NGH

MARKHAM, ON, Nov. 18 /CNW/ -- MARKHAM, ON, Nov. 18 /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 three- and six-month periods ended September 30, 2010. All results are reported in Canadian dollars unless otherwise stated.  Q2 Fiscal 2011 Summary -- Revenue was $4.2 million, up from $3.9 million in Q2 F2010, primarily reflecting a $0.6 million increase in software revenues, which offset a $0.4 million decrease in transcription revenue and a negative $0.1 million foreign exchange impact. -- Gross profit margin was 79%, up from 72% in Q2 F2010 as a result of the Company's increased focus on generating high-margin software revenue. -- EBITDA(1 )increased to $0.4 million, compared to $0.2 million in Q2 F2010, reflecting stronger top line and gross margin results. -- Net loss was $0.5 million, compared to net loss of $0.7 million for Q2 F2010. -- Cash from operations increased to $0.3 million from $0.02 million in Q2 F2010, driven by an improvement in the Company's bottom line results as well as the timing of collection of cash on deferred revenue. -- Total deferred revenue as at September 30, 2010 was $6.0 million compared to $5.0 million as at September 30, 2009. -- Completed a comprehensive debt refinancing, which resulted in reduced interest expense starting in Q2 F2010 compared to previous periods, and increased overall financial flexibility. -- Signed agreements with healthcare providers across Canada to deploy more than 200 EMR seats, including a five-year EMR and practice management agreement with the AIM Health Group, representing 150 seats. -- Announced plans to deploy, in partnership with Canadian Patient Access Inc., the Company's secure patient portal, mypatientaccess.ca, with a Canadian clinic, making the web-based interactive patient portal available to parents of more than 10,000 pediatric patients. "We have seen improved EMR business momentum across Canada during the first half of fiscal 2011, with Nightingale signing more than 400 new EMR seats," said Sam Chebib, President and CEO of Nightingale. "Driven by government funding - the key catalyst fueling EMR adoption at this stage - there is increased interest for our products in Ontario and Nova Scotia, and we are building a sales pipeline in Saskatchewan where we are also an approved EMR vendor under the Saskatchewan Medical Association's program. While these accomplishments are encouraging, their financial impact will be evident in the longer term in the form of recurring revenues." Mr. Chebib continued: "With the improvements in the overall EMR market environment, we remain optimistic about the long-term opportunities ahead of us. We are focusing our attention and investments on key areas of the business that best position us to acquire new customers and expand our market share, while remaining highly committed to carefully managing our expenses and cash. In the near-term, we expect there will be continued fluctuations in our quarterly results as the EMR market unfolds, with funding being rolled out to physicians at clinics of varying sizes and customers choosing either our up-front license or a monthly utilization payment option. However, we believe the combination of our existing EMR sales pipeline and the technology leadership of our product offering positions us to further strengthen our financial results over the longer term." Q2 and Year-to-date (YTD) Fiscal 2011 Financial Review Revenue was $4.2 million for Q2 F2011, compared to $3.9 million for Q2 F2010. The improvement is primarily the result of a $0.6 million increase in software license revenue, which was partially offset by a $0.4 million decreases in the Company's lower-margin transcription business, as well as a negative $0.1 million foreign exchange impact (the Company generated 52% of Q2 F2011 revenue in the US), which predominantly affected the Company's recurring revenue. YTD revenue was $8.6 million, compared to $8.1 million for the first half of F2010, which reflected a $1.6 million increase in software license revenue, a $0.9 million decreases in transcription revenue and a negative $0.4 million foreign exchange impact (the Company generated 52% of revenue in the US during the first half of F2011). Recurring Revenue(2) was $2.7 million for Q2 F2011, compared to $3.3 million for Q2 F2010. The decrease is primarily the result of a reduction in transcription revenue and the negative foreign exchange impact. For Q2 F2011, transcription revenue decreased to $0.07 million from $0.5 million for Q2 F2010. YTD, Recurring Revenue(2 )was $5.6 million, compared to $6.9 million for the first half of F2010. Recurring revenue generated by Nightingale's core business (which excludes the Company's transcription revenues and the impact of foreign exchange) was $2.8 million for Q2 fiscal 2011 and $5.8 million YTD, compared to $2.8 million and $5.9 million, respectively, for the same periods last year. Non-Recurring Revenue(2) increased to $1.5 million and $3.0 million for the Q2 and YTD F2011 periods, from $0.6 million and $1.2 million, respectively, for the same periods last year, primarily due to the increase in software licensing and professional services revenue driven by sales of the Company's Nightingale on Demand EMR product. For Q2 and the YTD F2011 periods, gross profit margin was 79% and 80%, respectively, compared to 72% and 71%, respectively, for the same periods last year, as the Company continues to increase its focus on generating a greater proportion of higher margin software sales in F2011. Operating expenses (excluding stock based compensation and amortization) were $2.9 million in Q2 F2011, compared to $2.6 million in Q2 F2010. The increase in expenses reflects the Company's increased investment in sales and marketing, which was partially offset by a positive $0.1 million foreign exchange impact. In Q2 2011, the Company incurred approximately 37% of its operating expenses in the US, providing a natural hedge position that offsets some of the negative foreign exchange impact on the Company's revenue. For YTD F2011, operating expenses were $5.9 million, compared to $5.6 million for the same period in F2010. For YTD F2011, the Company incurred approximately 35% of its expenses in the US, resulting in a positive $0.2 million foreign exchange impact. EBITDA was $0.4 million and $1.0 million for the Q2 and YTD F2011 periods, compared to $0.2 million and $0.2 million, respectively for the same periods in F2010. Net loss was $0.5 million and $0.5 million for the Q2 and YTD F2011 periods, compared to losses of $0.7 million and $1.6 million, respectively, for the same periods in F2010. Cash generated from (used in) operating activities was $0.3 million and $1.3 million for the Q2 and YTD F2011 periods, compared to $0.02 million and ($0.9) million, respectively for the same periods last year. The increase reflects 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 $3.0 million at September 30, 2010, compared to $1.8 million at March 31, 2010.  At September 30, 2010, total common shares issued and outstanding were 76,310,915. This press release should be read in conjunction with Nightingale's Consolidated Financial Statements for the quarter ended September 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 November 18, 2010.  Notice of Conference Call Nightingale will host a conference call on Thursday, November 18, 2010 at 8:30 a.m. Eastern Standard Time. To access the conference call by telephone, dial (647) 427-7450 or (888) 231-8191. Please connect approximately fifteen minutes prior to the call, and reference conference ID 24176473 prior to the beginning of the call to ensure participation. The conference call will be archived for replay until Thursday, November 25, 2010. To access the archived conference call, dial 1-800-642-1687 and enter reference 24176473 #. To listen to the conference call replay on the internet please visit our website shortly after the call at www.nightingalemd.com. 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 Quarter Fiscal Quarter Six Months Six Months Ended Ended Ended Ended September September September September Definition 30, 2010 30, 2009 30, 2010 30, 2009 Loss and $ (468) $ (726) $ (477) $ (1,570) Comprehensive Loss Adjustments for: Current Tax Benefit $ (28) $ - $ (11) $ - Other Loss (Income) (4) (35) (15) (78) Interest 249 253 425 570 Depreciation and 420 553 839 1,121 Amortization Stock-based 217 136 241 161 Compensation EBITDA $ 386 $ 181 $ 1,002 $ 204 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 Quarter Fiscal Quarter Six Months Six Months Ended Ended Ended Ended September September September September Definition 30, 2010 30, 2009 30, 2010 30, 2009 Non-Recurring $ 1,491 $ 585 $ 3,050 $ 1,152 Revenue Recurring Revenue 2,723 3,341 5,565 6,904 Revenue $ 4,214 $ 3,926 $ 8,615 $ 8,056 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 AND SIX MONTH PERIODS ENDED SEPTEMBER 30, 2010 3 months 3 months 6 months 6 months ending ended ending ended September September September September 30, 2010 30, 2009 30, 2010 30, 2009 Revenue $ 4,213,850 $ 3,926,392 $ 8,615,340 $ 8,056,611 Cost of sales 886,600 1,107,940 1,754,722 2,301,541 Gross profit 3,327,250 2,818,452 6,860,618 5,755,070 Expenses General and 708,835 606,572 1,484,243 1,372,495 administration Sales and 546,664 312,645 1,178,068 737,066 marketing Research and 755,083 695,326 1,433,347 1,427,474 development Client services 930,767 1,023,216 1,762,771 2,014,310 Stock based 217,029 136,132 240,624 161,482 compensation Amortization 419,588 552,718 838,854 1,121,288 3,577,966 3,326,609 6,937,907 6,834,115 Operating loss (250,716) (508,157) (77,289) (1,079,046) Interest, note 248,937 253,273 425,284 569,682 Foreign currency (4,202) (34,934) (15,190) (78,455) loss (gain) Profit / (loss) (495,451) (726,496) (487,383) (1,570,272) before tax Current income (27,593) - (10,521) - tax benefit Loss and $ (467,858) $ (726,496) $ (476,862) $ (1,570,272) comprehensive loss Basic and diluted $ (0.01) $ (0.01) $ (0.01) $ (0.02) loss per common share Weighted average 76,310,915 70,534,543 75,649,594 69,931,693 number of common shares INTERIM CONSOLIDATED BALANCE SHEETS (Unaudited) AS AT SEPTEMBER 30, 2010 and MARCH 31, 2010 As at As at September March 30, 2010 31, 2010 ASSETS Current assets Cash and cash equivalents $ 3,027,555 $ 1,798,247 Accounts receivable 2,700,116 2,626,757 Other receivables 74,866 134,459 Inventory 23,435 30,708 Prepaid expenses 549,675 454,070 6,375,647 5,044,241 Long-term assets Deferred costs 74,188 83,385 Property and equipment 680,184 821,243 Intangible assets 3,895,631 4,010,143 Goodwill 4,692,399 4,692,399 9,342,122 9,607,170 Total assets $ 15,717,769 $ 14,651,411 LIABILITIES Current liabilities Line of Credit $ 840,000 $ - Current portion of term loan 733,333 - Accounts payable and accrued liabilities 2,394,242 2,549,237 Income taxes payable 708,613 705,940 Current portion of deferred revenue 3,958,569 3,488,382 Current portion of capital lease 222,122 296,649 obligations 8,856,879 7,040,208 Long term liabilities Term Loan 1,161,102 - Convertible Debt 1,765,632 - Subordinated debt - 5,250,000 Deferred revenue 2,050,947 1,750,644 Capital lease obligations 207,466 211,578 5,185,147 7,212,222 Total liabilities 14,042,026 14,252,430 SHAREHOLDERS' EQUITY Capital stock 29,629,683 28,348,960 Contributed surplus 4,704,048 4,501,027 Other paid in capital 269,880 - Warrants 701,452 701,452 Deficit (33,629,320) (33,152,458) 1,675,743 398,981 Total liabilities and shareholders' equity $ 15,717,769 $ 14,651,411 CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) FOR THE THREE AND SIX MONTH PERIODS ENDED SEPTEMBER 30, 2010 3 months 3 months 6 months 6 months ending ended Ending Ended September September September September 30, 2010 30, 2009 30, 2010 30, 2009 Cash Flow from Operating Activities Loss and $ (467,858) $ (726,496) $ (476,862) $ (1,570,272) comprehensive loss Adjustments for: Depreciation and 419,588 552,718 838,854 1,121,288 amortization Amortization of 43,738 11,694 9,536 45,218 transaction costs related to debt financing Foreign currency 24 (34,934) 101,603 (78,455) loss (gain) Stock based 217,029 136,132 240,624 161,482 compensation Interest 14,414 55,386 49,616 157,005 accretion 227,935 (5,500) 763,371 (163,735) Changes in non-cash working capital balances Accounts 298,479 407,402 (64,223) 262,742 receivable Prepaid expenses 116,010 62,369 (95,605) (48,880) Inventory 3,400 6,329 7,272 23,596 Deferred costs 9,197 14,996 9,197 27,340 Other (42,828) (20,264) 59,602 (15,020) receivables Accounts payable (534,111) (196,598) (181,642) (767,153) and accrued liabilities Deferred revenue 204,621 (248,288) 770,489 (199,631) Cash flows 282,703 20,446 1,268,462 (880,741) provided by (used in) operating activities Cash flow from investing activities Purchase of (13,927) (12,806) (68,315) (29,052) property and equipment Capitalized (201,490) - (453,876) - development costs Cash flows used (215,418) (12,806) (522,191) (29,052) in investing activities Cash flow from financing activities Issuance of (7,001) - 1,243,119 - common shares (net of costs) Proceeds from 1,887,625 - 1,887,625 - Term Loan (net of costs) Proceeds from 2,017,373 - 2,017,373 - convertible debt financing (net of costs) Repayment of (5,284,202) - (5,284,202) - subordinated debt financing Borrowing 840,000 - 840,000 - (repayment) under line of credit Repayment of (71,069) (59,742) (140,059) (136,130) capital lease obligations Cash flows (617,274) (59,742) 563,855 (136,130) provided by (used in) financing activities Foreign exchange (29,125) (67,853) (80,818) (110,348) losses on cash held in foreign currency Net increase / (579,114) (52,102) 1,229,308 (1,045,923) (decrease) in cash during the period Cash and cash 3,606,669 2,477,741 1,798,247 3,514,056 equivalents, beginning of period Cash and cash $ 3,027,555 $ 2,357,786 $ 3,027,555 $ 2,357,786 equivalents, end of period OVERALL PERFORMANCE, RESULTS OF OPERATIONS AND FINANCIAL CONDITION (Unaudited) QUARTERLY DATA Fiscal Fiscal Fiscal Year Q3 Q4 Year Q1 Q2 Q3 Q4 Year Q1 Q2 Ended Ended Ended Ended Ended Ended Ended Ended Ended Ended Ended In $ 000's (Except per March Dec March March June Sept Dec March March June Sept Share 31, 31, 31, 31, 30, 30, 31, 31, 31, 30, 30, Amounts) 2008 2008 2009 2009 2009 2009 2009 2010 2010 2010 2010 Recurring $ $ Revenue $13,088 4,045 $ 3,746 $14,531 $ 3,564 $ 3,341 $ 3,342 $ 2,849 13,096 $2,843 $2,723 Non-Recurring 585 1,010 Revenue 5,788 511 971 3,934 566 1,324 3,485 1,559 1,491 Revenue 18,876 4,556 4,717 18,465 4,130 3,926 4,352 4,173 16,581 4,401 4,214 Gross Profit 13,706 3,272 3,305 13,410 2,937 2,818 3,314 3,169 12,238 3,533 3,327 Expenses 19,957 4,022 3,962 16,820 3,508 3,327 3,384 3,474 13,693 3,360 3,578 EBITDA Income (Loss) (3,526) (34) 9 (719) 24 180 593 406 1,203 616 386 Operating Gain / (Loss) for the Period (6,250) (750) (656) (3,410) (570) (509) (70) (306) (1,455) 173 (251) Loss and Comprehensive Loss (12,811) (876) (1,004) (4,632) (843) (727) (350) (1,524) (3,444) (9) (468) Loss and Comprehensive Loss per Common $ $ $ $ $ $ $ $ Share $(0.19) (0.01) (0.01) (0.07) (0.01) (0.01) (0.00) (0.02) (0.05) $(0.00) $(0.01) Weighted Avg. # of Common Shares 66,228 67,667 67,845 67,845 69,322 70,535 70,535 70,535 70,232 72,809 76,311 Total Assets $23,992 $ $ $17,906 $16,413 $15,170 $14,714 $ $ $16,867 $15,718 20,078 17,906 14,651 14,651 Total Long Term $ Liabilities $ 6,948 6,234 $ 6,517 $ 6,517 $ 6,309 $ 5,751 $ 6,285 $ 7,212 $ 7,212 $ 7,229 $ 5,185 %SEDAR: 00022709E table cellspacing="0" border="1" class="cnwBorderedTable"tr valign="top"td align="left"Michael Ford, CFO br/ Nightingale Informatix Corporationbr/ Tel: 905-307-7870br/ a href="mailto:mford@nightingalemd.com"mford@nightingalemd.com/a/td td valign="top" align="left"Kristen Dickson,br/ Account Executivebr/ The Equicom Groupbr/ Tel: 416-815-0700 ext. 273br/ a href="mailto:kdickson@equicomgroup.com"kdickson@equicomgroup.com/a/td/tr/table

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