ORANGEBURG, N.Y., Jan. 28, 2013 (GLOBE NEWSWIRE) -- Vision-Sciences, Inc. (Nasdaq:VSCI), a leading provider of unique flexible endoscopic products utilizing its proprietary sterile disposable EndoSheath® technology, today announced financial results for the three- and nine-month periods ended December 31, 2012, its third quarter and first nine months of fiscal 2013.
Third Quarter Fiscal Year 2013 Highlights
- Net sales were $4.0 million, compared with $3.7 million in the second quarter of fiscal 2013 and $4.3 million in third quarter of fiscal 2012;
- Operating loss decreased 25% to $1.5 million versus $2.0 million in the same quarter last year; and
- Net loss improved by 33% to $1.6 million, or ($0.03) per basic and diluted share, compared to $2.3 million, or ($0.05) per basic and diluted share, in the third quarter of fiscal 2012.
"We continue to execute our strategy to access acute care hospitals and drive awareness of our EndoSheath technology with our new multi-disciplinary, medical sales force. This approach provides us with the opportunity to capture both capital and disposable revenue streams," commented Cynthia Ansari, President and Chief Executive Officer of Vision-Sciences, Inc.
"During the quarter, there were noteworthy developments on both the SpineView and Stryker fronts. In particular, the FDA cleared for marketing the FlexLite Camera System, which incorporates our 2.0mm flexible endoscope with SpineView's proprietary space creator. Stryker also added our new ureteroscope to their urology product line, which they began selling through their dedicated sales specialists. We look forward to the impact of their efforts," Ansari concluded.
Results of Operations
Net sales in the third quarter of fiscal 2013 were $4.0 million compared to $4.3 million for the same period a year ago. The 8% decrease was primarily due to lower urology sales, including a 13% decline in sales to Stryker, partially offset by strong industrial sales growth.
Net sales (in thousands, except for percentages) for the three- and nine-month periods were as follows:
| Three Months Ended | Nine Months Ended | |||||
| December 31, | December 31, | |||||
| Market/Category | 2012 | 2011 | % | 2012 | 2011 | % |
| Urology | $ 1,421 | $ 1,839 | -23% | $ 3,365 | $ 5,251 | -36% |
| ENT | 398 | 500 | -20% | 1,417 | 1,430 | -1% |
| Surgery / GI | 385 | 340 | 13% | 895 | 765 | 17% |
| Pulmonology (Critical Care) | 238 | 254 | -6% | 525 | 563 | -7% |
| Spine | -- | 186 | -100% | 440 | 612 | -28% |
| Repairs, peripherals, and accessories | 528 | 449 | 18% | 1,548 | 1,436 | 8% |
| Total net medical sales | 2,970 | 3,568 | -17% | 8,190 | 10,057 | -19% |
| Total net industrial sales | 982 | 746 | 32% | 2,897 | 2,038 | 42% |
| Net sales | $ 3,952 | $ 4,314 | -8% | $ 11,087 | $ 12,095 | -8% |
Gross profit for the third quarter of fiscal 2013 was $1.1 million, as compared with $1.4 million in the third quarter of fiscal 2012. Gross margin percentage for the period declined approximately 200 basis points to 29% from 31% in the same period last year. A reduction in the allocation of manufacturing expenses to support research and development activities was the primary driver for the year-over-year decline.
Selling, general and administrative ("SG&A") expenses decreased 13% to $2.3 million in the third quarter of fiscal 2013, largely driven by lower stock-based compensation expense and lower vacation pay expense. SG&A expenses decreased to 58% of net sales for the third quarter of fiscal 2013 compared to 62% of net sales reported during the same period last year.
Research and development ("R&D") expenses decreased 52% to $0.3 million in the third quarter of fiscal 2013. The decrease was primarily attributable to lower product development costs associated with the Company's next generation digital processing unit and a reduction in the amount allocated from manufacturing to support R&D efforts. R&D expenses decreased to 9% of net sales compared to 17% of net sales during the same period last year.
The Company's operating loss in the third quarter of fiscal 2013 was $1.5 million, a decrease of $0.5 million, or 25%, compared to the third quarter of fiscal 2012. Lower operating expenses of $0.7 million contributed to the improvement in operating loss during the period.
At December 31, 2012, the Company had cash and cash equivalents of $1.3 million and working capital of $6.6 million, compared to cash and cash equivalents of $2.7 million and working capital of $6.0 million at March 31, 2012. The Company also has $5.0 million of capital available under a $20.0 million convertible note with Lewis C. Pell, the Company's Chairman.
Conference Call
Cynthia Ansari, President and Chief Executive Officer, and Keith Darragh, VP, Finance and Principal Financial and Accounting Officer, will host a conference call to discuss the third quarter fiscal 2013 financial results at 8:30 a.m. ET on Tuesday, January 29, 2013.
| Conference dial-in: | (877) 303-1595 |
| International dial-in: | (970) 315-0449 |
| Conference ID: | 91828937 |
| Webcast: | http://ir.visionsciences.com/ |
An audio replay of the conference call will be available from 11:30 a.m. ET on Tuesday, January 29, 2013, through 11:30 p.m. ET on Tuesday, February 5, 2013 by dialing (855) 859-2056 from the U.S. or (404) 537-3406 from abroad. The audio webcast will also be available in the investor section of the Company's website, www.visionsciences.com.
Use of Non-GAAP Financial Measures
Non-GAAP net loss and non-GAAP net loss per share excludes non-cash or non-operational activities. As a result, the Company uses these measures to assess and analyze its operational results and trends and to make financial and operations decisions. The Company also believes these non-GAAP financial measures are useful to investors, because they provide greater transparency regarding the Company's operating performance. These non-GAAP financial measures should not be considered measures of the Company's liquidity. In addition, these non-GAAP financial measures are unlikely to be comparable with non-GAAP information provided by other companies. Reconciliations between non-GAAP financial measures and GAAP financial measures for net loss and net loss per share are included in a table accompanying this press release after the unaudited condensed consolidated financial statements.
About Vision-Sciences, Inc.
Vision-Sciences, Inc. designs, develops, manufactures and markets products for endoscopy – the science of using an instrument, known as an endoscope, to provide minimally invasive access to areas not readily available to the human eye. Vision-Sciences' unique flexible endoscopic products utilize a streamlined visualization system and proprietary sterile disposable sheaths, known as EndoSheath technology, to provide users quick, efficient endoscope turnover while ensuring enhanced patient safety through the use of sterile, single-use technology. Within its medical segment, Vision-Sciences targets five main areas for its fiber and video endoscopes and EndoSheath technology: urology, pulmonology, gastroenterology (GI), ENT (ear, nose and throat) and spine. Information about Vision-Sciences' products is available at www.visionsciences.com.
Vision Sciences®, Slide-On®, EndoSheath®, EndoWipe® and The Vision System® are registered trademarks of Vision-Sciences, Inc.
The Vision-Sciences, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=3876
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: This press release contains forward-looking statements, which are any statements that are not historical facts. These forward-looking statements are based on Vision-Sciences' current expectations, and should not be relied upon as representing its views as of any subsequent date. Forward-looking statements are subject to a variety of risks and uncertainties that could cause the Company's actual results to differ materially from the statements contained herein; risk factors are detailed in the Company's most recent annual report and other filings with the U.S. Securities and Exchange Commission. There is no assurance that any future results or events discussed in these statements will be achieved. The Company does not assume any obligation to update any forward-looking statements as a result of new information or future events or developments, except as may be required by law.
(Financial tables follow)
| Vision-Sciences, Inc. and Subsidiaries | ||||
| Condensed Consolidated Statements of Operations | ||||
| (In thousands, except per share amounts) | ||||
| Three Months Ended | Nine Months Ended | |||
| December 31, | December 31, | |||
| 2012 | 2011 | 2012 | 2011 | |
| (unaudited) | (unaudited) | (unaudited) | (unaudited) | |
| Net sales | $ 3,952 | $ 4,314 | $ 11,087 | $ 12,095 |
| Cost of sales | 2,820 | 2,957 | 7,973 | 8,213 |
| Gross profit | 1,132 | 1,357 | 3,114 | 3,882 |
| Selling, general, and administrative expenses | 2,311 | 2,665 | 8,205 | 9,054 |
| Research and development expenses | 347 | 730 | 1,361 | 2,161 |
| Operating loss | (1,526) | (2,038) | (6,452) | (7,333) |
| Interest income | 1 | 2 | 4 | 9 |
| Interest expense | (36) | (131) | (467) | (329) |
| Debt cost expense | -- | (145) | (272) | (229) |
| Loss on extinguishment of debt | -- | -- | (1,244) | -- |
| Other, net | (6) | (32) | (47) | (43) |
| (41) | (306) | (2,026) | (592) | |
| Loss before provision for income taxes | (1,567) | (2,344) | (8,478) | (7,925) |
| Income tax provision (benefit) | 10 | (2) | 10 | -- |
| Net loss | $ (1,577) | $ (2,342) | $ (8,488) | $ (7,925) |
| Net loss per common share - basic and diluted | $ (0.03) | $ (0.05) | $ (0.18) | $ (0.18) |
| Weighted average number of shares outstanding - basic and diluted | 46,051 | 44,258 | 45,902 | 44,164 |
| Vision-Sciences, Inc. and Subsidiaries | ||
| Condensed Consolidated Balance Sheets | ||
| (In thousands, except per share amounts) | ||
| December 31, | March 31, | |
| 2012 | 2012 | |
| ASSETS | (unaudited) | (audited) |
| Current assets: | ||
| Cash and cash equivalents | $ 1,295 | $ 2,674 |
| Accounts receivable, net | 2,820 | 2,132 |
| Inventories, net | 4,881 | 3,970 |
| Prepaid expenses and other current assets | 218 | 197 |
| Total current assets | 9,214 | 8,973 |
| Property and equipment, net | 1,618 | 2,033 |
| Deferred debt cost, net | -- | 1,516 |
| Other assets, net | 77 | 77 |
| Total assets | $ 10,909 | $ 12,599 |
| LIABILITIES AND STOCKHOLDERS' DEFICIT | ||
| Current liabilities: | ||
| Accounts payable | $ 921 | $ 587 |
| Accrued compensation | 849 | 657 |
| Accrued expenses | 619 | 944 |
| Deferred revenue | 125 | -- |
| Capital lease obligations | 76 | 91 |
| Advances from customers | -- | 672 |
| Total current liabilities | 2,590 | 2,951 |
| Convertible debt—related party | 15,000 | -- |
| Line of credit—related party | -- | 10,000 |
| Deferred revenue, net of current portion | 67 | -- |
| Capital lease obligations, net of current portion | 39 | 97 |
| Total liabilities | 17,696 | 13,048 |
| Commitments and Contingencies | ||
| Stockholders' deficit: | ||
| Preferred stock, $0.01 par value | ||
| Authorized—5,000 shares; issued and outstanding—none | -- | -- |
| Common stock, $0.01 par value | ||
| Authorized—75,000 shares; issued and outstanding—46,249 shares and 45,396 shares, respectively | 462 | 454 |
| Additional paid-in capital | 100,560 | 98,382 |
| Treasury stock at cost, 34 shares and 7 shares of common stock, respectively | (50) | (14) |
| Accumulated deficit | (107,759) | (99,271) |
| Total stockholders' deficit | (6,787) | (449) |
| Total liabilities and stockholders' deficit | $ 10,909 | $ 12,599 |
| Vision-Sciences, Inc. and Subsidiaries | ||
| Condensed Consolidated Statements of Cash Flows | ||
| (In thousands, except per share amounts) | ||
| Nine Months Ended | ||
| December 31, | ||
| 2012 | 2011 | |
| Cash flows from operating activities: | ||
| Net loss | $ (8,488) | $ (7,925) |
| Adjustments to reconcile net loss to net cash used in operating activities: | ||
| Stock-based compensation expense | 1,209 | 1,707 |
| Depreciation and amortization | 603 | 618 |
| (Recovery of) provision for bad debt expenses | (4) | 1 |
| Debt cost expense | 272 | 229 |
| Loss on extinguishment of debt | 1,244 | -- |
| Loss on disposal of fixed assets | 51 | 39 |
| Changes in assets and liabilities: | ||
| Accounts receivable | (684) | 36 |
| Inventories | (1,062) | 508 |
| Prepaid expenses and other current assets | (21) | 63 |
| Accounts payable | 334 | (518) |
| Accrued expenses | (325) | (48) |
| Accrued compensation | 192 | (37) |
| Deferred revenue | 49 | -- |
| Advances from customers | (529) | (4,034) |
| Net cash used in operating activities | (7,159) | (9,361) |
| Cash flows from investing activities: | ||
| Purchases of property and equipment | (93) | (127) |
| Proceeds from disposal of fixed assets | 5 | 3 |
| Net cash used in investing activities | (88) | (124) |
| Cash flows from financing activities: | ||
| Proceeds from issuance of long-term debt—related party | 5,000 | -- |
| Advance on line of credit—related party | -- | 3,000 |
| Payment of costs related to line of credit—related party | -- | (5) |
| Net proceeds from sale of common stock | 878 | -- |
| Proceeds from exercise of stock options | 99 | 399 |
| Common stock repurchased | (36) | (11) |
| Payments of capital leases | (73) | (61) |
| Net cash provided by financing activities | 5,868 | 3,322 |
| Net decrease in cash and cash equivalents | (1,379) | (6,163) |
| Cash and cash equivalents at beginning of period | $ 2,674 | $ 9,180 |
| Cash and cash equivalents at end of period | $ 1,295 | $ 3,017 |
| Vision-Sciences, Inc. and Subsidiaries | ||||||
| Non-GAAP Financial Measures and Reconciliation | ||||||
| (In thousands, except per share amounts) | ||||||
| Three Months Ended | Nine Months Ended | |||||
| December 31, | December 31, | |||||
| Non-GAAP Financial Measures and Reconciliation | 2012 | 2011 | Difference | 2012 | 2011 | Difference |
| GAAP net loss | $ (1,577) | $ (2,342) | $ 765 | $ (8,488) | $ (7,925) | $ (563) |
| Add: loss on extinguishment of debt | -- | -- | -- | 1,244 | -- | 1,244 |
| Non-GAAP net loss | $ (1,577) | $ (2,342) | $ 765 | $ (7,244) | $ (7,925) | $ 681 |
| Non-GAAP net loss per common share - basic and diluted | $ (0.03) | $ (0.05) | $ (0.16) | $ (0.18) | ||
| Weighted average number of shares outstanding - basic and diluted | 46,051 | 44,258 | 45,902 | 44,164 | ||