QHR TECHNOLOGIES REPORTS THIRD QUARTER RESULTS FOR 2005
November 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 third quarter ended September 30, 2005. The Company completed the nine months ended September 30, 2005 with a consolidated loss of $875,143 ($.06 per share) compared to a loss of $411,851 ($.03 per share) for the first nine months of 2004.
Year-to Date Performance
Consolidated revenue grew to $2,790,265 for the nine months ended September 30, 2005 compared to $2,473,116 for the nine months ended September 30, 2004. The 13% increase in revenue includes results from the Company’s wholly owned subsidiary, Optimed Software Corporation (“Optimed”). Revenues derived from Optimed’s Electronic Medical Records (“EMR”) informatics tools known as AccuroTM rose to $302,924 for the nine-month period up from $87,974 in the previous year.
Much of the overall loss can be attributed to the operations of Optimed. EMR is a new emerging marketplace and new venture investment for QHR. The investment in Optimed is building both a best of breed product as well as a recurring revenue base from customers as its foundation for financial success.
At September 30, 2005 the Company had a current asset position of $1,599,915 comprised of cash on deposit of $894,827; accounts receivable in the amount of $638,289 and prepaid expenses in the amount of $66,799. Long- term receivables stood at $325,199 at September 30, 2005.
Total assets were $2,624,753 at September 30, 2005 down from $3,051,568 at December 31, 2004. Shareholders’ equity fell to $371,007 at September 30, 2005, a decrease of $96,423 from December 31, 2004.
A contributing factor to the financial results were the guidelines of Canadian GAAP requiring 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 even though investment in product development now exceeds $6,000,000 since inception. Management believes that its products have considerable commercial value that was not reflected on the financial statements at September 30, 2005.
A working capital deficiency of $522,158 existed at the quarter end but this amount also includes deferred revenue in the amount of $1,705,994. 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.
The Company invested $585,262 in sales and marketing activities during the nine months ended September 30, 2005 compared to $535,846 in 2004. The increase of $49,416 is due to the addition of sales and marketing staff to sell both Quadrant HRTM and AccuroTM.
Service delivery expenses for the nine months ended September 30, 2005 increased to $975,695 compared to $790,358 for 2004. These expenses include the costs of software implementation, training and support. Thisincrease 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 nine months ended September 30, 2005 increased to $965,500 compared to $713,411 for 2004. The key increases were attributable to the rental of additional office space, rising accounting and audit fees and the addition of administrative staff.
Product development expenditures increased to $842,954 for the nine months ended September 30, 2005 compared to $679,820 for 2004. These expenditures reflect the ongoing improvements and completion of Version 2.5 of Quadrant HRTM that has been released in November 2005. It also includes the work on Version 3.0 of AccuroTM to be released in the next few months.
Items not affecting cash resources include amortization charges in the amount of $271,473.
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 the better state-of-the-art products that are available in the markets today. Although challenging this trend provides a strong opportunity for QHR to continue to build its business model successfully.
Since September 30, 2005, the Company has secured several additional contracts for Quadrant HRTM adding over $600,000 in new business for the Company, some of which will be recognized in the fourth quarter. Other contractual arrangements are nearing completion and the results of these will be released when completed.
New customers are steadily adopting AccuroTM. The business model of Optimed is being built with recurring revenues from customers as its foundation for financial success. Positive cash flows from Optimed are expected by late 2006 based on current customer adoption rates.
While profitability was not attained during the first nine months of 2005, market conditions for the Company do remain favorable. 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 maintains financial health with over $1.5 million in cash and receivables at September 30, 2005. Annual recurring revenues from customers have reached $1,750,000. Current capital resources and anticipated cash flows will be sufficient to meet the requirements of our financial obligations and business initiatives through 2005 and 2006.
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 President & Chief Executive Officer
