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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2003

Commission file number 0-28701

HealthGate Data Corp.
(Exact name of registrant as specified in its charter)

Registrant's telephone number, including area code: (781) 685-4000

Securities registered pursuant to Section 12(b) of the Act: NONE

Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $0.03 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 at least the past 90 days. Yes o    No ý

        Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K o

        Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes o    No ý

        The aggregate market value of the common stock held by persons other than affiliates of the registrant, as of June 30, 2003 (the last business day of the registrant's most recently completed second fiscal quarter), was approximately $410,000 (based on the last sale price of the registrant's common stock on that date).

        The number of shares outstanding of the registrant's common stock as of March 16, 2004 was 5,469,700.

DOCUMENTS INCORPORATED BY REFERENCE

        Certain information in the registrant's definitive proxy statement to be filed with the Securities and Exchange Commission relating to the registrant's 2004 Annual Meeting of Shareholders is incorporated by reference into Part III.

TABLE OF CONTENTS

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Forward-Looking Statements

        This Annual Report on Form 10-K contains certain statements that are forward-looking and actual results may differ materially from those contemplated by the forward-looking statements. These forward-looking statements reflect management's current expectations, are based on many assumptions and are subject to certain risks and uncertainties, including among other things, HealthGate's ability to generate sufficient revenues; HealthGate's ability to sell its products and services and develop new products and services; HealthGate's ability to keep up with rapid technology developments in the electronic healthcare content industry; reliance on significant customers; unpredictability of quarter-to-quarter results; competition; the successful integration of the EBM Solutions business acquired in October, 2003; reliance on content providers, computer systems and software; and HealthGate's ability to retain key personnel. Factors that might cause or contribute to such differences include, but are not limited to those discussed in the sections "Business—Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations." Investors should carefully review the risks described in this and the other documents the Company files from time to time with the Securities and Exchange Commission. Investors are cautioned not to place undue reliance on the forward-looking statements, which appear elsewhere in this Report on Form 10-K. HealthGate does not intend to update or publicly release any revisions to the forward-looking statements.

PART I

ITEM 1.    Business

Overview

        HealthGate Data Corp. ("HealthGate" or the "Company") provides evidence-based decision support and risk containment solutions that help healthcare providers and payors improve quality, reduce variability of care and reduce costs. In conjunction with its Academic Medical Center Consortium comprised of Vanderbilt University Medical Center, Duke University Medical Center, Emory University Medical School and Oregon Health Sciences University, the Company creates clinical guidelines, order sets, and point of care tools that are based on clinical evidence. Additionally, HealthGate provides a suite of evidence-based patient education and consumer health content services that allow the patient to be an active participant in the delivery of their own care. These tools and content, when coupled with HealthGate's technology platform, can be integrated into a variety of healthcare information technology systems and accessed at the point of care.

        According to a study published by the National Committee for Quality Assurance ("NCQA") over 57,000 people die each year because they do not receive the appropriate healthcare. Additionally, the healthcare system's failure to treat just five conditions—asthma, depression, diabetes, heart disease and high blood pressure—is responsible for nearly 41 million sick days, costing American businesses approximately $11.5 billion in annual cost. The NCQA has identified five keys to closing the "quality gap":

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Investment in technology and systems to support evidence-based care



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Increased collaboration between healthcare professionals



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Payment systems that reward excellence



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More consumer engagement in provider selection and care decisions



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Greater transparency, to allow consumers and others to see and compare quality information

        HealthGate is positioned to positively affect the implementation of these criteria and the way healthcare professionals and patients participate in the delivery of care. Successfully addressing these

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key issues may have a direct and significant positive impact on the economics of the Company's existing and prospective customers. HealthGate believes that it is creating solutions to address these issues and can provide measurable economic benefit to its customers. The Company's offerings also are designed to have a positive economic impact for its customers by potentially limiting professional liability through improved informed consent for specific procedures and by reducing variability of care. As medical malpractice costs continue to rise, the utilization of HealthGate's products may eliminate or reduce potential claims.

        As part of the Company's mission to improve healthcare quality, reduce costs, and reduce treatment variability, HealthGate has been improving existing products and developing new services and applications to better integrate the Company's content into its customers' organizations. On October 27, 2003, HealthGate acquired substantially all of the assets and selected liabilities of EBM Solutions, Inc. ("EBM Solutions"). Through this acquisition HealthGate acquired 115 evidence-based clinical guidelines and related intellectual property and technology.

        These clinical guidelines offer more than 10,000 electronic pages that bring together the latest evidence-based clinical information. This resource delivers online health management solutions for over 100 clinical conditions, disease states and certain medical topics including: Cardiology, Oncology/Hematology, Psychiatric/Mental Health, Endocrinology, Nephrology, Ophthalmology, Pulmonary, ENT (Ear, Nose, Throat), Neurology, Orthopedics, Urology, Gastroenterology, Ob/Gyn, and Pediatrics, as well as General Conditions and Wellness Care/Education. The guidelines are produced through a rigorous process that includes selection and resource identification, guideline development, and testing and publishing. Over 2,500 recommendations are graded according to the strength of the evidence and benefits of the recommended treatment.

        The guidelines are available in both clinical and consumer versions. Individual sections within the guidelines include: key points, decision tree, description, importance, causes, signs and symptoms, diagnosis, prevention and treatment, alternative therapy, prognosis, future approaches, references, and information about the author. As part of the Company's potential strategic expansion beyond patient education content, the Company plans for these clinical assets to serve as the foundation for additional potential decision support and risk containment offerings for HealthGate, such as:

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Diagnostic Trees



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Evidence-Based Supporting Web sites



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Clinical Indicators



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Medication Tables



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Images and Diagrams



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Scales, Inventories, & Assessments



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Calculators



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Interactive Health Outcome Surveys



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Admission and Discharge Considerations

        HealthGate was incorporated under the laws of the State of Delaware in 1994. HealthGate's internet address is www.healthgate.com. Through its web site, HealthGate provides free access to its annual reports on Form 10K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports.

        HealthGate has registered the trademarks "HealthGate," "CHOICE," "activePress" and the HealthGate logo in the United States. On February 12, 2002, HealthGate acquired the U.S. registered trademark "The Natural Pharmacist." On October 27, 2003, HealthGate acquired the U.S. registered

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trademarks for "EBMSolutions" and "EBMPact." HealthGate has pending applications for "HealthGate OnSite," and "The HealthGateWay." All other trademarks, service marks or trade names referred to in this report are the property of their respective owners.

HealthGate's Products and Services

Design Philosophy

        HealthGate focuses on producing solutions, content and tools that can work within a healthcare organization to improve quality, reduce variability of care and reduce costs. All of the Company's proprietary offerings are evidence-based and go through a rigorous editorial and medical review process.

        The Company has adapted its product offerings to make available both packages and individual content resources and tools to its customers. Since 1999, the Company has offered CHOICE Web site products, which offered clients a generalized selection of HealthGate's more popular content resources, and since 2001 has licensed content on an individual resource basis, which allows customers with specific needs or target groups to select only those content resources and databases that are desired for that customer's purposes or constituents.

        In 2003 the Company introduced the consumer Health Library, a pre-packaged offering which includes a broad spectrum of the Company's proprietary and licensed content resources. Additionally, in 2003, HealthGate launched both the content Centers of Excellence and the HealthGateWay newsletter creation tool. The Centers of Excellence are designed to efficiently organize and deliver health care information on specific topics, such as cardiology and oncology. The newsletter creation tool is a web based service that allows customers to quickly and easily publish an electronic newsletter using any of the HealthGate proprietary content they currently license.

        HealthGate primarily builds its electronic repository of professional and consumer health information by developing its own content in-house. This proprietary content is supplemented by acquiring copyrights to content from third parties and licensing content from other healthcare and medical information providers.

        At December 31, 2003, 74% of the Company's 35 distinct tools and content resources were proprietary to HealthGate. HealthGate is currently developing additional proprietary content that can further enhance the return on investment for its customers. HealthGate's content includes information that has been tagged using one of the standardized medical coding vocabularies. By using this standardized "language" for labeling information, it is faster and easier to pull together all information available on the given topic. The Company markets this tagged content to healthcare institutions and related healthcare organizations for use in a variety of clinical systems.

        HealthGate's proprietary content is written by in-house writers, editors or contract writers. All in-house staff writers have advanced degrees in public health, health communication, or a related field. Contract writers are either health care professionals with experience writing for a consumer audience, or they are writers holding advanced degrees in health journalism or related fields, as well as membership in either the American Medical Writers Association or the National Science Writers Association. All contract writers must submit a curriculum vitae, verification of professional membership(s), and an updated professional license (if appropriate) to HealthGate on an annual basis.

        HealthGate's evidence-based health content and tools reflects national clinical practice guidelines and undergoes a detailed, multi-layered review before it reaches customers. New content undergoes an initial review by HealthGate's editorial staff and is then sent on for medical review. The Company's Academic Medical Center Consortium, a consortium of premier academic medical centers with prominence for research achievements and academic innovations, combine their vast expertise to assist with the ongoing development and routine updates of evidence-based guidelines for physicians and

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patients. Each academic medical center has appointed an experienced physician to represent their institution on HealthGate's Clinical Advisory Committee. This committee, along with the Company's Medical Director and consultants, participates in the entire consumer education and clinical guideline development processes and medical review. The Academic Medical Center Consortium may supplement its medical review with outside specialists for review of certain procedure-based articles and fact sheets. In addition, existing content is reviewed by the HealthGate editorial staff on a scheduled basis, and is regularly sent out for appropriate medical or professional updates.

HealthGate Proprietary Tools (including acquired tools)

        HealthGate currently markets the following proprietary tools:

        Clinical Guidelines.    This resource delivers online health management solutions for 115 clinical conditions, disease states and certain medical topics. The guidelines are produced through a rigorous process that includes selection and resource identification, guideline development, and testing and publishing. The guidelines are available in both clinical and consumer versions. Individual sections include: key points, decision tree, description, importance, causes, signs and symptoms, diagnosis, prevention and treatment, alternative therapy, prognosis, future approaches, references, and information about the author. Customers may use the guidelines in various applications. For example, one payor customer determines, in part, physician reimbursement based on whether the physician based the patient's treatment on the clinical guidelines.

        Self-Assessment Tools.    This resource includes more than a dozen interactive calculators and health risk assessors available to calculate various measures of health and fitness. There are also links in these self-assessment tools to other HealthGate articles to find more specific information. For example, a person could calculate their ideal body weight and then link to articles on how to start an exercise program, or they could estimate their risk of breast cancer or cardiovascular disease and be immediately linked to relevant articles and resources.

HealthGate Proprietary Content (including acquired content)

        HealthGate currently markets the following proprietary content:

        Health Library.    HealthGate's consumer Health Library, introduced in 2003, is a pre-packaged offering that includes a broad spectrum of the Company's proprietary and licensed content resources, specifically: Conditions inBrief, Conditions inDepth, Conditions inFull, Procedures inBrief, Procedures inMotion, the suite of interactive tools (Self-Assessment Tools, as well as Anatomy and Condition Explorer), Journal Notes, as well as the Medical Dictionary and Drug Information licensed resources. The Health Library provides customers with a comprehensive package of in depth consumer health information.

        Centers of Excellence.    These centers allow the Company's customers to more efficiently organize and deliver health care information to their constituents on specific topics. HealthGate's customers can use these Centers of Excellence to match up with the bricks-and-mortar center of excellence concept, and cost-effectively provide their constituents with the most complete, timely, and accurate information available in that medical specialty. Centers of Excellence are organized in a consumer-friendly way and provide comprehensive collections of specialty-specific information, interactive tools, newsletters, and reports. These enable a healthcare organization to leverage relationships between departments and showcase its overall strengths and available services.

        In addition, there is space available in the Centers of Excellence for customers to showcase their own resources including services, department information, related programs, and contact and staff details. HealthGate currently offers Centers of Excellence in Cardiovascular Health, Oncology, and Complementary and Alternative Medicine.

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        Conditions inBrief.    This resource includes 700-word fact sheets that describe more than 450 common diseases, conditions and injuries. This content covers topics ranging from acne to wrist sprains and is written with a target reading level of grade 9 or lower according to the Flesch-Kincaid Grade Level score. These fact sheets are reviewed regularly, dated and referenced. The Company also offers Spanish versions of approximately 200 of these fact sheets.

        Conditions inFull.    This content resource includes almost 50 "Specialty Centers" which provide information topic areas ranging from allergies to weight management. The "Specialty Centers" include additional relevant information from a variety of health resources, including government agencies and professional organizations. It integrates monographs, fact sheets, feature articles, resources, and other materials to provide content covering an overview of the condition in brief and in depth, associated diagnostic and surgical procedures, drug information, alternative therapies, and relevant medical news. Each "Specialty Center" contains between 20 to 100 articles.

        Conditions inDepth.    This series of articles explores over 100 common conditions in detail. These in-depth reports cover such topics as risk factors, signs and symptoms, diagnostic tests, treatment strategies and prevention. Included in this resource is Cancer inDepth launched in March 2003. This resource contains 21 detailed reports on the most common types of cancer and contains 7 treatment monographs. Each report thoroughly describes the cancer, its known causes, and whom it affects. The reports also discuss risk factors, screening tests, methods to reduce risk, the diagnostic process, prognosis, treatment options, questions to ask your doctor, online resources, and a first-person story on what it is like to live with that cancer. The monographs provide a thorough understanding of the main cancer treatment modalities including: biologic response modifiers, bone marrow transplantation, chemotherapy, hormonal agents, radiation therapy, and surgery, as well as medications to manage the side effects of cancer and its treatment.

        Procedures inBrief.    This resource includes 700-word fact sheets that describe approximately 130 of the most frequently performed diagnostic and surgical procedures in the United States, as determined by the Agency for Healthcare Research and Quality. This content covers topics ranging from abdominal surgery to ultrasound and is written with a target reading level of grade 9 or lower according to the Flesch-Kincaid Grade Level score. These fact sheets are reviewed regularly, dated and referenced.

        Procedures inMotion.    This resource contains instructive animations of some of the most common procedures in the following specialties: Anesthesiology, Cardiology, ENT (Ear, Nose and Throat), Gastroenterology, Laparoscopic General Surgeries, Neurology, Obstetrics, Oncology, Ophthalmology, Orthopedics, and Urology. Most animations are approximately 2.5 minutes in length and the data stream is highly compressed for rapid loading and viewing. Each animation is written for a consumer audience and includes professional voice-over with and without embedded written transcripts for the hearing impaired. A surgeon from each specialty reviews each script and final animation. These animations are fully integrated with HealthGate's Procedures inBrief fact sheets and uses QuickTime software.

        Health Features.    These feature magazine-style articles cover health topics that affect people throughout the life cycle. These articles are consumer-focused, evidence-based, and timely. These articles are written by HealthGate and medically reviewed. New articles are added regularly.

        Complementary and Alternative Medicine.    The Natural Pharmacist ("TNP") is a comprehensive evidence-based collection of alternative and natural health content for both consumers and healthcare professionals. TNP content is updated regularly and thoroughly referenced with the latest clinical and research studies to ensure the information is trustworthy and reliable. Its extensive coverage of herbs, dietary supplements and herb-drug interactions, as well as coverage of functional foods and homeopathy make it one of the leading sources of high quality information in the field of alternative and complementary medicine.

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        Journal Notes.    This content resource consists of articles that seek to "make sense of medical news" by describing the latest clinical research from leading medical journals throughout the world in language the average person can understand. Each week HealthGate's medical writers and physicians review, evaluate, and comment on new research and findings from a variety of medical journals, and provide scientific background and context for the topic at hand. This information is placed in context for the consumer and suggestions are made on how this new medical information might be used.

        Anatomy Explorer.    This resource allows for interactive exploration of the entire body by region and system. It identifies all of the 206 bones and 639 muscles in the human body, and magnifies specific areas for better viewing.

        Condition Explorer.    This is an interactive content resource for obtaining health information on conditions pertaining to various regions of the body. It allows the user to choose an area of the body and links them to fact sheets on conditions that affect that body part. This is integrated with the Condition inBrief articles.

HealthGate Proprietary Tools Under Development

        Interactive Informed Consent.    This tool is a series of patient education tutorials being designed to supplement the informed consent process in provider organizations. These procedure-based modules will provide an educational experience to patients to ensure they have a thorough understanding of the procedure including preparation, recovery and risk factors. Each module will document the patient's understanding by recording results of interactive quizzes. The tutorials will use text, audio, and dynamic illustrations in Macromedia Flash format. The patient will be able to access the tutorials either on a tablet pc or over the Internet through a workstation.

Licensed Content and Tools

        This category includes well-known, independent and authoritative health and medical content and tools licensed from third parties by HealthGate for distribution to its customers. This content is typically peer-reviewed and many of the Company's licensed content resources are recognized by healthcare professionals and academia for their high quality. Resources in this category includes the following types of information and representative sources:

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Patient education and consumer health content and tools, such as the Merriam-Webster's Medical Dictionary; the USP DI Volume II: Advice for the Patient from Micromedex; and WebMD's Personal Health Manager.



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News products, including Reuters Health eLine, NewsRX and WebMD Medical News.



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Bibliographic databases, such as MEDLINE, produced by the National Library of Medicine and CANCERLIT, produced by the National Cancer Institute.

        All licensed content must meet certain criteria prior to its incorporation into HealthGate's content repository. These include: (1) the content must be evidence-based; (2) the content provider must have a review process; and (3) the content's overall quality must be comparable with or superior to competing content sources.

Other Products and Services

        The HealthGateWay newsletter.    This product makes use of a Web-based tool to create a customizable electronic newsletter that can combine HealthGate content articles with each customer's local news stories and features. A newsletter may be issued monthly or quarterly to members of a customer's outreach community so that they can be kept up-to-date on the latest medical and health information as well as updated on opportunities and services available from the healthcare organization

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sending out the newsletter. This product is an efficient, cost-effective, and timely way for an organization to market their services while serving as a constant reminder that these organizations are concerned about their constituents and want to improve their care.

        Prior to 2003, HealthGate chose to phase out some of the other products and services that it had previously offered. These former products and services included: (1) use of the HealthGate Web site as a consumer portal; (2) advertising and sponsorship; (3) the NBC Internet, Inc. ("NBCi") Web portal alliance and (4) activePress service for publishers. See "Management's Discussion and Analysis of Financial Condition and Results of Operations."

Technology

        HealthGate's technology consists of systems that are an integration of both internally-developed and commercially-available software programs. HealthGate's production Web server systems are hosted at an independent remote data center and run on Intel-based computers operating in Microsoft Windows 2000 system environments. The software and data storage architecture makes extensive use of .NET-compiled applications, Extensible Markup Language ("XML"), Extensible Stylesheet Language ("XSL") and relational databases. Platform stability is achieved by load-balancing traffic to the HealthGate servers and by architecting the servers with extensive system redundancy. System scalability is designed to be achieved by adding servers when load thresholds are passed using an architecture that uses a data-driven approach for product configuration and delivery flexibility.

        The Company's technology platform enhances HealthGate's proprietary content by managing and indexing metadata that includes standard data (such as dates, titles, and authors) and controlled medical vocabularies (such as CCS). This dynamic technology infrastructure enables HealthGate to meet the challenges of the evolving healthcare content industry and provides customers with greater levels of customization and flexibility.

        There are three specific areas of information technology development and maintenance that contribute to the Company's content and tools: (1) Content Normalization, (2) Content Enhancement, and (3) Content Delivery.

Content Normalization

        HealthGate converts all text-based content files, regardless of original format, into a unified and consistent XML format. XML is a markup language used to identify text data structures within a document file. For example, all the words within a particular document are classified with an XML tagging structure. A data schema defines the XML tagging structure and all documents are validated to the schema as they are input to the content repository. Meta-information, or additional data that describes each document file, is retained in a relational database. Thus, HealthGate stores well-formed and validated XML and this "content normalization" process enables the Company to offer and flexibly deliver multiple product offerings with differing features, that use the same content files drawn from the same content repository.

Content Enhancement

        HealthGate enhances its content repository by indexing the files in it with both a standard word-count-frequency search engine and with a standard medical vocabulary. Users can then access content files either by specifying a word or phrase query for a term that occurs somewhere in the body of the content or by associating exact, meaningful healthcare concepts to each documents' metadata. The full-text searching module enables users to access the repository without specific regard for the level of their expertise, knowledge of medical terms or detailed knowledge of the search command query language, whereas the use of standard vocabulary terms enables users to request specific content that clusters around an appropriate medical concept.

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Content Delivery

        The content repository's delivery software dynamically detects each customer's delivery format preferences and appropriately transforms content files for presentation to each end user. XSL transformation logic files are used to convert the source XML into other data formats, such as the Hypertext Markup Language ("HTML") structure used to display data in Web browsers. The use of these techniques enables HealthGate to provide multiple product offerings with different features that all use the same content files from the same repository.

        HealthGate's XML-based healthcare content is customized and delivered so that it appears as a seamless component of the client's existing application and brand. This is accomplished using Extensible Stylesheet Language ("XSL") style sheets that HealthGate has developed to better render HealthGate's content to comply with each customer's own applications. Using a standard format for content articles and developing flexible style sheets has made it possible for HealthGate to generally deliver its current product offerings to a new client within one or two business days of signing an agreement. The Company's content can be delivered over the Internet to its customers in one of the following three ways:

        Web sites.    Hosted on HealthGate's servers, virtual portions of Web sites are built for each customer to host HealthGate's content in such a way as the pages of the virtual site can be readily integrated into the customer's own Web site. For many of the Company's customers, this is still the best approach for customers to present HealthGate's content to end-users. Some customers extend the integration of HealthGate content into their own Web site by using Hypertext Markup Language ("HTML") "Web scraping" techniques.

        HealthGate OnSite.    Developed in 2002, this File Transfer Protocol ("FTP") delivery method enables customers to download HealthGate's content files and host them on their own servers. This gives customers greater control over when and where HealthGate's content is placed on their Web sites and enables customers to specify and control their own site navigation and other features to further integrate HealthGate's content into their own sites.

        Web services.    In the Web services delivery model, a customer queries the HealthGate repository directly using Simple Object Access Protocol ("SOAP") or HTTP POST or HTTP GET and, as a result of the query, content in a native Extensible Markup Language ("XML") format, enriched with appropriate metadata, is passed directly from the repository to the customer's server where it is formatted for display or integrated in some other way to the customer's environment. This method can be used to give the customer extensive run-time control over the content and its display format.

Sales, Marketing and Customer Relationship Management

        HealthGate primarily uses its own direct sales force to sell its products and services. The sales force is organized according to assigned territories that are based on geography and target markets. An account management team is responsible for facilitating the sales process as well as sales support functions such as customer relationship management, sales engineering, customer and prospect database maintenance, and scheduling online product demonstration sessions and seminars with current and prospective customers.

        Although substantially all of HealthGate's revenues are generated by its own sales force, in the past HealthGate has had reseller and distributor agreements with Data General, GE Medical Systems and HCA-Information.

        HealthGate believes that customer service is an important factor in it being able to retain customers and attract new ones. The Company is therefore committed to providing high levels of service and support with its customer relationship management process. HealthGate is constantly

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seeking opportunities to repackage or repurpose existing assets as new products or services for its customers. The Company researches market trends, confers with health industry experts and thought leaders, and (by engaging with its customers) reviews competitive and complementary product offerings in order that it can be in a position to offer its customers the best available solutions.

        Each HealthGate customer works with a specific contact assigned from the account management team. This contact is initially responsible for assisting the customer in integrating tools and content licensed from HealthGate into its Web communications program or clinical applications. Following a successful implementation, the account manager continues to communicate with the customer for all subsequent day-to-day issues involving the HealthGate licensing relationship. This includes regular contacts with the customers to answer questions, report on outstanding issues and provide updates on the availability of new HealthGate content and tools.

        HealthGate distributes weekly and monthly e-mail newsletter publications to its customers. These newsletters include contemporary health and wellness information, highlighted customer case studies and the latest news (put into context) emerging from the field of study relating to evidence-based medicine. The Company believes that these newsletters enable its customers to quickly understand and integrate new initiatives into their Web-based communication and knowledge programs. HealthGate also participates in tradeshows, conferences and other venues in order to interact directly with potential and existing customers and partners.

        HealthGate's senior management team follows a systematic and on-going executive outreach program that has a foundation of regular scheduled visits to the Company's customers. This program involves engaging customers in a dialog about their businesses, their Web strategies, and their internal operational challenges. The primary focus of the program is for the Company to learn how it can help support a broad range of its customers' strategic and tactical needs. The program also enables the Company to validate the demand for its new product initiatives.

Competition

        The market for health content and Web services is intensely competitive and rapidly changing in the hospital marketplace. HealthGate competes, directly and indirectly, for customers, consumers, content and service providers and acquisition candidates with a variety of companies. Presently, HealthGate competitors include the following types of companies:

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Health and medical print and electronic publishers targeting the healthcare enterprise such as StayWell, Healthwise, Health Ink & Vitality, and A.D.A.M.;



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Healthcare consulting and Web development firms such as Greystone.net and Concept Communications;



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Medical societies and publishers such as UpToDate.

        Some of HealthGate's competitors may enjoy competitive advantages including: greater resources that can be devoted to the development, promotion and sale of their products and services; longer operating histories; greater brand recognition; and larger customer bases.

        The Company believes that the principal competitive factors in its target markets are comprehensiveness and quality of content and tools, value add and integration, pricing, quality of support and customer's ability to host content. See "—Risk Factors—HealthGate faces intense competition in licensing its electronic healthcare tools and content and it may not be able to compete effectively" on page 15.

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Governmental Regulation

        Currently, there are a number of laws that regulate communications or commerce on the Internet. Federal, state, local and foreign governments and agencies are considering laws and regulations that address issues such as user privacy, pricing, online content regulation, taxation and the characteristics and quality of online products and services. In addition, several telecommunications carriers have petitioned the Federal Communications Commission to regulate Internet service providers and online service providers in a manner similar to long distance telephone carriers and to impose access fees on these providers. Regulation of this type, if imposed, could substantially increase the cost of communicating on the Internet.

        The federal Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 (the "CAN-SPAM Act") took effect on January 1, 2004. The CAN-SPAM Act regulates the use of commercial electronic messages in the United States and provides for both civil and criminal penalties. HealthGate has taken steps to assure that its distribution of electronic newsletters on behalf of its clients complies with any applicable provisions of the CAN-SPAM Act.

        Internet user privacy has become an issue both in the United States and abroad. Recent regulations from the U.S. Department of Health and Human Services concerning The Health Insurance Portability and Accountability Act of 1996 ("HIPAA") may impact how HealthGate collects data about certain customer sites that the Company hosts and reports this information to these customers. In addition, the Federal Trade Commission and government agencies in some states and countries have been investigating certain Internet companies regarding their use of personal information.

        HealthGate may require users to register to access some content resources including the Clinical Guidelines. The information collected may include full name, email address and a username and password selected by the user. The information is stored to remind users what password they selected. HealthGate may also use this information to determine registration date and last login date and report this information on an aggregate basis to third parties or applicable customers. HealthGate does not share any personally identifiable information with any third party. HealthGate does not collect or store personal health information. Any additional government regulations imposed to protect the privacy of Internet users may affect HealthGate.

        It may take years to determine the extent to which existing laws related to issues such as intellectual property ownership and infringement, libel, obscenity and personal privacy are applicable to the Internet and for new laws to be adopted. Any new laws or regulations relating to the Internet, or the application or interpretation of existing laws, could slow the growth in the use of the Internet, decrease demand for HealthGate's products and services or otherwise materially adversely affect the Company's business. See "—Risk Factors—Government regulation of the Internet may result in increased costs of using the Internet, which could adversely affect HealthGate's business" on page 18.

Intellectual Property

        HealthGate regards its intellectual property as important to its business, and relies upon trademark and copyright law, trade secret protection and confidentiality and/or license agreements with the Company's employees, customers, strategic partners and others to protect its rights in this property. Effective trademark, copyright and trade secret protection may not be available in every country in which the Company's products and media properties are distributed or made available through the Internet. However, HealthGate cannot guarantee that the steps it has taken to protect its proprietary rights will be adequate to prevent infringement or misappropriation by third parties or will be adequate under the laws of some foreign countries, which may not protect these proprietary rights to the same extent as do the laws of the United States.

        HealthGate licenses a portion of its content from third parties. Under most of these license agreements, the licensor has agreed to defend and indemnify HealthGate for losses with respect to

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third-party claims that the licensed content infringes third-party proprietary rights. HealthGate cannot assure investors that these provisions will be adequate to protect the Company from infringement claims.

        HealthGate also relies on a variety of technologies that are licensed from third parties, including database and Internet server software, which is used for HealthGate's Web sites to perform key functions. These third-party licenses may not be available on commercially reasonable terms in the future. The loss of or inability to maintain any of these licenses could delay the introduction of software enhancements, interactive tools and other features until equivalent technology can be licensed or developed. See "—Risk Factors—HealthGate's business may be adversely affected if it is not able to effectively protect its intellectual property rights" on page 17.

Employees

        As of December 31, 2003, HealthGate had a total of 28 employees. Of these employees 14 serve in research and development, 8 in administration and 6 serve in sales and marketing. None of HealthGate's employees is represented by a labor union. The Company considers its relationship with its employees to be good.

Risk Factors

        HealthGate's business involves significant risks and uncertainties. HealthGate operates in a highly competitive and rapidly evolving electronic healthcare content industry. The risks and uncertainties described below are some of those that HealthGate currently believe may affect the Company.

        Failure to generate sufficient revenues, or raise additional capital will have a material adverse effect on HealthGate's long-term viability and its ability to achieve its intended business objectives.    At December 31, 2003, the Company had $3,431,000 of cash and cash equivalents and negative working capital of $555,000, including deferred revenue of $2,084,000. The Company has incurred substantial losses and negative cash flows from operations in every fiscal year since inception. In the twelve months ended December 31, 2003, the Company incurred a net loss of $1,390,000 and negative cash flows from operations of $1,104,000. Additionally, as of December 31, 2003, the Company had an accumulated deficit of $99,556,000.

        HealthGate continues to take actions to reduce operating cash outflows. These actions include settling commissions owed under development and distribution agreements in 2002 and 2003, workforce reductions in 2001, 2002 and 2003 and amending or canceling several content arrangements in 2001, 2002 and 2003. Other cost savings were made possible through process improvements, development of additional proprietary content and focusing on content sales and services. If the Company does not achieve its forecasted revenue levels in the future, management is prepared to implement additional cost reductions.

        The Company's future liquidity and capital requirements will depend upon numerous factors, including the success of existing and new content service offerings, and continued cost containment. Based on the Company's current forecasted cash flows and its cash and cash equivalents on hand, the Company currently anticipates its cash resources will be sufficient to finance its operations for at least the next twelve months. The Company's future beyond the next twelve months is dependent on its ability to maintain break-even or positive cash flow, or raise additional financing. The Company may need to raise additional funds to support expansion, develop new or enhanced applications and services, respond to competitive pressures, acquire complementary businesses or technologies, or take advantage of unanticipated opportunities. The Company may be required to raise additional funds through private financing, strategic relationships or other arrangements. There can be no assurance that additional funding, if needed, will be available on terms acceptable to the Company, or at all.

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        The success of the Company's business will depend on HealthGate's ability to sell its current tools and content products and develop new products.    HealthGate licenses access to content and tools on an individual resource basis so that customers can choose specific content elements that meet their needs. HealthGate also generates revenue from customers who license HealthGate's content on a pre-packaged basis, such as the Company's Health Library and the CHOICE Web site products, which offer customers a generalized selection of HealthGate's more popular tools content resources. During 2002, HealthGate released HealthGate OnSite™ which enables customers to download HealthGate's content files and host them on their own servers. In March 2003, HealthGate released The HealthGateWay^TM, a web-based newsletter tool that allows customers to publish a customized electronic newsletter integrating the content they license from HealthGate with the customer's local news stories and features. In October, 2003 the Company acquired Clinical Guidelines from EBM Solutions. The Company believes that these products will allow HealthGate's customers to provide their patients with complete, consistent and up-to-date healthcare information. These and other future new product initiatives involve some initial investment with no assurance of success.

        A key element of the Company's strategy is to continue sales and licensing into the hospital market as well as to expand sales and licensing into other healthcare markets, such as payors and pharmaceutical companies, and to continue entering into agreements with print publishers. HealthGate continually evaluates its products and services and looks to develop new products and services that meet the needs of its customers. HealthGate's ability to sell its existing products and services and develop new products and services is necessary for the Company to increase its sales and licensing. If HealthGate is unable to increase sales and licensing, the Company's business prospects, results of operations and the market price of the Company's common stock could be adversely affected.

        HealthGate's business prospects may suffer if the Company is not able to keep up with the rapid technological developments in the electronic healthcare content industry.    The electronic healthcare content industry is characterized by rapid technological developments, evolving industry standards, changes in user and customer requirements and frequent new service and product introductions and enhancements. The introduction of new technology or the emergence of new industry standards and practices could render the Company's systems and, in turn, its products and services, obsolete and unmarketable or require the Company to make significant unanticipated investments in research and development to upgrade its systems in order to maintain the marketability of its products. To be successful, in addition to maintaining the depth and breadth of its content repository, the Company must continue to license or develop leading technology, enhance its existing products and services and respond to emerging industry standards and practices on a timely and cost-effective basis. The Company has been able to effectively adopt and implement new technologies to date, however, there can be no assurances that the Company could continue to do so. If the Company is unable to successfully respond to these developments, particularly in light of the rapid technological changes in the electronic healthcare content industry generally and the highly competitive market in which it operates, the Company's business, results of operations and the market price of the Company's common stock could be adversely affected.

        A significant portion of HealthGate's revenue has historically been derived from a few customers and the loss of any of these customers could adversely affect the Company's business unless the Company finds other significant customers.    Historically, HealthGate has generated a substantial portion of its revenue from a few customers. In the twelve months ended December 31, 2003, one customer, HCA-Information, accounted for 18% of the Company's total revenue. HealthGate was a subcontractor under two different contracts with two different government agencies, through the same prime contractor. Total revenue from this prime contractor represented 10% of total revenue in the year ended December 31, 2003.

        In October 2002, HealthGate and HCA-Information entered into a new agreement. The term of the new agreement is from November 2002 through October 2004 and calls for HCA-Information to

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pay annual license fees to HealthGate of $1,100,000. The agreement covers up to 400 authorized entities and can be terminated by HCA-Information at any time with 60 days prior notice. The annual license fees are being recognized ratably over the term of the agreement.

        An agreement with a customer that represented 8% of revenue for the twelve months ended December 31, 2002 terminated in January 2003.

        The loss of HCA-Information or any other significant customer or HealthGate's failure to obtain new significant customers and sources of revenues could adversely affect the Company's business.

        HealthGate's quarterly operating results may fluctuate, which could affect the market price of HealthGate's common stock in a manner unrelated to the Company's long-term performance.    Quarterly fluctuations could result from a number of factors, including:

•

Development or acquisition of new content which may require up front investments;



•

The amount and timing of expenses required to integrate operations and technologies from joint ventures or other business combinations or investments.

        Although HealthGate does not plan a major increase in spending related to operations, the expense levels are in part based on the Company's expectations concerning future revenue and these expense levels are predominately fixed in the short-term. If the Company has lower revenue than expected, HealthGate may not be able to reduce spending in the short-term in response. Any shortfall in revenue would have a direct impact in HealthGate's results of operations. In this event, the price of the Company's common stock may fall.

        HealthGate faces intense competition in licensing its electronic tools and content and may not be able to compete effectively.    The market for healthcare content products and services is intensely competitive and rapidly changing. With only moderate barriers to entry in a rapidly evolving industry, there are now several content providers offering users similar healthcare tools and content, products and services, and there are many other companies that provide general healthcare content. The Company expects that competition will continue to grow. HealthGate competes, directly and indirectly, for customers, consumers, content and service providers, and acquisition candidates with other electronic healthcare content companies. Some of the Company's competitors may enjoy competitive advantages including: greater resources that can be devoted to the development, promotion and sale of their products and services, longer operating histories, greater brand recognition and larger customer bases.

        HealthGate is not current in its filings with the Securities and Exchange Commission.    As indicated on the cover page of this Annual Report on Form 10-K, HealthGate has not filed all reports required to be filed by Section 13 or Section 15(d) of the Securities Exchange Act of 1934. Despite HealthGate's good faith efforts, due to the lack of documentation concerning EBM Solutions' financial operations prior to its acquisition by HealthGate, HealthGate was unable to provide audited historical financial statements of EBM Solutions and related pro forma information in an amendment to Form 8-K that was due to be filed with the Securities and Exchange Commission on or before January 12, 2004. Although certain financial information about EBM Solutions is contained in HealthGate's audited financial statements for the year ended December 31, 2003, such information does not satisfy the requirements of Form 8-K. As a result of the failure to file the historical EBM Solutions financial statements and related pro forma information as required by SEC Form 8-K, HealthGate is not eligible to use SEC Forms S-2 or S-3, the SEC will not declare effective any HealthGate registration statements and HealthGate may not make offerings under Rules 505 and 506 of Regulation D where any purchasers are not accredited investors (as defined in Rule 501(a)). Accordingly, HealthGate's ability to have public offerings of shares of its stock or have offerings of its shares of stock to unaccredited investors under Regulation D will be limited.

        The performance of HealthGate's Web sites and computer systems is critical to its business and the business will suffer if the Company experiences system failures.    The performance of HealthGate's Web

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sites and computer systems is critical to the Company's reputation and ability to attract and retain customers. HealthGate provides products and services based on sophisticated computer and telecommunications software and systems, which may contain undetected errors or failures when introduced into the Company's existing systems. HealthGate experienced a minor unscheduled service interruption of approximately 4 hours in 1998 and a minor unscheduled service interruption of approximately 1 hour in 2002. These interruptions represent 0.05% and 0.01%, respectively, of the service time for each of those years. In April 2001, HealthGate's activePress service experienced an unscheduled service interruption of approximately six hours. The Company cannot guarantee that it will not experience more significant service interruptions in the future. The Company is also dependent upon Web browsers and Internet service providers to provide Internet users access to its Web sites. Many of them have experienced significant outages in the past and could experience outages, delays and other difficulties in the future due to system failures. The Company also depends on certain information providers to deliver information and data feeds to it on a timely basis. HealthGate Web sites could experience disruptions or interruptions in service due to the failure or delay in the transmission or receipt of this information. System errors or failures that cause a significant interruption in the availability of the Company's content or an increase in response time on the Company's Web sites could cause it to lose potential or existing users, customers, advertisers or subscribers and could result in damage to its reputation or a decline in the Company's stock price.

        Since March 1999, HealthGate has housed all of the Company's central computer facility servers at an independent Internet Data Center in Waltham, Massachusetts presently operated by Cable & Wireless. HealthGate does not presently maintain fully redundant systems at separate locations, so the Company's operations depend on Cable & Wireless' ability to protect the systems in its data center against damage from fire, power loss, water damage, telecommunications failure, vandalism and similar events. Although Cable & Wireless provides comprehensive facilities management services, including human and technical monitoring of all production servers, Cable & Wireless does not guarantee that HealthGate's Internet access will be uninterrupted, error-free or secure. Cable & Wireless has received US Bankruptcy Court approval for the proposed sale of its hosting and IP solutions assets to SAVVIS Communications Corporation. The sale transaction is expected to close during 2004. HealthGate does not anticipate any service disruption as a result of this transaction.

        HealthGate has also developed a disaster recovery plan to respond to system failures. HealthGate cannot guarantee that its disaster recovery plan is capable of being implemented successfully. HealthGate cannot guarantee that the Company's insurance will be adequate to compensate it for all losses that may occur as a result of any system failure.

        HealthGate's business prospects may suffer if it is not able to successfully retain key personnel.    HealthGate had 28 employees as of December 31, 2003. HealthGate's future success depends on the Company's ability to retain, train and motivate existing employees, and to identify, attract, and hire highly skilled technical, managerial, editorial, sales and customer service personnel. The Company cannot guarantee that it will be able to retain or attract skilled personnel.

        HealthGate may be subject to liability for information retrieved from the Company's content repository.    As a publisher and distributor of online information, HealthGate may be subject to third party claims for defamation, negligence, copyright or trademark infringement or other theories based on the nature and content of information supplied by the Company. These types of claims have been brought, sometimes successfully, against online service providers in the past. HealthGate could be subject to liability with respect to content that may be accessible through the Company's content repository or client Web sites. For example, claims could be made against HealthGate if material deemed inappropriate for viewing by children could be accessed through its Web site or if a professional, patient or consumer relies on healthcare information accessed through HealthGate to their detriment. Even if any of the kinds of claims described above do not result in liability to the Company, HealthGate could incur significant costs in investigating and defending against them and in

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implementing measures to reduce its exposure to this kind of liability. The Company's insurance may not cover potential claims of this type or may not be adequate to cover all costs incurred in defense of potential claims or to indemnify HealthGate for all liability that may be imposed.

        HealthGate's business depends on its ability to provide a comprehensive library of healthcare information.    A significant portion of HealthGate's content and tools is proprietary. HealthGate licenses the rest of its content from third parties. Although these licenses have an initial term of one year and are renewable, they are generally non-exclusive and a number of these licenses permit cancellation by the content provider upon 30 to 90 days notice. Although HealthGate currently considers its relationships with its third party content vendors to be good, the Company cannot guarantee that it will be able to continue to license its present content or be able to develop or license sufficient additional content to provide a diverse and comprehensive library.

        HealthGate's business may be adversely affected if the Company is not able to effectively protect its intellectual property rights.    HealthGate regards its trademarks, service marks, copyrights, trade secrets and similar intellectual property as important to its business, and the Company relies upon trademark and copyright law, trade secret protection and confidentiality and/or license agreements with its employees, customers, strategic partners and others to protect its rights in this property. HealthGate has registered the Company's "HealthGate," "CHOICE," "activePress," and its HealthGate logo trademarks in the United States. On February 12, 2002, HealthGate acquired the U.S. registered trademark for "The Natural Pharmacist." On October 27, 2003, HealthGate acquired the U.S. registered trademarks for "EBMSolutions" and "EBMPact." HealthGate has pending applications for "HealthGate OnSite," and "The HealthGateWay." Effective trademark, copyright and trade secret protection may not be available in every country in which HealthGate products and services are distributed or made available through the Internet. In order to limit unauthorized use of its intellectual property, HealthGate began conducting regular external Web audits in 2002. Therefore, HealthGate cannot guarantee that the steps it has taken to protect its proprietary rights will be adequate to prevent infringement or misappropriation by third parties or will be adequate under the laws of some foreign countries, which may not protect HealthGate's proprietary rights to the same extent, as do the laws of the United States.

        Although HealthGate believes that its proprietary rights do not infringe on the intellectual property rights of others, other parties may assert infringement claims against the Company or claim that the Company has violated a patent or infringed a copyright, trademark or other proprietary rights belonging to them. These claims, even if they are without merit, could result in HealthGate spending a significant amount of time and money to dispose of them. In July 1999, HealthGate received a letter from a company (the "Holder") claiming ownership of a patent that claims exclusive rights to all electronic methods of on-demand remote retrieval of graphic and audiovisual information. The letter asserted that the use of HealthGate's Web site, www.healthgate.com, induces users to infringe the patent. In the letter, the Holder offered to license the patent perpetually and retroactively to HealthGate for a one-time fee of between $50,000 and $150,000 depending upon the number of "hits" per day on the Company's web site. There has been no recent activity on this matter and at this time, HealthGate is unable to predict its outcome.

        HealthGate's business may be adversely affected if the Company is unable to continue to license software that is necessary for the development of product and service enhancements.    HealthGate relies on a variety of technologies that are licensed from third parties, including the Company's database software and Internet server software, which is used in HealthGate's computer network to perform key functions. These third party licenses may not be available to HealthGate on commercially reasonable terms in the future. The loss of or inability to maintain any of these licenses could delay the introduction of software enhancements, interactive tools and other features until equivalent technology could be licensed or developed.

17

        Government regulation of the Internet may result in increased costs of using the Internet, which could adversely affect HealthGate's business.    Currently, there are a number of laws that regulate communications or commerce on the Internet. Several telecommunications carriers have petitioned the Federal Communications Commission to regulate Internet service providers and online service providers in a manner similar to long distance telephone carriers and to impose access fees on these providers. Regulation of this type, if imposed, could substantially increase the cost of communicating on the Internet and adversely affect the Company's business, results of operations and the market price of the Company's common stock.

        Tax treatment of companies engaged in Internet commerce may adversely affect the Internet industry and HealthGate.    Tax authorities on the federal, state, and local levels are currently reviewing the appropriate tax treatment of companies engaged in Internet commerce. New state tax regulations may subject HealthGate to additional state sales, income and other taxes. In November 2001, the federal law that placed a temporary moratorium on certain types of taxation on Internet commerce was extended through and expired in November 2003. Bills have been proposed in both the United States House of Representatives and Senate to extend the moratorium on taxation. HealthGate cannot predict whether such bills will become law or the effect of current attempts at taxing or regulating commerce over the Internet. It is also possible that the governments of other states and foreign countries also might attempt to regulate HealthGate's transmission of content. Any new legislation, regulation or application or interpretation of existing laws would likely increase HealthGate's cost of doing business and may adversely affect its results of operations and the market price of the Company's common stock.

        HealthGate may be subject to liability for claims that the distribution of medical information constitutes practicing medicine over the Internet.    States and other licensing and accrediting authorities prohibit the unlicensed practice of medicine. HealthGate does not believe that its publication and distribution of healthcare information online constitutes practicing medicine. However, HealthGate cannot guarantee that one or more states or other governmental bodies will not assert claims contrary to its belief. Any claims of this nature could result in HealthGate spending a significant amount of time and money to defend and dispose of them.

ITEM 2.    Properties

        HealthGate's principal executive and corporate offices along with development and network operations are located in Burlington, Massachusetts, under a lease for approximately 32,000 square feet of space, which expires in June 2005. The Company is currently utilizing approximately 12,000 square feet of this space. During the fourth quarter of 2001, HealthGate committed to an exit plan to vacate certain excess space at its headquarters building and in February 2002, the Company began subleasing a portion of its excess space. In addition to the Burlington space, the Company's central computer facility is located at a Cable & Wireless Internet Data Center in Waltham, Massachusetts. The Company believes that current space is adequate.

        As part of the acquisition of certain assets and liabilities of EBM Solutions, HealthGate assumed approximately 3,633 square feet of office space in Brentwood, Tennessee under a lease which expires in October, 2006.

ITEM 3.    Legal Proceedings

        In July 1999, HealthGate received a letter alleging that HealthGate's Web site induces users to infringe a patent held by a company (the "Holder"). In lieu of pursuing a patent infringement claim against HealthGate, the Holder offered to provide HealthGate with a license for unlimited use of the patent for a one-time payment of between $50,000 and $150,000. There has been no recent activity on this matter and at this time, HealthGate is unable to predict its outcome.

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        From time to time HealthGate becomes the subject to legal proceedings and claims arising in connection with its business. HealthGate does not believe that there were any asserted claims at December 31, 2003 that, if adversely decided, would have a material adverse effect on its results of operations, financial condition or liquidity.

ITEM 4.    Submission of Matters to a Vote of Security Holders

        None.

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EXECUTIVE OFFICERS OF THE REGISTRANT

        The following table sets forth certain information regarding HealthGate's executive officers as of March 15, 2004.

        William S. Reece is a founder of HealthGate and has served as a member of HealthGate's board of directors and as President and Chief Executive Officer since the Company's inception in 1994. Mr. Reece has served as the Chairman of the Board of Directors since December 1994. From 1988 to 1994, Mr. Reece served in several positions, including Vice President, Sales and Marketing, Manager of U.S. Sales and Marketing Representative at PaperChase, a medical literature retrieval software company owned by Beth Israel Hospital in Boston.

        Veronica Zsolcsak has served as HealthGate's Chief Financial Officer and Treasurer since September 2000. Previous to her joining HealthGate, from January 2000 to September 2000, Ms. Zsolcsak was Chief Financial Officer of Infinium, Inc. a provider of financial software applications. During 1999, Ms. Zsolcsak served as Vice President of Operations for Renaissance Worldwide, Inc., a business and technology consulting services company. From 1996 to 1998 Ms. Zsolcsak was Chief Financial Officer of Town & Country Corporation. She has also served as Chief Financial Officer and Vice President of Finance at DRI/McGraw-Hill (1990 to 1993) and held senior financial positions at Wang (1982-1990) and Digital Equipment Corporation (1977 to 1982).

        Paul L. Harman joined HealthGate in 1997 and has held several titles and positions, including Managing Director, HealthGate Europe Ltd. (1997 to 1999), Vice President, activePress (1999 to 2000), Vice President, Information Technology and Software Development (2000 to 2003), and Vice President, Business Development (beginning in January 2004). Prior to joining HealthGate, Mr. Harman had six years experience in the medical publishing industry, including serving as Managing Director for Compact Information Ltd (UK) (owned by Blackwell Science Ltd.) from 1994 to 1997 and as International Sales Director for Adonis BV (Netherlands) from 1991 to 1994. Prior to that Mr. Harman worked for Sony Corporation as a Corporate Planning Manager in Sony's European Headquarters (from 1990 to 1991) and for The Harper Group (from 1979 to 1990) developing on-line software for the international freight forwarding and logistics industry.

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PART II

ITEM 5.    Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

        HealthGate's common stock was traded on the NASDAQ National Market from January 26, 2000 through May 23, 2002 under the symbol HGAT. Beginning May 24, 2002, HealthGate's common stock began trading on the Over-the-Counter Bulletin Board ("OTCBB") under the symbol "HGAT." The table below shows the high and low sales prices per share for the shares of common stock on the NASDAQ National Market and OTCBB, as applicable, for the calendar quarters indicated. Over-the-counter market quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and do not necessarily represent actual transactions.

        On March 16, 2004, the closing sale price of HealthGate's common stock, as quoted on the OTCBB, was $0.60 per share.

        On March 16, 2004, there were 79 holders of record of HealthGate's common stock. Because many of such shares are held by brokers and other institutions on behalf of stockholders, the Company is unable to accurately estimate the total number of beneficial stockholders represented by these record holders.

        HealthGate has never declared or paid any cash dividends on its common stock or other securities and does not anticipate paying cash dividends in the foreseeable future.

Equity Compensation Plan Information

        The Company maintains the HealthGate 1994 Stock Option Plan ("1994 Plan") pursuant to which the Company grants stock options to directors, officers, employees and consultants. The 1994 Plan was adopted by the Board of Directors and approved by HealthGate's stockholders.

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        The following table gives information about stock options under the 1994 Plan as of December 31, 2003.

(1)

Stock options under the 1994 Plan.

(2)

Excludes warrants issued to EBM Solutions and Duke University Medical Center. See "Recent Sales of Unregistered Securities," below, for a discussion of these warrants.

Recent Sales of Unregistered Securities

        During the quarter ended December 31, 2003, HealthGate sold the following shares of its common stock, which were not registered under the Securities Act at the time of issuance. No underwriter was involved in the transactions.

        On October 27, 2003, as consideration for substantially all the assets of EBM Solutions, HealthGate issued 752,048 shares of its common stock to EBM Solutions and issued to EBM Solutions a warrant for an additional 333,333 shares of HealthGate's common stock. The warrant expires on April 27, 2005 and the exercise price per share under the warrant is $1.20. These shares of common stock were not registered under the Securities Act at the time of sale and issuance in reliance upon the exemption contained in Section 4(2) of the Securities Act and Rule 506 for transactions by an issuer not involving a public offering.

        Also on October 27, 2003, HealthGate issued an aggregate 333,333 shares of its common stock to five accredited investors who were also stockholders of EBM Solutions at a per share price of $1.20. These shares were not registered under the Securities Act at the time of sale and issuance in reliance upon the exemptions contained in Section 4(2) of the Securities Act and Rule 506 for transactions by an issuer not involving a public offering.

        On October 27, 2003, HealthGate issued a warrant for 30,000 shares of HealthGate's common stock to Duke University Medical Center in connection with their continued participation in the Academic Medical Center Consortium. The warrant expires on April 27, 2005 and the exercise price per share under the warrant is $1.20. Neither the warrant nor the shares issuable under the warrant have been registered under the Securities Act in reliance upon the exemptions contained in Section 4(2) of the Securities Act for transactions by an issuer not involving a public offering.

Use of Proceeds

        On January 31, 2000, HealthGate closed upon its initial public offering of 1,250,000 shares of its common stock. The shares sold in the offering were registered under the Securities Act of 1933, as amended, on a Registration Statement on Form S-1 (No. 333-76899). This Registration Statement was declared effective by the Securities and Exchange Commission on January 25, 2000.

22

        The funds from the initial public offering and a $400,000 private placement closed in October, 2003 have been the principal source of liquidity for HealthGate during the year ended December 31, 2003 and were used to fund operating losses and make capital expenditures as described in the financial statements included in this report.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

        No repurchase of HealthGate's equity securities were made by HealthGate during the fourth quarter of 2003.

ITEM 6.    Selected Consolidated Financial Data

        The selected consolidated financial data set forth below should be read in conjunction with HealthGate's financial statements and the related notes and "Management's Discussion and Analysis of Financial Condition and Results of Operations" appearing elsewhere in this report. The consolidated statement of operations data for the years ended December 31, 2001, 2002 and 2003 and the consolidated balance sheet data as of December 31, 2002 and 2003, is derived from and qualified by reference to the audited financial statements included elsewhere in this filing. The consolidated statement of operations data for the years ended December 31, 1999 and 2000 and the consolidated balance sheet data as of December 31, 1999, 2000 and 2001 is derived from the Company's audited financial statements that do not appear in this filing. The historical results are not necessarily indicative of the results to be expected in the future.