LanVision Systems Reports Second Quarter Fiscal 2004 Results

LanVision Systems Reports Second Quarter Fiscal 2004 Results



CINCINNATI, Sept. 7  /PRNewswire-FirstCall/ -- LanVision Systems, Inc.
(NASDAQ:LANV) today announced the financial results for the second quarter and
first six months ended July 31, 2004.

Revenues for the second quarter were $2,558,295 compared with $2,966,590
reported in the second quarter of last year.  The operating loss for the second
quarter of fiscal 2004 was ($83,922), compared with operating income of
$646,559 in the second quarter of fiscal 2003.  The net loss for the quarter
was ($462,328), or ($0.05) per basic and diluted common share, compared with
net earnings of $213,596, or $0.02 per basic and diluted common share in the
second quarter of fiscal 2003.

Revenues for the first six months were $5,199,850, compared with $5,586,572
reported in the first six months of last year.  The operating loss for the
first six months of fiscal 2004 was ($125,639) compared with operating income
of $398,542 in the comparable prior period.  The net loss for the first six
months was ($883,391), or ($0.10) per basic and diluted common share, compared
with net loss of ($462,196), or ($0.05) per basic and diluted common share in
the first six months of last year.

  Second Quarter Highlights included:

   payment of the high interest rate 1998 long-term debt and the related
   accrued and unpaid interest at maturity on July 30, 2004, and replacement
   of this debt with a $3.5 million working capital term loan, at Prime plus
   2% (6.50%) payable in annual installments over three years,

   the successful pilot of LanVision's codingANYware at the Charleston Naval
   Hospital, and

   FORTUNE Small Business Magazine named LanVision as one of America's 100
   fastest-growing small companies in America in its fourth annual ranking.



Brian Patsy, LanVision's Chairman and Chief Executive Officer, stated, "Our
current quarter and first six months operations followed our traditional
cyclical pattern, with a greater portion of our annual licensing revenues
recorded in our later two quarters.  The quarterly operating results reflect
primarily a decline in high margin add-on software licensing revenues to
existing customers and the delayed purchasing decisions on new customer sales,
offset to some extent with increased application-hosting revenues, when
compared to the prior comparable period.  Because the size of deals and the
timing of revenue recognition on software licensing significantly affects
operating results, the comparability of operating results among fiscal quarters
can be skewed.  The current sales pipeline continues to contain significant new
opportunities that we anticipate closing during the remainder of the fiscal
year.  Our ASPeN(SM) application service provider (ASP) based recurring
revenues continue to grow as we expand our distribution and the direct sales of
our application-hosting services such as codingANYware(TM). Based on our
current projections for the second half of the fiscal year, we believe that net
new software revenues from the current sales pipeline and ASP hosting services
should increase.  The anticipated increase in new software licensing and ASP
hosting revenues combined with lower interest as a result refinancing our debt
at a significantly more favorable rate should enable us to be profitable in the
remaining two quarters."

Regarding the current sales pipeline for the second half of the year, Mr. Patsy
further commented, "We have a robust sales pipeline of direct and indirect
opportunities that we anticipate will close in the second half of our fiscal
year, including several large government sector codingANYware remote hosting
opportunities.  In addition, we will be rolling out an important new entry
level document management solution for Emergency Departments (EDView(TM)) in
September through a joint distribution arrangement with Iron Mountain
Incorporated (NYSE:IRM). We anticipate piloting EDView at 2 or 3 mutual
customer sites soon."

Mr. Patsy continued, "As noted in our announcement of the retirement of our
high interest rate debt, based on the anticipated prime rate and outstanding
loan balance during the second half of the current fiscal year, the anticipated
interest expense will be $109,600 compared with $955,800 in the second half of
the prior fiscal year or a reduction in interest expense of $846,200, or
approximately $0.09 per share, pre tax, for the second half of the current
fiscal year.  For the next fiscal year (2005), the annual interest expense is
anticipated to be approximately $148,000 compared with $908,000 anticipated for
the current fiscal-year (2004), or a reduction of approximately $760,000 in
interest expense."

Mr. Patsy Concluded, "We believe that we are on course to achieve improved
operating results in the final six months of the current fiscal year."

Conference Call Information

In conjunction with LanVision's Second Quarter Fiscal 2004 earnings release,
you are invited to listen to its conference call, which will be broadcast live
over the Internet on September 8, 2004, at 10:00 a.m. Eastern Time, at
http://www.lanvision.com/ .

About LanVision Systems

LanVision is a healthcare information technology company focused on digitally
streamlining healthcare by providing solutions that improve document-centric
information flows while complementing and enhancing existing
transaction-centric healthcare information systems.  The Company's workflow and
document management solutions bridge the gap between current, inefficient
paper-based processes and transaction-based healthcare information systems by
1) electronically capturing document-centric information from disparate
sources, 2) electronically directing that information through vital business
processes, and 3) providing access to the information for authenticated users
(such as physicians, nurses, administrative and financial personnel and payers)
across the continuum of care.

The company's workflow-based products and services offer unique solutions to
specific healthcare business processes within the Medical Record life cycle and
the revenue cycle, such as remote coding, abstracting and chart completion,
remote physician order processing, pre-admission registration scanning,
insurance verification, financial screening, secondary billing services,
explanation of benefits processing and release of information processing.

LanVision's products and services also create an integrated document- centric
repository of historical health information that is complementary and can be
seamlessly "bolted on" to existing transaction-centric clinical, financial and
management information systems, allowing healthcare providers to aggressively
move toward fully Electronic Medical Record (EMR) processes while improving
service levels and convenience for all stakeholders.  These integrated systems
allow providers and administrators to dramatically improve the availability of
patient information while decreasing direct costs associated with document
retrieval, work-in-process, chart completion, document retention and archiving.

LanVision's systems can be provided on a subscription basis via remote hosting
services or installed locally.  LanVision provides ASPeN, ASP-based remote
hosting services to The University Hospital, a member of The Health Alliance of
Greater Cincinnati, M. D. Anderson Cancer Center and Children's Medical Center
of Columbus, Ohio among others.  In addition, LanVision has installed its
workflow and document management solutions at leading healthcare providers
including Stanford Hospital and Clinics, the Albert Einstein Healthcare
Network, Parkview Health System, ProMedica Health System, Inc., the University
of Pittsburgh Medical Center, Medical University Hospital Authority of South
Carolina, and Memorial Sloan-Kettering Cancer Center.

For additional information on LanVision, please visit our website at
http://www.lanvision.com/ .

"Safe Harbor" statement under the Private Securities Litigation Reform Act of
1995

Statements made by LanVision that are not historical facts are forward- looking
statements that are subject to risks and uncertainties.  LanVision's future
financial performance could differ materially from expectations of management
and from results reported now or in the past.  Factors that could cause
LanVision's financial performance to so differ include, but are not limited to,
the impact of competitive products and pricing, product development, reliance
on strategic alliances, availability of products procured from third party
vendors, the healthcare regulatory environment, fluctuations in operating
results, and other risks detailed from time to time in LanVision's filings with
the U.S. Securities and Exchange Commission.

                  LANVISION SYSTEMS, INC. AND SUBSIDIARY
                   CONSOLIDATED STATEMENTS OF OPERATIONS

                                Three Months Ended       Six Months Ended
                                    July 31,                July 31,
                                2004        2003        2004         2003

  Revenues:
     Systems sales          $  165,467  $  889,963  $  452,350  $ 1,512,459
     Services, maintenance
      and support            1,755,512   1,630,309   3,477,170    3,199,553
     Application-hosting
      services                 637,316     446,318   1,270,330      874,560
         Total revenues      2,558,295   2,966,590   5,199,850    5,586,572

  Operating expenses:
     Cost of systems sales     241,238     443,307     600,150      905,770
     Cost of services,
      maintenance and support  711,236     667,540   1,391,481    1,330,417
     Cost of application-
      hosting services         221,147     214,128     437,795      429,496
     Selling, general and
      administrative           924,805     534,043   1,838,273    1,478,241
     Product research and
      development              543,791     461,013   1,057,790    1,044,106
        Total operating
         expenses            2,642,217   2,320,031   5,325,489    5,188,030
  Operating income (loss)      (83,922)    646,559    (125,639)     398,542
  Other income expense:
      Interest income           15,091      17,316      39,194       36,350
      Interest expense        (393,497)   (450,279)   (796,946)    (897,088)
  Net earnings (loss)       $ (462,328) $  213,596  $ (883,391) $  (462,196)

  Basic net earnings (loss)
   per common share         $    (0.05) $     0.02  $    (0.10) $     (0.05)
  Diluted net earnings
   (loss) per common share  $    (0.05) $     0.02  $    (0.10) $     (0.05)

  Number of shares used in
   per common Share
   computation - basic       9,067,700   8,991,517   9,051,973    8,978,207
  Number of shares used in
   per common Share
   computation - diluted     9,067,700   9,179,751   9,051,973    8,978,207


                   LANVISION SYSTEMS, INC. AND SUBSIDIARY
                   CONDENSED CONSOLIDATED BALANCE SHEETS

                                      July 31,      July 31,     January 31,
                                        2004          2003           2004
                         Assets
  Current assets:
     Cash and cash equivalents
      (restricted by long-term
      debt agreement)               $ 4,538,655   $ 5,734,314   $ 6,227,236
     Accounts receivable              1,436,999     2,206,102     2,786,723
     Contract receivables             1,826,147     2,875,807     2,972,356
     Allowance for doubtful
      accounts                         (400,000)     (400,000)     (400,000)
     Other                              424,361       396,533       357,921
        Total current assets          7,826,162    10,812,756    11,944,236

  Property and equipment:
     Computer equipment               2,660,267     2,418,051     2,588,749
     Computer software                  947,654       787,593       812,591
     Office furniture, fixtures and
      equipment                       1,167,497     1,161,551     1,166,377
     Leasehold improvements             157,492       157,492       157,492
                                      4,932,910     4,524,687     4,725,209
    Accumulated depreciation and
     amortization                    (3,941,069)   (3,426,660)   (3,672,442)
                                        991,841     1,098,027     1,052,767
  Capitalized software development
   costs, net of accumulated
   Amortization of $2,916,728,
   $2,350,228 and $2,600,228
   respectively                       1,873,201     1,539,701     1,689,701
  Installment receivables                 -           433,339         -
  Other, primarily Deferred
   Federal Tax asset                    633,036        46,691       603,750
                                   $ 11,324,240  $ 13,930,514  $ 15,290,454


            Liabilities, convertible redeemable preferred
             stock and stockholders'  equity
  Current liabilities:
     Accounts payable                $  294,021  $    560,709  $    637,222
     Accrued compensation               253,537       210,355       265,095
     Accrued other expenses             626,451     1,136,134       928,097
     Deferred revenues                2,102,374     2,137,460     2,357,531
     Current portion of
      capitalized leases                227,644       213,004       220,199
     Current portion of
      long term-debt                  1,166,667     2,000,000     1,000,000
     Long-term accrued
      interest payable                    -         3,824,020     4,635,169
        Total current liabilities     4,670,694    10,081,682    10,043,313

  Non-current portion of
   capitalized leases                    52,406       280,050       168,121
  Non-current portion of
   long-term debt                     2,333,333         -             -

  Stockholders' equity:
     Convertible redeemable
      preferred stock, $0.01
      par value per share,
      5,000,000 shares authorized         -             -             -
     Common stock, $0.01 par value
      per share, 25,000,000
      shares Authorized,
      9,081,701 shares,
      9,009,567 shares and
      9,030,032 shares issued,
      respectively                       90,817        90,096        90,300
     Capital in excess of par value  34,999,709    34,899,375    34,928,047
     Accumulated (deficit)          (30,822,719)  (31,420,689)  (29,939,327)
        Total stockholders' equity    4,267,807     3,568,782     5,079,020
                                   $ 11,324,240  $ 13,930,514  $ 15,290,454


DATASOURCE: LanVision Systems, Inc.



CONTACT:  Paul W. Bridge, Jr., Chief Financial Officer of LanVision

Systems, Inc., [phone]



Web site:  http://www.lanvision.com/ 

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