MARKHAM, ON, Aug. 26 /CNW/ -- - Generated $1.0 million of Cash from
Operations & achieved sixth consecutive quarter of positive
EBITDA - MARKHAM, ON, Aug. 26 /CNW/ - Nightingale Informatix
Corporation ("Nightingale" or the "Company") (TSX-V: NGH), an
application service provider (ASP) of electronic medical record
(EMR) software and related services announces its financial results
for the first quarter ended June 30, 2010. All results are reported
in Canadian dollars unless otherwise stated. Q1 Fiscal 2011
Financial Summary -------------------------------- - Revenue
increased to $4.4 million, compared to $4.1 million in Q1 F2010.
Revenue growth is attributed to an increase in software licensing
revenues, which offset a $0.4 million decrease in transcription
revenue and a negative foreign exchange impact of $0.3 million. -
Gross profit margin reached a record high in the Company's recent
history at 80%, up from 71% in Q1 F2010, as a result of the
Company's increased focus on generating high-margin software
revenue. - The trend of EBITDA(1) improvement reached a record high
as it grew to $0.6 million from $23,000 in Q1 F2010, primarily as a
result of increased revenues and gross profit. - Net profit before
tax was $8,000, compared to a net loss before tax of $0.08 million
in Q1 F2010. - Net loss was $9,000 compared to net loss of $0.8
million for Q1 F2010. - Cash from operations increased to $1.0
million from $(1.0) million in Q1 F2010, driven by strong
high-margin software sales. - Completed a private placement of
common shares and subscription receipts, as well as revolving and
term debt financings for aggregate gross proceeds of $6.3 million.
A total of $2.1 million, or 63%, of the proceeds from the private
placement of common shares and subscription receipts came from
Directors, Officers and other insiders. Subsequent to quarter end,
used the proceeds to complete a comprehensive debt refinancing,
which the Company expects will result in reduced interest expense,
starting in Q2 F2011, and increased overall financial flexibility.
Q1 Fiscal 2011 Operational Highlights
------------------------------------- - Signed agreements with
healthcare providers across Canada, representing the deployment of
more than 200 EMR seats. - Achieved Approved Vendor status as part
of Saskatchewan's EMR program, which is jointly funded through the
Saskatchewan Medical Association (SMA) and the Saskatchewan
Ministry of Health. - Subsequent to quarter end, signed a five-year
EMR and practice management agreement with the AIM Health Group to
support more than 150 healthcare professionals across Canada, who
conduct more than 1.5 million patient visits per year. "Fiscal 2011
is off to an encouraging start, with more than 200 EMR seats sold
across Canada in Q1, compared to only eight seats sold in Q1 of
last year," said Sam Chebib, President and CEO, Nightingale. "This
is further evidence of the strengthening of the EMR market now that
government funding has been released. In addition, as a result of
our funding approval in Saskatchewan in the quarter, we are
positioned to further broaden our Canadian customer penetration.
Government funding initiatives are currently a key catalyst for EMR
adoption. There may be some near-term fluctuations in adoption as
funding is rolled out; however, we do expect to see increasing
implementation of EMR over the longer term. With funding now
available in many of our target markets across North America, we
believe we are poised for growth." Mr. Chebib added: "Strengthening
our financial performance continues to be our primary focus for
fiscal 2011. We aim to increase high-margin software sales and grow
revenues, particularly by leveraging our Canadian market leadership
to further expand our physician customer base. This is demonstrated
by our recently announced major five-year contract win with AIM
Healthcare Group, one of the largest ambulatory healthcare
providers in Canada." Mr. Chebib continued: "In addition, we remain
committed to carefully managing our expenses and cash with the goal
of achieving consistent positive cash flow and profitability, while
concentrating our investments in areas that enable us to best
capitalize on the increase in EMR adoption we are starting to see.
I am satisfied with the performance we are reporting this quarter,
including our sixth consecutive quarter of positive EBITDA and $1
million of positive cash flow from operating activities, as well as
the trends underlying these results. I am also pleased and
encouraged by the support of our Directors, Officers and other
insiders by way of their participation in our recent placement of
debt and equity." Financial Review ---------------- Revenue for the
Q1 fiscal 2011 was $4.4 million, compared to $4.1 million for Q1
fiscal 2010. The year-over-year improvement is primarily the result
of a $1.0 million increase in non-recurring software license
revenue, which was partially offset by a $0.4 million decrease in
revenue from the Company's lower-margin transcription business, as
well as a negative $0.3 million foreign exchange impact (the
Company generated 53% of Q1 fiscal 2011 revenue in the US), which
predominantly affected the Company's recurring revenue. Recurring
Revenue(2) for Q1 fiscal 2011 was $2.8 million, compared to $3.6
million for Q1 fiscal 2010. The year-over-year decline is primarily
a result of a reduction in transcription revenue and the negative
foreign exchange impact. Transcription revenue decreased to $80,000
from $0.5 million for the same period last year. Nightingale
expects to realize further reductions in transcription revenue in
fiscal 2011, which the Company believes will be offset by revenue
generated from higher margin software sales over the longer term.
Recurring revenue generated by Nightingale's core business (which
excludes the Company's transcription revenues and the impact of
foreign exchange) was $3.1 million for Q1 fiscal 2011 , up from
$3.0 million for the same period last year. Non-Recurring
Revenue(2) for Q1 fiscal 2011 was $1.6 million, up from $0.6
million for Q1 fiscal 2010, primarily due to the $1.0 million
increase in license revenue driven by sales of the Company's
Nightingale on Demand EMR product. For Q1 fiscal 2011, gross profit
margin was 80% of revenue, compared to 71% of revenue in Q1 fiscal
2010, reflecting a greater proportion of higher margin software
sales in Q1 fiscal 2011. Expenses for Q1 fiscal 2011 decreased 4%
to $3.4 million from $3.5 million in Q1 fiscal 2011. This decline
in expenses is primarily the result of a decrease in amortization
expense associated with intangible assets, which was partially
offset by the Company's increased investment in sales and
marketing. The decrease in the value of the Canadian dollar
compared to the US dollar also contributed to the decline in
expenses. In Q1 2011, approximately 39% of Nightingale's expenses
were incurred in the US, providing the Company with a natural hedge
position that offsets some of the negative foreign exchange impact
on revenue. EBITDA increased to $0.6 million in Q1 fiscal 2011,
from $23,000 in Q1 fiscal 2010. For Q1 fiscal 2011, net loss
improved to $9, 000, up from $0.8 million for the same period last
year. Cash generated from operating activities increased to $1.0
million for Q1 fiscal 2011 from $(1.0) million in Q1 fiscal 2010,
reflecting both the improvement in the Company's bottom line
results as well as timing of the collection of cash on deferred
revenue. Cash and cash equivalents were $3.6 million at June 30,
2010, compared to $2.5 million at June 30, 2009. At June 30, 2010,
total common shares issued and outstanding were 76,310,915. Funding
of Senior Loan Facility, Conversion of Subscription Receipts and
Refinancing of Outstanding Third-Party Debt
-------------------------------------------------------------------------
In April 2010, Nightingale announced that it completed private
placement financings (collectively, the "Private Placement") of
common shares and subscription receipts, for aggregate gross
proceeds of $3.3 million, and entered into a commitment with a
third-party financial institution for additional aggregate gross
proceeds of approximately $3.0 million in revolving and term debt
(collectively, the "Senior Loan Facility"). On July 29, 2010,
subsequent to quarter end, the Company used the proceeds of the
Private Placement and the Senior Loan Facility for general
corporate purposes and to refinance its outstanding $5.3 million in
subordinated debt on more favourable terms. The Company completed
the Private Placement on April 20, 2010, whereby it issued an
aggregate of 5.7 million common shares of the Company at a price of
$0.22 per Common Share for gross proceeds of $1.3 million and
concurrently issued 2,074 subscription receipts ("Subscription
Receipts") for gross proceeds of $2.1 million, all on a
non-brokered private placement basis. The Subscription Receipts
were all automatically converted on July 29, 2010 pursuant to their
terms. On conversion, each Subscription Receipt entitled the holder
to receive, without additional consideration, a convertible
unsecured subordinated debenture in the aggregate principal amount
of $1,000 (collectively, the "Debentures"). The Debentures bear
interest at a rate of 12% per annum, payable monthly and are
scheduled to mature in July 2013. Following the first year
anniversary of the Debentures, the Company has the right to redeem
the Debentures, in whole or in part, at a price equal to their
principal amount plus accrued and unpaid interest. The Debentures
are convertible at the holder's option into fully-paid Common
Shares at any time prior to maturity or redemption at a conversion
price of $0.35 per share. Upon the automatic conversion of the
Subscription Receipts, an amount of escrowed funds equal to $2.1
million was released to the Company. This press release should be
read in conjunction with Nightingale's Consolidated Financial
Statements for the quarter ended June 30, 2010 and the accompanying
Management Discussion and Analysis. The financial statements and
MD&A will be available at www.nightingalemd.com and filed on
www.sedar.com on August 26, 2010. Notice of Conference Call and
Webcast ------------------------------------- Nightingale will host
a conference call on Thursday, August 26, 2010 at 8:30 a.m. Eastern
Standard Time. To access the conference call by telephone, dial
(647) 427-7450 or (888) 231-8192. Please connect approximately
fifteen minutes prior to the call, and reference conference ID
94720206 prior to the beginning of the call to ensure
participation. The conference call will be archived for replay
until Thursday, September 2, 2010. To access the archived
conference call, dial 1-800-642-1687 and enter reference 94720206
followed by the number sign. To listen to the conference call
on-demand at your convenience please send an email to
info@nightingale.md and a copy of the call recording will be
emailed directly to you. Non-GAAP Financial Measures The Company
internally measures its performance and results of initiatives
through a number of measures that are not recognized under Canadian
generally accepted accounting principles (GAAP) and may not be
comparable to similar measures used by other companies. 1. EBITDA
EBITDA is a non-GAAP measure that management believes is a useful
measurement to evaluate the performance of the Company. Investors
should be cautioned, however, that EBITDA should not be construed
as an alternative to net earnings as determined in accordance with
GAAP. The Company's method of calculating EBITDA may differ from
the methods used by other companies and, accordingly, it may not be
comparable to similarly titled measures used by other companies.
EBITDA is defined as earnings before other loss (income), interest,
income taxes, depreciation, amortization, and stock-based
compensation. Management believes it is useful to exclude these
items as they are either non-cash expenses, items that cannot be
influenced by management in the short term, or items that do not
impact core operating performance, and Management uses this
information internally for forecasting and budgeting purposes. The
following provides a reconciliation of EBITDA to Loss and
Comprehensive Loss:
-------------------------------------------------------------------------
Fiscal Fiscal Quarter Quarter Ended Ended June June Definition 30,
2010 30, 2009
-------------------------------------------------------------------------
Loss and Comprehensive Loss $ (9) $ (843)
-------------------------------------------------------------------------
Adjustments for: Current Tax Expense $ 17 $ - Other Loss (Income)
(11) (44) Interest 176 316 Depreciation and Amortization 419 569
Stock-based Compensation 24 25
-------------------------------------------------------------------------
EBITDA $ 616 $ 23
-------------------------------------------------------------------------
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2. Recurring and Non-Recurring Revenue The Company has included
recurring revenue and non-recurring revenue measurements since it
believes that this information is useful to investors to evaluate
its performance. Investors should be cautioned, however, that
recurring revenue and non-recurring revenue should not be construed
as an alternative to revenue as determined in accordance with GAAP.
Recurring Revenue is comprised of utilization fees, hosting,
support and maintenance revenue, data management and transcription
services, billing and financial management services and
transactional fees. Non-Recurring Revenue is comprised of revenues
generated from sales of software and systems and related training,
data conversion and installation services. The following provides a
reconciliation of Recurring Revenue and Non-Recurring Revenue to
Revenue:
-------------------------------------------------------------------------
Fiscal Fiscal Quarter Quarter Ended Ended June June Definition 30,
2010 30, 2009
-------------------------------------------------------------------------
Non-Recurring Revenue $ 1,559 $ 567 Recurring Revenue 2,843 3,563
-------------------------------------------------------------------------
Revenue $ 4,401 $ 4,130
-------------------------------------------------------------------------
-------------------------------------------------------------------------
About Nightingale Nightingale is one of the fastest growing health
care service and software companies in North America and is
recognized as an industry leader in Web-based clinician and
community based electronic medical records (EMR) serving the needs
of small primary care practices, multi-physician outpatient
clinics, and large scale regional health organizations and
networks. Coupled with integrated practice management,
transcription and revenue cycle management, Nightingale's
comprehensive service offering allows customers to enhance patient
care, increase revenue opportunities and optimize operations.
Nightingale is continuously innovating and enhancing its services
to meet the needs of its growing and diverse customer base.
Nightingale - Healthcare connected. www.nightingalemd.com Forward
Looking Statement This press release contains "forward-looking
statements" respecting the issuance and cancellation of securities
of the Company within the meaning of applicable Canadian securities
legislation. Generally, forward-looking statements can be
identified by the use of forward- looking terminology such as
"plans", "expects" or "does not expect", "is expected", "budget",
"scheduled", "estimates", "forecasts", "intends", "anticipates" or
"does not anticipate", or "believes", or variations of such words
and phrases or state that certain actions, events or results "may",
"could", "would", "might" or "will be taken", "occur" or "be
achieved". Forward-looking statements are subject to known and
unknown risks, uncertainties and other factors that may cause the
actual results, level of activity, performance or achievements of
Nightingale to be materially different from those expressed or
implied by such forward-looking statements, including but not
limited to: risks related to the speculative nature of the medical
software industry, which is affected by numerous factors beyond
Nightingale's control; the ability of Nightingale to successfully
integrate its acquisitions and any liabilities arising as a result
of such acquisitions, access to capital and agreements with its
Lenders; the existence of present and possible future government
regulation; access to debt or equity financing and agreements with
its Lenders; the significant and increasing competition that exists
in the medical software industry; the early stage of Nightingale's
business; and therefore it is subject to the risks associated with
early stage companies, including uncertainty of revenues, markets
and profitability and the need to raise additional funding. All
material assumptions used in making forward-looking statements are
based on management's knowledge of current business conditions and
expectations of future business conditions and trends. Although
management believes the assumptions used to make such statements
are reasonable at this time, our assumptions may not to be as
anticipated, estimated or intended. Certain material factors or
assumptions applied by management in making forward-looking
statements, include without limitation, factors and assumptions
regarding Nightingale's continued ability to fund its business,
rates of customer defaults, relationships with, and payments to,
lenders, demand for Nightingale's products, as well as
Nightingale's operating cost structure. Although Nightingale has
attempted to identify important factors that could cause actual
results to differ materially from those contained in
forward-looking statements, there may be other factors that cause
results not to be as anticipated, estimated or intended. There can
be no assurance that such statements will prove to be accurate, as
actual results and future events could differ materially from those
anticipated in such statements. Accordingly, readers should not
place undue reliance on forward-looking statements. Nightingale
does not undertake to update any forward-looking statements that
are incorporated by reference herein, except in accordance with
applicable securities laws. Further information on Nightingale
Informatix Corporation is available at www.sedar.com. Neither the
TSX Venture Exchange nor its Regulation Services Provider (as that
term is defined in the policies of the TSX Venture Exchange)
accepts responsibility for the adequacy or accuracy of this
release. INTERIM CONSOLIDATED STATEMENT OF OPERATIONS AND
COMPREHENSIVE LOSS (Unaudited) FOR THE THREE MONTHS ENDED JUNE 30
-------------------------------------------------------------------------
3 months 3 months ended ended June June 30, 2010 30, 2009
-------------------------------------------------------------------------
Revenue $ 4,401,490 $ 4,130,220 Cost of sales 868,121 1,193,602
------------- ------------- Gross profit 3,533,369 2,936,618
------------- ------------- Expenses General and administration
775,409 765,926 Sales and marketing 631,404 424,421 Research and
development 678,264 732,148 Client services 832,004 991,094 Stock
based compensation 23,595 25,349 Amortization 419,266 568,569
------------- ------------- 3,359,942 3,507,507 -------------
------------- Operating profit/(loss) 173,427 (570,889)
------------- ------------- Interest 176,347 316,408 Foreign
currency gain (10,988) (43,521) ------------- -------------
Profit/(loss) before tax 8,068 (843,776) Current tax expense 17,072
- ------------- ------------- Loss and comprehensive loss $ (9,004)
$ (843,776) ------------- ------------- ------------- -------------
Basic and diluted loss per common share Loss and comprehensive loss
per common share $ (0.00) $ (0.01) ------------- -------------
------------- ------------- Weighted average number of common
shares 72,808,928 69,322,220 ------------- -------------
------------- ------------- --------------------------- INTERIM
CONSOLIDATED BALANCE SHEETS (Unaudited) AS AT JUNE 30, 2010 and
MARCH 31, 2010
-------------------------------------------------------------------------
As at As at June March 30, 2010 31, 2010
-------------------------------------------------------------------------
ASSETS Current assets Cash and cash equivalents $ 3,606,669 $
1,798,247 Accounts receivable 3,037,056 2,626,757 Other receivables
32,615 134,459 Inventory 26,835 30,708 Prepaid expenses 665,685
454,070 ------------- ------------- 7,368,860 5,044,241
------------- ------------- Long-term assets Deferred costs 83,385
83,385 Property and equipment 742,711 821,243 Intangible assets
3,978,633 4,010,143 Goodwill 4,692,399 4,692,399 -------------
------------- 9,498,128 9,607,170 ------------- ------------- Total
assets $ 16,866,988 $ 14,651,411 ------------- -------------
------------- ------------- LIABILITIES Current liabilities
Accounts payable and accrued liabilities $ 2,969,446 $ 2,549,237
Income taxes payable 734,966 705,940 Current portion of deferred
revenue 4,009,431 3,488,382 Current portion of capital lease
obligations 260,939 296,649 ------------- ------------- 7,974,782
7,040,208 ------------- ------------- Long term liabilities
Subordinated debt 5,250,000 5,250,000 Deferred revenue 1,795,463
1,750,644 Capital lease obligations 183,051 211,578 -------------
------------- 7,228,514 7,212,222 ------------- ------------- Total
liabilities 15,203,296 14,252,430 ------------- -------------
SHAREHOLDERS' EQUITY Capital stock 29,636,683 28,348,960
Contributed surplus 4,487,019 4,501,027 Warrants 701,452 701,452
Deficit (33,161,462) (33,152,458) ------------- -------------
1,663,692 398,981 ------------- ------------- Total liabilities and
shareholders' equity $ 16,866,988 $ 14,651,411 -------------
------------- ------------- -------------
--------------------------- ---------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED MARCH 31,
2010
-------------------------------------------------------------------------
3 months 3 months ended ended June June 30, 2010 30, 2009
-------------------------------------------------------------------------
Cash flow from operating activities Net loss $ (9,004) $ (843,776)
Adjustments for: Depreciation and amortization 419,266 568,569
Amortization of transaction costs related to debt financing -
33,525 Stock based compensation 23,595 25,349 Unrealized foreign
exchange gain (loss) 101,579 (116,361) Interest accretion - 101,619
------------- ------------- 535,436 (231,075) Changes in non-cash
working capital balances Accounts receivable (362,702) (144,661)
Prepaid expenses (211,615) (111,249) Inventory 3,872 17,267
Deferred costs - 12,344 Other receivables 102,430 5,244 Accounts
payable and accrued liabilities 323,443 (570,554) Income taxes
payable 29,026 (54,273) Deferred revenue 565,868 48,657
------------- ------------- Cash flows used in operating activities
985,758 (1,028,300) ------------- ------------- Cash flow from
investing activities Purchase of property and equipment (54,388)
(16,246) Capitalized development costs (252,386) - -------------
------------- Cash flows used in investing activities (306,774)
(16,246) ------------- ------------- Cash flow from financing
activities Issuance of capital stock 1,250,120 - Repayment of
capital lease obligations (68,990) (76,388) -------------
------------- Cash flows provided by financing activities 1,181,130
(76,388) ------------- ------------- Foreign exchange losses on
cash in foreign currency (51,692) 84,619 Increase (decrease) in
cash during the period 1,808,422 (1,036,315) Cash and cash
equivalents, beginning of period 1,798,247 3,514,056 -------------
------------- Cash and cash equivalents, end of period $ 3,606,669
$ 2,477,741 ------------- ------------- ------------- -------------
--------------------------- ---------------------------
Supplemental cash flow information: Interest paid $ 176,860 $
182,626 Income taxes paid $ 25,895 $ 54,273 OVERALL PERFORMANCE,
RESULTS OF OPERATIONS AND FINANCIAL CONDITION QUARTERLY DATA
----------------------------------------------------------------
Fiscal Fiscal Year Q2 Q3 Q4 Year In $ 000's Ended Ended Ended Ended
Ended (Except per March 31, Sept 30, Dec 31, March March Share
Amounts) 2008 2008 2008 31, 2009 31, 2009
----------------------------------------------------------------
Recurring Revenue $13,088 $ 3,431 $ 4,045 $ 3,746 $14,531
Non-Recurring Revenue 5,788 815 511 971 3,934 Revenue 18,876 4,246
4,556 4,717 18,465 Gross Profit 13,706 3,164 3,272 3,305 13,410
Expenses 19,957 4,275 4,022 3,962 16,820 EBITDA Income (Loss)
(3,526) (458) (34) 9 (719) Operating Gain/ (Loss) for the Period
(6,250) (1,112) (750) (656) (3,410) Loss and Comprehensive Loss
(12,811) (1,492) (876) (1,004) (4,632) Loss and Comprehensive Loss
per Common Share $ (0.19) $ (0.02) $ (0.01) $ (0.01) $ (0.07)
Weighted Avg. No. of Common Shares 66,228 67,479 67,667 67,845
67,845
----------------------------------------------------------------
Total Assets $23,992 $20,308 $20,078 $17,906 $17,906 Total Long
Term Liabilities $ 6,948 $ 6,251 $ 6,234 $ 6,517 $ 6,517
----------------------------------------------------------------
-------------------------------------------------------------------------
Fiscal Q1 Q2 Q3 Q4 Year Q1 In $ 000's Ended Ended Ended Ended Ended
Ended (Except per June 30, Sept 30, Dec 31, March March June 30,
Share Amounts) 2009 2009 2009 31, 2010 31, 2010 2010
-------------------------------------------------------------------------
Recurring Revenue $ 3,564 $ 3,341 $ 3,342 $ 2,849 $13,096 $ 2,843
Non-Recurring Revenue 566 585 1,010 1,324 3,485 1,559 Revenue 4,130
3,926 4,352 4,173 16,581 4,401 Gross Profit 2,937 2,818 3,314 3,169
12,238 3,533 Expenses 3,508 3,327 3,384 3,474 13,693 3,360 EBITDA
Income (Loss) 24 180 593 406 1,203 616 Operating Gain/ (Loss) for
the Period (570) (509) (70) (306) (1,455) 173 Loss and
Comprehensive Loss (843) (727) (350) (1,524) (3,444) (9) Loss and
Comprehensive Loss per Common Share $ (0.01) $ (0.01) $ (0.00) $
(0.02) $ (0.05) $ (0.00) Weighted Avg. No. of Common Shares 69,322
70,535 70,535 70,535 70,232 72,809
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Total Assets $16,413 $15,170 $14,714 $14,651 $14,651 $16,867 Total
Long Term Liabilities $ 6,309 $ 5,751 $ 6,285 $ 7,212 $ 7,212 $
7,229
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%SEDAR: 00022709E Michael Ford, CFO, Nightingale Informatix
Corporation, Tel: 905-307-7870, mford@nightingalemd.com; Kristen
Dickson, Account Executive, The Equicom Group, Tel: 416-815-0700
ext. 273, kdickson@equicomgroup.com
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