PRESS RELEASE FOR IMMEDIATE RELEASE - Back to Press ReleasesToronto Stock Exchange Symbol: SXCSystems Xcellence Announces Third Quarter ResultsLaunch of HxBenefit ASP Offering Slated for March 1, 2001MILTON, Ontario (January 18, 2001) -- Systems Xcellence Inc. (TSE: SXC) announced today results for the three and nine months ended November 30, 2000. Sales in the third quarter were $6.7 million compared to $8.6 million last year. Last year's third quarter included a number of significant one-time 3rd party hardware and software sales amounting to approximately $3.5 million. Sales in this year's third quarter were consistent with the first two quarters of the current fiscal year. For the first nine months of the year sales were $19.8 million compared to $19.6 million last year. As at November 30, 2000 the Company's contracted sales order backlog was $21 million. Net income for the quarter was $95,721 or $0.01 per common share compared to $686,939 or $0.03 per share last year. The one-time contracts recognized in last year's third quarter resulted in the prior period's higher net income. On a comparable basis, gross margins in the third quarter of fiscal 2001 improved to 83% of sales from 65% last year when removing the large one-time sales and associated costs recognized in the prior year. For the first nine months of the year, net income was $737,176 or $0.04 per share compared to $1.7 million or $0.08 per share last year. The Company's revenue growth this fiscal year has been adversely impacted primarily due to three factors. First, the unexpected acquisition of two of the Company's largest customers early in the year resulted in a loss of recurring revenue that had accounted for approximately $9 million last year. Second, recent legislative changes (HIPAA) to the regulatory standards in the US healthcare market have caused many current and new customers to delay purchase decisions this fiscal year, but in turn the Company expects a growing demand for its HIPAA-compliant systems starting in the first quarter next year. Finally, a number of potential new clients have expressed strong interest in the Company's transaction-based Application Service Provider (ASP) offering, HxBenefit, preferring this outsourcing option versus procuring SX software licenses and running the system in-house. The Company has already signed contracts to supply HxBenefit's full function pharmacy benefit processing and reporting services to two large US-based pharmacy benefits management companies and will start processing claims for these customers on March 1, 2001. The Company continued to invest in long-term growth opportunities during the third quarter. Approximately $1.9 million has been expensed through the first nine months of the year to establish new facilities and hire staff related to the start-up of HxBenefit Inc. These expenses also include product development costs related to new ASP software functionality and the development of web portals to access the Company's pharmacy benefits management system. "We were pleased to have acquired the first customers for HxBenefit, validating our confidence in this leading-edge transaction-based ASP offering," stated Gordon Glenn, President and CEO. "We are on schedule to introduce this innovative product in the fourth quarter, however we do not expect to see any significant revenue contribution until next year. We also anticipate that the legislative changes in our US marketplace will drive significant growth in the coming year as healthcare participants upgrade systems to meet these new standards." Financial Highlights (unaudited financial statements follow)
Revenue Breakdown
Systems Xcellence is headquartered in Milton, Ontario, and provides advanced online transaction processing solutions for the healthcare benefits management industry. The Company combines web-enabled, real-time transaction processing technology with business consulting expertise, technical services and custom solution development to deliver patient-centric software solutions to the healthcare industry. The Company provides solutions specifically designed for health benefit management organizations including eCommerce providers, pharmacy benefit management organizations, Blue Cross Blue Shield plans, Managed Care Organizations and retail pharmacy chains. The Company's shares are traded on the Toronto Stock Exchange under the symbol SXC. Systems Xcellence can be found on the Internet at http://www.sxc.com.
Link to Financial Results (PDF) |
||||||||||||||||||||||||||||||||||||||||||||||||