Nightingale Informatix Corporation
TSX VENTURE : NGH

Nightingale Informatix Corporation

September 30, 2005 10:02 ET

Nightingale Reports Strong Growth For First Quarter Of Fiscal 2006

MARKHAM, ONTARIO--(CCNMatthews - Sept. 30, 2005) - Nightingale Informatix Corporation (TSX VENTURE:NGH) -

Not for dissemination in the United States of America

Nightingale Informatix Corporation ("Nightingale" or "the Company") (TSX VENTURE:NGH), today announced its financial results for the first quarter of fiscal 2006, ended June 30, 2005. Nightingale became a public company on September 1, 2005 via the amalgamation with Venquest Capital Ltd., ("Venquest"), a Capital Pool Corporation on the TSX Venture Exchange.

Nightingale continued to demonstrate strong organic growth in revenue fuelled by a significant increase in the sale of new licenses of its proprietary flagship product "myNightingale". In addition, Nightingale continued to build a healthy backlog of support and maintenance revenue under long term customer agreements, which is a foundation of the Company's recurring revenue stream, an important part of the Company's long term financial strategy.

Highlights

Highlights of the business for the first quarter of fiscal 2006, ended June 30, 2005 were as follows:

- Revenue grew to over $1 million for the quarter compared to revenue of $1.9 million for the entire previous fiscal 2005 year (no quarterly comparatives are available)

- The path to profitability continued unfolding according to plan. Expenses as a percentage of revenue dropped from 140% in fiscal 2005 to 102% in the first quarter of 2006

- Nightingale sold a total of 171 new Electronic Medical Record (EMR) licenses to various small and large clients under long term agreements, compared to 16 EMR licenses during the same period last year

- Nightingale began executing on three major software contracts in Canada, each estimated to contribute materially to the financial performance of Nightingale over the next few years:

a. Department of Health, Government of Nova Scotia: with a minimum value of $940,000 in the first year, and an additional recurring revenue stream from each subscriber

b. Alberta Orthopaedic Society: a 10 year contract worth over $4,600 per physician, with a minimum of 75 physicians annually

c. Mt. Sinai ARMS project: with a minimum value of $650,000 the first year and additional amounts for licenses and support over the life of the contract

- The company continued building strong brand equity and positioning as the Canadian market leader

- Key management personnel were added in the sales & marketing area

Summary of Financial Results

Revenue for the first quarter of fiscal 2006, ended June 30, 2005, was $1,011,290 while gross profit (i.e., revenue net of direct sales costs) was $867,756 representing a gross profit margin of 86%. This compared to revenue of $1,884,286 for the entire fiscal 2005 year ended March 31, 2005 with gross profit of $1,500,247 representing a gross profit margin of 80%.



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Q1 2006 Fiscal 2005
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Revenue 1,011,290 100% 1,884,286 100%

Gross Profit 867,756 86% 1,500,247 80%

Expenses 1,021,783 102% 2,630,747 140%

Net Loss for the Period (154,027) -15% (1,130,500) -60%
Net Loss per C/S (0.0014) (0.04)
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Expenses for the period totalled $1,021,783, or 102% of revenue for the period, compared to total expenses of $2,630,747, or 140% of revenue, for all of fiscal 2005. Expenses were reduced as a percentage of revenue as the Company better leveraged its existing resources across a larger customer base. Nightingale, however, continued to increase total expenses across all areas as it rounded out its capabilities in selling and delivering services to new and existing customers. Net loss for the period was $154,027, or 15% of revenue. This compares to net loss of $1,130,500, or -60% of revenue, for the entire period of fiscal 2005.

Nightingale expanded its sales force and continued to focus on enterprise clients. During the quarter, the Company also built marketing capabilities targeted at generating leads across both its market segments. In Client Services, Nightingale completed establishment of a country-wide implementation and training team, thereby reducing travel costs by having a local presence in each market. In Research and Development, Nightingale added new resources to continue enhancing its existing solutions and complete development of several new and innovative features.

The consolidated "unaudited" balance sheet, income statement and cash flow statement for first quarter of fiscal 2006 are attached. To view the full set of financial statements and MD&A for Nightingale, visit www.sedar.com.

Outlook

The healthcare IT market in Canada and the United States continues to demonstrate strong signals of a major positive shift. Policy makers, both federally and locally on both sides on the border continue to provide a positive environment for Electronic Medical Record adoption. The drivers behind this new momentum in the market are:

- Legislation governing patient privacy and data security are major drivers behind healthcare providers' automation

- Financial incentives offered by various levels of governments to subsidize the cost of software as well as associated hardware and implementation

- The benefits demonstrated by IT adoption in healthcare are seen in the improved quality of patient care as well as in the enhanced efficiency of running healthcare organizations

Nightingale has a clear and focused strategy for gaining market leadership and growing its market share and the Company will continue to execute on its strategy in a focused and diligent manner. Nightingale's strategy, listed below, sets Nightingale's immediate priorities, and are in various phases of execution:

- Continue to develop best of breed, technologically advanced tools and services to create a clear differentiator in the market place

- Deliver its products and services in a scalable, repeatable form with clear profitability targets

- Continue to adhere to an "operational excellence" approach to instil its position as the true "premiere" healthcare IT company in its markets

- Continue its quest for capturing market share through aggressive organic growth

- Execute its acquisition strategy, both in the US and Canada, of companies that provide complimentary services to the healthcare industry, where Nightingale's technology can be utilized, in order to accelerate its market penetration

Nightingale is pleased with its progress and its results to date and continues to explore innovative ways to accelerate the execution of its business plan and strategy to gain undisputed market leadership.



Selected Consolidated Financial Statements (Unaudited)

CONSOLIDATED BALANCE SHEET (Unaudited)
(In Canadian dollars)
AS AT JUNE 30, 2005

------------------------------------------------------------
------------------------------------------------------------

30-Jun-05
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ASSETS

Current Assets
Cash (Bank indebtedness) $ (6,438)
Accounts Receivable 953,662
Investment Tax Credits Receivable 296,305
Inventory 88,929
Prepaid Expenses 333,171
--------------

1,665,630
--------------

Capital Assets
Property and Equipment 604,942
--------------

604,942
--------------

$ 2,270,572
--------------
--------------

LIABILITIES

Current Liabilities
Accounts Payable and Accrued Liabilities $ 737,312
Current Portion of Deferred Revenue 609,240
Due to Shareholders 108,640
Bank Loan Payable 175,575
--------------

1,630,767
--------------

Long Term Liabilities
Deferred Compensation Payable to Employees 450,319
Deferred Revenue 848,281
--------------

1,298,600
--------------

SHAREHOLDERS' EQUITY/ (DEFICIENCY)
Capital Stock, Note 3 2,984,416
Contributed Surplus, Note 4 63,235
Deficit (3,706,447)
--------------

(658,795)
--------------

Total Liabilities and Shareholders'
Equity/(Deficiency) $ 2,270,572
--------------
--------------



CONSOLIDATED STATEMENT OF INCOME (Unaudited)
(In Canadian dollars)
FOR THE INTERIM PERIOD ENDED JUNE 30, 2005
-----------------------------------------------------------
-----------------------------------------------------------
3 months
ended
30-Jun-05
-----------------------------------------------------------

Revenue $ 1,011,290

Cost of Sales
Hardware, Software and Services 115,947
Sales Commissions 27,587
-----------

143,534
-----------

Gross Profit 867,756
-----------

Expenses
General and Administration 310,444
Sales and Marketing 279,411
Research and Development, Net of Government
Assistance 206,133
Implementation and Customer Support 191,297
Stock Based Compensation (9,772)
Interest on Bank Loan 3,319
Amortization - Property and Equipment 40,347
Amortization - Deferred Costs 603
-----------

1,021,783
-----------

Net Income (Loss) for the Period $ (154,027)
-----------
-----------


Net Loss per Common Share Basic $ (0.0014)
-----------
-----------

Weighted Average Number of Common Shares 113,888,745
-----------
-----------


CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
(In Canadian dollars)
FOR THE INTERIM PERIOD ENDED JUNE 30, 2005

---------------------------------------------------------------------
---------------------------------------------------------------------
3 months
ended
30-Jun-05
---------------------------------------------------------------------

Cash Flows from Operating Activities
Net Loss for the Period $ (154,027)
Adjustments for:
Amortization of Property and Equipment 40,347
Amortization of Deferred Costs 603
Stock Based Compensation (9,772)
----------------

(122,849)

Changes in Non-Cash Working Capital Balances
Decrease (Increase) in Accounts Receivable 317,276
Decrease (Increase) in Inventory (88,484)
Decrease (Increase) in Prepaid Expenses (151,189)
Decrease (Increase) in Tax Credits Receivable (62,500)
Increase (Decrease) in Accounts Payable and
Accrued Liabilities 86,018
Increase (Decrease) in Deferred Revenue (274,444)
Increase (Decrease) in Deferred Compensation Payable (5,130)
Decrease (Increase) in Common Share Subscription
Receivable 250,000

----------------
(51,302)

Cash Flow from Investing Activities
Purchase of Capital Assets (85,087)
----------------

(85,087)
----------------

Cash Flow from Financing Activities
Increase (Decrease) in Capital Stock -
Decrease (Increase) in Bank Loan Payable (8,931)
Increase (Decrease) in Due to Shareholders (50,000)
----------------

(58,931)
----------------

Net Increase (Decrease) in Cash (195,320)

Cash (Bank Indebtedness), Beginning of Year 188,882
----------------

Cash (Bank Indebtedness), End of Year $ (6,438)
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About Nightingale

Nightingale (www.nightingale.md) is Canada's largest healthcare application service provider (ASP) for Electronic Medical Records and Practice management. Customers include Mt. Sinai Hospital, the Government of Nova Scotia Department of Health, and the Alberta Orthopedics Society.

Nightingale's internet-based Electronic Health Record (EHR), Electronic Medical Record (EMR) and practice management solutions are designed to help physicians, clinics, hospitals and other healthcare organizations manage their practices, as well as their patient records through a secure internet browser. Nightingale's solutions offer multi-location, enterprise wide management and reporting capabilities. Nightingale's suite of products offer Canadian and United States physician's leading edge functionality for patient scheduling, resource scheduling, billing, claims processing, work flow tools, clinical documentation, laboratory interfaces, document management and patient portals, and other real-time patient services. 2043385 Ontario Inc. and VisionMD (2002) Inc. are wholly owned subsidiaries of Nightingale. Nightingale services customers in every province in Canada.

Except for historical information contained herein, this news release may contain forward-looking statements that involve risks and uncertainties. Actual results may differ materially. Factors that might cause a difference include, but are not limited to, market acceptance of principal products, the impact of competitive products and technologies, the possibility of products infringing patents and other intellectual property of fourth parties, and costs of product development. Neither Nightingale nor Venquest will update these forward-looking statements to reflect events or circumstances after the date hereof. More detailed information about potential factors that could affect financial results is included in the documents filed from time to time with the Canadian securities regulatory authorities by Venquest and Nightingale. Further information with respect to Nightingale and the Business Combination is available at www.sedar.com.

The TSX Venture Exchange Inc. has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • Nightingale Informatix Corporation
    Nick Vaney
    Chief Financial Officer
    (905) 943-2606
    or
    Veritas Communications Inc.
    Bill Walker
    Vice President
    (416) 482-2248 / (416) 558-8766