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news release:
VSM MedTech Discloses Fourth Quarter and Full
Year Financial Results
Vancouver, BC, Mar. 23: VSM MedTech Ltd. (TSX:
VSM), world
leader in the emerging clinical market for magnetoencephalography (MEG)functional
brain imaging, reported financial results for the year ended December 31, 2005
and the outlook for 2006.
"Momentum is building for expansion of the MEG market, supported by our record
backlog and a growing number of favourable peer-reviewed studies and articles
acknowledging the clinical value of this technology," said Jack Price, President
and CEO. "In 2005 we laid a solid foundation for VSM to participate in this
market expansion, including product improvements and aggressive sales and
marketing efforts. Of the 17 MEG systems awarded or announced in 2005, VSM had
ten for a 59% market share.
"In 2005 the quarterly results were lumpy but the full year delivered an advance
in consolidated revenue and a decline in our loss compared with 2004. For 2006,
we anticipate consolidated revenue in excess of $17 million. We expect positive
gross margin for 2006 and a significantly lower loss for 2006 compared with
2005.
"During 2006, with financial assistance from the Canadian government, we are
implementing a major electronics cost-reduction initiative for the next
generation of CTF MEG systems. This cost reduction should lead to further
improvements in our financial results in 2007," Mr. Price said.
Financial Results
Consolidated revenue for the fourth quarter of
2005 was $3.4 million, down 4% from $3.5 million for the same period of 2004.
The net loss for the fourth quarter of 2005 was $4.9 million or $0.11 per share,
compared with $4.2 million or $0.10 per share a year earlier.
Consolidated revenue for the full year was $11.2 million, up 51% from $7.4
million in 2004, reflecting growth for both the MEG and Vital Signs Monitoring
segments and a change in revenue recognition policy. Gross margin improved to
negative $0.4 million for 2005, compared with negative $1.3 million for 2004.
The net loss for the year was $15.9 million or $0.36 per share, compared with
$19.4 million or $0.45 per share for 2004.
Cash and cash equivalents at December 31, 2005 totaled $6.4 million compared
with $15.3 million at December 31, 2004. The decrease was primarily the result
of cash used in support of business operations. Working capital at December 31,
2005 was $7.4 million compared with $21.9 million at December 31, 2004. At
December 31, 2005 cash and cash equivalents less loans payable was $4.4 million,
compared with $12.1 million at December 31, 2004.
As previously disclosed, VSM will likely require additional equity and/or debt
financing during 2006 to satisfy its obligations and commitments and to fund
product development and other growth initiatives.
Revenue outlook
The full year 2006 consolidated revenue outlook
includes MEG revenue in excess of $15.0 million based solely on the order
backlog as of December 31, 2005 combined with MEG service and research revenue.
VSM expects revenue in excess of $2.0 million for Vital Signs Monitoring.
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