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Neoforma Reports Record Third Quarter Revenues; Significant Momentum at Marketplace@Novation
SAN JOSE, Calif.--(BW HealthWire)--Oct. 18, 2000--Neoforma.com, Inc. (Nasdaq:NEOF), a leading provider of business-to-business e-commerce solutions to the global medical marketplace, today announced its financial results for the third quarter ended September 30, 2000.
For the third quarter, net revenues were $2.3 million, comprised primarily of transaction fees paid in connection with the use of the company`s "Shop" service and live and online "Auction" services, professional service fees earned by the company`s "Services Delivery" organization, and subscription and license fees for "Plan" services and software. The gross value of transactions on which the company earned revenues for the third quarter was approximately $22.7 million. Third quarter gross transactions and net revenues represent record highs for the company.
Total cash operating expenses for the third quarter were $20.3 million, lower than anticipated. Total non-cash operating expenses for the same period were $30.2 million, lower than expected as a result of reduced charges related to the stock issued to VHA and UHC. The net loss for the quarter was $47.5 million, or $0.46 per share, compared to a net loss of $59.6 million, or $1.02 per share, for the second quarter of 2000. Excluding all non-cash and non-recurring charges for the periods, the net loss for the third quarter was $17.3 million, or $0.17 per share, compared to $18.7 million, or $0.32 per share, for the second quarter.
The third quarter results represent an increase in gross value of transactions and net revenues of approximately 40% and 12% respectively, compared to the second quarter of 2000. The following table sets forth the company`s gross transactions and net revenues by service line for the third quarter (amounts in thousands):
Service Line Gross Transactions Net Revenues
Shop(1) $18,581 $753 Auction 3,088 510 Plan 581 581 Services Delivery 485 485 --- --- $22,735 $2,329
(1) Shop net revenues include $255,000 in Novation catalog set-up fees.
As of September 30, 2000, cash, cash equivalents and short and long-term investments totaled $52.5 million.
"We made solid progress in our business and achieved a number of milestones during the third quarter, including significantly increasing Shop transaction fees by 54% from the second quarter," commented Bob Zollars, chairman, president and chief executive officer of Neoforma. "One of the strengths of our business model is the generation of revenue from multiple sources. In addition, our ongoing focus on reducing costs resulted in cash operating expense reductions that exceeded our expectations."
In a separate press release issued today, Neoforma discussed its progress in building Marketplace@Novation, including a significant number of additional hospital and supplier sign-ups, as well as implementations on the first wave of hospitals. "The combination of increased revenues and reduced expenses, as well as the progress in attracting buyers and suppliers to our marketplace, demonstrates the company`s focus and solid execution," commented Zollars.
In the third quarter, the Auction business generated significant revenues from liquidation sales resulting from hospital closures. Unlike traditional Auction revenues, which are primarily commissions received on the sales of consigned equipment, liquidation revenues are generated on sales where Neoforma has taken title to the equipment. Consequently, Neoforma will display gross revenues on such sales in the revenue section of the income statement, with the related cost of used equipment being shown in the operating expense section of the income statement, commencing this quarter.
Separately, the company also announced that Andrew Guggenhime has been appointed chief financial officer. Mr. Guggenhime, currently vice president of corporate development, previously led the company`s successful initial public offering as vice president for the company`s lead underwriter, Merrill Lynch. Mr. Guggenhime replaces Frederick Ruegsegger as chief financial officer, who stepped down to pursue other opportunities. "While we wish Fred well as he pursues new opportunities, we are exceptionally pleased to have someone as capable as Andrew assume the responsibilities of CFO for Neoforma," commented Bob Zollars. "The combination of Andrew`s background and his current responsibilities at Neoforma will ensure a smooth transition for the company," continued Zollars. The change will be effective immediately.
About Neoforma.com, Inc.
Neoforma is a leading provider of business-to-business e-commerce solutions to the global medical marketplace. Focused on transforming the inefficient and highly fragmented healthcare supply chain, the company provides an open, online marketplace that enables buyers to lower product-procurement costs, while giving suppliers a new, highly efficient direct marketing channel. Neoforma`s comprehensive e-commerce solutions are focused on improving healthcare purchasing needs, from planning to procurement to liquidation. For more information, visit the company`s Web site at www.neoforma.com.
This news release contains forward-looking information within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and is subject to the safe harbor created by those sections. These forward-looking statements include statements related to future growth and revenues, reduction of expenses, growth of Marketplace@Novation, and increases in transaction volumes and in buyers and suppliers using its marketplaces. These forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from those anticipated by these forward-looking statements. These risks include the risk that the company may be unable to increase its transaction volumes, to attract and retain a broad range of purchasers and suppliers, to successfully integrate the operations of acquired companies and to increase operating efficiencies. These and other risks are discussed in the company`s most recent Form 10-K and Form 10-Q filings with the Securities and Exchange Commission. These risks and other risks are described in Neoforma`s periodic reports filed with the SEC including its recent Form 10-K. Neoforma assumes no obligation to update the forward-looking information contained in this news release.
Note to Editors: Neoforma.com, Inc., and www.neoforma.com are trademarks of Neoforma.com, Inc. Other Neoforma.com logos, product names, and service names are also trademarks of Neoforma.com, Inc., which may be registered in other countries. Other product and brand names are trademarks of their respective owners.
Neoforma.com, Inc. Consolidated Statements of Operations (in thousands, except per share amounts)
For the Quarters Ended For the Nine Months Ended September 30, September 30, 1999 2000 1999 2000
NET REVENUE: Shop $ -- $ 753 $ -- $ 1,213 Auction -- -- -- -- Sales of used equipment -- 2,738 -- 3,306 Cost of used equipment -- (2,398) -- (2,562) Transaction fees on consigned equipment & other 451 170 451 1,067
Total Auction net revenue 451 510 451 1,811
Plan 6 581 13 1,644 Services -- 485 -- 943
Total net revenue 457 2,329 464 5,611
OPERATING EXPENSES: Cost of services -- 2,137 -- 2,796 Operations 1,049 2,735 2,328 7,829 Product development 1,693 5,625 4,183 14,886 Selling and marketing 2,659 7,346 4,971 28,001 General and administrative 4,185 2,412 5,729 8,622 Depreciation and amortization 412 10,362 647 23,396 Amortization of deferred compensation 5,662 7,889 5,662 27,368 Amortization of partnership costs -- 10,847 -- 10,847 Amortization of partnership warrant valuation -- 1,111 -- 1,111 Cost of warrant issued to recruiter 2,057 -- 2,364 -- Write off of acquired in-process research and development -- -- -- 18,000 Abandoned acquisition costs -- -- -- 2,742 Restructuring -- -- -- 2,100
Total operating expenses 17,717 50,464 25,884 147,698
Loss from operations (17,260) (48,135) (25,420) (142,087)
OTHER INCOME (EXPENSE): Interest income 45 938 173 3,904 Interest expense (242) (345) (337) (896) Other income (expense) (30) 21 (30) 21
Net loss $ (17,487) $ (47,521) $ (25,614) $(139,058)
NET LOSS PER SHARE Basic and diluted $ (5.22) $ (0.46) $ (14.20) $ (2.05)
Weighted average shares -- basic and diluted 3,353 103,919 1,804 67,886
PRO FORMA NET LOSS PER SHARE Basic and diluted $ (0.57) $ (0.46) $ (0.94) $ (1.95)
Weighted-average shares -- basic and diluted 30,474 103,919 27,225 71,402
PRO FORMA NET LOSS PER SHARE EXCLUDING NON-CASH AND NON-RECURRING CHARGES(2) Basic and diluted $ (0.31) $ (0.17) $ (0.62) $ (0.75)
Weighted-average shares -- basic and diluted 30,474 103,919 27,225 71,402
(2) Pro forma net loss per share excluding non-cash and non-recurring charges specifically excludes depreciation and amortization, amortization of deferred compensation, partnership costs and partnership warrant valuation, as well as cost of warrants issued to recruiters, write off of acquired in-process research and development, abandoned acquisition costs, and restructuring.
Neoforma.com, Inc. Consolidated Balance Sheets (in thousands)
Dec. 31, 1999 Sept. 30, 2000
Cash, cash equivalents and investments $ 46,775 $ 52,481 Working capital 36,888 30,295 Total assets 77,369 551,957 Notes payable, less current portion 7,743 7,718 Mandatorily redeemable convertible preferred stock 88,812 -- Total stockholders` equity (deficit) (31,863) 517,472
CONTACT: Neoforma.com Isabelle Trempe, 408/468-4240 isabelle.trempe@neoforma.com
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