QHR TECHNOLOGIES REPORTS SECOND QUARTER RESULTS FOR 2005
August 29, 2005 (QHR-TSX Venture Exchange) Mr. Al Hildebrandt, President and CEO of the Company, announces that the Company has released its financial statements for the second quarter ended June 30, 2005. The Company is reporting revenues of $1,104,585 for the quarter, the third consecutive quarter that the Company’s revenues exceeded $1,000,000. The Company reported a loss of $91,331 for the quarter, which is a 47% improvement compared to the same quarter last year. The Company completed the six months ended June 30, 2005 with a consolidated loss of $268,620 ($.02 per share) compared to a loss of $159,350 ($.01 per share) for the first six months of 2004.
Overall Performance
In addition to the heavy marketing expenses and costs associated with an unpredictable and lengthy sales cycle for Quadrant HRTM, much of the overall loss was the result of the operations of Optimed Software Corporation (“Optimed”), the Company’s wholly owned subsidiary, that develops and markets Electronic Medical Records (“EMR”) informatics tools known as AccuroTM. This is an emerging marketplace and new venture investment for QHR. Optimed accounted for $279,623 to the reported loss, including $91,666 in amortization charges relating to the purchase of AccuroTM in 2004, against revenue of $240,634 for the first and second quarters of 2005.
Consolidated revenue grew to $2,138,004 for the six months ended June 30, 2005 compared to $1,722,049 for the six months ended June 30, 2004. The increase of 24% reflects a 12% increase in revenue from the Company’s primary product, Quadrant HRTM that rose to $1,893,663 for the six-month period up from $1,693,714 in the previous year.
At June 30, 2005 the Company had a current asset position of $1,874,602 comprised of cash on deposit of $1,001,481; accounts receivable in the amount of $786,537 and prepaid expenses in the amount of $86,584. Long- term receivables stood at $355,058 at June 30, 2005.
Total assets were $3,015,570 at June 30, 2005 down slightly from $3,051,568 at December 31, 2004. Shareholders’ equity declined to $198,811 at June 30, 2005, a decrease from $467,430 at December 31, 2004. Canadian GAAP requires that all investments in product development must be expensed as they are incurred. As a result, no asset value has been assigned to the Company’s proprietary products on the financial statements. Shareholders’ equity has been eroded by this policy and investment in product development now exceeds $6,000,000 since inception. Management believes that its products have considerable commercial value that is not reflected on the financial statements.
A working capital deficiency of $802,789 existed at the quarter end but this amount also includes deferred revenue in the amount of $2,167,338. Deferred revenue is defined as contractual arrangements secured from customers in advance of services and/or products being delivered. The Company’s deferred obligations will be satisfied through the delivery of products and services in future periods. All deferred revenue obligations can be met from current corporate resources and will not require additional financing to satisfy.
The Company invested $390,267 in sales and marketing activities during the six months ended June 30, 2005 compared to $348,507 in 2004. The increase of $41,760 is due to the addition of sales and marketing staff to sell both Quadrant HRTM and AccuroTM.
Service delivery expenses for the six months ended June 30, 2005 increased to $660,637 compared to $519,290 for 2004. These expenses include the costs of software implementation, training and support. This increase was due to additional personnel acquired to service the growth in new and existing contracts relating to both Quadrant HRTM and AccuroTM initiatives.
Administrative expenses for the six months ended June 30, 2005 increased to $590,173 compared to $491,087 for 2004. The key increases were attributable to the rental of additional office space, rising accounting, audit and legal fees and the addition of administrative staff.
Product development expenditures increased to $569,803 for the six months ended June 30, 2005 compared to $439,556 for 2004. These expenditures reflect the ongoing improvements and additional functions for Quadrant HRTM and AccuroTM.
Items not affecting cash resources include amortization charges in the amount of $181,304.
The Future
Currently, older “legacy” human resource technologies used by many healthcare organizations in Canada are no longer effective management tools. Many healthcare facilities are now actively looking at upgrading their information technologies to better state-of-the-art products that are available in the markets today. This trend provides a strong opportunity for QHR to continue its business model successfully.
While profitability was not attained during the first six months of 2005, market conditions for the Company remain favourable. QHR continues to validate the value of its products in the HR and EMR markets. The challenge is to accelerate the adoption rates of prospective customers. QHR enjoys good financial health with over $1.8 million in cash and receivables. Current capital resources and anticipated cash flows will be more than sufficient to meet the requirements of our financial obligations and business initiatives through 2005.
For a more complete business and financial profile of the Company, management encourages interested parties to visit the Company’s website, www.QHRtechnologies.com
This news release may contain opinions and forward-looking statements that reflect the Company’s current expectations, forecasts and assumptions. These may involve risks and uncertainties that could cause actual future results to be materially different. Investors are cautioned against placing undue reliance on forward-looking statements. The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.
On behalf of the Board of Directors
“Al Hildebrandt”
Al Hildebrandt President & Chief Executive Officer
