MediSolution Ltd.
TSX : MSH

MediSolution Ltd.

November 09, 2006 08:15 ET

MediSolution Announces Results for the Second Quarter

MONTREAL, QUEBEC--(CCNMatthews - Nov. 9, 2006) - MediSolution Ltd. (TSX:MSH), a leading Canadian healthcare information technology company, today announced its financial results for the second quarter ended September 30, 2006.

Revenue increased by 3% to $10.1 million in the quarter compared to $9.8 million reported in the same quarter last year. Revenue from system sales increased by $0.6 million, or 29%, during the second quarter compared to the same quarter last year while recurring revenue decreased by 5% to $7.3 million. The increase in new system sales relates to an increase in clinical solutions implemented in the Healthcare Information Systems segment. The decrease in recurring revenue is due to payroll price erosion in the Resource Management segment following the win of regional payroll contracts in the Montreal, Quebec City and La Mauricie regions in a highly competitive environment.

Total revenue in the Healthcare Information Systems segment increased by 16% to $6.0 million while revenues in the Resource Management segment decreased by 12% to $4.1 million in the quarter.

Gross margins in the second quarter were 46% compared to 43% in the same quarter last year. The increase in margins is attributable to the impact of a richer mix of products and the cost reduction initiatives carried out last year. Selling, general and administrative expenses were $3.8 million, slightly lower than in the same quarter last year.

MediSolution is reporting a net loss of $0.2 million, or $0.00 per share, which is the same as the loss of $0.2 million, or $0.00 per share in the same quarter last year. The quarter ended September 30, 2005 also included a non recurring $0.7 million gain relating to the settlement of a lawsuit.

Highlights

New Sales Orders

MediSolution secured sales orders totalling $6.1 million in new business during the quarter, compared to $4.1 million in the same quarter last year. Orders in the quarter included contracts with the following customers:

- Agence de la sante et des services sociaux de la Mauricie et du Centre-du-Quebec (Quebec), for a clinical information management solution;

- Regie regionale de la sante et des services sociaux Chaudiere-Appalaches (Quebec), for a public health Blood Bank module;

- Total Renal Laboratories, Inc & DVA Laboratory Services, Inc. (Florida), for an integrated patient billing and revenue cycle management solution;

- Runnymede Healthcare Centre (Ontario), for an integrated patient billing and revenue cycle management solution and a financial and materials management information system;

- South Huron Hospital Association (Ontario), for an integrated patient billing and revenue cycle management solution and a patient management system.

It is expected that these contracts will be implemented over the next 18 months.

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 as close to 200 public sector and 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 organizations.

For more information, visit www.medisolution.com.

Note: This press release contains "forward-looking statements" regarding the Company's expectation that new sales orders secured in the quarter will be implemented over the next 18 months. In making these statements, the Company has assumed that the products and services contemplated by new sales orders will in fact be delivered and implemented and lead to revenue. If these assumptions prove incorrect, actual results and developments may differ materially from those contemplated by the forward-looking statements contained in this press release. Factors that could cause actual results to differ also include general economic conditions, interest rates, availability of financing and other risks detailed from time to time in the Company's continuous disclosure documents.



MediSolution Ltd.
Consolidated Statements of Operations (unaudited)
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(in thousands of Three months ended Six months ended
dollars except September 30 September 30
share amounts) 2006 2005 2006 2005
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(As restated)(As restated)

REVENUE
System sales $2,860 $2,210 $5,387 $5,530
Support and processing 7,257 7,641 14,562 15,025
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10,117 9,851 19,949 20,555
Cost of revenue 5,508 5,594 11,629 12,067
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Gross profit 4,609 4,257 8,320 8,488
Sales and marketing
expenses 1,974 1,998 3,755 4,136
Software development
expenses 534 381 1,039 836
General and
administrative
expenses 1,276 1,548 2,779 2,592
Restructuring charges 36 148 174 520
Gain on disposal of
assets - (2) - (12)
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Earnings before the
undernoted items: 789 184 572 416

Depreciation of property
and equipment 151 185 301 396
Amortization of
intangible assets 782 955 1,608 1,944
Interest expense 47 35 61 90
Loss (gain) on foreign
exchange 25 (17) 43 -
Settlement of balance
of sale - (707) - (707)
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Net loss from continuing
operations (216) (267) (1,441) (1,307)
Income from discontinued
operations - 26 - 277
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Net loss $(216) $(241) $(1,441) $(1,030)
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Net loss per share
- basic and fully
diluted (0.00) (0.00) (0.01) (0.01)
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Weighted average
number of common
shares
outstanding 155,025,424 157,238,596 155,001,654 157,221,328
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MediSolution Ltd.
Consolidated Statements of Deficit (unaudited)
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(in thousands of Three months ended Six months ended
dollars) September 30 September 30
2006 2005 2006 2005
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(As restated) (As restated)
Deficit, beginning
of period $(3,293) $(1,305) $(2,080) $(525)
Net loss (216) (241) (1,441) (1,030)
Interest on share
purchase financing 11 9 23 18
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Deficit, end of
period $(3,498) $(1,537) $(3,498) $(1,537)
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MediSolution Ltd.
Consolidated Balance Sheets
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----------------------------------------------------------------
As at (in thousands of September 30, March 31,
dollars) 2006 2006
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(Unaudited) (Audited)

ASSETS

Current Assets
Cash $123 $966
Accounts receivable and accrued revenue 13,506 21,791
Inventory 655 419
Sundry deposits and prepaid expenses 1,826 1,180
Deferred expenses 90 103
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16,200 24,459

Property and equipment 1,287 1,165
Intangible assets 8,669 8,611
Goodwill 8,340 8,340
Deferred expenses 2,734 2,144
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$37,230 $44,719
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LIABILITIES

Current Liabilities
Short-term loans $4,219 $2,463
Accounts payable and accrued liabilities 8,577 10,494
Deferred revenue 13,173 20,471
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25,969 33,428

Deferred revenue 5,041 3,912
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31,010 37,340
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Contingencies and commitments
SHAREHOLDERS' EQUITY 6,220 7,379
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$37,230 $44,719
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MediSolution Ltd.
Consolidated Statements of Cash Flows (unaudited)
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(in thousands of Three months ended Six months ended
dollars) September 30 September 30
2006 2005 2006 2005
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(As restated) (As restated)
INFLOW (OUTFLOW)
RELATED TO THE
FOLLOWING ACTIVITIES
Operating

Net loss $(216) $(241) $(1,441) $(1,030)
Items not affecting
cash:
Depreciation of
property and
equipment 151 185 301 396
Amortization of
intangible assets 782 955 1,608 1,944
Stock options
compensation 128 82 208 205
Settlement of balance
of sale - (707) - (707)
Gain on disposal of
assets - (2) - (262)
Non-cash portion of
restructuring charges (81) (21) (116) 4
Changes in non-cash
operating
working capital items 2,129 5,328 5,601 12,543
Change in deferred
revenue (4,023) (3,303) (6,169) (6,920)
Change in deferred
expenses (88) (560) (577) (733)
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(1,218) 1,716 (585) 5,440
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Investing
Business acquisition,
net of cash acquired - (112) - (112)
Proceeds from disposal
of assets - - - 271
Additions to intangible
assets, net of tax
credits (816) (685) (1,666) (1,550)
Additions to property
and equipment (176) (64) (423) (132)
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(992) (861) (2,089) (1,523)
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Financing
Repayment under capital
leases - (72) - (104)
Issuance of common
shares - - 52 10
Interest on share
purchase financing 11 9 23 18
Increase (decrease)
of short-term loans 2,171 (590) 1,756 (3,764)
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2,182 (653) 1,831 (3,840)
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Increase (decrease) in
cash and cash
equivalents (28) 202 (843) 77
Cash, beginning of
period 151 67 966 192
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Cash, end of period $123 $269 $123 $269
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Supplemental cash
flow information
Interest paid $36 $35 $50 $101
Income taxes received $- $- $- $-
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Contact Information

  • MediSolution Ltd.
    Allan D. Lin
    Chief Executive Officer
    514-850-5040
    or
    MediSolution Ltd.
    Paul Roche
    Senior Vice President and Chief Financial Officer
    514-850-5040