Gross Margin Expands to 36% on Continued Process Improvements and Expense Reduction
RICHLAND, Wash., Sept. 28, 2017 /PRNewswire/ -- IsoRay, Inc. (NYSE MKT: ISR), a medical technology company and innovator in seed brachytherapy and medical radioisotope applications for the treatment of prostate, brain, lung, head and neck and gynecological cancers, today announced its final financial results for the fourth quarter and fiscal year ended June 30, 2017.
Revenue for the fourth quarter of fiscal 2017 was $1.37 million, a 22% increase compared to $1.12 million revenue for the fourth quarter of fiscal 2016 and a 7% increase compared to revenue of $1.28 million in the third quarter of fiscal 2017. The increase in revenue is primarily due to a growing customer count from new and returning practitioners. Prostate brachytherapy represented 88% and 85% of total revenue for the fourth quarter of fiscal 2017 and 2016, respectively and 89% of total revenue for the third quarter of fiscal 2017. Gross profit for the three months ended June 30, 2017 was $0.50 million compared to a loss of $0.05 million in the prior year period and $0.29 million in the third quarter of fiscal 2017. The increase is primarily due to expense reductions and process and manufacturing improvements put in place over the past year. Gross profit margin was 36% in the current period compared to a negative gross margin in the fourth quarter of fiscal 2016 and 23% in the third quarter of fiscal 2017.
Operating expenses were $2.36 million compared to $1.21 million in the fourth quarter of the last fiscal year. The increase is primarily due to continued investment in research and development and implementation of the company’s new sales and marketing initiatives. In addition to these investments, during the fourth quarter the Company completed the settlement of a class action lawsuit for $0.195 million and had expenses related to a special shareholders’ meeting. These one-time expenses were recorded in the fourth quarter. In 2016, fourth quarter expenses were reduced by an asset retirement obligation adjustment of $0.456 million primarily related to an extension of the lease term for the manufacturing facility. Operating loss was $1.86 million compared to a $1.25 million loss in the fourth quarter of fiscal 2016. The net loss was $1.86 million, or ($0.03) per basic and diluted share, for the fourth quarter of fiscal 2017 compared to a net loss of $1.19 million, or ($0.02) per basic and diluted share, for the fourth quarter of fiscal 2016. Basic and diluted per share results are based on weighted average shares outstanding of approximately 55.0 million for both periods. IsoRay had cash and cash equivalents and certificates of deposit of $9.0 million as of June 30, 2017, and no debt.
For the fiscal year ended June 30, 2017, revenue was $4.76 million, consistent with revenue of $4.77 million for the fiscal year ended June 30, 2016. Prostate brachytherapy represented 88% and 86% of total revenue for fiscal 2017 and 2016, respectively. Operating expenses were $7.15 million for fiscal 2017 compared to $5.21 million for the year ended June 30, 2016. Gross profit was $0.84 million compared to $0.13 million for the prior year. Increased investments in research and development and sales and marketing accounted for the majority of the increase. Operating loss was $6.31 million for fiscal 2017, compared to a $5.08 million operating loss for fiscal 2016. The net loss was $6.16 million, or ($0.11) per basic and diluted share, for fiscal 2017 compared to a net loss of $4.71 million, or ($0.09) per basic and diluted share, for fiscal 2016. Basic and diluted per share results are based on weighted average shares outstanding of approximately 55.0 million for both periods.
“Our fourth quarter results reflect the momentum that has begun to build for IsoRay,” said Thomas LaVoy, Chairman and Chief Executive Officer of IsoRay, Inc. “Sales increased 22% year-over-year in the fourth quarter after increasing 7% year-over-year in the third quarter of this year. These increases come after the transition in our sales and marketing team during the second half of fiscal 2016 which continued into early fiscal 2017, as well as the revamping of our entire sales and marketing strategy with a renewed focus on marketing that we rolled out last fall. We believe that IsoRay’s growing customer count from both new and returning practitioners validates the strategic changes that we’ve made. For the full fiscal year, revenue was flat year-over-year, with the stronger second half offsetting the approximate 14% revenue decline of the first half of the fiscal year when the new sales team and strategies were being implemented. Process and manufacturing improvements, as well as expense reductions, contributed to the sustainable expansion of the gross margin to 36% in the fourth quarter.”
“Increasing evidence of Cesium-131’s efficacy and lower side effect profile as reported in a growing list of studies is supportive of our two-pronged growth strategy focused on prostate brachytherapy and brachytherapy for other parts of the body including brain and gynecological cancers. In prostate brachytherapy, emerging clinical data demonstrates sustained clinical outcomes with rapid patient return to baseline recently published in a study by the University of Pittsburgh Medical Center. Another recent study reported durable positive outcomes for Cesium-131 in prostate cancer patients followed over nine years, the longest data ever available.”
Mr. LaVoy continued, “In other cancers, a growing number of leading institutions are performing brain brachytherapy with Cesium-131. There are multiple publications from Weill Cornell Medical College that demonstrate high rates of brain cancer control when Cesium-131 brachytherapy is combined with surgery. And IsoRay’s collaboration with GammaTile LLC to develop and commercialize a custom delivery system is in development with a filing for FDA clearance and reimbursement code assignment in process. In gynecological cancers, a new study was recently accepted for publication in the highly respected International Journal of Radiation Oncology, Biology, Physics (the “Red Journal”) on Cesium-131’s use in recurrent pelvic malignancies. The study found that the use of Cesium-131 has the ability to control local disease, avoid radical surgery, and provide an improved quality of life for these patients.”
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