8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): April 29, 2005 (April 29, 2005)

ECLIPSYS CORPORATION

(Exact Name of Registrant as Specified in Charter)

Delaware	000-24539	65-0632092
(State or Other Juris- diction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

1750 Clint Moore Road, Boca Raton, Florida		33487
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code: (561) 322-4321

(Former Name or Former Address, if Changed Since Last Report)

     Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

          ¨     Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

          ¨     Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

          ¨     Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

          ¨     Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01. Entry into a Material Definitive Agreement.

     On April 29, 2005, Eclipsys Corporation (the “Company”) announced that Eugene V. Fife, the Company’s Chairman of the Board of Directors, had been named interim Chief Executive Officer and President, replacing Paul L. Ruflin who is leaving the Company. Mr. Fife will also continue to serve as the Chairman of the Company’s Board of Directors. The Company also announced that it had initiated a search for a new, permanent Chief Executive Officer.

     In connection with his appointment as interim Chief Executive Officer, the Company entered into an employment agreement with Mr. Fife on April 29, 2005. Pursuant to this agreement, the Company agreed to employ Mr. Fife as interim Chief Executive Officer and President at an initial annual salary of $750,000. Pursuant to the employment agreement, the Company or Mr. Fife can terminate Mr. Fife’s employment with the Company at any time. Mr. Fife also agreed not to solicit the Company’s employees or customers during his employment and for 12 months after the termination of his employment. In addition, separate from the employment agreement, Mr. Fife will continue to receive $150,000 in annual compensation as the Chairman of the Company’s Board of Directors.

     Also on April 29, 2005, the Company entered into a restricted stock agreement (the “Restricted Stock Agreement”) with Mr. Fife under the Company’s Amended and Restated 2000 Stock Incentive Plan. Pursuant to the Restricted Stock Agreement, the Company sold Mr. Fife 100,000 shares of the common stock of the Registrant at a purchase price of $0.01 per share. Under the Restricted Stock Agreement, the Company maintains the right to repurchase the unvested portion of these shares at the original purchase price upon the termination of the Business Relationship (as defined in the Restricted Stock Agreement) between the Company and Mr. Fife. The shares vest over a two-year period, with 4.166% vesting each month.

     In connection with his separation from the Company, Paul L. Ruflin is entitled to the following severance benefits under his Amended and Restated Employment Agreement with the Company: (i) severance pay consisting of 18 months of his current base salary, which is $750,000, 150% of his target bonus for 2005, which is $250,000, and a pro rata portion of his 2005 target bonus based on the number of days in 2005 that he was employed by the Company, payable over 18 months beginning on the first regular pay period after six months from the date of termination, (ii) continued life, group health and dental insurance benefits until the earlier of 18 months after his termination or such time as Mr. Ruflin is eligible to receive substantially similar benefits from another employer, and (iii) the acceleration of the vesting under his stock option and restricted stock grant so as to provide an additional 12 months of vesting.

Item 2.02. Results of Operations and Financial Condition

     On April 29, 2005, the Company announced its financial results for the quarter ended March 31, 2005. The full text of the press release issued in connection with the announcement is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

     The information in this Item 2.02 of this Current Report on Form 8-K (together with Exhibit 99.1) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such a filing.

Item 5.02. Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers.

     On April 29, 2005, the Company’s Board of Directors appointed Eugene V. Fife, the Company’s Chairman, to serve as interim Chief Executive Officer and President, replacing Paul L. Ruflin, who is leaving the Company. Mr. Fife is 64 years old, has served on the Company’s Board of Directors since May 1997 and has served as Chairman of the Board since January 2003. Since December 1999, Mr. Fife has served as the founding principal of Vawter Capital, LLC, a private investment firm. From September 1996 to October 2000, Mr. Fife served as the co-chairman and chief executive officer of Illuminis, Inc. (formerly known as Multimedia Medical Systems, Inc.), a medical information systems company. Mr. Fife was formerly a general partner in Goldman Sachs & Co., where he served as a member of its Management Committee and as chairman of Goldman Sachs International. He retired from Goldman Sachs & Co. in 1995, but continues to serve as a Senior Director of the firm. Mr. Fife is also a director of Caterpillar, Inc., a heavy equipment and engine manufacturer. See Item 1.01 for a description of the material terms of the employment agreement between the Company and Mr. Fife.

Item 8.01. Other Events.

      On April 29, 2005, Mr. Fife resigned from the Audit Committee and the Executive Development and Compensation Committee. In order to comply with the requirements of the Company’s committee charters and the rules of the NASDAQ Stock Market with respect to the number of independent directors required to serve on the Audit Committee and Executive Development and Compensation Committee, the Company’s Board of Directors selected Dan L. Crippen to replace Mr. Fife on both committees.

     In addition, in accordance with the Company’s Corporate Governance Guidelines, the Nominating and Corporate Governance Committee nominated, and a majority of the independent members of the Board of Directors approved, Edward A. Kangas as Lead Director.

Item 9.01. Financial Statements and Exhibits.

     (c)     Exhibits

The following exhibit relating to Item 2.02 shall be deemed to be furnished, and not filed:

99.1   Press Release entitled “Eclipsys Appoints Chairman Eugene V. Fife to the Additional Positions of President and Chief Executive Officer,” issued by the Company on April 29, 2005.

SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	ECLIPSYS CORPORATION
Date: April 29, 2005	By:	/s/ Robert J. Colletti
		Robert J. Colletti
		Senior Vice President and Chief Financial Officer

EX-99.1

Exhibit 99.1

     

ECLIPSYS APPOINTS CHAIRMAN EUGENE V. FIFE TO THE ADDITIONAL POSITIONS OF
PRESIDENT AND CHIEF EXECUTIVE OFFICER

— Reports Higher Revenues and Reduced Loss for First Quarter of 2005 Compared with First
Quarter of 2004 —

Boca Raton, FL, Friday, April 29, 2005 – Eclipsys^® [NASDAQ: ECLP], The Outcomes Company^®, today announced that its Board of Directors has named its Chairman and long-standing director Eugene V. Fife to the additional roles of President and Chief Executive Officer. Mr. Fife has been the Chairman of Eclipsys since January 2003 and a director since 1997. He succeeds Paul L. Ruflin, who is leaving the Company.

Separately, Eclipsys reported first quarter 2005 results, summarized in the following table and discussed in greater detail further below:

	In millions, except per share data
	Three months ended March 31,											Three months ended Dec. 31,
	2005			2004			Change $		Change %			2004			Change $			Change %
Revenues	$	84.4		$	68.4		$	16.1		23.5	%	$	87.2		$	(2.8	)		(3.2	)%
Loss per share		(0.15	)		(0.28	)		0.13		46.4			(0.06	)		(0.09	)		(150	)

Eclipsys’s senior executives will discuss the results during an investment community teleconference scheduled for 5:00 p.m. Eastern time today, Friday, April 29, 2005. Information for accessing the call and webcast is provided further below.

The Board of Directors stated, “We are pleased with Eclipsys’s improvement over its prior year’s results, and with the Company’s strategy, technology and products. With more than 1,500 customer facilities, including several of the nation’s top academic medical centers, Eclipsys is one of the leaders in the fast-growing healthcare information technology industry. We believe Eclipsys’s has a very significant and exciting growth opportunity in this rapidly transforming marketplace as a single source for integrated, comprehensive software and transaction processing for leading healthcare organizations.

“Having established the right strategy, a broad and deep suite of products rich in features and functionality exemplified by the recently-released Sunrise™ 4.0 XA™, a talented and dedicated workforce, and a large and distinguished customer base, we are confident in Eclipsys’s direction and its current day-to-day performance. We believe that in order to take full advantage of Eclipsys’s potential for profitable growth, the best step for the Company at this stage of its development is to put the execution of its strategy in the hands of our Chairman Gene Fife — a highly experienced manager of growing businesses who knows the healthcare industry, Eclipsys and its senior management well. Our senior management team remains in place, and we are confident that they and Gene will be very effective in moving our business forward with a continued sharp focus on our customers. We are also commencing a search for a long-term CEO who will complement Gene in his continuing role as Chairman,” the Board said. Spencer Stuart has been engaged to lead the search.

Mr. Fife stated, “I am proud of what Eclipsys’s employees have accomplished in providing high value-added solutions to our customers, and I share their excitement for the opportunity we have to become a world-class company. The senior management team and I are united in our commitment to leveraging the talent and skills of our entire Company to develop a scalable organization that matches the scalability of our technology, and to set and achieve a new industry standard for customer service.”

1750 Clint Moore Road, Boca Raton, FL 33487 • phone 561.322.4321 • fax 561.322.4320 • info@eclipsys.com

The Board concluded, “We appreciate Paul’s many contributions to the Company. With his strong consulting background, he played a key role in developing the strategic direction of the Company, which has been so important to Eclipsys’s strong competitive position.”

Mr. Fife, 64, was formerly a general partner of Goldman Sachs & Co., where he served as a member of the firm’s Management Committee and as Chairman of Goldman Sachs International. During his 26 years with the firm, Mr. Fife was responsible for managing the growth of its West Coast and European operations. He retired from Goldman Sachs & Co. in 1995. Mr. Fife’s healthcare industry experience includes serving as chief executive officer of Illuminis, Inc., a medical information systems company, from September 1996 to October 2000, and as a member of the University of Virginia Medical Center’s Operating Board since 2002. He is also the founding principal of Vawter Capital, LLC, a private investment firm, a member of the Board of Directors of Caterpillar, Inc. and the Director of the Miller Center of Public Affairs at the University of Virginia.

First quarter results

First quarter 2005 revenues were $84.4 million compared to revenues of $68.4 million in Q1’04 and $87.2 million in Q4’04, with systems and services revenues approximately 35% higher compared with Q1’04. Net loss for the quarter was $(7.2) million compared to a net loss of $(13.1) million in Q1’04 and $2.9 million in Q4’04. Basic and diluted net loss per share was $(0.15) compared to $(0.28) in Q1’04 and $(0.06) in Q4’04.

Operating cash flows were $(7.1) million in the quarter, compared to $(9.5) million in Q1’04; this represents a $2.4 million improvement compared to Q1’04. Cash, cash equivalents and marketable securities were $106.2 million as of March 31, 2005, and days sales outstanding (DSOs) were 63 days as of March 31, 2005. Deferred revenue (including current and long-term) was $125.0 million as of March 31, 2005, an increase of $26.6 million from $98.4 million as of March 31, 2004.

Investor teleconference today

Investors and analysts interested in participating in today’s 5:00 p.m. Eastern time teleconference should call (800) 573-4752 or, for international callers, (617) 224-4324, and enter passcode 65699575 within 15 minutes before the conference is scheduled to begin. For listen-only mode, participants can go to www.eclipsys.com, Investor Relations/News & Events/Event Calendar about 15 minutes prior to the conference call to register and to download the necessary audio software. An audio replay will be available beginning approximately 7:00 p.m. Eastern time today until the end of the day Tuesday, May 3 by visiting www.eclipsys.com, Investor Relations/News & Events/Event Calendar.

About Eclipsys

Eclipsys is a leading provider of advanced clinical, financial and management information software and service solutions to more than 1,500 healthcare facilities. Eclipsys empowers healthcare organizations to improve patient safety, revenue cycle management and operational efficiency through innovative information solutions. For more information, see www.eclipsys.com or e-mail info@eclipsys.com.

Statements in this news release concerning future results, performance or expectations are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. All forward-looking statements included in this document are based upon information available to Eclipsys as of the date hereof and Eclipsys assumes no obligation to update any such forward-looking statements. Because such statements involve risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. These risks include several risks in connection with our product strategy, including the uncertainty of the time and costs required to implement the strategy, the potential that our strategy could change, the potential that we may encounter technical difficulties in implementing our strategy, and the potential that the changes to our products may affect customer demand. Other risks include potential financial constraints and other factors faced by the healthcare industry, changing customer requirements and other risks described in the filings of Eclipsys with the Securities and Exchange Commission, including its year end report on Form 10-K for the year ended December 31, 2004. Eclipsys Corporation and The Outcomes Company are registered trademarks and Sunrise and XA are trademarks of Eclipsys Corporation. Other product and company names in this news release are trademarks or registered trademarks of their respective companies.

Eclipsys
Michael E. Donner	Robert J. Colletti
SVP & Chief Marketing Officer	SVP & Chief Financial Officer
(media)	(investors)
(561) 322-4485	(561) 322-4650
michael.donner@eclipsys.com	investor.relations@eclipsys.com

Eclipsys Corporation
Consolidated Statements of Operations — Unaudited
(In thousands, except per share amounts)

	Three Months Ended												Three Months Ended
	March, 31												December 31,
	2005			2004			Change $			Change %			2004			Change $			Change %
Revenues:
Systems and services	$	83,128		$	61,807		$	21,321			34.5	%	$	80,368		$	2,760			3.4	%
Hardware		1,307			6,577			(5,270	)		-80.1	%		6,865			(5,558	)		-81.0	%
Total revenues		84,435			68,384			16,051			23.5	%		87,233			(2,798	)		-3.2	%
Costs and expenses:
Cost of systems and services revenues		52,265			39,338			12,927			32.9	%		44,371			7,894			17.8	%
Cost of hardware revenues		1,101			5,634			(4,533	)		-80.5	%		5,667			(4,566	)		-80.6	%
Sales and marketing		18,176			15,941			2,235			14.0	%		18,784			(608	)		-3.2	%
Research and development		12,576			14,738			(2,162	)		-14.7	%		13,617			(1,041	)		-7.6	%
General and administrative		4,356			3,169			1,187			37.5	%		4,668			(312	)		-6.7	%
Depreciation and amortization		3,683			3,081			602			19.5	%		3,553			130			3.7	%
Total costs and expenses		92,157			81,901			10,256			12.5	%		90,660			1,497			1.7	%
Loss from operations		(7,722	)		(13,517	)		5,795			42.9	%		(3,427	)		(4,295	)		-125.3	%
Interest income, net		561			454			107			23.6	%		536			25			4.7	%
Loss before income taxes		(7,161	)		(13,063	)		5,902			45.2	%		(2,891	)		(4,270	)		-147.7	%
Provision for income taxes		—			—			—			—			—			—			—
Net loss	$	(7,161	)	$	(13,063	)	$	5,902			45.2	%	$	(2,891	)	$	(4,270	)		-147.7	%
Earnings per share:
Basic loss per share	$	(0.15	)	$	(0.28	)	$	0.13			46.4	%	$	(0.06	)	$	(0.09	)		-150.0	%
Diluted loss per share	$	(0.15	)	$	(0.28	)	$	0.13			46.4	%	$	(0.06	)	$	(0.09	)		-150.0	%
Weighted average shares outstanding:
Basic		47,323			46,115									46,937
Diluted		47,323			46,115									46,937

Eclipsys Corporation
Consolidated Balance Sheets — Unaudited
As of March 31, 2005 and December 31, 2004
(In thousands)

	March 31,			December 31,
	2005			2004
Assets
Current assets:
Cash and cash equivalents	$	69,344		$	122,031
Marketable securities		36,860			—
Accounts receivable, net		59,064			64,862
Inventory		1,564			1,644
Other current assets		19,030			15,586
Total current assets		185,862			204,123
Property and equipment, net		35,676			35,002
Capitalized software development costs, net		32,994			29,819
Acquired technology, net		812			886
Goodwill		6,441			6,667
Other assets		22,945			14,923
Total assets	$	284,730		$	291,420
Liabilities and Stockholders’ Equity
Current liabilities:
Deferred revenue	$	107,234		$	106,804
Accrued compensation costs		14,003			12,738
Other current liabilities		26,904			32,587
Total current liabilities		148,141			152,129
Deferred revenue		17,741			15,892
Other long-term liabilities		538			122
Stockholders’ equity:
Common stock		474			472
Additional paid-in-capital		432,650			429,001
Unearned stock compensation		(7,179	)		(5,641	)
Accumulated deficit		(307,505	)		(300,343	)
Accumulated other comprehensive loss		(130	)		(212	)
Total stockholders’ equity		118,310			123,277
Total liabilities and stockholders’ equity	$	284,730		$	291,420

Eclipsys Corporation
Statement of Cash Flow — Unaudited
(In thousands)

	Three Months Ended
	March 31,			March 31,
	2005			2004
Operating Activities:
Net loss	$	(7,161	)	$	(13,063	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		7,806			6,025
Write-off of capitalized software at development costs		—			—
Bad debt provision		450			550
Loss on sale of marketable securities		—			—
Stock compensation		416			56
Accounts receivable		5,348			4,880
Inventory		80			(1,169	)
Other current assets		(3,444	)		2,173
Other assets		(8,824	)		(1,991	)
Deferred revenue		2,279			(2,758	)
Accrued compensation		1,265			(4,033	)
Other current liabilities		(5,683	)		333
Other liabilities		416			(532	)
Total adjustments		109			3,534
Net cash used in operating activities		(7,052	)		(9,529	)
Investing Activities:
Purchase of fixed assets		(4,125	)		(4,018	)
Purchase of marketable securities		(138,018	)		(84,015	)
Proceed from sale of marketable securities		101,158			43,207
Sale of investments		—			—
Capitalized software development costs		(6,426	)		(4,638	)
Acquisitions, net of cash		—			(2,500	)
Net cash used in investing activities		(47,411	)		(51,964	)
Financing Activities:
Exercise of stock options		1,696			2,417
Employee stock purchase plan		—			782
Net cash provided by financing activities		1,696			3,199
Effect of exchange rate changes on cash and cash equivalents		81			(11	)
Net decrease in cash and cash equivalents		(52,686	)		(58,305	)
Cash and cash equivalents, beginning of period	$	122,031		$	151,683
Cash and cash equivalents, end of period		69,345			93,378
Marketable securities		36,860			40,808
Total cash	$	106,205		$	134,186