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VirtualScopics revenues up

VirtualScopics Inc. reported a 24 percent increase in fourth-quarter revenues and forecasts double-digit revenue growth in 2008.

VirtualScopics revenues up

VirtualScopics Inc. reported a 24 percent increase in fourth-quarter revenues and forecasts double-digit revenue growth in 2008.
The medical image analysis firm released its fourth-quarter earnings report after markets closed Wednesday.
VirtualScopics posted a net loss of $1.1 million, or 11 cents a share in the fourth quarter, compared with $520,813, or 2 cents a share in 2006. Revenues in the quarter were roughly $1.5 million, compared with $1.2 million a year ago. Gross profit in the quarter totaled $513,361.
For the full year, the company posted $5.6 million in revenues, a 19 percent jump over $4.7 million in 2006. Net loss for the year was $4.3 million, or 25 cents a share compared with $3.7 million, 17 cents a share in 2006.
A combination of a broader customer base, Department of Defense contracts and a shift towards later stage clinical trials helped boost revenues, company officials said. Sixty-six percent of the firm’s business was in phase I, II and III trials as compared with 47 percent in 2006.
During 2007, VirtualScopics reported a record level of contracts totaling $17 million, an 80 percent increase. The company also completed a $4.35 million capital raise, was issued its ninth patent and opened a sales office in Europe. Additionally, the firm last year focused on achieving operating efficiencies and boosting its sales and marketing efforts, officials said.
“We had very significant achievements in 2007 while also building a strong foundation for the future growth of the company,” said Jeffrey Markin, president and CEO, in a statement. “We recorded a record level of sales and new contract awards, invested in our operational infrastructure to support later stage clinical trials, doubled our sales force and secured the cash necessary to deliver on our plan.”
VirtualScopics’ technology extracts information from computed tomography and magnetic resonance imaging scans. The images can provide information on the progression of diseases and information on the action of a drug.
In a conference call this morning, company officials for the first time provided revenue guidance. The company expects to be able to grow revenues by 25 percent, to roughly $7 million in 2008.
“With the projections we have for revenue growth and operating efficiency we have clear visibility to turning cash flow break even on an operating basis, which is a tremendous milestone for the company and one on which we are very focused on achieving,” Markin said.
VirtualScopics expects to reach a break-even point in operating cash flow in 2008—the firm has approximately $4.5 million in cash on hand.
“We believe that with at least $2 million in quarterly revenues, we can achieve operating cash flow break even,” said Molly Henderson, chief financial officer of VirtualScopics, during the call.
She reiterated Markin’s point that achieving break-even on cash flow is a key objective and said the firm does not expect to require additional financing for its existing business.
Markin told investors the company is working to be in compliance with the Nasdaq stock exchange requirements. The firm this month received a notice from Nasdaq that observed that the bid price for VirtualScopics’ stock had slipped below $1 for 30 consecutive business days. Nasdaq rules require a $1 minimum bid price for continued listing. VirtualScopics has until Aug. 6 to regain compliance.
Markin said VirtualScopics is working with its board of directors on options, including a possible reverse stock split, which would allow the firm to regain compliance.
The company’s shares (NasdaqCM: VSCP) fluctuated today, reaching the $1 mark midday and then falling back to hover around 97 cents. The stock closed at 98 cents Wednesday.

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