Cedara Software Announces Strong Revenue and Earnings for Second
Quarter - Reflects strong organic growth in Cedara's core OEM
business from medical imaging manufacturers and solution providers
TORONTO, Feb. 8 /PRNewswire-FirstCall/ -- CEDARA SOFTWARE CORP.
(TSX:CDE/NASDAQ:CDSW), a leading independent provider of medical
imaging technologies for the global healthcare market, today
announced strong financial results for the 2005 fiscal year second
quarter ended December 31, 2004. Cedara's revenues from continuing
operations for the quarter were $23.0 million, up 89% from the
$12.1 million in the same quarter of the previous year. This
quarter is the first to include the impact of Cedara's recent
acquisition of eMed Technologies which closed October 8, 2004.
Accompanying the positive impact of eMed's operating results was
organic growth of 28% in Cedara's revenue, compared to the same
quarter last year. Net income for the quarter was $4.9 million, up
27% compared to a net income of $3.9 million in the previous year.
This included approximately $1.1 million of eMed acquisition
related charges. Diluted earnings per share were $0.15, compared to
$0.14 in the previous year. For the six months ended December 31,
2004, revenues were $35.3 million, up 59% from the $22.3 million in
the previous year. Net income for the six months was $8.1 million,
compared to $5.6 million in the previous year. Diluted earnings per
share of $0.24 were up from $0.20 in the previous year. The strong
growth in revenue for the quarter included a 75% increase in
software license revenue to $12.5 million. Sales of solutions and
workstations (which includes bundled software and hardware) reached
$5.3 million. Support services revenue increased 42% to $3.0
million, while engineering services revenue declined slightly to
$2.2 million. The change in revenue mix, which has helped diversify
Cedara's business model, delivered a strong gross margin of $16.3
million or 71% of revenue for the quarter. Operating expenses in
the second quarter increased by $6.0 million, or 114%, to $11.3
million. This resulted from including eMed's operating expenses in
the current quarter, the impact of acquisition related charges and
increased spending on sales and marketing activities. Prior year
operating expenses also included a one-time gain of $1.2 million
from settlement of outstanding loans to the former CEO. For the six
months ended December 31, 2004, operating expenses were $18.2
million, an increase of $7.1 million or 64%. "I am extremely
pleased to report another quarter of strong revenue growth and
profits," said Abe Schwartz, Cedara's President and Chief Executive
Officer. "The combined increase in revenues and profits this
quarter is validation of Cedara's dual strategy of selling to OEMs
as well as hospitals and imaging centres directly." On January 18,
2005, Cedara announced that it had signed a definitive agreement to
merge with Merge Technologies Incorporated (NASDAQ:MRGE), d.b.a.
Merge eFilm, in an all-stock transaction. The merger is subject to
shareholder and regulatory approval. Conference Call Information
The Cedara Software Corp. second quarter fiscal 2005 conference
call and web cast to discuss results and corporate strategy is
scheduled for 11:00 am EST on Wednesday, February 9, 2005. The
conference call can be accessed via audio web cast by visiting:
http://www.cedara.com/investors/teleconference_webcast.htm
Participants in the conference call are asked to dial 416-405-9328
or 1-800-387-6216, five to ten minutes prior to the February 9,
2005, 11:00 am start of the teleconference to participate in the
call. This conference call will be recorded and will be available
on instant replay at the end of the all, until midnight March 9,
2005. To listen to the replay, please dial 416-695-5800 or
1-800-408-3053, and enter pass code 3132861 followed by the number
sign. About Cedara Software Corp Cedara Software Corp. is a leading
independent provider of medical imaging technologies. Cedara's
software is deployed in hospitals and clinics worldwide and is
licensed by many of the world's leading medical device and
healthcare information technology companies. Approximately 28,000
medical imaging systems and 6,400 Picture Archiving and
Communications System (PACS) workstations have been licensed to
date. Cedara recently acquired eMed Technologies Corporation,
widely known as a provider of innovative PACS and teleradiology
solutions that have been installed in over 2,000 hospitals and
imaging centres. Cedara is unique in that it has technologies and
expertise that span all the major digital imaging modalities
including computed tomography (CT), magnetic resonance imaging
(MRI), digital X-ray, mammography, ultrasound, echo-cardiology,
angiography, nuclear medicine, positron emission tomography (PET)
and fluoroscopy. Furthermore, the Company's medical imaging
offerings are used in all aspects of clinical workflow including
the capture of a patient's digital image; the archiving,
communication and manipulation of digital images; sophisticated
clinical applications to analyze digital images; and even the use
of imaging in minimally-invasive surgery. Certain statements
contained in this news release are forward-looking within the
meaning of securities laws and are based on current expectations
that are subject to a number of assumptions, uncertainties and
risks, and the actual results may differ materially from what is
currently expected. In particular, statements relating to the
healthcare imaging software market and market share, relating to
the Company's expectations concerning its licensed software
products, relating to the Company's expectations as to revenues,
costs and cash flows, relating to the acquisition of eMed and
relating to the proposed merger with Merge eFilm are forward
looking statements. The assumptions, uncertainties and risks upon
which these forward looking statements are based include, but are
not limited to: dependence on key personnel of the Company,
dependence on major customers and individual contracts,
fluctuations in quarterly financial results, competitive pressures
(including price competition), rapid technological change, exchange
rate fluctuations, risks associated with international operations,
dependence on intellectual property rights, regulatory clearances
and approvals for new products, risks relating to product defects
and product liability, adverse consequences of financial leverage,
ability to service debt, continued acceptance of the Company's
products, regulatory changes to the health care industry,
seasonality, economic and political conditions, risks relating to
the acquisition of eMed and risks relating to the proposed merger
with Merge eFilm including risks associated with obtaining
regulatory and shareholder approvals without unexpected delays or
conditions, timely implementation and execution of merger
integration plans, retention of customers and the Company's
original employees, successfully leveraging Merge eFilm's and the
Company's comprehensive product offering to the combined customer
base and sustaining continued growth at rates approximating recent
levels. Further information about these risks and uncertainties can
be found in the continuous disclosure documents filed from time to
time by Cedara with the securities regulatory authorities, which
documents are available at http://www.sedar.com/. Three pages of
consolidated financial statements follow: CEDARA SOFTWARE CORP.
Consolidated Balance Sheets (In thousands of Canadian dollars)
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December 31, 2004 June 30, 2004
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(Unaudited) Assets Current assets: Cash and cash equivalents $
34,213 $ 40,510 Short-term investments - 10,902 Accounts receivable
19,471 7,449 Inventory 1,613 268 Prepaid expenses and other assets
1,962 881
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57,259 60,010 Capital assets 2,373 2,201 Long-term investment 1,026
510 Intangible assets 12,299 373 Goodwill 33,288 9,053
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$ 106,245 $ 72,147
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Liabilities and Shareholders' Equity Current liabilities: Bank
indebtedness $ 17,670 $ - Accounts payable and accrued liabilities
9,218 4,207 Deferred revenue 5,726 861 Current liabilities of
discontinued operations - 986
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32,614 6,054 Long-term liability 234 - Non-current portion of
provision for loss on sublease 17 44 Shareholders' equity : Capital
stock 162,912 161,536 Contributed surplus 632 388 Deficit (87,758)
(95,875) Cumulative translation adjustment (2,406) -
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73,380 66,049
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$ 106,245 $ 72,147
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CEDARA SOFTWARE CORP. Unaudited Consolidated Statements of
Operations (In thousands of Canadian dollars, except per share
amounts)
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Three Months Ended Six Months Ended December 31 December 31
------------------------------------------- 2004 2003 2004 2003
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Revenue $ 22,973 $ 12,148 $ 35,314 $ 22,251 Direct costs 6,682
2,607 9,086 4,971
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Gross margin 16,291 9,541 26,228 17,280 Expenses: Research and
development 2,907 2,104 4,825 4,414 Sales and marketing 3,587 1,397
5,275 2,412 General and administration 2,986 1,731 4,899 3,285
Severance costs (recovery) 336 (205) 415 (184) Other charges
(income) 493 (217) 1,562 218 Amortization of intangible assets 588
46 601 102 Depreciation and amortization 354 404 657 853
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11,251 5,260 18,234 11,100
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Income before interest expense 5,040 4,281 7,994 6,180 Interest
income (expense), net (147) (336) 88 (602)
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Income from continuing operations 4,893 3,945 8,082 5,578 Income
(loss) from discontinued operations 35 (53) 35 -
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Net income $ 4,928 $ 3,892 $ 8,117 $ 5,578
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Earnings per share from continuing operations: Basic $ 0.16 $ 0.16
$ 0.26 $ 0.23 Diluted $ 0.15 $ 0.14 $ 0.24 $ 0.20 Earnings per
share: Basic $ 0.16 $ 0.16 $ 0.26 $ 0.23 Diluted $ 0.15 $ 0.14 $
0.24 $ 0.20
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Weighted average number of shares outstanding: Basic 31,503,201
24,168,495 31,440,646 27,071,507 Diluted 33,370,845 27,762,206
33,282,965 27,548,191 CEDARA SOFTWARE CORP. Unaudited Consolidated
Statements of Cash Flows (In thousands of Canadian dollars)
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Three Months Ended Six Months Ended December 31 December 31
------------------------------------------- 2004 2003 2004 2003
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Cash provided by (used in): Operating activities: Net income from
continuing operations $ 4,893 $ 3,945 $ 8,082 $ 5,578 Items not
involving cash: Depreciation and amortization 1,081 450 1,397 955
Stock-based compensation expense 193 18 244 36 Other (45) 318 551
369
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6,122 4,731 10,274 6,938
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Change in non-cash operating working capital: Accounts receivable
(4,723) (1,130) (10,649) (3,900) Inventory (26) 95 (83) 88 Prepaid
expenses and other assets (220) (670) (263) (360) Accounts payable
and accrued liabilities 94 (1,214) 626 (2,335) Deferred revenue
1,293 (643) 1,477 137
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(3,582) (3,562) (8,892) (6,370)
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2,540 1,169 1,382 568 Investing activities: Decrease in short-term
investments 10,962 - 10,902 - Acquisition of eMed, net of cash
acquired (35,730) - (36,502) - Proceeds from sale of investments in
shares 273 - 273 - Additions to intangible assets (10) (20) (20)
(54) Additions to capital assets (432) (201) (502) (431)
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(24,937) (221) (25,849) (485) Financing activities: Increase in
long-term liability (5) - (5) - Issue of shares 1,304 849 1,376 849
Increase (decrease) in bank indebtedness 18,420 (1,778) 18,420
(549)
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19,719 (929) 19,791 300 Effect on exchange rate changes on cash and
cash equivalents (1,506) - (1,586) -
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Change in cash and cash equivalents from continuing operations
(4,184) 19 (6,262) 383 Change in cash and cash equivalents from
discontinued operations (35) (19) (35) (383) Cash and cash
equivalents, beginning of period 38,432 - 40,510 -
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Cash and cash equivalents, end of period $ 34,213 $ - $ 34,213 $ -
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DATASOURCE: Cedara Software Corp. CONTACT: Brian Pedlar, Chief
Financial Officer, Cedara Software Corp., (905) 672-2100, Extension
2015, ; To request a free copy of this organization's annual
report, please go to http://www.newswire.ca/ and click on
reports@cnw.
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