SALT LAKE CITY, May 3 /PRNewswire-FirstCall/ -- IOMED, Inc. today reported financial results for the third quarter of fiscal 2006, which ended March 31, 2006.
Third Quarter Results
For the quarter ended March 31, 2006, sales were $2,688,000 compared with $2,879,000 a year ago. The decreased sales were primarily due to reduced unit sales volume, which also contributed to a decline in gross margin to 59% in the third quarter of fiscal 2006 versus 60% a year ago.
Selling, general and administrative (“SG&A”) expenses were down 9% primarily due to reduced personnel costs. Research and development expenses were higher than a year ago due to increased investment in new product development activities.
IOMED reported net income of $15,000, or nil per share, for the third quarter of fiscal 2006 compared with net income of $32,000, or nil per share, for the third quarter of fiscal 2005. Pursuant to new accounting rules, which became effective for the Company beginning this year, net income in the quarter was impacted by a non-cash charge of $35,000 related to compensation expense associated with stock options.
Nine-Month Results
For the nine-month period, IOMED reported sales of $8,226,000, down 3% from a year ago. Lower average selling prices resulted in a decline in gross margin to 60% from 61% during the comparable period.
SG&A expenses were down 8% during the period due to reduced personnel and litigation-related expenses. Litigation-related expenses were $554,000 for the nine-months of fiscal 2006 versus $633,000 a year ago.
Net income for the period was up 38% from a year ago. The Company reported net income of $547,000, or $0.07 per diluted share, compared with net income of $395,000, or $0.05 per diluted share, a year ago. Net income in the current period was impacted by a non-cash charge of $116,000 related to compensation expense associated with stock options.
The Company generated operating cash flow of $916,000 for the nine-months of fiscal 2006. Working capital increased 3% to $9.3 million, long-term debt decreased 40% to $504,000 and total equity increased 9% to $10.7 million. Cash and cash equivalents were $8.4 million.
Management Comments
On March 27, 2006, IOMED received a notice of intent to terminate a distribution agreement between the Company and Compex Technologies, Inc. (formerly Rehabilicare, Inc.) effective June 30, 2006. The notice follows Compex’s acquisition by Encore Medical Corporation, a competitor of the Company. IOMED and Compex have enjoyed an excellent, long-standing business relationship, and Encore has offered to continue to distribute the Company’s products under revised terms. While IOMED intends to pursue discussions with Encore regarding a continuing relationship, the Company may elect to utilize alternative distribution channels to meet its future product distribution needs.
“Reduced orders from Compex were the major factor affecting our sales during the current quarter,” said Robert J. Lollini, President and CEO. “While lower sales through Compex are expected to continue, we anticipate that these declines will be offset, in part, by increased sales through our other distribution channels servicing these accounts.
“Year-to-date, we have settled two of the intellectual property lawsuits in which the Company was a party. In addition, we generated positive operating cash flow, reduced debt and improved equity in spite of increased funding of new product and market development. We are continuing to generate greater productivity using fewer resources, which has enabled us to maintain a strong balance sheet while managing the impact of lower unit sales volume and lower average selling prices on our revenues and gross margins,” Mr. Lollini said.
IOMED is a leader in developing, manufacturing and marketing active drug delivery systems used primarily to treat acute local inflammation in the physical and occupational therapy and sports medicine markets. The Company is pursuing opportunities to advance its position as a provider of quality, innovative non-invasive medical products that improve patient healthcare. IOMED seeks to accomplish this by expanding its product line, distributing new products, developing strategic partnerships, and through acquisitions. To find out more about IOMED, Inc. , visit our website at www.iomed.com.
The statements contained in this news release that are not purely historical are forward-looking statements, as defined in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, and include IOMED’s beliefs, expectations or intentions regarding its future operations and financial condition. All forward-looking statements included in this news release are made as of the date hereof and are based upon information available to IOMED as of such date. IOMED assumes no obligation to update any forward-looking statement. It is important to note that actual outcomes could differ materially from those in such forward-looking statements. Readers should also refer to the risk factors and other disclosures set forth in IOMED’s filings with the Securities Exchange Commission, including Forms 10-K, 10-Q and 8-K.
--TABLES FOLLOW-- INCOME STATEMENTS Three Months Ended Nine Months Ended March 31, March 31, 2006 2005 2006 2005 (unaudited) (unaudited) Product sales $2,688,000 $2,879,000 $8,226,000 $8,485,000 Cost of products sold 1,097,000 1,152,000 3,314,000 3,272,000 Gross profit 1,591,000 1,727,000 4,912,000 5,213,000 Operating costs and expenses: Selling, general and administrative 1,350,000 1,479,000 3,809,000 4,137,000 Research and product development 309,000 238,000 772,000 726,000 Total operating costs and expenses 1,659,000 1,717,000 4,581,000 4,863,000 Operating income (loss) (68,000) 10,000 331,000 350,000 Other income (expense): Interest expense (18,000) (29,000) (62,000) (98,000) Interest and other income, net 101,000 51,000 278,000 143,000 Net income $15,000 $32,000 $547,000 $395,000 Income per share: Basic $0.00 $0.00 $0.08 $0.06 Diluted $0.00 $0.00 $0.07 $0.05 Shares used in the computation of income per share: Basic 7,145,000 6,585,000 6,940,000 6,585,000 Diluted 7,942,000 7,682,000 7,876,000 7,676,000 CONDENSED BALANCE SHEET March 31, June 30, 2006 2005 (unaudited) (audited) Cash and cash equivalents $8,422,000 $8,293,000 Working capital, net $9,307,000 $9,032,000 Restricted cash $354,000 $585,000 Total assets $12,715,000 $12,538,000 Long-term obligations $504,000 $836,000 Accumulated deficit $(31,185,000) $(31,732,000) Shareholders’ equity $10,729,000 $9,868,000 STATEMENTS OF CASH FLOWS Nine Months Ended March 31, 2006 2005 Cash flows from operating activities (unaudited) Net income $547,000 $395,000 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 314,000 440,000 Other non-cash charges 116,000 -- Changes in operating assets and liabilities: Accounts receivable 82,000 60,000 Inventories 60,000 (95,000) Prepaid expenses 64,000 30,000 Trade accounts payable (40,000) (106,000) Other accrued liabilities (227,000) 277,000 Net cash provided by operating activities 916,000 1,001,000 Cash flows from investing activities Purchases of equipment and furniture (49,000) (53,000) Purchase of intangible assets (750,000) -- Net cash used in investing activities (799,000) (53,000) Cash flows from financing activities Change in restricted cash balance 231,000 262,000 Proceeds from issuance of common shares 198,000 -- Payments on long-term obligations (417,000) (470,000) Net cash provided by (used in) financing activities 12,000 (208,000) Net increase in cash and cash equivalents 129,000 740,000 Cash and cash equivalents at beginning of period 8,293,000 7,338,000 Cash and cash equivalents at end of period $8,422,000 $8,078,000
IOMED, Inc.
CONTACT: Robert J. Lollini, President & CEO, or Betsy Truax, InvestorRelations Consultant, ext. 411, info@iomed.com, both of IOMED, Inc.,+1-801-975-1191
Web site: http://www.iomed.com/
