PLAINVIEW, N.Y. March 30, 2016 – Vaso Corporation (“Vaso”) (OTCMKTS: VASO) today reported its operating results for the three months and year ended December 31, 2016.
“We are pleased to announce a record revenue of $72.6 million for the fiscal year 2016, a growth of 27% from 2015, which is significant because it was achieved in spite of a revenue decrease in the professional sales service business segment due to lower volume of equipment deliveries,” stated Dr. Jun Ma, President and Chief Executive Officer of Vaso Corporation. “Revenue contributions from our IT, professional sales service and proprietary equipment segments were respectively 54%, 39% and 7% in 2016, signifying a diversified and robust enterprise with less dependence on a single source of income.”
“Our IT segment continues to grow and has built a substantial backlog in 2016. The professional sales service segment also saw an increase in deferred revenue resulting from higher order bookings in 2016 than in the previous year. Performance in our proprietary equipment business improved in 2016 as well. Therefore, while we experienced a decrease in net income in 2016 as a result of continued investment in the IT segment and lower commission revenue in the professional sales service segment, we expect to see continued sales growth in 2017 with improved profitability. Our operations continue to generate healthy positive operating cash flow, $5.2 million in 2016 to be specific, further strengthening the Company’s financial position with cash balances of approximately $8 million as of March 24, 2017,” concluded Dr. Ma.
Financial Results for Three Months Ended December 31, 2016
For the three months ended December 31, 2016, revenue decreased 9.8% to $19.3 million from $21.4 million for the same period of 2015, due primarily to the decrease of $2.3 million in revenue in our professional sales service segment as a result of lower volume of equipment deliveries, partially offset by an increase in revenue in our IT segment principally from an increase in sales in the NetWolves business.
Gross profit for the fourth quarter of 2016 decreased 11.0% to $11.2 million, compared with a gross profit of $12.6 million for the fourth quarter of 2015. This decrease is primarily the result of the decrease in revenue in the professional sales service segment resulting in a decrease in segment gross profit of $1.9 million, partially offset by an increase in gross profit in both the IT and equipment segments.
Selling, general and administrative (SG&A) expenses for the fourth quarter of 2016 increased 5.8% to $10.4 million compared to $9.9 million for the fourth quarter of 2015. The increase is primarily attributable to an increase in personnel costs in the professional sales service segment. SG&A expenses were 54.1% of revenue in the fourth quarter of 2016 compared to 46.1% of revenue for the same quarter of 2015.
Net income for the three months ended December 31, 2016 was $0.4 million, compared with a net income of $2.7 million for the three months ended December 31, 2015.
Financial Results for Year Ended December 31, 2016
For the year ended December 31, 2016, revenue increased $15.5 million, or 27.2%, to $72.6 million, compared with $57.1 million for the year 2015. Revenue in our IT segment was $39.4 million for the year ended December 31, 2016, compared to revenue of $21.1 million in 2015, mainly as a result of including full-year revenue from NetWolves in 2016 versus only seven months revenue from NetWolves in 2015. Commission revenues in our professional sales service segment decreased by 9.7% to $28.5 million as a result of lower equipment deliveries compared to 2015. Equipment segment revenue for the year 2016 increased by 6.2% to $4.6 million, compared to $4.3 million in 2015, principally due to an increase in volume of EECP® equipment sales and an increase in sales at our Biox subsidiary.
Gross profit for the year ended December 31, 2016 increased 17.3% to $41.5 million, from $35.4 million in 2015. The increase was due primarily to the inclusion of twelve months of NetWolves operations in 2016 versus seven months in 2015, and to a higher gross profit in our equipment segment, partially offset by a decrease in gross profit in our professional sales service segment resulting from lower commission revenue in this segment as discussed above.
SG&A expenses for the year ended December31, 2016 increased 27.5% to $39.4 million, or 54.3% of revenue, compared with $30.9 million, or 54.2% of revenue, for the same period in 2015. The increase resulted primarily from including the NetWolves operation for twelve months in 2016 compared to seven months in 2015, and an increase in personnel costs in the professional sales service segment. SG&A costs in the equipment segment decreased, as did corporate costs.
For the year ended December 31, 2016, the Company had net income of $0.8 million, or $0.01 per common share, compared with a net income of $3.8 million, or $0.02 per common share, for the year ended December 31, 2015.
Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization, and share-based compensation) was $4.4 million for the year ended December 31, 2016 compared to $5.8 million for the year ended December 31, 2015. The decrease was primarily the result of lower net income in 2016, partially offset by higher depreciation and amortization of intangibles in 2016 compared to 2015.
Net cash provided by operating activities was $5.2 million and $6.5 million for the year ended December 31, 2016 and 2015, respectively. Net cash increased to $7.1 million at December 31, 2016, compared to $2.2 million at December 31, 2015. The increase in cash is the result of cash provided from operations and an increase in borrowings under our lines of credit. As of March 24, 2016, the Company’s net cash was approximately $8 million.
Deferred revenue remains substantial, at approximately $19.4 million as of December 31, 2016, which will be recognized in the future when the underlying equipment or services are delivered and accepted at the customer site. Our shareholders’ equity increased to $12.9 million as of December 31, 2016 from $11.7 million as of December 31, 2015.
Conference Call Information
The Company will host a conference call on Thursday, March 30, 2017 at 10:00 a.m. eastern time featuring presentations by Jun Ma, Ph.D., President and CEO, Peter Castle, Chief Operating Officer, and Michael Beecher, Chief Financial Officer of Vaso Corporation. To join the conference call, please dial 1-877-407-8033 from the U.S. or 1-201-689-8033 internationally. 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 Vaso’s website, http://www.vasocorporation.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 http://www.vasocorporation.com/. To access the dial-in replay of the call, which will be available until April 30, 2017, please dial 1-877-481-4010 or international 1-919-882-2331. All dial-in participants must use the following code to access the call: 10295.
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 four wholly owned subsidiaries. Vaso Technology, Inc. provides network and IT services through two business units: VasoHealthcare IT Corp., a national value added reseller of GE Healthcare IT’s Radiology PACS (Picture Archiving and Communication System) software solutions and 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 Solutions, Inc., manages and coordinates the design, manufacture and sales of EECP® Therapy Systems and other medical equipment operations. Vasomedical Global Corp operates the Company’s overseas assets including China-based subsidiaries (Biox Instruments Co. Ltd. and Life Enhancement Technology Limited) as well as the minority interest in VSK Medical Limited, a marketing and sales company for ECP products in the international market. Additional information is available on the Company’s website at www.vasocorporation.com.
Summarized Financial Information
Except for historical information contained in this report, 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”, “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.
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