<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the quarterly period ended March 31, 2000.
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 000-27056
CAREDATA.COM, INC.
(Exact name of registrant as specified in its charter)
Delaware 58-2256400
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Two Piedmont Center, Suite 400, 3565 Piedmont Rd., Atlanta, Georgia 30305
- --------------------------------------------------------------------------------
(Address of principal executive office) (Zip code)
Registrant's Telephone Number Including Area Code: (404) 364-6700
-----------------------------
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 [ ]
The number of shares outstanding of the issuer's only class of Common
Stock, $0.001 par value, as of May 10, 2000 was 8,267,047.
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PART I - -FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
CAREDATA.COM, INC AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEET
<TABLE>
<CAPTION>
(Amounts in thousands)
MARCH 31, 2000 DECEMBER 31, 1999
-------------- -----------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ -- $ 199
Accounts receivable, less allowance for doubtful
accounts of $1,018 and $902 at March 31, 2000
and December 31, 1999, respectively 13,801 12,053
Prepaid expenses 1,015 956
Note receivable from officer 39 39
Product and data licenses 1,250 1,188
Other current assets 730 621
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Total current assets 16,835 15,056
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Property and equipment 10,047 9,058
Less accumulated depreciation and amortization 4,718 4,020
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Property and equipment, net 5,329 5,038
------- -------
Excess of cost over net assets of businesses
acquired, less accumulated amortization of
$5,426 and $4,467 at March 31, 2000 and December 31, 1999, respectively 41,610 42,568
Intangible assets, less accumulated amortization of
$2,310 and $2,010 at March 31, 2000 and December 31, 1999, respectively 5,337 5,637
Software development costs, less accumulated
amortization of $1,170 and $925 at March 31, 2000 and
December 31, 1999, respectively 6,259 5,564
Note receivable from officer, excluding current portion 23 23
Investments 17,345 13,490
Other assets 1,868 1,392
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Total other assets 72,442 68,674
------- -------
Total assets $94,606 $88,768
======= =======
</TABLE>
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CAREDATA.COM, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31, 2000 DECEMBER 31, 1999
-------------- -----------------
<S> <C> <C>
CURRENT LIABILITIES
Current installments of long-term debt and obligations under
capital leases $ 22,709 $ 16,620
Accounts payable 434 678
Accrued expenses 1,493 1,927
Income taxes payable 905 758
Deferred revenue 4,268 3,569
-------- --------
Total current liabilities 29,809 23,552
Long-term debt and obligations under capital leases, excluding
current installments 76 105
-------- --------
Total liabilities 29,885 23,657
-------- --------
Series 1998-A preferred stock, $.001 par value, redeemable; 5 shares authorized
and designated; 0.465 shares issued and outstanding with a per-share
liquidation value of $10,000 at March 31, 2000 and December 31, 1999 4,255 4,255
STOCKHOLDERS' EQUITY
Preferred stock, $.001 par value; 795 shares
authorized; none issued or outstanding -- --
Series A junior participating preferred stock $.001 par
value; 200 shares authorized and designated; none
issued or outstanding -- --
Common stock -- $.001 par value; 20,000 shares authorized;
8,254 and 8,236 shares issued and outstanding at
March 31, 2000 and December 31, 1999, respectively 8 8
Additional paid in capital 83,004 82,920
Accumulated deficit (22,546) (22,072)
-------- --------
60,466 60,856
-------- --------
Total liabilities and stockholders' equity $ 94,606 $ 88,768
======== ========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
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CAREDATA.COM, INC AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
(Amounts in thousands, except per share data)
THREE MONTHS ENDED
------------------
MARCH 31,
---------
2000 1999
-------- --------
<S> <C> <C>
Revenue $ 11,068 $ 8,078
Salaries, wages and benefits 4,992 3,857
Other operating expenses 3,803 2,366
Depreciation and amortization 2,128 1,002
-------- --------
Operating income 145 853
Interest income (expense), net (404) 273
-------- --------
Income (loss) before income taxes (259) 1,126
Income taxes (215) (442)
-------- --------
Net income (loss) (474) 684
Series 1998-A preferred stock dividend (58) --
-------- --------
Net income (loss) attributable to common stock $ (532) $ 684
======== ========
Net income (loss) per share of common stock -- basic $ (0.06) $ 0.09
======== ========
Net income (loss) per share of common stock -- diluted $ (0.06) $ 0.09
======== ========
Weighted average number of common shares outstanding --
basic 8,249 7,391
======== ========
Weighted average number of common shares outstanding --
diluted 8,249 7,816
======== ========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
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CAREDATA.COM, INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
(Amounts in thousands)
THREE MONTHS
------------
ENDED MARCH 31,
---------------
2000 1999
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (474) $ 684
Adjustments to reconcile net loss to net cash provided by
(used in) operating activities:
Depreciation and amortization 2,128 1,002
Increase in:
Accounts receivable (1,748) (1,283)
Other assets (718) (52)
Increase (decrease) in:
Accounts payable (244) 587
Accrued expenses and other liabilities (287) (196)
Deferred revenue 699 358
-------- --------
Net cash provided by (used in) operating activities (644) 1,100
-------- --------
Cash flows from investing activities:
Acquisition of businesses, net of cash acquired -- (7,289)
Purchases of property and equipment (914) (626)
Additions to software development costs (940) (871)
Purchase of investments (3,855) --
Repayment of note receivable from stockholders -- 250
-------- --------
Net cash used in investing activities (5,709) (8,536)
-------- --------
Cash flows from financing activities:
Proceeds from issuance of common stock 95 72
Common stock repurchased and canceled (1) --
Proceeds from draw on revolving credit facility 6,090 --
Payments on long-term debt and obligations under capital leases (30) (33)
-------- --------
Net cash provided by financing activities 6,154 39
-------- --------
Net decrease in cash and cash equivalents (199) (7,397)
Cash and cash equivalents at beginning of period 199 21,365
-------- --------
Cash and cash equivalents at end of period $ -- $ 13,968
======== ========
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 408 $ 2
======== ========
Supplemental disclosure of non-cash activities:
-------- --------
Accrual of contingent consideration $ -- $ 5,402
======== ========
Issuance of restricted stock awards $ -- $ 145
======== ========
Acquisitions of businesses:
Fair value of assets acquired $ -- $ 4,867
Fair value of liabilities assumed -- (578)
Contingent consideration paid -- 3,000
-------- --------
Net cash paid for acquisitions $ -- $ 7,289
======== ========
</TABLE>
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CAREDATA.COM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
1. GENERAL:
The consolidated condensed financial statements as of March 31, 2000
and for the three-month periods ended March 31, 2000 and 1999 are unaudited. In
the opinion of management, all adjustments, consisting of normal recurring
accruals, necessary for the fair presentation of the consolidated financial
position and results of operations and cash flows for the periods presented have
been included. Results for the interim period are not necessarily indicative of
results that may be expected for the full year.
These consolidated condensed financial statements should be read in
conjunction with the consolidated financial statements and notes included in the
Annual Report on Form 10-K of Caredata.com, Inc. (the "Company") for the year
ended December 31, 1999.
2. NET EARNINGS (LOSS) PER SHARE OF COMMON STOCK:
Basic earnings (loss) per common share available to common stockholders
is based on the weighted-average number of common shares outstanding. Diluted
earnings (loss) per common share available to common stockholders is based on
the weighted-average number of common shares outstanding and dilutive potential
common shares, such as dilutive stock options, determined using the treasury
stock method.
Securities that could have potentially diluted basic earnings per share
("EPS") that were not included in diluted EPS because their effect on the three
months ended March 31, 2000 was antidilutive totaled approximately 570,000.
3. LINE OF CREDIT:
In June 1998, the Company entered into an Amended and Restated Credit
Agreement with Bank of America under which a $25 million revolving credit
facility (the "Bank of America Revolver") was made available to the Company to
fund working capital needs as well as new product development and acquisitions.
4. ACQUISITIONS:
Many of the Company's acquisition agreements provide for the payment of
contingent consideration based upon the performance of the acquired businesses
over a prescribed period of time. If such acquired businesses exceed the
relevant performance goals, the Company will be required to make additional
payments, which could be material. In connection with the CareData Reports
acquisition, additional consideration of $5.5 million and $3.0 million was paid
in 1999 and 1998, respectively. In connection with the 1998 acquisition of
Healthdemographics, the Company paid additional cash consideration of $4.7
million during 1999 and issued 465 shares of Series 1998-A Preferred Stock in
September 1999. Each share of Series 1998-A Preferred Stock has a liquidation
preference and redemption value of $10,000, is mandatorily convertible into 442
shares of common stock upon the market value of the Company's common stock
reaching $22.61 per share, earns dividends at a rate of 5 percent of the
redemption value, and is mandatorily redeemable at the twentieth anniversary of
the date of issuance. Although no additional contingent payments were made in
the three months ended March 31, 2000, additional contingent payments will be
forthcoming in 2000 and are expected to be material.
5. INVESTMENTS:
The Company has various investments, for which the Company does not
have the ability to exercise significant influence and for which there is not a
readily determinable market value, that are accounted for under the cost method
of accounting. The Company periodically evaluates the carrying value of its
investments accounted for under the cost method of accounting and as of March
31, 2000 such investments were recorded at the lower of cost or estimated net
realizable value.
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6. SEGMENT REPORTING:
The Company's reportable segments are strategic business units that
offer different products and services. The Company provides its services and
products through its Market Performance and Physician Information segments. The
Company's market performance products include healthcare forecasting software,
healthcare utilization and reimbursement data, clinical outcomes data,
healthcare satisfaction and pharmacy surveys, and on-line healthcare research
software. The Company's market performance services include facility
profitability analysis services, reimbursement compliance services, and clinical
outcomes reporting services. The Company's physician information products
consist of physician recruiting databases and software, physician credentialling
databases and software, and practice management software. The Company's
physician information services consist of physician recruiting services,
physician credentialling services, and healthcare administrative consulting
services.
The Company evaluates each segment's performance based on a modified
operating profit measurement (earnings before interest, taxes, depreciation,
amortization, and acquired in-process research and development costs and
integration costs).
<TABLE>
<CAPTION>
THREE MONTHS
(Amounts in thousands) ENDED MARCH 31,
2000 1999
--------- --------
<S> <C> <C>
Revenue:
Market Performance $ 5,729 $ 4,814
Physician Information 5,339 3,264
-------- --------
Total $ 11,068 $ 8,078
-------- --------
Operating profit(1):
Market Performance $ 2,156 $ 2,262
Physician Information 3,317 887
Corporate (3,200) (1,294)
-------- --------
Total $ 2,273 $ 1,855
-------- --------
Depreciation and amortization:
Market Performance $ 382 $ 188
Physician Information 486 196
Corporate 1,260 618
-------- --------
Total $ 2,128 $ 1,002
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Reconciling item:
Other $ (404) $ 273
-------- --------
Income (loss) before income taxes $ (259) $ 1,126
======== ========
MAR. 31, DEC. 31
2000 1999
--------- --------
Assets:
Market Performance $ 9,737 $ 9,958
Physician Information 9,468 9,892
Corporate 75,401 68,918
-------- --------
$ 94,606 $ 88,768
======== ========
</TABLE>
(1) Excludes depreciation costs, amortization costs, acquired in-process
research and development costs, integration costs and
acquisition-related costs.
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<PAGE> 8
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
Caredata.com is an online syndicator of healthcare content and
applications to a wide range of Internet portals and e-commerce sites. The
Company enables Web sites to enhance their content offerings by delivering its
proprietary databases and co-branded tools to their established online
communities. As a supplier of Web-based content and applications, the Company is
not subjected to the intense marketing costs needed to attract site users.
E-Health portals, payor sites, online destinations targeting small subsets of
healthcare consumers and provider-sponsored sites all need to attract and keep
visitors at their sites. Caredata.com's Web applications and proprietary content
attract visitors and provide this "stickiness" to its customers' Web sites
without the customer having to spend the significant time and capital that would
be required to develop similar applications and content on their own.
Caredata.com currently has more than 50 strategic partnerships and alliances
with leading Web businesses.
Caredata.com is also a provider of proprietary database products,
decision-support software and analytical services to the healthcare industry.
The Company's products and services enable its customers to make objective
comparisons of the financial costs and clinical outcomes of physician services
to customer-specific and industry benchmarks, assess member satisfaction with
specific managed-care plans, and obtain information concerning the background
and credentials of physicians. These capabilities assist healthcare industry
participants in strategic planning, effective contracting and improving the
delivery of care.
SOURCES OF REVENUE
The Company provides services and licenses its products within its two
segments, market performance and physician information. The Company also
co-brands or syndicates its products with its business partners in order to
enhance Caredata.com's brand recognition. The Company's product offerings enable
its partners to provide Internet features and functionality to their customers
and members, allowing them to remain competitive in the rapidly changing
Internet marketplace without having to incur the extensive time and costs
associated with the internal development of such products. In addition, because
many of the Company's products and databases are digitally linked, license
agreements often create multiple points of entry and distribution channels for
the Company's complementary products and services. These digital networks also
provide primary source data and strengthen the Company's information
infrastructure with minimal incremental costs.
The Company's market performance products include healthcare
forecasting software, healthcare utilization and reimbursement data, clinical
outcomes data, healthcare satisfaction and pharmacy surveys, and on-line
healthcare research software. The Company's market performance services include
facility profitability analysis services, reimbursement compliance services, and
clinical outcomes reporting services. The Company's physician information
products consist of physician recruiting databases and software, physician
credentialing databases and software, and practice management software. The
Company's physician information services consist of physician recruiting
services, physician credentialing services, and healthcare administrative
consulting services.
The Company's license and product revenues are generally recognized
upon delivery provided that no significant Company obligations remain and
collection of the receivable is probable. Revenue from healthcare surveys is
recognized as the related costs to produce the surveys are incurred. Fees from
maintenance, updates and support of the Company's products are deferred and
recognized ratably over the service period. Revenue from subscription to the
Company's physician recruiting databases is recognized over the term of the
subscription. Revenues for the Company's services are recognized as the services
are performed.
The Company's two groups of products contribute varying percentages of
the Company's total revenue from quarter to quarter based on a variety of
factors, including, without limitation, the timing and size of acquisitions and
the seasonality of the Company's products. Of its total revenue for the three
months ended March 31, 2000, the Company derived approximately 52% from market
performance products and approximately 48% from physician information products.
Of its total revenue for the year ended December 31, 1999, the Company derived
approximately 56% from market performance products and approximately 44% from
physician information products.
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<PAGE> 9
The Company's revenue is composed of both recurring revenue from the
Company's current customer base as well as revenue from new customers. The
Company defines its recurring revenue percentage with respect to any particular
period as the quotient, expressed as a percentage, of (i) revenue recognized
during such period from a sale of a product to a customer who purchased a
similar product in the prior period divided by (ii) the Company's total revenue
in the prior period. In determining its recurring revenue percentage, the
Company includes in its revenue the revenue of entities acquired during the
period as if such acquisitions had occurred at the beginning of the prior
period. The Company does not include revenue in its recurring revenue percentage
to the extent that such revenue exceeds total revenue in the prior period. The
Company's recurring revenue percentage has been in excess of 60% for each of the
last five years.
From time to time, the Company agrees to accept equity securities from
its customers in lieu of cash as payment for products and services purchased by
such customers from the Company. These arrangements typically involve high
risk, start-up companies whose equity securities have no trading market and,
therefore, no liquidity. Approximately $2.1 million or 19% of the Company's
revenue for the three months ended March 31, 2000 consists of such securities.
RESULTS OF OPERATIONS
The following table sets forth, for the fiscal periods indicated,
certain items from the statements of operations of the Company expressed as a
percentage of revenue:
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS: THREE MONTHS
------------
ENDED MARCH 31,
---------------
2000 1999
-------- -------
<S> <C> <C>
Revenue 100 % 100 %
Salaries, wages and benefits 45 48
Other operating expenses 35 29
Depreciation and amortization 19 12
------- -------
Operating income 1 11
Interest income (expense), net (3) 4
Income tax expense (2) (6)
------- -------
Net income (loss) (4)% 9 %
======= =======
</TABLE>
QUARTER ENDED MARCH 31, 2000 COMPARED TO QUARTER ENDED MARCH 31, 1999
Revenue. Revenue for the three months ended March 31, 2000 was $11.1
million, an increase of $3.0 million, or 37%, over the same period in the prior
year. Internet-related revenue, which consists of sales of newly developed
Internet products, Internet products acquired in connection with the
acquisitions made in 1999 and traditional products that became Web-enabled in
1999 and 2000, represented $8.3 million of the Company's revenue for the three
months ended March 31, 2000. The increase from 1999 to 2000 is primarily
attributable to sales of these Internet-related products and the full year
impact of the acquisitions made in 1999.
Salaries, wages and benefits. Salaries, wages and benefits for the
three months ended March 31, 2000 were $5.0 million, an increase of $1.1 million
or 29% over the same period in the prior year. The increase was primarily the
result of the full-year impact of the acquisitions made in 1999 and incremental
expenses associated with internal growth. As a percentage of revenue, salaries,
wages and benefits for the three months ended March 31, 2000 and 1999 were 45%
and 48%, respectively. The decrease in salaries, wages and benefits as a
percentage of revenue was primarily attributable to efficiencies gained from the
Company's integration and consolidation efforts.
Other operating expenses. Other operating expenses for the three months
ended March 31, 2000 were $3.8 million, an increase of $1.4 million or 61% over
the same period in the prior year. The increase was primarily related to costs
associated with the full-year impact of the acquisitions made in 1999 and costs
related to strengthening the Caredata.com brand. Other operating expenses as a
percentage of revenue were 35% for the three months ended March 31, 2000 as
compared to 29% in the same period in the prior year.
Depreciation and amortization. Depreciation and amortization expenses
for the three months ended March 31, 2000 were $2.1 million, an increase of $1.1
million or 112% over the same period in the prior year. The increase was
primarily the result of the amortization of intangible assets acquired in the
acquisitions made in 1999, acquisitions made in 1998 and acquisitions made in
1997. Depreciation and amortization as a percentage of revenue increased to 19%
for the three months ended March 31, 2000 compared to 12% in the same period in
the prior year.
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<PAGE> 10
Interest income (expense), net. Net interest expense for the three
months ended March 31, 2000 was $404,000, compared to net interest income of
$273,000 for the same period in the prior year. The increase in expense was a
result of decreased cash balances and the interest expense related to draws on
the Company's revolving credit facility with Bank of America.
Income tax expense. Income tax expense for the three months ended March
31, 2000 was $215,000, compared to income tax expense of $442,000 for the same
period in the prior year. The decrease was primarily due to a decrease in
taxable income. The Company records income tax expense using an effective tax
rate of 39% on its taxable income. Differences between taxable income and net
income (loss) arise primarily from the non-deductibility of amortization expense
related to certain acquisitions.
LIQUIDITY AND CAPITAL RESOURCES
The Company's Amended and Restated Credit Agreement with Bank of
America (the "Bank of America Revolver") under which $25.0 million was made
available to the Company is secured by substantially all of the Company's
assets. Under the terms of the Bank of America Revolver, the Company may borrow,
subject to customary terms, conditions and covenants, up to $25.0 million to
fund working capital needs, new product development and acquisitions. The
Amended and Restated Credit Agreement for the Bank of America Revolver provides
for interest at varying rates based on LIBOR and Bank of America's prime rate,
and will mature on July 15, 2000. Under the terms of the Bank of America
Revolver, the Company is subject to various restrictive covenants regarding,
among other things, payment of any dividends, capital expenditures limitations,
incurrence of indebtedness from others in excess of certain amounts, and
consummation of certain mergers and acquisitions without the consent of Bank of
America. Financial covenants include, but are not limited to, maintaining debt
to capitalization ratios, minimum net worth ratios, debt service coverage ratios
and cash flow leverage ratios. In 2000 and 1999, the Company borrowed $5.0
million on the Bank of America Revolver to partially fund the acquisition of
Citizen 1, $1.7 million to partially fund the contingent consideration paid in
connection with the Healthdemographics acquisition, $5.2 million for general
working capital use and $10.7 million to make minority equity investments in
several strategic businesses, primarily e-health companies.
The Company had a working capital deficit of $13.0 million as of March
31, 2000 as compared to a working capital deficit of $8.5 million at December
31, 1999. The decrease was primarily due to the additional borrowings against
the Bank of America Revolver as discussed in the preceding paragraph.
Net cash used in operating activities totaled $644,000 for the three
months ended March 31, 2000 as compared to net cash provided by operating
activities of $1.1 million for the same period in the prior year. The decrease
in cash provided by operating activities of $1.7 million was primarily due to a
net loss for the three months ended March 31, 2000 versus a net income in the
same period in the prior year.
Net cash used in investing activities was approximately $5.7 million
for the three months ended March 31, 2000 as compared to $8.5 million for the
same period in the prior year. In the three months ended March 31, 2000, the
Company used cash to fund $914,000 in fixed asset purchases, $940,000 of
software development and $3.9 million in minority investments in other
companies.
Net cash provided by financing activities was $6.2 million for the
three months ended March 31, 2000 as compared to $39,000 for the same period in
the prior year. In the three months ended March 31, 2000, the Company borrowed
$6.1 million under the Bank of America revolving credit facility.
Many of the Company's acquisition agreements provide for the payment of
contingent consideration based upon the performance of the acquired businesses
over a prescribed period of time. If such acquired businesses exceed the
relevant performance goals, the Company is required to make additional payments,
which could be material. In connection with the Caredata Reports acquisition,
additional consideration payments of $5.5 and $3.0 million were made in 1999 and
1998, respectively. In connection with the Healthdemographics acquisition,
additional consideration payments of $4.7 million in cash and 465 shares of
Series 1998-A Preferred Stock were made in 1999. Although no additional
contingent payments were made in the three months ended March 31, 2000,
additional contingent payments will be forthcoming in 2000 and are expected to
be material.
The Company believes that available borrowings under the Bank of
America Revolver and cash generated from operations will be sufficient to meet
the capital needs for the Company's operations for only the very near term.
Therefore, in connection with the maturity of the Bank of America Revolver and
the payment of certain required contingent obligations in July 2000, the Company
must either refinance the Bank of America Revolver and/or seek
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<PAGE> 11
alternative debt and/or equity financing to satisfy its obligations in this
regard. There can be no assurance that the Company will be able to refinance the
Bank of America Revolver or obtain alternative financing in amounts and on terms
acceptable to the Company. The Company's business operations will be materially
and adversely affected if the Company is unable to obtain new financing during
the second and/or third quarters of 2000. The Company's future liquidity and
cash requirements will depend on a wide range of factors, including costs
associated with development of new products, enhancements of existing products
and acquisitions. Although the Company has no present commitments or agreements
regarding acquisitions, part of the Company's strategy is to acquire additional
complementary products and businesses.
EFFECTS OF INFLATION
Management does not believe that inflation has had a material impact on
the Company's results of operations for the periods presented. Substantial
increases in costs, particularly the cost of labor for product development,
marketing and sales, could have an adverse impact on the Company and the
healthcare information industry.
RECENT ACCOUNTING PRONOUNCEMENTS
On September 15, 1998 the SEC issued a letter to the AICPA SEC
Regulations Committee outlining changes that the SEC believes should be made to
the methodology of calculating acquired in-process research and development
costs. The Company has applied this guidance with respect to the 1997, 1998 and
1999 acquisitions.
In December 1998, the AICPA issued SOP No. 98-9, "Modification of SOP
No. 97-2, Software Revenue Recognition, with Respect to Certain Transactions."
This SOP amends SOP No. 97-2 to, among other matters, require recognition of
revenue using the "residual method" in circumstances outlined in the SOP. Under
the residual method, revenue is recognized as follows: (1) the total fair value
of undelivered elements, as indicated by vendor-specific objective evidence, is
deferred and subsequently recognized in accordance with the relevant sections of
SOP No. 97-2, and (2) the difference between the total arrangement fee and the
amount deferred for the undelivered elements is recognized as revenue related to
the delivered elements. SOP No. 98-9 is effective for fiscal years beginning
after March 15, 1999. The Company does not believe that the adoption of SOP No.
98-9 will have a material effect on the Company's revenue recognition.
RISK FACTORS
In evaluating the Company and its business, prospective investors
should carefully consider the following risk factors in addition to the other
information contained herein. This quarterly report, as well as press releases
and other public statements made by the Company from time to time, contain
"forward-looking statements" within the meaning of the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995. These statements address
activities, events or developments that will or may occur in the future and are
based on assumptions and analyses made by the Company in light of its experience
and perception of historical trends, current conditions, expected future
developments and other factors. Forward-looking statements include those
statements that anticipate future financial performance, business prospects,
growth and operating strategies, industry and market dynamics, business
relationships, sources and types of revenue, sources and availability of
financing and similar matters, as well as statements modified by the words
"believes," "expects," "anticipates," "intends," "estimates" or similar
expressions. These forward-looking statements are subject to a number of risks
and uncertainties (such as those set forth below) that could cause future events
or actual results to differ materially from those expressed in or implied by the
forward-looking statements. Many of these risks and uncertainties are beyond the
control of the Company. Accordingly, readers are cautioned not to place undue
reliance on such forward-looking statements, which speak only as of the date
made and which the Company undertakes no obligation to revise or update in order
to reflect events after the date made.
Need for Additional Financing. The Company has near term demands on its
liquidity and capital resources, including the maturity of its revolving line of
credit with Bank of America in July 2000 and anticipated earnout obligations
from past acquisitions also due in July 2000. Therefore, the Company must either
re-finance the Bank of America revolver and/or seek alternative debt and/or
equity financing. In addition, implementation of the Company's growth strategy
will require significant capital resources. Capital is needed for both internal
growth and the acquisition and integration of new businesses, products and
services. If the Company does not maintain sufficient cash resources, the
Company's existing operations would be materially impaired, unless it is able to
obtain additional capital through debt or equity financings. Any debt financings
could result in the imposition on the Company of operational or financial
restrictions. Any equity financings could result in dilution to holders of the
Company's Common Stock. There can be no assurance that the Company will be able
to obtain needed financing in the near future or that, if available, such
financing will be on terms acceptable to the Company. The Company's business
operations will be materially and adversely affected if the Company is unable to
obtain new financing during the second and/or third quarters of 2000.
Variable Quarterly Operating Results; Seasonality. The Company's
quarterly revenue and operating results have varied significantly in the past
and are likely to vary substantially from quarter-to-quarter in the future.
Quarterly results may fluctuate as a result of a variety of factors including,
but not limited to, the length and
-11-
<PAGE> 12
unpredictable nature of the Company's sales cycle; demand for the Company's
products; the timing of significant new customer contracts; the loss or
non-renewal of significant customer contracts; the implementation of new pricing
strategies for the Company's products and services; the timing of acquisitions
or new strategic relationships; competitive conditions in the industry; changes
in customer budgets; and general economic factors. The Company has historically
recorded a disproportionate amount of its revenue for each quarter in the final
month of the quarter, while expenses have been incurred more evenly throughout
the period. Furthermore, the Company has experienced a seasonal pattern in its
operating results, with a greater proportion of the Company's revenue and more
favorable operating margins occurring in the second half of the year.
Accordingly, results of operations for any particular quarter may not be
indicative of results of operations for future periods. Additionally,
significant portions of the Company's expenses are relatively fixed, and the
amount and timing of increases in such expenses are based in large part on the
Company's expectations concerning future revenue. If revenue is below
expectations in any given quarter, the adverse effect may be magnified by the
Company's inability to adjust spending quickly enough to compensate for the
revenue shortfall. Accordingly, even a small variation from expected revenue
could have a material adverse effect on the Company's operating results and
financial condition for a given quarter. Fluctuations in the Company's revenue
and operating results could have a material adverse effect on the market price
for the Company's Common Stock.
History of Operating Losses; Uncertain Profitability. Although the
Company had net income for the year ended December 31, 1999, the Company has
recorded net losses in the three years ended December 31, 1996, 1997 and 1998
and in the three-month period ended March 31, 2000. In view of the Company's
prior operating history, there can be no assurance that the Company will
continue to achieve profitability on a quarterly or annual basis or that it will
be able to sustain or increase its revenue growth in future periods.
Furthermore, in applying the provisions of Statement of Financial Accounting
Standards No. 109 ("SFAS 109") to the Company, particularly considering the
Company's history of net losses, the Company has been unable to support a
conclusion that it is more likely than not that its deferred tax assets will be
realized for purposes of SFAS 109. As a result, the Company has provided a full
valuation allowance against its net deferred tax assets.
Risks Related to Growth. The Company's strategy is to grow aggressively
through investments in new products, strategic relationships, pursuit of
Internet-related opportunities and acquisitions. This strategy is likely to
place significant demands on the Company's financial, operational and management
resources, and exposes the Company to a variety of risks, including the risk
that the Company will be unable to retain the personnel or obtain the financial
and other resources necessary to pursue and manage such growth. The tremendous
opportunity related to equity upside in non-public, Internet startup companies
also makes it extremely difficult for the Company to recruit and retain quality
Web-knowledgable employees. The Company's growth has resulted in an increase in
the level of responsibility for the Company's key personnel. Expenses arising
from the Company's efforts to complete acquisitions, develop new products or
increase its existing market penetration could have an adverse impact on the
Company's business, results of operations and financial condition. Furthermore,
there can be no assurance that the Company will be able to identify, acquire or
integrate acquisition candidates successfully or manage profitably any
additional products and services resulting from such acquisitions. Acquired
businesses, products and services may not contribute to the Company's overall
strategy or produce returns that justify the related investment or
implementation by the Company. In addition, the Company's growth may involve the
acquisition of companies or the development of products or services in areas in
which the Company does not currently operate. Such acquisition or development
may require the Company's management to develop expertise in new areas and to
attract a new customer base, and could have a material adverse effect on the
Company's business, results of operations or financial condition. There can be
no assurance that the Company will be able to implement its growth strategy
successfully or, if successful in consummating acquisitions, that it will be
able to manage its expanded operations effectively and profitably.
Risks of Integration of Acquired Operations. The process of integrating
management services, administrative organizations, facilities, management
information systems and other operational aspects of acquired businesses,
products or services can be time consuming and costly, and may distract
management from day-to-day operations. The difficulties of integration may be
increased by challenges in coordinating geographically separated organizations,
integrating personnel with disparate business backgrounds and combining
different corporate cultures. If the Company is to realize the anticipated
benefits of past and future acquisitions, the operations of the acquired
entities must be combined and integrated successfully. There can be no assurance
that the Company's integration processes will be successful or that the
anticipated benefits of any past or future acquisitions will be realized.
Furthermore, there can be no assurance that there will not be substantial
unanticipated costs or liabilities, or other
-12-
<PAGE> 13
material adverse effects associated with past or future acquisitions and
integration activities conducted by the Company.
Dependence on Data Sources and AMA Licenses. The Company incorporates
the Physicians' Current Procedural Terminology ("CPT") codes of the AMA into
certain of its market performance products under a non-exclusive five-year
license with the AMA that expired in February 2000, but which remains in effect
based on an oral understanding with the AMA while a new license is being
negotiated. The CPT code system is considered to be the current industry
standard for identifying physician procedures, and the loss of the AMA CPT code
license or the failure to agree upon the terms of a new AMA CPT code license
would have a material adverse effect on the Company's business, results of
operations or financial condition. In addition, the Company relies in large part
on data from outside payor, provider and other sources to develop its
proprietary products, including acquired data and data received from customers
under the Company's data collection program. In general, the Company's data
sources are not subject to exclusive agreements with the Company; therefore,
data included in the Company's data products may also be included in data
products of the Company's competitors. There can be no assurance that the
Company's sources will continue to provide data in the future. If any of the
Company's sources of data becomes unavailable, there can be no assurance that
alternative sources of data would be available or that the Company could
purchase such data in a cost-efficient manner.
Risks of Rapid Technological Change. The healthcare information market
is characterized by rapid technological change, changing customer needs and
evolving industry standards. The Company believes that as the market for its
current products matures, its future success will depend on its ability to
enhance its current products and to develop or acquire and introduce new
products to keep pace with technological developments and emerging industry
standards. In addition, the introduction of competing products embodying new
technologies and the emergence of new industry standards could render the
Company's existing products non-competitive or obsolete. Accordingly, the
Company anticipates that significant amounts of future revenue may be derived
from products and product enhancements that do not exist today or have not been
sold in sufficient quantities to measure accurately market acceptance. There can
be no assurance that the Company will not experience difficulties that could
delay or prevent the successful development and introduction of product
enhancements or new products, or that such enhancements or new products will
adequately meet the requirements of the marketplace or achieve market
acceptance. Any failure by the Company to develop and introduce product
enhancements and new products in a timely and cost-efficient manner in response
to changing market conditions or customer requirements could have a material
adverse effect on the Company's business, results of operations or financial
condition.
Dependence on Intellectual Property Rights. The Company does not own
any patents or federally-registered copyrights relating to its databases or
software applications. The Company relies largely on copyright law, its license
agreements with customers and its own security systems, confidentiality
procedures and employee non-disclosure agreements to maintain the
confidentiality and trade secrecy of its proprietary procedures and resources.
Policing unauthorized use and piracy of the Company's products is difficult. The
Company is aware that from time to time there have been limited breaches of the
confidentiality provisions of customers' agreements with the Company, and there
can be no assurance that the precautions taken by the Company will be adequate
to prevent further breaches or misappropriation of the Company's proprietary
information. In addition, the Company cannot prevent the independent development
or implementation of functionally equivalent or superior systems, products or
methodologies. The misappropriation of the Company's information or independent
development of similar products may have a material adverse effect on the
Company's competitive position. Furthermore, there can be no
-13-
<PAGE> 14
assurance that third parties will not assert infringement claims against the
Company or that a license or similar agreement will be available on reasonable
terms in the event of an unfavorable ruling on any such claim.
Risk Related to Intangible Assets and Acquisition Related Charges.
Largely as a result of the Company's various acquisitions, the Company has
recorded approximately $53.2 million in intangible assets net of accumulated
amortization as of March 31, 2000. Such intangible assets are being amortized
over periods of five to 15 years. The Company expects its intangible assets to
increase in connection with future acquisitions, in connection with future
contingent consideration payments for acquisitions that have been consummated
and in connection with capitalized software development projects, resulting in
increases in the Company's amortization expense. In the event of any sale or
liquidation of the Company or a portion of its assets, there can be no assurance
that the value of the Company's intangible assets will be realized. In addition,
the Company regularly evaluates whether events and circumstances have occurred
indicating that any portion of the remaining balance of amounts allocable to the
Company's intangible assets may not be recoverable. If factors indicate that the
carrying value of the Company's intangible assets has been impaired, the Company
would be required to reduce the carrying value of such assets. Any future
determination requiring the write-off of a significant portion of the
unamortized intangible assets could have a material adverse effect on the
Company's business, results of operations or financial condition.
In connection with many of its acquisitions, the Company has recorded
non-recurring charges related to in-process research and development costs. The
amount of each of these non-recurring charges is equal to the estimated current
fair value of specifically identified technologies for which technological
feasibility has not yet been established pursuant to Statement of Financial
Accounting Standards No. 86, "Accounting for Costs of Computer Software to be
Sold, Leased or Otherwise Marketed" and for which future alternative uses did
not exist at the time of acquisition. The Company has recorded approximately
$4.4 million of these charges in 1997, $11.7 million in 1998 and $2.0 million in
1999. Similar charges could result in the future as a result of additional
acquisitions accounted for as purchases.
Uncertainty and Consolidation in the Healthcare Industry. The
healthcare industry is subject to changing political, economic and regulatory
influences that may affect the procurement practices and operation of healthcare
providers, payors and other industry participants. The Company's products and
services are designed to function within the current structure of the U.S.
healthcare system; therefore, the commercial value of the Company's products
could be adversely affected if there were material changes in the current U.S.
healthcare system. Many federal and state legislators have announced that they
intend to propose programs to reform the U.S. healthcare system at both the
federal and state levels. These programs may contain proposals to increase
governmental involvement in healthcare, lower reimbursement rates and otherwise
change healthcare delivery and payment systems. Participants in the healthcare
market may react to these proposals and the uncertainty surrounding such
proposals by curtailing or deferring investments, including investments in the
Company's products and services. In addition, in response to this changing
environment, many market participants are consolidating to create larger
healthcare delivery organizations. This consolidation reduces the number of
potential customers for the Company and may increase the bargaining power of
these organizations, which could lead to reduced prices for the Company's
products and services. The impact of these developments on the healthcare
industry is difficult to predict and could have a material adverse effect on the
Company's business, results of operations or financial condition.
Competition. The healthcare information market is intensely competitive
and rapidly changing. The Company believes that the principal competitive
factors in its target markets include the breadth and quality of database and
applications offerings, access to proprietary data, the proprietary nature of
methodologies and technical resources, price, and the effectiveness of marketing
and sales efforts. In each of its target markets, the Company competes with
various competitors, which vary in size, scope and breadth of product and
service offerings. In addition, other information companies not presently
offering healthcare information services competitive with the Company's products
and services may enter the markets in which the Company competes. Many of the
Company's competitors have, and many of its potential competitors may have,
significantly greater financial, technical, product development and marketing
resources than the Company. The Company also competes with the internal
information resources and systems of certain of its prospective and existing
customers. There can be no assurance that competitive pressures will not have a
material adverse effect on the Company's business, results of operations or
financial condition.
Potential for System Defects or Flawed Data Products. The information
products offered by the Company may contain undetected errors or failures. Any
such errors or failures could result in a loss of, or delay in, market
-14-
<PAGE> 15
acceptance of the product and in claims against the Company. The Company also
depends on the accuracy of the data received from its data sources. If a
statistically significant number of medical records, transactions or physician
profiles were found to have been altered or incorrectly entered, or otherwise
contain flawed data, there could be a loss of, or delay in, market acceptance of
the product and possible claims against the Company. Any of the foregoing
results could have a material adverse effect on the Company's business, results
of operations or financial condition.
Adverse Impact Of Anti-Takeover Provisions. Certain provisions of the
Company's Certificate of Incorporation and Bylaws and of Delaware law could have
the effect of delaying, deterring or preventing a change of control involving
the Company. Specifically, the Company's Certificate of Incorporation, as
amended, provides for the issuance of preferred stock with such rights and
preferences as may be determined by the Board of Directors. Such shares may be
issued without further stockholder approval in circumstances that could have the
effect of preventing or delaying a change of control. The Company's Board of
Directors is classified into three classes, with each class of directors having
a staggered three-year term. The Company's Bylaws prohibit action by the
stockholders through written consent and restrict the ability of stockholders to
call stockholder meetings and propose action at meetings. In addition, Section
203 of the Delaware General Corporation Law restricts transactions between the
Company and any "interested stockholders" (as defined therein). Finally, the
Company adopted a Shareholder Protection Rights Agreement, commonly known as a
"poison pill," in August of 1998. These provisions could reduce or eliminate any
takeover premium in the market price for the Company's Common Stock or otherwise
limit the price certain investors might be willing to pay for the Company's
Common Stock.
Reliance on Strategic Relationships. The Company has established
strategic relationships with a number of healthcare industry participants and
intends to continue doing so. These relationships are intended to increase
awareness of and access to the Company's products and services without a
substantial increase in internal costs, proliferate the Caredata.com brand,
improve product and data offerings, generate revenue to the Company, and augment
the Company's healthcare, Internet, and marketing expertise. The Company's
experience in establishing and managing these relationships is limited;
therefore, the success or failure of such relationships is difficult to predict.
The costs of establishing and managing these relationships could exceed any
revenue they generate. Loss of these strategic relationships, failure of these
relationships to generate additional revenue, actions taken by the Company's
partners in these relationships which conflict with the Company's values and
objectives, and failure by the Company to establish new strategic relationships
in the future could have a material adverse effect on the Company's business,
results of operations and financial condition.
Risks Related to Investing in Strategic Partners or Allowing Customers
to Pay for our Products Using their Equity Securities. From time to time the
Company makes minority equity investments in private companies with whom it has
strategic relationships or customer relationships. In addition, in some cases
the Company agrees to accept equity securities from its customers in lieu of
cash as payment for products and services purchased by such customers from the
Company. These arrangements typically involve high risk, start-up companies
whose equity securities have no trading market and, therefore, no liquidity. As
a result, the Company may be required to hold these equity securities for an
indefinite period of time and may never have an opportunity to liquidate these
securities. In addition, these companies are subject to the numerous risks
typically associated with start-up, high growth companies. As a result, these
companies may fail, causing the Company's equity in these companies to become
worthless and be written off. Any such event could have a material adverse
effect on the Company's business, financial condition or results of operations.
Internet Regulation Uncertainties. Currently, Internet access, content,
commerce, privacy, and usage are largely unregulated. However, with the
increased usage of and transition to the Internet by both consumers and
commercial users, it is likely that local, state, federal, and international
government agencies and other regulators will adopt new laws and regulations
covering such issues. Numerous proposals to regulate these issues have been
introduced at both the federal and state levels, but the extent to which such
proposals will be adopted is uncertain. Because Internet-related revenues are
becoming a significant portion of the Company's revenue, any new law or
regulation impairing the growth and usage of the Internet may hinder the demand
for the Company's Internet-related products and services and could have a
material adverse effect on the Company's business, results of operations or
financial condition.
Dependence on Key Personnel. The Company's success is substantially
dependent on the performance of its key employees, including its senior
management team, key sales and marketing personnel, and key technical
-15-
<PAGE> 16
personnel. The loss of the services of any of these key employees could have a
material adverse effect on the business, results of operations or financial
condition of the Company. The Company is heavily dependent upon its ability to
attract, retain and motivate skilled sales, marketing, technical and managerial
personnel. Competition for such personnel is intense, and there can be no
assurance that the Company will be able to attract, hire, or retain other highly
qualified sales, marketing, technical and managerial personnel in the future.
The inability to attract, hire, assimilate or retain the necessary sales,
marketing, technical and managerial personnel could have a material adverse
effect upon the Company's business, results of operations or financial
condition.
Liability for Information Retrieved from the Internet. Because
information distributed over the Internet is subject to unauthorized copying,
redistribution and other potential misuses, the Company may be exposed to
potential copyright infringement claims, privacy complaints, breach of contract
claims, or other legal claims that may not be covered by the Company's liability
insurance, which may have a material adverse effect on the Company's business,
results of operations or financial condition.
Dependence on the Internet. Access to the Company's Internet-related
products and services depends on the Internet infrastructure remaining a
reliable and effective medium. As the number of users of and products and
services offered on the Internet grows, there can be no assurance that the
Internet infrastructure will continue to be able to support the increased
demands placed upon it. In addition, the Internet could lose its commercial
viability if new technology and processes designed to alleviate increased levels
of Internet activity are not developed. Failure of the Internet to maintain a
reliable and effective infrastructure necessary to support commercial
transactions or the loss in confidence in the marketplace in the Internet's
ability to maintain a reliable and effective infrastructure may have a material
adverse effect on the Company's business, results of operations and financial
condition.
Risks Associated with Internet "Hackers" and Computer Vandalism.
Recently, computer vandals have caused certain leading Internet sites to shut
down temporarily and have materially affected the performance of the Internet
during key business hours by bombarding targeted sites with numerous false
requests for data. While the Company does not operate any Web sites like those
recently affected, the Company does rely on the Internet to deliver products and
services to certain customers and the Internet is expected to become an even
more significant distribution channel in the future. If the overall performance
of the Internet is seriously downgraded by such Web site attacks or other acts
of computer vandalism, the Company's ability to deliver its products and
services over the Internet could be adversely impacted. In addition, traditional
business interruption insurance may not cover losses the Company could incur
because of any such disruption of the Internet.
Risk of System Failure. Many of the Company's products and services are
accessible only over the Internet. The Internet and the Company's related
hardware and software is vulnerable to interruption or damage from fire, floods,
earthquakes, power loss, telecommunications failures, computer viruses, and
intentional sabotage. The occurrence of any of these interruptions could have a
material adverse effect on the Company's business, results of operations and
financial condition.
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended, 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
Quarterly Report on Form 10-Q, the words "estimate," "project," "believe,"
"anticipate," "intend," "expect," "plan," "predict," "may," should," "will," and
similar expressions are intended to identify forward-looking statements.
Forward-looking statements are inherently subject to risks and uncertainties,
many of which cannot be predicted with accuracy and some of which might not even
be anticipated. Future events and actual results, financial and otherwise, could
differ materially from those set forth in or contemplated by the forward-looking
statements contained herein. Important factors that could contribute to such
differences include, but are not limited to, the matters discussed above under
the caption "Risk Factors" and other factors that may be described from time to
time in the Company's other filings with the Securities and Exchange Commission,
news releases and other communications. Readers are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of the date
hereof. The Company does not undertake any obligation to release publicly any
revisions to these forward-looking statements to reflect events or circumstances
after the date hereof or to reflect the occurrence of unanticipated events.
Subsequent written
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<PAGE> 17
and oral forward-looking statements attributable to the Company or persons
acting on its behalf are expressly qualified in their entirety by the cautionary
statements contained in this Quarterly Report on Form 10-Q.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The Company is subject to interest rate risk on its Bank of America
Revolver and obligations under capital leases. The Company's primary market risk
exposure relates to (i) the interest rate risk on long-term and short-term
borrowings, (ii) the impact of interest rate movements on its ability to meet
interest expense requirements and (iii) the impact of the interest rate
movements on the Company's ability to obtain adequate financing for future
operations. The Company manages interest rate risk on its outstanding long-term
and short-term debt through its use of fixed and variable rate debt. While the
Company cannot predict or manage its ability to refinance existing debt or the
impact interest rate movements will have on its existing debt, management
continues to evaluate its financial position on an ongoing basis.
The Company's line of credit agreement provides for borrowings that
bear interest at variable rates based on either LIBOR or Bank of America prime
rate. At March 31, 2000, the Company had $22.6 million outstanding pursuant to
the line of credit. The Company believes that the effect, if any, of reasonably
possible near-term changes in interest rates on the Company's financial
position, results of operations and cash flows should not be material.
-17-
<PAGE> 18
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits:
Exhibit No. Description
3.1 Certificate of Incorporation of the Company (incorporated by
reference from Exhibit 3.1 to the Company's Registration
Statement on Form S-1 (No. 333-12311) filed with the
Commission on September 19, 1996).
3.1.1 Certificate of Designation of Series 1998-A Preferred Stock
(incorporated by reference from Exhibit 3.1.1 to the Company's
Current Report on Form 8-K dated March 31, 1998).
3.1.2 Certificate of Designation, Preferences and Rights of Series A
Junior Participating Preferred Stock (incorporated by
reference from Exhibit 3.1.2 to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1998).
3.2 Bylaws of the Company (incorporated by reference from Exhibit
3.2 to the Company's Registration Statement on Form S-1 (No.
333-12311) filed with the Commission on September 19, 1996).
4.1 Shareholder Protection Rights Agreement dated as of July 29,
1998 between the Company and SunTrust Bank, Atlanta, as Rights
Agent (incorporated by reference from Exhibit 2.8 to the
Company's Current Report on Form 8-K dated July 29, 1998).
4.2 Specimen Stock Certificate of the Common Stock of the Company
(incorporated by reference from Exhibit 4.2 to the Company's
Registration Statement on Form S-1 (No. 333-12311) filed with
the Commission on September 19, 1996).
10.1 Amendment No. 2 to Employment Agreement, dated as of March
14, 2000, between the Company and Mark A. Kaiser (incorporated
by reference from Exhibit 10.3 to the Company's Annual Report
on Form 10-K for the year ended December 31, 1999).
11 Statements of Computation of Per Share Income (Loss)
27 Financial Data Schedule (EDGAR Filing Only).
-18-
<PAGE> 19
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Caredata.com, Inc.
May 15, 2000 By: /s/ Thomas C. Kuhn III
---------------------------------
Thomas C. Kuhn III
Senior Vice President
Chief Financial Officer and
Chief Accounting Officer
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<PAGE> 20
EXHIBIT INDEX
Exhibit No. Description
3.1 Certificate of Incorporation of the Company (incorporated by
reference from Exhibit 3.1 to the Company's Registration
Statement on Form S-1 (No. 333-12311) filed with the
Commission on September 19, 1996).
3.1.1 Certificate of Designation of Series 1998-A Preferred Stock
(incorporated by reference from Exhibit 3.1.1 to the Company's
Current Report on Form 8-K dated March 31, 1998).
3.1.2 Certificate of Designation, Preferences and Rights of Series A
Junior Participating Preferred Stock (incorporated by
reference from Exhibit 3.1.2 to the Company's Annual Report on
Form 10-K for the fiscal year-ended December 31, 1998).
3.2 Bylaws of the Company (incorporated by reference from Exhibit
3.2 to the Company's Registration Statement on Form S-1 (No.
333-12311) filed with the Commission on September 19, 1996).
4.1 Shareholder Protection Rights Agreement dated as of July 29,
1998 between the Company and SunTrust Bank, Atlanta, as Rights
Agent (incorporated by reference from Exhibit 2.8 to the
Company's Current Report on Form 8-K dated July 29, 1998).
4.2 Specimen Stock Certificate of the Common Stock of the Company
(incorporated by reference from Exhibit 4.2 to the Company's
Registration Statement on Form S-1 (No. 333-12311) filed with
the Commission on September 19, 1996).
10.1 Amendment No. 2 to Employment Agreement, dated as of March
14, 2000, between the Company and Mark A. Kaiser (incorporated
by reference from Exhibit 10.3 to the Company's Annual Report
on Form 10-K for the year ended December 31, 1999).
11 Statements of Computation of Per Share Income (Loss)
27 Financial Data Schedule (EDGAR Filing Only).
-20-
<PAGE> 1
EXHIBIT 11
CAREDATA.COM, INC. AND SUBSIDIARIES
STATEMENTS OF COMPUTATION OF PER SHARE INCOME (LOSS)
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
THREE MONTHS
------------
ENDED MARCH 31,
---------------
2000 1999
------- ------
------- ------
<S> <C> <C>
Net income (loss) attributable to common stock $ (532) $ 684
======= ======
Weighted average number of common shares outstanding 8,249 7,391
======= ======
------- ------
Net income (loss) per share of common stock - basic $ (0.06) $ 0.09
======= ======
Shares used in net income (loss) per diluted share calculation:
Weighted average number of common shares outstanding 8,249 7,391
Dilutive securities -- 425
------- ------
8,249 7,816
======= ======
------- ------
Net income (loss) per share of common stock - diluted $ (0.06) $ 0.09
======= ======
</TABLE>
-21-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE CAREDATA.COM, INC.
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH
31, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH CONSOLIDATED
CONDENSED FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 14,819
<ALLOWANCES> 1,018
<INVENTORY> 0
<CURRENT-ASSETS> 16,835
<PP&E> 10,047
<DEPRECIATION> 4,718
<TOTAL-ASSETS> 94,606
<CURRENT-LIABILITIES> 29,809
<BONDS> 0
4,255
0
<COMMON> 8
<OTHER-SE> 60,458
<TOTAL-LIABILITY-AND-EQUITY> 94,606
<SALES> 11,068
<TOTAL-REVENUES> 11,068
<CGS> 0
<TOTAL-COSTS> 10,923
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 408
<INCOME-PRETAX> (259)
<INCOME-TAX> 215
<INCOME-CONTINUING> (474)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (474)
<EPS-BASIC> (0.06)
<EPS-DILUTED> (0.06)
</TABLE>
