MediSolution Ltd.
TSX : MSH

MediSolution Ltd.

August 11, 2005 08:01 ET

MediSolution Announces Results for the First Quarter

MONTREAL, QUEBEC--(CCNMatthews - Aug. 11, 2005) - MediSolution Ltd. (TSX:MSH), a leading Canadian healthcare information technology company, today announced its financial results for the first quarter ended June 30, 2005.

Revenue decreased by 6% to $11.1 million in the quarter compared to the prior year. Revenues from system sales decreased by $0.7 million, or 16%, during the current quarter compared to the prior year. The reduction in revenue was primarily due to:



- Lower Q1 implementation activity resulting from reduced HIS
clinical solutions sales in fiscal 2005; and
- De-emphasis of the company's lower margin hardware reselling
business.


MediSolution achieved EBITDA (1) of $0.7 million for the quarter ended June 30, 2005, compared to EBITDA of $0.8 million in the prior year. EBITDA for the quarter includes restructuring charges of $0.3 million. EBITDA also includes the gain on sale on the disposal of the site management division of $0.25 million. Excluding these two items, EBITDA for the quarter would be $0.8 million, unchanged from the prior year because lower revenues on new systems sales were offset by decreased indirect costs, due in large part to cost-cutting initiatives

MediSolution's net loss of $0.5 million, or $0.00 per share, was unchanged from the prior year.

Highlights

New Orders Increased Over 100% Over the Prior Year

MediSolution has had a strong start to the year, securing a total of $6.0 million in new business during the quarter, compared to $2.9 million in the prior year. Approximately 50% of these orders were generated outside of Quebec. Orders in the quarter included contracts with the following customers:



- Calgary Health Region (Alberta), in partnership with In4tek of the
United Kingdom, to deliver In4tek's PARIS software product and
provide services for a community care information system;
- St. Claire Regional Medical Center (Kentucky) for MediLab®, an
automated laboratory information system;
- University of Alabama at Birmingham (Alabama) for MediLab®;
- Winnipeg Regional Health Authority (Manitoba) for MediAR, an
integrated patient billing and accounts receivable solution; and
- Centre Regional des Achats en Commun ("CERAC") Bas Saint-
Laurent/Gaspesie, (Quebec) for MediFinance®, a financial and
materials management information system.


It is expected that the revenue on these contracts will be recognized over the next twenty four months, with the exception of the CERAC deal which will have sites implemented over the next five years.

Divestiture of Non-Strategic Site Management Business

Effective May 1, 2005, MediSolution divested of its site management division for cash proceeds of $0.25 million on closing plus additional contingent royalties of up to $0.4 million over the next four years. The site management business, previously included in the RM segment, comprised the maintenance of computer and networking equipment and related support services for five customers. The transaction included the transfer of all of the 16 employees to the purchaser along with the sale of the five contracts. This transaction is part of our ongoing plan to refocus the organization on our core software and services while divesting of non-core businesses such as the site management division.

Productivity Improvement Initiatives Implemented

In February 2005, the Company announced that it would close three of its offices as a part of a plan to consolidate the support and development groups. Over 60% of the planned headcount reductions have been completed. In June 2005, the Edmonton office closure was completed on schedule while the Phoenix office will be closed on October 1, 2005, three months ahead of schedule. The London office has already been significantly downsized.

Notice of Conference Call Webcast

MediSolution will be hosting a conference call to discuss the Company's first quarter financial results and business initiatives on Thursday, August 11, 2005 at 4:00 p.m. (EDT). To participate in the call, or listen to the taped rebroadcast, go to www.medisolution.com/investors/calendar.htm.

About MediSolution

MediSolution (TSX:MSH) is a leading healthcare and public sector information technology company, providing software, solutions and services to customers across North America. More than 500 hospitals and other healthcare facilities as well close to 200 public sector or government related organizations rely on MediSolution's systems to maximize their operational efficiencies, lower their costs, and improve the delivery of services. MediSolution has two operating segments. The Resource Management Systems segment is comprised of Financial Management software such as accounts receivable, budgeting and materials management as well as Human Capital Management tools including human resource management, staff scheduling and payroll processing. The Healthcare Information Systems segment is comprised of clinical solutions such as patient tracking, electronic patient health records, pharmacy, radiology and laboratory software for hospitals.

For more information, visit www.medisolution.com.

Note: This press release contains "forward-looking statements". The words "believe", "expect", "anticipate", "intend", "estimate" and other expressions which are predictions of or indicate future events and trends and which do not relate to historical matters identify forward-looking statements. Reliance should not be placed on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the company to differ materially from anticipated future results, performance or achievements expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially from those set forth in the forward-looking statements include general economic conditions, interest rates, availability of equity and debt financing and other risks detailed from time to time in the company's continuous disclosure documents. The company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

(1) The term "EBITDA" (earnings before interest expense, income taxes, depreciation of property and equipment and amortization of intangible assets) does not have a standardized meaning prescribed by Canadian Generally Accepted Accounting Principles (GAAP) and may not be comparable to similar measures presented by other publicly traded companies. We use EBITDA amongst other measures, to assess the operating performance of our business.



CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

---------------------------------------------------------------------
Three months ended June 30 (in thousands of
dollars, except share amounts) 2005 2004
---------------------------------------------------------------------

REVENUE
System sales $3,727 $4,418
Support and processing 7,394 7,388
---------------------------------------------------------------------
11,121 11,806
Cost of revenue 6,693 6,784
---------------------------------------------------------------------
Gross profit 4,428 5,022
Sales and marketing expenses 2,197 2,383
Software development expenses 317 626
General and administrative expenses 1,114 1,276
Restructuring charges 333 -
Gain on disposal of assets (10) -
---------------------------------------------------------------------
Earnings before the undernoted items: 477 737

Depreciation of property and equipment 211 198
Amortization of intangible assets 989 1,170
Interest expense 55 13
Loss (gain) on foreign exchange 17 (12)
---------------------------------------------------------------------
Net loss from continuing operations (795) (632)
Income from discontinued operations 250 66
---------------------------------------------------------------------
Net loss $(545) $(566)
---------------------------------------------------------------------
---------------------------------------------------------------------
Net loss per share - basic and fully diluted $(0.00) $(0.00)
---------------------------------------------------------------------
Weighted average number of common shares
outstanding 157,203,870 156,027,813
---------------------------------------------------------------------
---------------------------------------------------------------------



CONSOLIDATED STATEMENTS OF DEFICIT (UNAUDITED)

---------------------------------------------------------------------
Three months ended June 30 (in thousands of
dollars) 2005 2004
---------------------------------------------------------------------

Deficit, beginning of period $(525) $(63,860)
Net loss (545) (566)
Interest on share purchase financing 9 8
---------------------------------------------------------------------
Deficit, end of period $(1,061) $(64,418)
---------------------------------------------------------------------
---------------------------------------------------------------------



CONSOLIDATED BALANCE SHEETS

---------------------------------------------------------------------
As at (in thousands of dollars) June 30, 2005 March 31, 2005
---------------------------------------------------------------------
(Unaudited) (Audited)

ASSETS

Current Assets
Cash $67 $192
Accounts receivable and accrued revenue 15,727 25,957
Inventory 949 861
Sundry deposits and prepaid expenses 1,656 1,443
---------------------------------------------------------------------
18,399 28,453

Property and equipment 1,583 1,806
Intangible assets 9,051 9,175
Goodwill 8,384 8,611
---------------------------------------------------------------------
$37,417 $48,045
---------------------------------------------------------------------
---------------------------------------------------------------------

LIABILITIES

Current Liabilities
Short-term loans $2,097 $5,271
Accounts payable and accrued liabilities 8,925 11,910
Deferred revenue 17,880 21,914
Obligations under capital leases 81 113
---------------------------------------------------------------------
28,983 39,208

Future income taxes 154 154
---------------------------------------------------------------------
29,137 39,362
---------------------------------------------------------------------
---------------------------------------------------------------------

SHAREHOLDERS' EQUITY 8,280 8,683
---------------------------------------------------------------------
$37,417 $48,045
---------------------------------------------------------------------
---------------------------------------------------------------------



CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

---------------------------------------------------------------------
Three months ended June 30 (in thousands
of dollars) 2005 2004
---------------------------------------------------------------------

INFLOW (OUTFLOW) RELATED TO THE FOLLOWING
ACTIVITIES

Operating
Net loss $(545) $(566)
Items not affecting cash:
Depreciation of property and equipment 211 198
Amortization of intangible assets 989 1,170
Stock options compensation 123 126
Gain on disposal of assets (260) -
Non-cash portion of restructuring charges 25 -
Changes in non-cash operating working capital
items 3,181 2,899
---------------------------------------------------------------------
3,724 3,827
---------------------------------------------------------------------

Investing
Business acquisition, net of cash acquired - (1,849)
Proceeds from disposal of assets 271 -
Additions to intangible assets (865) (586)
Additions to property and equipment (68) (187)
---------------------------------------------------------------------
(662) (2,622)
---------------------------------------------------------------------

Financing
Repayment under capital leases (32) (32)
Issuance of common shares 10 15
Interest on share purchase financing 9 8
Decrease of short-term loans (3,174) (856)
---------------------------------------------------------------------
(3,187) (865)
---------------------------------------------------------------------
(Decrease) increase in cash and cash
equivalents (125) 340
Cash, beginning of period 192 598
---------------------------------------------------------------------
Cash, end of period $67 $938
---------------------------------------------------------------------
---------------------------------------------------------------------

Supplemental cash flow information
Interest paid $67 $13
Issuance of shares for business acquisition $- $1,580
---------------------------------------------------------------------
---------------------------------------------------------------------


Contact Information

  • MediSolution Ltd.
    Allan D. Lin
    President and Chief Executive Officer
    (514) 850-5040