Vasomedical Announces Financial Results for the Fourth Quarter and Year Ended 2012
Reports 34% Year-over-Year Increase in Equipment Segment Revenues for 2012
WESTBURY, N.Y., April 1, 2013 /PRNewswire/ -- Vasomedical, Inc. ("Vasomedical") (OTC BB: VASO) today reported its operating results for the three months and year ended December 31, 2012.
"This year we saw an increase in activity across each of our business segments, even though not everything was reflected in our total revenue for 2012, which declined by 6% compared to 2011," commented Dr. Jun Ma, President and Chief Executive Officer of Vasomedical, Inc. "The decline in revenue for 2012 is due to the lower commission rate earned by our VasoHealthcare unit as a result of the aggressive sales performance target set earlier in the year. We believe the sales target was aggressive given it was approximately 16% higher than the 2011 target and approximately 10% higher than 2011 actual performance, and on the other hand we saw in 2012 a relatively flat market for diagnostic imaging products, year-over-year. We believe the performance target for 2013 is more in line with current market conditions and our sales team's historical results, putting us in a position to achieve strong revenue growth in 2013."
"Revenue from our equipment segment grew 34% for the full year of 2012, compared to 2011. This was a direct result of the increased sales achieved from our Biox subsidiary, coupled with growth in international EECP® sales. As most of this growth was organic, we plan to expand distribution, sales and marketing for each area of our equipment segment in order to build on this momentum."
"Upon execution of our growth strategy, we expect to improve upon all fronts of our business and return to profitability. This strategy includes expanding on the domestic and international sales and marketing efforts for our EECP solutions and investing in further growth of our China operations. We will also seek out opportunities for partnerships and acquisitions in order to enhance our product lines. Most importantly, we have the capital resources needed to invest in our business and properly support future growth. As of March 1, 2013 our cash and cash equivalents were $12.9 million," concluded Dr. Ma.
Three Months Ended December 31, 2012 Financial Results
For the three months ended December 31, 2012, revenue decreased 32.9% to $9.8 million, compared to $14.6 million for the three months ended December 31, 2011. The decrease in revenue is attributable to the Sales Representation segment, which recorded a lower commission rate in 2012 than in 2011. The lower commission rate was a direct result of a higher sales performance target preset early in the year and a flat domestic market for the products in 2012, despite a good performance by the VasoHealthcare sales team. According to our sales representation agreement with our partner, we earn a progressively higher commission rate as performance targets are met during the year, and the higher commission rate is applied retroactively to all booked orders in the year. Therefore, we normally see higher commission revenue in the fourth quarter of the year when the relevant sales targets are met and the retroactive adjustments are made. Consequently, the full impact of the lower commission rate in 2012 was also recorded in the fourth quarter results. Commission revenue from the retroactive adjustment in the fourth quarter 2012 was 64.8% lower than in the fourth quarter of 2011.
Gross profit for the fourth quarter of 2012 was $6.8 million, for a gross margin of 69.7%, compared to a gross profit of $10.5 million, for a gross margin of 71.8%, for the fourth quarter of 2011.
Selling, general and administrative (SG&A) expenses for the fourth quarter of 2012 were $6.3 million compared to $5.2 million for the same period last year. SG&A increased principally from higher sales and marketing expenses incurred in conjunction with the extension of our exclusive representation agreement with GE Healthcare, a division of General Electric Company ("GEHC").
Net income attributable to common stockholders for the three months ended December 31, 2012 was $0.4 million, or $0.00 per common share, compared to a net income of $5.0 million, or $0.03 per common share, for the three months ended December 31, 2011.
Year Ended December 31, 2012 Financial Results
(For purposes of comparison, the Company compares the year ended December 31, 2012 results with the unaudited financial results for the year ended December 31, 2011. The Company's 2011 audited results, which are included in its 10K filing with the SEC, are for the seven months ended December 31, 2011 and full year ended May 31, 2011, reflecting its decision in 2011 to change to a fiscal year ended December 31st from May 31st.)
The Company reported a decrease in revenue of 6% to $29.2 million for the year ended December 31, 2012, compared to $31.1 million for the year ended December 31, 2011. The slight decrease in revenue is primarily due to a 13% decline in commission revenue in our sales representation segment attributable to a lower commission rate in 2012. This was partially offset by a 34% increase in revenue from our equipment segment.
Gross profit for 2012 was $20.6 million, for a gross margin of 70.4%, compared to a gross profit of $21.9 million, for a gross margin of 70.4%, for 2011.
SG&A for 2012 was $23.5 million compared to $17.7 million for 2011. This increase in SG&A is attributable to increased compensation and benefits expenses in the sales representation segment principally related to costs incurred in connection with the extension of the GEHC contract. SG&A also increased in the equipment segment due to higher compensation costs, higher sales and marketing expenses, mainly related to reimbursement consulting, and the inclusion of costs of China operations for a full year, as well as higher corporate expenses, mainly accounting, legal and director's fees.
For the year ended December 31, 2012, the Company had a net loss attributable to common stockholders of $3.4 million, or $0.02 per common share, compared to a net income of $2.2 million, or $0.02 per common share, for the year ended December 31, 2011.
The Company continues to record a substantial amount of deferred revenues, which will be recognized once the underlying equipment or service is accepted by the customer or performed by the Company. As of December 31, 2012, total deferred revenues were approximately $15.6 million, and the Company recorded cash and cash equivalents of approximately $11.5 million.
Conference Call Information
The Company will host a conference call today, Monday, April 1st at 1:00 p.m. ET. To dial into the conference call, please dial 1-866-393-1344 from the U.S. or 1-631-291-4669 internationally. All dial-in participants must use the following code to access the call: 26000098. Please call at least five minutes before the scheduled start time. The conference call will also be available via webcast and can be accessed through the Investor Relations section of Vasomedical's website, www.vasomedical.com, and www.kcsa.com. Please allow extra time prior to the call to visit the site and download any necessary software to listen to the live broadcast.
A replay of the conference call will be available approximately two hours after completion of the live conference call at www.vasomedical.com or www.kcsa.com. A dial-in replay of the call will also be available until May 1, 2013; please dial 1-855-859-2056 or 1-404-537-3406. All dial-in participants must use the following code to access the call: 26000098.
About Vasomedical
Vasomedical, Inc. is a diversified medical technology company specializing in the manufacture and sale of medical devices and in the domestic sale of diagnostic imaging products. The Company's main proprietary products are EECP® Therapy systems, the gold standard of ECP treatment. The Company operates through three wholly owned subsidiaries: VasoSolutions, Vasomedical Global and VasoHealthcare. VasoSolutions manages and coordinates the design, manufacture and sales of EECP® Therapy systems, and other medical equipment operations; Vasomedical Global operates the Company's China-based subsidiaries; and VasoHealthcare is the operating subsidiary for the exclusive sales representation of GE Healthcare diagnostic imaging products in certain markets. Additional information is available on the Company's website at www.vasomedical.com.
Summarized Financial Information
| FOR THE THREE MONTHS ENDED |
FOR THE YEAR ENDED |
||||
| STATEMENTS OF OPERATIONS |
December 31, 2012 |
December 31, 2011 |
December 31, 2012 |
December 31, 2011 |
|
| (In thousands except per share amounts) |
|||||
| Revenue |
$ 9,778 |
$ 14,562 |
$ 29,240 |
$ 31,112 |
|
| Gross profit |
$ 6,820 |
$ 10,454 |
$ 20,594 |
$ 21,917 |
|
| Operating (loss) income |
$ 377 |
$ 5,117 |
$ (3,508) |
$ 3,701 |
|
| Other income (expense), net |
$ 28 |
$ 145 |
$ 179 |
$ 208 |
|
| (Loss) income before taxes |
$ 405 |
$ 5,262 |
$ (3,329) |
$ 3,909 |
|
| Income tax benefit (expense) |
$ 21 |
$ (271) |
$ (52) |
$ (275) |
|
| Net (loss) income |
$ 426 |
$ 4,991 |
$ (3,381) |
$ 3,634 |
|
| Preferred stock dividends |
$ - |
$ - |
$ - |
$ (1,459) |
|
| Net (loss) income applicable to common stockholders |
$ 426 |
$ 4,991 |
$ (3,381) |
$ 2,175 |
|
| BALANCE SHEETS |
December 31, 2012 |
December 31, 2011 |
| (In thousands) |
||
| Total current assets |
$ 25,716 |
$ 27,686 |
| Total assets |
$ 32,381 |
$ 34,335 |
| Total current liabilities |
$ 18,178 |
$ 16,508 |
| Total stockholders' equity |
$ 9,010 |
$ 11,276 |
Except for historical information contained in this release, the matters discussed are forward-looking statements that involve risks and uncertainties. When used in this release, words such as "anticipates", "believes", "could", "estimates", "expects", "may", "plans", "potential" and "intends" and similar expressions, as they relate to the Company or its management, identify forward-looking statements. Such forward-looking statements are based on the beliefs of the Company's management, as well as assumptions made by and information currently available to the Company's management. Among the factors that could cause actual results to differ materially are the following: the effect of business and economic conditions; the effect of the dramatic changes taking place in the healthcare environment; the impact of competitive procedures and products and their pricing; medical insurance reimbursement policies; unexpected manufacturing or supplier problems; unforeseen difficulties and delays in the conduct of clinical trials and other product development programs; the actions of regulatory authorities and third-party payers in the United States and overseas; uncertainties about the acceptance of a novel therapeutic modality by the medical community; continuation of the GEHC agreement; and the risk factors reported from time to time in the Company's SEC reports. The Company undertakes no obligation to update forward-looking statements as a result of future events or developments.
Investor Contacts:
Todd Fromer / Garth Russell
KCSA Strategic Communications
Phone: 212-896-1215 / 212-896-1250
Email: [email protected] / [email protected]
SOURCE Vasomedical, Inc.
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