ROCHESTER, N.Y., Nov. 10, 2011 /PRNewswire/ -- VirtualScopics, Inc. (NASDAQ: VSCP), a leading provider of quantitative imaging for clinical trials, today reported year to date revenues of $10,780,710 for the nine months ended September 30, 2011 compared to $9,883,190 in the comparable period in 2010, a 9% increase. Third quarter 2011 revenues were $3,268,807 compared to revenues of $3,590,591 in the third quarter of 2010, a 9% decrease. Gross profit for the quarter ended September 30, 2011 was $1,496,626 compared to $1,887,281 for the quarter ended September 30, 2010. Operating income for the third quarter of 2011 was $19,559 compared to $400,235 in the third quarter of 2010. Earnings before interest, taxes, depreciation and amortization, and excluding stock compensation expense and gain on derivative financial instrument (“Adjusted EBITDA”) for the third quarter of 2011 was $341,669 compared to $758,636 in the comparable period in 2010. Net income for the quarter ended September 30, 2011 was $562,926 compared to $628,699 for the quarter ended September 30, 2010. The cash balance as of September 30, 2011 was $5,172,413 compared to $4,576,060 as of December 31, 2010.
“During the third quarter we were pleased with advancements we made both operationally and within our R&D initiatives,” stated Jeff Markin, president and chief executive officer of VirtualScopics. He added, “Our third quarter revenue was negatively impacted by the slower than anticipated ramp-up of several studies initiated earlier in the year, the delay of studies due to start in the third quarter, and the slowdown of a large phase III study that is moving towards registration with the regulatory authorities earlier than anticipated due to strong patient response.” He further stated, “The impact of these events and the overall softness in the economy are unfortunate, but we are optimistic we will see an uptick in the first half of 2012 given our sales pipeline and the progress we are seeing in our relationship with PPD.” He further stated, “Even with the lower revenues we are pleased to show positive Adjusted EBITDA and an increase to our cash balance.”
“Our cash position remains strong and further enables us to invest in market opportunities that support our long-term growth initiatives,” said Molly Henderson, chief business and financial officer of VirtualScopics. “As such, we continue to invest in research and development, including new market opportunities, in order to stay innovative with our technology while being prudent with our capital on-hand.” She added, “Of significant importance, is that we have filed a 510k with the FDA relative to our first personalized medicine application and accordingly, we’ve been engaged in several rounds of discussions with potential development partners. We believe quantitative imaging can play a critical role within medical practice and therefore are working towards a broader use of our applications outside of the clinical trial market.” She concluded, “In light of the softness in our third quarter revenues, we are adjusting our 2011 revenue guidance to $14 - $14.5 million, and estimate that our Adjusted EBITDA will range between $1.5 -1.7 million for the full year of 2011 which is in line with the guidance of $1.7 million.”
Jeff Markin and Molly Henderson will provide a business and third quarter 2011 financial update during the conference call today at 9:00 a.m. ET. Interested participants should call 877.407.8035 when calling within the United States or +1 201 689 8035 when calling internationally. This call can also be accessed at www.virtualscopics.com and will be available for 30 days after the call.
The Company provides Adjusted EBITDA as a supplemental measure to GAAP regarding the Company’s operational performance. The Company defines Adjusted EBITDA as earnings less interest, taxes (if any), depreciation and amortization as further adjusted to exclude stock compensation expense, the gain (loss) on derivative instrument (mark to market adjustment for warrants) and interest income and other expenses. This financial measure excludes the impact of certain items and, therefore, has not been calculated in accordance with GAAP. The Company’s method of calculating Adjusted EBITDA, however, may differ from methods used by other companies, and, as a result, Adjusted EBITDA measures disclosed herein may not be comparable to other similarly titled measures used by other companies. The Company continues to provide information in accordance with GAAP. However, with the adoption of ASC 815-40 and the non-cash variable nature of stock compensation expense (ASC 718) and their very substantial impact on the overall reported net income (loss), the Company believes it is also helpful for investors to receive additional information relating more specifically to the Company’s operating results. Accordingly, the Company has presented Adjusted EBITDA which excludes the non-cash effects of ASC 815-40 and ASC 718 on its financial results. Management uses Adjusted EBITDA (a) to evaluate the Company’s financial performance, (b) to set internal spending budgets, and (c) to measure operational profitability. In addition, investors have requested these non-GAAP financial measures as a means of providing consistent and comparable information with past reports of financial results. Pursuant to the requirements of Regulation G, the Company has provided a reconciliation of Adjusted EBITDA to the most directly comparable GAAP financial measure, net income, below.
About VirtualScopics, Inc.
VirtualScopics, Inc. is a leading provider of imaging solutions to accelerate drug and medical device development. VirtualScopics has developed a robust software platform for analysis and modeling of both structural and functional medical images. In combination with VirtualScopics’ industry-leading experience and expertise in advanced imaging biomarker measurement, this platform provides a uniquely clear window into the biological activity of drugs and devices in clinical trial patients, allowing sponsors to make better decisions faster. For more information about VirtualScopics, visit www.virtualscopics.com.
