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Spheris Reports Third Quarter 2007 Results

Tuesday, November 13, 2007 General News J E 4
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FRANKLIN, Tenn., Nov. 12 Spheris, a leadingglobal outsource provider of clinical documentation technology and services,today announced results for the three and nine months ended September 30,2007.

Financial Highlights--Third Quarter of 2007

Net revenues for the third quarter of 2007 were $48.9 million comparedwith $51.5 million in the third quarter of 2006. The decrease in net revenuesduring the third quarter of 2007 was primarily due to delayed implementationsof signed new business during the first half of the year, as well as theimpact of net lost business. Operating income was $1.5 million during thethird quarter of 2007 compared with $0.6 million during the prior-year period.The $0.9 million increase was primarily due to operational cost savings fromthe increased utilization of the Company's global production capabilities,lower medical language specialist, or MLS, direct costs and other operatingexpense reductions, as well as decreased depreciation expense. These savingswere partially offset by the impact of unfavorable currency exchange rates onproduction costs of the Company's Indian operations.

Earnings before interest, taxes, depreciation and amortization, or EBITDA,were $7.7 million in the third quarter of 2007 compared with $7.4 million inthe prior-year period. The increase in EBITDA was primarily due to theoperational cost savings noted above. The Company's net loss was $3.5 millionduring the third quarter of 2007 compared with a net loss of $3.1 millionduring the same period in 2006. The increased net loss versus the prior yearcomparable period was primarily driven by a non-cash charge of $1.8 millionassociated with the July 2007 refinancing of the Company's senior creditfacility, as off-set by the operational cost savings noted above.

EBITDA is a non-GAAP financial measure. Please refer to the "SupplementalFinancial Information" and related note contained in this press release forfurther discussion and reconciliation of GAAP financial measures to EBITDA.

Financial Highlights--First Nine Months of 2007

Net revenues for the first nine months of 2007 were $151.8 millioncompared with $155.8 million in the first nine months of 2006. The decline innet revenues during the first nine months of 2007 was primarily due to delayedimplementations of signed new business during the first half of 2007, as wellas net lost business. Operating income was $6.1 million during the first ninemonths of 2007 compared with $2.8 million during the prior-year period. The$3.3 million increase was primarily due to operational cost savings from theincreased utilization of the Company's global production capabilities, lowerMLS direct costs and other operating expense reductions, as well as decreaseddepreciation expense. These savings were partially offset by the impact ofunfavorable currency exchange rates on production costs of the Company'sIndian operations.

EBITDA was $24.0 million in the first nine months of 2007 compared with$22.7 million in the prior-year period. The increase in EBITDA was primarilydue to the operational cost savings noted above. The Company's net lossduring the first nine months of 2007 was $7.5 million compared with $8.8million in the prior-year period. The improved period-over-period net losswas primarily due to the operational cost savings noted above, as offset by anon-cash charge of $1.8 million associated with the July 2007 refinancing ofthe Company's senior credit facility.

Commenting on the third quarter results, Steven E. Simpson, president andchief executive officer of Spheris, stated, "We are pleased to report period-over-period EBITDA growth for the fourth consecutive quarter. These positivefinancial results are largely due to the hard work of Spheris' dedicatedworkforce to improve operational efficiencies through leveraging our globalresources and technology advances.
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