NEWPORT BEACH, Calif. – February 3, 2004 – The TriZetto Group, Inc. (Nasdaq: TZIX), today reported $290 million in revenues, a pro forma net profit of $0.06 per share and a GAAP net loss of ($0.60) per share for 2003. The company is expecting 2004 to be its first full profitable year, projecting $0.12 to $0.17 GAAP net profit per share.

"Revenue growth in 2003 reflected TriZetto's increasing shift toward larger health plans and customer acceptance of outsourced services," said TriZetto Chairman and CEO Jeff Margolis. "The year included many significant operational achievements, most notably substantially enhanced versions of each of our flagship enterprise software products, Facets® and QicLink™ and corresponding expanded hosting capabilities."

2003 Highlights

• Total 2003 revenues were $290.3 million, up 9% from $265.2 million 2002.
• EBITDA was $24.6 million for the year, down 10% from $27.2 million last year.
• Pro forma net income for 2003 was $3.1 million, or $0.06 per diluted share, compared to $14.3 million, or $0.31 per diluted share in 2002.
• GAAP net loss for the year was ($27.5) million, or ($0.60) per diluted share, compared to a net loss of ($148.4) million or ($3.28) per diluted share a year-ago.
• Capital expenditures in 2003 were $27.7 million.
• Cash and cash equivalents at December 31, 2003 were $76 million.
• In 2003, the company signed $232.0 million in new contract bookings.
• At December 31, 2003, total revenue backlog was approximately $496 million and 12-month revenue backlog was approximately $170 million. The timing of contract closings and other factors can cause the company's backlog to vary from one quarter to the next.

Fourth Quarter Highlights

• Total revenues were $66.7 million, down 5% from $70.1 million in the year-ago fourth quarter.
• EBITDA was $1.3 million in the quarter, down 86% from $9.8 million in the fourth quarter of 2002.
• Pro forma net loss for the quarter was ($2.5) million, or ($0.05) per diluted share, compared to pro forma net income of $5.8 million, or $0.12 per share in 2002.
• GAAP net loss for the fourth quarter was ($24.1) million, or ($0.52) per diluted share, compared to a net loss of ($136.6) million or ($3.00) per diluted share a year-ago. GAAP net loss for the fourth quarter includes an $18.7 million, or $0.40 per share, charge for expected losses on certain contracts and the write off of assets.
• New customer contract bookings in the fourth quarter were $48.8 million.
• Days sales outstanding was 57 for the quarter, compared to 51 in the same quarter last year.

Outlook

For the full year 2004, TriZetto expects to generate between $290 and $305 million in revenues, representing growth of 7% to 12% from an adjusted 2003 continuing operations revenue base of $272 million. The company expects to generate between $38 and $41 million in EBITDA, and between $0.12 and $0.17 GAAP EPS, on a fully diluted share count of approximately 50 million. Capital expenditures in 2004 are expected to be between $24 and $26 million.

The continuing operations revenue base was adjusted to take into account the anticipated reduction in revenues of approximately $18 million due to a customer being acquired (Altius Health Plans) and from reductions in certain lines of business. In 2004, the company is winding down its provider business and will also eliminate existing assets and services associated with non-Facets payer software platforms. The company will concentrate on those lines of business that offer the best strategic fit, future growth prospects and profitability.

For the first quarter of 2004, TriZetto expects to report between $65 and $70 million in revenues, between $7 and $8 million in EBITDA, and breakeven EPS on a fully diluted share count of approximately 49 million.

Fourth Quarter Financial Review

Revenue – Fourth quarter revenues totaled $66.7 million, down 5% from $70.1 million in the fourth quarter of 2002, consistent with the company's revised guidance issued on January 14, 2004.

Recurring revenues totaled $40.5 million in the quarter, up 6% over the 2002 quarter, due primarily to increased hosting services revenues year-over-year. Non-recurring revenues were $26.1 million, down 18% from a year ago, primarily from lower consulting revenues due to two large fixed-fee implementations, as well as to lower software sales.

Recurring revenues represented 61% of total revenues compared to 55% in the fourth quarter of 2002 and 53% in the third quarter of 2003.

There were 298 new customer contracts signed in the fourth quarter with a total value of $48.8 million, compared to $60.7 million in the year ago quarter and $37.4 million in the third quarter 2003. Contract bookings comprise a mix of current and future period revenues and represent the total expected minimum revenue to be generated during the initial term of each contract. Of the new fourth quarter contracts, 30 were outsourced services contracts (software hosting, business process outsourcing, and other services) valued at $6.3 million; 54 were software license contracts valued at $25.1 million; and 214 were for consulting, implementation services, software customizations and other services valued at $17.4 million.

EBITDA – Fourth quarter EBITDA was $1.3 million versus $9.8 million in the year-ago quarter. This decline was largely due to lower consulting revenue caused by the two fixed-fee implementation engagements and lower software sales. TriZetto reports earnings (loss) in accordance with Generally Accepted Accounting Principles (GAAP) and, additionally, on a non-GAAP basis referred to as pro forma income (loss) and EBITDA. Definitions of these non-GAAP measures and reconciliation to GAAP are included in the attached financial schedules. In 2003, TriZetto taxed pro forma results at a 40% rate; in 2002, pro forma results were taxed at less than 5%.

Pro forma and GAAP income and loss – Pro forma net loss for the fourth quarter was ($2.5) million, or ($0.05) per diluted share, compared to pro forma net income of $5.8 million, or $0.12 per diluted share in the corresponding 2002 quarter. GAAP net loss for the quarter was ($24.1) million, or ($0.52) per diluted share, compared to a net loss of ($136.6) million or ($3.00) per share a year ago.

Fourth quarter GAAP results include an $18.7 million, or $0.40 per share, charge for expected losses on certain contracts related to the provider business (which run through 2008), a fixed fee implementation contract (expected to be completed by mid 2004) and the write-off of assets related to the provider business and non-Facets payer platforms. The effect on future cash flows as a result of these future losses is anticipated to be about $15 million, of which, approximately $7.5 million is expected in 2004.

Cash resources – Cash, restricted cash and short-term investments totaled $76 million at December 31, 2003. For the fourth quarter, net cash used in operating activities was ($4.0) million. For the year, net cash provided by operating activities was $16.7 million.

SEC (3 Months) - View PDF

EBITDA (3 Months) - View PDF

SEC (12 Months) - View PDF

EBITDA (12 Months) - View PDF

Consolidated Balance Sheet - View PDF

Conference call

TriZetto will host a conference at 5:00 p.m. Eastern Time / 2:00 p.m. Pacific Time today to discuss fourth quarter results. Investors may access the webcast through TriZetto's web site at www.trizetto.com, first by clicking on the Investors button, and then on the Company Information drop-down menu item. The conference call will be archived and available through TriZetto's web site for 30 days following the call.

The webcast will also be distributed over CCBN's Investor Distribution Network to both institutional and individual investors. Individual investors can listen to the call through CCBN's individual investor center at www.fulldisclosure.com or by visiting any of the investor sites in CCBN's Individual Investor Network. Institutional investors can access the call via CCBN's password-protected event management site, StreetEvents (www.streetevents.com).

About TriZetto

The TriZetto Group, Inc. offers a broad portfolio of healthcare information technology (IT) products and services that can be delivered individually or combined to create a comprehensive solution.

The company provides:

• leading proprietary and third-party software, including e-business applications;
• outsourced services, such as software hosting, transaction processing and IT department operations; and
• strategic and implementation consulting.

TriZetto is focused on three healthcare markets: payers, benefits administrators and physician groups. Its more than 400 customers represent approximately 40 percent of the U.S. insured population. Headquartered in Newport Beach, Calif., TriZetto can be reached at (949) 719-2200 or www.trizetto.com.

Important Notice Regarding Forward-Looking Statements

CONTACTS:

TriZetto Media Relations
Audrey Mautner
303-495-7197
audrey.mautner@trizetto.com