EMERGIS INC.
TSX : EME

December 22, 2006 08:35 ET

Emergis Updates Financial Targets for 2007

Reflect recent contract wins and new developments in Finance

MONTREAL, QUEBEC--(CCNMatthews - Dec. 22, 2006) - Emergis Inc. (TSX:EME) today announced updates to its 2007 financial targets for revenue, EBITDA and earnings per share from continuing operations. As well as adding precision to the growth targets for 2007 announced in November, they include recent contract wins and three developments related to the Company's Finance sector also announced today (the sale of Emergis' motor vehicle lien registration service, the renewal of the managed security services contract with a unit of Bell Canada, and the decision by Visa to discontinue the Visa Commerce solution in mid 2007. They also include the impact of the contract for the deployment of Emergis' Oacis EHR system across the Montreal region which was announced in a separate release issued today.

"We are continuing to execute the business strategy we developed last year (to focus on those areas of Health and Finance that offer the greatest growth opportunities, to improve our profitability and to use our cash on hand to increase the value of Emergis," said Francois Cote, President and Chief Executive Officer of Emergis. "The Health sector remains the key driver of our revenue growth and profitability. We also see strong growth opportunities in the Finance sector for our mortgage document processing solution as it is rolled out across Canada, and for our tax filing solution, which has shown a 26% increase in transactions so far this year."

Revenue target

Revenue in 2007 is now targeted in a range of $184 million to $191 million compared to the 2006 target level of around $172 million. Excluding the revenue contributions of the motor vehicle lien registration and Visa Commerce solutions in 2006 and 2007, 2007 revenue is targeted to grow by about 17% compared to 2006, as a result of organic growth and growth from acquisitions completed in 2006.

Compared to the revenue growth target for 2007 announced in November, the current target reflects recent contract wins, including La Capitale Insurance for drug and dental claims processing, a major Canadian bank for mortgage document processing, and the Ontario Ministry of Health and Long-term Care for the outsourcing of the drug claims processing operations of the ODB program. The new target range assumes that the Company will be able to maintain and renew contracts with existing customers, and enter into new contracts to generate its targeted revenue growth. It also includes the following other developments in the Finance sector announced today:

Motor vehicle lien registration service

Emergis today announced that it has entered into an agreement to sell its motor vehicle lien registration service to a strategic buyer for an undisclosed amount. The Company will provide transition services to the buyer until mid-2007 to facilitate the transfer of the service. Emergis' lien registration service streamlines the process of securing financing and leasing transactions for automobiles, trucks, machinery and other personal property by offering a single entry point to each provincial registrar for lien registration.

"We have come to believe that this service would not meet our growth and profitability targets," said Mark O'Connell, Executive Vice-president at Emergis, responsible for the Finance sector.

Managed security services

The Company also announced today that it has renewed its contract with Bell Canada until 2009. Under the new multi-million dollar contract, Emergis provides managed security services to Bell in support of Bell's major government clients. The Company provides a broad range of technology solutions and facilities; specially trained, security-cleared personnel; and advanced change management processes.

"The renewal of this major contract confirms the positive track record of our operations and our expertise in delivering security solutions," said Marc Filion, Executive Vice-president at Emergis, responsible for the private health sector and managed services. "More than just supporting elements of our solutions for the Health and Finance sectors, our security and other managed services are viewed by the broader corporate market as offering real value on their own."

Visa Commerce

The Company today announced that it has been informed that Visa will no longer be pursuing the business line that was served by Visa Commerce and, as a result, Visa will not extend its contract with Emergis for Visa Commerce beyond its current expiry date in June 2007. Adoption of this business-to-business electronic payment solution, which leverages the VisaNet global network, continues to be below original estimates prepared several years ago when the solution was conceived.

Oacis EHR system

In a separate release issued today, Emergis announced that its innovative electronic health record (EHR) system, Oacis, has been purchased for deployment across the Montreal region. The first phase in the new wave of deployment involves six hospitals. An EHR system allows health care professionals to rapidly and securely consult a complete record of a patient's health history. Already installed in the eight hospitals or institutes representing the McGill University Health Centre and Centre hospitalier de l'universite de Montreal, the Oacis EHR system will help improve the quality of patient care in hospitals across the Montreal region. L'Agence de la sante et des services sociaux de Montreal is administering a single regional contract for the current and subsequent phases of this major, multi-million dollar project.

EBITDA and EPS targets

The Company's new EBITDA target range for 2007 is $37 million to $40 million, or 16% to 25% higher than the mid-point of the 2006 target range of $31 million to $33 million. The range represents a margin of 20% to 21% on targeted revenue. The 2007 target for EPS from continuing operations is in the range of $0.25 to $0.28 per share on a fully diluted basis. The Company continues to target EPS in 2006 to be above $0.15 per share. Using $0.15 as a base, the 2007 target range represents growth of 67% to 87%. The current EBITDA and EPS target ranges exceed the minimum year-over-year growth rates for these items that were announced in November.

About Emergis

Emergis is an IT leader in Canada that focuses on the health and financial services sectors. It develops and manages solutions that automate transactions and the exchange of information to increase the process efficiency and quality of service of its clients. Emergis has expertise in electronic health-related claims processing, health record systems, pharmacy management solutions, cash management and mortgage document processing and registration. In Canada, Emergis and its subsidiaries deliver solutions to the main insurance companies, top financial institutions, government agencies, hospitals, large corporations, real estate lawyers and notaries and approximately 40% of all pharmacies. The Company's shares (TSX:EME) are included in the S&P/TSX Composite Index.

Certain information in this news release, in various filings with Canadian regulators, in reports to shareholders and in other communications, is forward-looking within the meaning of certain securities laws, and is subject to important risks, uncertainties and assumptions. This forward-looking information includes, among others, information with respect to the Company's objectives and the strategies to achieve those objectives, as well as information with respect to the Company's beliefs, plans, expectations, anticipations, estimates and intentions. The words "may", "could", "should", "would", "suspect", "outlook", "believe", "anticipate", "estimate", "expect", "intend", "plan", "target" and similar words and expressions are used to identify forward-looking information. The forward-looking information in this news release describes the Company's expectations as of December 22, 2006.

The results or events predicted in such forward-looking information may differ materially from actual results or events. Material factors which could cause actual results or events to differ materially from a conclusion, forecast or projection in such forward-looking information include, among others: general economic factors, adverse industry events, the adoption rate of the Company's solutions by customers and by related electronic trading communities, the non-renewal of major contracts which expire in the near term, complexities and the timing of signing government contracts, customers developing internally the capability to perform the services which the Company performs on their behalf, the Company's response to its industry's rapid rate of change, competition, pricing pressures, fluctuations in its operating results, its ability to make and integrate acquisitions, failures or material changes in its strategic relationships, exposure under contract indemnities, defects in software or failures in the processing of transactions, security or privacy breaches, the Company's ability to attract and retain key personnel, its ability to protect its intellectual property, intellectual property infringement claims, and industry and government regulation.

Emergis cautions that the foregoing list of material factors is not exhaustive. When relying on the Company's forward-looking information to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. In making the forward-looking information contained in this news release, the Company does not assume any significant acquisitions, dispositions or one-time items. It does assume, however, the renewal of certain customer contracts. Every year, Emergis has major customer contracts that it needs to renew. Some of these may represent slightly more than 10% of its annual revenue. In addition, the Company also assumes the signature of contracts in new markets in the public health sector. In this regard, Emergis is pursuing large opportunities that present a very long and complex sales cycle, which substantially affect the Company's forecasting abilities. The Company has made certain assumptions regarding the timing of the realization of these opportunities which it thinks is reasonable but which may not be achieved. Furthermore, the pursuit of these larger opportunities does not ensure a linear progression of the Company's revenue and earnings, since they may involve significant up-front fees followed by reduced ongoing payments. The Company has assumed a certain progression, which may not be realized. It has also assumed that the material factors referred to in the previous paragraph will not result in such forward-looking information to differ materially from actual results or events. However, the list of these factors is not exhaustive and is subject to change and there can be no assurance that such assumptions will reflect the actual outcome of such items or factors. For additional information with respect to certain of these and other factors, refer to the risks and uncertainties section of the MD&A in the Company's 2005 Annual Report and to its 2005 Annual Information Form (risks and uncertainties) filed with Canadian regulators.

THE FORWARD-LOOKING INFORMATION CONTAINED IN THIS NEWS RELEASE REPRESENTS THE EXPECTATIONS OF EMERGIS AS OF DECEMBER 22, 2006 AND, ACCORDINGLY, IS SUBJECT TO CHANGE AFTER SUCH DATE. HOWEVER, EMERGIS EXPRESSLY DISCLAIMS ANY INTENTION OR OBLIGATION TO UPDATE OR REVISE ANY FORWARD-LOOKING INFORMATION, WHETHER AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE, EXCEPT AS REQUIRED BY APPLICABLE LAW.

Contact Information

  • Emergis Inc.
    John Gutpell
    450-928-6856