NDCHealth Still Ailing

Monday was a busy day for electronic medical data processing company NDCHealth (NYSE: NDC  ) . On tap: a restatement of three years' worth of financials, second-quarter earnings, and a raft of questions from analysts about when the Securities and Exchange Commission investigation and all the other bad stuff hanging over the company will finally be over.

But before we dig into Monday's details, a little factoid in NDCHealth's amended filings caught my eye. NDCHealth estimates that it touches 45% of all electronic health-care claims in the United States and that it handles a higher volume of electronic health-care claims than any other company. These are pretty big claims, and despite all of the company's recent problems, they may explain why so many analysts were on the call asking questions about the immediate future of a $500 million small cap.

First up on Monday was a restatement of financials from 2002 through the first quarter of 2005, which wiped away $7 million in net income. This is not a huge amount for NDCHealth, but after four years of restructuring charges with no clear end in sight, a large debt load, an ongoing SEC investigation, and the fact that the company is not finished with its Sarbanes-Oxley review, it only hurts credibility. The restatement, coupled with the other ongoing items, also means it's not unreasonable to assume that further restatements are yet to come.

To get back on track and reduce the debt load of $302 million -- $42 million is currently due -- NDCHealth is selling off international operations. If all sales are successful this year, the company believes it could be down to under $100 million in total debt, which is a large improvement. This also refocuses the company's management and resources on what are believed to be its strongest assets.

There's a direct lesson from the Nortel (NYSE: NT  ) saga that can be applied here quite well. It's worth waiting to see how the company's asset sales unfold and a sign that the company's ongoing restructurings are coming to an end before jumping in. The NDCHealth of 2000-2002 had robust profits and free cash flow, and it appears likely that if properly focused, the business could return to those levels. But thus far, management has not proved its ability to execute to plan, and competitors McKesson (NYSE: MCK  ) , WebMD (Nasdaq: HLTH  ) , and AMICAS (Nasdaq: AMCS  ) aren't sitting around idle. With close to 9,000 publicly traded companies, there's no rush to chase this one.

For related information, take a look at:

• Nortel: You Must Be Joking
• And reviews of WebMD's results here and here.

Fool contributor Nathan Parmelee wonders why NDCHealth didn't opt for a space in between NDC and Health. He does not own shares in any of the companies mentioned.