Nightingale reports fiscal 2012 second quarter results

Company reports 11th consecutive quarter of positive EBITDA

MARKHAM, ON, Nov. 29, 2011 /CNW/ - Nightingale Informatix Corporation ("Nightingale" or the "Company") (TSX-V: NGH), an application service provider (ASP) of electronic medical record (EMR) software and related services, announces its financial results for the quarter and six months ended September 30, 2011. The Company's consolidated financial statements are prepared in accordance with International Financial Reporting Standards (IFRS). All results are reported in IFRS and in Canadian dollars unless otherwise stated.

Q2 Fiscal 2012 Financial and Operational Summary

  • Revenue was $3.8 million compared to $4.2 million in Q2 F2011, primarily reflecting a decrease in software license revenue and revenue cycle management services.

    • Total software revenue (EMR and Practice Management) was $3.4 million compared to $3.6 million in Q2 F2011.

  • Gross profit was $3.0 million, or 79% of revenue, compared to $3.3 million, or 79% of revenue, in Q2 F2011.

  • Operating Expenses, excluding stock based compensation and depreciation and amortization, were $2.9 million in line with $2.9 million in Q2 F2011.

  • EBITDA was $0.1 million compared to $0.4 million in Q2 F2011.

  • Net loss was $0.3 million compared to $0.4 million in Q2 F2011.

  • Cash provided by operations was $0.5 million compared to $0.3 million in Q2 F2011.

  • Total deferred revenue was $7.6 million compared to $7.5 million as at March 31, 2011.

  • Signed agreements with healthcare providers to deploy 86 EMR seats2 compared to approximately 200 seats in Q2 F2011, reflecting near-term delays in purchase decisions in the enterprise market.

  • Received U.S. certification for Nightingale On Demand V10.0 as a Complete EHR by the Certification Commission for Health Information Technology (CCHIT®). This expands the Company's market opportunity, as eligible Nightingale customers in the U.S. now qualify for up to US$44,000 in funding incentives.

  • Received ISO 13485:2003 certification, further demonstrating the Company's commitment to providing its EMR customers with high-quality products, service and support.  ISO certification is becoming a requirement to qualify for future funding initiatives in some jurisdictions.

  • Subsequent to quarter end, signed a 100 seat agreement with a Canadian government agency.

"Sales for our EMR offering remain strong with small- to medium-sized clinics, and demand in the enterprise market continues to be robust, as demonstrated by our sizable contract win subsequent to quarter end," said Sam Chebib, President and CEO of Nightingale. "We are still in the negotiation phase with other large-scale enterprise contracts, and we are reasonably confident that we will see positive outcomes in the coming quarters. We have been devoting the necessary resources to the pursuit of these significant opportunities, and we believe these efforts will deliver tangible results in the second half of the fiscal year, positioning us to deliver accelerated top line growth."

Fiscal 2012 Second Quarter and Year To Date (YTD) Financial Review
Nightingale's Q2 and YTD fiscal 2012 results are prepared in accordance with IFRS. For more detailed information regarding the Company's transition to IFRS, including a reconciliation of the Company's Q2 fiscal 2011 YTD results as originally reported in Canadian Generally Accepted Accounting Principles (CGAAP) to IFRS please refer to the Company's financial statements and MD&A filings on SEDAR at www.sedar.com.

Revenue for Q2 fiscal 2012 was $3.8 million, down 10% from $4.2 million for Q2 fiscal 2011. YTD revenue in fiscal 2012 was $7.6 million, down 12%, from $8.6 million in fiscal 2011.  The year-over-year decreases were the result of declines in revenue from the Company's software and revenue cycle management businesses. In addition, total revenues were negatively impacted by approximately $0.1 million in the Q2 and YTD periods, related to foreign exchange (the Company generated 42% of Q2 fiscal 2012 revenue in the US and 43% YTD revenue in the US) which predominantly affected the Company's recurring revenue results.

Recurring revenue3 for Q2 fiscal 2012 was $2.4 million (62% of revenue), down in comparison to $2.7 million (65% of revenue) for Q2 fiscal 2011.  YTD recurring revenue for fiscal 2012 was $4.8 million (63% of revenue), down in comparison to $5.6 million (65% of revenue) for YTD fiscal 2011. These decreases were predominantly a result of a reduction in Revenue Cycle Management revenue as well as the impact of foreign exchange. Non-recurring revenue3 for Q2 fiscal 2012 was $1.4 million compared to $1.5 million for Q2 fiscal 2011.  YTD non-recurring revenue for fiscal 2012 was $2.8 million compared to $3.0 million for YTD fiscal 2011, with the year-over-year decreases primarily due to a decline in EMR software license sales.

For Q2 fiscal 2012, gross margin was 79% ($3.0 million gross profit) compared to 79% ($3.3 million gross profit) for Q2 fiscal 2011. For YTD fiscal 2012, gross margin was 81% ($6.2 million gross profit) compared to 80% ($6.9 million gross profit) for YTD fiscal 2011.

Operating expenses, excluding charges for stock based compensation and depreciation and amortization, for Q2 fiscal 2012 were $2.9 million in line with $2.9 million for Q2 fiscal 2011. YTD operating expenses were $6.0 million in fiscal 2012 compared to $5.9 million in fiscal 2011.

For Q2 fiscal 2012, EBITDA was $0.1 million compared to $0.4 million in Q2 fiscal 2011, and net loss for Q2 fiscal 2012 was $0.3 million compared to a net loss of $0.4 in Q2 fiscal 2011. For YTD fiscal 2012, EBITDA was $0.1 million compared to $1.0 million for YTD fiscal 2011, and net loss for YTD Q2 fiscal 2012 was $0.8 million compared to a net loss of $0.4 for YTD fiscal 2011.

Cash and cash equivalents were $2.7 million at September 30, 2011, down from $4.2 million at March 31, 2011, primarily as a result of the Company's increased investments in its long-term strategic growth initiatives.

At September 30, 2011, total common shares issued and outstanding were 76,310,915.

The financial statements and MD&A will be available at www.nightingalemd.com and filed on www.sedar.com on November 29, 2011.  This press release should be read in conjunction with Nightingale's Consolidated Financial Statements for the quarter and six months ended September 30, 2011 and the accompanying Management Discussion and Analysis.

Notice of Conference Call
Nightingale will host a conference call on Tuesday, November 29, 2011, at 8:30 a.m. Eastern Standard Time. To access the conference call by telephone, dial (888) 231-8191 (or (647) 427-7450 for international. Please connect approximately fifteen minutes prior to the call, and reference conference ID 28399241 prior to the beginning of the call to ensure participation. The conference call will be archived for replay until Tuesday, December 6, 2011. To access the archived conference call, dial 416-849-0833 or 1-855-859-2056 and enter reference 28399241 #. To listen to the conference call replay on the internet please visit the Nightingale website shortly after the call at www.nightingalemd.com.

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.   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 (dollars are in thousands):

         
  Three Months
Ended
Three Months
Ended
Six Months
Ended
Six Months
Ended
Definition September 30,
2011
September 30,
2010
September 30,
2011
September 30,
2010
         
Loss and Comprehensive Loss $   (315,381) $ (422,118) $   (752,125) $   (422,805)
               
Adjustments for:              
               
Current Tax Expense (Benefit)        $          468  $      (27,593) $         ( 5,730) $     (10,520)
Other Loss (Income)   (3,783)   (4,202)   (12,707)   (15,190)
Interest   93,202   228,589   208,132   399,380
Depreciation and Amortization   311,103   419,588   631,540   838,854
Stock-based Compensation   23,297   191,637   63,212   212,471
                 
EBITDA $    108,906 $     385,901 $ 132,322 $ 1,002,190

2.   Seat Sale
"Seat" is defined as a paying healthcare provider using Nightingale's Electronic Medical Record.

3.   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.  Recurring Revenue is comprised of utilization fees, hosting, support and maintenance revenue, data management and transcription services, billing and financial management services and transactional fees.  Non-Recurring Revenue is comprised of revenues generated from sales of software and systems and related training, data conversion and installation services.

The following provides a reconciliation of Recurring Revenue and Non-Recurring Revenue to Revenue (dollars are in thousands):

         
  Three Months
Ended
Three Months
Ended
Six Months
Ended
Six Months
Ended
Definition September 30,
2011
September 30,
2010
September 30,
2011
September 30,
2010
Non-Recurring Revenue $        1,439,372 $        1,490,704 $   2,781,683 $   3,049,160
Recurring Revenue   2,367,359   2,723,146   4,830,248   5,566,181
               
Revenue $     3,806,731 $     4,213,850 $   7,611,931 $   8,615,341

About Nightingale
Nightingale is one of the fastest growing health care service and software companies in North America and is recognized as an industry leader in Web-based clinician and community based electronic medical records (EMR) serving the needs of small primary care practices, multi-physician outpatient clinics, and large scale regional health organizations and networks. Coupled with integrated practice management, transcription and revenue cycle management, Nightingale's comprehensive service offering allows customers to enhance patient care, increase revenue opportunities and optimize operations. Nightingale is continuously innovating and enhancing its services to meet the needs of its growing and diverse customer base. Nightingale - Healthcare connected. www.nightingalemd.com

Forward Looking Statement
This press release contains "forward-looking statements" respecting the issuance and cancellation of securities of the Company within the meaning of applicable Canadian securities legislation. Generally, forward-looking statements can be identified by the use of forward- looking terminology such as "plans", "expects" or "does not expect",  "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or state that certain actions, events or results "may" ,"could", "would", "might", "occur" or "be achieved". Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of Nightingale to be materially different from those expressed or implied by such forward-looking statements, including but not limited to: risks related to the speculative nature of the medical software industry, which is affected by numerous factors beyond Nightingale's control; the ability of Nightingale to successfully secure customer contracts and the timing of securing such contracts; the ability of Nightingale to complete and successfully integrate its acquisitions on an accretive basis, Nightingale's access to debt and capital facilities, including compliance with current debt arrangements; the existence of present and possible future government regulation; the significant competition that exists in the medical software industry; the early stage of Nightingale's business, and risks associated with early stage companies, including uncertainty of revenues, markets and profitability and the need to raise additional funding.  All material assumptions used in making forward-looking statements are based on management's knowledge of current business conditions and expectations of future business conditions and trends. Certain material factors or assumptions applied by management in making forward-looking statements, include without limitation, factors and assumptions regarding future trends in healthcare spending, economic conditions affecting Nightingale and North American economies; Nightingale's ability to continue to fund its business, rates of customer defaults, relationships with, and payments to lenders, as well as Nightingale's operating cost structure.

Although Nightingale has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. Nightingale does not undertake to update any forward-looking statements that are incorporated by reference herein, except in accordance with applicable securities laws. Further information on Nightingale Informatix Corporation is available at www.sedar.com.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS
FOR THE THREE AND SIX MONTHS ENDED SEPTEMBER 30, 2011

 
 
 
 
Three Months
Ended
September
30, 2011
Three Months
Ended
September
30, 2010
    Six Months
Ended
September
30, 2011
Six Months
Ended
September
30, 2010
                     
Revenue $   3,806,731 $ 4,213,850       $ 7,611,931  $ 8,615,341  
                     
Cost of sales   807,629   886,600       1,449,596    1,754,721
                     
Gross profit   2,999,102   3,327,250       6,162,335    6,860,620
                     
Expenses                    
General and administration   788,777   803,827       1,515,934   1,600,772
Sales and marketing   725,059   761,118       1,535,927   1,591,452
Research and development   683,971   911,621       1,630,968   1,718,999
Client services   1,026,789   1,076,008       2,041,936   1,998,532
    3,224,596   3,552,574       6,724,765   6,909,755
                     
Operating income (loss)   (225,494)   (225,324)       (562,430)   (49,135)
                     
Interest   93,202   228,589       208,132    399,380
Foreign currency gain   (3,783)   (4,202)       (12,707)    (15,190)
                     
Loss before tax   (314,913)   (449,711)       (757,855)    (433,325)
                     
Current tax expense   468   (27,593)       (5,730)    (10,520)
                     
Loss and comprehensive loss $ (315,381) $ (422,118)     $ (752,125)  $ (422,805)
                     
Basic and diluted loss per common share                    
Loss and comprehensive loss per common share $          (0.00) $           (0.01)     $           (0.01)  $           (0.01)
                     
Weighted average number of common shares   76,310,915   76,310,915       76,310,915   75,649,594
                     



CONSOLIDATED BALANCE SHEET
AS AT SEPTEMBER 30, 2011

  September 30,
2011
    March 31, 2011
             
ASSETS            
             
Current assets            
Cash and cash equivalents $       2,691,154     $       4,165,406
Accounts receivable   2,655,890       3,006,073
Other receivables   9,539       66,868
Inventory   4,199       19,882
Prepaid expenses   676,170       418,072
    6,036,952       7,676,301
             
Long-term assets            
Deferred costs   224,578       198,401
Property and equipment   439,833         573,928
Intangible assets   3,873,236       3,273,672
Goodwill   4,692,399       4,692,399
    9,230,046       8,738,400
           
Total assets $     15,266,998     $     16,414,701
             
LIABILITIES            
             
Current liabilities            
Line of credit $          675,000     $         950,000
Accounts payable and accrued liabilities        2,404,249            2,323,880
Current portion of deferred revenue   4,699,732       4,778,811
Current portion of capital lease obligations   103,658       145,437
Current portion of term loan   800,000       800,000
    8,682,639       8,998,128
             
Long term liabilities            
Term loan   386,578       767,857
Convertible debentures   1,874,468       1,820,050
Deferred revenue   2,907,671       2,731,075
Capital lease obligations   80,967       128,130
Income taxes payable   721,835       667,708
    5,971,519       6,114,820
         
 
Total liabilities   14,654,158       15,112,948
             
SHAREHOLDERS' EQUITY            
Capital stock   29,629,683       29,629,683
Contributed surplus   4,758,865       4,695,653
Equity portion of convertible debentures   269,880       269,880
Warrants   701,452       701,452
Deficit   (34,747,040)       (33,994,915)
    612,840       1,301,753
         
 
Total liabilities and shareholders' equity $    15,266,998     $    16,414,701
             



CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE THREE AND SIX MONTHS ENDED SEPTEMBER 30, 2011

  Three Months
Ended
September
30, 2011
    Three Months
Ended
September
30, 2010
    Six Months
Ended
September
30, 2011
   
  
Six Months
Ended
September
30, 2010
                             
Cash flow from operating activities                            
Loss from operations $    (315,381)     $     (422,118)     $    (752,125)     $     (422,805)
                             
Adjustments for:                            
Depreciation and amortization   311,104       419,588       631,542       838,854
Amortization of transaction costs related to debt financing   13,766       43,737       26,897       43,737
Stock based compensation   23,297       191,637       63,212       212,471
Unrealized foreign exchange (gain) loss   174,094       24       149,332       101,604
Interest accretion   23,121       16,416       46,242       16,416
    230,001       249,284       165,100       790,277
                             
Changes in non-cash working capital balances                            
  Accounts receivable   (136,626)       298,479                 284,449       (64,224)
  Prepaid expenses   (34,423)       116,010       (258,098)       (95,605)
  Inventory                13,450       3,400       15,683       7,273
  Deferred costs   (37,751)       9,197       (26,177)       9,197
  Other receivables   41,157       (42,829)       56,774       59,601
  Accounts payable and accrued liabilities   335,454       (532,310)       (27,257)       (208,468)
  Income taxes payable   57,639       (1,801)       54,127       27,225
  Deferred revenue   19,364       204,621       97,517       770,089
Cash flows provided by operating activities   488,265       304,051       362,118       1,295,365
                             
Cash flow from investing activities                            
Purchase of property and equipment   (6,324)       (13,927)       (27,168)       (69,315)
Acquisition of intangible assets   (803,296)       (222,839)       (995,065)       (479,781)
Cash flows used in investing activities   (809,620)       (236,766)       (1,022,233)       (549,096)
                             
Cash flow from financing activities                            
Proceeds  from line of credit borrowing             675,000       840,000       1,635,000       840,000
Repayment of line of credit borrowing   (960,000)       -       (1,910,000)       -
Proceeds from issuance of common shares, net of costs   -       (7,001)       -       1,243,119
Proceeds from convertible debt financing (net of costs)   -       2,017,373       -       2,017,373
Proceeds from term loan (net of costs)   -       1,887,625       -       1,887,625
Repayment of term loan   (200,000)       -       (400,000)       -
Repayment of subordinated debt financing   -       (5,284,202)       -       (5,284,202)
Repayment of capital lease obligations   (77,899)       (71,069)       (163,692)       (140,059)
Cash flows provided by (used in) financing activities   (562,899)       (617,274)       (838,692)       563,856
                             
Foreign exchange losses on cash in foreign currency   27,204       (29,125)       24,555       (80,817)
                             
Net increase (decrease) in cash   (857,050)       (579,114)
      (1,474,252)       1,229,308
Cash and cash equivalents, beginning of period   3,548,204       3,606,669       4,165,406       1,798,247
   
                       
Cash and cash equivalents, end of period $       2,691,154     $        3,027,555     $        2,691,154     $        3,027,555
                             



OVERALL PERFORMANCE, RESULTS OF OPERATIONS AND FINANCIAL CONDITION

QUARTERLY DATA

  CGAAP
(1)
    CGAAP
(1)
    CGAAP
(1)
    CGAAP
(1)
    IFRS     IFRS     IFRS     IFRS     IFRS     IFRS     IFRS
 
Q2
Ended
    Q3
Ended
    Q4
Ended
    Fiscal
Year
Ended
    Q1
Ended
    Q2
Ended
    Q3
Ended
    Q4
Ended
    Fiscal
Year
Ended
    Q1
Ended
    Q2
Ended
In $ 000's
(Except per Share Amounts)
Sept
30,
2009
    Dec
31,
2009
    March
31,
2010
    March
31,
2010
    June
30,
2010
    Sept
30,
2010
    Dec
31,
2010
    March
31,
2011
    March
31,
2011
    June
30,
2011
    Sept
30,
2011
                                                                                     
Recurring Revenue $ 3,341     $ 3,342     $ 2,849     $ 13,096     $ 2,843     $ 2,723     $ 2,661     $ 2,452     $ 10,679     $ 2,463     $ 2,367
                                                                                     
Non-Recurring Revenue   585       1,010       1,324       3,485       1,559       1,491       1,744       1,901       6,695       1,342       1,439
                                                                                     
Revenue   3,926       4,352       4,173       16,581       4,402       4,214       4,405       4,353       17,374       3,805       3,807
                                                                                     
Gross Profit   2,818       3,314       3,169       12,238       3,533       3,327       3,565       3,737       14,162       3,163       2,999
                                                                                     
Expenses   3,327       3,384       3,474       13,693       3,357       3,553       3,686       3,870       14,466       3,500       3,225
                                                                                     
EBITDA (Loss)
(non-GAAP measure)
  180       593       406       1,203       616       386       404       445       1,851       23       109
                                                                                     
Operating Income
(Loss) for the Period
  (509)       (70)       (306)       (1,455)       176       (225)       (121)       (135)       (304)       (337)       (225)
                                                                                     
Loss and
Comprehensive Loss
  (727)       (350)       (1,524)       (3,444)       -       (422)       (245)       (205)       (874)       (437)       (315)
                                                                                     
Loss and
Comprehensive Loss
per Common Share
$ (0.01)     $ (0.00)     $ (0.02)     $ (0.05)     $ (0.00)     $ (0.01)     $ (0.00)     $ (0.00)     $ (0.01)     $ (0.00)     $ (0.00)
                                                                                     
Weighted Avg. #
of Common Shares
  70,535       70,535       70,535       70,232       72,809       76,311       76,311       76,311       75,979       76,311       76,311
                                                                                     
Total Assets $ 15,170     $ 14,714     $ 14,651     $ 14,651     $ 16,873     $ 15,744     $ 15,218     $ 16,415     $ 16,415     $ 15,521     $ 15,267
                                                                                     
Total Long-Term
Liabilities
$ 6,558     $ 7,062     $ 7,918     $ 7,918     $ 1,979     $ 5,185     $ 5,337     $ 6,115     $ 6,115     $ 5,819     $ 5,972
                                                                                     
Total Deferred
Revenue
$ 5,033     $ 4,928     $ 5,239     $ 5,239     $ 5,805     $ 6,010     $ 6,788     $ 7,510     $ 7,510     $ 7,588     $ 7,607

(1) Financial information in this table for periods prior to April 1, 2010 have not been restated for changes in accounting policies on adoption of IFRS. Refer to the Company's MD&A filed on SEDAR at www.sedar.com for a discussion of IFRS and its impact on the Company's financial statements.

 

SOURCE Nightingale Informatix Corporation

For further information:

Michael Ford, CFO
Nightingale Informatix Corporation
Tel: 905-307-7870
mford@nightingalemd.com
Kristen Dickson, Account Executive
The Equicom Group
Tel: 416-815-0700 ext. 273
kdickson@equicomgroup.com

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Nightingale Informatix Corporation

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