HealthGate Announces First Quarter Results; Continued Execution On Strategies and Objectives Defines First Quarter.

Business Editors

BURLINGTON, Mass.--(BUSINESS WIRE)--April 16, 2002

HealthGate Data Corp. (NASDAQ: HGAT), a market-leading provider and electronic publisher of healthcare information for health-related organizations, today reported financial results for the first quarter ended March 31, 2002.

Total revenue for the first quarter of 2002 was $1.6 million compared with $2.8 million for the comparable period of 2001. HealthGate's revenues for the quarter ending March 31, 2001 declined from the prior year primarily as a result of previously disclosed customer contract modifications and the termination of a contract with Blackwell Science.

HealthGate reclassified its amortization of marketing and distribution rights from an operating expense to a reduction in revenue for the three months ended March 31, 2001 and 2002. This reclassification was in accordance with the provisions of the Emerging Issues Task Force's Issue No. 01-09, "Accounting for Consideration Given by a Vendor to a Customer".

HealthGate reported a net loss of $1.1 million or a loss per share of $0.19 for the first quarter of 2002 compared to a net loss of $2.2 million or a per share loss of $0.37 in the first quarter of 2001. All per share amounts for the current and prior year periods are reported on a split-adjusted basis reflecting the company's 3-for-1 reverse split effective July 1, 2001. The improvement in loss per share over the prior year underscores the company's change in strategic direction and the related restructuring of its operations and lowering of its cost profile.

"We continued to focus during the first quarter on the strategies and objectives that are key milestones for HealthGate in our drive to build a long term profitable business," said Bill Reece, HealthGate's CEO. "During the quarter we introduced a new proprietary content offering, expanded our strategic alliances, entered the Canadian pharmaceutical market, appointed a highly respected physician as medical director and achieved a milestone with our publishing initiatives. Importantly, we maintained the commitment to invest for future growth and demonstrated our capability to acquire and integrate additional content properties with the acquisition of The Natural Pharmacist from Random House."

HealthGate reported $6.7 million in cash and marketable securities at March 31, 2002 compared to $8.6 million at December 31, 2001. During the quarter HealthGate had cash disbursements of $3.6 million. Included in these cash expenditures were $1.2 million related to annual payments for items such as insurance and content, and one-time payments for sub-lease expenses and for the acquisition of The Natural Pharmacist. The net cash burn for the quarter was $1.9 million. Cash burn excluding the aforementioned items was $725,000 underscoring the company's continuing focus on financial control of its operations.

First Quarter 2002 Highlights and Achievements

-- Acquired The Natural Pharmacist from Random House, one of the most highly respected and comprehensive evidence-based alternative and natural health content resources for consumers and healthcare professionals.

-- Appointed Richard Glickman-Simon, MD, a respected medical expert in complementary and alternative medicine, as medical director.

-- Signed HealthGate's first publishing agreement with Mosby, Inc., a division of Elsevier Science, to provide content for Mosby's Drug Consult. HealthGate's publishing strategy further leverages its healthcare content assets by creating additional revenue streams.

-- Entered the Canadian pharmaceutical market through a publishing and licensing agreement with Wampole Brands, Inc. This agreement expands HealthGate's channel distribution to include retail pharmacy chains, grocery-pharmacy chains and independent pharmacies throughout Canada.

-- Maintained HealthGate's lead in the hospital market with a signed deal from Adventist Health System to provide private-labeled content services to 40 percent of this national hospital network.

-- Expanded HealthGate's strategic alliances through an agreement with Intellicare, Inc. to provide health content for Intellicare's contact center network.

"The milestone accomplishments achieved during the first quarter are important because they underscore our capability to build the elements that should lead to revenue growth in the near term," commented Reece. "Our achievements in electronic publishing are noteworthy and we expect this strategy to position us to further leverage HealthGate's content repository and drive new revenue streams in expanding market segments."

"A key component of this strategy is our innovative early adoption of Microsoft's .NET XML services platform. This architecture enables applications to communicate and share data regardless of operating system, device, or programming language. This has cut development time significantly and it is helping to optimize our technology platform with the flexibility to create new products to meet any customer content need," noted Reece.

"HealthGate's technology platform and application tools are enabling us to replace the traditional two-dimensional view of a content repository with a new multi-dimensional perspective, one that is even more responsive to the healthcare industry's demand for customized content. Importantly, over time we expect this multidimensional approach to customized content to lead to new revenue streams and the potential for enhanced margins," concluded Reece.

About HealthGate

HealthGate Data Corp. (NASDAQ:HGAT) is a market-leading provider and electronic publisher of healthcare information. HealthGate offers customers the most comprehensive content repository of healthcare information, unrivaled in its breadth and depth of content. HealthGate's authoritative content is used by more than 600 hospitals in the U.S. to provide the capability to drive down costs through more effective research and treatment, regulatory compliance, and clinician and patient education. The company's XML-based content can be delivered electronically across virtually any technology used by its customers.

Since 1999, HealthGate has become an integral part of operations in approximately 12 percent of all hospitals in the United States. Some of the most respected healthcare institutions in the world, including Brigham and Women's Hospital, Swedish Medical Center, and HCA now utilize the data provided by HealthGate. The company's content repository is supported by a technology infrastructure designed to enable HealthGate to rapidly develop products and services for additional markets such as pharmaceutical companies and payors (insurance companies, governments, and self-insured organizations).

Forward Looking Statements

This press release contains certain statements that are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. HealthGate's actual results may differ materially from those contemplated by the forward-looking statements. These forward-looking statements reflect management's current expectations, are based on many assumptions and are subject to certain risks and uncertainties, including among other things, HealthGate's ability to generate sufficient revenues; HealthGate's ability to sell its products and services; HealthGate's ability to maintain a listing on Nasdaq; HealthGate's ability to develop and implement its Project Intellect strategic initiative; reliance on significant customers; unpredictability of quarter-to-quarter results; competition; reliance on content providers, computer systems and software; HealthGate's ability to retain and attract key personnel; and other risk factors that are described in the periodic reports and other documents HealthGate files from time to time with the Securities and Exchange Commission. HealthGate does not intend to update or publicly release any revisions to the forward-looking statements.

                         HealthGate Data Corp.
                   Condensed Statement of Operations
                 (in thousands, except per share data)

                                        Three months    Three months
                                            ended         ended
                                       March 31, 2002  March 31, 2001


Revenue                                    $ 1,642       $ 2,769

Costs and expenses:
     Cost of revenue                           473           788
     Research and development                  700           916
     Sales and marketing                       510         1,822
     General and administrative              1,116         1,642

           Total costs and expenses          2,799         5,168

     Loss from operations                   (1,157)       (2,399)

Interest and other income (expense), net        41           169

           Net loss                        $(1,116)      $(2,230)

 Basic and diluted net loss per share      $ (0.19)      $ (0.37)

 Shares used in computing basic and
      diluted net loss per share             6,015         5,995



                         HealthGate Data Corp.
                        Condensed Balance Sheet
                            (in thousands)

                                          March 31,   December 31,
                                            2002          2001

Assets
Current assets:
    Cash, cash equivalents and marketable
     securities                            $ 6,651       $ 8,589
    Accounts receivable, net of allowance
     for doubtful accounts                     654           444
    Prepaid expenses and other current
     assets                                    569           325

       Total current assets                  7,874         9,358

Fixed assets, net                            3,140         3,492
Marketing and distribution rights, net         418           598
Other assets                                   882           322

       Total assets                        $12,314       $13,770

Liabilities and Stockholders' Equity
Current liabilities:
    Current portion of capital lease
     obligation                            $   153       $   214
    Accounts payable                         1,199         1,001
    Accrued expenses                         1,724         1,927
    Deferred revenue                         3,461         3,555

       Total current liabilities             6,537         6,697

Long-term portion of capital lease
 obligation                                      -             6
Other long-term liabilities                  1,242         1,425

       Total liabilities                     7,779         8,128

Stockholders' equity:
    Common stock                               180           180
    Additional paid-in capital              99,202        99,202
    Accumulated deficit                    (94,847)      (93,731)
    Deferred compensation                        -            (9)

       Total common stock and other
        stockholders' equity                 4,535         5,642

       Total liabilities and stockholders'
        equity                             $12,314       $13,770