Vaso Corporation Announces Financial Results for Fourth Quarter and Full Year for 2019

Vaso Corporation Announces Financial Results for Fourth Quarter and Full Year for 2019

Plainview, NY, April 14, 2020 – Vaso Corporation (“Vaso”) (OTCMKTS: VASO) today reported its operating results for the three months and year ended December 31, 2019.

“The Company’s total revenue for fiscal 2019 reached $75.7 million, a record in its history, as sales in its IT and professional sales service segments grew 3.4% and 2.7%, respectively, from the prior year,”
commented Dr. Jun Ma, President and Chief Executive Officer of Vaso Corporation. “In addition, as a result of revenue growth and significant cost reduction, Vaso Corporation has returned to profitability
after two years of losses, with an operating income of $1.0 million for 2019, an improvement of $4.7 million when compared to an operating loss of $3.7 million in 2018.”

“Selling, general and administrative, or SG&A, costs went down by $3.1 million, or 7.1%, in 2019 when compared to 2018. We continue to watch business expenses while carefully executing our business strategy, especially in this time of uncertainty when the COVID-19 pandemic is impacting all aspects of life and business adversely,” concluded Dr. Ma.

Financial Results for Three Months Ended December 31, 2019

For the three months ended December 31, 2019, revenue increased 24.5% to $24.0 million from $19.2 million for the same period of 2018, due primarily to the increase of $4.7 million, or 70.5%, in revenue in
our professional sales service segment as the result of achieving certain performance goals and higher blended commission rates for the equipment delivered during the quarter. Revenue in our IT segment
increased 3.7%, to $11.5 million in the fourth quarter 2019, compared to the same quarter of 2018, while our equipment segment revenue decreased 25.5% to $1.1 million from $1.5 million for the fourth quarter
of 2018, due to lower sales of EECP products.

Gross profit for the fourth quarter of 2019 increased 36.8% to $14.5 million, compared with a gross profit of $10.6 million for the same quarter of 2018. This increase was primarily the result of the increase in revenue in the professional sales service and IT segments, partially offset by a decrease in gross profit in the equipment segment

Selling, general and administrative (SG&A) expenses for the fourth quarter of 2019 decreased 4.8% to $11.0 million, compared to $11.5 million for the fourth quarter of 2018. The decrease is primarily
Page 2 of 4 attributable to a decrease in personnel costs in the professional sales service and IT segments. SG&A expenses were 45.7% and 59.8% of revenue in the fourth quarter of 2019 and 2018, respectively.

Net income for the three months ended December 31, 2019 was $3.1 million, compared with a net loss of $0.8 million for the three months ended December 31, 2018.

Financial Results for Year Ended December 31, 2019

For the year ended December 31, 2019, revenue increased $1.8 million or 2.4% to $75.7 million when compared with $74.0 million for the year 2018. Revenue in our IT segment increased 3.4% to $45.7 million for the year 2019, from 2018 revenue of $44.2 million, primarily due to an increase of $1.6 million in the healthcare IT business, offset by a slight decrease in network service revenue. Commission revenues in our professional sales service segment increased by 2.7% to $26.2 million in the year 2019, compared to revenue of $25.5 million in 2018. The increase was the result of achieving certain performance goals
and higher blended commission rates for the equipment delivered during the year. Equipment segment revenue for the year 2019 decreased by 10.4% to $3.8 million, from $4.2 million in 2018, principally due to the decrease in EECP equipment sales and related service revenues.

Gross profit for the year ended December 31, 2019 increased 3.7% to $42.7 million, from $41.1 million in 2018, as a result of $1.1 million increase in the professional sales service segment gross profit and $642
thousand increase in the IT segment gross profit, both resulting from revenue growth in the segments, offset by a $225 thousand decrease in the equipment segment gross profit as a result of the lower revenues
in that segment.

SG&A expenses for the year ended December 31, 2019 decreased $3.1 million or 7.1% to $40.8 million, or 53.9% of revenue, compared with $44.0 million, or 59.4% of revenue, for the same period in 2018.
The decrease resulted primarily from a decrease in personnel and other costs in the professional sales service and IT segments, as well as a decrease in corporate expenses.

For the year ended December 31, 2019, the Company had net income of $39 thousand, compared with a net loss of $3.7 million for the year ended December 31, 2018.

Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization, and share-based compensation) was $3.9 million for the year ended December 31, 2019 compared to negative Adjusted
EBITDA of $0.6 million for the year ended December 31, 2018, an improvement of $4.5 million. The improvement was primarily the result of the net income in 2019 compared to the net loss in 2018.

Net cash used in operating activities was $1.3 million, compared to net cash used in operating activities of $1.5 million in 2018. The decrease is principally due to the increase in profitability and an increase in
deferred revenue, offset by an increase in accounts receivable. Net cash decreased to $2.1 million at December 31, 2019, compared to $2.7 million at December 31, 2018. The decrease in cash is the net effect of negative cash from operating and investing activities, offset by an increase in net borrowings. As of March 31, 2020, the Company’s net cash was approximately $7.2 million.

Deferred revenue increased to $19.3 million at December 31, 2019, compared to $18.1 million at December 31, 2018. The increase is primarily the result of higher order bookings in the professional sales
service segment. The deferred revenue 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 $5.8 million
as of December 31, 2019 from $5.6 million as of December 31, 2018.

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 Biox Instruments Co. Ltd. and Life Enhancement Technology Limited.

Additional information is available on the Company’s website at www.vasocorporation.com.

Summarized Financial Information

 

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.

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Vaso Corporation Announces Financial Results for Second Quarter 2019

Plainview, NY, August 14, 2019 – Vaso Corporation (“Vaso”) (OTCMKTS: VASO) today reported its operating results for the three months ended June 30, 2019.
“The Company’s total revenue for the second quarter of 2019 was $17.5 million, a 5% decrease when compared to revenue for the same quarter of 2018, resulting from a lower volume of equipment delivery during the quarter by our partner in our professional sales service segment. Our IT and equipment segments, on the other hand, enjoyed year-over-year quarterly revenue growths of 7% and 11%, respectively. We remain optimistic about continued growth in the IT and equipment segments and improved deliveries of underlying equipment in the professional sales service segment in the third and fourth quarters of 2019,” commented Dr. Jun Ma, President and CEO of the Company.

“The cost cutting effort we initiated at the end of 2018 has yielded a substantial decrease in selling, general and administrative (“SG&A”) costs, by 9%, in the first half of 2019 when compared to the first half of 2018. We also are implementing additional measures to further integrate and streamline operations to improve performance and efficiency. While it takes time for these measures to fully reveal the intended outcomes, we believe the Company will demonstrate substantially improved financial results by year end,” concluded Dr. Ma.

Financial Results for Three Months Ended June 30, 2019

For the three months ended June 30, 2019, revenue decreased by 5% to $17.5 million from $18.4 million for the same period of 2018, resulting from a decrease of $1.7 million in our professional sales service segment revenue, mainly due to lower equipment deliveries by our partner. We expect that deliveries of equipment will improve over the remainder of 2019. Quarterly revenue in our IT and equipment segments increased year-over-year, by $701,000 or 7% and $96,000 or 11%, respectively.

Gross profit for the second quarter of 2019 decreased 10% to $9.4 million, compared with a gross profit of $10.4 million for the second 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.

SG&A expenses for the second quarter of 2019 decreased 7% to $9.7 million compared to $10.4 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 decreased 10% to $228 thousand in the second quarter of 2019 compared to the same period in 2018, due to lower software development costs in the equipment segment.

Net loss for the three months ended June 30, 2019 was $750 thousand, compared to a net loss of $446 thousand for the second 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 performance 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 $2.4 million in the six months ended June 30, 2019, compared to net cash used in operations of $2.2 million for the same period in 2018. Cash and cash equivalents at June 30, 2019 was $1.0 million, compared to $2.7 million at December 31, 2018.

Total deferred revenue remains substantial, at approximately $17.6 million as of June 30, 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 $2.2 million as of June 30, 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 for the six months ended June 30, 2019. We maintain lines of credit from a lending institution which will require further extensions after their current December 18, 2019 maturity date; as well as other notes payable that mature within twelve months from June 30, 2019. Our ability to continue operating as a going concern is dependent upon
achieving profitability, extending the maturity date of our existing lines of credit and notes payable, 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 Biox Instruments Co. Ltd. and Life Enhancement Technology Limited.

Additional information is available on the Company’s website at www.vasocorporation.com.

Summarized Financial Information

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.

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Vaso Corporation Announces Financial Results for Third Quarter 2018

Plainview, NY, November 14, 2018 – Vaso Corporation (OTC PK: VASO) (formerly Vasomedical, Inc.) today reported its operating results for the three months ended September 30, 2018.

“Total revenues for the three and nine months of 2018 were $18.8 million and $54.7 million, respectively, representing growth rate at 4% and 5% when compared to the same periods of last year,” commented Dr. Jun Ma, President and Chief Executive Officer of Vaso.  “While all three of our business units contributed to the revenue growth, VasoHealthcare, the professional sales service business unit, enjoyed a 9% year-over-year revenue increase during the third quarter as a result of higher equipment delivery volume by our partner, turning deferred revenue into recognized revenue.”

“We also recorded improved quarterly and year-to-date operating results in 2018 as compared to 2017, and we anticipate the trend of growth in top- and bottom-line performances to continue for the remainder of the year and into the next year as deferred revenue and order backlog continue to convert to revenue when underlying equipment and services are delivered to customers.  We are excited about the future of the Company, as we believe our diversified operations and strong book of businesses could withstand market uncertainties and business fluctuations,” concluded Dr. Ma.

 Financial Results for the Three Months Ended September 30, 2018

For the three months ended September 30, 2018, revenue increased 4% to $18.8 million from $18.0 million for the same period of 2017.  The year-over-year increase was the result of a $0.5 million, or 9%, growth in our professional sales service segment revenue, due to higher equipment deliveries by GE Healthcare (“GEHC”) compared to the third quarter 2017.  Revenue in our IT segment increased $0.2 million, or 2%, attributable to an increase in revenue in our NetWolves operation of network services business.  Revenue in the equipment segment increased $23 thousand for the quarter from the same quarter a year ago, due to an increase in EECP® business.

Gross profit for the third quarter of 2018 increased 4% to $10.5 million, compared with $10.0 million for the third quarter of 2017.  The increase was principally due to the increase in revenue in the professional sales service segment and in the equipment segment, offset by a slightly lower gross profit margin in the IT segment as a result of the lower product margin sales mix in that segment.  Total gross profit margin was 56% of revenue for each of the three-month periods ended September 30, 2018 and 2017.

Selling, general and administrative (SG&A) expenses for the third quarter of 2018 increased to $10.5 million from $10.4 million for the third quarter of the prior year.  The increase is primarily due to an increase in personnel costs in the IT segment, offset by lower costs in the professional sales service segment and the equipment segment.

The Company had an operating loss of $241 thousand for the third quarter 2018, a reduction of 61% when compared to an operating loss of $619 thousand for the same period in 2017.  The $378 thousand improvement was principally due to the higher revenue in the professional sales service segment. Net loss for the three months ended September 30, 2018 was $377 thousand, compared with net loss of $816 thousand for the three months ended in the same period in 2017, an improvement of $439 thousand or 54%.

Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization and non-cash stock-based compensation) was $476 thousand for the three months ended September 30, 2018, compared to $152 thousand for the same period a year ago.

Net cash used in operating activities in the first nine months of 2018 was $1.5 million.  As of September 30, 2018, the Company had cash and cash equivalents of approximately $3.0 million, compared to cash and cash equivalents of $5.2 million at December 31, 2017.  We anticipate an improvement in cash flow from operations for the remainder of this year.

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 Biox Instruments Co. Ltd. and Life Enhancement Technology Limited.

Additional information is available on the Company’s website at www.vasocorporation.com.

Summarized Financial Information

   Financial Summary 2017

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.

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Vaso Corporation Announces Financial Results for Second Quarter 2018

PLAINVIEW, N.Y. August 14, 2018 – Vaso Corporation (“Vaso”) (OTCMKTS: VASO) today reported its operating results for the three months ended June 30, 2018.

“The Company recorded a total revenue of $18.4 million and $36.0 million for the second quarter and first half of 2018, respectively, representing a growth rate of 3% and 5% from the same periods of the previous year. All three business segments of the Company contributed to the year-to-date revenue growth, led by IT segment’s 7% increase year-over-year,” commented Dr. Jun Ma, President and Chief Executive Officer of Vaso Corporation. “We also saw significant improvement in the bottom-line numbers for both three- and six-month periods of the year as well, and we expect the trend to continue for the balance of the year as deferred revenue in our professional sales service segment and order backlog in the healthcare IT VAR operations are turning into revenues upon delivery of underlying goods and services.”

“Therefore, we anticipate revenues to continue to grow as well as significantly improved financial results for fiscal 2018,” concluded Dr. Ma.

Financial Results for Three Months Ended June 30, 2018

For the three months ended June 30, 2018, revenue increased 3% to $18.4 million from $17.9 million for the same period of 2017, due to the increase of $0.8 million, or 13%, in commission revenue in our professional sales service segment as a result of higher volume of equipment deliveries by our partner, offset slightly by the lower volume of equipment sales in our equipment segment and a 1% decrease in revenue in our IT segment.

Gross profit for the second quarter of 2018 increased 7% to $10.4 million, compared with a gross profit of $9.8 million for the second quarter of 2017. This increase is primarily the result of the 15% increase in gross profit in the professional sales service segment resulting from the increase in revenue, and an increase of 2% in the IT segment as margins improved in this segment, partially offset by lower gross profit in the equipment segment.

Selling, general and administrative (SG&A) expenses for the second quarter of 2018 increased 2% to $10.4 million compared to $10.2 million for the second quarter of 2017. The increase is primarily attributable to an increase in personnel costs in the IT segment, partially offset by decreases in the professional sales service and equipment segments.

Research and development costs decreased 3% to $252 thousand in the second quarter of 2018 compared to the same quarter of 2017, principally due to lower software development costs in the IT segment.

Net loss for the three months ended June 30, 2018 was $446 thousand, an improvement of $541 thousand when compared with a net loss of $987 thousand for the three months ended June 30, 2017.

Net cash used in operating activities was $2.2 million for the six months ended June 30, 2018, compared to cash provided from operations of $1.4 million for the same period in 2017. The decrease was principally due to the decrease in deferred revenue in the professional sales service segment. Net cash at June 30, 2018 was $3.2 million, compared to $5.2 million at December 31, 2017.

Deferred revenue remains substantial, at approximately $20.2 million as of June 30, 2018, compared to $23.1 million at December 31, 2017, 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 $6.9 million as of June 30, 2018 from $9.2 million as of December 31, 2017.

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 Biox Instruments Co. Ltd. and Life Enhancement Technology Limited.

Additional information is available on the Company’s website at www.vasocorporation.com.

Summarized Financial Information

   Financial Summary 2017

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.

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Vaso Corporation Announces Financial Results for First Quarter 2018

PLAINVIEW, N.Y. May 15, 2018 – Vaso Corporation (“Vaso”) (OTCMKTS: VASO) today reported its operating results for the three months ended March 31, 2018.

“The Company’s revenue increased by $1.2 million, or 7%, in the first quarter of 2018 when compared to the same quarter of the prior year, led by a 16% year-over-year quarterly revenue growth in the information technology, or IT, segment, continuing the upward trend in this segment,” stated Dr. Jun Ma, President and Chief Executive Officer of Vaso Corporation.  “Our equipment segment also contributed to the improvement in total revenue and gross profit, but we continued to experience slow equipment delivery by our partner in the professional sales services segment. This has resulted in a decrease in commission revenue for the quarter in the segment since we only recognize revenue upon delivery and acceptance of the underlying equipment.  Therefore, at the end of the first quarter, deferred revenue in the segment increased 8% from a year ago to $20.3 million, of which $15.2 million was short-term, as compared to $9.1 million a year ago, a strong indication that equipment deliveries will be accelerated in the following quarters.”

“As we expect continued growth and improved performance in our IT and equipment segments, and anticipate higher equipment delivery volume in the professional sales service segment, we remain optimistic about the Company’s future profitability and financial position,” concluded Dr. Ma.

 

Financial Results for Three Months Ended March 31, 2018

For the three months ended March 31, 2018, revenue grew by 7% to $17.5 million from $16.4 million from the same period of 2017, resulting from an increase of $1.6 million in our IT segment revenue and an increase of $0.2 million in our equipment segment revenue, offset by a decrease of $0.7 million in our professional sales service segment due to a decrease in delivery of underlying equipment by our partner.  We expect that deliveries will improve over the remainder of 2018.

Gross profit for the first quarter of 2018 increased 6% to $9.6 million, compared with a gross profit of $9.1 million for the first quarter of 2017.  This increase is primarily the result of the increase in revenue in the IT and equipment segments, partially offset by a decrease in gross profit in the professional sales services segment.

Selling, general and administrative (SG&A) expenses for the first quarter of 2018 increased 8% to $11.5 million compared to $10.7 million for the first quarter of 2017.  The increase is primarily attributable to an increase in personnel costs in the professional sales service and IT segments.

Research and development costs decreased 15% to $187 thousand in the first quarter of 2018 compared to the first quarter of 2017, due to a decrease in software development costs.

Net loss for the three months ended March 31, 2018 was $2.1 million, representing a year-over-year improvement of $62 thousand.

Net cash use in operating activities was $0.5 million in the first quarter of 2018 compared to net cash provided by operations of $0.7 million for the three months ended March 31, 2017.  Cash and cash equivalents at March 31, 2018 was $5.8 million, compared to $5.2 million at December 31, 2017.

Total deferred revenue remains substantial, at approximately $21.3 million as of March 31, 2018, 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 $7.5 million as of March 31, 2018 from $9.2 million as of December 31, 2017.

 

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 Biox Instruments Co. Ltd. and Life Enhancement Technology Limited.

 

Additional information is available on the Company’s website at www.vasocorporation.com.

 

Summarized Financial Information

   Financial Summary 2017

 

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.