Netsmart Reports Second Quarter 2006 Results

Quarterly Results Reflect 84 Percent Increase in Revenue and 64 Percent Increase in Net Income

Great River, New York (August 09, 2006) –

Netsmart Technologies, Inc. (NASDAQ SC: NTST), a leading provider of enterprise-wide software for health and human services organizations, today reported record results for the second quarter ended June 30, 2006.

Revenue for the quarter was $14,287,000, an 84 percent increase from $7,759,000 for the quarter ended June 30, 2005. Net income for the second quarter was $735,000, an increase of 64 percent compared with net income of $449,000 for the same quarter in 2005. Net income per diluted share for the quarter was $0.11 compared with $0.08 for the same quarter last year. Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA) for the three months ended June 30, 2006 were $2.4 million, compared to $1.1 million for the same period last year. The second quarter of 2006 represents the Company’s 32nd consecutive quarter of profitability.

Backlog of orders at June 30, 2006 was a record $44.9 million, compared to $27.7 million at June 30, 2005. The June 30, 2006 backlog includes $32.8 million for recurring revenue related to support, ASP and clearinghouse areas, as compared to $14.8 million for those categories at June 30, 2005. Recurring revenue for the quarter ended June 30, 2006 was $7,768,000, compared to $3,336,000 for the same quarter in 2005.

Revenue for the six months ended June 30, 2006 was $28,143,000, an 85 percent increase from $15,188,000 for the six months ended June 30, 2005. Net income for the six months was $1,244,000, an increase of 53 percent compared with net income of $813,000 for the same period in 2005.

Net income per diluted share for the six months ended June 30, 2006 was $0.18 compared with $0.15 for the same period last year. EBITDA for the six months ended June 30, 2006 was $4.4 million, compared to $2 million for the same period last year. Recurring revenue for the six months ended June 30, 2006 was $15,223,000, compared to $6,524,000 for the same period last year.

“We are pleased to report another record quarter, including a $2.4 million increase in EBITDA for the six months ended June 30, 2006,” said James L. Conway, chairman and chief executive officer of Netsmart Technologies. “A key component of our continued success is the investment we have made in sales, marketing, strategic initiatives and other key areas. In addition to our strong organic growth, we are executing on our growth strategy by winning strategic deals, such as the recently announced contract to provide a new statewide public health system for the State of North Carolina, and by acquisitions such as the recent purchase of QS Technologies.”

The Company will host a conference call at 4:30 p.m. ET today to discuss these results. The Company’s prepared remarks will be followed by a question-and-answer period. To listen to the conference call, please dial 1.866.250.3615 or access the live Webcast at http://www.ntst-ir.com/confcall/index.htm.
A written transcript of the prepared remarks and an audio file of the conference call will be made available on the Investor Relations area of the Netsmart Web site www.ntst.com following the call until the next quarter’s conference call.

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

EBITDA is 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.

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, with more than 1,325 clients, including more than 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
website does not constitute a part of this release.

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Anthony Grisanti Executive Vice President and CFO Netsmart Technologies 1-800-451-7503

Source: Netsmart