Portfolio Update: Systems Xcellence

Systems Xcellence Inc. (Nasdaq: SXCI, TSX: SXC), an information technology solutions provider to participants in the pharmaceutical supply chain in the United States and Canada, on May 3 announced the results of its operations for the first quarter 2007 ended March 31.

Total revenue for the quarter was $24.3 million, an increase of 26% from $19.3 million in the first quarter of 2006. Recurring revenue totaled $17.9 million, up 44% from $12.4 million for the same period last year. Non-recurring revenue totaled $6.4 million versus $6.9 million in the same period last year.

Net income was $3.7 million, or $0.17 per fully diluted share, compared with net income of $5.6 million, or $0.31 per fully diluted share, for the same period last year.  The press release noted, "Net income in Q1 2006 included a non-cash $2.5 million future tax recovery that was recognized based on the Company's ability to utilize a taxable benefit attributable to historical net operating losses and tax-related timing."

Chairman and CEO Gordon S. Glenn commented, "Strong organic growth in Q1 was driven by increased activity in our higher margin transaction processing business. In January, we 'went live' on substantial contracts with the Georgia Department of Community Health and Kroger Corporation who are now our largest customers in the State Medicaid and employer group markets, respectively. These new customer relationships reflect the maturity and growing acceptance of our business model in the pharmacy benefits marketplace as well as our ability to scale our operations to meet the processing demand from such marquee organizations. With the on-going investment in our products, personnel and capacity, we are well positioned to increase market share in our core healthcare payer markets while further capitalizing on new State Medicaid, employer group and long-term care opportunities."

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