VirtualScopics, Inc. (VSCP) research, news, and more from GeoInvesting

Company description

Thu, 28 Jan 2016 16:55:07 GMT

VirtualScopics, Inc. provides imaging solutions to the pharmaceutical, biotechnology, and medical device industries. The company offers a suite of image analysis software tools and applications, which are used in detecting and measuring specific anatomical structures and metabolic activity using medical images. Its proprietary software and algorithms provide measurement capabilities designed to improve clinical research and development. The company’s image-based measurement and visualization tools enable automated, accurate, and reproducible measurement of minute changes that occur in anatomic structures in musculoskeletal, oncological, cardiological, and neurological diseases. It has strategic alliances with PPD, Inc. to provide clients with an integrated and customized clinical development and medical imaging solution for oncology clinical trials; and IXICO, plc. to provide imaging contract research services related to clinical trials of drugs and medical devices across a range of therapeutic areas and modalities. VirtualScopics, Inc. was founded in 2000 and is headquartered in Rochester, New York.

Research

Wed, 11 May 2016 04:00:00 GMT

MALVERN, Pa., May 11, 2016 (GLOBE NEWSWIRE) -- BioTelemetry, Inc. (NASDAQ:BEAT), the leading wireless medical technology company focused on the delivery of health information to improve quality of life and reduce cost of care, announced today that it has completed its acquisition of VirtualScopics, Inc. (NASDAQ:VSCP), a leading provider of clinical trial imaging solutions. The acquisition comes after the successful completion of the all cash tender offer for all outstanding common and preferred shares of VirtualScopics. The total purchase consideration was approximately $15.0 million, net of cash and debt acquired. Joseph H. Capper, President and Chief Executive Officer of BioTelemetry, commented: “We are excited to welcome VirtualScopics to the BioTelemetry family. The addition of VirtualScopics’ imaging capabilities expands our clinical research offerings and further demonstrates our commitment to growing this important portion of our business. As I have mentioned in the past, an integrated cardiac and imaging testing platform will deliver much greater value to our customers and makes us a far more formidable competitor in this market. We are also thrilled to add a strong operational leadership team and look forward to building upon their longstanding customer relationships.”

Source: GlobeNewsWire

Research

Fri, 25 Mar 2016 04:00:00 GMT

Just two months after our January 28, 2016 RFT on VirtualScopics, Inc. (NASDAQ:VSCP), a leading provider of clinical trial imaging solutions, the company signed a definitive agreement to be acquired by BioTelemetry, Inc. (NASDAQ:BEAT), the leading wireless medical technology company focused on the delivery of health information to improve quality of life and reduce cost of care.

"BioTelemetry will commence an all cash tender offer for all outstanding common and preferred shares of VirtualScopics. In the tender offer, BioTelemetry will offer investors $4.05 per share for VirtualScopics’ common stock, $336.30 per share for VirtualScopics’ Series A and Series B Convertible Preferred Stock and $920.00 per share for VirtualScopics’ Series C-1 Convertible Preferred Stock. The total purchase consideration is approximately $15.5 million.
The tender offer is expected to commence on or about April 11, 2016, and will be open for a minimum of 20 business days. VirtualScopics’ Board has approved the transaction and has agreed to unanimously recommend to its stockholders that they tender their shares of VirtualScopics’ common and preferred stock in the tender offer. Stockholders holding approximately 20% of VirtualScopics’ current outstanding voting stock have agreed, among other things, to tender their voting stock pursuant to the tender offer.

The closing of the transaction is conditioned on the tender and acceptance of at least a majority of the outstanding voting stock and a majority of the Series C-1 Convertible Preferred Stock as well as other customary conditions. BioTelemetry will acquire any VirtualScopics’ shares not purchased in the tender offer in a second-step merger at the same per-share price paid in the tender offer. The closing of the transaction is expected to occur in the second quarter of 2016.

While there were still several questions up in the air at the time of our publication, it's now obvious that management's confidence in the future of the company resonated well with BioTelemetry, Inc.

The takeover price of $4.05 was under the current share price at the time it was consummated, so it remains to be seen if any noise will be made by activists and/or investors who have assigned a higher valuation to the company.

However, we issued our Reasons for Tracking note with the stock at $3.05, meaning the proposed buyout offer represents 32.8% upside from our initial note.

That said, we cannot see there to be much of a case of a higher buyout offer, given the company's history of losing money, and the fact that it was more or less in the midst of a turn-around - one in which BioTelemetry will be deeply involved.

Reasons For Tracking

Thu, 28 Jan 2016 05:00:00 GMT

VirtualScopics, Inc. (VSCP) ($3.06) provides imaging solutions used in drug and medical device development. The company offers a suite of image analysis software tools and applications, which are used in detecting and measuring specific anatomical structures and metabolic activity using medical images. Its proprietary software and algorithms provide measurement capabilities designed to improve clinical research and development.

Dating back to 2007, VSCP has lost money since Q2 2013 and only has achieved annual profitably in one year (2011).

Source: Nasdaq.com

Despite its history of losing money, we believe there are reasons for tracking the story:

It appears the company is in the midst of its restructuring efforts that began roughly two years ago to put the company back on a path to profitability. The efforts have taken the company from a cash burn to a potential cash generator on a quarterly basis. The efforts include:
- A focus on core customer base to improve customer relationships. The company is active in engaging and educating its current customer base.
- Promote better work environment for employees
- Focus on higher margin projects
Strong Q3 2015 results :
- Revenues for the third quarter of 2015 increased 18% to $3,224,407 compared to $2,741,241 for the third quarter of 2014.
- VSCP reported a net loss for the third quarter of 2015 of $24,779, or $0.02 loss per share, representing a 97% improvement from a net loss of $955,523, or $0.33 loss per share, reported in the third quarter of 2014.
- The company reported positive Adjusted EBITDA in the third quarter of 2015 of $132,101 as compared to negative Adjusted EBITDA of $842,772 in the third quarter of 2014.
Bullish commentary regarding outlook indicates company is on path to achieve profitability for the first time since Q2 2013:

"We are very pleased with the company's strong performance during the third quarter of 2015," said Eric T. Converse, president and chief executive officer of VirtualScopics. "This quarter is the first time the company has achieved positive Adjusted EBITDA since the second quarter of 2013 , a trend we believe will continue to improve for the remainder of this year and beyond. I am very proud of the entire VirtualScopics team."

Margins are improving, quotes from management:

"We are pleased to have achieved strong margins for both 2015 reporting periods over the prior year's periods," said Jim Groff, VirtualScopics' chief financial officer. "In the third quarter of 2015, margins improved to 42% as compared to 34% in the third quarter of 2014. For the first nine months of 2015 margins improved to 37% as compared to 34% achieved last year. The margin improvement thus far in 2015 reflects the increase in the startup of new projects, which yield higher margins during their startup phase, along with a continued focus on our core offerings and investment in our infrastructure and people."

Bullish on the backlog:

"the backlog has grown to $31.9 million and we believe it will continue to grow. Our decision to focus on our core competencies has proven to be the right decision as we continue to strengthen our relationships with large pharma and develop new relationships with biotechs. This year we were chosen to be the sole imaging provider for several of our customers and most recently we were awarded a phase III oncology trial from yet another large pharma company.

But I do want to mention this, because our bookings and awards this year are $24 million, with over $16 million of that already booked and the reason why I’m sharing this with you is we’re on the verge of two consecutive years with bookings over $20 million. Just to give you a perspective on that, before last year, we had not had bookings over $20 million since 2009 and that was the only time it happened in the history of this company.

Now, we’re looking at two years in a row with these booking numbers. This will definitely help increase our backlog and we believe continue to help our revenue grow. This organic growth is promising. However, I will continue to speak to industry people and explore how we can obtain a greater backlog more rapidly than just organic growth. I have nothing more to offer on this subject, but want to be clear that I’m looking to overcome this challenge in the shortest timeframe possible.”

Shares rocketed higher on Q3 results reaching a high of $6.65, a 269% rise from the prior day close of $1.80. Shares settled at $4.50 by the close of that trading day and have since retraced to current levels of $3.00.
Flat line chart

We suggest investors read the Q3 2015 conference call transcript for a better understanding of the story.

Caveat:

We cannot find a comparable backlog figure to compare to the Company’s current backlog. We will also like to learn how long it takes the company to fill its backlog.
Unsure how profitable the company will be without any specific guidance
Quote from the Q3 conference call:

“ I do want to remind you that we are always at risk of changes in trials we win. This risk is inherent in our business. I would also like to advise you that the greater our backlog becomes the lessened the risk becomes. The progress we’re making as a team gives me great confidence in our future .”