Vision-Sciences Reports Record Third Quarter Fiscal 2012 Net Sales Of $4.3 Million

Vision-Sciences, Inc. (NASDAQ: VSCI), a leading provider of unique flexible endoscopic products utilizing its proprietary sterile disposable EndoSheath® technology, today reported third quarter fiscal 2012 net sales of $4.3 million, an increase of 59% over net sales reported for the same period in fiscal 2011.

“We delivered solid results this past quarter,” commented Cynthia Ansari, Chief Executive Officer of Vision-Sciences, Inc. “Our employees are focused on delivering meaningful innovation to patients in order to address unmet clinical needs, positioning us well for the future.”

Records sales driven by increased penetration in Urology and Pulmonology

Net sales increased $1.6 million, or 59%, to $4.3 million in the third quarter of fiscal 2012, compared to $2.7 million reported during the third quarter of fiscal 2011, as a result of a 73% increase in medical segment sales. Medical segment sales increased to $3.6 million during the period driven by increased demand for endoscopes and EndoSheath disposables in the urology and pulmonology markets.

Urology sales during the quarter increased $1.0 million to $1.8 million. The Company continues to make solid progress with its supply of flexible video and fiber cystoscopes and related EndoSheath disposables to Stryker. Pulmonology sales for the period increased $0.2 million to $0.3 million. The Company continues to increase its customer base and capture increased penetration in the pulmonology market.

Net sales in the Company’s industrial segment improved 15% to $0.7 million, primarily attributable to higher borescope sales.

Sequentially, net sales for the third quarter increased 7% from $4 million reported during the second quarter of fiscal 2012.
  Three Months Ended    
December 31,
Market/Category   2011     2010 Change %  
ENT and TNE $ 840 $ 751 $ 89 12 %
Urology 1,839 827 1,012 122 %
Pulmonology 254 70 184 263 %
Spine 186 - 186 n/m*
Repairs, peripherals, and accessories   449   420   29 7 %
Total medical sales   3,568   2,068   1,500 73 %
Total industrial sales   746   647   99 15 %
Net sales $ 4,314 $ 2,715 $ 1,599 59 %
 

* not meaningful

Gross margin expansion resulting from favorable sales mix

The Company reported gross profit of $1.4 million for the third quarter of fiscal 2012, which represents an increase of $0.5 million, or 68%, over the same period in fiscal 2011. Gross margin for the period increased 170 basis points to 31%. The expansion of gross margin was primarily attributable to a more favorable mix of higher gross margin product sales and favorable manufacturing variances from manufacturing efficiencies.

Selling, general and administrative expenses (“SG&A”) increased $0.1 million, or 3%, to $2.7 million in the third quarter of fiscal 2012. This slight increase in expense was largely driven by higher stock-based compensation expense, increased spending on sales and marketing consulting activities, and higher sales commissions tied to the overall growth of net sales. As a percentage of sales, SG&A decreased to 62% compared to 96% reported during the same period last year.

Research and development expenses (“R&D”) increased $0.1 million, or 11%, to $0.7 million in the third quarter of fiscal 2012. This slight increase in expense was due to higher development costs associated with next generation products. As a percentage of sales, R&D decreased to 17%, which compares to 24% reported during the same period last year.

The Company’s operating loss decreased 17% to $2 million during the third quarter of fiscal 2012 driven largely by higher gross profit and partially offset by moderate increases in operating expenses.

The Company ended the third quarter of fiscal 2012 with $3.0 million in cash and equivalents and working capital of $6.6 million.

As of December 31, 2011, the Company has drawn a total of $8 million against the aggregate $10 million available under the loan provided by the Company’s Chairman, Lewis C. Pell.

Conference Call

An accompanying conference call hosted by Cynthia Ansari, Chief Executive Officer and Katherine Wolf, Chief Financial Officer and EVP, Corporate Development, to discuss the results will be held at 8:30 a.m. ET, on Wednesday, February 1, 2012.

Conference dial-in: (877) 303-1595 International dial-in: (970) 315-0449 Conference ID: 46468179 Webcast: http://ir.visionsciences.com

An audio replay of the conference call will be available from 11:30 a.m. ET on Wednesday, February 1, 2012, through 11:30 p.m. ET on February 14, 2012 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.

Forward Looking Statements

Except for the historical information provided, the matters discussed in this release include forward-looking statements for the purposes of the safe harbor protections under The Private Securities Litigation Reform Act of 1995. These forward-looking statements generally can be identified by phrases such as Vision-Sciences or its management “believes,” “expects,” “allows,” “anticipates,” or other words or phrases of similar import. Similarly, statements in this release that describe our business strategy, outlook, objectives, plans, intentions, or goals are also forward-looking statements. All such forward-looking statements are subject to certain risks and uncertainties that could cause our actual results to differ materially from those in forward-looking statements. Other risk factors are detailed in our most recent annual report and other filings with the Securities and Exchange Commission. We do not assume any obligation to update any forward-looking statements as a result of new information or future events or developments.

About Vision-Sciences, Inc.

Vision-Sciences, Inc. designs, develops, manufactures and markets unique flexible endoscopic products utilizing sterile disposable sheaths, the Slide-On EndoSheath System, which provide the users quick, efficient product turnover while ensuring the patient a contaminant-free product. Vision-Sciences owns the registered trademarks Vision Sciences®, Slide-On®, EndoSheath®, EndoWipe® and The Vision System®. Information about Vision-Sciences’ products is available at www.visionsciences.com.
 

Vision-Sciences, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(In thousands, except per share amounts)

(Unaudited)
               
 
Three Months Ended Nine Months Ended
December 31, December 31,
2011 2010 2011 2010
 
Net sales $ 4,314 $ 2,715 $ 12,095 $ 7,671
Cost of sales   2,957     1,906     8,213     5,532  
Gross profit 1,357 809 3,882 2,139
 
Selling, general, and administrative expenses 2,665 2,599 9,054 7,872
Research and development expenses   730     655     2,161     1,984  
Operating loss (2,038 ) (2,445 ) (7,333 ) (7,717 )
 
Interest income 2 1 9 4
Interest expense (131 ) (91 ) (329 ) (235 )
Debt cost expense (145 ) (37 ) (229 ) (101 )
Other, net   (32 )   -     (43 )   (1 )
Loss before provision for income taxes (2,344 ) (2,572 ) (7,925 ) (8,050 )
Income tax (benefit) provision   (2 )   4     -     10  
Net loss $ (2,342 ) $ (2,576 ) $ (7,925 ) $ (8,060 )
 

Net loss per common share - basic and diluted
$ (0.05 ) $ (0.07 ) $ (0.18 ) $ (0.22 )
 

Weighted average shares used in computing net loss per common share - basic and diluted
  44,258     36,955     44,164     36,904  
 
 

Vision-Sciences, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(In thousands, except per share amounts)
           
December 31, March 31,
2011 2011
ASSETS (unaudited)
Current assets:
Cash and cash equivalents $ 3,017 $ 9,180
Accounts receivable, net 1,555 1,592
Inventories, net 5,306 6,096
Prepaid expenses and other current assets   269     332  
Total current assets   10,147     17,200  
 
Machinery and equipment 3,435 3,182
Demonstration equipment 1,036 1,413
Furniture and fixtures 224 224
Leasehold improvements   372     372  
Total property and equipment, at cost 5,067 5,191
Less—accumulated depreciation and amortization   2,958     2,970  
Total property and equipment, net 2,109 2,221
Other assets, net 69 73
Deferred debt cost, net   1,659     272  
Total assets $ 13,984   $ 19,766  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Capital lease obligations $ 99 $ 65
Accounts payable 403 921
Accrued expenses 734 782
Accrued compensation 669 706
Advances from customers   1,659     5,693  
Total current liabilities 3,564 8,167
 
Line of credit—related party 8,000 5,000
Capital lease obligations, net of current portion   115     75  
Total liabilities   11,679     13,242  
 
Commitments and Contingencies - -
Stockholders’ equity:
Common stock, $0.01 par value—
Authorized—75,000 shares
Issued—44,665 shares and 44,025 shares, respectively 447 440
Additional paid-in capital 98,049 94,339
Treasury stock at cost, 5 shares of common stock and none, respectively (11 ) -
Accumulated deficit   (96,180 )   (88,255 )
Total stockholders’ equity   2,305     6,524  
Total liabilities and stockholders’ equity $ 13,984   $ 19,766  
 
 

Vision-Sciences, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(In thousands, except per share amounts)
             
Nine Months Ended
December 31,
2011 2010
Cash flows from operating activities:
Net loss $ (7,925 ) $ (8,060 )
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 618 559
Stock-based compensation expense 1,704 1,310
Issuance of restricted stock awards 3 7
Provision for (recovery of) bad debt expenses 1 (152 )
Debt cost expense 229 101
Loss on disposal of fixed assets 39 -
Changes in assets and liabilities:
Accounts receivable 36 (348 )
Inventories 508 (2,372 )
Prepaid expenses and other current assets 63 720
Accounts payable (518 ) 1,036
Accrued expenses (48 ) (168 )
Accrued compensation (37 ) (428 )
Advances from customers   (4,034 )   3,669  
Net cash used in operating activities   (9,361 )   (4,126 )
Cash flows from investing activities:
Purchase of property and equipment (127 ) (220 )
Purchase of short-term investments - (149 )
Proceeds from short-term investment sales/maturities - 596
Proceeds from disposal of fixed assets   3     -  
Net cash (used in) provided by investing activities   (124 )   227  
Cash flows from financing activities:
Advance on line of credit—related party 3,000 2,500
Payments for deferred debt cost (5 ) -
Payments of capital leases (61 ) (45 )
Proceeds from exercise of stock options 399 112
Common stock repurchased   (11 )   -  
Net cash provided by financing activities   3,322     2,567  
Net decrease in cash and cash equivalents   (6,163 )   (1,332 )
Cash and cash equivalents at beginning of period $ 9,180   $ 2,540  
Cash and cash equivalents at end of period $ 3,017   $ 1,208  
 
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest $ 301   $ 58  
Income taxes $ 4   $ 27  
 

Copyright Business Wire 2010

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