HBO & CO
10-Q, 1995-07-31
COMPUTER INTEGRATED SYSTEMS DESIGN
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<PAGE>
                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549

                                   FORM 10-Q

(Mark one)
 X   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ending June 30, 1995
                                       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 0-9900

                                 HBO & COMPANY
           (Exact name of registrant as specified in its charter)
         DELAWARE                                             37-0986839
(State or other jurisdiction of                            (I.R.S. Employer
incorporation or organization)                            Identification Number)
                          301 Perimeter Center North
                                Atlanta, Georgia
                                      30346
                    (Address of principal executive offices)
                                  ( Zip Code)
                                (404) 393-6000
              (Registrant's telephone number, including area code)
                                       N/A
(Former name, former address and former fiscal year, if changed since last
report.)

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    .

                     APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.

          CLASS                                     OUTSTANDING AT JUNE 30, 1995
 Common Stock, $.05 par value                            36,197,554 Shares

                               Page 1 of 23
                         Exhibit Index is on Page 5

<PAGE>

                       PART 1 - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

The following required financial statements are incorporated by reference
from the Registrant's Quarterly Report to Stockholders for the quarter ended
June 30, 1995 (attached as Exhibit 19):

        Consolidated Statements of Income
        Consolidated Condensed Balance Sheets
        Consolidated Statements of Cash Flows
        Notes to Consolidated Financial Statements

The financial information included in this Quarterly Report on Form 10-Q has
been reviewed by Arthur Andersen LLP, independent public accountants, in
accordance with established professional standards and procedures for such a
review as set forth in their review letter presented on page 3 of this report.

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

The information required in Item 2 is incorporated by reference from the
Financial Review in the Registrant's Quarterly Report to Stockholders for the
quarter ended June 30, 1995 (attached as Exhibit 19).

                                Page 2 of 23

<PAGE>

                              ARTHUR ANDERSEN LLP


                   REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To the Stockholders and
Board of Directors of
HBO & Company:


We have reviewed the accompanying consolidated condensed balance sheet of HBO
& COMPANY (a Delaware corporation) and Subsidiaries as of June 30, 1995 and
the related statements of income for the three and six month periods and cash
flows for the six month period then ended.  These financial statements are
the responsibility of the Company's management.

We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants.  A review of interim
financial information consists principally of applying analytical procedures
to financial data and making inquiries of persons responsible for financial
and accounting matters.  It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that
should be made to the financial statements referred to above for them to be
in conformity with generally accepted accounting principles.

We have previously audited, in accordance with generally accepted auditing
standards, the balance sheet of HBO & Company as of December 31, 1994 (not
presented herein), and in our report dated February 8, 1995, we expressed an
unqualified opinion on that statement.  In our opinion, the information set
forth in the accompanying consolidated condensed balance sheet as of December
31, 1994 is fairly stated in all material respects in relation to the balance
sheet from which it has been derived.

                                       Arthur Andersen LLP
Atlanta, Georgia
July 19, 1995


                                Page 3 of 23

<PAGE>

                          PART II - OTHER INFORMATION


ITEM 1. LEGAL PROCEEDINGS.

The information required in Item 1 is incorporated by reference from the
Notes to Consolidated Financial Statements in the Registrant's Quarterly
Report to Stockholders for the quarter ended June 30, 1995 (attached as
Exhibit 19).

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

The Company held its Annual Meeting of Stockholders on May 9, 1995.  Of the
32,086,984 shares of common stock entitled to vote, 28,804,342 shares were
represented in person or by proxy at the meeting.  There were no broker
non-votes.  The following matters were voted upon.

1.  The election of the Board of Directors consisting of nine members to hold
office until the next Annual Meeting of Stockholders or until their
successors are elected and qualified. The result of the vote for each
individual director was:

<TABLE>
<CAPTION>
                                                               For                Withheld
<S>                                                         <C>                   <C>
John P. Crecine                                             28,751,472             52,870
Alfred C. Eckert III                                        28,749,904             54,438
Holcombe T. Green, Jr.                                      28,746,794             57,548
Alton F. Irby III                                           28,749,759             54,583
Gerald E. Mayo                                              28,752,593             51,749
Charles W. McCall                                           28,752,289             52,053
James V. Napier                                             28,728,223             76,119
Charles E. Thoele                                           28,750,283             54,059
Donald C. Wegmiller                                         28,752,224             52,118
</TABLE>

Accordingly, all nine nominees were duly elected Directors of the Company.

2.  The adoption of the HBO & Company Chief Executive Officer Incentive Plan.
 The result of the vote was 27,532,262 shares in favor of the Plan, 1,181,155
shares opposed to the Plan and 90,925 shares abstained.  Accordingly, the
Plan was adopted.

3.  The ratification of the appointment of Arthur Andersen LLP as independent
public accountants.  The result of the vote was 28,743,401 shares in favor of
the appointment, 15,409 shares opposed to the appointment and 45,532 shares
abstained.  Accordingly, Arthur Andersen LLP  was appointed.

                                Page 4 of 23

<PAGE>

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.

<TABLE>
<CAPTION>
(a)     Exhibits:                                                                  Page
                                                                                   ----
<S>     <C>                                                                        <C>
        10     Interim Loan and Security Agreement between General Electric           7
               Capital Corporation, HTG Corp. and HBO & Company of Georgia
               and letter agreement between HTG Corp. and HBO & Company of
               Georgia, dated June 26, 1995.

        11     Statement regarding computation of per share earnings (loss).          14

        15     Letter re: unaudited interim financial information.                    15

        19     Report furnished to security holders.                                  16
</TABLE>

(b)     Reports on Form 8-K during the quarter ended June 30, or subsequent
to that date but prior to the filing date of this Form 10-Q:

FORM 8-K REPORT DATED MAY 17, 1995, was filed under ITEM 5 reporting that the
Company signed a definitive agreement to acquire the Health Systems Group
(HSG) of First Data Corporation in exchange for approximately 4 million
shares of HBOC Common Stock.

FORM 8-K REPORT DATED JUNE 23, 1995, was filed under ITEM 2 reporting the
acquisition of the Health Systems Group (HSG) of First Data Corporation in
exchange for 4 million shares of Common Stock, $500,000 in cash and a
promissory note for $100,000.

FORM 8-K REPORT DATED JULY 10, 1995, was filed under ITEM 5 reporting the
acquisition of Pegasus Medical, LTD, a privately held Israeli software
company that markets a computer-based patient record known as the Smart
Medical Record.

FORM 8-K REPORT DATED JULY 18, 1995, was filed under ITEM 5 reporting that
the Company signed a definitive agreement to acquire CliniCom Inc. in exhange
for .4 of a share of HBOC Common Stock for each of the approximately
8,660,000 shares outstanding of CliniCom stock.

                                Page 5 of 23

<PAGE>

                                  SIGNATURE


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.

                                                                  HBO & COMPANY
                                                                  (Registrant)


Date:  July 31, 1995                         By:    /s/ Jay P. Gilbertson

                                                        Jay P. Gilbertson
                                                        Vice President-Finance,
                                                        Chief Financial Officer,
                                                        Treasurer and
                                                        Assistant Secretary


                                Page 6 of 23


<PAGE>

                                                                      Exhibit 10

3900 (Loan to Loan)

                       INTERIM LOAN AND SECURITY AGREEMENT

     THIS INTERIM LOAN AND SECURITY AGREEMENT (this "AGREEMENT") is dated as of
_____________ between General Electric Capital Corporation, a New York
corporation having an office and place of business located at 3379 Peachtree
Road N.E.  400 Atlanta, GA  30326 ("LENDER") and HTG Corp. a corporation
organized and existing under the laws of the State of Georgia and having its
principal place of business at 3343 Peachtree Road, NE, Ste. 1420, Atlanta, GA
30326 and HBO & COMPANY OF GEORGIA a corporation organized and existing under
the laws of the State of Delaware and having its principal place of business at
301 Perimeter Center North, Atlanta, GA  30346 (the "Co-Borrowers").
                                                                 /s/ JKS CH
                                                                 ----------
                                                                   initial

                                    RECITALS:
     WHEREAS Borrower desires to purchase the equipment more particularly
described in EXHIBIT A  hereto (the "EQUIPMENT") pursuant to a purchase order
contract, agreement and/or other document, copies of which have been attached
hereto as EXHIBIT C (the "PURCHASE AGREEMENT"), with AlliedSignal, Inc.
("SUPPLIER");

     WHEREAS Borrower desires to borrow from Lender, on the terms and conditions
hereinafter provided, the purchase price and acquisition costs of the Equipment;

     WHEREAS Borrower desires to borrow from Lender, on the terms and conditions
hereinafter provided, the purchase price and acquisition costs of the Equipment;

     WHEREAS, to induce Lender to lend to Borrower the purchase price and
acquisition costs of the Equipment, Borrower desires to assign to Lender, as
security for all of Borrower's obligations hereunder, all of Borrower's right,
title and interest in and to the Equipment and the Purchase Agreement.

     NOW, THEREFORE, in consideration of these premises and of the covenants
contained herein and other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties hereto agree as follows:

     SECTION 1.  DEFINITIONS.  All capitalized terms used but not otherwise
defined herein shall have the meanings ascribed to them in the Loan Schedule
attached hereto as EXHIBIT D (the "LOAN SCHEDULE").

     SECTION 2.  AGREEMENT TO MAKE LOANS.  Subject to the terms and conditions
hereof, and provided no Default (as defined in Section 8), or event which with
the passing of time or giving of notice or both would constitute a Default, has
occurred and is continuing, Lender agrees to advance to Borrower, on the date
hereof the amount of ONE HUNDRED NINETY FIVE THOUSAND SEVEN HUNDRED FIFTY AND
NO/100 ($ 195,750.00) U.S. Dollars, and, upon five (5) days written notice, from
time to time hereafter until close of business on the Cut-Off Date to make such
additional advances in such amounts as Borrower may request, but limited in all
events in the aggregate to the Maximum Loan Commitment amount stated in the Loan
Schedule.  (Each day on which a loan is made is hereinafter referred to as a
"FUNDING DATE," each advance a "LOAN FUNDING".)  Lender shall not be required or
obligated to make any Loan Funding if such Loan Funding, when added to all
previous Loan Fundings, would cause Lender to advance to Borrower any sum in
excess of the Maximum Loan Commitment set forth in the Loan Schedule.  Lender
shall have no obligation to make any Loan Funding to any person or entity other
than Borrower, and shall have no obligation to make any Loan Funding to Borrower
if control of Borrower shall change in any material respect.

     SECTION 3.  PROMISSORY NOTE(S).

     (a)  Each Loan Funding shall be evidenced by a separate demand Promissory
     Note, at such interest rate as the parties may hereafter agree, in the form
     of EXHIBIT E.

     (b)  Subject to the terms hereof, upon the earlier of the (i) Cut-Off Date
     or (ii) the Funding Date on which the total Loan Fundings made as of that
     date total in the aggregate the Maximum Loan Commitment, Borrower shall (x)
     pay all unpaid interest due and owing under any Promissory Note issued
     pursuant hereto; and (y) execute a Consolidated Promissory Note
     ("CONSOLIDATED NOTE") in the form of EXHIBIT F in a principal amount equal
     to the aggregate amount of all Loan Fundings (Each Demand Promissory Note
     and the Consolidated Promissory Note shall hereinafter be referred to,
     individually or collectively, as the "NOTE(S)".)

     SECTION 4.  CONDITIONS PRECEDENT TO LOAN FUNDINGS.  The obligation of
Lender to make any Loan Funding to Borrower on the applicable Funding Date is
subject to the performance by Borrower of all of its agreements and covenants
under this Agreement and the fulfillment of the following conditions:

     (a)  Borrower shall have paid to Supplier the Borrower's Down Payment, if
     any, specified on the Loan Schedule.

     (b)  No Default, or event which with the passing of time or the giving of
     notice or both would constitute a Default, has occurred and is continuing
     on such Funding Date under this Agreement, any Note or any other agreement
     or instrument then existing between Borrower and Lender.

     (c)  Lender has received such executed financing statements, fixture
     filings and other documents as it may reasonable request to perfect a first
     priority security interest in the Collateral, as that term is defined in
     Section 5, below (including, without limitation, any lien, mortgages,
     landlord or similar waivers).

     (d)  Borrower has executed and delivered to Lender a Demand Promissory
     Note, in the form of Exhibit E, in the principal amount of the Loan
     Funding, executed by an authorized officer of the Borrower.

     (e)  Lender has received such other documents, certificates and opinions,
     including but not limited to opinions of Borrower's counsel and invoices
     and receipts in connection with the Equipment, as it shall reasonably
     request.

     (f)  There has not occurred any adverse change in Borrower's financial
     situation from the date of execution hereof to the date of the Loan Funding
     which materially impairs Borrower's ability to perform its obligations
     hereunder, or under any of the Notes, or materially impairs Lender's
     interest in the Collateral.

     SECTION 5.  GRANT OF SECURITY INTEREST.

     (a)  As security for the punctual payment and performance of Borrower's
     obligations under each and all of the Note(s), whether now existing or
     hereinafter arising, whether the same be totally repaid and extinguished
     and thereafter reincurred or otherwise, direct or indirect, liquidated or
     contingent, whether as primary obligor or as endorser, indemnitor, or
     otherwise, including any obligation arising in connection with or resulting
     from any amendment to or extension of any Note and, further, as security
     for the performance and observance by Borrower of all representations,
     warranties and covenants made by it in this Agreement, any amendment or
     extension hereof or in any other agreement, document or certificate
     delivered in connection with this Agreement or any Note, Borrower hereby
     gives, sets over, assigns, transfers and grants to Lender a security


                                  Page 7 of 23


<PAGE>

     (j)  This Agreement and any and all obligations and liabilities secured
     hereby shall be governed by and construed under the laws of the State of
     GEORGIA, without regard to choice of law principles thereof, and any
     provision of this Agreement or of the obligations and liabilities secured
     by this Agreement which may prove to be unenforceable shall not affect the
     validity of any other provision of this Agreement or of the said
     obligations and liabilities.  Borrower acknowledges receipt of a true copy
     hereof and waives acceptance hereof.

     (k)  This Agreement shall continue in full force and effect for so long as
     there shall remain in existence obligations or liabilities from Borrower to
     Lender hereunder or under the Notes.

     (l)  BORROWER HEREBY UNCONDITIONALLY WAIVES ITS RIGHTS TO A JURY TRIAL OF
     ANY CAUSE OF ACTION BASED UPON OR ARISING OUT OF, DIRECTLY OR INDIRECTLY,
     THIS AGREEMENT, ANY OF THE RELATED DOCUMENTS, ANY DEALINGS BETWEEN BORROWER
     AND LENDER RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION OR ANY
     RELATED TRANSACTIONS, AND/OR THE RELATIONSHIP THAT IS BEING ESTABLISHED
     BETWEEN BORROWER AND LENDER.  The scope of this waiver is intended to be
     all encompassing of any and all disputes that may be filed in any court
     (including, without limitation, contract claims, tort claims, breach of
     duty claims, and all other common law and statutory claims).  THIS WAIVER
     IS IRREVOCABLE MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN
     WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
     SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT, ANY RELATED DOCUMENTS, OR
     TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS TRANSACTION OR ANY
     RELATED TRANSACTION.  In the event of litigation, this Agreement may be
     filed as a written consent to a trial by the court.  Time is of the essence
     of this Agreement.  Lender's failure at any time to require strict
     performance by Borrower of any of the provisions hereof shall not waive or
     diminish Lender's right thereafter to demand strict compliance therewith.
     Borrower agrees, upon Lender's request, to execute any instrument necessary
     or expedient for filing, recording or perfecting the interest of Lender.
     All notices required to be given hereunder shall be deemed adequately given
     if sent by registered or certified mail to the addressee at its address
     stated herein, or at such other place as such addressee may have designated
     in writing.  This Agreement and any, Exhibits or Annexes thereto constitute
     the entire agreement of the parties with respect to the subject matter
     hereof.  NO VARIATION OR MODIFICATION OF THIS AGREEMENT OR ANY WAIVER OF
     ANY OF ITS PROVISIONS OR CONDITIONS, SHALL BE VALID UNLESS IN WRITING AND
     SIGNED BY AN AUTHORIZED REPRESENTATIVE OF THE PARTIES HERETO.

     IN WITNESS WHEREOF, Borrower and Lender, intending to be legally bound
hereby, have caused their duly authorized representatives to execute this
Agreement, as of the day and year first above-written.

LENDER                                       CO-BORROWER

GENERAL ELECTRIC CAPITAL CORPORATION         HTG CORP.

By:                                          By: /s/ Julie Koers Shirey
   ---------------------------------            -------------------------------
Title:                                       Title: Secretary
      ------------------------------               ----------------------------


                                             HBO & COMPANY OF GEORGIA

                                             By: /s/ Charles W. McCall
                                                --------------------------------

                                             Title: Pres/CEO
                                                   -----------------------------


                                  Page 8 of 23


<PAGE>

                               LIST OF EXHIBITS TO

                   INTERIM LOAN AND SECURITY AGREEMENT BY AND

                  BETWEEN GENERAL ELECTRIC CAPITAL CORPORATION

                                       AND

            HTG CORP. AND HBO & COMPANY OF GEORGIA AS CO-BORROWERS


                             DATED:
                                    ----------------



EXHIBIT A                                  EQUIPMENT DESCRIPTION

EXHIBIT B                                  CERTIFICATE - Not Required

EXHIBIT C                                  PURCHASE AGREEMENT

EXHIBIT D                                  LOAN SCHEDULE

EXHIBIT E                                  FORM OF DEMAND PROMISSORY NOTE

EXHIBIT F                                  FORM OF CONSOLIDATED PROMISSORY NOTE



                                  Page 9 of 23

<PAGE>

                                    EXHIBIT D

     THIS EXHIBIT D is annexed to and made a part of the Interim Loan and
Security Agreement of even date herewith between General Electric Capital
Corporation as Lender and HTG Corp. and HBO & Company of Georgia as Co-Borrowers
as Borrower.


                                  LOAN SCHEDULE

LENDER:                                    BORROWER:

General Electric Capital Corporation       HTG Corp. and HBO & Company of
3379 Peachtree Road N.E. 400               Georgia as Co-Borrowers
Atlanta, GA  30326                         3343 Peachtree Road 1420
                                           Atlanta, Georgia  30326

ADDITIONAL TERMS AND DEFINITIONS:

1.   Maximum Loan Commitment:  $3,007,500.00

2.   Cut-Off Date:  October 31, 1995

3.   Borrower's Down Payment:  $0.00

4.   Loan Fundings:  (Borrower hereby authorizes Lender to insert below the date
     on which any Loan Funding is made and the amount thereof.)

<TABLE>
<CAPTION>
           Funding Date:                   Loan Funding Amount:
           -------------                   --------------------
     <S>                                   <C>
     06/  /95                                 $  195,750.00
     06/26/95                                    587,250.00
     08/14/95                                    587,250.00
     09/30/95                                    587,250.00
     10/01/95                                  1,050,000.00

     TOTAL                                    $3,007,500.00

</TABLE>

5.   Location of Equipment and of Additional Equipment (if different than
     Borrower's address given above.)

          Garrett's Springfield Mo. Installation Facility

6.   Supplier of Equipment (name and address):

          AlliedSignal, Inc., 6201 W. Imperial Hwy., Los Angeles, CA  90045

LENDER:                                    CO-BORROWER:

GENERAL ELECTRIC CAPITAL CORPORATION       HTG CORP.

By:                                        By: /s/ Julie Koers Shirey
   --------------------------------           ---------------------------------

Title:                                     Title: Secretary
      -----------------------------              ------------------------------

Date:                                      Date:
     ------------------------------             -------------------------------

                                           HBO & COMPANY OF GEORGIA

                                           By: /s/ Charles McCall
                                              ---------------------------------

                                           Title: Pres/CEO
                                                 ------------------------------

                                           Date:
                                                -------------------------------


                                  Page 10 of 23

<PAGE>

                                    HTG CORP.
                            3343 Peachtree Road, N.E.
                                   Suite 1420
                             Atlanta, Georgia 30326


                                  June 26, 1995


HBO & Company of Georgia
301 Perimeter Center North
Atlanta, Georgia 30346

          Re:  Loan from General Electric Capital Corporation

Gentlemen:

     1.   FACTUAL BACKGROUND.  HTG Corp.  ("HTG") and HBO & Company of Georgia
("HBO") entered into a certain Co-Ownership Agreement dated as of July 15, 1993,
as amended, which provided for, among other things, the equal ownership of the
Airplane, as such term is defined therein.  The Co-Owners have entered into,
jointly and severally, a certain Interim Loan and Security Agreement (the "Loan
Agreement") dated of even date herewith, with General Electric Capital
Corporation (together with its successors in interest, "GECC"), providing for a
series of promissory notes to be made jointly and severally by the Co-Owners in
favor of GECC (the "Notes") in the collective principal amount of $3,007,500.00,
the Notes being secured by the Airplane.  A portion of the proceeds of the Notes
will be applied to pay the entire remaining obligations under an existing note
to GECC in the original principal amount of $1,200,000 co-made by HTG and HBO,
and the remaining proceeds will be used to reimburse HBO in respect of funds
expended in connection with, and by HTG to fund its one-half share of the costs
of, the purchase and installation of new engines for the Airplane.  HBO will
separately fund its one-half share of such expense.  HBO recognizes that it
will directly benefit from HTG's ability to fund its one-half share of the costs
of the new engines from the proceeds of the Notes.

     2.   PAYMENT OF THE NOTES.  For good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, HTG hereby agrees to
timely satisfy for and on behalf of the Co-Owners all obligations arising in
connection with the Notes.  In the event that HTG fails to make when due a
payment in connection with the Notes, HBO will pay the amount due on behalf of
HTG.

     3.   RIGHT OF INDEMNIFICATION.  HTG shall hold HBO harmless from and
against all liability, loss, damage, or injury and all reasonable costs and
expenses (including reasonable counsel fees and costs of any suit related
thereto) suffered or incurred by HBO (including, without limitation, any loss or
diminution in value of the Airplane) arising from any claims made by or on
behalf of GECC,


                                  Page 11 of 23


<PAGE>

or for any payments made by HBO on behalf of HTG, in connection with the Notes.

     4.   PAYMENTS OF CLAIMS.  Any payments made by HBO on behalf of HTG
pursuant to this Agreement (after reasonable prior written notice and demand for
reimbursement), or any reimbursements due pursuant to paragraph 3 hereof, shall
bear interest at a per annum rate of interest equal to the prime rate of
interest (as published in the "Money Rates" section of THE WALL STREET JOURNAL)
plus two percent (2%).  Such interest shall begin to accrue on the date demand
for such reimbursement is made.

     5.   FURTHER ASSURANCES.  HTG hereby agrees that at any time, and from
time to time, after the date hereof, it will execute such additional instruments
and take such actions as may be reasonably requested by HBO to confirm or
perfect or otherwise carry out the intent and purposes of this letter.

                                           HTG CORP.


                                           By:   /s/ Julie Koers Shirey
                                              -----------------------------
                                           Title:      Treasurer
                                                 --------------------------


Accepted and Agreed to by:

HBO & COMPANY OF GEORGIA


By:  /s/  Charles McCall
   -----------------------------
     Title:   Pres/CEO
           ---------------------


                                  Page 12 of 23

<PAGE>



                                                                      Exhibit 11


                         HBO & COMPANY AND SUBSIDIARIES


            COMPUTATION OF EARNINGS (LOSS) PER SHARE OF COMMON STOCK
     FOR THE THREE-MONTH AND SIX MONTH PERIODS ENDED JUNE 30, 1995 AND 1994
                     (000 OMITTED EXCEPT FOR PER SHARE DATA)


<TABLE>
<CAPTION>

                                         Three Months Ended    Six Months Ended
                                              June 30,              June 30,
                                            1995      1994       1995      1994
                                         -------   -------    -------   -------
<S>                                      <C>       <C>        <C>       <C>
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING                 32,739    31,449     32,333    31,286

ADD-Shares of common stock assumed
  issued upon exercise of stock
  options using the "treasury stock"
  method as it applies to the compu-
  tation of primary earnings per
  share                                        -     1,591          -     1,548
                                         -------   -------    -------   -------

NUMBER OF COMMON AND COMMON EQUIVALENT
SHARES OUTSTANDING                        32,739    33,040     32,333    32,834


ADD-Shares of common stock assumed
  issued upon exercise of stock options
  using the "treasury stock" method as
  it applies to the computation of
  fully diluted earnings per share             -         -          -         -
                                         -------   -------    -------   -------

NUMBER OF COMMON AND COMMON EQUIVALENT
SHARES OUTSTANDING ASSUMING FULL
DILUTION                                  32,739    33,040     32,333    32,834
                                         -------   -------    -------   -------
                                         -------   -------    -------   -------


NET EARNINGS FOR PRIMARY AND FULLY
DILUTED EARNINGS (LOSS) PER SHARE       ($63,563)   $6,335   ($54,561)  $11,763
                                         -------   -------    -------   -------
                                         -------   -------    -------   -------


EARNINGS (LOSS) PER SHARE:

  PRIMARY                                 ($1.94)    $0.19    ($1.69)     $0.36
                                         -------   -------    -------   -------
                                         -------   -------    -------   -------

FULLY DILUTED                             ($1.94)    $0.19     ($1.69)    $0.36
                                         -------   -------    -------   -------
                                         -------   -------    -------   -------

<FN>
     Note: No common stock was assumed issued upon exercise of stock options for
           the computation of loss per share.

</TABLE>

                                PAGE 14 OF 23



<PAGE>


                                                                      EXHIBIT 15

                               ARTHUR ANDERSEN LLP

To HBO & Company:

We are aware that HBO & Company has incorporated by reference in its
previously filed registration statements on Form S-8 its Form 10-Q for the
quarter ended June 30, 1995, which includes our report dated July 19, 1995
covering the unaudited interim consolidated financial information contained
therein.  Pursuant to Regulation C of the Securities Act of 1933 (the "Act"),
that report is not considered a part of the registration statement prepared
or certified by our firm or a report prepared or certified by our firm within
the meaning of Sections 7 and 11 of the Act.

                                       Arthur Andersen LLP
Atlanta, Georgia
July 19, 1995


                                Page 15 of 23


<PAGE>

                                                                    Exhibit 19

SECOND QUARTER REPORT

     TO OUR STOCKHOLDERS

          IN EVERY QUARTER OF
          THE PAST YEAR, HBO & COMPANY HAS ANNOUNCED AN ACQUISITION THAT
          HAS HELPED PROPEL THE COMPANY TOWARD ITS GOAL OF BECOMING NO. 1 IN THE
          HEALTHCARE INFORMATION SOLUTIONS INDUSTRY. SECOND QUARTER 1995
          WAS NO DIFFERENT.

Charles W. McCall

Early in the quarter, we acquired the rights to the CHC (UK) Ltd. Crescendo
nursing system, which gave HBOC another 60 National Health Service customers
in the United Kingdom. And in June, we acquired the Health Systems Group of
First Data Corporation, now the Charlotte Product Group (CPG). With 1994
revenue of $121 million, this group had been the fifth largest healthcare
information systems vendor. The acquisition added several solid hospital
transaction systems and 500 customers to HBOC, bringing our total customer
count to approximately 2,600.

The CPG acquisition did cause HBOC to take a one-time write-off of $126
million primarily related to purchased research and development charges. Even
though this resulted in a second quarter loss, fully diluted earnings per
share excluding the purchased research and development charge came in at 34
cents, a 79 percent increase over the same period last year. Our growth in
revenue of 27 percent over second quarter 1994 is not due entirely to
acquisitions, however, but results from strong internal sales and
installation activity as well. In particular, products from the Company's
enterprisewide Pathways 2000TM line continue to roll out, and customers "went
live" on several Pathways 2000 products during the quarter.

Soon after the close of second quarter, we completed the acquisition of
Pegasus Medical, LTD. While this acquisition does not bring us existing
customers, the strategic potential is tremendous. Pegasus is a physician-led
Israeli software development company that has designed and is developing a
computer-based patient record for the physician's office known as the Smart
Medical Record (SMR-trademark-). This product -- built by physicians, for
physicians -- is strategic to the Company's ongoing effort to provide access
to critical patient information across the continuum of care.

The acquisition activity didn't stop there, however. On July 17, we announced
the signing of a definitive agreement to acquire CliniCom Incorporated. A
long-time marketing partner of HBOC, CliniCom is an industry leader in
point-of-care nursing information systems. The merger will give HBOC an even
greater ability to build on CliniCom's considerable clinical expertise. The
acquisition, which is subject to regulatory and shareholder approval, is
expected to close in the early fourth quarter of 1995.

Obviously, being No. 1 is a key goal for HBOC -- but not just in revenue.
Being No. 1 also means taking a leadership position within the industry. With
the tremendous expertise we have on board, the quality products we have in
place and the vision we have to take our customers forward, HBOC continues to
pursue our goal of being the industry leader.

Sincerely,



Charles W. McCall
President & Chief Executive Officer

July 18, 1995


                                Page 16 of 23

<PAGE>

                                                    HBO&Company and Subsidiaries
                                                                FINANCIAL REVIEW

RESULTS OF OPERATIONS

QUARTER AND SIX-MONTH PERIOD ENDED JUNE 30, 1995, COMPARED TO QUARTER AND
SIX-MONTH PERIOD ENDED JUNE 30, 1994:

Earnings per share for the quarter and six months ended June 30, 1995,
excluding the purchased research and development charge was $.36 ($.34 fully
diluted), an 89% increase over second quarter 1994, and $.64 ($.61 fully
diluted), a 78% increase over the same period in the prior year.  These
increases are attributable to increases in revenue of 27% for the quarter and
30% for the six-month period compared to the same periods in 1994 with
related increases of only 17% and 22% in operating expense, excluding the
purchased research and development charge.  Revenue growth was fueled
primarily by increased revenue from support and maintenance, software license
fees, and implementation services related to both internal growth and
acquisitions.

With the purchased research and development charge, the loss per share for
the quarter and six months ended June 30, 1995, was $(1.94) and $(1.69).  The
purchased research and development charge of $126 million is primarily
related to research and development purchased from the Health Systems Group
of First Data Corporation, now the Charlotte Product Group (CPG), which had
not reached technological feasibility.  Also, the reported loss per share is
not adjusted for the effect of stock options outstanding since the effect was
anti-dilutive.  Fully diluted earnings per share information, excluding the
purchased research and development charge, is presented above to aid in the
analysis of results.

The Company's revenue growth is a result of the continued success of the
Pathways 2000 product group of enterprisewide solutions and HBOC's core
transaction systems and the Company's merger and acquisition activity.  The
Company's acquisitions -- IBAX Healthcare Systems (Series product line) in
May 1994; Serving Software, Inc. (SSG) in September 1994; Advanced Laboratory
Systems, Inc. (ALG) in February 1995 and the Health Systems Group of First
Data Corporation (CPG) in June 1995 -- have helped to build revenue by
enhancing the current product offerings as well as giving the Company an
expanded customer base in which to sell its products.

Support and maintenance revenue increased 82% for the quarter and 91% for the
six-month period compared to the same periods last year and is now the source
of approximately 29% of the Company's revenue compared to approximately 20% a
year ago.  The increase in support and maintenance revenue is a result of
having more installed customers.

Software license fee revenue grew 19% for the quarter and 29% for the
six-month period, largely due to Pathways 2000.  As hospitals continue to
consolidate into local and regional healthcare enterprises, the need for
clinical and financial information across the continuum of care is driving
more enterprises to seek the types of solutions offered by HBO & Company in
the Pathways 2000 suite of products.  Also contributing to the growth in
license fee revenue was SSG, which has successfully introduced its Pathways
Healthcare Scheduling product to the market.  HBOC continues to derive a
large portion of its software license fee revenue from the STAR and TRENDSTAR
products.

Implementation services revenue grew 24% for the quarter and 29% for the
six-month period compared to the same periods last year.  The increase was a
result of the addition of the Series product line and continued increases in
implementation services for all current business units.  The Company
continues to develop new methodologies for delivering services to its
customers which increase the efficiency and productivity of services
provided.  The Company has recently opened a new state-of-the-art training
facility in Dallas and has implemented a process called "Service Tracks" to
streamline the implementation of Pathways products.

Cost of operations dropped to 45% of revenue for the second quarter and 48%
of revenue for the six-month period compared to 54% for both of the same
periods in 1994.  Cost of operations expense increased at a rate
significantly slower than the rate of revenue growth primarily due to a shift
in the Company's software, services and hardware revenue mix, a low salary
growth rate resulting from streamlining within the implementation
organization, and a decrease in the use of consultants and third-party
contractors.

                                Page 17 of 23

<PAGE>

Marketing expense for both the quarter and six-month period increased to 14%
of revenue from 13% during the same periods in 1994.  Salary, travel and
commission expense have increased due to a larger sales force and higher
sales volume.

Research and development (R&D) expense remained constant at 9% of revenue for
the quarter and six-month periods of both 1995 and 1994.  Salary expense
increased, while consulting expense decreased as HBOC brought almost all of
its development expertise in-house.  The R&D capitalization rate was 24% for
the quarter and 25% for the six-month period compared to 26% for both periods
in 1994.  Aggressive development efforts continue as HBOC works to enhance
existing products and bring additional Pathways 2000 products to the point of
general availability.

General and administrative expense increased to 12% of revenue for the
quarter and 11% for the six-month period compared to 10% for both periods in
1994.  The increases were primarily due to increased depreciation and
amortization expense resulting from a larger fixed asset base and increased
intangible asset amortization related to the acquisitions and higher expense
for incentive programs such as the Company-wide gainsharing program.

The $126 million purchased research and development charge related to the CPG
acquisition resulted in an operating loss of  $105 million for the second
quarter and $90 million for the six-month period ended June 30, 1995.  Before
adjusting for the impact of this nonrecurring charge, operating income
increased 90% for the quarter and 82% for the six-month period compared to
the same periods in 1994.  Operating income as a percent of revenue before
the purchased research and development charge increased to 20% from 14% for
the quarter and 19% from 13% for the six-month period.

The tax rate remained constant at 40% for all periods presented.

LIQUIDITY AND CAPITAL RESOURCES

JUNE 30, 1995, COMPARED TO DECEMBER 31, 1994:

During the six-month period ended June 30, 1995, HBOC generated $17 million
of cash flow from operations.  The Company used a net $11 million for
investing activities including the purchase of Advanced Laboratory Systems,
Inc. and capital expenditures.  In addition, the Company used $3.6 million to
reduce indebtedness and pay dividends.  As a result, the Company increased
its cash balance by $2.4 million to $8.2 million at June 30, 1995.

The Company's current ratio remained constant at .9:1 at both June 30, 1995
and December 31, 1994.  Current assets increased $40.3 million or 33%
primarily due to acquisitions.  The bulk of this growth came from increased
receivables acquired in the CPG acquisition.  Receivables management is a key
performance factor for HBOC, and although the Company already believes it has
better receivables performance than most of its competitors, management
continues to focus on this area.  Current liabilities increased $44 million
or 33% primarily due to liabilities assumed related to the CPG acquisition
and increased accounts payable.

The Company has access to several financing sources, including $25 million
available under a revolving credit agreement and $5 million available on two
lines of credit totalling $10 million, as of June 30, 1995.

Management believes HBOC is well positioned to generate strong positive cash
flow from operations through continued focus on receivables and expense
controls.  The CPG acquisition brings a strong base of recurring revenue and
cash flow.  This, combined with significant expense reductions resulting from
the synergies created as the companies combine operations, should result in a
positive impact on cash flow for the Company as a whole.  The Company has
flexibility in completing future acquisitions on a non-cash basis if desired.
 Management believes positive future cash flows from operations and access to
financing sources will enable HBOC to make strategic investments to enhance
quality, increase efficiency and promote growth.

                                Page 18 of 23

<PAGE>


                                                    HBO&Company and Subsidiaries
                                                            FINANCIAL STATEMENTS
                                         (000 Omitted Except for Per Share Data)

CONSOLIDATED STATEMENTS OF INCOME -- UNAUDITED

<TABLE>
<CAPTION>
                                                                THREE MONTHS ENDED        SIX MONTHS ENDED
                                                                     JUNE 30,                  JUNE 30,
                                                                 1995         1994        1995        1994
<S>                                                            <C>           <C>           <C>        <C>
REVENUE                                                      $ 99,536      $78,343    $190,245    $145,850
OPERATING EXPENSE:
  Cost of Operations                                           45,192       42,490      91,279      78,870
  Marketing                                                    14,080       10,205      26,411      19,649
  Research and Development                                      8,482        6,996      16,453      13,085
  General and Administrative                                   11,535        7,979      20,490      14,712
  Purchased Research and Development Charge                   125,520           --     125,520          --
                                                             --------      -------    --------    --------
    Total Operating Expense                                   204,809       67,670     280,153     126,316
                                                             --------      -------    --------    --------
OPERATING INCOME (LOSS)                                      (105,273)      10,673     (89,908)     19,534
Other Income (Expense), Net                                      (664)         (65)     (1,026)         73
                                                             --------      -------    --------    --------
Income (Loss) Before Provision (Credit) for Income Taxes     (105,937)      10,608     (90,934)     19,607
Provision (Credit) for Income Taxes                           (42,374)       4,273     (36,373)      7,844
                                                             --------      -------    --------    --------
NET INCOME (LOSS)                                            $(63,563)     $ 6,335    $(54,561)   $ 11,763
                                                             --------      -------    --------    --------
EARNINGS (LOSS) PER SHARE:
  Primary                                                    $  (1.94)     $   .19    $  (1.69)   $    .36
  Fully Diluted                                              $  (1.94)     $   .19    $  (1.69)   $    .36
                                                             --------      -------    --------    --------
WEIGHTED AVERAGE SHARES OUTSTANDING:
  Primary                                                      32,739       33,040      32,333      32,834
  Fully Diluted                                                32,739       33,040      32,333      32,834
                                                             --------      -------    --------    --------
CASH DIVIDENDS DECLARED PER SHARE                              $  .04      $   .04    $    .08    $    .08
                                                             --------      -------    --------    --------
                                                             --------                 --------
</TABLE>

CONSOLIDATED CONDENSED BALANCE SHEETS -- UNAUDITED

<TABLE>
<CAPTION>
ASSETS
                                                                                      June 30,    Dec. 31,
                                                                                          1995        1994
<S>                                                                                   <C>         <C>
CURRENT ASSETS:
  Cash and Cash Equivalents                                                           $  8,232    $  5,825
  Receivables, Net of $2,389 and $1,749 Allowance for Doubtful Accounts                131,709     101,457
  Current Deferred Income Taxes                                                          9,130       5,133
  Inventories                                                                            1,868       1,280
  Prepaids and Other Current Assets                                                     12,061       8,968
                                                                                      --------    --------
    Total Current Assets                                                               163,000     122,663
                                                                                      --------    --------
INTANGIBLES, Net of $6,390 and $3,482 Accumulated Amortization                         181,293      57,569
DEFERRED INCOME TAX                                                                     33,096          --
PROPERTY AND EQUIPMENT, Net of $63,025 and $61,166 Accumulated Depreciation             31,983      26,598
CAPITALIZED SOFTWARE, Net of $19,015 and $16,182 Accumulated Amortization               25,626      25,035
OTHER NONCURRENT ASSETS, NET                                                             6,457       2,012
                                                                                      --------    --------
                                                                                      $441,455    $233,877
                                                                                      --------    --------
                                                                                      --------

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES                                                                   $175,370    $131,382
DEFERRED INCOME TAXES                                                                       --       9,623
LONG-TERM DEBT AND OTHER LIABILITIES                                                    24,316       1,397
STOCKHOLDERS' EQUITY                                                                   241,769      91,475
                                                                                      --------    --------
                                                                                      $441,455    $233,877
                                                                                      --------    --------
                                                                                      --------
</TABLE>

The accompanying Notes to Consolidated Financial Statements are an integral part
of these consolidated financial statements.

                                      Page 19 of 23

<PAGE>

                                                    HBO&Company and Subsidiaries
                                                            Financial Statements
                                                                   (000 Omitted)

CONSOLIDATED STATEMENTS OF CASH FLOWS -- UNAUDITED

<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,                                                                    1995        1994
<S>                                                                                        <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net Income (Loss)                                                                      $(54,561)   $ 11,763
                                                                                         --------    --------
  Adjustments to Reconcile Net Income (Loss) to Net Cash Provided by Operating
   Activities:
    Purchased Research and Development Charge                                             125,520          --
    Depreciation and Amortization                                                          11,667       7,449
    Provision (Credit) for Noncurrent Deferred Income Taxes                                (9,521)        826
    Changes in Assets and Liabilities:
      Receivables                                                                          (3,318)    (20,317)
      Current Deferred Income Taxes                                                        (3,997)       (628)
      Inventories                                                                            (588)       (754)
      Prepaids and Other Current Assets                                                    (2,077)     (1,467)
      Deferred Income Tax                                                                 (33,096)         --
      Other Noncurrent Assets, Net                                                           (878)       (383)
      Current Liabilities                                                                 (12,320)     15,345
    Other, Net                                                                                213         (88)
                                                                                         --------    --------
      Total Adjustments                                                                    71,605         (17)
                                                                                         --------    --------
      NET CASH PROVIDED BY OPERATING ACTIVITIES                                            17,044      11,746
                                                                                         --------    --------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Sale of Property and Equipment                                                              159          --
  Purchase of Facility                                                                         --      (2,698)
  Purchase of Businesses, Net of Cash Acquired                                             (2,121)    (40,876)
  Capital Expenditures                                                                     (3,679)     (2,218)
  Capitalized Software                                                                     (5,365)     (4,556)
                                                                                         --------    --------
    NET CASH USED IN INVESTING ACTIVITIES                                                 (11,006)    (50,348)
                                                                                         --------    --------
    NET CASH PROVIDED (USED) BEFORE FINANCING ACTIVITIES                                    6,038     (38,602)
                                                                                         --------    --------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from Long-Term Debt                                                             40,500      45,000
  Proceeds from Short-Term Debt                                                            18,000          --
  Proceeds from Issuance of Common Stock                                                    4,402       4,503
  Payment of Dividends                                                                     (2,553)     (2,304)
  Repayment of Short-Term Debt                                                            (23,000)         --
  Repayment of Long-Term Debt                                                             (40,980)    (15,017)
                                                                                         --------    --------
    Net Cash Provided (Used) by Financing Activities                                       (3,631)     32,182
                                                                                         --------    --------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                            2,407      (6,420)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                                              5,825      25,777
                                                                                         --------    --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                                               $  8,232    $ 19,357
                                                                                         --------    --------
                                                                                         --------
Cash Paid During the Period for:
  Interest                                                                               $  1,651    $    782
  Income Taxes                                                                           $ 10,274    $  3,980
</TABLE>

The accompanying Notes to Consolidated Financial Statements are an integral part
of these consolidated financial statements.

                                Page 20 of 23

<PAGE>

                                                    HBO&Company and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  The consolidated financial statements include all adjustments that,
in the opinion of management, are necessary for a fair presentation of
the results for the periods indicated. Quarterly results of operations
are not necessarily indicative of annual results. These statements
should be read in conjunction with the consolidated financial statements
and the notes thereto included in the Company's 1994 Annual Report to
Stockholders.

2.  Earnings per share is based upon the weighted average number of
shares and the dilutive effect of stock options outstanding.  The loss
per share is based upon the weighted average number of shares
outstanding, since the effect of stock options was anti-dilutive.

3.  At June 30, 1995, HBOC had a long-term revolving credit agreement
for $25 million with interest payable at the Company's option of prime
or LIBOR plus a margin determined by certain of the Company's financial
ratios (71/16% as of June 30, 1995). The commitment fee on the revolving
credit agreement is 3/8% payable quarterly on the unused portion of the
commitment. The agreement, which expires on June 30, 1997, contains
certain net worth, income, cash flow and financial ratio covenants. The
Company is in compliance with these covenants at June 30, 1995.

HBOC also has available a committed, unsecured line of credit for $5
million with no commitment fee, and an uncommitted, unsecured line of
credit for $5 million with interest payable at prime less .5% and no
commitment fee.

Additionally, the Company has repaid, in advance, all amounts
outstanding related to the $25 million five-year loan entered into in
1994.

During the second quarter of 1994, the Company entered into an agreement
with a financial institution whereby the Company can sell on an ongoing
basis, with partial recourse, an undivided interest in a pool of
customer receivables. During the first quarter of 1995, the Company
increased the amount available to be sold and the amount sold from $20
million to $30 million. Interest is payable at the Company's option of
prime or LIBOR plus a margin determined by certain of the Company's
financial ratios (71/16% as of June 30, 1995). The two-year agreement
expires June 25, 1996. The Company, as agent for the purchaser, retains
collection and administrative responsibilities for the receivables sold.

4.  On February 22, 1995, HBOC completed the acquisition of Advanced
Laboratory Systems, Inc. for approximately $7 million, net of cash
acquired. Advanced Laboratory Systems, Inc. was a Eugene, Oregon-based
developer of laboratory software for the healthcare and commercial
marketplace. The transaction was accounted for as a purchase.

5.  On June 17, 1995, HBO & Company of Georgia, a wholly owned
subsidiary of HBOC, acquired First Data Health Systems Corporation, now
known as the Charlotte Product Group (CPG), a wholly owned subsidiary of
First Data Corporation, in exchange for 4 million shares of Common Stock
of HBOC valued at approximately $200 million, $500,000 in cash and a
promissory note for $100,000. First Data Health Systems Corporation
provided information systems and services to hospitals, medical group
practices and medical facilities throughout the United States, United
Kingdom, Australia, Puerto Rico and other countries.

The transaction was accounted for as a purchase. The cost of the
acquisition has been allocated on the basis of an outside appraisal of
the tangible ($58 million) and intangible assets acquired and the
liabilities assumed ($83 million).  HBOC recorded approximately $115
million of intangibles after adjusting for the purchased research and
development charge (note 6), which are being amortized on a straight
line basis over periods ranging from seven to 15 years. The Company is
in the process of finalizing the purchase price allocation.

                                Page 21 of 23

<PAGE>

                                                    HBO&Company and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The results of operations of CPG are included in the accompanying
financial statements since the date of acquisition. The following
unaudited pro forma information was prepared assuming the transaction
was consummated on January 1 of each year presented and excludes the
effect of the second quarter 1995 purchased research and development
charge of $126 million:

<TABLE>
<CAPTION>
(000 Omitted Except for Per Share Data)         Three Months Ended June 30,
                                                       1995         1994
<S>                                                 <C>           <C>
Revenue                                            $126,571     $115,981
Net Income                                         $ 12,664     $  7,993
Earnings Per Share                                 $    .34     $    .22
                                                   --------     --------

<CAPTION>
                                                      Six Months Ended
                                                          June 30,
                                                       1995         1994
<S>                                                <C>          <C>
Revenue                                            $258,440     $220,126
Net Income                                         $ 24,686     $ 15,462
Earnings Per Share                                 $    .66     $    .42
                                                   --------     --------
</TABLE>

This pro forma information is not necessarily indicative of the results
of operations that would have been attained had the acquisition been
consummated on January 1 of each year presented or that may be attained
in the future.

6.  During the second quarter of 1995, the Company recorded a $126
million charge primarily related to research and development purchased
from the Health Systems Group of First Data Corporation which had not
reached the stage of technological feasibility ($115 million). The
charge also included severance and other acquisition related costs ($8
million) and a mainframe capitalized research and development net book
value adjustment ($3 million).

7.  In October 1986 a class action lawsuit was filed against the Company
by a plaintiff who purchased 500 shares of the Company's stock in 1985.
In April 1991 the United States Federal District Court for the Northern
District of Georgia, Atlanta Division (the "District Court"), certified
the case as a class action on behalf of all purchasers of the Company's
common stock on the open market during the period from March 29, 1985,
to April 20, 1986. The plaintiff alleges that HBOC's filings with the
Securities and Exchange Commission did not fairly present the Company's
financial position and results of operations for the years ended
December 31, 1984 and 1985, and the intervening quarters with respect
to, among other things, reporting the effect of discounting service
agreement contracts. In November 1992 the lawsuit was amended to add a
claim regarding the timeliness of recognition and disclosure of various
expense items by the Company during fiscal year 1985. The plaintiff also
alleges that the market price of the Company's common stock during the
period was inflated due to the alleged nondisclosures and
misrepresentations in the Company's filings. In early February 1993 the
plaintiff evidenced an intention to allege substantial damages.
Management believes that the members of the class have suffered no
damages that entitle them to compensation and that, in any event, the
plaintiff's calculation of alleged damages is unrealistic and without
merit.

On April 1, 1994, the District Court issued an Order granting the
Company's motion for summary judgement and dismissed the suit. On April
20, 1994, the District Court issued an Order setting forth the reasons
for dismissing the suit. The plaintiff has appealed from the District
Court's determination and that appeal is pending. In the event that the
outcome is ultimately unfavorable, the amount of loss could be
substantial. Management believes, however, that the Company should be
able to continue to defend the suit successfully.

                                Page 22 of 23

<PAGE>

The Company is subject to other legal proceedings and claims which arise in the
ordinary course of business. In the opinion of management, the amount of
potential liability with respect to these actions will not materially affect the
Company's financial position or results of operations.

8.  On July 10, 1995, the Company completed the acquisition of Pegasus
Medical, Ltd for approximately $8 million of cash and contingent
payments, based on certain deliverables, of $7 million. Pegasus was a
privately held Israeli software company that markets the Smart Medical
Record, a computer-based patient record. The transaction will be
accounted for as a purchase.

9.  On July 14, 1995, the Company signed a definitive agreement to
acquire CliniCom Incorporated (CliniCom) for .4 of a share of HBOC
common stock in exchange for each of the approximately 8,660,000
currently outstanding shares of CliniCom common stock. CliniCom is a
developer of point-of-care clinical information systems. The
transaction, which is subject to certain conditions including regulatory
and shareholder approval, will be accounted for as a pooling of
interests and is expected to close in the early fourth quarter of 1995.

HBO&COMPANY
301 Perimeter Center North
Atlanta, Georgia 30346
Phone (404) 393-6000



                                Page 23 of 23



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