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VirtualScopics Reports 2nd Quarter 2011 Results; Revenues Rise 20%

ROCHESTER, N.Y., Aug. 9, 2011 /PRNewswire/ -- VirtualScopics, Inc. (NASDAQ: VSCP), a leading provider of quantitative imaging for clinical trials, today reported revenues of $3,852,925 for the second quarter of 2011 compared to revenues of $3,221,593 in the second quarter of 2010, a 20% increase. Gross profit for the quarter ended June 30, 2011 was $1,821,018 compared to $1,639,017 for the quarter ended June 30, 2010. Operating income for the second quarter of 2011 was $158,029 compared to $90,427 in the second quarter of 2010, a 75% increase. Earnings before interest, taxes, depreciation and amortization, and excluding stock compensation expense and gain (loss) from derivative financial instrument ("Adjusted EBITDA") for the second quarter of 2011 was $489,234 compared to $419,026 in the comparable period in 2010, a 17% increase. Net income for the quarter ended June 30, 2011 was $327,650 compared to $341,024 for the quarter ended June 30, 2010.

Highlights for the first half of 2011 include:

  • Total revenues of $7,511,902 an increase of $1,219,303, or 19%, compared to the first half of 2010.
  • Gross profit of $3,420,759 compared to $3,237,130 in first half of 2010, a 6% increase.
  • Adjusted EBITDA of $882,177 compared to $868,706 in the comparable period in 2010.
  • Working capital as of June 30, 2011 was $5,195,835 compared to $2,863,503 at December 31, 2010, an increase of over 80%.

  • "The company delivered very good top and bottom line operating performance in the second quarter and first half of 2011 along with making progress on the strategic initiatives we outlined at the beginning of the year," stated Jeff Markin, president and chief executive officer of VirtualScopics. "The PPD alliance that we announced in October of 2010 is beginning to pay dividends as we have been awarded several studies resulting from the alliance that are, or soon will be, coming online along with others in the sales process." He further stated, "The personnel investments made earlier in the year to our software and technology teams have resulted in enhancements that will reduce cost, increase study speed, and soon allow for greater customer access to study information through our web portal." He concluded, "As the market awareness of the cost and quality benefits of the PPD alliance increases, along with the deployment of our technology roadmap to enhance efficiency and capabilities, we believe we will see strong demand for our services in the second half of 2011."

    "We are pleased with our revenue growth and the solid increase in our operating income during the second quarter," said Molly Henderson, chief business and financial officer of VirtualScopics. "Additionally, our cash position remains strong as we enter the second half of 2011. We continue to balance investment on our development and new market initiatives in order to stay innovative with our technology while being prudent with our capital on-hand." She added, "We are also encouraged by our new business success in 2011 as we've been awarded projects with five new customers this year and are in consideration for projects with several companies new to VirtualScopics."  She concluded, "The continued diversification of our client base will play an important role in helping us achieve our 2011 second half goals."

    Jeff Markin and Molly Henderson will provide a business and second quarter 2011 financial update during the conference call tomorrow, August 10, 2011 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 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 (loss), 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

    Forward-Looking Statements The statements contained in this press release that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended, and are intended to be covered by the safe harbors created thereby. These forward-looking statements include, but are not limited to, statements regarding the expected benefits of the Company's investment in infrastructure and new customer contract signings and awards and/or statements preceded by, followed by or that include the words "believes," "could," "expects," "anticipates," "estimates," "intends," "plans," "projects," "seeks," or similar expressions. Forward-looking statements deal with the Company's current plans, intentions, beliefs and expectations. Investors are cautioned that all forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements.  Many of these risks and uncertainties are discussed in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2010 filed with the Securities and Exchange Commission (the "SEC"), and in any subsequent reports filed with the SEC, all of which are available at the SEC's website at These include without limitation: the risk of cancellation or delay of customer contracts or specifically as it relates to contact awards, the risk that they may not get signed.  Other risks include the company's dependence on its largest customers and risks of contract performance, protection of our intellectual property and the risks of infringement of the intellectual property rights of others. All forward-looking statements speak only as of the date of this press release and the Company undertakes no obligation to update such forward-looking statements.

    -Financial tables to follow-VirtualScopics, Inc. and SubsidiaryCondensed Consolidated Statements of Operations (unaudited)For the Three Months Ended June 30,For the Six Months Ended June 30,2011201020112010Revenues$ 3,576,253$ 2,970,039$ 6,925,863$ 5,811,795Reimbursement revenues276,672251,554586,039480,804Total revenues3,852,9253,221,5937,511,9026,292,599Cost of services1,755,2351,331,0223,505,1042,574,665Cost of reimbursement revenues276,672251,554586,039480,804Total cost of services2,031,9071,582,5764,091,1433,055,469Gross profit1,821,0181,639,0173,420,7593,237,130Operating expensesResearch and development350,449268,116664,706519,238Sales and marketing307,618338,807609,714641,322General and administrative687,969621,2221,288,1811,223,523Stock-based compensation expense203,729193,351437,934377,126Depreciation and amortization113,224127,094250,448252,013Total operating expenses1,662,9891,548,5903,250,9833,013,222Operating income 158,02990,427169,776223,908Other income (expense)Other income13,0063,13814,2327,359Other expense(16,720)(5,115)(17,940)(5,286)Gain (Loss) on derivative financial instrument173,335252,574(38,799)123,135Total other income (expense)169,621250,597(42,507)125,208Net income 327,650341,024127,269349,116Series B preferred stock cash dividend12,00044,09224,989100,057Net income attributable to common stockholders$
    249,059Basic and diluted earnings per common share$
    .01Weighted average number of common shares outstandingBasic 29,045,42826,081,48728,544,85625,804,026Diluted36,964,76031,017,40636,738,76230,632,898*  Cost of services includes non-cash stock-based compensation expense of $14,252 and $8,154 for the    three months ended June 30, 2011 and 2010, respectively, and $24,019 and $15,659 for the six months ended    June 30, 2011 and 2010, respectively.   VirtualScopics, Inc. and SubsidiaryCondensed Consolidated Balance SheetsJune 30,December 31,20112010Assets(unaudited)Current assetsCash

    $   4,571,031$
    4,576,060Accounts receivable, net

    3,192,8652,727,525Prepaid expenses and other current assets

    367,545305,079Total current assets

    8,131,4417,608,664Patents, net

    1,651,0501,711,501Property and equipment, net

    614,032404,426Total assets

    $ 10,396,523$
    9,724,591Liabilities and Stockholders' EquityCurrent liabilitiesAccounts payable and accrued expenses

    ,099,838Accrued payroll

    667,654821,107Unearned revenue

    599,565214,508   Derivative liability

    864,7972,609,708Total current liabilities

    2,935,6064,745,161Commitments and Contingencies

    --Stockholders' EquityConvertible preferred stock, $0.001 par value; 15,000,000 shares authorized; Series A 8,400 shares authorized; issued and outstanding, 2,290 and 3,188 at June 30, 2011 and December 31, 2010, respectively; liquidation preference $1,000 per share

    23Series B 6,000 shares authorized; issued and outstanding, 600 and 800 at June 30, 2011 and December 31, 2010, respectively; liquidation preference $1,000 per share

    11Common Stock, $0.001 par value; 85,000,000 shares authorized; issued and outstanding, 29,188,861 and 27,414,620 shares at June 30, 2011 and December 31, 2010, respectively

    29,18927,415Additional paid-in capital

    17,442,69915,090,254Accumulated deficit

    (10,010,974)(10,138,243)Total stockholders' equity

    7,460,9174,979,430Total liabilities and stockholders' equity

    $ 10,396,523$
    9,724,591Three Months EndedThree Months EndedJune 30, 2011June 30, 2010(unaudited)

    (unaudited)Adjusted EBITDA (non-GAAP measurement):Net income$

    341,024Interest income and other expenses3,714

    1,977Depreciation and amortization113,224

    127,094Stock-based compensation expense 217,981

    201,505Gain on derivative financial instrument (173,335)

    (252,574)  Adjusted EBITDA$

    419,026  Basic Adjusted EBITDA per common share, non-GAAP$

    .02  Diluted Adjusted EBITDA per common share, non-GAAP$

    .01Six Months EndedSix Months EndedJune 30, 2011June 30, 2010(unaudited)

    (unaudited)Adjusted EBITDA (non-GAAP measurement):Net income $

    349,116Interest income and other expenses3,708

    (2,073)Depreciation and amortization250,448

    252,013Stock-based compensation expense 461,953

    392,785Loss (Gain) on derivative financial instrument 38,799

    (123,135)  Adjusted EBITDA$

    868,706  Basic Adjusted EBITDA per common share, non-GAAP$

    .03  Diluted Adjusted EBITDA per common share, non-GAAP$

    .03CONTACT: Investor Relations:Company Contact:Tim Ryan

    Molly HendersonThe Shoreham Group

    Chief Business and Financial Officer, Sr. Vice President80 Eighth Ave, Ste 1107

    500 Linden OaksNew York, NY 10011

    Rochester, New York 14625+1 212 242.7777 Direct

    +1 585  

    SOURCE VirtualScopics, Inc.
    Copyright©2010 PR Newswire.
    All rights reserved

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