##### Table of Contents



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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

________________

FORM 10-Q
________________

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2001

COMMISSION FILE NUMBER: 000-24539

ECLIPSYS CORPORATION
(Exact name of registrant as specified in its charter)

|                                  |  |                                                
|--------------------------------- |  | -----------------------------------------------
|DELAWARE
(State of Incorporation) |  | 65-0632092
(IRS Employer Identification Number)

777 East Atlantic Avenue
Suite 200
Delray Beach, Florida
33483
(Address of principal executive offices)

(561)-243-1440
(Telephone number of registrant)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 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 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.

|                             |  |                                      |            | 
|---------------------------- |  | ------------------------------------ | ---------- | 
|Class                        |  | Shares outstanding as of May 8, 2001
|                             |  |                                     
|Common Stock, $.01 par value |  |                                      | 43,308,671 | 





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TABLE OF CONTENTS



|         |                                                                                                                  |  |  |  |  |  |  | 
|-------- | ---------------------------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I. 
|         | Condensed Consolidated Balance Sheets (unaudited)  As of March 31, 2001 and December 31, 2000                  
|         | Condensed Consolidated Statements of Operations (unaudited)  For the Three Months ended March 31, 2001 and 2000
|         | Condensed Consolidated Statements of Cash Flows (unaudited)  For the Three Months ended March 31, 2001 and 2000
|         | Notes to Condensed Consolidated Financial Statements (unaudited)                                                
|         | Managements Discussion and Analysis of Financial Condition and Results of Operations                           
|         | Quantitative and Qualitative Disclosures About Market Risk                                                      
|PART II.
|         | Exhibits and Reports on Form 8-K                                                                                



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##### Table of Contents



ECLIPSYS CORPORATION

FORM 10-Q

FOR THE QUARTER ENDED MARCH 31, 2001

INDEX

|        |  |                                                                                                                 
|------- |  | ----------------------------------------------------------------------------------------------------------------
|PART I  |  | Financial Information                                                                                           
|       
|       
|       
|       
|       
|       
|       
|       
|Item 1. |  | Condensed Consolidated Balance Sheets (unaudited)  As of March 31, 2001 and December 31, 2000                  
|       
|       
|       
|       
|       
|       
|       
|       
|        |  | Condensed Consolidated Statements of Operations (unaudited)  For the Three Months ended
March 31, 2001 and 2000
|       
|       
|       
|       
|       
|       
|       
|       
|        |  | Condensed Consolidated Statements of Cash Flows (unaudited)  For the Three Months ended
March 31, 2001 and 2000
|       
|       
|       
|       
|       
|       
|       
|       
|        |  | Notes to Condensed Consolidated Financial Statements (unaudited)                                                
|       
|       
|       
|       
|       
|       
|       
|       
|Item 2. |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                           
|       
|       
|       
|       
|       
|       
|       
|       
|Item 3. |  | Quantitative and Qualitative Disclosures About Market Risk                                                      
|       
|       
|       
|       
|       
|       
|       
|       
|PART II |  | Other Information                                                                                               
|       
|       
|       
|       
|       
|       
|       
|       
|Item 6. |  | Exhibits and Reports on Form 8-K                                                                                

2



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##### Table of Contents






PART I.




ITEM 1.

ECLIPSYS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
AS OF MARCH 31, 2001 AND DECEMBER 31, 2000
(IN THOUSANDS)

|                                            |                                      |   |                |          |                   |   |         |          |  
|------------------------------------------- | ------------------------------------ | - | -------------- | -------- | ----------------- | - | ------- | -------- | -
|                                            |                                      |   | MARCH 31, 2001 |          | DECEMBER 31, 2000
|                                            |                                      |   |                |          |                  
|ASSETS                                     
|                                           
|                                           
|                                           
|                                           
|Current assets:                            
|                                           
|                                           
|                                           
|                                           
|                                            | Cash and cash equivalents            |   | $              | 145,358  |                   |   | $       | 20,799   |  
|                                           
|                                           
|                                           
|                                           
|                                            | Accounts receivable, net             |   |                | 63,784   |                   |   |         | 63,912   |  
|                                           
|                                           
|                                           
|                                           
|                                            | Inventory                            |   |                | 313      |                   |   |         | 1,065    |  
|                                           
|                                           
|                                           
|                                           
|                                            | Other current assets                 |   |                | 6,617    |                   |   |         | 6,854    |  
|                                            |                                      |   |                |          |                   |   |         |         
|Total current assets                        |                                      |   | 216,072        |          |                   |   | 92,630  |         
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|Property and equipment, net                 |                                      |   | 19,787         |          |                   |   | 16,801  |         
|                                           
|                                           
|                                           
|                                           
|Capitalized software development costs, net |                                      |   | 12,046         |          |                   |   | 11,469  |         
|                                           
|                                           
|                                           
|                                           
|Acquired technology, net                    |                                      |   | 15,434         |          |                   |   | 19,714  |         
|                                           
|                                           
|                                           
|                                           
|Intangible assets, net                      |                                      |   | 5,585          |          |                   |   | 7,831   |         
|                                           
|                                           
|                                           
|                                           
|Other assets                                |                                      |   | 8,347          |          |                   |   | 7,667   |         
|                                            |                                      |   |                |          |                   |   |         |         
|TOTAL ASSETS                                |                                      | $ | 277,271        |          |                   | $ | 156,112 |         
|                                            |                                      |   |                |          |                   |   |         |         
|LIABILITIES AND STOCKHOLDERS EQUITY       
|                                           
|                                           
|                                           
|                                           
|Current liabilities:                       
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                            | Deferred revenue                     |   | $              | 53,570   |                   |   | $       | 45,970   |  
|                                           
|                                           
|                                           
|                                           
|                                            | Current portion of long-term debt    |   |                |         |                   |   |         | 314      |  
|                                           
|                                           
|                                           
|                                           
|                                            | Other current liabilities            |   |                | 21,499   |                   |   |         | 28,361   |  
|                                            |                                      |   |                |          |                   |   |         |         
|Total current liabilities                   |                                      |   | 75,069         |          |                   |   | 74,645  |         
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|Deferred revenue                            |                                      |   | 3,374          |          |                   |   | 5,258   |         
|                                           
|                                           
|                                           
|                                           
|Long-term debt                              |                                      |   |               |          |                   |   | 1,177   |         
|                                           
|                                           
|                                           
|                                           
|Other long-term liabilities                 |                                      |   | 1,408          |          |                   |   | 1,628   |         
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|Stockholders equity:                      
|                                           
|                                           
|                                           
|                                           
|                                            | Common stock                         |   |                | 432      |                   |   |         | 371      |  
|                                           
|                                           
|                                           
|                                           
|                                            | Unearned stock compensation          |   |                | (140     | )                 |   |         | (176     | )
|                                           
|                                           
|                                           
|                                           
|                                            | Additional paid-in capital           |   |                | 387,071  |                   |   |         | 259,903  |  
|                                           
|                                           
|                                           
|                                           
|                                            | Accumulated deficit                  |   |                | (189,635 | )                 |   |         | (186,459 | )
|                                           
|                                           
|                                           
|                                           
|                                            | Accumulated other comprehensive loss |   |                | (308     | )                 |   |         | (235     | )
|                                           
|                                           
|                                           
|                                           
|                                            |                                      |   |                |          |                   |   |         |         
|Total stockholders equity                  |                                      |   | 197,420        |          |                   |   | 73,404  |         
|                                            |                                      |   |                |          |                   |   |         |         
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY  |                                      | $ | 277,271        |          |                   | $ | 156,112 |         
|                                            |                                      |   |                |          |                   |   |         |         

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE UNAUDITED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

3



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##### Table of Contents






ECLIPSYS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2001 AND 2000
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)

|                                                   |                                       |   |                    |        |      |   |        |        | 
|-------------------------------------------------- | ------------------------------------- | - | ------------------ | ------ | ---- | - | ------ | ------ | 
|                                                   |                                       |   | THREE MONTHS ENDED
|                                                   |                                       |   | MARCH 31,         
|                                                   |                                       |   |                   
|                                                   |                                       |   | 2001               |        | 2000
|                                                   |                                       |   |                    |        |     
|REVENUES                                          
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Systems and services                  |   | $                  | 51,760 |      |   | $      | 60,640 | 
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Hardware                              |   |                    | 2,911  |      |   |        | 4,050  | 
|                                                   |                                       |   |                    |        |      |   |        |       
|TOTAL REVENUES                                     |                                       |   | 54,671             |        |      |   | 64,690 |       
|                                                  
|                                                  
|                                                  
|                                                  
|                                                  
|                                                  
|                                                  
|                                                  
|COSTS AND EXPENSES                                
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Cost of systems and services revenues |   |                    | 30,813 |      |   |        | 32,277 | 
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Cost of hardware revenues             |   |                    | 2,283  |      |   |        | 3,276  | 
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Sales and marketing                   |   |                    | 10,643 |      |   |        | 9,275  | 
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Research and development              |   |                    | 9,363  |      |   |        | 9,774  | 
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | General and administrative            |   |                    | 2,347  |      |   |        | 2,326  | 
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Depreciation and amortization         |   |                    | 3,802  |      |   |        | 3,654  | 
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Transaction costs                     |   |                    |       |      |   |        | 3,100  | 
|                                                   |                                       |   |                    |        |      |   |        |       
|TOTAL COSTS AND EXPENSES                           |                                       |   | 59,251             |        |      |   | 63,682 |       
|                                                   |                                       |   |                    |        |      |   |        |       
|INCOME (LOSS) FROM OPERATIONS                      |                                       |   | (4,580             | )      |      |   | 1,008  |       
|                                                  
|                                                  
|                                                  
|                                                  
|                                                  
|                                                  
|                                                  
|                                                  
|                                                  
|                                                  
|                                                  
|                                                  
|                                                  
|                                                  
|                                                  
|                                                  
|Interest income, net                               |                                       |   | 1,404              |        |      |   | 385    |       
|                                                  
|                                                  
|                                                  
|                                                  
|Other income, net                                  |                                       |   |                   |        |      |   | 3,596  |       
|                                                   |                                       |   |                    |        |      |   |        |       
|NET INCOME (LOSS)                                  |                                       | $ | (3,176             | )      |      | $ | 4,989  |       
|                                                   |                                       |   |                    |        |      |   |        |       
|BASIC NET INCOME (LOSS) PER COMMON SHARE           |                                       | $ | (0.08              | )      |      | $ | 0.14   |       
|                                                   |                                       |   |                    |        |      |   |        |       
|DILUTED NET INCOME (LOSS) PER COMMON SHARE         |                                       | $ | (0.08              | )      |      | $ | 0.13   |       
|                                                   |                                       |   |                    |        |      |   |        |       
|BASIC WEIGHTED AVERAGE COMMON SHARES OUTSTANDING   |                                       |   | 41,295             |        |      |   | 36,504 |       
|                                                   |                                       |   |                    |        |      |   |        |       
|DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING |                                       |   | 41,295             |        |      |   | 38,645 |       
|                                                   |                                       |   |                    |        |      |   |        |       

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE UNAUDITED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

4



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##### Table of Contents






ECLIPSYS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2001 AND 2000
(IN THOUSANDS)

|                                                                                                    |                                             |   |                                                                   |                                                                                                              |   |                    |         |        |   |        |         |  
|--------------------------------------------------------------------------------------------------- | ------------------------------------------- | - | ----------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------ | - | ------------------ | ------- | ------ | - | ------ | ------- | -
|                                                                                                    |                                             |   |                                                                   |                                                                                                              |   | THREE MONTHS ENDED
|                                                                                                    |                                             |   |                                                                   |                                                                                                              |   | MARCH 31,         
|                                                                                                    |                                             |   |                                                                   |                                                                                                              |   |                   
|                                                                                                    |                                             |   |                                                                   |                                                                                                              |   | 2001               |         | 2000  
|                                                                                                    |                                             |   |                                                                   |                                                                                                              |   |                    |         |       
|OPERATING ACTIVITIES                                                                               
|                                                                                                   
|                                                                                                   
|                                                                                                   
|                                                                                                   
|Net Income (Loss)                                                                                   |                                             | $ | (3,176                                                            | )                                                                                                            |   | $                  | 4,989   |       
|                                                                                                   
|                                                                                                   
|                                                                                                   
|                                                                                                   
|Adjustments to reconcile net income (loss) to net cash
provided by  (used in) operating activities:
|                                                                                                   
|                                                                                                   
|                                                                                                   
|                                                                                                   
|                                                                                                    |                                             |   | Depreciation and amortization                                     |                                                                                                              |   | 9,690              |         |        |   | 8,702  |        
|                                                                                                   
|                                                                                                   
|                                                                                                   
|                                                                                                   
|                                                                                                    |                                             |   | Provision for bad debts                                           |                                                                                                              |   | 600                |         |        |   | 485    |        
|                                                                                                   
|                                                                                                   
|                                                                                                   
|                                                                                                   
|                                                                                                    |                                             |   | Gain on sale of investments                                       |                                                                                                              |   |                   |         |        |   | (4,462 | )      
|                                                                                                   
|                                                                                                   
|                                                                                                   
|                                                                                                   
|                                                                                                    |                                             |   | Write-down of investments                                         |                                                                                                              |   |                   |         |        |   | 800    |        
|                                                                                                   
|                                                                                                   
|                                                                                                   
|                                                                                                   
|                                                                                                    |                                             |   | Stock compensation expense                                        |                                                                                                              |   | 36                 |         |        |   | 36     |        
|                                                                                                   
|                                                                                                   
|                                                                                                   
|                                                                                                   
|                                                                                                    |                                             |   | Changes in operating assets and liabilities, net of acquisitions:
|                                                                                                   
|                                                                                                   
|                                                                                                   
|                                                                                                   
|                                                                                                    |                                             |   |                                                                   | Accounts receivable                                                                                          |   |                    | (472    | )      |   |        | (6,691  | )
|                                                                                                   
|                                                                                                   
|                                                                                                   
|                                                                                                   
|                                                                                                    |                                             |   |                                                                   | Inventory                                                                                                    |   |                    | 602     |        |   |        | (21     | )
|                                                                                                   
|                                                                                                   
|                                                                                                   
|                                                                                                   
|                                                                                                    |                                             |   |                                                                   | Other current assets                                                                                         |   |                    | 237     |        |   |        | 5,317   |  
|                                                                                                   
|                                                                                                   
|                                                                                                   
|                                                                                                   
|                                                                                                    |                                             |   |                                                                   | Other assets                                                                                                 |   |                    | (1,011  | )      |   |        | 756     |  
|                                                                                                   
|                                                                                                   
|                                                                                                   
|                                                                                                   
|                                                                                                    |                                             |   |                                                                   | Deferred revenue                                                                                             |   |                    | 5,716   |        |   |        | (4,442  | )
|                                                                                                   
|                                                                                                   
|                                                                                                   
|                                                                                                   
|                                                                                                    |                                             |   |                                                                   | Other current liabilities                                                                                    |   |                    | (6,862  | )      |   |        | (10,328 | )
|                                                                                                   
|                                                                                                   
|                                                                                                   
|                                                                                                   
|                                                                                                    |                                             |   |                                                                   | Other liabilities                                                                                            |   |                    | (220    | )      |   |        | (116    | )
|                                                                                                    |                                             |   |                                                                   |                                                                                                              |   |                    |         |       
|                                                                                                    |                                             |   |                                                                   | Total adjustments to reconcile net income (loss) to net
cash      provided by (used in) operating activities |   |                    | 8,316   |        |   |        | (9,964  | )
|                                                                                                    |                                             |   |                                                                   |                                                                                                              |   |                    |         |       
|                                                                                                    |                                             |   |                                                                   | NET CASH PROVIDED BY (USED IN) OPERATING
          ACTIVITIES                                                |   |                    | 5,140   |        |   |        | (4,975  | )
|                                                                                                    |                                             |   |                                                                   |                                                                                                              |   |                    |         |       
|INVESTING ACTIVITIES                                                                               
|                                                                                                   
|                                                                                                   
|                                                                                                   
|                                                                                                   
|                                                                                                    | Purchase of property and equipment          |   |                                                                   | (4,544                                                                                                       | ) |                    |         | (1,938 | )
|                                                                                                   
|                                                                                                   
|                                                                                                   
|                                                                                                   
|                                                                                                    | Purchase of investments                     |   |                                                                   |                                                                                                             |   |                    |         | (7,905 | )
|                                                                                                   
|                                                                                                   
|                                                                                                   
|                                                                                                   
|                                                                                                    | Sale of investments                         |   |                                                                   |                                                                                                             |   |                    |         | 12,432 |  
|                                                                                                   
|                                                                                                   
|                                                                                                   
|                                                                                                   
|                                                                                                    | Capitalized software development costs      |   |                                                                   | (1,702                                                                                                       | ) |                    |         | (1,800 | )
|                                                                                                    |                                             |   |                                                                   |                                                                                                              |   |                    |         |       
|                                                                                                    |                                             |   |                                                                   | NET CASH (USED IN) PROVIDED BY INVESTING
        ACTIVITIES                                                  |   |                    | (6,246  | )      |   |        | 789     |  
|                                                                                                    |                                             |   |                                                                   |                                                                                                              |   |                    |         |       
|FINANCING ACTIVITIES                                                                               
|                                                                                                   
|                                                                                                   
|                                                                                                   
|                                                                                                   
|                                                                                                    | Issuance of common stock in public offering |   |                                                                   | 123,231                                                                                                      |   |                    |         |       |  
|                                                                                                   
|                                                                                                   
|                                                                                                   
|                                                                                                   
|                                                                                                    | Payments on borrowings                      |   |                                                                   | (1,491                                                                                                       | ) |                    |         |       |  
|                                                                                                   
|                                                                                                   
|                                                                                                   
|                                                                                                   
|                                                                                                    | Exercise of stock options                   |   |                                                                   | 3,431                                                                                                        |   |                    |         | 952    |  
|                                                                                                   
|                                                                                                   
|                                                                                                   
|                                                                                                   
|                                                                                                    | Employee stock purchase plan                |   |                                                                   | 567                                                                                                          |   |                    |         | 748    |  
|                                                                                                   
|                                                                                                   
|                                                                                                   
|                                                                                                   
|                                                                                                    | Exercise of warrants                        |   |                                                                   |                                                                                                             |   |                    |         | 4      |  
|                                                                                                    |                                             |   |                                                                   |                                                                                                              |   |                    |         |       
|                                                                                                    |                                             |   |                                                                   | NET CASH PROVIDED BY FINANCING ACTIVITIES                                                                    |   |                    | 125,738 |        |   |        | 1,704   |  
|                                                                                                    |                                             |   |                                                                   |                                                                                                              |   |                    |         |       
|EFFECT OF EXCHANGE RATES ON CASH AND                                                               
|                                                                                                   
|                                                                                                   
|                                                                                                   
|                                                                                                   
|CASH EQUIVALENTS                                                                                    |                                             |   | (73                                                               | )                                                                                                            |   |                    | 454     |       
|                                                                                                    |                                             |   |                                                                   |                                                                                                              |   |                    |         |       
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                                |                                             |   | 124,559                                                           |                                                                                                              |   |                    | (2,028  | )     
|                                                                                                   
|                                                                                                   
|                                                                                                   
|                                                                                                   
|                                                                                                   
|                                                                                                   
|                                                                                                   
|                                                                                                   
|CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                                      |                                             |   | 20,799                                                            |                                                                                                              |   |                    | 33,956  |       
|                                                                                                    |                                             |   |                                                                   |                                                                                                              |   |                    |         |       
|                                                                                                   
|                                                                                                   
|                                                                                                   
|                                                                                                   
|                                                                                                   
|                                                                                                   
|                                                                                                   
|                                                                                                   
|CASH AND CASH EQUIVALENTS, END OF PERIOD                                                            |                                             | $ | 145,358                                                           |                                                                                                              |   | $                  | 31,928  |       
|                                                                                                    |                                             |   |                                                                   |                                                                                                              |   |                    |         |       

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART TO THESE UNAUDITED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

5



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##### Table of Contents






ECLIPSYS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)



|1. |  | BASIS OF PRESENTATION
|-- |  | ---------------------

The condensed consolidated financial statements include all adjustments
that, in the opinion of management, are necessary for a fair presentation of
the results for the periods presented. All such adjustments are considered of a
normal recurring nature. Quarterly results of operations are not necessarily
indicative of annual results.

Certain financial information and footnote disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. These unaudited condensed
consolidated financial statements should be read in conjunction with the
consolidated financial statements and the notes thereto included in the
Companys Annual Report on Form 10-K filed March 15, 2001.



|2. |  | ACCOUNTS RECEIVABLE
|-- |  | -------------------

The current portion of
unbilled accounts receivable was $12.8 million and $12.5 million as
of March 31, 2001 and December 31, 2000, respectively, and is
included in accounts receivable in the accompanying
condensed consolidated balance sheets. The non-current portion
of unbilled accounts receivable was $3.5 million and $3.3 million as
of March 31, 2001 and December 31, 2000, respectively, and is
included in other assets in the accompanying condensed consolidated
balance sheets.



|3. |  | PUBLIC OFFERING
|-- |  | ---------------

During the quarter ended March 31, 2001,
the Company completed a follow-on public offering for 5,750,000 shares
of its common stock. Net proceeds from the offering were approximately $123.2 million.



|4. |  | INVESTMENTS
|-- |  | -----------

During the quarter ended March 31, 2000, the Company recorded a gain on
its investment in Shared Medical Systems Corp. (SMS) of approximately $4.5
million. The investment was made in connection with a proposed merger with SMS
that was not consummated.

Additionally, during the
quarter ended March 31, 2000, the Company recorded a charge of
approximately $800,000 to write down certain equity securities to their net
realizable value.



|5. |  | TERMINATION OF MERGER
|-- |  | ---------------------

On March 30, 2000, the Company signed an agreement to merge with
Neoforma.com, Inc. (Neoforma), a California-based, business-to-business
e-commerce services provider in the medical products, supplies and equipment
industry. The merger was subject to the approval of stockholders of both the
Company and Neoforma and certain other conditions. Subsequent to March 31,
2000, the Company and Neoforma agreed to terminate the Merger Agreement without
the payment of a termination fee.

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PART I.




ITEM 2.

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

This report contains forward-looking statements. For this purpose, any
statements contained herein that are not statements of historical fact may be
deemed to be forward-looking statements. Without limiting the foregoing, the
words believes, anticipates, plans, expects, intends, and similar
expressions are intended to identify forward-looking statements. The important
factors discussed under the caption Certain Factors that May Affect Future
Operating Results/Risk Factors, presented from time to time in the Companys
filings with the Securities and Exchange Commission, among others, could cause
actual results to differ materially from those indicated by forward-looking
statements made herein. The Company undertakes no obligation to publicly update
or revise any forward-looking statements, whether as a result of new
information, future events or otherwise.

OVERVIEW

We are a healthcare information technology company. Our solutions assist
healthcare organizations in achieving balanced outcomes through an appropriate
and sustainable combination of clinical quality, efficient use of resources and
patient satisfaction. We have designed our solutions to help our customers
deliver better healthcare through information. Our solutions consist of a
comprehensive service offering and seven integrated software suites that we
market under the Sunrise brand name.

Our software applications consist of individual product modules that can
be implemented in any combination and integrated with our customers existing
information technology systems. We believe the open, modular nature of our
software architecture reduces the overall cost of ownership and reduces the
time to productive use because our solutions do not require the initial
investment and disruption associated with a complete replacement of a
customers existing legacy systems. To facilitate rapid adoption by our
customers, we have engineered our solutions to take advantage of Web-based
technologies. Our software applications are available to our customers for
implementation in-house or through our remote hosting service, and are designed
to work in a variety of healthcare settings.

In addition, we provide a range of services to our customers, including
implementation, integration, support, maintenance and training. We also provide
outsourcing, remote hosting, networking services and business solutions
consulting to assist customers in meeting their healthcare information
technology requirements. Through this comprehensive service offering and our
integrated software suites, we provide our customers with an end-to-end
solution for their clinical, financial and administrative information needs.

We market our solutions primarily to large healthcare organizations,
particularly academic medical centers. We have one or more of our products
installed or being installed in over 1,400 facilities in the United States and
9 other countries. We maintain decentralized sales and customer support teams
in each of our five North American regions to provide direct, sustained
customer contact.

In 2000, in response to our customers desire for flexible pricing and
more comprehensive bundled information technology solutions, we began to offer
our customers the option of purchasing our solutions under arrangements that
bundled the software license fees (including the right to future products
within the suite sold), implementation, maintenance, outsourcing, remote
hosting, networking services and other related services in one comprehensive
contract that provides for monthly or annual payments over the term of the
contract. We generally recognize revenues under these arrangements on a monthly
basis over the term of the contract, which typically ranges from seven to ten
years.

RESULTS OF OPERATIONS

Total revenues for the quarter ended March 31, 2001 decreased $10.0
million, or 15.5%, to $54.7 million compared with $64.7 million for the first
quarter 2000. Systems and services revenues decreased $8.9 million, or 14.6%,
to $51.8 million compared with $60.6 million for the first quarter of 2000.
This decrease in revenue was primarily attributable to the shift toward
providing comprehensive bundled solutions, which represented a larger portion
of our revenues in the first quarter of 2001 than in the first quarter of 2000,
and the completion of the implementations under traditional licensing
arrangements with some of our customers.

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Hardware revenues for the quarter ended March 31, 2001 decreased $1.1
million, or 28.1%, to $2.9 million compared with $4.1 million for the first
quarter 2000. The decrease was primarily due to decreased volume of
hardware sales a result of less hardware-intensive transactions, as
well as more competitive pricing of hardware in the industry.

Total cost of revenues decreased $2.5 million, or 6.9%, to $33.1 million,
or 60.5% of total revenues, for the quarter ended March 31, 2001, from $35.6
million, or 55.0% of total revenues, for the same period in 2000. Cost of
systems and services revenues decreased $1.5 million, or 4.5%, to $30.8
million, or 59.5% of systems and services revenues, for the quarter ended March
31, 2001 compared to $32.3 million, or 53.2% of systems and services revenues,
for the first quarter of 2000. The decrease in cost of systems and services
revenues was a result of the realization of integration synergies and
restructuring, which resulted in lower salaries and payroll related expenses,
including travel. These cost savings were partially offset by higher
amortization of capitalized software development costs and acquired technology. Cost of hardware revenues decreased $1.0 million, or 30.3%, to
$2.3 million, or 78.4% of hardware revenues, for the quarter ended March 31,
2001 compared to $3.3 million, or 80.9% of hardware revenues, for the first
quarter of 2000. The decrease in cost of hardware revenues was directly
attributable to lower hardware revenues.

Sales and marketing expenses increased $1.4 million, or 14.7%, to $10.6
million, or 19.5% of total revenues, for the quarter ended March 31, 2001
compared to $9.3 million, or 14.3% of total revenues, for the first quarter in
2000. The increase was primarily due to an increase in commissions resulting
from an increase in new contracted business as well as costs associated with
newly implemented sales incentive programs.

Total expenditures for research and development, including both
capitalized and non-capitalized expenses decreased $0.5 million, or 4.4%, to
$11.1 million, or 20.2% of total revenues, for the quarter ended March 31, 2001
compared to $11.6 million, or 17.9% of total revenues, for the first quarter of
2000. The decrease was due primarily to the realization of integration
synergies and restructuring. Research and development expenses capitalized for
the first quarter of 2001 decreased $0.1 million, to $1.7 million, compared to
$1.8 million for the same period in 2000. The percentage of research and
development expenditures capitalized of 15.4% for the quarter ended March 31,
2001 was relatively consistent with the 15.6% for the first quarter of 2000.
Amortization of capitalized software development costs, which is
included in cost of systems and services revenues, increased by $0.4
million to $1.1 million for the
quarter ended March 31, 2001, compared to $0.7 million for the first quarter of
2000.

General and administrative expenses were relatively unchanged at $2.3
million, or 4.3% of total revenues, for the quarter ended March 31, 2001
compared to $2.3 million, or 3.6% of total revenues, for the first quarter of
2000.

Depreciation and amortization increased $0.1 million, or 4.1%, to $3.8
million, or 7.0% of total revenues, for the quarter ended March 31, 2001
compared to $3.7 million, or 5.6% of total revenues, for the same quarter in
2000. The increase was primarily the result of purchases of computer
equipment.

Transaction costs incurred during the quarter ended March 31, 2000 of $3.1
million were related to the costs associated with proposed mergers with Shared
Medical Systems Corp. (SMS) and Neoforma.com, Inc. (Neoforma).

Interest income increased
$1.0 million to $1.4 million for the quarter ended March 31, 2001
compared to $0.4 million for the quarter ended March 31, 2000.

Other income recorded during the first quarter of 2000 related to a gain
on the Companys investment in SMS. (See notes to the unaudited condensed
consolidated financial statements.)

LIQUIDITY AND CAPITAL RESOURCES

During the first quarter of 2001, the Companys operations provided $5.1
million. Investing activities used $6.2 million for the purchase of fixed
assets and the funding of development costs. Financing activities provided
$125.7 million, from issuance of common stock in a public offering, exercise of
stock options and the issuance of common stock under the employee stock
purchase plan, offset by the repayment of all outstanding debt.

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As of March 31, 2001, the Company had $145.4 million in cash and cash
equivalents.

Management believes that its available cash and cash equivalents and
anticipated cash generated from its future operations will be sufficient to meet the
Companys operating requirements for at least the next twelve months.




ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We do not currently use
derivative financial instruments. We generally buy investments with
maturities of 90 days or less. Based upon the nature of our
investments, we do not expect any material loss from our investments.

Investments in both fixed rate
and floating rate interest earning instruments carry a degree of
interest rate risk. Fixed rate securities may have their fair market
value adversely impacted due to a rise in interest rates, while
floating rate securities may produce less income than expected if
interest rates fall. Due in part to these factors, our future
investment income may fall short of expectations due to changes in
interest rates or we may suffer losses in principal if forced to sell
securities that have seen a decline in market value due to changes in
interest rates. A hypothetical 10% increase or decrease in interest
rates, however, would not have a material adverse effect on our
financial condition.

The Company accounts for cash
equivalents and marketable securities in accordance with Statement of
Financial Accounting Standards (SFAS) No. 115 "Accounting for
Certain Investments in Debt and Equity Securities". Cash equivalents
are short-term highly liquid investments with original maturity dates
of three months or less. Cash equivalents are carried at cost, which
approximates fair market value.

We do not currently enter into
foreign currency hedge transactions. Through March 31, 2001 foreign
currency fluctutations have not had a material impact on our
financial position or results of operations.

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PART II.




ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K



| | (a) |  | Exhibits: See Index to exhibits.                                                                                                  
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------------
|
| | (b) |  | Reports on Form 8-K:                                                                                                              
|
| |     |  | (1)         No reports on Form 8-K were filed with the Securities and Exchange
Commission during the quarter ended March 31, 2001.

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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.

|      |              |  |  |  |  |                                                                               
|----- | ------------ |  |  |  |  | ------------------------------------------------------------------------------
|      |              |  |  |  |  | ECLIPSYS CORPORATION                                                          
|     
|Date: | May 14, 2001 |  |  |  |  | /s/ Gregory L.Wilson                                                          
|      |              |  |  |  |  |                                                                               
|      |              |  |  |  |  | Gregory L. Wilson
Senior Vice President, Chief Financial Officer and
Treasurer

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ECLIPSYS CORPORATION
EXHIBIT INDEX

|        |  |             |  | 
|------- |  | ----------- |  | 
|EXHIBIT
|NO.     |  | DESCRIPTION
|        |  |            
|None   













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