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CAS Medical Systems Inc. Reports Operating Results (10-Q)

August 04, 2010 | About:

10qk

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CAS Medical Systems Inc. (CASM) filed Quarterly Report for the period ended 2010-06-30.

Cas Medical Systems Inc. has a market cap of $24.8 million; its shares were traded at around $2.15 with and P/S ratio of 0.8. CASM is in the portfolios of Chuck Royce of Royce& Associates.

Highlight of Business Operations:

For the three months ended June 30, 2010, the Company reported net income of $8,000 or $0.00 per basic and diluted common share compared to a net loss of $834,000 or ($0.07) per basic and diluted common share reported for the three months ended June 30, 2009. The Company reported net income of $215,000 or $0.02 per basic and diluted common share for the six months ended June 30, 2010 compared to a net loss of $1,737,000 or ($0.15) per basic and diluted common share for first six months of 2009. The improvement in results for both the three month and six month periods ended June 30, 2010 resulted from reductions in both product costs and operating expenses which were partially offset by a reduction in revenues compared to the prior year. Operating income of $13,000 and $307,000 for the three and six months ended June 30, 2010, respectively, were affected by $288,000 and $488,000, respectively, of legal expenses related to the Somanetics litigation.

Sales to the U.S. market accounted for $11,423,000 or 68% of the total revenues reported for the six months ended June 30, 2010, a decrease of $310,000 or 3% from the $11,733,000 in sales reported for the six months ended June 30, 2009. Sales of bedside monitoring products and supplies and service products were primarily responsible for the shortfall and were partially offset by increase in critical care monitoring products and OEM modules. International sales accounted for $5,296,000 or 32% of the total revenues reported for the six months ended June 30, 2010, an increase of $55,000 or 1% from the $5,241,000 reported for the same period of the prior year. Increased critical care monitoring products and OEM modules were partially offset by reductions in bedside monitoring product sales.

Operating expenses for the three months ended June 30, 2010 decreased $612,000 or 16% to $3,144,000 from $3,756,000 for the three months ended June 30, 2009. Operating expenses for the first six months of 2010 decreased $1,786,000 or 24% to $5,807,000 from $7,593,000 reported for the same period the prior year. Personnel reductions initiated during several periods in 2009 are primarily responsible for the lower operating expenses.

Research and development (“R&D”) expenses decreased $110,000 or 19% to $468,000 or 6% of revenues for the three months ended June 30, 2010 compared to $578,000 or 7% of revenues for the three months ended June 30, 2009. R&D expenses for the first six months of 2010 decreased $272,000 or 23% to $932,000 from $1,204,000 reported for the first six months of the prior year. For both periods reported, decreases in expenses pertained to salaries and related fringe benefits resulting from the 2009 personnel reductions, R&D project related materials, depreciation and refunds both received and expected from the state government related to R&D spending. Partially offsetting these reductions were increases in recruitment costs and reductions in reimbursements from the National Institutes of Health (“NIH”) pertaining to the Company s Near-Infrared Spectroscopy (“NIRS”) technology. For the three months and six months ended June 30, 2010, NIH reimbursements totaled $125,000 and $247,000, respectively, compared to $188,000 and $413,000 for the three and six-month periods ended June 30, 2009. As of June 30, 2010, a maximum of approximately $700,000 remains available under the $2.8 million multi-year NIH award received during 2007.

Other sales and marketing expenses totaled $503,000 and decreased $552,000 from the $1,054,000 reported for the three months ended June 30, 2009. General and administrative (“G&A”) expenses increased $46,000 to $1,185,000. G&A expenses for the second quarter of 2010 included $288,000 of legal expenses related to the Somanetics litigation. Legal expenses decreased approximately $51,000 from the first six months of 2009. Legal costs incurred for the first six months of 2009 included costs pertaining to the Analogic Corporation arbitration. The Analogic legal fees were recovered during the latter part of 2009 subsequent to an August 2009 settlement between the Company and Analogic.

S,G&A expenses for the first six months of 2009 totaled $4,875,000, a decrease of $1,514,000, or approximately 24%, from the $6,389,000 reported for the first six months of 2009. Fore-Sight related sales and marketing expenses were $1,776,000, a decrease of $318,000 over the same six months of the prior year. Other sales and marketing expenses totaled $1,070,000 and accounted for $1,062,000 of the decrease in S,G&A expenses. The decrease results primarily from reductions in personnel initiated during both the second and fourth quarters of 2009. G&A expenses totaled $2,029,000 and decreased approximately $135,000 from the first six months of 2009 primarily from reductions in salaries and related fringe benefits and depreciation and amortization. Legal expenses, which included approximately $488,000 related to the Somanetics litigation, decreased approximately $36,000 from the first six months of 2009. Legal costs incurred for the first six months of 2009 included costs pertaining to the Analogic Corporation arbitration.

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