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VirtualScopics Reaches the Black in 4Q

Zacks Equity Research

Medical imaging solutions provider VirtualScopics (VSCP) posted breakeven earnings a share in fourth-quarter 2011. The New York-based company swung to a profit in the quarter on flat revenues. Analysts polled by Zacks were looking for earnings of a penny a share on average.

VirtualScopics clocked a net income (attributable to common stockholders) of $1,100 in the fourth quarter versus a loss of roughly $1.6 million (or 6 cents a share) a year ago. The bottom line in the year-ago quarter was hit by hefty losses on derivative instruments.

For fiscal 2011, earnings of 2 cents a share were in line with the Zacks Consensus Estimate. Net income (attributable to common stockholders) was $654,306 compared with a net loss of $802,058 (or 3 cents a share) a year ago.

Revenues in the fourth quarter were essentially flat year over year at $3.5 million, missing the Zacks Consensus Estimate of $4 million. For the full year, sales rose 7% year over year to $14.3 million. 

Gross margin declined to 38.8% from 48.4% a year ago, hurt by higher cost of services. Operating expenses rose 3% year over year to roughly $1.5 million. Research and development expenses jumped 42% to $339,734. Sales and marketing costs fell 10% to $235,155.

VirtualScopics ended the fiscal with cash of roughly $5.7 million, up 25% year over year, with no debt. The company envisions its currently available cash will enable it to invest in new markets including personalized medicine.

VirtualScopics, in its fourth quarter call, noted that it has received feedback from the U.S. Food and Drug Administration (“FDA”) for its first personalized medicine application. The company filed a 510(k) with the FDA in October 2011.

VirtualScopics offers its imaging solutions to pharmaceutical, biotechnology and medical devices industries. The company provides a range of imaging software and applications that are used for image-based detection and measurement of anatomical structures and metabolic activity. VirtualScopics competes with BioClinica Inc (BIOC) and ICON plc (ICLR) among others.

The company, in January 2012, expanded its strategic collaboration with North Carolina-based leading contract research organization (“CRO”) Pharmaceutical Product Development (“PPD”) Inc. The entities extended their partnership in clinical and medical imaging to include a range of therapeutic areas such as oncology, central nervous system, cardiovascular, general medicine and medical devices. The scope of the collaboration was originally limited to oncology.

Moving ahead, VirtualScopics expects revenues for fiscal 2012 in a band of $14.5 million to $15.5 million. The company expects sales in 2012 to be supported by its alliance with PPD Inc.

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