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TriZetto Reports Second Quarter 2002;
Results Show Continued Progress Toward Profitability
NEWPORT BEACH, Calif. – July 23, 2002 – The TriZetto(R) Group, Inc. (Nasdaq:TZIX) reported financial results today for the second quarter ended June 30, 2002. For the eleventh consecutive quarter, the company's performance has met or exceeded the guidance range provided to the investment community.
Financial and Operations Highlights
- Total revenue grew to $66.8 million in the second quarter of 2002, an increase of 25% over the $53.3 million reported in the second quarter of 2001. The increase was predominantly from existing operations.
- Net loss for the second quarter of 2002 improved to $3.7 million or $0.08 per diluted share compared with a net loss of $15.0 million or $0.40 per diluted share in the second quarter last year.
- Diluted pro forma earnings per share improved to $0.06 in the second quarter of 2002, compared with diluted pro forma earnings per share of $0.00 in the second quarter of 2001. (Note: pro forma numbers exclude amortization of acquisition-related intangibles and deferred stock compensation, write-offs of in-process research and development costs, restructuring and related impairment charges and related taxes.)
- EBITDA (earnings before interest, taxes, depreciation and amortization) was $5.6 million in the second quarter, compared with EBITDA of $2.1 million in the second quarter of 2001.
- Days sales outstanding were 52 for the second quarter 2002.
- Total revenue backlog at June 30, 2002 was approximately $636 million. Twelve-month revenue backlog was approximately $189 million.
- 250 contracts were signed in the second quarter, with a total value of $74.1 million. 28 of these were business services contracts (software hosting and other outsourcing services) valued at $21.5 million, and 44 software license contracts were valued at $43.2 million. 178 contracts were for consulting services valued at $9.4 million.
"In the second quarter we continued to make steady, consistent progress toward profitability, as has been our pattern since going public in 1999," said Jeffrey H. Margolis, TriZetto's Chief Executive Officer. "The quarter's performance reflects solid growth from existing operations and cost-containment discipline throughout the organization. We increased EBITDA by 36% in the second quarter compared to the first quarter, and by 172% year-over-year. In addition, we maintained a strong financial position, with over $92.6 million in cash and equivalents on the balance sheet at the end of the June quarter."
"One of our main growth strategies is to win business from top tier healthcare organizations," Margolis continued. "In the second quarter, we signed new contracts with a total value of $74.1 million, including contracts with UnitedHealth Group, Inc. (UNH:NYSE), a leading diversified health services company."
TriZetto's two contracts with UnitedHealth Group, Inc. were the largest signed in the quarter. One of these contracts is a hosting arrangement under which TriZetto will provide Facets and other ancillary software for certain businesses in UnitedHealth's Specialized Care Services division. The second is a license and software support agreement, under which TriZetto will provide maintenance and support for a customized broker application developed by ChannelPoint, Inc. As previously announced, in support of this contract TriZetto acquired certain personnel, intellectual property and assets from the healthcare division of ChannelPoint.
"No company is in better position than TriZetto to serve the healthcare payer market," Margolis concluded. "We offer market-leading software and a full complement of outsourcing services built around those products, including application hosting, transaction processing and IT operations support. We are encouraged that an increasing number of health plans are moving away from home-grown systems to packaged software and that the demand for outsourced services is growing."
Financial Review/Outlook
The financial guidance issued on January 8, 2002 remains unchanged. Go to www.trizetto.com "Investor Relations", "Financial Reports", to view 2002 guidance by quarter and for the year. Whether TriZetto reaches the low or the high end of the guidance range depends upon a number of factors, primarily the timing of contract signings. Given the information currently available, the company anticipates that it is more likely to hit the low-to-mid point of the guidance range for the third and fourth quarters and for the full year, rather than the high end.
Revenue - Second quarter revenue totaled $66.8 million, up 25% from $53.3 million in the second quarter of 2001. Recurring revenue totaled $40.9 million in the second quarter of 2002 and non-recurring revenue was $25.9 million. Comparing the second quarter of 2002 with same period in 2001, organic growth was 24%. Year-over-year, revenue increased as a result of growth in all of TriZetto's major lines of business. Sequentially (from the first quarter of 2002 to the second quarter), revenue growth was driven by two major contracts signed early in the quarter.
Recurring revenue in the second quarter was 61% of total revenue, compared with 63% in the second quarter of 2001 and 67% in the first quarter of 2002. The decrease in the percentage of recurring revenue reflects a shift in the mix of business during the quarter, toward higher non-recurring revenue associated with several large customer implementations and consulting contracts. Over time, TriZetto expects recurring revenue as a percent of total revenue to increase.
EBITDA - TriZetto posted EBITDA of $5.6 million in the second quarter of 2002, compared with $2.1 million in the second quarter of 2001 and positive EBITDA of $4.1 million in the first quarter of 2002. This improvement in EBITDA reflects a higher increase in revenue and continued emphasis on pricing discipline and cost control throughout the company. The company expects EBITDA to continue to improve as the year progresses.
Net Loss/Per Share Data - TriZetto reported a net loss of $3.7 million in the second quarter of 2002, or a loss per diluted share of $0.08, compared with a loss of $15.0 million or $0.40 per diluted share in the second quarter of 2001. Most of the improvement is the result of eliminating goodwill amortization from the income statement as required by Financial Accounting Standard 142, which went into effect on January 1, 2002.
TriZetto's pro forma net income in the second quarter of 2002 was $2.6 million, or $0.06 per diluted share, compared to a pro forma net loss of $184,000 or a $0.00 per share in the second quarter of 2001.
Cash Resources - Cash, cash equivalents, restricted cash and short-term investments totaled $92.6 million at June 30, 2002. TriZetto generated approximately $13.4 million in cash from operations during the second quarter of 2002.
Conference Call
TriZetto will host a conference call to discuss its second quarter results today at 7:30 a.m. Pacific Time. To listen to the conference call via the Internet, go to TriZetto's Web site at www.trizetto.com, click on "Investor Relations", and follow the instructions provided.
About TriZetto
The TriZetto Group, Inc. offers a broad portfolio of healthcare information technology (IT) products and services that can be delivered individually or combined to create a comprehensive solution.
The company provides:
- leading proprietary and third-party software, including e-business applications;
- outsourced services, such as software hosting, transaction processing and IT department operations; and
- strategic and implementation consulting.
TriZetto is focused on three healthcare markets: payers, benefit administrators and physician groups. Its more than 550 customers represent approximately 40 percent of the U.S. insured population. Headquartered in Newport Beach, Calif., TriZetto can be reached at (949) 719-2200 or www.trizetto.com.
Advisory Regarding Forward-Looking Statements
This press release contains forward-looking statements that involve risks and uncertainties. The forward-looking statements are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may include statements about future net revenues, profits, and financial results, the market for TriZetto's services, future service offerings, client and partner relationships, and TriZetto's operational capabilities. Actual results may differ materially from those stated in any forward-looking statements based on a number of factors, including the effectiveness of TriZetto's implementation of its business plan, the market's acceptance of TriZetto's services, risks associated with management of growth, reliance on third parties to supply key components of TriZetto's services, attraction and retention of employees, variability of quarterly operating results, competitive factors, risks associated with acquisitions, changes in demand for third party products or solutions, which form the basis of TriZetto's service offerings, financial stability of our customers, changes in government laws and regulations and risks associated with rapidly changing technology, as well as the other risks identified in TriZetto's Form 10-K and other SEC filings.
CONTACTS:
Investor Relations
Anna Marie Dunlap
949-719-2236
am.dunlap@trizetto.com
Media Relations
Margie McCarthy
303-495-7225
margie.mccarthy@trizetto.com
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