Vaso Corporation Reports Financial Results for First Quarter 2019
PLAINVIEW, NY / ACCESSWIRE / May 15, 2019 / Vaso Corporation (“Vaso”) (OTC PINK: VASO) today reported its operating results for the three months ended March 31, 2019.
“For the first quarter of 2019, the Company recorded a year-over-year revenue decrease of $2.0 million, mainly due to a lower equipment delivery volume by our partner, leading to a shortfall of $1.8 million in recognized revenue in our professional sales service segment alone. Under applicable accounting rules we recognize commission revenues upon delivery of the underlying equipment to customers. While we continued to experience slow equipment delivery in this segment, we anticipate an improvement in deliveries in the remainder of 2019,” stated Dr. Jun Ma, President and CEO of the Company.
“Meanwhile, we initiated a substantial cost reduction program at the end of 2018, which has already resulted in a decrease of $1.2 million in SG&A costs in the first quarter of 2019 when compared to the first quarter of 2018. Additional steps are being taken to align expense with revenue and to improve performance margin; therefore we believe that these cost reduction measures and an improved revenue for the balance of the year can return the Company to profitability by year end,” concluded Dr. Ma.
Financial Results for Three Months Ended March 31, 2019
For the three months ended March 31, 2019, revenue decreased by 11% to $15.5 million from $17.5 million for the same period of 2018, primarily resulting from a decrease of $1.8 million in our professional sales service segment revenue, substantially due to lower equipment deliveries. Quarterly revenue in our IT and equipment segments also decreased year-over-year, by $86,000 and $131,000, respectively. Order bookings in the professional sales service segment in the first quarter of 2019 were very strong and we expect that deliveries of the underlying equipment will improve over the remainder of 2019.
Gross profit for the first quarter of 2019 decreased 18% to $7.9 million, compared with a gross profit of $9.6 million for the first quarter of 2018. This decrease is primarily the result of the decrease in revenue as discussed above, compounded by a lower gross profit margin in the quarter compared to a year ago.
Selling, general and administrative (SG&A) expenses for the first quarter of 2019 decreased 10% to $10.3 million compared to $11.5 million for the same quarter of 2018. The decrease is primarily attributable to decreases in personnel and other costs in the professional sales service and IT segments, resulting from the cost reduction program the Company initiated in the fourth quarter 2018. We anticipate these costs reduction initiatives will result in significant cost savings for the full year 2019.
Research and development costs increased 7% to $200 thousand in the first quarter of 2019 compared to the first quarter of 2018, due to an increase in software development costs in the IT segment.
Net loss for the three months ended March 31, 2019 was $2.8 million, compared to a net loss of $2.1 million for the first quarter of 2018. The increase in the loss is principally due to the decrease in revenue in the professional sales service segment. We expect an improvement in profitability for the remainder of 2019, as we anticipate an increase in equipment deliveries in the professional sales service segment and improved operating results as an effect of our cost reduction initiatives.
Net cash used in operating activities was $0.7 million in the first quarter of 2019 compared to net cash used in operations of $0.5 million for the three months ended March 31, 2018. Cash and cash equivalents at March 31, 2019 was $2.1 million, compared to $2.7 million at December 31, 2018.
Total deferred revenue remains substantial, at approximately $17.9 million as of March 31, 2019, which will be recognized in the future when the underlying equipment or services are delivered and accepted at the customer site. Our shareholders’ equity decreased to $2.9 million as of March 31, 2019 from $5.6 million as of December 31, 2018.
We have incurred net losses from operations for the years ended December 31, 2018 and 2017, and we maintain lines of credit from a lending institution and these lines of credit will require further extensions after their current June 28, 2019 maturity date. Our ability to continue operating as a going concern is dependent upon achieving profitability, extending the maturity date of our existing lines of credit, or through additional debt or equity financing.
About Vaso
Vaso Corporation is a diversified medical technology company with several distinctive but related specialties: managed IT systems and services, including healthcare software solutions and network connectivity services; professional sales services for diagnostic imaging products; and design, manufacture and sale of proprietary medical devices.
The Company operates through three wholly owned subsidiaries:
- VasoTechnology, Inc. provides network and IT services through two business units: VasoHealthcare IT Corp., a national value added reseller of Radiology Information System (“RIS”), Picture Archiving and Communication System (“PACS”), and other software solutions from GEHC Digital and other vendors as well as related services, including implementation, management and support; and NetWolves Network Services LLC, a managed network services provider with an extensive, proprietary service platform to a broad base of customers.
- Vaso Diagnostics, Inc. d.b.a. VasoHealthcare, provides professional sales services and is the operating subsidiary for the exclusive sales representation of GE Healthcare diagnostic imaging products in certain market segments in the USA.
- VasoMedical, Inc. manages and coordinates the design, manufacture and sales of EECP® Therapy Systems and other medical equipment operations, as well as operates the Company’s overseas assets including China-based subsidiaries.
Summarized Financial Information
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FOR THE THREE MONTHS ENDED
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STATEMENTS OF OPERATIONS
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March 31, 2019
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March 31, 2018
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(In thousands)
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(Unaudited)
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Revenue
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$ | 15,524 | $ | 17,537 | ||||
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Gross profit
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7,886 | 9,621 | ||||||
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Operating loss
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(2,655 | ) | (2,114 | ) | ||||
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Other income (expense), net
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(183 | ) | 65 | |||||
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Loss before taxes
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(2,838 | ) | (2,049 | ) | ||||
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Income tax expense
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(11 | ) | (20 | ) | ||||
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Net loss
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(2,849 | ) | (2,069 | ) | ||||
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Income tax expense
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11 | 20 | ||||||
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Interest (income) expense, net
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217 | 161 | ||||||
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Depreciation and amortization
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675 | 595 | ||||||
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Non-cash stock-based compensation
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44 | 141 | ||||||
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Adjusted EBITDA*
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$ | (1,902 | ) | $ | (1,152 | ) | ||
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BALANCE SHEETS
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March 31,
2019 |
December 31, 2018
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(In thousands)
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(Unaudited)
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Total current assets
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$ | 15,223 | $ | 19,174 | ||||
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Total assets
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$ | 47,084 | $ | 50,474 | ||||
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Total current liabilities
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$ | 35,386 | $ | 35,353 | ||||
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Total stockholders’ equity
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$ | 2,943 | $ | 5,611 | ||||
Except for historical information contained in this release, the matters discussed are forward-looking statements that involve risks and uncertainties. When used in this report, words such as “anticipates”, “believes”, “could”, “estimates”, “expects”, “may”, “optimistic”, “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 IT and healthcare; continuation of the GEHC agreements; the impact of competitive technology 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; 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 Contact:
Michael J. Beecher
Investor Relations
Phone: 516-508-5837
Email: mbeecher@vasocorporation.com
SOURCE: Vaso Corporation
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