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Major contract win and acquisition drive 118% increase in Adjusted EBITDA and provide predictability for sustainable revenue growth and EBITDA margin expansion going forward MARKHAM, ON, Feb. 28, 2012 /CNW/ - Nightingale Informatix Corporation ("Nightingale" or the "Company") , an application service provider (ASP) of electronic medical record (EMR) software and related services, announces its financial results for the three and nine months ended December 31, 2011. All results are reported under IFRS and are in Canadian dollars unless otherwise stated. Q3 Fiscal 2012 Financial and Operational Summary -- Revenue was $5.1 million, up 16% from $4.4 million in Q3 F2011, reflecting a significant increase in software revenue. o Total software revenue (EMR and Practice Management) was $4.7 million, up 27% from $3.7 million in Q3 F2011. -- Gross profit was $4.3 million (or 85% of revenue) up from $3.6 million (81% of revenue) in Q3 F2011. -- Operating Expenses, excluding stock based compensation, depreciation, amortization and one-time business acquisition, integration and other costs were $3.5 million compared to $3.2 million in Q3 F2011. -- Adjusted EBITDA1 was $0.9 million (17% of revenue), up 118% from $0.4 million (9% of revenue) in Q3 F2011. -- Net income was $0.4 million excluding one-time business acquisition, integration and other costs and a one-time write-off to interest expense, compared to $(0.2) million in Q3 F2011. -- Cash from operations was $0.3 million compared to $0.6 million in Q3 F2011. -- Total deferred revenue was $7.8 million, up from $7.5 million as at March 31, 2011. -- In addition to signing agreements with healthcare providers to deploy 150 EMR seats2, won a contract with the Association of Ontario Health Centres (AOHC) to provide Nightingale on Demand EMR to cover 3,500 healthcare providers across Ontario over a two-year deployment, representing $9.0 million in revenue over the first three years, and up to $17.0 million over 10-year life of the contract. Company signed agreements to deploy approximately 220 seats in Q3 F2011. -- Acquired assets of the Medrium Practice Management software business for US $1.7 million on December 19, 2011. The Medrium software business is expected to add approximately $2.0 million of recurring revenue on an annual basis. -- Subsequent to quarter end, appointed Marc Filion to the Company's Board of Directors. "We hit an inflection point in Q3, with our significant increase in revenue, which was up 16% year-over-year and 25% sequentially, driving a substantial improvement in Adjusted EBITDA for the quarter," said Sam Chebib, President and CEO of Nightingale. "We signed one of the largest EMR contracts ever awarded in Canada and completed an acquisition that strengthens our presence in the U.S. and Quebec EMR markets. Given the transparency and predictability these transformational events provide for our financial results, we are confident our growth will continue over the coming quarters. In addition, we plan to stay disciplined with our expenses. As a result, we expect revenue improvements to materially outpace any increase in expenses, fueling further EBITDA margin expansion going forward." Mr. Chebib continued: "EMR is our key growth driver, and we are seeing the market open up. Large enterprises along with small and medium-sized clinics are increasingly recognizing the value, technology leadership and cost efficiencies of a cloud-based EMR offering. We have a web-native solution, and are a leading EMR provider in Canada. We continue to gain market share, and with our plans to expand into Quebec, strengthen our position in the U.S. and augment our organic growth initiatives with strategic acquisitions where appropriate, we are well positioned to deliver continued long-term growth." Fiscal 2012 Third Quarter and Year to Date (YTD) Financial Review  Nightingale's Q3 and YTD fiscal 2012 results are prepared in accordance with IFRS. For more detailed information regarding the Company's transition to IFRS, including a reconciliation of the Company's Q3 fiscal 2011 YTD results as originally reported in Canadian Generally Accepted Accounting Principles (CGAAP) to IFRS please refer to the Company's financial statements and MD&A filings on SEDAR at www.sedar.com. Revenue for Q3 fiscal 2012 was $5.1 million, up 16% from $4.4 million for Q3 fiscal 2011.  The year-over-year improvement was driven by a 27% increase in software revenue ($4.7 million for Q3 fiscal 2012, compared to $3.7 million in Q3 fiscal 2011) which was predominantly a result of the Company's major EMR contract win with the AOHC, as the Company recognized part of the revenue related to the contract in Q3 with the remainder of the revenue to be recognized over coming quarters. The Company generated 37% of Q3 fiscal 2012 revenue in US dollars.  However, foreign exchange fluctuations had a negligible impact on revenue for the quarter compared to the year ago quarter. YTD fiscal 2012 revenue was $12.7 million, down 2% from $13.0 million for the same period in fiscal 2011, due to slower enterprise sales in the first half of the fiscal year. The Company generated 40% of YTD fiscal 2012 revenue in US dollars. As a result, foreign exchange fluctuations had a $(0.2) million impact on revenue for the period. Foreign exchange fluctuations predominantly impact the Company's recurring revenue results. Recurring revenue(3) for Q3 fiscal 2012 was $2.5 million (49% of revenue), down in comparison to $2.7 million (60% of revenue) for Q3 fiscal 2011. YTD fiscal 2012 recurring revenue was $7.3 million (57% of revenue), down in comparison to $8.2 million (63% of revenue) for YTD fiscal 2011. These decreases were predominantly a result of a reduction in Revenue Cycle Management revenue, as the Company moves away from providing healthcare services to increasingly focus on being a leading technology provider. Non-recurring revenue(3) for Q3 fiscal 2012 was $2.6 million, up 50% from $1.7 million for Q3 fiscal 2011, largely reflecting revenue related to the Company's significant EMR contract with the AOHC. YTD non-recurring revenue for fiscal 2012 was $5.4 million, up 13% from $4.8 million for YTD fiscal 2011. For Q3 fiscal 2012, gross margin was 85% ($4.3 million gross profit) compared to 81% ($3.6 million gross profit) for Q3 fiscal 2011. For YTD fiscal 2012, gross margin was 83% ($10.5 million gross profit) compared to 80% ($10.4 million gross profit) for YTD fiscal 2011. Operating expenses for Q3 fiscal 2012, were $4.0 million, excluding charges for stock based compensation and depreciation and amortization, or $3.5 million also excluding one-time business acquisition, integration and other costs. This is compared to operating expenses of $3.2 million, excluding charges for stock based compensation and depreciation and amortization for Q3 fiscal 2011. YTD fiscal 2012 operating expenses were $10.0 million, excluding charges for stock based compensation and depreciation and amortization, or $9.5 million also excluding one-time business acquisition, integration and other costs. This is compared to $9.0 million in operating expenses, excluding charges for stock based compensation and depreciation and amortization for YTD fiscal 2011. For Q3 fiscal 2012, adjusted EBITDA was $0.9 million, up 118% from $0.4 million in Q3 fiscal 2011. For YTD fiscal 2012, adjusted EBITDA was $1.0 million compared to $1.4 million for YTD fiscal 2011. For Q3 fiscal 2012, net income was $(0.2) million, or $0.4 million excluding one-time business acquisition, integration and other costs and a one-time write-off to interest expense. This is compared to $(0.2) million in Q3 fiscal 2011. Net income for YTD fiscal 2012 was $(0.9) million, or $(0.4) million excluding one-time costs and one-time write-off, compared to $(0.7) million for YTD fiscal 2011. Cash and cash equivalents were $3.0 million at December 31, 2011, down from $4.2 million at March 31, 2011, primarily as a result of the Company's increased investments in its long-term strategic growth initiatives. At December 31, 2011, total common shares issued and outstanding were 76,310,915. The financial statements and MD&A will be available at www.nightingalemd.com and filed on www.sedar.com on February 28, 2012.  This press release should be read in conjunction with Nightingale's Consolidated Financial Statements for the three and nine months ended December 31, 2011 and the accompanying Management Discussion and Analysis. Notice of Conference Call Nightingale will host a conference call on Tuesday, February 28, 2012, at 8:30 a.m. Eastern Standard Time. To access the conference call by telephone, dial (888) 231-8191 (or (647) 427-7450 for international). Please connect approximately fifteen minutes prior to the call, and reference conference ID 54208352 prior to the beginning of the call to ensure participation. The conference call will be archived for replay until Tuesday, March 6, 2012. To access the archived conference call, dial 416-849-0833 or 1-855-859-2056 and enter reference 54208352 #. To listen to the conference call replay on the internet please visit the Nightingale 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. Adjusted EBITDA Adjusted 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 Adjusted EBITDA should not be construed as an alternative to net earnings as determined in accordance with GAAP. The Company's method of calculating Adjusted 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. Adjusted EBITDA is defined as earnings before other loss (income), interest, income taxes, depreciation, amortization, stock-based compensation, and business acquisition, integration and other costs. 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 Adjusted EBITDA to Loss and Comprehensive Loss (dollars are in thousands): Three Three Months Months Nine Months Nine Months Ended Ended Ended Ended December December 31, 31, December31, December31, Definition 2011 2010 2011 2010 Loss and $ $ $ $ Comprehensive Loss (190,655) (245,478) (942,780) (668,283) Adjustments for: Current Tax $ $ $ $ Expense (Benefit) 12,212 - 6,482 (10,520) Other Loss (Income) 8,153 620 (4,554) (14,570) Interest 150,130 124,192 358,262 523,572 Depreciation and Amortization 376,816 474,247 1,008,356 1,313,101 Stock-based Compensation 32,777 50,140 95,989 262,611 Acquisition, Integration and Other 491,258 - 512,889 - Adjusted $ $ $ $ EBITDA 880,691 403,721 1,034,644 1,405,911 2. Seat Sale "Seat" is defined as a paying healthcare provider using Nightingale's Electronic Medical Record. 3. 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 (dollars are in thousands): Three Three Nine Nine Months Months Months Months Ended Ended Ended Ended December December December December31, 31, 31, 31, Definition 2011 2010 2011 2010 Non-Recurring $ $ $ $ Revenue 2,620,072 1,744,438 5,401,754 4,793,598 Recurring Revenue 2,472,624 2,660,887 7,302,873 8,227,068 Revenue $ 5,092,696 $ 4,405,325 $ 12,704,627 $ 13,020,666 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",  "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", "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 secure customer contracts and the timing of securing such contracts; the ability of Nightingale to complete and successfully integrate its acquisitions on an accretive basis, Nightingale's access to debt and capital facilities, including compliance with current debt arrangements; the existence of present and possible future government regulation; the significant competition that exists in the medical software industry; the early stage of Nightingale's business, and 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. Certain material factors or assumptions applied by management in making forward-looking statements, include without limitation, factors and assumptions regarding future trends in healthcare spending, economic conditions affecting Nightingale and North American economies; Nightingale's ability to continue to fund its business, rates of customer defaults, relationships with, and payments to lenders, 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. CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2011 Three Nine Months Three Months Nine Months Months Ended Ended Ended Ended December December 31, December 31, December 31, 31, 2011 2010 2011 2010 Revenue $ 5,092,696 $ 4,405,325 $ 12,704,627 $ 13,020,666 Cost of sales 744,254 839,788 2,193,850 2,594,509 Gross profit 4,348,442 3,565,537 10,510,777 10,426,157 Expenses General and administration 967,856 822,336 2,480,839 2,423,109 Sales and marketing 797,378 818,228 2,314,624 2,409,680 Research and development 1,025,006 1,001,221 2,655,974 2,720,219 Client services 1,087,104 1,044,418 3,129,041 3,042,950 Business acquisition, integration and other costs 491,258 - 512,889 - 4,368,602 3,686,203 11,093,367 10,595,958 Operating income (loss) (20,160) (120,666) (582,590) (169,801) Interest 150,130 124,192 358,262 523,572 Foreign currency gain 8,153 620 (4,554) (14,570) Loss before tax (178,443) (245,478) (936,298) (678,803) Current tax expense (benefit) 12,212 - 6,482 (10,520) Loss and $ $ $ $ comprehensive loss (190,655) (245,478) (942,780) (668,283) Basic and diluted loss per common share Loss and $ $ $ $ comprehensive loss per common share (0.00) (0.00) (0.01) (0.01) Weighted average number of common shares 76,310,915 76,310,915 76,310,915 75,649,594 CONSOLIDATED BALANCE SHEET AS AT DECEMBER 31, 2011 December31, 2011 March 31, 2011 ASSETS Current assets Cash and cash equivalents $ 2,951,523 $ 4,165,406 Accounts receivable 3,228,519 3,006,073 Other receivables 84,667 66,868 Inventory 6,056 19,882 Prepaid expenses 533,411 418,072 6,804,176 7,676,301 Long-term assets Deferred costs 188,560 198,401 Property and equipment 457,647 573,928 Intangible assets 5,740,242 3,273,672 Goodwill 4,792,399 4,692,399 11,178,848 8,738,400 Total assets $ 17,983,024 $ 16,414,701 LIABILITIES Current liabilities Line of credit $ 850,000 $ 950,000 Accounts payable and $ $ accrued liabilities 2,665,389 2,323,880 Current portion of deferred revenue 4,925,052 4,778,811 Current portion of finance lease obligations 94,440 145,437 Current portion of term loan 890,925 800,000 9,425,806 8,998,128 Long term liabilities Term loan 2,566,595 767,857 Convertible debentures 1,901,677 1,820,050 Deferred revenue 2,871,560 2,731,075 Finance lease obligations 62,074 128,130 Income taxes payable 700,350 667,708 8,102,256 6,114,820 Total liabilities 17,528,062 15,112,948 SHAREHOLDERS' EQUITY Capital stock 29,629,683 29,629,683 Contributed surplus 4,791,642 4,695,653 Equity portion of convertible debentures 269,880 269,880 Warrants 701,452 701,452 Deficit (34,937,695) (33,994,915) 454,962 1,301,753 Total liabilities and $ $ shareholders' equity 17,983,024 16,414,701 CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2011 Threemonths Three months Nine months Nine months Ended Ended Ended Ended Dec 31, Dec 31, 2011 Dec 31, 2010 2011 Dec31,2010 Cash flow from operating activities Loss from $ $ $ $ operations (190,655) (245,478) (942,780) (668,283) Adjustments for: Depreciation and amortization 376,816 474,247 1,008,358 1,313,101 Amortization of transaction costs related to debt financing 84,177 (2,304) 111,074 41,433 Stock based compensation 32,777 50,140 95,989 262,611 Unrealized foreign exchange (gain) loss (67,282) (40,767) 82,050 60,837 Provision for bad debt 28,038 - 28,038 - Interest accretion 23,121 23,121 69,363 39,537 286,992 258,959 452,092 1,049,236 Changes in non-cash working capital balances Accounts receivable (566,815) (567,533) (282,366) (631,757) Prepaid expenses 151,891 79,327 (106,207) (16,278) Inventory (1,857) 1,948 13,826 9,221 Deferred costs 36,018 (63,452) 9,841 (54,255) Other receivables (74,408) 26,204 (17,634) 85,805 Accounts payable and accrued liabilities 255,604 32,260 228,347 (176,208) Income taxes payable (21,485) 25,824 32,642 53,049 Deferred revenue 189,209 778,477 286,726 1,548,566 Cash flows provided by operating activities 255,149 572,014 617,267 1,867,379 Cash flow from investing activities Purchase of property and equipment (124,568) (16,768) (151,736) (86,083) Capitalized development costs (423,169) (84,054) (1,418,234) (563,835) Acquisition of assets and liabilities from Medrium (1,761,880) - (1,761,880) - Cash flows used in investing activities (2,309,617) (100,822) (3,331,850) (649,918) Cash flow from financing activities Proceeds from line of credit borrowing 1,350,000 - 2,985,000 - Repayment of line of credit borrowing (1,175,000) (840,000) (3,085,000) - Proceeds from issuance of common shares, net of costs - - - 1,243,119 Proceeds from convertible debt financing (net of costs) - - - 2,017,373 Proceeds from term loan (net of costs) 3,457,520 - 3,457,520 - Repayment of term loan (1,266,667) (133,333) (1,666,667) - Repayment of subordinated debt financing - - - (3,529,910) Repayment of finance lease obligations (43,501) (100,020) (207,193) (240,079) Cash flows provided by (used in) financing activities 2,322,352 (1,073,353) 1,483,660 (509,497) Foreign exchange gains (losses) on cash in foreign currency (7,515) (11,643) 17,040 (92,460) Net increase (decrease) in cash 260,369 (613,804) (1,213,883) 615,504 Cash and cash equivalents, beginning of period 2,691,154 3,027,555 4,165,406 1,798,247 Cash and cash equivalents, end of $ $ $ $ period 2,951,523 2,413,751 2,951,523 2,413,751 OVERALL PERFORMANCE, RESULTS OF OPERATIONS AND FINANCIAL CONDITION QUARTERLY DATA CGAAP CGAAP CGAAP IFRS IFRS IFRS IFRS IFRS IFRS IFRS IFRS (1) (1) (1) Fiscal Fiscal Q3 Q4 Year Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Ended Ended Ended Ended Ended Ended Ended Ended Ended Ended Ended In $ 000's June March June Sept (Except per Dec31, March31, March31, 30, Sept30, Dec 31, 31, March31, 30, 30, Dec 31, ShareAmounts) 2009 2010 2010 2010 2010 2010 2011 2011 2011 2011 2011 Recurring Revenue $3,342 $2,849 $13,096 $2,843 $2,723 $2,661 $2,452 $10,679 $2,463 $2,367 $2,473 Non-Recurring Revenue 1,010 1,324 3,485 1,559 1,491 1,744 1,901 6,695 1,342 1,439 2,620 Revenue 4,352 4,173 16,581 4,402 4,214 4,405 4,353 17,374 3,805 3,807 5,093 Gross Profit 3,314 3,169 12,238 3,533 3,327 3,565 3,737 14,162 3,163 2,999 4,348 Expenses 3,384 3,474 13,693 3,357 3,553 3,686 3,870 14,466 3,500 3,225 4,369 Adjusted EBITDA (Loss) (non-GAAP measure) 593 406 1,203 616 386 404 445 1,851 23 131 881 Operating Income (Loss) for the Period (70) (306) (1,455) 176 (225) (121) (135) (304) (337) (225) (20) Loss and Comprehensive Loss (350) (1,524) (3,444) - (422) (245) (205) (874) (437) (315) (191) Loss and Comprehensive Loss per Common Share $(0.00) $(0.02) $(0.05) $(0.00) $(0.01) $(0.00) $(0.00) $(0.01) $(0.00) $(0.00) $(0.00) Weighted Avg. # of Common Shares 70,535 70,535 70,232 72,809 76,311 76,311 76,311 75,979 76,311 76,311 76,311 Total Assets $14,714 $14,651 $14,651 $16,873 $15,744 $15,218 $16,415 $16,415 $15,521 $15,267 $17,983 Total Long-Term Liabilities $7,062 $7,918 $7,918 $1,979 $5,185 $5,337 $6,115 $6,115 $5,819 $5,972 $8,102 Total Deferred Revenue $4,928 $5,239 $5,239 $5,805 $6,010 $6,788 $7,510 $7,510 $7,588 $7,607 $7,797 (1) Financial information in this table for periods prior to April 1, 2010 have not been restated for changes in accounting policies on adoption of IFRS. Refer to the Company's MD&A filed on SEDAR at www.sedar.com for a discussion of IFRS and its impact on the Company's financial statements.         Nightingale Informatix Corporation CONTACT: Michael Ford, CFONightingale Informatix CorporationTel: 905-307-7870mford@nightingalemd.com Kristen Dickson, Account ExecutiveThe Equicom GroupTel: 416-815-0700 ext. 273kdickson@equicomgroup.com

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