock
and 1.3 shares for each share of CareInsite's common stock not owned by Medical
Manager. Completion of the acquisitions, which will be accounted for as
purchase transactions, is subject to certain conditions, including regulatory
and shareholder approvals.
(3) Acquisitions:
The Health Information Network Connection LLC ("THINC")-
In January 2000, the Company acquired the 80% equity interest in THINC
owned by Empire Blue Cross and Blue Shield, Group Health Incorporated, HIP
Health Plans and Greater New York Hospital Association (the "THINC founding
members") for 600,800 shares of Company common stock in a transaction valued at
$45,672,000. The fair value of the shares, as determined by management, was
$76.018 per common share. THINC is a New York-based provider of software and
services to facilitate the exchange of healthcare information in the New York
metropolitan area among physicians, hospitals, laboratories, and payers.
Concurrently with the acquisition, warrants to purchase an aggregate of
3,247,294 shares of the Company's common stock, which represented the THINC
founding members' interest in the warrants issued by the Company to THINC in
January 1999, were distributed to the THINC founding members. Immediately
following this transaction, the THINC founding members exercised their warrants
in full. All shares including those issued upon the exercise of the warrants are
subject to certain restrictions on transfer. Simultaneously, the Company
acquired Cerner Corporation's ("Cerner") 2% non-voting ownership interest in
THINC for a note payable of $2,735,000. The note bears interest at 5.8% per
annum and is repayable on demand after September 2002.
The acquisition of THINC was accounted for using the purchase method of
accounting with the purchase price being allocated to assets acquired and
liabilities assumed based on their fair values. The goodwill related to the
transaction will be amortized over a three-year period. THINC's results of
operations have been included in the Company's financial statements as of
January 1, 2000.
A preliminary summary of the purchase price allocation is as follows
(in thousands):
Current assets.................................... $ 1,605
Goodwill.......................................... 61,412
Other noncurrent assets........................... 1,954
-----------
$ 64,971
===========
Current liabilities............................... $ 13,646
Noncurrent liabilities............................ 5,653
-----------
$ 19,299
===========
Provider Technology Group ("PTG")-
On February 14, 2000, the Company agreed to acquire substantially all
of the assets of Provider Technology Group ("PTG"), the e-commerce network of
Blue Cross Blue Shield of Massachusetts ("BCBSMA"), for $26,500,000 in cash and
651,968 shares of the Company's common stock. This acquisition was completed on
March 27, 2000. Pursuant to the asset purchase agreement, if BCBSMA
9
<PAGE>
does not realize at least $22,500,068 in proceeds from the sale of 325,984 of
the common shares issued, the Company has agreed to pay BCBSMA an amount equal
to the shortfall in cash. Accordingly, the fair value of 325,984 of the common
shares issued was $69.022 per share. The fair value of the remaining 325,984
shares of common stock, as determined by management, was $40.646 per share.
Based on the March 31, 2000 closing price for the Company's common
stock of $23.375, the Company would be obligated to remit $14,880,192 to BCBSMA
pursuant to the Company's guarantee of at least $22,500,068 in proceeds from the
sale of 325,984 of the common shares issued to acquire PTG.
BCBSMA has the right to require the Company to purchase from BCBSMA
325,984 shares of Company common stock at $69.022 per common share if a
registration statement for these shares has not been declared effective on or
before November 15, 2000 (the "First Put"). Additionally, if the registration
statement referred to above is not declared effective by December 29, 2000,
BCBSMA has the right to require the Company to purchase up to 651,968 shares of
Company common stock from BCBSMA, including any shares not purchased by the
Company pursuant to the First Put, for a price equal to the average closing
price per share of Company common stock for the ten successive trading days
ending December 29, 2000. The shares covered by this arrangement are classified
as Redeemable Common Stock in the accompanying balance sheet as of March 31,
2000.
The acquisition of PTG was accounted for using the purchase method of
accounting with the purchase price being allocated to assets acquired and
liabilities assumed based on their fair values. The goodwill related to the
transaction will be amortized over a five year period. PTG's results of
operations have been included in the Company's financial statements as of March
27, 2000.
A preliminary summary of the purchase price allocation is as follows
(in thousands):
Current assets.................................... $ 114
Goodwill.......................................... 64,406
Other noncurrent assets........................... 65
------------
$ 64,585
============
Current $ 2,335
liabilities...............................
============
Scinet EDI Business-
In March 2000, the Company acquired the assets of the electronic data
interchange business of Scinet Inc. ("Scinet EDI Business") for 182,197 shares
of Company common stock from Medical Manager in a transaction valued at
$12,000,000. The fair value of the shares, as determined by management, was
$65.8628 per common share. The Scinet EDI Business is an Arizona based provider
of electronic data interchange claims clearing, statement processing and
remittance advice postage services to medical practices.
The acquisition of the Scinet EDI Business was accounted for using the
purchase method of accounting with the purchase price being allocated to assets
acquired and liabilities assumed based on their fair values. Goodwill of
$12,120,000 related to the transaction will be amortized over a three year
period. The results of operations of the Scinet EDI Business have been included
in the Company's financial statements as of March 7, 2000.
10
<PAGE>
Netics-
In March 2000, the Company acquired the assets of Netics, Inc.
("Netics") for 35,125 shares of Company common stock in a transaction valued at
approximately $1,802,000. The fair value of the shares issued, as determined by
management, was $51.2917 per common share. Netics is a Maryland based developer
of web-enabled software which is used in the provision of electronic data
interchange claims clearing, statement processing and remittance advice postage
and other services for medical practices.
The acquisition of Netics was accounted for using the purchase method
of accounting with the purchase price allocated to assets acquired and
liabilities assumed based on their fair values. Goodwill of $1,934,000 related
to the transaction will be amortized over a three year period. The results of
operations of Netics have been included in the Company's financial statements as
of March 13, 2000.
The following summary, prepared on a pro forma basis, combines the
results of operations of the Company, THINC and PTG assuming the acquisitions
were consummated at the beginning of the periods presented. The pro forma
financial data does not purport to represent what the Company's results of
operations actually would have been if these transactions had been consummated
on the dates or for the periods presented, or what such results will be for any
future date or for any future period. The acquisitions of the Scinet EDI
business and Netics were not material to the financial statements and results of
operations of the Company, therefore, they are not included in the table below.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31
------------------------ -----------------
2000 1999 2000 1999
------------------------ ----------------------
(in thousands, except per share data)
<S> <C> <C> <C> <C>
Revenue.............................. $ 2,673 $ 1,063 $ 6,446 $ 3,056
Net loss available to common
shareholders.................... (35,685) (18,360) (55,913) (52,191)
Net loss per share available to
common stockholders,
basic and diluted............... $ (0.46) $ (0.27) $ (0.74) $ (0.89)
</TABLE>
(4) America Online Agreement:
In September 1999, the Company entered into a strategic alliance with
America Online, Inc. ("AOL") for the Company to be AOL's exclusive provider of a
comprehensive suite of services that connect AOL's members, as well as
CompuServe members and visitors to AOL's Web-based services, Netcenter, AOL.COM
and Digital City (collectively, "AOL Members"), to physicians, health plans,
pharmacy benefit managers, covered pharmacies and labs. Under the agreement, the
Company and AOL have agreed to create co-branded sites which will enable AOL
Members to manage their healthcare through online communication with their
physicians, health plans, pharmacy benefit managers, covered pharmacies and
labs. The agreement has an initial term of four years, subject to the rights of
the parties to terminate the agreement under certain conditions, including the
right of AOL to terminate the agreement upon the completion of the Company's
pending merger with Healtheon/WebMD. Through this arrangement, AOL Members will
have access to the Company's secure, real-time services being developed that
allow them, among other things, to select and enroll in health plans, choose
their providers, schedule appointments, renew and refill plan approved
prescriptions, view lab results, review claims status, receive explanation of
benefits, review patient education materials provided by their health plans,
understand plan policies and procedures and receive plan treatment
authorizations. The Company and AOL have also agreed to collaborate in sales and
marketing to the healthcare industry, and they intend to leverage their alliance
into cross-promotional and shared advertising revenue initiatives. Under the
financial terms of
11
<PAGE>
the arrangement, the Company has agreed to make $30,000,000 of guaranteed
payments to AOL over three years. The Company made the first payment of
$10,000,000 in September 1999. The Company is required to make the remaining
guaranteed payments of $10,000,000 on August 31, 2000 and $10,000,000 on August
31, 2001. If the pending merger with Healtheon/WebMD (Note 2) is completed, AOL
will have the right to terminate its strategic alliance with CareInsite, in
which case the remaining guaranteed payments due to AOL under the agreement
shall become immediately payable by the Company.
The Company also entered into a four-year agreement with Netscape
Communications Corporation ("Netscape") under which the Company acquired a
nonexclusive and nontransferable right and license for the use of an unlimited
quantity of the Netscape and Sun Microsystems software offered via the Sun
Microsystems-Netscape Alliance. The cost of the products was $3,750,000, with a
maintenance fee of $750,000 in the initial year and an option to purchase
maintenance at $1,000,000 per year in the second, third, and fourth years of the
agreement.
Under a separate agreement entered into in September 1999, AOL
purchased 100 shares of the Company's newly issued Series A Convertible
Redeemable Preferred Stock ("Series A Preferred Stock") at a price of $100,000
per share, or $10,000,000 of Series A Preferred Stock in the aggregate, with an
option to purchase up to an additional 100 shares of Series A Preferred Stock in
September 2000 ("Series A Preferred Option") at the same price. At the option of
AOL, in March 2002, the Series A Preferred Stock is either redeemable in whole
for $100,000 per share in cash or convertible in whole, on a per share basis,
into (i) the number of shares of the Company's common stock equal to $100,000
divided by $49.25 (or 2,030.5 shares) and (ii) a warrant exercisable for the
same number of shares of the Company's common stock, or 2,030.5 shares, at a
price of $49.25 per share. In the event that AOL elects to convert the 100
shares of Series A Preferred Stock it purchased in September 1999, it would
receive 203,046 shares of the Company's common stock and a warrant exercisable
into an additional 203,046 shares at $49.25 per share. Prior to March 2002, AOL
has the right to require the Company to redeem the Series A Preferred Stock in
whole at $100,000 per share in the event of certain changes in control of the
Company, which would not include the pending mergers of the Company and Medical
Manager with Healtheon/WebMD under the Healtheon/WebMD Agreements. The Series A
Preferred Stock is non-voting except under certain extraordinary circumstances,
and no dividend is payable on the Series A Preferred Stock unless the Company
declares a dividend on its common stock.
The proceeds received of $10,000,000 were allocated based on the
relative fair values of the Series A Preferred Stock and the Series A Preferred
Option, as determined by management. Accordingly, $7,608,000 was allocated to
the Series A Preferred Stock and $2,392,000 was allocated to the Series A
Preferred Option. Additionally, as the Series A Preferred Stock is convertible
into equity securities with a value in excess of $10,000,000 (the "beneficial
conversion feature"), a portion of the proceeds has been allocated to the
beneficial conversion feature and is reflected as a discount to the Series A
Preferred Stock. The value of the beneficial conversion feature, as determined
by management was $5,268,000. The discount is being amortized through March 2002
using the effective interest method and is reflected in the accompanying
statement of operations as Accretion on Series A Preferred Stock. The Series A
Preferred Stock and Series A Preferred Option are classified as Convertible
Redeemable Preferred Stock in the accompanying balance sheets.
(5) Investments
On February 4, 2000, the Company made a $5,000,000 loan to a privately
held company under a senior convertible note. On March 20, 2000, the note was
converted into 1,420,454 shares of borrower Series D Preferred Stock.
On February 4, 2000, the Company acquired 10,000 shares of Series B
Preferred stock and 56,088 Series B warrants of another privately held company
for an aggregate of $1,000,000.
12
<PAGE>
On January 7, 2000 and February 25, 2000, the Company loaned $750,000 and
$250,000, respectively, to a third privately held company. These loans bear
interest at 8% per annum and have a maturity date of September 7, 2000.
(6) Fair Value of Financial Instruments
Financial instruments that potentially subject the Company to a
concentration of credit risk consist of cash, cash equivalents, short-term
marketable securities and accounts receivable. Cash, cash equivalents and
short-term marketable securities are deposited with high quality financial
institutions. All highly liquid investments with an original maturity from date
of purchase of three months or less are considered to be cash equivalents. The
Company's cash and cash equivalents are invested in various investment-grade
money market accounts. The Company's short-term marketable securities are
invested in a U.S. Federal Agency note maturing in June 2001.
Gross unrealized losses on the marketable securities were $482,000 at
March 31, 2000 and gross unrealized gains on the marketable securities were
$278,000 at June 30, 1999 and are included as part of accumulated other
comprehensive income.
Management determines the appropriate classification of debt and equity
securities at the time of purchase and reevaluates such designation as of each
balance sheet date. Marketable debt and equity securities are considered
available-for-sale, and are carried at their fair value, with the unrealized
gains and losses reported net-of-tax as other comprehensive income or loss.
Realized gains and losses and declines in value judged to be
other-than-temporary on available-for-sale securities are included in other
income. The cost of securities sold is based on specific identification.
Interest and dividends on securities classified as available-for-sale are
included in other income.
(7) Earnings per Share
Basic net loss per share and diluted net loss per share are presented
in conformity with SFAS No. 128, "Earnings per Share" and SEC Staff Accounting
Bulletin No. 98 ("SAB 98"). Under SFAS No. 128 and SAB 98, basic net loss per
share is computed by dividing net loss by the weighted-average number of
common shares outstanding for the period. It also requires a reconciliation of
the numerator and denominator of the basic net loss per share to the numerator
and denominator of the diluted net loss per share. As of March 31, 2000, the
calculation of diluted net loss per share excludes an aggregate of 7,423,400
shares of common stock issuable upon exercise of employee stock options,
warrants to purchase an aggregate of 1,618,580 shares of common stock, options
and warrants to purchase an aggregate of 812,184 shares of common stock reserved
for issuance upon the conversion of shares of Series A Preferred Stock and an
aggregate of 2,503,125 shares of common stock issuable to Cerner, as the effect
of such shares would be anti-dilutive. As of March 31, 1999, the calculation of
diluted net loss per share excludes an aggregate of 5,067,563 warrants to
purchase common stock and an aggregate of 2,503,125 shares of common stock
issuable to Cerner, as the effect of such shares would be anti-dilutive.
(8) Commitments and Contingencies
On February 18, 1999, Merck & Co., Inc. ("Merck") and Merck-Medco
Managed Care, L.L.C. ("Merck-Medco") filed a complaint in the Superior Court of
New Jersey against the Company, Medical Manager, Martin J. Wygod, Chairman of
the Company, and Paul C. Suthern, Roger C. Holstein and Charles A. Mele,
officers and/or directors of the Company. Merck and Merck-Medco asserted that
the Company, Medical Manager and the individual defendants were in violation of
certain non-competition, non-solicitation and other agreements. The complaint
sought to enjoin the Company, Medical Manager and the individual defendants from
conducting the Company's healthcare e-commerce business and from soliciting
Merck-Medco's customers. A hearing was held on March 22, 1999 on the plaintiffs'
application for a preliminary injunction. On April 15, 1999, the Superior Court
denied that application. In March 2000, the Superior Court ruled in favor of the
Company, Medical Manager and Messrs. Wygod, Suthern,
13
<PAGE>
Holstein and Mele and entered an order dismissing with prejudice all of the
plaintiffs' claims. The Court's orders terminate Merck's and Merck-Medco's right
to seek any claim for injunctive relief or damages arising out of the Company's
and Medical Manager's activities to deploy the Company's healthcare e-commerce
services. The Company's and Medical Manager's counterclaims against Merck and
Merck-Medco are still pending.
The Company has recorded $350,000, $2,500,000, $1,450,000 and
$2,500,000 in litigation costs associated with the Merck and Merck-Medco
litigation in the three months ended March 31, 2000 and March 31, 1999 and the
nine months ended March 31, 2000 and March 31, 1999, respectively.
On March 14, 2000, the Company was served with a summons in a lawsuit
which was filed on February 17, 2000, against the Company, Medical Manager and
certain of their officers and directors, among other parties, in the New Jersey
Superior Court, Chancery Division, in Bergen County. The plaintiff purports to
be a holder of CareInsite common stock. The lawsuit, captioned Ina Levy, et al.
vs. Martin J. Wygod, et al., purports to bring an action on behalf of the
plaintiff and others similarly situated to enjoin the defendants from
consummating the proposed mergers of the Company and Medical Manager with
Healtheon/WebMD (the "Mergers"). The plaintiff alleges that the defendants have
breached their fiduciary duties in that the proposed Mergers favor the interests
of Medical Manager and its shareholders over the interests of the Company's
minority shareholders. The plaintiff also alleges that the proposed Mergers
provide the defendants and other Medical Manager shareholders with a premium
which exceeds the premium provided to the Company's minority shareholders. The
lawsuit seeks, among other things, an injunction prohibiting the proposed
Mergers unless certain mechanisms are implemented by the Company, as well as
plaintiff's costs and disbursements. The Company believes that this lawsuit is
without merit and intends to vigorously defend against it.
In the normal course of business, the Company is involved in various
claims and legal proceedings. While the ultimate resolution of these matters has
yet to be determined, the Company does not believe that their outcome will have
a material adverse effect on its financial condition or results of operations.
(9) Other
On March 16, 2000, the Company signed a binding letter of intent with
Medical Mutual of Ohio ("MMO") to acquire MMO's provider connectivity business
for 405,318 shares of CareInsite Common Stock. Under the terms of the binding
letter of intent, if MMO does not realize at least $10,000,000 in proceeds from
the sale of 202,659 of the common shares to be issued at closing, the Company
has agreed to pay MMO an amount equal to the shortfall in cash.
14
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Overview
The Company is in the initial stages of deploying certain of its
healthcare e-commerce services. The market for the Company's services is
unproven. These factors make it difficult to evaluate the Company's business and
prospects. The Company has incurred substantial operating losses since the
Company's inception and there can be no assurance that the Company will generate
significant revenues or profitability in the future. The Company intends to
continue to increase its expenditures primarily in the areas of development,
sales and marketing, data center operations and customer support. As a result,
the Company expects to incur substantial operating losses.
The Company expects to generate a significant portion of its revenue
from payers and suppliers who are expected to pay initial set-up and ongoing
maintenance fees associated with organizing, loading and maintaining their
content and transaction fees associated with the processing of healthcare
transactions. The Company also expects to generate revenue from physicians who
are expected to pay a monthly fee for access to a range of the Company's
services.
The Company also has contracted with certain payers and in the future
may contract with other payers and suppliers to guarantee them incremental cost
savings from the use of certain of the Company's services. If any of these
payers or suppliers do not realize the guaranteed level of cost savings, the
Company will be obligated to make a payment to that payer or supplier, which
payment may exceed the Company's charges to that payer or supplier. In some
cases, the Company intends to share in any cost savings in excess of the
guaranteed cost savings. The amount and timing of transaction revenue generated
under these arrangements may be impacted by the Company's guarantee of cost
savings.
On February 13, 2000, the Company and Medical Manager signed
definitive agreements (the Healtheon/WebMD Agreements") to be acquired by
Healtheon/WebMD Corporation ("Healtheon/WebMD"). Under the terms of the
agreements, Healtheon/WebMD will pay 1.3 shares of Healtheon/WebMD common stock
for each share of the Company's common stock not owned by Medical Manager and
1.65 shares of Healtheon/WebMD common stock for each share of Medical Manager's
common stock. Completion of the acquisitions, which will be accounted for as
purchase transactions, are subject to certain conditions, including regulatory
and shareholder approvals.
In light of the Company's pending acquisition by Healtheon/WebMD, the
Company made certain strategic decisions, including the decision to delay
deployment of certain of its healthcare e-commerce services. During this period
of delay, the Company has been conducting a review of its systems and
applications to determine, among other things, what additional efforts are
required to fully develop certain services for broad deployment to customers. As
part of this review, the Company is also evaluating (i) the possible integration
of its technology with Healtheon/WebMD's technology if the Company's pending
acquisition by Healtheon/WebMD is completed, (ii) the recently acquired
technology assets of Provider Technology Group and the possible integration of
those assets into the Company's overall technology platform, (iii) the unique
requirements of existing customers and potential customers with whom the Company
is currently in discussions and (iv) the limited availability of cost-effective,
high-speed Internet connections into physicians' offices in our target
geographic markets, to assess any potential impact that they may have on its
development efforts. As a result of these factors and risks and uncertainties
described herein and in the Company's Form 10-K, the Company believes that the
development and deployment of certain services will take longer and cost more
then previously expected.
In September 1999, the Company entered into a strategic alliance with
America Online, Inc. ("AOL") for the Company to be AOL's exclusive provider of a
comprehensive suite of services that connect AOL's members, as well as
CompuServe members and visitors to AOL's Web-based services, Netcenter, AOL.COM
and Digital City (collectively, "AOL Members"), to physicians, health plans,
pharmacy benefit managers, covered pharmacies and labs. Under the agreement, the
Company and AOL have agreed to create co-branded sites which will enable AOL
Members to manage their healthcare through online communication with their
physicians, health plans, pharmacy benefit managers, covered pharmacies and
labs. The agreement has an initial term of four years, subject to the rights of
the parties to terminate the agreement under certain conditions, including the
right of AOL to terminate the agreement upon the completion of the Company's
pending merger with Healtheon/WebMD. Through this arrangement, AOL Members will
have access to the Company's secure, real-time services being developed that
allow them, among other things, to select and enroll in health plans, choose
their providers, schedule appointments, renew and refill plan approved
prescriptions, view lab results, review claims status, receive explanation of
benefits, review patient education materials provided by their health plans,
understand plan policies and procedures and receive plan treatment
authorizations. The Company and AOL have also agreed to collaborate in sales and
marketing to the healthcare industry, and they intend to leverage their alliance
into cross-promotional and shared advertising revenue initiatives. Under the
financial terms of the arrangement, the Company has agreed to make $30,000,000
of guaranteed payments to AOL over three years. The Company made the first
payment of $10,000,000 in September 1999. The Company is required to make the
remaining guaranteed payments of $10,000,000 on August 31, 2000 and $10,000,000
on August 31, 2001. If the pending merger with Healtheon/WebMD (Note 2) is
completed, AOL will have the right to terminate its strategic alliance with
CareInsite, in which case the remaining guaranteed payments due to AOL under the
agreement shall become immediately payable by the Company.
15
<PAGE>
The Company also entered into a four-year agreement with Netscape
Communications Corporation ("Netscape") under which the Company acquired a
nonexclusive and nontransferable right and license for the use of an unlimited
quantity of the Netscape and Sun Microsystems software products offered via the
Sun Microsystems--Netscape Alliance. The cost of the products was $3,750,000,
with a maintenance fee of $750,000 in the initial year and an option to purchase
maintenance at $1,000,000 per year in the second, third, and fourth years of the
agreement.
In January 2000, the Company acquired the 80% equity interest in The
Health Information Network Connection LLC ("THINC") owned by Empire Blue Cross
and Blue Shield, Group Health Incorporated, HIP Health Plans and Greater New
York Hospital Association (the "THINC founding members") for 600,800 shares of
Company common stock in a transaction valued at $45,672,000. The fair value of
the shares, as determined by management, was $76.018 per common share. THINC is
a New York based provider of software and services to facilitate the exchange of
healthcare information in the New York metropolitan area among physicians,
hospitals, laboratories, and payers. Concurrently with the acquisition, warrants
to purchase an aggregate of 3,247,294 shares of the Company's common stock,
which represented the THINC founding members' interest in the warrants issued by
the Company to THINC in January 1999, were distributed to the THINC founding
members. Immediately following this transaction, the THINC founding members
exercised their warrants in full. All shares including those issued upon the
exercise of the warrants are subject to certain restrictions on transfer.
Simultaneously, the Company acquired Cerner's 2% non-voting ownership interest
in THINC for a note payable of $2,735,000. The note bears interest at 5.8% per
annum and is repayable on demand after September 2002.
On February 14, 2000, the Company agreed to acquire substantially all
of the assets of Provider Technology Group ("PTG"), the e-commerce network of
Blue Cross Blue Shield of Massachusetts ("BCBSMA"), for $26,500,000 in cash and
651,968 shares of the Company's common stock. This acquisition was completed on
March 27, 2000. Pursuant to the asset purchase agreement, if BCBSMA does not
realize at least $22,500,068 in proceeds from the sale of 325,984 of the common
shares issued, the Company has agreed to pay BCBSMA an amount equal to such
shortfall in cash. Accordingly, the fair value of 325,984 of the common shares
issued was $69.022 per share. The fair value of the remaining 325,984 shares of
common stock, as determined by management was $40.646 per share.
In March 2000, the Company acquired the assets of the electronic data
interchange business of Scinet Inc. ("Scinet EDI Business") for 182,197 shares
of Company common stock from Medical Manager in a transaction valued at
$12,000,000. The fair value of the shares, as determined by management, was
$65.8628 per common share. The Scinet EDI Business is an Arizona based provider
of electronic data interchange claims clearing, statement processing and
remittance advice postage services to medical practices.
In March 2000, the Company acquired the assets of Netics, Inc.
("Netics") for 35,125 shares of Company common stock in a transaction valued at
approximately $1,802,000. The fair value of the shares issued, as determined by
management was $51.2917 per common share. Netics is a Maryland based developer
of web-enabled software which is used in the provision of electronic data
interchange claims clearing, statement processing and remittance advice postage
and other services for medical practices.
The THINC, PTG, SciNet EDI Business, and Netics acquisitions and the
Company's May 24, 1999 acquisition of Med-Link Technologies, Inc. ("Med-Link"),
a provider of electronic data interchange services, collectively will be
referred to as the "Acquisitions" in Management's Discussion and Analysis of
Financial Condition and Results of Operations.
16
<PAGE>
Results of Operations
Total revenues for the three and nine months ended March 31, 2000 were
$1,651,000 and $4,809,000, respectively, as compared to $213,000 for the three
and nine months ended March 31, 1999. Total revenues were comprised of (i)
electronic data interchange revenue of $1,651,000 and $3,236,000 for the three
and nine months ended March 31, 2000, respectively, and (ii) management services
revenue of $1,573,000 for the nine months ended March 31, 2000 and $213,000 for
the three and nine months ended March 31, 1999. There was no management
services revenue for the three months ended March 31, 2000, due to the
acquisition of THINC in January 2000. All of the Company's electronic data
interchange revenue in the three and nine months ended March 31, 2000 was
derived from the Acquisitions for which there were no comparable amounts in the
prior year periods.
Cost of revenues, other than to affiliates, was $787,000 and $1,312,000
for the three and nine months ended March 31, 2000, respectively. Cost of
services to affiliates was $1,573,000 for the nine months ended March 31, 2000,
as compared to $213,000 for the three and nine months ended March 31, 1999, and
consisted primarily of employee compensation and benefits expense for those
employees supporting the THINC business. The increase in costs of revenues in
the three and nine months ended March 31, 2000 was attributable to the Company's
electronic data interchange services revenue, derived from the Acquisitions, for
which there were no comparable amounts in the prior year periods.
Research and development expenses consisted primarily of employee
compensation, the cost of consultants and other direct expenses. Total research
and development expenditures were $8,386,000 and $16,287,000 for the three and
nine months ended March 31, 2000, respectively, as compared to $1,958,000 and
$7,646,000 for the three and nine months ended March 31, 1999, respectively. The
increase in research and development expenditures of $6,428,000 and $8,641,000
for the three and nine months ended March 31, 2000, respectively, is primarily
due to (i) increased expenditures related to the development of the Company's
physician portal, software products and data center and (ii) inclusion of
expenses related to the Acquisitions for which there were no comparable amounts
in the prior year periods. There were no capitalized research and development
costs for the three and nine months ended March 31, 2000.
Sales and marketing expenses consist primarily of salaries and
benefits, travel for sales, marketing and business development personnel and
promotion-related expenses such as advertising, marketing materials, and trade
shows. Sales and marketing expenses were $5,565,000 and $12,076,000 for the
three and nine months ended March 31, 2000, respectively, as compared to
$813,000 and $1,428,000 for the three and nine months ended March 31, 1999,
respectively. The increase of $4,752,000 and $10,648,000 for the three and nine
months ended March 31, 2000, respectively, is primarily related to (i) expenses
related to the AOL agreement for which there are no comparable amounts in the
prior periods, (ii) increased marketing activities, (iii) increased staffing,
and (iv) inclusion of expenses related to the Acquisitions for which there were
no comparable amounts in the prior year periods.
General and administrative expenses consist primarily of compensation
for legal, finance, management and administrative personnel. General and
administrative expenses were $3,450,000 and $9,805,000 for the three and nine
months ended March 31, 2000, respectively, as compared to $1,147,000 and
$2,855,000 for the three and nine months ended March 31, 1999, respectively. The
increase in general and administrative expenses of $2,303,000 and $6,950,000 for
the three and nine months ended March 31, 2000, respectively, resulted primarily
from (i) increased staffing in the finance, legal and corporate development
groups, (ii) inclusion of expenses related to the Acquisitions for which there
were no comparable amounts in the prior periods and (iii) inclusion of the
Company's interest in the losses of
17
<PAGE>
its equity investee for all months in the three and nine months ended March 31,
2000 versus three months in the three and nine months ended March 31, 1999.
The Company has recorded $350,000, $2,500,000, $1,450,000 and
$2,500,000 in litigation costs associated with the Merck and Merck-Medco
litigation in the three months ended March 31, 2000 and March 31, 1999 and the
nine months ended March 31, 2000 and March 31, 1999, respectively.
Depreciation and amortization expenses were $8,924,000 and $11,609,000
for the three and nine months ended March 31, 2000, respectively, as compared to
$275,000 and $1,162,000 for the three and nine months ended March 31, 1999,
respectively. The increase is primarily due to (i) amortization of goodwill
related to the Acquisitions, (ii) the amortization of the Company's capitalized
software costs and (iii) amortization related to certain contracts and other
intangibles.
Other income was $1,534,000 and $4,801,000 for the three and nine
months ended March 31, 2000, respectively, as compared to $19,000 and $110,000
for the three and nine months ended March 31, 1999, respectively. The increase
is due to interest income on the funds raised in connection with the Company's
initial public offering on June 16, 1999 and interest income on the funds
generated by the sale of the Company's investment in a privately held company
that merged with a publicly held company during the three months ended December
31, 1999.
Gain on sale of investment was $25,511,000 and relates to the
disposition of an investment in a privately held company that merged with a
publicly traded company during the three months ended December 31, 1999.
Liquidity and Capital Resources
Prior to completing its initial public offering on June 16, 1999, the
Company's operations since Inception (December 24, 1996) were funded through
capital contributions from its parent company, Medical Manager. On June 16,
1999, the Company completed its initial public offering of 6,497,500 shares
of its common stock at $18.00 per share (the "Offering"). The net cash proceeds
of the Offering were approximately $106,446,000, after deducting anticipated
amounts for underwriting discounts and commissions and Offering expenses. As of
March 31, 2000, the Company had $68,588,000 of cash and cash equivalents and
short-term marketable securities.
Cash used in operating activities was $46,893,000 for the nine months
ended March 31, 2000 compared to $12,447,000 in the comparable prior year
period. The cash used during this period was primarily attributable to the
losses associated with the development of the Company's business activities and
the payment of $10,000,000 in connection with the Company's strategic alliance
and agreement with AOL.
Cash used in investing activities was $9,269,000 for the nine months
ended March 31, 2000 compared to $9,243,000 in the comparable prior year period.
Cash used during the period resulted from (i) purchases of marketable securities
of $50,000,000, (ii) a payment of $26,500,000 for the cash portion of the PTG
acquisition and (iii) the purchase of computer equipment primarily related to
the establishment of the Company's data center of $7,520,000 offset by (i)
proceeds of $27,511,000 from the sale of the Company's investment in a privately
held company that merged with a publicly traded company during the three months
ended December 31, 1999 and (ii) maturities and redemptions of marketable
securities of $54,545,000. The Company's marketable securities are invested in
various investment-grade money market accounts and a Federal Agency Note.
Cash provided by financing activities was $11,207,000 for the nine
months ended March 31, 2000 compared to $26,433,000 in the comparable prior year
period. The cash provided during this period was primarily related to the
purchase by AOL of 100 shares of the Company's newly issued Series A Convertible
Redeemable Preferred Stock ("Series A Preferred Stock") at a price of $100,000
per share, or
18
<PAGE>
$10,000,000 of Series A Preferred Stock in the aggregate, with an option to
purchase up to an additional 100 shares of Series A Preferred Stock in September
2000 ("Series A Preferred Option") at the same price. At the option of AOL, in
March 2002, the Series A Preferred Stock is either redeemable in whole for
$100,000 per share in cash or convertible in whole, on a per share basis, into
(i) the number of shares of the Company's common stock equal to $100,000 divided
by $49.25 (or 2,030.5 shares) and (ii) a warrant exercisable for the same number
of shares of the Company's common stock, or 2,030.5 shares, at a price of $49.25
per share. In the event that AOL elects to convert the 100 shares of Series A
Preferred Stock it purchased in September 1999, it would receive 203,046 shares
of the Company's common stock and a warrant exercisable into an additional
203,046 shares at $49.25 per share. Prior to March 2002, AOL has the right to
require the Company to redeem the Series A Preferred Stock in whole at $100,000
per share in the event of certain changes in control of the Company, which would
not include the pending mergers of the Company and Medical Manager with
Healtheon/WebMD under the Healtheon/WebMD Agreements. The Series A Preferred
Stock is non-voting except under certain extraordinary circumstances and no
dividend is payable on the Series A Preferred Stock unless the Company declares
a dividend on its common stock.
Under the terms of the strategic alliance and agreement with AOL, the
Company is required to make guaranteed payments of $10,000,000 in August 2000
and $10,000,000 in August 2001. If the pending merger with Healtheon/WebMD is
completed, AOL will have the right to terminate its strategic alliance with
the Company, in which case these guaranteed payments due to AOL under the
agreement shall become immediately payable by the Company.
On February 14, 2000 the Company agreed to acquire substantially all of
the assets of PTG, the e-commerce network of BCBSMA, for $26,500,000 in cash and
651,968 shares of the Company's common stock. Pursuant to the asset purchase
agreement, if BCBSMA does not realize at least $22,500,068 in proceeds from the
sale of 325,984 of the common shares issued, the Company has agreed to pay
BCBSMA an amount equal to such shortfall in cash. Based on the March 31, 2000
closing price for the Company's common stock of $23.375, the Company would be
obligated to remit $14,880,192 to BCBSMA pursuant to the Company's guarantee of
at least $22,500,068 in proceeds from the sale of 325,984 of the common shares
issued to acquire PTG.
BCBSMA has the right to require the Company to purchase from BCBSMA
325,984 shares of Company common stock at $69.022 per common share if a
registration statement for these shares has not been declared effective on or
before November 15, 2000 (the "First Put"). Additionally, if the registration
statement referred to above is not declared effective by December 29, 2000,
BCBSMA has the right to require the Company to purchase up to 651,968 shares of
Company common stock from BCBSMA, including any shares not purchased by the
Company pursuant to the First Put for a price equal to the average closing price
per share of Company common stock for the ten successive trading days ending
December 29, 2000.
On March 16, 2000, the Company signed a binding letter of intent with
Medical Mutual of Ohio ("MMO") to acquire MMO's provider connectivity business
for 405,318 shares of CareInsite Common Stock. Under the terms of the binding
letter of intent, if MMO does not realize at least $10,000,000 in proceeds from
the sale of 202,659 of the common shares to be issued at closing, the Company
has agreed to pay MMO an amount equal to the shortfall in cash.
The Company currently anticipates that it may require additional
funding during Fiscal 2001 to meet the Company's presently anticipated working
capital, capital expenditure and business expansion requirements including the
requirements of the Acquisitions. If such additional funds are required, the
Company may seek additional equity or debt financing. There can be no assurance
that such financing will be available on acceptable terms, if at all, or that
such financing will not be dilutive to the Company's stockholders.
Subject to the provisions of the pending merger agreement with
Healtheon/WebMD, the Company continues to pursue an acquisition program
pursuant to which it seeks to effect one or more acquisitions or other similar
business combinations with businesses it believes have significant growth
potential. Financing for such acquisitions may come from several sources,
including, without limitation,
19
<PAGE>
(i) the Company's cash, cash equivalents and marketable securities and (ii)
proceeds from the incurrence of additional indebtedness or the issuance of
common stock, preferred stock, convertible debt or other securities. There can
be no assurance that the Company's acquisition program will be successful.
Year 2000
Many currently installed computer systems and software products are
coded to accept or recognize only two digit entries for the year in the date
code field. This problem is often referred to as the "year 2000 problem". These
systems and software products need to accept four digit year entries to
distinguish 21st century dates from 20th century dates. Though the Company did
not experience any year 2000 problems on January 1, 2000, additional year 2000
problems may become evident after that date.
The Company believes that its systems are year 2000 compliant and, to
date, those systems have not experienced any year 2000 problems. Although the
Company continues to have contingency plans in place for operational problems
which may arise as a result of a year 2000 problem, the Company cannot be
assured that year 2000 issues will not potentially pose significant operational
problems or have a material adverse effect on the Company's business, financial
condition and results of operations in the future.
To date, the Company has not incurred any material expenditures in
connection with identifying or evaluating year 2000 compliance issues. The
Company does not expect its future costs related to year 2000 to be material.
The Company is not aware of any material year 2000 problems encountered
by suppliers or customers of the Company's businesses to date but have not yet
obtained confirmations from such suppliers and customers that they did not
experience year 2000 problems. Accordingly, the Company cannot determine whether
any suppliers have experienced year 2000 problems that may impact their ability
to supply the Company with equipment and services or any customers have
experienced disruptions to their business. Further, the Company cannot determine
the state of its suppliers' and customers' year 2000 readiness on a going-
forward basis. The Company cannot be assured that the Company's suppliers and
customers will be successful in ensuring that their systems have been or will be
year 2000 compliant or that their failure to do so will not have an adverse
effect on the Company's business, financial condition and results of operations.
20
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK.
Interest rate sensitivity
The Company is exposed to market risk from potential changes in
interest rates as it relates to the Company's investments in highly liquid
marketable debt securities. The Company believes that the amount of risk as it
relates to its investments is not material to the Company's financial condition
or results of operations due to the following:
o The Company does not use derivative financial instruments in its
investments.
o The Company's investment consists of a Federal Agency Note.
21
<PAGE>
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
For legal proceedings, please refer to "Item 3 - Legal Proceedings"
filed in the Company's Annual Report on Form 10-K for the fiscal year ended June
30, 1999.
On February 18, 1999, Merck & Co., Inc. ("Merck") and Merck-Medco
Managed Care, L.L.C. ("Merck-Medco") filed a complaint in the Superior Court of
New Jersey against the Company, Medical Manager, Martin J. Wygod, Chairman of
the Company, and Paul C. Suthern, Roger C. Holstein and Charles A. Mele,
officers and/or directors of the Company. Merck and Merck-Medco asserted that
the Company, Medical Manager and the individual defendants were in violation of
certain non-competition, non-solicitation and other agreements. The complaint
sought to enjoin the Company, Medical Manager and the individual defendants from
conducting the Company's healthcare e-commerce business and from soliciting
Merck-Medco's customers. A hearing was held on March 22, 1999 on the plaintiffs'
application for a preliminary injunction. On April 15, 1999, the Superior Court
denied that application. In March 2000, the Superior Court ruled in favor of the
Company, Medical Manager and Messrs. Wygod, Suthern, Holstein and Mele and
entered an order dismissing with prejudice all of the plaintiffs' claims. The
Court's orders terminate Merck's and Merck-Medco's right to seek any claim for
injunctive relief or damages arising out of the Company's and Medical Manager's
activities to deploy the Company's healthcare e-commerce services. The Company's
and Medical Manager's counterclaims against Merck and Merck-Medco are still
pending.
On March 14, 2000, the Company was served with a summons in a lawsuit
which was filed on February 17, 2000, against the Company, Medical Manager and
certain of their officers and directors, among other parties, in the New Jersey
Superior Court, Chancery Division, in Bergen County. The plaintiff purports to
be a holder of CareInsite common stock. The lawsuit, captioned Ina Levy, et al.
vs. Martin J. Wygod, et al., purports to bring an action on behalf of the
plaintiff and others similarly situated to enjoin the defendants from
consummating the proposed mergers of the Company and Medical Manager with
Healtheon/WebMD (the "Mergers"). The plaintiff alleges that the defendants have
breached their fiduciary duties in that the proposed Mergers favor the interests
of Medical Manager and its shareholders over the interests of the Company's
minority shareholders. The plaintiff also alleges that the proposed Mergers
provide the defendants and other Medical Manager shareholders with a premium
which exceeds the premium provided to the Company's minority shareholders. The
lawsuit seeks, among other things, an injunction prohibiting the proposed
Mergers unless certain mechanisms are implemented by the Company, as well as
plaintiff's costs and disbursements. The Company believes that this lawsuit is
without merit and intends to vigorously defend against it.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
During the nine months ended March 31, 2000 the Company issued a total
of 4,541,706 shares of common stock, par value $.01 per share ("Common Stock"),
in connection with the acquisition of four companies. The Common Stock was
issued pursuant to the exemption from registration set forth in Section 4(2) of
the Securities Act of 1933, as amended. The details of each such issuance are as
follows:
On January 18, 2000, the Company issued 3,672,416 shares of Common
Stock related to the acquisition of the 80% equity interest in The Health
Information Network Connection ("THINC"), owned by Empire Blue Cross and Blue
Shield, Group Health Incorporated, HIP Health Plans and Greater New York
Hospital Association (the "THINC Founding Members"), and the distribution and
exercise of certain warrants held by the THINC Founding Members.
22
<PAGE>
On February 14, 2000, the Company issued 651,968 shares of Common
Stock, together with $26,500,000 in cash, in connection with the acquisition of
substantially all of the assets of Provider Technology Group, the e-commerce
network of Blue Cross Blue Shield of Massachusetts.
On March 7, 2000, the Company issued 182,197 shares of Common Stock to
acquire the assets of the electronic data interchange business of Scinet, Inc.
from Medical Manager Corporation.
On March 13, 2000, the Company issued 35,125 shares of Common Stock to
acquire the assets of Netics, Inc.
On September 15, 1999, the Company issued to America Online, Inc.
("AOL") 100 shares of newly issued Series A Convertible Redeemable Preferred
Stock ("Series A Preferred Stock") at a price of $100,000 per share, or
$10,000,000 of Series A Preferred Stock in the aggregate, with an option to
purchase up to an additional 100 shares of Series A Preferred Stock in September
2000 at the same price. At the option of AOL, in March 2002, the Series A
Preferred Stock is either redeemable in whole for $100,000 per share in cash or
convertible in whole, on a per share basis, into (i) the number of shares of the
Company's Common Stock equal to $100,000 divided by $49.25 (or 2,030.5 shares)
and (ii) a warrant exercisable for the same number of shares of the Company's
Common Stock, or 2,030.5 shares, at a price of $49.25 per share. Prior to March
2002, AOL has the right to require the Company to redeem the Series A Preferred
Stock in whole at $100,000 per share in the event of certain changes in control
of the Company, which would not include the pending merger of the Company with
Healtheon/WebMD. The Series A Preferred Stock is non-voting except under certain
extraordinary circumstances and no dividend is payable on the Series A Preferred
Stock unless the Company declares a dividend on its Common Stock. The Series A
Preferred Stock was issued pursuant to the exemption from registration set forth
in Section 4(2) of the Securities Act, as amended.
On June 16, 1999, the Company completed the initial public offering
(the "Offering") of 6,497,500 shares of its Common Stock at a price of $18.00
per share. The shares of Common Stock sold in the offering were registered under
the Securities Act of 1933, as amended, on a Registration Statement on Form S-1
(No. 333-75071). The Registration Statement was declared effective by the
Securities and Exchange Commission on June 16, 1999. Concurrent with the
Offering, the Company sold 537,634 shares of its Common Stock in a separate,
private transaction to Cerner for net proceeds of approximately $9,000,000.
The Company invested the proceeds from the Offering, the private sale
of Common Stock to Cerner and the sale of Series A Preferred Stock to AOL in
U.S. Treasury Notes and Federal Agency Notes. During the three and nine months
ended March 31, 2000, the Company used a portion of the proceeds for working
capital.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit No. Exhibits
----------- -----------------------------------
2.1 Agreement and Plan of Merger, dated
as of February 13, 2000, between
Healtheon/WebMD Corporation and
Medical Manager Corporation
(incorporated by reference to
Exhibit 2.1 to the amendment filed
on February 17, 2000 to the Current
Report on Form 8-K filed by the
Company on February 14, 2000)
2.2 Agreement and Plan of Merger, dated
as of February 13, 2000, among
Healtheon/WebMD Corporation,
Avicenna Systems Corporation and
CareInsite, Inc. (incorporated by
reference to Exhibit 2.2 to the
amendment filed on February 17, 2000
to the Current Report on Form 8-K
filed by the Company on February 14,
2000)
23
<PAGE>
10.1 Reorganization Agreement, dated as
of December 31, 1999, among
CareInsite, Inc., The Health
Information Network Connection LLC,
GNYHA Management Corporation, Empire
Blue Cross and Blue Shield, Health
Insurance Plan of Greater New York
and Group Health Incorporated
(incorporated by reference to
Exhibit 10.1 to the Current Report
on Form 8-K filed by the Company on
February 4, 2000)
10.2 Asset Purchase Agreement dated as of
February 14, 2000 between
CareInsite, Inc. and Blue Cross Blue
Shield of Massachusetts, Inc.
(incorporated by reference to
Exhibit 10.1 to the Current Report
on Form 8-K filed by the Company on
April 10, 2000)
10.3 Letter Agreement dated March 24,
2000 by and among CareInsite, Inc.
and Blue Cross Blue Shield of
Massachusetts, Inc. (incorporated
by reference to Exhibit 10.2 to the
Current Report on Form 8-K filed by
the Company on April 10, 2000)
27 Financial Data Schedule
(b) On February 4, 2000, the Company filed a report on Form 8-K
disclosing that it agreed to acquire the 80% equity interest in The Health
Information Network Connection, LLC ("THINC"), that it did not already own.
On February 14, 2000, the Company filed a report on Form 8-K disclosing
that Healtheon/WebMD Corporation entered into an Agreement and Plan of Merger
both with Avicenna Systems Corporation ("ASC"), a wholly-owned subsidiary of
Medical Manager Corporation ("Medical Manager"), and the Company and with
Medical Manager (the "Merger Agreements"). Also on February 14, 2000, the
Company filed on Form 8-K/A, an amendment to the Form 8-K previously filed on
February 14, 2000, attaching as an exhibit thereto a copy of the joint press
release announcing the Merger Agreements.
On February 17, 2000, the Company filed an amendment to the Form 8-K
and Form 8-K/A, each filed on February 14, 2000, attaching as exhibits thereto
copies of the Merger Agreements.
On March 23, 2000, the Company filed an amendment to the Form 8-K filed
on February 4, 2000 regarding the Company's acquisition of THINC. The following
Financial Statements and notes thereto were filed:
Independent Auditor's Report
Balance Sheet at December 31, 1999
Statements of Operations for the Year Ended December
31, 1999 and the Cumulative Period from Inception
(November 12, 1996) to December 31, 1999
Statements of Members' Capital for the Year Ended
December 31, 1999 and for the Cumulative Period from
Inception (November 12, 1996) to December 31, 1999
Statements of Cash Flows for the Year Ended December
31, 1999 and the Cumulative Period from Inception
(November 12, 1996) to December 31, 1999
Notes to Financial Statements
The following Pro Forma Financial Statements and notes thereto
related to the Company's acquisition of THINC were also filed:
Pro Forma Combined Condensed Consolidated Statement
of Operations (unaudited) for the year ended June 30,
1999
Pro Forma Combined Condensed Consolidated Statement
of Operations
24
<PAGE>
(unaudited) for the six months ended December 31,
1999
Pro Forma Combined Condensed Consolidated Balance
Sheet (unaudited) as of December 31, 1999
Notes to Pro Forma Combined Condensed Consolidated
Financial Statements (unaudited)
On March 29, 2000, the Company filed a report on Form 8-K disclosing
that a holder of the Company's common stock filed a lawsuit on February 17, 2000
alleging that the Company, Medical Manager and certain of their officers and
directors have breached their fiduciary duties in that the proposed merger of
the Company and Medical Manager with Healtheon/WebMD (the "Mergers") favors the
interests of Medical Manager and its shareholders over the interests of the
Company's minority shareholders. The plaintiff also alleges that the proposed
Mergers provide the defendants and other Medical Manager shareholders with a
premium which exceeds the premium provided to the Company's minority
shareholders. The lawsuit seeks, among other things, an injunction prohibiting
the proposed Mergers unless certain mechanisms are implemented by the Company,
as well as plaintiff's costs and disbursements. The Company believes that this
lawsuit is without merit and intends to vigorously defend against it.
25
<PAGE>
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934, Registrant
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
CAREINSITE, INC.
Dated: May 15, 2000 /s/ James R. Love
------------------
James R. Love
Executive Vice President and
Chief Financial Officer
(Principal Financial and Accounting Officer)
26
<PAGE>
EXHIBIT INDEX
-------------
NUMBER DESCRIPTION
------ -----------
2.1 Agreement and Plan of Merger, dated
as of February 13, 2000, between
Healtheon/WebMD Corporation and
Medical Manager Corporation
(incorporated by reference to
Exhibit 2.1 to the amendment filed
on February 17, 2000 to the Current
Report on Form 8-K filed by the
Company on February 14, 2000)
2.2 Agreement and Plan of Merger, dated
as of February 13, 2000, among
Healtheon/WebMD Corporation,
Avicenna Systems Corporation and
CareInsite, Inc. (incorporated by
reference to Exhibit 2.2 to the
amendment filed on February 17, 2000
to the Current Report on Form 8-K
filed by the Company on February 14,
2000)
10.1 Reorganization Agreement, dated as
of December 31, 1999, among
CareInsite, Inc., The Health
Information Network Connection LLC,
GNYHA Management Corporation, Empire
Blue Cross and Blue Shield, Health
Insurance Plan of Greater New York
and Group Health Incorporated
(incorporated by reference to
Exhibit 10.1 to the Current Report
on Form 8-K filed by the Company on
February 4, 2000)
10.2 Asset Purchase Agreement dated as of
February 14, 2000 between
CareInsite, Inc. and Blue Cross Blue
Shield of Massachusetts, Inc.
(incorporated by reference to
Exhibit 10.1 to the Current Report
on Form 8-K filed by the Company on
April 10, 2000)
10.3 Letter Agreement dated March 24,
2000 by and among CareInsite, Inc.
and Blue Cross Blue Shield of
Massachusetts, Inc. (incorporated
by reference to Exhibit 10.2 to the
Current Report on Form 8-K filed by
the Company on April 10, 2000)
27* Financial Data Schedule
*Attached thereto
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This schedule contains summary financial information extracted from the
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on the third quarter Form 10-Q and is qualified in its entirety by reference to
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