Healthscreen Solutions Inc. (TSX VENTURE: MDU), Canada's premier provider of physician practice enhancement services and electronic medical record (EMR) software, today announced its first quarter of fiscal 2010 results for the period ending December 31, 2009.
"Our new product offerings have really propelled us this quarter, and demonstrated our ability to innovate and execute effectively. This quarter is a great start to this new fiscal year," said Mr. Justin Belobaba, President and CEO of Healthscreen.
Q1 Fiscal Year 2010 Financial Results
Healthscreen's revenue for the quarter ended December 31, 2009 was $4,055,480, as compared to $3,059,383 in the quarter ended December 31, 2008, representing an increase of $996,097 or 33%. The Physician Services business unit showed an increase in revenue of $699,575 or 39% from $1,807,600 in the quarter ended December 31, 2008 to $2,507,175 in the quarter end December 31, 2009. The increase in revenue was due to the creation of new customer relationships and the launch, in late fiscal 2009, of new physician services. The Software Products business unit revenue increased from $1,251,783 to $1,548,305, an increase of $296,522 or 24% from the quarter ended December 31, 2008 to the quarter ended December 31, 2009. The overall increased revenue in the Software Products business unit was the result of a strong focus on new system sales as well recurring revenue from maintenance fees on existing software installations.
Though overall gross margin has increased by $352,031 from Q1 2009 to Q1 2010, gross margins as a percentage of revenue have dropped. Physician services margins were 71% in the quarter ended December 31, 2009 as compared to 80% in quarter ended December 31, 2008. The increase in Physician Services costs from Q1 2009 has primarily resulted from certain low margin revenue associated with some of the Company's initial Chronic Condition Management offerings. Margins on hardware sales were 7% in the quarter ended December 31, 2009 as compared to 30% in the quarter ended December 31, 2008. High margins in Q1 2009 were the result of a certain non-recurring high margin hardware contract.
SG&A expenses for the quarter ended December 31, 2009 was $1,211,726, as compared to $1,444,385 in the quarter ended December 31, 2008, representing a decrease of $232,659 or 16%. SG&A as a percentage of revenue decreased from 47% in Q1 2009 to 30% in Q1 2010. The decrease in SG&A as a percentage of revenue resulted from the cost-cutting initiative which took place in Q3 2009. This initiative decreased Healthscreen's full time equivalent staff headcount by 30%, through a combination of attrition, termination and layoffs. The results of this initiative were realized first in Q4 2009. Certain of those costs cut during this initiative have been resumed in Q1 2010, however, cost containment continues to be a focus of management.
Operating expenses for the fiscal quarter ended December 31, 2009 was $1,494,702 (37% of revenue), as compared to $1,041,906 (34% of revenue) in the quarter ended December 31, 2008, representing an increase of $452,796 or 43%. The increase in operating expenses resulted primarily from a one-time $650,000 fee payable to Healthscreen's physiotherapy clinic chain partner, incurred to terminate an exclusivity clause contained in an earlier contract.
Consistent with fiscal year end 2009, and largely because of significant investments being made in the company's EMR product, the company did not meet the requirements of its EBITDA measurement with its lender for the quarter ended December 31, 2009. Although the Company has not yet been declared in default of its loan facilities as a result of the shortfall on this financial covenant, it is in discussions with the lender to obtain any necessary approvals and modifications to the agreement.
Complete financial statements and the Management Discussion and Analysis and Financial Statements for the first quarter of 2010 are available on the Company's website at www.healthscreen.com (http://www.healthscreen.com) and www.sedar.com (http://www.sedar.com) .
Mr. Belobaba continued: "Looking forward to the remainder of 2010, we are focused on three important goals: -- Capitalize on the market opportunity presented by the announcement of
government funding for the purchase of EMR software; -- Continue to build on our foundation of innovative products by refining
existing offerings, and further commercializing our Chronic Condition
Management services; and -- Continue to focus on increasing EBITDA and become cash flow positive
from the core business."
About Healthscreen Solutions
Healthscreen Solutions (www.healthscreen.com (http://www.healthscreen.com) ) provides a comprehensive suite of practice enhancing products and services to increase physician productivity and revenue while reducing costs and improving patient care. The Company's portfolio includes billing and scheduling software, electronic medical records software, CallerMD which assists physicians in managing a range of uninsured medical services, PrevCareMD which helps physicians earn supplemental income by achieving government-set preventive care targets, and HealthAlert which allows physicians to help their patients in managing complex healthcare issues. Healthscreen's and its partners' services and software are used by over 8,000 full-time physicians who are responsible for the health care of more than seven million Canadians.
5/8 2010 Healthscreen Solutions Inc. All Rights Reserved.
Disclaimer: Forward Looking Statements
This press release contains information that is forward looking information with respect to Healthscreen within the meaning of Section 138.4(9) of the Ontario Securities Act and other applicable securities laws. In some cases, forward-looking information can be identified by the use of terms such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "intend", "estimate", "predict", "potential", "continue" or the negative of theses terms or other similar expressions concerning matters that are not historical facts. In particular, statements about future revenues or profitability, including the estimated timing of profitability, and any other statements regarding Healthscreen's future expectations, beliefs, goals or prospects are or involve forward-looking information.
Forward-looking information is based on certain factors and assumptions. While the company considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect. Forward-looking information, by its nature necessarily involves risks and uncertainties, including risks and uncertainties relating to government regulation and funding in the healthcare industry, financial and capital market risks, technology development and adoption, Healthscreen's ability to maintain its competitive position and effectively implement it's acquisition strategy, liability for software malfunction, management of growth, and length of sales cycles. Additional risks and uncertainties affecting Healthscreen can be found in Healthscreen's 2009 Annual Report and Management's Discussion and Analysis for the Fiscal Year ended September 30, 2009 filed on SEDAR at www.sedar.com (http://www.sedar.com) . If any of these risks or uncertainties were to materialize or if the factors and assumptions underlying the forward- looking information were to prove incorrect, actual results could vary materially from those that are expressed or implied by the forward-looking information contained herein. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof. Trading in the securities of Healthscreen should be considered highly speculative.
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