##### Table of Contents



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

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 31, 2005oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission File Number
    000-22052
      PROXYMED, INC.
 (Exact name of registrant as
    specified in its charter)
  Florida

65-0202059(State or other jurisdiction
    of
    incorporation or organization)

(I.R.S. Employer
    Identification No.)1854 Shackleford Court,
    Suite 200,
    Norcross, Georgia(Address of principal
    executive offices)

30093(Zip Code)   Registrants telephone number, including area code:
 (770)-806-9918
  Securities registered pursuant to Section 12(b) of the
    Act:
 None
  Securities registered pursuant to Section 12(g) of the
    Act:
  Common Stock, $.001 Par Value
 (Title of class)
  o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K.  Yes o o
  Rule 12b-2
  o þ o
  Rule 12b-2 o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE
  Form 10-K.




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##### Table of Contents



PART I
  ITEM 1.  BUSINESS
    sm
  Phoenix sm Pilot tm .
      Phoenix
     1




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##### Table of Contents



Our
    Changing Market
  non-par tm .
    Phoenix sm
  Phoenix Phoenix Phoenix
  Industry
    Growth
    
    Per capita, health spending increased in 2004 by $610 to $6,280.
    Health spending accounted for 16% of GDP in 2004
    Health expenditures are projected to grow at an average annual
    rate of 7.1 percent through the year 2014.  Modern Healthcares
   2




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##### Table of Contents



Key
    Competitive Strengths
    Our solutions allow us to reach out to providers AND
    payers with combined solutions that reduce their
    costs.
  Our technology is
    superior. sm
  sm
  Our connectivity is extensive.
  Our PPO network is national in scope but also has a
    strong rural presence.
  Barriers
    to Entry
    Current
    Products and Services
   3




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##### Table of Contents



1
  medavanthealth.com.
  Transaction
    Services
  Payer Services
  ClaimPassXL ®
  National Preferred Provider
    Network tm tm
      1
 4




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##### Table of Contents



Electronic Claims Repricing
  Network and Data Management
  Bill Review and Negotiation out-of-network non-NPPN
  Business Process Outsourcing
  Desktop 
  Online  www.medavanthealth.com,
  
    claims submission and reporting;
    eligibility verification;
    claims status inquiries;
    ERA; 5




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##### Table of Contents




    referral management; and
    pre-certifications.  Real-Time 
  
    eligibility verification and benefits inquiry;
    referral authorization and pre-certifications;
    claim status inquiry.  B2B  business-to-business
  Prescription
    Services
  PreScribe® PreScribe. PreScribe Phoenix sm
  Laboratory
    Communication Solutions
    Product
    and Services Development
    Pilot sm Navigator tm Pilot dial-up. Pilot Navigator Navigator
    Marketing
   6




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##### Table of Contents



Channel FocusDirect

We have a direct sales force of
    account executives, inside telemarketers, account managers and
    customer care representatives who serve our providers, payers,
    laboratories and pharmacies. We license access to our
    proprietary network,
    Phoenixsmand provide intelligent laboratory results reporting devices for
    communications between providers and clinical
    laboratories.Partners

We work with the vendors of POMIS
    and pharmacy office management systems to enable their existing
    applications to process transactions through us between
    providers and payers, laboratories and pharmacies. We also
    license these customers to offer our products and services under
    their own private label. In addition, we connect with other
    electronic transaction processing networks so that the
    participants on both networks can communicate with each other in
    National Council of Pharmacy Drug Program standard, HIPAA
    approved formats, and the HL-7 standard format for laboratories.Internet

We provide comprehensive suites of
    products for financial, clinical, and administrative transaction
    processing services through our portal, www.medavanthealth.com
    which may be easily accessed by any payer, provider or business
    partner with an Internet connection. We are currently in
    development to customize those products by customer, so that
    every solution a payer will want to use will be available on one
    easy-to-use
    site. There will also be a customized portal for providers and
    partners.   Competition
  Transaction Services
  Preferred Provider Network
 7




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Electronic Claims Repricing
  
    large managed care organizations and third party administrators
    with in-house claims processing and repricing systems, such as
    Blue Cross and Blue Shield plans, UnitedHealth Group, and
    Wellpoint Health Networks; and
    healthcare information technology companies providing
    enterprise-wide systems to the payer market, such as MultiPlan,
    McKesson Corporation and Perot Systems Corporation.      Healthcare
    and Privacy Related Legislation and Regulation
    
    mandated basic healthcare benefits;
    controls on healthcare spending through limitations on the
    growth of private health insurance premiums and Medicare and
    Medicaid reimbursement;
    the creation of large insurance purchasing groups;
    fundamental changes to the healthcare delivery system;
    enforcement actions of Federal and State privacy laws;
    Medicare or Medicaid prescription benefit plans;
    State licensing requirements; or
    patient protection initiatives.  HIPAA
   8




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Transaction
    and Code Sets Compliance
    Security
    Compliance
    Identifiers
    Gramm-Leach-Bliley
    Internet
    Privacy and Regulation
    Patient/Consumer
    Protection Initiatives
   9




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Provider
    Contracting and Claims Regulation
  and/or
    Licensing
    Regulation
  state-by-state
  Summary
        Intellectual
    Property and Technology
   10




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Employees
    Available
    Information
  Form 10-K, Form 10-Q, Form 8-K,
  ITEM
    1A.  RISK FACTORS
  FACTORS
    THAT MAY AFFECT FUTURE RESULTS OF OPERATIONS
    FINANCIAL CONDITION OR BUSINESS
    Risks
    Related to Acquisitions
  Our
    business will suffer if we fail to successfully integrate into
    our business the customers, products, and technology of the
    companies we acquire.
   11




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
    conflicts or potential conflicts with customers, suppliers, and
    strategic partners;
    integration of platforms, product lines, networks, and other
    technology;
    migration of new customers and products to our existing network;
    ability to cross-sell products and services to our new and
    existing customer base;
    retention of key personnel;
    consolidation of accounting and administrative systems and
    functions;
    coordinating new product and process development;
    increasing the scope, geographic diversity and complexity of
    operations;
    difficulties in consolidating facilities and transferring
    processes and know-how; and
    other difficulties in the assimilation of acquired operations,
    technologies or products.  Businesses
    we acquire may have undisclosed liabilities or contingent
    liabilities that are indeterminable and which may have a
    negative impact on our results of operations and require
    unanticipated expense.
    We may
    lose customers as a result of acquisitions which may have an
    adverse impact on our business or operations.
      Risks
    Related to Our Industry
  Government
    regulation and new legislation may have a negative impact on our
    business and results of operations.
   12




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There
    are a significant number of state initiatives regarding
    healthcare services. If we are unable to comply with the
    standards set by the states in which we operate, we or our
    operations could be harmed.
    We are
    dependent on the growth of the Internet and electronic
    healthcare information markets.
  e-commerce
  Risks
    Related to Our Business
  General:
  Recent
    management changes may disrupt our operations, and we may not be
    able to retain key personnel or replace them when they
    leave.
   13




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We may
    not prevail in ongoing litigation and may be required to pay
    substantial damages.
    We have
    senior and subordinated debt that matures in December 2008 and
    2010.
    Transaction
    Services Segment:
  Changes
    that reduce payer compensation for electronic claims may reduce
    our revenue and margins.
    As
    electronic transaction processing penetrates the healthcare
    industry more extensively, we will face increasing pressure to
    reduce our prices which may cause us to no longer be
    competitive.
    Consolidation
    in the healthcare industry may give our customers greater
    bargaining power and lead us to reduce our prices.
   14




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Our
    business will suffer if we are unable to successfully integrate
    acquired IT platforms or if our existing
    Phoenix sm platform is unstable or unable to accommodate our
    clients needs.
  Phoenix sm
  Our
    business and future success may depend on our ability to
    cross-sell our products and services.
    We depend
    on connections to insurance companies and other payers, and if
    we lose these connections, our service offerings would be
    limited and less desirable to healthcare providers.
    We have
    important business relationships with other companies to market
    and sell some of our clinical and financial products and
    services. If these companies terminate their relationships with
    us, or are less successful in the future, we will need to add
    this emphasis internally, which may divert our efforts and
    resources from other projects.
   15




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A
    significant amount of our revenues in our Transaction Services
    segment is from one party. Loss of this relationship may
    adversely affect our profitability.
    The
    adoption of electronic processing of clinical transactions in
    the healthcare industry is proceeding slowly; thus, the future
    of our business is uncertain which may have an adverse impact on
    our business or operations.
    An error
    by us in the process of providing clinical connectivity or
    transmitting prescription and laboratory data could result in
    substantial injury to a patient, and our liability insurance may
    not be adequate in a catastrophic situation which may have an
    adverse impact on our business or operations.
      Our
    businesses have many competitors.
    Our PPO
    and provider arrangements provide no guarantee of long-term
    relationships.
   16




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Some
    providers have historically been reluctant to participate in
    secondary networks.
    Our cost
    containment accounts receivable are subject to
    adjustment.
    Laboratory
    Services Segment:
  Our
    Laboratory Services Communications Segment has a high customer
    concentration.
    Risks
    Related to Our Technology
  Evolving
    industry standards and rapid technological changes could result
    in our products becoming obsolete or no longer in
    demand.
    We
    depend on uninterrupted computer access for our customers; any
    prolonged interruptions in operations could cause customers to
    seek alternative providers of our services.
     17




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Computer
    network systems like ours could suffer security and privacy
    breaches that could harm our customers and us.
    The
    protection of our intellectual property requires substantial
    resources.
  sm
  We may
    be subject to infringement claims.
    We are
    currently involved in a trademark dispute with Metavante
    Corporation that may limit our ability to use our new
    name.
    If our
    ability to expand our network infrastructure is constrained, we
    could lose customers, and that loss could adversely affect our
    operating results.
   18




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Risks
    Related to Our Stock
  We
    incurred losses in 2003, 2004 and 2005. We may not be able to
    generate positive earnings in the future and this could have a
    detrimental effect on the market price of our
    stock.
    An
    inability to maintain effective internal controls over financial
    reporting as required by the Sarbanes-Oxley Act of 2002 could
    have an adverse affect on our stock price.
    We may
    issue additional shares that could adversely affect the market
    price of our Common Stock.
    
    to raise additional capital or finance acquisitions;
    upon the exercise or conversion or an exchange of outstanding
    options, warrants and shares of convertible preferred
    stock; or
    in lieu of cash payment of dividends.    The
    trading price of our common stock may be volatile.
    ITEM 1B.
    UNRESOLVED
    STAFF COMMENTS.   19




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ITEM 2.
    PROPERTIES  Properties
    ApproximateBusiness Segment

Location (1)

Description

Square FootageTransaction Services

Norcross, Georgia

Corporate headquarters/


31,200operations office/data centerSanta Ana, California

Operations office/data center


16,900Tampa, Florida

Operations office


8,200Middletown, New York

Operations office/data center


26,900Fort Lauderdale, Florida

Operations office


6,000Laboratory Communication
    Solutions

Jeffersonville, Indiana

Operations office/warehouse


32,000     (1)
    
    All locations are leased from a third party.  SM
  ITEM 3.
    LEGAL
    PROCEEDINGS    ITEM 4.
    SUBMISSION
    OF MATTERS TO A VOTE OF SECURITY HOLDERS   20




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PART II
  ITEM 5.
    MARKET
    FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS
    AND ISSUER PURCHASES OF EQUITY SECURITIES    2005:First Quarter

$
10.74


$
7.81Second Quarter

$
8.69


$
5.75Third Quarter

$
7.97


$
5.01Fourth Quarter

$
5.34


$
3.422004:First Quarter

$
20.00


$
16.65Second Quarter

$
20.10


$
16.19Third Quarter

$
17.20


$
8.77Fourth Quarter

$
11.38


$
6.78     and/or
  Securities
    Authorized for Issuance Under Equity Compensation
    Plans
    Number of SecuritiesRemaining Available forNumber of Securities to


Weighted-Average


Future Issuance Under Equitybe Issued upon Exercise


Exercise Price of


Compensation Plansof Outstanding Options,


Outstanding Options,


(Excluding SecuritiesWarrants and Rights(1)


Warrants and Rights


Reflected in Column (a)Plan Category

(a)


(b)


(c)Equity Compensation Plans approved
    by security holders


1,700,415


$
9.74



289,483Equity Compensation Plans not
    approved by security holder


920,301


$
18.36



350,654Total


2,620,716


$
12.77



640,137     (1)
    
    The description of the material terms of the non-plan issuances
    of equity instruments is discussed in Note 13 of the
    accompanying consolidated financial statements. 21




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Recent
    Sales of Unregistered Securities
    and/or
  ITEM 6.
    SELECTED
    FINANCIAL DATA      Year Ended
    December 31,2005


2004(1)


2003(2)


2002


2001(In thousands except for share
    and per share amounts)STATEMENT OF OPERATIONS DATA:Net Revenues

$
77,519


$
90,246


$
71,556


$
50,182


$
43,230Operating loss

$
(103,177
)

$
(1,974
)

$
(3,642
)

$
(1,340
)

$
(6,712
)Loss from continuing operations

$
(105,294
)

$
(3,800
)

$
(5,000
)

$
(1,950
)

$
(6,798
)Net loss applicable to common
    shareholders

$
(105,294
)

$
(3,800
)

$
(5,000
)

$
(1,338
)

$
(19,060
)PER SHARE DATA:Basic and diluted net loss per
    share of common stock:Loss from continuing operations

$
(8.29
)

$
(0.33
)

$
(0.74
)

$
(0.21
)

$
(8.81
)Net loss

$
(8.29
)

$
(0.33
)

$
(0.74
)

$
(0.21
)

$
(8.81
)Basic and diluted weighted average
    common shares outstanding


12,707,695



11,617,601



6,783,742



6,396,893



2,162,352DIVIDEND DATA:Dividends on cumulative preferred
    stock

$



$



$



$



$
1,665   December 31,2005


2004


2003


2002


2001BALANCE SHEET DATA:Working capital (deficiency)

$
15


$
(1,664
)

$
10,512


$
8,749


$
9,393Convertible notes

$
13,137


$
13,137


$
13,137


$
13,400


$
Other long-term obligations

$
5,898


$
1,069


$
3,518


$
2,581


$
442Total assets

$
75,641


$
184,403


$
73,130


$
88,704


$
35,882Stockholders equity

$
32,904


$
135,082


$
45,778


$
50,735


$
22,873     (1)
    
    includes operations of PlanVista from March 2, 2004(2)
    
    includes operations of MedUnite from January 1, 2003 22




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ITEM 7.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS  Overview
  Form 10-K
  
    Introduction  This section provides a
    general description of our business, summarizes the significant
    acquisitions we completed in the last three years, and provides
    a brief overview of our operating segments.
    Results of Operations  This section
    provides our analysis and outlook for the line items on our
    consolidated statement of operations on both a company-wide and
    segment basis.
    Liquidity and Capital Resources  This
    section provides an analysis of our liquidity and cash flows, as
    well as our discussion of our debts and other commitments.
    Critical Accounting Policies and
    Estimates  This section discusses those
    accounting policies that are considered to be both important to
    our financial condition and results of operations, and require
    us to exercise subjective or complex judgments in their
    application. In addition, all of our significant accounting
    policies, including our critical accounting policies, are
    summarized in Note 1 to our consolidated financial
    statements.
    New Accounting Pronouncements  This
    section includes a discussion of recently published accounting
    authoritative literature that may have an impact on our
    historical or prospective results of operations or financial
    condition.  Introduction
         23




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e-prescribing e-prescribing tm
  Acquisitions
    end-to-end
   24




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Sale
    of Assets
      Financing
    Transactions
      Operating
    Segments
   25




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##### Table of Contents



Results
    of Operations
  Year
    Ended December 31, 2005, Compared to Year Ended
    December 31, 2004
  Net Revenues.
  2005


2004(In thousands)Transaction Services

$
66,042


$
71,304Laboratory Communication Solutions


11,477



18,942$
77,519


$
90,246           2005


2004(In thousands)Core transactions(1)


185,626



194,558Additional core transactions


63,292



64,775Encounters


18,349



29,172Total transactions


267,267



288,505     (1)
    Includes 4.5 million cost containment transactions in the
    2004 period from ProxyMeds acquisition of PlanVista      quarter-over-quarter
 26




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Cost of Sales.
  2005


2004(In thousands)Transaction Services

$
20,523


$
22,401Laboratory Communication Solutions


6,301



11,811$
26,824


$
34,212       Selling, General and Administrative
    Expenses.
  2005


2004(In thousands)Transaction Services

$
45,296


$
43,625Laboratory Communication Solutions


2,666



4,398$
47,962


$
48,023       Impairment charges.
 27




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##### Table of Contents



Depreciation and Amortization.
  2005


2004(In thousands)Transaction Services

$
8,788


$
8,719Laboratory Communication Solutions


517



823Corporate






221$
9,305


$
9,763     Litigation settlement.
  Operating Income (Loss).
  2005


2004(In thousands)Transaction Services

$
(104,414
)

$
(2,815
)Laboratory Communication Solutions


1,238



1,938Corporate






(1,097
)$
(103,176
)

$
(1,974
)   Interest Expense, net.
  Net Loss.
 28




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##### Table of Contents



Year
    Ended December 31, 2004, Compared to Year Ended
    December 31, 2003
  Net Revenues.
  2004


2003(In thousands)Transaction Services

$
71,304


$
46,673Laboratory Communication Solutions


18,942



24,883$
90,246


$
71,556           2004


2003(In thousands)Core transactions(1)


194,558



197,284Additional core transactions


64,775



50,502Encounters


29,172



25,529Total transactions


288,505



273,315     (1)
    
    Includes 4.5 million cost containment transactions in the
    2004 period from ProxyMeds acquisition of PlanVista  Cost of Sales.
  2004


2003(In thousands)Transaction Services

$
22,401


$
15,893Laboratory Communication Solutions


11,811



16,528$
34,212


$
32,421    29




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Selling, General and Administrative
    Expenses.
  2004


2003(In thousands)Transaction Services

$
43,625


$
30,283Laboratory Communication Solutions


4,398



5,526$
48,023


$
35,809       Depreciation and Amortization.
  2004


2003(In thousands)Transaction Services

$
8,719


$
4,754Laboratory Communication Solutions


823



1,369Corporate


221



193$
9,763


$
6,316   Loss on Disposal of Assets.
  Litigation settlement.
 30




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##### Table of Contents



Operating Income (Loss).
 2004


2003(In thousands)Transaction Services

$
(2,815
)

$
(920
)Laboratory Communication Solutions


1,938



1,119Corporate


(1,097
)


(3,841
)$
(1,974
)

$
(3,642
)   Other Income (Expense), net.
  Interest Expense, net.
  Net Loss.
  Liquidity
    and Capital Resources
     31




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32




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##### Table of Contents



2006


2007


2008


2009


2010(In thousands)Interest on convertible notes(1)

$
525


$
525


$
526


$



$
Interest on senior and other debt


420



297



208



119



31Convertible notes(1)










13,137







Senior debt


804



1,071



1,071



1,071



983Notes payable(2)


350















Litigation settlement(3)


1,410



1,080



327







Capital lease obligations(2)


6



1











Operating leases(4)


1,783



1,791



1,220



957



181TOTAL

$
5,298


$
4,765


$
16,489


$
2,147


$
1,195     (1)
    
    Assumes no conversion of convertible notes(2)
    
    Includes principal and interest(3)
    
    Net of insurance reimbursement(4)
    
    Includes new office leases entered into in 2006.      Critical
    Accounting Policies and Estimates
   33




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Page F-8.




Revenue Recognition
















No. 99-19,










34



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Goodwill
  Capitalized Software Development and Research and
    Development
  Purchased Technology and Other Intangibles
    Assets
  Reserve for Doubtful Accounts/Revenue Allowances/Bad Debt
    Estimates write-off
 35




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New
    Accounting Pronouncements
  Accounting Changes and Error Corrections Accounting Changes Reporting Accounting Changes in Interim Financial
    Statements
  Accounting for Conditional Asset
    Retirement Obligations, an interpretation of FASB Statement
    No. 143
  No. 04-8, (EITF No. 04-8). EITF No. 04-8 EITF No. 04-8 EITF No. 04-8 EITF No. 04-8, non-market
    Cautionary
    Statement Pursuant to Safe Harbor Provisions of the Private
    Securities Litigation Reform Act of 1995
   36




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##### Table of Contents



Form 10-K,
    ITEM 7A.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK    Concentration
    of Credit Risk
    Rate
    Risk
    ITEM 8.
    FINANCIAL
    STATEMENTS AND SUPPLEMENTARY DATA  Page F-1.
 37




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|        |                                                                                             
|------- | --------------------------------------------------------------------------------------------
|ITEM 9. | CHANGES
    IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
    FINANCIAL DISCLOSURE







|         |                            
|-------- | ---------------------------
|ITEM 9A. | CONTROLS
    AND PROCEDURES



Disclosure
    Controls and Procedures:




Rule 13a-15(e)




Changes
    in Internal Control












Rules 13a-15(f)/15d-15(f).


















38



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39



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REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
  To the Board of Directors and Stockholders of
 ProxyMed, Inc.
 Norcross, Georgia
  Internal
    Control  Integrated Framework
      Internal Control  Integrated Framework Internal
    Control  Integrated Framework
        40




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PART III
      Name

Age


PositionEric D. Arnson


34


Executive Vice President, Product
    ManagementCynthia Bird


51


Executive Vice President,
    Information TechnologyWilliam L. Bennett(1) (3)


56


DirectorChristopher K. Carter


49


Executive Vice President, Sales
    and Account ManagementEdwin M. Cooperman(2)


62


DirectorDouglas J. ODowd


40


Executive Vice President, Chief
    Financial Officer and TreasurerLonnie W. Hardin


50


Executive Vice President,
    OperationsThomas E.
    Hodapp(1) (2) (3)


46


DirectorBraden R. Kelly(2)


35


Director and Interim Chairman of
    the BoardJohn G. Lettko


48


Chief Executive Officer, President
    and DirectorJames H. McGuire(1)


62


DirectorKevin M. McNamara(4)


49


Chairman of the BoardAllison W. Myers


28


Executive Vice President, Human
    ResourcesDavid E. Oles(4)


45


Executive Vice President, General
    Counsel and SecretaryEmily J. Pietrzak


29


Executive Vice President,
    Marketing and CommunicationsEugene R. Terry(1) (3)


67


Director     (1)
    Member of the Audit Committee, the Chairman of which was
    Mr. Bennett. Mr. McGuire became an interim member in
    January 2006 upon the death of Mr. Bennett.        Eric D. Arnson
  William L. Bennett
 41




---



##### Table of Contents



Cynthia Bird
  Christopher K. Carter e-commerce
  Edwin M. Cooperman
  Lonnie W. Hardin
  Thomas E. Hodapp
 42




---



##### Table of Contents



Braden R. Kelly
  John G. Lettko
  James H. McGuire
  Kevin M. McNamara
  Allison W. Myers
 43




---



##### Table of Contents



Douglas J. ODowd
  David E. Oles
  Emily J. Pietrzak
  Eugene R. Terry
  Audit
    Committee
     44




---



##### Table of Contents



PART IV
  ITEM 15.
    EXHIBITS AND
    FINANCIAL STATEMENT SCHEDULES  Page(a)(1)

The following financial statements
    are included in Part II, Item 8:Report of Independent Registered Public Accounting Firm

F-2Report of Independent Registered Public Accounting Firm

F-3Consolidated Balance Sheets  December 31, 2005 and 2004

F-4Consolidated Statements of Operations  Years Ended December 31, 2005, 2004 and 2003

F-5Consolidated Statements of Stockholders Equity  Years Ended December 31, 2005, 2004 and 2003

F-6Consolidated Statements of Cash Flows  Years Ended December 31, 2005, 2004 and 2003

F-7Notes to Consolidated Financial Statements

F-8 - F-37(2)

The following schedule for the
    years 2005, 2004 and 2003 is submitted herewith:Schedule II  Valuation and Qualifying Accounts  Years Ended December 31, 2005, 2004 and 2003

F-38(3)

Exhibits required to be filed by
    Item 601 of
    Regulation S-K
    as exhibits to this Report are listed in the Exhibit Index
    appearing on pages 47 through 50  45




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##### Table of Contents



SIGNATURES
      By:
    /s/  John G. Lettko       POWER OF
    ATTORNEY
  attorney-in-fact Form 10-K, attorneys-in-fact attorneys-in-fact
    Signature

Title

Date/s/  John G. LettkoJohn
    G. Lettko

Director, Chief Executive Officer
    and President (Principal Executive Officer)

March 14, 2006/s/  Douglas J.
    ODowdDouglas
    J. ODowd

Vice President, Finance and Chief
    Financial Officer (Principal Financial and
    Accounting Officer

March 14, 2006/s/  Edwin M.
    CoopermanEdwin
    M. Cooperman

Director

March 14, 2006/s/  Thomas E. HodappThomas
    E. Hodapp

Director

March 14, 2006/s/  Braden R. KellyBraden
    R. Kelly

Interim Chairman of the Board of
    Directors

March 14, 2006/s/  Eugene R. TerryEugene
    R. Terry

Director

March 14, 2006/s/  James McGuireJames
    McGuire

Director

March 14, 2006  46




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##### Table of Contents



EXHIBIT INDEX
  ExhibitNo.

Description2
.1

Agreement and Plan of Merger,
    dated as of December 5, 2003, by and among the Registrant,
    Planet Acquisition Corp. and PlanVista Corporation (incorporated
    by reference to Annex A of the Registration Statement on
    Form S-4,
    File
    No. 333-111024).2
.2

Agreement and Plan of Merger and
    Reorganization dated December 31, 2002 between ProxyMed,
    Inc., Davie Acquisition Corp., and MedUnite Inc. (incorporated
    by reference to Exhibit 2.1 of
    Form 8-K
    File
    No. 000-22052,
    reporting an event dated December 31, 2002).2
.3

Asset Purchase Agreement dated
    July 30, 2002 between ProxyMed, Inc. and MDIP, Inc.
    (incorporated by reference to Exhibit 2.1 of
    Form 8-K
    File
    No. 000-22052,
    reporting an event dated July 31, 2002).2
.4

Stock Purchase Agreement dated
    May 6, 2002 between ProxyMed, Inc. and KenCom
    Communications & Services, Inc. (incorporated by
    reference to Exhibit 2.1 of
    Form 8-K
    File
    No. 000-22052,
    reporting an event dated May 6, 2002).2
.5

Stock and Warrant Purchase
    Agreement between ProxyMed and General Atlantic Partners 74,
    L.P., GAP Coinvestment Partners II, L.P., GAPCO
    GmbH & Co., KG and GapStar, LLC (incorporated by
    reference to Exhibit 10.1 of
    Form 8-K,
    File No.
    000-22052,
    reporting an event dated March 26, 2002).2
.6

Asset Purchase Agreement dated
    June 28, 2004 between ProxyMed, Inc., and Key
    Communications Services, Inc., and Key Electronics, Inc.
    (incorporated by reference to Exhibit 2.1 of
    Form 8-K
    File
    No. 000-22052,
    reporting an event dated July 30, 2004).3
.1

Articles of Incorporation, as
    amended (incorporated by reference to Exhibit 3.1 of the
    Registration Statement on
    Form SB-2,
    File
    No. 333-2678).3
.2

Bylaws, as amended (incorporated
    by reference to Exhibit 3.1 of the Registration Statement
    on
    Form SB-2,
    File
    No. 333-2678).3
.3

Articles of Amendment to Restated
    Articles of Incorporation of the Registrant dated March 1,
    2004 (incorporated by reference to Exhibit 3.1 of
    Form 8-K
    File
    No. 000-22052,
    reporting an event dated March 2, 2004).3
.4

Articles of Amendment to Articles
    of Incorporation of the Registrant dated May 22, 2002
    (incorporated by reference to Exhibit 3.4 of
    Form 10-K
    for the period ended December 31, 2003).3
.5

Articles of Amendment to Articles
    of Incorporation of the Registrant dated December 21, 2001
    (incorporated by reference to Exhibit 3.1 of
    Form 8-K
    File
    No. 000-22052,
    reporting an event dated December 13, 2001).3
.6

Articles of Amendment to Articles
    of Incorporation dated August 21, 2001 (incorporated by
    reference to Exhibit 2.2 of
    Form 8-K,
    File
    No. 000-22052,
    reporting an event dated August 17, 2001).3
.7

Articles of Amendment to Articles
    of Incorporation dated July 25, 2001 (incorporated by
    reference to Exhibit 2.1 of
    Form 8-K,
    File
    No. 000-22052,
    reporting an event dated August 17, 2001).3
.8

Articles of Amendment to Articles
    of Incorporation of the Registrant dated July 7, 2000
    (incorporated by reference to Exhibit 3.8 of
    Form 10-K
    for the period ended December 31, 2003).3
.9

Articles of Amendment to Articles
    of Incorporation of the Registrant dated June 15, 2000
    (incorporated by reference to Exhibit 3.4 of
    Form 10-Q/A
    for the period ended June 30, 2000).4
.1

Common Stock Purchase Warrants
    issued to First Data Corporation (incorporated by reference to
    Exhibit 10.1 of
    Form 8-K,
    File No.
    000-22052,
    reporting an event dated July 8, 2003).4
.2

Form of 4% Convertible
    Promissory Notes dated December 31, 2002 issued in
    connection with the Agreement and Plan of Merger and
    Reorganization dated December 31, 2002 between ProxyMed,
    Inc., Davie Acquisition Corp., and MedUnite, Inc. (incorporated
    by reference to Exhibit 10.1 of
    Form 8-K
    File No.
    000-22052,
    reporting an event dated December 31, 2002).4
.3

Form of Common Stock Purchase
    Warrants issued to General Atlantic Partners 74, L.P., GAP
    Coinvestment Partners II, L.P., GAPCO GmbH & Co.,
    KG and GapStar, LLC (incorporated by reference to
    Exhibit 10.2 of
    Form 8-K,
    File
    No. 000-22052,
    reporting an event dated March 26, 2002).4
.4

Form of Exchanged Warrant to
    Purchase Common Stock of the Registrant dated May 4, 2000,
    issued to certain investors (incorporated by reference to
    Exhibit 4.1 of
    Form 8-K,
    File
    No. 000-22052,
    reporting an event dated May 4, 2000). 47




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##### Table of Contents



ExhibitNo.

Description4
.5

Form of New Warrant to Purchase
    Common Stock of the Registrant dated May 4, 2000, issued to
    certain investors (incorporated by reference to Exhibit 4.2
    of
    Form 8-K,
    File No.
    000-22052,
    reporting an event dated May 4, 2000).4
.6

Form of Warrant to Purchase Common
    Stock of the Registrant dated December 23, 1999, issued to
    certain investors (incorporated by reference to Exhibit 4.1
    of
    Form 8-K,
    File No.
    000-22052,
    reporting an event dated December 23, 1999).10
.1

Amended and Restated Registration
    Rights Agreement among the Registrant, General Atlantic Partners
    77, L.P., General Atlantic Partners 74, L.P., GAP Coinvestment
    Partners II, L.P., GAP Coinvestments III, LLC, GAP
    Coinvestments IV, LLC, GapStar, LLC, GAPCO GmbH & Co.
    KG, PVC Funding Partners, LLC, ComVest Venture Partners, L.P.,
    Shea Ventures, LLC, and Robert Priddy, dated March 2, 2004
    (incorporated by reference to Exhibit 4.1 of
    Form 8-K,
    File
    No. 000-22052,
    reporting an event dated March 2, 2004).10
.2

Stock Purchase Agreement, dated as
    of December 5, 2003 among the Registrant, General Atlantic
    Partners 77, L.P., GAP Coinvestment Partners II, L.P.,
    GapStar, LLC, GAPCO GmbH & Co. KG, PVC Funding
    Partners, LLC, ComVest Venture Partners, L.P., Shea Ventures,
    LLC, and Robert Priddy (incorporated by reference to
    Exhibit 2.2 of the Registration Statement on
    Form S-4,
    File
    No. 333-111024).10
.3

Registration Rights Agreement
    among the Registrant General Atlantic Partners 74, L.P., GAP
    Coinvestment Partners II, L.P., GapStar, LLC and GAPCO
    GmbH & Co. KG dated April 5, 2002 (incorporated by
    reference to Exhibit 10.3 of
    Form 8-K,
    File No.
    000-22052,
    reporting an event dated March 29, 2003).10
.4

Registration Rights Agreement
    dated December 31, 2002 among ProxyMed, Inc. and the
    holders of the 4% Convertible Promissory Notes
    (incorporated by reference to Exhibit 10.2 of
    Form 8-K
    File
    No. 000-22052,
    reporting an event dated December 31, 2002).10
.5

Form of Indemnification Agreement
    for all Officers and Directors adopted May 22, 2002
    (incorporated by reference to Exhibit 10.55 of
    Form 10-K
    for the period ended December 31, 2002).10
.6

Registration Rights Agreement
    dated May 6, 2002 ProxyMed, Inc. and Deborah M. Kennedy and
    Colleen Phillips-Norton (incorporated by reference to
    Exhibit 10.1 of
    Form 8-K
    File
    No. 000-22052,
    reporting an event dated May 6, 2002).10
.7

Registration Rights Agreement
    between ProxyMed and General Atlantic Partners 74, L.P., GAP
    Coinvestment Partners II, L.P., GapStar, LLC, and GAPCO
    GmbH & Co. KG (incorporated by reference to
    Exhibit 10.3 of
    Form 8-K,
    File
    No. 000-22052,
    reporting an event dated March 26, 2002).10
.8

Employment Letter between ProxyMed
    and Jeffrey L. Markle effective March 2, 2004 (incorporated
    by reference to Exhibit 10.8 of
    Form 10-K
    for the period ended December 31, 2003).*10
.9

Employment Agreement between
    ProxyMed and Gregory J. Eisenhauer dated December 8, 2003
    (incorporated by reference to Exhibit 10.9 of
    Form 10-K
    for the period ended December 31, 2003).*10
.10

Employment Agreement between
    ProxyMed and Tom Wohlford dated May 13, 2003 (incorporated
    by reference to Exhibit 10.10 of
    Form 10-K
    for the period ended December 31, 2003).*10
.11

Employment Agreement between
    ProxyMed and A. Thomas Hardy dated December 31, 2001
    (incorporated by reference to Exhibit 10.40 of
    Form 10-K
    for the period ended December 31, 2001).*10
.12

Employment Agreement between
    ProxyMed and Lonnie W. Hardin dated March 29, 2001
    (incorporated by reference to Exhibit 10.1 of
    Form 10-Q
    for the period ended March 31, 2001).*10
.13

Employment Agreement between
    ProxyMed and Timothy J. Tolan dated January 23, 2001
    (incorporated by reference to Exhibit 10.30 of
    Form 10-K
    for the period ended December 31, 2000).*10
.14

Amendment to Employment Agreement
    between ProxyMed and Timothy J. Tolan effective January 1,
    2004 (incorporated by reference to Exhibit 10.15 of
    Form 10-K
    for the period ended December 31, 2003).*10
.15

Employment Agreement between
    ProxyMed and Michael K. Hoover dated July 28, 2000
    (incorporated by reference to Exhibit 99.1 of
    Form 10-Q
    for the period ended September 30, 2000).*10
.16

Amendment to Employment Agreement
    between ProxyMed and Michael K. Hoover effective January 1,
    2004 (incorporated by reference to Exhibit 10.17 of
    Form 10-K
    for the period ended December 31, 2003).* 48




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##### Table of Contents



ExhibitNo.

Description10
.17

Employment Agreement between
    ProxyMed and Judson E. Schmid dated September 29, 2000
    (incorporated by reference to Exhibit 99.2 of
    Form 10-Q
    for the period ended September 30, 2000).*10
.18

Employment Agreement between
    ProxyMed and Nancy J. Ham dated October 2, 2000
    (incorporated by reference to Exhibit 99.3 of
    Form 10-Q
    for the period ended September 30, 2000).*10
.19

Amendment to Employment Agreement
    between ProxyMed and Nancy J. Ham effective January 1, 2004
    (incorporated by reference to Exhibit 10.20 of
    Form 10-K
    for the period ended December 31, 2003).*10
.20

Employment Agreement between
    ProxyMed and John Paul Guinan (incorporated by reference to
    Exhibit 3.1 of the Registration Statement on
    Form SB-2,
    File
    No. 333-2678).*10
.21

Form of bonus letter offered to
    executive and senior management on February 26, 2002
    (incorporated by reference to Exhibit 10.54 of
    Form 10-K
    for the period ended December 31, 2002).*10
.22

2002 Stock Option Plan, as amended
    (incorporated by reference to Exhibit 10.23 of
    Form 10-K
    for the period ended December 31, 2003).*10
.23

2001 Stock Option Plan
    (incorporated by reference to Exhibit B of the Proxy
    Statement filed on June 22, 2001).*10
.24

2000 Stock Option Plan
    (incorporated by reference to Exhibit B of the Proxy
    Statement filed on June 12, 2000).*10
.25

20001/2
    Stock Option Plan (incorporated by reference to Exhibit C
    of the Proxy Statement filed on June 12, 2000).*10
.26

1997 Stock Option Plan
    (incorporated by reference to Exhibit A of the Proxy
    Statement filed on May 6, 1997).*10
.27

Amended 1993 Stock Option Plan
    (incorporated by reference to Exhibit A of ProxyMeds
    Proxy Statement for its 1994 Annual Meeting of Shareholders).*10
.28

1995 Stock Option Plan
    (incorporated by reference to Exhibit 3.1 of the
    Registration Statement on
    Form SB-2,
    File
    No. 333-2678).*10
.29

Subscription Agreement dated
    December 21, 2001 for the private placement issuance of up
    to $8,000,000 of ProxyMed, Inc. common stock (incorporated by
    reference to Exhibit 10.1 of
    Form 8-K
    File
    No. 000-22052,
    reporting an event dated December 13, 2001).10
.30

Placement Agency Agreement dated
    December 18, 2001 between ProxyMed, Inc. and Commonwealth
    Associates, L.P. for the private placement issuance of up to
    $8,000,000 of ProxyMed, Inc. common stock (incorporated by
    reference to Exhibit 10.2 of
    Form 8-K
    File
    No. 000-22052,
    reporting an event dated December 13, 2001).10
.31

Conversion Agreement for
    Series C 7% Convertible Preferred shareholder pursuant
    to conversion offer dated December 13, 2001 (incorporated
    by reference to Exhibit 10.3 of
    Form 8-K
    File
    No. 000-22052,
    reporting an event dated December 13, 2001).10
.32

Designation and Subscription
    Amendment Agreement for Series C 7% Convertible
    Preferred shareholder pursuant to conversion offer dated
    December 13, 2001 (incorporated by reference to
    Exhibit 10.4 of
    Form 8-K
    File
    No. 000-22052,
    reporting an event dated December 13, 2001).10
.33

Loan and Security Agreement by and
    between ProxyMed, Key Communications Service, Inc., MedUnite
    Inc. and Wachovia Bank, National Association dated
    December 4, 2003 (incorporated by reference to
    Exhibit 10.34 of
    Form 10-K
    for the period ended December 4, 2003).10
.34

Revolver Note dated
    December 4, 2003, issued in connection with the Loan and
    Security Agreement by and between ProxyMed, Key Communications
    Service, Inc., MedUnite Inc. and Wachovia Bank, National
    Association dated December 4, 2003 (incorporated by
    reference to Exhibit 10.35 of
    form 10-K
    for the period ended December 31, 2003).10
.35

Patent and Trademark Security
    Agreement effective as of December 4, 2003 between
    ProxyMed, Key Communications Service, Inc., MedUnite Inc. and
    Wachovia Bank, National Association (incorporated by reference
    to Exhibit 10.36 of
    Form 10-K
    for the period ended December 31, 2003).10
.36

Independent Contractor Agreement
    between ProxyMed and Kevin M. McNamara dated December 21,
    2004 (incorporated by reference to Exhibit 99.1 of
    Form 8-K
    File
    No. 000-22052,
    reporting an event dated December 21, 2004.* 49




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##### Table of Contents



ExhibitNo.

Description10
.37

Employment Agreement between
    ProxyMed and David Edward Oles dated April 14, 2004
    (incorporated by reference to Exhibit 10.10 of
    Form 10-Q
    for the period ended March 31, 2004).*10
.38

Amendment to Employment Agreement
    between ProxyMed and Judson E. Schmid dated June 2, 2004
    (incorporated by reference to Exhibit 10.2 of
    Form 10-Q
    for the period ended June 30, 2004).*10
.39

Consulting Agreement between
    ProxyMed and Philip S. Dingle dated April 13, 2004
    (incorporated by reference to Exhibit 10.3 of
    Form 10-Q
    for the period ended June 30, 2004).*10
.40

Letter Agreement dated
    July 14, 2004 between ProxyMed and Gregory J. Eisenhauer
    (incorporated by reference to Exhibit 10.2 of
    Form 10-Q
    for the period ended September 30, 2004).*10
.41

Purchase Agreement dated
    June 27, 1997 by and between ProxyMed, Inc. and Walgreen Co.10
.42

Letter Agreement dated
    March 8, 2005 between ProxyMed, Inc. and Nancy J. Ham.*10
.43

Letter Agreement dated
    March 8, 2005 between ProxyMed, Inc. and Lonnie J. Hardin.*10
.44

Letter Agreement dated
    March 8, 2005 between ProxyMed, Inc. and Gregory J.
    Eisenhauer.*10
.45

Letter Agreement dated
    March 8, 2005 between ProxyMed, Inc. and Jeffrey L. Markle.*16


Letter Regarding Change in
    Certifying Accountant dated August 16, 2004 from
    PricewaterhouseCoopers LLP to the Securities and Exchange
    Commission (incorporated by reference to Exhibit 16.1 of
    Form 8-K
    File No.
    000-22052,
    reporting an event dated August 11, 2004).21


Subsidiaries of the Registrant.23
.1

Consent of PricewaterhouseCoopers
    LLP.23
.2

Consent of Deloitte &
    Touche LLP.31
.1

Certification by John G. Lettko,
    Chief Executive Officer, pursuant to Exchange Act
    Rules 13a-14
    and 15d-14.31
.2

Certification by Douglas J.
    ODowd, Chief Financial Officer, pursuant to Exchange Act
    Rules 13a-14
    and 15d-14.32
.1

Certification by John G. Lettko,
    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 by Douglas J.
    ODowd, Chief Financial Officer, pursuant to 18 U.S.C.
    Section 1350, as adopted pursuant to Section 906 of
    the Sarbanes-Oxley Act of 2002.     *
    
    Denotes management contract or compensating plan or arrangement. 50




---



##### 



PROXYMED,
    INC. AND SUBSIDIARIES
  Index to Consolidated Financial Statements and Schedule
  PageConsolidated Financial StatementsReport of
    Independent Registered Public Accounting Firm


F-2Report of
    Independent Registered Public Accounting Firm


F-3Consolidated
    Balance Sheets  December 31, 2005 and
    2004


F-4Consolidated
    Statements of Operations  Years Ended
    December 31, 2005, 2004 and 2003


F-5Consolidated
    Statements of Stockholders Equity  Years
    Ended December 31, 2005, 2004 and 2003


F-6Consolidated
    Statements of Cash Flows  Years Ended
    December 31, 2005, 2004 and 2003


F-7Notes to
    Consolidated Financial Statements


F-8 - F-37Schedule II  Valuation
    and Qualifying Accounts  Years Ended
    December 31, 2005, 2004, and 2003


F-38EX-23.1 CONSENT OF PRICEWATERHOUSECOOPERS LLPEX-23.2 CONSENT OF DELOITTE & TOUCHE LLPEX-31.1 CERTIFICATION BY JOHN G. LETTKO, CHIEF EXECUTIVE OFFICEREX-31.2 CERTIFICATION BY DOUGLAS J. O'DOWD, CHIEF FINANCIAL OFFICEREX-32.1 CERTIFICATION BY JOHN G. LETTKO, CHIEF EXECUTIVE OFFICEREX-32.2 CERTIFICATION BY DOUGLAS J. O'DOWD, CHIEF FINANCIAL OFFICER




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##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM            Internal
    Control  Integrated Framework
      F-2




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##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED CERTIFIED PUBLIC ACCOUNTING
    FIRM
           F-3




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##### Table of Contents



PROXYMED,
    INC. AND SUBSIDIARIES



Consolidated Balance Sheets

December 31, 2005 and 2004  2005


2004(Amounts in thousands except
    share and per share data)ASSETSCurrent assets:Cash and cash equivalents

$
5,546


$
12,374Accounts
    receivable  trade, net of allowance for doubtful
    accounts of $5,525 and $3,168, respectively


15,976



17,591Other receivables


140



312Inventory, net


1,030



1,775Restricted cash


75



Other current assets


950



1,399Total current assets


23,717



33,451Property and equipment, net


4,322



4,801Goodwill


26,444



93,604Purchased technology, capitalized
    software and other intangible assets, net


17,879



52,305Restricted cash






75Other long-term assets


3,279



167Total Assets

$
75,641


$
184,403LIABILITIES AND
    STOCKHOLDERS EQUITYCurrent liabilities:Notes payable and current portion
    of long-term debt

$
8,584


$
2,178Related party
    debt  See Notes 11(b) and 19






18,394Accounts payable and accrued
    expenses and other current liabilities


14,009



13,637Deferred revenue


334



691Income taxes payable


775



215Total current liabilities


23,702



35,115Income taxes payable


911



Convertible notes


13,137



13,137Other long-term debt


3,335



206Long-term deferred revenue and
    other long-term liabilities


1,652



863Total liabilities


42,737



49,321Commitments and
    contingencies  see Notes 18Stockholders equity:Series C 7% Convertible
    preferred stock  $.01 par value. Authorized
    300,000 shares; issued 253,265 shares; outstanding
    2,000; liquidation preference $200






Common
    stock  $.001 par value. Authorized
    30,000,000 shares; issued and outstanding 13,203,702, and
    12,626,182 shares, respectively


14



13Additional paid-in capital


242,297



239,255Unearned compensation


(40
)


(113
)Accumulated deficit


(209,367
)


(104,073
)Total stockholders equity


32,904



135,082Total liabilities and
    stockholders equity

$
75,641


$
184,403     F-4




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##### Table of Contents



PROXYMED,
    INC. AND SUBSIDIARIES
 Consolidated
    Statements of OperationsYears Ended December 31, 2005, 2004 and 2003 2005


2004


2003(Amounts in thousandsexcept share and per share
    data)Net revenues:Transaction fees, cost containment
    services and license fees

$
67,909


$
73,538


$
51,813Communication devices and other
    tangible goods


9,610



16,708



19,74377,519



90,246



71,556Costs and expenses:Cost of transaction fees, cost
    containment services and license fees excluding depreciation and
    amortization


20,674



22,626



15,917Cost of laboratory communication
    devices and other tangible goods excluding depreciation and
    amortization


6,150



11,586



16,504Selling, general and
    administrative expenses


47,962



48,023



35,809Depreciation and amortization


9,305



9,763



6,316Loss on disposal of assets


14



47



111Litigation settlement


175



175



Write-off of impaired assets


96,416







541180,696



92,220



75,198Operating loss


(103,177
)


(1,974
)


(3,642
)Other income (expense), net


1



134



(496
)Interest expense, net


(2,118
)


(1,920
)


(862
)Loss before income taxes


(105,294
)


(3,760
)


(5,000
)Provision for income taxes






40



Net loss

$
(105,294
)

$
(3,800
)

$
(5,000
)Basic and diluted weighted average
    shares outstanding


12,707,695



11,617,601



6,783,742Basic and diluted loss per share

$
(8.29
)

$
(0.33
)

$
(0.74
)     F-5




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##### Table of Contents



PROXYMED,
    INC. AND SUBSIDIARIES



Consolidated
    Statements of Stockholders Equity
    Years Ended December 31, 2005, 2004 and 2003  NotesSeries C Preferred
    Stock


Common Stock


Additional


Unearned





ReceivableNumber of


Par


Number of


Par


Paid-in


Compen-


Accumulated


from Stock-Shares


Value


Shares


Value


Capital


sation


Deficit


holder


Total(Amounts in thousands except for
    share and per share data)Balances, December 31, 2002


2,000


$




6,782,938


$
7


$
146,187


$



$
(95,273
)

$
(186
)

$
50,735Exercise of stock options










555







7















7Other, net










625







36















36Net loss


























(5,000
)






(5,000
)Balances, December 31, 2003


2,000







6,784,118



7



146,230







(100,273
)


(186
)


45,778Exercise of stock options










1,558







16















16Exercise of warrants










549,279







8,750















8,750Common Stock issued for acquired
    Business










3,600,000



4



59,756















59,760Sales of Common Stock, net










1,691,227



2



24,048















24,050Unearned compensation charge for
    options


















295



(295
)










Compensatory option charges


















92



182











274Compensatory option charge included
    in loss on disposal of assets


















68















68Repayment of note receivable from
    shareholder






























186



186Net loss


























(3,800
)






(3,800
)Balances, December 31, 2004


2,000







12,626,182



13



239,255



(113
)


(104,073
)






135,082Compensatory option charges


















173



73











246Issuance of Common Stock










577,520



1



2,869















2,870Net loss


























(105,294
)






(105,294
)Balances, December 31, 2005


2,000


$




13,203,702


$
14


$
242,297


$
(40
)

$
(209,367
)

$



$
32,904    F-6




---



##### Table of Contents



PROXYMED,
    INC. AND SUBSIDIARIES
 Consolidated
    Statements of Cash FlowsYears Ended December 31, 2005, 2004 and 2003 2005


2004


2003(Amounts in thousands)Cash flows from operating
    activities:Net loss

$
(105,294
)

$
(3,800
)

$
(5,000
)Adjustments to reconcile net loss
    to net cash provided by operating activities:Depreciation and amortization


9,305



9,763



6,316Provision for doubtful accounts






858



152Provision for obsolete inventory


214



92



28Non-cash interest (income) expense






(59
)


54Loss (Gain) on settlement of
    liability


175



(134
)


Write-off of impaired assets


96,416







541Compensatory stock options and
    warrants and stock compensation awards issued


246



275



Write-off of investment










496Loss on disposal of fixed assets


14



47



111Changes in assets and liabilities,
    net of effect of acquisitions and dispositions:Accounts and other receivables


1,615



548



(498
)Inventory


531



(1,329
)


(601
)Other current assets


706



465



430Accounts payable and accrued
    expenses


(678
)


124



(1,173
)Accrued expenses of PlanVista paid
    by ProxyMed






(4,011
)


Deferred revenue


(357
)


137



222Income taxes


1,471



(418
)


Other, net


819



(727
)


440Net cash provided by operating
    activities


5,183



1,831



1,518Cash flows from investing
    activities:Acquisition of businesses, net of
    cash acquired






782



Capital expenditures


(2,295
)


(3,440
)


(2,601
)Capitalized software


(557
)


(909
)


(1,426
)Collection of notes receivable






374



120Proceeds from sale of fixed assets


57



4,526



395Decrease in restricted cash






215



534Payments for acquisition-related
    costs






(884
)


(6,623
)Net cash (used in) provided by
    investing activities


(2,795
)


664



(9,601
)Cash flows from financing
    activities:Net proceeds from sale of common
    stock


500



24,100



Proceeds from exercise of stock
    options and warrants






8,766



7Draws on line of credit


47,015



4,900



Repayments of line of credit


(39,517
)


(4,900
)


Payment of related party note
    payable


(18,894
)


(2,000
)


Borrowings on notes payable


4,070







Debts issuance cost


(857
)






Payment of notes payable, long-term
    debt and capital leases


(1,533
)


(26,320
)


(2,969
)Net cash (used in) provided by
    financing activities


(9,216
)


4,546



(2,962
)Net (decrease) increase in cash and
    cash equivalents


(6,828
)


7,041



(11,045
)Cash and cash equivalents at
    beginning of year


12,374



5,333



16,378Cash and cash equivalents at end of
    year

$
5,546


$
12,374


$
5,333    F-7




---



##### Table of Contents



PROXYMED,
    INC. AND SUBSIDIARIESNotes to Consolidated Financial Statements
  (1)  Business
    and Summary of Significant Accounting Policies
  Business of
    ProxyMed
  Principles of
    Consolidation
  Use of Estimates
  Revenue
    Recognition
        No. 99-19,
 F-8




---



##### Table of Contents



PROXYMED,
    INC. AND SUBSIDIARIES
  Notes to
    Consolidated Financial
    Statements  (Continued)
             Fair Value of Financial
    Instruments
  Cash and Cash
    Equivalents
  Reserve for Doubtful Accounts/Revenue
    Allowances/Bad Debt Estimates
   F-9




---



##### Table of Contents





PROXYMED,
    INC. AND SUBSIDIARIES




Notes to
    Consolidated Financial
    Statements  (Continued)






Inventory (first-in,




Property and
    Equipment








Intangible Assets




Goodwill




Other Intangibles








Purchased Technology and Capitalized
    Software










F-10



---



##### Table of Contents





PROXYMED,
    INC. AND SUBSIDIARIES




Notes to
    Consolidated Financial
    Statements  (Continued)






Research and Development




Income Taxes




Net Loss Per Share




|                                                                                          |  |                                                        |            |   |      |   |            |      |  |   |           |  
|----------------------------------------------------------------------------------------- |  | ------------------------------------------------------ | ---------- | - | ---- | - | ---------- | ---- |  | - | --------- | -
|                                                                                          |  | 2005                                                   |            |   | 2004 |   |            | 2003 | 
|                                                                                          |  | (In thousands except for share
    and per share data) |           
|                                                                                         
|Net loss applicable to common
    shareholders                                            |  | $                                                      | (105,294   | ) |      | $ | (3,800     | )    |  | $ | (5,000    | )
|                                                                                          |  |                                                        |            |   |      |   |            |      |  |   |           |  
|Common shares outstanding:                                                                |  |                                                        |            |   |      |   |            |      |  |   |           |  
|Weighted average common shares
    used in computing basic and diluted net loss per share |  |                                                        | 12,707,695 |   |      |   | 11,617,601 |      |  |   | 6,783,742 |  
|Plus incremental shares from
    assumed conversions:                                     |  |                                                        |            |   |      |   |            |      |  |   |           |  
|Convertible preferred stock                                                               |  |                                                        |           |   |      |   |           |      |  |   |          |  
|Stock options                                                                             |  |                                                        |           |   |      |   |           |      |  |   |          |  
|Warrants                                                                                  |  |                                                        |           |   |      |   |           |      |  |   |          |  
|                                                                                          |  |                                                        |            |   |      |   |            |      |  |   |           |  
|Weighted average common shares
    used in computing basic and diluted net loss per share |  |                                                        | 12,707,695 |   |      |   | 11,617,601 |      |  |   | 6,783,742 |  
|                                                                                          |  |                                                        |            |   |      |   |            |      |  |   |           |  
|Basic and diluted net loss per
    common share:                                          |  | $                                                      | (8.29      | ) |      | $ | (0.33      | )    |  | $ | (0.74     | )









|                            |  |      |           |  |      |  |           |      |  |  |           | 
|--------------------------- |  | ---- | --------- |  | ---- |  | --------- | ---- |  |  | --------- | 
|                            |  | 2005 |           |  | 2004 |  |           | 2003 | 
|                           
|Convertible preferred stock |  |      | 13,333    |  |      |  | 13,333    |      |  |  | 13,333    | 
|Stock options               |  |      | 1,750,167 |  |      |  | 1,812,909 |      |  |  | 1,426,670 | 
|Warrants                    |  |      | 857,215   |  |      |  | 900,049   |      |  |  | 1,460,994 | 
|                            |  |      |           |  |      |  |           |      |  |  |           | 
|                            |  |      | 2,620,715 |  |      |  | 2,726,291 |      |  |  | 2,900,997 | 
|                            |  |      |           |  |      |  |           |      |  |  |           | 









Stock-based
    Compensation


F-11



---



##### Table of Contents



PROXYMED,
    INC. AND SUBSIDIARIES
  Notes to
    Consolidated Financial
    Statements  (Continued)
      2005


2004


2003(In thousands except for per
    share data)Net loss applicable to common
    shareholders, as reported

$
(105,294
)

$
(3,800
)

$
(5,000
)Deduct: Total stock-based employee
    pro forma compensation expense determined under fair value based
    method for all awards, net of related tax effects (1)


(1,393
)


(2,717
)


(4,378
)Add back charges already taken for
    intrinsic value of options


73



115



Pro forma net loss

$
(106,614
)

$
(6,402
)

$
(9,378
)Basic and diluted net income
    (loss) per common share:As reported

$
(8.29
)

$
(0.33
)

$
(0.74
)Pro forma


(8.39
)


(0.55
)


(1.38
)     (1)
    
    The following assumptions were used in the calculation of pro
    forma compensation expense for the periods presented:  Risk-free interest rate

4.0-4.6%

3.8%-4.8%

3.4%-4.4%Expected life

6 years

6 years

10 yearsExpected volatility

82%-85%

75%-77%

81%Dividend yield

0%

0%

0%   New Accounting
    Pronouncements Accounting Changes and Error
    Corrections, Accounting Changes, Reporting Accounting Changes in Interim
    Financial Statements.
  Accounting for Conditional Asset
    Retirement Obligations, an interpretation of FASB Statement
    No. 143
 F-12




---



##### Table of Contents



PROXYMED,
    INC. AND SUBSIDIARIES
  Notes to
    Consolidated Financial
    Statements  (Continued)
   No. 04-8, No. 04-8). No. 04-8 No. 04-8 No. 04-8,
    (2) Acquisition
    of Businesses
  PlanVista No. 99-12, end-to-end
   F-13




---



##### Table of Contents



PROXYMED,
    INC. AND SUBSIDIARIES
  Notes to
    Consolidated Financial
    Statements  (Continued)
        (In thousands)Common stock issued

$
59,760Acquisition-related costs


1,328Other adjustments


(642
)Total purchase price


60,446Allocation of purchase price:Cash and cash equivalents


(782
)Accounts receivable, net


(9,470
)Other current assets


(381
)Property and equipment, net


(658
)Customer relationships


(24,600
)Provider network


(16,200
)Technology platforms


(1,180
)Other long-term assets


(360
)Accounts payable and accrued
    expenses


9,612Income taxes payable


633Notes payable, debt and other
    obligations


44,889Other long-term liabilities


880Goodwill

$
62,829    F-14




---



##### Table of Contents



PROXYMED,
    INC. AND SUBSIDIARIES
  Notes to
    Consolidated Financial
    Statements  (Continued)
         Form S-4 No. 333-111024)
       F-15




---



##### Table of Contents



PROXYMED,
    INC. AND SUBSIDIARIES
  Notes to
    Consolidated Financial
    Statements  (Continued)
     2004


2003(In thousands except for per
    share data)Revenues

$
95,914


$
104,644Cost of sales


35,655



40,867Selling, general and
    administrative expenses


50,373



49,282Operating income (loss)


(881
)


1,429Interest expense, net


(2,227
)


(2,064
)Net loss


(3,114
)


(1,516
)Basic and diluted net loss per
    share of common stock


(0.25
)


(0.13
)   MedUnite
       F-16




---



##### Table of Contents



PROXYMED,
    INC. AND SUBSIDIARIES
  Notes to
    Consolidated Financial
    Statements  (Continued)
              (3)
    Sale of
    Assets     F-17




---



##### Table of Contents



PROXYMED,
    INC. AND SUBSIDIARIES
  Notes to
    Consolidated Financial
    Statements  (Continued)
     (4)
    Equity
    Transactions  Common Stock
        Series B
    Warrants
  Series C Preferred
    Stock
 F-18




---



##### Table of Contents



PROXYMED,
    INC. AND SUBSIDIARIES
  Notes to
    Consolidated Financial
    Statements  (Continued)
   Series C
    Warrants
  Other Warrants
    Other
  (5)
    Segment
    information   F-19




---



##### Table of Contents



PROXYMED,
    INC. AND SUBSIDIARIES
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Year Ended
    December 31,2005


2004


2003(In thousands)Net revenues by operating segment:Transaction Services

$
66,042


$
71,304


$
46,673Laboratory Communication Solutions


11,477



18,942



24,883$
77,519


$
90,246


$
71,556Net revenues by geographic
    location:Domestic

$
77,519


$
90,140


$
70,340International(1)






106



1,216$
77,519


$
90,246


$
71,556Operating income (loss) by
    operating segment:Transaction Services

$
(104,415
)

$
(3,115
)

$
(920
)Laboratory Communication Solutions


1,238



1,938



1,119Corporate






(797
)


(3,841
)$
(103,177
)

$
(1,974
)

$
(3,642
)Depreciation and amortization by
    operating segment:Transaction Services

$
8,788


$
8,718


$
4,754Laboratory Communication Solutions


517



823



1,369Corporate






222



193$
9,305


$
9,763


$
6,316Capital expenditures and
    capitalized software by operating segment:Transaction Services

$
2,355


$
3,957


$
3,345Laboratory Communication Solutions


497



392



602Corporate










80$
2,852


$
4,349


$
4,027Total assets by operation segment:Transaction Services

$
63,186


$
173,061


$
54,052Laboratory Communication Solutions


12,455



11,342



12,053Corporate










7,025$
75,641


$
184,403


$
73,130     (1)
    
    All amounts are transacted in US Dollars  (6)  Investment
    in Warrant
   F-20




---



##### Table of Contents



PROXYMED,
    INC. AND SUBSIDIARIES
  Notes to
    Consolidated Financial
    Statements  (Continued)
      (7)
    Inventory    2005


2004(In thousands)Materials, supplies and component
    parts

$
290


$
651Work in process


84



32Finished goods


656



1.0981,030



1,781Less: Obsolescence reserve






(6
)$
1,030


$
1,775   (8)
    Property
    and Equipment    Estimated2005


2004


Useful years(In thousands)Furniture, fixtures and equipment

$
2,263


$
1,763


$
4 to 7 yearsComputer hardware and software


12,851



10,132



2 to 5 yearsService vehicles


141



139



5 yearsLeasehold improvements


603



1,087



Life of leaseRevenue earning equipment


1,327



1,302



3 to 5 years17,185



14,423Less: accumulated depreciation


(12,863
)


(9,622
)Property and equipment, net

$
4,322


$
4,801    F-21




---



##### Table of Contents



PROXYMED,
    INC. AND SUBSIDIARIES
  Notes to
    Consolidated Financial
    Statements  (Continued)
   (9)  Goodwill
    and Other Intangible Assets
  Goodwill
      Transaction


LaboratoryServices


Solutions


Total(In thousands)Balance as of December 31,
    2003

$
28,673


$
2,102


$
30,775Goodwill acquired during 2004


62,829







62,829Balance as of December 31,
    2004


91,502



2,102



93,604Adjustments to goodwill


875







875Write off


(68,035
)






(68,035
)Balance as of December 31,
    2005

$
24,342


$
2,102


$
26,444   Other Intangible Assets 
  December 31,


December 31,2005


2004Carrying


Accumulated





Carrying


AccumulatedAmount


Amortization


Net


Amount


Amortization


Net(In thousands)Capitalized software

$
3,133


$
(1,429
)

$
1,704


$
2,661


$
(769
)

$
1,892Purchased technology


8,852



(4,791
)


4,061



10,342



(4,738
)


5,604Customer relationships


13,747



(6,454
)


7,293



34,283



(4,324
)


29,959Provider network


7,565



(2,744
)


4,821



16,200



(1,350
)


14,850$
33,297


$
(15,418
)

$
17,879


$
63,486


$
(11,181
)

$
52,305  F-22




---



##### Table of Contents





PROXYMED,
    INC. AND SUBSIDIARIES




Notes to
    Consolidated Financial
    Statements  (Continued)


















|                       |  |                        |              | 
|---------------------- |  | ---------------------- | ------------ | 
|                       |  | Estimated Useful Lives |             
|                      
|Capitalized software   |  |                        | 3  5 years  | 
|Purchased technology   |  |                        | 3  12 years | 
|Customer relationships |  |                        | 7 years      | 
|Provider network       |  |                        | 7 years      | 













|     |  |                |        | 
|---- |  | -------------- | ------ | 
|     |  | (In thousands) |       
|    
|2006 |  | $              | 6,516  | 
|2007 |  |                | 5,729  | 
|2008 |  |                | 4,293  | 
|2009 |  |                | 1,786  | 
|2010 |  |                | 1,733  | 
|     |  |                |        | 
|     |  | $              | 20,057 | 
|     |  |                |        | 



F-23



---



##### Table of Contents





PROXYMED,
    INC. AND SUBSIDIARIES




Notes to
    Consolidated Financial
    Statements  (Continued)






|     |                                          
|---- | -----------------------------------------
|(10) | Accounts
    Payable and Accrued Expenses







|                                                    |  |                |        |  |      |   |        | 
|--------------------------------------------------- |  | -------------- | ------ |  | ---- | - | ------ | 
|                                                    |  | 2005           |        |  | 2004 |  
|                                                    |  | (In thousands) |       
|                                                   
|Accounts payable                                    |  | $              | 4,165  |  |      | $ | 2,072  | 
|Accrued payroll and related costs                   |  |                | 3,598  |  |      |   | 3,196  | 
|Accrued vendor rebates and network
    fees payable |  |                | 2,292  |  |      |   | 2,825  | 
|Accrued professional fees                           |  |                | 546    |  |      |   | 1,645  | 
|Other accrued expenses                              |  |                | 3,408  |  |      |   | 3,899  | 
|                                                    |  |                |        |  |      |   |        | 
|Total accounts payable and accrued
    expenses     |  | $              | 14,009 |  |      | $ | 13,637 | 
|                                                    |  |                |        |  |      |   |        | 









|     |                     
|---- | --------------------
|(11) | Debt
    Obligations



Revolving Credit Facility and Term
    Debt








12-month






F-24



---



##### Table of Contents



PROXYMED,
    INC. AND SUBSIDIARIES
  Notes to
    Consolidated Financial
    Statements  (Continued)
          Senior Debt
  Convertible Notes
   F-25




---



##### Table of Contents



PROXYMED,
    INC. AND SUBSIDIARIES
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Notes Payable
            2005


2004(In thousands)Related party debt

$



$
18,394Convertible debt


13,137



13,137Line of credit


7,498



Notes payable


4,420



2,38425,055



33,915Less: current maturities


(8,583
)


(20,572
)$
16,472


$
13,343     (In thousands)2006

$
8,5832007


7862008


13,9972009


9412010


748$
25,055  F-26




---



##### Table of Contents



PROXYMED,
    INC. AND SUBSIDIARIES
  Notes to
    Consolidated Financial
    Statements  (Continued)
   (12)
    Income
    Taxes    2005


2004


2003(In thousands)Current:Federal

$



$



$State






40







40



Deferred:Federal










State










Income tax provision

$



$
40


$
     2005


2004


2003$ Amount


%


$ Amount


%


$ Amount


%(In thousands)Federal income tax benefit at
    statutory rate


(35,799
)


(34.0
)


(1,278
)


(34.0
)


(1,700
)


(34.0
)State income tax benefit


(2,562
)


(2.4
)


(133
)


(3.5
)


(174
)


(3.5
)Non-deductible items


13,907



13.2



(90
)


(2.4
)


205



4.1Increase in valuation allowance


24,454



23.2



1,541



41.1



1,669



33.4Total provision

$







$
40



1.2
%

$




     2005


2004(In thousands)Net operating
    losses  Federal

$
73,408


$
69,110Net operating
    losses  State


8,548



8,048Depreciation and amortization


7,747



Capitalized start up costs


1,456



3,951Other  net


4,627



3,889Total deferred tax assets


95,786



84,998Less valuation allowance


(95,786
)


(71,054
)Net deferred tax assets






13,944Depreciation and amortization






(13,944
)Net deferred tax assets

$



$
    F-27




---



##### Table of Contents





PROXYMED,
    INC. AND SUBSIDIARIES




Notes to
    Consolidated Financial
    Statements  (Continued)


















|     |                  
|---- | -----------------
|(13) | Stock
    Options







|                           |  |                   |           |   |             |  |            |                  |  |   |       | 
|-------------------------- |  | ----------------- | --------- | - | ----------- |  | ---------- | ---------------- |  | - | ----- | 
|                           |  |                   |           |   |             |  |            | Weighted Average | 
|                           |  | Options Available |           |   | Options     |  |            | Exercise Price   | 
|                           |  | for Grant         |           |   | Outstanding |  |            | of Options       | 
|                          
|Balance, December 31, 2002 |  |                   | 575,042   |   |             |  | 1,084,555  |                  |  | $ | 23.27 | 
|Options authorized         |  |                   |          |   |             |  |           |                  |  |   |      | 
|Options granted            |  |                   | (443,750  | ) |             |  | 443,750    |                  |  | $ | 13.25 | 
|Options exercised          |  |                   |          |   |             |  | (556       | )                |  | $ | 12.00 | 
|Options expired/forfeited  |  |                   | 90,521    |   |             |  | (101,080   | )                |  | $ | 36.09 | 
|                           |  |                   |           |   |             |  |            |                  |  |   |       | 
|Balance, December 31, 2003 |  |                   | 221,813   |   |             |  | 1,426,669  |                  |  | $ | 19.26 | 
|Options authorized         |  |                   | 750,000   |   |             |  |           |                  |  |   |      | 
|Options granted            |  |                   | (537,253  | ) |             |  | 537,253    |                  |  | $ | 14.96 | 
|Options exercised          |  |                   |          |   |             |  | (1,558     | )                |  | $ | 10.14 | 
|Options expired/forfeited  |  |                   | 142,835   |   |             |  | (149,455   | )                |  | $ | 30.80 | 
|                           |  |                   |           |   |             |  |            |                  |  |   |       | 
|Balance, December 31, 2004 |  |                   | 577,395   |   |             |  | 1,812,909  |                  |  | $ | 17.04 | 
|Options authorized         |  |                   |          |   |             |  |           |                  |  |   |       | 
|Options granted            |  |                   | (991,938  | ) |             |  | 991,938    |                  |  | $ | 5.90  | 
|Options exercised          |  |                   |          |   |             |  |           |                  |  |   |      | 
|Options expired/forfeited  |  |                   | 1,054,680 |   |             |  | (1,054,680 | )                |  | $ | 18.40 | 
|                           |  |                   |           |   |             |  |            |                  |  |   |       | 
|Balance, December 31, 2005 |  |                   | 640,137   |   |             |  | 1,750,167  |                  |  | $ | 9.91  | 



F-28



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##### Table of Contents



PROXYMED,
    INC. AND SUBSIDIARIES
  Notes to
    Consolidated Financial
    Statements  (Continued)
     Weighted AverageRemainingRange of

Number


Contractual Life


Weighed Average


Number


Weighted AverageExercise Prices

Outstanding


(Years)


Exercise Price


Exercisable


Exercise Price$ 3.55  $ 15.00


1,305,785



5.8


$
6.81



360,912


$
9.05$15.01  $ 18.00


250,299



3.7


$
17.09



185,409


$
17.02$18.01  $ 23.00


190,750



2.5


$
19.96



188,061


$
19.97$23.01  $107.85


3,333



2.6


$
105.60



3,332


$
105.601,750,167











737,714     2005


2004


2003Number exercisable


737,714



996,673



825,448Weighted average exercise price

$
14.27


$
19.40


$
22.73     2005


2004


2003Risk-free interest rate


4.43
%


4.18
%


4.08
%Expected life


6.0 years



6.0 years



10.0 yearsExpected volatility


84.0
%


76.2
%


80.8
%Expected dividend yield


0.0
%


0.0
%


0.0
%          F-29




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##### Table of Contents





PROXYMED,
    INC. AND SUBSIDIARIES




Notes to
    Consolidated Financial
    Statements  (Continued)




















2004-2005








30-month






F-30



---



##### Table of Contents





PROXYMED,
    INC. AND SUBSIDIARIES




Notes to
    Consolidated Financial
    Statements  (Continued)














F-31



---



##### Table of Contents



PROXYMED,
    INC. AND SUBSIDIARIES
  Notes to
    Consolidated Financial
    Statements  (Continued)
   (14)
    Supplemental
    Disclosure of Cash Flow Information  Year Ending
    December 31,2005


2004


2003(In thousands)Cash paid for interest

$
2,053


$
1,875


$
932Cash paid for income taxes


880







Increase in purchase price of
    acquisition of PlanVista related to settlement of New York state
    tax liability


875







Acquisition of businesses:Common stock issued for businesses
    acquired






59,760



Debt issued for businesses acquired










Other acquisition costs accrued






1,328



Other non-cash adjustments






(642
)


Details of acquisitions:Working capital components,
    including cash acquired






(388
)


Property and equipment






(658
)


Goodwill






(62,829
)


Intangible assets acquired:Customer Relationships






(24,600
)


Purchased Technology






(1,180
)


Provider Network






(16,200
)


Long-term debt






44,889



Other long-term liabilities, net






520



Cash acquired in acquisitions






782



Net cash acquired from acquisitions

$



$
782


$
Disposition of assets:Detail of disposition:Working capital components, other
    than cash

$



$
3,742


$
Property and equipment, net






757



Net cash provided from disposition

$



$
4,499


$
Non-cash financing activities:Issuance of 500,000 shares of
    Common Stock in conjunction with revolving credit facility and
    term debt with Laurus

$
2,370


$



$
   (15)  Concentration
    of Credit Risk
       F-32




---



##### Table of Contents



PROXYMED,
    INC. AND SUBSIDIARIES
  Notes to
    Consolidated Financial
    Statements  (Continued)
    (16)  Employee
    Benefit Plans
  401(k) Savings
    Plan
    Self-Insurance
  Deferred Compensation
    Plan
  (17)  Contingencies
  Litigation
   F-33




---



##### Table of Contents



PROXYMED,
    INC. AND SUBSIDIARIES
  Notes to
    Consolidated Financial
    Statements  (Continued)
      and/or
     F-34




---



##### Table of Contents



PROXYMED,
    INC. AND SUBSIDIARIES
  Notes to
    Consolidated Financial
    Statements  (Continued)
   Disputes
  Other
  (18)  Commitments
    and Other
  Leases
  Capital


OperatingLeases


Leases(In thousands)2006

$
6


$
1,7832007


1



1,7912008






1,2202009






9572010






181Total minimum lease payments


7


$
5,932Less amount representing interest


(1
)Present value of minimum lease
    payments

$
6     Settlement of Contract
    Dispute
  Employment
    Agreements
 F-35




---



##### Table of Contents



PROXYMED,
    INC. AND SUBSIDIARIES
  Notes to
    Consolidated Financial
    Statements  (Continued)
   (19)  Related
    Party Transactions
            (20)
    Subsequent
    Events  Management
    Changes
  Acquisitions
 F-36




---



##### Table of Contents



PROXYMED,
    INC. AND SUBSIDIARIES
  Notes to
    Consolidated Financial
    Statements  (Continued)
   (21)
    Quarterly
    Financial Data (unaudited)      2005 Quarter Ended(2)March 31


June 30


September 30


December 31(In thousands except share and
    per share data)Net revenues

$
21,714


$
20,781


$
17,769


$
17,255Operating loss

$
(1,190
)

$
(2,466
)

$
(98,360
)

$
(1,161
)Loss from continuing operations

$
(1,791
)

$
(2,886
)

$
(98,779
)

$
(1,838
)Net loss applicable to common
    shareholders

$
(1,791
)

$
(2,886
)

$
(98,779
)

$
(1,838
)Basic and diluted net loss per
    share

$
(0.14
)

$
(0.23
)

$
(7.78
)

$
(0.14
)Basic and diluted weighted average
    common shares outstanding


12,626,567



12,664,516



12,703,702



12,834,137   2004 Quarter Ended(1)March 31


June 30


September 30


December 31Net revenues

$
20,504


$
24,649


$
22,511


$
22,582Operating loss

$
(43
)

$
(264
)

$
(450
)

$
(1,217
)Loss from continuing operations

$
(427
)

$
(772
)

$
(1,028
)

$
(1,573
)Net loss applicable to common
    shareholders

$
(427
)

$
(772
)

$
(1,028
)

$
(1,573
)Net loss per share (basic and
    diluted)

$
(0.05
)

$
(0.06
)

$
(0.08
)

$
(0.12
)Basic and diluted weighted average
    common shares outstanding


8,570,731



12,625,260



12,626,066



12,626,182     (1)
    
    Includes operations of PlanVista from March 2, 2004.(2)
    
    Includes an impairment charge of $96.4 million, see
    Note 9. F-37




---



##### Table of Contents



PROXYMED,
    INC. AND SUBSIDIARIES
 SCHEDULE II  Valuation
    and Qualifying Accounts  Allowance for Doubtful
    AccountsAdditionsBalance at


Charged toYear Ended

Beginning of


Costs and


Charged to Other





Balance atDecember 31,

Year


Expenses


Accounts(1)(2)


Deductions(3)


End of Year(In thousands)2005

$
3,168



695



4,777



3,115


$
5,5252004

$
882



858



7,138



5,710


$
3,1682003

$
1,096



152



803



1,169


$
882     (1)
    
    Includes amounts charged against revenue in 2003 ($803), 2004
    ($1,997) and 2005 ($4,777)(2)
    
    Includes amounts acquired through acquisitions in 2003 ($-0-),
    and 2004 ($5,141), and 2005 ($-0-)(3)
    
    Primarily write-off of bad debts and amounts charged against
    revenues, net of recoveries F-38