SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For The Quarterly Period Ended March 31, 2003
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934
For The Transition Period From To
Commission File No. 000-28715
NEOFORMA, INC.
(Exact name of the Registrant as Specified in its Charter)
| Delaware |
77-0424252 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification Number) |
| 3061 Zanker Rd., San Jose, CA |
95134 | |
| (Address of principal executive offices) |
(Zip code) |
(408) 468-4000
(The Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.001 Par Value Per Share
(Title of Class)
Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes x No ¨
The number of shares of common stock outstanding on May 12, 2003 was 18,912,644.
| Page | ||||||
| PART I. |
FINANCIAL INFORMATION |
3 | ||||
| ITEM 1. |
||||||
| Unaudited Condensed Consolidated Balance Sheets as of March 31, 2003 and December 31, 2002 |
3 | |||||
| 4 | ||||||
| 5 | ||||||
| Notes to Unaudited Condensed Consolidated Financial Statements |
7 | |||||
| ITEM 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
13 | ||||
| ITEM 3. |
32 | |||||
| ITEM 4. |
32 | |||||
| PART II. |
OTHER INFORMATION |
33 | ||||
| ITEM 1. |
33 | |||||
| ITEM 2. |
33 | |||||
| ITEM 3. |
33 | |||||
| ITEM 4. |
33 | |||||
| ITEM 5. |
33 | |||||
| ITEM 6. |
33 | |||||
| 34 | ||||||
| 35 | ||||||
2
PART I. FINANCIAL INFORMATION
Item 1. Unaudited Condensed Consolidated Financial Statements
NEOFORMA, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
(unaudited)
| December 31, 2002* |
March 31, 2003 |
|||||||
| Assets |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ |
23,277 |
|
$ |
22,416 |
| ||
| Short-term investments |
|
1,305 |
|
|
952 |
| ||
| Accounts receivable, net of allowance for doubtful accounts of $259 and $138 as of December 31, 2002 and March 31, 2003, respectively |
|
1,828 |
|
|
1,471 |
| ||
| Related party accounts receivable |
|
800 |
|
|
800 |
| ||
| Prepaid expenses and other current assets |
|
3,357 |
|
|
2,868 |
| ||
| Total current assets |
|
30,567 |
|
|
28,507 |
| ||
| Property and equipment, net |
|
16,821 |
|
|
13,627 |
| ||
| Intangibles, net of amortization |
|
2,610 |
|
|
2,462 |
| ||
| Goodwill |
|
1,414 |
|
|
1,414 |
| ||
| Capitalized partnership costs, net of amortization |
|
166,451 |
|
|
149,604 |
| ||
| Non-marketable investments |
|
83 |
|
|
83 |
| ||
| Restricted cash |
|
1,020 |
|
|
1,020 |
| ||
| Other assets |
|
1,844 |
|
|
1,734 |
| ||
| Total assets |
$ |
220,810 |
|
$ |
198,451 |
| ||
| Liabilities and Stockholders’ Equity |
||||||||
| Current liabilities: |
||||||||
| Notes payable, current portion |
$ |
4,000 |
|
$ |
3,651 |
| ||
| Accounts payable |
|
3,803 |
|
|
2,056 |
| ||
| Accrued payroll |
|
7,776 |
|
|
2,470 |
| ||
| Other accrued liabilities |
|
4,288 |
|
|
3,428 |
| ||
| Deferred revenue |
|
3,027 |
|
|
3,425 |
| ||
| Total current liabilities |
|
22,894 |
|
|
15,030 |
| ||
| Deferred rent |
|
623 |
|
|
637 |
| ||
| Deferred revenue, less current portion |
|
1,689 |
|
|
1,001 |
| ||
| Other liabilities |
|
105 |
|
|
83 |
| ||
| Accrued interest on related party notes payable |
|
2,516 |
|
|
2,761 |
| ||
| Notes payable, less current portion: |
||||||||
| Due to related party |
|
14,000 |
|
|
14,000 |
| ||
| Other |
|
152 |
|
|
54 |
| ||
| Total notes payable, less current portion |
|
14,152 |
|
|
14,054 |
| ||
| Stockholders’ equity: |
||||||||
| Common stock $0.001 par value: |
||||||||
| Authorized—300,000 shares at March 31, 2003 |
||||||||
| Issued and outstanding: 17,691 and 17,867 shares at December 31, 2002 and March 31, 2003, respectively |
|
18 |
|
|
18 |
| ||
| Warrants |
|
80 |
|
|
80 |
| ||
| Additional paid-in capital |
|
814,162 |
|
|
815,317 |
| ||
| Notes receivable from stockholders |
|
(6,460 |
) |
|
(5,457 |
) | ||
| Deferred compensation |
|
(2,649 |
) |
|
(1,702 |
) | ||
| Accumulated deficit |
|
(626,320 |
) |
|
(643,371 |
) | ||
| Total stockholders’ equity |
|
178,831 |
|
|
164,885 |
| ||
| Total liabilities and stockholders’ equity |
$ |
220,810 |
|
$ |
198,451 |
| ||
* Derived from audited financial statements.
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
NEOFORMA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
| Three Months Ended March 31, |
||||||||
| 2002 |
2003 |
|||||||
| Revenue: |
||||||||
| Marketplace revenue: |
||||||||
| Related party (see Note 2) |
$ |
— |
|
$ |
297 |
| ||
| Other |
|
329 |
|
|
238 |
| ||
| Total Marketplace revenue |
|
329 |
|
|
535 |
| ||
| Trading Partner Services revenue (see Note 2) |
|
283 |
|
|
2,067 |
| ||
| Total revenue |
|
612 |
|
|
2,602 |
| ||
| Operating expenses: |
||||||||
| Cost of services |
|
2,189 |
|
|
1,378 |
| ||
| Operations |
|
3,389 |
|
|
5,142 |
| ||
| Product development |
|
3,733 |
|
|
4,743 |
| ||
| Selling and marketing |
|
3,368 |
|
|
4,977 |
| ||
| General and administrative |
|
3,634 |
|
|
2,967 |
| ||
| Amortization of intangible assets |
|
— |
|
|
147 |
| ||
| Amortization of partnership costs (see Note 2) |
|
5,250 |
|
|
— |
| ||
| Restructuring |
|
(68 |
) |
|
— |
| ||
| Write-down of non-marketable investments, net |
|
(184 |
) |
|
— |
| ||
| Loss on divested business |
|
59 |
|
|
— |
| ||
| Total operating expenses |
|
21,370 |
|
|
19,354 |
| ||
| Loss from operations |
|
(20,758 |
) |
|
(16,752 |
) | ||
| Other income (expense): |
||||||||
| Interest income |
|
119 |
|
|
51 |
| ||
| Interest expense |
|
(357 |
) |
|
(274 |
) | ||
| Other income (expense) |
|
5 |
|
|
(76 |
) | ||
| Net loss |
$ |
(20,991 |
) |
$ |
(17,051 |
) | ||
| Net loss per share: |
||||||||
| Basic and diluted |
$ |
(1.29 |
) |
$ |
(0.97 |
) | ||
| Weighted average shares—basic and diluted |
|
16,326 |
|
|
17,540 |
| ||
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
NEOFORMA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
| Three Months Ended March 31, |
||||||||
| 2002 |
2003 |
|||||||
| Cash flows from operating activities: |
||||||||