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Nightingale Reports Fiscal 2014 Third Quarter Results(Canada Newswire Via Acquire Media NewsEdge) MARKHAM, ON, Feb. 6, 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 three and nine months ended December 31, 2013. Q3 Fiscal 2014 Financial and Operational Summary Revenue was $3.8 million, down 25% compared to $5.1 million in Q3 F2013, primarily reflecting a decrease in software license revenues from enterprise contracts as well as a decrease in professional services revenues. Gross profit was $3.4 million, or 88% of revenue, compared to $4.3 million, or 85% of revenue, in Q3 F2013 and $3.3 million, or 87% of revenue, in Q2 F2014. Operating Expenses, excluding stock based compensation, depreciation and amortization costs were $3.2 million compared to $3.5 million in Q3 F2013 and $3.0 million in Q2 F2014. Adjusted EBITDA1 was $0.1 million, 4% of revenue, down from $0.8 million, or 16% of revenue in Q3 F2013 and down from $0.3 million in Q2 F2014, or 7% of revenue. Net loss was $1.4 million compared to net income of $0.2 million in Q3 F2013 and net loss of $0.2 million in Q2 F2014. Cash used by operations was $0.6 million compared to cash used by operations of $0.6 million in Q3 F2013. Total deferred revenue was $5.2 million down from $5.9 million at March 31, 2013. On November 27, 2013, the Company completed a $2,500,000 private placement pursuant to which a convertible note payable was issued to a director of the Company. The Company's shareholders approved the conversion of this note into 10,000,000 shares of common stock at a meeting held on December 31, 2013. Fiscal 2014 YTD Financial and Operational Summary Revenue was $11.3 million, down 28% compared to $15.7 million for the same period in F2013, primarily reflecting a decrease in software license revenues from enterprise contracts. Gross profit was $10.0 million, or 88% of revenue, compared to $13.9 million, or 88% of revenue for the same period in F2013. Operating Expenses, excluding stock based compensation, depreciation and amortization costs were $9.4 million compared to $11.1 million for the same period in F2013. Adjusted EBITDA1 was $0.5 million, 5% of revenue, down from $2.7 million, or 17% of revenue for the same period in F2013. Net loss was $2.4 million compared to net income of $1.1 million for the same period in F2013. Cash used by operations was $0.6 million compared to cash used in operations of $0.9 million in the same period in F2013. "During our third quarter, our focus continued to be on building out and launching our next generation EHR platform for the US and Canadian markets, we made material progress in our goal of driving profitability from recurring revenue," said Sam Chebib, President and CEO of Nightingale. "The initial feedback from our pilot sites has been very encouraging, and validates our strategy to offer the market a cutting edge, true cloud-based platform, deployed on a SaaS self-service model. We expect our SaaS-based revenue to start making a meaningful impact on our results in the next two to three fiscal quarters." "While not reflected in this quarter's results, we made significant strides with our partners at Prompt Alert and NetSmart," continued Mr. Chebib. "The trial we ran with a select group of clients using Prompt Alert's patient communications platform, has validated the value proposition of this offering, which is ready for wider commercial release in our fourth quarter. The NetSmart sales force is now fully trained on our offerings, and we anticipate gains in this area next quarter as well. We are actively exploring other partnerships to leverage our install base and look forward to announcing additional success in the near future." Fiscal 2014 Third 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 Q3 F2014 was $3.8 million, a decrease of $1.3 million from $5.1 million for Q3 F2013. YTD F2014 revenue was $11.3 million compared to $15.7 million for the same period in F2013. These decreases are primarily associated with a decrease in software revenues from enterprise contracts (which can vary significantly from quarter to quarter) as well as a decrease in revenues from professional services. These decreases were partially offset by an increase in recurring revenues from the Company's Nightingale On Demand EHR. Recurring Revenue2 for Q3 F2014 was $2.8 million (74% of revenue), an increase of $0.2 million, or 7%, from $2.6 million (52% of revenue) in Q3 F2013. Recurring revenue for YTD F2014 was $8.2 million (72% of revenue), an increase of $0.2 million, or 3% from $8.0 million (51% of revenue) for the same period in F2013. The increase in Recurring Revenue in Q3 was primarily the result of an increase in revenues from the Company's Nightingale On Demand EHR product which was partially offset by a decrease in revenue from the Company's low-margin transcription business. In the YTD period, decreases in revenues from the Company's low-margin transcription business and a decrease in transaction based revenues on the Company's US based product lines offset the increase in recurring revenues from the Company's EHR product. For Q3 F2014, gross margin was 88% ($3.4 million gross profit) compared to 90% ($4.3 million gross profit) for Q3 F2013. For YTD F2014, gross margin was 88% ($10.0 million) compared to 88% ($13.8 million) for the same period in F2013. Operating expenses for Q3 F2014 decreased 8% to $3.2 million (85% of revenue), excluding charges for stock based compensation and depreciation and amortization, compared to operating expenses of $3.5 million (69% of revenue), excluding charges for stock based compensation and depreciation and amortization, for Q3 F2013. Operating expenses for YTD F2014 decreased 8% to $9.4 million (83% of revenue), excluding charges for stock based compensation and depreciation and amortization, compared to operating expenses of $11.2 million (71% of revenue), excluding charges for stock based compensation and depreciation and amortization, for the same period in F2013. For Q3 F2014, Adjusted EBITDA was $0.1 million (4% of revenue), compared to $0.8 million (16% of revenue) in Q3 F2013. For YTD F2014, Adjusted EBITDA was $0.5 million (5% of revenue), compared to $2.7 million (17% of revenue) for the same period in F2013. The impact of fluctuations in the rate of exchange between the US Dollar and Canadian Dollar on Q3 F2014 EBITDA were negligible. The $0.2 million loss from foreign currency in the YTD F2013 period 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 Q3 F2014 is a financial loss of $0.7 million. The financial loss is predominantly related to the write off of a portion of the financial derivative asset that is embedded in the Company's Series B convertible debentures. The Company wrote off a significant portion of the financial asset in Q3 F2014 when a substantial number of debenture holders (85%) converted their investment to common shares or transferred their investment to the Company's Series C convertible debentures. For Q3 F2014, net loss was $1.4 million compared to net income of $0.2 million in Q3 F2013. For the YTD F2014 period, net loss was $2.4 million compared to net income of $1.0 million for the same period in F2013. Cash and cash equivalents on December 31, 2013 were $0.7 million, a decrease of $2.8 million, or 81%, from March 31, 2013, of which $3.5 million was for product development costs related to the Company's long-term strategic growth initiatives. At December 31, 2013, 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 February 6, 2014. This press release should be read in conjunction with Nightingale's Consolidated Financial Statements and the accompanying Management Discussion and Analysis for the quarter ended December 31, 2013. Stock Option Grant In February 2014, Nightingale granted 1,415,000 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, 800,000 were granted to Officers of the Company. Each option under the Plan is exercisable to acquire one common share at a price of $0.25 per share. The options granted have been approved by the Board of Directors and are due to expire on February 4, 2019. The Plan has been approved by the Company's shareholders. Notice of Conference Call Nightingale will host a conference call on Thursday, February 6, 2014, at 8:30 a.m. Eastern Standard Time. To access the conference call by telephone, dial (888) 231-8191 (or (647) 427-7450 for international). Please connect approximately fifteen minutes prior to the call to ensure participation. The conference call will be archived for replay until Thursday, February 13, 2014. To access the archived conference call, dial 416-849-0833 or 1-855-859-2056 and enter reference 54076703#. 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 Nine Months Ended Dec 31, 2013 Dec 31, 2012 Dec 31, 2013 Dec 31, 2012 $ $ $ $ Income (Loss) and Comprehensive Income (Loss) (1,403,797) 226,605 (2,428,903) 873,291 Adjustments for Current Tax Expense (Recovery) 236 1,621 64,740 (71,650) Other Income (Loss) 125,737 29,943 341,466 (24,704) Interest 337,590 128,616 671,948 176,903 Depreciation and Amortization 366,964 413,333 1,128,918 771,895 Stock-Based Compensation 26,836 27,855 78,112 101,803 Other financing loss 686,607 - 681,140 - Acquisition, Integration and Other - - - 49,971 Adjusted EBITDA 140,173 827,973 537,421 1,877,509 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: Three Months Ended Six Months Ended Dec 31, 2013 Dec 31, 2012 Dec 31, 2013 Dec 31, 2012 $ $ $ $ Non-Recurring Revenue 1,002,674 2,470,832 3,133,386 7,730,625 Recurring Revenue 2,797,823 2,625,335 8,195,055 7,994,942 3,800,497 5,096,167 11,328,441 15,725,567 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 StatementThis 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 LOSSFOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2013 Unaudited (Canadian Dollars) Three Months Ended Nine Months Ended Dec 31, 2013 Dec 31, 2012 Dec 31, 2013 Dec 31, 2012 $ $ $ $ Revenue 3,800,497 5,096,167 11,328,441 15,725,567 Cost of sales 440,603 760,078 1,370,447 1,879,197 Gross profit 3,359,894 4,336,089 9,957,994 13,846,370 Expenses General and administration 775,359 875,968 2,404,615 2,594,069 Sales and marketing 813,987 791,783 2,089,117 2,635,919 Research and development 887,784 1,227,111 2,712,397 4,113,542 Client services 1,136,391 1,054,442 3,421,474 3,112,244 Business acquisition, integration and other - - - 49,971 3,613,521 3,949,304 10,627,603 12,505,745 Operating income (loss) (253,627) 386,785 (669,609) 1,340,625 Interest 337,590 128,616 671,948 305,519 Other finance loss 686,607 - 681,140 - Foreign currency loss 125,737 29,943 341,466 5,239 Income (loss) before tax (1,403,561) 228,226 (2,364,163) 1,029,867 Current tax expense (benefit) 236 1,621 64,740 (70,029) Income (loss) and comprehensive income (loss) (1,403,797) 226,605 (2,428,903) 1,099,896 Basic and diluted income (loss) per share Basic and diluted income (loss) per share ($0.02) $0.00 ($0.03) $0.01 Weighted number of common shares - basic 77,517,772 76,310,915 76,711,733 76,310,915 Weighted number of common shares - diluted 77,517,772 90,085,652 76,711,733 90,092,882 CONDENSED CONSOLIDATED BALANCE SHEET AS AT DECEMBER 31, 2013 Unaudited (Canadian Dollars) Dec 31, 2013 March 31, 2013 $ $ ASSETS Current assets Cash and cash equivalents 679,386 3,491,780 Accounts receivable and unbilled accounts receivable 6,099,852 5,820,214 Other receivables 9,183 196,127 Prepaid expenses 496,949 415,958 7,285,370 9,924,079 Long-term assets Unbilled accounts receivable - 339,752 Financial asset 127,554 808,694 Property and equipment 990,987 857,270 Intangible assets 10,512,471 7,974,606 Goodwill 4,792,399 4,792,399 Total assets 23,708,781 24,696,800 LIABILITIES Current liabilities Line of credit 1,000,000 1,000,000 Accounts payable and accrued liabilities 4,038,531 4,271,996 Current portion of deferred revenue 4,256,820 4,176,876 Current portion of finance lease obligations 88,060 64,397 Current portion of term loan 1,639,717 1,521,720 Current portion of convertible debentures - 1,064,428 11,023,128 12,099,417 Long-term liabilities Term loan 1,668,869 2,686,704 Convertible debentures 4,963,929 5,353,050 Deferred revenue 975,731 1,713,326 Finance lease obligations 42,003 36,739 Total liabilities 18,673,660 21,889,236 SHAREHOLDERS EQUITY Capital stock 34,177,890 29,629,683 Contributed surplus 5,889,326 5,781,073 Equity portion of convertible debentures 811,558 811,558 Warrants 4,407 4,407 Deficit (35,848,060) (33,419,157) 5,035,121 2,807,564 Total liabilities and shareholders equity 23,708,781 24,696,800 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWSFOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2013 Unaudited (Canadian Dollars) Three Months Ended Nine Months Ended Dec 31, 2013 Dec 31, 2012 Dec 31, 2013 Dec 31, 2012 $ $ $ $ Cash flow from operating activities Income (loss) from operations: (1,403,797) 226,605 (2,428,903) 1,099,896 Adjustments for: - Depreciation and amortization 366,965 413,330 1,128,919 1,185,225 Charge to bad debt expense 9,890 2,474 35,293 23,115 Amortization of transaction costs related to debt financing 70,680 12,736 169,855 42,097 Tax recovery on warrant expiry - - - (87,682) Stock based compensation 26,837 27,855 78,113 129,658 Other financial gain 686,607 - 681,140 - Unrealized foreign exchange (gain) loss 100,616 39,677 235,811 (39,498) Interest accretion 152,430 51,648 274,991 95,092 10,228 774,325 175,219 2,447,903 Changes in non-cash working capital balances Accounts receivable and unbilled accounts receivable (398,623) (279,786) (121,338) (1,353,391) Prepaid expenses 143,680 99,645 (80,991) 144,658 Other receivables 67,807 10,330 30,323 23,509 Other assets 381,538 (151,280) 339,752 (588,511) Accounts payable and accrued liabilities (547,268) (381,354) (280,558) (219,890) Income taxes payable - 8,057 - (1,790) Deferred revenue (240,365) (691,522) (657,651) (1,395,225) Cash flows used in operating activities (583,003) (611,585) (595,244) (942,737) Cash flow from investing activities Purchase of property and equipment (128,875) (13,858) (256,499) (708,881) Capitalized development costs (1,293,294) (962,946) (3,477,479) (2,695,796) Cash flows used in investing activities (1,422,169) (976,804) (3,733,978) (3,404,677) Cash flow from financing activities Proceeds from issuance of common stock 2,436,207 - 2,436,207 - Repayment of capital lease obligations (14,752) (27,366) (37,596) (80,069) Proceeds of convertible debentures (11,277) - 1,428,628 2,689,967 Proceeds from line of credit borrowing, net - 239,000 - 129,000 Proceeds from landlord inducement - - - 120,000 Repayment of convertible debentures - - (1,141,000) - Repayment of term loan (382,383) (222,709) (1,172,057) (665,246) Cash flows provided by (used in) financing activities 2,027,795 (11,075) 1,514,182 2,193,652 Foreign exchange losses on cash in foreign currency 882 4,108 2,646 9,264 Net increase (decrease) in cash 23,505 (1,595,356) (2,812,394) (2,144,498) Cash and cash equivalents Beginning of period 655,881 2,649,916 3,491,780 3,199,058 End of period 679,386 1,054,560 679,386 1,054,560 Interest Paid 357,223 132,790 872,363 249,188 Taxes Paid (Refunded) 236 1,621 64,740 (70,029) OVERALL PERFORMANCE, RESULTS OF OPERATIONS AND FINANCIAL CONDITION Quarter Year Year In $000's Ended Ended Quarter Ended Ended Quarter Ended (except per March 31, March 31, June 30, Sept. 30, Dec. 31, March 31, March 31, June 30, Sept. 30, Dec. 31, share data) 2012 2012 2012 2012 2012 2013 2013 2013 2013 2013 $ $ $ $ $ $ $ $ $ $ Revenue Recurring 2,889 10,192 2,705 2,665 2,625 2,606 10,601 2,602 2,794 2,798 Non-recurring 2,487 7,888 2,856 2,403 2,471 2,594 10,324 1,167 964 1,002 Total 5,376 18,080 5,561 5,068 5,096 5,200 20,925 3,769 3,758 3,800 Software Business 5,017 16,422 5,480 4,993 5,014 5,145 20,632 3,767 3,755 3,800 Gross Profit 4,509 15,029 4,940 4,570 4,336 4,736 18,582 3,338 3,259 3,360 Operating Expenses 4,804 15,898 4,516 4,040 3,949 4,784 17,289 3,618 2,993 3,614 Adjusted EBITDA 231 1,276 916 962 828 1,027 3,733 131 266 140 Operating Income (Loss) (295) (867) 425 529 387 (48) 1,293 (279) (136) (254) Income (Loss) and Comprehesive Income (Loss) (285) (1,218) 250 624 227 893 1,994 (780) (245) (1,404) Per share Basic $ - $ (0.02) $ - $ 0.01 $ - $ 0.01 $ 0.03 $ (0.01) $ - $ (0.01) Diluted $ - $ (0.02) $ - $ 0.01 $ - $ 0.01 $ 0.03 $ (0.01) $ - $ (0.01) Weighted Avg. # of Common Shares Basic 76,311 76,311 76,311 76,311 76,311 76,311 76,311 76,311 76,311 77,518 Diluted 76,311 76,311 82,360 90,086 90,083 92,870 92,882 76,311 76,311 77,518 Total Assets 17,204 17,204 17,962 19,761 19,059 24,697 24,697 22,787 23,493 23,709 Total Long-Term Liabilities 7,434 7,434 7,244 8,421 7,861 9,790 9,790 9,386 10,083 7,651 Total Deferred Revenue 7,309 7,309 7,479 6,605 5,913 5,890 5,890 5,837 5,473 5,233 SOURCE Nightingale Informatix Corporation |