QuadraMed Corporation Announces Q3 2009 Results

http://www.businesswire.com/news/home/20091105006375/en

Revenues of $35.8 Million

Income from Operations of $2.0 Million

Adjusted Non-GAAP EBITDA of $3.5 Million
RESTON, Va.--(Business Wire)--
QuadraMed Corporation (NASDAQ:QDHC) announced today that it will report net
income of $1.5 million before preferred stock dividends for the three months
ended September 30, 2009, compared to $2.5 million for the same period in 2008.
For the nine months ended September 30, 2009, the Company had net income before
preferred stock dividends of $3.8 million, compared to $4.6 million for the same
period in 2008.

For the three months ended September 30, 2009, the Company had revenues of $35.8
million, gross margin of 59% and operating expenses of $19.3 million. These
compare to revenues of $38.6 million, gross margin of 60% and operating expenses
of $19.1 million for the same period in 2008. For the nine months ended
September 30, 2009, the Company had revenues of $106.7 million, gross margin of
59% and operating expenses of $58.1 million. These compare to revenues of $111.9
million, gross margin of 58% and operating expenses of $57.9 million for the
same period in 2008.

Income from operations was $2.0 million for the three months ended September 30,
2009, compared to $4.0 million for the three months ended September 30, 2008,
and $5.0 million and $7.2 million for the nine-month periods ended September 30,
2009 and 2008, respectively. Adjusted Non-GAAP EBITDA (Earnings Before Interest,
Taxes, Depreciation and Amortization, before stock-based compensation, severance
and loss on sale of assets) was $3.5 million for the three months ended
September 30, 2009, compared to $5.9 million for the same period in 2008. For
the nine months ended September 30, 2009, the Company had adjusted Non-GAAP
EBITDA of $11.4 million, compared to $14.9 million for the nine months ended
September 30, 2008.

The three month and nine month periods ended September 30, 2008 included revenue
of $1.5 million and $2.5 million respectively, related to contracts that were
completed in periods prior to 2008. The costs related to these contracts were
recognized in the periods of origin; consequently, the reported gross margins,
net income and adjusted Non-GAAP EBITDA and other measures also include the $1.5
million and $2.5 million, respectively for the quarterly and year-to-date
periods ended September 30, 2008. The nine-month period ended September 30, 2008
also includes a $1.1 million loss on the sale of the Company`s Australia-based
lab and radiology assets and the nine-month period ended September 30, 2009
included severance of $1.7 million associated with executive management changes.
In addition to the above, the decreases in income from operations and Adjusted
Non-GAAP EBITDA for the 2009 periods when compared to the corresponding 2008
periods were primarily driven by lower revenue and resultant gross margins in
the 2009 periods.

The Company will also report net income attributable to common shareholders of
$0.1 million, or $0.02 per basic and diluted share for the three months ended
September 30, 2009, compared to net income attributable to common shareholders
of $1.1 million, or $0.12 per basic and diluted share for the same period in
2008. The Company will also report a net loss attributable to common
shareholders of $0.4 million, or $(0.05) per basic and diluted share for the
nine months ended September 30, 2009, compared to net income attributable to
common shareholders of $0.4 million, or $0.05 per basic and diluted share during
the nine month period ended September 30, 2008.

Cash used in operations was $2.0 million for the three months ended September
30, 2009 compared to cash provided by operations of $2.4 million for the three
months ended September 30, 2008; the difference between the three-month periods
was due primarily to a decrease in net income during the 2009 period compared to
2008, and a decrease in working capital between periods. Cash used in operations
was $3.7 million for the nine months ended September 30, 2009 compared to cash
provided by operations of $14.5 million for the nine months ended September 30,
2008; the difference between nine-month periods was primarily attributable to
the timing of payments related to our Veterans Health Administration contract
and the payment of executive severance costs in 2009. Cash and investments
decreased by $8.9 million during the nine months ended September 30, 2009 to
$19.0 million, from $27.9 million at December 31, 2008. During October 2009, the
Company invoiced the Department of Veterans Affairs for the $20.5 million annual
license fee associated with the Task Order renewal for the Department of
Veterans Affairs` 2010 fiscal year, and payment has been received in full for
this license.

Software development expenses during the current quarter of $9.3 million, or 26%
of revenue, compare to $8.3 million, or 22% of revenue in the 2008 quarter; the
increase in software development expenses reflect the initiatives the Company
announced in March with respect to, among other things, the certification of its
software in order to assist customers in meeting the criteria for meaningful use
of certified electronic health record technology as currently contemplated by
the American Recovery and Reinvestment Act of 2009 (ARRA).

As previously announced, during the current quarter, the Company signed four new
significant license agreements to install QCPR Clinical Information Systems at
three hospital systems in the United States and one hospital system in Canada.
Also on October 21, 2009, the Department of Veterans Affairs awarded the Company
a Task Order contract under its existing Blanket Purchase Agreement (the "Task
Order"). The Task Order has a stated value of approximately $24.1 million and
includes (i) a renewal of the Department of Veterans Affairs term license for
QuadraMed`s Encoder and VIP software, and (ii) related training services for all
Veterans Affairs Medical Centers nationwide for the government`s fiscal year
2010.

"We are pleased with the extension of our relationship with the Department of
Veterans Affairs and our four new QCPR agreements. However, the economic
environment continues to provide a headwind for our performance," said Duncan W.
James, QuadraMed`s Chief Executive Officer. "We have increased our product
development initiatives during 2009 to provide our customers with a platform to
meet the criteria for meaningful use in order to maximize the benefits available
to them from ARRA. In addition, we remain focused on our product roadmap so that
we will be well positioned to provide solutions to our customers in 2010 and
future years," added James.

Management will review these results in an investment community conference call
at 5:00 PM Eastern (2:00 PM Pacific) on Thursday, November 5, 2009. To ensure
fair dissemination of information, no inquiries of management should be made
regarding QuadraMed`s results until after the conference call. A brief question
and answer period will follow management`s presentation. The dial-in number for
the conference call is 800-974-2159 domestic and 973-638-3397 international.
Callers should dial in by 4:45 PM Eastern (1:45 PM Pacific) to register. The
call will also be webcast live and available to the public via the Investor
Relations section of QuadraMed`s webpage at www.quadramed.com. Please note that
the webcast is listen-only. Listeners should access the website at 4:45 PM
Eastern (1:45 PM Pacific) to register and to download and install any necessary
audio software. A digital recording of the conference will be available for
replay two hours after the live call is completed. The replay will be available
until midnight, November 14, 2009. Replay telephone numbers are 800-642-1687 or
706-645-9291; conference ID 39069333.

Attachments Exhibit 1 Condensed Consolidated Balance Sheets (unaudited) as of September 30, 2009 and December 31, 2008
Exhibit 2 Condensed Consolidated Statements of Operations (unaudited) for the Three Months Ended September 30, 2009 and 2008 and the Nine Months Ended September 30, 2009 and 2008
Exhibit 3 Condensed Consolidated Statements of Cash Flows (unaudited) for the Three Months Ended September 30, 2009 and 2008 and the Nine Months Ended September 30, 2009 and 2008
Exhibit 4 Reconciliation of EBITDA and Non-GAAP Measurements (unaudited) for the Three Months Ended September 30, 2009, June 30, 2009, March 31, 2009, December 31, 2008, September 30, 2008, June 30, 2008, March 31, 2008, and December 31, 2007.
Exhibit 5 Reconciliation of EBITDA and Non-GAAP Measurements (unaudited) for the Nine Months Ended September 30, 2009 and September 30, 2008

About Adjusted EBITDA and other Non-GAAP Measurements

The Company`s use and presentation of the terms EBITDA, Adjusted EBITDA and
other Non-GAAP measurements included in this press release and Exhibits 4 and 5
hereto, and the reconciliations of those items to the most directly comparable
GAAP financial measure with equal or greater prominence as the non-GAAP
financial measures, have been prepared in direct response to questions from its
investors and other interested parties. Although the Company has frequently
discussed these reconciling items when they occur, both in its filings as well
as in investment community conference calls that are open to the public at
large, many inquiries are still made as to the nature of these items, and the
impact of removing these items from the GAAP financial results. As a result, the
Company believes it is important to provide these reconciliations, so that the
requesting investors will not have to perform the arithmetic themselves and so
that all interested parties will benefit from the disclosures and
reconciliations, through a straightforward and unambiguous presentation. The
Company believes that the use and presentation of the terms EBITDA, Adjusted
EBITDA and the other non-GAAP financial measures is useful because it allows
readers of its financial information to evaluate its performance for different
periods on a more comparable basis by excluding items that are unique in nature
such as non-cash compensation, or do not relate to the ongoing operation of its
core business. The items presented in calculating Adjusted EBITDA and other
Non-GAAP measurements represent specific events or items as follows (please see
Exhibits 4 and 5 to this press release):

* Cash Severance - costs associated with payments to former executive officers
of the Company in the three-month periods ended June 30, 2009 and March 31,
2009, and restructuring and downsizing of the Company`s employee base during the
three-month periods ended March 31, 2008, June 30, 2008 and December 31, 2008;
* Non-cash Compensation - the costs of employee stock options and restricted
stock; the three-month periods ended June 30, 2009 and March 31, 2009 include
$0.2 million and $0.3 million, respectively, related to the acceleration of
employee stock option expense to former executive officers of the Company upon
their respective resignations from the Company;
* Tax benefit, Net - the amount recorded in the three-month period ended
December 31, 2007 resulting from the release of a portion of the reserve against
the Company`s deferred tax assets, net of deferred income tax expense recorded
in the period;
* Strategic Initiatives - the expenses recorded in connection with merger and
acquisition activities during the three-month period ended December 31, 2007;
* Employment Matters - the cost of the Company`s review of wage/hour
classifications for certain employees during the three-month period ended
December 31, 2007;
* Loss on Sale of Assets - a one-time loss for accounting purposes recorded in
connection with the Company`s April 2008 sale of its Australia-based lab and
radiology business, with operations in Australia, New Zealand and the United
Kingdom.

About QuadraMed Corporation

QuadraMed® - (NASDAQ:QDHC) is a leading provider of healthcare technologies and
services that help turn quality care into positive financial outcomes. QuadraMed
provides innovative solutions that streamline processes, ensure compliance and
help healthcare professionals deliver quality patient care. Behind the Company's
products and services is a staff of 600 professionals whose experience and
dedication have earned QuadraMed the trust and loyalty of clients at over 2,000
healthcare provider facilities. For more information about QuadraMed, visit
http://www.quadramed.com.

Cautionary Statement on Risks Associated with QuadraMed Forward-Looking
Statements

This press release contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995 that are subject to risks and
uncertainties. The words "believe," "expect," "target," "goal," "project,"
"anticipate," "predict," "intend," "plan," "estimate," "may," "will," "should,"
"could" and similar expressions and their negatives are intended to identify
such statements. Forward-looking statements are not guarantees of future
performance, anticipated trends or growth in businesses, or other
characterizations of future events or circumstances and are to be interpreted
only as of the date on which they are made. QuadraMed undertakes no obligation
to update or revise any forward-looking statement. You should not place undue
reliance on these forward-looking statements. Our actual results could differ
materially from those anticipated in these forward-looking statements for many
reasons, including the risks faced by QuadraMed described in documents filed
with the Securities and Exchange Commission ("SEC") from time to time.
QuadraMed`s SEC filings can be accessed through the Investor Relations section
of our website, www.quadramed.com, or through the SEC`s EDGAR Database at
www.sec.gov (QuadraMed has EDGAR CIK No. 0001018833).

QuadraMed is a registered trademark of QuadraMed Corporation. All other
trademarks are the property of their respective holders.

Exhibit 1

QUADRAMED CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
(unaudited)

September 30, December 31,
ASSETS 2009 2008

Current assets
Cash and cash equivalents $ 7,879 $ 20,649
Short-term investments 7,650 4,213
Accounts receivable, net of allowance for doubtful accounts of $1,402 and $1,052, respectively 27,384 20,843
Unbilled receivables 6,817 6,177
Deferred contract expenses 5,678 5,005
Prepaid royalty expenses 1,094 7,831
Prepaid expenses and other current assets, net of allowance on other receivable of $919, respectively 4,330 4,485
Deferred tax asset, net of valuation allowance 6,241 6,240
Total current assets 67,073 75,443

Restricted cash 1,522 1,444
Long-term investments 3,506 3,043
Property and equipment, net of accumulated depreciation and amortization of $19,169 and $17,732, respectively 3,556 3,895
Goodwill 35,632 35,632
Other amortizable intangible assets, net of accumulated amortization of $30,932 and $29,305, respectively 7,760 9,387
Other long-term assets 2,831 2,829
Deferred tax asset, net of valuation allowance 48,009 47,921
Total assets $ 169,889 $ 179,594

LIABILITIES AND STOCKHOLDERS` EQUITY
Current liabilities
Accounts payable and accrued expenses $ 5,794 $ 4,705
Accrued payroll and related benefits 5,221 7,228
Accrued exit cost of facility closing 346 888
Income tax payable 2,079 688
Other accrued liabilities 3,491 4,721
Dividends payable 1,375 1,375
Deferred revenue 43,004 53,190
Total current liabilities 61,310 72,795

Other long-term liabilities 1,458 1,834
Total liabilities 62,768 74,629

Commitments and Contingencies

Stockholders` equity
Preferred stock, $0.01 par, 5,000 shares authorized, 4,000 shares issued and outstanding, respectively 96,144 96,144
Common stock, $0.01 par, 30,000 shares authorized; 9,471 and 9,451 shares issued and 8,307 and 8,287 outstanding, respectively 95 95
Shares held in treasury, 1,164, respectively (9,031) (9,031)
Additional paid-in-capital 317,868 316,027
Accumulated other comprehensive loss (987) (1,675)
Accumulated deficit (296,968) (296,595)
Total stockholders` equity 107,121 104,965

Total liabilities and stockholders` equity $ 169,889 $ 179,594

Exhibit 2

QUADRAMED CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)

Three months ended, Nine months ended,
September 30, September 30,
2009 2008 2009 2008
Revenue
Services $ 5,803 $ 5,930 $ 16,441 $ 17,102
Maintenance 16,849 18,205 49,349 51,734
Installation and other 3,064 3,153 9,133 9,614
Services and other revenue 25,716 27,288 74,923 78,450

Term licenses 8,500 8,099 25,925 23,651
Perpetual licenses 1,446 3,127 5,454 9,260
License revenue 9,946 11,226 31,379 32,911
Hardware 140 75 387 505
Total revenue 35,802 38,589 106,689 111,866

Cost of revenue
Cost of services and other revenue 10,502 11,487 31,615 34,324
Royalties and other 3,592 3,671 10,944 11,365
Amortization of acquired technology and capitalized software 219 245 676 756
Cost of license revenue 3,811 3,916 11,620 12,121
Cost of hardware revenue 217 64 361 328
Total cost of revenue 14,530 15,467 43,596 46,773
Gross margin 21,272 23,122 63,093 65,093

Operating expense
General and administration 4,876 5,027 16,619 14,907
Software development 9,316 8,328 25,937 25,362
Sales and marketing 4,247 4,968 13,117 14,105
Loss on sale of assets - 46 - 1,161
Amortization of intangible assets and depreciation 856 761 2,387 2,400
Total operating expenses 19,295 19,130 58,060 57,935
Income from operations 1,977 3,992 5,033 7,158

Other income (expense)
Interest expense, includes non-cash charges of $14, $18 and $47, $54 (16) (26) (51) (99)
Interest income 58 136 179 460
Other income, net 160 1 268 9
Other income, net 202 111 396 370

Income from operations before income taxes $ 2,179 $ 4,103 $ 5,429 $ 7,528
Provision for income taxes (669) (1,634) (1,677) (2,963)
Net Income 1,510 2,469 3,752 4,565
Preferred stock dividends declared (1,375) (1,375) (4,125) (4,125)

Net income (loss) attributable to common shareholders $ 135 $ 1,094 $ (373) $ 440

Income (loss) per share
Basic $ 0.02 $ 0.12 $ (0.05) $ 0.05
Diluted $ 0.02 $ 0.12 $ (0.05) $ 0.05

Weighted average shares outstanding
Basic 8,300 8,931 8,296 8,930

Diluted 8,324 8,962 8,296 8,963

Exhibit 3

QUADRAMED CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)

Three months ended Nine months ended
September 30, September 30,
2009 2008 2009 2008
Cash flows from operating activities
Net income $ 1,510 $ 2,469 $ 3,752 $ 4,565
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation and amortization 1,075 1,006 3,063 3,156
Deferred compensation amortization - 85 - 273
Stock-based compensation 295 805 1,740 2,445
Provision for bad debts 322 34 894 164
Provision for income taxes 669 1,634 1,677 2,963
Loss on sale of assets - 46 - 1,161

Changes in operating assets and liabilities:
Accounts receivable (4,776) (1,835) (8,075) (3,861)
Prepaid expenses and other 2,515 3,271 5,889 866
Accounts payable and accrued liabilities (704) 960 (2,425) (8,355)
Deferred revenue (2,951) (6,081) (10,186) 11,155
Cash (used in) provided by operating activities (2,045) 2,394 (3,671) 14,532

Cash flows from investing activities
Decrease (increase) in restricted cash 6 173 (78) 833
Purchases of available-for-sale securities (8,161) (190) (15,837) (4,220)
Proceeds from sale of available-for-sale securities 9,210 190 11,734 6,049
Payment of acquisition costs - (10) - (56)
Purchases of property and equipment (588) (577) (1,097) (1,420)
Proceeds from sale of assets - - - 106
Cash provided by (used in) investing activities 467 (414) (5,278) 1,292

Cash flows from financing activities
Payment of preferred stock dividends (1,375) (1,375) (4,125) (4,125)
Proceeds from issuance of common stock and other 53 395 101 544
Repurchase of common stock - - - (3,728)
Cash used in financing activities (1,322) (980) (4,024) (7,309)

Effect of exchange rate changes on cash 26 (193) 203 (224)

Net (decrease) increase in cash and cash equivalents (2,874) 807 (12,770) 8,291

Cash and cash equivalents, beginning of period 10,753 14,603 20,649 7,119

Cash and cash equivalents, end of period $ 7,879 $ 15,410 $ 7,879 $ 15,410

Exhibit 4

QUADRAMED CORPORATION
Reconciliation of EBITDA and Non-GAAP Measurements
(in thousands, except percentages)
(unaudited)

For the Three Month Periods Ended
9/30/2009 6/30/2009 3/31/2009 12/31/2008 9/30/08 6/30/08 3/31/08 12/31/07

EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization)

Net income, as reported $1,510 $1,045 $1,197 $2,600 $2,469 $1,787 $309 $56,674

Adjustments to Net Income for EBITDA
Interest Expense 16 16 19 23 26 42 31 20
Interest Income (58 ) (70 ) (51 ) (114 ) (136 ) (158 ) (166 ) (364 )
Provision (benefit) for Income Taxes 669 426 582 1,061 1,634 1,151 178 (52,821 )
Depreciation and Amortization 1,075 1,009 979 983 1,091 1,159 1,180 1,323
Subtotal Non-GAAP Adjustments for EBITDA 1,702 1,381 1,529 1,953 2,615 2,194 1,223 (51,842 )

EBITDA $3,212 $2,426 $2,726 $4,553 $5,084 $3,981 $1,532 $4,832
EBITDA % to Revenue 9.0 % 6.8 % 7.8 % 11.8 % 13.2 % 10.5 % 4.3 % 11.8 %

Non-GAAP Adjustments to EBITDA
Non-cash Compensation 295 598 847 410 805 841 799 928
Severance 10 300 982 11 - 161 561 -
Loss on Sale of Assets - - - (333 ) - 1,115 - -
Subtotal Non-GAAP Adjustments to EBITDA 305 898 1,829 88 805 2,117 1,360 928

Adjusted Non-GAAP EBITDA $3,517 $3,324 $4,555 $4,641 $5,889 $6,098 $2,892 $5,760
Adjusted Non-GAAP EBITDA % to Revenue 9.8 % 9.3 % 13.0 % 12.0 % 15.3 % 16.1 % 8.2 % 14.1 %

Non-GAAP Net Income before Preferred Stock Accretion

Net income, as reported $1,510 $1,045 $1,197 $2,600 $2,469 $1,787 $309 $56,674

Non-GAAP adjustments to Net income
Non-cash Compensation 295 598 847 410 805 841 799 928
Cash Severance 10 300 982 11 - 161 561 -
Strategic Initiatives - - - - - - - 57
Tax benefit, Net - - - - - - - (52,898 )
Employment Matters - - - - - - - (374 )
Loss on Sale of Assets - - - (333 ) - 1,115 - -
Subtotal Non-GAAP adjustments 305 898 1,829 88 805 2,117 1,360 (52,287 )

Non-GAAP Net income $1,815 $1,943 $3,026 $2,688 $3,274 $3,904 $1,669 $4,387

Other Information

Revenue $35,802 $35,768 $35,119 $38,569 $38,589 $37,986 $35,291 $40,874
Costs of Revenue $14,530 $14,575 $14,491 $16,050 $15,467 $15,760 $15,546 $16,167
Gross Margin $21,272 $21,193 $20,628 $22,519 $23,122 $22,226 $19,745 $24,707
Gross Margin % 59 % 59 % 59 % 58 % 60 % 59 % 56 % 60 %

About Adjusted EBITDA and other Non-GAAP Measurements

The Company`s use and presentation of the terms EBITDA, Adjusted EBITDA and
other Non-GAAP measurements included in this press release and Exhibits 4 and 5
hereto, and the reconciliations of those items to the most directly comparable
GAAP financial measure with equal or greater prominence as the non-GAAP
financial measures, have been prepared in direct response to questions from its
investors and other interested parties. Although the Company has frequently
discussed these reconciling items when they occur, both in its filings as well
as in investment community conference calls that are open to the public at
large, many inquiries are still made as to the nature of these items, and the
impact of removing these items from the GAAP financial results. As a result, the
Company believes it is important to provide these reconciliations, so that the
requesting investors will not have to perform the arithmetic themselves and so
that all interested parties will benefit from the disclosures and
reconciliations, through a straightforward and unambiguous presentation. The
Company believes that the use and presentation of the terms EBITDA, Adjusted
EBITDA and the other non-GAAP financial measures is useful because it allows
readers of its financial information to evaluate its performance for different
periods on a more comparable basis by excluding items that are unique in nature
such as non-cash compensation, or do not relate to the ongoing operation of its
core business. The items presented in calculating Adjusted EBITDA and other
Non-GAAP measurements represent specific events or items as follows:

* Cash Severance -- costs associated with payments to former executive officers
of the Company in the three-month periods ended June 30, 2009 and March 31,
2009, and restructuring and downsizing of the Company`s employee base during the
three-month periods ended March 31, 2008, June 30, 2008 and December 31, 2008;
* Non-cash Compensation - the costs of employee stock options and restricted
stock; the three month periods ended June 30, 2009 and March 31, 2009 include
$0.2 million and $0.3 million, respectively, related to the acceleration of
employee stock option expense to former executive officers of the Company upon
their respective resignations from the Company;
* Tax benefit, Net - the amount recorded in the three-month period ended
December 31, 2007 resulting from the release of a portion of the reserve against
the Company`s deferred tax assets, net of deferred income tax expense recorded
in the period;
* Strategic Initiatives - the expenses recorded in connection with merger and
acquisition activities during the three-month period ended December 31, 2007;
* Employment Matters - the cost of the Company`s review of wage/hour
classifications for certain employees during the three-month period ended
December 31, 2007;
* Loss on Sale of Assets - a one-time loss for accounting purposes recorded in
connection with the Company`s April 2008 sale of its Australia-based lab and
radiology business, with operations in Australia, New Zealand and the United
Kingdom.

Exhibit 5

QUADRAMED CORPORATION
Reconciliation of EBITDA and Non-GAAP Measurements
(in thousands, except percentages)
(unaudited)

For the Nine Months Ended
9/30/2009 9/30/2008

EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization)

Net income, as reported $3,752 $4,565

Adjustments to Net Income for EBITDA
Interest Expense 51 99
Interest Income (179 ) (460 )
Provision for Income Taxes 1,677 2,963
Depreciation and Amortization 3,063 3,430
Subtotal Non-GAAP Adjustments for EBITDA 4,612 6,032

EBITDA $8,364 $10,597
EBITDA % to Revenue 7.8 % 9.5 %

Non-GAAP Adjustments to EBITDA
Non-cash Compensation 1,740 2,445
Cash Severance 1,292 722
Loss on Sale of Assets - 1,115
Subtotal Non-GAAP Adjustments to EBITDA 3,032 4,282

Adjusted Non-GAAP EBITDA $11,396 $14,879
Adjusted Non-GAAP EBITDA % to Revenue 10.7 % 13.3 %

Non-GAAP Net Income before Preferred Stock Accretion

Net income, as reported $3,752 $4,565

Non-GAAP adjustments to Net income
Non-cash Compensation 1,740 2,445
Cash Severance 1,292 722
Loss on Sale of Assets - 1,115
Subtotal Non-GAAP adjustments 3,032 4,282

Non-GAAP net income $6,784 $8,847

Other Information

Revenue $106,689 $111,866
Costs of Revenue $43,596 $46,773
Gross Margin $63,093 $65,093
Gross Margin % 59 % 58 %

About Adjusted EBITDA and other Non-GAAP Measurements

The Company`s use and presentation of the terms EBITDA, Adjusted EBITDA and
other Non-GAAP measurements included in this press release and Exhibits 4 and 5
hereto, and the reconciliations of those items to the most directly comparable
GAAP financial measure with equal or greater prominence as the non-GAAP
financial measures, have been prepared in direct response to questions from its
investors and other interested parties. Although the Company has frequently
discussed these reconciling items when they occur, both in its filings as well
as in investment community conference calls that are open to the public at
large, many inquiries are still made as to the nature of these items, and the
impact of removing these items from the GAAP financial results. As a result, the
Company believes it is important to provide these reconciliations, so that the
requesting investors will not have to perform the arithmetic themselves and so
that all interested parties will benefit from the disclosures and
reconciliations, through a straightforward and unambiguous presentation. The
Company believes that the use and presentation of the terms EBITDA, Adjusted
EBITDA and the other non-GAAP financial measures is useful because it allows
readers of its financial information to evaluate its performance for different
periods on a more comparable basis by excluding items that are unique in nature
such as non-cash compensation, or do not relate to the ongoing operation of its
core business. The items presented in calculating Adjusted EBITDA and other
Non-GAAP measurements represent specific events or items as follows:

* Cash Severance - costs associated with payments to former executive officers
of the Company in the three-month periods ended June 30, 2009 and March 31,
2009, and restructuring and downsizing of the Company`s employee base during the
three-month periods ended March 31, 2008, June 30, 2008 and December 31, 2008;
* Non-cash Compensation - the costs of employee stock options and restricted
stock; the three month periods ended June 30, 2009 and March 31, 2009 include
$0.2 million and $0.3 million, respectively, related to the acceleration of
employee stock option expense to former executive officers of the Company upon
their respective resignations from the Company;
* Tax benefit, Net - the amount recorded in the three-month period ended
December 31, 2007 resulting from the release of a portion of the reserve against
the Company`s deferred tax assets, net of deferred income tax expense recorded
in the period;
* Strategic Initiatives - the expenses recorded in connection with merger and
acquisition activities during the three-month period ended December 31, 2007;
*
Employment Matters - the cost of the Company`s review of wage/hour
classifications for certain employees during the three-month period ended
December 31, 2007;

* Loss on Sale of Assets - a one-time loss for accounting purposes recorded in
connection with the Company`s April 2008 sale of its Australia-based lab and
radiology business, with operations in Australia, New Zealand and the United
Kingdom.

QuadraMed Corporation
David L. Piazza
Investor Relations
703-742-5393
InvestorRelations@quadramed.com

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