I-many Reports First Quarter 2006 Financial Results

-- Highlights:

-- Gross value of new software license contracts up 121% from Q1 2005

-- Unamortized software subscriptions increase 216% from Q1 2005

-- Cash, restricted cash & short term investments increase by $381,000 to $17.7 million from the previous quarter

I-many, Inc. (NASDAQ:IMNY), the leading provider of EnterpriseContract Management (ECM) solutions for managing corporatecommitments, reported financial results for the first quarter of 2006.

GAAP Results

On a GAAP basis, net revenues for the quarter totaled $7.6million, a decrease of 15% from $8.9 million reported in the firstquarter of 2005. Net revenues exclude the portion of the gross valueof license and service contracts booked during the quarter which thecompany cannot realize until future periods, like those related to theincreasing number of multi-year software subscriptions.

Net loss for the quarter was $(0.06) per share, as compared to aloss of $(0.04) per share in the first quarter of 2005.

Quarter-end cash, restricted cash and short-term investmentstotaled $17.7 million, an increase of $381,000 or 2% from the end ofthe previous quarter.

Non-GAAP Results

Management believes certain non-GAAP financial results may presenta useful picture of the company's progress as it changes its businessmodel to include software subscriptions. This includes the gross valueof license contracts signed during the quarter, which totaled $4.0million - an increase of 121% from the $1.8 million signed in thefirst quarter 2005.

These contracts raised the total amount of unamortizedsubscriptions to be recognized over the next five years to $9.8million - an increase of 216% from $3.1 million at end of the firstquarter 2005.

The combined amount of deferred revenue and unamortizedsubscriptions increased to $22.8 million, up 106% from $11.0 millionat the end of the first quarter 2005.

These GAAP and non-GAAP results are in-line with the company'sguidance provided on its February 1, 2006 conference call.

I-many's CFO Kevin Harris commented, "As I mentioned in our lastfinancial news release, it is important to keep in mind the continuedimpact of our software subscription service offering introduced in2004. Externally, it expands our market to customers that find regularsubscription payments an easier and more flexible implementation ofECM. Internally, it provides I-many with the potential for smoother,more predictable revenue growth.

"While subscriptions have these benefits, they defer revenues tofuture periods that we would normally book in the current period asone-time sales. As our non-GAAP measures reveal, the effect of ourincreasing subscription revenue is therefore important to considerwhen comparing current results to previous periods when subscriptionswere a smaller percentage of sales."

Other Q1 2006 Highlights

Significant events during the first quarter 2006 included:

-- 8 new license transactions for the quarter (software license and subscriptions), up from 6 from the same year-ago quarter.

-- An order for I-many Contract Manager(TM) from the nation's largest retail drug store chain, supplanting a competitive product. As I-many's second retail customer for Contract Manager, this win demonstrates I-many's growing appeal to other major industries beyond its core Life Sciences market, and the increasing awareness of the importance of contract lifecycle management by corporate America.

-- Introduction of two new products: I-many Validata(TM), which allows pharmaceutical companies to streamline rebate validation processes and minimize compliance risks; and I-many Scoring Manager(TM), a powerful scoring engine that allows organizations to easily analyze large volumes of contract data to identify top performing customers and suppliers.

-- Sale of new products to existing, Fortune 200 clients, including I-many Validata to GlaxoSmithKline, and I-many Medicaid Analytics(TM) to Merck.

-- Top scores awarded by Forrester Research for contract compliance in a new report, The Forrester Wave: Contract Life-Cycle Management, Q1 2006. The report recognized I-many as a leader and pioneer in buy-side and sell-side contract lifecycle management (CLM).

"We continue to enjoy the positive trends established in the finalmonths of 2005," notes I-many chairman and interim CEO and president,John A. Rade, "as we report more than a doubling of the gross value ofour license contracts. This performance, underscored by major winswith Contract Manager, Medicaid Analytics, and our new Validata,reflects customer confidence in I-many's ability to deliverworld-class solutions for Enterprise Contract Lifecycle Management.The net increase in our cash position at end of the quarter indicatesI-many is in a strong position to continue to leverage its dominantposition in this fast-growing industry."

"We are now entering a pivotal time in I-many's growth anddevelopment," continues Rade. "As I-many rolls out new and updatedapplications based on its new Enterprise Contract ManagementFoundation (ECMF) platform, we expect this to act as a watershed foropening new markets, as well as broadening existing markets whereI-many is already the dominant player."

I-many's revolutionary ECMF platform, first implemented with theintroduction of Medicaid Analytics in September 2005, is designed toset the industry standard for contract management solutions for yearsto come, supporting both license solutions and hosted services thattake advantage of its new multi-tenant architecture. Application ofthis new technology is expected to help I-many customers better manageand optimize the quality of their revenue and control their expenses.

"I-many's ECMF solution will provide levels of capability,integration, and efficiency previously unavailable to the industry,"said Rade. "We plan to accomplish this with proven, high ROI forcustomers and competitive cost of maintenance. The inherentefficiencies of its state-of-the-art architecture will also makecreating new applications easier and less costly, which is especiallyimportant as we expand to new vertical markets."

I-many's market timing could not be better, as cost-containmentand profitability, together with compliance and risk management, movehigher and higher on executive agendas. This makes enterprise contractmanagement automation increasingly imperative not only for I-many'score Life Science customers, but for all industries. "Our major saleswins this quarter clearly speak to this growing need and awareness,"notes Rade.

Leading industry analyst, the Aberdeen Group, has also takennotice of these trends and foresees a minimum 20% year-over-yeargrowth rate in the ECM market through 2008. For managing theincreasingly complex enterprise contract lifecycle, I-many is nowpositioned as the only provider able to meet this growing demand for acomprehensive and integrated solution.

Management is including additional financial information in thispress release and in its quarterly report on Form 10-Q that theybelieve will give shareholders additional insight into quarterlyresults. Following the income statement and balance sheet, managementhas included a table that shows the results for the first quarter 2006compared to the comparable periods in 2005 for new licensetransactions, including subscription contracts, the recognition intoreportable revenue of subscriptions and other deferred transactions,and the reconciliation of those numbers to total product revenueaccording to generally accepted accounting principles ("GAAP").

Conference Call

I-many will hold a conference call tomorrow, April 27, 2006, at10:00 a.m. Eastern Time. The call-in number is (800) 561-2718 or (617)614-3525, passcode #35751656. The call is also being webcast, whichcan be accessed at I-many's web site at www.imany.com.

For those who cannot listen to the live broadcast, a replay of thecall will be available from April 27, 2006, at 12:00 p.m., through May5th, at 11:59 p.m., and can be accessed by dialing (888) 286-8010 or(617) 801-6888, conference ID #86811008.

Use of Non-GAAP Financial Information

The company supplements its GAAP financial statements with anon-GAAP quarterly and annual reconciliation of the gross value oflicense transactions to its reported GAAP product revenues. Thisnon-GAAP financial information is provided as additional informationfor investors and is not in accordance with or an alternative to GAAP.Management believes its inclusion can enhance an overall understandingof the company's past operational performance and also its prospectsfor the future. This reconciliation of product revenues is made withthe intent of providing both management and investors a more completeunderstanding of the revenue performance of the company, as opposed toGAAP revenue results, which do not include the impact ofnewly-executed subscription agreements and other deferred revenuearrangements that are material to the ongoing performance of thecompany's business. This information quantifies the various componentscomprising current revenue, which in each quarter consists of revenuesfrom licenses sold in current periods plus revenues deferred fromprior periods, less revenue deferred from licenses sold in currentperiods. Management uses this information as a basis for planning andforecasting core business activity in future periods and believes itis useful in understanding our results of operations. The presentationof this additional revenue information is not meant to be consideredin isolation or as a substitute for revenues reported in accordancewith generally accepted accounting principles in the United States.

About I-many

I-many (NASDAQ:IMNY) is the leading provider of advancedEnterprise Contract Management solutions for managing corporatecommitments. Designed to extend beyond the traditional contractmanagement capabilities, I-many ContractSphere(R) offers an end-to-endsolution, from pre-contract processes and contract management totransaction compliance. Ultimately, this provides companies with thevisibility and control needed to manage any type of commitment - fromcontracts and obligations to payments and collections. The result isincreased revenue, minimized risk and dramatically reduced operatingcosts, which deliver improved profitability with hard return oninvestment. More than 280 customers across 21 industries worldwidehave implemented and realized the value of I-many business solutions.For more information, please visit www.imany.com.

This news release contains forward-looking statements, and actualresults may vary from those expressed or implied herein. Factors thatcould affect these results include: the risk of unforeseen technicalor practical impediments to planned software development, which couldaffect the company's product release timetable; the inherent risks oflarge software implementation projects, which can cause customerdisagreements that could affect I-many's ability to collect bothservices and license revenue, whether recognized or deferred; thepossibility that customers could cancel maintenance and supportservices at the time of annual renewal, which could decrease I-many'sbase of recurring revenue; the possibility that current economicconditions will not improve as anticipated or will deteriorate; thepossibility that extraordinary events outside the company's controlcould extend the length of the sales cycle for the company's productsor make the market for the company's products more unpredictable; therisk that the company will not be successful in opening new marketsfor its products; and other risk factors set forth from time to timein the company's filings with the Securities and Exchange Commission.
I-MANY, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(Unaudited)

Three months
ended March 31,
2006 2005
--------- ---------

Net Revenues:
Product $1,570 $2,077
Services 6,048 6,857
--------- ---------
Total net revenues 7,618 8,934

Operating expenses:
Cost of third-party technology 77 10
Cost of services 3,817 3,792
Amortization of acquired intangible assets 343 355
Sales and marketing 2,073 2,039
Research and development 2,978 3,046
General and administrative 1,313 1,144
Depreciation 171 180
Restructuring and other charges 8 (27)
--------- ---------
Total operating expenses 10,780 10,539
--------- ---------

Loss from operations (3,162) (1,605)

Other income, net 132 31
--------- ---------

Net loss ($3,030) ($1,574)
========= =========

Basic and diluted net loss per common share ($0.06) ($0.04)
========= =========

Weighted average shares outstanding 46,676 42,863
========= =========
I-MANY, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(in thousands)


March 31, December 31,
2006 2005
------------ -------------
(Unaudited)

Assets
Current Assets:
Cash and cash equivalents $17,184 $16,805
Accounts receivable 7,163 9,577
Other current assets 1,021 845
------------ -------------
Total current assets 25,368 27,227

Property and equipment, net 1,227 1,188
Restricted cash 557 555
Other assets 126 122
Acquired intangible assets, net 370 713
Goodwill 8,667 8,667
------------ -------------
Total assets $36,315 $38,472
============ =============


Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued expenses $5,146 $5,618
Current portion of deferred revenue 13,290 12,194
Current portion of capital lease
obligations 8 8
------------ -------------
Total current liabilities 18,444 17,820

Deferred revenue, net of current portion 943 1,242
Other long-term liabilities 987 1,054

Stockholders' equity 15,941 18,356
------------ -------------

Total liabilities and stockholders'
equity $36,315 $38,472
============ =============
Reconciliation of Gross Value of License Bookings to Reportable
Product Revenue

Three Months (Quarter) ended
--------- ---------- --------- --------- ----------
3/31/2006 12/31/2005 9/30/2005 6/30/2005 3/31/2005
--------- ---------- --------- --------- ----------
(AMOUNTS IN THOUSANDS)

Gross value of
license contracts*
sold:
Health and Life
Sciences $3,457 $3,912 $1,346 $4,649 $1,535
Industry
Solutions 546 155 1,559 592 276
--------- ---------- --------- --------- ----------
4,003 4,067 2,905 5,241 1,811
Add product revenue
recorded in
current quarter
from contracts
sold in prior
periods:
Health and Life
Sciences -
subscriptions 461 326 239 223 138
Health and Life
Sciences - other
deferrals 0 0 0 0 1,476
Industry
Solutions -
subscriptions 19 35 0 0 0
--------- ---------- --------- --------- ----------
480 361 239 223 1,614
Less value of
license contracts
sold in current
quarter and
deferred to future
periods:
Health and Life
Sciences 2,382 2,221 1,041 3,892 1,310
Industry
Solutions 531 52 1,536 92 38
--------- -------------------- --------- ----------
2,913 2,273 2,577 3,984 1,348
--------- ---------- --------- --------- ----------
Product revenue
recorded:
Health and Life
Sciences 1,536 2,017 544 980 1,839
Industry
Solutions 34 138 23 500 238
--------- ---------- --------- --------- ----------
$1,570 $2,155 $567 $1,480 $2,077
========= ========== ========= ========= ==========

* I-many has updated the definition of "Gross Value of License
Contracts" signed to include first year maintenance and support sold
with new traditional perpetual licenses. Management believes this
presents a more comparable number to subscriptions that include
maintenance and support as part of the subscription fee paid. The
results have been updated with this definition for both the current
and comparable periods.