-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KFLEVxNF6CV0JCIvUMqnDmLjA7Jp09KtMn3t1oIxHPlKjxuiOkPtte/2i3aAXME4 gHprEtAud5363DX2QORVWw== 0000950133-00-002099.txt : 20000517 0000950133-00-002099.hdr.sgml : 20000517 ACCESSION NUMBER: 0000950133-00-002099 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ECLIPSYS CORP CENTRAL INDEX KEY: 0001034088 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER INTEGRATED SYSTEMS DESIGN [7373] IRS NUMBER: 650632092 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-24539 FILM NUMBER: 636438 BUSINESS ADDRESS: STREET 1: 777 E ATLANTIC AVE STE 200 CITY: DELRAY BEACH STATE: FL ZIP: 33483 BUSINESS PHONE: 5612431440 MAIL ADDRESS: STREET 1: 777 EAST ATLANTIC AVE SUITE 200 CITY: DELRAY BEACH STATE: FL ZIP: 33483 10-Q 1 FORM 10-Q 1 ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------- FORM 10-Q ---------------- QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED March 31, 2000 COMMISSION FILE NUMBER: 000-24539 ECLIPSYS CORPORATION (Exact name of registrant as specified in its charter) DELAWARE 65-0632092 (State of Incorporation) (IRS Employer Identification Number)
777 East Atlantic Avenue Suite 200 Delray Beach, Florida 33483 (Address of principal executive offices) (561)-243-1440 (Telephone number of registrant) 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 for the past 90 days. Yes [X] No [ ] Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date. CLASS SHARES OUTSTANDING AS OF APRIL 30, 2000 ----- --------------------------------------- Common Stock, $.01 par value 36,706,108
================================================================================ 2 ECLIPSYS CORPORATION FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2000 INDEX PART I. Financial Information Item 1. Condensed Consolidated Balance Sheets - As of March 31, 2000 (unaudited) and December 31, 1999 Condensed Consolidated Statements of Operations (unaudited) - For the Three Months ended March 31, 2000 and 1999 Condensed Consolidated Statements of Cash Flows (unaudited) - For the Three Months ended March 31, 2000 and 1999 Notes to Condensed Consolidated Financial Statements (unaudited) - For the Three Months ended March 31, 2000 and 1999 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations PART II. Other Information Item 6. Exhibits and Reports on Form 8-K
2 3 PART I. ITEM 1. ECLISPSYS CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 2000 (UNAUDITED) AND DECEMBER 31, 1999 (IN THOUSANDS)
MARCH 31, 2000 DECEMBER 31, 1999 -------------- ----------------- ASSETS Current assets: Cash and cash equivalents $ 31,928 $ 33,956 Accounts receivable, net 82,312 77,254 Inventory 606 660 Other current assets 8,367 11,800 ---------- --------- TOTAL CURRENT ASSETS 123,213 123,670 Fixed assets, net 14,976 14,522 Capitalized software development costs, net 9,045 7,944 Acquired technology, net 32,593 33,161 Intangible assets, net 14,594 16,858 Other assets 5,087 6,780 ---------- --------- TOTAL ASSETS $ 199,508 $ 202,935 ========== ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Deferred revenue $ 47,594 $ 49,279 Other current liabilities 34,215 41,288 ---------- --------- TOTAL CURRENT LIABILITIES 81,809 90,567 Deferred revenue 7,103 8,803 Other long-term liabilities 2,148 2,264 STOCKHOLDERS' EQUITY Common stock 366 363 Unearned stock compensation (284) (320) Additional paid-in capital 255,750 254,085 Accumulated other comprehensive income (loss) 127 (327) Accumulated deficit (147,511) (152,500) ---------- --------- Total stockholders' equity 108,448 101,301 ---------- --------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 199,508 $ 202,935 ========== =========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 3 4 ECLIPSYS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999 (IN THOUSANDS EXCEPT PER SHARE AMOUNTS) (UNAUDITED)
THREE MONTHS ENDED MARCH 31, ------------------------------------ 2000 1999 ------------------- --------------- REVENUES Systems and services $ 60,640 $ 51,880 Hardware 4,050 5,498 ------------ ----------- TOTAL REVENUES 64,690 57,378 ------------ ----------- COSTS AND EXPENSES Cost of systems and services revenues 32,277 28,827 Cost of hardware revenues 3,276 4,670 Marketing and sales 9,275 7,765 Research and development 9,774 9,889 General and administrative 2,326 3,065 Depreciation and amortization 3,654 3,784 Transaction costs 3,100 614 ------------ ----------- TOTAL COSTS AND EXPENSES 63,682 58,614 ------------ ----------- INCOME (LOSS) FROM OPERATIONS 1,008 (1,236) ------------ ----------- Interest income, net 385 443 Other income, net 3,596 - ------------ ------- NET INCOME (LOSS) 4,989 (793) ------------ ----------- BASIC NET INCOME (LOSS) PER COMMON SHARE $ 0.14 $ (0.02) ============ =========== DILUTED NET INCOME (LOSS) PER COMMON SHARE $ 0.13 $ (0.02) ============ =========== BASIC WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 36,504 33,229 ============ =========== DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 38,645 33,229 ============ ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 4 5 ECLIPSYS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999 (IN THOUSANDS) (UNAUDITED)
THREE MONTHS ENDED MARCH 31, ----------------------------- 2000 1999 --------------- ------------ OPERATING ACTIVITIES Net Income (Loss) $ 4,989 $ (793) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 8,702 9,858 Provision for bad debts 485 360 Gain on sale of investments (4,462) - Write down of investments 836 - Stock compensation expense - 113 Changes in operating assets and liabilities, net of acquisitions: Accounts receivable (6,691) 4,424 Inventory (21) (61) Other current assets 5,317 (183) Other assets 756 223 Deferred revenue (4,442) (6,726) Other current liabilities (10,328) (3,878) Other liabilities (116) (4) --------- --------- Total adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities (9,964) 4,126 --------- --------- NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (4,975) 3,333 ========= ========= INVESTING ACTIVITIES Purchase of investments (7,905) - Maturities of investments - 17,003 Sales of investments 12,432 - Purchase of fixed assets (1,938) (1,401) Capitalized software development costs (1,800) (1,233) Acquisitions, net of cash acquired - (25,000) --------- --------- NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 789 (10,631) ========= ========= FINANCING ACTIVITIES Borrowings - 20,000 Exercise of stock options 952 811 Employee stock purchase plan 748 549 Exercise of warrants 4 - --------- --------- NET CASH PROVIDED BY FINANCING ACTIVITIES 1,704 21,360 ========= ========= EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS 454 159 --------- --------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (2,028) 14,221 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 33,956 37,983 --------- --------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 31,928 $ 52,204 ========= =========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART TO THESE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 5 6 ECLIPSYS CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999 (UNAUDITED) 1. BASIS OF PRESENTATION The condensed consolidated financial statements include all adjustments that, in the opinion of management, are necessary for a fair presentation of the results for the periods presented. All such adjustments are considered of a normal recurring nature. Quarterly results of operations are not necessarily indicative of annual results. Effective June 17, 1999, the Company completed a merger with MSI Solutions, Inc. and MSI Integrated Services, Inc. (collectively, "MSI"). The merger was accounted for as a pooling of interests and, accordingly, the condensed consolidated financial statements for the quarter ended March 31, 1999 has been retroactively restated as if the merger had occurred as of January 1, 1999. Certain financial information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company's Annual Report on Form 10-K dated March 29, 2000 and as amended April 28, 2000. 2. ACQUISITIONS The MSI acquisition discussed in Note 1 was accounted for as a pooling of interests, accordingly, all prior period amounts have been restated. A reconciliation between revenue and net loss as previously reported by the Company and as restated (unaudited) is as follows: FOR THE THREE MONTHS ENDED MARCH 31, 1999 -------------- Revenue: As previously reported $ 53,933 MSI 3,445 --------- As restated $ 57,378 Net Loss: As previously reported $ (1,265) MSI 472 --------- As restated $ (793) ========= Effective March 31, 1999, the Company acquired the common stock of Intelus Corporation ("Intelus") and Med Data Systems, Inc. ("Med Data"), both wholly owned subsidiaries of Sungard Data Systems, Inc. for total consideration of $25.0 million in cash. The acquired entities both provide document imaging technology and workflow solutions to entities throughout the healthcare industry. The acquisition was accounted for as a purchase and, accordingly, the purchase price was allocated based on the fair value of the net assets acquired. The purchase price is composed of and allocated as follows (in thousands): Cash $ 25,000 Liabilities assumed 4,306 ---------- 29,306 Current assets 9,830 Fixed assets 778 ---------- 10,608 ---------- Identifiable intangible assets (acquired technology) $ 18,698 ========== As of March 31, 1999 the Company intended to dispose of Med Data. Effective July 1, 1999, the Company sold Med Data for total a sales price of $5.0 million in cash. The Company reduced the acquired technology originally recorded above in the purchase by $4.4 million, which represented the difference between the sales price and the net assets sold. No gain or loss was recorded. 6 7 During the quarter ended March 31, 2000, the Company finalized the purchase price of Intelus. An increase of $3.3 million was recorded to acquired technology. Unaudited pro forma results of operations as if the aforementioned acquisitions had occurred on January 1, 1999 is as follows (in thousands except per share data): THREE MONTHS ENDED MARCH 31, 1999 -------- Revenues $60,869 Net loss $(1,232) Basic and diluted loss per share $ (0.04) 3. UNBILLED ACCOUNTS RECEIVABLE The current portion of unbilled accounts receivable were $21.0 million and $15.7 million as of March 31, 2000 and 1999, respectively, and are included in accounts receivable in the accompanying condensed consolidated balance sheet. The non-current portion of unbilled accounts receivable were $1.6 and $1.3 million as of March 31, 2000 and 1999, respectively, and are included in other assets in the accompanying condensed consolidated balance sheet. 4. INVESTMENTS During the quarter ended March 31, 2000, the Company recorded a gain on its investment in Shared Medical Systems Corp (SMS) of approximately $4.5 million. The investment was made in connection with a proposed merger with SMS. The Company recorded transaction costs of approximately $50,000 related to the proposed merger with SMS which was not consummated. Additionally, during first quarter 2000, the Company recorded a charge of approximately $802,000 to write down an equity investment to its net realizable value, unrelated to the SMS investment. 5. ECLIPSYS MERGER On March 30, 2000, the Company signed a merger agreement to be acquired by Neoforma.com Inc., (Neoforma) a California based, business-to-business e-commerce services provider in the medical products, supplies and equipment industry. The merger is subject to the approval of stockholders of both the Company and Neoforma and the consummation of certain other transactions (see Management's Discussion and Analysis). In connection with the transaction, Eclipsys stockholders will receive 1.344 shares of Neoforma common stock for each share of Eclipsys stock they own. In connection with the proposed merger, the Company recorded transaction costs of approximately $3.1 million during the quarter ended March 31, 2000. The Company and Neoforma are holding discussions regarding the mutually agreed termination of the Merger Agreement without the payment of a termination fee. There can be no assurances as to the outcome of these discussions, or the timing or terms of any termination if, any. 7 8 PART I. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This report contains forward-looking statements. For this purpose, any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, the words "believes," "anticipates," "plans," "expects," "intends," and similar expressions are intended to identify forward-looking statements. The important factors discussed under the caption "Certain Factors that May Affect Future Operating Results/Risk Factors," presented from time to time in the Company's filings with the Securities and Exchange Commission, among others, could cause actual results to differ materially from those indicated by forward-looking statements made herein. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. OVERVIEW Eclipsys Corporation ("Eclipsys" or "the Company") is a healthcare information technology company delivering solutions that enable healthcare providers to achieve improved clinical, financial and administrative outcomes. The Company offers an integrated suite of core products in seven functional areas - clinical management, access management, patient financial management, health information management, strategic decision support, resource planning management and enterprise application integration. These products can be purchased in combination to provide an enterprise-wide solution or individually to address specific needs. Eclipsys' products have been designed specifically to deliver a measurable impact on outcomes, enabling Eclipsys' customers to quantify clinical benefits and return on investment in a precise and timely manner. Eclipsys' products can be integrated with a customer's existing information systems, which Eclipsys believes reduces overall cost of ownership and increases the attractiveness of its products. Eclipsys also provides outsourcing, remote hosting and networking services to assist customers in meeting their healthcare information technology requirements. Eclipsys markets its products primarily to large hospitals, academic medical centers and integrated health networks. To provide direct and sustained customer contact, Eclipsys maintains decentralized sales, implementation and customer support teams in each of its eight North American regions. The Company was formed in December 1995 and has grown primarily through a series of strategic acquisitions as follows: METHOD OF TRANSACTION DATE ACCOUNTING ----------- ---- ---------- ALLTEL Healthcare Information Services, Inc. 1/24/97 Purchase ("Alltel") SDK Medical Computer Services Corporation 6/26/97 Purchase ("SDK") Emtek Healthcare Systems 1/30/98 Purchase ("Emtek") a division of Motorola, Inc. HealthVISION, Inc. (acquired by Transition) 12/1/98 Purchase ("HealthVISION") Transition Systems, Inc. 12/31/98 Pooling ("Transition") PowerCenter Systems, Inc. 2/17/99 Pooling ("PCS") Intelus Corporation and Med Data Systems, Inc. 3/31/99 Purchase ("Intelus" and "Med Data") wholly owned subsidiaries of Sungard Data Systems, Inc. MSI Solutions, Inc. and MSI Integrated 6/17/99 Pooling Services, Inc. (collectively, "MSI") The condensed consolidated financial statements of the Company reflect the financial results of the purchased entities from the respective dates of the purchase. For all transactions accounted for using the pooling of interests method, the Company's condensed consolidated financial statements have been retroactively restated as if the transactions had occurred as of the beginning of the earliest period presented. 8 9 RESULTS OF OPERATIONS SUMMARY Total revenues for the quarter ended March 31, 2000 increased 12.8% to $64.7 million compared with $57.4 million for the first quarter 1999. Total costs and expenses for the quarter ended March 31, 2000 increased 8.7% compared to the same period in 1999. These changes in revenues and expenses combined to decrease net loss for the quarter ended March 31, 2000 by 729.5% to net income of $5.0 million compared to the same period in 1999. Included in the reported quarterly results were acquisition related amortization of intangible assets and certain non-recurring charges of $5.6 million and $8.2 million for the quarter ended March 31, 2000 and 1999, respectively. REVENUES System and services revenues increased 16.9% to $60.6 million for the first quarter of 2000 compared to the same period in 1999. The increase was primarily due to the inclusion of the results of operations of Intelus during the first quarter of 2000 and the performance of services related to new contracted business. Hardware revenues decreased 26.4% to $4.1 million for the first quarter of 2000 compared to the same period in 1999. The decrease was primarily due to decreased volume as a result of less hardware-intensive transactions. EXPENSES Total cost of revenues increased 6.2% for the first quarter of 2000 compared to the same period in 1999. Increased costs of system, services and hardware associated with the growth in revenues were partially offset by a decrease in hardware costs. Marketing and sales expenses increased 19.5% for the first quarter of 2000 compared to the same period in 1999. The increase was primarily due to the addition of marketing and direct sales personnel. Total expenditures for research and development, including both capitalized and non-capitalized expenses increased 4.1% to $11.6 million for the first quarter 2000 compared to the same period in 1999. The increase was due primarily to continued development of an enterprise-wide, web enabled, client server platform solution. Research and development expenses capitalized for the first quarter of 2000 increased $567,000 compared to the same period in 1999. Increased capitalization was primarily the result of expenditures related to the development of an enterprise-wide, web enabled, client server platform solution that had reached technological feasibility. General and administrative expenses decreased 24.2% for the first quarter of 2000 compared to the same period in 1999. The decrease was primarily due to the reduction of administrative and finance personnel following the Company's restructuring that commenced in the second quarter of 1999. Depreciation and amortization decreased 3.5% for the first quarter of 2000 compared to the same period in 1999. The decrease for the quarter is primarily the result of the completion of the amortization of acquired technology from the Alltel acquisition partially offset by an increase in acquired technology amortization as a result of the Intelus acquisition. Transaction costs increased 404.9% for the first quarter of 2000 compared to the same period in 1999. The increase is primarily the result of costs associated with a proposed merger with Shared Medical Systems Corp (SMS) and Neoforma.com, Inc. (Neoforma). Other income during the first quarter of 2000 related to a gain on the Company's investment in SMS. ACQUIRED IN-PROCESS RESEARCH AND DEVELOPMENT In connection with the Alltel, SDK and HealthVISION acquisitions, the Company wrote off acquired in-process research and development totaling $92.2 million and $7.0 million in 1997 and $2.4 million in 1998, respectively. These amounts were expensed as non-recurring charges on the respective acquisition dates. The Company continues to believe that the acquired in-process research and 9 10 development will be successfully developed, but there can be no assurance that commercial viability of these products will be achieved. The value of the acquired in-process research and development was determined by estimating the projected net cash flows related to such products, including costs to complete the development of the technology and the future revenues to be earned upon commercialization of the products. These cash flows were discounted back to their net present value. The resulting projected net cash flows from such projects were based on management's estimates of revenues and operating profits related to such projects. Through March 31, 2000, revenues and operating profit attributable to the acquired in-process technology have not materially differed from the projections used in determining its value. Throughout 1999 and during the first quarter of 2000, the Company has continued the development of the in-process technology that was acquired in the transactions. To date, the Company is installing modules derived from the acquired in-process technology in various field trial sites and activated certain sites by the end of 1999. Additionally, the Company has begun to successfully market certain aspects of the technology to new and existing customers. The Company expects to continue releasing products derived from the technology through 2001. Management continues to believe the projections used reasonably estimate the future benefits attributable to the in-process technology. However, no assurance can be given that deviations from these projections will not occur. If these projects to develop commercial products based on the acquired in-process technology are not successfully completed, the sales and profitability of the Company may be adversely affected in future periods. Additionally, the value of other intangible assets may become impaired. BALANCE SHEET OTHER CURRENT ASSETS Other current assets decreased during the three months ended March 31, 2000 primarily due to the receipt of taxes withheld from employees by the Company's stock plan administrator which were remitted to the government during the same period. CAPITALIZED SOFTWARE DEVELOPMENT COSTS Capitalized software development costs increased during the three months ended March 31, 2000 primarily due to the continued development of an enterprise-wide, web enabled, client server platform solution that had reached technological feasibility. INTANGIBLE ASSETS Intangible assets decreased during the three months ended March 31, 2000 due to amortization. OTHER ASSETS Other assets decreased during the three months ended March 31, 2000 primarily due to a write-down of an equity investment to its net realizable value. DEFERRED REVENUE Deferred revenue decreased during the three months ended March 31, 2000 primarily due to the completion of certain implementations and milestones of various software license fee contracts. OTHER CURRENT LIABILITIES Other current liabilities decreased during the three months ended March 31, 2000 primarily due to the timing of certain employee compensation related expenses. LIQUIDITY AND CAPITAL RESOURCES During the three months ended March 31, 2000, the Company used $5.0 million in operations. Included in operations is approximately $10.5 million of annual employee compensation related liabilities paid during the first quarter. Investing activities 10 11 provided $790,000 that was primarily the result of the gain on the SMS investment. Financing activities provided $1.7 million, primarily due to the exercise of stock options and the employee stock purchase plan. As of March 31, 2000, the Company had no amounts outstanding under its $50.0 million revolving credit facility. As of March 31, 2000, the Company had $31.9 million in cash and cash equivalents. Management believes that its available cash and cash equivalents, anticipated cash generated from its future operations and amounts available under the existing revolving credit facility will be sufficient to meet the Company's operating requirements for at least the next twelve months. Proposed Merger with Neoforma On March 30, 2000, the Company entered into a merger agreement with Neoforma.com, Inc. ("Neoforma"), pursuant to which the Company agreed to be acquired by Neoforma (the "Merger Agreement"). Subject to the terms and conditions of the Merger Agreement, the Company would become a wholly owned subsidiary of Neoforma, and each outstanding share of the Company's common stock will be converted into the right to receive 1.344 shares of Neoforma common stock. The transaction was structured to qualify as a tax-free reorganization and to be accounted for as a purchase. In addition, Neoforma and HEALTHvision, Inc. ("HEALTHvision"), entered into a merger agreement pursuant to which HEALTHvision would become a wholly owned subsidiary of Neoforma. Concurrently with the execution of the merger agreements, Neoforma entered into an Outsourcing and Operating Agreement with Novation, LLC, VHA, Inc. ("VHA"), University Healthsystem Consortium ("UHC"), and Healthcare Purchasing Partners International, LLC, and Common Stock and Warrant Agreements with VHA and UHC. Consummation of each of the above-referenced transactions is conditioned upon completion of each of the other transactions and the approval of the Neoforma stockholders. In addition, completion of the merger involving Neoforma and the Company requires the approval of the Company's stockholders. The Company and Neoforma are holding discussions regarding the mutually agreed termination of the Merger Agreement without the payment of a termination fee. In addition, Neoforma and HEALTHvision are holding discussions regarding the mutually agreed termination of the Merger Agreement without the payment of a termination fee. In connection with such potential terminations, the parties are discussing entering into commercial arrangements. There can be no assurances as to the outcome of these discussions, or the timing or terms of any termination, if any. See also "Legal Proceedings" in Item 1 of Part II of this report, which describes shareholder lawsuits related to the proposed merger with Neoforma. 11 12 PART II. ITEM 1. LEGAL PROCEEDINGS In April 2000, the Company and the members of its Board of Directors were named as defendants in three shareholder lawsuits filed in the Court of Chancery of the State of Delaware, Ilene Silberman v. Eclipsys Corporation, et al.; Paul Minch v. Eclipsys Corporation, et al; and William York v. Eclipsys Corporation, et al. Each of the lawsuits seeks to enjoin or rescind the proposed merger with Neoforma.com, Inc. or to collect an unspecified amount of damages. Each of the lawsuits in general alleges that the members of the Company's Board of Directors have breached their fiduciary duties by approving the transaction with Neoforma.com, Inc. and that the consideration received by the Company's shareholders in connection with the transaction would be inadequate. The Company believes that the members of its Board of Directors have properly exercised their fiduciary duties and intends to defend these claims vigorously. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits: See Index to exhibits. (b) Reports on Form 8-K: The Company filed with the Securities and Exchange Commission a Current Report on Form 8-K on April 3, 2000, relating to the merger agreement with Neoforma.com, Inc., dated March 30, 2000. 12 13 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. ECLIPSYS CORPORATION Date: May 15, 2000 /s/ Gregory L. Wilson -------------------------------------------------- Gregory L. Wilson Senior Vice President, Chief Financial Officer and Treasurer 13 14 ECLIPSYS CORPORATION EXHIBIT INDEX EXHIBIT NO. DESCRIPTION --- ----------- 2 Agreement and Plan of Merger, dated as of March 30,2000, by and among the Registrant, Neoforma, and NeoIII Acquisition Corp. (Incorporated by reference to the Registrant's Current Report on Form 8-K dated March 30, 2000 (File No. 000-24539) 27 Financial Data Schedule (for SEC use only) 14 EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 3-MOS DEC-31-2000 JAN-01-2000 MAR-31-2000 31,928 0 89,923 (7,611) 606 123,213 33,865 (18,889) 199,508 (81,809) 0 0 0 (366) (108,082) (199,508) 64,690 64,690 (35,553) (35,553) (28,129) 0 385 4,989 0 0 0 0 0 4,989 $0.14 $0.13
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