MINNEAPOLIS, Oct. 30 /PRNewswire-FirstCall/ -- Vital Images, Inc. , a leading provider of enterprise-wide advanced visualization and analysis solutions, today reported revenue for the third quarter ended September 30, 2007 of $17.1 million, a 4 percent decrease from $17.8 million of revenue a year ago, and a 10 percent increase from $15.5 million of revenue for the second quarter ended June 30, 2007. Net income for the third quarter was $927,000, or $0.05 per diluted share. This compares to net income for the 2006 third quarter of $1.6 million, or $0.12 per diluted share.
“These results are an improvement from the 2007 second quarter but are below our expectations,” said Jay D. Miller, Vital Images president and chief executive officer. “The slowdown in the scanner and IT/PACS markets impacted our ability to increase revenue to the extent we anticipated at the beginning of the quarter. However, we were able to effectively manage costs to achieve a profitable quarter despite lower revenue.
“When we discussed our second quarter results in August, we underestimated the marketplace slowdown. We believe customers are anticipating the release of next-generation, faster CT scanners and delaying purchases until they become available. Our solutions are especially adept at handling the large datasets that these new scanners generate. We have seen slowdowns in the CT scanner market before, and we are confident the CT scanner and IT/PACS markets will come back. Additionally, the Deficit Reduction Act, or DRA, is having a larger impact on Vital Images and our competitors than we anticipated at the beginning of 2007. Chiefly because of these market conditions, we are reducing our financial guidance for 2007.”
The DRA is a move by Congress to reduce Medicare spending, including reimbursement for scanning procedures conducted outside the hospital. The reimbursement restrictions in this act are primarily directed toward freestanding imaging centers; most Vital Images customers are hospitals and healthcare systems.
Miller continued, “We are very proud of the fact that we are winning more than our share of important deals in this current competitive market. In addition, during the third quarter we released Vitrea(R) 4.0 and ViTALConnect(R) 4.1, and they have been well-received by early customers. We continue to have strong relationships with Toshiba and McKesson, and remain optimistic about opportunities in cardiology, gastroenterology and international markets.”
Key Developments
In the third quarter, Vital Images released Vitrea 4.0 and ViTALConnect 4.1, and both have been well-received at early customer sites. These releases provide significant enhancements to the company’s powerful cardiovascular, neurovascular and gastrointestinal applications, as well as improved Web-based cardiovascular analysis and distribution capabilities. Increasingly, referring physicians want to review 3D images, which makes Web-based access through ViTALConnect especially important to the continuum of care.
In late September, ACRIN -- the American College of Radiology Imaging Network -- announced preliminary data from a 15-center clinical trial comparing the performance of CT Colonoscopy (CTC) to optical colonoscopy for the detection of clinically significant colonic polyps. Colonic polyps are considered a precursor to colon cancer, the second leading cause of death from cancer in the United States. An estimated 40 million to 60 million Americans should be screened for colonic polyps today. These preliminary results indicate that virtual colonoscopy may be as effective as a traditional optical colonoscopy in identifying intermediate to large polyps, considered heightened clinical significance.
At the Transcatheter Cardiovascular Therapeutics Scientific Symposium, or TCT, in late October, Vitrea was prominently showcased during live case broadcasts from the Minneapolis Heart Institute at Abbott Northwestern Hospital. Cardiologists performed challenging procedures on patients with severely blocked arteries using CT imaging combined with Vitrea software. Vitrea’s cardiovascular applications allow physicians to look inside a completely blocked artery and better understand the character of the plaque causing the occlusion. With this information, cardiologists can better plan interventional procedures and treat many patients less invasively.
Revised Full Year 2007 Guidance
For the full year ending December 31, 2007, the company now anticipates revenue of $68 million to $72 million and earnings in the range of $0.05 to $0.18 per diluted share. The company’s previous guidance was for revenue of $75 million to $80 million and net income of $0.23 to $0.33 per diluted share. This guidance and the factors below do not include the potential effects of any acquisitions.
Factors considered in preparing guidance include the following estimates for 2007:
Conference Call and Webcast
Vital Images will host a live Webcast of its third quarter earnings conference call today, Tuesday, October 30, 2007, at 10:30 a.m. CT. To access this Webcast, go to the investors’ portion of the company’s Website, http://www.vitalimages.com, and click on the Webcast icon. The Webcast replay will be available beginning at 12:30 p.m. CT on the same day.
If you wish to listen to an audio replay of the conference call, dial (800) 405-2236 and enter conference call ID # 11098809. The audio replay will be available beginning at 12:30 p.m. CT on Tuesday, October 30, 2007, through 5:00 p.m. CT on Tuesday, November 6, 2007.
About Vital Images
Vital Images, Inc., headquartered in Minneapolis, is a leading provider of enterprise-wide advanced visualization and analysis software solutions. The company’s technology gives radiologists, cardiologists, oncologists and other medical specialists time-saving productivity and communications tools that can be accessed throughout the enterprise and via the Web for easy use in the day-to-day practice of medicine. Vital Images also has offices in Beijing, China and Den Haag, the Netherlands. For more information, visit http://www.vitalimages.com.
Forward-Looking Statements
Except for the historical information contained herein, the matters discussed in this news release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and are intended to enjoy the protection of the safe harbor for forward-looking statements provided by that Act. These statements involve risks and uncertainties which could cause results to differ materially from those projected, including but not limited to dependence on market growth, challenges associated with international expansion, the ability to predict product, customer and geographic sales mix, regulatory approvals, the timely introduction, availability and acceptance of new products, the impact of competitive products and pricing, dependence on major customers, the ability to successfully manage operating costs, fluctuations in quarterly results, approval of products for reimbursement and the level of reimbursement, and other factors detailed from time to time in Vital Images’ SEC reports, including its annual report on Form 10-K for the year ended December 31, 2006. Vital Images encourages urges you to consider all of these risks, uncertainties and other factors carefully in evaluating the forward-looking statements contained in this release. As a result of these matters, changes in facts, assumptions not being realized or other circumstances, the company’s actual results may differ materially from the expected results discussed in the forward-looking statements contained in this release. The forward-looking statements made in this release are made only as of the date of this release, and the company undertakes no obligation to update them to reflect subsequent events or circumstances.
CONTACT: Michael H. Carrel, Chief Operating Officer and Chief Financial
Officer of Vital Images, +1-952-487-9500; or Nancy A. Johnson,
+1-612-455-1745, njohnson@psbpr.com, or Marian Briggs, +1-612-455-1742,
mbriggs@psbpr.com, both of Padilla Speer Beardsley, for Vital Images
Web site: http://www.vitalimages.com/
