Vigil Health Solutions Inc.
TSX VENTURE : VGL

Vigil Health Solutions Inc.

November 08, 2010 10:33 ET

Vigil Health Solutions Reports Q2 Results

VICTORIA, BRITISH COLUMBIA--(Marketwire - Nov. 8, 2010) - Vigil Health Solutions Inc. ("Vigil") (TSX VENTURE:VGL) announces the results of operations for the quarter ending September 30, 2010.

Business highlights

  • Revenue, returning to levels not seen since before the recession, was $1.18 million for the three-months ended September 30, 2010.
  • Expanded revenue from service and maintenance agreements and one-off sales to $330 thousand, up 98% compared to the same period in fiscal 2010.
  • Achieved positive Adjusted EBITDA, a non-GAAP financial measure, of $10 thousand compared to a loss of $19 thousand in the period ending September 30, 2009.
  • Bookings for the quarter were $988 thousand down 27% compared to the three-month period ended September 30, 2009. Bookings in Q1 and Q2 of the current fiscal are showing improvement from those seen in the latter part of fiscal 2010.
  • On July 16, 2010 Vigil entered into an aggregate $200,000 loan agreement, the loan is convertible at the option of the lenders into Vigil's common shares at a rate of one common share for each $0.20 of indebtedness.

"We are optimistic that bookings and revenue numbers have improved from the levels seen in the latter half of fiscal 2010. We expect that the rate at which the credit markets and senior housing construction recover will continue to influence bookings and results going forward," stated Troy Griffiths, President and CEO of Vigil Health Solutions Inc.

Financial Results

Revenue for the three-months ended September 30, 2010 was $1.18 million compared to $1.19 million in the three-month period ended September 30, 2009. Project revenue made up 67% of total revenue; the remaining revenue came from follow on sales to existing customers. These sales include service and maintenance billings and replacement products including wireless devices and communication equipment and were up 98% over the same period in fiscal 2010. Demand for these follow on sales has been relatively unaffected by the recession.

Bookings for the quarter were $988 thousand down 27% compared to $1.36 million in the three-month period ended September 30, 2009. The decrease in bookings primarily reflects one large individual sale of $770 thousand made in September 2009. While sales continue to be effected by the lack of credit, bookings in Q1 and Q2 of the current fiscal are showing improvement from those seen in the latter part of fiscal year ended March 31, 2010.

At September 30, 2010, Vigil had a backlog of approximately $2.79 million (including $1.38 million in deposits and progress billings, recorded as deferred revenue on the balance sheet) a 27% decrease compared to approximately $3.18 million (including $1.15 million in deposits and progress billings, recorded as deferred revenue on the balance sheet) at September 30, 2009. This decrease reflects the greater number of projects completed and recognized in revenue than new sales booked in the quarter.

The gross margin percentage for the three months ended September 30, 2010 was 39% compared to 44% for the three months ended September 30, 2009. The gross margin during the period was below management's expectations of margins of between 42% and 47%. The decrease in margins is the result of competitive pricing which was deemed necessary given the recessionary environment. Management expects the effect of this pricing will continue to be seen on margins in the next two quarters.

Expenditures for the three months ended September 30, 2010 were $456 thousand down 26% from operating expenditures of $617 thousand for the same period ended September 30, 2009. The Company decreased expenditures in all areas. Management expects some expenditure to increase in future periods reflecting increases in payroll going forward.

Net loss for the three month period ended September 30, 2010 was $23 thousand, or $0.005 per share compared to a loss of $139 thousand, or $0.028 per share for the previous year. The decrease in losses is a result of a decrease in administrative, research and development and professional fees reflecting cost reducing measures implemented during the recession.

Detailed financial statements along with Management Discussion and Analysis have been filed with SEDAR and may be viewed on the Company web site (http://www.vigil.com/?Investors&#58Financial_Statements) or at www.sedar.com.

Financial information will be mailed to entitled security holders on November 12, 2010. Or, upon notice to the Company, entitled security holders may request a copy of financials in advance.

Summary Financial Information

    Sep 30,     Sep 30,
    2010     2009
    (unaudited)     (unaudited)
           
Revenue $ 1,178,800   $ 1,188,561
Cost of sales   720,571     664,524
           
    458,229     524,037
           
Expenses   455,694     616,847
           
Income before the following items   2,535     (92,810)
           
Other income (expense):   (25,665)     (46,400)
           
Income / (loss) for the period $ (23,130)   $ (139,210)

Non-GAAP Measure

For the three months ended September 30, 2010, we are disclosing Adjusted EBITDA, a non-GAAP financial measure, as a supplementary indicator of operating performance. We define Adjusted EBITDA as net income before, interest, income taxes, amortization, stock based compensation and currency gains or losses including derivative foreign exchange differences. We are presenting the non-GAAP financial measure in our filings because we use it internally to make strategic decisions, forecast future results and to evaluate our performance and because we believe that our current and potential investors and analysts use the measure to assess current and future operating results and to make investment decisions. It is a non-GAAP measure, may not be comparable to other companies and it is not intended as a substitute for GAAP measures.

Adjusted EBITDA reconciliation

    Three months ended
    Sep 30, 2010     Sep 30, 2009
           
Income / (loss) for the period $ (23,130)   $ (139,210)
           
Add / (deduct)          
  Foreign exchange gain (loss)   11,381     37,827
  Derivative exchange gain   -     7,248
  Interest   14,284     1,325
  Stock based compensation   171     14,797
  Amortization   7,310     10,275
    33,146     71,472
           
Adjusted EBITDA $ 10,016   $ (67,738)

About Vigil Health Solutions Inc.

Vigil offers a proprietary technology platform combining software and hardware to provide comprehensive solutions to the expanding seniors' housing market. Vigil has established a growing presence in North America and an international reputation for being on the leading edge of systems design and integration. The Vigil Integrated Care Management System™ (Vigil® System) includes the award-winning Vigil Dementia System, a nurse call system, bed monitoring, resident check in, and the latest development the Vigil Wireless call system. The first to supply dementia specific care technology, Vigil facilitates the highest standard of care for cognitive residents while helping dementia residents enjoy a higher quality of life and greater dignity.

Certain statements contained in this news release that are not based on historical facts may constitute forward-looking statements or forward-looking information within the meaning of applicable securities laws ("forward-looking statements"). These forward-looking statements are not promises or guarantees of future performance but are only predictions that relate to future events, conditions or circumstances or our future results, performance, achievements or developments and are subject to substantial known and unknown risks, assumptions, uncertainties and other factors that could cause our actual results, performance, achievements or developments in our business or in our industry to differ materially from those expressed, anticipated or implied by such forward-looking statements.

Forward-looking statements include all financial guidance, disclosure regarding possible events, conditions, circumstances or results of operations that are based on assumptions about future economic conditions, courses of action and other future events. We caution you not to place undue reliance upon any such forward-looking statements, which speak only as of the date they are made. These forward-looking statements appear in a number of different places in this presentation and can be identified by words such as "may", "estimates", "projects", "expects", "intends", "believes", "plans", "anticipates", or their negatives or other comparable words. Forward-looking statements include statements regarding the outlook for our future operations, plans and timing for the introduction or enhancement of our services and products, statements concerning strategies or developments, statements about future market conditions, supply conditions, end customer demand conditions, channel inventory and sell through, revenue, gross margin, operating expenses, profits, forecasts of future costs and expenditures, the outcome of legal proceedings, and other expectations, intentions and plans that are not historical fact.

The risk factors and uncertainties that may affect our actual results, performance, achievements or developments are many and include, amongst others, our ability to develop our sales force and generate revenue, the length of the sales cycle, management of the Company's growth, ability to recruit and retain staff, fluctuations in demand for current and future products, our ability to develop, manufacture, supply and market existing and new products that meet the needs of customers, volatility in the exchange rate, ability to secure financing, ability to secure product liability insurance, the continuous commitment of our customers, increased competition, changes in regulation and reliance on third party suppliers. These risk factors and others are discussed in the Risks and Uncertainties section of our "Management Discussion and Analysis" segment of our fiscal 2010 Annual Report. Many of these factors and uncertainties are beyond the control of the Company. Consequently, all forward-looking statements in this news release are qualified by this cautionary statement and there can be no assurance that actual results, performance, achievements or developments anticipated by the Company will be realized.

Forward-looking statements are based on management's current plans, estimates, projections, beliefs and opinions and, except as required by law, the Company does not undertake any obligation to update forward-looking statements should the assumptions related to these plans, estimates, projections, beliefs and opinions change.

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

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