Nightingale Reports Fiscal 2012 Fourth Quarter and Year End Results

- Strong demand for Company's cloud-based EMR software fuels top line growth for fiscal 2012 as well as year-over-year and sequential revenue improvements for the fourth quarter -

MARKHAM, ON, July 18, 2012 /CNW/ - Nightingale Informatix Corporation ("Nightingale" or the "Company") (TSXV: NGH), an application service provider (ASP) of electronic medical record (EMR) software and related services, announces its financial results for the three months and year ended March 31, 2012. All results are reported under International Financial Reporting Standards (IFRS) and are in Canadian dollars unless otherwise stated.

Q4 Fiscal 2012 Financial and Operational Summary

• Revenue was $5.4 million, up 23% from $4.4 million in Q4 F2011, reflecting a significant increase in software revenue. Total Q4 revenue was also up 6% from $5.1 million in Q3 F2012.
• Total software revenue (EMR and Practice Management) was $5.0 million, up 31% from $3.9 million in Q4 F2011.
• Gross profit was $4.5 million (or 84% of revenue) up 24% from $3.7 million (84% of revenue) in Q4 F2011.
• Operating Expenses, excluding stock based compensation, depreciation, amortization and one-time business acquisition, integration and other costs were $4.3 million, up 31% compared to $3.3 million in Q4 F2011.
• Adjusted EBITDA¹ was $0.3 million (5% of revenue) compared to $0.4 million (9% of revenue) in Q4 F2011.
• Net loss was $0.3 million in both Q4 F2012 and Q4 F2011.
• Cash from operations was $1.3 million in both Q4 F2012 and Q4 F2011.
• Total deferred revenue was $7.3 million compared to $7.5 million as at March 31, 2011.

Fiscal 2012 Financial and Operational Summary

• Revenue was $18.1 million, up 4% from $17.4 million in F2011, reflecting a significant increase in software revenue.
• Total software revenue was $16.4 million, up 11% from $14.8 million in F2011.
• Gross profit was $15.0 million (or 83% of revenue) up 7% from $14.0 million (81% of revenue) in F2011.
• Operating Expenses, excluding stock based compensation, depreciation, amortization and one-time business acquisition, integration and other costs were $13.8 million, up 12% from $12.3 million in F2011.
• Adjusted EBITDA¹ was $1.3 million (7% of revenue) compared to $1.7 million (10% of revenue) in F2011.
• Net loss was $1.2 million compared to a net loss of $1.0 million for F2011.
• Cash from operations was $1.9 million compared to $3.1 million in F2011.
• Won a 10-year approximately $17 million contract with the Association of Ontario Health Centres (AOHC) to deploy Nightingale on Demand EMR to 3,500 healthcare providers across Ontario over a two-year period. The Company also signed additional enterprise and SMB (small and medium-sized business) EMR agreements during the year.
• Acquired assets of the Medrium Practice Management software business for US $1.7 million on December 19, 2011.  The Medrium software business is expected to add approximately $2 million of recurring revenue on an annual basis.

"During fiscal 2012, we experienced a number of positive events that are acting as catalysts for growth, profitability and predictability of future financial performance," said Sam Chebib, President and CEO of Nightingale. "We signed one of the largest EMR contracts ever awarded in Canada, completed an accretive acquisition that further bolsters our presence in the U.S. and Quebec EMR markets, and we transitioned the business to a pure-play technology company by moving away from increasingly commoditized revenue cycle management and transcription healthcare services. Our EMR market share gains translated into top line growth for the year and the quarter, which we expect to translate into notable improvements in profitability going forward."

Mr. Chebib added: "We invested heavily during the fourth quarter in various initiatives to ensure the success of our AOHC deployment as well as the integration of Medrium. We expect our growth momentum to continue in fiscal 2013 and to contribute in a meaningful way to our profitability on a go forward basis. Our acquisition and existing EMR deployment pipeline provide greater predictability in our financial results. In addition, due to the credibility and brand awareness our major contract win is creating, as well as increasing overall demand, we are seeing new opportunities emerge for our cloud-based EMR in both the enterprise and SMB markets. With our plans to grow our customer footprint in Canada, strengthen our presence in the U.S. and augment our organic growth initiatives with strategic acquisitions, we are positioned to deliver long-term growth."

Fiscal 2012 Year End and Q4 Financial Review
Nightingale's F2012 and F2011 annual and Q4 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 fiscal 2011 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 F2012 was $18.1 million, up 4% from $17.4 million for F2011.  Revenue for Q4 F2012 was $5.4 million, up 23% from $4.4 million for Q4 F2011.  The year-over-year improvement was driven by a 11% increase in software revenue in the annual period ($16.4 million for F2012, compared to $14.8 million in F2011) and a 31% increase in software revenue in the quarterly period ($5.0 million for Q4 F2012, compared to $3.9 million for Q4 F2011). This was a result of strong EMR sales, particularly the Company's major EMR contract win with the AOHC as Nightingale recognized part of the revenue related to the contract in F2012. The Company generated 40% of F2012 revenue and 43% of Q4 F2012 revenue in US dollars.  Foreign exchange fluctuations had a positive impact on revenue for F2012 of approximately 1%, or $0.2 million, compared to the previous year, and a negative 1% impact or $0.03 million for Q4 F2012.

Recurring revenue² for F2012 was $10.2 million (56% of revenue) compared to $10.7 million (61% of revenue) for F2011. This reflects a reduction in Revenue Cycle Management (RCM) revenue, as the Company has moved away from providing healthcare services to increasingly focus on being a leading technology provider. Recurring revenue for Q4 F2012 increased 16% to $2.9 million (54% of revenue) from $2.5 million (56% of revenue) for Q4 F2011 because the year-over-year decline in RCM revenue was more than offset by revenue resulting from the Company's acquisition of the Medrium assets.

Non-recurring revenue² for F2012 was $7.9 million, up 18% from $6.7 million for F2011. Non-recurring revenue for Q4 F2012 was $2.5 million, up 34% from $1.9 million in Q4 F2011. These increases were largely the result of revenue related to the Company's significant EMR contract with the AOHC.

For F2012, gross margin was 83% ($15.0 million gross profit) compared to 81% ($14.0 million gross profit) for F2011. For Q4 F2012, gross margin was 84% ($4.5 million gross profit) compared to 84% ($3.7 million gross profit) for Q4 F2011.

As a result of the Company's continued strategic investment in the business to support long-term growth initiatives, operating expenses for F2012 increased 16% to $14.3 million excluding charges for stock based compensation and depreciation and amortization, or 12% to $13.8 million also excluding one-time business acquisition, integration and other one-time costs incurred in Q3 F2012. This is compared to operating expenses of $12.3 million excluding charges for stock based compensation and depreciation and amortization for F2011. Operating expenses for Q4 F2012 were $4.3 million excluding charges for stock based compensation and depreciation and amortization, up 31% compared to $3.3 million for Q4 F2011.

For F2012, adjusted EBITDA was $1.3 million compared to $1.7 million in F2011 reflecting the Company's increased investment in the business. For Q4 F2012, adjusted EBITDA was $0.3 million compared to $0.4 million for Q4 F2011.

For F2012, net loss was $1.2 million, or $0.6 million excluding one-time business acquisition, integration and other costs and a one-time write-off to interest expense. This is compared to $1.0 million in F2011. Net loss was $0.3 million for Q4 F2012 and Q4 F2011.

Cash and cash equivalents were $3.2 million at March 31, 2012, 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 March 31, 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 July 18, 2012.  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, 2012.

Notice of Conference Call
Nightingale will host a conference call on Wednesday, July 18, 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 99385855 prior to the beginning of the call to ensure participation. The conference call will be archived for replay until Wednesday, July 25, 2012. To access the archived conference call, dial 416-849-0833 or 1-855-859-2056 and enter reference 99385855#. 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		Quarter Ended		Fiscal Year Ended		Fiscal Year Ended
Definition		March 31, 2012		March 31, 2011		March 31, 2012		March 31, 2011
Loss and Comprehensive Loss	$	(285,457)	$	(266,013)	$	(1,218,396)	$	(988,551)
Adjustments for:
Current Tax Expense (Benefit)	$	12,032	$	(12,888)	$	18,514	$	(23,408)
Other Loss (Income)		(74,954)		(35,490)		(79,508)		(50,060)
Interest		108,247		119,043		466,509		642,615
Depreciation and Amortization		505,557		578,865		1,513,913		1,891,966
Stock-based Compensation		19,814		696		115,803		263,307
Acquisition, Integration and Other		-		-		512,889		-
Adjusted EBITDA	$	285,239	$	384,213	$	1,329,724	$	1,735,869

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:

		Quarter		Quarter		Fiscal Year		Fiscal Year
		Ended		Ended		Ended		Ended
		March		March		March		March
Definition		31, 2012		31, 2011		31, 2012		31, 2011
Non-Recurring Revenue	$	2,486,361	$	1,901,461	$	7,888,115	$	6,695,059
Recurring Revenue		2,889,396		2,451,968		10,192,269		10,679,036
Revenue	$	5,375,757	$	4,353,429	$	18,080,384	$	17,374,095

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 TWELVE MONTHS ENDED MARCH 31, 2012 and MARCH 31, 2011

			March 31, 2012					March 31, 2011
Revenue		$	18,080,384				$	17,374,095
Cost of sales			3,050,782					3,327,190
Gross profit			15,029,602					14,046,905
Expenses
General and administration			3,351,479					3,381,836
Sales and marketing			3,291,377					3,272,314
Research and development			4,433,611					3,773,445
Client services			4,307,829					4,038,714
Business acquisition, integration and
	other		512,889					-
			15,897,185					14,466,309
Operating loss			(867,583)					(419,404)
Interest			466,509					642,615
Other financing gain			(54,702)					-
Foreign currency gain			(79,508)					(50,060)
Loss before tax			(1,199,882)					(1,011,959)
Current tax expense (benefit)			18,514					(23,408)
Loss and comprehensive loss		$	(1,218,396)				$	(988,551)
Basic and diluted loss per common share
Basic and diluted loss per common share		$	(0.02)				$	(0.01)
Weighted average number of common shares			76,310,915					75,979,348

CONSOLIDATED BALANCE SHEET
AS AT MARCH 31, 2012 and MARCH 31, 2011

		March 31, 2012				March 31, 2011
ASSETS
Current assets
Cash and cash equivalents	$	3,199,058			$	4,165,406
Accounts receivable		2,267,854				3,006,073
Other receivables		103,513				66,868
Inventory		-				19,882
Prepaid expenses		581,593				418,072
		6,152,018				7,676,301
Long-term assets
Property and equipment		450,989				573,928
Intangible assets		5,808,744				3,273,672
Goodwill		4,792,399				4,692,399
		11,052,132				8,539,999
Total assets	$	17,204,150			$	16,216,300
LIABILITIES
Current liabilities
Line of credit	$	670,000			$	950,000
Accounts payable and accrued liabilities		3,351,187				2,323,880
Current portion of deferred revenue		4,689,175				4,778,811
Current portion of finance lease obligations		122,710				145,437
Current portion of term loan		872,813				800,000
		9,705,885				8,998,128
Long term liabilities
Term loan		2,287,608				767,857
Convertible debentures		1,802,256				1,820,050
Deferred revenue		2,619,448				2,731,075
Finance lease obligations		37,345				128,130
Income taxes payable		686,921				667,708
		7,433,578				6,114,820
Total liabilities		17,139,463				15,112,948
SHAREHOLDERS' EQUITY
Capital stock		29,629,683				29,629,683
Contributed surplus		4,811,456				4,695,653
Equity portion of convertible debentures		333,808				269,880
Warrants		701,452				701,452
Deficit		(35,411,712)				(34,193,316)
		64,687				1,103,352
Total liabilities and shareholders' equity	$	17,204,150			$	16,216,300

CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE TWELVE MONTHS ENDED MARCH 31, 2012 and MARCH 31, 2011

			March 31, 2012				March 31, 2011
Cash flow from operating activities
Loss from operations		$	(1,218,396)			$	(988,551)
Adjustments for:
Depreciation and amortization			1,513,913				1,891,966
Amortization of transaction costs related to debt financing			130,313				40,516
Stock based compensation			115,803				298,196
Other financing gain			(54,702)				-
Unrealized foreign exchange (gain) loss			12,079				92,438
Provision for bad debt			90,845				-
Interest accretion			92,484				61,657
			682,339				1,396,222
Changes in non-cash working capital balances
	Accounts receivable		653,236				(374,344)
	Prepaid expenses		(154,389)				35,998
	Inventory		19,882				10,826
	Other receivables		(53,338)				72,982
	Accounts payable and accrued liabilities		945,147				(230,832)
	Income taxes payable		19,213				(38,232)
	Deferred revenue		(201,263)				2,270,860
Cash flows provided by operating activities			1,910,827				3,143,480
Cash flow from investing activities
Purchase of property and equipment			(241,177)				(168,772)
Capitalized development costs			(1,869,120)				(638,223)
Acquisition of assets and liabilities from Medrium			(1,761,880)				-
Cash flows used in investing activities			(3,872,177)				(806,995)
Cash flow from financing activities
Proceeds from line of credit borrowing			-				950,000
Repayment of line of credit (net of borrowings)			(280,000)				-
Proceeds from issuance of common shares (net of costs)			-				1,208,231
Proceeds from convertible debt financing (net of costs)			-				2,017,372
Proceeds from term loan (net of costs)			3,374,983				1,871,575
Repayment of term loans			(1,886,917)				(333,333)
Repayment of subordinated debt financing			-				(5,250,000)
Repayment of finance lease obligations			(230,724)				(339,448)
Cash flows provided by financing activities			977,342				124,397
Foreign exchange losses on cash in foreign currency			17,660				(93,723)
Net increase (decrease) in cash			(966,348)				2,367,159
Cash and cash equivalents, beginning of period			4,165,406				1,798,247
Cash and cash equivalents, end of period		$	3,199,058			$	4,165,406

OVERALL PERFORMANCE, RESULTS OF OPERATIONS AND FINANCIAL CONDITION

QUARTERLY DATA

	CGAAP ^(1)	IFRS	IFRS	IFRS	IFRS	IFRS	IFRS	IFRS	IFRS	IFRS	IFRS
	Fiscal Year	Q1	Q2	Q3	Q4	Fiscal Year	Q1	Q2	Q3	Q4	Fiscal Year
In $ 000's (Except per Share Amounts)	Ended	Ended	Ended	Ended	Ended	Ended	Ended	Ended	Ended	Ended	Ended
	March 31, 2010	June 30, 2010	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
Recurring Revenue	$13,096	$2,843	$2,723	$2,661	$2,452	$10,679	$2,463	$2,367	$2,473	$2,889	$10,192
Non-Recurring Revenue	3,485	1,559	1,491	1,744	1,901	6,695	1,342	1,439	2,620	2,486	7,888
Revenue	16,581	4,402	4,214	4,405	4,353	17,374	3,805	3,807	5,093	5,376	18,080
Gross Profit	12,238	3,533	3,336	3,502	3,675	14,047	3,175	2,961	4,384	4,509	15,030
Operating Expenses	13,693	3,357	3,553	3,686	3,870	14,466	3,500	3,225	4,369	4,804	15,897
EBITDA  (non-IFRS measure)	1,203	616	395	340	384	1,736	35	93	917	285	1,330
Operating Income (Loss) for the Period	(1,455)	176	(216)	(184)	(195)	(419)	(325)	(263)	16	(295)	(868)
Loss and Comprehensive Loss	(3,444)	(1)	(413)	(309)	(266)	(989)	(425)	(353)	(155)	(285)	(1,218)
Loss and Comprehensive Loss per Common Share	$(0.05)	$(0.00)	$(0.01)	$(0.00)	$(0.00)	$(0.01)	$(0.00)	$(0.00)	$(0.00)	$(0.01)	$(0.02)
Weighted Avg. # of Common Shares	70,232	72,809	76,311	76,311	76,311	75,979	76,311	76,311	76,311	76,311	76,311
Total Assets	$14,651	$16,789	$15,669	$15,080	$16,216	$16,216	$15,334	$15,042	$17,794	$17,204	$17,204
Total Long-Term Liabilities	$7,918	$1,979	$5,185	$5,337	$6,115	$6,115	$5,819	$5,972	$8,102	$7,434	$7,434
Total Deferred Revenue	$5,239	$5,805	$6,010	$6,788	$7,510	$7,510	$7,588	$7,607	$7,797	$7,309	$7,309

^(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.

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

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