Mr. Sam Chebib reports

NIGHTINGALE REPORTS FISCAL 2014 RESULTS

Nightingale Informatix Corp. has released its financial results for the three months and year ended March 31, 2014.

Fourth quarter fiscal 2014 financial and operational summary

• Revenue was $4-million, down 24 per cent compared with $5.2-million in the fourth quarter of fiscal 2013, and up 4 per cent from $3.8-million in the third quarter of fiscal 2014. The variance from fiscal 2013 primarily reflects a decrease in software licence revenues from enterprise contracts as well as a decrease in professional services revenues.
• Gross profit was $3.6-million, or 90 per cent of revenue, compared with $4.7-million, or 91 per cent of revenue, in the fourth quarter of fiscal 2013 and $3.4-million, or 88 per cent of revenue, in the third quarter of fiscal 2014.
• Operating expenses, excluding stock-based compensation, depreciation and amortization costs, were $3.2-million, compared with $4.3-million in the fourth quarter of fiscal 2013 and $3.2-million in the third quarter of fiscal 2014.
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was $400,000, 10 per cent of revenue, down from $1-million, or 20 per cent of revenue, in the fourth quarter of fiscal 2013 and up from $100,000, or 4 per cent of revenue, in the third quarter of fiscal 2014.
• Net loss was $600,000, compared with net income of $900,000 in the fourth quarter of fiscal 2013 and net loss of $1.4-million in the third quarter of fiscal 2014.
• Cash provided by operations was $1.5-million, compared with cash used by operations of $700,000 in the fourth quarter of fiscal 2013.
• Total deferred revenue was $4.8-million, down from $5.9-million at March 31, 2013.

Fiscal 2014 financial and operational summary

• Revenue was $15.3-million, down 27 per cent compared with $20.9-million from fiscal 2013, primarily reflecting a decrease in software licence revenues from enterprise contracts.
• Gross profit was $13.5-million, or 88 per cent of revenue, compared with $18.6-million, or 89 per cent of revenue, for fiscal 2013.
• Operating expenses, excluding stock-based compensation, depreciation and amortization costs, were $12.6-million, compared with $15.5-million for fiscal 2013.
• Adjusted EBITDA was $900,000, or 6 per cent of revenue, down from $3.7-million, or 18 per cent of revenue, for fiscal 2013.
• Net loss was $3-million, compared with net income of $2-million for fiscal 2013.
• Cash provided by operations was $900,000, compared with cash used in operations of $1.7-million in fiscal 2013.

"This past fiscal year was effectively a transitional year for the company, reflecting the large investment in our next-generation product, the negative impact the product delays had on our perpetual licence revenues and the shift to a SaaS [software as a service]-based sales model for the SMB [small and medium-sized business] space," said Sam Chebib, president and chief executive officer. "We are at the tail end of this transition, and with the bulk of the investment in Nightingale EHR [electronic health record] (Nexia) behind us, we will be reducing our spending on research and development. Nexia will be initially sold in the U.S. and Ontario market, and in other Canadian provinces later in the year. Going forward, we will be focusing our energy on sales and marketing, as we are very optimistic about the impact Nexia will have on our market position and, consequently, our ability to drive incremental recurring revenues and increase the predictability of our business model."

Fiscal 2014 fourth quarter and annual financial review

The company's results are prepared in accordance with international financial reporting standards (IFRS) and in Canadian dollars unless otherwise stated.

Revenue for the fourth quarter of fiscal 2014 was $4-million, a decrease of $1.2-million from $5.2-million for the fourth quarter of fiscal 2013. Fiscal 2014 revenue was $15.3-million, compared with $20.9-million for fiscal 2013. These decreases are primarily associated with a decrease in software revenues from enterprise contracts (which can vary significantly from quarter to quarter) as well as a decrease in revenues from professional services. These decreases were partially offset by an increase in recurring revenues from the company's Nightingale On Demand EHR.

Recurring revenue for the fourth quarter of fiscal 2014 was $2.8-million (70 per cent of revenue), an increase of $200,000, or 8 per cent, from $2.6-million (50 per cent of revenue) in the fourth quarter of fiscal 2013. Recurring revenue for fiscal 2014 was $11-million (72 per cent of revenue), an increase of $400,000, or 4 per cent, from $10.6-million (51 per cent of revenue) for fiscal 2013. The increase in recurring revenue in the fourth quarter of was primarily the result of an increase in revenues from the company's Nightingale On Demand EHR product, partially offset by a decrease in revenue from the company's low-margin transcription business. In the year-to-date period, decreases in revenues from the company's low-margin transcription business and a decrease in transaction-based revenues on the company's United States-based product lines offset the increase in recurring revenues from the company's EHR product.

For the fourth quarter of fiscal 2014, gross margin was 90 per cent ($3.6-million gross profit), compared with 91 per cent ($4.7-million gross profit) for the fourth quarter of fiscal 2013. For fiscal 2014, gross margin was 88 per cent ($13.5-million), compared with 89 per cent ($18.6-million) for fiscal 2013.

Operating expenses for the fourth quarter of fiscal 2014 decreased 26 per cent to $3.2-million (79 per cent of revenue), excluding charges for stock-based compensation and depreciation and amortization, compared with operating expenses of $4.3-million (83 per cent of revenue), excluding charges for stock-based compensation and depreciation and amortization, for the fourth quarter of fiscal 2013. Operating expenses for fiscal 2014 decreased 19 per cent to $12.6-million (82 per cent of revenue), excluding charges for stock-based compensation and depreciation and amortization, compared with operating expenses of $15.5-million (74 per cent of revenue), excluding charges for stock-based compensation and depreciation and amortization, for fiscal 2013.

For the fourth quarter of fiscal 2014, adjusted EBITDA was $400,000 (10 per cent of revenue), compared with $1-million (20 per cent of revenue) in the fourth quarter of fiscal 2013. For fiscal 2014, adjusted EBITDA was $900,000 (6 per cent of revenue), compared with $3.7-million (18 per cent of revenue) for fiscal 2013.

The effect of fluctuations in the rate of exchange between the U.S. dollar and Canadian dollar on fourth quarter fiscal 2014 EBITDA was negligible. The $500,000 loss from foreign currency in fiscal 2014 is predominantly the result of the remeasurement of the company's term loans (denominated in U.S. dollars) into Canadian dollars.

Included in net loss for fiscal 2014 is a financial loss of $700,000. The financial loss is predominantly related to the write-off of a portion of the financial derivative asset that is embedded in the company's Series B convertible debentures. The company wrote off a significant portion of the financial asset in the third quarter of fiscal 2014, when a substantial number of debenture holders (85 per cent) converted their investment to common shares or transferred their investment to the company's Series C convertible debentures.

For the fourth quarter of fiscal 2014, net loss was $600,000, compared with net income of $900,000 in the fourth quarter of fiscal 2013. For fiscal 2014, net loss was $3-million, compared with net income of $2-million for fiscal 2013.

Cash and cash equivalents on March 31, 2014, were $500,000, a decrease of $3-million, or 85 per cent, from March 31, 2013, of which $3.5-million was for product development costs related to the company's long-term strategic growth initiatives.

At March 31, 2014, total common shares issued and outstanding were 94,758,915.

The financial statements and management's discussion and analysis will be available on the company's website and on SEDAR on July 31, 2014. This press release should be read in conjunction with Nightingale's consolidated financial statements and the accompanying management's discussion and analysis for the year ended March 31, 2014.

Notice of conference call

Nightingale will host a conference call on Friday, Aug. 1, 2014, at 8:30 a.m. ET. To access the conference call by telephone, dial 888-231-8191 (or 647-427-7450 for international). Please connect approximately 15 minutes prior to the call and reference conference ID 82566313 prior to the beginning of the call to ensure participation. The conference call will be archived for replay until Friday, Aug. 8, 2014. To access the archived conference call, dial 416-849-0833 or 855-859-2056 and enter reference 82566313 followed by the pound sign. To listen to the conference call replay on the Internet, please visit the Nightingale website shortly after the call.

      CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME AND LOSS
                FOR THE 12 MONTHS ENDED MARCH 31, 2014, AND MARCH 31, 2013

                                                            Year ended            Year ended
                                                        March 31, 2014        March 31, 2013

Revenue                                                  $  15,297,008         $  20,924,852
Cost of sales                                                1,762,503             2,342,467
Gross profit                                                13,534,505            18,582,385
Expenses
General and administration                                   3,313,888             3,489,350
Sales and marketing                                          2,808,039             3,366,065
Research and development                                     3,523,188             5,500,278
Client services                                              4,615,652             4,258,158
Business acquisition, integration and other                          -               675,804
                                                            14,260,767            17,289,655
Operating income (loss)                                       (726,262)            1,292,730
Interest                                                     1,027,193               537,598
Other finance (gain) loss                                      658,963              (134,942)
Foreign currency (gain) loss                                   481,433               (23,029)
Income (loss) before tax                                    (2,893,851)              778,161
Current tax expense (benefit)                                   95,405            (1,079,452)
Income (loss) and comprehensive income (loss)               (2,989,256)            1,857,613
Basic and diluted income (loss) per share
Basic and diluted income (loss) per share                        (0.04)                 0.02

We seek Safe Harbor.