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Press release from CNW Group

Nightingale Delivers Continued Year-Over-Year Growth in Fiscal 2013 Second Quarter

Wednesday, November 14, 2012

Nightingale Delivers Continued Year-Over-Year Growth in Fiscal 2013 Second Quarter07:00 EST Wednesday, November 14, 2012Company reports 33% year-over-year revenue growth and record profitability for the quarterMARKHAM, ON, Nov. 14, 2012 /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 second quarter ("Q2 F2013") and six months ended ("YTD F2013") September 30, 2012.Q2 Fiscal 2013 Financial and Operational SummaryRevenue was $5.1 million, up 33% compared to $3.8 million in Q2 F2012, primarily reflecting an increase in revenue from the Company's software business.Total software revenue (EMR and Practice Management) was $5.0 million, up 48% from $3.4 million in Q2 F2012.Gross profit was $4.6 million, or 90% of revenue, compared to $3.0 million, or 78% of revenue, in Q2 F2012.Operating Expenses, excluding stock based compensation, depreciation and amortization were $3.6 million compared to $2.9 million in Q2 F2012.Adjusted EBITDA1 was $1.0 million, or 19% of revenue, up from $0.1 million, or 2% of revenue, in Q2 F2012.Net income was $0.6 million compared to a net loss of $0.4 million in Q2 F2012.Cash provided by operations was $0.2 million compared to $0.5 million in Q2 F2012.Completed a non-brokered, private placement of $2.75 million aggregate principal amount of 12% Series B unsecured subordinated convertible debentures for gross proceeds of $2.75 million.Fiscal 2013 YTD Financial SummaryRevenue was $10.6 million, up 40% compared to $7.6 million for the same period in F2012, primarily reflecting an increase in revenue from the Company's software business.Total software revenue (EMR and Practice Management) was $10.5 million, up 56% from $6.7 million in for the same period in F2012.Gross profit was $9.5 million, or 89% of revenue, compared to $6.1 million, or 81% of revenue, for the same period in F2012.Operating Expenses, excluding stock based compensation, depreciation and amortization were $7.7 million compared to $6.0 million for the same period in F2012.Adjusted EBITDA1 was $1.9 million, or 18% of revenue, up from $0.1 million, or 2% of revenue, for the same period in F2012.Net income was $0.9 million compared to a net loss of $0.8 million for the same period in F2012.Cash used in operations was $0.3 million compared to cash generated by operations of $0.4 million for the same period in F2012."Reflecting further expansion of our EMR user base, we delivered continued year-over-year growth in our key financial metrics," said Sam Chebib, President and CEO of Nightingale. "Revenue was up 33%, we recorded our 15th consecutive quarter of positive EBITDA and we generated record earnings. We are on-track with our major AOHC EMR deployment, we are building a particularly strong enterprise sales pipeline and we continue to win new business with small and medium-sized clinics. As a result, despite quarter-to-quarter fluctuations due to the varying mix between recurring and non-recurring revenue, we expect continued year-over-year revenue growth and a stronger second half of fiscal 2013."Fiscal 2013 Second Quarter and Six Months Financial ReviewThe Company's results are prepared in accordance with International Financial Reporting Standards (IFRS) and in Canadian dollars unless otherwise stated.Revenue for Q2 F2013 was $5.1 million, an increase of $1.3 million, or 33%, from $3.8 million for Q2 F2012. The year-over-year improvement reflects a $1.6 million increase in revenue from the Company's software business, which grew to $5.0 million in Q2 F2013 primarily as a result of the Company's major contract win in Q3 F2012. YTD F2013 revenue was $10.6 million, up $3.0 million, or 40%, from $7.6 million for the same period in F2012.Recurring revenue2 for Q2 F2013 was $2.7 million (53% of revenue), an increase of $0.3 million, or 13%, from $2.4 million (62% of revenue) in Q2 F2012, predominantly as a result of the Company's acquisition of the Medrium practice management business in Q3 F2012. YTD F2013 recurring revenue was $5.4 million, an increase of $0.5 million, or 11%, from $4.8 million in YTD F2012.Non-recurring revenue2 for Q2 F2013 was $2.4 million, an increase of $1.0 million, or 67%, from $1.4 million for Q2 F2012, primarily as a result of the Company's major contract win. YTD F2013 non-recurring revenue was $5.3 million, an increase of $2.5 million, or 89%, from $2.8 million for the same period in F2012.For Q2 F2013, gross margin was 90% ($4.6 million gross profit) compared to 78% ($3.0 million gross profit) for Q2 F2012. The year-over-year increase was a function of product mix, as the Company has moved away from providing lower margin healthcare services to increasingly focus on being a leading technology provider. YTD F2013 gross margin was 89% ($9.5 million gross profit) compared to $81% ($6.1 million gross profit) for the same period in F2012.Q2 F2013 operating expenses excluding charges for stock based compensation, depreciation and amortization increased 25% to $3.6 million (71% of revenue) compared to operating expenses of $2.9 million (76% of revenue) for Q2 F2012, reflecting the Company's increased investments in the growth areas of the business. However, operating expenses excluding charges for stock based compensation, depreciation and amortization were down 11% sequentially from $4.1 million in Q1 F2013 due to a decrease in sales and marketing wages and related program costs. YTD F2013 operating expenses excluding charges for stock based compensation, depreciation and amortization increased $1.7 million, or 27%, to $7.7 million compared to operating expense of $6.0 million for the same period in F2012.For Q2 F2013, Adjusted EBITDA was $1.0 million (19% of revenue), compared to $0.1 million (2% of revenue) in Q2 F2012. YTD F2013 Adjusted EBITDA was $1.9 million (18% of revenue), compared to $0.1 million (2% of revenue) for the same period in F2012.For Q2 F2013, net income was a quarterly record of $0.6 million compared to a net loss of $0.4 million for Q2 F2012. YTD net income was $0.9 million compared to a net loss of $0.8 million for the same period in F2012.Cash and cash equivalents were $2.6 million at September 30, 2012, down from $3.2 million at March 31, 2012, primarily as a result of the Company's increased investments in its long-term strategic growth initiatives.At September 30, 2012, 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 14, 2012.  This press release should be read in conjunction with Nightingale's Consolidated Financial Statements and the accompanying Management Discussion and Analysis for the quarter and six months ended September 30, 2012.Notice of Conference Call Nightingale will host a conference call on Wednesday, November 14, 2012, 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 59125046 prior to the beginning of the call to ensure participation. The conference call will be archived for replay until Wednesday, November 21, 2012. To access the archived conference call, dial 416-849-0833 or 1-855-859-2056 and enter reference 59125046#. To listen to the conference call replay on the internet please visit the Nightingale website shortly after the call at www.nightingalemd.com.Non-IFRS Financial MeasuresThe Company internally measures its performance and results of initiatives through a number of measures that are not recognized under IFRS and may not be comparable to similar measures used by other companies.1.Adjusted EBITDAAdjusted EBITDA is a non-IFRS measure that management believes is a useful measurement to evaluate the performance of the Company. Investors should be cautioned, however, that Adjusted EBITDA should not be construed as an alternative to net earnings as determined in accordance with IFRS. The Company's method of calculating Adjusted EBITDA may differ from the methods used by other companies and, accordingly, it may not be comparable to similarly titled measures used by other companies.Adjusted EBITDA is defined as earnings before other loss (income), interest, income taxes, depreciation, amortization, stock-based compensation, and business acquisition, integration and other costs.Management believes it is useful to exclude these items as they are either non-cash expenses, items that cannot be influenced by management in the short term, or items that do not impact core operating performance, and Management uses this information internally for forecasting and budgeting purposes.The following provides a reconciliation of Adjusted EBITDA to Loss and Comprehensive Loss:             Definition Three MonthsEndedSeptember 30,2012 Three Months EndedSeptember 30,2011 Six MonthsEndedSeptember 30,2012 Six MonthsEndedSeptember 30,2011             Income (Loss) and Comprehensive Income (Loss) $  623,654 $(353,132) $873,291 $(778,302)             Adjustments for:                         Current Tax Expense (Recovery) $  (85,130) $468 $(71,650) $(5,730)Other Loss (Income)  (92,875)  (3,783)  (24,704)  (12,707)Interest  83,689  93,202  176,903  208,132Depreciation and Amortization  397,018  311,103  771,895  631,540Stock-Based Compensation  35,380  23,297  101,803  63,212Acquisition, Integration and Other  -  21,631  49,971  21,631             Adjusted EBITDA $961,736 $92,786 $1,877,509 $127,7762. Recurring and Non-Recurring RevenueThe 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 IFRS.  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 perpetual software and systems licenses and related training, data conversion and installation services.The following provides a reconciliation of Recurring Revenue and Non-Recurring Revenue to Revenue:                 Definition    Three MonthsEndedSeptember 30,2012    Three MonthsEndedSeptember 30,2011    Six MonthsEndedSeptember 30,2012    Six MonthsEndedSeptember 30,2011Non-Recurring Revenue  $2,403,405  $1,439,372  $5,259,793  $2,781,682                 Recurring Revenue   2,664,878   2,367,359   5,369,607   4,830,249                 Revenue  $5,068,283  $3,806,731   $10,629,400  $6,136,158About NightingaleNightingale 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.comForward Looking StatementThis 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.CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME AND LOSSFOR THE THREE AND SIX MONTHS ENDED SEPTEMBER 30, 2012Unaudited (Canadian Dollars)                    Three MonthsEnded  Three MonthsEnded  Six MonthsEnded  Six MonthsEnded   September 30, 2012     September 30, 2011    September 30, 2012    September 30,2011                 Revenue  $5,068,283  $3,806,731  $10,629,400  $7,611,931                 Cost of sales         498,448         845,380   1,119,119   1,475,773                 Gross profit       4,569,835       2,961,351   9,510,281   6,136,158                 Expenses                General and administration   853,599   785,827   1,718,101   1,512,983Sales and marketing   787,761   706,378   1,844,136   1,517,246Research and development   1,363,825   683,971   2,886,431   1,630,968Client services   1,035,312   1,026,789   2,057,802   2,041,937Business acquisition, integration and other   -   21,631   49,971   21,631    4,040,497   3,224,596   8,556,441   6,724,765                 Operating income (loss)   529,338   (263,245)   953,840   (588,607)                 Interest   83,689   93,202   176,903   208,132Foreign currency gain   (92,875)   (3,783)   (24,704)   (12,707)                 Income (loss) before tax   538,524   (352,664)   801,641   (784,032)Current tax expense (recovery)   (85,130)   468   (71,650)   (5,730)                 Comprehensive income (loss)  $623,654  $ (353,132)  $873,291  $(778,302)                 Income (loss) and comprehensive income (loss) per common share - Basic and Diluted  $0.01  $(0.00)  $0.01  $(0.01)                 Weighted Average Common Shares                 Basic   76,310,915   76,310,915   76,310,915   76,310,915 Diluted   90,085,652   76,310,915   90,092,882   76,310,915                        CONDENSED CONSOLIDATED BALANCE SHEET AS AT SEPTEMBER 30, 2012Unaudited (Canadian Dollars)          September 30, 2012  March 31, 2012         ASSETS                 Current assets        Cash and cash equivalents  $2,649,916  $3,199,058Accounts receivable   3,747,993   2,267,854Other receivables   88,906   103,513Prepaid expenses   536,580   581,593    7,023,395   6,152,018         Long-term assets        Property and equipment   1,014,372   450,989Intangible assets   6,930,906   5,808,744Goodwill   4,792,399   4,792,399    12,737,677   11,052,132         Total assets  $19,761,072  $17,204,150         LIABILITIES                 Current liabilities        Line of credit  $560,000  $670,000Accounts payable and accrued liabilities   3,461,051   3,351,187Current portion of deferred revenue          4,170,901          4,689,175Current portion of finance lease obligations             85,198             122,710Current portion of term loan   860,300   872,813Current portion of convertible debenture   841,000   -           9,978,450   9,705,885         Long term liabilities        Term loan   1,825,808   2,287,608Convertible debentures   3,287,750   1,802,256Deferred revenue          2,434,018          2,619,448Finance lease obligations             51,721             37,345Non-current portion of landlord inducement   144,822   -Income taxes payable   677,074   686,921    8,421,193   7,433,578         Total liabilities       18,399,643       17,139,463         SHAREHOLDERS' EQUITY         Capital stock   29,629,683       29,629,683Contributed surplus         5,527,029         4,811,456Equity portion of convertible debentures   743,138   333,808Warrants            -            701,452Deficit   (34,538,421)   (35,411,712)    1,361,429             64,687         Total liabilities and shareholders' equity  $  19,761,072  $17,204,150                      CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWSFOR THE THREE AND SIX MONTHS ENDED SEPTEMBER 30, 2012Unaudited (Canadian Dollars)                Three months  Three months  Six months    Six months   Ended  Ended  Ended  Ended   Sept 30, 2012  Sept 30, 2011  Sept 30, 2012    Sept 30, 2011                 Cash flow from operating activities                Income (Loss) from operations  $623,654  $(353,132)  $873,291  $(778,302)                 Adjustments for:                Depreciation and amortization   397,019   311,104   771,895   631,542Charge to bad debt expense   5,315       20,641    Amortization of transaction costs related to debt financing          17,766          13,766   29,361   26,897Tax recovery on warrant expiry   (87,682)   -   (87,682)   -Stock based compensation          35,380          23,297   101,803   63,212Unrealized foreign exchange (gain) loss          (146,146)          174,094   (79,175)   149,332Interest accretion          20,323          23,121   43,444   46,242           865,629          192,250   1,673,578   138,923                 Changes in non-cash working capital balances                Accounts receivable   203,804          (136,626)   (1,510,836)   284,449Prepaid expenses          139,134          (34,423)   45,013   (258,098)Inventory          -          13,450   -   15,683Other receivables   (447)          41,157   13,179   56,774Accounts payable and accrued liabilities          (93,764)          335,454   161,465   (27,257)Income taxes payable   (24,033)   57,639   (9,847)   54,127Deferred revenue          (873,934)          19,364   (703,704)   97,517Cash flows provided by (used in) operating activities   216,389   488,265    (331,152)   362,118                 Cash flow from investing activities                Purchase of property and equipment   (355,620)   (6,324)   (695,023)   (27,168)Capitalized development costs          (967,452)          (803,296)   (1,732,850)   (995,065)Cash flows used in investing activities         (1,323,072)         (809,620)   (2,427,873)   (1,022,233)                 Cash flow from financing activities                Proceeds from line of credit borrowing                 504,000   675,000     504,000   1,635,000Repayment of line of credit borrowing   (614,000)   (960,000)   (614,000)   (1,910,000)Proceeds from convertible debt financing, net of costs   2,689,967   -   2,689,967   -Proceeds from landlord inducement   -   -   120,000   -Repayment of term loan          (223,788)          (200,000)   (442,537)   (400,000)Repayment of finance lease obligations       (25,473)          (77,899)   (52,703)   (163,692)Cash flows provided by (used in) financing activities   2,330,706   (562,899)   2,204,727   (838,692)                 Foreign exchange gains on cash in foreign currency         3,763         27,204   5,156   24,555                 Net increase (decrease) in cash          1,227,786          (857,050)   (549,142)        (1,474,252)Cash and cash equivalents, beginning of period          1,422,130          3,548,204             3,199,058   4,165,406                 Cash and cash equivalents, end of period  $2,649,916  $2,691,154  $2,649,916  $2,691,154                       OVERALL PERFORMANCE, RESULTS OF OPERATIONS AND FINANCIAL CONDITION                         Q2Ended Q3Ended Q4Ended FiscalYear Ended Q1Ended Q2Ended Q3Ended Q4Ended Fiscal Year Ended Q1Ended Q2Ended In $ 000's(Except per Share Amounts) Sept 30, 2010 Dec 31,2010 March 31,2011  March 31, 2011 June 30,2011  Sept 30,2011  Dec 31, 2011  March 31,2012  March 31, 2012 June 30,2012 Sept 30,2012 Recurring Revenue $2,723 $2,661 $2,452 $10,679 $2,463 $2,367 $2,473 $2,889 $10,192 $ 2,705 $ 2,665                       Non-Recurring Revenue 1,491 1,744 1,901 6,695 1,342 1,439 2,620 2,486 7,888 2,856 2,403                       Revenue 4,214 4,405 4,353 17,374 3,805 3,807 5,093 5,376 18,080 5,561 5,068                       Software business revenue 3,576 3,697 3,879 14,780 3,382 3,382 4,679 5,017 16,422 5,480 4,993                       Gross Profit 3,336 3,502 3,675 14,047 3,175 2,961 4,384 4,509 15,030 4,940 4,570                       Operating Expenses 3,553 3,686 3,870 14,466 3,500 3,225 4,369 4,804 15,897 4,516 4,040                       EBITDA  (non-IFRS measure) 395 340 384 1,736 35 93 917 231 1,330 916 962                       Operating Income (Loss) for the Period (216) (184) (195) (419) (325) (263) 16 (295) (868) 425 529                       Income (Loss) and Comprehensive Income (Loss) (413) (309) (266) (989) (425) (353) (155) (285) (1,218) 250 624                       Income (Loss) and Comprehensive Income (Loss) per Common Share - Basic and Diluted $(0.01) $(0.00) $(0.00) $(0.01) $(0.00) $(0.00) $(0.00) $(0.01) $(0.02) $0.00 $0.01                       Weighted Avg. # of Common Shares - Basic 76,311 76,311 76,311 75,979 76,311 76,311 76,311 76,311 76,311 76,311 76,311                       Weighted Avg. # of Common Shares - Diluted 76,311 76,311 76,311 75,979 76,311 76,311 76,311 76,311 76,311 82,360 90,086                       Total Assets $15,669 $15,080 $16,216 $16,216 $15,334 $15,042 $17,794 $17,204 $17,204 $17,962 $19,761                       Total Long-Term Liabilities $5,185 $5,337 $6,115 $6,115 $5,819 $5,972 $8,102 $7,434 $7,434 $7,244 $8,421                       Total Deferred Revenue $6,010 $6,788 $7,510 $7,510 $7,588 $7,607 $7,797 $7,309 $7,309 $7,479 $6,605  SOURCE: Nightingale Informatix CorporationFor further information: Michael Ford, CFO Nightingale Informatix Corporation Tel: 905-307-7870 mford@nightingalemd.com  Kristen Dickson, Senior Account Executive TMX Equicom Tel: 416-815-0700 ext. 273 kdickson@equicomgroup.com