Vital Images Reports Record Revenue, 47 Percent Growth for 2001 First Quarter

Apr 19, 2001, 01:00 ET from Vital Images, Inc.

    MINNEAPOLIS, April 19 /PRNewswire/ --
     Vital Images, Inc. (Nasdaq:   VTAL), a medical imaging software company,
 today reported record revenue for the first quarter ended March 31, 2001.
     Revenue for the 2001 first quarter rose to $3,331,000, up 47 percent from
 $2,270,000 in the first quarter of 2000.  Software license fee revenue totaled
 $2,147,000 compared with $1,507,000 during the same period last year.  The
 first quarter net loss was $622,000, or $0.09 per share, versus a net loss of
 $665,000, or $0.10 per share, in the first quarter of 2000.
     "We are sustaining strong revenue growth and managing operating losses
 downward, while growing the business in a balanced manner," said Albert Emola,
 president and CEO.  "Order volume was very strong during the first quarter,
 and we see that trend continuing in the second quarter.  The productivity of
 our recently enlarged and newly trained sales force of 14 regional sales
 managers is accelerating as expected."
     Emola continued:  "Overall, our recent product introductions and
 investments in our sales and marketing infrastructure are bearing fruit,
 confirming that our strategies are on track.  Physicians and hospitals are
 clearly demanding and purchasing the newest, most advanced scanners and, in
 turn, requiring advanced 3D imaging software to maximize the clinical benefits
 of their investments.  In particular, we are experiencing strong demand for
 our software products for coronary artery calcification scoring."
     Gross margin for the first quarter of 2001 totaled $2,529,000 versus
 $1,744,000 for the first quarter of 2000, a 45 percent increase.  For the
 quarter, the company again achieved a high gross margin rate, coming in at
 76 percent versus 77 percent for the first quarter of 2000.
     First-quarter operating expenses totaled $3,166,000, a 29 percent increase
 over $2,454,000 in the same period a year ago.  Emola noted that operating
 expenses in the first quarter of 2001 reflect the financial impact of the
 company's infrastructure build-up during 2000 and that quarterly operating
 expense increases on a year-to-year comparative basis are expected to be lower
 for the balance of 2001.
     Sales and marketing expenses totaled $1,631,000 for the 2001 first
 quarter, or 49 percent of total revenue, versus $1,087,000, or 48 percent of
 total revenue, during the first quarter of 2000, a 50 percent increase.  The
 increased expenditures in sales and marketing are consistent with the
 expansion of the field sales force during 2000.
     R&D expense totaled $841,000, or 25 percent of total revenue, compared
 with $719,000, or 32 percent of total revenue, for the first quarter of 2000,
 a 17 percent increase.  The company's R&D priorities are on track and focused
 on developing software applications for large potential markets, such as
 cardiovascular disease, colon cancer, and surgical and therapy planning.
     During the first quarter, the company began shipping two new products --
 Vitrea 2(R) Version 2.2 and VScore(TM) with AutoGate(TM).  Both products
 received 510(k) marketing clearance from the Food and Drug Administration and
 were demonstrated at the 2000 Radiological Society of North America (RSNA)
 Annual Meeting.
     Vitrea 2 Version 2.2 offers new clinical capabilities designed
 specifically to aid in colon analysis, comparing images and tumor volume
 measurements.  In addition, it is demonstrably faster and easier to use than
 previous releases.
     VScore with AutoGate simplifies coronary artery calcium scoring by
 allowing customers to create high quality heart images using existing helical
 CT scanners without the use of EKG recording devices.  Eliminating the EKG
 requirement decreases patient preparation time and improves patient comfort,
 while reducing hardware and imaging center costs.  Calcium scoring is an
 efficient method of screening patients at risk of coronary artery disease.
 The company released this product during the first quarter of 2001 and
 successfully qualified several scanners for use with VScore with AutoGate,
 primarily scanners manufactured by GE Medical Systems.  During the coming
 quarters, the company expects to qualify CT scanners from other manufacturers.
     During the first quarter, the company also announced that it had received
 ISO 9001 Certification, an internationally recognized quality standard, and
 Class I Measurement Conformitee Europeene (CE) Mark for its medical imaging
 software products.  The CE Mark certification allows continued expansion of
 sales and marketing activities in Europe.
 
     Outlook for 2001
     "Market demand for 3D imaging software remains strong," stated Emola.
 "Given current economic estimates and trends in our business, we continue to
 expect revenue growth of 45 to 55 percent for 2001.  We are exploring new
 partnerships in several areas of our business and expect an incremental
 revenue increase in the second half of the year in conjunction with these
 partnering activities.  We are on track to continue reducing our operating
 losses, particularly in the second half of 2001, and to achieve profitability
 in the fourth quarter."
     As of March 31, 2001, Vital Images had a cash balance of $1.0 million.
 Emola commented:  "As in prior years, we expect our cash usage in 2001 to be
 heaviest in the first quarter of the year.  Given our projected revenue growth
 and declining operating losses, we believe we will have sufficient cash on
 hand to cross over to profitability.  In addition, we have the potential of
 redeeming our outstanding warrants, which, if fully exercised, would provide
 an additional $6 million in equity."
 
     Conference Call and Webcast
     Vital Images will host a live Webcast of its first quarter and year-end
 conference call on Thursday, April 19, 2001, at 10:00 a.m. CDT.  To access
 this Webcast, go to the company's Web site, http://www.vitalimages.com , and
 click on the Webcast icon.  The Webcast replay will be available from
 11:00 a.m. CDT, Thursday, April 19, until 11:00 a.m. CDT, Friday, May 18.
 Listening to the Webcast requires speakers and RealPlayer.  If you do not have
 RealPlayer, download the free player at http://www.real.com
     If you do not have access to the Internet and want to listen to an audio
 replay of the fourth quarter and year-end conference, call 800-633-8284 and
 enter conference call ID # 18380953.  The audio replay will be available
 beginning at 12:00 p.m. CDT on Thursday, April 19, through 12:00 p.m. CDT on
 Saturday, April 21.
 
     About Vitrea
     Vitrea is the Company's advanced medical imaging software for diagnostic
 evaluation of computed tomography (CT) and magnetic resonance (MR) image data.
 Vitrea features real-time navigation of 3D volume data, permitting the user to
 create two- and three-dimensional views of human anatomy and to interactively
 navigate within these images to better visualize and understand internal
 structures and disease conditions.  In addition, Vitrea utilizes an intuitive
 clinical workflow and automatic settings to improve speed and simplicity over
 other visualization techniques.
 
     About Vital Images
     Vital Images is a leading provider of 3D imaging software for use in
 disease screening applications, clinical diagnosis and therapy planning.  The
 company's technology utilizes high-speed volume visualization and analysis, as
 well as network communications based on DICOM and Internet protocols.  Vital
 Images cost effectively brings 3D visualization and analysis into the
 day-to-day practice of medicine.  Press releases, examples of 3D medical
 imaging and other corporate information are available on Vital Images' Web
 site at http://www.vitalimages.com
 
     Except for the historical information contained herein, the matters
 discussed in this news release are forward-looking statements within the
 meaning of the Private Securities Litigation Reform Act of 1995 that involve
 risks and uncertainties which could cause results to differ materially from
 those projected, including dependence on market growth, the timely
 availability and acceptance of new products, the impact of competitive
 products and pricing, dependence on major customers, fluctuations in quarterly
 results, third-party reimbursement, the availability of capital and other
 risks detailed from time to time in the company's SEC reports, including the
 company's most recent report on Form 10-K for the year ended
 December 31, 2000.
 
     Vitrea(R) is a registered trademark and VScore(TM) and VScore with
 AutoGate(TM) are trademarks of Vital Images, Inc.
 
 
     Vital Images, Inc.
     Statements of Operations
     (Unaudited)
     (In thousands, except per share data)
 
                                                    For the Three Months Ended
                                                             March 31,
                                                        2001           2000
     Revenue:
       License fees                                    $2,147         $1,507
       Maintenance and services                           448            304
       Hardware                                           736            459
          Total revenue                                 3,331          2,270
 
     Cost of revenue
       License fees                                        68             52
       Maintenance and services                           123             69
       Hardware                                           611            405
          Total cost of revenue                           802            526
 
     Gross margin                                       2,529          1,744
 
     Operating expenses:
       Sales and marketing                              1,631          1,087
       Research and development                           841            719
       General & administrative                           694            648
          Total operating expenses                      3,166          2,454
 
     Operating loss                                      (637)          (710)
     Interest income                                       18             46
 
     Loss before income taxes                            (619)          (664)
     Income taxes                                           3              1
 
     Net loss                                           $(622)         $(665)
 
     Net loss per share - basic and diluted            $(0.09)       $ (0.10)
 
     Weighted average common shares
      outstanding - basic and diluted                   6,824          6,713
 
 
     Vital Images, Inc.
    Balance Sheets
    (In thousands)
 
                                                     March 31,    December 31,
                                                       2001           2000
                                                    (Unaudited)
 
 
     Cash and cash equivalents                         $1,013         $2,291
     Accounts receivable, net                           3,689          3,024
     Prepaid expenses and other current assets            431            442
          Total current assets                          5,133          5,757
     Property and equipment, net                        1,423          1,530
 
          Total Assets                                 $6,556         $7,287
 
 
 
     Accounts payable                                    $777         $1,020
     Accrued payroll                                      692            800
     Deferred revenue                                   1,392          1,238
     Other current liabilities                            329            355
          Total current liabilities                     3,190          3,413
 
     Deferred revenue                                     179            109
          Total liabilities                             3,369          3,522
 
 
     Common stock                                          68             68
     Additional paid-in capital                        23,607         23,563
     Accumulated deficit                              (20,488)       (19,866)
          Total shareholders' equity                    3,187          3,765
 
               Total Liabilities and
                Shareholders' Equity                   $6,556         $7,287
 
 

SOURCE Vital Images, Inc.
    MINNEAPOLIS, April 19 /PRNewswire/ --
     Vital Images, Inc. (Nasdaq:   VTAL), a medical imaging software company,
 today reported record revenue for the first quarter ended March 31, 2001.
     Revenue for the 2001 first quarter rose to $3,331,000, up 47 percent from
 $2,270,000 in the first quarter of 2000.  Software license fee revenue totaled
 $2,147,000 compared with $1,507,000 during the same period last year.  The
 first quarter net loss was $622,000, or $0.09 per share, versus a net loss of
 $665,000, or $0.10 per share, in the first quarter of 2000.
     "We are sustaining strong revenue growth and managing operating losses
 downward, while growing the business in a balanced manner," said Albert Emola,
 president and CEO.  "Order volume was very strong during the first quarter,
 and we see that trend continuing in the second quarter.  The productivity of
 our recently enlarged and newly trained sales force of 14 regional sales
 managers is accelerating as expected."
     Emola continued:  "Overall, our recent product introductions and
 investments in our sales and marketing infrastructure are bearing fruit,
 confirming that our strategies are on track.  Physicians and hospitals are
 clearly demanding and purchasing the newest, most advanced scanners and, in
 turn, requiring advanced 3D imaging software to maximize the clinical benefits
 of their investments.  In particular, we are experiencing strong demand for
 our software products for coronary artery calcification scoring."
     Gross margin for the first quarter of 2001 totaled $2,529,000 versus
 $1,744,000 for the first quarter of 2000, a 45 percent increase.  For the
 quarter, the company again achieved a high gross margin rate, coming in at
 76 percent versus 77 percent for the first quarter of 2000.
     First-quarter operating expenses totaled $3,166,000, a 29 percent increase
 over $2,454,000 in the same period a year ago.  Emola noted that operating
 expenses in the first quarter of 2001 reflect the financial impact of the
 company's infrastructure build-up during 2000 and that quarterly operating
 expense increases on a year-to-year comparative basis are expected to be lower
 for the balance of 2001.
     Sales and marketing expenses totaled $1,631,000 for the 2001 first
 quarter, or 49 percent of total revenue, versus $1,087,000, or 48 percent of
 total revenue, during the first quarter of 2000, a 50 percent increase.  The
 increased expenditures in sales and marketing are consistent with the
 expansion of the field sales force during 2000.
     R&D expense totaled $841,000, or 25 percent of total revenue, compared
 with $719,000, or 32 percent of total revenue, for the first quarter of 2000,
 a 17 percent increase.  The company's R&D priorities are on track and focused
 on developing software applications for large potential markets, such as
 cardiovascular disease, colon cancer, and surgical and therapy planning.
     During the first quarter, the company began shipping two new products --
 Vitrea 2(R) Version 2.2 and VScore(TM) with AutoGate(TM).  Both products
 received 510(k) marketing clearance from the Food and Drug Administration and
 were demonstrated at the 2000 Radiological Society of North America (RSNA)
 Annual Meeting.
     Vitrea 2 Version 2.2 offers new clinical capabilities designed
 specifically to aid in colon analysis, comparing images and tumor volume
 measurements.  In addition, it is demonstrably faster and easier to use than
 previous releases.
     VScore with AutoGate simplifies coronary artery calcium scoring by
 allowing customers to create high quality heart images using existing helical
 CT scanners without the use of EKG recording devices.  Eliminating the EKG
 requirement decreases patient preparation time and improves patient comfort,
 while reducing hardware and imaging center costs.  Calcium scoring is an
 efficient method of screening patients at risk of coronary artery disease.
 The company released this product during the first quarter of 2001 and
 successfully qualified several scanners for use with VScore with AutoGate,
 primarily scanners manufactured by GE Medical Systems.  During the coming
 quarters, the company expects to qualify CT scanners from other manufacturers.
     During the first quarter, the company also announced that it had received
 ISO 9001 Certification, an internationally recognized quality standard, and
 Class I Measurement Conformitee Europeene (CE) Mark for its medical imaging
 software products.  The CE Mark certification allows continued expansion of
 sales and marketing activities in Europe.
 
     Outlook for 2001
     "Market demand for 3D imaging software remains strong," stated Emola.
 "Given current economic estimates and trends in our business, we continue to
 expect revenue growth of 45 to 55 percent for 2001.  We are exploring new
 partnerships in several areas of our business and expect an incremental
 revenue increase in the second half of the year in conjunction with these
 partnering activities.  We are on track to continue reducing our operating
 losses, particularly in the second half of 2001, and to achieve profitability
 in the fourth quarter."
     As of March 31, 2001, Vital Images had a cash balance of $1.0 million.
 Emola commented:  "As in prior years, we expect our cash usage in 2001 to be
 heaviest in the first quarter of the year.  Given our projected revenue growth
 and declining operating losses, we believe we will have sufficient cash on
 hand to cross over to profitability.  In addition, we have the potential of
 redeeming our outstanding warrants, which, if fully exercised, would provide
 an additional $6 million in equity."
 
     Conference Call and Webcast
     Vital Images will host a live Webcast of its first quarter and year-end
 conference call on Thursday, April 19, 2001, at 10:00 a.m. CDT.  To access
 this Webcast, go to the company's Web site, http://www.vitalimages.com , and
 click on the Webcast icon.  The Webcast replay will be available from
 11:00 a.m. CDT, Thursday, April 19, until 11:00 a.m. CDT, Friday, May 18.
 Listening to the Webcast requires speakers and RealPlayer.  If you do not have
 RealPlayer, download the free player at http://www.real.com
     If you do not have access to the Internet and want to listen to an audio
 replay of the fourth quarter and year-end conference, call 800-633-8284 and
 enter conference call ID # 18380953.  The audio replay will be available
 beginning at 12:00 p.m. CDT on Thursday, April 19, through 12:00 p.m. CDT on
 Saturday, April 21.
 
     About Vitrea
     Vitrea is the Company's advanced medical imaging software for diagnostic
 evaluation of computed tomography (CT) and magnetic resonance (MR) image data.
 Vitrea features real-time navigation of 3D volume data, permitting the user to
 create two- and three-dimensional views of human anatomy and to interactively
 navigate within these images to better visualize and understand internal
 structures and disease conditions.  In addition, Vitrea utilizes an intuitive
 clinical workflow and automatic settings to improve speed and simplicity over
 other visualization techniques.
 
     About Vital Images
     Vital Images is a leading provider of 3D imaging software for use in
 disease screening applications, clinical diagnosis and therapy planning.  The
 company's technology utilizes high-speed volume visualization and analysis, as
 well as network communications based on DICOM and Internet protocols.  Vital
 Images cost effectively brings 3D visualization and analysis into the
 day-to-day practice of medicine.  Press releases, examples of 3D medical
 imaging and other corporate information are available on Vital Images' Web
 site at http://www.vitalimages.com
 
     Except for the historical information contained herein, the matters
 discussed in this news release are forward-looking statements within the
 meaning of the Private Securities Litigation Reform Act of 1995 that involve
 risks and uncertainties which could cause results to differ materially from
 those projected, including dependence on market growth, the timely
 availability and acceptance of new products, the impact of competitive
 products and pricing, dependence on major customers, fluctuations in quarterly
 results, third-party reimbursement, the availability of capital and other
 risks detailed from time to time in the company's SEC reports, including the
 company's most recent report on Form 10-K for the year ended
 December 31, 2000.
 
     Vitrea(R) is a registered trademark and VScore(TM) and VScore with
 AutoGate(TM) are trademarks of Vital Images, Inc.
 
 
     Vital Images, Inc.
     Statements of Operations
     (Unaudited)
     (In thousands, except per share data)
 
                                                    For the Three Months Ended
                                                             March 31,
                                                        2001           2000
     Revenue:
       License fees                                    $2,147         $1,507
       Maintenance and services                           448            304
       Hardware                                           736            459
          Total revenue                                 3,331          2,270
 
     Cost of revenue
       License fees                                        68             52
       Maintenance and services                           123             69
       Hardware                                           611            405
          Total cost of revenue                           802            526
 
     Gross margin                                       2,529          1,744
 
     Operating expenses:
       Sales and marketing                              1,631          1,087
       Research and development                           841            719
       General & administrative                           694            648
          Total operating expenses                      3,166          2,454
 
     Operating loss                                      (637)          (710)
     Interest income                                       18             46
 
     Loss before income taxes                            (619)          (664)
     Income taxes                                           3              1
 
     Net loss                                           $(622)         $(665)
 
     Net loss per share - basic and diluted            $(0.09)       $ (0.10)
 
     Weighted average common shares
      outstanding - basic and diluted                   6,824          6,713
 
 
     Vital Images, Inc.
    Balance Sheets
    (In thousands)
 
                                                     March 31,    December 31,
                                                       2001           2000
                                                    (Unaudited)
 
 
     Cash and cash equivalents                         $1,013         $2,291
     Accounts receivable, net                           3,689          3,024
     Prepaid expenses and other current assets            431            442
          Total current assets                          5,133          5,757
     Property and equipment, net                        1,423          1,530
 
          Total Assets                                 $6,556         $7,287
 
 
 
     Accounts payable                                    $777         $1,020
     Accrued payroll                                      692            800
     Deferred revenue                                   1,392          1,238
     Other current liabilities                            329            355
          Total current liabilities                     3,190          3,413
 
     Deferred revenue                                     179            109
          Total liabilities                             3,369          3,522
 
 
     Common stock                                          68             68
     Additional paid-in capital                        23,607         23,563
     Accumulated deficit                              (20,488)       (19,866)
          Total shareholders' equity                    3,187          3,765
 
               Total Liabilities and
                Shareholders' Equity                   $6,556         $7,287
 
 SOURCE  Vital Images, Inc.