PRESS RELEASE FOR IMMEDIATE RELEASE - Back to Press Releases

Toronto Stock Exchange Symbol: SXC

Systems Xcellence Announces Second Quarter FY2002 Financial Results

 Company Achieves EBITDA Positive Status

MILTON, ON, October 17, 2001 -- Systems Xcellence Inc., (TSE: SXC) announced today financial results for the second fiscal quarter of 2002 ended August 31, 2001.

Highlights of the quarter include:

• The return to EBITDA positive status

• Recurring revenues representing 54% of total revenue earned during the quarter

• The successful implementation of restructuring efforts resulting from the ComCoTec acquisition

• The awarding of a three year contract, valued in excess of US $1,000,000 to provide ASP services to Dean Health Plan

• Ending revenue backlog of $59 million

"SXC is on track with achieving its revenue and profitability goals as stated for fiscal 2002," said Gordon S. Glenn, President & CEO of Systems Xcellence. "Based on our revenue increase, recent restructuring and on-going cost control efforts, during the quarter we achieved positive earnings before interest, taxes, depreciation and amortization (EBITDA) and were successful in effectively integrating the operations of ComCoTec. We are now one company, one management team, focussed and doing business as SXC."

"In fact, we believe our acquisition and integration efforts have significantly exceeded our stated goals", Mr. Glenn added. "We have derived more cost and revenue synergies than originally anticipated, enhanced our market offerings, increased our base of ASP-based recurring revenues, enhanced cash flow and earnings, built market presence with new and expanded product offerings, and acquired significant pharmacy domain expertise. Our strong order backlog, impressive list of blue-chip clientele and continued drive toward revenue from recurring sources have the Company well positioned for the next several quarters and beyond."

Subsequent to the end of the quarter, the Company announced a US$1,750,000 agreement with a large regional health plan to provide a software license for Systems Xcellence's claims processing system (RxCLAIM®) along with consulting, development services and maintenance. The system will manage the prescription drug benefit processing for the health plan's three million members.

Financial Results

Revenues for the second quarter ended August 31, 2001 totaled $9.0 million, up 34.8% from $6.7 million for the three months ended August 31, 2000. For the first half of fiscal 2002, revenues reached $17.1 million or 30.1% higher than the $13.1 million recorded for the first half of fiscal 2001. The acquisition of ComCoTec has advanced Systems Xcellence's transformation to a company with a more solid foundation of recurring revenue, including its industry leading Application Solutions Provider (ASP) offering. For the second quarter of 2002, 54% of the Company's revenue was earned from recurring sources and for the first half, 57%. The continued transformation to a more balanced recurring revenue model should provide Systems Xcellence with a much more stable revenue stream.

The Company recorded EBITDA of $673,792 during the second quarter, an increase of 6% compared with $633,683 during the same period in fiscal 2001. The improvement in EBITDA is largely a result of increased sales and operating expense synergies of the combined Company, offset by increased project costs. The Company reported negative EBITDA of $3.1 million for the six months ended August 31, 2001, compared with EBITDA of $1.2 million for the first six months of fiscal 2001.

For the second quarter of fiscal 2002, Systems Xcellence reported a net loss of $3.7 million, which is ($0.03) per share before amortization of goodwill, or ($0.12) per share after amortization of goodwill, compared to net income of $310,390 or $0.01 per share for the corresponding period in fiscal 2001. The $3.7 million net loss includes $2.8 million of goodwill amortization.

For the first half of fiscal 2002, the Company's net loss totaled $11.8 million, which is ($0.24) per share before amortization of goodwill and ($0.45) per share after amortization of goodwill, compared to net income of $641,445, or $0.03 per share for the corresponding six-month period in fiscal 2001. The $11.8 million net loss includes $5.5 million of goodwill amortization.

The Company continues to focus on managing certain short-term financial liquidity initiatives, which it expects to have completed by its fiscal third quarter. The Company has already made significant progress with a number of such initiatives including the sale and leaseback of its corporate headquarters, securing additional borrowing capacity, and reaching agreement with and/or restructuring certain long and short-term debt obligations with its primary lenders. Completion of these initiatives is expected to both improve the Company's position with its various stakeholders and position it for future growth.

The Company's contract order backlog increased to $59 million at the end of the second quarter of fiscal 2002, compared to $22 million at the end of the comparable quarter in fiscal 2001. Management anticipates that this contracted order backlog would be realized over a three-year period.

Analyst Conference Call:

A taped replay of the Company's fiscal second quarter analyst conference call to be held on October 17th will be available until October 24th by dialing 416-695-5800 or 1-800-408-3053 and entering the reference number 934426.

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 (IT) solutions and services to the healthcare benefits management industry. The Company's product offerings and solutions combine a wide range of software applications, ASP processing services and professional services, designed for many of the largest organizations in the pharmaceutical supply chain, such as pharmacy benefit managers (PBMs), managed care organizations (MCOs), retail pharmacy chains and other healthcare intermediaries.

The Company's products offer its customers comprehensive pharmacy benefits management, claims switching and processing, drug dispensing, data warehousing and analysis, and rebate contract management systems. SXC delivers these solutions to its customers as software products bundled with systems implementation and consulting services, or on an ASP basis from its data centres in Scottsdale, Arizona and Lombard, Illinois. The Company's shares are traded on the Toronto Stock Exchange under the symbol SXC. SXC can be found on the Internet at www.sxc.com.

This press release contains forward-looking statements based on current expectations. These forward-looking statements entail various risks and uncertainties that could cause actual results to differ materially from those reflected in these forward-looking statements. Risks and uncertainties about the Company's business are more fully discussed in the Management Discussion and Analysis published in the Company's annual report.

Accompanying Files - In Excel Format

Balance Sheets
Statements of Operations
Statements of Deficit
Statements of Cashflow