QMed, Inc. Reports Third Quarter Results

Tuesday, October 9, 2007 General News
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EATONTOWN, N.J., Oct. 8 QMed, Inc.(Nasdaq: QMED) today announced financial results for the third quarter endingAugust 31, 2007. Revenue for the three-month period increased to $10,781,247compared to $2,202,270 in the prior year's quarter. This revenue includesamounts for the disease management segment of $846,860 and $1,763,429 for thethree months ended August 31, 2007 and 2006, respectively. On a sequentialbasis revenue increased 14.1% from 2007's second quarter. Net loss for thequarter increased to $(9,201,399) or $(0.54) per share on a diluted basis,compared to net loss of $(3,317,401) or $(0.20) per share on a diluted basis,for the same period a year ago. The Company's cash position as of August 31,2007 was approximately $6.4 million, net of statutory reserves.

Revenue for the nine-month period ended August 31, 2007 increased to$26,574,368 from $7,306,588 in the same period a year ago. Net loss for thenine months was $(13,068,372) or $(0.77) per share on a diluted basis,compared to net loss of $(8,924,946) or $(0.53) per share on a diluted basis,for the same period a year ago.

South Dakota SNPs member months totaled 18,450 producing $20.5 million inrevenue or $1,113 Per Member Per Month (PMPM). Member months in the NewJersey SNP totaled 1,269 producing $2.2 million in revenue or $1,758 PMPM. Asreported in our September 27, 2007 press release, the medical expense ratio(MER) results from a spike in the payment of medical claims related toservices from prior months paid in July and August, so that we have reportedan increase in our incurred but not reported or paid (IBNP) claims liability.This IBNP estimate will represent approximately 30% of total medical expensesfor the nine months ended August 31, 2007 resulting in a MER of approximately114%. Given our limited claims history, the implications of these payments onour MER cannot be determined with certainty until we achieve a higher claimscompletion rate.

Jane Murray, QMed president and CEO said, "We believe that medicalexpenses will moderate over time as:

"We have seen both phenomena. We received an increase in 2007 for memberswho joined in 2006. In addition, we have observed in both Medicaredemonstrations and in managing Medicare members for other health plancustomers, that length of time in the program (LOTIP) correlates withincreasingly positive health and financial outcomes."

"We continue to experience strong sequential quarterly growth andobviously expect it to continue. The third quarter's revenue increase is theresult of continued strong enrollment in our Medicare Advantage Special NeedsPlans in South Dakota coupled with more modest growth in New Jersey. InSeptember we experienced similar trends, as we added another 149 in ourchronic SNP in South Dakota, 33 members in New Jersey and 46 in the SouthDakota SNP for Duals."

"We enter the 2008 marketing season with strong momentum. As of the end ofthe third quarter, our revenue run rate was $44,000,000. In addition, we willoffer five SNPs in 2008. These include an SNP for those dually eligible forMedicare and Medicaid in South Dakota, as well as a SNP for diabetes and a SNPfor cardiovascular disease and stroke in both New Jersey and South Dakota. Aswe have stated previously, these offerings have the effect of increasing thenumber of those eligible for our chronic SNPs by nearly 80% in both New Jerseyand South Dakota. These two facts, run rate and major expansion of our pool ofpotential enrollees, combined with increasing confidence among selling agents,providers and our own members, provide a basis for our guidance of $88-$95million," she concluded.

The Company will hold its quarterly conference call on Monday October 8,at 5:00 pm Eastern time. Investors will have the opportunity to listen to theconference call by dialing 877-356-9649, conference ID: 18623908 at least 5minutes prior. A replay wil

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