MediSolution Announces Results for the First Quarter Reports Net Earnings of $1.6 Million and EBITDA of $2.6 Million: Financial News

MediSolution Announces Results for the First Quarter Reports Net Earnings of $1.6 Million and EBITDA of $2.6 Million
Thursday August 14, 2008 6:49 pm ET

MONTREAL, QUEBEC--(MARKET WIRE)--Aug 14, 2008 -- MediSolution Ltd. (Toronto:MSH.TO - News), a Brookfield Asset Management company and a leading healthcare and service sector information technology company, today announced its results for the first quarter ended June 30, 2008.

First Quarter Highlights

For the quarter ended June 30, 2008, the Corporation reported net earnings of $1.6 million, compared to net earnings of $0.1 million in the same period ended June 30, 2007.

New systems revenue in the first quarter of fiscal 2009 was $7.3 million, an increase of 42% as compared to the same quarter in the prior year, ($5.2 million, Q1 fiscal year 2008).

Recognition of revenue on previous contracts enabled by the amendment of certain contract clauses in order to meet particular accounting requirements and allow for the recognition of revenue and related costs in the current quarter increased net earnings by $1.7 million in the current quarter as compared to an increase in net earnings of $0.3 million in the same quarter of the prior year and also increased revenue by $4.1 million in the current quarter compared to an increase of $0.6 million in the same quarter of the prior year.

Consolidated revenue in the first quarter of fiscal 2009 increased by 23% as compared to the same quarter in the prior year, totalling $15.1 million ($12.2 million, Q1 fiscal year 2008).

The Corporation's EBITDA1 increased by $1.4 million to $2.6 million before interest, taxes, depreciation, and amortization, reported in the same quarter in the prior year.

 

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Three months ended June 30 (in millions $)               2008         2007
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System sales                                            $7.34        $5.15
Support and processing                                   7.75         7.08
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  Total Revenues                                        15.09        12.23

Cost of revenues                                         9.61         7.33
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  Gross profit                                           5.48         4.90

Sales and marketing expenses                             1.27         1.69
Software development expenses                            0.52         0.67
General and administrative expenses                      1.12         1.32

EBITDA                                                   2.57         1.22

Depreciation of property and equipment                   0.11         0.15
Amortization of intangible assets                        0.88         0.83
Interest expense                                         0.00         0.03
Loss on foreign exchange                                 0.01         0.08
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Net earnings                                            $1.57        $0.13
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Q1 Highlights

The Corporation achieved the following significant improvements in the first quarter of fiscal 2009 as compared to the same period in the prior year:

- an increase of 24% in total revenue to $15.1 million from $12.2 million in the same period prior year;

- a 42% increase in new system revenue to $7.3 million from $5.2 million in the same period prior year;

- a 111% increase in EBITDA(1) to $2.6 million in the first quarter of fiscal 2009 from $1.2 million in the same period prior year; and

- a 21% reduction in indirect costs totaling $0.8 million. Indirect costs include Sales & Marketing, General & Administrative, Software Development, and restructuring charges;

The results across its two major segments in the first quarter of the fiscal year as compared to the same period in the prior year:

- Total Healthcare Information Systems revenue increased by $3.0 million or 39% in the first quarter of fiscal 2009 with an increase of 61% in new system revenue to $5.8 million

- Total Resource Management revenue decreased by $0.1 million or 2%. Revenue remained flat as compared to the same quarter in the prior year, and EBIDTA(1) improved by 68% or $0.2 million.

 

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Three months ended June 30 (in millions $)               2008         2007
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Total Revenue
Healthcare Information Systems                         $10.57        $7.62
Resource Management Systems                              4.52         4.61
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                                                        15.09        12.23
Gross Profit
Healthcare Information Systems                           4.07         3.27
Resource Management Systems                              1.41         1.63
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                                                         5.48         4.90
Earnings (loss) before the undernoted items
Healthcare Information Systems                           2.03         0.90
Resource Management Systems                              0.54         0.32
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                                                         2.57         1.22

Depreciation of property and equipment                   0.11         0.15
Amortization of intangible assets                        0.88         0.83
Interest expense                                         0.00         0.03
Loss on foreign exchange                                 0.01         0.08
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Net earnings                                            $1.57        $0.13
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New systems sales orders for the quarter included:

- Virtuo Solutions, a division of MediSolution Ltd. announced the signing of a contract with ITHQ, the Institut de tourisme et d'hotellerie du Quebec (Quebec Tourism and Hotel Institute) for the deployment of its Virtuo Financial Management Suite with a contract, valued at over $500,000.

- The signing of a contract with CSSS Suroit for the Virtuo HCM solution and a 10 year payroll renewal.

"We are pleased with our Q1 results", said Paul Lepage, President and Chief Executive Officer. "We have delivered improvements in our financial performance and made incremental improvements to our cost structure."

"On July 16(th) we announced the signing of an agreement to sell the Healthcare Information Systems business unit to HealthVision Solutions Inc. for $49.5 million in cash subject to certain adjustments."

About MediSolution

MediSolution (Toronto:MSH.TO - News), a Brookfield Asset Management company, 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 and 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.

This press release contains "forward-looking statements" regarding MediSolution. The words "believe", "expect", "anticipate", "intend", "estimate" and other expressions which are predictions of or indicate future events and trends and which do not relate to historical matters identify forward-looking statements. Readers are cautioned not to place undue reliance on forward-looking statements because they involve known an unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the company to differ materially from anticipated future results, performance or achievements expressed or implied by such forward-looking statements.

(1) "EBITDA" (earnings before interest expense, income taxes, depreciation of property and equipment, amortization of intangible assets and loss on settlement of lawsuit) does not have a standardized meaning prescribed by Canadian Generally Accepted Accounting Principles (GAAP) and may not be comparable to similar measures presented by other publicly traded companies. We use EBITDA amongst other measures, to assess the operating performance of our business.

 

MediSolution Ltd.
Consolidated Balance Sheets (unaudited)

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As at (in thousands of dollars)             June 30, 2008   March 31, 2008
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ASSETS

Current Assets

  Cash                                             $1,449           $1,404
  Accounts receivable and accrued revenue          13,850           20,127
  Tax credit receivable                               825              660
  Inventory                                           423              452
  Sundry deposits and prepaid expenses              1,688            1,351
  Deferred expenses                                   235              234
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                                                   18,470           24,228

Property and equipment                                787              890
Intangible assets                                   8,861            8,937
Goodwill                                            8,340            8,340
Deferred expenses                                   1,538            3,566
Other long-term asset                                 150              162
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                                                  $38,146          $46,123
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LIABILITIES

Current Liabilities
  Short-term loans                                     $-               $-
  Accounts payable and accrued liabilities          7,567           10,739
  Deferred revenue                                 17,799           19,478
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                                                   25,366           30,217

Deferred revenue                                    1,294            6,069
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                                                   26,660           36,286
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Contingencies and commitments

SHAREHOLDERS' EQUITY                               11,486            9,837

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                                                  $38,146          $46,123
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MediSolution Ltd.
Consolidated Statements of Operations and Comprehensive Income (unaudited)

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Three months ended June 30
(in thousands of dollars except share amounts)       2008             2007
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REVENUE

  System sales                                     $7,338           $5,152
  Support and processing                            7,751            7,080
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                                                   15,089           12,232

  Cost of revenue                                   9,608            7,333
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  Gross profit                                      5,481            4,899
  Sales and marketing expenses                      1,265            1,694
  Software development expenses                       529              666
  General and administrative expenses               1,115            1,440
  Restructuring charges                                 -             (122)
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Earnings before the undernoted items                2,572            1,221

Depreciation of property and equipment                111              152
Amortization of intangible assets                     883              834
Interest expense                                        1               31
Loss on foreign exchange                               10               73
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Earnings before income tax                         $1,567             $131
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Income tax recovered                                    -                -
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Net earnings and comprehensive income              $1,567             $131
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Net earnings per share - basic and fully
 diluted                                             0.01             0.00
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Weighted average number of common shares
 outstanding                                  158,282,332      157,891,401
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MediSolution Ltd.
Consolidated Statements of Deficit (unaudited)

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Three months ended June 30 (in thousands
 of dollars)                                         2008             2007
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Deficit, beginning of year                        $(1,259)         $(1,850)
Net earnings                                        1,567              131
Interest on share purchase financing                    -                9
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Retained earnings (deficit), end of year             $308          $(1,710)
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MediSolution Ltd.
Consolidated Statements of Cash Flows (unaudited)

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Three months  ended June 30 (in thousands
 of dollars)                                         2008             2007
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INFLOW (OUTFLOW) RELATED TO THE
 FOLLOWING ACTIVITIES

Operating
Net earnings                                       $1,567             $131
Items not affecting cash:
  Depreciation of property and equipment              111              152
  Amortization of intangible assets                   883              834
  Stock-based compensation                             82               56
  Non-cash portion of restructuring charges             -             (122)
Changes in non-cash operating working capital
 items                                              2,644            4,463
Change in deferred revenue                         (6,454)          (3,228)
Change in deferred expenses                         1,427              133
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                                                      260            2,419
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Investing
Additions to property and equipment                    (8)             (59)
Additions to intangible assets, net of tax
 credits                                             (807)            (780)
Change in deferred expenses                           600                -
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                                                     (215)            (839)
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  Financing
  Decrease of short-term loans Trilon Bancorp          $-           (1,999)
  Decrease of short-term loans                          -             (324)
  Repayment of share purchase plan loan                 -              800
  Issuance of common shares                             -              136
  Interest on share purchase financing                  -                9
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                                                        -           (1,378)
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  Increase (decrease) in cash and cash equivalents     45              202

  Cash, beginning of year                           1,404              856
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  Cash, end of year                                $1,449           $1,058
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  Supplemental cash flow information

  Interest paid                                        $1              $31

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