Healthscreen Solutions Inc.
TSX VENTURE : MDU

Healthscreen Solutions Inc.

February 28, 2008 08:00 ET

Healthscreen Announces First Quarter 2008 Results

Revenues up 35% from immediately previous quarter; 390% from same quarter last year

TORONTO, ONTARIO--(Marketwire - Feb. 28, 2007) - Healthscreen Solutions Inc. (TSX VENTURE:MDU) ("Healthscreen" or the "Company") the premier supplier of physician practice enhancement services and electronic medical record (EMR) software to the Canadian market, is pleased to announce its first quarter 2008 results for the period ending December 31, 2007.

For the first quarter of fiscal year 2008, Healthscreen's consolidated revenues increased to $1.91 million, compared to $390 thousand for the corresponding period ending December 31, 2006. This increase was the result of three factors: the acquisition of Medical Telecom Corporation ("MTC") completed in May 2007, organic growth in Physician Services since the MTC acquisition and a 165% increase in Software Products revenues. On a consecutive quarter basis, Healthscreen's revenues were up 35% from the fourth quarter of fiscal year 2007 (the first full quarter since the MTC acquisition) when revenues were $1.42 million.

Effective this quarter, the Company is now reporting a cost of sales figure, which includes costs of hardware and CallerMD direct mailing costs, as well as a gross profit figure. Relative to the immediate preceding quarter, gross profit for the period increased by $160 thousand to $1.21 million, but decreased as a percentage of sales, due to increased hardware sales which generate a lower margin. Cost of sales from physician services remained relatively flat on a percentage basis in the period compared to the fourth quarter of fiscal 2007.

Compared to the fourth quarter of fiscal 2007, SG&A expenses were down $39 thousand and operating expenses were up $46 thousand even with the 35% increase in revenue. These relatively modest changes in operating expenses resulted from early efficiencies in investments made in infrastructure and headcount in previous quarters.

Adjusted EBITDA (as defined by Income Before Undernoted on the company's Income Statement), was a loss of $311 thousand compared to a loss of $465 thousand in the fourth quarter of fiscal 2007, representing a 33% improvement.

Net loss from continuing operations was $657 thousand, or $0.011 cents per share, and net loss was $777 thousand, or $0.013 per share. While this represents a significant decline over the result posted for the comparative 2006 period which showed a net loss from continuing operations of $21 thousand, or $0.001 per share, and a net loss of $23 thousand, or $0.001, the decline was due to acquisition and integration costs such as additional legal expenses and costs associated to increased headcount, and the additional expenses incurred in order to prepare for further growth. Compared to the previous quarter, net loss from continuing operations increased to a loss of $651 thousand, or $0.012 per share, and a net loss of $731 thousand, or $0.013 per share.

As at December 31, 2007 the current ratio was 0.98, a significant improvement from the September 30, 2007 fiscal year end position of 0.34. This positive improvement was aided by the forced exercise of the May 2007 private placement warrants which expired in December 2007 and grossed total proceeds of $2.4 million, as well as the increase in the Company's receivables due to the increase in sales.

"In the first quarter of 2008, Healthscreen is proud to have coordinated preventive care screenings for tens of thousands of Ontarians, helping to detect serious illnesses such as breast cancer and colorectal cancer at early stages," said Justin Belobaba, President and CEO of Healthscreen. "While this past quarter again generated record revenues, we are already very excited about future prospects, as we continue to enjoy the benefits of successfully integrating three separate organizations into the new Healthscreen. With the introduction of ReminderMD, our patient-focused healthcare reminder service, combined with a growing pipeline of innovative services, Healthscreen continues to be the first choice for physicians looking to enhance their practices and provide a higher standard of care to their patients."

Full financial results for the first quarter of fiscal year 2008 are available on the Company's website at www.healthscreen.com.

Healthscreen will also host a conference call on Thursday February 28, 2008 at 11:00 AM EST. Mr. Justin Belobaba, President and CEO, and Mr. Eugene Bomba, CFO will review the quarter-end results and respond to questions during the call. Investors and analysts are invited to call the conference line: 416-641-2140 or 1-800-952-4972 at least 5 minutes prior to the start of the call. If you are unable to participate during the live conference call, it will be archived and available for replay on the Company's website or until March 6 at 11:59 pm by dialing 416-695-5800 or 1-800-408-3053, and entering passcode 325 38 98.

About Healthscreen Solutions Inc.

Healthscreen Solutions (www.healthscreen.com) offers a comprehensive suite of practice enhancing products and services designed to increase physician productivity and revenue, while reducing costs and improving patient care. The Company's robust OHIP billing and patient scheduling software is used by over 4,000 full-time physicians and handles more than $1.5 billion in healthcare transactions a year.

Healthscreen's Electronic Medical Record (EMR) software supports digitalization and network connectivity for community specialists and family physicians plus a growing list of research groups. The Company's broader goal of Continuous Practice Enhancement is being further realized with a growing list of services such as CallerMD, which assists doctors in managing a range of uninsured medical services and PrevCareMD which helps doctors earn supplemental income by achieving government-set preventive care targets.

Disclaimer:

Statements in this release that are forward looking involve known and unknown risks and uncertainties, which may cause the company's actual results in future periods to be materially different from any future performance that may be suggested in this release. The company assumes no obligation to update any forward-looking statements contained in this release. Trading in the securities of Healthscreen should be considered highly speculative.



CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
(UNAUDITED)
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December 31 September 30
2007 2007
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ASSETS
Current assets
Cash $ 1,871,140 $ 239,139
Accounts receivable 1,266,177 681,855
Prepaids and deposits 62,982 55,761
Due from shareholders 42,777 42,777
Current assets of discontinued operations 90,326 142,774
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3,333,402 1,162,306

Property, plant and equipment 391,633 334,601
Intangible assets 2,366,535 2,463,167
Goodwill (note 3) 1,488,621 1,488,621
Non-current assets of discontinued operations - 10,338
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$ 7,580,191 $ 5,459,033
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LIABILITIES
Current liabilities
Accounts payable and accrued liabilities $ 1,121,143 $ 1,221,848
Payables to doctors 759,180 451,670
Current portion of deferred revenue 1,353,133 1,212,001
Current portion of long-term debt 25,300 26,967
Shareholders' loans 52,209 52,209
Current liabilities of discontinued
operations 51,932 44,162
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3,362,897 3,008,857

Deferred revenue 172,643 158,377
Long-term debt 13,300 19,000
Future income tax liabilities 24,000 24,000
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3,572,840 3,210,234

SHAREHOLDERS' EQUITY
Share capital (note 4) 8,998,505 5,905,918
Warrants (note 5) - 749,203
Contributed surplus (note 6) 579,647 387,074
Accumulated other comprehensive income - -
Deficit (5,570,801) (4,793,396)
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4,007,351 2,248,799
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$ 7,580,191 $ 5,459,033
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CONSOLIDATED INCOME STATEMENT
(UNAUDITED)

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Three months ended
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December September December
31 30 31
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2007 2007 2006
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Revenues
Physician services $ 868,868 $ 642,803 $ -
Hardware sales 391,505 183,041 6,412
Software maintenance fees 356,354 305,466 272,397
Software sales 294,038 288,490 114,365
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1,910,765 1,419,800 393,174
Cost of sales
Physician expenses 356,962 249,294 -
Hardware 343,347 121,789 5,203
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700,309 371,083 5,203
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Gross profit 1,210,456 1,048,716 387,971


Expenses
Sales, general and administrative 1,032,388 1,071,111 221,364
Operating expenses 489,093 443,064 94,177
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1,521,481 1,514,175 315,541
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(Loss) Income before undernoted (311,025) (465,459) 72,430
Stock compensation expense 171,705 79,582 -
Amortization of intangible assets 96,632 102,382 34,757
Amortization of property, plant and
equipment 68,376 95,725 57,272
Interest, net 9,034 11,373 1,819
Other expense (income), net 270 3,379 (49)
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Loss before income taxes (657,042) (757,900) (21,369)
Future income taxes - (107,000) -
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Net loss from continuing operations (657,042) (650,900) (21,369)
Loss from discontinued operations (120,363) (80,517) (2,474)
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Net loss $ (777,405) $ (731,417) $ (23,843)
Deficit, beginning of period - (6,459,356) -
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Deficit, end of period $ - $(5,727,939) $ -
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Loss per share
Continuing operations (0.011) (0.012) (0.001)
Discontinued operations (0.002) (0.001) -
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Total $ (0.013) $ (0.013) $ (0.001)
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