Friday, 13 February 2009

The LMS Train is Still Chugging Along

LMS Medical Systems (LMZ - TSX)
Shares outstanding: 25.8m
Fully Diluted: 30.7 million

LMS released its Q3/F09 (Dec. 31) financial results today with the bright spot being the recurring revenue stream. It showed a 40% increase to $571 thousand compared to approximately $411 thousand over the same quarter of Fiscal 2008.

Revenues in the quarter were $651 thousand, down from $952 thousand for the same period in the last fiscal year. As such, 87% of the last quarter’s total is made up of recurring revenue.

Kudos should be given to the management team for decreasing operating expenses by 34% to $1.37 million from just over $2 million in Q3/F08. Clearly there’s still a substantial gap between expenses and the revenue stream but we wouldn’t be surprised to see operating expenses come down even further in the next quarter. This is a necessity. It’s no secret that the company is at a critical juncture.

Other events in the quarter include:

· An increase in its backlog to $4.6 million
· The TSX has extended its listing review till March 13, 2009
· The appointment of a new interim CEO, COO & CTO
· The current agreement with its distribution partner will not be extended beyond October 9th, 2009.
· LMS’ workforce has been reduced by 50%

The quarterly results aside, the market is anxiously waiting for LMS to announce a deal that would give it the capital it needs to move forward. The clock is ticking and we’re all hoping to hear something soon.

To read the full release, please click here.