REMOTEMDx REPORTS GROWTH IN REVENUES AND IMPROVEMENT IN GROSS MARGIN FOR SECOND FISCAL QUARTER, 2009
CUSTOMER GROWTH TO 627 AGENCIES SUPPORTS OPERATIONAL CASH FLOW BREAKEVEN PLAN BY YEAR-END
SANDY, UT (Market Wire) – May 20, 2009—RemoteMDx Inc. (OTC BB: RMDX.OB, NEWS), announced results for the second fiscal quarter ended March 31, 2009. The company reported improved operating results from continuing operations on a year-over-year basis.
Total revenues for the quarter ended March 31, 2009 increased by 22% or $559,267 to $3,047,714 compared to $2,488,447 for the quarter ended March 31, 2008. Revenues for the quarter included recurring revenues from ongoing monitoring services of $3,037,254, an increase of 24% or $588,056 compared to $2,449,198 in ongoing monitoring services revenues for the quarter ended March 31, 2008.
Total revenues for the six months ended March 31, 2009 increased by 5% or $312,280 to $6,270,012 compared to $5,957,732 for the six months ended March 31, 2008. This included recurring revenues from ongoing monitoring services of $5,851,868 in the period compared to $4,849,105 in the prior year period, an increase of 21% or $1,002,763. In addition to the increase in revenues in the three and six months ended March 31, 2009, the Company was successful in continuing to improve operating margins by significantly reducing costs.
Gross margin increased to 9% of revenues for the quarter ended March 31, 2009, compared to a negative gross margin of approximately -29% of revenues for the quarter ended March 31, 2008, representing a 38 point improvement in gross margin. Likewise, gross margin increased to 6% of revenues for the six months ended March 31, 2009, compared to less than 1% for the six months ended March 31, 2008, representing a five point improvement in gross margin.
Additionally, gross margin improved on a quarter-to-quarter basis with a 9% gross margin for the quarter ended March 31, 2009 compared to 3% gross margin for the previous quarter ended December 31, 2008, or an additional six point margin improvement.
Importantly, the loss from operations improved by $7,323,487 comparing the operating loss for the quarter ended March 31, 2009 of $3,875,494 to the operating loss for the quarter ending March 31, 2008 of $11,198,981. Relevantly, the operating loss of $3,875,494 for the quarter included $1,208,592 of non-cash compensation expense. Likewise, the loss from operations for the six months ended March 31, 2009 was $8,350,329 compared to a loss of $15,490,540 for the six months ended March 31, 2008, an improvement of $7,140,211. These operational improvements for the three and six months ended March 31, 2009, are primarily due to the Company’s continued focus on reducing costs and its ongoing drive toward profitability.
The Company’s continuing emphasis on reducing costs resulted in a net loss of $4,070,991 for the quarter ended March 31, 2009, an improvement of $15,946,043 compared to the net loss of $20,017,034 reported for the quarter ended March 31, 2008. The loss in the 2008 period included $8,477,168 of expense from the redemption of SecureAlert Series A Preferred stock during the quarter ended March 31, 2008. Relevantly, the net loss of $4,070,991 for the quarter ended March 31, 2009 includes $1,816,787 of non-cash expenses during the period.
According to John Hastings, President and Chief Operating Officer of RemoteMDx, “The improved financial results for the Company this quarter reflect several important operational milestones which highlight the progress to date.”
These include:
• Revenues for the quarter were substantially comprised of recurring monitoring revenues, and such recurring revenues were 24% higher than the comparable quarter ended March 31, 2008, and 8% higher than the quarter ended December 31, 2008.
• The 38 point improvement in gross margin reflects the Company’s continued initiative to create operating and cost efficiencies, including a decrease in its monitoring services communications costs. These improvements resulted primarily from recent AT&T Certification and renegotiated rates, as well as from efficiencies within the Company’s monitoring center, gained primarily through software automation and process enhancements.
“The Company’s outlook for continued growth of recurring revenues from monitoring services is fueled by its expanded deployment of 58 new agency and county clients added since the quarter ended December 31, 2008. We anticipate the ramping up of a considerable amount of this business sometime during the next two quarters,” said Hastings.
Mr. Hastings added that, “Revenue growth has come from several previously announced agency contracts, local and county government initiatives throughout the United States. To highlight this domestic progress, the Company has entered into several county and judicial district relationships in Illinois, stimulated by Illinois’ implementation of the Cynthia L. Bischof Domestic Violence Act, passed in January 2009. To date, we have new deployment commitments from 46 Illinois counties (out of 102), where we expect to deploy products and to begin monitoring services over in the next few months.”
“Furthermore recently, the national media has extensively profiled the demand for intervention-based sexual predator and domestic violence legislation, enforcement and compliance technologies – all available from the Company. Additionally, the need to balance these sexual predator and domestic violence concerns with budget constraints is making government agencies more aware of the inherent budgetary efficiencies and savings achieved by partnering with firms like RemoteMDx,” said Hastings.
Mr. Hastings continued, noting that, “Given the unique portability of our integrated monitoring center and one-piece GPS/RF/Cellular tracking technologies, we believe that the Company is competitively well-positioned for growth in the international marketplace, supported by our planned pre-sales, marketing and market development investment of over $1,000,000 during 2008 and 2009. We expect meaningful sales opportunities to manifest themselves from our targeted efforts in Latin America, Europe and Africa all in support of our continued profitable growth in recurring monitoring revenues.”
According to Mr. Hastings, “We are pleased that RemoteMDx appears to be well-poised to capitalize from many years of technology investment and field experiences, which have created a platform for growth with demonstrated global marketplace needs, an extensive intellectual property and patent portfolio, a growing revenue base, and improving operating efficiencies, which should all lead to RemoteMDx achieving operational cash flow breakeven by year-end.”
About RemoteMDx
RemoteMDx, is a leading edge, patented monitoring and advanced communications technology company, widely utilized in over 627 law enforcement agencies, judicial districts and county jurisdictions across 35 states, with applications targeted for offender tracking and homeland security. Through its SecureAlert subsidiary, RemoteMDx observes and tracks offenders no matter where they may be -- in their car, home or office. SecureAlert can intervene in real-time with direct voice communication when an offender is in violation of probation or parole, such as sex offenders who are prohibited from entering school areas, parks, etc. Highly trained case managers monitor the offender's activities 24/7 through satellite mapping and computer systems. The SecureAlert programs allow convicted criminals to re-enter society by keeping them accountable 24 hours a day, every day, while reducing the burdens and costs carried by the criminal justice system. To learn more about RemoteMDx, visit www.remotemdx.com.
Safe Harbor Statement
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act, including future growth and earnings opportunities of the company. Examples of forward-looking statements in this release include references to the results of operations during future periods, the success of implementing cost-cutting plans, the goal for break-even operating results, future phases of the company's business plan, and the launch of new products. Actual results could differ materially from those projected in these forward-looking statements, which involve a number of risks and uncertainties, including the Company's ability to retain and to promptly satisfy current backorders and other economic, competitive, governmental, technological, regulatory, manufacturing and marketing risks associated with the Company's business and financial plans. The contents of this release should be considered in conjunction with the risk factors, warnings, and cautionary statements that are contained in the Company's most recent filings with the Securities and Exchange Commission.
Non-GAAP Financial Measures
To supplement our reporting of operating results, we use non-GAAP financial measures (such as “recurring revenues”) which we believe are helpful in understanding our past financial performance and our future results. Our non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. Our management regularly uses our supplemental non-GAAP financial measures internally to understand, manage and evaluate our business and make operating decisions. These non-GAAP measures are among the primary factors management uses in planning for and forecasting future periods.
SecureAlert, TrackerPAL(TM) and Offender Monitoring Center are trademarks of SecureAlert. RemoteMDx is a trademark of RemoteMDx, Inc.