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

Company reports 33% year-over-year revenue growth and record profitability for the quarter

MARKHAM, 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 Summary

• Revenue 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 Summary

• Revenue 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 Review
The 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 [phone] (or [phone] 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 Measures
The 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 EBITDA

Adjusted 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 Months Ended September 30, 2012			Three Months Ended September 30, 2011			Six Months Ended September 30, 2012			Six Months Ended September 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			208,132
Depreciation and Amortization			397,018			311,103			771,895			631,540
Stock-Based Compensation			35,380			23,297			101,803			63,212
Acquisition, Integration and Other			-			21,631			49,971			21,631
Adjusted EBITDA		$	961,736		$	92,786		$	1,877,509		$	127,776

2. 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 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 Months Ended September 30, 2012				Three Months Ended September 30, 2011				Six Months Ended September 30, 2012				Six Months Ended September 30, 2011
Non-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			$	6,136,158

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.

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME AND LOSS
FOR THE THREE AND SIX MONTHS ENDED SEPTEMBER 30, 2012
Unaudited (Canadian Dollars)
				Three Months Ended				Three Months Ended					Six Months Ended							Six Months Ended
				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							1,512,983
Sales and marketing					787,761				706,378					1,844,136							1,517,246
Research and development					1,363,825				683,971					2,886,431							1,630,968
Client services					1,035,312				1,026,789					2,057,802							2,041,937
Business 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							208,132
Foreign 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, 2012
Unaudited (Canadian Dollars)
			September 30, 2012				March 31, 2012
ASSETS
Current assets
Cash and cash equivalents			$	2,649,916			$	3,199,058
Accounts receivable				3,747,993				2,267,854
Other receivables				88,906				103,513
Prepaid expenses				536,580				581,593
				7,023,395				6,152,018
Long-term assets
Property and equipment				1,014,372				450,989
Intangible assets				6,930,906				5,808,744
Goodwill				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			$	670,000
Accounts payable and accrued liabilities				3,461,051				3,351,187
Current portion of deferred revenue				4,170,901				4,689,175
Current portion of finance lease obligations				85,198				122,710
Current portion of term loan				860,300				872,813
Current portion of convertible debenture				841,000				-
				9,978,450				9,705,885
Long term liabilities
Term loan				1,825,808				2,287,608
Convertible debentures				3,287,750				1,802,256
Deferred revenue				2,434,018				2,619,448
Finance lease obligations				51,721				37,345
Non-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				29,629,683
Contributed surplus				5,527,029				4,811,456
Equity portion of convertible debentures				743,138				333,808
Warrants				-				701,452
Deficit				(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 FLOWS
FOR THE THREE AND SIX MONTHS ENDED SEPTEMBER 30, 2012
Unaudited (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					631,542
Charge to bad debt expense				5,315										20,641
Amortization of transaction costs related to debt financing				17,766					13,766					29,361					26,897
Tax recovery on warrant expiry				(87,682)					-					(87,682)					-
Stock based compensation				35,380					23,297					101,803					63,212
Unrealized foreign exchange (gain) loss				(146,146)					174,094					(79,175)					149,332
Interest 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)					284,449
Prepaid expenses				139,134					(34,423)					45,013					(258,098)
Inventory				-					13,450					-					15,683
Other receivables				(447)					41,157					13,179					56,774
Accounts payable and accrued liabilities				(93,764)					335,454					161,465					(27,257)
Income taxes payable				(24,033)					57,639					(9,847)					54,127
Deferred revenue				(873,934)					19,364					(703,704)					97,517
Cash 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					1,635,000
Repayment 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
		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, 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 Corporation

Michael Ford, CFO
Nightingale Informatix Corporation
Tel: [phone]
[email protected] 

Kristen Dickson, Senior Account Executive
TMX Equicom
Tel: [phone] ext. 273
[email protected]