Nightingale Reports Second Quarter Fiscal 2015 Results

MARKHAM, ON, Nov. 26, 2014 /CNW/ - Nightingale Informatix Corporation ("Nightingale" or the "Company") (TSX-V: NGH), a cloud-based provider of electronic health record (EHR) software and related services, announces its financial results for the quarter ended September 30, 2014.

Q2 Fiscal 2015 Financial and Operational Summary

• Revenue was $3.7 million compared to $3.8 million in Q2 F2014, and $3.7 million in Q1 F2015. The variance from F2014 primarily reflects a decrease in non-recurring revenues which was partially offset by a 5% increase in recurring revenues from Q2 F2014 and an increase of 3% from Q1 F2015.
  • Recurring revenue from the  EHR business grew by 21% from Q2 F2014
• Gross profit was $3.3 million, or 89% of revenue, compared to $3.3 million, or 87% of revenue, in Q2 F2014 and $3.3 million, or 88% of revenue, in Q1 F2015.
• Operating Expenses, excluding stock based compensation, depreciation and amortization costs were $3.0 million compared to $3.0 million in Q2 F2014 and $2.9 million in Q1 F2015.
• Adjusted EBITDA was $0.33 million, or 9% of revenue, an increase of 19% from $0.27 million, or 7% of revenue, in Q2 F2014 and flat at $0.3 million, or 9% of revenue, in Q1 F2015.
• Net loss was $0.3 million compared to a net loss of $0.2 million in Q2 F2014 and net loss of $0.1 million in Q1 F2015.
• Total deferred revenue was $5.6 million up from $4.8 million at March 31, 2014.
• In Q2, the Company added $0.5 million of new annualized EHR recurring revenue to its backlog.
• In July 2014, the Company announced the appointment of Ray Payette as Chief Technology Officer. 
• In July 2014, the Company introduced its next generation cloud-based EHR – Nightingale 10 (formerly known as Nexia).
• In September 2014, the Company secured a $4.2 million investment in the form of a subordinated term loan to fund the sales and marketing programs for its next generation product, Nightingale 10.

Fiscal 2015 YTD Financial and Operational Summary

• Revenue was $7.4 million, down 2% compared to $7.5 million for the same period in F2014, primarily reflecting a decrease in non-recurring professional services revenues from enterprise contracts.
  • Recurring revenue from the core EHR business grew by 23% over the same period in F2014.
• Gross profit was $6.6 million, or 89% of revenue, compared to $6.6 million, or 88% of revenue, for the same period in F2014.
• Operating Expenses, excluding stock based compensation, depreciation and amortization costs were $5.9 million compared to $6.2 million for the same period in F2014.
• Adjusted EBITDA was $0.6 million, or 9% of revenue, compared to $0.4 million, or 5% of revenue for the same period in F2014.
• Net loss was $0.4 million compared to a net loss of $1.0 million for the same period in F2014.

"During the quarter, we added over $500,000 of new annualized recurring revenue to our backlog, which will start to gradually contribute to our recognized recurring revenue starting in the December quarter. Our recurring revenue from the EHR business has grown 23% year over year, we expect this trend to continue for the balance of the year. This brings us one step closer to achieving profitability from our recurring revenues." said Sam Chebib, President and CEO. "The shift in our investment from product development towards sales and marketing started to make an impact, the result of which will start to become evident in the next few financial periods."

Fiscal 2015 Second Quarter and YTD 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 F2015 was $3.7 million, a decrease of 1% from $3.8 million for Q2 F2014.  YTD F2015 revenue was $7.4 million compared to $7.5 million for the same period in F2014.  This decrease was primarily due to a decrease in non-recurring revenues which was partially offset by a 7% increase in recurring revenues.

Recurring revenue² for Q2 F2015 was $2.9 million (79% of revenue), an increase of $0.1 million, or 5%, from $2.8 million (74% of revenue) in Q2 F2014.  Recurring revenue for YTD 2015 was $5.8 million (78% of revenue), an increase of $0.4 million, or 7%, from $5.4 million (72% of revenue) for the same period in F2014.  The increase in recurring revenue in F2015 was primarily the result of an increase in revenue from the Company's Nightingale EHR business.

For Q2 F2015, gross margin was 89% ($3.3 million) compared to 87% ($3.3 million) for Q2 F2014.  For YTD F2014, gross margin was 89% ($6.6 million) compared to 88% ($6.6 million) for the same period in F2014. 

Operating expenses for Q2 F2015 remained flat at $2.9 million, excluding charges for stock based compensation and depreciation and amortization, compared to Q2 F2014. Operating expenses for YTD F2015 decreased 5% to $5.9 million, excluding charges for stock based compensation and depreciation and amortization, compared to operating expenses of $6.2 million, excluding charges for stock based compensation and depreciation and amortization, for the same period in F2014.

For Q2 F2015, Adjusted EBITDA was $0.3 million (9% of revenue), compared to $0.3 million (7% of revenue) in Q2 F2014.  For YTD F2015, Adjusted EBITDA was $0.6 million (9% of revenue), compared to $0.4 million (5% of revenue) for the same period in F2014. 

The impact of fluctuations in the rate of exchange between the US Dollar and Canadian Dollar on Q2 F2015 EBITDA were negligible.  The $0.1 million loss from foreign currency in Q2 F2015 is predominantly the result of the re-measurement of the Company's term loans (denominated in US Dollars) into Canadian Dollars.

For Q2 F2015, net loss was $0.3 compared to a net loss of $0.2 million in Q2 F2014.  For the YTD F2014 period, net loss was $0.4 million compared to net loss of $1.0 million for the same period in F2014.  

Cash and cash equivalents on September 30, 2014 were $0.9 million, an increase of $0.4 million, or 66%, from March 31, 2014.

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

Stock Option Grants

In August 2014, Nightingale granted 450,000 options to certain employees and Officers of the Company, pursuant to the Company's employee stock option plan (the "Plan"). Of the total options granted, 400,000 were granted to Officers of the Company. Each option under the Plan is exercisable to acquire one common share at a price of $0.14 per share. The options granted have been approved by the Board of Directors and are due to expire on August 4, 2019.

In November 2014, Nightingale's Board of Directors approved the grant of 960,000 options to certain employees, Directors and Officers of the Company pursuant to the Company's employee stock option plan (the "Plan"). Of the total options granted, 850,000 were granted to Directors and Officers of the Company. Each option under the Plan is exercisable to acquire one common share and the strike price will be equal to the closing price of the Company's common stock on November 28, 2014. The options granted have been approved by the Board of Directors and are due to expire on November 27, 2019.

The Plan has been approved by the Company's shareholders.

The financial statements and MD&A will be available at www.nightingalemd.com and filed on www.sedar.com on November 26, 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, November 27, 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 37737366 prior to the beginning of the call to ensure participation. The conference call will be archived for replay until Thursday, December 4, 2014. To access the archived conference call, dial [phone] or [phone] and enter reference 37737366#. 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: 

				Three Months Ended				Six Months Ended
				Sept 30, 2014		Sept 30, 2013		Sept 30, 2014		Sept 30, 2013
				$		$		$		$
Loss and Comprehensive Loss				(343,289)		(245,477)		(405,021)		(1,025,106)
Adjustments for
	Current Tax Expense			14,291		62,321		26,799		64,504
	Other Income (Loss)			13,441		(92,832)		(78,607)		215,729
	Interest			131,192		146,600		225,560		334,358
	Depreciation and Amortization			383,872		381,068		769,482		761,954
	Stock-Based Compensation			22,397		21,783		42,920		51,276
	Other financing gain (loss)			96,044		(7,100)		66,561		(5,467)
Adjusted EBITDA				317,948		266,363		647,694		397,248

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 total revenue:

				Three Months Ended				Six Months Ended
				Sept 30, 2014		Sept 30, 2013		Sept 30, 2014		Sept 30, 2013
				$		$		$		$
Non-Recurring Revenue				781,699		963,928		1,642,385		2,130,712
Recurring Revenue				2,924,415		2,794,835		5,755,944		5,397,232
				3,706,114		3,758,763		7,398,329		7,527,944

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		Six Months Ended		Six Months Ended
				September 30, 2014		September 30, 2013		Sept 30, 2014		Sept 30, 2013
				$		$		$		$
Revenue				3,706,114		3,758,763		7,398,329		7,527,944
Cost of sales				401,055		499,024		839,284		929,844
Gross profit				3,305,059		3,259,739		6,559,045		6,598,100
Expenses
	General and administration			813,405		836,063		1,599,105		1,629,256
	Sales and marketing			473,966		617,093		1,087,253		1,275,130
	Research and development			918,648		779,103		1,671,101		1,824,613
	Client services			1,187,361		1,163,968		2,366,294		2,285,083
				3,393,380		3,396,227		6,723,753		7,014,082
Operating loss				(88,321)		(136,488)		(164,708)		(415,982)
	Interest			131,192		146,600		225,560		334,358
	Other finance (gain) loss			13,441		(7,100)		(16,042)		(5,467)
	Foreign currency (gain) loss			96,044		(92,832)		3,996		215,729
Loss before tax				(328,998)		(183,156)		(378,222)		(960,602)
Current tax expense				14,291		62,321		26,799		64,504
Loss and comprehensive loss				(343,289)		(245,477)		(405,021)		(1,025,106)
Basic and diluted loss per share
	Basic and diluted loss per share			$                   (0.00)		$                   (0.00)		$          (0.00)		$       (0.01)
	Weighted number of common shares -
	basic and diluted			94,758,915		76,310,915		94,758,915		76,310,915

CONDENSED CONSOLIDATED BALANCE SHEET
Unaudited (Canadian Dollars)

				Sept 30, 2014		March 31, 2014
				$		$
ASSETS
Current assets
	Cash and cash equivalents			884,206		532,038
	Accounts receivable and unbilled accounts receivable			5,177,033		5,016,958
	Other receivables			287,457		82,958
	Prepaid expenses			439,747		289,379
				6,788,443		5,921,333
Long-term assets
	Unbilled accounts receivable			377,360		415,124
	Financial derivative asset			165,773		149,731
	Property and equipment			1,119,409		1,225,676
	Intangible assets			13,035,028		11,153,240
	Goodwill			4,792,399		4,792,399
Total assets				26,278,412		23,657,503
LIABILITIES
Current liabilities
	Line of credit			700,000		1,000,000
	Accounts payable and accrued liabilities			4,537,044		5,122,303
	Current portion of deferred revenue			4,474,340		3,791,558
	Current portion of finance lease obligations			103,243		104,731
	Current portion of term loans			1,649,727		1,634,461
				11,464,354		11,653,053
Long-term liabilities
	Senior term loans			592,076		1,403,557
	Subordinated term loan			3,504,324		-
	Convertible debentures			5,114,792		5,015,180
	Deferred revenue			1,087,577		978,015
	Finance lease obligations			10,222		82,745
Total liabilities				21,773,345		19,132,550
SHAREHOLDERS EQUITY
	Capital stock			34,177,890		34,177,890
	Contributed surplus			5,952,291		5,909,371
	Equity portion of convertible debentures			841,698		841,698
	Warrants			346,622		4,407
	Deficit			(36,813,434)		(36,408,413)
				4,505,067		4,524,953
Total liabilities and shareholders equity				26,278,412		23,657,503

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited (Canadian Dollars)

				Quarter Ended				Six Months Ended
				Sept 30, 2014		Sept 30, 2013		Sept 30, 2014		Sept 30, 2013
				$		$		$		$
Cash flow from operating activities
	Loss from operations:			(343,289)		(245,477)		(405,021)		(1,025,106)
	Adjustments for:
		Depreciation and amortization		383,872		381,068		769,482		761,954
		Amortization of transaction costs related to debt financing		64,123		59,344		112,834		111,722
		Stock based compensation		22,397		21,783		42,920		51,276
		Other financial (gain) loss		13,441		(7,100)		(16,042)		(5,467)
		Unrealized foreign exchange (gain) loss		108,438		(92,368)		12,488		122,649
		Interest accretion		13,782		27,231		27,564		122,560
				262,764		144,481		544,225		139,588
	Changes in non-cash working capital balances
		Accounts receivable and unbilled accounts receivable		(315,887)		(155,695)		(170,355)		302,688
		Prepaid expenses		(27,563)		55,897		(150,368)		(224,671)
		Other recievables		7,477		(63,997)		(204,499)		(37,484)
		Other assets		19,782		(53,031)		37,764		(41,786)
		Accounts payable and accrued liabilities		(1,009,510)		226,958		(573,369)		266,710
		Deferred revenue		41,988		(363,666)		792,344		(417,286)
Cash flows (used in) provided by operating activities				(1,020,949)		(209,053)		275,742		(12,241)
Cash flow from investing activities
	Purchase of property and equipment			-		(15,090)		(74,575)		(127,624)
	Capitalized development costs			(1,349,902)		(1,219,756)		(2,470,428)		(2,184,185)
Cash flows used in investing activities				(1,349,902)		(1,234,846)		(2,545,003)		(2,311,809)
Cash flow from investing activities
	Line of credit repayment			(300,000)		-		(300,000)		-
	Proceeds from convertible debentures			-		1,439,905		-		298,905
	Proceeds from issuance of term loan, net of costs			3,494,460		-		3,494,460		-
	Proceeds from issuance of warrants			342,215		-		342,215		-
	Costs associated with term loan			-		-		-		(21,874)
	Repayment of term loan			(417,408)		(382,383)		(839,886)		(767,800)
	Repayment of capital lease obligations			(15,516)		(12,628)		(74,011)		(22,844)
Cash flows (used in) provided by financing activities				3,103,751		1,044,894		2,622,778		(513,613)
Foreign exchange losses on cash in foreign currency				(1,349)		882		(1,349)		1,764
Net decrease in cash				731,551		(398,123)		352,168		(2,835,899)
Cash and cash equivalents
	Beginning of period			152,655		1,054,004		532,038		3,491,780
	End of period			884,206		655,881		884,206		655,881

OVERALL PERFORMANCE, RESULTS OF OPERATIONS AND FINANCIAL CONDITION

				Year	Quarter Ended				Year	Quarter	Quarter
In $000's		Quarter Ended		Ended					Ended	Ended	Ended
(except per		Dec. 31,	March 31,	March 31,	June 30,	Sept. 30,	Dec. 31,	March 31,	March 31,	June 30,	Sept 30,
share data)		2012	2013	2013	2013	2013	2013	2014	2014	2014	2014
		$	$	$	$	$	$		$	$	$
Revenue
	Recurring	2,625	2,606	10,601	2,602	2,794	2,798	2,817	11,012	2,832	2,924
	Non-recurring	2,471	2,594	10,324	1,167	964	1,002	1,152	4,285	861	782
	Total	5,096	5,200	20,925	3,769	3,758	3,800	3,969	15,297	3,693	3,706
Gross Profit		4,336	4,736	18,582	3,338	3,259	3,360	3,576	13,534	3,254	3,305
Operating
	Expenses	3,949	4,784	17,289	3,618	3,396	3,614	3,633	14,261	3,330	3,393
Adjusted
	EBITDA	828	1,027	3,733	131	266	140	389	926	330	318
Operating
Income (Loss)		387	(48)	1,293	(279)	(136)	(254)	(57)	(726)	(76)	(88)
Income (Loss) and
Comprehesive
Income (Loss)		227	893	1,994	(780)	(245)	(1,404)	(560)	(2,989)	(62)	(343)
Per share
	Basic	$        -	$     0.01	$      0.03	$     (0.01)	$           -	$     (0.01)	$     (0.01)	$     (0.04)	$          -	$           -
	Diluted	$        -	$     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	77,518	94,759	81,174	94,759	94,759
	Diluted	90,083	92,870	92,882	76,311	76,311	77,518	94,759	81,174	94,759	94,759
Total Assets		19,059	24,697	24,697	22,787	23,493	23,709	23,657	23,657	24,288	26,278
Total Long-Term
	Liabilities	7,861	9,790	9,790	9,386	10,083	7,651	7,479	7,479	7,261	10,309
Total Deferred
	Revenue	5,913	5,890	5,890	5,837	5,473	5,233	4,770	4,770	5,520	5,562

SOURCE: Nightingale Informatix Corporation

Sam Chebib, CEO, Nightingale Informatix Corporation, Tel: [phone], [email protected]

Related Links

http://www.nightingalemd.com/