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Systems Xcellence Reports Record
Annual Revenues & Profits

Company Reports 38% Increase in Revenue and 305% Increase in Net Income for the Year

MILTON, Ontario (May 4, 2000) -- Systems Xcellence Inc. (TSE: SXC), today reported record financial results for the year ending February 29, 2000. Significant increases in annual profits and revenues, accompanied by a dramatic improvement in earnings per share and cash generated from operations reflect the success the Company has had in extending its reach into the global health benefits management arena.

Revenue for the year ending February 29, 2000 was $26.7 million, a 38% increase from last year's revenue of $19.3 million. Total revenues for the fourth quarter increased to $7.1 million from $6.9 million for the same quarter last year, a 3% increase over the same quarter last year.
The Company's revenue breaks down as follows:

Three Months

Three Months

Twelve Months

Twelve Months

ended

ended

ended

ended

February 29, 2000

February 28, 1999

February 29, 2000

February 28, 1999

Software licenses

4,827,466

5,364,162

16,530,315

12,460,852

Services

1,599,611

1,037,392

6,726,509

4,977,221

Maintenance

670,771

481,340

2,453,711

1,888,929

Hardware

-

-

955,604

-

Total

7,097,848

6,882,894

26,666,139

19,327,002

Gross profit margins for both the quarter and year-to-date are down compared to the respective periods last year (68% for the fourth quarter compared to 83% for the same quarter last year; and 66% for the year-to-date as compared to 76% for the same period last year). This reduction, however, is based on management initiating value-added, but lower margin, sales of hardware with its core products as well as the addition of third party software to the Corporation's product line.

Net income for the year ended February 29, 2000 was $2.1 million, or $0.10 per share, compared with $0.5 million, or $0.03 per share for the prior year. Net income for the quarter was $0.4 million, or $0.02 per share, compared with $1.5 million or $0.08 per share for the same quarter last year.

The decline in net income for the fourth quarter of fiscal 2000 was due to the following factors:

    1. The Company had an exceptional fourth quarter in fiscal 1999 with regards to the sale of its proprietary software products, which in turn contributed to the generation of a uniquely high gross profit margin of 83% in the quarter.

    2. In the fourth quarter of fiscal 2000, the Company incurred $0.5 million of one-time expenses related to a property tax assessment, bad debts and professional fees.

Fiscal 2000 Highlights:

  • Enhanced our blue chip customer list with the addition of nine new clients

  • Complimented our Senior Management Team with the appointment of the following executives:

  • Mr. Mike Bennof - Senior Vice President of Systems Implementation

  • Mr. Malcolm Macallum - Vice President of Product Development

  • Mr. Walt Ellenberger - Senior Vice President of Sales & Marketing

  • Mr. John Connolly - Vice President of Corporate Development

  • Strengthened Board of Directors with the addition of four key players from the healthcare industry

  • Fortified an already solid product offering with the addition of four new innovative products: HX-B&P (Billing & Payment), HX-Member, HX-Compliance and HX-Decision

  • Released version 3.3 of the flagship product, HX-PBS

  • Established a new development capability in Chennai, India

  • Announced the establishment of HxBenefit, Inc, a wholly owned subsidiary which will utilize Systems Xcellence's suite of Healthcare Xcellence (Hx)Ô benefits software as an application service provider (ASP), utilizing the Internet to allow customers portal-based access to the Company's rich and fully-functional suite of products on a transaction or subscription fee basis

  • Generated $3.8 million of positive cash flow from operations, which represents a significant improvement over the negative cash flow from operations of ($0.6) million in the previous year

  • Closed the year with a record contracted order backlog of $20.9 million

"We are pleased with our results for fiscal year 2000 and extremely optimistic with regards to our future prospects." said Gordon Glenn, President and CEO. "Fiscal 2001 begins with a record contracted order backlog, complimented by a robust sales pipeline, a strong balance sheet and a management team with the breadth and depth necessary to successfully implement the Company's growth strategy. Fiscal 2001 also presents many interesting opportunities for the Company which include the continued growth and market acceptance or our Healthcare Xcellence product suite and a focused implementation of an application service provider product offering which will result in significant growth of our recurring revenues in the years to come."

Systems Xcellence will be hosting a conference call this morning at 10:00 a.m. to discuss the Company's fourth quarter and year-end financial results. Interested parties are invited to participate by calling the conference operator at 1-888-424-1091. The call will be recorded and a re-broadcast may be heard until midnight on Thursday, May 11, 2000 by dialing 1-800-558-5253 and entering reservation #15082128.

Systems Xcellence is headquartered in Milton, Ontario, and provides advanced online transaction processing solutions for the healthcare benefits management industry. The Company combines robust software products, business expertise and services to deliver superior solutions to the ever-changing managed care sector. The Company's shares are traded on the Toronto Stock Exchange under the symbol SXC.

Link to Financial Results (PDF)