MediSolution Ltd.
TSX : MSH

MediSolution Ltd.

November 09, 2007 08:30 ET

MediSolution Announces Results for the Second Quarter

Reports Net Loss of $(0.1) million and EBITDA (1) of $1.0 million

MONTREAL, QUEBEC--(Marketwire - Nov. 9, 2007) - MediSolution Ltd. (TSX:MSH), a Brookfield Asset Management company and a leading healthcare and service sector information technology company, today announced its results for the second quarter ended September 30, 2007.

Second Quarter Highlights

For the quarter ended September 30, 2007, the Corporation reported a loss of $(0.1) million, compared to a loss of $(0.2) million in the same period in fiscal 2007. Second quarter results were negatively impacted by the settlement of a lawsuit of $112,000, as well as the strength of the Canadian dollar during the quarter which resulted in a currency exchange loss of $30,000.

New systems revenue increased by 35% for a total of $3.9 million in the second quarter of fiscal 2008 as compared to $2.9 million during the same period in the prior year. From this increase, $0.3 million is related to the recognition of previously deferred revenue due to the attainment of key milestones within a customer contract during the quarter. Consolidated revenue in the second quarter of fiscal 2008 increased by 9% to $11.1 million as compared to $10.1 million during the same quarter in the prior year.

The EBITDA(1) increased by $0.2 million to $1.0 million before interest, taxes, depreciation, amortization and loss on settlement of lawsuit, compared to $0.8 million reported in the same quarter in the prior year. The gross margin for the quarter was 41% compared to 46% for the same quarter last year due to an increase in 3rd party licenses and professional services revenues versus proprietary license revenues which negatively impacted the sales mix for the quarter. The Corporation continued to focus on improving operating efficiencies throughout the quarter and reduced quarterly indirect costs in comparison to the same quarter in the prior year.



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Three months ended September 30
(in millions $) 2007 2006
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System sales $3.85 $2.86
Support and processing 7.22 7.26
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Total Revenues 11.07 10.12

Cost of revenues 6.55 5.51
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Gross profit 4.52 4.61

Sales and marketing expenses 1.72 1.97
Software development expenses 0.36 0.54
General and administrative expenses 1.42 1.31

EBITDA 1.02 0.79

Depreciation of property and equipment 0.14 0.15
Amortization of intangible assets 0.81 0.78
Interest expense 0.02 0.05
Loss on foreign exchange 0.03 0.03
Loss on settlement of lawsuit 0.11 -
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Net loss $(0.09) $(0.22)
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"Q2 has traditionally been a weak quarter for us and although we are satisfied with the progress we made during the quarter, we recognize that there are still areas for improvement" said Paul Lepage, president and chief executive officer at MediSolution. "Excluding one-time items, the company delivered profitable results in the second quarter with a strong focus on execution and client deliverables."

Key Results Highlights

The Corporation continued to improve operating efficiencies across all areas of the organization, delivering significant improvements in the first six months of fiscal 2008 as compared to the same period in the prior year:

- a 67% increase in new business revenue to $9.0 million in the first half of fiscal 2008 from $5.4 million in the same period prior year;

- a 17% increase in consolidated revenue to $23.3 million in the first half of fiscal 2008 from $19.9 million in the same period prior year;

- a 292% increase in EBITDA1 to $2.2 million in the first half of fiscal 2008 from $0.6 million in the same period prior year; and

- a 7% reduction in General & Administrative expense, including restructuring charges;

The Corporation also delivered strong results across its two major segments in the first half of the year as compared to the same period in the prior year:

- Total Healthcare Information Systems revenue increased by $1.4 million or 12% in the first half of fiscal 2008 with an increase of 36% or $1.4 million in new system revenue

- Resource Management Systems revenue increased by $2.0 million or 24% with a 66% increase in gross margins and a $1.7 million improvement in gross profit.



------------------------------------------------------------------------
Six months ended September 30
(in millions $) 2007 2006
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Total Revenue
Healthcare Information Systems $13.02 $11.64
Resource Management Systems 10.28 8.31
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23.30 19.95

Gross Profit
Healthcare Information Systems 5.24 5.80
Resource Management Systems 4.19 2.52
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9.43 8.32

Earnings (loss) before the undernoted items
Healthcare Information Systems 1.16 1.39
Resource Management Systems 1.08 (0.81)
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2.24 0.58

Depreciation of property and equipment 0.29 0.30
Amortization of intangible assets 1.65 1.61
Interest expense 0.05 0.06
Loss on foreign exchange 0.10 0.05
Loss on settlement of lawsuit 0.11 -
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Net earnings (loss) $0.04 $(1.44)
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About MediSolution

MediSolution (TSX:MSH), a Brookfield Asset Management company, is a leading healthcare and public sector information technology company, providing software, solutions and services to customers across North America. More than 500 hospitals and other healthcare facilities and close to 200 public sector and related organizations rely on MediSolution's systems to maximize their operational efficiencies, lower their costs, and improve the delivery of services. MediSolution has two operating segments. The Resource Management Systems segment is comprised of Financial Management software such as accounts receivable, budgeting and materials management as well as Human Capital Management tools including human resource management, staff scheduling and payroll processing. The Healthcare Information Systems segment is comprised of clinical solutions such as patient tracking, electronic patient health records, pharmacy, radiology and laboratory software for healthcare organizations.

For more information, visit www.medisolution.com.

This press release contains "forward-looking statements" regarding MediSolution. The words "believe", "expect", "anticipate", "intend", "estimate" and other expressions which are predictions of or indicate future events and trends and which do not relate to historical matters identify forward-looking statements. Readers are cautioned not to place undue reliance on forward-looking statements because they involve known an unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the company to differ materially from anticipated future results, performance or achievements expressed or implied by such forward-looking statements.

(1) "EBITDA" (earnings before interest expense, income taxes, depreciation of property and equipment, amortization of intangible assets and loss on settlement of lawsuit) does not have a standardized meaning prescribed by Canadian Generally Accepted Accounting Principles (GAAP) and may not be comparable to similar measures presented by other publicly traded companies. We use EBITDA amongst other measures, to assess the operating performance of our business.

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