HMGN Hemagen Reports Significantly Improved Fiscal Year 2001 Results
COLUMBIA, Md., Jan 3, 2002 (BW HealthWire) -- Hemagen Diagnostics, Inc.
(NASDAQ: HMGN, HMGNW) a biotechnology company that develops, manufactures and
markets proprietary medical diagnostic test kits, today reported significantly
improved operating results for the fiscal year ended September 30, 2001.
The net loss for the period, before the "cumulative effect of a change in
accounting principle", was $1,068,000 or $(0.11) per share compared to a net
loss of $5,130,000 or $(0.53) per share during last fiscal year. After adjusting
for non-cash charges including depreciation, amortization, non-cash interest and
the cumulative effect of the change in accounting principle, the earnings for
the period were $114,000 compared to a loss in the same prior fiscal period of
$3,793,000.
Revenues for the year were $10,971,000 compared to $10,996,000 during the prior
fiscal year, a decrease of $25,000. In fiscal 2001, the Company began to focus
its sales and marketing efforts on products that could provide the highest
profit margin. As a result of this focus, some low margin product sales were
terminated. In February 2001, the Company terminated a contract manufacturing
agreement because of its high cost of production. Revenues under this agreement
for the five months in fiscal 2001 were approximately $435,000, as compared to
$932,000 in the previous full year.
Offsetting the reduction in revenues from this agreement were the increased
sales to Roche Diagnostics, Inc., pursuant to the December 1999 supply
agreement. With several new product introductions to this customer during the
year, revenues increased to $1,700,000 from $838,000 in the previous year. The
Company expects to continue to expand the current product offering to this
customer by introducing several products previously agreed to under the supply
agreement.
Gross Margins improved in fiscal 2001 to 31% compared to 13% in fiscal 2000.
Much of the improvement the Company experienced in its gross margins resulted
from the consolidation of operations, and better utilization of inventory. In
April 2001, the Company completed the closure of its Waltham, Massachusetts's
facility and the relocation of its Waltham-based product lines to the Company's
Columbia, Maryland headquarters. Margins in fiscal year 2000 were burdened with
the costs of relocating the Company's Analyst(R) product line to Columbia,
Maryland and excess inventory levels.
At September 30, 2001, Hemagen had $672,000 of cash on hand, working capital of
$3,937,000 and a current ratio of 3.0 to 1.0. At the prior fiscal year end, the
Company had working capital of $3,451,000 and a current ratio of 1.8 to 1.
In the first quarter of fiscal 2001 in accordance with a FASB Emerging Issues
Task Force (EITF) consensus requiring the remeasurement of original issue
discount on certain debt securities, the Company recognized a one-time, non-cash
charge of $1,130,000 associated with the convertible notes issued in the
Company's May 2000 private placement offering. In accordance with the consensus,
an additional $1,130,000 of original issue discount was expensed in the current
period and recognized as the cumulative effect of a change in accounting
principle in the income statement. This charge resulted in a non-cash loss of
$(0.12) per share being recognized in the current fiscal year. The Net Loss
including the cumulative effect of the change in accounting principle was
$2,199,000 or $0.23 per share.
Jerry L. Ruyan, Chairman and CEO said, "As we embark on a new year, management
remains committed to executing our growth plans by continuing to pursue product
and product line acquisitions, and developing products internally through our
own research and development."
William P. Hales, President and COO said, "We are pleased to report that the
company generated positive earnings before non-cash charges compared to a
$3,793,000 loss in the same prior fiscal period despite many one-time cash
expenditures related to severance and the consolidation of our Waltham facility.
We remain focused on increasing sales volumes and reducing expenses. We continue
to focus on building shareholder value and positioning the company for sustained
profitability." |
