MINNEAPOLIS, Feb. 18, 2009 (GLOBE NEWSWIRE) -- Vital Images, Inc. (Nasdaq:VTAL), a leading provider of advanced visualization and analysis solutions, today reported revenue for the fourth quarter ended December 31, 2008 of $17.4 million, compared to $16.7 million for the fourth quarter of 2007. Net loss for the 2008 fourth quarter was $(386,000), or $(0.03) per diluted share, compared to a net loss of $(1.6) million, or $(0.09) per diluted share, for the 2007 fourth quarter.
The company also reported adjusted EBITDA (a non-GAAP measure) for the fourth quarter of 2008 of $1.2 million, compared to a $(1.2) million loss for the fourth quarter of 2007. For an explanation of the "Adjusted EBITDA" calculation, see the description and reconciliation of non-GAAP financial measure in the Non-GAAP Information section of this earnings release.
Michael H. Carrel, Vital Images president and chief executive officer, said, "Our fourth quarter results were solid in light of the difficult economic environment. We continue to see progress from our strategic investment in enterprise solutions, specifically ViTAL Enterprise. Among many other accomplishments in the fourth quarter, we closed many sizeable enterprise transactions, rolled out Vitrea(r) Web and solidified our future by signing a five-year Toshiba distribution agreement. Further, we continue to see growth in international sales as well as maintenance and service revenue."
Carrel continued, "ViTAL is healthy and financially strong, with nearly $150 million in cash and 2008 cash from operations of $8.6 million. As a result of being the industry's technology leader, we are gaining market share and we are focused on growing our profitability in 2009."
Financial Summary
For the three months ended For the year ended
December 31, December 31,
--------------------------- ---------------------------
2008 2007 2008 2007
------------ ------------ ------------ ------------
Revenue:
License
fees $ 8,112 $ 9,087 $34,290 $39,673
Maintenance
and
services 8,934 7,311 32,436 29,487
Hardware 392 304 1,415 1,016
------- ------- ------- -------
Total
revenue $17,438 $16,702 $68,141 $70,176
======= ======= ======= =======
Revenue by
channel
and as a
percent
of total
revenue:
Direct $ 7,730 44% $ 7,621 45% $28,351 41% $31,405 44%
Toshiba 8,820 51 7,974 48 35,274 52 32,710 47
McKesson 888 5 1,107 7 4,516 7 6,061 9
------------ ------------ ------------ ------------
Total $17,438 100% $16,702 100% $68,141 100% $70,176 100%
============ ============ ============ ============
Revenue by
geography:
United
States $11,266 $12,527 $48,473 $56,630
Europe 3,881 2,763 11,316 8,378
Asia and
Pacific
Region 881 599 3,643 2,380
Canada 173 128 1,401 349
Other
Foreign
Countries 1,237 685 3,308 2,439
------- ------- ------- -------
Total $17,438 $16,702 $68,141 $70,176
======= ======= ======= =======
Export
revenue
as a
percent of
total
revenue: 35% 25% 29% 19%
* Cash and investments as of December 31, 2008 were $147.0 million.
During the 2008 fourth quarter, the company repurchased 1.0 million
shares of its common stock for $12.8 million under its share
repurchase program initiated in May 2008. The company completed the
program on February 6, 2009, having purchased a total of 2.9
million shares of its common stock for $40.0 million. Upon the
completion of the share repurchase program, there were 14.5 million
shares outstanding.
* Operating Expenses Summary:
- During the 2008 fourth quarter, the company incurred a $660,000
restructuring charge related to an 11 percent reduction in
workforce announced in November 2008. The charge consisted
primarily of severance and other termination costs.
- Sales and marketing expense was $7.2 million for the 2008 fourth
quarter, compared to $9.1 million for the same period in 2007,
and $30.3 million for the full year 2008, compared to $32.0
million for full year 2007, due to lower compensation expense
resulting from the workforce reduction and other cost-control
measures.
- Research and development expense was $3.9 million for the 2008
fourth quarter, compared to $3.9 million for the fourth quarter
of 2007, and $17.1 million for the full year 2008, compared to
$15.2 million for full year 2007. The major driver of higher
research and development expenses in 2008 was new product
initiatives.
- General and administrative expense was $3.5 million for the
fourth quarter of 2008, compared to $4.4 million for the 2007
fourth quarter, and $14.0 million for full year 2008, compared
to $14.6 million for full year 2007, due to a pre-tax charge of
$885,000 in the fourth quarter of 2007 related to the
resignation of the company's former president and chief
executive officer.
* In October 2008, the research and development (R&D) tax credit,
which expired December 31, 2007, was reinstated for the period from
January 1, 2008 to December 31, 2009. As a result, the company
recorded an R&D tax credit of $597,000 to its tax provision in the
2008 fourth quarter relating to the entire fiscal year.
2009 Guidance
Given today's economic uncertainty, the company expects to continue to feel the impact of sluggish hospital spending due to the credit crunch and overall economic weakness. In this environment, the company is providing the following annual guidance and underlying assumptions based on what management currently believes. This guidance and the factors below do not include the potential effects of any acquisitions.
2009 Guidance
--------------------
Low High
--------------------
(In millions)
Revenue $ 61.0 to $ 66.0
Adjusted EBITDA (non-GAAP) (1) $ 2.0 to $ 5.0
--------------------------------
(1) See description and reconciliation on non-GAAP financial measure
in the Non-GAAP Information section of this earnings release.
Factors considered in preparing guidance include the following estimates for 2009:
* Gross margin of approximately 76 to 77 percent. * Sales and marketing expenses of approximately 43 percent to 44 percent of total revenue. * Research and development expenses of approximately 23 percent to 25 percent of total revenue. * General and administrative expenses of approximately 18 percent to 19 percent of total revenue. * Equity-based compensation of approximately $3.7 million. * Depreciation and amortization of property and equipment of approximately $5.2 million, and estimated capital expenditures of approximately $3.5 million. * Amortization of acquired intangibles of $426,000. * Estimated interest income of $2.2 million based on an estimated return on investment of 1.5 percent for 2009, which is significantly lower than the return on investment in 2008 due to general market conditions; further interest rate changes would have a significant impact on results. * An effective income tax rate of approximately 40 percent to 60 percent in 2009 compared to 46 percent in 2008. The company's effective income tax rate may fluctuate significantly from quarter to quarter due to the relative proximity to break even of results before taxes, which causes research and development credits to have a greater impact on the effective tax rate. The company does not anticipate paying any significant federal income taxes for the next three to four years due to the utilization of deferred tax assets relating to net operating losses. Actual results could accelerate or defer the utilization of the company's deferred tax assets. Additionally, if the company is unable to generate sufficient taxable income, causing management to believe that the company's deferred tax assets will not be utilized, additional valuation allowances may need to be established on the company's deferred tax assets, which could materially impact the company's financial position and results of operations. * Weighted average diluted common shares of 14.7 million for 2009, which includes the impact of the share repurchase program.
Conference Call and Webcast
Vital Images will host a live webcast of its fourth quarter earnings conference call, Thursday, February 19, 2009 at 10:30 a.m. CT. To access this webcast, go to the investors' portion of the company's Web site, www.vitalimages.com, and click on the webcast icon. The webcast replay will be available beginning at 2:00 p.m. CT on the same day. If you wish to listen to an audio replay of the conference call, dial (888) 203-1112 and enter conference call ID #5588145. The audio replay will be available beginning at 2:00 p.m. CT on Thursday, February 19, 2009 through 5:00 p.m. CT on Thursday, March 5, 2009.
About Vital Images
Vital Images, Inc., headquartered in Minneapolis, is a leading provider of advanced visualization and analysis software solutions. The company's technology gives radiologists, cardiologists, oncologists and other medical specialists time-saving productivity and communications tools that can be accessed throughout the enterprise and via the Web for easy use in the day-to-day practice of medicine. Vital Images also has offices in Beijing, China, and Den Haag, the Netherlands. For more information, visit www.vitalimages.com.
The Vital Images, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=5843
Non-GAAP Information
Vital Images provides certain non-GAAP information to supplement GAAP information. Adjusted EBITDA (non-GAAP) is defined as earnings before interest, taxes, depreciation, amortization, impairment of patent, equity-based compensation and reduction in workforce charges. Adjusted EBITDA (non-GAAP) excludes certain items that are non-cash in nature and/or items that are affected by market forces that are difficult to predict and may not be within the control of management. Accordingly, management excludes these items from its internal operating forecasts and models when establishing internal operating budgets, supplementing the financial results and forecasts reported to the company's board of directors, determining a portion of bonus compensation for executive officers and certain other key employees, and evaluating short-term and long-term operating trends in the company's core operations. Management believes that this presentation facilitates the comparison of the company's current operating results to historical operating results.
Non-GAAP information is not prepared in accordance with GAAP and should not be considered a substitute for or an alternative to GAAP and may not be computed the same as similarly titled measures used by other companies. Management expects to continue to incur expenses similar to the non-GAAP adjustments described above, and the exclusion of these items from its non-GAAP net income should not be construed as an inference that these costs are unusual, infrequent or non-recurring.
The following is a reconciliation from GAAP earnings to adjusted EBITDA:
For the three
months ended For the year ended
December 31, December 31,
----------------- -----------------
2008 2007 2008 2007
------- ------- ------- -------
Adjusted EBITDA (in thousands):
(Loss) income before income
taxes $(1,280) $(2,277) $(5,182) $ 1,718
Interest income (787) (2,199) (4,643) (8,886)
Equity-based compensation 1,143 1,750 5,007 5,987
Restructuring charge 660 -- 660 --
Depreciation and amortization
of property and equipment 1,240 1,229 4,919 4,517
Amortization of identified
intangibles and impairment
of patent 261 261 1,044 1,447
------- ------- ------- -------
Adjusted EBITDA $ 1,237 $(1,236) $ 1,805 $ 4,783
======= ======= ======= =======
Forward-Looking Statements
Except for the historical information contained herein, the matters discussed in this news release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and are intended to enjoy the protection of the safe harbor for forward-looking statements provided by that Act. These statements involve risks and uncertainties which could cause results to differ materially from those projected, including but not limited to dependence on market growth, challenges associated with international expansion, the ability to predict product, customer and geographic sales mix, fluctuations in interest rates, regulatory approvals, the timely introduction, availability and acceptance of new products, the impact of competitive products and pricing, dependence on major customers, the ability to successfully manage operating costs, fluctuations in quarterly results, approval of products for reimbursement and the level of reimbursement, and other factors detailed from time to time in Vital Images' SEC reports, including its annual report on Form 10-K for the year ended December 31, 2007. Vital Images encourages you to consider all of these risks, uncertainties and other factors carefully in evaluating the forward-looking statements contained in this release. As a result of these matters, changes in facts, assumptions not being realized or other circumstances, the company's actual results may differ materially from the expected results discussed in the forward-looking statements contained in this release. The forward-looking statements made in this release are made only as of the date of this release, and the company undertakes no obligation to update them to reflect subsequent events or circumstances.
Vital Images(r) and Vitrea(r) are registered trademarks of Vital Images, Inc. Vital Images disclaims any proprietary interest in the marks and names of others.
Vital Images, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
For the three
months ended For the year ended
December 31, December 31,
------------------ ------------------
2008 2007 2008 2007
-------- -------- -------- --------
Revenue:
License fees $ 8,112 $ 9,087 $ 34,290 $ 39,673
Maintenance and services 8,934 7,311 32,436 29,487
Hardware 392 304 1,415 1,016
-------- -------- -------- --------
Total revenue 17,438 16,702 68,141 70,176
Cost of revenue:
License fees 1,577 1,185 4,922 4,725
Maintenance and services 2,477 2,393 10,089 9,928
Hardware 238 188 862 694
Impairment of patent -- -- -- 242
-------- -------- -------- --------
Total cost of revenue 4,292 3,766 15,873 15,589
Gross profit 13,146 12,936 52,268 54,587
Operating expenses:
Sales and marketing 7,164 9,073 30,294 31,991
Research and development 3,902 3,906 17,131 15,204
General and administrative 3,487 4,433 14,008 14,560
Restucturing charge 660 -- 660 --
-------- -------- -------- --------
Total operating expenses 15,213 17,412 62,093 61,755
Operating loss (2,067) (4,476) (9,825) (7,168)
Interest income 787 2,199 4,643 8,886
-------- -------- -------- --------
(Loss) income before
income taxes (1,280) (2,277) (5,182) 1,718
(Benefit) provision
for income taxes (894) (724) (2,382) 351
-------- -------- -------- --------
Net (loss) income $ (386) $ (1,553) $ (2,800) $ 1,367
======== ======== ======== ========
Net (loss) income
per share - basic $ (0.03) $ (0.09) $ (0.17) $ 0.08
======== ======== ======== ========
Net (loss) income
per share - diluted $ (0.03) $ (0.09) $ (0.17) $ 0.08
======== ======== ======== ========
Weighted average common shares
outstanding - basic 15,025 17,044 16,155 16,972
======== ======== ======== ========
Weighted average common shares
outstanding - diluted 15,025 17,044 16,155 17,457
======== ======== ======== ========
Vital Images, Inc.
Condensed Consolidated Balance Sheets
(In thousands, except per share amounts)
(Unaudited)
December 31, December 31,
2008 2007
-------- --------
Assets
Current assets:
Cash and cash equivalents $109,706 $146,685
Marketable securities 37,287 31,709
Accounts receivable, net 13,047 15,962
Deferred income taxes 654 3,472
Prepaid expenses and other current assets 2,179 2,441
-------- --------
Total current assets 162,873 200,269
Property and equipment, net 11,519 11,165
Deferred income taxes 13,904 8,621
Other intangible assets, net 808 1,852
Goodwill 9,089 9,089
-------- --------
Total assets $198,193 $230,996
======== ========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 3,792 $ 3,330
Accrued compensation 2,936 3,092
Accrued royalties 1,057 1,113
Other current liabilities 1,947 2,282
Deferred revenue 17,724 16,547
-------- --------
Total current liabilities 27,456 26,364
Deferred revenue 1,164 1,140
Deferred rent 882 1,276
-------- --------
Total liabilities 29,502 28,780
-------- --------
Stockholders' equity:
Preferred stock: $0.01 par value;
5,000 shares authorized; none
issued or outstanding -- --
Common stock: $0.01 par value;
40,000 shares authorized; 14,673 issued
and outstanding as of December 31, 2008;
and 17,153 shares issued and outstanding
as of December 31, 2007 147 172
Additional paid-in capital 168,738 199,625
(Accumulated deficit) retained
earnings (380) 2,420
Accumulated other comprehensive
income (loss) 186 (1)
-------- --------
Total stockholders' equity 168,691 202,216
-------- --------
Total liabilities and stockholders'
equity $198,193 $230,996
======== ========
Vital Images, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
For the year ended
December 31,
------------------
2008 2007
-------- --------
Cash flows from operating activities:
Net (loss) income $ (2,800) $ 1,367
Adjustments to reconcile net (loss) income
to net cash provided by operating activities:
Depreciation and amortization of property
and equipment 4,919 4,517
Amortization of identified intangibles 1,044 1,205
Impairment of patent -- 242
Provision for doubtful accounts 519 239
Deferred income taxes (2,521) (16)
Excess tax benefit from stock transactions (481) (1,395)
Amortization of discount and accretion of
premium on marketable securities (473) (857)
Employee stock-based compensation 5,007 5,987
Amortization of deferred rent (375) (338)
Changes in operating assets and liabilities:
Accounts receivable 2,396 3,388
Prepaid expenses and other assets 262 (513)
Accounts payable 623 (363)
Accrued expenses and other liabilities (740) (1,142)
Deferred revenue 1,201 1,382
Deferred rent -- 199
-------- --------
Net cash provided by operating activities 8,581 13,902
-------- --------
Cash flows from investing activities:
Purchases of property and equipment (5,434) (6,577)
Purchases of marketable securities (76,395) (59,974)
Proceeds from maturities of marketable
securities 70,002 49,931
Proceeds from sale of marketable securities 1,581 750
-------- --------
Net cash used in investing activities (10,246) (15,870)
-------- --------
Cash flows from financing activities:
Repurchases of common stock (38,214) --
Proceeds from sale of common stock under stock
plans 2,419 2,876
Excess tax benefit from stock transactions 481 1,395
-------- --------
Net cash (used in) provided by financing
activities (35,314) 4,271
-------- --------
Net (decrease) increase in cash and cash
equivalents (36,979) 2,303
Cash and cash equivalents, beginning of year 146,685 144,382
-------- --------
Cash and cash equivalents, end of year $109,706 $146,685
======== ========