By a News Reporter-Staff News Editor at Pharma Business Week -- Vasomedical, Inc. ("Vasomedical") (OTC BB: VASO) reported its operating results for the three months ended March 31, 2014 (see also Vasomedical, Inc.).
"We are excited to report that during the quarter, the Company generated positive cash flow of $4.2 million from operating activities, mainly due to our VasoHealthcare subsidiary achieving the highest commission rate, which is applied retroactively for all orders booked in 2013," stated Jun Ma, President and CEO of Vasomedical. "As our GEHC business continues to grow, we are taking advantage of the higher cash inflows and reinvesting in our business, while continuing our search for opportunities to complement and diversify our business."
"While total revenues slightly declined by 3% to $7.1 million for the quarter, mainly due to a decrease in EECP equipment sales, we are optimistic that our international performance will improve once the recently announced cooperative agreement with PSK-Health Sci-Tech Development Co. Ltd., the leading manufacturer of ECP therapy systems in China, is implemented. This venture should help Vasomedical expand existing sales presence and tap into new geographical territories internationally, as well as substantially reduce sales and marketing costs. We are currently in the process of reorganizing our EECP business model, both domestically and internationally, in view of this cooperative agreement."
"In addition, we strengthened our product portfolio within BIOX with the introduction of MobiCare™ system, a patented wireless multi-parameter patient monitoring system, and expect our China operations to grow. Looking forward, we believe we are well positioned to achieve profitability and maintain positive cash flow, and continue to achieve superior performance from our sales representation business," concluded Dr. Ma.
Three Months Ended March 31, 2014 Financial Results
For the three months ended March 31, 2014, revenue decreased by 3% to $7.1 million from $7.3 million for the same period of 2013. This is mainly attributable to a 45% decline in equipment sales due to decreased EECP(®) revenues, which was partially offset by the 4% growth in commission revenues to $6.2 million, from our Sales Representation segment. As we have stated previously, EECP sales are expected to remain soft unless acceptance level for its currently indicated use and reimbursement policies change positively. The uncertain timing for this to occur was ultimately the reason behind the Company's diversification strategy, which included entering the GEHC representation agreement and acquiring its Chinese operating companies.
Gross profit for the first quarter of 2014 increased 2% to $5.2 million, compared with $5.1 million for the first quarter of 2013. This increase is primarily a result of the higher commission revenues from the Sales Representation segment, arising from higher commission rates for orders booked in 2013, partially offset by lower equipment shipments in the Equipment Segment.
Selling, general and administrative (SG&A) expenses for the first quarter of 2014 was $6.0 million or 85% of revenues, compared with $5.6 million, or 77% of revenues for the same period last year. This is mainly attributable to the annual sales team meeting in the Sales Representation segment during the quarter, which took place in the second quarter last year.
Net loss for the three months ended March 31, 2014 was $1.0 million, a 60% increased loss compared with a net loss of $652,000 for the three months ended March 31, 2013, as a result of an 8% increase in selling, general and administrative costs.
Net cash increased by $4.0 million to $12.0 million at March 31, 2014, compared with net cash of $8.0 million as of December 31, 2013. This increase in cash is mainly attributable to the significantly higher commission rate generated in the fourth quarter of 2013, resulting in significant cash inflows early in 2014. Based on current forecast, we anticipate cash flow from operating activities to be positive for 2014.
Deferred revenue remains substantial, at approximately $17.0 million as of March 31, 2014, to be recognized in the future when the underlying equipment is delivered and accepted at the customer site.
Keywords for this news article include: Asia, China, Vasomedical Inc.
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