MediSolution Ltd.
TSX : MSH

MediSolution Ltd.

November 10, 2005 09:00 ET

MediSolution Announces Results for the Second Quarter

MONTREAL, QUEBEC--(CCNMatthews - Nov. 10, 2005) - MediSolution Ltd. (TSX:MSH), a leading Canadian healthcare information technology company, today announced its financial results for the second quarter ended September 30, 2005.

The Company is reporting a profit of $0.3 million as a result of increased revenue growth, improved operational profits, and a gain on settlement of a liability.

Revenue increased by 9% to $11.0 million in the quarter compared to the prior year. Revenues from system sales increased by $0.5 million, or 20%, while recurring revenue increased by 4% during the current quarter compared to the prior year. The increase in revenue was mainly concentrated in the Healthcare Information Systems segment, which increased $0.8 million, or 17% over the prior year, while Resource Management system revenues were up 2% or up $0.1 million from the prior year.

MediSolution achieved EBITDA(1) of $0.8 million for the quarter ended September 30, 2005, compared to EBITDA of $0.1 million in the prior year. EBITDA for the quarter includes restructuring charges of $0.1 million related to the office consolidation plan announced in February 2005.

MediSolution is reporting a profit of $0.3 million or $0.00 per share, compared to a loss of $1.2 million, or $0.01 per share in the prior year. These quarterly results also include a $0.7 million gain relating to the write off of a liability following the dismissal of a lawsuit against MediSolution. This gain is not included in our calculation of EBITDA.

On a year-to-date basis, revenues totalled $22.1 million compared to $21.9 million in the prior year. EBITDA for the six months ended September 30, 2005 was $1.5 million compared to $0.9 million in the prior year. Excluding the restructuring charges, the EBITDA would be $2.0 million this year compared to $0.9 million in the prior year. Net loss on a year-to-date basis was $0.2 million, compared to a loss of $1.7 million in the prior year. The first half of the year is traditional slower than the second half as fewer system implementations occur during the summer months.

(1) The term "EBITDA" (earnings before interest expense, income taxes, depreciation of property and equipment and amortization of intangible assets and gain on dismissal of lawsuit) 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. EBITDA includes income from discontinued operations. Refer to Management's Discussion and Analysis for the quarter ended September 30, 2005 for a reconciliation of EBITDA to net income (loss) on a consolidated basis.


New Orders Increased Over 30% Compared to the Prior Year

MediSolution continues to experience a strong order writing start to the year, securing a total of $4.1 million in new business orders during the second quarter, compared to $3.1 million in the prior year. Over the past six months, the company is reporting a 65% increase in sales orders compared to the prior year with sales orders amounting to $10.1 million compared to $6.2 million last year. 50%, or $5 million in sales orders were generated outside of Quebec, including $2.6 million on the Calgary community health contract. Order taking activity in the Quebec healthcare market is now beginning to rebound following the reorganization of the industry over the past 18 months. Orders in the Quebec healthcare market are 42% higher on a year-to-date basis compared to the prior year.

Orders in the second quarter included contracts with the following customers:

- Calgary Health Region (Alberta) for additional orders for professional services to implement the enterprise-wide community care information system. The system is being implemented in partnership with In4tek;

- Agence de developpement de reseaux locaux de services de sante et de services sociaux du Bas-Saint-Laurent (Quebec) to implement MediSolution's Patient Management Systems (MediPatient+® and MediVisit®) ;

- Centre de sante et de services sociaux du Lac-des-Deux-Montagnes (Quebec) for MediLab®, an automated laboratory information system; and

- L'Institut de recherche Robert-Sauve en sante et securite du travail (Quebec) for VIRTUO, an integrated financial and materials management system.

It is expected that the revenue on these contracts will be recognized over the next twenty four months.

Additional Productivity Improvement Initiatives Implemented

On October 5, 2005, the Company announced a plan to accelerate its previously announced office consolidation plan as well as additional savings from increased efficiency and organizational focus.

As a result of these operational efficiency efforts, the Company has identified additional areas for costs savings. These actions are expected to be completed by the end of January. Restructuring expenses of approximately $0.8 million will be charged to earnings, largely during the quarter ended December 31, 2005 and will result in additional annual savings of approximately $2.5 million which are in addition to the $2.5 million in annual savings previously announced as part of the Office Consolidation Plan.

Notice of Conference Call Webcast

MediSolution will be hosting a conference call to discuss the Company's second quarter financial results and business initiatives on Monday, November 14, 2005 at 10:00 a.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 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 healthcare facilities.

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.



CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

(in thousands of dollars except share amounts)

--------------------------------------------------------------------
Three months ended Six months ended
September 30 September 30
2005 2004 2005 2004
--------------------------------------------------------------------
REVENUE
System sales $3,379 $2,820 $7,106 $7,239
Support and
processing 7,622 7,298 15,016 14,686
---------------------------------------------------------------------
11,001 10,118 22,122 21,925
Cost of revenue 6,313 5,937 13,006 12,723
---------------------------------------------------------------------
Gross profit 4,688 4,181 9,116 9,202
Sales and
marketing expenses 2,006 2,206 4,203 4,588
Software
development expenses 244 415 561 1,042
General and
administrative
expenses 1,531 1,464 2,645 2,741
Restructuring charges 135 - 468 -
Gain on disposal
of assets (2) - (12) -
---------------------------------------------------------------------
Earnings before the
undernoted items: 774 96 1,251 831

Depreciation of property
and equipment 185 203 396 400
Amortization of
intangible assets 955 1,111 1,944 2,281
Gain on dismissal
of lawsuit (707) - (707) -
Interest expense 35 40 90 53
Gain on foreign exchange (17) (34) - (47)
---------------------------------------------------------------------
Net income (loss) from
continuing operations 323 (1,224) (472) (1,856)
Income from discontinued
operations 26 54 276 120
---------------------------------------------------------------------
Net income (loss) $349 $(1,170) $(196) $(1,736)
---------------------------------------------------------------------
---------------------------------------------------------------------
Net income (loss)
per share - basic
and fully diluted 0.00 (0.01) (0.00) (0.01)
---------------------------------------------------------------------
Weighted average
number of common
shares
outstanding 157,238,596 157,318,544 157,221,238 156,676,705
---------------------------------------------------------------------
---------------------------------------------------------------------

CONSOLIDATED STATEMENTS OF DEFICIT
(UNAUDITED)

(in thousands of dollars)

--------------------------------------------------------------------
Three months ended Six months ended
September 30 September 30
2005 2004 2005 2004
--------------------------------------------------------------------

Deficit, beginning
of period $(1,061) (64,418) $(525) $(63,860)
Deficit applied to
stated capital - 64,000 - 64,000
Net income (loss) 349 (1,170) (196) (1,736)
Interest on share
purchase financing 9 7 18 15
--------------------------------------------------------------------
Deficit, end of period $(703) $(1,581) $(703) $(1,581)
--------------------------------------------------------------------
--------------------------------------------------------------------


CONSOLIDATED BALANCE SHEETS

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

ASSETS

Current Assets
Cash $269 $192
Accounts receivable and accrued revenue 10,385 25,957
Inventory 917 861
Sundry deposits and prepaid expenses 1,380 1,443
---------------------------------------------------------------------
12,951 28,453

Property and equipment 1,460 1,806
Intangible assets 8,782 9,175
Goodwill 8,366 8,611
---------------------------------------------------------------------
$31,559 $48,045
---------------------------------------------------------------------
---------------------------------------------------------------------

LIABILITIES

Current Liabilities
Short-term loans $1,507 $5,271
Accounts payable and accrued liabilities 7,743 11,910
Deferred revenue 13,427 21,914
Obligations under capital leases 9 113
---------------------------------------------------------------------
22,686 39,208

Future income taxes 154 154
---------------------------------------------------------------------
22,840 39,362
---------------------------------------------------------------------
---------------------------------------------------------------------

SHAREHOLDERS' EQUITY 8,719 8,683
---------------------------------------------------------------------
$31,559 $48,045
---------------------------------------------------------------------
---------------------------------------------------------------------


CONSOLIDATED STATEMENTS OF CASH
FLOWS (UNAUDITED)

(in thousands of dollars)

--------------------------------------------------------------------
Three months ended Six months ended
September 30 September 30
2005 2004 2005 2004
--------------------------------------------------------------------

INFLOW (OUTFLOW) RELATED
TO THE FOLLOWING
ACTIVITIES
Operating
Net income (loss) $349 $(1,170) $(196) $(1,736)
Items not affecting cash:
Depreciation of
property and
equipment 185 203 396 400
Amortization of
intangible assets 955 1,111 1,944 2,281
Stock options
compensation 82 124 205 250
Gain on dismissal
of lawsuit (707) - (707) -
Gain on disposal
of assets (2) 1 (263) 1
Non-cash portion of
restructuring
charges (21) - 4 -
Changes in non-cash
operating:
Working capital items 875 (3,498) 4,056 (598)
--------------------------------------------------------------------
1,716 (3,229) 5,439 598
--------------------------------------------------------------------

Investing
Business acquisition,
net of cash acquired (112) - (112) (1,849)
Proceeds from disposal
of assets - 4 271 4
Additions to
intangible assets (685) (1,008) (1,550) (1,594)
Additions to property
and equipment (64) (216) (131) (403)
--------------------------------------------------------------------
(861) (1,220) (1,522) (3,842)
--------------------------------------------------------------------

Financing
Repayment under
capital leases (72) (28) (104) (60)
Issuance of common shares - 10 10 25
Interest on share
purchase financing 9 7 18 15
(Decrease) increase of
short-term loans (590) 3,794 (3,764) 2,938
--------------------------------------------------------------------
(653) 3,783 (3,840) 2,918
--------------------------------------------------------------------
Increase (decrease) in
cash and cash
equivalents 202 (666) 77 (326)
Cash, beginning
of period 67 938 192 598
--------------------------------------------------------------------
Cash, end of period $269 $272 $269 $272
--------------------------------------------------------------------
--------------------------------------------------------------------

Supplemental cash flow
information
Interest paid $35 $20 $101 $33
Issuance of shares for
business acquisition $- $- $- $1,580
--------------------------------------------------------------------
--------------------------------------------------------------------


Contact Information

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