##### Table of Contents



UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
    Form 10-Q
  (Mark One)þ

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended
    June 30, 2006ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          
    to   Commission file number:
    000-19480
  Per-Se Technologies,
    Inc.
 (Exact name of Registrant as
    specified in its charter)
  Delaware

58-1651222(State or other jurisdiction
    of
    incorporation or organization)

(I.R.S. Employer
    Identification No.)1145 Sanctuary Parkway,
    Suite 200
    Alpharetta, Georgia

3004(Zip code)(Address of principal executive
    offices)    (770) 237-4300 (Registrants
    telephone number, including area code)
   Not
    Applicable (Former
    name, former address and former fiscal year, if changed since
    last report)
  þ o
  Rule 12b-2
  o þ o
  Rule 12b-2 o þ
    Title of Class

Shares Outstanding at July 28, 2006Common Stock $0.01 Par Value

39,100,025 sharesNon-voting Common Stock
    $0.01 Par Value

0 shares




---



##### 



PER-SE
    TECHNOLOGIES, INC.
  FORM 10-Q
 For the
    Fiscal Quarter Ended June 30, 2006
  
  PagePART I:
    FINANCIAL INFORMATIONItem 1.

Financial
    Statements


2Consolidated
    Balance Sheets as of June 30, 2006 and December 31,
    2005 (Unaudited)


2Consolidated
    Statements of Operations for the three and six months ended
    June 30, 2006 and 2005 (Unaudited)


3Consolidated
    Statements of Cash Flows for the six months ended June 30,
    2006 and 2005 (Unaudited)


4Notes to
    Consolidated Financial Statements (Unaudited)


5Item 2.

Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations


24Item 3.

Quantitative and
    Qualitative Disclosures About Market Risk


34Item 4.

Controls and
    Procedures


35PART II:
    OTHER INFORMATIONItem 1.

Legal
    Proceedings


38Item 1A.

Risk
    Factors


38Item 4.

Submission of
    Matters to a Vote of Security Holders


44Item 6.

Exhibits


45EX-10.5 FORM OF PERFORMANCE-BASED RESTRICTED STOCKEX-10.6 FORM OF SERVICE-BASED RESTRICTED STOCKEX-31.1 SECTION 302 CERTIFICATION OF THE CEOEX-31.2 SECTION 302 CERTIFICATION OF THE CFOEX-32.1 SECTION 906 CERTIFICATION OF THE CEOEX-32.2 SECTION 906 CERTIFICATION OF THE CFO   1




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##### Table of Contents



PART I:
    FINANCIAL INFORMATION  Item 1.
    Financial
    Statements  PER-SE
    TECHNOLOGIES, INC. AND SUBSIDIARIES
  CONSOLIDATED
    BALANCE SHEETS (UNAUDITED)
  June 30,


December 31,2006


2005(In thousands, exceptpar value data)Current Assets:Cash and cash equivalents

$
26,867


$
61,161Accounts receivable (less
    allowances of $5,131 and $3,348 as of June 30, 2006, and
    December 31, 2005, respectively)


96,158



54,397Deferred income taxes 
    current, net


4,507



4,056Prepaid expenses


11,662



3,004Other


5,227



3,555Total current assets


144,421



126,173Property and equipment, net of
    accumulated depreciation


41,669



16,843Goodwill


382,952



38,199Other intangible assets, net of
    accumulated amortization


303,030



21,946Deferred income taxes, net


29,151



26,238Other


20,330



10,124Total assets

$
921,553


$
239,523Current Liabilities:Accounts payable

$
8,732


$
5,982Accrued compensation


17,978



15,265Accrued expenses


55,379



17,002Current portion of long-term debt
    and capital lease obligations


240



135Deferred revenue 
    current


37,984



25,821Total current liabilities


120,313



64,205Long-term debt and capital lease
    obligations


510,448



125,490Deferred revenue


10,096



Other obligations


22,122



5,312Total liabilities


662,979



195,007Stockholders
    Equity:Preferred stock, no par value,
    20,000 shares authorized; none issued






Common stock, voting,
    $0.01 par value, 200,000 shares authorized, 42,068 and
    33,511 issued and 39,080 and 30,523 outstanding as of
    June 30, 2006, and December 31, 2005, respectively


421



335Common stock, non-voting,
    $0.01 par value, 600 shares authorized; none issued






Paid-in capital


1,017,052



804,875Accumulated deficit


(720,542
)


(719,759
)Treasury stock at cost, 2,988 as
    of June 30, 2006, and December 31, 2005


(41,899
)


(41,817
)Deferred stock unit plan obligation


1,507



1,429Accumulated other comprehensive
    income (loss)


2,035



(547
)Total stockholders equity


258,574



44,516Total liabilities and
    stockholders equity

$
921,553


$
239,523    2




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##### Table of Contents



PER-SE
    TECHNOLOGIES, INC. AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF OPERATIONS (UNAUDITED)
  Three Months Ended


Six Months EndedJune 30,


June 30,2006


2005


2006


2005(In thousands, except per share data)Revenue

$
152,673


$
93,300


$
298,914


$
185,330Operating expenses:Cost of services


86,746



62,470



188,351



122,507Selling, general and administrative


44,530



21,974



88,990



43,114Operating income


21,397



8,856



21,573



19,709Interest expense


8,562



1,448



17,075



2,929Interest income


(482
)


(336
)


(1,114
)


(648
)Income before income taxes


13,317



7,744



5,612



17,428Income tax expense


5,460



198



6,321



451Income (loss) from continuing
    operations


7,857



7,546



(709
)


16,977Loss from discontinued operations,
    net of tax


(49
)






(74
)


Net income (loss)

$
7,808


$
7,546


$
(783
)

$
16,977Net income (loss) per common
    share  basic:Income (loss) from continuing
    operations

$
0.20


$
0.25


$
(0.02
)

$
0.57Loss from discontinued operations,
    net of tax














Net income (loss) per common
    share  basic

$
0.20


$
0.25


$
(0.02
)

$
0.57Weighted average shares used in
    computing basic earnings per share


39,025



29,773



38,721



30,032Net income (loss) per common
    share  diluted:Income (loss) from continuing
    operations

$
0.18


$
0.23


$
(0.02
)

$
0.52Loss from discontinued operations,
    net of tax














Net income (loss) per common
    share  diluted

$
0.18


$
0.23


$
(0.02
)

$
0.52Weighted average shares used in
    computing diluted earnings per share


44,078



32,410



38,721



32,480    3




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##### Table of Contents



PER-SE
    TECHNOLOGIES, INC. AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS (UNAUDITED)
  Six Months EndedJune 30,2006


2005(In thousands)Cash Flows from Operating
    Activities:Net (loss) income

$
(783
)

$
16,977Adjustments to reconcile net
    (loss) income to net cash provided by operating activities:Depreciation and amortization


37,396



7,539Stock-based compensation expense


2,703



Amortization of deferred financing
    costs


1,108



683Deferred income taxes


5,385



Changes in assets and liabilities,
    excluding effects of acquisitions and divestitures:Accounts receivable


(5,894
)


(5,551
)Accounts payable


(4,810
)


156Accrued compensation


(3,714
)


6,603Accrued expenses


(26,062
)


(2,082
)Deferred revenue


18,233



1,639Other, net


6,313



(3,352
)Net cash provided by operating
    activities


29,875



22,612Cash Flows from Investing
    Activities:Acquisitions, net of cash acquired


(429,835
)


Purchases of property and equipment


(6,312
)


(4,529
)Software development costs


(8,595
)


(3,373
)Other






(163
)Net cash used for investing
    activities


(444,742
)


(8,065
)Cash Flows from Financing
    Activities:Treasury stock purchases






(15,404
)Proceeds from the exercise of
    stock options


2,897



4,600Proceeds from borrowings


435,000



Payments of debt


(50,134
)


(9
)Deferred financing costs


(7,662
)


Other


472



10Net cash provided by (used for)
    financing activities


380,573



(10,803
)Cash and Cash
    Equivalents:Net change


(34,294
)


3,744Balance at beginning of period


61,161



42,422Balance at end of period

$
26,867


$
46,166Supplemental
    Disclosures:Cash paid for:Interest

$
16,074


$
2,291Income taxes


10,278



413Non-cash investing activity:Common Stock issued in connection
    with the acquisition of NDCHealth

$
197,915


$
    4




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##### Table of Contents



PER-SE
    TECHNOLOGIES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
  Note 1 
    Basis of
    Presentation    Form 10-K Form 10-K). Form 10-K.
    Note 2 
    Stock-Based
    Compensation Plans  Share-Based Payment Accounting for Stock-Based
    Compensation Accounting for Stock
    Issued to Employees Statement of Cash Flows.
      
    A modified prospective method in which compensation
    cost is recognized beginning with the effective date
    (a) based on the requirements of SFAS No. 123(R)
    for all share-based payments granted after the effective date,
    and (b) based on the requirements of SFAS No. 123
    for all awards granted to employees prior to the effective date
    of SFAS No. 123(R) that remain unvested on the
    effective date.
    A modified retrospective method which includes the
    requirements of the modified prospective method described above,
    but also permits entities to restate based on the amounts
    previously recognized under SFAS No. 123 for purposes
    of pro forma disclosures either (a) all periods presented
    or (b) prior interim periods of the year of adoption.     5




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##### Table of Contents



PER-SE
    TECHNOLOGIES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (UNAUDITED)  (Continued)
        Three Months


Six MonthsEnded June 30, 2006Income before income taxes

$
(1,481
)

$
(2,413
)Income (loss) from continuing
    operations

$
(921
)

$
(1,480
)Net income (loss)

$
(921
)

$
(1,480
)Net income (loss) per common share:Basic

$
(0.02
)

$
(0.04
)Diluted

$
(0.02
)

$
(0.04
)     Three Months


Six MonthsEnded June 30, 2005Net income as reported

$
7,546


$
16,977Deduct: total stock-based employee
    compensation expense determined under fair value based method
    for all awards, net of related tax effects


(1,453
)


(2,598
)Pro forma net income

$
6,093


$
14,379Net income per common share:Basic  as reported

$
0.25


$
0.57Basic  pro forma

$
0.20


$
0.48Diluted  as reported

$
0.23


$
0.52Diluted  pro forma

$
0.19


$
0.44  6




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##### Table of Contents



PER-SE
    TECHNOLOGIES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (UNAUDITED)  (Continued)
   Stock
    Option Plans
  three-to-five
      Weighted-AverageWeighted-Average


Remaining


Aggregate IntrinsicShares


Exercise Price


Contractual Term


ValueOptions outstanding as of
    January 1


5,386


$
10.86Granted


655


$
26.59Exercised


(292
)

$
9.91Canceled


(64
)

$
15.84Options outstanding as of
    June 30


5,685


$
12.67



6.90 years


$
71,128Options exercisable as of
    June 30


4,114


$
10.19



5.89 years


$
61,650Options vested and expected to
    vest as of June 30


5,371


$
12.30



6.75 years


$
69,184      7




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##### Table of Contents



PER-SE
    TECHNOLOGIES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (UNAUDITED)  (Continued)
     2006


2005Expected life (years)


4.63



4.58Risk-free interest rate


4.9
%


3.7
%Dividend rate


0
%


0
%Expected volatility


45.1
%


49.3
%       Long
    Term Incentive Plan
    one-for-one one-for-one
 8




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##### Table of Contents



PER-SE
    TECHNOLOGIES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (UNAUDITED)  (Continued)
   Performance-based restricted stock units.
  Weighted-Average


Weighted-AverageGrant-Date


RemainingUnits


Fair Value


Contractual TermNonvested units as of Plan
    inception





$
Granted


256


$
31.57Canceled





$
Nonvested units as of June 30


256


$
31.57



2.5 years     2006Market value of the Companys
    Common Stock on the grant date

$
25.53Risk-free interest rate


5.0
%Dividend rate


0
%Expected volatility


40.0
%     31-month
    Service-based restricted stock units.
  Weighted-Average


Weighted-AverageGrant-Date


RemainingUnits


Fair Value


Contractual TermNonvested units as of Plan
    inception





$
Granted


145


$
25.53Canceled





$
Nonvested units as of June 30


145


$
25.53



2.9 years      9




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##### Table of Contents



PER-SE
    TECHNOLOGIES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (UNAUDITED)  (Continued)
     Note 3 
    Acquisitions          (In thousands)Cash paid to NDCHealth Stockholders

$
515,996Fair value of Per-Se Common Stock
    issued


197,915Transaction costs


13,891$
727,802       Preliminary
    Purchase Price Allocation
     10




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##### Table of Contents



PER-SE
    TECHNOLOGIES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (UNAUDITED)  (Continued)
     (In thousands)Cash

$
100,017Accounts receivable


37,165Deferred income tax asset


96,793Other current assets


9,946Property and equipment


25,102Identifiable intangible assets


289,400Goodwill  Physician
    Solutions


81,747Goodwill  Hospital
    Solutions


175,295Goodwill  Pharmacy
    Solutions


87,687Other long-term assets


8,229In-process research and development


13,300Accounts payable


(7,686
)Accrued expenses


(54,282
)Accrued compensation


(6,269
)Deferred revenue


(3,650
)Accrued restructuring and merger
    costs


(11,047
)Deferred income taxes


(96,793
)Other long-term obligations


(17,152
)Total purchase price

$
727,802   Accounting for
    Business Combinations
     11




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##### Table of Contents



PER-SE
    TECHNOLOGIES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (UNAUDITED)  (Continued)
   Identifiable
    Intangible Assets
    Accumulated


Net BookIntangible Asset

Fair Value


Amortization


Value


Useful LifeCustomer lists and agreements

$
180,900


$
5,765


$
175,135



11 - 22 yearsDeveloped technology


105,900



7,882



98,018



5 - 8 yearsTrademarks


1,500



38



1,462



20 yearsNoncompete agreements


1,100



275



825



2 years$
289,400


$
13,960


$
275,440     In-Process
    Research and Development
  .
  Deferred
    Revenue
  build-up build-up
 12




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##### Table of Contents



PER-SE
    TECHNOLOGIES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (UNAUDITED)  (Continued)
    Accrued
    Restructuring and Merger Costs
        TotalReserve balance, January 6,
    2006

$
11,047Cost applied against the reserve


(8,960
)Reserve balance, June 30, 2006

$
2,087   Pre-Acquisition
    Contingencies
    Pro
    Forma Financial Information
   13




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##### Table of Contents



PER-SE
    TECHNOLOGIES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (UNAUDITED)  (Continued)
      Three Months Ended


Six Months EndedJune 30, 2005


June 30, 2005(1)(In thousands, except per share data)Revenue

$
146,472


$
295,314Net loss

$
(2,798
)

$
(7,028
)Net loss per common
    share  basic

$
(0.07
)

$
(0.18
)Net loss per common
    share  diluted

$
(0.07
)

$
(0.18
)     (1)
    
    Includes approximately $13.3 million of in-process research
    and development expense  Note 4
    
    Earnings (Loss) Per Share    Three Months


Six MonthsEnded June 30,


Ended June 30,2006


2005


2006


2005(In thousands, except per share data)Net income (loss)

$
7,808


$
7,546


$
(783
)

$
16,977Common shares outstanding:Shares used in computing net
    income (loss) per common share  basic


39,025



29,773



38,721



30,032Effect of potentially dilutive
    stock options and other equity-based awards


5,053



2,637







2,448Shares used in computing net
    income (loss) per common share  diluted


44,078



32,410



38,721



32,480Net income (loss) per common share:Basic

$
0.20


$
0.25


$
(0.02
)

$
0.57Diluted

$
0.18


$
0.23


$
(0.02
)

$
0.52    14




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##### Table of Contents



PER-SE
    TECHNOLOGIES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (UNAUDITED)  (Continued)
     Note 5 
    Comprehensive
    Income (Loss)      Three Months Ended


Six Months EndedJune 30,


June 30,2006


2005


2006


2005Net income (loss)

$
7,808


$
7,546


$
(783
)

$
16,977Change in cumulative foreign
    currency translation adjustment


(106
)


21



67



15Change in cash flow hedging
    activities


1,024







2,515



Comprehensive income

$
8,726


$
7,567


$
1,799


$
16,992     June 30,


December 31,2006


2005Cumulative foreign currency
    translation adjustment

$
(480
)

$
(547
)Cumulative cash flow hedging
    activities


2,515



Accumulated other comprehensive
    income (loss)

$
2,035


$
(547
)     Note 6 
    Legal
    Matters  class-action,
 15




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##### Table of Contents



PER-SE
    TECHNOLOGIES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (UNAUDITED)  (Continued)
  Rule 10b-5
  Rule 10b-5 and/or
      Note 7 
    Long-Term
    Debt   16




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##### Table of Contents



PER-SE
    TECHNOLOGIES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (UNAUDITED)  (Continued)
           Accounting for Derivative Instruments
    and Hedging Activities
 17




---



##### Table of Contents



PER-SE
    TECHNOLOGIES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (UNAUDITED)  (Continued)
   year-to-date
  Note 8 
    Income
    Taxes        paid-in-capital
  No. FAS 123R-3, Transition Election Related to Accounting for Tax
    Effects of Share-Based Payment Awards.
  with-and-without with-and-without
 18




---



##### Table of Contents



PER-SE
    TECHNOLOGIES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (UNAUDITED)  (Continued)
  paid-in-capital
  Note 9 
    Restructuring
    Expenses    Reserve Balance

Costs Applied

Reserve BalanceDecember 31, 2005

Against Reserve

June 30, 2006(In thousands)Lease termination costs

$
807


$
(115
)

$
692   Note 10 
    Segment
    Reporting      business-to-business
 19




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##### Table of Contents



PER-SE
    TECHNOLOGIES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (UNAUDITED)  (Continued)
  percentage-of-completion
  point-of-service point-of-service
     20




---



##### Table of Contents



PER-SE
    TECHNOLOGIES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (UNAUDITED)  (Continued)
     Three Months Ended


Six Months EndedJune 30,


June 30,2006


2005


2006


2005(In thousands)Revenue:Physician Solutions

$
80,183


$
69,068


$
157,509


$
136,258Hospital Solutions


44,563



27,808



88,090



56,172Pharmacy Solutions


32,066







61,467



Eliminations


(4,139
)


(3,576
)


(8,152
)


(7,100
)$
152,673


$
93,300


$
298,914


$
185,330Segment operating expenses:Physician Solutions

$
67,986


$
61,581


$
137,165


$
120,203Hospital Solutions


32,403



22,547



68,399



44,482Pharmacy Solutions


25,372







59,278



Corporate


9,654



3,892



20,651



8,036Eliminations


(4,139
)


(3,576
)


(8,152
)


(7,100
)$
131,276


$
84,444


$
277,341


$
165,621Segment operating income:Physician Solutions

$
12,197


$
7,487


$
20,344


$
16,055Hospital Solutions


12,160



5,261



19,691



11,690Pharmacy Solutions


6,694







2,189



Corporate


(9,654
)


(3,892
)


(20,651
)


(8,036
)$
21,397


$
8,856


$
21,573


$
19,709Interest expense

$
8,562


$
1,448


$
17,075


$
2,929Interest income

$
(482
)

$
(336
)

$
(1,114
)

$
(648
)Income before income taxes

$
13,317


$
7,744


$
5,612


$
17,428Depreciation and amortization(1):Physician Solutions

$
2,326


$
2,097


$
6,636


$
4,157Hospital Solutions


3,838



1,615



10,649



3,211Pharmacy Solutions


5,291







19,149



Corporate


495



75



962



171$
11,950


$
3,787


$
37,396


$
7,539Capital expenditures and
    capitalized software development costs:Physician Solutions

$
2,227


$
1,511


$
3,646


$
3,489Hospital Solutions


3,139



1,457



7,063



4,050Pharmacy Solutions


1,590







3,054



Corporate


628



309



1,144



363$
7,584


$
3,277


$
14,907


$
7,902  21




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##### Table of Contents



PER-SE
    TECHNOLOGIES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (UNAUDITED)  (Continued)
   As ofJune 30,


December 31,2006


2005(In thousands)Identifiable assets:Physician Solutions

$
193,740


$
66,380Hospital Solutions


346,753



71,482Pharmacy Solutions


281,974



Corporate


99,086



101,661$
921,553


$
239,523     (1)
    
    For the six months ended June 30, 2006, depreciation and
    amortization expense includes $13.3 million of in-process
    research and development that was purchased as part of the
    NDCHealth acquisition and expensed during the first three months
    of 2006. By segment, Physician Solutions includes approximately
    $1.9 million, Hospital Solutions includes approximately
    $2.8 million and Pharmacy Solutions includes approximately
    $8.6 million of in-process research and development expense.  Note 11 
    Retirement
    Benefits      Three Months Ended


January 6, 2006June 30, 2006


Through June 30, 2006(In thousands)Interest cost on projected benefit
    obligation

$
536


$
1,072Expected return on plan assets


(500
)


(1,000
)Net periodic pension cost

$
36


$
72     Note 12 
    Physician
    Solutions Agreement   22




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##### Table of Contents



PER-SE
    TECHNOLOGIES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (UNAUDITED)  (Continued)
      Note 13 
    Recent
    Accounting Pronouncements  Accounting for Uncertainty in Income Taxes
   23




---



##### Table of Contents



Item 2.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  Description
    of Business
        business-to-business percentage-of-completion
 24




---



##### Table of Contents



point-of-service point-of-service
  General
    Overview
  Key Performance Indicators.
  NDCHealth Acquisition.
  Overview of Operating Results.
  Atypical Items.
  Adoption of
    SFAS No. 123(R).
 25




---



##### Table of Contents



Long Term Incentive Plan.
  one-for-one one-for-one
    Cash Flow from Operations.
  Capitalization.
  year-to-date
 26




---



##### Table of Contents



Results
    of Operations
  Three
    months ended June 30, 2006, as compared to three months
    ended June 30, 2005
  Revenue.
  Three Months EndedJune 30,2006


2005(In thousands)Physician Solutions

$
80,183


$
69,068Hospital Solutions


44,563



27,808Pharmacy Solutions


32,066



Eliminations


(4,139
)


(3,576
)$
152,673


$
93,300   year-over-year
           27




---



##### Table of Contents



Segment Operating Income.
  Three Months EndedJune 30,2006


2005(In thousands)Physician Solutions

$
12,197


$
7,487Hospital Solutions


12,160



5,261Pharmacy Solutions


6,694



Corporate


(9,654
)


(3,892
)$
21,397


$
8,856           Interest.
  Income Taxes.
 28




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##### Table of Contents



Accounting for
    Income Taxes.
  paid-in-capital
  No. FAS 123R-3, Transition Election Related to Accounting for Tax
    Effects of Share-Based Payment Awards.
  with-and-without with-and-without paid-in-capital
   29




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##### Table of Contents



Six
    months ended June 30, 2006, as compared to six months ended
    June 30, 2005
  Revenue.
  Six Months EndedJune 30,2006


2005(In thousands)Physician Solutions

$
157,509


$
136,258Hospital Solutions


88,090



56,172Pharmacy Solutions


61,467



Eliminations


(8,152
)


(7,100
)$
298,914


$
185,330   year-over-year
         30




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##### Table of Contents



Segment Operating Income.
  Six Months EndedJune 30,2006


2005(In thousands)Physician Solutions

$
20,344


$
16,055Hospital Solutions


19,691



11,690Pharmacy Solutions


2,189



Corporate


(20,651
)


(8,036
)$
21,573


$
19,709           Interest.
 31




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##### Table of Contents



Income Taxes.
      paid-in-capital
  No. FAS 123R-3, Transition Election Related to Accounting for Tax
    Effects of Share-Based Payment Awards.
  with-and-without with-and-without
 32




---



##### Table of Contents



paid-in-capital
    Liquidity
    and Capital Resources
    June 30,


December 31,2006


2005Unrestricted cash and cash
    equivalents

$
26,867


$
61,161   Six Months EndedJune 30,2006


2005Cash provided by continuing
    operations

$
29,875


$
22,612Cash used for investing activities
    from continuing operations

$
(444,742
)

$
(8,065
)Cash provided by (used for)
    financing activities from continuing operations

$
380,573


$
(10,803
)                33




---



##### Table of Contents



Item 3.
    Quantitative
    and Qualitative Disclosures about Market Risk  Interest
    Rate Sensitivity
       34




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##### Table of Contents



Exchange
    Rate Sensitivity
    Item 4.
    Controls
    and Procedures  Conclusions
    Regarding Disclosure Controls and Procedures
  Rule 13a-15(b)
  Control
    System Limitations; NDCHealth Material Weaknesses
     35




---



##### Table of Contents



Revenue
    Recognition and Billing Processes
      
    The lack of policy, procedures and personnel with the skills and
    experience to properly evaluate and record revenue for
    multi-element arrangements, specifically relating to the
    contract review process, evidence of delivery, and establishing
    fair value where applicable;
    Lack of controls over recording of certain credit card
    transactions relating to credit card chargebacks and rejects;
    Lack of controls over the authorization of credit memos and
    their classification between sales allowance and bad debt;
    Inconsistent management review and approval of journal entries
    and account reconciliations relating to recording of unbilled
    accounts receivable; and
    Lack of documented controls and review procedures over timely
    and accurate billing of customers.  Financial
    Statement Close Process
      
    Lack of adequate policies and procedures with respect to journal
    entries and account reconciliations, including insufficient
    supporting detail and inconsistent evidence of management review;
    Lack of sufficient personnel with appropriate skills and
    experience to properly prepare journal entries and account
    reconciliations and to do so in a timely manner;
    Lack of documented controls over the preparation of financial
    statement footnotes and the calculation of earnings per share,
    including consistent first level management review for accuracy,
    completeness, and compliance with generally accepted accounting
    principles; and
    Lack of policy, procedures, and controls including review and
    approval procedures to ensure that financial statements for
    external purposes were prepared in accordance with generally
    accepted accounting principles including periodic in-depth
    review of the proper application of generally accepted
    accounting principles to the specific facts and circumstances of
    each of NDCHealths businesses.  Income
    Taxes
     36




---



##### Table of Contents



Remediation
    Measures for Identified NDCHealth Material
    Weaknesses
    
    The NDCHealth account reconciliation process was redesigned to
    provide better support for account balances and to ensure all
    significant accounts were reconciled as a part of the quarter
    end close process;
    Addition of accounting staff with the technical accounting skill
    and experience to review and properly record revenue for
    complex, multi-element agreements in accordance with generally
    accepted accounting principles;
    Performing daily reconciliations of credit card transactions;
    Enforcing company policy on authorization of credit memos and
    the completeness of information needed for proper classification;
    Expanding analytic and review procedures at each quarter end in
    support of footnote disclosures;
    Providing more focus on income taxes; and
    Implementing a
    cash-on-delivery
    recognition process with regard to revenue recognition in the
    physician practice management services and the pharmaceutical
    information businesses.      Changes
    in Internal Control Over Financial Reporting
  Rule 13a-15(d)
   37




---



##### Table of Contents



PART II:
    OTHER INFORMATION  Item 1.
    Legal
    Proceedings    Item 1A.
    Risk
    Factors  Cautionary
    Statement Regarding Forward-Looking Statements
    
    demand for and market acceptance of new and existing products
    and services;
    successful development of new products and services;
    the timing of new product and service introductions;
    pricing pressures and other competitive factors;
    product and service obsolescence;
    the ability to develop and implement new technologies and to
    obtain protection for the related intellectual property;
    the prospect of changes in laws and regulations governing the
    Companys business;
    the uncertainties of litigation; and
    costs related to integrating NDCHealths business practices
    and operations with those of the Company.    Factors
    That May Affect Future Results of Operations, Financial
    Condition or Business
   38




---



##### Table of Contents



The
    Companys businesses are highly competitive, and an
    inability to successfully compete for business could adversely
    affect the Company.
        The
    markets for the Companys services and solutions are
    characterized by rapidly changing technology, evolving industry
    standards and frequent new product introductions and an
    inability to keep pace could adversely affect the
    Company.
    
    enhance existing products and services;
    introduce new products and services quickly and cost effectively;
    achieve market acceptance for new products and services; and
    respond to emerging industry standards and other technological
    changes.    The
    healthcare marketplace is characterized by consolidation, which
    may result in fewer potential customers for the Companys
    services.
   39




---



##### Table of Contents



The
    healthcare industry is highly regulated, which may increase the
    Companys costs of operation or have a material adverse
    effect on the Companys businesses.
           40




---



##### Table of Contents



The
    trading price of the Companys common stock may be volatile
    and may negatively affect your investment.
    Per-Se
    has significantly increased its long-term debt as a result of
    the NDCHealth acquisition, which could limit funds available to
    Per-Se to finance other activities.
    The
    agreements governing Per-Ses debt limit the Companys
    financial and operating flexibility.
    
    incurring additional indebtedness or guarantee obligations;
    declaring or paying dividends and other distributions;
    prepaying or modifying the terms of indebtedness;
    creating liens; 41




---



##### Table of Contents




    making capital expenditures;
    making investments or acquisitions;
    entering into acquisitions or consolidations;
    making sales of assets; and
    engaging in transactions with affiliates.      Loss
    of key management could adversely affect the Companys
    business.
    Per-Se
    may be unable to successfully integrate the businesses of Per-Se
    and NDCHealth and may be unable to realize the anticipated
    benefits of the acquisition.
    
    the inability to achieve the cost savings and operating
    synergies anticipated in the acquisition, including a reduction
    in costs associated with the acquisition;
    complexities associated with managing the geographic scope of
    the combined businesses, coupled with those of consolidating
    multiple physical locations where management may determine
    consolidation is desirable;
    integrating personnel from diverse corporate cultures while
    maintaining focus on providing consistent, high quality customer
    service; and
    potential unknown liabilities and increased costs associated
    with the acquisition.  and/or
    If
    Per-Se is unable to manage its growth profitably, its business
    and financial results could suffer.
   42




---



##### Table of Contents



As
    part of the acquisition, Per-Se and NDCHealth entered into, and
    are bound by the terms of, long-term data sharing agreements
    with Wolters Kluwer that place certain restrictions on the
    Companys ability to sell certain products to third parties
    and compete in certain markets.
    20-year
  The
    Company is regularly involved in litigation, which may expose it
    to significant liabilities.
    class-action Rule 10b-5
  class-action
   43




---



##### Table of Contents



Per-Se
    and NDCHealth are each the subject of separate SEC
    investigations, the resolution of which could have a material
    adverse effect on the combined companies.
        Prior
    to its acquisition by Per-Se, NDCHealth identified material
    weaknesses in its internal control over financial reporting. If
    such deficiencies persist or if additional weaknesses are
    discovered, the combined company may not be able to accurately
    report its financial results and management may not be able to
    conclude that the Companys internal control over financial
    reporting is effective.
        Item 4.
    Submission
    of Matters to a Vote of Security Holders   44




---



##### Table of Contents



Nominee

Votes For


Votes WithheldJohn W. Clay, Jr.


36,886,770



273,639John W. Danaher, M.D


36,887,207



273,202Craig Macnab


36,817,688



342,721David E. McDowell


36,934,293



226,116Philip M. Pead


36,699,911



460,498C. Christopher Trower


36,886,959



273,450Jeffrey W. Ubben


36,770,642



389,767     
    A proposal to ratify the appointment of the firm of
    Ernst & Young LLP as independent auditors of the
    Company for 2006. Votes cast were 37,142,390 for and 9,896
    against. There were 8,124 abstentions and no broker non-votes as
    to this proposal.
    A proposal to approve the Companys 2006 Long-Term
    Incentive Plan. Votes cast were 26,541,556 for and 7,057,271
    against. There were 28,162 abstentions and 3,533,421 broker
    non-votes as to this proposal.  Item 6.
    Exhibits    ExhibitNumber

Document2
.1



Agreement and Plan of Merger,
    dated as of August 26, 2005, among Registrant, Royal Merger
    Co. and NDCHealth Corporation (incorporated by reference to
    Exhibit 2.1 to Current Report on
    Form 8-K
    filed on August 30, 2005). (schedules and similar
    attachments to this exhibit have not been filed; Registrant
    agrees to furnish supplementally a copy of any of these
    materials to the Securities and Exchange Commission upon
    request).2
.2



Stock Purchase Agreement, dated as
    of August 26, 2005, among Wolters Kluwer Health, Inc., NDC
    Health Information Services (Arizona). Inc., and NDCHealth
    Corporation (incorporated herein by reference to
    Exhibit 2.1 to NDCHealth Corporations Current Report
    on
    Form 8-K
    filed on August 29, 2005). (schedules and similar
    attachments to this exhibit have not been filed; Registrant
    agrees to furnish supplementally a copy of any of these
    materials to the Securities and Exchange Commission upon
    request).3
.1



Restated Certificate of
    Incorporation of Registrant (incorporated by reference to
    Exhibit 3.1 to Annual Report on
    Form 10-K
    for the year ended December 31, 1999).3
.2



Restated By-laws of Registrant, as
    amended (incorporated by reference to Exhibit 3.2 to
    Current Report on
    Form 8-K
    filed on July 29, 2005).4
.1



Rights Agreement dated as of
    February 11, 1999, between Registrant and American Stock
    Transfer & Trust Company (including form of rights
    certificates). (incorporated by reference to Exhibit 4 to
    Current Report on
    Form 8-K
    filed on February 12, 1999).4
.2



First Amendment to Rights
    Agreement dated as of February 11, 1999, between Registrant
    and American Stock Transfer & Trust Company, entered
    into as of May 4, 2000 (incorporated by reference to
    Exhibit 4.4 to Quarterly Report of
    Form 10-Q
    for the quarter ended June 30, 2000).4
.3



Second Amendment to Rights
    Agreement dated as of February 11, 1999, between Registrant
    and American Stock Transfer & Trust Company, entered
    into as of December 6, 2001, to be effective as of
    March 6, 2002 (incorporated by reference to
    Exhibit 4.12 to Annual Report on
    Form 10-K
    for the year ended December 31, 2001). 45




---



##### Table of Contents



ExhibitNumber

Document4
.4



Third Amendment to Rights
    Agreement dated as of February 11, 1999, between Registrant
    and American Stock Transfer & Trust Company, entered
    into as of March 10, 2003 (incorporated by reference to
    Exhibit 4.13 to Annual Report on
    Form 10-K
    for the year ended December 31, 2002).4
.5



Fourth Amendment to Rights
    Agreement dated as of February 11, 1999, between Registrant
    and American Stock Transfer & Trust Company, entered
    into as of February 18, 2005 (incorporated by reference to
    Exhibit 4.1 to Current Report on
    Form 8-K
    filed on February 22, 2005).4
.6



Fifth Amendment to Rights
    Agreement dated as of February 11, 1999, between Registrant
    and American Stock Transfer & Trust Company, entered
    into as of August 26, 2005 (incorporated by reference to
    Exhibit 4.1 to Current Report on
    Form 8-K
    filed on August 26, 2005).4
.7



Indenture dated as of
    June 30, 2004, between Registrant and U.S. Bank
    National Association, as Trustee, relating to Registrants
    3.25% Convertible Subordinated Debentures Due 2024
    (incorporated by reference to Exhibit 4.5 to Quarterly
    Report on
    Form 10-Q
    for the quarter ended June 30, 2004).10
.1



Employment Agreement dated as of
    April 18, 2006, between Registrant and Patrick J. Leonard
    (incorporated by reference to Exhibit 10.1 to Current
    Report on
    Form 8-K
    filed on April 20, 2006).10
.2



Employment Agreement dated as of
    April 18, 2006, between Registrant and David F. Mason
    (incorporated by reference to Exhibit 10.2 to Current
    Report on
    Form 8-K
    filed on April 20, 2006).10
.3



Employment Agreement dated as of
    May 1, 2006, between Registrant and Stephen M. Scheppmann
    (incorporated by reference to Exhibit 10.1 to Current
    Report on
    Form 8-K
    filed on May 1, 2006).10
.4



Per-Se Technologies, Inc. 2006
    Long-Term Incentive Plan (incorporated by reference to
    Exhibit 99.1 to Current Report on
    Form 8-K
    filed on June 1, 2006).10
.5



Form of Performance-Based
    Restricted Stock Unit Agreement under the Per-Se Technologies,
    Inc. 2006 Long-Term Incentive Plan.10
.6



Form of Service-Based Restricted
    Stock Unit Agreement under the Per-Se Technologies, Inc. 2006
    Long-Term Incentive Plan.10
.7



Per-Se Technologies, Inc.
    Non-Employee Director Compensation Plan (incorporated by
    reference to Exhibit 99.4 to Current Report on
    Form 8-K
    filed on June 1, 2006).31
.1



Certification of Chief Executive
    Officer pursuant to Exchange Act
    Rules 13a-14(a).
    and
    15d-14(a).,
    as adopted pursuant to Section 302 of the Sarbanes-Oxley
    Act of 2002.31
.2



Certification of Chief Financial
    Officer pursuant to Exchange Act
    Rules 13a-14(a).
    and
    15d-14(a).,
    as adopted pursuant to Section 302 of the Sarbanes-Oxley
    Act of 2002.32
.1



Certification of Chief Executive
    Officer pursuant to 18 U.S.C. Section 1350, as adopted
    pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32
.2



Certification of Chief Financial
    Officer pursuant to 18 U.S.C. Section 1350, as adopted
    pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.  46




---



##### Table of Contents



SIGNATURES
    Per-Se Technologies, Inc.
   By:
    /s/  Stephen
    M. Scheppmann   Executive Vice President and
 Chief Financial Officer
  By:
    /s/  Richard
    A. Flynt   Senior Vice President and Corporate Controller
 (Principal Accounting Officer)
   47




---



##### Table of Contents



INDEX TO
    EXHIBITS
  ExhibitNumber

Document2
.1



Agreement and Plan of Merger,
    dated as of August 26, 2005, among Registrant, Royal Merger
    Co. and NDCHealth Corporation (incorporated by reference to
    Exhibit 2.1 to Current Report on
    Form 8-K
    filed on August 30, 2005) (schedules and similar
    attachments to this exhibit have not been filed; Registrant
    agrees to furnish supplementally a copy of any of these
    materials to the Securities and Exchange Commission upon
    request).2
.2



Stock Purchase Agreement, dated as
    of August 26, 2005, among Wolters Kluwer Health, Inc., NDC
    Health Information Services (Arizona) Inc., and NDCHealth
    Corporation (incorporated herein by reference to
    Exhibit 2.1 to NDCHealth Corporations Current Report
    on
    Form 8-K
    filed on August 29, 2005) (schedules and similar
    attachments to this exhibit have not been filed; Registrant
    agrees to furnish supplementally a copy of any of these
    materials to the Securities and Exchange Commission upon
    request).3
.1



Restated Certificate of
    Incorporation of Registrant (incorporated by reference to
    Exhibit 3.1 to Annual Report on
    Form 10-K
    for the year ended December 31, 1999).3
.2



Restated By-laws of Registrant, as
    amended (incorporated by reference to Exhibit 3.2 to
    Current Report on
    Form 8-K
    filed on July 29, 2005).4
.1



Rights Agreement dated as of
    February 11, 1999, between Registrant and American Stock
    Transfer & Trust Company (including form of rights
    certificates) (incorporated by reference to Exhibit 4 to
    Current Report on
    Form 8-K
    filed on February 12, 1999).4
.2



First Amendment to Rights
    Agreement dated as of February 11, 1999, between Registrant
    and American Stock Transfer & Trust Company, entered
    into as of May 4, 2000 (incorporated by reference to
    Exhibit 4.4 to Quarterly Report of
    Form 10-Q
    for the quarter ended June 30, 2000).4
.3



Second Amendment to Rights
    Agreement dated as of February 11, 1999, between Registrant
    and American Stock Transfer & Trust Company, entered
    into as of December 6, 2001, to be effective as of
    March 6, 2002 (incorporated by reference to
    Exhibit 4.12 to Annual Report on
    Form 10-K
    for the year ended December 31, 2001).4
.4



Third Amendment to Rights
    Agreement dated as of February 11, 1999, between Registrant
    and American Stock Transfer & Trust Company, entered
    into as of March 10, 2003 (incorporated by reference to
    Exhibit 4.13 to Annual Report on
    Form 10-K
    for the year ended December 31, 2002).4
.5



Fourth Amendment to Rights
    Agreement dated as of February 11, 1999, between Registrant
    and American Stock Transfer & Trust Company, entered
    into as of February 18, 2005 (incorporated by reference to
    Exhibit 4.1 to Current Report on
    Form 8-K
    filed on February 22, 2005).4
.6



Fifth Amendment to Rights
    Agreement dated as of February 11, 1999, between Registrant
    and American Stock Transfer & Trust Company, entered
    into as of August 26, 2005 (incorporated by reference to
    Exhibit 4.1 to Current Report on
    Form 8-K
    filed on August 26, 2005).4
.7



Indenture dated as of
    June 30, 2004, between Registrant and U.S. Bank
    National Association, as Trustee, relating to Registrants
    3.25% Convertible Subordinated Debentures Due 2024
    (incorporated by reference to Exhibit 4.5 to Quarterly
    Report on
    Form 10-Q
    for the quarter ended June 30, 2004).10
.1



Employment Agreement dated as of
    April 18, 2006, between Registrant and Patrick J. Leonard
    (incorporated by reference to Exhibit 10.1 to Current
    Report on
    Form 8-K
    filed on April 20, 2006).10
.2



Employment Agreement dated as of
    April 18, 2006, between Registrant and David F. Mason
    (incorporated by reference to Exhibit 10.2 to Current
    Report on
    Form 8-K
    filed on April 20, 2006).10
.3



Employment Agreement dated as of
    May 1, 2006, between Registrant and Stephen M. Scheppmann
    (incorporated by reference to Exhibit 10.1 to Current
    Report on
    Form 8-K
    filed on May 1, 2006).10
.4



Per-Se Technologies, Inc. 2006
    Long-Term Incentive Plan (incorporated by reference to
    Exhibit 99.1 to Current Report on
    Form 8-K
    filed on June 1, 2006).10
.5



Form of Performance-Based
    Restricted Stock Unit Agreement under the Per-Se Technologies,
    Inc. 2006 Long-Term Incentive Plan.10
.6



Form of Service-Based Restricted
    Stock Unit Agreement under the Per-Se Technologies, Inc. 2006
    Long-Term Incentive Plan.10
.7



Per-Se Technologies, Inc.
    Non-Employee Director Compensation Plan (incorporated by
    reference to Exhibit 99.4 to Current Report on
    Form 8-K
    filed on June 1, 2006).




---



##### Table of Contents



ExhibitNumber

Document31
.1



Certification of Chief Executive
    Officer pursuant to Exchange Act
    Rules 13a-14(a)
    and
    15d-14(a),
    as adopted pursuant to Section 302 of the Sarbanes-Oxley
    Act of 2002.31
.2



Certification of Chief Financial
    Officer pursuant to Exchange Act
    Rules 13a-14(a)
    and
    15d-14(a),
    as adopted pursuant to Section 302 of the Sarbanes-Oxley
    Act of 2002.32
.1



Certification of Chief Executive
    Officer pursuant to 18 U.S.C. Section 1350, as adopted
    pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32
.2



Certification of Chief Financial
    Officer pursuant to 18 U.S.C. Section 1350, as adopted
    pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.