SAINT PAUL, Minn., Sept. 7, 2016 /PRNewswire/ -- MGC Diagnostics Corporation (NASDAQ: MGCD), a global medical technology company, today reported financial results for the third quarter ended July 31, 2016.
Third Quarter Fiscal 2016 Highlights:
- Third quarter 2016 revenue increased by 7% to $9.9 million, compared to $9.2 million in the prior year period.
- Operating income increased 88% to $794,000, compared to $423,000 in the prior year period.
- The Company reported net income of $260,000 for the 2016 third quarter, or $0.06 per diluted share, compared to net income of $3.4 million, or $0.80 per diluted share, in the prior year period. Third quarter 2015 net income included a one-time tax benefit of $3.1 million, or $0.73 per diluted share.
- Medical Graphics’ revenue increased 9% to $8.6 million, compared to $7.8 million in the third quarter of fiscal 2015. Medisoft’s revenue decreased 6% to $1.3 million from $1.4 million in the fiscal 2015 third quarter.
- Service revenue increased 3% to $1.72 million in the fiscal 2016 third quarter compared to $1.67 million in the prior year period. Supplies revenue increased 9% to $1.8 million from $1.6 million in the prior year period.
- 2016 third quarter domestic equipment, supplies and accessories revenues, including Medisoft’s U.S. revenue, increased 13% to $5.9 million, compared to $5.2 million in the 2015 third quarter.
- During the quarter, competitive account conversions totaled 16 accounts, or $1.4 million in revenue, compared to 14 accounts, or $612,000 in revenue, for the same quarter last year.
- Sales backlog of $1.66 million ($1.43 million for Medical Graphics and $230,000 for Medisoft) at the end of the quarter, compared to $2.35 million at the end of the fiscal 2015 third quarter.
- Operating expenses were $4.3 million in the third quarter, compared to $4.1 million in the prior year quarter.
- For the third quarter, Medical Graphics had operating income of $882,000 and Medisoft had an operating loss of $(88,000).
Todd Austin, chief executive officer of MGC Diagnostics, said, “Our operating performance during the third quarter was very solid. The domestic sales team generated double-digit growth from strong competitive conversion wins, resulting in competitive conversion revenue increasing 134% compared to last year’s third quarter. We define ‘competitive conversion’ as our sale of a cardio-respiratory device that replaces a competitor’s device in a hospital, clinic, physician’s office or other setting. We also achieved a number of key strategic initiatives during the quarter, including FDA 510(k) clearance for the Resmon PRO FOT device, retirement of our bank debt and the formation of our Scientific Advisory Committee. Our successful execution of these initiatives positions us to continue achieving consistent operating performance and delivering solid annual financial results.”
“I am also pleased with the continued performance of our Medical Graphics team, as they achieved domestic equipment, supplies and accessories revenue growth of 12% compared to the third quarter last year. Year to date, we have converted 62 new customers from our direct competitors, generating $3.9 million in revenue compared to 37 wins and $1.4 million of revenue in last year’s nine-month period. These conversions indicate that our products provide the right features and value proposition. We are pleased with the results of the first nine months and we are confident that we will finish the year strong.”
Additional Fiscal 2016 Third Quarter Data:
- The Attachment Rate for domestic sales, which reflects the percentage of Extended Service Contracts that were sold during customer equipment purchases, was 21% for the fiscal 2016 third quarter, compared to 26% in the prior year quarter.
- Current and long-term deferred revenue at the end of the third quarter was $7.6 million, compared to $6.5 million for last year’s third quarter.
- International equipment, supplies and accessories revenues decreased to $2.3 million, compared to $2.4 million for the fiscal 2015 third quarter. Medical Graphics’ international revenue increased to $1.11 million, compared to $1.07 million for last year’s third quarter. Medisoft’s international revenue decreased to $1.16 million for the quarter, compared to last year’s third quarter of $1.28 million.
- Gross margin of 51.2% in the third quarter includes gross margin of 53.2% and 38.4% for Medical Graphics and Medisoft, compared to gross margin of 48.7% for last year’s third quarter, which included gross margins of 50.3% and 39.9% for Medical Graphics and Medisoft, respectively.
- Gross margin for equipment, supplies and accessories was 46.9% for the quarter (48.5% for Medical Graphics and 38.4% for Medisoft), compared to 44.9% for the prior year’s quarter (46.0% for Medical Graphics and 39.9% for Medisoft). Gross margin for services was 71.8% for the quarter, compared to 66.0% for the same period last year.
- Third quarter 2016 general and administrative expenses totaled $1.1 million, or 10.9% of revenue, compared to $1.2 million, or 13.2% of revenue in the comparable quarter last year.
- Sales and marketing expenses were $2.5 million, or 24.9% of revenue, compared to $2.1 million, or 22.8% of revenue in the 2015 third quarter. This increase is primarily due to higher Medical Graphics sales and marketing expenses of $238,000 and higher Medisoft sales and marketing expenses of $113,000.
- Research and development expenses were $665,000, or 6.7% of revenue in the fiscal 2016 third quarter, compared to $694,000, or 7.5% of revenue in last year’s third quarter.
As we reported in our Statement of Cash Flows, $412,000 of the $460,000 provision for taxes in the first nine months of 2016 is a non-cash expense from the effect of our deferred tax assets.
To read full press release, please click here.
