MARKHAM,
ON, Feb. 24, 2015 /CNW/ -
Nightingale Informatix Corporation ("Nightingale" or the "Company")
(TSX-V: NGH), a cloud-based provider of electronic health record
(EHR) software and related services, announces its financial
results for the quarter ended December 31,
2014.
Highlights for the Quarter
- Revenue was $3.3 million compared
to $3.8 million in Q3 F2014, and
$3.7 million in Q2 F2015. The
variance from F2014 primarily reflects a decrease in non-recurring
revenues which was partially offset by a 6% increase in recurring
revenues from Q3 F2014 and an increase of 2% from Q2 F2015.
- Recurring revenue from the core practice management and EHR
business grew by 19% from Q3 F2014.
- Gross profit was $3.0 million, or
89% of revenue, compared to $3.4
million, or 88% of revenue, in Q3 F2014 and $3.3 million, or 89% of revenue, in Q2
F2015.
- Operating Expenses (excluding stock based compensation,
depreciation and amortization costs) were $3.2 million compared to $3.2 million in Q3 F2014 and $3.0 million in Q2 F2015.
- Adjusted EBITDA was negative $0.2
million, or negative 5% of revenue, a decrease from
$0.1 million, or 4% of revenue, in Q3
F2014 and from $0.33 million, or 9%
of revenue, in Q2 F2015.
- Net loss was $0.9 million
compared to a net loss of $1.4
million in Q3 F2014 and net loss of $0.3 million in Q2 F2015.
- Total deferred revenue was $5.6
million up from $4.8 million
at March 31, 2014.
- In Q3, the Company added $0.2
million of new annualized core product recurring revenue to
its backlog.
- During the quarter, the Company announced the addition of
David Toews as its Chief Financial
Officer.
- On February 20, 2015, the Company
announced a $2.1 million private
placement in the form of a convertible secured note that was
purchased by a company controlled by one of Nightingale's
directors.
"Our recurring revenue continues to grow, and we
expect once our V10 product is commercially ready, that we will be
able to accelerate this growth. Our recurring revenue from the core
product practice management and EHR business has grown 19% year
over year." said Sam Chebib,
President and CEO. "We continue to invest heavily in the V10
platform and are excited about its potential. It has taken
longer than anticipated, but we have made significant
progress. We will begin migrating USA based practice management customers to the
V10 platform starting in March 2015.
We continue to develop the EHR functionality on the platform and we
expect to start adding new customers on V10 this summer. "
Stock Option Grant
In February 2015, Nightingale's Board of Directors
approved the grant of 2,200,000 options to certain employees and
Officers of the Company pursuant to the Company's employee stock
option plan (the "Plan"). Of the total options granted, 1,500,000
were granted to Officers of the Company. Each option under the Plan
is exercisable to acquire one common share and the strike price
will be equal to the greater of the closing price of the Company's
common stock on February 26, 2015 and
$0.10 per share. The options
granted have been approved by the Board of Directors and are due to
expire on February 25, 2020.
The Plan has been approved by the Company's shareholders.
Subordinated Convertible Note
The
Company also announced that the subordinated convertible secured
note (the "Note") in the principal amount of $2.1 million ("Principal Amount") announced on
February 20, 2015 had been
completed. The Note will be purchased by Optimum Marketing
& Merchandising Services Ltd. (the "Lender"), a company
controlled by a director of the Company. The proceeds of the Note
are intended to be used by the Company for working capital and
general corporate purposes.
The Note matures on December 31, 2016, and will bear interest at a
fixed rate of 12% per annum. The Note will be secured by all
of the Company's present and subsequently acquired property and
assets and shall be subordinated to certain defined senior
indebtedness. In connection with the Note, the Lender will
also be issued 7,776,000 warrants to purchase Common Shares of the
Company with an exercise price of $0.085 per Common Share ("Warrants"). The
Warrants will expire on December 31,
2016. The Note, the Warrants, and any common shares issued
upon conversion of the Note or exercise of the Warrants shall be
subject to a hold period until June 24,
2015.
The Note allows the Lender a one-time option to
convert all or part of the Principal Amount into a standby
commitment for a rights offering or participation in a similar
equity offering by the Company, raising minimum aggregate gross
proceeds of $4 million (the
"Offering") that is undertaken by the Company within 150 days from
the date of the advance (the "Offering Deadline"), at a conversion
rate equal to the greater of: i) $0.085 per share; or ii) the price per share at
which the equity offering is completed with arms length parties. If
there is no Offering as described above, the Note shall thereafter
become convertible by the Lender at its option, in whole or in
part, at the conversion rate of $0.085 per share for the balance of the
term. In the event that the Lender does not participate in
the Offering, the Note will thereafter be
non-convertible.
The issuance of the Note constitutes a "related
party transaction" within the meaning of Multilateral Instrument
61-101 – Protection of Minority Security Holders in Special
Transactions ("MI 61-101") and Policy 5.9 of the TSXV Corporate
Finance Manual, because the Lender is a company controlled by a
director and significant shareholder of the Company ("Invested
Director"). Accordingly, the Board of Directors of the Company,
excluding the Invested Director, approved the issuance of the
Note. MI 61-101 requires a formal valuation and minority
shareholder approval for a related party transaction unless an
exemption is available. An exemption from the valuation requirement
is available to the Company, as no securities of the Company are
listed on a specified exchange. An exemption from the
minority shareholder approval is available to the Company, since,
at the time the transaction was agreed to, neither the fair market
value of the securities to be distributed in the transaction, nor
the consideration to be received for those securities, exceeded
$2,500,000. The Company expects to
release a material change report including details with respect to
the related party transaction less than 21 days prior to the
issuance of the Note, which the Company deemed reasonable in the
circumstances so as to be able to avail itself of the financing
opportunity and complete the Note issuance in an expeditious
manner.
The financial statements and MD&A will be
available at www.nightingalemd.com and filed on www.sedar.com on
February 24, 2015. This press
release should be read in conjunction with Nightingale's
Consolidated Financial Statements and the accompanying Management
Discussion and Analysis for the year ended March 31, 2014.
Non-IFRS Financial Measures
The Company
internally measures its performance and results of initiatives
through a number of measures that are not recognized under IFRS and
may not be comparable to similar measures used by other
companies.
1. Adjusted EBITDA
Adjusted
EBITDA is a non-IFRS measure that management believes is a useful
measurement to evaluate the performance of the Company. Investors
should be cautioned, however, that Adjusted EBITDA should not be
construed as an alternative to net earnings as determined in
accordance with IFRS. The Company's method of calculating Adjusted
EBITDA may differ from the methods used by other companies and,
accordingly, it may not be comparable to similarly titled measures
used by other companies.
Adjusted EBITDA is defined as earnings before
other loss (income), interest, income taxes, depreciation,
amortization, stock-based compensation, and business acquisition,
integration and other costs. Management believes it is useful to
exclude these items as they are either non-cash expenses, items
that cannot be influenced by management in the short term, or items
that do not impact core operating performance, and Management uses
this information internally for forecasting and budgeting
purposes.
The following provides a reconciliation of Adjusted EBITDA to
Loss and Comprehensive Loss:
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
|
|
Dec 31,
2014
|
|
Dec 31,
2013
|
|
Dec 31,
2014
|
|
Dec 31,
2013
|
|
|
|
|
$
|
|
$
|
|
$
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
Loss and
Comprehensive Loss
|
(943,485)
|
|
(1,403,797)
|
|
(1,348,506)
|
|
(2,428,903)
|
Adjustments
for
|
|
|
|
|
|
|
|
|
Current Tax
Expense
|
672
|
|
236
|
|
27,471
|
|
64,740
|
|
Other Income
(Loss)
|
105,673
|
|
125,737
|
|
109,669
|
|
341,466
|
|
Interest
|
311,317
|
|
337,590
|
|
536,877
|
|
671,948
|
|
Depreciation and
Amortization
|
380,436
|
|
366,964
|
|
1,149,918
|
|
1,128,918
|
|
Stock-Based
Compensation
|
24,248
|
|
26,836
|
|
67,168
|
|
78,112
|
|
Other financing gain
(loss)
|
(58,764)
|
|
686,607
|
|
(74,806)
|
|
681,140
|
Adjusted
EBITDA
|
(179,903)
|
|
140,173
|
|
467,791
|
|
537,421
|
|
|
|
|
|
|
|
|
|
|
|
2. Recurring and Non-Recurring Revenue
The
Company has included recurring revenue and non-recurring revenue
measurements since it believes that this information is useful to
investors to evaluate its performance. Investors should be
cautioned, however, that recurring revenue and non-recurring
revenue should not be construed as an alternative to revenue as
determined in accordance with IFRS. Recurring revenue is
comprised of utilization fees, hosting, support and maintenance
revenue, data management and transcription services and
transactional fees. Non-recurring revenue is comprised of
revenues generated from sales of perpetual software and systems
licenses and related training, data conversion and installation
services.
The following provides a reconciliation of recurring revenue and
non-recurring revenue to total revenue:
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
|
|
Dec 31,
2014
|
|
Dec 31,
2013
|
|
Dec 31,
2014
|
|
Dec 31,
2013
|
|
|
|
|
$
|
|
$
|
|
$
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
Non-Recurring
Revenue
|
364,419
|
|
1,002,674
|
|
2,006,804
|
|
3,133,386
|
Recurring
Revenue
|
2,972,844
|
|
2,797,823
|
|
8,728,788
|
|
8,195,055
|
|
|
|
|
3,337,263
|
|
3,800,497
|
|
10,735,592
|
|
11,328,441
|
About Nightingale
For more than a
decade, Nightingale (TSX-V: NGH) has been delivering innovative
cloud-based Electronic Health Record (EHR) and Practice Management
solutions to healthcare organizations across the United States and Canada. Our goal is to uncomplicate the
day-to-day challenges of healthcare providers. We achieve this by
creating software that is truly intuitive—minimizing training and
maximizing adoption. We believe so strongly in building easy-to-use
software that we structured our entire product team around
user-centric design. Our clients are benefiting from this focus
through a well-supported and robust solution that presents a
holistic view of a person's well-being in a simple, clean
interface, so that the best health decisions can be made.
Nightingale – One Patient.
One Record.
www.nightingalemd.com
Forward Looking Statement
This press
release contains "forward-looking statements" respecting the
issuance and cancellation of securities of the Company within the
meaning of applicable Canadian securities legislation. Generally,
forward-looking statements can be identified by the use of forward-
looking terminology such as "plans", "expects" or "does not
expect", "budget", "scheduled", "estimates", "forecasts",
"intends", "anticipates" or "does not anticipate", or "believes",
or variations of such words and phrases or state that certain
actions, events or results "may" ,"could", "would", "might",
"occur" or "be achieved". Forward-looking statements are subject to
known and unknown risks, uncertainties and other factors that may
cause the actual results, level of activity, performance or
achievements of Nightingale to be materially different from those
expressed or implied by such forward-looking statements, including
but not limited to: risks related to the speculative nature of the
medical software industry, which is affected by numerous factors
beyond Nightingale's control; the ability of Nightingale to
successfully secure customer contracts and the timing of securing
such contracts; the ability of Nightingale to complete and
successfully integrate its acquisitions on an accretive basis,
Nightingale's access to debt and capital facilities, including
compliance with current debt arrangements; the existence of present
and possible future government regulation; the significant
competition that exists in the medical software industry; the early
stage of Nightingale's business, and risks associated with early
stage companies, including uncertainty of revenues, markets and
profitability and the need to raise additional funding. All
material assumptions used in making forward-looking statements are
based on management's knowledge of current business conditions and
expectations of future business conditions and trends. Certain
material factors or assumptions applied by management in making
forward-looking statements, include without limitation, factors and
assumptions regarding future trends in healthcare spending,
economic conditions affecting Nightingale and North American
economies; Nightingale's ability to continue to fund its business,
rates of customer defaults, relationships with, and payments to
lenders, as well as Nightingale's operating cost structure.
Although Nightingale has attempted to identify
important factors that could cause actual results to differ
materially from those contained in forward-looking statements,
there may be other factors that cause results not to be as
anticipated, estimated or intended. There can be no assurance that
such statements will prove to be accurate, as actual results and
future events could differ materially from those anticipated in
such statements. Accordingly, readers should not place undue
reliance on forward-looking statements. Nightingale does not
undertake to update any forward-looking statements that are
incorporated by reference herein, except in accordance with
applicable securities laws. Further information on Nightingale
Informatix Corporation is available at
www.sedar.com.
Neither the TSX Venture Exchange nor its
Regulation Services Provider (as that term is defined in the
policies of the TSX Venture Exchange) accepts responsibility for
the adequacy or accuracy of this release.
SOURCE Nightingale Informatix Corporation