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SECURITIES AND EXCHANGE COMMISSIONWashington, D. C. 20549

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FORM 10-Q

|/x/ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
|--- | ---------------------------------------------------------------------------------------

For the quarterly period ended September 30, 2001

OR

|/ / | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
|--- | ----------------------------------------------------------------------------------------

For the transition period from  to

Commission File Number: 0-30822

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SYNAVANT Inc.(Exact name of registrant as specified in its charter)

Delaware(State of Incorporation)

22-2940965(I.R.S. Employer Identification No.)3445 Peachtree Road NE, Suite 1400
Atlanta, GA(Address of principal executive offices)

30326(Zip Code)


Registrant's telephone number, including area code(404) 841-4000

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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes /x/  No / /

Indicate
the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:

Title of Class

Shares Outstanding
at November 1, 2001Common Stock,
par value $.01 per share

15,004,120 Shares


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SYNAVANT Inc.

FORM 10-Q  FOR THE QUARTER ENDED SEPTEMBER 30, 2001

INDEX

|           |  |                                                                                                              |  | PAGE
|---------- |  | ------------------------------------------------------------------------------------------------------------ |  | ----
|PART I.    |  | FINANCIAL INFORMATION                                                                                        |  |     
|ITEM 1.    |  | FINANCIAL STATEMENTS (UNAUDITED)                                                                             |  |     
|           |  | Condensed Consolidated Balance Sheets as of September 30, 2001 and December 31, 2000                         |  | 2   
|           |  | Consolidated Statements of Operations for the Three Months and Nine Months Ended September 30, 2001 and 2000 |  | 3   
|           |  | Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2001 and 2000                  |  | 4   
|           |  | Notes to Condensed Consolidated Financial Statements                                                         |  | 5   
|ITEM 2.    |  | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS                        |  | 10  
|ITEM 3.    |  | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                                                   |  | 25  
|PART II.   |  | OTHER INFORMATION                                                                                            |  |     
|ITEM 1.    |  | LEGAL PROCEEDINGS                                                                                            |  | 26  
|ITEM 2.    |  | CHANGES IN SECURITIES AND USE OF PROCEEDS                                                                    |  | 26  
|ITEM 3.    |  | DEFAULTS UPON SENIOR SECURITIES                                                                              |  | 26  
|ITEM 4.    |  | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                                          |  | 26  
|ITEM 5.    |  | OTHER INFORMATION                                                                                            |  | 26  
|ITEM 6.    |  | EXHIBITS AND REPORTS ON FORM 8-K                                                                             |  | 26  
|SIGNATURES |  | 27                                                                                                          

1

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PART I. FINANCIAL INFORMATION

ITEM I. FINANCIAL STATEMENTS

SYNAVANT Inc.  CONDENSED CONSOLIDATED BALANCE SHEETS(Dollar amounts in thousands, except per share data)

|                                           |                                                                                                                 | September 30,
2001
(Unaudited) |         | December 31,
2000
(Audited)
|------------------------------------------ | --------------------------------------------------------------------------------------------------------------- | ------------------------------ | ------- | ---------------------------
|ASSETS:                                    |                                                                                                                 |                                |         |                            
|CURRENT ASSETS:                            |                                                                                                                 |                                |         |                            
|                                           | Cash and cash equivalents                                                                                       |                                | $       | 10,666                     
|                                           | Accounts receivablenet                                                                                         |                                |         | 39,631                     
|                                           | Other receivables                                                                                               |                                |         | 1,064                      
|                                           | Other current assets (see note 2)                                                                               |                                |         | 7,291                      
|                                           |                                                                                                                 |                                |         |                            
|TOTAL CURRENT ASSETS                       |                                                                                                                 |                                | 58,652  |                            
|                                           |                                                                                                                 |                                |         |                            
|                                           | Property, plant and equipmentnet                                                                               |                                |         | 11,326                     
|                                           | Computer softwarenet                                                                                           |                                |         | 8,405                      
|                                           | Goodwillnet                                                                                                    |                                |         | 43,567                     
|                                           | Long term notes receivable                                                                                      |                                |         | 1,000                      
|                                           | Other assets                                                                                                    |                                |         | 2,790                      
|                                           |                                                                                                                 |                                |         |                            
|TOTAL LONG TERM ASSETS                     |                                                                                                                 |                                | 67,088  |                            
|                                           |                                                                                                                 |                                |         |                            
|TOTAL ASSETS                               |                                                                                                                 | $                              | 125,740 |                            
|                                           |                                                                                                                 |                                |         |                            
|LIABILITIES AND STOCKHOLDERS' EQUITY:      |                                                                                                                 |                                |         |                            
|CURRENT LIABILITIES:                       |                                                                                                                 |                                |         |                            
|                                           | Accounts payable                                                                                                |                                | $       | 11,928                     
|                                           | Accrued restructuring                                                                                           |                                |         | 4,229                      
|                                           | Accrued and other current liabilities                                                                           |                                |         | 13,888                     
|                                           | Accrued income taxes                                                                                            |                                |         | 3,008                      
|                                           | Deferred revenues                                                                                               |                                |         | 8,897                      
|                                           |                                                                                                                 |                                |         |                            
|TOTAL CURRENT LIABILITIES                  |                                                                                                                 |                                | 41,950  |                            
|                                           |                                                                                                                 |                                |         |                            
|                                           | Deferred taxes                                                                                                  |                                |         | 426                        
|                                           | Accrued liability due to former parent                                                                          |                                |         | 9,000                      
|                                           | Other liabilities                                                                                               |                                |         | 411                        
|                                           |                                                                                                                 |                                |         |                            
|TOTAL LIABILITIES                          |                                                                                                                 |                                | 51,787  |                            
|                                           |                                                                                                                 |                                |         |                            
|Commitments and contingencies (see note 3) |                                                                                                                 |                                |         |                            
|Minority interests                         |                                                                                                                 |                                |        |                            
|STOCKHOLDERS' EQUITY:                      |                                                                                                                 |                                |         |                            
|                                           | Common stock, par value $.01, authorized 41,000,000 shares; 15,004,227 shares outstanding at September 30, 2001 |                                |         | 150                        
|                                           | Other stockholders' equity                                                                                      |                                |         | 73,803                     
|                                           |                                                                                                                 |                                |         |                            
|TOTAL STOCKHOLDERS' EQUITY                 |                                                                                                                 |                                | 73,953  |                            
|                                           |                                                                                                                 |                                |         |                            
|TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |                                                                                                                 | $                              | 125,740 |                            
|                                           |                                                                                                                 |                                |         |                            

See
accompanying Notes to the Condensed Consolidated Financial Statements (unaudited).

2

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SYNAVANT Inc.  CONSOLIDATED STATEMENTS OF OPERATIONS  (Unaudited)(Dollar amounts in thousands, except per share data)

|                                                       |                       | Three Months Ended
September 30, |         | Nine Months Ended
September 30, |  
|------------------------------------------------------ | --------------------- | -------------------------------- | ------- | ------------------------------- | -
|
|REVENUES:                                              |                       |                                  |         |                                 |  
|                                                       | Software fees         |                                  | $       | 1,594                           |  
|                                                       | Software services     |                                  |         | 21,123                          |  
|                                                       | Interactive marketing |                                  |         | 18,029                          |  
|                                                       |                       |                                  |         |                                 |  
|TOTAL REVENUES                                         |                       |                                  | 40,746  |                                 |  
|                                                       |                       |                                  |         |                                 |  
|OPERATING COSTS:                                       |                       |                                  |         |                                 |  
|                                                       | Software fees         |                                  |         | 1,041                           |  
|                                                       | Software services     |                                  |         | 15,039                          |  
|                                                       | Interactive marketing |                                  |         | 15,101                          |  
|                                                       |                       |                                  |         |                                 |  
|TOTAL OPERATING COSTS                                  |                       |                                  | 31,181  |                                 |  
|                                                       |                       |                                  |         |                                 |  
|Research & development                                 |                       |                                  | 2,250   |                                 |  
|Selling and administrative expenses                    |                       |                                  | 8,228   |                                 |  
|Restructuring expenses                                 |                       |                                  | 4,620   |                                 |  
|Depreciation and amortization                          |                       |                                  | 5,267   |                                 |  
|Spin related costs                                     |                       |                                  | 729     |                                 |  
|                                                       |                       |                                  |         |                                 |  
|OPERATING LOSS                                         |                       |                                  | (11,529 | )                               |  
|Other incomenet                                       |                       |                                  | (1,520  | )                               |  
|                                                       |                       |                                  |         |                                 |  
|LOSS BEFORE PROVISION (BENEFIT) FOR INCOME TAXES       |                       |                                  | (13,049 | )                               |  
|                                                       |                       |                                  |         |                                 |  
|Income tax (Provision) Benefit                         |                       |                                  | 604     |                                 |  
|                                                       |                       |                                  |         |                                 |  
|NET LOSS                                               |                       |                                  | (12,445 | )                               |  
|                                                       |                       |                                  |         |                                 |  
|Net loss per share of common stock: basic and diluted  |                       | $                                | (0.83   | )                               | $
|Weighted average shares outstanding: basic and diluted |                       |                                  | 14,945  |                                 |  

See
accompanying Notes to the Condensed Consolidated Financial Statements (unaudited).

3

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SYNAVANT Inc.  CONSOLIDATED STATEMENTS OF CASH FLOWS  (Unaudited)(Dollar amounts in thousands)

|                                                                                       |                                                                                                                                                     | Nine Months Ended
September 30, |       
|-------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------- | ------
|
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                  |                                                                                                                                                     |                                 |       
|                                                                                       | Net loss                                                                                                                                            |                                 | $     
|Adjustments to reconcile net loss to net cash provided (used) by operating activities: |                                                                                                                                                     |                                 |       
|                                                                                       | Depreciation and amortization                                                                                                                       |                                 |       
|                                                                                       | Amortization of capitalized computer software                                                                                                       |                                 |       
|                                                                                       | Loss on sale of marketable equity securities                                                                                                        |                                 |       
|                                                                                       | Restructuring costs                                                                                                                                 |                                 |       
|                                                                                       | Deferred income taxes                                                                                                                               |                                 |       
|Changes in operating assets and liabilities:                                           |                                                                                                                                                     |                                 |       
|                                                                                       | Accounts and other receivable                                                                                                                       |                                 |       
|                                                                                       | Accounts payable                                                                                                                                    |                                 |       
|                                                                                       | Accrued liabilities and other current liabilities                                                                                                   |                                 |       
|                                                                                       | Accrued income taxes                                                                                                                                |                                 |       
|                                                                                       | Deferred revenues                                                                                                                                   |                                 |       
|                                                                                       | Other                                                                                                                                               |                                 |       
|                                                                                       |                                                                                                                                                     |                                 |       
|NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES                                       |                                                                                                                                                     |                                 | (9,676
|                                                                                       |                                                                                                                                                     |                                 |       
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                  |                                                                                                                                                     |                                 |       
|                                                                                       | Capital expenditures                                                                                                                                |                                 |       
|                                                                                       | Additions to computer software                                                                                                                      |                                 |       
|                                                                                       | Sale of marketable equity securities                                                                                                                |                                 |       
|                                                                                       | Other                                                                                                                                               |                                 |       
|                                                                                       |                                                                                                                                                     |                                 |       
|NET CASH PROVIDED (USED) IN INVESTING ACTIVITIES                                       |                                                                                                                                                     |                                 | 530   
|                                                                                       |                                                                                                                                                     |                                 |       
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                  |                                                                                                                                                     |                                 |       
|                                                                                       | Payments for deferred loan fees                                                                                                                     |                                 |       
|                                                                                       | Transfers from IMS HEALTH                                                                                                                           |                                 |       
|                                                                                       |                                                                                                                                                     |                                 |       
|NET CASH PROVIDED (USED) IN FINANCING ACTIVITIES                                       |                                                                                                                                                     |                                 | (195  
|                                                                                       |                                                                                                                                                     |                                 |       
|Effect of exchange rate changes on cash and cash equivalents                           |                                                                                                                                                     |                                 | 239   
|                                                                                       |                                                                                                                                                     |                                 |       
|Decrease in cash and cash equivalents                                                  |                                                                                                                                                     |                                 | (9,102
|Cash and cash equivalents, beginning of period                                         |                                                                                                                                                     |                                 | 19,768
|                                                                                       |                                                                                                                                                     |                                 |       
|Cash and cash equivalents, end of period                                               |                                                                                                                                                     | $                               | 10,666
|                                                                                       |                                                                                                                                                     |                                 |       
|Supplemental Disclosure of Cash Flow Information:                                      |                                                                                                                                                     |                                 |       
|                                                                                       | Cash payments for foreign, state and local income taxes were $2,516 and $3,807 for the nine months ended September 30, 2001 and 2000, respectively. |                                

See
accompanying Notes to the Condensed Consolidated Financial Statements (unaudited).

4

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SYNAVANT Inc.  NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation.The accompanying unaudited condensed consolidated financial statements have been prepared in
accordance with U.S. generally accepted accounting principles for interim financial information and with the rules and regulations of the Securities and Exchange Commission (the "SEC"). The condensed
consolidated financial statements and related notes should be read in conjunction with the consolidated financial statements and related notes of SYNAVANT Inc. (the "Company" or "SYNAVANT") on
Form 10-K. These condensed consolidated financial statements include estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent
assets, and amounts of revenues and expenses. Actual results may differ from those estimated. In the opinion of management, all adjustments of a normal recurring nature considered necessary for a fair
presentation of financial position, results of operations and cash flows for the periods presented have been included. Certain information and footnote disclosures have been condensed or omitted
pursuant to SEC rules and regulations. However, management believes that the disclosures made are adequate for a fair presentation of the results of all interim periods reported herein.

Organization.On August 31, 2000, IMS HEALTH INCORPORATED ("IMS HEALTH") completed the spin off of SYNAVANT to
its stockholders (the "Distribution" or "Spin"). As a result of the Spin, SYNAVANT became a separate legal entity. SYNAVANT serves the pharmaceutical industry by developing and selling pharmaceutical
relationship management solutions that support sales and marketing decision-making and program implementation. SYNAVANT's business is composed of the pharmaceutical industry automated sales and
marketing support business of the former IMS HEALTH Strategic Technologies, Inc., certain other former foreign subsidiaries of IMS HEALTH; substantially all of IMS HEALTH's former interactive
and direct marketing businesses, including the business of Clark-O'Neill, Inc. ("Clark O'Neill"); and Permail Pty., Ltd. ("Permail"), of which SYNAVANT owns 51%. These businesses, prior
to the Spin, were managed by IMS HEALTH and reported within IMS HEALTH's consolidated financial statements. In connection with the Spin, the Company and IMS HEALTH entered into a Distribution
Agreement, dated August 31, 2000, which described certain matters related to the transaction (SeeNote 2).

The
Company operated as a business unit of IMS HEALTH for all periods prior to August 31, 2000 ("Respective Periods"). The financial statements during the Respective Periods
have been prepared using IMS HEALTH's historical basis in the assets and liabilities and historical results of operations related to the Company's business, which were all under the common control of
IMS HEALTH. The financial statements generally reflect the financial position, results of operations, and cash flows of the Company as if it were a separate entity for all periods presented.

The
financial statements during the Respective Periods include allocations of certain IMS HEALTH corporate and other expenses (including cash management, legal, accounting, tax,
employee benefits, insurance services, data services and other corporate overhead) relating to the Company's business for the Respective Periods. Management believes the methods used to allocate these
costs are reasonable. The financial statements exclude allocations of revenues and costs for related party transactions with IMS HEALTH as it relates to the licensing of data, except for the periods
subsequent to the Distribution, which include costs consistent with agreements executed in connection with the Spin. The financial information for the Respective Periods included herein may not
necessarily reflect the financial position, results of operations, and cash flows of the Company in the future or what they would have been if the Company had been a separate entity during the periods
presented.

Reclassifications.Certain prior period amounts have been reclassified to conform with current period presentation. The
reclassifications have resulted in an increase to Software Services Costs of

5

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$1.3 million and a decrease in Software Fee Costs of $1.1 million and Selling and Administrative expenses of $0.2 million for the nine months ended September 30, 2001.

Earnings Per Share.Basic and diluted earnings per share ("EPS") are calculated in accordance with Statement of
Financial Standards No. 128. For the Company's calculation, the numerator is the same for the calculation of both basic and diluted EPS. The denominator for basic and diluted EPS is the same
for both the three month and nine month periods ended September 30, 2001 and 2000 as the loss from operations would otherwise cause the inclusion of common stock options to be
anti-dilutive. Options to purchase 7,643,191 shares of common stock at a weighted average price of $10.16 were outstanding but not included in the computation of diluted EPS for the three
and nine months ended September 30, 2001.

The
Distribution resulted in a tax-free dividend to shareholders of IMS HEALTH who received one share of SYNAVANT Common Stock for every 20 shares of IMS HEALTH common
stock held as of July 28, 2000. Basic and diluted income per share and the average number of shares outstanding for the three and nine months ended September 30, 2000 were adjusted to
reflect the twenty-for-one reverse stock split. The EPS computation for the three and nine months ended September 30, 2000 includes the weighted average number of IMS
HEALTH common shares outstanding.

Recently Issued Accounting Standards.In June 1998, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities". SFAS No. 133 requires that all derivative instruments be recorded on the balance sheet at their fair value.
In July 1999, the FASB issued SFAS No. 137, "Accounting for Derivative Instruments and Hedging ActivitiesDeferral of the Effective Date of SFAS No. 133an
amendment of FASB Statement No. 133". Citing concerns about companies' ability to modify their information systems in time to apply SFAS No. 133, the FASB delayed its effective date for
one year, to fiscal years beginning after June 15, 2000 (January 1, 2001 for the Company). The adoption of the statement has not had a material impact on the Company's consolidated
financial statements.

In
July 2001, the FASB issued SFAS No. 141, "Business Combinations" and SFAS No. 142 "Goodwill and other Intangibles". Under these new standards the FASB
eliminated accounting for certain mergers and acquisitions as poolings of interests, eliminated amortization of goodwill and indefinite life intangible assets, and established new impairment
measurement procedures for goodwill. For the Company, the standards become effective for all acquisitions completed on or after June 30, 2001. Changes in financial statement treatment for
goodwill and intangible assets arising from mergers and acquisitions completed prior to June 30, 2001 become effective January 1, 2002.

In
June of 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement Obligations." The statement provides accounting and reporting standards for recognizing
obligations related to asset retirement costs associated with the retirement of tangible long-lived assets. Under this statement, legal obligations associated with the retirement of
long-lived assets are to be recognized at their fair value in the period in which they are incurred if a reasonable estimate of fair value can be made. The fair value of the asset
retirement costs is capitalized as part of the carrying amount of the long-lived asset and subsequently allocated to expense using a systematic and rational method over the assets' useful
life. Any subsequent changes to the fair value of the liability due to the passage of time or changes in the amount or timing of estimated cash flows is recognized as an accretion expense. The Company
will be required to adopt this statement no later then January 1, 2003.

In
October of 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets", which is effective for fiscal years beginning
after December 15, 2001. This statement supercedes FASB Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of." However, it retains the fundamental provisions of SFAS No. 121 for the recognition and measurement of the impairment of long-lived assets to be held and used and the
measurement of long-lived assets to be disposed of by sale. Impairment on Goodwill

6

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is not included in the scope of SFAS No. 144 and will be treated in accordance with the accounting standards established in SFAS No. 142, "Goodwill and Other Intangible Assets."
According to SFAS No. 144, long-lived assets are measured at the lower of carrying amount or fair value less cost to sell, whether reported in continuing or discontinued operations.
The statement applies to all long-lived assets, including discontinued operations, and replaces the provisions of APB Opinion No. 30,
"Reporting the Results of Unusual and Infrequently Occurring Events and Transactions", for the disposal of segments of a business. The Company will be required to adopt this statement no later than
January 1, 2002.

The
Company is currently assessing the impact of implementing these recently issued statements on its results of operations, financial position and cash flows.

NOTE 2. DISTRIBUTION AGREEMENT

Pursuant to the Distribution Agreement, the Company was contractually entitled to receive shares of Gartner Group common stock with a fair value of
$4.0 million as of the close of business on the Distribution date and a note receivable from a third party with a carrying value of $2.5 million. The Gartner Group common stock was
included in Other current assets as of December 31, 2000. During the second quarter, the Gartner Group common stock was transferred to the Company. During the third quarter, the Gartner Group
repurchased all the outstanding shares held by the Company for $3.1 million in cash. As a result of this transaction, the Company recorded a realized loss of $0.9 million during the
third quarter which is included in Other incomenet. The note receivable from a third party was not transferred to the Company until October 29, 2001, subsequent to the end of the
third quarter. The Company has classified the note receivable from a third party as a long term note receivable and is accounting for it in accordance with the underlying asset to be received. During
the second quarter, the Company revalued this note receivable to $1.0 million. This valuation has appropriately been reflected in the financial statements as of September 30, 2001.

To
facilitate the Distribution, IMS HEALTH had committed to certain credit support arrangements with SYNAVANT. The IMS HEALTH credit support letter would, if necessary, provide
certain credit support sufficient to meet the working capital needs of SYNAVANT up to the one-year anniversary of the Distribution. On April 27, 2001, SYNAVANT Inc. entered
into a stand-alone revolving credit facility with Foothill Capital Corporation (the "Foothill Facility"), a wholly-owned subsidiary of Wells Fargo & Company. The Foothill Facility has a term of
five years with a maximum credit line of $20 million (See"Management's Discussion and AnalysisLiquidity and Capital Resources"). As
of September 30, 2001, the Company has not required the use of the Foothill Facility. Concurrent with the Foothill Facility obtained by the Company, IMS HEALTH was relieved of its obligation to
provide this credit support. In addition, SYNAVANT and IMS HEALTH have agreed in principal to resolutions regarding other outstanding matters in connection with the Distribution relating to the
Company's cash balances at the time of the Distribution, the transfer of the Company's Scriptrac businesses in Canada and Australia to IMS HEALTH, the transfer of IMS HEALTH's Call Reporting
businesses in Latin America to the Company, and the formalization of real estate leases between the Company and IMS HEALTH. The resolution of these matters will not result in any additional charge to
the Company's Statement of Operations.

NOTE 3. CONTINGENCIES

SYNAVANT has from time to time been involved in legal proceedings and litigation arising in the ordinary course of business. In the opinion of management, the
outcome of all current proceedings, claims and litigation will not materially affect SYNAVANT's consolidated financial position. In addition, the Company is subject to certain other contingencies
discussed below.

7

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In connection with the Distribution, SYNAVANT is jointly and severally liable to other parties in connection with prior IMS HEALTH Distribution Agreements for the liabilities relating
to certain tax matters as well as a legal matter ("Distribution Liabilities"). Under the Distribution Agreement, IMS HEALTH and SYNAVANT agreed that SYNAVANT would have a maximum liability of
$9.0 million for the Distribution Liabilities. Management believes it is probable that at least one of these matters will have an unfavorable outcome and as a result the Company has recorded a
$9.0 million liability associated with these matters as part of the Distribution. The Distribution Agreement required that if an unfavorable outcome occurred, the amount due up to
$9.0 million is due and payable in 2003. In concurrence with the Foothill Facility obtained by the Company (See"Management's Discussion and
AnalysisLiquidity and Capital Resources"), IMS HEALTH has agreed to defer any payments associated with the Distribution Liabilities until 2005. Under the
Distribution Agreement, SYNAVANT would be liable for amounts in excess of $9.0 million, related to the Distribution Liabilities, only to the extent that all of the parties involved do not have
sufficient combined assets to settle such contingencies.

NOTE 4. RESTRUCTURING CHARGE

On August 16, 2001, the Company announced that, in an attempt to optimize customer responsiveness and organizational effectiveness, it would simplify
its senior leadership structure as well as eliminate certain other positions in its international and domestic operations. This action has resulted in a reduction in personnel by approximately 6% to
8% worldwide. On September 25, 2001, the Company completed the first step in the restructuring process, resulting in the elimination of 70 positions which is reflected in the charge of
$4.6 million for the three months ended September 30, 2001. These reductions included six senior management positions with the remainder being operating, technical and administrative
staff. The restructuring charge is composed entirely of employee severance and separation related costs, such as extended benefits and outplacement fees. Of the $4.6 million charge,
$0.4 million was paid during the period, with the remainder expected to be paid within the next twelve to twenty-four months.

NOTE 5. INCOME TAX

The Company's consolidated tax provision was a benefit of $0.6 million for the three months and a provision of $1.3 million for the nine months
ended September 30, 2001, respectively, compared with a benefit of $5.6 million for the same periods in the prior year. The Company's effective tax rate is different than the U.S.
federal statutory tax rate due to taxable income in certain foreign jurisdictions, non-deductible goodwill amortization, and losses for which a full valuation has been provided.

NOTE 6. OPERATIONS BY SEGMENT

The Company delivers pharmaceutical relationship management solutions globally in approximately 30 countries. The Company's chief operating decision-makers
evaluate the business on a global basis with consideration of resource allocation on a geographic basis. The Americas Segment principally consists of operations for the United States, the Company's
country of domicile. The Europe Segment includes, but is not limited to, the operations of the United Kingdom, which is the largest region in this segment. The Asia Pacific Segment consists
principally of the operations of Australia. For further

8

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information on material individual countries see the additional disclosure in the second table of this note.

|                                     |                                             | Americas |   | Europe  |   | Asia Pacific |        | Total |  
|------------------------------------ | ------------------------------------------- | -------- | - | ------- | - | ------------ | ------ | ----- | -
|
|Nine Months Ended September 30, 2001 |                                             |          |   |         |   |              |        |       |  
|                                     | Operating revenues                          |          | $ | 79,359  |   | $            | 41,033 |       | $
|                                     | Segment operating income (loss)             |          |   | (25,966 | ) |              | 933    |       |  
|                                     | Non-operating income (loss)                 |          |   | 208     |   |              | (1,465 | )     |  
|                                     | Loss before income taxes                    |          |   | (25,758 | ) |              | (532   | )     |  
|                                     | Provision for income taxes                  |          |   |         |   |              |        |       |  
|                                     | Net loss                                    |          |   |         |   |              |        |       |  
|                                     | Segment total depreciation and amortization |          |   | 15,571  |   |              | 1,503  |       |  
|                                     | Segment capital expenditures                |          |   | 826     |   |              | 1,083  |       |  
|                                     | Identifiable assets at September 30, 2001   |          |   | 89,933  |   |              | 29,731 |       |  

|                                     |                                             | Americas |   | Europe   |   | Asia Pacific |        | Total |  
|------------------------------------ | ------------------------------------------- | -------- | - | -------- | - | ------------ | ------ | ----- | -
|Nine Months Ended September 30, 2000 |                                             |          |   |          |   |              |        |       |  
|                                     | Operating revenues                          |          | $ | 80,102   |   | $            | 42,319 |       | $
|                                     | Segment operating income (loss)             |          |   | (137,158 | ) |              | 1,934  |       |  
|                                     | Non-operating income (loss)                 |          |   | (318     | ) |              | (32    | )     |  
|                                     | Loss before income taxes                    |          |   | (137,476 | ) |              | 1,902  |       |  
|                                     | Provision for income taxes                  |          |   |          |   |              |        |       |  
|                                     | Net loss                                    |          |   |          |   |              |        |       |  
|                                     | Segment total depreciation and amortization |          |   | 133,565  |   |              | 1,258  |       |  
|                                     | Segment capital expenditures                |          |   | 4,118    |   |              | 816    |       |  
|                                     | Identifiable assets at September 30, 2000   |          |   | 121,184  |   |              | 34,162 |       |  

Information
about the Company's operations and long-lived assets by geography is as follows:

|                                     |                      | US |   | UK     |  | Australia |        | Rest of
World(2) |   | Total 
|------------------------------------ | -------------------- | -- | - | ------ |  | --------- | ------ | ---------------- | - | ------
|Nine Months Ended September 30, 2001 |                      |    |   |        |  |           |        |                  |   |       
|                                     | Operating revenues   |    | $ | 74,984 |  | $         | 15,917 |                  | $ | 10,237
|                                     | Long-lived assets(1) |    |   | 57,892 |  |           | 3,250  |                  |   | 686   
|Nine Months Ended September 30, 2000 |                      |    |   |        |  |           |        |                  |   |       
|                                     | Operating revenues   |    | $ | 75,309 |  | $         | 18,955 |                  | $ | 13,034
|                                     | Long-lived assets(1) |    |   | 73,606 |  |           | 9,072  |                  |   | 1,025 

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF RATIONS

The following "Management's Discussion and Analysis of Financial Condition and Results of Operations" includes forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact made in this Quarterly Report on Form 10-Q are forward-looking, which
can be identified by the use of forward-looking terminology such as "may," "will," "expect," "anticipate," "estimate," "believe," "continue" or other similar words. Such forward-looking statements are
based on management's current plans and expectations and are subject to risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking
statements. Factors that could cause or contribute to such differences include, but are not limited to: risks associated with operating on a global basis; the ability to identify, consummate and
integrate acquisitions, alliances and ventures on satisfactory terms; the ability to develop new or advanced technologies, systems or products; the ability to successfully maintain historic effective
tax rates; regulatory, legislative and enforcement initiatives; the ability to obtain future financing on satisfactory terms and consolidation in the pharmaceutical industry. These risks and
uncertainties are not intended to be exhaustive and should be read in conjunction with other cautionary statements made herein including, but not limited to, the material set forth herein under the
heading "Factors That May Affect Future Performance." The Company assumes no obligation to update any such forward-looking statements.

This
discussion and analysis should be read in conjunction with the condensed consolidated financial statements and related notes contained in Item I of this report and with the
Company's Annual Report on Form 10-K for the year ended December 31, 2000.

OVERVIEW

On August 31, 2000 ("Distribution Date"), SYNAVANT was spun off from IMS HEALTH, a provider of information solutions to the pharmaceutical and
healthcare industries. SYNAVANT serves the pharmaceutical industry by developing and selling pharmaceutical relationship management solutions that support sales and marketing decision-making and
program implementation. Simultaneous with the spin-off, Clark-O'Neill, another wholly-owned subsidiary of IMS HEALTH, merged into SYNAVANT.

Pursuant
to the spin-off, shares of SYNAVANT common stock were distributed to the shareholders of IMS HEALTH. This transaction was structured as a tax-free
dividend to the stockholders of IMS HEALTH, who received one share of our Common Stock (together with the associated preferred share purchase right) for every 20 shares of IMS HEALTH common stock held
as of the record date for the
distribution. Prior to August 31, 2000, these businesses and products were managed as part of the core IMS segment of IMS HEALTH.

SIEBEL ALLIANCE

On July 19, 2000, the Company announced a five-year strategic alliance (the "Alliance") with Siebel Systems, Inc. ("Siebel"), a
leading provider of eBusiness application software, to develop, market, and sell an integrated eBusiness software and service solution featuring Siebel ePharma, a pharmaceutical version of Siebel
eBusiness Applications, and the Company's global implementation and support capabilities.

As
part of the Alliance, the Company has agreed with Siebel to a revenue-sharing agreement for certain new client contracts that incorporate a joint solution offering as well as for
certain new client contracts based on the Company's existing Cornerstone and Premieresm offerings.

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Under the terms of the Alliance, the Company is contractually obligated to discontinue the future enhancement and development of its Cornerstone and
Premieresm products, but continues to support users of these products under current and future contracts. The Company anticipates that it will eventually phase out these products and
replace them with a new generation of joint solution offerings incorporating Siebel technology.

The
Company has incurred significant costs to make the transition from implementing and supporting proprietary software to implementing and supporting third party software.

RESULTS OF OPERATIONS

THREE MONTHS ENDED SEPTEMBER 30, 2001 COMPARED WITH THREE MONTHS ENDED SEPTEMBER 30, 2000.

REVENUE

Total revenues for the three months ended September 30, 2001 decreased by $2.0 million and 4.7% to $40.7 million from $42.7 million
for the three months ended September 30, 2000. An increase in Software fees was offset by a stronger U.S. Dollar, the divestiture of EMRON and a decline in interactive marketing revenues.
Excluding the impact of a stronger U.S. Dollar and the impact of the EMRON divestiture, revenues were essentially unchanged. EMRON, an operating unit of the Interactive marketing segment, was divested
during the fourth quarter 2000.

SOFTWARE FEES.Software fees increased to $1.6 million for the three months ended September 30, 2001 from
$0.7 million for the three months ended September 30, 2000, an increase of $0.9 million and 128.6%. The increase in Software fees is primarily due to revenue generated from
customer sales representative expansions in North America. Excluding the impact of a stronger U.S. Dollar, Software fees revenue increased 134.7%.

SOFTWARE SERVICES.Software services revenue decreased to $21.1 million for the three months ended
September 30, 2001 from $21.5 million for the three months ended September 30, 2000, a decrease of $0.4 million and 1.9%. The decrease in revenue from Software services is
principally due to fluctuations in foreign currency exchange rates. Excluding the impact of a stronger U.S. dollar, Software services revenue remained essentially unchanged.

INTERACTIVE MARKETING.Interactive marketing revenue declined to $18.0 million for the three months ended
September 30, 2001 from $20.5 million for the three months ended September 30, 2000, a decline of $2.5 million and 12.2%. The decline in revenue from Interactive marketing
is primarily due to the absence of EMRON, which was divested in late 2000, lower business volumes in the US and at Permail, our non-strategic 51% owned direct mail business in Australia,
and a stronger U.S. Dollar, partially offset by the inclusion of Pharbase license revenue from IMS HEALTH in 2001. Excluding the impact of the EMRON divestiture, a stronger U.S. Dollar, and the
inclusion of Pharbase revenue on a consistent basis, Interactive marketing revenue on the adjusted basis only declined by 5.5%.

OPERATING COSTS

COST OF SOFTWARE FEES.Cost of Software fees decreased to $1.0 million for the three months ended
September 30, 2001, from $6.1 million for the three months ended September 30, 2000, a decrease of $5.1 million and 83.6%. The decrease is due to the absence of
$5.3 million of accelerated amortization of impaired software as a result of the Distribution and the Siebel Alliance in the third quarter of 2000 (see discussion of Siebel in "Overview"). This
decrease is partially offset by the third party royalty costs associated with the increase in software fee revenue during the three months ended September 30, 2001.

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COST OF SOFTWARE SERVICES.Cost of Software services decreased to $15.0 million for the three months ended
September 30, 2001, from $15.6 million for the three months ended September 30, 2000, a decrease of 3.8%. The decrease in Cost of Software services is primarily due to cost
containment actions, including the lower incentives, and the impact of a stronger U.S. Dollar.

COST OF INTERACTIVE MARKETING.Cost of Interactive marketing revenue declined to $15.1 million for the three
months ended September 30, 2001, from $17.4 million for the three months ended September 30, 2000. The decline in the Cost of Interactive marketing is primarily driven by the
absence of EMRON, divested in late 2000 and lower volumes in the US and at Permail, our non-strategic 51% owned direct mail business in Australia.

OPERATING EXPENSES

RESEARCH AND DEVELOPMENT.Research and development expenses declined by 23.3% to $2.3 million for the three
months ended September 30, 2001 from $3.0 million for the three months ended September 30, 2000. The decline in research and development costs is principally attributable to a
change in development priorities driven by the Siebel Alliance. Development resource levels have been reduced and priorities have been realigned since the Company entered into the Siebel Alliance in
July 2000. Development efforts in the future will be focused on the development of applications that are proprietary to SYNAVANT and compatible with the Siebel technology.

SELLING AND ADMINISTRATIVE.Selling and administrative expenses increased to $8.2 million for the three months
ended September 30, 2001 from $7.6 million for the three months ended September 30, 2000. The increase in Selling and administrative expenses is principally due to higher costs
associated with running an independent public company.

DEPRECIATION AND AMORTIZATION.Depreciation and amortization for the three months ended September 30, 2001
declined to $5.3 million from $115.9 million for the same period in the prior year. The decline is due to the absence of the Goodwill impairment charge recorded in the quarter ended
September 30, 2000.

OPERATING LOSS

Operating loss decreased to $11.5 million for the three months ended September 30, 2001 compared with an operating loss of $124.0 million
for the three months ended September 30, 2000. The $112.5 million decrease in operating loss is primarily due to the absence of the impairment charge related to capitalized software and
goodwill that was incurred in the third quarter ended September 30, 2000, partially offset by the costs associated with mobilizing the organization to implement and support the SYNAVANT
solution using Siebel technology and the higher costs associated with running an independent public company.

RESTRUCTURING

On August 16, 2001, the Company announced that, in an attempt to optimize customer responsiveness and organizational effectiveness, it would simplify
its senior leadership structure as well as eliminate certain other positions in its international and domestic operations. This action resulted in a reduction in personnel by approximately 6% to 8%
worldwide. On September 25, 2001, the Company completed the first step in the restructuring process, resulting in the elimination of 70 positions which is reflected in the charge of
$4.6 million for the three months ended September 30, 2001. These reductions included six senior management positions with the remainder being operating, technical and administrative
staff. The restructuring charge is composed entirely of employee severance and separation related costs, such as extended benefits and outplacement fees. Of the $4.6 million charge,
$0.4 million was paid during the period, with the remainder expected to be paid within the next twelve

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to twenty-four months. The Company is currently considering additional restructuring actions that could take effect in the fourth quarter of 2001 and the first half of 2002. The estimated
charges for these additional actions if executed are estimated to be between $3.4 million and $7.4 million. These actions along with the actions taken in the third quarter are expected
to generate savings of between $6.0 million and $9.0 million on an annual basis, with minimal impact on 2001 results.

TAXES

The Company had a consolidated tax benefit of $0.6 million for the three months ended September 30, 2001, compared with a benefit of
$5.6 million for the three months ended September 30, 2000. The change reflects the absence of tax benefits that were realized in 2000 and the impact of global tax planning initiatives
in 2001. The Company's effective tax rate is different than the U.S. federal statutory tax rate due to taxable income in certain foreign jurisdictions, non-deductible goodwill
amortization, and losses for which a full valuation has been provided.

NINE MONTHS ENDED SEPTEMBER 30, 2001 COMPARED WITH NINE MONTHS ENDED SEPTEMBER 30, 2000.

REVENUE

Total revenues for the nine months ended September 30, 2001 decreased by $4.4 million and 3.2% to $131.5 million from
$135.9 million for the nine months ended September 30, 2000. This decrease was due to a stronger U.S. Dollar, the divestiture of EMRON and lower Interactive marketing volumes partially
offset by increased software fees. Excluding the impact of a stronger U.S. Dollar and the EMRON divestiture, revenues were up 2.8%. EMRON, an operating unit of the Interactive marketing segment, was
divested during the fourth quarter 2000.

SOFTWARE FEES.Software fees increased to $8.8 million for the nine months ended September 30, 2001 from
$5.0 million for the nine months ended September 30, 2000, an increase of $3.8 million and 76.0%. The increase in Software fees is primarily due to revenue from customer sales
representative expansions in North America and initial Siebel implementations in Europe. Excluding the impact of a stronger U.S. Dollar, Software fees revenue increased 81.3%.

SOFTWARE SERVICES.Software services revenue was unchanged at $64.9 million for the nine months ended
September 30, 2001 compared to the same period in the prior year. Increases in revenue from Software services, principally due to hardware and software rebills associated with customer sales
representative expansions in North America, were offset by a stronger U.S. Dollar. Excluding the impact of a stronger U.S. dollar, Software services revenue increased 2.2%.

INTERACTIVE MARKETING.Interactive marketing revenue declined to $57.9 million for the nine months ended
September 30, 2001 from $66.1 million for the nine months ended September 30, 2000, a decline of $8.2 million and 12.4%. The decline in revenue from Interactive marketing
is primarily due to the absence of EMRON, which was divested in late 2000, lower volumes in the US and at Permail, our non-strategic 51% owned direct mail business in Australia, and a
stronger U.S. Dollar, partially offset by the inclusion of Pharbase license revenue from IMS HEALTH in 2001. Excluding the impact of a stronger U.S. Dollar, the EMRON divestiture, and the inclusion of
Pharbase revenue on a consistent basis, Interactive marketing revenue on the adjusted basis only declined by 4.4%.

OPERATING COSTS

COST OF SOFTWARE FEES.Cost of Software fees decreased to $4.5 million for the nine months ended
September 30, 2001, from $7.3 million for the nine months ended September 30, 2000, a decrease of $2.8 million. The decrease is due to $5.3 million of accelerated
amortization of impaired

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software as a result of the Distribution and the Siebel Alliance in the third quarter of 2000 (see discussion of Siebel in "Overview"). The impairment charge is partially offset by higher third party
software royalties associated with the Siebel Alliance and higher software revenue.

COST OF SOFTWARE SERVICES.Cost of Software services increased to $49.9 million for the nine months ended
September 30, 2001, from $43.5 million for the nine months ended September 30, 2000, an increase of $6.4 million. The increase in Cost of Software services is primarily due
to hardware and software rebills relating to customer sales representative expansions in North America, the costs associated with mobilizing the organization to begin implementing and supporting the
new SYNAVANT solution with technology from Siebel and investments made in selected markets in Europe and Asia. These costs have been partially offset by cost containment actions, including lower
incentives, and the impact of a stronger US Dollar.

COST OF INTERACTIVE MARKETING.Cost of Interactive marketing revenue declined to $47.9 million for the nine
months ended September 30, 2001, from $56.8 million for the nine months ended September 30, 2000, a decrease of $8.9 million. The decline in the Cost of Interactive
marketing is primarily driven by the absence of EMRON, divested in late 2000, and lower business volumes in the US and at Permail, our non-strategic 51% owned direct mail business in
Australia.

OPERATING EXPENSES

RESEARCH AND DEVELOPMENT.Research and development expenses declined by $3.1 million and 31.6% to
$6.7 million for the nine months ended September 30, 2001 from $9.8 million for the nine months ended September 30, 2000. The decline in research and development costs is
principally attributable to a change in development priorities driven by the Siebel Alliance. Development resource levels have been reduced and priorities have been realigned since the Company entered
into the Siebel Alliance in July 2000. Development efforts in the future will be focused on the development of applications that are proprietary to SYNAVANT and compatible with the Siebel
technology.

SELLING AND ADMINISTRATIVE.Selling and administrative expenses increased by $2.7 million and 11.5% to
$26.2 million for the nine months ended September 30, 2001 from $23.5 million for the nine
months ended September 30, 2000. The increase in Selling and administrative expenses is principally due to higher costs associated with running an independent public company, partially offset
by cost containment actions.

DEPRECIATION AND AMORTIZATION.Depreciation and amortization for the nine months ended September 30, 2001
declined to $16.0 million from $128.4 million for the same period in the prior year. The decline is primarily driven by the absence of the capitalized software and goodwill impairment
charge recorded in the quarter ended September 30, 2000.

OPERATING LOSS

Operating loss for the nine months ended September 30, 2001, was $25.7 million compared with a loss of $134.5 million for the six months
ended September 30, 2000. The $108.8 million decrease in operating loss is primarily due to the absence of the impairment charge related to capitalized software and goodwill that was
incurred in the third quarter ended September 30, 2000, partially offset by the costs associated with mobilizing the organization to implement and support the SYNAVANT solution using Siebel
technology and the higher costs associated with running an independent public company.

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RESTRUCTURING

As referenced in the three month discussion of the Results of Operations (see "Three Months Ended September 30, 2001 Compared with the Three Months
Ended September 30, 2000"), the Company recorded a restructuring charge of $4.6 million in the third quarter of 2001.

TAXES

The Company's consolidated tax provision was $1.3 million for the nine months ended September 30, 2001, compared with a tax benefit of
$5.6 million for the nine months ended September 30, 2000. The change reflects the absence of tax benefits that were realized in 2000 and the impact of global tax planning initiatives in
2001. The Company's effective tax rate is different than the U.S. federal statutory tax rate due to taxable income in certain foreign jurisdictions, non-deductible goodwill amortization,
and losses for which a full valuation has been provided.

RESULTS BY SEGMENT

THE AMERICAS.Revenue for the nine months ended September 30, 2001 was $79.4 million compared with
$80.1 million for the nine months ended September 30, 2000. The slight decrease was due to lower interactive marketing volumes and the divesture of EMRON, offset by customer sales
representative expansions in North America. The operating loss for the nine months ended September 30, 2001 was $26.0 million compared to a loss of $137.2 million for the nine
months ended September 30, 2000 primarily due to the impairment charge related to capitalized software and goodwill that was incurred in the third quarter ended September 30, 2000,
partially offset by the additional costs associated with running an independent public company and the $3.4 million restructuring charge for the region.

EUROPE.Revenue for the nine months ended September 30, 2001 was $41.0 million compared with
$42.3 million for the nine months ended September 30, 2000. The decrease was largely driven by lower Interactive marketing volumes and the negative impact of foreign currency
fluctuations. Operating income for the nine months ended September 30, 2001 decreased to $0.9 million from $1.9 million in the nine months ended September 30, 2000 due to
lower revenues, the $1.2 million restructuring charge for the region and the costs associated with investments in selected European countries.

ASIA PACIFIC.Revenue for the nine months ended September 30, 2001, decreased to $11.1 million compared
to $13.5 million for the nine months ended September 30, 2000. The decrease was driven by lower interactive marketing revenues in Australia and the negative impact of foreign currency
fluctuations. The operating loss for the nine months ended September 30, 2001 was $0.6 million compared to an operating income of $0.7 million for the nine months ended
September 30, 2000. Excluding the Permail operation, revenue decreased by 0.4 million and operating income decreased by $0.9 million.

NON-U.S. OPERATING AND MONETARY ASSETS

SYNAVANT operates globally, deriving 43% of its revenues in the first nine months of 2001 from non-U.S. operations. As a result, fluctuations in
the value of foreign currencies relative to the U.S. Dollar may increase the volatility of reported U.S. Dollar operating results.

Non-U.S.
monetary assets are maintained in currencies other than the U.S. Dollar, principally those of the Euro, the Pound Sterling and the Australian Dollar. Changes in
the value of these currencies relative to the U.S. Dollar are charged or credited to stockholders' equity. The effect of exchange rate changes during the nine months ended September 30, 2001
decreased the U.S. Dollar amount of cash and cash equivalents by $0.2 million.

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LIQUIDITY AND CAPITAL RESOURCES

The Company operated as an entity wholly-owned by IMS HEALTH prior to the Distribution Date and, as such, was dependent on IMS HEALTH for cash management,
credit and financial resources on an as needed basis to fund operations and to fund seasonal cash needs. The Company had a credit support letter from IMS HEALTH that provided certain credit support.

On
March 6, 2001, the Company entered into a revolving credit facility (the "ABN Facility") with ABN AMRO that was guaranteed by IMS HEALTH. The Company did not require the use
of the Facility, which was terminated by the Company on April 27, 2001 concurrently with the commencement of the stand-alone revolving credit facility with Foothill Capital Corporation (the
"Foothill Facility"), a wholly-owned subsidiary of Wells Fargo & Company.

On
April 27, 2001, SYNAVANT Inc. entered into the Foothill Facility, which has a term of five years with a maximum credit line of $20 million. The available line
is determined based on a percentage of the eligible accounts receivable in the U.S. Any borrowing against the line will be at a rate of Prime plus 100 basis points. As of September 30, 2001,
the Company has not required the use of the Foothill Facility. The Company has filed an 8-K on May 8, 2001 related to the closing of the Foothill Facility.

Concurrent
with the Foothill Facility, IMS HEALTH has agreed to defer any payments associated with the Distribution Liabilities (See Note 3) until January 1, 2005. In
addition, SYNAVANT and IMS HEALTH have also agreed in principal to resolutions on other outstanding matters in connection with the Distribution relating to the Company's cash balances at the time of
the Distribution, the transfer of the Company's Scriptrac businesses in Canada and Australia to IMS HEALTH, the transfer of IMS HEALTH's Call Reporting businesses in Latin America to the Company and
the formalization of real estate leases between the Company and IMS HEALTH. The resolution of these matters will not result in any additional charge to the Company's Statement of Operations.

We
currently estimate that our cash and working capital needs for the next twelve months can be met by cash on hand, amounts available under our credit facility, and cash flow from
operations. If our expectations change due to market conditions, strategic opportunities or otherwise, then our capital requirements may vary materially from those currently anticipated.

CASH FLOWS

Net cash used in operating activities totaled $9.7 million for the nine months ended September 30, 2001 compared with net cash provided by
operating activities of $4.3 million for the nine months ended September 30, 2000. The decrease of $14.0 million primarily reflects a larger Net Loss, excluding the capitalized
software and goodwill impairment charge, and the timing of collections relating to deferred revenue.

Net
cash provided by investing activities totaled $0.5 million for the nine months ended September 30, 2001 compared with cash used in investing activities of
$9.5 million for the nine months ended September 30, 2000. The decrease in the cash outflow of $10.0 million was primarily due to lower capital expenditures, elimination of
capitalization of software development costs and the sale of marketable equity securities.

Net
cash used in financing activities totaled $0.2 million for the nine months ended September 30, 2001 compared with net cash provided by financing activities of
$19.0 million for the nine months ended September 30, 2000. The decrease in cash flows was due to the absence of transfers from the Company's former parent, IMS HEALTH, that occurred
through the third quarter in 2000.

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CHANGES IN FINANCIAL POSITION AT SEPTEMBER 30, 2001 COMPARED WITH DECEMBER 31, 2000

Cash and cash equivalents were $10.7 million as of September 30, 2001 compared with $19.8 million as of December 31, 2000. The
decrease in cash and cash equivalents of $9.1 million was primarily due to the net loss for the period as well as the timing in working capital requirements, partially offset by the sale of
marketable equity securities in the period.

Accounts ReceivablesNet.Decreased to $39.6 million at September 30, 2001 from
$44.4 million at December 31, 2000 due to the focused efforts on collections and lower revenues.

Other Current Assets.Increased $1.3 million to $7.3 million primarily due to the purchase of computer
equipment to be delivered as part of a customer sales representative expansion in the United States and deferred loan costs associated with the Company's credit facility.

Computer Software.Decreased $4.6 million to $8.4 million due to amortization of the remaining book value
based on the greater of straight line or revenue based amortization.

GoodwillNet.Decreased to $43.6 million at September 30, 2001 from $52.9 million at
December 31, 2000. The reduction was primarily due to amortization of the remaining book value on a straight line basis.

Accrued Restructuring.Increased to $4.2 million as a result of a restructuring charge of $4.6 million
taken in the third quarter of 2001, of which $0.4 million was paid during the quarter.

Accrued and Other Current Liabilities.Decreased to $13.9 million at September 30, 2001 from
$15.9 million at December 31, 2000. The decrease reflected the timing of certain supplier payments made during the period and the adjustment of incentive accruals.

Deferred Revenue.Decreased to $8.9 million at September 30, 2001 from $13.2 million at
December 31, 2000. The decrease related to the recognition of annual maintenance contract revenue and the delivery of previously contracted commitments for certain customers in North America.

Total Equity.Decreased to $74.0 million at September 30, 2001 from $101.6 million at
December 31, 2000. The reduction was primarily due to the Net Loss during the period.

FACTORS THAT MAY AFFECT FUTURE PERFORMANCE

In addition to other information in this quarterly report on Form 10-Q, the following risk factors should be
carefully considered in evaluating us and our business because such factors currently may have a significant impact on our business, operating results and financial condition. As a result of the risk
factors set forth below, actual results could differ materially from those projected in any forward-looking statements.

COMPETITION FROM OTHER PROVIDERS OF PHARMACEUTICAL RELATIONSHIP MANAGEMENT SOLUTIONS MAY REDUCE DEMAND FOR OUR PRODUCTS AND SERVICES OR CAUSE US TO REDUCE THE PRICE OF OUR
PRODUCTS AND SERVICES.

We compete with other companies that sell sales force software products and services and interactive marketing services that specifically target the
pharmaceutical industry. We also face competition from many vendors that market and sell Customer Relationship Management ("CRM") solutions in the
consumer packaged goods industry. In addition, we compete with various companies that provide support services and interactive marketing services similar to our services.

Current
economic conditions may delay or stop customer decisions to invest in new CRM solutions. Customers may elect to maintain their current Sales Force Automation ("SFA") and
customer

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systems or select solutions that are less costly and less comprehensive than a Siebel ePharma solution. Such delays may have a negative impact on the Company's business results.

We
may not compete effectively in our markets. Competitive pressure may result in our reducing the price of our products and services, which would negatively affect our revenues and
operating margins. If we are unable to compete effectively in our markets, our business, results of operations and financial condition would be materially and adversely affected.

Increased
competition is anticipated based on the growing strategic focus on CRM and the success of Siebel Systems eBusiness solutions. Large established companies such as Oracle, SAP
and PeopleSoft that are well established providers of ERP software solutions are expected to offer new CRM solutions that may compete with SYNAVANT solutions based on Siebel products. During the
second quarter of 2001, Dendrite International and Oracle announced a relationship designed to jointly develop products for this marketplace. It is unclear what impact this relationship will have in
the marketplace.

Some
of our competitors and potential competitors are part of large corporate groups and have longer operating histories and significantly greater financial, sales and marketing,
technology and other resources than we have. In the event that we are unable to compete successfully with these companies, it could have a material adverse effect on our business, operating results or
financial condition.

IF OUR ALLIANCE WITH SIEBEL IS UNSUCCESSFUL, OUR BUSINESS MAY SUFFER MATERIALLY.

You should note the following risk factors relating to our Alliance with Siebel:



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WE MAY NEED ADDITIONAL FINANCING TO MEET OUR FUTURE CAPITAL REQUIREMENTS.

We invest in research and development as well as in capital projects to enhance existing products and services and develop new products and services in
response to technological and marketplace changes. In addition, the strategic Alliance with Siebel requires us to make significant investments during 2001 to launch our joint offering. To the extent
that we need additional funding in the future to finance our operations and capital expenditures, we may not be able to access the capital markets or otherwise obtain necessary financing, or to obtain
such financing in a timely manner or on commercially favorable terms. In the event that we satisfy our financing needs through the issuance of additional equity securities, such issuance would be
dilutive to existing stockholders.

THE LOSS OF OUR KEY PERSONNEL COULD NEGATIVELY IMPACT OUR BUSINESS AND RESULTS OF OPERATIONS.

Our success depends on our continuing ability to attract, hire, train and retain a substantial number of highly skilled managerial, technical, sales, marketing
and customer support personnel. In particular, our Chairman and Chief Executive Officer, Wayne P. Yetter, is integral to our future success and is not currently bound by an employment agreement.
Competition for qualified personnel is intense, and we may fail to retain our key employees or to attract or retain other highly qualified personnel. Even if we are able to attract qualified
personnel, new hires frequently require extensive training before they achieve desired levels of productivity. If we are unable to hire or fail to retain competent personnel, our business, results of
operations and financial condition could be materially and adversely affected. None of our key employees are bound by an employment agreement.

FAILURE TO COMPLETE OUR RESTRUCTURING SUCCESSFULLY MAY ADVERSELY IMPACT US.

In order to streamline business processes and improve customer focus and responsiveness, the Company has undertaken a restructuring effort. We began this
restructuring in August 2001, however, additional adjustments to our structure remain outstanding and further adjustments may be necessary if we are unable to meet our anticipated levels of revenue.

The
following action occurred as a result of this restructuring:



The
following additional actions are expected to occur in the course of this restructuring:



Our
failure to complete our restructuring successfully and to adapt to our new structure may have a material adverse effect on our financial condition and results of operations.

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OUR FAILURE TO INTRODUCE NEW OR ENHANCED PRODUCTS IN A TIMELY MANNER COULD RENDER OUR PRODUCTS OBSOLETE AND UNMARKETABLE.

We compete in businesses that develop and market sophisticated information systems, software and other technology. We expect that these systems, software and
other technology will be subject to refinements as such systems and underlying technologies are upgraded and advanced. As various systems and technologies become outdated, we may not be able to
enhance or replace them, to enhance or replace them as quickly as our competition, or to develop and market new or enhanced products and services in the future on schedule and on a
cost-effective basis. Our failure to develop and market new or enhanced products that compete with other available products could materially and adversely affect our business, results of
operations and financial condition.

Our
success will depend in part upon our ability to:



We
are devoting significant resources to the enhancement of our solutions offerings.

DEFECTS IN OUR PRODUCTS COULD DELAY MARKET ADOPTION OF OUR SOFTWARE OR CAUSE US TO COMMIT SIGNIFICANT RESOURCES TO REMEDIAL EFFORTS.

Software products frequently contain errors or failures, especially when first introduced or when new versions or enhancements are released. We could be forced
to delay the commercial release of products until software problems have been corrected. We could lose revenues as a result of software errors or defects. Our products are intended for use in sales
and marketing applications that may be critical to a customer's business. As a result, we expect that customers and potential customers will have a greater sensitivity to product defects than the
market for software products generally. Testing errors may also be found in new products, enhancements or releases after commencement of commercial shipments, resulting in loss of revenue or delay in
market acceptance, damage to our reputation, or increased service and warranty costs, any of which could have a material adverse effect on our business, operating results or financial condition. The
foregoing would also be applicable to Siebel products that we intend to redistribute. With respect to such products, we would also depend on Siebel for the correction of errors and the delivery of any
required modifications relating to such products.

OUR SUCCESS DEPENDS ON THE STRENGTH OF THE PHARMACEUTICAL INDUSTRY.

Our products and services are primarily used in connection with the marketing and sale of prescription-only drugs. The market for
prescription-only drugs is undergoing a number of significant changes, including:



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Our
failure to respond effectively to any or all of these and other changes in the marketplace for prescription-only drugs could have a material and adverse effect on our
business, operating results and financial condition.

FORECASTING FUTURE RESULTS MAY BE DIFFICULT SINCE WE HAVE ONLY RECENTLY BEGUN OPERATIONS AS AN INDEPENDENT COMPANY.

We have a limited operating history as an independent public company and have relied on IMS HEALTH for various financial and administrative services in
conducting our operations. As an independent company, we may not continue to generate cash flow at the same level as we did as a wholly-owned subsidiary of IMS HEALTH. Additionally, the Company may
not be able to establish the financial and administrative structure necessary to operate successfully as an independent public company. Finally, the development of such structure may require a
significant amount of management's time and other resources.

SIGNIFICANT FLUCTUATIONS IN OUR QUARTERLY AND ANNUAL OPERATING RESULTS MAY ADVERSELY AFFECT THE MARKET PRICE OF OUR COMMON STOCK.

We believe that our quarterly and annual operating results are likely to fluctuate significantly in the future, and our results of operations may fall below
the expectations of securities analysts and investors. If this occurs or if market analysts perceive that it will occur, our market value could decrease substantially. The selection of a PRM software
product often entails an extended decision-making process because of the strategic implications and substantial costs associated with a customer's license of the software. As a result, the
decision-making process typically takes nine to eighteen months, although in some cases it may take even longer. Accordingly, we cannot control or predict the timing of our execution of contracts with
customers. In addition, an implementation process of three to nine months is customary before the software is rolled out to a customer's sales force. Other factors may cause significant fluctuations
in our quarterly and annual operating results, including:



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AS WE EXPAND OUR INTERNATIONAL SALES AND MARKETING ACTIVITIES, OUR BUSINESS WILL BE MORE SUSCEPTIBLE TO NUMEROUS RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS.

We operate globally, deriving 43% of our revenues during the nine months of 2001 from foreign operations. As a result, fluctuations in the value of foreign
currencies relative to the U.S. Dollar may increase the volatility of our operating results. To be successful, we believe we must expand our operations in emerging markets such as eastern Europe and
Asia. As a result, we expect to commit significant resources to expand our international sales and marketing activities. If successful, we will be subject to a number of risks associated with
international business activities. These risks generally include:



EXPOSURE TO CERTAIN CONTINGENT LIABILITIES MAY MATERIALLY AND ADVERSELY AFFECT US.

We are subject to certain material contingent liabilities. As a condition to our spin-off from IMS HEALTH, we are required to undertake to be
jointly and severally liable to certain corporate predecessors of IMS HEALTH for IMS HEALTH's obligations under certain agreements with such entities, including potential liability relating to a
complaint filed against such entities alleging violations of federal antitrust laws and seeking $350 million in damages. Pursuant to our agreement with IMS HEALTH, IMS HEALTH will indemnify us
for any liability we incur in connection with such contingent liabilities in excess of $9.0 million. In concurrence with the Foothill Facility obtained by the Company, IMS HEALTH has agreed to
defer any payments associated with the Distribution Liabilities until 2005 (see Note 3). Any failure of IMS HEALTH to fulfill its indemnification obligations that resulted in our obligation to
fund a substantial portion of such excess liabilities could have a material adverse effect on our business, operating results and financial condition.

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POTENTIAL TAXATION.

If the distribution of SYNAVANT shares of common stock to IMS HEALTH shareholders, pursuant to the spin off, were not to qualify under Section 355 of
the Internal Revenue Code, the aggregate corporate tax liability could be approximately $100 million and SYNAVANT could be severally liable for such tax. In the event that SYNAVANT were
obligated to fund a substantial portion of such liability, it would have a material adverse effect on SYNAVANT'S financial condition. Moreover, each IMS HEALTH stockholder that received shares of
SYNAVANT common stock in the spin off would be treated as if such stockholder had received a taxable distribution in an amount equal to the fair market value of the SYNAVANT common stock received.

GOVERNMENTAL REGULATION MAY MATERIALLY AND ADVERSELY AFFECT OUR ABILITY TO DISTRIBUTE CONTROLLED SUBSTANCES THROUGH THE MAIL.

We currently distribute controlled substances to doctors' offices through the mail as part of certain interactive marketing programs we provide on behalf of
pharmaceutical manufacturers. It is important to our business that this practice of distributing prescription-only drugs continues. Future legislation may restrict our ability to provide
these types of services. If any such legislation is enacted, it could have a material and adverse effect on our business, operating results and financial condition.

WE RELY ON OUR ABILITY TO PROTECT OUR INTELLECTUAL PROPERTY.

We rely on a combination of trade secret, copyright and trademark laws, non-disclosure and other contractual agreements, and technical measures to
protect our proprietary technology. The steps we have taken or will take in the future may not prevent misappropriation of our technology. Further, protective actions we have taken or will take in the
future may not prevent competitors from developing products with features similar to our products. In addition, effective copyright and trade secret protection may be unavailable or limited in certain
foreign countries. Despite our efforts to protect our products' proprietary rights, unauthorized parties may attempt to copy aspects of our products or to obtain and use information that we regard as
proprietary. Litigation may be necessary to enforce our intellectual property rights, to protect our trade secrets, to determine the validity and scope of the proprietary rights of others or to defend
against claims of infringement or invalidity. Such litigation could result in substantial costs and diversion of resources and could harm our business, operating results and financial condition.

CLAIMS AGAINST US REGARDING OUR PROPRIETARY TECHNOLOGY COULD REQUIRE US TO PAY LICENSING OR ROYALTY FEES OR TO MODIFY OR DISCONTINUE OUR PRODUCTS.

Any claim that our products infringe on the intellectual property rights of others could materially and adversely affect our business, results of operations
and financial condition. Because knowledge of a third party's patent rights is not required for a determination of patent infringement and because the United States Patent and Trademark Office is
issuing new patents on an ongoing basis, infringement claims against us are a continuing risk.

Infringement
claims against us could cause product release delays, require us to redesign our products or require us to enter into royalty or license agreements. These agreements may
be unavailable on acceptable terms. Litigation, regardless of the outcome, could result in substantial cost, divert management attention and delay or reduce customer purchases. Claims of infringement
are becoming increasingly common as the software industry matures and as courts apply expanded legal protections to software products. Third parties may assert infringement claims against us regarding
our proprietary technology and intellectual property licensed from others. Generally, third-party software licensors indemnify us from claims of infringement. However, licensors may be unable to
indemnify us fully for such claims, if at all.

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If a court determines that one of our products violates a third party's patent or other intellectual property rights, there is a material risk that the revenue from the sale of the
infringing product will be significantly reduced or eliminated, as we may have to:



In
addition, if a court finds that one of our products infringes a third party's patent or other intellectual property rights, then we may be liable to that third party for actual
damages and attorneys' fees. If a court finds that we wilfully infringed on a third party's patent, the third party may be able to recover treble damages, plus attorneys' fees and costs.

OUR CERTIFICATE OF INCORPORATION, OUR BYLAWS AND OUR AGREEMENT WITH IMS HEALTH CONTAIN PROVISIONS THAT MAY DISCOURAGE A TAKEOVER.

Our Amended and Restated Certificate of Incorporation and Amended and Restated By-Laws contain provisions that may have the effect of discouraging
an acquisition of control of the Company not approved by our Board of Directors. Such provisions may also have the effect of discouraging third parties from making proposals involving an acquisition
or change of control of the Company, although such proposals, if made, might be considered desirable by a majority of our stockholders. Such provisions could further have the effect of making it more
difficult for third parties to cause the replacement of our Board of Directors. These provisions include:



These
provisions have been designed to enable us to develop our businesses and foster our long-term growth without disruptions caused by the threat of a takeover not
deemed by our Board of Directors to be in the best interests of us and our stockholders. In addition, under the Distribution Agreement we entered into with IMS HEALTH, we agree that until
August 31, 2002 we will not, among other things, merge or consolidate with another corporation, sell or transfer all or substantially all of our assets, or take any other action which would
result in one or more persons acquiring a 50 percent or greater interest in us, unless, before taking such action, we obtain a written opinion of a law firm or a ruling from the Internal
Revenue Service that such action will not affect the tax-free treatment of the distribution. Such provisions may have the effect of discouraging third parties from making proposals
involving an acquisition or change of control of the Company.

We
have a stockholder rights plan that is designed to protect our stockholders in the event of an unsolicited offer and other takeover tactics that, in the opinion of our Board of
Directors, could impair

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the Board's ability to represent stockholder interests. The provisions of our stockholder rights plan may render an unsolicited takeover of the Company more difficult or less likely to occur or might
prevent such a takeover.

Pursuant
to the Distribution Agreement with IMS HEALTH, we are each subject to certain non-competition arrangements that restrict our respective business activities for a
specified period after the distribution. Pursuant to the terms of the Distribution Agreement, the restrictions would generally be binding on an entity that acquires us or is the survivor in a business
combination with the Company. Such restrictions may have the effect of discouraging third parties from making proposals involving an acquisition or change of control of the Company. We are also
subject to the provisions of Delaware corporate law, which may restrict certain business combination transactions.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Information in response to this Item is set forth in "Non-U.S. Operating and Monetary Assets" under Management's Discussion and Analysis of
Financial Condition and Results of Operations.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

On August 21, 2001, Gabrielle Harriset. al.initiated an action against SYNAVANT before the Industrial
Relations Commission of New South Wales, Australia seeking orders that certain non-compete provisions of a Shared Acquisition Agreement and an Employment Agreement (collectively the
"Agreement") be declared void or varied so as to limit the period of restraint contemplated by the Agreement. SYNAVANT counterclaimed by commencing an action before the Federal Court of Australia on
September 6, 2001. On October 29, 2001, the Federal Court of Australia ordered Gabrielle Harris to be restrained for a period of six months from October 23, 2001 from engaging in
any activity which is directly competitive with SYNAVANT's Direct Mail Processing, Integrated Technology and Data Marketing business. With respect to all remaining respondents, the Court found that
the restraints imposed by the Agreement was void.

Information
in response to this Item is also set forth in "Note 3. Contingencies" of the Notes to Condensed Consolidated Financial Statements.

Item 2. Changes In Securities

None.

Item 3. Default Upon Senior Securities

None.

Item 4. Submission of Matters to a Vote of Security Holders

None.

Item 5. Other Information

None.

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits



(b)
Reports on Form 8-K

On
August 16, 2001, the Company filed Form 8-K under Item 5 announcing its global restructuring (File No. 0-30822).

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

SYNAVANT INC.

|    |  | Signature                                         |  | Title                                                                                            |  | Date             
|--- |  | ------------------------------------------------- |  | ------------------------------------------------------------------------------------------------ |  | -----------------
|By: |  | /s/WAYNE P. YETTERWayne P. Yetter                 |  | Chairman and Chief Executive Officer
(Principal Executive Officer)                               |  | November 14, 2001
|By: |  | /s/CLIFFORD A. FARREN, JR.Clifford A. Farren, Jr. |  | Vice President, Finance and Chief Financial Officer (Principal Financial and Accounting Officer) |  | November 14, 2001

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