Nightingale reports fiscal 2013 fourth quarter and year end results

- Strong demand for Company's cloud-based EMR software fuels top line

MARKHAM, ON, July 24, 2013 /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 three months and year ended March 31, 2013. All results are reported under International Financial Reporting Standards (IFRS) and are in Canadian dollars unless otherwise stated.

Q4 Fiscal 2013 Financial and Operational Summary

• Revenue was $5.2 million, down 3% from $5.4 million in Q4 F2012, reflecting the Company's exit from its low margin revenue cycle management and transcription businesses.  Total Q4 revenue increased 2% from $5.1 million in Q3 F2013.
• Total software revenue (EMR and Practice Management) was $5.1 million, up 3% from $5.0 million in Q4 F2012.
• Gross profit was $4.7 million (or 91% of revenue), up 5% from $4.5 million (84% of revenue) in Q4 F2012.
• Operating Expenses, excluding stock based compensation, depreciation and amortization were $4.3 million in each of Q4 F2013 and Q4 F2012.
• Adjusted EBITDA¹ was $1.0 million (20% of revenue), compared to $0.2 million (4% of revenue) in Q4 F2012.
• Net income was $0.9 million in Q4 F2013, compared to a net loss of $0.2 million in Q4 F2012. Net income included a tax gain of $1.0 million resulting from the release of an unneeded tax provision and the recognition of benefit from previously unrecorded tax losses.
• Cash used in operations was $0.7 million in Q4 F2013 compared to cash provided by operations of $1.4 million in Q4 F2012.
• Revaluation of a derivative financial asset related to the Company's Series B convertible debenture resulted in a gain of $0.1 million, recorded as other financial gains.

Fiscal 2013 Financial and Operational Summary

• Total revenue was $20.9 million, up 16% from $18.1 million in F2012, reflecting a significant 26% increase in software revenue to $20.6 million.
• Software revenue increased from $16.3 million in FY2102 to $20.6 million in FY2013, an increase of 26%.
• Recurring revenue from continued operations increased by 21% compared to F2012.
• Gross profit was $18.6 million (or 89% of revenue), compared to $15.0 million (83% of revenue) in F2012.
• Operating Expenses, excluding stock based compensation, depreciation and amortization were $15.5 million, up 9% from $14.3 million in F2012. Without business acquisition, integration and other costs, operating expenses were $14.8 million, compared to $13.8 million for F2012.
• Adjusted EBITDA¹ was $3.7 million (18% of revenue), compared to $1.3 million (7% of revenue) in F2012.
• Net income was $2.0 million, compared to a net loss of $1.2 million for F2012. Net income included a tax gain of $0.7 million from the release of an unneeded tax provision and another $0.4 million from the recognition of the benefit from previously unrecorded tax losses.
• Cash used in operations was $1.7 million, compared to cash provided by operations of $1.9 million in F2012.
• Completed a $5.3 million financing through a Convertible Debenture Private Placement and the arrangement of a Senior Debt Facility in March 2013.
• Appointed a new Chief Financial Officer, Peter Cauley, in April 2013.
• Signed a $3.0 million five-year agreement with Giiwedong Health Link (GHL) in March 2013.

"Our efforts in 2013 have positioned our company well to benefit from the opportunities in the North American EMR market.  We have strengthened our balance sheet through our most recent financing as well as a near $1 million repayment of our Series A debenture, nearly completed the transformation into a pure-play technology company, successfully changed our sales strategy and strengthened our management team. As a result, we recorded our 17^th consecutive quarter of positive EBITDA, with EBITDA growing to 18% of revenue, compared to 7% for the prior year," said Sam Chebib, President and CEO of Nightingale. "During the year we delivered on large projects, such as the AOHC deal, while dedicating resources to the enterprise sector, resulting in a number of important customer wins, this past quarter most notably with GHL."

Mr. Chebib added: "We anticipate launching Nexia, our next generation EMR platform, in the U.S. in the fall.  Initial feedback from Beta testing has shown us the game changing potential of this platform, and our enterprise team has built up a healthy long-term pipeline.  The launch of Nexia will also see Nightingale transition to a SaaS-based business model for the SMB market, a process we started subsequent to Q4.  Long-term, we believe the recurring revenue nature of the SaaS model will result in much greater predictability of the business, yield higher margins and create a platform for accelerated growth. However, this transition, combined with prospect enterprise clients holding off on making investments in EMR pending the commercial availability of Nexia, we anticipate will generate some revenue volatility in the coming quarters."

Fiscal 2013 Year End and Q4 Financial Review
Nightingale's F2013 and F2012 annual and Q4 results are prepared in accordance with IFRS. For more detailed information regarding the Company's financial results please refer to the Company's financial statements and MD&A filings on SEDAR at www.sedar.com.

Revenue for F2013 was $20.9 million, up 16% from $18.1 million for F2012, driven by a 26% increase in software revenue ($20.6 million for F2013, compared to $16.4 million in F2012). Growth in software sales was attributable in large part to the ongoing implementation of the Company's major EMR contract win with the AOHC in F2012, which contributed 15% of F2013 revenue. The Company generated 33% of F2013 revenue and 28% of Q4 F2013 revenue in US dollars.  Foreign exchange fluctuations had a minimal impact on revenue for F2013 and for Q4 F2013.

Revenue for Q4 F2013 was $5.2 million, down 3% from $5.4 million for Q4 F2012, attributable to the Company's gradual exit from its low-margin transcription business.

Recurring revenue² for F2013 was $10.6 million (51% of revenue), compared to $10.2 million (56% of revenue) for F2012. The decrease was caused primarily by a reduction in Revenue Cycle Management (RCM) revenue, as the Company moved away from providing lower margin healthcare services. Recurring revenue from continued operations increased by 21% over F2012.  Recurring revenue for Q4 F2013 decreased 10% to $2.6 million (50% of revenue) from $2.9 million (54% of revenue) for Q4 F2012, primarily due to the year-over-year decline in RCM revenue.

Non-recurring revenue² for F2013 was $10.3 million, up 31% from $7.9 million for F2012. Non-recurring revenue for Q4 F2013 was $2.6 million, up 4% from $2.5 million in Q4 F2012. Growth was largely the result of revenue related to the Company's significant EMR contracts with GHL, MCI and the AOHC.

For F2013, gross margin was 89% ($18.6 million gross profit) compared to 83% ($15.0 million gross profit) for F2012. For Q4 F2013, gross margin was 91% ($4.7 million gross profit) compared to 84% ($4.5 million gross profit) for Q4 F2012.

As a result of the Company's continued strategic investment in the business to support long-term growth initiatives, operating expenses for F2013 increased 9% to $15.5 million, excluding charges for stock based compensation and depreciation and amortization, or 8% to $14.8 million also excluding one-time business acquisition, integration and other one-time costs. This is compared to operating expenses of $14.3 million, excluding charges for stock based compensation and depreciation and amortization for F2012 and $13.7 million when you exclude one-time business acquisition, integration and other one-time costs . Operating expenses for Q4 F2013 and Q4 F2012 were $4.3 million excluding charges for stock based compensation and depreciation and amortization.

For F2013, adjusted EBITDA was $3.7 million compared to $1.3 million in F2012, reflecting the Company's increased revenue from its software business. For Q4 F2013, adjusted EBITDA was $1.0 million compared to $0.2 million for Q4 F2012.

For F2013, the Company recognized an income tax benefit resulting from the release of an unneeded tax provision and the recognition of the benefit from previously unrecorded tax losses.

For F2013, net income was $2.0 million, compared to a loss of $1.2 million in F2012. Net income was $0.9 million for Q4 F2013, compared to a net loss of $0.3 million in Q4 F2012.

Cash and cash equivalents were $3.5 million as at March 31, 2013, up from $3.2 million as at March 31, 2012, primarily as a result of the Company's financing completed in the fourth quarter, offset by increased investments in its long-term strategic growth initiatives.

In March 2013, the Company redeemed $925,000 of the Series A Debentures in exchange for investments in Series C and subsequent to year end, in the first quarter of F2014, the Company redeemed the remaining $1,141,000 of Series A Debentures.

At March 31, 2013, 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 24, 2013.  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, 2013.

Investor Relations Agreement
Nightingale has engaged Tekkfund Capital Corp. to assist the company with investor outreach. In connection with the engagement, Tekkfund has been awarded a consulting contract paying $6,000 per month for a term of three years, cancellable on thirty days' notice after the first year.  In relation to the agreement Tekkfund has been granted options to purchase 100,000 shares of Nightingale at a price of 23.5 cents ($0.235) per share for the first year of service.  Each subsequent year of the agreement, Tekkfund will receive additional options for the purchase of 100,000 shares.  The options will vest quarterly and will be governed by the provisions of Nightingale's stock option plan.

Notice of Conference Call
Nightingale will host a conference call on Wednesday, July 24, 2013, 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 15748935 prior to the beginning of the call to ensure participation. The conference call will be archived for replay until Wednesday, July 31, 2013. To access the archived conference call, dial 416-849-0833 or 1-855-859-2056 and enter reference 15748935#. 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 Income (Loss) and Comprehensive Income (Loss):

	Quarter Ended		Quarter Ended		Fiscal Year Ended		Fiscal Year Ended
Definition	March 31, 2013		March 31, 2012		March 31, 2013		March 31, 2012
Income (Loss) and Comprehensive Income (Loss)	$	892,659	$	(285,457)	$	1,992,555	$	(1,218,396)
Adjustments for:
Current Tax Expense (Benefit)		(1,009,423)	$	12,032		(1,079,452)	$	18,514
Other Loss (Income)		(28,268)		(74,954)		(23.029)		(79,508)
Interest		232,079		108,247		537,598		466,509
Depreciation and Amortization		439,861		505,557		1,625,089		1,513,913
Stock-based Compensation		10,135		19,814		139,793		115,803
Other financing gain		(134,942)		(54,702)		(134,942)		(54,702)
Acquisition, Integration and Other		625,833		-		675,804		512,889
Adjusted EBITDA	$	1,027,934	$	230,537	$	3,733,416	$	1,275,022

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 Ended		Quarter Ended		Fiscal Year Ended		Fiscal Year Ended
Definition	March 31, 2013		March 31, 2012		March 31, 2013		March 31, 2012
Non-Recurring Revenue	$	2,593,780	$	2,486,361	$	10,324,405	$	7,888,115
Recurring Revenue		2,605,505		2,889,396		10,600,447		10,192,269
Revenue	$	5,199,285	$	5,375,757	$	20,924,852	$	18,080,384

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, 2013 and MARCH 31, 2012

	March 31, 2013					March 31, 2012
Revenue	$	20,924,852				$	18,080,384
Cost of sales		2,342,467					3,050,782
Gross profit		18,582,385					15,029,602
Expenses
General and administration		3,489,350					3,351,479
Sales and marketing		3,366,065					3,291,377
Research and development		5,500,278					4,433,611
Client services		4,258,158					4,307,829
Business acquisition, integration and
other		675,804					512,889
		17,289,655					15,897,185
Operating income (loss)		1,292,730					(867,583)
Interest		537,598					466,509
Other financing gain		-					(54,702)
Foreign currency gain		(23,029)					(79,508)
Income (loss) before tax		913,103					(1,199,882)
Current tax benefit (expense)		1,079,452					(18,514)
Net Income (loss) and comprehensive income (loss)	$	1,992,555				$	(1,218,396)
Basic and diluted net income (loss) per common share
Net income (loss) per common share - basic	$	0.03				$	(0.02)
Net income (loss) per common share - diluted	$	0.03				$	(0.02)
Weighted average number of common shares - basic		76,310,915					76,310,915
Weighted average number of common shares - diluted		92,882,264					76,310,915

CONSOLIDATED BALANCE SHEET
AS AT MARCH 31, 2013 and MARCH 31, 2012

	March 31, 2013			March 31, 2012
ASSETS
Current assets
Cash and cash equivalents	$	3,491,780		$	3,199,058
Accounts receivable and unbilled accounts receivable		5,820,214			2,267,854
Other receivables		196,127			103,513
Prepaid expenses		415,958			581,593
		9,924,079			6,152,018
Long-term assets
Unbilled accounts receivable		339,752			-
Financial asset		808,694			-
Property and equipment		857,270			450,989
Intangible assets		7,974,606			5,808,744
Goodwill		4,792,399			4,792,399
		14,772,721			11,052,132
Total assets	$	24,696,800		$	17,204,150
LIABILITIES
Current liabilities
Line of credit	$	1,000,000		$	670,000
Accounts payable and accrued liabilities		4,271,996			3,351,187
Current portion of deferred revenue		4,176,876			4,689,175
Current portion of finance lease obligations		64,397			122,710
Current portion of convertible debentures		1,064,4280			-
Current portion of term loan		1,521,720			872,813
		12,099,417			9,705,885
Long term liabilities
Term loan		2,686,704			2,287,608
Convertible debentures		5,353,050			1,802,256
Deferred revenue		1,713,326			2,619,448
Finance lease obligations		36,739			37,345
Income taxes payable		-			686,921
		9,789,819			7,433,578
Total liabilities		21,889,236			17,139,463
SHAREHOLDERS' EQUITY
Capital stock		29,629,683			29,629,683
Contributed surplus		5,781,073			4,811,456
Equity portion of convertible debentures		811,558			333,808
Warrants		4,407			701,452
Deficit		(33,419,157)			(35,411,712)
		2,807,564			64,687
Total liabilities and shareholders' equity	$	24,696,800		$	17,204,150

CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE TWELVE MONTHS ENDED MARCH 31, 2013 and MARCH 31, 2012

		March 31, 2013				March 31, 2012
Cash flow from operating activities
Income (loss) from operations		$	1,992,555			$	(1,218,396)
Adjustments for:
Depreciation and amortization			1,625,089				1,513,913
Amortization of transaction costs related to debt financing			65,310				130,313
Stock based compensation			139,793				115,803
Tax recovery on warrant expiry			(87,682)				-
Other financing gain			(134,942)				(54,702)
Unrealized foreign exchange (gain) loss			(53,507)				12,079
Provision for bad debt			63,115				90,845
Interest accretion			222,159				92,484
			3,520,343				682,339
Changes in non-cash working capital balances
	Accounts receivable and unbilled accounts receivable		(3,598,762)				653,236
	Prepaid expenses		165,635				(154,389)
	Inventory		-				19,882
	Other assets		(339,752)				-
	Other receivables		(91,211)				(53,338)
	Accounts payable and accrued liabilities		767,762				945,147
	Income taxes payable		(686,921)				19,213
	Deferred revenue		(1,418,421)				(201,263)
Cash flows provided by (used in) operating activities			(1,681,327)				1,910,827
Cash flow from investing activities
Purchase of property and equipment			(711,684)				(241,177)
Capitalized development costs			(3,455,981)				(1,869,120)
Acquisition of assets and liabilities from Medrium			-				(1,761,880)
Cash flows used in investing activities			(4,167,665)				(3,872,177)
Cash flow from financing activities
Proceeds from line of credit borrowing			330,000				-
Repayment of line of credit (net of borrowings)			-				(280,000)
Proceeds from convertible debt financing (net of costs)			4,705,723				-
Proceeds from term loan (net of costs)			1,946,850				3,374,983
Repayment of term loans			(882,087)				(1,886,917)
Proceeds from leasehold inducement			120,000				-
Repayment of finance lease obligations			(88,486)				(230,724)
Cash flows provided by financing activities			6,132,000				977,342
Foreign exchange losses on cash in foreign currency			9,714				17,660
Net increase (decrease) in cash			292,722				(966,348)
Cash and cash equivalents, beginning of period			3,199,058				4,165,406
Cash and cash equivalents, end of period		$	3,491,780			$	3,199,058

OVERALL PERFORMANCE, RESULTS OF OPERATIONS AND FINANCIAL CONDITION

	Q4	Year	Q1	Q2	Q3	Q4	Year	Q1	Q2	Q3	Q4	Year
In $ 000's  (Except per Share Amounts)	Ended	Ended	Ended	Ended	Ended	Ended	Ended	Ended	Ended	Ended	Ended	Ended
	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	Dec 31, 2012	March 31, 2013	March 31, 2013
Recurring Revenue	$2,452	$10,679	$2,463	$2,367	$2,473	$2,889	$10,192	$ 2,705	$ 2,665	$ 2,625	$2,606	$10,600
Non-Recurring Revenue	1,901	6,695	1,342	1,439	2,620	2,486	7,888	2,856	2,403	2,471	2,594	10,324
Revenue	4,353	17,374	3,805	3,807	5,093	5,376	18,080	5,561	5,068	5,096	5,200	20,925
Software business revenue	3,879	14,780	3,344	3,382	4,679	5,017	16,422	5,480	4,993	5,014	5,145	20,633
Gross Profit	3,675	14,047	3,175	2,961	4,384	4,509	15,030	4,940	4,570	4,336	4,736	18,582
Operating Expenses	3,870	14,466	3,500	3,225	4,369	4,804	15,897	4,516	4,040	3,949	4,784	17,290
Adjusted EBITDA (non-IFRS measure)	384	1,736	35	93	917	231	1,275	916	962	828	1,028	3,733
Operating Income (Loss) for the Period	(195)	(419)	(325)	(263)	16	(295)	(868)	425	529	387	(48)	1,293
Income (Loss) and Comprehensive Income (Loss)	(266)	(989)	(425)	(353)	(155)	(285)	(1,218)	250	624	227	893	1,993
Income (Loss) and Comprehensive Income (Loss) per Common Share - Basic and Diluted	$(0.00)	$(0.01)	$(0.00)	$(0.00)	$(0.00)	$(0.01)	$(0.02)	$0.00	$0.01	$0.00	$0.01 / $0.01	$0.03 / $0.03
Weighted Avg. # of Common Shares - Basic	76,311	75,979	76,311	76,311	76,311	76,311	76,311	76,311	76,311	76,311	76,311	76,311
Weighted Avg. # of Common Shares - Diluted	76,311	75,979	76,311	76,311	76,311	76,311	76,311	82,360	90,086	90,083	92,870	92,882
Total Assets	$16,216	$16,216	$15,334	$15,042	$17,794	$17,204	$17,204	$17,962	$19,761	$19,059	$24,697	$24,697
Total Long-Term Liabilities	$6,115	$6,115	$5,819	$5,972	$8,102	$7,434	$7,434	$7,244	$8,421	$7,861	$9,790	$9,790
Total Deferred Revenue	$7,510	$7,510	$7,588	$7,607	$7,797	$7,309	$7,309	$7,479	$6,605	$5,913	$5,890	$5,890

 

 

 

SOURCE: Nightingale Informatix Corporation

Peter Cauley, CFO
Nightingale Informatix Corporation
Tel: [phone]
[email protected]

Marc Lakmaaker, Account Executive
The Equicom Group
Tel: [phone] ext. 248
[email protected]