Nightingale first-quarter revenue increases to $4.4 million

- Generated $1.0 million of Cash from Operations & achieved sixth consecutive quarter of positive EBITDA -

Nightingale Informatix Corporation ("Nightingale" or the "Company") (TSX-V: NGH), an application service provider (ASP) of electronic medical record (EMR) software and related services announces its financial results for the first quarter ended June 30, 2010. All results are reported in Canadian dollars unless otherwise stated.

Q1 Fiscal 2011 Financial Summary --------------------------------

- Revenue increased to $4.4 million, compared to $4.1 million in Q1 F2010. Revenue growth is attributed to an increase in software licensing revenues, which offset a $0.4 million decrease in transcription revenue and a negative foreign exchange impact of $0.3 million. - Gross profit margin reached a record high in the Company's recent history at 80%, up from 71% in Q1 F2010, as a result of the Company's increased focus on generating high-margin software revenue. - The trend of EBITDA improvement reached a record high as it grew to $0.6 million from $23,000 in Q1 F2010, primarily as a result of increased revenues and gross profit. - Net profit before tax was $8,000, compared to a net loss before tax of $0.08 million in Q1 F2010. - Net loss was $9,000 compared to net loss of $0.8 million for Q1 F2010. - Cash from operations increased to $1.0 million from $(1.0) million in Q1 F2010, driven by strong high-margin software sales. - Completed a private placement of common shares and subscription receipts, as well as revolving and term debt financings for aggregate gross proceeds of $6.3 million. A total of $2.1 million, or 63%, of the proceeds from the private placement of common shares and subscription receipts came from Directors, Officers and other insiders. Subsequent to quarter end, used the proceeds to complete a comprehensive debt refinancing, which the Company expects will result in reduced interest expense, starting in Q2 F2011, and increased overall financial flexibility.

Q1 Fiscal 2011 Operational Highlights -------------------------------------

- Signed agreements with healthcare providers across Canada, representing the deployment of more than 200 EMR seats. - Achieved Approved Vendor status as part of Saskatchewan's EMR program, which is jointly funded through the Saskatchewan Medical Association (SMA) and the Saskatchewan Ministry of Health. - Subsequent to quarter end, signed a five-year EMR and practice management agreement with the AIM Health Group to support more than 150 healthcare professionals across Canada, who conduct more than 1.5 million patient visits per year.

"Fiscal 2011 is off to an encouraging start, with more than 200 EMR seats sold across Canada in Q1, compared to only eight seats sold in Q1 of last year," said Sam Chebib, President and CEO, Nightingale. "This is further evidence of the strengthening of the EMR market now that government funding has been released. In addition, as a result of our funding approval in Saskatchewan in the quarter, we are positioned to further broaden our Canadian customer penetration. Government funding initiatives are currently a key catalyst for EMR adoption. There may be some near-term fluctuations in adoption as funding is rolled out; however, we do expect to see increasing implementation of EMR over the longer term. With funding now available in many of our target markets across North America, we believe we are poised for growth."

Mr. Chebib added: "Strengthening our financial performance continues to be our primary focus for fiscal 2011. We aim to increase high-margin software sales and grow revenues, particularly by leveraging our Canadian market leadership to further expand our physician customer base. This is demonstrated by our recently announced major five-year contract win with AIM Healthcare Group, one of the largest ambulatory healthcare providers in Canada."

Mr. Chebib continued: "In addition, we remain committed to carefully managing our expenses and cash with the goal of achieving consistent positive cash flow and profitability, while concentrating our investments in areas that enable us to best capitalize on the increase in EMR adoption we are starting to see. I am satisfied with the performance we are reporting this quarter, including our sixth consecutive quarter of positive EBITDA and $1 million of positive cash flow from operating activities, as well as the trends underlying these results. I am also pleased and encouraged by the support of our Directors, Officers and other insiders by way of their participation in our recent placement of debt and equity."

Financial Review ----------------

Revenue for the Q1 fiscal 2011 was $4.4 million, compared to $4.1 million for Q1 fiscal 2010. The year-over-year improvement is primarily the result of a $1.0 million increase in non-recurring software license revenue, which was partially offset by a $0.4 million decrease in revenue from the Company's lower-margin transcription business, as well as a negative $0.3 million foreign exchange impact (the Company generated 53% of Q1 fiscal 2011 revenue in the US), which predominantly affected the Company's recurring revenue.

Recurring Revenue for Q1 fiscal 2011 was $2.8 million, compared to $3.6 million for Q1 fiscal 2010. The year-over-year decline is primarily a result of a reduction in transcription revenue and the negative foreign exchange impact. Transcription revenue decreased to $80,000 from $0.5 million for the same period last year. Nightingale expects to realize further reductions in transcription revenue in fiscal 2011, which the Company believes will be offset by revenue generated from higher margin software sales over the longer term.

Recurring revenue generated by Nightingale's core business (which excludes the Company's transcription revenues and the impact of foreign exchange) was $3.1 million for Q1 fiscal 2011 , up from $3.0 million for the same period last year.

Non-Recurring Revenue for Q1 fiscal 2011 was $1.6 million, up from $0.6 million for Q1 fiscal 2010, primarily due to the $1.0 million increase in license revenue driven by sales of the Company's Nightingale on Demand EMR product.

For Q1 fiscal 2011, gross profit margin was 80% of revenue, compared to 71% of revenue in Q1 fiscal 2010, reflecting a greater proportion of higher margin software sales in Q1 fiscal 2011.

Expenses for Q1 fiscal 2011 decreased 4% to $3.4 million from $3.5 million in Q1 fiscal 2011. This decline in expenses is primarily the result of a decrease in amortization expense associated with intangible assets, which was partially offset by the Company's increased investment in sales and marketing. The decrease in the value of the Canadian dollar compared to the US dollar also contributed to the decline in expenses. In Q1 2011, approximately 39% of Nightingale's expenses were incurred in the US, providing the Company with a natural hedge position that offsets some of the negative foreign exchange impact on revenue.

EBITDA increased to $0.6 million in Q1 fiscal 2011, from $23,000 in Q1 fiscal 2010.

For Q1 fiscal 2011, net loss improved to $9, 000, up from $0.8 million for the same period last year.

Cash generated from operating activities increased to $1.0 million for Q1 fiscal 2011 from $(1.0) million in Q1 fiscal 2010, reflecting both the improvement in the Company's bottom line results as well as timing of the collection of cash on deferred revenue.

Cash and cash equivalents were $3.6 million at June 30, 2010, compared to $2.5 million at June 30, 2009. At June 30, 2010, total common shares issued and outstanding were 76,310,915.

Funding of Senior Loan Facility, Conversion of Subscription Receipts and Refinancing of Outstanding Third-Party Debt -------------------------------------------------------------------------

In April 2010, Nightingale announced that it completed private placement financings (collectively, the "Private Placement") of common shares and subscription receipts, for aggregate gross proceeds of $3.3 million, and entered into a commitment with a third-party financial institution for additional aggregate gross proceeds of approximately $3.0 million in revolving and term debt (collectively, the "Senior Loan Facility"). On July 29, 2010, subsequent to quarter end, the Company used the proceeds of the Private Placement and the Senior Loan Facility for general corporate purposes and to refinance its outstanding $5.3 million in subordinated debt on more favourable terms.

The Company completed the Private Placement on April 20, 2010, whereby it issued an aggregate of 5.7 million common shares of the Company at a price of $0.22 per Common Share for gross proceeds of $1.3 million and concurrently issued 2,074 subscription receipts ("Subscription Receipts") for gross proceeds of $2.1 million, all on a non-brokered private placement basis. The Subscription Receipts were all automatically converted on July 29, 2010 pursuant to their terms. On conversion, each Subscription Receipt entitled the holder to receive, without additional consideration, a convertible unsecured subordinated debenture in the aggregate principal amount of $1,000 (collectively, the "Debentures"). The Debentures bear interest at a rate of 12% per annum, payable monthly and are scheduled to mature in July 2013. Following the first year anniversary of the Debentures, the Company has the right to redeem the Debentures, in whole or in part, at a price equal to their principal amount plus accrued and unpaid interest. The Debentures are convertible at the holder's option into fully-paid Common Shares at any time prior to maturity or redemption at a conversion price of $0.35 per share. Upon the automatic conversion of the Subscription Receipts, an amount of escrowed funds equal to $2.1 million was released to the Company.

Source: NIGHTINGALE INFORMATIX CORPORATION