EMAGEON INC.
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
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| þ |
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2006,
or
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| o |
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the transition period from ___ to ___
Commission File Number 0-51149
EMAGEON INC.
(Exact name of registrant as specified in its charter)
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| Delaware
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63-1240138 |
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| (State or other jurisdiction of incorporation
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(I.R.S. Employer Identification No.) |
| or organization) |
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| 1200 Corporate Drive, Suite 200 |
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| Birmingham, Alabama
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35242 |
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| (Address of principal executive offices)
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(Zip Code) |
205-980-9222
(Registrant’s telephone number, including area code)
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.
þ Yes o No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer,
or a non-accelerated filer as defined in Rule 12b-2 of the Exchange Act.
Large accelerated filer o
Accelerated filer þ Non-accelerated filer o
Indicate by check mark whether the registrant is a shell company as defined in Rule 12b-2 of the
Exchange Act. o Yes
þ No
Common stock, par value $0.001 per share: 20,942,878 shares outstanding
as of May 5, 2006
EMAGEON INC.
FORM 10-Q
March 31, 2006
Table of Contents
PART I: FINANCIAL INFORMATION
ITEM 1: CONSOLIDATED FINANCIAL STATEMENTS
EMAGEON INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
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(Unaudited) |
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March 31, |
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December 31, |
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2006 |
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2005 |
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ASSETS: |
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Current assets: |
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|
|
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|
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Cash and cash equivalents |
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$ |
15,597 |
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$ |
15,520 |
|
Marketable securities |
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|
— |
|
|
|
4,951 |
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Trade accounts receivable, net |
|
|
28,558 |
|
|
|
29,261 |
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Prepaid expenses and other current assets |
|
|
3,663 |
|
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|
3,052 |
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Inventories |
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9,726 |
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|
8,031 |
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|
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|
|
|
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Total current assets |
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57,544 |
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|
60,815 |
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Property and equipment, net |
|
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21,102 |
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|
21,433 |
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Other noncurrent assets |
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1,471 |
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|
1,419 |
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Intangible assets, net |
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32,929 |
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|
34,277 |
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Total assets |
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$ |
113,046 |
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$ |
117,944 |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current liabilities: |
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Accounts payable |
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$ |
11,672 |
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$ |
13,196 |
|
Accrued payroll and related costs |
|
|
2,835 |
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|
|
4,104 |
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Deferred revenue |
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|
27,395 |
|
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|
25,312 |
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Other accrued expenses |
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|
6,440 |
|
|
|
4,723 |
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Current portion of long-term debt
and capital lease obligations |
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|
2,668 |
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|
2,763 |
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|
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Total current liabilities |
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51,010 |
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|
50,098 |
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Long-term deferred revenue |
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2,899 |
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|
3,221 |
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Long-term debt and capital lease obligations |
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|
395 |
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986 |
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Total liabilities |
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54,304 |
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|
54,305 |
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Stockholders’ equity: |
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Common stock, $0.001 par value, 23,965
shares authorized; 20,974 shares and 20,629
shares issued, and 20,799 shares and 20,453
shares outstanding at March 31, 2006 and
December 31, 2005, respectively |
|
|
21 |
|
|
|
21 |
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Additional paid in capital |
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117,305 |
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|
115,215 |
|
Accumulated other comprehensive income |
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|
91 |
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|
85 |
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Accumulated
deficit |
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|
(58,400 |
) |
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|
(51,407 |
) |
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59,017 |
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|
63,914 |
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Treasury stock, 176 shares, at cost |
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(275 |
) |
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|
(275 |
) |
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Total stockholders’ equity |
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58,742 |
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|
63,639 |
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Total liabilities and stockholders’ equity |
|
$ |
113,046 |
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$ |
117,944 |
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The accompanying notes are an integral part of these financial statements.
1
EMAGEON INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
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Unaudited |
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Quarter Ended March 31 |
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2006 |
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2005 |
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Revenue: |
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System sales |
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$ |
17,269 |
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$ |
7,719 |
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Support services |
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9,309 |
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3,617 |
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Total revenue |
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26,578 |
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|
11,336 |
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Cost of revenue: |
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System sales |
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13,284 |
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|
4,823 |
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Support services |
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5,795 |
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3,083 |
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Total cost of revenue |
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19,079 |
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|
7,906 |
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Gross profit |
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7,499 |
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3,430 |
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Operating expenses: |
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Research and development |
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4,130 |
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2,534 |
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Sales and marketing |
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4,002 |
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|
2,804 |
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General and administrative |
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4,318 |
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|
2,291 |
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Amortization of intangible assets related
to Camtronics acquisition |
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|
885 |
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|
— |
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Acquisition and reorganization costs related to
Camtronics acquisition |
|
|
1,204 |
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|
— |
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|
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Total operating expenses |
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14,539 |
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|
7,629 |
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Operating loss |
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|
(7,040 |
) |
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|
(4,199 |
) |
Interest income |
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|
156 |
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|
232 |
|
Interest expense |
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|
(109 |
) |
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|
(851 |
) |
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Net loss |
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$ |
(6,993 |
) |
|
$ |
(4,818 |
) |
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|
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Net loss per share-basic and diluted |
|
$ |
(0.34 |
) |
|
$ |
(0.42 |
) |
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Weighted average shares outstanding-basic
and diluted |
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20,583 |
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|
11,532 |
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|
|
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|
The accompanying notes are an integral part of these financial statements.
2
EMAGEON, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
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Unaudited |
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Quarter Ended March 31, |
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2006 |
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|
2005 |
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Operating activities |
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|
|
|
|
|
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Net loss |
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$ |
(6,993 |
) |
|
$ |
(4,818 |
) |
Adjustments to reconcile net loss to net cash
(used in) provided by operating activities: |
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Depreciation |
|
|
1,731 |
|
|
|
1,151 |
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Amortization of intangible assets |
|
|
1,293 |
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|
214 |
|
Write-off of subordinated debt discount |
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|
— |
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|
|
646 |
|
Stock-based compensation expense |
|
|
575 |
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|
|
282 |
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Other operating activities |
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|
36 |
|
|
|
69 |
|
Changes in operating assets and liabilities, net |
|
|
(1,089 |
) |
|
|
4,298 |
|
|
|
|
|
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|
Net cash (used in) provided by operations |
|
|
(4,447 |
) |
|
|
1,842 |
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|
|
|
|
|
|
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Investing activities |
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|
|
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|
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|
|
Purchases of property, plant and equipment |
|
|
(1,413 |
) |
|
|
(2,714 |
) |
Purchases of marketable securities |
|
|
— |
|
|
|
(29,582 |
) |
Maturities of marketable securities |
|
|
5,000 |
|
|
|
— |
|
Capitalized software development costs |
|
|
(109 |
) |
|
|
(88 |
) |
Other investing activities |
|
|
219 |
|
|
|
— |
|
|
|
|
|
|
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Net cash provided by (used in) investing activities |
|
|
3,697 |
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|
|
(32,384 |
) |
|
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|
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Financing activities |
|
|
|
|
|
|
|
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Proceeds of issuance of common stock, net of issue costs |
|
|
1,516 |
|
|
|
69,349 |
|
Proceeds of issuance of preferred stock, net of issue costs |
|
|
— |
|
|
|
54 |
|
Payment of debt and capital lease obligations |
|
|
(686 |
) |
|
|
(4,615 |
) |
Other financing activities |
|
|
— |
|
|
|
374 |
|
|
|
|
|
|
|
|
Net cash provided by financing activities |
|
|
830 |
|
|
|
65,162 |
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash |
|
|
(3 |
) |
|
|
— |
|
|
|
|
|
|
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|
Net increase in cash |
|
|
77 |
|
|
|
34,620 |
|
Cash at beginning of period |
|
|
15,520 |
|
|
|
5,994 |
|
|
|
|
|
|
|
|
Cash at end of period |
|
$ |
15,597 |
|
|
$ |
40,614 |
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these financial statements.
3
EMAGEON INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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| NOTE 1 — |
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BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES |
The accompanying unaudited condensed consolidated financial statements include the accounts of
Emageon Inc.(“Emageon”, or the “Company”) and its majority-owned subsidiaries. All significant
intercompany accounts and transactions have been eliminated in consolidation.
In the opinion of management, the accompanying financial statements contain all adjustments
(consisting of normal recurring items) necessary for a fair presentation of results for the interim
periods presented. These unaudited interim financial statements should be read in conjunction with
the audited consolidated financial statements and related notes contained in the Company’s Annual
Report on Form 10-K for the year ended December 31, 2005.
Certain reclassifications have been made to the prior year amounts to provide comparability with
the current year presentation.
Operating results for the quarter ended March 31, 2006 are not necessarily indicative of results
that may be expected for the year ending December 31, 2006.
The preparation of financial statements in conformity with accounting principles generally accepted
in the United States requires that management use judgments to make estimates and assumptions that
affect the amounts reported in the financial statements. As a result, there is some risk that
reported financial results could have been materially different had different methods, assumptions,
and estimates been used. The Company believes that of its significant accounting policies, those
related to revenue recognition, research and development costs, and intangible and other long-lived
assets may involve a higher degree of judgment and complexity than other accounting policies used
in the preparation of its consolidated financial statements. There have been no significant changes
during the quarter ended March 31, 2006 to the items disclosed as “Critical Accounting Policies and
Estimates” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2005 or in
the Company’s method of application of these critical accounting policies.
4
All numbers of shares and dollar amounts in the financial statements and footnotes, except per
share amounts, are expressed in thousands.
NOTE 2 — INITIAL PUBLIC OFFERING
In February 2005 the Company completed the initial public offering of its common stock, selling
5,750 shares of its common stock for proceeds, net of underwriting discount and offering expenses,
of approximately $67,200. In connection with the offering, the Company also issued 10,843 common
shares upon the automatic conversion of outstanding preferred shares, issued 537 common shares upon
the exercise of warrants to purchase its common shares, issued 171 common shares upon the release
of escrowed shares from a prior acquisition of another business, and cancelled 553 warrants to
purchase its common shares.
NOTE 3 — ACQUISITIONS AND INTANGIBLE ASSETS
On November 1, 2005 the Company acquired all of the outstanding capital stock of Camtronics Medical
Systems, Ltd. (“Camtronics”), a developer and manufacturer of cardiology image and information
management systems, for a cash purchase price, including acquisition expenses and net of cash
acquired, of $40,359. The results of operations of Camtronics have been included in the Company’s
statement of operations since the acquisition date.
The purchase price of Camtronics was allocated to the assets and liabilities of Camtronics on a
fair-value basis, including the identification and valuation of its intangible assets and the
assignment of value to goodwill. Goodwill represents, among other things, the synergistic value and
potential competitive benefits that may be realized as a result of the acquisition, any future
products that may arise from the acquired technology, and the skilled and specialized workforce
acquired. In total, intangible asset value of $11,603 and goodwill
value of $17,160 related to the
Camtronics acquisition was identified and recorded.
Summarized below are the Company’s intangible assets, which include those arising from acquisitions
of other businesses and the capitalized portion of costs of internally developed software. These
assets are amortized on a straight-line basis over lives ranging from one to six years, with the
exception of goodwill, which is not amortized but is tested for impairment at least annually or as
circumstances arise that may indicate impairment.
5
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Weighted |
|
|
March 31, 2006 |
|
|
December 31, 2005 |
|
| |
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Average |
|
|
Gross |
|
|
|
|
|
|
Gross |
|
|
|
|
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Amortization |
|
|
Carrying |
|
|
Accumulated |
|
|
Carrying |
|
|
Accumulated |
|
| |
|
Period (Yrs.) |
|
|
Amount |
|
|
Amortization |
|
|
Amount |
|
|
Amortization |
|
Acquired
technology |
|
|
4.6 |
|
|
$ |
5,240 |
|
|
$ |
2,510 |
|
|
$ |
5,240 |
|
|
$ |
2,212 |
|
Customer
relationships |
|
|
4.9 |
|
|
|
10,028 |
|
|
|
1,296 |
|
|
|
10,028 |
|
|
|
518 |
|
Trade names |
|
|
1.2 |
|
|
|
501 |
|
|
|
179 |
|
|
|
501 |
|
|
|
72 |
|
Software
development costs |
|
|
1.3 |
|
|
|
857 |
|
|
|
626 |
|
|
|
798 |
|
|
|
567 |
|
Goodwill |
|
|
— |
|
|
|
20,914 |
|
|
|
— |
|
|
|
21,079 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
$ |
37,540 |
|
|
$ |
4,611 |
|
|
$ |
37,646 |
|
|
$ |
3,369 |
|
Amortization expense was $2,007 for the year ended December 31,
2005, $1,293 for the quarter
ended March 31, 2006, and $214 for the quarter ended March 31,
2005. Estimated amortization expense for the full year 2006 and beyond is as
follows:
| |
|
|
|
|
2006 |
|
$ |
4,956 |
|
2007 |
|
|
2,638 |
|
2008 |
|
|
2,027 |
|
2009 |
|
|
1,381 |
|
2010 and thereafter |
|
|
2,255 |
|
|
|
|
|
Total |
|
$ |
13,257 |
|
NOTE 4 — MARKETABLE SECURITIES
At December 31, 2005 the Company held marketable debt securities classified as available-for-sale
and carried at estimated fair market value, consisting of U.S. government agency securities, in the
amount of $4,951. These securities matured during the quarter ended March 31, 2006.
6
NOTE 5 — INVENTORIES
Inventories consist of the following:
| |
|
|
|
|
|
|
|
|
| |
|
March 31, |
|
|
December 31, |
|
| |
|
2006 |
|
|
2005 |
|
Third-party components |
|
$ |
636 |
|
|
$ |
497 |
|
Work-in-process |
|
|
190 |
|
|
|
345 |
|
Completed systems |
|
|
8,900 |
|
|
|
7,189 |
|
|
|
|
|
|
|
|
Total |
|
$ |
9,726 |
|
|
$ |
8,031 |
|
NOTE 6 — SUPPLEMENTARY CASH FLOW INFORMATION
Changes in operating assets and liabilities of the Company, net of the effects of acquisitions of
other businesses, in reconciling net loss to net cash provided by or used in operations are as
follows:
| |
|
|
|
|
|
|
|
|
| |
|
Quarter Ended March 31, |
|
| |
|
2006 |
|
|
2005 |
|
(Increase) decrease in: |
|
|
|
|
|
|
|
|
Trade accounts receivable, net |
|
$ |
670 |
|
|
$ |
3,384 |
|
Inventories, net |
|
|
(1,695 |
) |
|
|
9 |
|
Prepaid expenses and other current assets |
|
|
(745 |
) |
|
|
(148 |
) |
Other noncurrent assets |
|
|
(5 |
) |
|
|
(54 |
) |
|
|
|
|
|
|
|
|
|
Increase (decrease) in: |
|
|
|
|
|
|
|
|
Accounts payable |
|
|
(1,522 |
) |
|
|
2,384 |
|
Accrued payroll and related costs |
|
|
(1,270 |
) |
|
|
(620 |
) |
Other accrued expenses |
|
|
1,717 |
|
|
|
(2,168 |
) |
Deferred revenue |
|
|
1,761 |
|
|
|
1,511 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net changes in operating assets
and liabilities |
|
$ |
(1,089 |
) |
|
$ |
4,298 |
|
There were no significant non-cash investing and financing transactions in the quarters ended March
31, 2006 and 2005.
7
NOTE 7 — COMPUTATION OF NET LOSS PER SHARE
Basic net loss per share is computed using the weighted average common shares outstanding during
the period. Diluted net loss per share is computed using the weighted average common shares and
common share equivalents outstanding during the period. Common share equivalents consisted of
convertible preferred stock, common stock warrants, and options to purchase common stock granted to
employees and directors (“stock options”) during the quarter ended March 31, 2005, and consisted of
common stock warrants and stock options during the quarter ended March 31, 2006. All common stock
equivalents, consisting of 2,400 shares as of March 31, 2005 and
1,778 shares as of March 31, 2006, were excluded from the computation for these periods because
their inclusion would have been anti-dilutive.
8
NOTE 8 — STOCK-BASED COMPENSATION
The Company’s stock-based compensation
plans are administered by the Compensation Committee of the
Board of Directors, which selects persons eligible to receive awards and determines the number of
shares and/or options subject to each award and the terms, conditions, performance measures, and
other provisions of the award. Options granted under the Company’s
plans generally vest over three to four years and are exercisable for
a period of ten years. Note 16 of the Company’s consolidated financial statements included
in its Annual Report on Form 10-K for the year ended December 31, 2005 contains additional
information related to these stock-based compensation plans.
Effective January 1, 2006, the Company
adopted Statement of Financial Accounting Standards No. 123
(revised), Share-Based Payment (“SFAS 123R”) utilizing the modified prospective approach. Prior to
the adoption of SFAS 123R, the Company accounted for stock option grants in accordance with APB
Opinion No. 25, Accounting for Stock Issued to Employees (the intrinsic value method), and
accordingly recognized no compensation expense for stock options grants that were granted at or
above fair market value on the date of grant.
The provisions of SFAS 123R are applied to
awards granted after its effective date and to awards
outstanding at the effective date that are subsequently modified, repurchased or cancelled. Under
the modified prospective approach, compensation cost to be recognized includes compensation cost
for all share-based awards granted prior to, but not yet vested as of the effective date, based on
the grant-date fair value estimated in accordance with the original provisions of SFAS 123, and
includes compensation cost for all share-based awards granted subsequent to the effective date
based on the grant-date fair value estimated in accordance with the
provisions of SFAS 123R. No
share-based awards were granted during the Company’s first quarter of 2006. As allowed by SFAS
123R, the Company elected not to restate periods prior to the effective date to reflect the impact
of adopting the new standard.
As a
result of adopting SFAS 123R on
January 1, 2006, the Company’s net loss and basic and
diluted earnings per share for the quarter ended March 31, 2006
were $0.3 million and $0.01 lower,
respectively, than if the Company had continued to account for stock-based compensation under APB
Opinion No. 25.
Net cash proceeds from the exercise of
stock options were $1.5 million for the quarter ended March
31, 2006.
Total
stock-based compensation expense was $0.6 million for the quarter
ended March 31, 2006 and $0.3 million for the quarter ended March 31,
2005, and is included in general and administrative expense in the
statement of operations.
The following table illustrates the effect
on net loss and net loss per share for the quarter ended
March 31, 2005 had the Company accounted for stock-based compensation in accordance with SFAS 123R
for that quarter:
| |
|
|
|
|
Net loss: |
|
|
|
|
As reported |
|
$ |
(4,818 |
) |
Add: Stock-based employee compensation reported in net loss |
|
|
282 |
|
Deduct: Stock-based employee compensation under the fair
value method for all awards |
|
|
(478 |
) |
|
|
|
|
Pro forma net loss |
|
$ |
(5,014 |
) |
|
|
|
|
Basic and diluted net loss per share: |
|
|
|
|
As reported |
|
$ |
(0.42 |
) |
Add: Stock-based employee compensation reported in net loss |
|
|
0.02 |
|
Deduct: Stock-based employee compensation under the fair
value method for all awards |
|
|
(0.04 |
) |
|
|
|
|
Pro forma net loss per share |
|
$ |
(0.44 |
) |
|
|
|
|
9
Stock Options
The Company used the Black-Scholes option pricing model to estimate the fair value of stock-based
awards utilizing the following assumptions for the quarter ended March 31, 2005. No stock-based
awards were granted during the quarter ended March 31, 2006.
| |
|
|
|
|
Dividend yield |
|
|
0.0 |
% |
Expected volatility |
|
|
70.9 |
% |
Risk-free interest rate |
|
|
3.7 |
% |
Expected life of options (in years) |
|
|
5.0 |
|
Weighted-average grant-date fair value |
|
$ |
9.40 |
|
The assumptions above are based on multiple factors, including historical exercise patterns of
employees in relatively homogeneous groups with respect to exercise and post-vesting employment
termination behaviors, expected future exercising patterns for these same homogeneous groups, and
the volatility of our stock price.
At March 31, 2006, there was $4.3 million of unrecognized compensation cost related to share-based
payments. The Company expects this compensation cost to be recognized over a weighted-average
period of 2.8 years.
The following table represents stock option activity for the three months ended March 31, 2006:
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
Weighted-Average |
|
| |
|
Number of |
|
|
Weighted-Average |
|
|
Remaining |
|
| |
|
Shares |
|
|
Exercise Price |
|
|
Contractual Life |
|
Options at beginning of period |
|
|
2,129 |
|
|
$ |
5.91 |
|
|
|
|
|
Granted |
|
|
— |
|
|
|
— |
|
|
|
|
|
Exercised |
|
|
(333 |
) |
|
|
4.40 |
|
|
|
|
|
Forfeited |
|
|
(54 |
) |
|
|
6.63 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at end of period |
|
|
1,742 |
|
|
$ |
6.17 |
|
|
7.05 years |
|
|
|
|
|
|
|
|
|
|
Exercisable at end of period |
|
|
1,071 |
|
|
$ |
4.50 |
|
|
6.03 years |
|
|
|
|
|
|
|
|
|
|
Shares available for future stock option grants to employees and directors under existing plans
were 2,990 and 486, respectively, at March 31, 2006. At March 31, 2006, the aggregate intrinsic
value of options outstanding was $18.9 million, and the aggregate intrinsic value of options
exercisable was $13.7 million. Total intrinsic value of options exercised was $4.3 million for the
three months ended March 31, 2006.
The following table summarizes the Company’s nonvested stock option activity for the three months
ended March 31, 2006:
| |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
Weighted-Average |
|
| |
|
Number of Shares |
|
|
Exercise Price |
|
Nonvested stock options at beginning of period |
|
|
866 |
|
|
$ |
8.53 |
|
Granted |
|
|
— |
|
|
|
— |
|
Vested |
|
|
(141 |
) |
|
|
5.29 |
|
Forfeited |
|
|
(54 |
) |
|
|
6.63 |
|
|
|
|
|
|
|
|
Nonvested stock options at end of period |
|
|
671 |
|
|
$ |
9.05 |
|
|
|
|
|
|
|
|
10
NOTE 9 — COMPREHENSIVE LOSS
The Company’s comprehensive loss differs from its reported net loss due to non-equity items
consisting of foreign currency translation adjustments and unrealized gains and losses on
available-for-sale marketable securities. Comprehensive loss for the quarter ended March 31, 2006
was $6,989 and for the quarter ended March 31, 2005 was $4,818. Net accumulated comprehensive
income adjustments as of March 31, 2006 are $91.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENTS
Some of the statements made in this Quarterly Report on Form 10-Q contain forward-looking
statements which reflect the Company’s plans, beliefs, and current views with respect to, among
other things, future events and financial performance. These statements are often identified by use
of forward-looking words such as “believe”, “expect”, “potential”, “continue”, “may”, “will”,
“should”, “could”, “would”, “intend”, “plan”, “estimate”, “anticipate”, and comparable words or the
negative version of these and other words. Any forward-looking statement contained in this Form
10-Q is based upon the Company’s historical performance and on current plans, estimates, and
expectations. The inclusion of this forward-looking information should not be regarded as a
representation by the Company or any other person that the future plans, estimates, or expectations
contemplated by the Company will be achieved. Such forward-looking statements are subject to
various risks and uncertainties. In addition, there are or will be important factors that could
cause actual results to differ materially from those indicated in the statements. These factors
include, but are not limited to, those described in Item 1A of the Company’s Annual Report on Form
10-K for the year ended December 31, 2005 under the caption “Risk Factors”.
This cautionary statement should not be regarded as exhaustive and should be read in conjunction
with other cautionary statements and other information contained in the Company’s Annual Report on
Form 10-K for the year ended December 31, 2005. The Company operates in a continually changing
business environment, and new risks and uncertainties emerge from time to time. Management cannot
predict these new risks and uncertainties, nor can it assess the impact, if any, that any such
risks and uncertainties may have on the Company’s business or the extent to which any factor or
combination of factors may cause actual results to differ from those projected in any
forward-looking statement. Accordingly, the risks and uncertainties to which the Company is subject
can be expected to change over time, and the Company undertakes no obligation to update
11
publicly or review the risks or uncertainties described herein or in the Company’s Annual Report on
Form 10-K for the year ended December 31, 2005. The Company also undertakes no obligation to update
publicly or review any of the forward-looking statements made in this Form 10-Q, whether as a
result of new information, future developments, or otherwise.
This Management’s Discussion and Analysis of Financial Condition and Results of Operations section
should be read in conjunction with the unaudited financial statements and footnotes appearing in
Part I of this Form 10-Q and the audited financial statements included in the Company’s Annual
Report on Form 10-K for the year ended December 31, 2005.
COMPANY OVERVIEW
Emageon provides an enterprise-level information technology solution for the clinical analysis and
management of digital medical images within multi-hospital networks, community hospitals, and
diagnostic imaging centers. The Company’s solution consists of advanced visualization and image
management software, third-party components, and comprehensive support services. The Company’s
web-enabled advanced visualization software, which is hosted by the customer, provides physicians
across the enterprise—in multiple medical specialties and at any network access point—with
dynamic tools to manipulate and analyze images in both a two dimensional and three dimensional
perspective. With these tools, physicians have the ability to better understand internal anatomic
structure and pathology, which can improve clinical diagnoses, disease screening, and therapy
planning. The Company’s open standard solution is designed to help customers improve staff
productivity, enhance revenue opportunities, automate complex medical imaging workflow, lower total
cost of ownership, and provide better service to physicians and patients.
RESULTS SUMMARY
Revenue for the quarter ended March 31,
2006 was a record $26.6 million, a 134% increase over the
first quarter of 2005. The net loss for the quarter was $7.0 million, or $0.34 per share, compared
to a first quarter 2005 net loss of $4.8 million, or $0.42 per share ($0.24 per share on a pro forma basis assuming
the Company’s initial public offering had occurred at the
beginning of that quarter—see
below). The Company’s gross margin for the
quarter was 28.2% compared to 30.3% in the comparable prior year quarter, and its total operating
expenses increased by 63.2% to $12.5 million in the quarter. As explained in the individual
sections of this Management’s Discussion and Analysis of Financial Condition and Results of
Operations, the acquisition of Camtronics Medical Systems, Ltd. on November 1, 2005 accounts for
much of the change in the individual categories of expense quarter to quarter described in this
section.
Included in the results of the Company for first quarter 2006 are the following:
12
| |
1) |
|
Expenses of $1.2 million, or $0.06 per share, related to the acquisition and
reorganization of Camtronics and its integration with the Company, |
| |
| |
2) |
|
Non-cash expenses of $1.0 million, or $0.05 per share, in amortization of intangible
assets acquired in the Camtronics acquisition, and |
| |
| |
3) |
|
Non-cash expenses of $0.6 million, or $0.03 per share, for stock options-based
compensation after the Company’s adoption of Statement of Financial Accounting Standards
No. 123R as of January 1, 2006. |
Cash used in operations for the first quarter of 2006 was $4.4 million. At March 31, 2006 the
Company had approximately $15.6 million in unrestricted cash and cash equivalents. In addition,
subsequent to March 31, 2006 the Company entered into a new $10 million secured line of credit
agreement with a bank.
The following table presents the Company’s net loss per share for the first quarter of 2005 on a
pro forma basis, a non-GAAP financial measurement, as if the Company’s initial public offering of
its common stock, which occurred February 9, 2005, had occurred on January 1, 2005. The Company
believes that presentation of the net loss per share for the first quarter of 2005 utilizing the
Company’s post-initial public offering capital structure enhances an overall understanding of its
current and historical financial performance and provides an additional meaningful measure of
operating performance by enhancing the consistency and comparability of reported financial results,
enabling investors to more thoroughly evaluate current performance in comparison to past
performance. This information will necessarily differ from comparable information that may be
provided by other companies and should not be considered in isolation or as an alternative to the
Company’s operating and other financial information determined under U.S. generally accepted
accounting principles.
The table presents the adjustments made to actual weighted average shares of common stock
outstanding in order to derive weighted average common stock outstanding on the pro forma basis
described above. The resulting pro forma net loss per share for the period was calculated by
dividing the actual net loss for the period by the pro forma weighted average common stock
outstanding as determined in the table.
| |
|
|
|
|
| |
|
Quarter Ended March 31, 2005 |
|
| |
|
(in thousands) |
|
Weighted average shares outstanding |
|
|
11,532 |
|
Effects of: |
|
|
|
|
Conversion of preferred stock |
|
|
5,301 |
|
Required exercise of warrants |
|
|
263 |
|
Release of escrowed common stock at completion
of initial public offering |
|
|
84 |
|
Issuance of common stock in initial public offering |
|
|
2,844 |
|
|
|
|
|
Total pro forma shares outstanding |
|
|
20,024 |
|
Pro forma net loss per share |
|
$ |
0.24 |
|
Revenue
Revenue consists of system sales and support services revenue. System sales revenue is
comprised of revenue from sales of the Company’s software and third-party components. Support
services revenue is comprised of revenue from up-front professional services such as
implementation, adoption and training, as well as ongoing maintenance services. The following
table sets forth revenue component data.
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Three Months Ended |
|
| |
|
March 31, |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
Change |
|
| |
|
2006 |
|
|
2005 |
|
|
Change |
|
|
(%) |
|
| |
|
(in
thousands) |
|
System sales |
|
$ |
17,269 |
|
|
$ |
7,719 |
|
|
$ |
9,550 |
|
|
|
123.7 |
% |
Percentage of total revenue |
|
|
65.0 |
% |
|
|
68.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Support services |
|
$ |
9,309 |
|
|
$ |
3,617 |
|
|
$ |
5,692 |
|
|
|
157.4 |
% |
Percentage of total revenue |
|
|
35.0 |
% |
|
|
31.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue |
|
$ |
26,578 |
|
|
$ |
11,336 |
|
|
$ |
15,242 |
|
|
|
134.5 |
% |
|
|
|
|
The increase in system sales revenue over the prior year quarter is attributable to an
increase in the number of new and existing customer installations, offset by a decrease in the
average individual size of these installations. During first quarter 2006, the Company had more
acceptances of its software than in first quarter 2005 as a result of growth in the sales of
legacy products as well as the addition of the HeartSuite line of products in late 2005. The
Company also experienced increased revenue from higher than usual installations of third-party
components in the first quarter of 2006 that resulted from record bookings of new business in the
last four months of 2005. Third-party components
13
are typically delivered to customers ahead of the related software and installation. The
average revenue recognized per acceptance decreased in 2006 as compared to 2005. This decrease is a
result of the addition of the HeartSuite line of products, which tends to have lower selling prices
than legacy products.
The increase in support services revenue is attributable to revenue related to support of
the HeartSuite line of products as well as an increase in customer installations. Approximately
$3.8 million of the increase is attributable to an increase in the number of customers that have
implemented the Company’s solutions and are paying ongoing support and maintenance fees. The
remaining $1.9 million increase is related to an increase in non-recurring revenue related to
services such as implementation and training for new customers as well as add-on services for
existing customers.
In general, the increased number of customer installations is a result of increased
customer awareness and acceptance of the Company’s products and services with multi-facility
healthcare providers. Of the software acceptances related to legacy products during the three
months ended March 31, 2006 and 2005, 84% and 75%, respectively, related to agreements with
multi-facility healthcare providers. The Company expects systems revenue from both existing
long-term customers and new customers to continue to increase, and that support services revenue
will continue to increase as the installed customer base increases.
Cost of Revenue
Cost of revenue consists of costs associated with system sales and support services revenue.
System sales costs are comprised of the cost of third-party components and the cost of software
licenses. Support services costs are comprised of labor costs and related overhead relating to the
implementation, installation, training, application support and maintenance of the Company’s
products as well as costs related to maintenance of third-party components. The following table
sets forth cost of revenue component data.
14
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Three Months Ended |
|
| |
|
March 31, |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
Change |
|
| |
|
2006 |
|
|
2005 |
|
|
Change |
|
|
(%) |
|
| |
|
(in thousands) |
|
Cost of system sales revenue |
|
$ |
13,284 |
|
|
$ |
4,823 |
|
|
$ |
8,461 |
|
|
|
175.4 |
% |
Percentage of system sales revenue |
|
|
76.9 |
% |
|
|
62.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of support services revenue |
|
$ |
5,795 |
|
|
$ |
3,083 |
|
|
$ |
2,712 |
|
|
|
88.0 |
% |
Percentage of support services revenue |
|
|
62.3 |
% |
|
|
85.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cost of revenue |
|
$ |
19,079 |
|
|
$ |
7,906 |
|
|
$ |
11,173 |
|
|
|
141.3 |
% |
|
|
|
|
Percentage of total revenue |
|
|
71.8 |
% |
|
|
69.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
The increase in total cost of revenue is attributable to increased purchases of third-party
components and, to a lesser extent, increased labor costs, as a result of the increased number of
new customer installations. Cost of revenue as a percentage of total revenue increased primarily as
a result of the mix of revenue recognized during the periods and, to a lesser extent, the Company’s
acquisition of Camtronics Medical Systems, Ltd. in November 2005. The mix of revenue during first
quarter 2006 was more heavily weighted towards third-party component sales relative to software
license sales than in the corresponding prior year period. Costs associated with third-party
component sales are significantly higher than costs associated with software license sales. Also,
in accordance with applicable purchase accounting rules, the Company
recorded a liability to reflect the fair value of its assumed
performance obligation to complete Camtronics in-process implementations based on
the amount of effort remaining to complete an implementation, plus a
fair-value mark-up. As a result
of these purchase accounting adjustments, gross margins on the HeartSuite line of products have
been lower than they otherwise would have been.
For the three months ended March 31, 2006, cost of system sales increased by 175.4% as
compared to the corresponding period in 2005. This increase was caused by the increased number of
health care institutions that acquired and installed the Company’s solution. Cost of systems sales
revenue is expected to continue to increase in absolute dollars as a result of additional purchases
of third-party components related to customer installations. Cost of system sales as a percentage
of system sales revenue increased as a result of the mix of revenue recognized during the periods
and, to a lesser extent, the purchase accounting adjustments discussed above.
For the three months ended March 31, 2006, cost of support services increased by 88.0%
as compared to the corresponding period in 2005. This increase was caused by an increase in the
staffing levels of support services teams as well as increased costs to maintain third-party
components due to an increase in volume. Cost of support services as a percentage of support
services revenue decreased in 2006 as compared to 2005 as a
15
result of efficiencies realized as the installed customer base grew and the cost of support
services was spread over a broader base of customers. The Company has focused on the achievement of
efficiencies of scale in the support services area as a result of the increase in the installed
customer base. These initiatives include investments in software technologies and use of more
cost-effective resources.
Gross Margin Percentage
The Company’s total gross margin percentage decreased from 30.3% of total revenue for the
three months ended March 31, 2005 to 28.2% of total revenue for the corresponding period in 2006,
primarily as the result of the increase in third-party component sales relative to software license
sales and low Camtronics margin. The Company expects gross margins relating to the HeartSuite line
of products to return to normal levels starting in the third quarter, when the majority of the
implementations for which deferred revenue was recorded at the acquisition of Camtronics are
expected to be completed.
OPERATING EXPENSES
Total
research and development, sales and marketing, and general and
administrative expenses for the quarter ended March 31, 2006 were $12.5 million as compared to
$7.6 million in the corresponding prior year quarter, an increase of $4.9 million or 63.2%. The
addition of the operating expenses of Camtronics, which was acquired by the Company November 1,
2005, accounts for $3.5 million of the total increase, with the remainder of the increase
consisting primarily of general and administrative expenses resulting from the Company’s initial
public stock offering in early February, 2005 and to its adoption of the requirements of Statement
of Financial Accounting Standards No. 123R, dealing with stock-based compensation, on January 1,
2006.
The growth
of 63.2% in these expenses quarter to quarter compares to total revenue growth
over the same period of 134%. As a percentage of revenue, these expenses were 46.8% in
first quarter 2006 compared to 67.3% in first quarter 2005.
The
Company expects that these expenses will continue to grow as its revenue grows and as
it addresses new product markets, including the cardiology market via its Camtronics subsidiary,
but doesn’t expect growth in excess of its rate of revenue growth.
Research and Development Expenses. Research and development expenses increased by $1.6 million, or
63.0%, in first quarter 2006 compared to first quarter 2005. The addition of Camtronics and its
employee headcount and cardiology development efforts accounts for $1.4 million of the increase
quarter to quarter, with the remainder consisting primarily of increased depreciation charges on
equipment added since first quarter 2005.
16
As a percentage of revenue, research and development expenses were 15.5% in first quarter 2006
compared to 22.4% in first quarter 2005.
Sales and Marketing Expenses. Sales and marketing expense increased by $1.2 million, or 42.7%, in
first quarter 2006 compared to first quarter 2005. The addition of Camtronics and its employee
headcount, its cardiology selling efforts, and the efforts of the combined companies to begin
cross-market selling added $1.6 million to first quarter sales and marketing expense, the effects
of which were offset primarily by a decline from first quarter 2005 commissions expense, which was
unusually high as the result of execution of individually significant sales contracts in that
period.
As a percentage of revenue, sales and marketing expenses were 15.1% in first quarter 2006 compared
to 24.7% in first quarter 2005.
General and Administrative Expenses. General and administrative expenses increased by $2.0 million,
or 88.5%, in first quarter 2006 compared to first quarter 2005. The addition of Camtronics and its
employee headcount and related activities accounted for $0.5 million of the increase, with the
majority of the remainder of the increase due to new expenses related to the Company’s status as a
publicly held entity, such as audit and legal fees, insurance, and other expenses incurred to
become compliant with the Sarbanes-Oxley Act of 2002, and to headcount and related increases in
support of the Company’s revenue growth. In addition, as required, the Company began to recognize
the costs of its stock-based compensation using the fair-value
method in first quarter 2006, which added approximately $0.3
million to general and administrative expense compared to first quarter 2005.
As a percentage of revenue, general and administrative expense was 16.2% in first quarter 2006
compared to 20.2% in first quarter 2005.
LIQUIDITY AND CAPITAL RESOURCES
Summary. The Company’s unrestricted cash, cash equivalents, and marketable securities at March 31,
2006 were $15.6 million, a decline of approximately $4.9 million since December 31, 2005. This
decline is primarily the result of funding of the Company’s net loss for the quarter, but also
includes the effects of investment in property, plant, and equipment of $1.4 million and the
payment of scheduled debt installments of $0.7 million, offset by the proceeds of stock option
exercises by employees of $1.5 million. Primarily due to the effects of the decline in cash and
marketable securities, the Company’s total working capital declined by $4.2 million during the
quarter, but total debt remained minimal at $3.1 million, and the Company completed negotiation of
a new $10 million line of credit arrangement with a bank. In addition, revenue for the quarter was
at a record level, with accounts receivable at March 31, 2006 of $28.6 million net of reserves. The
Company continues to believe that its existing cash balances, together with
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its future cash flows and the availability of funding under its line of credit, if necessary, will
be sufficient to fund its operations in 2006.
Cash Used In Operating Activities. Net cash used in operations for the quarter ended March 31, 2006
was $4.4 million, versus a net provision of cash from operations in the quarter ended March 31,
2005 of $1.8 million. The net use of cash in first quarter of 2006 is essentially the result of the
Company’s net loss for the period, but also includes the negative effects of an inventory increase
of $1.7 million and an accounts payable and accrual net decline of $1.1 million, both of which are
the result of timing. In addition, deferred revenue increased by $1.8 million as the result of new
billings in excess of recognized revenue.
The net provision of cash of $1.8 million in the quarter ended March 31, 2005 is the result of that
quarter’s net loss of $4.8 million, offset by a decline in accounts receivable of $3.4 million and
the effects of timing issues in other current assets and liabilities, and by an increase in
deferred revenue that was reflective of new billings in excess of recognized revenue.
Cash from operating activities in a given period is most affected by the Company’s net income or
loss for the period, by the timing of billings to customers versus the timing of revenue
recognition, and by the timing of orders and deliveries of those orders, which can temporarily
affect the levels of inventory and accounts payable. The Company expects to be cash-flow positive
from its operations for the remainder of the current year, but also expects a continuation through
third quarter, and possibly fourth quarter, of the funding of its integration of operations with
Camtronics, which it purchased in November, 2005. The Company expects that the total cost of
Camtronics integration could approximate $6.0 million for the full year 2006.
Cash From Investing Activities. Net cash provided by investing activities was $3.7 million in the
quarter ended March 31, 2006 versus a net use of cash in investing activities of $32.4 million in
the same prior year quarter. The first quarter 2006 provision of cash from investing activities
consisted of the maturity of $5.0 million of marketable securities, the proceeds of which were used
to finance operating activities, and a use of cash of $1.4 million to purchase property and
equipment items for internal use, primarily in research and development and to equip new employees.
In the first quarter of 2005, the net use of cash consisted of the purchase of marketable
securities of $30 million, reflecting the investment of part of the funds raised in the Company’s
initial public offering, and the purchase of $2.7 million in property and equipment items for
research and development, quality assurance, and to equip new employees. The Company expects that
purchases of plant and equipment for internal use and for use at customer sites will continue as
its customer base, resulting employee headcount, and its research and development activities
continue to grow.
Cash From Financing Activities. Net cash provided by financing activities was $0.8 million for the
quarter ended March 31, 2006 versus $65.2 million in first quarter 2005. In first quarter 2006, the
Company received proceeds of $1.5 million on the exercise of
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stock options, and made regularly scheduled payments on its outstanding debt of $0.7 million. Cash
provided by financing activities in first quarter 2005 was the result of the Company’s initial
public offering of its stock in February, less the payment of debt of $4.6 million with a portion
of the public offering proceeds.
Contractual Cash Obligations. As of March 31, 2006 the Company had total obligations for the
payment of cash of approximately $10.2 million, consisting of
$3.2 million in debt and capital
lease obligations and $7.0 million in operating lease commitments, primarily of office space. Under
their present terms, these obligations come due in the amounts of approximately $4.2 million in
less than one year, $3.4 million in one to three years, and $2.7 million in three to five years and
beyond.
Available Credit. Prior to the expiration of its previous loan and security agreement with a bank
at April 30, 2006, the Company entered into a new agreement with that bank that provides available
credit of $10.0 million (previously $4.0 million) at the bank’s prime interest rate (previously
prime plus 1.5% to 2.0%). The agreement is for a term of two years, at the end of which all amounts
become due and payable. Security for any amounts borrowed under the agreement consists of all
assets of the Company other than its intellectual property and real estate. At March 31, 2006 there
were no amounts outstanding under the agreement.
The Company believes that existing cash, together with its future cash flows and amounts available
under its loan and security agreement, if necessary, will be sufficient to execute its business
plan for 2006. However, any projections of cash flow are subject to uncertainties, including the
Company’s rate of revenue growth, the expansion of its sales and marketing activities, the timing
and extent of spending in support of product development efforts, the timing and success of new
product introductions, continuing market acceptance of the Company’s products, costs and risks
associated with the integration of acquired businesses, and the Company’s ability to manage its
growth. In addition, although not currently a party to any letter of intent or binding agreement,
the Company may also invest in or acquire complementary businesses, services, or technologies,
which could require that funding be obtained through additional equity or debt financing. It is
possible that additional financing for any of these purposes could be required, and that additional
funds may not be available on favorable terms or at all.
ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The debt instruments of the Company do not expose the Company to material market risks relating to
changes in interest rates. Excess funds of the Company are invested in short-term,
interest-bearing, investment-grade securities. The value of these securities is subject to interest
rate risk and could decline in value if interest rates rise. The effect of a hypothetical one
hundred basis point decrease across all interest rates related to the Company’s investments would
result in an annual decrease of approximately $0.1 million
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in operating results, assuming no change in the amount of investments on hand at March 31, 2006.
The primary objective of the Company’s investing activity is to preserve principal while maximizing
income without significantly increasing risk. Cash is invested principally in U.S. marketable debt
securities from a diversified portfolio of institutions with strong credit ratings and in U.S.
government agency notes. By policy, the amount of credit exposure to any single institution is
limited. These investments generally are not collateralized and
mature in less than one year. At March 31, 2006 all investments held by the
Company had scheduled maturities of 90 days or less. To minimize the
exposure to changes in interest rates, the Company schedules its investments to mature in line with
expected cash needs, thus reducing the potential of selling investments prior to their maturity.
The Company believes it has minimal exposure to interest rate risk.
ITEM 4: CONTROLS AND PROCEDURES
The Company maintains disclosure controls and procedures, as defined in Rules 13a-15(e) and
15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended, that are designed to
ensure that information required to be disclosed in the reports filed or submitted by the Company
under the Exchange Act is recorded, processed, summarized, and reported within the time periods
specified in the SEC’s rules and forms and that such information is accumulated and communicated to
management of the Company, including its Chief Executive Officer and Chief Financial Officer, as
appropriate, to allow timely decisions regarding required disclosure. Charles A. Jett, Jr., Chief
Executive Officer and President, and W. Randall Pittman, Chief Financial Officer and Treasurer,
conducted an evaluation of the effectiveness of the design and operation of the Company’s
disclosure controls and procedures as of March 31, 2006 and, based on that evaluation, found the
Company’s disclosure controls and procedures were effective in ensuring that information required
to be disclosed in the reports filed by the Company and submitted under the Exchange Act is
recorded, processed, summarized and reported as and when required, and that information required to
be disclosed is accumulated and communicated to them as appropriate to allow timely decisions
regarding timely disclosure. There have been no changes in the Company’s internal controls over
financial reporting during the quarter ended March 31, 2006 that have materially affected, or are
reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II.
ITEM 1A. RISK FACTORS
In addition to the other information set forth in this report, careful consideration
should be given to the factors discussed in Part I, “Item 1A. Risk Factors” in the Company’s Annual
Report on Form 10-K for the year ended December 31, 2005, which could materially affect the Company’s business,
financial condition, or future results. The risks described in the Company’s Annual Report on
Form 10-K are not the only risks facing the Company. Additional risks and uncertainties not currently known or that
are currently deemed to be immaterial also may materially adversely affect the Company’s business, financial
condition, and/or operating results.
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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The Company’s initial public offering of its common stock was effected through a Registration
Statement on Form S-1 which was declared effective on February 8, 2005. In the offering the Company
sold 5,750,000 shares of common stock for net proceeds of approximately $67.2 million. On February
18, 2005 the Company used $4.0 million of the proceeds to repay borrowings under its subordinated
notes, and invested the remaining proceeds in short-term, investment grade securities pending
further use. Since that time and through March 31, 2006, the Company has used approximately $7.2
million of the net proceeds for capital purchases, substantially all of which have been equipment,
and an additional $40.0 million of the net proceeds to acquire all of the outstanding stock of
Camtronics Medical Systems, Ltd. on November 1, 2005.
ITEM 6. EXHIBITS
(a) Exhibits
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DESCRIPTION |
31.1 *
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Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or
Rule 15d-14(a) under the Securities Exchange Act of 1934 |
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31.2 *
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Certification of the Chief Financial Officer pursuant to Rule 13a-14(a)
or Rule 15d-14(a) under the Securities Exchange Act of 1934 |
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32 *
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Certification of the Chief Executive Officer and Chief Financial
Officer pursuant to 18U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned, thereunto duly authorized May 9, 2006.
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Emageon Inc. |
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By:
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/s/ Charles A. Jett, Jr. |
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Charles A. Jett, Jr. |
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Chairman, Chief Executive |
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Officer, and President |
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(Principal Executive Officer) |
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By:
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/s/ W. Randall Pittman |
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W. Randall Pittman |
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Chief Financial Officer |
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and Treasurer |
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(Principal Financial and |
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Accounting Officer) |
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