Healthscreen Solutions announces fiscal year end 2009 financial results

Healthscreen Solutions Inc. (TSX VENTURE:MDU), Canada's premier provider of physician practice enhancement services and electronic medical record (EMR) software, today announced its record fiscal year end 2009 financial results.

Fourth Quarter Operational Highlights

• Healthscreen's EMR software, HSPractice, met requirements for OMD 3.0 Certification
• Secures largest single EMR software sale in Canadian history
• Develops and launches no cost EMR solution with HP Canada in Ontario
• Establishes new partnership with Physiomed

"Healthscreen's key financial goal for fiscal 2009 has always been positive EBITDA, and the Company has worked hard to achieve it," said Justin Belobaba, President and CEO of Healthscreen. "Our EBITDA performance resulted from a combination of activities including greater efficiencies driven by judicious management of our expense base and tremendous revenue growth through new product and existing product sales throughout the year."

Financial Highlights

On a segmented basis, the Physician Services business unit revenue for the year was $8,059,208, as compared to $5,745,693 in comparable fiscal year, representing an increase of $2,313,515 or 40%. The increase in revenue was due to the creation of new customer relationships, including growth in customer list from past acquisitions. Healthscreen continues to leverage relationships with existing software customers to grow the Physician Services business. Also, Healthscreen began providing Chronic Condition Management services to patients of its physician customers. Included in this offering is the Company's new DIAMOND ("Diabetes Management Optimized with Nurses and Devices") Program, which provides comprehensive condition management for patients living with diabetes. Healthscreen also partnered with Toronto based, Physiomed Health, Inc, to offer its physician customers a simplified process for referring patients to Physiomed's WholeHealth experience to allow them to easily gain access to a wide range of health care professionals including physiotherapists, kinesiologists, and lifestyle management consultants.

The Software Product business unit revenue for the year was $4,965,227, as compared to $3,600,103 in the prior year, representing an increase of $1,365,124 or 38%. The increased revenue in the business unit was the result of a strong focus on new system sales as well recurring revenue from maintenance fees on existing software installations.

Although operating expenses and selling, general and administrative expenses ("SG&A") increased over the prior year, these expenses decreased sharply as a percentage of revenue. SG&A as a percentage of revenue decreased from 55% in FY 2008 to 42% in FY 2009. Operating expenses as a percentage of revenue decreased from 35% in FY 2008 to 30% in FY 2009. The growth in expenses over the year corresponds with the growth in the revenues of the Company, with some economic opportunities realized due to management's efforts to contain costs and take advantage of economies of scale. Also contributing to the decrease in expenses as a percentage of revenue was a cost-cutting initiative commenced in Q3 2009.

As a result of both the growth in revenue and decrease of SG&A and operating expenses as a percentage of revenue, net loss from continuing operations decreased 46%, from $3,164,830 in FY 2008 to $1,720,611 in FY 2009.

The decrease in cash from $2,153,052 at September 30, 2008 to $1,287,969 at September 30, 2009 was primarily the result of investment in Healthscreen's infrastructure and software product and an increase in working capital. Cash was relatively steady over Q4 2009, starting the quarter at $1,288,413 and decreasing $444.

Despite the $ 2.8m improvement in EBITDA, 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 year ended September 30, 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 fiscal year 2009 are available on the Company's website at www.healthscreen.com and www.sedar.com.

2010 Outlook

Looking toward 2010, the company is focused on three important goals:

• Continue to build on its foundation of innovative products by refining existing offerings, and further commercializing its Chronic Condition Management services. This will require both time and investment to ensure that these new services succeed.
• Continue to focus on increasing EBITDA and become cash flow positive from the core business.
• Capitalize on the market opportunity presented by the announcement of government funding for the purchase of EMR software.

Effective January 31, 2010, Healthscreen's current CFO, Ken Killin, will be departing Healthscreen. The Company has undertaken a search to fill the role and is optimistic that it will be able to attract and retain a qualified individual in a timely manner. In addition, effective January 31, 2010, the contract between Healthscreen and the Company's VP Software, Cynthia Emerson, ended. With the tighter integration of Services and EMR business lines, the role has been absorbed by existing members of operating management and no replacement is necessary for this position.

Source: Healthscreen Solutions Inc.