Healthscreen Solutions Inc.
TSX VENTURE : MDU

Healthscreen Solutions Inc.

August 31, 2010 09:00 ET

Healthscreen Reports Third Quarter 2010 Results, and Announces New Loan Facility, Stock Option Amendments, and Issuance of Stock Options

Revenue grows by 15% from Q3 2009

- Total quarterly revenue grows to $4,011,072 from $3,501,141 for the same quarter of prior year

- SG&A and OPEX drop to 54% of revenue from 73% of revenue in Q3 2009

- EBITDA increases 58% from Q3 2009

TORONTO, ONTARIO--(Marketwire - Aug. 31, 2010) - Healthscreen Solutions Inc. (TSX VENTURE:MDU), Canada's premier provider of physician practice enhancement services and electronic medical record (EMR) software, today announced its third quarter of fiscal 2010 results for the period ending June 30, 2010. "Our focus on development and marketing our EMR product has really paid off this quarter, with software sales increasing by 96% over Q3 2009. Healthscreen has done a great job capturing additional market share in the EMR space; we are currently the second most popular EMR provider to Ontario government funded doctors, and we will continue to devote resources and attention to this product line until we are first" said Justin Belobaba, president and CEO of Healthscreen.

Q3 Fiscal Year 2010 Financial Results

Healthscreen's revenue for the quarter ended June 30, 2010 was $4,011,072, as compared to $3,501,141 in the quarter ended June 30, 2009, representing an increase of $509,931 or 15%. 

On a segmented basis, the Physician Services business unit's revenue for the quarter ended June 30, 2010 was $2,497,870, as compared to $2,427,871 in the quarter ended June 30, 2009, representing an increase of $69,999 or 3%. The growth in Physician Services revenue from the three months ended June 30, 2009 resulted from Chronic Condition Management services. Starting in Q2 2009, Healthscreen has started offering Chronic Condition Management services to the patients of physician customers. The Chronic Condition Management offering currently includes comprehensive case management for patients with diabetes and referral services to one of several chains of physiotherapy clinics.

The Software Product business unit's revenue for the quarter ended June 30, 2010 was $1,513,202, as compared to $1,073,270 in the quarter ended June 30, 2009, representing an increase of $439,932 or 41%. The overall increased revenue in the Software Products business unit was the result of a strong focus on new system sales, bolstered by an increased investment in the size and training of the software sales force and the recent funding announcement from the Ontario government.

Direct costs associated with the Healthscreen's Physician Services operations for the quarter ended June 30, 2010 was $860,521, as compared to $424,913 in the quarter ended June 30, 2009, representing an increase of $435,608 or 103%. The increase in Physician Services costs from Q3 2009 has primarily resulted increased Physician Services revenue as well as certain low margin revenue associated with some of the Company's initial Chronic Condition Management offerings. Hardware expense for the quarter ended June 30, 2010 was $283,876, as compared to $77,482 in the quarter ended June 30, 2009, representing an increase of $206,394 or 266%. Overall, the increase in hardware expenses has resulted from the growth in hardware revenues as well as a per unit increase in the cost of certain hardware components purchased during the quarter.

Selling, general and administrative expenses ("SG&A") expenses for the quarter ended June 30, 2010 was $1,081,191, as compared to $1,544,967 in the quarter ended June 30, 2009, representing a decrease of $463,776 or 30%. The overall drop in SG&A expenses for Q3 2010 from the comparative quarter was the result of cost cutting measures implemented in Q3 2009, which reduced overall staff headcount by 30% in that quarter. Certain of the expenses cut during that initiative have been resumed; however, the effects of the initiative remain evident in the SG&A expenses incurred. Operating expenses for the quarter ended June 30, 2010 was $1,069,976, as compared to $1,000,761 in the quarter ended June 30, 2009, representing an increase of $69,215 or 7%. The increase in operating expenses from the comparative three months in the prior year resulted from several recent hires in the growing Software Product business unit, including training and customer support staff.

Cash increased from $1,287,969 at September 30, 2009 to $2,204,688 at June 30, 2010, primarily as a result of a private placement for gross proceeds of $1.3M completed on April 20, 2010. In connection with the private placement, Healthscreen has issued 5,777,778 common shares at $.225 per share and warrants to purchase 5,777,778 common shares with an exercise price of $.30 and a one year term. The proceeds from the financing will be used for working capital and general corporate purposes.

Complete financial statements and the Management Discussion and Analysis and Financial Statements for the third quarter of 2010 are available on the Company's website at www.healthscreen.com and www.sedar.com.

Q4 2010 Outlook

Mr. Belobaba continued: "Looking forward to the remainder of 2010, we are focused on three important goals:
  • Capitalize on the market opportunity presented by the announcement of government funding for the purchase of EMR software;
  • Continue to build on our foundation of innovative products by refining existing offerings, and further commercializing our Chronic Condition Management services; and
  • Continue to focus on increasing EBITDA and become cash flow positive from the core business."

Amendment of Stock Option Plan

The Board of Directors of Healthscreen has also approved an amendment to the Company's Stock Option Plan which would permit options to vest at the discretion of the Board in accordance with TSX-V policy. The ability to tailor vesting arrangements based on the optionee will grant the Company increased flexibility to enter into arrangements with employees and consultants.

Stock Option Grant

Healthscreen has also granted an aggregate 350,000 stock options to consultants of the Company. Each option is exercisable at the share closing share price on August 30, 2010 and exercisable at any time until August 30, 2015. 

Amendment to Stock Option Grant

Healthscreen has agreed to permit 135,714 options granted to a former employee to vest in accordance with their original vesting schedule notwithstanding the optionees cessation of employment with the Company. The options will have an exercise period of 5 years. 

Loan

Healthscreen also announced today that it has entered into a secured credit facility with certain of its directors and officers for up to a maximum of $400,000 in order to finance the purchase of equipment used by the Company in the ordinary course of business.

Dr. Bruce Rosenberg, the Company's Privacy Officer and Vice President of Business Development and Justin Belobaba, the Company's President and Chief Executive Officer, both of whom are directors of the Company, collectively advanced approximately $266,799 to the Company during Q3 2010 as part of this secured credit facility. The debt is repayable in whole or in part by the Company at any time up to one year in advance, and carries an interest rate of 2% per month. The Company expects to be able to repay the secured credit facility with cash generated from operations. 

The Stock Option Plan amendment, issuance of stock options, amendment of stock option grant, and entering into the loan facility may be subject to TSX-V approval.

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.

© 2010 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.

Contact Information

  • Healthscreen Solutions Inc.
    Justin Belobaba
    President and CEO
    1-866-534-DOCS ext. 7015
    ir@healthscreen.com