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Medipattern Reports Q2 Fiscal 2009 Results

The Medipattern Corporation (Medipattern), a medical diagnostic imaging company, has reported revenues of CAD72,000 for the second quarter of fiscal 2009, compared with the revenues of CAD0.15 million, in the year-ago quarter. It has also reported a net loss of CAD1.06 million for the second quarter of fiscal 2009, compared with the net loss of CAD0.9 million in the year-ago quarter.

Jeff Collins, chief executive officer of Medipattern stated, “The second quarter was an incredibly active period for Medipattern on all corporate fronts and highlighted by the sale of 200 B-CAD® systems in China – our largest sale to date. The Chinese market represents a massive opportunity for Medipattern and we look forward to beginning to ship B-CAD systems during the first half of this calendar year. Through the fall our quoting activity did not translate into the sales we expected due to the difficulty our customers had in attaining the financing necessary to purchase B-CAD. As a result we introduced B-CAD-FOR-LIFE(TM), a monthly fee-based managed service agreement, and have begun installations in the field under this new initiative.”

Select Business Highlights:

October 8, 2008 – Medipattern announces that a study abstract, showing statistically significant increase in diagnostic accuracy when using B-CAD Version 2 on lesions less than 1 cm in size, has been published in the October 2008 American Journal of Clinical Oncology.

October 15, 2008 – Medipattern releases enhanced versions of B-CAD (v. 1.3/2.3). The Catholic Medical Center in New Hampshire (beta site) reported timesavings, improved consistency, and ease of reimbursement with version 1.3.

December 9, 2008 – Medipattern announces that China Primary Health Care Foundation (CPHCF) purchases 200 B-CAD systems for a pilot breast-screening program in rural China as part of a large-scale trial to finalize breast-screening protocol prior to launching their national screening program.

December 18 and 24, 2008 – Medipattern announces a convertible debenture financing in the amount of $357,000.

December 19, 2008 – Medipattern announces the signing of a non-exclusive OEM agreement allowing iPACS, LLC to integrate B-CAD into its product line. iPACS offers a full line of radiology imaging archiving and routing solutions that provide rapid access to images.

January 29, 2009 – Medipattern announces that the Company has extended their collaboration and development agreement with GE Healthcare to create ultrasound-based Vascular Imaging Quantification Tools as an application: Vascular iQ(TM).

February 12, 2009 – Medipattern announces B-CAD-FOR-LIFE(TM), a new sales model for accessing the benefits of B-CAD. All of the components to tailor the installation for each customer including B-CAD software, seat licenses and hardware, as well as training, installation and maintenance fees, are bundled under one flat monthly fee.

Financial Highlights of Q2 2009:

Revenue was $148 thousand in the first half of fiscal 2009 (ended December 31, 2008) versus $288 thousand for the corresponding periods in 2007. Revenue resulted from professional fees and licensing fees in the six-month period. Licensing fees were comparably lower in the first half of fiscal 2009 as no licensing fees were recognized during the first quarter of fiscal 2009. During the second quarter of fiscal 2009, the Company signed an agreement for the sale of 200 B-CAD systems in China. None of the revenue from the transaction was recognized in the quarter. Also, included in the second quarter and first half results for the periods ending December 31, 2007, was the recognition of $41 thousand and $82 thousand respectively, of deferred revenue resulting from the pre-sale of B-CAD licenses in January 2005 and recognized quarterly until June 30, 2008.

Total expenses rose 7% to $1.14 million in the three-month period ($1.07 million in 2007) and 27% to $2.31 million in the six months ended December 31, 2008 ($1.82 million in 2007), mostly as a result of increased sales and marketing costs, and administrative and product support costs. Year-over-year, research and development expenses increased to $466 thousand in the second quarter ($415 thousand in 2007) and to $885 thousand in the six-month period ($757 thousand in 2007). Administration and product support costs declined to $377 thousand in the six months ended December 31, 2008 ($421 thousand in 2007) due to lower non-cash stock compensation expenses. For the six-month period, Administration and product support costs increased to $768 thousand ($656 thousand in 2007). Sales and marketing expenses reached $324 thousand in the second quarter ($273 thousand in 2007) and to $714 thousand in the six-month period ($476 thousand in 2007). These expenses were offset by investment income of $15 thousand in the second quarter ($58 thousand in 2007) and $43 thousand in the six-month period ended December 31, 2008 ($104 thousand in 2007). At the end of the second quarter of fiscal 2009, the Company initiated a cost reduction program, which included staff reductions. All costs related to the staff reductions are reflected in the second quarter results. The Company expects that the measures taken in the second quarter will reduce overall costs going forward.

Cash and cash equivalents totaled $1.83 million as at December 31, 2008, against $2.91 million at the end of fiscal 2008. Investments totaled $nil as at December 31, 2008, against $475 thousand at the end of fiscal 2008.

“The launch of B-CAD-FOR-LIFE and our enhanced versions of B-CAD, combined with our expanded sales channels, and the growing focus in the U.S. regarding healthcare related IT as a result of the recently announced stimulus package, bode well for our immediate future as we continue to focus on growing sales in the U.S. and international breast ultrasound and MRI markets,” added Mr. Collins. “Looking further ahead, the recently announced new initiative with GE Healthcare further solidifies our long term relationship with the industry leader and sets the foundation for our move into the much larger global vascular ultrasound market.”