Toronto Stock Exchange Symbol: SXC
Systems Xcellence announces third quarter fiscal year 2004 results`MILTON, Ontario January 14, 2004, Systems Xcellence Inc., (“SXC”) (TSX: SXC) a leading provider of healthcare information technology solutions throughout the pharmaceutical supply chain, today announced financial results for its third quarter of fiscal 2004, ended November 30, 2003. All dollars are Canadian except where noted. Highlights of the quarter included:
“During the quarter we continued to deliver solid results from our core business while making important strides toward capitalizing on two emerging market opportunities,” said Gordon S. Glenn, President & CEO of SXC. “Driven by the ongoing demand by pharmacies, out-patient clinics and managed care organizations for retail and mail-order software applications to help streamline their business, we are building our pipeline of opportunities for our RxEXPRESS® for Windows workflow system. In the area of pharmacy benefits processing for health plans, our InformedRx suite of products continues to expand and improve, and we are pursuing new benefits processing sales opportunities both with large managed care organizations as well as public agencies.” Revenue for the three-month period ended November 30, 2003, was $11.9 million (US$8.9 million), compared with revenue of $11.6 million (US$7.3 million) in the same period of fiscal 2003. As SXC generates approximately 97% of its sales from the U.S., total revenue in the third quarter was adversely impacted by the 15% appreciation of the Canadian dollar, relative to the U.S. dollar, during this period. On a U.S. dollar basis, third quarter revenue grew 22%. Revenue for the nine-month period ended November 30, 2003, was $35.0 million (US$25.4 million), compared with revenue of $34.0 million (US$21.7 million) in the same period of fiscal 2003. On a U.S. dollar basis, revenue for the nine-month period ended November 30, 2003, grew 17%. Net income in the third quarter increased to $1.4 million, or $0.03 per share, from $0.7 million, or $0.02 per share, in the third quarter of fiscal 2003. Year-to-date, net income rose to $3.9 million, or $0.09 per share (basic), compared with $1.5 million, or $0.04 per share (basic), in the comparable period of the prior year. Fully-diluted net income per share was $0.08 for the first nine months of fiscal 2004 compared to $0.04 for the first nine months of fiscal 2003. For the three-month period ended November 30, 2003, revenue of a recurring nature was $6.2 million (US$4.7 million), or 52% of total revenue, versus $6.1 million (US$4.1 million), or 53% of total revenue, in the comparable prior quarter. This represents a 15% increase in recurring revenue on a U.S. dollar basis. Year-to-date, revenue of a recurring nature increased to $17.9 million (US$13.0 million), or 51% of total revenue, versus $17.3 million (US$11.0 million), or 51% of total revenue in the comparable period of fiscal 2003. Gross margin for the three-month period ended November 30, 2003, was 61% compared to 51% in the third quarter of fiscal 2003. Year-to-date, gross margin was 59% compared to 53% in the first nine months of fiscal 2003. This increase in gross profit margin was primarily the result of leveraging increased transactional processing activity on the Company’s data center and on a higher portion of revenue derived from software license sales. Total expenses, comprised of product development and selling, general and administration costs, were $5.0 million in the third quarter of fiscal 2004 compared with $3.6 million in the comparable period of the prior year. Year-to-date, total expenses were $13.8 million compared with $11.6 million during the first nine months of fiscal 2003. The rise in expenses is primarily due to an increase in product development costs. This increase, on both a total dollar and percentage of revenue basis, is largely a result of the redeployment of resources that were previously engaged on customer specific consulting activities to other development projects. The increase also reflects additional hiring and consulting resources deployed for the RxEXPRESS® for Windows product suite. At November 30, 2003, the Company had a working capital position of $17.9 million, with cash and cash-equivalents of $16.9 million, compared with $9.3 million of working capital and $10.1 million of cash and cash-equivalents at February 28, 2003. The $6.8 million increase in the Company’s cash position was primarily the result of an underwritten private placement completed in June 2003, resulting in net proceeds of $4.7 million. At the end of the third quarter of fiscal 2004, the Company’s contract order backlog was $63.2 million (US$48.7 million) compared with $66.1 million (US$47.8 million) at the end of the second quarter of fiscal 2004. Management anticipates this contracted order backlog to be realized over a three-year period. Subsequent Events Subsequent to quarter-end, on December 22, 2003 the Company announced that, subject to regulatory approval, the board of directors had approved a change in its financial year-end from February 28 to December 31. Subject to regulatory approval, this change is being made effective with the period ended December 31, 2003. In addition, SXC disclosed that it will begin reporting in U.S. currency commencing with its new December 31, 2003 year-end. “With the majority of our revenue and expenses being generated in U.S. dollars, we believe that removing exchange rate fluctuation and reporting in U.S. currency will provide a better representation of our financial performance,” said Irwin Studen, CFO at SXC. “In addition, management and the Board believe that moving to a December 31 year-end will further enhance shareholder and research analyst understanding of reported financial results.” On December 19, 2003, the Company announced details of new contracts, with two existing U.S.-based customers, having a combined value of approximately $1,000,000. Under the terms of the first agreement, SXC will provide its RxEXPRESS® mail order fulfillment application on an ASP basis for an initial period of two years to an existing PBM customer. Under the second agreement, SXC will license its RxMAX® application to a long-standing client with eight million lives under management. Calendar Year Financial Information In anticipation of its conversion to calendar year-end reporting in U.S. currency as noted above, SXC will post its unaudited U.S. denominated calendar-based quarterly Consolidated Statements of Operations for Calendar Year 2002 and Calendar 2003 (through the quarter ended September 30, 2003) on its website (www.sxc.com) as of 4:00PM ET on Wednesday, January 14, 2004. Notice of Conference Call SXC will be holding a conference call on January 15, 2004 at 8:30AM (ET) to discuss its third quarter fiscal 2004 financial results. Mr. Gordon S. Glenn, President and CEO, will host the call. A live audio webcast of the call will be available at www.financialdisclosure.ca and www.sxc.com. Webcast attendees are welcome to listen to the conference in real-time or on-demand at your convenience. A taped replay of the call will be archived at those sites for 90 days. A replay of the call can also be heard by dialling 1-800-408-3053 or 416-695-5800 and entering the reference code 1518875. The taped call is available until January 22, 2004. About Systems Xcellence Inc. Systems Xcellence (SXC) is headquartered in Milton,
Ontario with offices and processing centres in Lombard, Illinois,
Scottsdale, Arizona and Victoria, British Columbia. SXC is a leading
provider of healthcare information technology solutions and services to the
healthcare benefits management industry. The company’s product offerings and
solutions combine a wide range of software applications, application service
provider (ASP) processing services and professional services, designed for
many of the largest organizations in the pharmaceutical supply chain, such
as pharmacy benefit managers, managed care organizations, retail pharmacy
chains and other healthcare intermediaries. SXC can be found on the
Internet at
www.sxc.com.
Q3
Statements in Microsoft Excel Format For more information, please contact:
|