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QMed, Inc. Reports Third Quarter Results

EATONTOWN, N.J., Oct. 8 /PRNewswire-FirstCall/ -- QMed, Inc. (Nasdaq: QMED) today announced financial results for the third quarter ending August 31, 2007. Revenue for the three-month period increased to $10,781,247 compared to $2,202,270 in the prior year's quarter. This revenue includes amounts for the disease management segment of $846,860 and $1,763,429 for the three months ended August 31, 2007 and 2006, respectively. On a sequential basis revenue increased 14.1% from 2007's second quarter. Net loss for the quarter increased to $(9,201,399) or $(0.54) per share on a diluted basis, compared to net loss of $(3,317,401) or $(0.20) per share on a diluted basis, for the same period a year ago. The Company's cash position as of August 31, 2007 was approximately $6.4 million, net of statutory reserves.

Revenue for the nine-month period ended August 31, 2007 increased to $26,574,368 from $7,306,588 in the same period a year ago. Net loss for the nine months was $(13,068,372) or $(0.77) per share on a diluted basis, compared to net loss of $(8,924,946) or $(0.53) per share on a diluted basis, for the same period a year ago.

South Dakota SNPs member months totaled 18,450 producing $20.5 million in revenue or $1,113 Per Member Per Month (PMPM). Member months in the New Jersey SNP totaled 1,269 producing $2.2 million in revenue or $1,758 PMPM. As reported in our September 27, 2007 press release, the medical expense ratio (MER) results from a spike in the payment of medical claims related to services from prior months paid in July and August, so that we have reported an increase in our incurred but not reported or paid (IBNP) claims liability. This IBNP estimate will represent approximately 30% of total medical expenses for the nine months ended August 31, 2007 resulting in a MER of approximately 114%. Given our limited claims history, the implications of these payments on our MER cannot be determined with certainty until we achieve a higher claims completion rate.

Jane Murray, QMed president and CEO said, "We believe that medical expenses will moderate over time as:

-- Medicare premium payments rise based upon data submitted through our

proprietary technology

-- Members are in our programs longer, so that our interventions gain


"We have seen both phenomena. We received an increase in 2007 for members who joined in 2006. In addition, we have observed in both Medicare demonstrations and in managing Medicare members for other health plan customers, that length of time in the program (LOTIP) correlates with increasingly positive health and financial outcomes."

"We continue to experience strong sequential quarterly growth and obviously expect it to continue. The third quarter's revenue increase is the result of continued strong enrollment in our Medicare Advantage Special Needs Plans in South Dakota coupled with more modest growth in New Jersey. In September we experienced similar trends, as we added another 149 in our chronic SNP in South Dakota, 33 members in New Jersey and 46 in the South Dakota SNP for Duals."

"We enter the 2008 marketing season with strong momentum. As of the end of the third quarter, our revenue run rate was $44,000,000. In addition, we will offer five SNPs in 2008. These include an SNP for those dually eligible for Medicare and Medicaid in South Dakota, as well as a SNP for diabetes and a SNP for cardiovascular disease and stroke in both New Jersey and South Dakota. As we have stated previously, these offerings have the effect of increasing the number of those eligible for our chronic SNPs by nearly 80% in both New Jersey and South Dakota. These two facts, run rate and major expansion of our pool of potential enrollees, combined with increasing confidence among selling agents, providers and our own members, provide a basis for our guidance of $88-$95 million," she concluded.

The Company will hold its quarterly conference call on Monday October 8, at 5:00 pm Eastern time. Investors will have the opportunity to listen to the conference call by dialing 877-356-9649, conference ID: 18623908 at least 5 minutes prior. A replay will be available two hours after the call's completion for 30 days by dialing 800-642-1687, and using the same ID code, and the replay will also be available on the Company's Web site at

About QMed, Inc.

QMed provides evidence-based clinical information management systems around the country to its health plan customers. The system incorporates Disease Management services to patients and decision support to physicians. The Company's QMedCare subsidiary specializes in serving high-risk populations of Medicare beneficiaries. The Company also operates a Medicare Demonstration to test the feasibility of reimbursing its care coordinated DM services in the vast Medicare fee-for-service program. More information on QMed, Inc. can be obtained at, by calling (732) 544-5544 or by emailing

Except for historical information contained herein, matters discussed in this news release are forward-looking statements that involve risks and uncertainties. They include but are not limited to those relating to the timely implementation of programs, the impact of competitive product introductions, acceptance and pricing, and those risks detailed in the Company's filings with the Securities and Exchange Commission (SEC). Actual results may differ materially from any forward-looking statements due to these risks and uncertainties.



August 31, November 30,

2007 2006

ASSETS (unaudited)

Current assets

Cash and cash equivalents $ 2,411,562 $ 3,039,695

Investments 4,011,933 10,867,815

Accounts receivable, net of allowances

of $49,910 and $59,505, respectively 2,627,358 2,005,485

Inventory, net of reserve 13,278 36,631

Prepaid commissions 457,045 -

Prepaid expenses and other current

assets 510,435 301,282

10,031,611 16,250,908

Restricted cash and cash equivalents,

non-current 2,975,081 705,881

Property and equipment, net of

accumulated depreciation 762,453 989,329

Product software development costs,

net 1,970,885 2,104,788

Acquired intangibles, net 462,675 587,027

Other assets 142,513 149,202

Investment in joint ventures 19,050 23,703

$ 16,364,268 $ 20,810,838


Current liabilities

Accounts payable and accrued expenses $ 2,410,285 $ 2,827,223

Medical claims payable 7,570,729 364,830

Leases payable, current portion 20,142 65,881

Accrued salaries and commissions 558,796 446,740

Fees reimbursable to health plans 7,825 47,005

Contract billings in excess of revenue 1,564,667 1,396,423

Deferred revenue 528,960 16,583

12,661,404 5,164,685

Leases payable - long term - 11,645

Accrued severance payable, long term 313,589 619,643

12,974,993 5,795,973

Commitments and Contingencies

Stockholders' equity

Common stock $.001 par value;

40,000,000 shares authorized;

17,013,056 and 16,858,539 shares

issued and 16,991,056 and

16,836,539 outstanding,

respectively 17,013 16,859

Paid-in capital 54,885,049 53,433,095

Accumulated deficit (51,423,068) (38,354,696)

Accumulated other comprehensive loss

Unrealized loss on securities

available for sale (14,094) (4,768)

3,464,900 15,090,490

Less treasury stock at cost, 22,000

common shares (75,625) (75,625)

Total stockholders' equity 3,389,275 15,014,865

$ 16,364,268 $ 20,810,838




For the For the For the For the

Three Three Nine Nine

Months Months Months Months

Ended Ended Ended Ended

August 31, August 31, August 31, August 31,

2007 2006 2007 2006

Revenue $10,781,247 $2,202,270 $26,574,368 $7,306,588

Cost of revenue 15,430,886 1,371,709 28,741,667 4,951,164

Gross (loss)

margin (4,649,639) 830,561 (2,167,299) 2,355,424

Selling, general



expenses 4,079,495 4,025,951 12,125,123 11,099,815

Research and


expenses 604,031 298,836 1,553,086 1,180,866

Loss from

operations (9,333,165) (3,494,226) (15,845,508) (9,925,257)

Interest expense (5,903) (4,337) (20,844) (15,146)

Interest income 137,307 201,833 458,682 577,152

Loss in

operations of

joint ventures - (18,927) (24,973) (57,365)

Other income - - 2,375,400 450,000

Loss before

income tax

provision (9,201,761) (3,315,657) (13,057,243) (8,970,616)


(provision) for

income taxes 362 (1,744) (11,129) 45,670

Net loss $(9,201,399) $(3,317,401) $(13,068,372) $(8,924,946)

Basic and diluted

loss per share


average shares

outstanding 16,989,180 16,823,885 16,953,750 16,804,457

Basic and

diluted loss per

share $(.54) $(.20) $(.77) $(.53)

Copyright©2007 PR Newswire.
All rights reserved

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