NEWPORT BEACH, Calif. – July 22, 2003 – The TriZetto Group, Inc. (Nasdaq:TZIX) reported financial results today for the second quarter ended June 30, 2003. The company's second quarter pro forma earnings per share of $0.04 exceeded the First Call consensus estimate of $0.03.

"In the second quarter we generated healthy revenue growth from existing operations and a strong sequential increase in new business," said Jeffrey H. Margolis, TriZetto's chief executive officer. "Our net loss in the quarter narrowed by 63% over the same quarter last year, bringing us closer to our goal of becoming profitable in the fourth quarter of this year. Our financial position remains solid, with $83 million in cash and equivalents at quarter's end."

"We continued to invest in software development and other strategic initiatives during the quarter, which will help expand our lead in the payer market, " Margolis said."The limited-availability release of Facets Extended Enterprise™, the newest version of our flagship software for health plans, was launched on schedule at the end of June."

Second Quarter Financial and Operations Highlights

• Total revenue grew to $76.5 million in the second quarter of 2003, an increase of 15% over the $66.8 million reported in the second quarter of 2002. All of the increase was from existing operations.
• EBITDA was $7.5 million in the second quarter of 2003, compared with EBITDA of $5.6 million in the second quarter of 2002, an increase of 34%.
• Net loss for the second quarter of 2003 improved to $1.4 million or $0.03 per diluted share from a net loss of $3.7 million or $0.08 per diluted share in the second quarter last year.
• Diluted pro forma earnings per share were $0.04 in the second quarter of 2003, compared with $0.06 in the same quarter last year. (Note: Pro forma numbers exclude acquisition-related expenses. For a detailed definition of pro forma, see attached financial statements. In 2003, TriZetto is taxing pro forma numbers at 40%; in 2002 pro forma numbers were taxed at approximately 5%.)
• Days sales outstanding were 62 for second quarter 2003, compared with 52 in the same quarter last year.
• Total revenue backlog at June 30, 2003 was approximately $613.9 million. Twelve-month revenue backlog was approximately $182.7 million. The timing of contract closings and other factors can cause the company's backlog to vary from one quarter to the next.
• 335 contracts were signed in the second quarter, with a total value of $83.6 million. 30 of these were outsourced services contracts (software hosting, business process outsourcing, and other services) valued at $53.9 million, and 75 were software license contracts valued at $14.8 million. 229 contracts were for consulting and implementation services, valued at $14.9 million.

"Our sales were solid in the quarter, with $83.6 million in new bookings across all three strategic business units," Margolis said. "Under the largest of these contracts, TriZetto will host Facets® for the managed care business unit of a large health plan (the customer prefers to remain unnamed until the project is fully completed). We also significantly expanded a Facets license agreement with one of the largest Blue Cross and Blue Shield plans in the country. Our benefits administration division had an excellent quarter, signing numerous software and outsourced services contracts. The largest of these contracts included Benesys, Inc., Benefit Plan Administrators, and HCH Administration, all third party administrators."

"We are encouraged by our sales for the quarter and by the opportunities in our pipeline, particularly with large health plans," Margolis said. "Although sales cycles remain a year or longer for prospects considering multiple products and services, we are confident that our market share will continue to grow."

On July 9, 2003, Coventry Health Care, Inc. (NYSE:CVH) announced its plan to acquire Altius Health Plans, Inc., one of TriZetto's outsourced services customers. In 2003, we estimate that the Altius account will produce revenue of $20 million and EBITDA of $1.5 - $2.5 million. We do not know what services, if any, Coventry will elect to continue under the Altius contract. Given the termination provisions of the contract, we do not expect 2003 financial results to be affected by Coventry's acquisition of Altius. With the information currently available, we cannot determine the impact on our 2004 financial results.

Financial Review / Outlook

Financial guidance for the third quarter of 2003 and fiscal year 2003 is linked to this press release. Guidance for fiscal year 2003 remains unchanged from April 1, 2003; guidance for the third quarter of 2003 is new. Guidance is also posted on the company's web site at www.trizetto.com, "Investor Relations", "Financial Reports". TriZetto's actual financial results may vary from guidance, depending upon the timing of contract signings, competition, changes in demand for products and services, and other factors that are identified in TriZetto's Form 10-K and other SEC filings.

Revenue – Second quarter revenue totaled $76.5 million, up 15% from $66.8 million in the second quarter of 2002. All of the increase was organic, primarily the result of growth in software license, maintenance and implementation revenue. Given the typical seasonality of our software license revenue, we expect revenue to be higher in the second half of 2003 than in the first half. For the third quarter of 2003, total revenue is expected to range from $78 - $81 million.

Recurring revenue totaled $40.5 million in the second quarter of 2003 and non-recurring revenue was $36.0 million. Recurring revenue in the second quarter was 53% of total revenue, compared with 61% in the second quarter of 2002 and 57% in the first quarter of 2003. The year-over-year decrease in the percentage of recurring revenue reflects a change in the mix of business. Revenue from software licenses and implementation contracts grew at a faster rate than recurring revenue.

EBITDA –TriZetto reported EBITDA of $7.5 million in the second quarter of 2003, compared with $5.6 million in the second quarter of 2002. The improvement in EBITDA reflects the higher margins associated with increased software license revenue in the quarter. The company expects EBITDA to be higher in the second half of 2003 than in the first half of the year, reflecting seasonally higher revenue that is typical in the second half of the year. For the third quarter of 2003, EBITDA is expected to range from $9.7 - $10.1 million.

Net Loss/Per Share Data – TriZetto reported a net loss of $1.4 million in the second quarter of 2003, or a loss per diluted share of $0.03, compared with a loss of $3.7 million or $0.08 per diluted share in the second quarter of 2002. This improvement is primarily the result of an intangible asset impairment charge taken in fourth quarter 2002, which eliminated part of the acquisition-related amortization of intangible assets from the company's income statement. The impairment charge was taken in accordance with Financial Accounting Standards 142 and 144. For the third quarter of 2003, net income is expected to range from $0.0 – $0.4 million, or $0.0 - $0.1 per share.

Cash Resources – Cash, restricted cash and short-term investments totaled $82.6 million at June 30, 2003. TriZetto generated approximately $3.9 million in cash from operations during the second quarter of 2003. The company currently has net operating loss carryforwards of $60 million, which will be applied against future taxable income.

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. The company has nearly 500 customers representing 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.

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CONTACTS:

Investor Relations
Anna Marie Dunlap
949-719-2236
am.dunlap@trizetto.com

Media Relations
Margie McCarthy
303-495-7225
margie.mccarthy@trizetto.com

Information

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