Nightingale Reports First Quarter Fiscal 2015 Results

MARKHAM, ON, Aug. 27, 2014 /CNW/ - Nightingale Informatix Corporation ("Nightingale" or the "Company") (TSX-V: NGH), an application service provider (ASP) of electronic health record (EHR) software and related services, announces its financial results for the quarter ended June 30, 2014.

Q1 Fiscal 2015 Financial and Operational Summary

• Revenue was $3.7 million, down 1% compared to $3.8 million in Q1 F2014, and down 7% from $4.0 million in Q4 F2014. The variance from F2014 primarily reflects a decrease in non-recurring revenues which was partially offset by a 9% increase in recurring revenues.
• Gross profit was $3.3 million, or 88% of revenue, compared to $3.3 million, or 89% of revenue, in Q1 F2014 and $3.6 million, or 90% of revenue, in Q4 F2014.
• Operating Expenses, excluding stock based compensation, depreciation and amortization costs were $2.9 million compared to $3.2 million in Q1 F2014 and $3.2 million in Q4 F2014.
• Adjusted EBITDA¹ was $0.3 million, 9% of revenue, an increase of 19% from $0.1 million, or 3% of revenue, in Q1 F2014 and down from $0.4 million or 10% of revenue, in Q4 F2014.
• Net loss was $0.1 million compared to a net loss of $0.8 million in Q1 F2014 and net loss of $0.6 million in Q4 F2014.
• Cash provided by operations was $1.6 million compared to cash provided by operations of $0.2 million in Q1 F2014.
• Total deferred revenue was $5.5 million up from $4.8 million at March 31, 2014.
• In May 2014, the Company announced the promotion of Jamie Cappelli to Executive Vice President of Operations and in July 2014, the Company announced the appointment of Ray Payette as Chief Technology Officer. 
• In July 2014, unveiled its next generation cloud-based EHR – Nightingale EHR (Nexia).
• In August 2014, the Company announced a commitment for an investment of $3.5 million in the form of a subordinated term loan to fund the sales and marketing programs to capitalize on its next generation product Nexia.

"We are at the tail-end of our transition phase. Nexia, our next generation product, has started to attract the attention of buying organizations and we are very encouraged by the rate of growth of our pipeline," said Sam Chebib, President and CEO. "We have started to shift our investment from product development towards sales and marketing, the result of which will start to become evident in the next few financial periods."

Fiscal 2015 First Quarter 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 Q1 F2015 was $3.7 million, a decrease of $76,966 from $3.8 million for Q1 F2014.  This decrease was primarily due to a decrease in non-recurring revenues which was partially offset by a 9% increase in recurring revenues.

Recurring Revenue² for Q1 F2015 was $2.8 million (77% of revenue), an increase of $0.2 million, or 9%, from $2.6 million (69% of revenue) in Q1 F2014.  The increase in Recurring Revenue in Q1 was primarily the result of an increase in revenues from the Company's Nightingale On Demand and NightingaleEHR (Nexia) products.

For Q1 F2015, gross margin was 88% ($3.3 million gross profit) compared to 89% ($3.3 million gross profit) for Q1 F2014. 

Operating expenses for Q1 F2015 decreased 7% to $2.9 million (79% of revenue), excluding charges for stock based compensation and depreciation and amortization, compared to operating expenses of $3.2 million (85% of revenue), excluding charges for stock based compensation and depreciation and amortization, for Q1 F2014.

For Q1 F2015, Adjusted EBITDA was $0.3 million (9% of revenue), compared to $0.1 million (3% of revenue) in Q1 F2014.  

The impact of fluctuations in the rate of exchange between the US Dollar and Canadian Dollar on Q1 F2015 EBITDA were negligible.  The $0.1 million gain from foreign currency in Q1 F2015 is predominantly the result of the re-measurement of the Company's term loans (denominated in US Dollars) into Canadian Dollars.

Included in net loss for Q1 F2015 is a financial gain of $0.03 million.  The financial gain is related to the change in valuation of a derivative asset that is embedded in the Company's Series B convertible debentures.    

For Q1 F2015, net loss was $61,732 compared to a net loss of $0.8 million in Q1 F2014.

Cash and cash equivalents on June 30, 2014 were $0.2 million, a decrease of $0.4 million, or 71%, from March 31, 2014.

At June 30, 2014, total common shares issued and outstanding were 94,758,915.

The financial statements and MD&A will be available at www.nightingalemd.com and filed on www.sedar.com on August 27, 2014.  This press release should be read in conjunction with Nightingale's Consolidated Financial Statements and the accompanying Management Discussion and Analysis for the year ended March 31, 2014.

Notice of Conference Call
Nightingale will host a conference call on Thursday, August 28, 2014 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 93452990 prior to the beginning of the call to ensure participation. The conference call will be archived for replay until Thursday, September 4, 2014. To access the archived conference call, dial [phone] or [phone] and enter reference 93452990#. 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: 

						Quarter Ended
						June 30, 2014		June 30, 2013
						$		$
Loss and Comprehensive Loss						(61,732)		(779,629)
Adjustments for
	Current Tax Expense					12,508		2,183
	Other Income (Loss)					(92,048)		308,561
	Interest					94,368		187,758
	Depreciation and Amortization					385,610		380,886
	Stock-Based Compensation					20,523		29,493
	Other financing (gain) loss					(29,483)		1,633
Adjusted EBITDA						329,746		130,885

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 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:

							Quarter Ended
							June 30, 2014		June 30, 2013
							$		$
Non-Recurring Revenue							860,687		1,166,784
Recurring Revenue							2,831,528		2,602,397
							3,692,215		3,769,181

About Nightingale
For more than a decade, Nightingale (TSX-V: NGH) has been delivering innovative cloud-based Electronic Health Record (EHR) and Practice Management solutions to healthcare organizations across the United States and Canada. Our goal is to uncomplicate the day-to-day challenges of healthcare providers. We achieve this by creating software that is truly intuitive—minimizing training and maximizing adoption. We believe so strongly in building easy-to-use software that we structured our entire product team around user-centric design. Our clients are benefiting from this focus through a well-supported and robust solution that presents a holistic view of a person's well-being in a simple, clean interface, so that the best health decisions can be made. Nightingale – One Patient. One Record. 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
Unaudited (Canadian Dollars)

					Quarter Ended		Quarter Ended
					June 30, 2014		June 30, 2013
					$		$
Revenue					3,692,215		3,769,181
Cost of sales					438,229		430,820
Gross profit					3,253,986		3,338,361
Expenses
	General and administration				785,700		793,193
	Sales and marketing				613,287		658,037
	Research and development				752,453		1,045,510
	Client services				1,178,933		1,121,115
					3,330,373		3,617,855
Operating loss					(76,387)		(279,494)
	Interest				94,368		187,758
	Other finance (gain) loss				(29,483)		1,633
	Foreign currency (gain) loss				(92,048)		308,561
Loss before tax					(49,224)		(777,446)
Current tax expense					12,508		2,183
Loss and comprehensive loss					(61,732)		(779,629)
Basic and diluted loss per share
	Basic and diluted loss per share				$                   (0.00)		$                   (0.01)
	Weighted number of common shares - basic and diluted				94,758,915		76,310,915

CONDENSED CONSOLIDATED BALANCE SHEET
Unaudited (Canadian Dollars)

					June 30, 2014		March 31, 2014
					$		$
ASSETS
Current assets
	Cash and cash equivalents				152,655		532,038
	Accounts receivable and unbilled accounts receivable				4,871,426		5,016,958
	Other receivables				294,934		82,958
	Prepaid expenses				412,184		289,379
					5,731,199		5,921,333
Long-term assets
	Unbilled accounts receivable				397,142		415,124
	Financial derivative asset				179,214		149,731
	Property and equipment				1,208,961		1,225,676
	Intangible assets				11,979,446		11,153,240
	Goodwill				4,792,399		4,792,399
Total assets					24,288,361		23,657,503
LIABILITIES
Current liabilities
	Line of credit				1,000,000		1,000,000
	Accounts payable and accrued liabilities				5,558,444		5,122,303
	Current portion of deferred revenue				4,305,098		3,791,558
	Current portion of finance lease obligations				106,125		104,731
	Current portion of term loan				1,573,877		1,634,461
					12,543,544		11,653,053
Long-term liabilities
	Term loan				958,400		1,403,557
	Convertible debentures				5,064,986		5,015,180
	Deferred revenue				1,214,831		978,015
	Finance lease obligations				22,856		82,745
Total liabilities					19,804,617		19,132,550
SHAREHOLDERS EQUITY
	Capital stock				34,177,890		34,177,890
	Contributed surplus				5,929,894		5,909,371
	Equity portion of convertible debentures				841,698		841,698
	Warrants				4,407		4,407
	Deficit				(36,470,145)		(36,408,413)
					4,483,744		4,524,953
Total liabilities and shareholders equity					24,288,361		23,657,503

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited (Canadian Dollars)

				Quarter Ended		Quarter Ended
				June 30, 2014		June 31, 2013
				$		$
Cash flow from operating activities
	Loss from operations:			(61,732)		(779,629)
	Adjustments for:
		Depreciation and amortization		385,610		380,886
		Amortization of transaction costs related to debt financing		48,711		52,378
		Stock based compensation		20,523		29,493
		Other financial (gain) loss		(29,483)		1,633
		Unrealized foreign exchange (gain) loss		(95,950)		215,017
		Interest accretion		13,782		95,329
				281,461		(4,893)
	Changes in non-cash working capital balances
		Accounts receivable and unbilled accounts receivable		145,532		458,383
		Prepaid expenses		(122,805)		(280,568)
		Other recievables		(211,976)		26,513
		Other assets		17,982		11,245
		Accounts payable and accrued liabilities		436,141		39,752
		Deferred revenue		750,356		(53,620)
Cash flows provided by operating activities				1,296,691		196,812
Cash flow from investing activities
	Purchase of property and equipment			(74,575)		(112,534)
	Capitalized development costs			(1,120,526)		(964,429)
Cash flows used in investing activities				(1,195,101)		(1,076,963)
Cash flow from financing activities
	Costs associated with term loan					(21,874)
	Repayment of term loan			(422,478)		(385,417)
	Repayment of convertible debentures			-		(1,141,000)
	Repayment of capital lease obligations			(58,495)		(10,216)
Cash flows used in financing activities				(480,973)		(1,558,507)
Foreign exchange losses on cash in foreign currency				-		882
Net decrease in cash				(379,383)		(2,437,776)
Cash and cash equivalents
	Beginning of period			532,038		3,491,780
	End of period			152,655		1,054,004
Interest paid				$              93,474		$             187,758
Income taxes paid				$                4,497		$                  2,183
Non-cash investing and financing activities:
Assets acquired under finance lease				$                         -		$                28,860

OVERALL PERFORMANCE, RESULTS OF OPERATIONS AND FINANCIAL CONDITION

				Year	Quarter Ended				Year	Quarter
In $000's	Quarter Ended			Ended					Ended	Ended
(except per	Sept. 30,	Dec. 31,	March 31,	March 31,	June 30,	Sept. 30,	Dec. 31,	March 31,	March 31,	June 30,
share data)	2012	2012	2013	2013	2013	2013	2013	2014	2014	2014
	$	$	$	$	$	$	$		$	$
Revenue
Recurring	2,665	2,625	2,606	10,601	2,602	2,794	2,798	2,817	11,012	2,832
Non-recurring	2,403	2,471	2,594	10,324	1,167	964	1,002	1,152	4,285	861
Total	5,068	5,096	5,200	20,925	3,769	3,758	3,800	3,969	15,297	3,693
Gross Profit	4,570	4,336	4,736	18,582	3,338	3,259	3,360	3,576	13,534	3,254
Operating
Expenses	4,040	3,949	4,784	17,289	3,618	3,396	3,614	3,633	14,261	3,330
Adjusted
EBITDA	962	828	1,027	3,733	131	266	140	389	926	330
Operating
Income (Loss)	529	387	(48)	1,293	(279)	(136)	(254)	(57)	(726)	(76)
Income (Loss) and
Comprehesive
Income (Loss)	624	227	893	1,994	(780)	(245)	(1,404)	(560)	(2,989)	(62)
Per share
Basic	$       0.01	$              -	$       0.01	$        0.03	$     (0.01)	$              -	$     (0.01)	$     (0.01)	$     (0.04)	$              -
Diluted	$       0.01	$              -	$       0.01	$        0.03	$     (0.01)	$              -	$     (0.01)	$     (0.01)	$     (0.04)	$              -
Weighted Avg. #
of Common Shares
Basic	76,311	76,311	76,311	76,311	76,311	76,311	77,518	94,759	81,174	94,759
Diluted	90,086	90,083	92,870	92,882	76,311	76,311	77,518	94,759	81,174	94,759
Total Assets	19,761	19,059	24,697	24,697	22,787	23,493	23,709	23,657	23,657	24,288
Total Long-Term
Liabilities	8,421	7,861	9,790	9,790	9,386	10,083	7,651	7,479	7,479	7,261
Total Deferred
Revenue	6,605	5,913	5,890	5,890	5,837	5,473	5,233	4,770	4,770	5,520

SOURCE: Nightingale Informatix Corporation

Peter Cauley, CFO, Nightingale Informatix Corporation, Tel: [phone], [email protected]; Marc Lakmaaker, Senior Account Executive, TMX Equicom, Tel: [phone] ext. 248, [email protected]