TORONTO, ONTARIO, May 30, 2011 (MARKETWIRE via COMTEX News Network) --
Healthscreen Solutions Inc. ("Healthscreen") (TSX VENTURE: MDU), Canada's premier provider of physician practice enhancement services and electronic medical record ("EMR") software, today announced its second quarter 2011 financial results.
Q2 2011 Financial Highlights
Revenue Decrease from $4.1m to $3.2m EBITDA Decrease from
.8m to ($2.0m) Net Loss Increase from (
.04m) to ($3.6m) Cash Decrease of
.7m during the quarter
"Compared to the second quarter of fiscal 2010, the Software and Hardware Products business segment grew 15% while the Physician Services business segment was down 42% primarily due to the cyclical nature of the PrevCareMD offering. The main focus in the quarter ended March 31, 2011, was a change in the Company's management structure and the start of an in-depth operational review which resulted in changes during the quarter and which are ongoing. We expect the results of these efforts to be the consolidation of our product offerings and a stronger, moreefficient operational platform," commented Stewart Davis, Healthscreen President and CEO.
Tom Enright, Chairman of the Company's Board of Directors stated, "The Board initiated a review to address control and process issues that were identified during the fiscal 2010 year end audit. The Board wants to ensure the Company is well positioned for the future, and has the right management in place to initiate and manage the changes required."
Revenue generated by the Physician Services business segment was $1,541,281 plus revenue generated from the Software and Hardware Products business segment was $1,612,417 for total revenue for the second quarter of 2011 of $3,153,698. In the fiscal 2010 second quarter revenue generated by the Physician Services business segment was $2,667,774 plus revenue generated from the Software and Hardware Products business segment was $1,401,313 for total revenue of $4,069,087. Overall revenue in the second quarter of 2011 decreased by 22% or $915,389 compared to the second quarter of 2010.
The decrease in quarterly revenue for the Physician Services business segment of $1,126,493 is primarily due to lower PrevCareMD revenue. The Company facilitates the maximization of physician bonus payments for two Ministry of Health programs, one which is annual and the other which is every two years. In 2011, there will be minimal PrevCareMD revenue generated from the latter.
The increase in the Software and Hardware Products business segment of $211,104 reflects continued growth in sales of the EMR software platform (HSPRactice product) which qualified for funding by the doctors who purchased this platform under Ontario government EMR initiatives.
Total gross profit for the three months ended March 31, 2011 is 54% compared to 68% for the three months ended March 31, 2010. The impact on margin is from a change in product mix during the quarter.
Total selling, general and administrative plus operating expenses for the second quarter of fiscal 2011 were $3,721,294 or 118% of revenue. For the second quarter of the prior year, total selling, general and administrative plus operating expenses were $1,999,866 or 49% of revenue. The net change in expenses relates primarily to an account receivable write-off as well as the inclusion of software development costs expensed in the quarter.
As a result of the above, the Company generated a negative EBITDA of $2,007,749 for the quarter, compared to $784,757 for the prior year second quarter.
Including all non-cash items such as amortization and impairment of intangible assets, stock- compensation as well as interest costs resulted in a net loss for the second quarter of fiscal 2011 of $3,640,473 compared to a net loss of $44,041 in the prior year second quarter.
The cash balance as at March 31, 2011 was $1,080,041 down from the cash balance of $1,758,008 as at December 31, 2010. The Company was not in compliance with certain of its covenants at March 31, 2011 and faces a significant debt principal repayment amounting to $4,800,000 which became due on May 15, 2011 and for which the company is in default. The Company has retained M Partners to assist with its review of strategic alternatives and is in continued discussions with its lender on forbearance.
On May 16, 2011, PricewaterhouseCoopers LLP informed the Company that they had decided not to stand for reappointment for the audit of Healthscreen for the year ended September 30, 2011. The Company is currently in the process of appointing new auditors. The resignation of PricewaterhouseCoopers LLP has been approved by the Audit Committee and the Board of Directors of the Company.
Complete Financial Statements and the Management Discussion and Analysis for the quarter ended March 31, 2011 are available on the Company's website at www.healthscreen.com and www.sedar.com.
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