Healthscreen Solutions Inc.
TSX VENTURE : MDU

Healthscreen Solutions Inc.

May 19, 2009 17:35 ET

Healthscreen Reports Second Quarter 2009 Results

Grows Positive EBITDA by 598% from immediately preceding quarter

TORONTO, ONTARIO--(Marketwire - May 19, 2009) - Healthscreen Solutions Inc. (TSX VENTURE:MDU) -

- Quarterly revenue grows 69% to $3,077,077 from $1,823,330 for the same quarter of prior year.

- Physican Services revenue grows 79% to $1,713,480 from $956,334 for the same quarter last year.

- Quarterly Gross Profit Margin improves to 82% from 71% last year.

- EBITDA increases to $262,862 from a loss of $642,323 in Q208, and a profit of $37,654 in Q109.

- Net Loss, from continuing operations, is $357,419 compared to $918,684 in comparable period in 2008, and $590,110 in previous quarter.

- Diabetes management pilot with CA Inc. (NASDAQ:CA) yields promising results with patients.

Healthscreen Solutions Inc. (TSX VENTURE:MDU), Canada's premier provider of physician practice enhancement services and electronic medical record (EMR) software, today announced its second quarter of fiscal 2009 results for the period ending March 31, 2009. "We continued to perform and realize benefits from our previous cost cutting and ongoing process improvement measures, and the investments we made in infrastructure and operational efficiency. These efforts have resulted in total EBITDA growth for the first six months of 2009 to $300k, a $1.4 million improvement from the first six months of 2008. To achieve this dramatic improvement in a terrible economic climate is a testament to our business model and people," said Justin Belobaba, president and CEO of Healthscreen.

Q2 F2009 Financial Results

Revenue for the quarter ended March 31, 2009 was $3,077,077, as compared to $1,823,330 in the quarter ended March 31, 2008, representing an increase of $1,253,747, or 69%. Revenue was up slightly compared to the immediately preceding period when revenue was $3,059,383.

On a segmented basis, Physician Services increased in revenue by $757,146 or 79% from $956,334 in the quarter ended March 31, 2008 to $1,713,480 in the quarter ended March 31, 2009. The increase in revenue was due to the creation of new customer relationships, including growth in customer list through acquisition. Healthscreen has also leveraged relationships with existing software customers to grow the Physician Services business. The Software Products business unit revenue increased from $866,966 to $1,363,597 an increase of $496,601 or 57% from the quarter ended March 31, 2008 to the quarter ended March 31, 2009, the result of a strong focus on new system sales, recurring revenue from maintenance fees on existing software installations, and some changes to revenue recognition policies.

Gross profit for the period, which accounts for costs of hardware, mailing costs, and other direct costs associated with offering the Company's software and services, increased significantly from 71% of revenue to 82% of revenue, and remained flat from the immediately preceding quarter when gross profit was also 82%. The increase in gross profit from last year remains due to cost-cutting measures and process improvement.

Compared to the second quarter of 2008, SG&A expenses increased to $1,374,834 from $1,112,718, an increase of $262,116 or 24%. Expressed as a percentage of revenue, however, SG&A decreased from 61% of revenue to 45%. Operating expenses grew from $827,871 in the quarter ended March 31, 2008 to $899,531 in the quarter ended March 31, 2009, an increase of $71,660 or 9%. Expressed as a percentage of revenue, operating expenses decreased to 29% from 45%.

EBITDA for the period increased to $262,862 from a loss of $642,323 in Q208, and a profit of $37,654 in Q109. Net loss was $359,293, or $0.005 per share compared to the result posted in the first quarter of 2008, $932,762 or $0.013 per share.

The decrease in cash from $2,153,052 at September 30, 2008 to $1,733,857 at March 31, 2009 was primarily the result of investment in Healthscreen's infrastructure and software products. This was offset by the completion of a private equity placement led by Horizons Advantaged Equity Fund, managed by T.I.P. Wealth Manager Inc. of Toronto for gross proceeds of $850,000.

On January 4, 2009, the Company issued 1,403,514 shares to Regent's former shareholders as part of the purchase price. As of March 31, 2009, Healthscreen had 74,518,525 common shares issued and outstanding. Healthscreen also announces pursuant to TSX Venture Exchange requirements that, on April 30, 2009, the Company granted options to purchase 606,667 common shares to officers of Healthscreen. The stock options were granted pursuant to the terms of Healthscreen's stock option plan and are exercisable at $0.265 per share.

Subsequent to the end of the quarter, Healthscreen amended and augmented its debt financing agreement with Wellington Financial LP ("Wellington") to gain access to approximately $1,000,000 in additional working capital including a six month addition to the facility through the issuance of secured debentures in the principal amount of $550,000 and the amendment of certain covenants in the existing facilities.

Complete financial statements and the Management Discussion and Analysis and Financial Statements for the second quarter of 2009 are available on the Company's website at www.healthscreen.com and www.sedar.com.

New Initiative in Chronic Disease Management

On January 30, 2009, Healthscreen announced an agreement to form a joint initiative with CA, Inc, a US-based independent IT management software company, to develop technology and services aimed at helping doctors offer chronic disease management programs to their patients. The 100-patient pilot project yielded extremely positive results during the second quarter, and Healthscreen is currently in the process of beginning full commercialization of the diabetes management service. The service helps diabetic patients record and monitor key health statistics on a real-time basis, allowing for more precise tracking and trending of the impact of their daily behaviours such as diet and exercise, as well as adherence to prescription drugs.

"I'm delighted with how far we've come in a short period of time with our pilot effort. In just three months we have developed the early stages of what I believe will be a world class service in diabetic care," said Mr. Belobaba.

F2009 Outlook

Looking to the second half of 2009, the company remains focused on three important goals:

- Continue to build on its foundation of innovative products by refining existing offerings, and commercializing the first of its Chronic Disease Management services. This will require both time and investment to ensure that this new service succeeds.

- Generate operating efficiencies by leveraging existing infrastructure with improved technology rather than increased headcount.

- Continue to focus on increasing EBITDA and reach cash flow positive from the core business.

Conference Call

Healthscreen will host a conference call on Wednesday May 20, 2009 at 10:30 AM EST. Justin Belobaba, President and CEO, and Ken Killin, CFO will discuss the quarter-end results and respond to questions during the call. Investors and analysts are invited to call the conference line: 1 (866) 212-4491 at least 5 minutes prior to the start of the call. For those unable to participate in the live conference, the event will be archived and available for replay on the Company's website or until May 27 at 11:59 pm by dialing 1 (866) 583-1035 and entering passcode 6520584#.

About Healthscreen Solutions

Healthscreen Solutions (www.healthscreen.com) provides a comprehensive suite of practice enhancement products and services to increase physician productivity and revenue while reducing costs and improving patient care. The Company's portfolio includes billing and scheduling software, electronic medical records software, CallerMD which assists physicians in managing a range of uninsured medical services, PrevCareMD which helps physicians earn supplemental income by achieving government-set preventive care targets, and HealthAlert which allows physicians to help their patients in managing complex healthcare issues. Healthscreen's and its partners' services and software are used by over 8,000 full-time physicians who are responsible for the health care of more than seven million Canadian patients.

(C) 2009 Healthscreen Solutions Inc. All Rights Reserved.

Disclaimer: Forward Looking Statements

This press release contains information that is forward looking information with respect to Healthscreen within the meaning of Section 138.4(9) of the Ontario Securities Act and other applicable securities laws. In some cases, forward-looking information can be identified by the use of terms such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "intend", "estimate", "predict", "potential", "continue" or the negative of theses terms or other similar expressions concerning matters that are not historical facts. In particular, statements about future revenues or profitability, including the estimated timing of profitability, and any other statements regarding Healthscreen's future expectations, beliefs, goals or prospects are or involve forward-looking information.

Forward-looking information is based on certain factors and assumptions. While the company considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect. Forward-looking information, by its nature necessarily involves risks and uncertainties, including risks and uncertainties relating to government regulation and funding in the healthcare industry, financial and capital market risks, technology development and adoption, Healthscreen's ability to maintain its competitive position and effectively implement it's acquisition strategy, liability for software malfunction, management of growth, and length of sales cycles. Additional risks and uncertainties affecting Healthscreen can be found in Healthscreen's 2008 Annual Report and Management's Discussion and Analysis for the Fiscal Year ended September 30, 2008 filed on SEDAR at www.sedar.com. If any of these risks or uncertainties were to materialize, or if the factors and assumptions underlying the forward-looking information were to prove incorrect, actual results could vary materially from those that are expressed or implied by the forward-looking information contained herein. Healthscreen or revise any forward looking statements, whether as a result of new information, future events or otherwise. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof. Trading in the securities of Healthscreen should be considered highly speculative.

The TSX Venture Exchange has in no way approved nor disapproved the contents of this new release.

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