QHR Technologies Inc.
TSX VENTURE : QHR

QHR Technologies Inc.

November 25, 2010 07:46 ET

QHR Announces Q3 2010 Revenue of $4.65 Million

KELOWNA, BRITISH COLUMBIA--(Marketwire - Nov. 25, 2010) - QHR Technologies Inc. ("QHR" or the "Company") (TSX VENTURE:QHR) a leader in the Canadian Healthcare Information Technology sector, reports third quarter results for the three and nine months ended September 30, 2010.

HIGHLIGHTS

  • $4.65 million revenue in Q3 2010, an increase of $896 thousand or 23.9% over same quarter, prior year.
  • EMR division revenue up 151% compared to same quarter prior year ($2.3 million Q3 2010 compared to $907 thousand in Q3 2009). Of the $1.4 million quarterly revenue increase, $543 thousand came from organic growth and $850 thousand from the Clinicare acquisition. 
  • Year-to-date revenue increase of 49.5% representing an increase of $4.8 million over the same period prior year, moving from $9.6 million to $14.4 million.
  • EBITDA for 2010 Q3 is $517 thousand, and the year-to-date EBITDA is $1.7 million.
  • EMR division grows with dominant EMR position in Saskatchewan and Manitoba.
  • EMR division hosts 215 client staff at the 2nd Annual User Conference in Kelowna, B.C.

Q3 RESULTS

Revenue for the third quarter of fiscal 2010 was $4.65 million, down 9.6% from $5.09 million in the previous record quarter and up 23.9% from $2.3 million in the same quarter of last year. Of the $440 thousand reduction in revenues from the previous and all time high quarter of Q2 2010, $330 thousand relate to seasonal variations during summer months, where delivery tends to slow due to client staff vacation schedules. This slow down and subsequent reduction in revenue is typical for the company during the third quarter. The revenue breakdown for the quarter was approximately 51% within the EMS division and 49% within the EMR division.

The Company's net loss for the quarter was $91.8 thousand, or ($0.00) per share, compared with net income of $655.8 thousand, or $0.03 per share in the same quarter prior year, which included approximately $1 million in software licenses in the EMS division recognized in that prior year quarter. Net loss for the 9 month year-to-date period was $118.4 thousand, or ($0.00) per share, compared with net income of $1.02 million, or $0.04 per share in the same period prior year. More detailed financial information can be viewed below.

"I believe 2010 to be the company's breakout year, where we have shown a strong ability to grow our top line organically and to make intelligent acquisitions that further increase our client base, revenues, and earnings", said Al Hildebrandt, President and CEO. "Although encouraged by the strong top-line results in 2010, we need to monitor our costs of raising capital while continuing our investment in optimizing the Company's three recent acquisitions, building for the future through investments in the company's IT infrastructure, product development, processes and people, while focusing and actively managing to strong earnings."

Conference Call Details: Al Hildebrandt, CEO & President and Charles LaFleche, Chief Financial Officer, will host a conference call at 8:00 a.m. EST (5am PST) Thursday November 25, 2010 to discuss the results of the Company for the third quarter of 2010. To listen to the conference call, please dial 647-427-7450 (Toronto) or 778-371-9827 (Vancouver).

On a November 23, 2010 News Release the Company announced the filing of the Short Form Prospectus regarding the Offering as being led by Paradigm Capital Inc. and including a syndicate of agents comprised of Versant Partners Inc. and MGI Securities Inc. (collectively, the "Agents") as properly disclosed in the Prospectus. MGI Financials Inc. was incorrectly disclosed in the News Release.

ABOUT QHR TECHNOLOGIES INC.

QHR operates two business units in distinct markets:

The Electronic Medical Records ("EMR") division offers a suite of medical software modules that provides computer-based medical records for family physicians, medical specialists, and surgeons, as well as administrative modules for billing and patient scheduling, that is a key component of the move throughout Canada to provide electronic healthcare records for all Canadians. The EMR division also provides on-site and off-site (ASP) hosting capabilities.

The Enterprise Management Software ("EMS") division specializes in workforce management software, which consists of integrated payroll, staff scheduling and human resource software, and in customized financial management software built on the Microsoft Dynamics GP platform. These products are targeted at complex healthcare, social services and public safety environments.

For a more complete business and financial profile of the Company, management encourages interested parties to visit the Company's website, www.QHRtechnologies.com.

On behalf of the Board of Directors

Al Hildebrandt, President and CEO

Legal Notice Regarding Forward Looking Statements

This news release may contain "forward looking statements" within the meaning of applicable Canadian securities legislation. These statements are subject to risks that may cause the actual results to be materially different in future periods from those expressed or implied by such forward looking statement. Forward looking statements in this press release may include that profitability of the Company should continue to improve; that we can add new revenues at low marginal costs; that the Company's industry will grow in coming years; that spending in the industry are stable; that trends of the medical industry include interoperable systems and cost control, and the Company is well situated to assist in these endeavours; Risks that may prevent or delay the forward looking statements from coming to fruition include that we may not offer products that are acceptable to industry regulators or customers; competitors may offer better or cheaper products; we may not be able to raise sufficient capital to improve products to remain competitive; changing regulatory requirements may prevent our products from being sold as expected; we may not be able to attract or retain key personnel; our technology may become obsolete; and market factors may increase our costs more than expected. QHR is a technology business development enterprise where investment and product enhancements must be carefully managed to achieve long-term revenue growth and profitability. It is our policy not to update forward looking statements. Further information on the Company is available at www.sedar.com.

For a more complete business and financial profile of the Company, management encourages interested parties to visit the Company's website, www.QHRtechnologies.com.

 
QHR TECHNOLOGIES INC.
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2010 AND DECEMBER 31, 2009
 
  September 30, 2010   December 31, 2009  
         
ASSETS        
Current Assets        
  Cash $ 252,536   $ 1,037,609  
  Accounts receivable   3,039,462     2,206,851  
  Inventory   55,683     31,390  
  Prepaid expenses and deposits   594,179     737,241  
  Investment tax credits receivable   89,301     579,092  
    4,031,161     4,592,183  
             
Accounts receivable   24,347     82,874  
Property and equipment   1,515,691     1,307,812  
Goodwill   2,961,192     2,919,181  
Intangible assets   8,360,604     8,825,663  
  $ 16,892,995   $ 17,727,713  
             
LIABILITIES            
Current Liabilities            
  Accounts payable and accrued liabilities $ 3,200,791   $ 3,677,266  
  Promissory notes payable   865,474     3,205,174  
  Current portion of long-term debt   268,359     395,526  
  Current portion of capital lease obligations   420,397     366,659  
    4,755,021     7,644,625  
             
  Deferred revenue   2,939,704     2,081,412  
    7,694,725     9,726,037  
             
Long-term debt   1,401,013     1,518,293  
Capital lease obligations   426,945     374,980  
    9,522,683     11,619,310  
             
SHAREHOLDERS' EQUITY            
  Share capital   10,797,520     9,559,282  
  Contributed surplus   175,776     134,165  
  Warrants   578,189     477,709  
  Deficit   (4,181,173 )   (4,062,753 )
    7,370,312     6,108,403  
  $ 16,892,995   $ 17,727,713  
 
The notes to the financial statements are an integral part of these consolidated financial statements.
 
 
QHR TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF OPERATIONS, COMPREHENSIVE INCOME AND DEFICIT
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009
 
  Three Months ended
September 30
Nine months ended
September 30
 
  2010   2009 2010   2009  
               
REVENUE $ 4,645,807   $ 3,749,243 $ 14,400,215   $ 9,633,723  
                       
OPERATING EXPENSES                      
  Cost of goods   504,790     258,083   1,532,713     574,249  
  Service costs   1,625,874     1,599,355   5,895,796     4,307,330  
  Selling and administrative expenses   1,998,365     899,467   5,278,631     2,656,566  
    4,129,029     2,756,905   12,707,140     7,538,145  
                       
Earnings before the following items   516,778     992,338   1,693,075     2,095,578  
                       
Stock-based compensation expense   47,198     19,319   85,837     72,928  
Amortization of property and equipment   182,071     82,410   500,470     227,668  
Amortization of intangible assets   278,821     185,320   840,438     532,377  
Interest expense   100,569     48,740   377,435     239,879  
(Gain) loss on foreign exchange   (28 )   737   7,315     (1,624 )
    608,631     336,526   1,811,495     1,071,228  
Net earnings (loss) and comprehensive income   (91,853 )   655,812   (118,420 )   1,024,350  
                       
Deficit, beginning of period   4,089,320     5,048,452   4,062,753     5,416,990  
                       
Deficit, end of period $ 4,181,173   $ 4,392,640 $ 4,181,173   $ 4,392,640  
                       
Basic earnings per share   ($0.00 ) $ 0.03   ($0.00 ) $ 0.04  
Fully diluted (loss) earnings per share   ($0.00 ) $ 0.03   ($0.00 ) $ 0.04  
                       
Basic weighted average number of shares outstanding   30,259,774     26,103,259   29,576,899     23,761,929  
Fully diluted weighted average number of shares outstanding   30,987,648     26,103,259   30,458,986     23,761,929  
                       
 
QHR TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009
 
  Three Months ended September 30   Nine Months ended September 30  
  2010   2009   2010   2009  
                 
OPERATING ACTIVITIES                
Net earnings $ (91,853 ) $ 655,812   $ (118,420 ) $ 1,024,350  
Items not affecting cash                        
  Amortization of property and equipment   182,071     82,410     500,470     227,668  
  Loss on disposition of property and equipment   56,637     -     56,637     -  
  Amortization of intangible assets   278,821     185,320     840,438     532,377  
  Stock based compensation   47,198     19,319     85,837     72,928  
                         
Changes in non-cash operating assets and liabilities                        
  Accounts receivable   539,580     (124,987 )   (774,084 )   (8,428 )
  Inventory   (8,829 )   (12,923 )   (24,293 )   (4,773 )
  Prepaid expenses and deposits   (54,651 )   163,722     241,171     (101,804 )
  Investment tax credits receivable   489,791     -     489,791     380,000  
  Accounts payable and accrued liabilities   27,070     (33,785 )   (451,475 )   328,966  
  Deferred revenue   (1,216,376 )   (1,820,676 )   858,292     475,025  
    249,459     (885,788 )   1,704,364     2,926,309  
                         
INVESTING ACTIVITIES                        
  Deposit (Note 3)   -     -     -     250,000  
  Purchase of property and equipment   (28,688 )   (49,155 )   (254,920 )   (154,906 )
  Business acquisition net of cash acquired (Note 3)   -     -     (42,011 )   (4,585,300 )
  Acquisition of intangible assets   (118,504 )   (120,000 )   (375,379 )   (361,832 )
    (147,192 )   (169,155 )   (672,310 )   (4,852,038 )
                         
FINANCING ACTIVITIES                        
  Increase of long-term debt   -     -     -     1,145,000  
  Repayment of long-term debt and capital lease obligations   (159,512 )   (122,514 )   (648,810 )   (376,100 )
  Increase of promissory note   500,000     -     500,000     -  
  Repayment of promissory note   (743,899 )   -     (2,937,809 )   -  
  Proceeds from share issuances, less issue costs   208,867     -     1,269,492     1,571,403  
    (194,544 )   (122,514 )   (1,817,127 )   2,340,303  
Increase (decrease) in cash   (92,277 )   (1,177,457 )   (785,073 )   414,574  
                         
Cash – beginning of period   344,813     1,690,665     1,037,609     98,634  
Cash – end of period $ 252,536   $ 513,208   $ 252,536   $ 513,208  
                         
Supplemental Cash Flow Disclosure                        
  Interest paid $ 127,576   $ 48,740   $ 377,435   $ 239,879  
Non-cash financing and investing activities:                        
  Capital assets acquired under capital lease obligations   102,802     11,772     394,183     150,083  
  Leaseholds financed by landlord   115,883     -     115,883     -  
  Prepaid expenses acquired through promissory notes   98,109     -     98,109        
  Share capital issued with long term debt   164,717     -     164,717     62,134  

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