LMS Third Quarter 2008 Financial Results - Q3 Revenue Increases 88% to $1.0 Million - YTD Revenue Increases 87% to $2.6 Million

    MONTREAL, Feb. 12 /CNW Telbec/ - LMS Medical Systems
(TSX: LMZ, AMEX:   LMZ), a healthcare technology company and developer of the
CALM(R)clinical information system and risk management software tools for
obstetrics, today reported its unaudited financial results for the third
quarter ended December 31, 2007. All amounts are in Canadian dollars.
    On the strength of new installations and growing recurring maintenance
and technical service revenues, our comparative quarterly revenues for Q3 2008
grew 88% to $952,000 from $506,000 in Q3 2007. As a result of the growth in
our installed client base, our recurring maintenance and service revenues
increased by 46% to $1,058,000 from $726,000 for the comparative nine-month
period. For the third quarter, these revenues increased 70% to $355,000 from
    Following the implementation of a program to streamline operations during
Q3 2008, operating expenses were reduced by $906,000 for the third quarter of
fiscal 2008, from $2,991,000 for Q3 2007 to $2,085,000 for Q3 2008, and by
$1,389,000 for year-to-date, from $8,768,000 for the nine months ended
December 31, 2006 to $7,379,000 for the nine months ended December 31, 2007.
The reduction for Q3 2008 is explained mainly by a decrease in research and
development expenses of $405,000, lower selling marketing product management
expenses of $193,000 and lower administrative expenses of $272,000. Included
in operating expenses are non-cash, stock-based compensation expenses of
$305,000 for Q3 2008 and $870,000 on a year-to-date basis.
    The combination of the increase in revenues of $446,000 and lower overall
expenses of $906,000 reduced the comparative operating loss by $1,297,000 from
$2,563,000 ($0.14 per share) in Q3 2007 to $1,266,000 ($0.06 per share) in
Q3 2008, and decreased the cash used in operating activities before net
changes in non-operating working capital items by $1,211,000 to $935,000 for
Q3 2008 compared to $2,146,000 for Q3 2007.
    Cash, cash equivalents and short-term investments held to maturity, as at
December 31, 2007 totaled $0.5 million compared to $3.38 million as at
March 31, 2007. In addition, under our contract with a distributor, LMS is
entitled to receive amounts for contracts contained in our backlog, described
below. As at December 31, 2007, this amount, which does not qualify as a
receivable under generally accepted accounting principles, amounted to
$0.6 million and will provide short term additional liquidity. As such, the
total cash, cash equivalents, short term investments and accounts receivable,
including this amount, amounted to $1.8 million as at December 31, 2007.


    - In conjunction with a seasonally stronger spring quarter (Q4) and
      corporate streamlining of operations, we anticipate reaching a cash
       flow break even for the last quarter of the current fiscal year.

    - Both the backlog of signed contracts and identified sales opportunities
      were maintained at $4.6 million and $25 million, respectively.

    - In total, we added six new hospitals to our client base as well as four
      insurance contracts during the third quarter of fiscal 2008.

    - We implemented a program to streamline operations, thus substantially
      reducing LMS expenses with the objective of reaching near term positive
      cash flow and ensuring profitability. There are reductions in
      consulting expenses and salaries in research and development and other
      non core expenditures. All operational, sales and core development
      activities have been maintained. Also, management has demonstrated its
      commitment to the future of LMS by making a collective decision to
      temporarily suspend a portion of salaried compensation for the balance
      of fiscal 2008. Upon meeting certain milestones, the board of directors
      will have an option to pay the suspended salaries in the form of LMS
      common shares or a cash payment, subsequent to the year end, including
      a 25% premium. There have been only minimal cash restructuring costs
      related to the implementation of this plan.

    LMS complete results for the quarter ended December 31, 2007 along with
Management's Discussion and Analysis will be released in normal course on or
about February 12th and will be available in Canada at www.sedar.com, in the
United States at www.sec.gov and at www.lmsmedical.com.


    LMS is a leader in the application of advanced mathematical modeling and
neural networks for medical use. The LMS CALM(TM) Suite provides physicians,
nursing staff, risk managers and hospital administrators with clinical
information systems and risk management tools designed to improve outcomes and
patient care for mothers and their infants during childbirth.

    Except for historical information contained herein, the matters discussed
in this news release are forward-looking statements. Because these
forward-looking statements involve risks and uncertainties, there are
important factors that could cause actual results to differ materially from
those expressed implied by the forward-looking statements including, but
without limitation, economic conditions in general and in the healthcare
market, the demand for and market for our products in domestic and
international markets, our current dependence on the CALM product suite, the
challenges associated with developing new products and obtaining regulatory
approvals if necessary, research and development activities, the uncertainty
of acceptance of our products by the medical community, the lengthy sales
cycle for our products, third party reimbursement, competition in our markets,
including the potential introduction of competitive products by others, our
dependence on our distributors, physician training, enforceability and the
costs of enforcement of our patents, potential infringements of our patents
and the other factors set forth from time to time in the Company's filings
with the United States Securities and Exchange Commission and with the
Canadian Securities Commissions. The Company has no intention of or obligation
to update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise.

For further information:

For further information: Yves Grou, Chief Financial Officer, LMS Medical
Systems Inc., (514) 488-3461 Ext. 238, Fax: (514) 488-1880,
yves.grou@lmsmedical.com, www.lmsmedical.com

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