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VirtualScopics Reports Second Quarter 2013 Results

ROCHESTER, N.Y., Aug. 13, 2013 /PRNewswire/ -- VirtualScopics, Inc. (NASDAQ: VSCP), a leading provider of quantitative imaging, today announced revenues of $3,706,677 for the quarter ended June 30, 2013 compared to $3,335,861 for the quarter ended June 30, 2012. Net income for the three months ended June 30, 2013 was $134,286 compared to a net loss of $62,966 for the three months ended June 30, 2012. Year to date 2013 new project awards totaled $15.9 million as compared to $4.6 million during the same period in 2012, a 246% increase.

Other second quarter ended June 30, 2013 results were:

  • Gross profit of $1,770,083 compared to $1,343,937 in the second quarter of 2012.
  • Gross margin of 48% compared to 40% in the second quarter of 2012.
  • Operating income of $131,371 compared to an operating loss of $166,694 in the second quarter of 2012.
  • Adjusted EBITDA of $333,445 compared to $72,973 for the second quarter of 2012.
  • Jeff Markin, president and chief executive officer of VirtualScopics stated, "We are very pleased with our performance in the second quarter which exhibited a 14% growth in revenue, a rebound in gross margins to 48%, resulting in a significant improvement in our operating performance and cash generation as compared to the first quarter of 2013." He continued, "We are also pleased with the amount of new project awards that we have received so far in 2013.  New project awards are up more than 240% versus the similar period last year, and exceed the amount of new awards received during the full year of 2012." He concluded, "We are especially encouraged that more than 40% of our new study awards in 2013 are through our alliance with PPD which visibly validates the significant client benefits offered by our joint clinical and imaging solution."

    "Aside from the second quarter 2013 growth in revenues, one of the strongest financial accomplishments during the quarter was our gross margin performance," stated Molly Henderson, chief business and financial officer of VirtualScopics. She added, "By reporting margins approaching 50% we gained greater confidence in the productivity of our enhanced Phase III analysis tools." She continued, "Additionally, we are pleased to return to a quarter of generating cash as reported in our positive Adjusted EBITDA." She concluded, "During the second quarter of 2013, a single accelerated project represented a significant portion of the quarterly revenues. We do not anticipate a project of this magnitude recurring in a similar condensed time period during the remainder of this year.  As a result, we estimate that our full year 2013 revenues will range between $10.5 million and 11 million."

    Jeff Markin and Molly Henderson will provide a business update and discuss these results during the Annual Stockholders' Meeting today at 11:00 am ET at the Country Club of Rochester in Rochester, New York. For those not able to attend in person, the script of the meeting will be available on the U.S. Securities and Exchange Commission's website at Additionally, the Company's management will hold a question and answer call at 11:00 am ET on Wednesday, August 14, 2013, for stockholders not able to attend the Annual Meeting in person. Interested participants should call 877-407-8035 when calling within the United States or +1 201 689 8035 when calling internationally.

    The Company provides Adjusted EBITDA as a supplemental measure to Generally Accepted Accounting Principles ("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-based compensation expense and the loss/gain on derivative liabilities (mark to market adjustment for warrants).  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 Accounting Standards Codification ("ASC") 815-40 and the non-cash variable nature of stock-based compensation expense 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, 2012 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-CONTACTS:Company Contact:Molly HendersonChief Business and Financial Officer, Sr. Vice President500 Linden OaksRochester, New York 14625+1 585 249.6231 VirtualScopics, Inc. and SubsidiaryCondensed Consolidated Statements of Operations (unaudited)For the Three Months Ended June 30,For the Six Months Ended June 30,2013201220132012Revenues$
    ,391,974Reimbursement revenues160,070237,545409,826646,045Total revenues3,706,6773,335,8616,239,2647,038,019Cost of revenues*1,776,5241,754,3793,274,0633,637,124Cost of reimbursement revenues160,070237,545409,826646,045Total cost of services1,936,5941,991,9243,683,8894,283,169Gross profit1,770,0831,343,9372,555,3752,754,850Operating expensesResearch and development333,423357,839767,268714,166Sales and marketing427,373311,393781,982642,465General and administrative688,213615,1591,578,2491,269,899Stock-based compensation expense99,149119,249227,093295,185Depreciation and amortization90,554106,991186,867218,610Total operating expenses1,638,7121,510,6313,541,4593,140,325Operating income (loss)131,371(166,694)(986,084)(385,475)Other income (expense)Interest income3,3427154,3511,130Other expense(9,510)(5,446)(10,881)(5,713)Unrealized loss on change in   fair value of derivative liabilities9,083108,45913,953(286,453)Total other income (expense)2,915103,7287,423(291,036)Net income (loss)134,286(62,966)(978,661)(676,511)Preferred stock deemed dividend-1,806,919-1,806,919Preferred stock dividends42,00041,33384,00053,333Net income (loss) attributable to common stockholders$
    (2,536,763)Basic and diluted earnings (loss) per share$
    (0.09)Weighted average number of common shares outstandingbasic 29,799,52329,706,07429,799,52329,538,381diluted34,671,38429,706,07429,799,52329,538,381*

    Cost of revenues includes non-cash stock-based compensation expense of $12,371 and $13,427 for the three months ended  June 30, 2013 and 2012, respectively and $25,214 and $26,758 for the six months ended June 30, 2013 and 2012, respectively. VirtualScopics, Inc. and SubsidiaryCondensed Consolidated Balance SheetsJune 30,December 31,20132012Assets(unaudited)Current assetsCash 

    7,145,743$   8,523,807Accounts receivable, net

    2,968,9971,762,507Prepaid expenses and other current assets

    311,685437,698Total current assets

    10,426,42510,724,012Patents, net

    1,396,8441,470,436Property and equipment, net

    280,007399,569Other assets

    -5,428Total assets

    2,103,276$ 12,599,445Liabilities and Stockholders' EquityCurrent liabilitiesAccounts payable and accrued expenses

    872,652Accrued payroll

    664,251481,661Unearned revenue

    446,714272,509Dividends payable

    209,333125,333Total current liabilities

    2,066,3401,752,155Commitments and ContingenciesStockholders' EquityConvertible preferred stock, $0.001 par value; 15,000,000 shares authorized; Series C-1 3,000 shares authorized; issued and outstanding, 3,000 shares at June 30, 2013 and December 31, 2012; liquidation preference $1,000 per share

    33Series B 6,000 shares authorized; issued and outstanding, 600 at June 30, 2013 and December 31, 2012; liquidation preference $1,000 per share

    11Series A 8,400 shares authorized; issued and outstanding, 2,190 at June 30, 2013 and December 31, 2012; liquidation preference $1,000 per share

    22Series C-2 3,000 shares authorized; issued and outstanding, 0 shares at June 30, 2013 and December 31, 2012; liquidation preference $1,000 per share

    --Common Stock, $0.001 par value; 85,000,000 shares authorized; issued 29,958,795 and 29,799,523 shares at June 30, 2013 and December 31, 2012, respectively; outstanding, 29,799,523 shares at June 30, 2013 and December 31, 2012, respectively 

    29,80029,800Additional paid-in capital

    21,949,39121,781,084Accumulated deficit

    (11,942,261)(10,963,600)Total stockholders' equity

    10,036,93610,847,290Total liabilities and stockholders' equity

    2,103,276$ 12,599,445 Three Months EndedThree Months EndedAdjusted EBITDA (non-GAAP measurement):June 30, 2013June 30, 2012(unaudited)

    (unaudited)Net income (loss)$

    (62,966)Interest income and other expenses6,168

    4,731Depreciation and amortization90,554

    106,991Stock-based compensation expense 111,520

    132,676Unrealized gain on change in fair value of derivative liabilities(9,083)

    (108,459)  Adjusted EBITDA$

    72,973  Basic Adjusted EBITDA per common share, non-GAAP$

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

    .00Six Months EndedSix Months EndedAdjusted EBITDA (non-GAAP measurement):June 30, 2013June 30, 2012(unaudited)

    (unaudited)Net loss$

    (676,511)Interest income and other expenses6,530

    4,583Depreciation and amortization186,867

    218,610Stock-based compensation expense 252,307

    321,943Unrealized (gain) loss on change in fair value of derivative liabilities(13,953)

    286,453  Adjusted EBITDA$

    55,078  Basic Adjusted EBITDA per common share, non-GAAP$

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


    SOURCE VirtualScopics, Inc.
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