Misonix Reports Record Third Quarter Revenue

Revenue Rises 73% to $12.4 Million, Inclusive of $4.0 Million in Licensing Revenue, Resulting in Record Quarterly Diluted EPS of $0.23

FARMINGDALE, N.Y., May 07, 2018 (GLOBE NEWSWIRE) -- Misonix, Inc. (Nasdaq:MSON) (“Misonix” or the “Company”), a provider of minimally invasive therapeutic ultrasonic medical devices that enhance clinical outcomes, today reported financial results for the third quarter of fiscal year 2018 ended March 31, 2018 as summarized below:

($ in millions)Three Months Ended Nine Months Ended
 March 31, March 31,
  2018  2017   2018  2017 
Revenue$  12.4 $  7.2  $  28.0 $  19.4 
Gross Profit$  9.8 $  5.1  $  20.8 $  13.5 
GP Percentage - product revenue 68.8% 70.6%  69.7% 69.9%
Operating income (loss)$  2.2 $  (1.5) $  (1.1)$  (4.6)
Net income (loss)$  2.2 $  (0.1) $  (5.8)$  (1.3)
EBITDA (1)$  2.6 $  (0.0) $  0.4 $  (0.8)
Adjusted EBITDA (1)$  4.0 $  0.5  $  4.4 $  (0.2)
 March 31,  June 30, 
  2018    2017  
Long Term Debt$  -    $  -   
Cash$  12.3   $  11.6  
(1) Definitions and disclosures regarding non-GAAP financial information including reconciliations are included on page 6 of this press release

Stavros Vizirgianakis, President and Chief Executive Officer of Misonix, stated, “Misonix delivered solid financial results in the 2018 fiscal third quarter, including our second consecutive quarter of record revenue. The successful ongoing execution of our strategies to aggressively grow our leading ultrasonic medical device platform is providing Misonix with a solid foundation to continue expanding market share domestically as well as abroad. Importantly, our strong performance reflects our ability to achieve top line growth, while preserving healthy margins and maintaining a strong balance sheet and liquidity position, which allows us to continue making return-focused growth investments, including the development of our next generation of products.

“Our record third quarter revenue of $12.4 million includes $4 million of license revenue related to an agreement with a Chinese partner. In addition to the license revenue, we generated continued revenue growth across domestic and international markets, both on a quarterly and on a nine-month basis, as well as ongoing growth in both consumables and sales of our core products. Misonix’s strong revenue growth reflects growing market demand for our products, resulting in a 17% growth in product revenue for the quarter and a 24% increase year to date. We are also very pleased to see our consumables business continue its double-digit revenue growth trajectory, something the team has been laser focused on given the high margins and added predictability of this revenue stream. Excluding license revenue, consumables accounted for 70% of total sales for the quarter, including 88% of domestic sales.

“The strategic initiatives we have implemented through-out the company and the changes we have made are yielding positive results across our business and have positioned Misonix to pursue a range of near- and long-term profitable growth opportunities.

“Nexus, our next generation of products to be launched later this year, will present a compelling value proposition to both hospitals and physicians, while allowing Misonix to further penetrate operating rooms by expanding our addressable procedures. For the first nine months of fiscal 2018, over 45,000 surgical procedures have been performed with Misonix consumables, which positions us well to achieve our goal of 100,000 annual procedures world-wide within the next 3 years.

“Looking ahead, we are excited about the opportunities to enhance shareholder value by expanding our scale, growth and profitability. As we bring the next generation of products to market and complete our transformation to a direct commercialization platform, we remain confident in our ability to end fiscal 2018 with double-digit top-line growth and to continue that growth trend into fiscal 2019.”

Sales Performance Supplemental Data

  For the three months ended     
  March 31, Net change
   2018  2017 $ %
Consumables $  5,898,937 $  5,281,454 $  617,483 11.7%
Equipment    2,530,195    1,896,309    633,886 33.4%
License    4,010,000    -     4,010,000 100.0%
Total $  12,439,132 $  7,177,763 $  5,261,369 73.3%
Domestic product:        
Consumables $  4,340,759 $  3,736,960 $  603,799 16.2%
Equipment    590,269    278,348    311,921 112.1%
Total $  4,931,028 $  4,015,308 $  915,720 22.8%
International product:        
Consumables $  1,558,178 $  1,544,494 $  13,684 0.9%
Equipment    1,939,926    1,617,961    321,965 19.9%
Total $  3,498,104 $  3,162,455 $  335,649 10.6%
License    4,010,000    -     4,010,000 100.0%

Joe Dwyer, Chief Financial Officer, added, “Misonix generated record revenue and strong results across several key financial metrics in the 2018 fiscal third quarter, including net income, earnings per share, cash from operations and adjusted EBITDA, reflecting the ongoing success we are achieving in transforming our operations and cost structure to become more efficient, while implementing effective sales and marketing strategies focused on expanding our market footprint and creating added demand for our products.

“In the third quarter, we saw significant revenue contributions from our agreement with one of our Chinese partners, as we recognized $4 million in license revenue following the successful delivery of the SonaStar technology for future production in China. The license revenue was the main driver of the over 820 basis point gross margin improvement. Going forward, we expect gross margin to be in-line with recent results at around 70%.

“We also further strengthened our liquidity position, ending the fiscal third quarter with over $12.3 million in cash, while remaining debt free. We believe it is important to preserve our strong liquidity position while remaining as committed as ever to profitably growing the business through organic growth investments and select accretive acquisitions that will add complementary capabilities to our product portfolio and generate strong returns for our shareholders.

“With our focus on growth, disciplined expense management, efforts to drive operational efficiencies, emphasis on driving consumable sales and ongoing transition towards a direct sales force model, we are confident we are putting in place an operational structure that will appropriately position Misonix to achieve its potential and create significant value for shareholders.

“Given the strong performance in our fiscal third quarter and year-to-date results, we are increasing our total revenue guidance for the year ending June 30, 2018 to between $35 million and $36 million, which implies annual revenue growth of 28% to 32%.
Fiscal Third Quarter 2018 Conference Call
Misonix will host a conference call at 4:30 p.m. ET today, Monday, May 7, 2018.  Senior management will discuss the financial results and host a question and answer session.  The dial in number for the audio conference call is 800-263-0877 (domestic) or 323-794-2094 (international), conference ID 7937390. Participants may also listen to a live webcast of the call through the “Events and Presentations” section under “Investor Relations” on Misonix’s website at www.misonix.com.

A webcast replay will be available for 30 days following the live event at www.misonix.com.

About Misonix, Inc.
Misonix, Inc. (Nasdaq:MSON) designs, develops, manufactures and markets ultrasonic medical devices for the precise removal of hard and soft tissue, including bone removal, wound debridement and ultrasonic aspiration. Misonix is focused on leveraging its proprietary ultrasonic technology to become the standard of care in operating rooms and clinics around the world. Misonix's proprietary ultrasonic medical devices are used in a growing number of medical procedures, including spine surgery, neurosurgery, orthopedic surgery, cosmetic surgery, laparoscopic surgery, and other surgical and medical applications. At Misonix, Better Matters to us. That is why throughout the Company’s history, Misonix has maintained its commitment to medical technology innovation and the development of ultrasonic surgical products that radically improve patient outcomes. Additional information is available on the Company's web site at www.misonix.com.

Safe Harbor Statement
With the exception of historical information contained in this press release, content herein may contain “forward looking statements” that are made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on management’s current expectations and are subject to uncertainty and changes in circumstances. Investors are cautioned that forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from the statements made. These factors include general economic conditions, delays and risks associated with the performance of contracts, risks associated with international sales and currency fluctuations, uncertainties as a result of research and development, acceptable results from clinical studies, including publication of results and patient/procedure data with varying levels of statistical relevancy, risks involved in introducing and marketing new products, potential acquisitions, consumer and industry acceptance, litigation and/or court proceedings, including the timing and monetary requirements of such activities, the timing of finding strategic partners and implementing such relationships, regulatory risks including approval of pending and/or contemplated 510(k) filings, the ability to achieve and maintain profitability in the Company’s business lines, the impact of the pending investigation by the Department of Justice and Securities Exchange Commission, and other factors discussed in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2017, subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. The Company disclaims any obligation to update its forward-looking relationships.

Joe DwyerJoseph Jaffoni, Norberto Aja, Jennifer Neuman
Chief Financial OfficerJCIR
Misonix, Inc.212-835-8500 or mson@jcir.com 

Misonix, Inc. and Subsidiaries

Consolidated Statements of Operations


  For the three months endedFor the nine months ended
  March  31, March  31,
    2018  2017   2018 2017 
     Product$   8,429,132 $  7,177,763  $  24,033,700 $    19,379,768 
     License    4,010,000    -      4,010,000   -  
Total revenue   12,439,132   7,177,763  28,043,700 19,379,768 
Cost of goods sold, exclusive of depreciation from consigned product    2,631,893    2,112,099     7,275,073   5,842,778 
Gross profit     9,807,239    5,065,664   20,768,627   13,536,990 
Operating expenses:         
    Selling expenses    4,447,421    3,587,859     11,937,649   10,184,680 
    General and administrative expenses    1,925,086    2,484,962     6,879,077   6,504,202 
    Research and development expenses    1,199,895    465,863     3,058,374   1,398,311 
Total operating expenses     7,572,402    6,538,684     21,875,100   18,087,193 
Income (loss) from operations     2,234,837    (1,473,020)  (1,106,473)   (4,550,203)
Other income (expense):         
   Interest income     9,074    18     9,131   56 
   Royalty income     916    953,235     525,438   2,846,351 
   Other     (5,712)   (6,940)    (15,474)  (15,576)
Total other income     4,278    946,313   519,095   2,830,831 
Income (loss) from operations before income taxes     2,239,115    (526,707)  (587,378)  (1,719,372)
Income tax expense (benefit)     -    (219,000)  5,243,422   (275,000)
Net income (loss) from continuing operations     2,239,115    (307,707)   (5,830,800)  (1,444,372)
Discontinued operations:    
   Income from discontinued operations net of tax expense of $0 and $88,139     -    161,861     -   161,861 
Net income from discontinued operations     -    161,861   -   161,861 
Net income (loss) $   2,239,115 $  (145,846) $(5,830,800)$(1,282,511)
Net income (loss) per share:      
  Continuing operations:      
    Basic $   0.24 $  (0.04) $  (0.65)$            (0.18)
    Diluted $   0.23 $  (0.04) $  (0.65)$             (0.18)
Discontinued operations:      
    Basic $   -  $  0.02  $  -  $             0.02 
    Diluted $   -  $  0.02  $  -  $             0.02 
    Basic $   0.24 $  (0.02) $  (0.65)$           (0.16)
    Diluted $   0.23 $  (0.02) $  (0.65)$  (0.16)
Weighted average shares - Basic     9,028,506  8,613,354   8,999,938 8,263,343 
Weighted average shares - Diluted     9,575,944  8,613,354   8,999,938 8,263,343 

Misonix, Inc. and Subsidiaries
Consolidated Balance Sheets


  March 31, June 30,
   2018   2017 
Current assets:    
Cash and cash equivalents $  12,309,631  $  11,557,071 
Accounts receivable, less allowance for doubtful accounts of $96,868 and $96,868, respectively    4,478,779     5,133,389 
Inventories, net    5,164,501     4,992,434 
Prepaid expenses and other current assets    861,369     918,899 
Total current assets    22,814,280     22,601,793 
Property, plant and equipment, net of accumulated amortization and depreciation of $8,686,372 and $7,794,580, respectively    4,019,410     3,730,203 
Patents, net of accumulated amortization of $1,030,313 and $995,568, respectively    745,777     719,136 
Goodwill    1,701,094     1,701,094 
Intangible and other assets    433,393     282,876 
Deferred income tax    -      4,334,547 
Total assets $  29,713,954  $  33,369,649 
Liabilities and shareholders' equity    
Current liabilities:    
Accounts payable $  1,421,719  $  1,861,228 
Accrued expenses and other current liabilities    2,744,134     3,346,138 
Total current liabilities    4,165,853     5,207,366 
Deferred lease liability    2,339     9,354 
Deferred income    18,601     13,087 
Total liabilities    4,186,793     5,229,807 
Commitments and contingencies    
Shareholders' equity:    
Common stock, $.01 par value-shares authorized 20,000,000; 9,402,466 and 9,357,166 shares issued and outstanding, respectively    94,025     93,572 
Additional paid-in capital    39,117,601     36,808,810 
Accumulated deficit    (13,684,465)    (8,762,540)
Total shareholders' equity    25,527,161     28,139,842 
Total liabilities and shareholders' equity $  29,713,954  $  33,369,649 

Use of Non-GAAP Financial Measures
The Company has presented the following non-GAAP financial measures in this press release: EBITDA and Adjusted EBITDA. The Company defines EBITDA as the net income (loss) as reported under GAAP, plus depreciation and amortization expense, interest expense and income tax expense (benefit). The Company defines Adjusted EBITDA as EBITDA plus non-cash stock compensation expense and engineering costs associated with its development of its next generation platform, which will not be a recurring cost when the project is completed in late 2018.

We present these non-GAAP measures because we believe these measures are useful indicators of our operating performance. Our management uses these non-GAAP measures principally as a measure of our operating performance and believes that these measures are useful to investors because they are frequently used by analysts, investors and other interested parties to evaluate the operating performance of companies in our industry. We also believe that these measures are useful to our management and investors as a measure of comparative operating performance from period to period.

Misonix, Inc. and Subsidiaries
Reconciliation of GAAP Results to Non-GAAP Measures


(in millions)Three Months Ended Nine Months Ended
 March 31, March 31,
  2018 2017   2018  2017 
Net income (loss)$  2.2$  (0.1) $  (5.8)$  (1.3)
Depreciation and amortization   0.4   0.3  $  1.0    0.8 
Income taxes   -    (0.2) $  5.2    (0.3)
EBITDA 2.6  (0.0) $ 0.4   (0.8)
Non-cash compensation 0.6 0.5  $  2.1   0.6 
Next generation engineering 0.8   -   $  1.9   
Adjusted EBITDA$  4.0$  0.5  $  4.4 $  (0.2)