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Eclipsys financial results and conference call for the Quarter ended March 31, 2004

Revenue for the quarter was $68.4M, up 20.4% Year over Year; 2% Quarter over Quarter. The company also reported deferred revenue of $98.4M, vs. $85.9M YoY and $101.2M QoQ.

There was a net loss of ($13.1M), or ($.28) per share, vs. ($.29) YoY and ($.46) QoQ.

Operating Cash Flow was impacted ($9.5M), vs. $1.2M YoY and ($3.8M) QoQ. The company reported cash and equivalents of $134.2M, down from $180M a year ago and $151.7M last quarter. The company has no debt.

Days Sales Outstanding were reported at 65, vs. 71 for the last quarter.

By way of Guidance, the company projects a loss of ($.60) to ($.70) for fiscal 2004, declining to a small loss or break-even by the end of fourth quarter. They expect to use up to $35M more cash for the year, but to have positive cash flow by year-end. They also expect to see gross margins of 50% in fiscal 2005.

Notes from the conference call:

· There were seven major agreements covering 23 facilities signed since the October 20 announcement of a response time issue. These include two net new customers for Eclipsys.
· There are more than 50 core clinical and 45 non-clinical activations scheduled for the balance of fiscal 2004.
· Eclipsys remains the leading vendor in terms of CPOE penetration, representing over 30% of the total CPOE practice in North America.
· Sunrise Clinical Manager achieved top ranking in the KLAS report for the third straight year.
· The company's two primary priorities are the continued growth of recurring revenue, and the delivery of Sunrise XA release 3.5 by the end of June 2004. The CEO was very confident about meeting both objectives.

The overall tone of the call was very positive and upbeat. They spoke of their “robust pipeline”, and of the significant potential for sales in the second quarter, and expressed a great deal of confidence in quality of the Sunrise XA product, and of overcoming all of the performance issues of the last quarter. The CEO indicated that 90% of their revenue guidance was already booked. This is not surprising, given their subscription-pricing model.

If there is any major deviation in revenue growth from the forecast for the rest of the year, or if release 3.5 of Sunrise XA fails to ship by the end of June, that could mean more trouble for Eclipsys. Otherwise, it should be a year in which the company finally turns the corner and becomes profitable.


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