Nightingale reports fiscal 2009 first quarter results



    MARKHAM, ON, Aug. 29 /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 with
more than 5.3 million patient records under management, announces its
financial results for the three-month period ended June 30, 2008. All results
are reported in Canadian dollars unless otherwise stated.

    
    Q1 Fiscal 2009 Summary
    -----------------------
    -   Revenue was $4.9 million, compared to revenue from continuing
        operations of $5.0 million in Q1 fiscal 2008. Excluding the negative
        impact of foreign exchange fluctuations year-over-year, revenue for
        Q1 fiscal 2009 would have been $5.2 million.
    -   Recurring revenue(1) was $3.3 million, compared to recurring revenue
        of $3.2 million in Q1 fiscal 2008.
    -   EBITDA(2) was $(0.2) million, compared to EBITDA of $(0.4) million in
        Q1 fiscal 2008.
    -   Net loss was $1.3 million, or $(0.02) per share, compared to a loss
        from continuing operations of $1.9 million, or $(0.03) per share, in
        Q1 fiscal 2008.
    -   13,000 North American healthcare practitioners using Nightingale
        technology solutions and services.
    -   5.3 million patient records under management on Company's ASP EMR.
    -   Subsequent to quarter end, completed the OntarioMD certification
        process, enabling eligible primary care physicians across Ontario to
        receive funding when implementing Nightingale's hosted EMR solution.
        Nightingale is one of three funding approved ASP EMR providers in
        Ontario.
    

    "We continue to focus on building more cost-efficient operations that can
support strong growth and achieve positive cash flow," said Sam Chebib,
President and CEO of Nightingale. "In Q1, we demonstrated good progress. We
grew our revenue compared to the previous quarter and reduced our expenses on
a year-over-year and sequential-quarter basis. We realized one-time expenses
related to our OntarioMD certification, which offset some of our
expense-management initiatives. However, with the certification process now
complete, we expect to generate additional cost-savings in the coming
quarters."
    Mr. Chebib continued: "The adoption of healthcare IT is gaining momentum
across North America. To propel growth, our strategy is three-fold: increase
the number of healthcare practitioners on our technology platform, cross-sell
our products and services to our existing customers and launch patient-centric
offerings. We believe our sizable customer footprint, broad suite of products
and services and key contract wins, such as OntarioMD, enable us to capitalize
on this expanding market opportunity and grow our top line. We believe that
this, combined with our efforts to further reduce expenses, positions us for
improved overall financial performance going forward."

    Q1 Fiscal 2009 Financial Review
    --------------------------------
    As a result of Nightingale's sale of Therapist Helper in Q4 fiscal 2008,
all financial results for Q1 fiscal 2008 are reported on a continuing
operations basis.
    Revenue for Q1 fiscal 2009 was $4.9 million, compared to revenue from
continuing operations of $5.0 million for Q1 fiscal 2008. The slight
year-over-year decrease is a result of lower one-time hardware sales, declines
in professional service, data management and transcription revenues and the
negative impact of the fluctuation in foreign exchange, which were all
partially offset by stronger license sales and an increase in software support
and maintenance revenue.
    Recurring revenue, consisting of support and maintenance, utilization and
transaction fees, transcription and billing services was $3.3 million, or 67%
of total revenue, for Q1 fiscal 2009, fairly consistent with recurring revenue
of $3.2 million, or 64% of total revenue, in Q1 fiscal 2008. In Q1 fiscal
2009, Nightingale realized a year-over-year decrease in transcription revenue,
which was offset by an increase in support and maintenance revenue.
    During Q1 fiscal 2009, Nightingale generated approximately 63% 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 5%, or $0.3 million. Nightingale generates
approximately 50% of its expenses (including costs of goods sold) in the U.S.,
providing the Company with a natural hedge position. The Company expects to
continue to be susceptible to currency exchange fluctuations.
    Gross profit was $3.7 million, or 74% of revenue, in Q1 fiscal 2009,
compared to a gross profit of $3.8 million, or 75% of revenue, in Q1 fiscal
2008. The slight year-over-year decline primarily reflects a decrease in
non-recurring revenue, which, in its entirety, carries a higher margin than
non-recurring revenue.
    As a result of the steps Nightingale has taken to streamline costs, total
operating expenses decreased to $4.6 million in Q1 fiscal 2009, from
$4.7 million in Q4 fiscal 2008 and $4.9 million in Q1 fiscal 2008. Going
forward, the Company will remain focused on maintaining tight cost controls
while also investing in the growth areas of the business.
    Nightingale realized an EBITDA loss of $0.2 million in Q1 fiscal 2009,
compared to an EBITDA loss of $0.4 million in Q1 fiscal 2008. The
year-over-year improvement reflects a decrease in the Company's overall
operating expenses.
    Net loss was $1.3 million, or $(0.02) per share, in Q1 fiscal 2009,
compared to a net loss from continuing operations of $1.9 million, or $(0.03)
per share, in Q1 fiscal 2008. The year-over-year improvement is a result of
the success of Nightingale's cost-reduction initiatives and an approximate 50%
decrease in interest expense as a result of the Company's repayment of
approximately $6.0 million of its subordinated debt in Q4 fiscal 2008.
    Cash and cash equivalents were $4.4 million at June 30, 2008, compared to
$5.0 million at March 31, 2008. At June 30, 2008, total common shares issued
and outstanding were 67,478,540.
    The financial statements and MD&A will be available at
http://www.nightingale.md and filed on www.sedar.com on August 29, 2008. This
press release should be read in conjunction with Nightingale's Consolidated
Financial Statements for the quarter ended June 30, 2008 and the accompanying
Management Discussion and Analysis.

    Notice of Conference Call and Webcast
    --------------------------------------
    Nightingale will host a conference call on Friday August 29, 2008 at 8:30
a.m. Eastern Standard Time. To access the conference call by telephone, dial
416-644-3421 or 1-800-732-6179. Please connect approximately fifteen minutes
prior to the beginning of the call to ensure participation. The conference
call will be archived for replay until Friday September 5, 2008. To access the
archived conference call, dial 416-640-1917 or 1- 877-289-8525 and enter
reference 21280807 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.

    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.  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.

    2.  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       Fiscal
                                                        Quarter      Quarter
    In $000's                                             Ended        Ended
                                                           June         June
    Definition                                         30, 2008     30, 2007
    -------------------------------------------------------------------------

    Loss and Comprehensive Loss                         $(1,260)     $(1,787)
    -------------------------------------------------------------------------

    Adjustments for:
    Earnings from discontinued operations                     -         (127)
    Other Loss                                               12           54
    Interest                                                356          697
    Depreciation and Amortization                           612          569
    Stock-based Compensation                                 44          213
    -------------------------------------------------------------------------

    EBITDA (Loss)                                         $(236)       $(381)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    About Nightingale

    Nightingale is one of the fastest growing health care service and
software companies in North America with over 5.3 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 the United States Private Securities Litigation Reform Act of 1995
and 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 Company's ability to succeed in the US market, a
new market for the Company; the existence of present and possible future
government regulation; Nightingale's ability to successfully integrate its
acquisitions and any liabilities arising as a result of such acquisitions; the
significant and increasing competition that exists in the medical software
industry; and the early stage of Nightingale's business. The Company is
subject to the risks associated with early stage companies, including
uncertainty of revenues, markets and profitability and the ability to access
debt or equity financing, as necessary. 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. 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,
including their knowledge of the current sales trends, spending on healthcare
and general economic conditions affecting Nightingale and the Canadian and US
economies. Although Nightingale believes the assumptions used to make such
statements are reasonable at this time and has attempted to identify in its
continuous disclosure documents 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. Certain material factors or assumptions
are applied by the Company in making forward-looking statements, including
without limitation, factors and assumptions regarding, acceptance of its
products in the marketplace, as well as its operating cost structure and
current and future trends in healthcare spending. 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 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-MONTH PERIOD ENDED JUNE 30, 2008

    -------------------------------------------------------------------------
                                                       3 Months     3 Months
                                                          Ended        Ended
                                                           June         June
                                                       30, 2008     30, 2007
    -------------------------------------------------------------------------
    Revenue                                          $4,945,587   $4,998,367

    Cost of sales
    Software and services                             1,158,203    1,143,363
    Sales commissions                                   118,606      104,871
                                                    ------------ ------------
                                                      1,276,809    1,248,234
                                                    ------------ ------------

    Gross profit                                     $3,668,778   $3,750,133
                                                    ------------ ------------

    Expenses
    General and administration                          852,579      722,955
    Sales and marketing                                 696,897      836,465
    Research and development                          1,061,720    1,154,829
    Client services                                   1,293,533    1,417,108
    Stock based compensation                             43,593      212,829
    Depreciation and amortization                       612,302      569,045
                                                    ------------ ------------
                                                     $4,560,624   $4,913,231
                                                    ------------ ------------

    Operating loss                                    $(891,846) $(1,163,098)
                                                    ------------ ------------

    Interest                                            356,027      697,948
    Foreign currency loss (gain)                         11,996       53,679
                                                    ------------ ------------

    Loss from continuing operations                  (1,259,869)  (1,914,725)
    Earnings from discontinued operations                     -      127,473
                                                    ------------ ------------

    Loss and comprehensive loss                     $(1,259,869) $(1,787,252)
                                                    ------------ ------------
                                                    ------------ ------------

    Basic and diluted (loss per common share)
    Loss from continuing operations                       (0.02)       (0.03)
    Earnings from discontinued operations
     - basic and diluted                                      -            -
                                                    ------------ ------------
    Loss and comprehensive loss per common share          (0.02)       (0.03)
                                                    ------------ ------------
                                                    ------------ ------------

    Weighted average number of common shares
     - basic and diluted                             67,478,540   63,345,256
                                                    ------------ ------------
                                                    ------------ ------------



    INTERIM CONSOLIDATED BALANCE SHEET
    AS AT JUNE 30, 2008

    -------------------------------------------------------------------------
                                                          As at        As at
                                                           June        March
                                                       30, 2008     31, 2008
    -------------------------------------------------------------------------
    ASSETS

    Current assets
    Cash and cash equivalents                        $4,419,206   $5,033,746
    Accounts receivable                               2,766,347    3,151,582
    Other receivables                                   442,553    1,034,721
    Inventory                                           108,967      168,948
    Prepaid expenses                                    714,342      649,207
                                                    ------------ ------------
                                                      8,451,415   10,038,204
                                                    ------------ ------------

    Long-term assets
    Deferred costs                                      155,249      201,940
    Property and equipment                            1,608,227    1,722,276
    Intangible assets                                 6,899,888    7,336,804
    Goodwill                                          4,692,399    4,692,399
                                                    ------------ ------------
                                                     13,355,763   13,953,419
                                                    ------------ ------------

    Total assets                                    $21,807,178  $23,991,623
                                                    ------------ ------------
                                                    ------------ ------------
    LIABILITIES

    Accounts payable and accrued liabilities          3,721,205    4,048,260
    Income taxes payable, note 5                      1,324,180    1,336,270
    Current portion of subordinated debt, note 6        750,000            -
    Current portion of deferred revenue               3,460,793    4,199,690
    Current portion of capital lease obligations        243,082      278,658
                                                    ------------ ------------
                                                      9,499,260    9,862,878
                                                    ------------ ------------

    Long term liabilities
    Subordinated debt, note 6                         4,706,950    5,295,648
    Deferred revenue                                  1,288,635    1,214,110
    Capital lease obligations                           370,805      438,682
                                                    ------------ ------------
                                                      6,366,390    6,948,440
                                                    ------------ ------------

    Total liabilities                                15,865,650   16,811,318
                                                    ------------ ------------

    SHAREHOLDERS' EQUITY
    Capital stock,                                   27,521,485   27,521,485
    Contributed surplus, note 8                       1,480,177    1,459,085
    Warrants, note 9                                  3,277,011    3,277,011
    Deficit                                         (26,337,145) (25,077,276)
                                                    ------------ ------------
                                                      5,941,528    7,180,305
                                                    ------------ ------------

    Total liabilities and shareholders' equity      $21,807,178  $23,991,623
                                                    ------------ ------------
                                                    ------------ ------------

    Approved on behalf of the Board of Directors:

    "Samer Chebib"     Director
    ---------------
    "David Atkins"     Director
    ---------------



    INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS
    FOR THE THREE-MONTH PERIOD ENDED JUNE 30, 2008

    -------------------------------------------------------------------------
                                                       3 Months     3 Months
                                                          Ended        Ended
                                                           June         June
                                                       30, 2008     30, 2007
    -------------------------------------------------------------------------
    Cash flow from operating activities
    Loss from continuing operations                  (1,259,869) $(1,914,725)

    Adjustments for:
    Depreciation and amortization                       612,302      569,045
    Amortization of transaction costs related to
     debt financing                                      33,525      134,100
    Stock based compensation                             43,593      212,829
    Unrealized foreign exchange loss                     14,593       49,134
    Interest accretion                                  127,777      196,857
                                                    ------------ ------------
                                                       (428,079)    (752,760)

    Changes in non-cash working capital balances
      Accounts receivable                               356,091      593,898
      Prepaid expenses                                  (65,135)     (39,772)
      Inventory                                          59,981      (55,135)
      Deferred costs                                     46,691      400,810
      Other receivables                                 580,229       38,786
      Accounts payable and accrued liabilities         (336,092)  (1,040,614)
      Deferred compensation payable                           -     (100,824)
      Deferred revenue                                 (664,373)    (190,035)
                                                    ------------ ------------
    Cash flows used in operating activities            (450,687)  (1,145,646)
                                                    ------------ ------------

    Cash flow from investing activities
    Purchase of property and equipment                  (61,221)    (148,096)
    VantageMed acquisition                                    -  (13,533,087)
                                                    ------------ ------------
    Cash flows used in investing activities             (61,221) (13,681,183)
                                                    ------------ ------------

    Cash flow from financing activities
    Increase in capital stock                                 -    8,741,932
    Proceeds from subordinated debt financing                 -   11,089,812
    Repayment of capital lease obligations             (102,632)     (77,553)
    Borrowing under line of credit                            -   (1,541,733)
                                                    ------------ ------------
    Cash flows provided by financing activities        (102,632)  18,212,458
                                                    ------------ ------------

    Foreign exchange gains(losses) on cash held in
     foreign currency                                    (2,598)      (4,545)

    Net increase in cash from continuing operations    (611,942)   3,390,174
    Net increase in cash from discontinued
     operations                                               -      410,610
                                                    ------------ ------------
    Net increase in cash during the period             (614,540)   3,796,239
    Cash and cash equivalents, beginning of period    5,033,746    1,747,660
                                                    ------------ ------------

    Cash and cash equivalents, end of period         $4,419,206   $5,543,899

    Supplemental cash flow information:
      Interest paid                                    $254,935     $542,123
      Income taxes paid                                      $-           $-
    

    %SEDAR: 00022709E




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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