AHT Corporation Reports 1998 Financial Results.

TARRYTOWN, N.Y.--(Bw HealthWire)--March 17, 1999--For the year ended December 31, 1998, AHT Corporation (Nasdaq:AHTC) reported today a net loss of approximately ($68.9) million, or approximately ($6.83) per share for basic and diluted earnings per share, the majority of which was attributable to the Company's practice management services unit, Advanced Health Management (AHM).

The Company had previously announced significant losses and the potential for additional charges in connection with its AHM unit. The Company indicated it is currently engaged in discussions to divest this unit and expects such divestiture to be completed before the end of the second quarter of 1999. The potential sale of the AHM unit would enable the Company to devote its full resources to expanding its Internet-based laboratory and prescription transaction management business.

Competitive Positioning

"We believe we are now very well positioned to participate in the rapidly growing clinical e-commerce industry," said Jon Edelson, MD, Chairman and CEO. "We have already established a strong foundation for this business with prominent customers such as Mayo Medical Laboratories and Merck-Medco Managed Care and have key distribution channel agreements in place, including, most recently, an agreement with WebMD, a leading Internet healthcare portal. We continue to build momentum and expect our business development efforts will reflect this in 1999 and 2000. We believe that our middleware connectivity software has been an important factor in securing new customers and distribution channels. We have a library of over 100 system interfaces that connect physician offices to hospital, laboratory and prescription benefit manager information systems. With these interfaces," Dr. Edelson noted, "we believe that integration can be accomplished effectively and efficiently.

"This past year's financial results were disappointing for our Company and our stockholders, and the dramatic and severe downturn in the physician practice management industry, which historically had provided more than 80% of our revenues, contributed to these results," Dr. Edelson said. "However, 1998 was a year when the force of the Internet and increased physician adoption began paving the way for more concrete opportunities in clinical e-commerce. Difficult decisions needed to be made and decisive actions were taken. We focused the Company on clinical e-commerce and significantly restructured and downsized our outsourcing services business. To better position our Company to capture opportunities in clinical e-commerce, we restructured our information technology operations, which included redirecting our sales activities to focus on longer-term recurring revenue opportunities, we reduced our workforce to focus only on our clinical e-commerce business, and we wrote-down software that was no longer core to our business."

Dr. Edelson added, "We believe that the decisive actions we have taken are beginning to produce the results we projected for 1999: reduced expenses, new customers, substantial new distribution channels, new sales and distribution channel opportunities, and an adequate level of remaining capital resources to execute our business plan."

Financial Results

Because of its intention to divest its AHM unit, the Company is reporting 1998 financial results of the AHM unit as discontinued operations. Jeffrey Sauerhoff, CFO, explained that due to the unique aspects of reporting discontinued operations, the Company has chosen to present its complete financial statements for 1998 on a comparative basis in its Form 10-K. Mr. Sauerhoff said that discussions in which the Company is currently engaged with respect to divestiture of its AHM unit and monies owed to it may alter today's reported financial results. He noted the Company has fully reserved for these outstanding matters, which may or may not be resolved in time to be reflected in its Form 10-K filing.

Continuing Operations 

For the year ended December 31, 1998, the Company reported revenues from continuing operations of approximately $3.2 million. Mr. Sauerhoff said that the Company recorded approximately $7.0 million of restructuring charges which are comprised of approximately $6.2 million of a non-cash write-down of the Company's capitalized software development assets related to its Med-E-Practice and other developed software. The write-down of Med-E-Practice-related software assets results from the Company's redirection towards its core laboratory and prescription transaction processing products. Such write-down is consistent with the Company's previous disclosures.

Discontinued Operations

For the year ended December 31, 1998, Mr. Sauerhoff reported the Company's estimated loss from the discontinuation of the AHM unit is approximately $23 million. The estimated loss from the discontinuation of this unit includes approximately $16 million of non-cash charges relating to the write-off of certain intangible assets and reserves for monies owed to it.

Liquidity

Mr. Sauerhoff stated the Company ended 1998 with approximately $18.8 million in cash, cash equivalents and securities available for sale at year-end. He said the Company expects to have approximately $14 to $15 million in cash, cash equivalents and securities available for sale at the end of this year's first quarter, the point at which the run-rate of 1998 expenses is expected to be significantly reduced. At this time, the Company believes that it has adequate capital to effectively operate its clinical e-commerce business through the year 2000.

Outlook

"Our objective is to secure new contracts that provide recurring revenues based on transaction fees and annual software maintenance fees," Dr. Edelson said. "We have been successful in this approach in our recent contracts."

Dr. Edelson said he and his management team have expended substantial effort over the past six months in developing strategic customers and new proprietary distribution channels, such as the alliance with WebMD, which are designed to enable the Company to enter into transaction-based contracts. The Company anticipates that these efforts, coupled with its current contract backlog of approximately $1.2 million from 1998, should generate approximate revenues of between $3 and $5 million in 1999, with the majority of the expected revenue occurring in the second half of the year as new distribution channels are expected to be implemented. The Company believes that revenues in 2000 have the potential to be significantly greater than those in 1999. He said AHT is not expected to be profitable this year or next but is targeting to be cash flow positive by the end of 2000.

AHT Corporation (Nasdaq:AHTC) participates in the growing healthcare e-commerce market. The Company provides information technology enabling the electronic management of laboratory and prescription transactions. AHT's goal is to become a leading provider of Internet-based clinical e-commerce among physicians and healthcare organizations. For more information, please visit AHT's web site at www.ahtech.com. (Effective February 1, 1999, Advanced Health Corporation changed the name under which it is conducting business to AHT Corporation and changed its Nasdaq stock symbol to AHTC from ADVH.)

This press release contains forward-looking information regarding AHT Corporation. The forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements, including statements as to industry trends, future economic performance, anticipated profitability, anticipated revenues and expenses, and products or service line growth may be significantly impacted by certain risks and uncertainties, including, but not limited to, failure of the clinical e-commerce industry to develop at anticipated rates, failure of the Company's clinical information technology products and services to gain significant market acceptance, failure to meet operating objectives or to execute the operating plan, failure to successfully restructure AHT's business units, competition and other economic factors. These forward-looking statements speak only as of the date hereof, and the Company disclaims any intention or obligation to update these forward-looking statements in the future. No assurances can be given as to the outcome of any pending lawsuits against AHT. Additional risks and uncertainties are described in AHT's public filings with the Securities and Exchange Commission.