IMRIS Inc. (IMRIS), a surgical imaging company, has reported sales of CAD23 million for the full year of 2008, compared with the sales of CAD17.4 million, in the previous year-end. It has reported a net loss of CAD17 million, or CAD0.62 per share, for the full year of 2008, compared with net loss of CAD14.5 million, or CAD0.75 per share, in the previous year-end.
“We are very pleased with the results in the fourth quarter and the 2008 year as a whole.” stated David Graves, chairman, president and chief executive officer. “Notwithstanding the current economic environment, IMRIS achieved record sales and order bookings during the quarter, and our order backlog at the end of 2008 gives us a solid base to work from as we move into 2009.”
Mr. Graves added, “IMRIS continued to expand its global reach in 2008 by establishing a presence in Europe, Japan and Australia. As we head into 2009, our strategy remains focused on the release of new products such as IMRIScardio, the world’s first integrated Angio-MR system, as well as growing our order backlog and recurring revenue sources.”
Sales for the fourth quarter were $5.7 million compared to $3.4 million in the fourth quarter of 2007, bringing annual sales to $23.0 million, compared to $17.4 million in 2007. The year-over-year increase was directly attributable to an increase in IMRISneuro system installations. The 2008 sales resulted mainly from deliveries against installations in five locations, including two in the Asia Pacific region and three in the North American market. Sales for the current year included $22.2 million of revenues associated with new IMRISneuro system deliveries and $0.8 million of revenues associated with extended maintenance contracts.
Gross profit for the fourth quarter of 2008 was $1.6 million or 27.0% of sales versus $0.5 million or 13.6% of sales in the same quarter last year. Gross profit for the year increased by approximately $2.8 million over 2007 and as a percentage of sales, improved to 22.1% compared to 13.0% in 2007. The increase in gross profit percentage is primarily due to reduced discounts to penetrate the market and the implementation of focused programs to reduce the direct costs of our systems. Notwithstanding the year-over-year margin improvement, gross profit for the year was adversely affected by a final net loss of $0.2 million recorded in the first quarter of 2008, associated with costs overruns on two strategic customer sites projects announced in 2007.
Operating expenses for the fourth quarter of 2008 increased 29% to $6.3 million compared to $4.9 million in the fourth quarter of 2007. For the year ended December 31, 2008, operating expenses were $23.8 million, an increase of $6.8 million or 40% over the previous year. The increase is reflected across all major functional areas of the company, as we continued to build capacity and develop our core competencies. The growth in operating expenses in 2008 is largely attributable to increased staffing. As we move forward into 2009, management believes the company is now adequately staffed to handle the anticipated growth in demand for IMRISneuro in the near to mid-term and therefore we anticipate that our operating expenses will remain relatively stable in the near term future.
The net loss for the fourth quarter of 2008 was $3.8 million compared to $4.1 million in 2007. For the year ended December 31, 2008 the net loss was $17.0 million, an increase of $2.4 million over 2007. This increase was mainly due to increased staffing costs which were partially offset by higher gross profit.
During the fourth quarter of 2008, the company received purchase orders for four new systems, increasing the order backlog to $67.8 million as at December 31, 2008, compared to $48.5 million as at September 30, 2008 and $31.7 million at the end of 2007.
In 2008, our gross profit margins improved as a result of improved pricing and product sourcing and focused programs to reduce the direct costs of our systems. We expect to see this positive trend continue into 2009. Margins are also expected to improve in 2009 relative to 2008 if the current foreign exchange rates remain stable.
Operating expenses for 2009 are expected to increase only modestly over 2008. The company has reached a point where we do not foresee the need to materially increase our staffing and resulting operating expenses to meet the anticipated growth in operations over the next 12 months.
We continue to be optimistic about our long-term prospects, while also recognizing that we are not immune to the current economic challenges facing all businesses as a result of the weakening credit environment. Going forward, we will continue to focus our strategies on commercializing our IMRISneuro products globally and by introducing and developing new products such as IMRIScardio.
Over the near term, we will be particularly focused on generating additional orders for IMRISneuro, carefully managing our expenses and improving our gross profit margins. Our longer term objectives include continued innovation and development of high value imaging solutions for specific surgical applications, the strengthening of our technology base and competitive barriers and the growth of recurring revenue sources.