Inspira Financial
TSX VENTURE : LND

January 31, 2017 09:00 ET

Inspira Financial Inc. Releases Third Quarter Financial Results

Completes Integration of Billing Company, Now Offering a Single Solution to the Market; Continued Focus on Transitioning the Loan Book into the Addiction Industry

BOCA RATON, FLORIDA--(Marketwired - Jan. 31, 2017) -

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Inspira Financial Inc. (TSX VENTURE:LND) ("Inspira"), a company focused on providing revolving lines of credit, as well as billing and collection services, to the highly fragmented U.S. mental health and addiction services market, released its unaudited condensed interim consolidated financial statements for the three and nine month periods ended November 30, 2016.

Q3 Overview:

  • Increased revenue to $1,190,403 as compared to $759,106 for the same quarter a year ago.
  • Generated $341,063 of net income before stock based compensation and before legal expenses related to the Terranova matter, the largest quarterly profit in the history of the Company.
  • The balance sheet remained relatively steady with assets of $30,859,407 as compared to the year-ending quarter (February 28, 2016) of $31,736,018.
  • Launched sales and marketing campaign to small-sized addiction centers in the US with a focus on building a sizable client roster.

"I am pleased with this quarter from an operational point of view," said Edward Brann. "We are in full swing now in terms of building our client roster. We are attending a number of addiction focused conferences and continue to invest in technology development to improve margins in our billing and collections group. Our refresh of this Company is nearly behind us. Over the last quarter, I have asked many of the past officers and directors, as well as advisors, to step aside so that we can refresh our efforts and focus on sales growth and better communications to shareholders. We instituted a special dividend, and continued with our quarterly dividend. We narrowed our sales focus from an unwieldy $3 trillion dollar market to a tightly segmented $35 billion market, which I expect will result in renewed sales growth. We have focused on an integrated business offering several cash flow support services that are as compelling as anything in the market. We are finding quite a bit of interest for this approach from potential clients and I am gratified to see it in action. Finally, I am proud that we were able to secure several clients for the single solution, billing and lending, that we have been offering over the last few months."

"I am hopeful we can all get back to focusing on growing our business rather than fighting over it. I believe we should be spending our capital on investments that improve this business, not legal fees, and I invite all shareholders to support this new plan. I hope we can put past conflicts aside and work together to build shareholder value through both increasing revenues and profits, but also improving market communication and transparency."

Reduction of Options Issued

At the end of the second fiscal quarter ending August 30, 2016, the Company had a total of 6,065,427 options outstanding at an average weighted exercise price of $0.55. At the end of the third quarter, the Company had a total of 2,694,731 options outstanding at an average exercise price of $0.47. During the third quarter, no new options were issued and to date, no options have been exercised.

"Since joining the Board in early November, I have been focused on reducing the number of outstanding options to limit dilution and am pleased that the total options outstanding have been more than cut in half. I will continue to focus on putting shareholders first and will keep the market up to date on our option issuances."

Inspira's unaudited condensed interim consolidated financial statements for the three and nine months ended November 30, 2016 and accompanying Management's Discussion & Analysis (MD&A) are available at www.sedar.com.

About Inspira Financial

The mental health and substance abuse market in the U.S. is a rapidly expanding industry, with current spending exceeding $35 billion. Within this industry, thousands of businesses have annual revenues in the $1 million to $50 million range. Due to the significant increase in addiction treatment as a result of the Parity Act, the large and permanently elevated volumes of claims has led Payors to impose upon facilities in the mental health sector similarly complex reimbursement requirements as those imposed in the physical healthcare sector. Substance abuse facilities tend to use several software applications and a non-automated billing company to document services provided and bill insurance companies. This cumbersome process slows down the tracking, billing and collection process as the customer's billings increase, and were not designed to handle the volume, or level of detail, now required by Payors for prompt payment. As a result, across the mental health and substance abuse industry there are collection delays and consequently a need for capital.

Non-GAAP Measures

Inspira uses a number of financial measures to assess its performance and these measures are intended to provide additional information to investors concerning Inspira. Some of these measures, including operational profit, are not calculated in accordance with Generally Accepted Accounting Principles (GAAP), which are based on International Financial Reporting Standards (IFRS), are not defined by GAAP and do not have standardized meanings that would ensure consistency and comparability between companies using these measures. These non-GAAP measures are used throughout this news release and are defined below:

Operational profit is defined as net income before stock based compensation and before legal expenses related to the Terranova matter. A reconciliation of operational profit to net income is included below:

Quarter ended Nov 30, 2016
Net Income $ (361,271 )
ADD Back: Share-based Compensation $ 308,294
ADD Back: Legal Fees Terranova Matter $ 394,039
Operational Profit $ 341,062

Management uses these non-GAAP measures as key metrics in the evaluation of Inspira's performance and the consolidated financial results. Inspira believes these non-GAAP measures are useful to investors in their assessment of the operating performance and the valuation of Inspira. In addition, these non-GAAP measures address questions Inspira routinely receives from analysts and investors and, in order to assure that all investors have access to similar data, Inspira has determined that it is appropriate to make this data available to all investors. However, non-GAAP financial measures are not prepared in accordance with GAAP, as they exclude certain items as described above. Therefore, the information is not necessarily comparable to other companies and should be considered as a supplement to, not a substitute for, or superior to, the corresponding measures calculated in accordance with GAAP.

Forward-Looking Statements

Certain statements contained in this press release constitute "forward-looking information" as such term is defined in applicable Canadian securities legislation. The words "may", "would", "could", "should", "potential", "will", "seek", "intend", "plan", "anticipate", "believe", "estimate", "expect" and similar expressions as they relate to Inspira, narrowing of the sales focus resulting in renewed sales growth, and building shareholder value through both increasing revenues and profits, are intended to identify forward-looking information. All figures are in Canadian dollars. All statements other than statements of historical fact may be forward-looking information. Such statements reflect Inspira's current views and intentions with respect to future events, and current information available to Inspira, and are subject to certain risks, uncertainties and assumptions, including; attracting clients by having a more targeted sales and marketing strategy; existing clients not decreasing in size; adding new clients will increase revenue; increasing revenue and profits improves share price; the continued existence of billing/collection contracts; the demand for addiction treatment continuing to increase; the new service line being complimentary to existing Inspira clients; Inspira being successful in its integration of the billing company; Inspira's clients maintaining revenue regardless of overall industry demand; Inspira's sales and marketing efforts resulting in more clients; increasing total clients serviced will result in Inspira's ability to attract larger clients which will have a significant positive impact on revenue; sales and marketing effectively growing the total client base; Inspira being able to use the scale of multiple clients and a larger operation to reduce costs; and the ability of Inspira to successfully create, including its ability to retain and employ the necessary talent, the effective software that results in automation. Material factors or assumptions were applied in providing forward-looking information. Many factors could cause the actual results, performance or achievements that may be expressed or implied by such forward-looking information to vary from those described herein should one or more of these risks or uncertainties materialize.
These factors include changes in law, competition, the ability to implement business strategies and pursue business opportunities, state of the capital markets, the availability of funds and resources to pursue operations, dependence on debt markets and interest rates, demand for the lending products Inspira offers at interest rates higher than at which Inspira can borrow, a novel business model, granting of permits and licenses in a highly regulated business, difficulty integrating newly acquired businesses (including the billing company), risks of performance by the target, new technologies, risk of billing irregularities by borrowers, low profit market segments, as well as general economic, market and business conditions, as well as those risk factors discussed or referred to in Inspira's annual Management's Discussion and Analysis for the year ended February 29, 2016, filed with the securities regulatory authorities in certain provinces of Canada and available at
www.sedar.com. Should any factor affect Inspira in an unexpected manner, or should assumptions underlying the forward-looking information prove incorrect, the actual results or events may differ materially from the results or events predicted. Any such forward-looking information is expressly qualified in its entirety by this cautionary statement. Moreover, Inspira does not assume responsibility for the accuracy or completeness of such forward-looking information. The forward-looking information included in this press release is made as of the date of this press release and Inspira undertakes no obligation to publicly update or revise any forward-looking information, other than as required by applicable law.

All amounts herein are in Canadian dollars and are based on our interim consolidated financial statements and accompanying MD&A for the three and nine month periods ended November 30, 2016 and related notes prepared in accordance with International Financial Reporting Standards (IFRS) unless otherwise noted.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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