COTTONWOOD HEIGHTS, Utah, Sept. 26, 2016Dynatronics Corporation (NASDAQ: DYNT) today announced its fourth quarter results and financial results for the fiscal year ended June 30, 2016.

Net sales for the quarter increased 2.8 percent to $8.1 million, compared to $7.9 million in the same period of the prior year. Gross profit for the quarter increased 45.1 percent representing 33.0 percent of sales, compared to 23.4 percent of sales for the quarter ended June 30, 2015. Included in the cost of sales were inventory write-offs for fiscal year 2016 and 2015 of $270,000 and $952,000 respectively. Gross margins during the current quarter were positively impacted by a greater proportion of sales of proprietary therapeutic modalities which carry higher-than-average margins.

“The 2.8 percent increase in sales for the quarter continues a sustained upward trend in revenues that began in our fourth fiscal quarter in 2014,” reported Jeff Gephart, senior vice president of sales at Dynatronics. “During 2016 we also made significant additions to our sales management team that should enable us to continue our upward trajectory.”

Net loss for the quarter ended June 30, 2016, was $1.1 million, compared to a loss of $1.9 million for the quarter ended June 30, 2015. Due to factors discussed below, net loss applicable to common stockholders for the quarter ended June 30, 2016, was $1.2 million, compared to a loss of $4.8 million for the quarter ended June 30, 2015. Several factors resulted in the reported net loss applicable to common stockholders in each period. The following charges were of significance in the fiscal year 2016 quarter: (1) a severance expense of approximately $770,000; (2) an inventory write-off of $270,000; (3) a tax benefit related to the deferred tax asset valuation allowance of $65,000; and (4) non-cash dividends of $99,000 paid to holders of Series A Preferred Stock. Three notable charges impacted the fiscal year 2015 quarter: (1) a deferred tax asset valuation allowance of $1.4 million; (2) an inventory write-off of $952,000; and (3) the recording of a beneficial conversion feature of $2.9 million as a deemed dividend associated with the sale of the company’s Series A Preferred Stock in June 2015.

“Fiscal 2016 has been a year of unprecedented change at Dynatronics,” stated Kelvyn H. Cullimore Jr., company chairman and CEO. “We have significantly restructured senior management and sales management to facilitate new growth strategies. These changes have involved significant investment as reflected in the reported losses. However, they are changes that position us to execute on our strategic plans for continued growth – not only organically but also through acquisition in fiscal 2017 and beyond.”

For the year ended June 30, 2016, net sales increased 4.4 percent to $30.4 million, compared to $29.1 million for fiscal year 2015. Net loss for the year was $1.9 million, compared to a net loss of $2.3 million for fiscal year 2015. Net loss applicable to common stockholders for the year ended June 30, 2016, was $2.3 million ($0.84 per common share), compared to a net loss of $5.1 million ($2.03 per common share) for fiscal year 2015. Net loss and net loss applicable to common stockholders for both fiscal years reflect the impact of the unique expenses incurred in the respective fourth quarters as outlined above.

Sales of proprietary and distributed capital equipment – especially the Solaris family of products – were Dynatronics’ leading growth categories in 2016. “We believe the upward trend in sales indicates increased customer confidence in our markets,” noted Cullimore. “We’ve developed plans for increasing organic sales growth through improved sales management, new product introductions, domestic and international expansion, and growth into post-acute care markets.”

The company’s key objectives in the coming year are as follows:

  • Achieve organic sales growth through improved sales management, new product introductions, geographic expansion both domestic and international, and expansion into post-acute care markets
  • Identify and act on acquisition opportunities that will further enhance our product offering and distribution coverage, and leverage our current sales network to improve gross profit margins
  • Improve our investor relations efforts in order to better alert the market to our strategic growth objectives

Mr. Cullimore is scheduled to present at the Second Annual Ladenburg Thalmann Healthcare Conference at the Sofitel Hotel in New York City on Tuesday, September 27, at 3:00 PM EDT. “The Conference provides an excellent forum to reach the investment community and discuss the growth strategy we are currently pursuing,” added Cullimore.

Dynatronics has scheduled a conference call for investors on September 26, 2016, at 8:30 AM ET. Those wishing to participate should call (877) 471-2694 and use the passcode 83012782.

The following is a summary of the financial results as of June 30, 2016 and 2015, and for the quarter and year then ended:

Summary Selected Financial Data
Statement of Operations Highlights
In thousands, except per share amounts

Quarter Ended

Year Ended

June 30

June 30

2016

2015

2016

2015

Net sales

$8,131

$7,907

$30,412

$29,118

Cost of sales

5,451

6,061

20,058

20,048

Gross profit

$2,680

$1,846

$10,354

$9,069

Selling, general, and admin. expenses

$3,534

$2,381

$10,979

$8,974

Research and development expenses

301

239

1,070

927

Non-recurring acquisition costs

0

0

0

256

Other expense, net

55

112

272

312

Loss before income taxes

($1,210)

($885)

($1,967)

($1,399)

Income tax (provision) benefit

65

(1,065)

65

(851)

Net loss

($1,145)

($1,950)

($1,902)

($2,250)

8% convertible preferred stock dividend

(99)

(1)

(372)

(1)

Series A 8% – convertible preferred stock beneficial conversion feature

0

(2,859)

0

(2,859)

Net loss available to common stockholders

($1,244)

($4,809)

($2,275)

$5,110

Net loss per share detail

from operations

($0.14)

($0.31)

($0.34)

($0.43)

from severance expense

(0.28)

0.00

(0.28)

0.00

from preferred dividend

(0.04)

(0.00)

(0.14)

(0.00)

from net other expense

(0.02)

(0.04)

(0.10)

(0.12)

from valuation allowance

0.02

(0.42)

0.02

(0.34)

from beneficial conversion

0.00

(1.13)

0.00

(1.13)

Net Loss attributable to common stockholders

($0.45)

($1.91)

($0.84)

($2.03)

Balance Sheet Highlights
In thousands, except per share amounts

June 30, 2016

June 30, 2015

Cash and cash equivalents

$966

$3,926

Trade accounts receivable

3,524

3,347

Inventories, net

4,997

5,422

Prepaid & other

268

618

Total current assets

$9,755

$13,313

Accounts payable

$1,914

$2,520

Accrued payroll and benefits expense

1,035

263

Accrued expenses

358

279

Other current liabilities

627

599

Line of credit

0

1,910

Total current liabilities

$3,934

$5,571

About Dynatronics Corporation

Dynatronics manufactures, markets and sells advanced-technology medical devices, orthopedic soft goods and supplies, treatment tables and rehabilitation equipment for the physical therapy, sports medicine, chiropractic and podiatry markets. More information regarding Dynatronics is available at www.dynatronics.com.

Safe Harbor Notification

This press release contains forward-looking statements. Those statements include references to the company’s expectations and similar statements. Forward-looking statements in this press release include statements regarding expansion into new markets. Actual results may vary from the views expressed in the forward-looking statements contained in this release. The development and sale of the company’s products are subject to a number of risks and uncertainties, including, but not limited to, changes in the regulatory environment, competitive factors, inventory risks due to shifts in market demand, market demand for the company’s products, availability of financing at cost-effective rates, and the risk factors listed from time to time in the company’s SEC reports.

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SOURCE Dynatronics Corporation