Per-Se Technologies Reports Second Quarter 2006 Results

Per-Se Technologies, Inc., the leader in Connective Healthcare solutions that help physicians, pharmacies, hospitals and healthcare organizations realize their financial goals, today reported its financial results for the second quarter and six-month period ended June 30, 2006. The financial results of the NDCHealth businesses acquired on January 6, 2006, are included in the Company’s current year results.

Second Quarter Highlights

• On a GAAP basis, second quarter revenue was $152.7 million, operating income was $21.4 million, and income from continuing operations was $7.9 million or $0.18 per share.
• Revenue increased 63.6% in the second quarter from $93.3 million a year ago, driven by the addition of the acquired NDCHealth businesses and by organic growth.
• Adjusted operating income in the second quarter increased to $25.8 million, or 16.9% of revenue, from $8.9 million, or 9.5% of revenue, a year ago.
• Second quarter adjusted earnings per share were $0.24 on approximately 44.1 million diluted shares, compared to guidance of $0.17 to $.0.19.
• Adjusting the income tax rate to reflect Per-Se’s estimated cash tax paying rate to facilitate comparison to published analyst expectations, adjusted earnings were approximately $0.38 per diluted share.

Year-to-Date Highlights

• Adjusted cash flow from continuing operations more than doubled to $56.9 million in the first six months of 2006, compared to cash flow from continuing operations of $22.6 million in the same period last year.
• The Company repaid a total of $50 million of its Term Loan debt during the first six months of 2006.

2006 Full-Year Guidance

• The Company raised guidance for new business sold for its Hospital Solutions and Pharmacy Solutions divisions, and reaffirmed net new business sold guidance for the Physician Solutions division.
• The Company reaffirmed:
• Adjusted cash flow guidance in a range of $100 million to $110 million;
• Adjusted EBITDA range of $142 million to $147 million;
• Adjusted diluted earnings per share range of $0.81 to $0.87; and
• The Company lowered its revenue guidance to a range of $615 million to $620 million.

On a GAAP basis, the Company reported revenue for the second quarter ended June 30, 2006 of $152.7 million, operating income of $21.4 million, and income from continuing operations of $7.9 million, or $0.18 per diluted share. Excluding stock-based compensation expense and NDCHealth transition and integration-related expenses, on a non-GAAP basis the Company reported second quarter adjusted operating income of $25.8 million, or 16.9% of revenue, and adjusted income from continuing operations of $10.5 million, or $0.24 per diluted share. These adjusted results include an income tax provision at an income tax rate of approximately 41%.

During the second quarter of 2006, the Company incurred pre-tax, non-cash stock-based compensation expense of approximately $1.8 million. The Company also recorded transition and integration expenses of approximately $2.6 million related to the NDCHealth acquisition.

For comparison purposes, in the second quarter of 2005, the Company reported revenue of $93.3 million, operating income of $8.9 million, or 9.5% of revenue, and income from continuing operations of $7.5 million, or $0.23 per diluted share, which included an income tax rate of approximately 3.0%.

“Our second quarter financial results significantly exceeded our expectations in all three divisions,” said Philip M. Pead, chairman, president and chief executive officer of Per-Se Technologies. “I am excited about the momentum that has been created within our business units and the strong demand for our products and services. The breadth of our offerings and the leadership position we have in helping providers improve their revenue cycle is having a very positive impact on our Company performance.”

Business Segment Performance

The following business segment review references adjusted operating income for the second quarter of 2006, which excludes stock-based compensation expense.

Physician Solutions Division

The Physician Solutions division reported revenue of $80.2 million and adjusted operating income of $12.4 million, or 15.5% of revenue, for the second quarter of 2006, compared to revenue and operating income of $69.1 million and $7.5 million, respectively, or 10.8% of revenue, for the same quarter of 2005.

This division’s outsourced receivables management business had net new business sold in the second quarter of approximately $6 million, which compares to net new business sold of approximately $10 million in the same quarter a year ago. In July 2006, this division closed more than $5 million in net new sales in its outsourced receivables management business, bringing its year-to-date total of net new business sold to approximately $14 million.

“Our physician outsourcing business generated organic revenue growth of over 6% during the quarter as compared to last year’s second quarter. The incremental revenue contributed to a strong margin performance for our outsourcing business, with margins increasing over the first quarter,” commented Pead. “While our net new business sold for the quarter was below our expectations due to the timing of new business closings, our performance through July is on track and I am confident that we will achieve our full-year net new business sold range of $25 million to $35 million.”