Nightingale Reports Fiscal 2009 Third Quarter Results



    MARKHAM, ON, Feb. 27 /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 and nine-month period ended December 31, 2008.
    As a result of Nightingale's sale of Therapist Helper in Q4 fiscal 2008,
all financial results for fiscal 2008 are reported on a continuing operations
basis and are in Canadian dollars unless otherwise stated.

    
    Q3 Fiscal 2009 Highlights
    --------------------------

    -   Revenue increased 7.3% from the previous quarter to $4.6 million and
        increased 15.6% over revenue of $3.9 million achieved in the same
        quarter last year. On a year-over-year basis revenue was 6.5% lower
        than revenue of $14.7 million for the nine months ended December 31,
        2007.
    -   Recurring revenue increased 17.9% from the previous quarter to
        $4 million and increased approximately 25.3% over the same quarter
        last year. Year to date, recurring revenues increased 9.6% to $10.8
        million.
    -   Gross profit for Q3 was $3.3 million representing a margin of 71.8%,
        an increase from the previous quarter's gross profit of $3.2 million,
        but a decrease in margin compared to 74.5% achieved in Q2. Q3 gross
        profit margin was higher than the 67.5% achieved in the same quarter
        last year. Gross profit was $10.1 million and a margin of 73.5% for
        the nine months ended December 31, 2008, slightly lower than gross
        profit of $10.7 million, but representing a higher margin than 72.9%
        from the same period last year.
    -   Loss and comprehensive loss was approximately $876,000, or 19.2% of
        revenue compared to a loss of $1.5 million or 35.1% for the previous
        quarter. Year-to-date loss and comprehensive loss was $3.6 million or
        26.4% compared to $6.9 million or 47.3% of revenue for the same
        period last year.
    -   During the quarter Nightingale closed an agreement to provide its
        OntarioMD Certified web-based Nightingale EMR solution to the three
        core urban Family Health Organizations (FHOs) in London, Ontario.
        These clinics are associated with London Health Sciences Centre and
        St. Joseph's Health Care in London, Ontario along with several of
        their community family practice partners. Nightingale's EMR will be
        accessed by over 125 users in these FHOs to provide care to tens of
        thousands of patients in the London area.
    -   Subsequent to quarter end, the Company was selected by the
        Saskatchewan Medical Association (SMA) as one of four preferred EMR
        vendors for the SMA EMR Program. The EMR Program will be made
        available to approximately 1,400 fee-for-service and contracted
        physicians within the province of Saskatchewan. Upon completion of
        further conformance testing and signing of an agreement between the
        SMA and Nightingale, physicians will have the option to choose
        Nightingale as one of four funding eligible EMR solutions under this
        program.
    

    "Notwithstanding the overall positive impact from the strengthening of
the US dollar relative to the Canadian dollar, our quarterly results
demonstrate continued strength and growth in our Recurring Revenue base as
well as continued reductions in our costs moving us closer to our goal of
achieving profitability," said Sam Chebib, President and CEO of Nightingale.
"Over the last four quarters we have worked diligently to improve operating
efficiencies. While we are not satisfied that our efforts are complete, we are
proud to report the progress that we have made to date."
    Mr. Chebib continued: "Nightingale has been successful in gaining further
product acceptance by physicians, academic teams and provincial ministries of
health. We believe that our focus on our current customers, demonstrated by
our recurring revenues, is an important driver of this recognition and
ultimately our growth. I am confident that our ability to win the approval of
stakeholders at all levels within the healthcare system coupled with our
sensible approach to management should serve us well in subsequent quarters."

    
    Q3 Fiscal 2009 Financial Review
    --------------------------------
    
    Revenue for Q3 fiscal 2009 was $4.6 million, compared to revenue from
continuing operations of $3.9 million for Q3 fiscal 2008. The year-over-year
increase is largely due to the positive impact of the US dollar exchange rate
on the growing base of Recurring Revenues, offset partially by a decrease in
Non-Recurring Revenue.
    For the three months ended December 31, 2008, the Company generated 83%
of its revenue from the US market. With the recent increase in the value of
the US dollar relative to the Canadian dollar, the Company estimates that
revenue was positively impacted by approximately $700,000 during the current
quarter compared to the same quarter of the previous fiscal year,
approximately $550,000 during the consecutive quarterly periods and
approximately $400,000 during the year to date periods. During the quarter
ended December 31, 2008, Nightingale incurred approximately 52% of its
expenses (including costs of goods sold) in the U.S., providing the Company
with a natural hedge position. The Company continues to expect that a
significant portion of its revenue and expenses will be generated from the
U.S., as a result, Nightingale will remain susceptible to currency
fluctuations.
    Recurring revenue, consisting of support and maintenance, utilization and
transaction fees, transcription and billing services was $4.0 million, or
88.8% of total revenue, marking the fourth consecutive quarterly increase in
recurring revenues. The increase from the quarter ended September 30, 2008 to
the quarter ended December 31, 2008 was largely due to the impact of the
improvement in the US dollar as well as an increase in revenue cycle
management revenues.
    As a result of the steps Nightingale has taken to control costs, total
operating expenses were reduced. Total operating expenses for the three and
nine months ended December 31, 2008, were $4 million and $12.9 million,
respectively. This compares to $5.2 million and $15.2 million for the three
and nine months ended December 31, 2007, representing a 23.1% and 15.1%
decrease over these respective periods. These decreases in expenses were
partially offset by one time expenses in the quarter related to severance and
in lieu pay costs associated with the headcount reductions as well as
increases in expense associated with the increase in the value of the US
dollar.
    Net loss was $876,000, or $(0.01) per share, in Q3 fiscal 2009, compared
to a net loss from continuing operations of $3.4 million, or $(0.05) per
share, in Q3 fiscal 2008. The year-over-year improvement is primarily due to a
reduction in operating expenses as well as repayment of debt and subsequent
interest expense reductions. The Company remains focused on achieving positive
cash flow.
    Cash and cash equivalents were $3.1 million at December 31, 2008.
    At December 31, 2008, total common shares issued and outstanding were
67,666,557.
    The financial statements and Management's Discussion and Analysis will be
available at http://www.nightingale.md and filed on www.sedar.com on February
27, 2009. This press release should be read in conjunction with Nightingale's
Consolidated Financial Statements for the quarter ended December 31, 2008 and
the accompanying Management Discussion and Analysis.

    
    Notice of Conference Call and Webcast
    --------------------------------------
    
    Nightingale will host a conference call on Friday, February 27, 2009 at
8:30 a.m. Eastern Standard Time. To access the conference call by telephone,
dial 416-644-3424 or 1-800-590-1817. 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, March 6, 2009. To
access the archived conference call, dial 416-640-1917 or 1-877-289-8525 and
enter reference 21299200 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    Nine Months    Nine Months
                          Ended          Ended          Ended          Ended
    In $000's       December 31,   December 31,   December 31,   December 31,
    Definition             2008           2007           2008           2007
    -------------------------------------------------------------------------
    Loss and
     Comprehensive
     Loss          $       (876)  $     (3,431)  $     (3,628)  $     (6,947)
    -------------------------------------------------------------------------
    Adjustments
     for:
    -------------------------------------------------------------------------
    Other Loss             (202)            17           (174)           170
    -------------------------------------------------------------------------
    Interest                328            854          1,049          2,288
    -------------------------------------------------------------------------
    Depreciation
     and Amortiza-
     tion                   690            521          1,935          1,640
    -------------------------------------------------------------------------
    Stock-based
     Compensation            26            241             91            512
    -------------------------------------------------------------------------
    EBITDA (Loss)
    -------------------------------------------------------------------------
                   $        (34)  $     (1,798)  $       (727)  $     (2,337)
    -------------------------------------------------------------------------

    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. Nightingale 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 continue to service its debt
obligations and to comply with the related covenants and conditions;
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 AND NINE MONTH PERIODS ENDED DECEMBER 31, 2008

    -------------------------------------------------------------------------
                       3 months       3 months       9 months       9 months
                         ending          ended         ending          ended
                       December       December       December       December
                       31, 2008       31, 2007       31, 2008       31, 2007
    -------------------------------------------------------------------------
    Revenue        $  4,556,485   $  3,942,345   $ 13,748,385   $ 14,697,495
    Cost of sales
    Hardware,
     software and
     services         1,234,833      1,153,171      3,456,645   $  3,539,111
    Sales
     commissions         49,316        129,397        187,093        430,633
                   -------------  -------------  -------------  -------------
                      1,284,149      1,282,568      3,643,738      3,969,744

                   -------------  -------------  -------------  -------------
    Gross profit      3,272,336      2,659,777     10,104,647     10,727,751
                   -------------  -------------  -------------  -------------

    Expenses
    General and
     administra-
     tion               801,924        950,125      2,485,633      2,753,691
    Sales and
     marketing          621,682        859,277      1,969,147      2,494,365
    Research and
     development        780,782      1,221,594      2,765,729      3,584,011
    Client
     services         1,102,187      1,427,293      3,612,134      4,233,159
    Stock based
     compensation        25,544        241,111         90,549        512,078
    Depreciation
     and
     amortization       689,845        520,991      1,934,718      1,639,906
                   -------------  -------------  -------------  -------------
                      4,021,964      5,220,391     12,857,910     15,217,210
                   -------------  -------------  -------------  -------------

    Operating loss     (749,628)    (2,560,614)    (2,753,263)    (4,489,459)
                   -------------  -------------  -------------  -------------

    Interest            328,135        853,669      1,048,521      2,288,096
    Other loss
     (income)          (201,671)        16,646       (174,151)       169,649
                   -------------  -------------  -------------  -------------

    Loss from
     continuing
     operations        (876,092)    (3,430,929)    (3,627,633)    (6,947,204)
    Earnings from
     discontinued
     operations               -        107,320              -        408,763
                   -------------  -------------  -------------  -------------

    Loss and
     comprehensive
     loss          $   (876,092)  $ (3,323,609)  $ (3,627,633)  $ (6,538,441)
                   -------------  -------------  -------------  -------------
                   -------------  -------------  -------------  -------------

    Basic and
     diluted (loss
     per common
     share)
    Loss from
     continuing
     operations    $      (0.01)  $      (0.05)  $      (0.05)  $      (0.11)
    Earnings from
     discontinued
     operations    $       0.00   $       0.00   $       0.00   $       0.01
                   -------------  -------------  -------------  -------------
    Loss and
     comprehensive
     per common
     share         $      (0.01)  $      (0.05)  $      (0.05)  $      (0.10)
                   -------------  -------------  -------------  -------------
                   -------------  -------------  -------------  -------------

    Weighted
     average number
     of common
     shares          67,772,826     66,914,490     67,827,225     65,733,398
                   ----------------------------------------------------------



    INTERIM CONSOLIDATED BALANCE SHEET
    AS AT DECEMBER 31, 2008

    -------------------------------------------------------------------------
                                                        As at          As at
                                                     December          March
                                                     31, 2008       31, 2008
    -------------------------------------------------------------------------
    ASSETS

    Current assets
    Cash and cash equivalents                    $  3,062,852   $  5,033,746
    Accounts receivable                             3,531,857      3,151,582
    Other receivables                                 510,113      1,034,721
    Inventory                                          67,158        168,948
    Prepaid expenses                                  687,556        649,207
                                                 -------------  -------------
                                                    7,859,536     10,038,204
                                                 -------------  -------------

    Long-term assets
    Deferred costs                                    194,509        201,940
    Property and equipment                          1,367,499      1,722,276
    Intangible assets                               5,963,951      7,336,804
    Goodwill                                        4,692,399      4,692,399
                                                 -------------  -------------
                                                   12,218,358     13,953,419
                                                 -------------  -------------

    Total assets                                 $ 20,077,894   $ 23,991,623
                                                 -------------  -------------
                                                 -------------  -------------

    LIABILITIES

    Current liabilities
    Borrowing under line of credit               $  1,200,000   $          -
    Accounts payable and accrued liabilities        3,512,479      4,048,260
    Income taxes payable                            1,591,980      1,336,270
    Current portion of deferred revenue             3,696,484      4,199,690
    Current portion of capital lease obligations      199,441        278,658
                                                 -------------  -------------
                                                   10,200,384      9,862,878
                                                 -------------  -------------

    Long term liabilities
    Subordinated debt                               4,754,281      5,295,648
    Deferred revenue                                1,144,212      1,214,110
    Capital lease obligations                         335,797        438,682
                                                 -------------  -------------
                                                    6,234,290      6,948,440
                                                 -------------  -------------

    Total liabilities                              16,434,674     16,811,318
                                                 -------------  -------------

    SHAREHOLDERS' EQUITY
    Capital stock,                                 27,596,692     27,521,485
    Contributed surplus                             3,282,175      1,459,085
    Warrants                                        1,469,262      3,277,011
    Deficit                                       (28,704,909)   (25,077,276)
                                                 -------------  -------------
                                                    3,643,220      7,180,305
                                                 -------------  -------------

    Total liabilities and shareholders' equity   $ 20,077,894   $ 23,991,623
                                                 -------------  -------------
                                                 -------------  -------------

                                                 ----------------------------


    Approved on behalf of the Board of Directors:

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



    INTERIM CONSOLIDATED STATEMENT OF DEFICIT
    FOR THE THREE AND NINE MONTH PERIODS ENDED DECEMBER 31, 2008

    -------------------------------------------------------------------------
                       3 months       3 months       9 months       9 months
                         ending          ended         ending          ended
                       December       December       December       December
                       31, 2008       31, 2007       31, 2008       31, 2007
    -------------------------------------------------------------------------
    Deficit,
     beginning of
     the period    $(27,828,817)  $(15,480,681)  $(25,077,276)  $(12,265,849)

    Loss and
     comprehen-
     sive loss         (876,092)    (3,323,609)    (3,627,633)    (6,538,441)
                   -------------  -------------  -------------  -------------

    Deficit, end
     of the
     period        $(28,704,909)  $(18,804,290)  $(28,704,909)  $(18,804,290)
                   -------------  -------------  -------------  -------------
                   -------------  -------------  -------------  -------------

                   ----------------------------------------------------------



    INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS
    FOR THE THREE AND NINE MONTH PERIODS ENDED DECEMBER 31, 2008

    -------------------------------------------------------------------------
                       3 months       3 months       9 months       9 months
                         ending          ended         ending          ended
                       December       December       December       December
                       31, 2008       31, 2007       31, 2008       31, 2007
    -------------------------------------------------------------------------
    Cash Flow from
     Operating
     Activities
    Loss from
     continuing
     operations        (876,092)    (3,430,929)    (3,627,633)    (6,947,204)
    Adjustments
     for:
    Depreciation
     and
     amortization       689,931        515,011      1,951,351      1,633,926
    Amortization of
     transaction
     costs related
     to debt
     financing           33,525        134,099        100,574        419,709
    Gain on Sale of
     Asset                    -        (22,130)             -        (22,130)
    Unrealized
     foreign
     exchange loss
     (gain)             255,125        (14,009)       329,489        (82,450)
    Stock based
     compensation        25,544        241,100         90,549        512,067
    Interest
     accretion          101,821        222,899        358,059        616,612
                   -------------  -------------  -------------  -------------
                        229,854     (2,353,959)      (797,611)    (3,869,470)

    Changes in
     non-cash
     working
     capital
     balances
      Accounts
       receivable      (554,722)     1,549,183       (100,008)       551,228
      Prepaid
       expenses         (82,576)        57,282        (38,349)      (250,924)
      Inventory          10,974         33,174        100,772        (45,893)
      Deferred
       costs            (14,263)        21,707          7,431        425,218
      Other
       receivables       25,414              -        595,256         79,689
      Accounts
       payable and
       accrued
       liabilities     (234,765)      (624,719)      (937,084)    (1,230,711)
      Deferred
       revenue          293,730        (23,379)      (573,105)       108,570
                   -------------  -------------  -------------  -------------
    Cash flows used
     in operating
     activities        (326,354)    (1,340,711)    (1,742,698)    (4,232,293)
                   -------------  -------------  -------------  -------------

    Cash flow from
     investing
     activities
    Purchase of
     property and
     equipment          (47,042)       (74,106)      (166,742)      (529,752)
    Proceeds from
     sale of
     property and
     equipment                -        258,065              -        258,065
    VantageMed
     acquisition              -              -              -    (13,533,087)
                   -------------  -------------  -------------  -------------
    Cash flows used
     in investing
     activities         (47,042)       183,959       (166,742)   (13,804,774)
                   -------------  -------------  -------------  -------------

    Cash flow from
     financing
     activities
    Increase in
     capital stock            -              -              -      8,741,932
    Proceeds from
     subordinated
    debt financing            -              -              -     11,089,812
    Repayment of
     subordinated
     debt financing    (500,000)             -     (1,000,000)             -
    Repayment of
     capital lease
     obligations        (84,991)       (64,500)      (261,454)      (215,532)
    Borrowing
     (repayment)
     under line of
     credit             450,000      1,000,000      1,200,000       (541,733)
                   -------------  -------------  -------------  -------------
    Cash flows from
     (used in)
     financing
     activities        (134,991)       935,500        (61,454)    19,074,479
                   -------------  -------------  -------------  -------------

    Foreign exchange
     gains (losses)
     on cash held
     in foreign
     currency           456,796        (30,655)       503,640       (252,099)

    Net increase
     (decrease) in
     cash from
     continuing
     operations        (965,183)      (190,597)    (2,474,534)     1,289,511
    Net increase in
     cash from
     discontinued
     operations               -        312,991              -        964,450
                   -------------  -------------  -------------  -------------
    Net Increase
     (decrease) in
     cash during
     the period        (508,387)        91,739     (1,970,894)     2,001,862
    Cash and cash
     equivalents,
     beginning of
     period           3,571,239      3,657,783      5,033,746      1,747,660
                   -------------  -------------  -------------  -------------

    Cash and cash
     equivalents,
     end of period $  3,062,852   $  3,749,522   $  3,062,852   $  3,749,522
                   -------------  -------------  -------------  -------------
                   -------------  -------------  -------------  -------------

                   ----------------------------------------------------------

    Non-cash
     investing and
     financing
     activities:
      Acquisition
       of property
       and
       equipment
       under
       capital
       lease                  -   $    258,065   $     56,265   $    258,065

    Supplemental
     cash flow
     information:
      Interest
       paid        $    231,110   $    655,998   $    735,696   $  1,775,908
    

    %SEDAR: 00022709E




For further information:

For further information: Michael Ford, CFO, Nightingale Informatix
Corporation, Tel: (905) 307-7870, mford@nightingale.md

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