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TriZetto Reports First Quarter Results
Top Line Grows 160% Continued Progress Toward Profitability
NEWPORT BEACH, Calif. – April 24, 2001 – The TriZetto(R) Group, Inc. (Nasdaq: TZIX) reported financial results today for the first quarter ended March 31, 2001.
First Quarter Highlights
- Total revenue grew to $46.0 million in the first quarter of 2001, an increase of 160% over the $17.7 million reported in the first quarter of 2000. First quarter 2001 recurring revenue increased 153% over the same period last year.
- The pro forma loss per share was $0.13 in the first quarter of 2001, compared with a pro forma loss of $0.28 per share in the first quarter of 2000. (Pro forma numbers exclude amortization of acquisition-related intangibles and deferred stock compensation, in-process research and development costs and taxes.)
- Reported net loss for the first quarter 2001 was $17.9 million or $0.50 per share, compared with a loss of $7.9 million or $0.42 per share in the first quarter of 2000.
- EBITDA (earnings before interest, taxes, depreciation and amortization) improved from a loss of $6.9 million in the fourth quarter of 2000 to a loss of $2.8 million in the first quarter of 2001.
- The total recurring and software license revenue backlog at March 31, 2001 was approximately $421 million. Total recurring revenue backlog was approximately $392 million.
- The 12-month recurring and software license revenue backlog at March 31, 2001 was approximately $134 million. The 12-month recurring revenue backlog was approximately $112 million.
- 62 new recurring revenue and software contracts were signed in the first quarter, with a total contract value of $42.1 million. 26 of these were application service provider (ASP) contracts, and 36 were software license contracts.
- Days billings outstanding were 42 as of March 31, 2001.
"We generated substantial top line growth in the first quarter while continuing to progress toward our goal of reaching positive EBITDA by the middle of this year," said Jeffrey H. Margolis, TriZetto's Chief Executive Officer. "Our revenue growth was driven by the strong performance of our recent acquisitions of Erisco and RIMS, as well as an increase in ASP and HealthWeb(R) revenue. Our sequential EBITDA improvement primarily reflects the impact of Erisco and RIMS software license and maintenance revenue, which has higher gross margins than our ASP business. In addition, we are beginning to leverage the investments we made in management and administrative infrastructure last year, and HealthWeb is making solid progress toward profitability.
"Our HealtheWare(TM) and HealthWeb sales were robust during the quarter, the result of continued demand from payers for highly functional systems that can streamline administrative processes," Margolis continued. "In the first quarter, we signed 9 new customer contracts with a total value of $35 million for our HealtheWare and HealthWeb businesses combined. The integrated Erisco Facets(R)-HealthWeb product, which allows Facets customers to conduct business with their constituents over the Internet, continues to be well received. Since the first of this year, we have signed two large health plans for the combined product: Anthem Blue Cross and Blue Shield and Blue Cross and Blue Shield of Missouri. In the first quarter, we also completed the first phase of the RIMS QicLink(TM)-HealthWeb integration and recently began marketing that product.
"During the quarter, we experienced longer sales cycles in our ASP business, which we believe was largely the result of erroneous financial information published about TriZetto's cash burn rate by Barron's and Fortune," Margolis said. "In addition, given the financial difficulties of many other technology companies, our potential customers are exercising greater care in evaluating the viability of prospective long-term technology partners.
"Also of note, earlier this month we announced the acquisition of INFOTRUST(R), which will increase our ability to offer comprehensive technology and outsourcing services to the payer market," Margolis stated. "INFOTRUST hosts AMISYS Managed Care System software and provides outsourcing of administrative transactions. We plan to use INFOTRUST's technical expertise and excellent reputation to expand the market share they have established in the AMISYS customer base."
Financial Review/Outlook
Revenue -- First quarter revenue totaled $46.0 million; recurring revenue totaled $30.3 million; and non-recurring revenue was $15.7 million. Comparing the first quarter of 2001 with the same period in 2000, revenue increased primarily as a result of the Erisco and RIMS acquisitions, as well as increased ASP and HealthWeb business. Organic ASP recurring revenue growth was 32% in the first quarter of 2001, compared with the same period last year. Overall organic growth was 10%.
Recurring revenue in the first quarter was 66% of total revenue, compared with 68% in the first quarter last year. On a sequential basis (from the fourth to the first quarter), recurring revenue as a percent of total revenue declined from 68% to 66%. The first quarter included Erisco and RIMS for the entire period, and these businesses have a lower percentage of recurring revenue than TriZetto's ASP business. TriZetto expects recurring revenue as a percent of total revenue to increase gradually as 2001 progresses.
TriZetto anticipates that total revenue for 2001 will be approximately $208 - $222 million compared with $89.1 million in 2000, driven by increases in its ASP, HealtheWare and HealthWeb businesses. In 2002, total revenue is expected to range from $260 - $275 million.
EBITDA (earnings before interest, taxes, depreciation and amortization) -- The EBITDA loss in the first quarter of 2001 was $2.8 million, compared with an EBITDA loss of $4.4 million in the first quarter of 2000 and $6.9 million in the fourth quarter of 2000.
In 2001, TriZetto expects EBITDA to range between $13.5 million and $17 million, and expects to achieve positive EBITDA by mid-year. In 2002, TriZetto expects to generate $26 - $31 million in EBITDA.
Net Loss/Earnings Per Share (EPS) -- TriZetto reported a net loss of $17.9 million in the first quarter of 2001, or a loss per share of $0.50, compared with a loss of $7.9 million or $0.42 per share in the first quarter of 2000.
TriZetto's pro forma net loss in the first quarter of 2001 was $4.8 million, or a loss of $0.13 per share, compared to a pro forma net loss of $5.3 million, or $0.28 per share, in the first quarter of 2000. (Pro forma numbers exclude amortization of acquisition-related intangibles and deferred stock compensation, in-process research and development costs and taxes.)
In 2001, TriZetto expects pro forma net income to range from a loss of $400,000 to net income of $2.2 million, and earnings per share to range from a loss of $0.01 to positive EPS of $0.09. In 2002, TriZetto anticipates pro forma net income to range from $6 - $9 million and pro forma EPS to range from $0.14 to $0.20.
Cash Resources -- TriZetto generated approximately $5.3 million in cash from operations during the first quarter of 2001. Cash, cash equivalents, restricted cash and short-term investments totaled $31.2 million at March 31, 2001. TriZetto believes that its cash resources are sufficient to operate the business for at least the next 12 months.
TriZetto will be hosting a conference call to discuss its first quarter results today at 8:00 a.m. Pacific Time. To listen to the conference call via the Internet, go to TriZetto's Web site at http://www.trizetto.com and follow the instructions provided on the investor relations section of the site.
About TriZetto
The TriZetto(R) Group, Inc., is an information technology and services company focused on the healthcare industry. TriZetto hosts and licenses software and provides Internet platforms, serving approximately 600 customers. TriZetto's payer customers have more than 90 million enrollees, or 40% of the insured population in the U.S. TriZetto's ASP hosts third-party and proprietary applications and provides business outsourcing services. TriZetto's HealthWeb(R) technology allows health plans to exchange information and conduct business over the Internet with their providers, employers and members. HealtheWare(TM) develops and licenses premium Erisco and RIMS applications for payers and benefits administrators. Headquartered in Newport Beach, Calif., TriZetto can be reached at 949-719-2200, www.trizetto.com.
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, 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:
The TriZetto Group, Inc.
Anna Marie Dunlap (Investors)
949-719-2236
am.dunlap@trizetto.com
The TriZetto Group, Inc.
Jodi Amendola (Media)
480-657-9966, ext. 25
jamendola@cpronline.com
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