Nightingale reports fiscal 2008 third quarter results



    In a separate press release issued today, the Company announced the
    sale of its Therapist Helper business for US$12.3 million

    MARKHAM, ON, Feb. 29 /CNW/ - Nightingale Informatix Corporation
("Nightingale" or the "Company") (TSX-V: NGH), one of North America's fastest
growing healthcare software and services providers, announces its financial
results for the three- and nine-month periods ended December 31, 2007. All
results are reported in Canadian dollars unless otherwise stated.
    In a separate press release issued earlier today, Nightingale announced
the US$12.3 million sale of its Therapist Helper business to Netsmart
Technologies, Inc. As a result of this transaction, Nightingale's financial
results for the three- and nine-month periods exclude contribution from the
Therapist Helper business, and are reported as continuing operations. This
transaction materially improves the Company's balance sheet.

    
    Q3 Fiscal 2008 Financial Summary
    --------------------------------
        -  Revenue from continuing operations (excluding Therapist Helper
           business) was $3.9 million, compared to $4.2 million in
           Q3 fiscal 2007.

              -  Including contribution from the Therapist Helper business,
                 revenue would have been  $5.1 million in Q3 fiscal 2008.
    	         -  Change in the value of the US dollar is estimated to have
                 negatively affected Q3 fiscal 2008 revenue by approximately
                 14%, or $0.5 million, versus the comparable period in
                 fiscal 2007.

        -  Recurring revenue1a increased to $3.2 million, or 82% of total
           revenue, compared to $2.3 million, or 56% of total revenue, in Q3
           fiscal 2007.

        -  Adjusted EBITDA1b (earnings before interest, taxes, depreciation,
           amortization and stock based compensation) was $(1.8) million,
           compared to adjusted EBITDA of $(0.01) million in Q3 fiscal 2007.

        -  Loss from continuing operations was $3.5 million, or $(0.05) per
           share, compared to net loss of $0.3 million, or $(0.01) per share,
           in Q3 fiscal 2007.

        -  Deferred revenue has increased to $5.6 million at December 31,
           2007, compared to $3.5 million at March 31, 2007.

        -  Upon completion of the sale of the Therapist Helper business,
           Nightingale will strengthen its balance sheet by adding to its
           cash balance and paying down a portion of its debt.
    

    "Operationally, in Q3 we achieved a significant milestone with our
OntarioMD contract win; however, our financial performance in the quarter fell
below our expectations," said Sam Chebib, President & CEO Nightingale
Informatix Corporation. "Overall, results were affected by a delay in funding
initiatives in certain jurisdictions, which impacted software license sales,
and the negative year-over-year fluctuation in foreign exchange rates. In
addition, our contract with OntarioMD had an impact on our Q3 revenue from the
province of Ontario because many potential clients are delaying their purchase
decision until we have completed the certification process. We expect these
deferred sales opportunities to materialize in future periods and look forward
to strong contribution from OntarioMD in fiscal 2009."
    Mr. Chebib continued: "Looking forward, while Q3 was a challenging
quarter, we believe we have established an operating platform and strong
market position with the right technology, strategy and personnel to drive
growth over the long-term. Through our OntarioMD contract win and, more
recently, the agreement with the Medical Society of the State of New York, we
are steadily building our pipeline, and we have demonstrated our ability to
win sizable and highly competitive EMR mandates across North America. With the
changes we made to our sales team subsequent to quarter-end, we believe we are
now better positioned to address the unique needs of the U.S. and Canadian
healthcare industries, convert our pipeline of opportunities into sales and
grow the number of healthcare practitioners on our EMR platform."

    Recent Operational Highlights
    -----------------------------
    
        -  Signed a 15-year contract with OntarioMD to be one of three
           funding approved ASP EMR providers. Currently, there is total
           funding of $28,600 per physician for 2,700 of Ontario's 22,000
           physicians, with additional funding expected to become available.

        -  Signed a three-year US$3.1 million revenue cycle management
           agreement with Baltimore, Maryland-based Harbor Hospital.

        -  Appointed Michael Ford as Chief Financial Officer and Nick Vaney
           as VP, Operations and Chief Strategy Officer.

        -  Subsequent to quarter end, announced additional annual cost-saving
           synergies of approximately $1.6 million, resulting from the
           VantageMed acquisition and the creation of a streamlined and
           geographically focused sales team.

        -  Subsequent to quarter end, signed a three-year agreement with the
           Medical Society of the Sate of New York (MSSNY) to be one of three
           preferred ASP EMR providers for MSSNY's 30,000 members.
    

    Q3 and Year-to-date Fiscal 2008 Financial Review
    ------------------------------------------------
    As previously stated, all financial results for the three- and nine-month
periods ended December 31, 2007, are reported as continuing operations.
    Revenue from continuing operations for Q3 fiscal 2008 was $3.9 million,
compared to revenue of $4.2 million in Q3 fiscal 2007. The year-over-year
decline was a result of lower software license sales during the quarter, the
negative impact of the fluctuation in foreign exchange rates and timing of
revenue recognition associated with the Company's Harbor Hospital contract, as
Nightingale commenced work during the quarter, but did not record any
corresponding revenue. For the year-to-date period, revenue from continuing
operations was $14.7 million, a 39% increase over the corresponding period in
fiscal 2007.
    Recurring revenue, consisting of software support and maintenance,
utilization fees, transaction fees, data management, transcription and billing
services, was $3.2 million, or approximately 82% of total revenue, for Q3
fiscal 2008. For the year-to-date period, recurring revenue was $9.8 million
or 67% of total revenue.
    In Q3 fiscal 2008, Nightingale generated approximately 78% of its revenue
in the U.S. As such, the Company estimates that revenue was negatively
affected by U.S. currency fluctuations relative to the Canadian dollar by a
difference of approximately 14%, or $0.5 million. Nightingale generates 51% of
its expenses (including costs of goods sold) in the U.S., providing the
Company with a natural hedge position. However, going forward, Nightingale
expects to generate an increasing percentage of revenue in the U.S. and will
therefore continue to be susceptible to currency exchange fluctuations over
the coming quarters.
    In Q3 fiscal 2008, gross profit margin decreased to 67%, compared to 73%
in Q3 fiscal 2007, primarily as a result of a reduction in higher margin
software sales during the quarter. For the year-to-date period, gross profit
margin was 73%, up from 69% for the same period last year.
    Nightingale generated adjusted EBITDA of $(1.8) million in Q3 fiscal
2008, compared to adjusted EBITDA of $(0.01) million in Q3 fiscal 2007. The
year-over-year decrease in adjusted EBITDA was due to a combination of
factors, which included: lower software sales, a negative impact from the
reduction in value of the US dollar relative to the Canadian dollar, the
timing of revenue recognition associated with the Company's Harbor Hospital
contract and increased investment in infrastructure to support future growth.
For the year-to-date period, Nightingale generated adjusted EBITDA of
$(2.3) million, compared to adjusted EBITDA of $(2.2) million for the same
period in fiscal 2007.
    Loss from continuing operations was $3.5 million, or $(0.05) per share,
compared to a net loss of $0.3 million or $(0.01) per share in Q3 fiscal 2007.
For the year-to-date period, loss from continuing operations was $7.2 million,
or $(0.11) per share, compared to a net loss of $3.8 million, or $(0.10) per
share for the same period last year.
    A full set of financial statements and MD&A will be available at
http://www.nightingale.md and www.sedar.com.

    
    (1) 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.

    a.  Recurring and Non-Recurring Revenue

    The Company has included recurring revenue and non-recurring revenue
    measurements since it believes that this information would be useful to
    investors to help 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.

    b.  Adjusted EBITDA

    The Company has included an adjusted EBITDA measurement since it believes
    that this information would be useful to investors to help 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 a non-GAAP measure that management believes is a
    useful supplemental measure of operating performance prior to 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 Adjusted EBITDA to
    Net Income/ Loss:

    -------------------------------------------------------------------------
                               Fiscal       Fiscal         Nine         Nine
                              Quarter      Quarter       Months       Months
                                Ended        Ended        Ended        Ended
                             December     December     December     December
    Name     Definition      31, 2007     31, 2006     31, 2007     31, 2006
    -------------------------------------------------------------------------
    Adjusted
     EBITDA  Net Income
              (Loss)      $(3,536,270)   $(352,250) $(7,233,615) $(3,757,506)
            -----------------------------------------------------------------

             Adjustments
              for:
             Other Loss
              (Income)         16,646      -40,858      169,649     -157,721
             Interest         719,569       40,511    1,868,387      594,108
             Depreciation and
              Amortization    759,768      214,759    2,345,364      609,076
             Stock-based
              Compensation    241,111      126,264      512,078      506,442
            -----------------------------------------------------------------

             Adjusted EBITDA
              (Loss)      $(1,799,176)    $(11,574) $(2,338,137) $(2,205,601)
    -------------------------------------------------------------------------
    

    Notice of Conference Call and Webcast
    -------------------------------------
    Nightingale will host a conference call Monday March 3, 2008, at 8:30
a.m. Eastern Standard Time. To access the conference call by telephone, dial
416-644-3422 or 1-800-731-5319. Please connect approximately fifteen minutes
prior to the beginning of the call to ensure participation. The conference
call will be archived for replay until March 10, 2008. To access the archived
conference call, dial 416-640-1917 or 1-877-289-8525 and enter reference
number 21262891(followed by the number sign).
    A live audio webcast of the call will be available at www.newswire.ca and
http://www.nightingale.md. Please connect to the website at least 15 minutes
prior to the conference call to ensure adequate time for any software download
that may be necessary. The webcast will be archived for 365 days.

    About Nightingale

    Nightingale is one of the fastest growing health care service and
software companies in North America with over 4.7 million patient records
under management in a hosted (ASP) environment. It 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.nightingale.md

    Forward-Looking Statement

    This press release contains "forward-looking statements" 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; the existence of present
and possible future government regulation; 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.
    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.

    The TSX Venture Exchange Inc. has not reviewed and does not accept
    responsibility for the adequacy or accuracy of this release

    
    INTERIM CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS
    FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2007
    (unaudited)

    -------------------------------------------------------------------------
                          3 months      3 months      9 months      9 months
                            ending         ended        ending         ended
                          December      December      December      December
                          31, 2007      31, 2006      31, 2007      31, 2006
    -------------------------------------------------------------------------

    Revenue           $  3,942,345  $  4,153,822  $ 14,697,495  $ 10,602,396

    Cost of Sales
    Hardware,
     Software and
     Services            1,153,172       993,424     3,539,111     3,105,447
    Sales Commissions      129,397       114,153       430,633       225,314
                      ------------- ------------- ------------- -------------
                         1,282,569     1,107,577     3,969,744     3,330,761
                      ------------- ------------- ------------- -------------

    Gross Profit         2,659,776     3,046,245    10,727,751     7,271,635
                      ------------- ------------- ------------- -------------
    Expenses
    General and
     Administration        950,784       819,399     2,754,353     2,483,233
    Sales and
     Marketing             859,273       576,096     2,494,365     2,164,702
    Research and
     Development         1,221,594       856,463     3,584,011     2,830,936
    Client Services      1,427,293       805,861     4,233,159     1,998,365
    Stock Based
     Compensation          241,111       126,264       512,078       506,442
    Depreciation and
     Amortization          759,769       214,759     2,345,364       609,076
                      ------------- ------------- ------------- -------------
                         5,459,824     3,398,842    15,923,330    10,592,754
                      ------------- ------------- ------------- -------------

    Operating Loss
     for the Period     (2,800,048)     (352,597)   (5,195,579)   (3,321,119)
                      ------------- ------------- ------------- -------------

    Interest               719,569        40,511     1,868,387       594,108
    Other Loss
     (Income)               16,646       (40,858)      169,649      (157,721)
                      ------------- ------------- ------------- -------------
    Loss from
     Continuing
     Operations         (3,536,263)     (352,250)   (7,233,615)   (3,757,506)
    Earnings from
     discontinued
     operations            245,523             -       795,087             -
                      ------------- ------------- ------------- -------------
    Net Loss and
     Comprehensive
     Loss for the
     Period           $ (3,290,740) $   (352,250) $ (6,438,528) $ (3,757,506)
                      ------------- ------------- ------------- -------------
                      ------------- ------------- ------------- -------------

    Basic and Diluted
     Earnings (Loss)
     per Common Share
    Loss from
     Continuing
     Operations       $      (0.05) $      (0.01) $      (0.11) $      (0.10)
    Earnings from
     Discontinued
     Operations               0.00             -          0.01             -
                      ------------- ------------- ------------- -------------
    Net Loss per
     Common Share     $      (0.05) $      (0.01) $      (0.10) $      (0.10)
                      ------------- ------------- ------------- -------------
                      ------------- ------------- ------------- -------------
    Weighted Average
     Number of Common
     Shares             66,914,490    41,945,189    65,733,398    39,528,391
                      ------------- ------------- ------------- -------------
                      ------------- ------------- ------------- -------------


    INTERIM CONSOLIDATED BALANCE SHEET
    (unaudited)

    -------------------------------------------------------------------------
                                                         As at         As at
                                                      December         March
                                                      31, 2007      31, 2007
    -------------------------------------------------------------------------

    ASSETS

    Current Assets
    Cash and Cash Equivalents                     $  3,749,522  $  1,747,660
    Accounts Receivable                              2,981,901     3,018,767
    Other Receivables                                        -        79,739
    Inventory                                           82,616         7,893
    Prepaid Expenses                                   695,401       257,157
    Assets of Discontinued Operations               10,908,666             -
                                                 -------------- -------------
                                                    18,418,106     5,111,216
                                                 -------------- -------------

    Long-Term Assets
    Deferred Costs                                     184,262       626,890
    Property and Equipment                           1,561,928     1,352,739
    Proprietary Software                               934,549     1,230,472
    Intangible Assets                                7,782,962     1,878,099
    Goodwill                                         7,375,691     7,331,853
                                                 -------------- -------------
                                                    17,839,392    12,420,053
                                                 -------------- -------------
                                                  $ 36,257,498  $ 17,531,269
                                                 -------------- -------------
                                                 -------------- -------------

    LIABILITIES

    Current Liabilities
    Borrowing under Line of Credit                $  1,000,000  $  1,541,733
    Accounts Payable and Accrued Liabilities         3,665,781     2,770,367
    Current Portion of Deferred Revenue              4,328,848     1,829,931
    Current Portion of Capital Lease Obligations       239,183       258,586
    Liabilities of Discontinued Operations           1,398,257             -
                                                 -------------- -------------
                                                    10,632,069     6,400,617
                                                 -------------- -------------

    Long Term Liabilities
    Subordinated Debt                               10,538,885             -
    Deferred Compensation Payable to Employees               -       100,824
    Deferred Revenue                                 1,263,007     1,716,512
    Capital Lease Obligations                          295,343       196,246
                                                 -------------- -------------
                                                    12,097,235     2,013,582
                                                 -------------- -------------

    Total Liabilities                               22,729,304     8,414,199
                                                 -------------- -------------
                                                 -------------- -------------

    SHAREHOLDERS' EQUITY
    Capital Stock                                   27,521,485    18,553,953
    Contributed Surplus                              1,434,075     1,021,217
    Warrants                                         3,277,011     1,807,749
    Deficit                                        (18,704,377)  (12,265,849)
                                                 -------------- -------------
                                                    13,528,194     9,117,070
                                                 -------------- -------------

    Total Liabilities and Shareholders' Equity    $ 36,257,498  $ 17,531,269
                                                 -------------- -------------
                                                 -------------- -------------


    INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS
    FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2007
    (unaudited)
    -------------------------------------------------------------------------
                          3 months      3 months      9 months      9 months
                            ending         ended        ending         ended
                          December      December      December      December
                          31, 2007      31, 2006      31, 2007      31, 2006
    -------------------------------------------------------------------------

    Cash Flow from
     Operating
     Activities
    Loss from
     continuing
     operations       $ (3,536,263) $   (352,250) $ (7,233,615) $ (3,757,506)

    Adjustments for:
    Depreciation and
     Amortization          759,769       214,758     2,345,364       609,077
    Gain on Sale of
     Assets                (22,130)            -       (22,130)            -
    Stock Based
     Compensation          241,111       126,264       512,078       506,442
    Interest Accretion     222,899             -       616,612             -
                      ------------- ------------- ------------- -------------
                        (2,334,614)      (11,228)   (3,781,691)   (2,641,987)
    Changes in
     Non-Cash
     Working Capital
     Balances,
    Decrease
     (Increase)
     in Accounts
     Receivable          1,562,223    (1,324,742)      814,470    (2,764,857)
    Decrease
     (Increase)
     in Investment
     Tax Credits
     Receivable                  -       163,361             -       163,361
    Decrease
     (Increase)
     in Prepaid
     Expenses               57,004        87,916      (251,729)      158,562
    Decrease
     (Increase)
     in Inventory           33,174             -       (45,892)            -
    Decrease
     (Increase) in
     Deferred Costs         21,707       (48,288)      425,218       175,104
    Decrease
     (Increase) in
     Other Receivables           -             -        79,739       145,107
    Increase
     (Decrease) in
     Accounts Payable
     and Accrued
     Liabilities          (650,358)      290,980    (1,474,300)     (356,329)
    Increase
     (Decrease) in
     Deferred
     Compensation
     Payable                     -       (30,918)     (100,824)     (317,411)
    Increase
     (Decrease)
     in Deferred
     Revenue               (59,584)      374,098        71,540       586,946
                      ------------- ------------- ------------- -------------
    Cash flows
     provided by
     (used in)
     operating
     activities         (1,370,448)     (498,821)   (4,263,469)   (4,851,504)
                      ------------- ------------- ------------- -------------
    Cash Flow from
     Investing
     Activities
    Purchase of
     Property and
     Equipment             (78,315)      (96,719)     (531,999)     (527,411)
    IHPS Acquisition             -             -             -    (2,990,880)
    VantageMed
     Acquisition                 -             -   (13,533,087)            -
                      ------------- ------------- ------------- -------------
    Cash flows
     provided from
     (used in)
     investing
     activities            (78,315)      (96,719)  (14,065,086)   (3,518,291)
                      ------------- ------------- ------------- -------------

    Cash Flow from
     Financing
     Activities
    Increase in
     Capital Stock               -             -     8,741,932     9,424,866
    Decrease in Bank
     Loan Payable                -             -             -      (148,782)
    Proceeds from
     Subordinated Debt
     Financing                   -             -    11,089,812     5,000,000
    Repayment of
     Subordinated
     Debt Financing              -             -             -    (4,569,000)
    Decrease In
     Promissory Notes
     Payable                     -      (165,944)            -    (1,643,500)
    Increase
     (Decrease) in
     Capital Lease
     Obligations           192,438       (65,613)       35,352       109,888
    Increase
     (Decrease) in
     Borrowing
     under Line of
     Credit              1,000,000       939,683      (541,733)    1,908,606
                      ------------- ------------- ------------- -------------
    Cash flows used
     in financing
     activities          1,192,438       708,126    19,325,363    10,082,078
                      ------------- ------------- ------------- -------------
    Net Increase
     (Decrease) in
     Cash From
     Continuing
     Operations           (256,325)      112,586       996,808     1,712,283
    Net Increase in
     Cash From
     Discontinued
     Operations            348,199             -     1,005,054             -
                      ------------- ------------- ------------- -------------
    Net Increase in
     Cash During the
     Period                 91,874       112,586     2,001,862     1,712,283
    Cash and Cash
     Equivalents,
     Beginning of
     Period              3,657,648     1,973,388     1,747,660       373,691
                      ------------- ------------- ------------- -------------
    Cash and Cash
     Equivalents,
     End of Period    $  3,749,522  $  2,085,974  $  3,749,522  $  2,085,974
                      ------------- ------------- ------------- -------------
                      ------------- ------------- ------------- -------------
    




For further information:

For further information: Michael Ford, CFO Nightingale Informatix
Corporation, Tel: (905) 307-7870, mford@nightingale.md; Dave Mason,   Investor
Relations, The Equicom Group, Tel: (416) 815-0700 x237, Email:
dmason@equicomgroup.com

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Nightingale Informatix Corporation

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