Netsmart Announces Third Quarter Results

Revenues increase 15 percent from Third Quarter Fiscal 2004

Great River, New York (November 15, 2005) –

Netsmart Technologies, Inc. (Nasdaq: NTST), a leading supplier of enterprise-wide software solutions for health and human services providers, today reported results for the third quarter ended September 30, 2005.

Revenue for the quarter ended September 30, 2005 was a record $8,517,000 as compared to $7,421,000 for the quarter ended September 30, 2004 representing an increase of 15%. Recurring revenue for the quarter was $3,718,000, an increase of 20% from the $3,086,000 for the comparable quarter last year. The firm order backlog at September 30, 2005, was $28.6 million with a recurring revenue component of $16.5 million as compared to a firm order backlog of $26.0 million at September 30, 2004, which included a recurring revenue component of $13.8 million. Net income for the quarter ended September 30, 2005 was $379,000 or $0.07 per share (basic and diluted) as compared to $633,000 or $0.12 per share basic and $.11 per share diluted for the same period last year.

Revenue for the nine months ended September 30, 2005, was $23,705,000 as compared to $21,433,000 for the nine months ended September 30, 2004, representing an increase of 11%. Net income for the nine months ended September 30, 2005, was $1,191,000, or $.22 per share basic and $.21 per share diluted, as compared to $1,451,000, or $.27 per share basic and $.26 per share diluted for the same period last year. Earnings before interest, taxes, depreciation and amortization, or “EBITDA”, were $1,151,000 for the quarter ended September 30, 2005 as compared to $1,237,000 for the comparable quarter in 2004.

James Conway, CEO of Netsmart Technologies, Inc. stated, “We are very pleased to report our 29th consecutive quarter of profitability as well as a record high order backlog. We are particularly pleased to have achieved these results notwithstanding our management team’s focus on our acquisition of CMHC Systems, Inc., which was consummated on September 28, 2005. Since we completed the acquisition at the end of the quarter, there was no financial impact on our results. Our recurring revenue has been running at the rate of approximately $14.8 million annually and, when added to the present annual recurring revenue generated by CMHC, we expect our combined annual recurring revenue to increase to approximately $28 million, nearly equal to our total 2004 annual revenue. Our number one objective for the balance of 2005 is to integrate CMHC’s operations into our Company to ensure that we have the best possible opportunities in 2006. We hope to be able to capitalize on those opportunities and achieve improved financial results.”

Reconciliation of Earnings before Interest, Taxes, Depreciation and Amortization (“EBITDA”) to Net Income.

Calculated for any period as the sum of net income, plus net interest expense, income tax expense, and depreciation and amortization expense. We consider EBITDA to be a widely accepted financial indicator of a company’s ability to service debt, fund capital expenditures and expand its business. EBITDA is not calculated in the same way by all companies and therefore may not be comparable to similarly titled measures reported by other companies. EBITDA is not a measure in accordance with accounting principles generally accepted in the United States.

EBITDA should not be considered as an alternative to net income, as an indicator of operating performance or as an alternative to cash flow as a measure of liquidity. The funds depicted by this measure may not be available for management’s discretionary use due to legal or functional requirements, debt service, or other commitments and uncertainties.

Three Months Ended September, 30

Nine Months Ended September, 30
2005 2004 2005 2004
EBITDA $1,151,000 $1,237,000 $ 3,138,000 $ 3,219,000
Less: Depreciation and Amortization (566,000) (412,000) (1,419,000) (1,194,000)
Interest income (expense) ,net 86,000 2,000 194,000 (11,000)
Net Income $ 379,000 $ 633,000 $ 1,191,000 $ 1,451,000
About Netsmart Technologies, Inc.

Netsmart Technologies, Inc., based in Great River, N.Y., is an established, leading supplier of enterprise-wide software solutions for health and human services providers, now with over 1250 clients, including 30 systems with state agencies. Netsmart’s clients include health and human services organizations, public health agencies, mental health and substance abuse clinics, psychiatric hospitals, and managed care organizations. Netsmart’s products are full-featured information systems that operate on a variety of operating systems, hardware platforms, and mobile devices, and offer unlimited scalability.

Statement on Behalf of Netsmart Technologies, Inc.

Statements in this press release may be “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “anticipate”, “believe”, “estimate”, “expect”, “intend” and similar expressions, as they relate to the company or its management, identify forward-looking statements. These statements are based on current expectations, estimates and projections about the company’s business based, in part, on assumptions made by management. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may, and probably will, differ materially from what is expressed or forecasted in such forward-looking statements due to numerous factors, including those described above and those risks discussed from time to time in Netsmart’s filings with the Securities and Exchange Commission. In addition, such statements could be affected by risks and uncertainties related to product demand, market and customer acceptance, competition, pricing and development difficulties, as well as general industry and market conditions and growth rates, and general economic conditions. Any forward-looking statements speak only as of the date on which they are made, and the company does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this release. Information on Netsmart’s or Creative’s website does not constitute a part of this release.

NETSMART TECHNOLOGIES, INC.

Comparative Operating Results for the Three and Nine Months Ended September 30,

Three Months EndedSeptember, 30

Nine Months Ended September, 30
2005 2004 2005 2004
Revenue $8,517,000 $7,421,000 $23,705,000 $21,433,000
Net Income $ 379,000 $ 633,000 $ 1,191,000 $ 1,451,000
Net Income Per
Share Basic $ .07 $ .12 $ .22 $ .27
Weighted Average
Shares of Common Stock
Outstanding Basic 5,538,000 5,339,000 5,410,000 5,330,000
Net Income Per
Share Diluted $ .07 $ .11 $ .21 $ .26
Weighted Average
Shares of Common
Stock and Common
Stock Equivalents
Outstanding Diluted 5,798,000 5,548,000 5,656,000 5,545,000

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Netsmart Technologies, Inc. Anthony F. Grisanti, CFO 800.451.7503 tgrisanti@ntst.com Stu Fine Carpe DM, Inc. 908.490.0075| stuart@carpedminc.com

Source: Netsmart