MGC Diagnostics Corporation (NASDAQ: MGCD), a global medical technology company, today reported financial results for the fourth quarter and year ended October 31, 2013.
Fourth Quarter Highlights:
- Fourth quarter revenue of $9.1 million, an 11% increase over the fiscal 2012 fourth quarter. Sequential quarterly revenue growth of 15% from the fiscal 2013 third quarter;
- Fourth quarter operating income increased to $875,000, compared to $7,000 in the fourth quarter of 2012;
- Net income for the fourth quarter of $836,000, or $0.20 per diluted share, compared to net income of $790,000, of which $785,000 was generated from income from discontinued operations, or $0.20 per diluted share in the 2012 fourth quarter;Â
- Fourth quarter service revenue increased 24% on a year-over-year basis, while service gross margin improved 180 basis points to 70.1%, compared to 68.3% in the fiscal 2012 fourth quarter;Â
- Fourth quarter gross margin improved 270 basis points to 57.8%, compared to 55.1% in last year’s fourth quarter;
- The fourth quarter Attachment Rate of point-of-sale extended service contracts improved to 31%, compared to 10% in last year’s fourth quarter; and
- Fourth quarter 2013 recurring revenue (service and supplies revenues) totaled $3.1 million, or 34% of total fourth quarter revenue.
Fiscal Year 2013 Highlights:
- Fiscal 2013 revenue increased 17% to $31.6 million, compared to $27.2 million in fiscal 2012;
- Fiscal 2013 competitive conversions totaled 102 accounts representing $6.3 million of recognized revenue;
- Fiscal 2013 net income of $1.4 million, or $0.34 per diluted share, compared to fiscal 2012 net loss of $1,000, or $0.00 per diluted share;
- Strong balance sheet with $10.6 million in cash and cash equivalents, $15.4 million of working capital and no long-term debt; and
- At October 31, 2013, the Company had federal net operating loss carry forwards of approximately $12.8 million that may be used to offset a portion of the Company’s future tax liability.
Fourth quarter fiscal 2013 total revenues increased 11% to $9.1 million, compared to $8.2 million in the fiscal 2012 fourth quarter. Domestic 2013 fourth quarter sales increased 15% to $7.6 million, compared to $6.6 million in the 2012 fourth quarter, while international sales decreased 4% to $1.58 million from $1.64 million for last year’s fourth quarter. Fourth quarter Group Purchasing Organization (“GPOâ€) sales increased 23% to $5.9 million, compared to $4.8 million in the prior year’s fourth quarter.
Fourth quarter equipment, supplies and accessories sales totaled $7.7 million, an increase of 9%, compared to $7.1 million for last year’s fourth quarter. Service revenues for the fourth quarter totaled $1.4 million, compared to $1.1 million for last year’s fourth quarter. The Attachment Rate, which reflects the percentage of Extended Service Contracts added at the point of sale to customer equipment purchases, was 31% for the fiscal 2013 fourth quarter, compared to 10% for the same period last year. Backlog at October 31, 2013 was $504,000, an improvement from $413,000 at the end of the 2012 fourth quarter.
Gross margin for the quarter was 57.8%, compared to 55.1% for the 2012 fourth quarter. Gross margin for equipment, supplies and accessories was 55.6% for the quarter, compared to 53.0% for the prior year’s quarter. Gross margin for services increased to 70.1% for the quarter, compared to 68.3% for the prior year’s quarter, primarily due to improved pricing and service mix.
Fourth quarter 2013 general and administrative expenses totaled $1.2 million, or 12.7% of revenue, compared to $1.2, or 14.1% of revenue in the comparable quarter last year. Sales and marketing expenses were $2.9 million, or 31.6% of revenue, compared to $2.5 million, or 30.0% of revenue in the 2012 fourth quarter. Research and development expenses were $363,000, or 4.0% of revenue, compared to $791,000, or 9.6% of revenue in last year’s fourth quarter. This decrease is primarily due to a $294,000 expense reduction attributed to claims for expense credits under the State of Minnesota Credit for Increasing Research Activities, which the Company will be filing for fiscal years 2011, 2012 and 2013. In fiscal 2013, the Company invested approximately $1.4 million in new research and product development initiatives. During the 2013 fourth quarter, the Company capitalized $150,000 of software development expenses, compared to $161,000 for the same quarter last year.
Fourth quarter operating income improved to $875,000, compared to operating income of $7,000 in the 2012 fourth quarter. For the 2013 fourth quarter, the Company reported net income of $836,000, or $0.20 per diluted share, versus net income of $790,000, or $0.20 per diluted share, in the 2012 fourth quarter. During the fourth quarter of 2012, the Company recognized income from discontinued operations totaling $785,000, or $0.20 per diluted share.