Mr. Michael Franks reports

SYNCORDIA TECHNOLOGIES AND HEALTHCARE SOLUTIONS, CORP. REPORTS SECOND QUARTER FISCAL 2016 RESULTS

Syncordia Technologies and Healthcare Solutions Corp. has provided its financial results for the three and six months ended Sept. 30, 2015.

Reported results reflect six months of operations of Health Services Integration Inc., which was acquired effective Oct. 31, 2014, and 159 days of operations of Paragon Billing LLC, which was acquired April 24, 2015. Syncordia had no revenue cycle management segment operational activities for the period ended Sept. 30, 2014. All results are reported in thousands of U.S. dollars and are prepared in accordance with international financial reporting standards.

Q2 FY 2016 financial highlights

• Revenue from the RCM segment grew 15 per cent to $3,899 from $3,393 in Q1 FY 2016, reflecting both organic growth at HSI and Paragon, as well as reporting Paragon for a full three-month period in Q2 FY 2016.
• Adjusted earnings before interest, taxes, depreciation and amortization before corporate and Syncordia Cloud segment costs grew 10 per cent to $1,713 from $1,562 in Q1 FY 2016. Adjusted EBITDA grew 4 per cent to $676 from $651 in Q1 FY 2016.
• As at Sept. 30, 2015, the company had cash and cash equivalents of $10,044 compared with $10,286 as at June 30, 2015.

Year-to-date FY 2016 financial highlights

• Revenue from the RCM segment was $7,292.
• Adjusted EBITDA before corporate and Syncordia Cloud segment costs was $3,275.
• Adjusted EBITDA was $1,327.

Q2 FY 2016 business highlights

• Established ground billing operations in Maryland targeting a significantly lower cost structure;
• Secured a three-year contract with Air Medical for air ambulance RCM billing services;
• Commenced a number of lean initiatives to improve HSI's operating efficiencies.

Management commentary

Mike Franks, chief executive officer of Syncordia, said: "We are very pleased with the organic growth and better customer accountability and focus at both HSI and Paragon since our acquisition of both companies. Paragon has experienced growth in the number of customers as we continue to sign up behavioural health providers to our ONC certified software solution. In April, 2015, at the time of Syncordia's acquisition, Paragon had 552 active providers and has grown that to 571 active providers as of Sept. 30, 2015."

Mr. Franks says: "HSI had an adjusted EBITDA of $3.2-million for the 12 months ended Dec. 31, 2014. For the six months ended Sept. 30, 2015, it had an adjusted EBITDA of $2.9-million, although this number includes revenue from the REACH contract, which will be terminated on Nov. 30, 2015. HSI now has a far better focus on task ownership and execution, and customers have benefited greatly from our restructuring efforts and the company-wide lean management project focused on enhancing all aspects of the business for the benefit of our valued customers. Along with the internal focus to improve customer service and performance, we have formalized our referral program, introduced an enhanced request for proposal process and initiated the Syncordia Advisory Group. Each of these endeavours is aimed at supporting organic growth opportunities."

Mr. Franks says: "Additionally, we are focused on all drivers of cost to improve operating margin. Other noteworthy items are the signing of six new customers since the acquisition of HSI, further expanding our geographical presence in the United States. We elected not to pursue three acquisition targets in our pipeline due to items discovered during due diligence, which speaks to our acquisition discipline we have spoken about so much in the past. However, we may elect to purse these acquisitions in the future if the items we identified as problematic are addressed. We maintain a relationship with the owners. We continue to pursue some other interesting organic growth opportunities, which we hope to bring to conclusion before the fiscal year-end. We have focused our DevOps team on the Syncordia Billing module, which will help us disintermediate various players in the RCM market as we come to market late calendar year 2016. We look forward to the exciting impact this product will have on the market. Additionally, we remain engaged with various acquisition targets."

Q2 FY 2016 financial results

Revenue from the RCM segment was $3,899, segmented between air transportation client billings of $3,025, ground transportation client billings of $178, behavioural health client billings of $496 as well as other RCM-related revenue streams of $200.

Gross margin was $2,819 or 72 per cent of revenue.

Adjusted EBITDA before Syncordia Cloud and corporate costs was $1,713 or 44 per cent of revenue.

Syncordia Cloud costs were $394 reflecting the ramp-up of the company's development efforts which are focused on a proprietary billing platform.

Corporate costs were $643 reflecting additional costs associated with the company becoming a reporting issuer.

Adjusted EBITDA was $676, or 17 per cent of revenue.

Key performance indicator

The company is introducing encounters as a key performance indicator (KPI) to assist readers in better evaluating its performance. It has defined an encounter as a discrete business activity for which it would submit a claim. The company believes this metric provides investors with a better proxy for measuring the level of business activity than revenue as encounters measure the number of distinct services provided in the period whereas revenue reflects the amount of services recognized for accounting purposes and is typically a lagging indicator of business activity.

HSI encounters grew 19 per cent to 14,901 from 12,539 in Q1 FY 2016.

Paragon encounters decreased 9 per cent to 73,834 from 81,244 in Q1 FY 2016. This decrease in encounters reflects the seasonality in Paragon's business.

Business outlook

The company believes that favourable industry trends, along with operating improvements and competitive positioning of the company's RCM business, will allow it to meaningfully grow its revenues. However, as a result of the company's wholly owned subsidiary, HSI, receiving a notice of termination of a customer contract which will begin to impact revenue in the fourth fiscal quarter of 2016, its near-term outlook is more cautious. While this loss will begin to impact revenue in calendar year 2016, the company believes that a combination of new contract wins and operating efficiencies will offset the loss of this contract. However, the company's ability to predict the actual time at which the impact of the loss of this contract will be fully offset is not possible at this time.

The company remains confident that it is taking appropriate measures at this time and with $10-million of cash and cash equivalents, has adequate liquidity to implement its business strategy.

Notice of conference call

Syncordia will hold a conference call on Wednesday, Nov. 25, 2015, at 8 a.m (ET) to discuss its financial results and other corporate developments. To access the conference call by telephone, dial 647-427-7450 or 1-888-231-8191. A live audio webcast will be available through the company's website. An archived replay of the webcast will be available for 90 days. A presentation will accompany the conference call and will be available for download from the investor relations section of Syncordia's website.

          CONDENSED INTERIM CONSOLIDATED STATEMENT OF LOSS AND COMPREHENSIVE LOSS
                For the three and six months ended Sept. 30, 2015, and 2014
                                    (in U.S. dollars)

                                                         Three months ended         Six months ended 
                                                             Sept. 30,                  Sept. 30,     
                                                          2015         2014         2015        2014           

Revenue                                                $3,898,903           -   $7,291,698           -              
                                                  
Gain on settlement of contingent consideration                  -           -    1,111,342           -              
                                                        3,898,903           -    8,403,040           -              
                                                      
Cost of sales                                           1,079,434           -    2,092,166           -              
                                                        
Amortization of operating assets                          704,652           -    1,368,983           -              
Gross profit                                            2,114,817           -    4,941,891           -              
                                                        
Operating expenses                                      2,270,264     226,765    4,056,187     305,760        
                                                        
Transaction costs                                          47,378     250,057    1,769,428     273,057        
                                                          
Other amortization                                         66,986         697      132,286         697            
Loss before financing expenses                           (269,811)   (477,519)  (1,016,010)   (579,514)      
                                                         
Interest expense                                          475,757           -      919,643           -              
                                                         
Unrealized non-cash gain on fair value of derivative 
financial liability                                      (607,961)          -     (607,961)          -              
Net (loss) and comprehensive (loss) for the period       (137,607)   (477,519)  (1,327,692)   (579,514)      
Net (loss) per share                                     
Basic and diluted earnings per share                        (0.01)      (0.08)       (0.08)      (0.11)