MediSolution Ltd. Announces Results for the Third Quarter

MONTREAL, QUEBEC--(Marketwire - February 13, 2009) - MediSolution Ltd.(TSX: MSH), a leading provider of enterprise resource planning (ERP) solutions and specialized blood bank software, today announced its results for the third quarter ended December, 31, 2008.

Third Quarter Highlights

For the quarter ended December 31, 2008, the Corporation reported a net loss of $0.7 million, compared to a net loss of $1.0 million in the same period ended December 31, 2007.

Overall, new systems revenue in the third quarter of fiscal 2009 increased by 26% to $1.96 million as compared to $1.56 million during the same quarter in the prior year. Consolidated revenue in the third quarter of fiscal 2009 increased by 7% for a total of $5.6 million as compared to $5.2 million the same quarter in fiscal 2008. The Corporation’s earnings before interest, taxes, depreciation and amortization of negative $0.2 million remained unchanged from the same quarter prior year.

“In Q3, we continue to focus on rationalizing our cost structure to reflect our more streamlined ERP and Blood Bank business focus,” said Paul Lepage, President and Chief Executive Officer, “while looking for opportunities to increase revenue, improve operational efficiency and reduce costs.”

About MediSolution

MediSolution (TSX: MSH), a Brookfield Asset Management company, is a leading information technology company, providing enterprise resource planning (ERP) and specialized blood bank software, solutions and services to healthcare and service sector customers across North America. More than 300 healthcare, public and service sector organizations rely on MediSolution’s systems to maximize their operational efficiencies, lower their costs and improve the delivery of services. The company’s product portfolio is comprised of Financial Management software such as accounts receivable, budgeting and materials management, Business Intelligence solutions as well as Human Capital Management tools and services including human resources management, staff scheduling and payroll processing. The company also provides speciality hemovigilance solutions that improve patient safety, reduce waste and increase efficiency for blood transfusion services.

For more information, visit www.medisolution.com.

This press release contains “forward-looking statements” regarding MediSolution. The words “believe”, “expect”, “anticipate”, “intend”, “estimate” and other expressions which are predictions of or indicate future events and trends and which do not relate to historical matters identify forward-looking statements. Readers are cautioned not to place undue reliance on forward-looking statements because they involve known an unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the company to differ materially from anticipated future results, performance or achievements expressed or implied by such forward-looking statements.

(1) “EBITDA” (earnings before interest expense, income taxes, depreciation of property and equipment, amortization of intangible assets and loss on settlement of lawsuit) does not have a standardized meaning prescribed by Canadian Generally Accepted Accounting Principles (GAAP) and may not be comparable to similar measures presented by other publicly traded companies. We use EBITDA amongst other measures, to assess the operating performance of our business.

 MediSolution Ltd. Consolidated Statements of Operations and Comprehensive Income (loss) (unaudited) -------------------------------------------------------------------------- -------------------------------------------------------------------------- (in thousands of dollars Three months ended Nine months ended except per share data) December 31 December 31 2008 2007 2008 2007 -------------------------------------------------------------------------- -------------------------------------------------------------------------- REVENUE System sales $1,959 $1,564 $4,673 $5,122 Support and processing 3,598 3,649 10,543 10,579 -------------------------------------------------------------------------- 5,557 5,213 15,216 15,701 Cost of revenue 3,328 3,030 9,612 9,519 -------------------------------------------------------------------------- 2,229 2,183 5,604 6,182 Sales and marketing expenses 814 1,279 2,253 3,528 Software development expenses (net of tax credit) 387 346 1,246 1,132 General and administrative expenses 1,196 794 2,927 3,094 Restructuring charges - 4 (9) (117) -------------------------------------------------------------------------- Loss before the undernoted items: (168) (240) (813) (1,455) Depreciation of property and equipment 86 89 241 323 Amortization of intangible assets 564 529 1,687 1,563 Interest expense (3) 66 (2) 116 Interest income (199) - (294) - Loss on foreign exchange 52 36 57 139 Loss on settlement of lawsuit - - - 112 -------------------------------------------------------------------------- Loss from continuing operations before income taxes (668) (960) (2,502) (3,708) -------------------------------------------------------------------------- Income taxes recovered - - (7,113) (3) -------------------------------------------------------------------------- Net earning (loss) from continuing operations (668) (960) 4,611 (3,705) Net earnings (loss) from discontinued operations, net of taxes (29) 651 32,364 3,435 -------------------------------------------------------------------------- Net earnings (loss) and comprehensive income (loss) $(697) $(309) $36,975 $(270) -------------------------------------------------------------------------- -------------------------------------------------------------------------- Net earnings (loss) per share - basic From continuing operations (0.00) (0.01) 0.03 (0.02) From discontinued operations (0.00) 0.01 0.21 0.02 -------------------------------------------------------------------------- Net earnings (loss) per share - basic (0.00) (0.00) 0.24 (0.00) -------------------------------------------------------------------------- Net earnings (loss) per share - diluted From continuing operations (0.00) (0.01) 0.03 (0.02) From discontinued operations (0.00) 0.01 0.20 0.02 -------------------------------------------------------------------------- Net earnings (loss) per share - diluted (0.00) (0.00) 0.23 (0.00) -------------------------------------------------------------------------- Weighted average Number of common shares outstanding - basic 158,292,332 158,282,332 158,286,114 158,152,970 -------------------------------------------------------------------------- Weighted average number of common shares outstanding - diluted 158,292,332 158,282,332 158,878,810 158,152,970 -------------------------------------------------------------------------- -------------------------------------------------------------------------- MediSolution Ltd. Consolidated Statements of Retained Earnings (deficit) (unaudited) -------------------------------------------------------------------------- -------------------------------------------------------------------------- Nine months ended December 31 (in thousands of dollars) 2008 2007 -------------------------------------------------------------------------- Deficit, beginning of period $(1,259) $(1,850) Net earnings (loss) 36,975 (270) Interest on share purchase financing - 9 Retained earnings (deficit), end of period $35,716 $(2,111) -------------------------------------------------------------------------- -------------------------------------------------------------------------- MediSolution Ltd. Consolidated Balance Sheets (unaudited) -------------------------------------------------------------------------- -------------------------------------------------------------------------- As at (in thousands of dollars) December 31 , March 31, 2008 2008 -------------------------------------------------------------------------- ASSETS Current Assets Cash $32,006 $1,404 Accounts receivable and accrued revenue 9,362 7,695 Tax credit receivable 1,038 660 Inventory 113 161 Sundry deposits and prepaid expenses 921 1,184 Deferred expenses 170 218 Current assets held for sale - 12,906 -------------------------------------------------------------------------- 43,610 24,228 Property and equipment 466 600 Intangible assets 5,882 6,056 Goodwill 5,022 5,022 Deferred expenses 842 1,373 Other long-term asset 75 162 Long-term assets held for sale - 8,682 -------------------------------------------------------------------------- $55,897 $46,123 -------------------------------------------------------------------------- -------------------------------------------------------------------------- LIABILITIES Current Liabilities Accounts payable and accrued liabilities $4,632 $6,876 Deferred revenue 3,045 5,450 Current liabilities related to assets held for sale - 17,891 -------------------------------------------------------------------------- 7,677 30,217 Deferred revenue 1,162 2,068 Long-term liabilities related to assets held for sale - 4,001 -------------------------------------------------------------------------- 8,839 36,286 -------------------------------------------------------------------------- -------------------------------------------------------------------------- SHAREHOLDERS’ EQUITY 47,058 9,837 -------------------------------------------------------------------------- $55,897 $46,123 -------------------------------------------------------------------------- -------------------------------------------------------------------------- MediSolution Ltd. Consolidated Statements of Cash Flows (unaudited) -------------------------------------------------------------------------- -------------------------------------------------------------------------- (in thousands of dollars) Three months ended Nine months ended December 31 December 31 2008 2007 2008 2007 -------------------------------------------------------------------------- INFLOW (OUTFLOW) RELATED TO THE FOLLOWING ACTIVITIES Operating Net earnings (loss) from continuing operations $(668) $(960) $4,611 $(3,705) Items not affecting cash: Depreciation of property and equipment 86 89 241 323 Amortization of intangible assets 564 529 1,687 1,563 Stock-based compensation 105 80 244 234 Non-cash portion of restructuring charges - 4 (9) (117) Changes in non-cash operating working capital items (1,145) 204 (3,882) 2,368 Change in deferred revenue (1,497) (1,205) (3,312) (4,180) Change in deferred expenses 143 (68) 579 452 -------------------------------------------------------------------------- Cash flows from continuing operations (2,412) (1,327) 159 (3,062) Cash flows from discontinued operations (29) (1,602) (2,958) 83 -------------------------------------------------------------------------- (2,441) (2,929) (2,799) (2,979) -------------------------------------------------------------------------- Investing Additions to property and equipment (78) (68) (107) (246) Additions to intangible assets, net of tax credits (512) (599) (1,513) (1,663) -------------------------------------------------------------------------- Cash flows from continuing operations (590) (667) (1,620) (1,909) Cash flows from discontinued operations - (330) 35,019 (875) -------------------------------------------------------------------------- (590) (997) 33,399 (2,784) -------------------------------------------------------------------------- Financing Repayment of share purchase plan loan - - - 800 Issuance of common shares - - 2 136 Interest on share purchase financing - - - 9 Increase of short-term loans Trilon Bancorp - 4,000 - 2,001 Increase (decrease) of short-term loans - (171) - 2,206 -------------------------------------------------------------------------- Cash flows from continuing operations - 3,829 2 5,152 Cash flows from discontinued operations - - - - -------------------------------------------------------------------------- - 3,829 2 5,152 -------------------------------------------------------------------------- Increase (decrease) in cash and cash equivalents (3,031) (97) 30,602 (611) Cash, beginning of period 35,037 342 1,404 856 -------------------------------------------------------------------------- Cash, end of period $32,006 $245 $32,006 $245 -------------------------------------------------------------------------- -------------------------------------------------------------------------- Supplemental cash flow information Interest paid $(3) $66 $1 $116 Interest received (153) - (247) - Income taxes received - - - 3 -------------------------------------------------------------------------- --------------------------------------------------------------------------