Vasomedical’s Q2 Benefits From NetWolves Acquisition

Westbury, N.Y.-based Vasomedical Inc. has released its financial results for its second quarter which ended June 30.

Revenue increased $3 million, or 38 percent year-over-year, to $10.9 million compared to $7.9 million for the same period of 2014. The increase was principally due to $2.8 million in revenue from the operations of the recently acquired managed network provider NetWolves. The Sales Representation segment revenue increased $352 thousand or 5 percent to $7 million, due primarily to increased commission rates, while revenue from the Equipment segment declined $184 thousand or 16 percent to $1 million, due primarily to lower revenues from Vasomedical’s Enhanced External Counter Pulsation therapy business.

Gross profit for the second quarter of 2015 increased 34 percent to $7.3 million, compared with $5.5 million for the second quarter of 2014. The increase is primarily due to $1.2 million of gross profit in the IT (information technology) segment as a result of the NetWolves acquisition and an increase of $0.7 million in the Sales Representation segment, arising from higher commission rates in this segment, partially offset by lower gross profit in the Equipment segment.

Selling, general and administrative (SG&A) expenses for the second quarter of 2015 was $7 million or 64 percent of revenues, compared with $5.5 million, or 70 percent of revenues for the same period last year. The increase in SG&A expenditures resulted primarily from the acquisition of NetWolves, partially offset by lower costs in our Equipment and Sales Representation segments.

Net income for the quarter was $0.2 million, a significant improvement compared to the net loss of $0.2 million for the three months ended June 30, 2014. This improvement is principally due to an increase in gross profit and a decrease in SG&A costs in the Sales Representation segment and lower costs in the Equipment segment.

At June 30, 2015 the Company had net cash and cash equivalents of $2.9 million compared to $9.1 million at December 31, 2014. The decrease is principally due to the cash used for the NetWolves acquisition. We expect our cash position to improve during the remainder of 2015.

“We are pleased to report continued growth at Vasomedical in the second quarter of 2015, during which our total revenue grew to $10.9 million, a $3 million increase from the same quarter a year ago. The growth was primarily due to the inclusion of one month of operations of NetWolves, which we acquired at the end of May 2015. Our existing operations also saw a year-over-year growth of 2.1 percent and 3.5 percent during the 3-month and 6-month periods ended June 30, 2015, respectively,” said Jun Ma, president and CEO of Vasomedical. “As a result, we recorded a net income of $191 thousand for the second quarter of 2015, compared to a net loss of $176 thousand for the same period in 2014. We are confident that, based on our current expectations, we are on track to be profitable for the year 2015.”

“We are very excited about the newly acquired NetWolves, as, again, the second quarter financial results reflected only one month of activity from its operations,” Ma added. “However, the impact of NetWolves operations to our revenue and profitability is beyond just the consolidation of its current operations. We believe the synergies it brings to our healthcare IT unit are more significant: while the integration enhances our healthcare IT value added resale business, we will also see more growth opportunities for NetWolves managed network services among healthcare customers.”