##### Table of Contents



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



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FORM 10-Q



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

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2002

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)

1750 Clint Moore Road
Boca Raton, Florida
33487
(Address of principal executive offices)

(561)-322-4321
(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
þ No Box

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 6, 2002
|                             |  |                                     
|Common Stock, $.01 par value |  |                                      | 44,633,645 | 



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TABLE OF CONTENTS



|         |                                                                    |                                                                                                            |  |  |  |  |  | 
|-------- | ------------------------------------------------------------------ | ---------------------------------------------------------------------------------------------------------- |  |  |  |  |  | 
|PART I. 
|         | ITEM 1.                                                           
|         |                                                                    | CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)                                                         
|         |                                                                    | CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)                                               
|         |                                                                    | CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)                                               
|         |                                                                    | NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS                                                      
|         | 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.
|         | ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS       
|         | ITEM 6. 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, 2002

INDEX

|        |  |                                                                                                                 
|------- |  | ----------------------------------------------------------------------------------------------------------------
|PART I  |  | Financial Information                                                                                           
|       
|       
|       
|       
|Item 1. |  | Condensed Consolidated Balance Sheets (unaudited)  As of March 31, 2002 and December 31, 2001                  
|       
|       
|       
|       
|        |  | Condensed Consolidated Statements of Operations (unaudited)  For the Three Months ended
March 31, 2002 and 2001
|       
|       
|       
|       
|        |  | Condensed Consolidated Statements of Cash Flows (unaudited)  For the Three Months ended
March 31, 2002 and 2001
|       
|       
|       
|       
|        |  | 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 4. |  | Submission of Matters to a Vote of Security Holders                                                             
|       
|       
|       
|       
|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, 2002 AND DECEMBER 31, 2001
(IN THOUSANDS)

|                                            |                                      |   |                |          |                   |   |         |          |  
|------------------------------------------- | ------------------------------------ | - | -------------- | -------- | ----------------- | - | ------- | -------- | -
|                                            |                                      |   | MARCH 31, 2002 |          | DECEMBER 31, 2001
|                                            |                                      |   |                |          |                  
|ASSETS                                      |                                      |   |                |          |                   |   |         |         
|                                           
|                                           
|                                           
|                                           
|Current assets:                             |                                      |   |                |          |                   |   |         |         
|                                           
|                                           
|                                           
|                                           
|                                            | Cash and cash equivalents            |   | $              | 114,253  |                   |   | $       | 168,942  |  
|                                           
|                                           
|                                           
|                                           
|                                            | Marketable securities                |   |                | 60,257   |                   |   |         |         |  
|                                           
|                                           
|                                           
|                                           
|                                            | Accounts receivable, net             |   |                | 68,032   |                   |   |         | 66,094   |  
|                                           
|                                           
|                                           
|                                           
|                                            | Inventory                            |   |                | 414      |                   |   |         | 667      |  
|                                           
|                                           
|                                           
|                                           
|                                            | Other current assets                 |   |                | 15,342   |                   |   |         | 18,424   |  
|                                            |                                      |   |                |          |                   |   |         |         
|Total current assets                        |                                      |   | 258,298        |          |                   |   | 254,127 |         
|                                           
|                                           
|                                           
|                                           
|Property and equipment, net                 |                                      |   | 24,399         |          |                   |   | 21,675  |         
|                                           
|                                           
|                                           
|                                           
|Capitalized software development costs, net |                                      |   | 14,488         |          |                   |   | 13,831  |         
|                                           
|                                           
|                                           
|                                           
|Acquired technology, net                    |                                      |   | 1,314          |          |                   |   | 3,345   |         
|                                           
|                                           
|                                           
|                                           
|Intangible assets, net                      |                                      |   | 454            |          |                   |   | 628     |         
|                                           
|                                           
|                                           
|                                           
|Other assets                                |                                      |   | 6,982          |          |                   |   | 6,888   |         
|                                            |                                      |   |                |          |                   |   |         |         
|TOTAL ASSETS                                |                                      | $ | 305,935        |          |                   | $ | 300,494 |         
|                                            |                                      |   |                |          |                   |   |         |         
|LIABILITIES AND STOCKHOLDERS EQUITY        |                                      |   |                |          |                   |   |         |         
|                                           
|                                           
|                                           
|                                           
|Current liabilities:                        |                                      |   |                |          |                   |   |         |         
|                                           
|                                           
|                                           
|                                           
|                                            | Deferred revenue                     |   | $              | 59,290   |                   |   | $       | 56,428   |  
|                                           
|                                           
|                                           
|                                           
|                                            | Other current liabilities            |   |                | 20,202   |                   |   |         | 22,748   |  
|                                            |                                      |   |                |          |                   |   |         |         
|Total current liabilities                   |                                      |   | 79,492         |          |                   |   | 79,176  |         
|                                           
|                                           
|                                           
|                                           
|Deferred revenue                            |                                      |   | 1,174          |          |                   |   | 2,418   |         
|                                           
|                                           
|                                           
|                                           
|Other long-term liabilities                 |                                      |   | 743            |          |                   |   | 699     |         
|                                           
|                                           
|                                           
|                                           
|Stockholders equity:                       |                                      |   |                |          |                   |   |         |         
|                                           
|                                           
|                                           
|                                           
|                                            | Common stock                         |   |                | 445      |                   |   |         | 444      |  
|                                           
|                                           
|                                           
|                                           
|                                            | Unearned stock compensation          |   |                |         |                   |   |         | (32      | )
|                                           
|                                           
|                                           
|                                           
|                                            | Additional paid-in capital           |   |                | 401,519  |                   |   |         | 400,242  |  
|                                           
|                                           
|                                           
|                                           
|                                            | Accumulated deficit                  |   |                | (176,742 | )                 |   |         | (182,051 | )
|                                           
|                                           
|                                           
|                                           
|                                            | Accumulated other comprehensive loss |   |                | (696     | )                 |   |         | (402     | )
|                                            |                                      |   |                |          |                   |   |         |         
|Total stockholders equity                  |                                      |   | 224,526        |          |                   |   | 218,201 |         
|                                            |                                      |   |                |          |                   |   |         |         
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY  |                                      | $ | 305,935        |          |                   | $ | 300,494 |         
|                                            |                                      |   |                |          |                   |   |         |         

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, 2002 AND 2001
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)

|                                                   |                                       |   |                    |        |      |   |        |        | 
|-------------------------------------------------- | ------------------------------------- | - | ------------------ | ------ | ---- | - | ------ | ------ | 
|                                                   |                                       |   | THREE MONTHS ENDED
|                                                   |                                       |   | MARCH 31,         
|                                                   |                                       |   |                   
|                                                   |                                       |   | 2002               |        | 2001
|                                                   |                                       |   |                    |        |     
|REVENUES                                           |                                       |   |                    |        |      |   |        |       
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Systems and services                  |   | $                  | 56,548 |      |   | $      | 51,760 | 
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Hardware                              |   |                    | 5,689  |      |   |        | 2,911  | 
|                                                   |                                       |   |                    |        |      |   |        |       
|TOTAL REVENUES                                     |                                       |   | 62,237             |        |      |   | 54,671 |       
|                                                  
|                                                  
|                                                  
|                                                  
|COSTS AND EXPENSES                                 |                                       |   |                    |        |      |   |        |       
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Cost of systems and services revenues |   |                    | 26,697 |      |   |        | 30,813 | 
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Cost of hardware revenues             |   |                    | 4,612  |      |   |        | 2,283  | 
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Sales and marketing                   |   |                    | 11,348 |      |   |        | 10,643 | 
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Research and development              |   |                    | 10,239 |      |   |        | 9,363  | 
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | General and administrative            |   |                    | 2,534  |      |   |        | 2,347  | 
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Depreciation and amortization         |   |                    | 2,442  |      |   |        | 3,802  | 
|                                                   |                                       |   |                    |        |      |   |        |       
|TOTAL COSTS AND EXPENSES                           |                                       |   | 57,872             |        |      |   | 59,251 |       
|                                                   |                                       |   |                    |        |      |   |        |       
|INCOME (LOSS) FROM OPERATIONS                      |                                       |   | 4,365              |        |      |   | (4,580 | )     
|                                                  
|                                                  
|                                                  
|                                                  
|Interest income, net                               |                                       |   | 1,109              |        |      |   | 1,404  |       
|                                                   |                                       |   |                    |        |      |   |        |       
|INCOME (LOSS) BEFORE INCOME TAXES                  |                                       |   | 5,474              |        |      |   | (3,176 | )     
|                                                  
|                                                  
|                                                  
|                                                  
|Provision for income taxes                         |                                       |   | 165                |        |      |   |       |       
|                                                   |                                       |   |                    |        |      |   |        |       
|NET INCOME (LOSS)                                  |                                       | $ | 5,309              |        |      | $ | (3,176 | )     
|                                                   |                                       |   |                    |        |      |   |        |       
|BASIC NET INCOME (LOSS) PER COMMON SHARE           |                                       | $ | 0.12               |        |      | $ | (0.08  | )     
|                                                   |                                       |   |                    |        |      |   |        |       
|DILUTED NET INCOME (LOSS) PER COMMON SHARE         |                                       | $ | 0.11               |        |      | $ | (0.08  | )     
|                                                   |                                       |   |                    |        |      |   |        |       
|BASIC WEIGHTED AVERAGE COMMON SHARES OUTSTANDING   |                                       |   | 44,498             |        |      |   | 41,295 |       
|                                                   |                                       |   |                    |        |      |   |        |       
|DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING |                                       |   | 46,938             |        |      |   | 41,295 |       
|                                                   |                                       |   |                    |        |      |   |        |       

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, 2002 AND 2001
(IN THOUSANDS)

|                                                                                         |                                             |                                              |                           |                                                                                               |       |                    |         |         |       |        |         |  
|---------------------------------------------------------------------------------------- | ------------------------------------------- | -------------------------------------------- | ------------------------- | --------------------------------------------------------------------------------------------- | ----- | ------------------ | ------- | ------- | ----- | ------ | ------- | -
|                                                                                         |                                             |                                              |                           |                                                                                               |       | THREE MONTHS ENDED
|                                                                                         |                                             |                                              |                           |                                                                                               |       | MARCH 31,         
|                                                                                         |                                             |                                              |                           |                                                                                               |       |                   
|                                                                                         |                                             |                                              |                           |                                                                                               |       | 2002               |         | 2001   
|                                                                                         |                                             |                                              |                           |                                                                                               |       |                    |         |        
|OPERATING ACTIVITIES                                                                     |                                             |                                              |                           |                                                                                               |       |                    |         |        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Net Income (Loss)                                                                        |                                             | $                                            | 5,309                     |                                                                                               |       | $                  | (3,176  | )      
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Adjustments to reconcile net income (loss) to net cash
provided by operating activities: |                                             |                                              |                           |                                                                                               |       |                    |         |        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         |                                             | Depreciation and amortization                |                           |                                                                                               | 5,805 |                    |         |         | 9,690 |       
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         |                                             | Provision for bad debts                      |                           |                                                                                               | 150   |                    |         |         | 600   |       
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         |                                             | Stock compensation expense                   |                           |                                                                                               | 32    |                    |         |         | 36    |       
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         |                                             | Changes in operating assets and liabilities: |                           |                                                                                               |       |                    |         |         |       |       
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         |                                             |                                              | Accounts receivable       |                                                                                               |       | (2,712             | )       |         |       | (472   | )      
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         |                                             |                                              | Inventory                 |                                                                                               |       | 253                |         |         |       | 602    |        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         |                                             |                                              | Other current assets      |                                                                                               |       | 3,082              |         |         |       | 237    |        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         |                                             |                                              | Other assets              |                                                                                               |       | (547               | )       |         |       | (1,011 | )      
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         |                                             |                                              | Deferred revenue          |                                                                                               |       | 1,620              |         |         |       | 5,716  |        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         |                                             |                                              | Other current liabilities |                                                                                               |       | (2,548             | )       |         |       | (6,862 | )      
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         |                                             |                                              | Other liabilities         |                                                                                               |       | 44                 |         |         |       | (220   | )      
|                                                                                         |                                             |                                              |                           |                                                                                               |       |                    |         |        
|                                                                                         |                                             |                                              |                           | Total adjustments to reconcile net income (loss) to net
cash provided by operating activities |       |                    | 5,179   |         |       |        | 8,316   |  
|                                                                                         |                                             |                                              |                           |                                                                                               |       |                    |         |        
|                                                                                         |                                             |                                              |                           | NET CASH PROVIDED BY OPERATING ACTIVITIES                                                     |       |                    | 10,488  |         |       |        | 5,140   |  
|                                                                                         |                                             |                                              |                           |                                                                                               |       |                    |         |        
|INVESTING ACTIVITIES                                                                     |                                             |                                              |                           |                                                                                               |       |                    |         |        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         | Purchase of property and equipment          |                                              |                           | (3,915                                                                                        | )     |                    |         | (4,544  | )    
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         | Purchase of marketable securities           |                                              |                           | (60,551                                                                                       | )     |                    |         |        |      
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         | Capitalized software development costs      |                                              |                           | (1,989                                                                                        | )     |                    |         | (1,702  | )    
|                                                                                         |                                             |                                              |                           |                                                                                               |       |                    |         |        
|                                                                                         |                                             |                                              |                           | NET CASH USED IN INVESTING ACTIVITIES                                                         |       |                    | (66,455 | )       |       |        | (6,246  | )
|                                                                                         |                                             |                                              |                           |                                                                                               |       |                    |         |        
|FINANCING ACTIVITIES                                                                     |                                             |                                              |                           |                                                                                               |       |                    |         |        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         | Issuance of common stock in public offering |                                              |                           |                                                                                              |       |                    |         | 123,231 |      
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         | Payments on borrowings                      |                                              |                           |                                                                                              |       |                    |         | (1,491  | )    
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         | Exercise of stock options                   |                                              |                           | 694                                                                                           |       |                    |         | 3,431   |      
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         | Employee stock purchase plan                |                                              |                           | 584                                                                                           |       |                    |         | 567     |      
|                                                                                         |                                             |                                              |                           |                                                                                               |       |                    |         |        
|                                                                                         |                                             |                                              |                           | NET CASH PROVIDED BY FINANCING ACTIVITIES                                                     |       |                    | 1,278   |         |       |        | 125,738 |  
|                                                                                         |                                             |                                              |                           |                                                                                               |       |                    |         |        
|EFFECT OF EXCHANGE RATES ON CASH AND
CASH EQUIVALENTS                                    |                                             |                                              |                          |                                                                                               |       |                    | (73     | )      
|                                                                                         |                                             |                                              |                           |                                                                                               |       |                    |         |        
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                     |                                             |                                              | (54,689                   | )                                                                                             |       |                    | 124,559 |        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                           |                                             |                                              | 168,942                   |                                                                                               |       |                    | 20,799  |        
|                                                                                         |                                             |                                              |                           |                                                                                               |       |                    |         |        
|CASH AND CASH EQUIVALENTS, END OF PERIOD                                                 |                                             | $                                            | 114,253                   |                                                                                               |       | $                  | 145,358 |        
|                                                                                         |                                             |                                              |                           |                                                                                               |       |                    |         |        

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 25, 2002.



|2. |  | MARKETABLE SECURITIES
|-- |  | ---------------------

Marketable securities consist of funds that are highly liquid and are
classified as available-for-sale. Marketable securities are recorded at fair
value and unrealized gains and losses are recorded as a component of other
comprehensive income.



|3. |  | ACCOUNTS RECEIVABLE
|-- |  | -------------------

The non-current portion of unbilled accounts receivable was $1.6 million
and $1.8 million as of March 31, 2002 and December 31, 2001, respectively, and
is included in other assets in the accompanying condensed consolidated balance
sheets.

Accounts receivable was composed of the following as of:

|                               |                                                                               |   |                |        |              |   |        |        | 
|------------------------------ | ----------------------------------------------------------------------------- | - | -------------- | ------ | ------------ | - | ------ | ------ | 
|                               |                                                                               |   | March 31,      |        | December 31,
|                               |                                                                               |   | 2002           |        | 2001        
|                               |                                                                               |   |                |        |             
|                               |                                                                               |   | (in thousands)
|Accounts Receivable:           |                                                                               |   |                |        |              |   |        |       
|                              
|                              
|                              
|                              
|                               | Unbilled accounts receivable related to
long-term contracts (current portion) |   | $              | 2,276  |              |   | $      | 3,212  | 
|                              
|                              
|                              
|                              
|                               | Other unbilled accounts receivable                                            |   |                | 8,555  |              |   |        | 6,768  | 
|                               |                                                                               |   |                |        |              |   |        |       
|                               | Total unbilled accounts receivable                                            |   |                | 10,831 |              |   |        | 9,980  | 
|                              
|                              
|                              
|                              
|                               | Billed accounts receivable, net                                               |   |                | 57,201 |              |   |        | 56,114 | 
|                               |                                                                               |   |                |        |              |   |        |       
|Total accounts receivable, net |                                                                               | $ | 68,032         |        |              | $ | 66,094 |       
|                               |                                                                               |   |                |        |              |   |        |       



|4. |  | OTHER COMPREHENSIVE INCOME
|-- |  | --------------------------

The components of comprehensive income (loss) were as follows (in
thousands):

|                                                                                      |  |                    |       |      |  |   |        |  
|------------------------------------------------------------------------------------- |  | ------------------ | ----- | ---- |  | - | ------ | -
|                                                                                      |  | Three Months Ended
|                                                                                      |  | March 31,         
|                                                                                      |  |                   
|                                                                                      |  | 2002               |       | 2001
|                                                                                      |  |                    |       |     
|Net income (loss)                                                                     |  | $                  | 5,309 |      |  | $ | (3,176 | )
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|Unrealized loss on available-for-sale
marketable securities arising during the period |  |                    | (294  | )    |  |   |       |  
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|Foreign currency translation adjustment                                               |  |                    |      |      |  |   | (73    | )
|                                                                                      |  |                    |       |      |  |   |        |  
|Total comprehensive income (loss)                                                     |  | $                  | 5,015 |      |  | $ | (3,249 | )
|                                                                                      |  |                    |       |      |  |   |        |  

6



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##### Table of Contents





|5. |  | 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.



|6. |  | NEW ACCOUNTING PRONOUNCEMENTS
|-- |  | -----------------------------

In June 2001, the Financial Accounting Standard Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 142 Goodwill and
other Intangibles. Under this new standard the FASB eliminated amortization
of goodwill and created indefinite life intangible assets and established new
impairment measurement procedures for goodwill. In accordance with SFAS 142,
amortization of goodwill is no longer amortized, but instead tested for
impairment at least annually. There was no impairment of goodwill upon
adoption of SFAS 142 and amortization ceased as of January 1, 2002, leaving a
recorded balance of $454,000 for goodwill as of December 31, 2001 and March 31,
2002. The effect of adopting SFAS 142 was to reduce depreciation and
amortization expense by $227,000 for the quarter ended March 31, 2002. Net
income and earnings per share for the three months ended March 31, 2001
adjusted to exclude amortization expense is as follows:

|                                  |                         |                         |   |                                           |        |  
|--------------------------------- | ----------------------- | ----------------------- | - | ----------------------------------------- | ------ | -
|                                  |                         |                         |   | Three Months Ended                       
|                                  |                         |                         |   | March 31, 2001                           
|                                  |                         |                         |   | (in thousands, except earnings per share)
|                                  |                         |                         |   |                                          
|Net income:                       |                         |                         |   |                                          
|                                 
|                                 
|                                 
|                                 
|                                  | Reported net loss       |                         | $ | (3,176                                    | )     
|                                 
|                                 
|                                 
|                                 
|                                  | Goodwill amortization   |                         |   | 1,244                                     |       
|                                  |                         |                         |   |                                          
|                                  |                         | Adjusted net loss       |   | $                                         | (1,932 | )
|                                  |                         |                         |   |                                          
|Basic and diluted loss per share: |                         |                         |   |                                          
|                                 
|                                 
|                                 
|                                 
|                                  | Reported loss per share |                         | $ | (0.08                                     | )     
|                                 
|                                 
|                                 
|                                 
|                                  | Goodwill amortization   |                         |   | 0.03                                      |       
|                                  |                         |                         |   |                                          
|                                  |                         | Adjusted loss per share |   | $                                         | (0.05  | )
|                                  |                         |                         |   |                                          

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 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 is not included in the scope
of SFAS 144 and will be treated in accordance with the accounting standards
established in SFAS 142. According to SFAS 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 adoption of SFAS 144 has had no impact on the Companys
financial position or results of operations.



|7. |  | AMENDMENT TO STOCK OPTION PLANS
|-- |  | -------------------------------

At the Annual Meeting of Stockholders of the Company held on May 8, 2002,
the shareholders voted to approve the amendment and restatement of the
Companys 2000 Stock Incentive Plan, the 1999 Stock Incentive Plan, the 1998
Stock Incentive Plan, and the Amended and Restated 1998 Employee Stock Purchase
Plan to reflect an increase in the number of shares of Voting Common Stock
authorized for issuance under all the Companys stock plans (the 2000 Stock
Incentive Plan, the 1999 Stock Incentive Plan, the Amended and Restated
Employee Stock Purchase Plan, the 1998 Stock Incentive Plan and the 1996 Stock
Plan) from 12,000,000 to 15,000,000.

7



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##### Table of Contents



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

Eclipsys is a healthcare information technology company that provides
software and services to help healthcare organizations improve the quality of
care and the level of patient satisfaction, while reducing costs and enhancing
revenues.

We believe our mission of better healthcare through knowledge aligns
with our customers objectives, and our software solutions help them improve
their workflow processes and implement best practices in their organizations.
To these ends, we design and offer a comprehensive package of software
applications and services that together enable providers in a variety of
healthcare settings to improve the effectiveness of their operations and the
quality of care as measured by clinical outcomes.

Our software and services provide comprehensive functionality to help
healthcare organizations solve the clinical problems and business issues they
face and achieve balanced outcomes through an appropriate and sustainable
combination of clinical quality, resource utilization and patient satisfaction.

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 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 wide range of complementary services to our
customers, including implementation, integration, support, maintenance and
training. We also provide outsourcing, remote hosting, network services and
business solutions consulting to assist customers in meeting their healthcare
information technology requirements. Through this comprehensive service
offering and our integrated software components, we provide our customers with
solutions for their clinical, financial and administrative information needs.

We maintain decentralized sales and customer support teams in each of our
six North American regions to provide direct, sustained customer contact. 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 1,500 facilities worldwide. Of 2,800 U.S. hospitals
with over 200 beds, more than 50% are Eclipsys customers. Of the 16 top-ranked
hospitals in the July 23, 2001 issue of U.S. News & World Report, all 16 use
one or more of our products. Additionally, of the 50 largest integrated
delivery networks, 37, or 74%, use one or more of Eclipsys products.

RESULTS OF OPERATIONS

Total revenues for the quarter ended March 31, 2002 increased
approximately $7.5 million, or 13.7%, to $62.2 million, from $54.7 million for
the same period in 2001. Systems and services revenues increased approximately
$4.7 million, or 9.1%, to $56.5 million for the quarter ended March 31, 2002,
from $51.8 million for the same period in 2001. The increase in systems and
services revenues was primarily attributable to revenues generated under our
comprehensive solutions offerings, which we began to offer in 2000, and other
new contracted business. The comprehensive offerings may bundle software
license fees (including the right to future products) within the applicable
suite, implementation, maintenance, outsourcing, remote hosting, networking
services and other related services

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##### Table of Contents



into comprehensive contracts that generally provide for monthly or annual
payments over the term of the contracts. Revenues under these arrangements are
recognized on a monthly basis over the term of the contract, which typically
ranges from seven to ten years. The increase in revenues was also contributed
to by improvements we made in our product delivery area, which includes
research and development, implementation and customer support. These functions
were consolidated under one management team to help improve all aspects of the
product delivery cycle. Significant investments were made in this area to
standardize the development, implementation and ongoing support of our
products. These investments among other things have helped shorten the product
development and implementation cycles while improving quality in each area.
Additionally, we continue to gain market acceptance of our products. Our
flagship product, Sunrise Clinical Manager, which was generally released in
1999, continues to gain market acceptance and has received strong ratings by
independent market research firms. We also have seen increased activity in the
revenue management area as hospitals have begun to replace legacy systems.
Finally, outside organizations, including the Institute of Medicine, the
Leapfrog Group and various state and local governments have begun to influence
the industry with respect to patient safety initiatives.

Hardware revenues increased $2.8 million, or 96.6%, to $5.7 million for
the quarter ended March 31, 2002, from $2.9 million for the same period in
2001. The increase in hardware revenues was primarily due to increased
shipments under contracts entered into in the last twelve months.

Cost of systems and services revenues decreased $4.1 million, or 13.3%, to
$26.7 million, or 47.3% of systems and services revenues, for the quarter ended
March 31, 2002, compared to $30.8 million, or 59.5% of systems and services
revenues, for the same period in 2001. These costs decreased primarily from
lower amortization of acquisition related acquired technology and network
services assets that amounted to $2.0 million for the quarter ended March 31,
2002, compared to $4.7 million for the same period in 2001. Another factor
contributing to the decrease were certain expense reduction initiatives
undertaken related to telecommunications, outside consulting and data center
related costs. These cost savings were partially offset by higher software
royalties and associated higher license fee revenue. Also higher was
amortization of capitalized software development costs that amounted to $1.3
million for the quarter ended March 31, 2002, compared to $1.1 million for the
same period in 2001. This increase was due to certain products becoming
available for general release.

Cost of hardware revenues increased $2.3 million, or 100.0%, to $4.6
million, or 80.7% of hardware revenues, for the quarter ended March 31, 2002,
compared to $2.3 million, or 79.3% of hardware revenues, for the same period in
2001. The increase in cost of hardware revenues was directly attributable to
higher hardware revenues and somewhat lower margins due to pricing pressure in
the hardware sector.

Sales and marketing expenses increased $0.7 million, or 6.6%, to $11.3
million, or 18.2% of total revenues, for the quarter ended March 31, 2002, from
$10.6 million, or 19.4% of total revenues, for the same period in 2001. The
increase in sales and marketing expenses was primarily due to an increased
number of marketing events held in the first quarter of 2002. Additionally,
during the fourth quarter of 2001, we initiated a program to significantly
increase the size of our sales and marketing organization. This program is
expected to be completed by the end of 2002 and will result in higher expenses.
The program was implemented to increase the sales presence of our sales
organization and enhance the market awareness of our company and its products
and services.

Research and development expenses increased approximately $0.8 million, or
8.5%, to $10.2 million, or 16.4% of total revenues, for the quarter ended March
31, 2002, compared to $9.4 million, or 17.2% of total revenues, for the same
period in 2001. The increase in research and development expenses was due
primarily to a program we implemented in the fourth quarter of 2001. This
program accelerates the development of our products with respect to our
SunriseXAtm initiative, which among other things, will migrate our products
onto the Microsoft.NET platform. This initiative is expected to be
substantially completed within the next 15 months and to result in higher
expenses over this period. The percentage of research and development
expenditures capitalized for the quarter ended March 31, 2002 was 16.3%,
compared to 15.4% for the same period in 2001. Research and development
expenses that were capitalized amounted to $2.0 million and $1.7 million for
the quarters ended March 31, 2002 and 2001, respectively.

General and administrative expenses increased approximately $0.2 million,
or 8.7%, to $2.5 million, or 4.0% of total revenues, for the quarter ended
March 31, 2002, compared to $2.3 million, or 4.2% of total revenues, for the
same period in 2001. The increase in general and administrative expenses was
in large part due to the relocation of our corporate offices to Boca Raton,
Florida.

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Depreciation and amortization decreased $1.4 million, or 36.8%, to $2.4
million, or 3.9% of total revenues, for the quarter ended March 31, 2002, from
$3.8 million, or 6.9% of total revenues, for the same period in 2001. The
decrease was primarily the result of the complete amortization of certain
intangibles, which became fully amortized during the fourth quarter of 2001, as
well as the adoption of SFAS 142, which eliminated the amortization of
goodwill, partially offset by higher depreciation of fixed assets purchased
during 2001. For the quarter ended March 31, 2002 and 2001, respectively, we
recorded acquisition related amortization of $2.1 million and $6.5 million.

Interest income decreased $0.3 million to $1.1 million for the quarter
ended March 31, 2002, from $1.4 million for the same period in 2001. This
decrease was due to a significant decline in interest rates partially offset by
higher balances of cash and marketable securities. Cash and marketable
securities increased primarily due to the public offering in January 2001, as
well as cash generated from operations.

As a result of these factors, we had net income of $5.3 million for the
quarter ended March 31, 2002, compared to a net loss of $3.2 million for the
same period in 2001.

LIQUIDITY AND CAPITAL RESOURCES

During the quarter ended March 31, 2002, operations provided $10.5 million
of cash. Investing activities used $66.5 million of cash, of which $60.6
million was for the purchase of marketable securities, $3.9 million was for the
purchase of fixed assets and $2.0 million was for the funding of development
costs. Financing activities provided $1.3 million of cash, as a result of the
exercise of stock options and the purchase of common stock under our employee
stock purchase plan.

As of March 31, 2002, our principal source of liquidity is our combined
cash and marketable securities balance of $174.5 million. Our future
capital requirements will depend upon a number of factors, including the rate
of growth of our sales and the timing and level of research and development
activities. As of March 31, 2002, we did not have any material commitments for
capital expenditures. We believe that our available cash and cash equivalents
and anticipated cash generated from our future operations will be sufficient to
meet our operating requirements for at least the next 12 months.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We do not currently use derivative financial instruments. We generally
buy investments that are highly liquid. 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. The following table
illustrates potential fluctuation in annualized interest income based upon
hypothetical values for blended interest rates and cash and marketable
securities account balances.

Annualized interest income based upon hypothetical values for cash and
marketable securities combined balances and interest rates:*

|              |  |                                    |           |              |  |              |           |  |  |   |           | 
|------------- |  | ---------------------------------- | --------- | ------------ |  | ------------ | --------- |  |  | - | --------- | 
|              |  | Combined cash and cash equivalents
|Hypothetical  |  | and marketable securities balances
|Blended       |  |                                   
|Interest Rate |  | $150,000,000                       |           | $170,000,000 |  | $190,000,000
|              |  |                                    |           |              |  |             
|1.5%          |  | $                                  | 2,250,000 |              |  | $            | 2,550,000 |  |  | $ | 2,850,000 | 
|             
|             
|             
|             
|2.0%          |  |                                    | 3,000,000 |              |  |              | 3,400,000 |  |  |   | 3,800,000 | 
|             
|             
|             
|             
|2.5%          |  |                                    | 3,750,000 |              |  |              | 4,250,000 |  |  |   | 4,750,000 | 
|             
|             
|             
|             
|3.0%          |  |                                    | 4,500,000 |              |  |              | 5,100,000 |  |  |   | 5,700,000 | 
|             
|             
|             
|             
|3.5%          |  |                                    | 5,250,000 |              |  |              | 5,950,000 |  |  |   | 6,650,000 | 
|             
|             
|             
|             
|4.0%          |  |                                    | 6,000,000 |              |  |              | 6,800,000 |  |  |   | 7,600,000 | 



|* |  | (This sensitivity analysis is not a forecast of future interest income.)
|- |  | ------------------------------------------------------------------------

The Company accounts for cash equivalents and marketable securities in
accordance with 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. Marketable securities
consist of funds that are highly liquid and are classified as
available-for-sale. Marketable securities are recorded at fair value and
unrealized gains and losses are recorded as a component of other comprehensive
income.

We do not currently enter into foreign currency hedge transactions.
Through March 31, 2002, foreign currency fluctuations have not had a material
impact on our financial position or results of operations.

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PART II.




ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

At the Annual Meeting of Stockholders of the Company held on May 8, 2002,
the shareholders voted upon three proposals. They consisted of (i) the election
of two Class I directors for a three-year period (Proposal One); (ii)
the amendment and restatement of the Company's 2000 Stock Incentive Plan, the 1999 Stock Incentive Plan, the 1998 Stock Incentive Plan, and the Amended and Restated 1998
Employee Stock Purchase Plan to reflect an increase in the number of shares of Voting Common
Stock authorized for issuance under all the Company's stock plans (the 2000 Stock Incentive Plan, the 1999
Stock Incentive Plan, the Amended and Restated 1998 Employee Stock Purchase Plan, the 1998 Stock Incentive Plan and the
1996 Stock Plan) from 12,000,000 to 15,000,000
(Proposal Two); and (iii) the
ratification of the selection of PricewaterhouseCoopers LLP by the Board of
Directors as the Companys independent auditors for the current fiscal year.

The outcome of the voting on Proposal One was as follows:

|                |  |     |            |          |  |  |         | 
|--------------- |  | --- | ---------- | -------- |  |  | ------- | 
|Nominee         |  | For |            | Withheld
|                |  |     |            |         
|Eugene V. Fife  |  |     | 39,783,673 |          |  |  | 991,034 | 
|               
|               
|               
|               
|Braden R. Kelly |  |     | 39,782,562 |          |  |  | 992,145 | 

The outcome of the voting on Proposal Two was as follows:

|         |  |  |            | 
|-------- |  |  | ---------- | 
|For      |  |  | 24,535,895 | 
|        
|        
|        
|        
|Against  |  |  | 9,349,804  | 
|        
|        
|        
|        
|Abstain  |  |  | 221,890    | 
|        
|        
|        
|        
|Non-Vote |  |  | 6,667,118  | 

The outcome of the voting on Proposal Three was as follows:

|         |  |  |            | 
|-------- |  |  | ---------- | 
|For      |  |  | 40,107,734 | 
|        
|        
|        
|        
|Against  |  |  | 658,993    | 
|        
|        
|        
|        
|Abstain  |  |  | 7,980      | 
|        
|        
|        
|        
|Non-Vote |  |  |           | 

The Companys Proxy Statement filed pursuant to Section 14 of the
Securities and Exchange Act contains a detailed discussion of the proposals
that the shareholders were asked to vote upon.

In addition to the directors elected above, the other members of the Companys
board of directors include:

|                  |  |                |  | 
|----------------- |  | -------------- |  | 
|Name              |  | Director Class
|                  |  |               
|Jay B. Pieper     |  | Class II      
|Steven A. Denning |  | Class II      
|Harvey J. Wilson  |  | Class III     
|G. Fred Dibona    |  | Class III     

The terms for Class II and Class III directors end at the Annual Meeting of
Shareholders of the Company, to be held in 2003 and 2004, respectively.






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, 2002.

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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 13, 2002 |  | /s/ Robert J. Colletti                                              
|                   |  |                                                                     
|                   |  | Robert J. Colletti
Senior Vice President and Chief Financial Officer

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ECLIPSYS CORPORATION
EXHIBIT INDEX

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



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