PLAINVIEW, NY / ACCESSWIRE / April 15, 2019 / Vaso Corporation ('Vaso') (OTC PINK: VASO) today reported its operating results for the three months and year ended December 31, 2018.
'The Company's total revenue continued to increase, to $74.0 million, for the fiscal year 2018, thanks to the growth in our IT segment and proprietary medical equipment segment, at 3.9% and 12.7%, respectively,' stated Dr. Jun Ma, President and Chief Executive Officer of Vaso Corporation. 'The IT segment we started in 2014 contributed $44.2 million in 2018 revenue, accounting for 60% of our total revenue.'
'On the other hand, 2018 was a challenging year for our professional sales service segment as order bookings for diagnostic imaging equipment and delivery volume of the equipment were lower than in the prior year, partially due to the rising uncertainty in the healthcare provision marketplace, especially in the middle market we cover, relating to activities in practice ownership changes as well as impending regulatory or policy changes. We continue to monitor developments in the marketplace as well as legislation changes in the government, and have taken steps to align business expenses with growth potential in both the professional sales service segment and the IT segment to improve the operating results,' concluded Dr. Ma.
Financial Results for Three Months Ended December 31, 2018
For the three months ended December 31, 2018, revenue decreased 6.2% to $19.2 million from $20.5 million for the same period of 2017, due primarily to the decrease of $1.6 million, or 19.6%, in revenue in our professional sales service segment as the result of lower equipment delivery by our partner as well as lower blended commission rates, while our equipment segment revenue increased 33.3% to $1.5 million from $1.1 million for the fourth quarter of 2017. Revenue in our IT segment was relatively flat compared to the same quarter last year.
Gross profit for the fourth quarter of 2018 decreased 10.3% to $10.6 million, compared with a gross profit of $11.8 million for the same quarter of 2017. This decrease was primarily the result of the decrease in revenue in the professional sales service segment, partially offset by an increase in gross profit in the equipment segment. Gross profit in the IT segment was relatively flat year-over-year.
Selling, general and administrative (SG&A) expenses for the fourth quarter of 2018 decreased 6.2% to $11.5 million, compared to $12.3 million for the fourth quarter of 2017. The decrease is primarily attributable to a decrease in personnel costs in the professional sales service segment, partially offset by an increase in the IT segment. SG&A expenses were 59.8% of revenue in the fourth quarter of 2018 and 2017.
Net loss for the three months ended December 31, 2018 was $0.8 million, compared with a net loss of $0.6 million for the three months ended December 31, 2017.
Financial Results for Year Ended December 31, 2018
For the year ended December 31, 2018, revenue increased $1.2 million to $74.0 million, compared with $72.8 million for the year 2017. Revenue in our IT segment increased 3.9% to $44.2 million for fiscal 2018, compared to revenue of $42.6 million in 2017, primarily due to an increase of $1.4 million from managed network services and a small increase from the healthcare IT VAR operation. Commission revenues in our professional sales service segment decreased by 3.5% to $25.5 million as a result of lower equipment deliveries as well as lower blended commission rates compared to 2017. Equipment segment revenue for the year 2018 increased by 12.7% to $4.2 million, from $3.8 million in 2017, principally due to the increase in volume of equipment and software sales.
Gross profit for the year ended December 31, 2018 increased 1.0% to $41.1 million, from $40.7 million in 2017. The increase was due primarily to an increase of $0.8 million in our IT segment and $0.1 million in the equipment segment, resulting from the increase in revenue in these segments offset by a decrease of $0.5 million in our professional sales service segment as a result of the lower revenues in that segment.
SG&A expenses for the year ended December 31, 2018 increased less than 1% to $44.0 million, or 59.4% of revenue, compared with $43.6 million, or 59.9% of revenue, for the same period in 2017. The increase resulted primarily from an increase in personnel and other costs in the IT segment, offset by decreases in the professional sales service and equipment segments and lower corporate expenses.
For the year ended December 31, 2018, the Company had a net loss of $3.7 million, or $0.02 per common share, compared with a net loss of $4.5 million, or $0.03 per common share, for the year ended December 31, 2017.
Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization, and share-based compensation) was negative at $0.6 million for the year ended December 31, 2018 compared to negative Adjusted EBITDA of $0.8 million for the year ended December 31, 2017. The improvement was primarily the result of the lower net loss in 2018, compared to the net loss in 2017.
Net cash used in operating activities was $1.5 million, compared to net cash provided by operating activities of $1.6 million in 2017. The decrease is principally due to a decrease in deferred revenue in the professional sales service segment, partially offset by decreases in accounts receivable and deferred commission expense. Net cash decreased to $2.7 million at December 31, 2018, compared to $5.2 million at December 31, 2017. 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, 2019, the Company's net cash was approximately $2.0 million.
Deferred revenue decreased to $18.1 million at December 31, 2018, compared to $23.1 million at December 31, 2017. The decrease is primarily the result of lower 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 decreased to $5.6 million as of December 31, 2018 from $9.2 million as of December 31, 2017.
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.
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 ownedsubsidiaries:
- 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.
Additional information is available on the Company's website atwww.vasocorporation.com.
Summarized Financial Information
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STATEMENTS OF OPERATIONS
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Other income (expense), net
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*Adjusted EBITDA is earnings before interest, taxes, depreciation and amortization and non-cash stock-based compensation
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Total current assets
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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.
Michael J. Beecher
SOURCE: Vaso Corporation