EX-99.1 2 ex99-1.htm EXHIBIT 99.1 ex99-1.htm
Exhibit 99.1

Vision-Sciences, Inc. Announces $5.0 Million in Revenue for the First Half of Fiscal 2011

ORANGEBURG, N.Y., November 10, 2010 – Vision-Sciences, Inc. (Nasdaq:VSCI) today announced results for its second quarter and first half of fiscal 2011, ended September 30, 2010. For the second quarter of fiscal 2011, net sales were $2.3 million, a decrease of $0.6 million, or 20%, from the second quarter of fiscal 2010, ended September 30, 2009, primarily due to lower sales of ENT (“ear, nose and throat”) fiberscopes to Medtronic, which, effective April 1, 2010, no longer served as our distributor of ENT endoscopes. Pro forma for the exclusion of sales to Medtronic, net sales for the second quarter of fiscal 2011 represented an increase of $0.9 million, or 58%, from the second quarter of fiscal 2010.

For the first half of fiscal 2011, net sales were $5.0 million, a decrease of $1.3 million, or 20%, over the first half of fiscal 2010. Pro forma for the exclusion of sales to Medtronic, net sales for the first half of fiscal 2011 represented an increase of $1.6 million, or 46%, over the first half of fiscal 2010.

Loss from operations in the second quarter of fiscal 2011 was $2.9 million compared to $3.1 million in the second quarter of fiscal 2010, a decrease of $0.2 million. Loss from operations in the first half of fiscal 2011 was $5.3 million compared to $5.6 million in the second quarter of fiscal 2010, a decrease of $0.3 million.

Warren Bielke, our interim Chief Executive Officer, stated “We are pleased with our second quarter and first six month results for fiscal 2011 relative to the same periods in fiscal 2010, pro forma for the exclusion of Medtronic. Sales growth of 58% for our second quarter and 46% for our first half reflect our success with driving top-line revenue growth and improving our margins without the benefit of the Medtronic distribution agreement, which ended April 1, 2010. We are making substantial progress selling our endoscopes to teaching hospitals and academic institutions.”

Mr. Bielke continued, “We are also very excited about our urology supply agreement with Stryker, which we announced September 22nd, covering our fiber and video cystoscopes, urology EndoSheath technology, and ureteroscopes. We expect the supply agreement to launch in the first quarter of calendar 2011. We believe this agreement will substantially drive our urology sales and allow us to focus on increasing sales of our airway-related products, including our bronchoscopes, trans-nasal esophagoscopes, and related EndoSheath technology and ENT endoscopes. We will also focus development on our spine video endoscopes, which will be used to give direct visualization to surgeons during minimally invasive procedures, which the healthcare market is rapidly moving toward.”

Abbreviated results (in thousands, except for per share data and percentages) for the second quarter and first half of fiscal 2011 and 2010 were as follows:
 
   
Three Months Ended
               
Six Months Ended
             
   
September 30,
               
September 30,
             
   
2010
   
2009
   
Difference
   
%
   
2010
   
2009
   
Difference
   
%
 
Net sales
  $ 2,325     $ 2,889     $ (564 )     -20 %   $ 4,957     $ 6,207     $ (1,250 )     -20 %
Net sales, excluding Medtronic (1)
    2,325       1,475       850       58 %     4,957       3,400       1,557       46 %
Loss from operations
    (2,886 )     (3,139 )     (253 )     -8 %     (5,273 )     (5,619 )     (346 )     -6 %
Net loss
    (3,014 )     (3,170 )     (156 )     -5 %     (5,483 )     (5,638 )     (155 )     -3 %
Net loss per share - basic and diluted
  $ (0.08 )   $ (0.09 )   $ (0.01 )     -11 %   $ (0.15 )   $ (0.15 )   $ -       0 %
 
(1) See attached reconciliation of GAAP to non-GAAP financial measures for additional information.

Please refer to the attached balance sheet and statement of operations for more detail.

The decrease in operating loss of $0.3 million in the second quarter of fiscal 2011 was primarily attributable to a higher gross profit of $0.2 million. The decrease in operating loss of $0.3 million in the first half of fiscal 2011 was primarily attributable to lower research and development (“R&D”) expenses of $0.4 million.

 
 

 

Net loss for the second quarter of fiscal 2011 was $3.0 million, or $0.08 per basic and diluted share, compared to $3.2 million, or $0.09 per basic and diluted share, in the second quarter of fiscal 2010. The decrease in net loss of $0.2 million was primarily attributable to a higher gross profit of $0.2 million. Net loss for the first half of fiscal 2011 was $5.5 million, or $0.15 per basic and diluted share, compared to $5.6 million, or $0.15 per basic and diluted share, in the first half of fiscal 2010. The decrease in net loss of $0.1 million was primarily attributable to lower R&D expenses of $0.4 million.

Medical sales decreased 23% to $1.7 million in the second quarter of fiscal 2011 from $2.2 million in the second quarter of fiscal 2010, and industrial sales decreased 6% to $0.6 million compared to the same period last year.  Within medical sales:

 
·
ENT and TNE (trans-nasal esophagoscopy) sales decreased 41% to $0.6 million from $1.0 million;
 
·
Urology sales increased 34% to $0.7 million from $0.5 million;
 
·
Bronchoscopy sales decreased 60% to $54 thousand from $136 thousand;
 
·
SpineView sales were $74 thousand; and
 
·
Repairs, peripherals, and accessories sales decreased 48% to $0.3 million from $0.6 million.

Medical sales decreased 21% to $3.8 million in the first half of fiscal 2011 from $4.9 million in the first half of fiscal 2010, and industrial sales decreased 18% to $1.1 million from $1.4 million for the same period.  Within medical sales:

 
·
ENT and TNE (trans-nasal esophagoscopy) sales decreased 53% to $1.0 million from $2.2 million;
 
·
Urology sales increased 31% to $1.6 million from $1.3 million;
 
·
Bronchoscopy sales increased 42% to $0.5 million from $0.3 million;
 
·
SpineView sales were $74 thousand; and
 
·
Repairs, peripherals, and accessories sales decreased 41% to $0.6 million from $1.1 million.

Net sales detail (in thousands, except for percentages) for the second quarter and first half of fiscal 2011 and 2010 were as follows:
 
   
Three Months Ended
               
Six Months Ended
             
   
September 30,
               
September 30,
             
Market/Category
 
2010
   
2009
   
Difference
   
%
   
2010
   
2009
   
Difference
   
%
 
ENT and TNE
  $ 590     $ 1,007     $ (417 )     -41 %   $ 1,024     $ 2,194     $ (1,170 )     -53 %
Urology
    699       520       179       34 %     1,644       1,258       386       31 %
Bronchoscopy
    54       136       (82 )     -60 %     471       332       139       42 %
SpineView
    74       -       74       n/m *     74       -       74       n/m *
Repairs, peripherals, and accessories
    304       585       (281 )     -48 %     627       1,069       (442 )     -41 %
Total medical sales
    1,721       2,248       (527 )     -23 %     3,840       4,853       (1,013 )     -21 %
Total industrial sales
    604       641       (37 )     -6 %     1,117       1,354       (237 )     -18 %
Net sales
  $ 2,325     $ 2,889     $ (564 )     -20 %   $ 4,957     $ 6,207     $ (1,250 )     -20 %
______________
* Not meaningful

With respect to ENT and TNE, our net sales decrease in the second quarter and first half of fiscal 2011 was primarily due to lower sales of our ENT fiberscopes to Medtronic of approximately $0.5 million and $1.2 million, respectively. As announced on February 11, 2010, Medtronic no longer serves as the distributor for our ENT endoscopes effective April 1, 2010. Within the ENT area, we manufacture ENT endoscopes and, for the past three years, had sold these scopes exclusively to Medtronic. Since April 1, 2010, we have sold our ENT endoscopes through our direct sales force in the U.S. and through distributors internationally.

 
 

 

Conference Call

Vision-Sciences will host a conference call to discuss the second quarter and first half of fiscal 2011 results and provide an update on the company on November 11, 2010 at 8:30 am EST. The dial-in number for the call is 877.303.1595. Please dial in five minutes prior to the call to register. A recording of the call will be available through November 18, 2010. The replay dial-in is 706.645.9291. The replay pass code is 23897870. The call may also be accessed via a live audio webcast available in the investor relations section of Vision-Sciences website at www.visionsciences.com. The audio webcast of the call will be archived and available for replay through the website.
 
Non-GAAP Financial Measures

To supplement Vision-Sciences' condensed consolidated financial statements presented in accordance with GAAP, Vision-Sciences provides certain non-GAAP measures of financial performance, specifically non-GAAP sales, excluding sales to Medtronic.

Vision-Sciences' reference to these non-GAAP measures should be considered in addition to results prepared under current accounting standards, but are not a substitute for, nor superior to, GAAP results.  These non-GAAP measures are provided to enhance investors' overall understanding of Vision-Sciences' current financial performance and to provide further information for comparative purposes due to the discontinuance of our distribution relationship with Medtronic.

Specifically, the Company believes the non-GAAP sales provide useful information to both management and investors by isolating sales from continuing major relationships.  Reconciliation to the most directly comparable GAAP measure of all non-GAAP measures is included in this press release.

Forward Looking Statements

Except for the historical information provided, the matters discussed in this release include forward-looking statements for the purposes of the safe harbor protections under The Private Securities Litigation Reform Act of 1995. These forward-looking statements generally can be identified by phrases such as Vision-Sciences or its management “believes,” “expects,” “allows,” “anticipates,” or other words or phrases of similar import.  Similarly, statements in this release that describe our business strategy, outlook, objectives, plans, intentions, or goals are also forward-looking statements. All such forward-looking statements are subject to certain risks and uncertainties that could cause our actual results to differ materially from those in forward-looking statements.  Other risk factors are detailed in our most recent annual report and other filings with the Securities and Exchange Commission. We do not assume any obligation to update any forward-looking statements as a result of new information or future events or developments.

Vision-Sciences, Inc. designs, develops, manufactures and markets unique flexible endoscopic products utilizing sterile disposable sheaths, the Slide-On® EndoSheath® Technology, which provide the users quick, efficient product turnover while ensuring the patient a contaminant-free product.

Vision-Sciences owns the registered trademarks Vision Sciences®, Slide-On®, EndoSheath® and The Vision System®.  Information about Vision-Sciences' products is available at www.visionsciences.com.

CONTACT: 
Vision-Sciences, Inc.
Katherine Wolf, CFO & EVP, Corporate Development
(845) 365-0600
 
 
 

 

VISION-SCIENCES, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(In thousands, except per share data)
(unaudited)
 

   
Three Months Ended
               
Six Months Ended
             
   
September 30,
               
September 30,
             
Non-GAAP Financial Measures and Reconciliation
 
2010
   
2009
   
Difference
   
%
   
2010
   
2009
   
Difference
   
%
 
GAAP net sales
  $ 2,325     $ 2,889     $ (564 )     -20 %   $ 4,957     $ 6,207     $ (1,250 )     -20 %
Less: Net sales to Medtronic
    -       (1,414 )     (1,414 )     -100 %     -       (2,807 )     (2,807 )     -100 %
Non-GAAP net sales
  $ 2,325     $ 1,475     $ 850       58 %   $ 4,957     $ 3,400     $ 1,557       46 %
 

 
 

 
VISION-SCIENCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)


   
September 30,
   
March 31,
 
   
2010
   
2010
 
ASSETS
 
(unaudited)
   
(audited)
 
Current assets:
           
Cash and cash equivalents
  $ 4,480     $ 2,540  
Short-term investments
    -       447  
Accounts receivable, net of allowance for doubtful accounts of $115
               
  and $347, respectively
    1,591       1,147  
Inventories, net
    4,635       4,175  
Prepaid expenses and other current assets
    222       886  
Total current assets
    10,928       9,195  
                 
Property and equipment, at cost:
               
Machinery and equipment
    4,090       3,584  
Furniture and fixtures
    226       225  
Leasehold improvements
    359       357  
      4,675       4,166  
Less—accumulated depreciation and amortization
    2,609       2,237  
Total property and equipment, net
    2,066       1,929  
Other assets, net of accumulated amortization of $87 and $84,
               
  respectively
    76       79  
Deferred debt cost, net of accumulated amortization of $94
               
  and $31, respectively
    320       296  
Total assets
  $ 13,390     $ 11,499  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
               
Current liabilities:
               
Capital lease obligations
  $ 39     $ 55  
Accounts payable
    1,658       867  
Accrued expenses
    713       984  
Accrued compensation
    1,085       1,107  
Advances from customers
    3,777       -  
Total current liabilities
    7,272       3,013  
Line of credit—related party
    4,500       2,500  
Capital lease obligations, net of current portion
    41       61  
Total liabilities
    11,813       5,574  
                 
Commitments and Contingencies
               
Stockholders’ equity:
               
Preferred stock, $0.01 par value—
               
Authorized—5,000 shares
               
issued and outstanding—none
    -       -  
Common stock, $0.01 par value—
               
Authorized—50,000 shares
               
issued and outstanding—37,709 shares and 36,856 shares,
               
  respectively
    377       369  
Additional paid-in capital
    83,095       81,968  
Accumulated deficit
    (81,895 )     (76,412 )
Total stockholders’ equity
    1,577       5,925  
Total liabilities and stockholders’ equity
  $ 13,390     $ 11,499  


 
 

 
VISION-SCIENCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)



   
Three Months Ended
   
Six Months Ended
 
   
September 30,
   
September 30,
 
   
2010
   
2009
   
2010
   
2009
 
                         
Net sales
  $ 2,325     $ 2,889     $ 4,957     $ 6,207  
Cost of sales
    1,684       2,424       3,627       4,954  
Gross profit
    641       465       1,330       1,253  
                                 
Selling, general, and administrative expenses
    2,795       2,707       5,273       5,189  
Research and development expenses
    732       897       1,330       1,683  
Loss from operations
    (2,886 )     (3,139 )     (5,273 )     (5,619 )
                                 
Interest income
    1       21       3       71  
Interest expense
    (90 )     (46 )     (145 )     (46 )
Debt cost expense
    (36 )     -       (63 )     -  
Other, net
    (1 )     -       -       (28 )
Loss before provision for income taxes
    (3,012 )     (3,164 )     (5,478 )     (5,622 )
Income tax provision
    2       6       5       16  
Net loss
  $ (3,014 )   $ (3,170 )   $ (5,483 )   $ (5,638 )
                                 
Net loss per common share - basic and diluted
  $ (0.08 )   $ (0.09 )   $ (0.15 )   $ (0.15 )
                                 
Shares used in computing net loss
                               
per common share
    36,901       36,854       36,879       36,851