Notes on Eclipsys Q4 2001 Conference Call


Revenue
- $60.7M for the Quarter; Up 12.2% over Q4 2000
- $237M for 2001; up 9.4% over 2000

Earnings
- Actual - $.05 for Q4, $.10 for 2001
- pro forma - $.10 for Q4, $.42 for 2001
- EBITDA - $.21 for Q4, $.80 for 2001

Margins
- 52% Gross
- 15% EBITDA

Bookings
- $113M for Q4, exceeding guidance of $95M - $105M.
- $358M for 2001; Up 15% YOY; 188% QOQ

Other Metrics
- Strong Operating Cash Flow - $7.8M in Q4, $27.9M, or $.60 / share YTD.
- Third consecutive quarter of positive GAAP earnings
- 98 days DSO
- $169M cash; no long-term debt

Guidance
- Q1 bookings - $90M - $100M (13% - 20% decrease)
- 2002 bookings - $410M – $440M (15% - 23% increase)
- Q1 earnings .10 - .12 (100% - 140% increase)
- 2002 diluted earnings $.52- $.56 ( vs. $.09 in 2001)
- 2002 reported (GAAP) earnings $.72 - $.76 (85% - 95% increase)
- Q1 revenue – $60M - $63M (essentially flat over 2001 Q4)
- 2002 revenue - $269M - $277M (14% - 17% increase)
- Operating Cash Flow - $30M - $35M (8% - 25% increase)

Outlook
- Enough unused credits to project no tax for next 10 – 12 quarters.
- Estimate 3 - 4 year lead over all competition in moving to Intel 64 bit and Microsoft “.NET” solutions.
- New “Xa” internet-based XML architecture features infinite scalability, rapid delivery. Includes installation services & the applications themselves.
- Move to Xa will be 100% complete by mid-2003.
- All Sunrise customers will receive Xa as an upgrade. “We can now sell smaller slices of our products”.
-Sunrise Xa implementation cycle headed for 7 months.
-New product announcements from Siemens & McKesson should be very positive for Eclipsys. Will force their customers to wake up and look around
-No new acquisitions foreseen

Market
- Strongest since the Balanced Budget Act was passed in '96.
- Clinical Systems growth is expected to be the strongest of all.
- Many hospitals selecting Eclipsys as their core technology.
- Latest sales replace Cerner, IDX, McKesson & Siemens.
- Industry realizing that back-office systems can't address patient safety and cost issues.

Eclipsys Position in the Market
- Sunrise Clinical Manager (SCM) rated #1 by
1. Leapfrog Report (concerned with patient safety & medical errors)
- More installed sites than all of the competition combined
- Highest marks in all nine categories. Way ahead of #2
2. KLAS Report (Customer Satisfaction)
- SCM rated #1, but room for improvement
- 50% of executive compensation & 50% 401k contribution is now tied to customer satisfaction
3. Five Rights Report

Eclipsys has only 60% market recognition
- 25 new salesmen hired last quarter, including veterans of the major competition. Currently undergoing boot-camp style training program.
- Anticipate hiring 35 - 40 more salesmen in 2002
- SCM Customer base includes 35 IDN's, ranging from 108 to 5813 beds

Notes
- Deferral of Q3 bookings due to 9/11 tragedy probably responsible for stronger Q4 number. Lower guidance for Q1 2002 would seem to bear this out.
- Income from Operations positive for Q4 but still negative for the year.
- While not mentioned in the call, there was recent (11/01) insider buying of 3,715,187 shares by directors and investment partnerships.

Comparison with past (Q2 2001) guidance
- Actual Q4 earnings of $.10, vs. projection of $.17 - $.19.
- Actual bookings of $358M vs. projection of $400M - $425M.
- EBITDA up only slightly since projection of “18% - 22% range within 12 – 24 months” made in the Q2 2001 call.
- Dilution from previous acquisitions not yet fully accounted for.