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[CAREDATA.COM LOGO]
EXHIBIT 99.1
CONTACT:
MARK A. KAISER
CHAIRMAN AND CEO
CAREDATA.COM
(404) 364-6700
CAREDATA.COM SECURES $24 MILLION COMMITMENT FOR EQUITY FINANCING,
ANNOUNCES PRELIMINARY SECOND QUARTER RESULTS AND
RESTRUCTURES BUSINESS TO FOCUS ON CASH FLOW AND PROFITS
ATLANTA (July 6, 2000) - Caredata.com (Nasdaq/NM: CDCM), a leading
online provider of healthcare content and applications, today announced that:
(1) it has entered into an agreement with Fusion Capital Fund II, LLC, a Chicago
based investment fund, to provide the Company with up to $24 million in equity
financing; (2) based on information available to date, total revenue for the
second quarter is expected to be approximately $5.0 million; and (3) it is
taking significant steps to put the business on the quickest path to positive
cash flow and profitability.
"The recent difficult market conditions for all eHealth companies have
resulted in our decision to take specific steps to generate sustainable revenue
growth with an emphasis on maximizing cash flow and profitability. The steps we
are taking will focus our efforts on utilizing the Internet as an extremely
efficient and effective distribution channel for our products; leveraging our
traditional business serving institutional healthcare customers; and eliminating
certain products that do not meet our growth and profitability criteria," said
Mark A. Kaiser, Chairman and CEO of Caredata.com. "As demonstrated by the
aggressive restructuring steps we are implementing, the Company's management and
Board are committed to pursuing all available strategies and alternatives to
increase shareholder value, including a possible merger or sale."
COMMITMENT FOR EQUITY FINANCING
"Our agreement with Fusion Capital is a very positive step in
addressing our liquidity and capital needs," said Mr. Kaiser. "Under the terms
of the agreement we will have the ability to sell equity at our discretion at
higher and higher prices as we create value in our business."
Under the terms of the agreement, Fusion Capital has agreed to purchase
from Caredata.com up to $12 million of Caredata.com common stock over a 12-month
period and, at Caredata.com's option, to purchase up to an additional $12
million over a subsequent 12-month period. The purchase price will be based upon
the market price on the date of each sale without any fixed discount to the
market price. Generally, Caredata.com has the right to control the timing and
the amount of shares sold to Fusion Capital, and Caredata.com has the right to
terminate the agreement at any time without any additional cost as long as the
stock price remains under $6. Funding is contingent upon the Company having a
registration statement
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July 6, 2000
declared effective by the SEC. Fusion Capital has agreed not to engage in any
direct or indirect short selling or hedging of the common stock.
A copy of the definitive agreement between the Company and Fusion
Capital is being filed with the Securities and Exchange Commission today as an
exhibit to a Current Report on Form 8-K dated July 6, 2000. The summary
discussion of the Fusion Capital transaction set forth above is qualified by
reference to that definitive agreement.
SunTrust Equitable Securities represented the Company in this
transaction. SunTrust Equitable Securities and Thomas Weisel Partners are
assisting Caredata.com in considering various strategic alternatives for the
company, including a possible merger or sale.
PRELIMINARY SECOND QUARTER RESULTS
Based on information available to date, total revenue for the second
quarter, ending June 30, 2000, is expected to be approximately $5.0 million.
Caredata expects to report final second quarter results during the week of July
31, 2000.
Anticipated second quarter revenue reflects weakness in up-front fees
associated with syndication and co-branding fees related to the Company's sales
to eHealth Internet customers. Revenue from syndication and co-branding fees are
expected to be in the range of $400,000-$600,000 in the second quarter, down
from over $6 million in the first quarter 2000. Revenue from the core business
serving institutional healthcare customers is expected to be generally in line
with analyst expectations.
"Due to adverse changes in the capital market conditions during the
second quarter, eHealth sites slowed their product purchase decisions, focused
on structuring distribution arrangements without up-front costs and placed
greater emphasis on the sharing of transactional revenue," said Kenneth M.
Goins, Jr., President and Chief Operating Officer. "Our business model had
assumed a decline in up-front fees over time with a shift toward higher revenue
from transaction fees and eCommerce activities, but the rapid and dramatic
change in access to capital for Internet companies in the second quarter
accelerated this shift much faster than we and our business model anticipated.
"We continued to close new co-branding and syndication deals during the
second quarter and we are encouraged by the continuing interest in our content
and applications, especially among enterprise sites and application service
providers (ASPs). While we will continue to syndicate our content to leading
consumer destination portals, our primary focus will remain on working with
sites that are business application focused."
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MAJOR STEPS IN BUSINESS RESTRUCTURING TO FOCUS ON CASH FLOW AND PROFITS
Caredata.com will begin implementing today a major restructuring of its
business to focus on the products and customer segments that have the greatest
capacity to generate sustainable growth in revenue, cash flow and profitability.
The specific steps are:
- An immediate reduction in headcount of approximately 25% of
our current employee base of approximately 250 people
including discontinuing the operations of our Clinical
Outcomes business unit located in Chicago. The Company also
plans to discontinue offering selected products that do not
meet the Company's growth and profitability criteria.
- A write-down of the value of our portfolio of minority equity
holdings in approximately 20 eHealth companies largely due to
the significant change in market valuations during the second
quarter.
Caredata.com expects to record a one-time charge in the second quarter
2000 in the range of $20-25 million to account for the expenses associated with
these activities, including costs associated with headcount reductions,
discontinued operations and products, fees associated with financing activities,
including fees due relating to the Company's revolving credit facility, and the
reduction in market value of minority equity holdings.
"The significant steps we are taking will enable the Company to
leverage its ability to drive growth focused on generating profits and positive
cash flow," said Mr. Goins. "We believe that the impact of these comprehensive
efforts will strengthen our organization and enhance our ability to create value
for our shareholders."
ABOUT CAREDATA.COM
Caredata.com is a leading 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
Caredata.com's award-winning, co-branded tools to their established online
communities. These syndicated tools and services empower physicians, consumers
and healthcare enterprises to gain insight into critical healthcare information
and conduct business more efficiently. Caredata.com's Web applications include
its CiteLine(TM) medical search tool, appSTAT(TM) universal healthplan
application, myPhysicianSelector(TM) and myHealthPlanSelector(TM) consumer
reference tools, HealthcareMatch.com/PracticeMatch(R) job community and
PrimeSourceWeb(TM) physician credentials database. Caredata.com has more than
fifty strategic partnerships and alliances with leading Web businesses.
Caredata.com is headquartered in Atlanta, Ga., and can be found on the Internet
at http://www.caredata.com.
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ABOUT FUSION CAPITAL
Fusion Capital is an innovative, broad-based investment fund located in
Chicago, Illinois and is dedicated to meeting the business needs of its partner
companies. Fusion Capital offers a wide range of investment products ranging
from special situation financing to long-term strategic capital.
Certain statements in this press release, particularly those
anticipating future sources and amounts of available capital, future financial
performance, business prospects, growth and operating strategies, strategic
Internet relationships, sources of revenue and similar matters, and those
modified by the words "believes," "expects," "anticipates," "intends,"
"estimates" or similar expressions, constitute "forward-looking statements"
within the meaning of federal securities laws. These forward-looking statements
reflect management's expectations and are based upon currently available
information. These statements are not guarantees of performance and are
inherently subject to risks and uncertainties, many of which cannot be predicted
or anticipated. Future events and actual results, financial or otherwise, could
differ materially from those expressed in or implied by the forward-looking
statements. Important factors that could cause future events or actual results
to differ materially include: the company's liquidity and the availability of
capital to fund operations; the cooperation of the company's senior lender as
the company pursues additional near-term financing (including obtaining an
extension of the maturity date of the company's senior credit facility);
satisfying the conditions to the availability of the company's equity financing
commitment from Fusion Capital; demand for the company's products; pressure on
the pricing of the company's products; the effects of the on-going restructuring
of the company's business and operations; the length and unpredictable nature of
the company's sales cycle; the timing of significant new customer contracts; the
loss or non-renewal of significant customer contracts; the number and timing of
new strategic Internet relationships such as syndication partners; a reduction
in the amount or quality of the company's sources of data; adverse changes in
economic conditions in the healthcare information and technology markets;
competition from other healthcare information and technology companies; and
other risks identified from time to time in the company's reports filed with the
Securities and Exchange Commission, including but not limited to the Company's
annual report on Form 10-K for the year ended December 31, 1999 and the
Company's quarterly report on Form 10-Q for the quarter ended March 31, 2000.
Copies of such filings are available upon request from Caredata.com, Inc.'s
investor relations department.
