Netsmart Technologies Announces Record Revenue for 2005 and 30th Consecutive Quarter of Profitability

Earnings Conference Call Scheduled for April 13, 2006, 8:30 a.m. ET

Great River, New York (April 03, 2006) –

Netsmart Technologies, Inc. (NASDAQ SC: NTST), a leading provider of enterprise-wide software for health and human services organizations, today reported results for the year ended December 31, 2005.

Revenue for the year ended December 31, 2005 was a record $37,978,000, a 31 percent increase from the prior fiscal year. Net income for the year ended December 31, 2005 was $1,590,000, or $.28 per share (basic) and $.27 per share (diluted), as compared to $2,753,000 or $.52 per share (basic) and $.50 per share (diluted) for 2004. Backlog of orders, including ongoing maintenance and data center contracts for behavioral health information systems, was $44,100,000 at December 31, 2005 compared to $25,800,000 at December 31, 2004.

Revenue for the fourth quarter ended December 31, 2005 was $14,273,000, an 88 percent increase from $7,572,000 for the same period last year. Net income for the fourth quarter ended December 31, 2005 was $399,000 compared to $1,302,000 for the same period in 2004.

The decrease in net income for 2005 as well as the quarter ended December 31, 2005 was substantially the result of the 2004 tax provision being reduced by $952,000 as a result of the reversal of the deferred tax valuation allowance with respect to the utilization of a net operating loss carry forward. Earnings before interest, taxes, depreciation and amortization (EBITDA), were $1,870,000 for the quarter ended December 31, 2005 as compared to $1,470,000 for the comparable quarter in 2004.

“We are pleased to report our continued strong growth as evidenced by record revenues for 2005 and 30 consecutive quarters of profitability,” said James L. Conway, chairman and CEO of Netsmart Technologies. “Of particular note in 2005 was our acquisition of CMHC Systems, which expanded our client base by more than one-third and strengthened our ability to be an enterprise solutions provider for inpatient, outpatient, institutional and community-based behavioral healthcare systems. The acquisition also significantly impacted our recurring revenue. If you annualize our fourth quarter recurring revenue, our annual recurring revenue is estimated to be at a run rate of approximately $29,000,000, which is approximately equal to our total revenue for 2004.”

Mr. Conway continued, “In 2005 we also acquired Addiction Management Systems (AMS) and ContinuedLearning. AMS solidified Netsmart’s position as the nation’s largest supplier of automated computerized methadone dispensing systems, enabling Netsmart to serve more than 400 of the estimated 1,100 methadone clinics in the U.S. by providing a range of offerings for small “storefront” clinics and large clinics managed by institutional health providers. ContinuedLearning, a Florida-based provider of online training services, has been integrated into Netsmart’s existing customer training programs, with the combined offerings branded as Netsmart University, providing a wide range of Web-based, classroom and onsite training, as well as a learning management system.”

The Company combined all of its existing and acquired companies under the single Netsmart brand as part of the integration of the three acquisitions made in 2005. It also created a new stand-alone marketing department, and expanded and re-aligned its sales organization on a vertical market basis, each of which is designed to result in increased revenue in future periods.

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.

Conference Call/Webcast Information
Netsmart will host a conference call to discuss its fourth quarter 2005 and year-end 2005 financial results on Thursday, April 13, 2006 at 8:30 a.m. ET. The Company’s prepared remarks will be followed by a question-and-answer period.

To listen to the conference call, please dial 800-240-5318 or access the live Webcast at

A written transcript of the prepared remarks and an audio file of the conference call will be made available on the Netsmart Web site The material will be archived on that site under the Investors Relations section for a one-year period.

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 1,250 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 website does not constitute a part of this release.


CONTACT: Anthony F. Grisanti Executive Vice President and CFO Netsmart Technologies, Inc. 800.451.7503

Source: Netsmart