NGH

Software Revenue continues growth while nine-month Adjusted EBITDA and net income surpass full-year 2012 results

MARKHAM, ON, March 1, 2013 /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 third quarter ("Q3 F2013") and nine months ended ("YTD F2013") December 31, 2012.

Q3 Fiscal 2013 Financial and Operational Summary

• Revenue was $5.1 million, flat compared to Q3 F2012.
• • Total software revenue (EMR and Practice Management) was $5.0 million, up 7% from $4.7 million in Q3 F2012.
  • A decrease of $0.3 million related to the closure of the Company's low-margin revenue cycle management business offset this increase in revenue.
• Gross profit was $4.3 million, or 85% of revenue, compared to $4.4 million, or 86% of revenue, in Q3 F2012.
• Operating Expenses, excluding stock based compensation, depreciation and amortization, were $3.5 million, compared to $4.0 million in Q3 F2012.
• Adjusted EBITDA¹ was $0.8 million, or 16% of revenue, down from $0.9 million, or 18% of revenue, in Q3 F2012.
• Spending on capitalized development projects totaled $1.0 million compared to $0.4 million in Q3 F2012.
• Net income was $0.2 million compared to a net loss of $0.2 million in Q3 F2012.
• Cash used in operations was $0.6 million compared to cash provided by operations of $0.3 million in Q3 F2012.
• Signed an Enterprise software three year agreement with MCI Medical Clinics Inc., a subsidiary of Altima HealthCare Inc., one of Canada's largest integrated healthcare providers.

Fiscal 2013 YTD Financial Summary

• Revenue was $15.7 million, up 24% compared to $12.7 million for the same period in F2012, primarily reflecting an increase in revenue from the Company's software business.
• • Total software revenue was $15.5 million, up 36% from $11.4 million in for the same period in F2012.
  • A decrease of $1.1 million related to the closure of the Company's low-margin revenue cycle management business offset this increase in revenue.
• Gross profit was $13.8 million, or 88% of revenue, compared to $10.5 million, or 83% of revenue, for the same period in F2012.
• Operating Expenses, excluding stock based compensation, depreciation and amortization were $11.2 million compared to $10.0 million for the same period in F2012.
• Adjusted EBITDA¹ was $2.7 million, or 17% of revenue, up from $1.0 million, or 8% of revenue, for the same period in F2012.
• Spending on capitalized development projects totaled $2.7 million compared to $1.5 million for the same period in F2012.
• Net income was $1.1 million compared to a net loss of $0.9 million for the same period in F2012.
• Cash used in operations was $0.9 million compared to cash generated by operations of $0.6 million for the same period in F2012.

"We recorded our 16^th consecutive quarter of positive EBITDA, and we delivered continued profitability," said Sam Chebib, President and CEO of Nightingale. "Operationally, Q3 was a testament to our ability to further strengthen our presence in the enterprise EMR market, both in terms of sales and implementation. We delivered on key deployments, such as our major AOHC EMR contract, and added new clients. We also secured our win with MCI Clinics in the quarter and will recognize additional revenues related to the MCI win over the next 12 months. We also neared completion of market launch of our next-generation EMR platform, neXia. We anticipate roll-out to the US market in the next quarter, with Canada to follow in the fall. We believe our new EMR platform has the potential to be a key growth catalyst in fiscal 2014."

Fiscal 2013 Third Quarter and Nine Months Financial Review
The Company's results are prepared in accordance with International Financial Reporting Standards (IFRS) and in Canadian dollars unless otherwise stated.

Revenue for Q3 F2013 was $5.1 million, flat compared to Q3 F2012. The Company's software revenue increased to $5.0 million in Q3 F2013 from $4.7 million in Q3 F2012, reflecting EMR revenue growth and the acquisition of the Medrium practice management business late in Q3 F2012. YTD F2013 revenue was $15.7 million, up $3.0 million, or 24%, from $12.7 million for the same period in F2012.

Recurring revenue² for Q3 F2013 was $2.6 million (52% of revenue), an increase of $0.2 million, or 6%, from $2.5 million (49% of revenue) in Q3 F2012, YTD F2013 recurring revenue was $8.0 million, an increase of $0.7 million, or 9%, from $7.3 million in YTD F2012.

Non-recurring revenue² for Q3 F2013 was $2.5 million, a decrease of $0.1 million, or 6%, from $2.6 million for Q3 F2012. YTD F2013 non-recurring revenue was $7.7 million, an increase of $2.3 million, or 43%, from $5.4 million for the same period in F2012.

For Q3 F2013, gross margin was 85% ($4.3 million gross profit) compared to 86% ($4.4 million gross profit) for Q3 F2012.  Q3 F2013 gross margin was negatively impacted compared to the previous quarter due to the impact of a short-term arrangement with a transaction-based customer (where the transaction-based revenues are lower margin revenues). YTD F2013 gross margin was 88% ($13.8 million gross profit) compared to 83% ($10.5 million gross profit) for the same period in F2012. The YTD increase was predominantly a result of the Company's shift away from lower margin healthcare services to higher margin software sales.

Q3 F2013 operating expenses excluding charges for stock based compensation, depreciation and amortization decreased 11% to $3.5 million (69% of revenue) compared to operating expenses of $4.0 million (78% of revenue) for Q3 F2012, which included $0.5 million in expenses related to the Company's acquisition of the Medrium assets. YTD F2013 operating expenses excluding charges for stock based compensation, depreciation and amortization increased $1.2 million, or 12%, to $11.2 million compared to operating expense of $10.0 million for the same period in F2012. The year-over-year increase was primarily due to an increase in expenses associated with maintaining the Company's current platform as well as an increase in technology and infrastructure costs including costs associated with the Medrium business, which was acquired in December 2011.

For Q3 F2013, Adjusted EBITDA was $0.8 million (16% of revenue), compared to $0.9 million (18% of revenue) in Q3 F2012. YTD F2013 Adjusted EBITDA was $2.7 million (17% of revenue), compared to $1.0 million (8% of revenue) for the same period in F2012.

For Q3 F2013, net income was $0.2 million compared to a net loss of $0.2 million for Q3 F2012. YTD net income was $1.1 million compared to a net loss of $0.9 million for the same period in F2012.

Cash and cash equivalents were $1.1 million at December 31, 2012, down from $2.1 million at March 31, 2012, primarily as a result of the Company's increased investments in its long-term strategic growth initiatives.

At December 31, 2012, 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 March 1, 2013.  This press release should be read in conjunction with Nightingale's Consolidated Financial Statements and the accompanying Management Discussion and Analysis for the quarter and nine months ended December 31, 2012.

Notice of Conference Call
Nightingale will host a conference call on Friday, March 1, 2013, 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 17041399 prior to the beginning of the call to ensure participation. The conference call will be archived for replay until Friday, March 8, 2013. To access the archived conference call, dial 416-849-0833 or 1-855-859-2056 and enter reference 17041399#. To listen to the conference call replay on the internet please visit the Nightingale website shortly after the call at www.nightingalemd.com.

Non-IFRS Financial Measures
The Company internally measures its performance and results of initiatives through a number of measures that are not recognized under IFRS and may not be comparable to similar measures used by other companies.

1. Adjusted EBITDA

Adjusted EBITDA is a non-IFRS 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 IFRS. 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:

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 IFRS.  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 perpetual software and systems licenses and related training, data conversion and installation services.

The following provides a reconciliation of Recurring Revenue and Non-Recurring Revenue to Revenue:

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.

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME AND LOSS
FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2012
Unaudited (Canadian Dollars)

CONDENSED CONSOLIDATED BALANCE SHEET
AS AT DECEMBER 31, 2012
Unaudited (Canadian Dollars)

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2012
Unaudited (Canadian Dollars)

OVERALL PERFORMANCE, RESULTS OF OPERATIONS AND FINANCIAL CONDITION

SOURCE Nightingale Informatix Corporation