Reply from Investor Relations Regarding Concerns: Part I
John,
Vasomedical values the support of its shareholders and believes effective, candid communication can help sustain and increase their support. Your recent inquiry to the Company has been forwarded to our attention, and I would like to take the opportunity to address some concerns and clarify its position.
Regarding Vasomedical’s financial results reported on March 27th, management was pleased by the performance of the Company and its subsidiaries for 2013, in which total revenues grew by 12.5% and the VasoHealthcare subsidiary reached the highest commission rate under its agreement with GEHC. However, this performance wasn’t entirely reflected in our revenue which is only recognized on delivery of the equipment, due to timing of equipment deliveries to customers by GE Healthcare during the fourth quarter of 2013. This is reflected by our deferred revenue on the balance sheet, which increased to $18.0 million in 2013 compared with $15.6 million for 2012. In addition, it is important to consider the increase in cash to $13.8 million as of February 28, 2014, compared to $11.5 million as of December 31, 2012, even after the Company used approximately $1.8 million in its share repurchase program during 2013.
Regarding the EECP business, many shareholders, as well as some members of the board and management team were drawn to Vasomedical because of this technology. The Company remains committed to the success of EECP technology and intends to continue working diligently and intelligently based on its best judgment for the benefit of all stakeholders.
Over the last several years, the Company has made considerable investments into the EECP business and has attained some successes in various areas, as you may have been aware through public announcements and other information channels.
Nevertheless, EECP still experiences significant adoption challenges and certain regulatory hurdles, particularly with regard to applications as well as reimbursement beyond refractory angina. As such, management has informed shareholders that the market for EECP will remain soft, and this is exactly the reason they embarked on a diversification strategy that could allow the Company to expand at the same time as it’s weathering the time-consuming battle for broad acceptance of EECP.
In the interim, the relative contribution of EECP to our total revenue may decrease to the extent management is successful in executing its growth and diversification strategy.
Regarding the stock price and shares outstanding, management is very aware of the recent fluctuations in the Company’s stock price. While management does not usually comment on the stock price, it believes that two factors may have been among the factors driving the latest trading activity: the interpretation of the financial results for year ended December 31, 2013, which is discussed above, and current trends in the financial markets affecting life science stocks in general