MGC Diagnostics Corporation Reports Fourth Quarter and Fiscal Year 2012 Operating Results

   MGC Diagnostics Corporation Reports Fourth Quarter and Fiscal Year 2012
                              Operating Results

PR Newswire

SAINT PAUL, Minn., Dec. 19, 2012

SAINT PAUL, Minn., Dec. 19, 2012 /PRNewswire/ -- MGC Diagnostics Corporation
(NASDAQ: MGCD) (formerly Angeion Corporation), a global medical technology
company, today reported financial results for the fourth quarter and fiscal
year 2012 ended October 31, 2012.

(Logo: http://photos.prnewswire.com/prnh/20120821/LA60189LOGO)

Fourth Quarter and Fiscal Year 2012 Highlights:

  oFourth quarter revenue of $8.2 million increased 4% versus fourth quarter
    of fiscal 2011 and 19% on a sequential basis. Fiscal 2012 revenue was
    comparable to fiscal 2011 revenue;
  oFiscal fourth quarter income from continuing operations was $5,000 or
    $0.00 per diluted share and income from discontinued operations was
    $785,000 or $0.20 per diluted share for comprehensive income of $790,000
    or $0.20 per diluted share. The fiscal 2012 loss from continuing
    operations was $(1.06) million or $(0.28) per diluted share and income
    from discontinued operations was $1.06 million or $0.28 per diluted share
    for a net comprehensive loss of $(3,000) or $(0.00) per diluted share;
  oFiscal 2012 recurring revenue (service and supplies revenues) totaled 40%
    of total revenue compared to 37% in fiscal 2011;
  oFiscal 2012 maintenance and service contract billings increased 6% on a
    year-over-year basis;
  oStrong year-end balance sheet with $9.7 million in cash and investments,
    $13.5 million of working capital and no long-term debt;
  oRated #1 in all product and service categories of a September 24, 2012
    User Satisfaction Survey by MD Buyline; a provider of objective,
    evidence-based information used in the selection, acquisition, and
    management of medical technology;
  oThe Company sold the assets of its New Leaf business to Life Time Fitness,
    effective August 28, 2012 to focus on its core business. Life Time Fitness
    paid the Company $1.0 million at closing, and will pay an additional
    $235,000 over the next 18 months.

Fourth quarter fiscal 2012 total revenues increased 4% to $8.2 million
compared to $7.9 million in the fiscal 2011 fourth quarter. Domestic 2012
fourth quarter sales were $6.6 million, compared to $6.4 million in the 2011
fourth quarter while international sales were $1.6 million, versus $1.5
million in last year's comparable fourth quarter.

Fourth quarter equipment, supplies and accessories sales totaled $7.1 million,
compared to $6.7 million during last year's comparable quarter. Service
revenues for the fourth quarter decreased $26,000, or 2%, to $1.1 million
compared to last year's fourth quarter. The decrease in 2012 fourth quarter
service revenues reflects the Company's strategic decision to no longer
support older customer equipment as the parts needed to meet our service
standards are no longer available. We will focus on transitioning these
customers to newer MGC Diagnostics equipment. For the 2012 fourth quarter, the
Company recorded a $816,000 gain related to the sale of its New Leaf assets to
Life Time Fitness, Inc. Overall, the Company reported net income of $790,000,
or $0.20 per diluted share, versus net income of $391,000, or $0.10 per
diluted share, in the comparable quarter last year.

Gross margin for the quarter was 55.1% compared to 56.2% in the fourth quarter
of fiscal year 2011, respectively. This decrease is due in part to lower
margin Group Purchasing Organization (GPO) sales accounting for a higher
percent of fiscal 2012 Company sales. For the fourth quarter and fiscal year,
GPO sales increased 176% and 218%, as compared with the prior year quarter and
fiscal year, respectively. GPO sales accounted for approximately 58% and 45%
of total sales for the just completed quarter and fiscal year, respectively.

Fourth quarter 2012 general and administrative expenses totaled $1.2 million
versus $1.1 million in the comparable quarter last year. Sales and marketing
expenses were $2.5 million compared to $1.8 million in the fourth quarter of
fiscal year 2011. Increases included GPO fees; personnel/consulting and
related meeting, travel and convention costs introducing rebranded products,
as well as separation costs totaling $90,000 for terminated sales and
marketing management positions. Research and development costs were $791,000
compared to $852,000 in last year's fourth quarter.

For fiscal year 2012, the Company reported total revenues of $27.2 million
compared to $27.0 million in fiscal year 2011. Income from discontinued
operations was $1.1 million, reflecting a gain of $816,000 attributable to the
sale of the Company's New Leaf assets to Life Time Fitness, Inc. on August 28,
2012, compared to a loss of $712,000 in fiscal 2011 (see "Discontinued
Operations" below). The Company reported a net loss of $1,000, or $(0.00) per
fully diluted share, compared to a net loss of $152,000, or $(0.04) per
diluted share in fiscal year 2011.

Gregg O. Lehman,Ph.D., president and chief executive officer of MGC
Diagnostics, said, "As we enter fiscal year 2013, the former Angeion
Corporation has completely transformed into MGC Diagnostics, a highly-focused
global medical technology company specializing in cardio/respiratory health
solutions. We have reconfigured and strengthened the executive management team
and now have the appropriate skill sets to consistently grow the company. We
have streamlined the sales and marketing management team to enhance
efficiencies that will drive sales. We have successfully rebranded our
products and corporate identity by leveraging the strength of our highly
respected MedGraphics brand and we concluded the sale of our New Leaf
operations to Life Time Fitness, Inc.

"From an operating standpoint, we have taken a major step in stabilizing, and
bringing a level of predictability to our revenue stream by having expanded
our GPO (group purchasing organization) sales channel in the U.S. Given that a
majority of hospitals in the U.S. are members of a GPO, this distribution
channel has the ability to effectively showcase our products on a much wider
scale than we could ever do in-house. These types of efficiencies permit us to
focus our resources on reengineering and refreshing our existing products and
developing new products to drive future growth.

"In the just concluded fiscal year," continued Dr. Lehman, "we initiated the
roll-out of our new Real Time Diffusion product, which has been very well
received to this point and that we expect will generate substantial traction
in fiscal 2013. We expect to introduce two new products in fiscal 2013 that
will be important contributors to the top and bottom lines in the coming
years. New product development is a priority at MGC Diagnostics and we are
uniquely positioned to bring innovation to a space that has traditionally
relied on older technology. We are focusing on improving operating
efficiencies, achieving better patient outcomes and managing costs in a manner
consistent with the needs of the market and the coming regulatory
requirements."

Dr. Lehman concluded, "With the Company appropriately reconfigured, we are now
at the proverbial starting line as a company that is right-sized, with a
highly-focused management team, a commitment to new product development, and a
motivated sales force with the necessary tools to take this company to the
next level of its development in the coming years. There are great
opportunities ahead and we look forward to fully developing those
opportunities to drive value for our customers, employees and our loyal
shareholders."

Discontinued Operations

In reporting these results for the three months and the fiscal years ended
October 31, 2012 and 2011, the Company is presenting results from its New Leaf
business line as "discontinued operations." In December 2011, the Company
announced that its Board of Directors had determined that it would seek
strategic alternatives, including the possibility of a sale, of the New Leaf
business and that it had hired an investment banker to assist it in this
process. On August 28, 2012, the Company announced the completion of the sale
of the assets of its New Leaf business to Life Time Fitness, Inc. for $1.235
million.

As a result, in this press release the Company has eliminated from its
statement of comprehensive income (loss) all revenues and expenses associated
with its New Leaf business and presented the income (loss) from New Leaf
activities as "discontinued operations." The Company has also reclassified its
results for prior periods in these financial statements to reflect this
discontinued operations treatment for its New Leaf business line.

Conference Call

The Company has scheduled a conference call for Wednesday, December 19, 2012
at 11:00 a.m. ET to discuss its financial results for the fourth quarter of
fiscal year 2012.

Participants can dial (877) 317-6789 or (412) 317-6789 to access the
conference call, or listen via a live Internet webcast on the Company's
website at www.mgcdiagnostics.com. A replay of the conference call will be
available by dialing (877) 344-7529 or (412) 317-0088, confirmation code
10022073, through December 26, 2012. A webcast replay of the conference call
will be accessible on the Company's website at www.mgcdiagnostics.com for 90
days.

About MGC Diagnostics

MGC Diagnostics Corporation (NASDAQ: MGCD), (formerly Angeion Corporation), is
a global medical technology company dedicated to cardiorespiratory health
solutions. MGC Diagnostics develops, manufactures and markets non-invasive
diagnostic systems. This portfolio of products provide solutions for disease
detection, integrated care, and wellness across the spectrum of
cardiorespiratory healthcare. The Company's products are sold internationally
through distributors and in the United States through a direct sales force
targeting heart and lung specialists located in hospitals, university-based
medical centers, medical clinics, physicians' offices, pharmaceutical
companies, medical device manufacturers, and clinical research organizations
(CROs). For more information about MGC Diagnostics, visit
www.mgcdiagnostics.com.

Cautionary Statement Regarding Forward Looking Statements

From time to time, in reports filed with the Securities and Exchange
Commission, in press releases, and in other communications to shareholders or
the investing public, MGC Diagnostics Corporation may make forward−looking
statements concerning possible or anticipated future financial performance,
business activities or plans that include the words "believes," "expects,"
"anticipates," "intends" or similar expressions. For these forward−looking
statements, the Company claims the protection of the safe harbor for
forward−looking statements contained in federal securities laws. These
forward−looking statements are subject to a number of factors, risks and
uncertainties, including those disclosed in our periodic filings with the SEC,
that could cause actual performance, activities or plans after the date the
statements are made to differ significantly from those indicated in the
forward−looking statements. For a list of these factors¸ see the sections
entitled "Risk Factors" and "Cautionary Note Regarding Forward Looking
Statements," in the Company's Form 10-K for the year ended October 31, 2011,
and any updates in subsequent filings on Form 10-Q or Form 8-K under the
Securities Exchange Act of 1934.

Contact:  Robert M. Wolf              Joe Dorame, Robert Blum, Joe Diaz
            MGC Diagnostics Corporation Lytham Partners, LLC
            Chief Financial Officer     (602) 889-9700
            (651) 484-4874              mgcd@lythampartners.com

(Financial Tables to Follow)

MCG DIAGNOSTICS CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands, except share and per share data) October 31,    October 31,
                                                2012            2011
      Assets
Current Assets:
 Cash and cash equivalents                    $   9,665     $   8,461
 Short-term investments                       -               723
 Accounts receivable, net of allowance for
doubtful
accounts of $98 and $96, respectively           5,860           5,958
 Inventories, net of obsolescence reserve of
$373 and
$431, respectively                              3,850           3,688
 Prepaid expenses and other current assets    418             235
 Current assets of discontinued operations    -               62
Total current assets                            19,793          19,127
Property and equipment, net of accumulated
depreciation of $3,876 and $3,735,             578             440
respectively
Intangible assets, net                          1,492           1,174
Other non-current assets                        85              -
Non-current assets of discontinued operations   -               31
Total Assets                                    $   21,948    $   20,772
      Liabilities and Shareholders' Equity
Current Liabilities:
 Accounts payable                             $            $   
                                                2,094           2,022
 Employee compensation                        1,749           1,481
 Deferred income                              1,927           1,771
 Warranty reserve                             91              141
 Other current liabilities and accrued        442             221
expenses
Total current liabilities                       6,303           5,636
Long-term liabilities:
 Long-term deferred income and other          895             817
Total Liabilities                               7,198           6,453
Commitments and Contingencies                   -               -
Shareholders' Equity:
 Common stock, $0.10 par value, authorized
25,000,000 shares,
3,986,350 and 3,905,648 shares issued and
3,885,279 and
3,778,796 shares outstanding in 2012 and 2011,  388             378
respectively
 Undesignated shares, authorized 5,000,000
shares,
no shares issued and outstanding                -               -
 Additional paid-in capital                   21,046          20,622
 Accumulated deficit                          (6,684)         (6,683)
 Accumulated other comprehensive income       -               2
Total Shareholders' Equity                      14,750          14,319
Total Liabilities and Shareholders' Equity      $             $   20,772
                                                21,948

MCG DIAGNOSTICS CORPORATION AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income (Loss)
(Unaudited in thousands,       Three Months Ended       Year EndedOctober 31,
except per share amounts)      October 31,
                               2012       2011          2012           2011
Revenues
 Equipment, supplies and     $        $   6,736  $  22,839    $ 
accessories revenues           7,101                                   22,912
 Service revenues            1,131      1,157         4,319          4,090
                               8,232      7,893         27,158         27,002
Cost of revenues
 Cost of equipment,
supplies and accessories       3,338      3,108         10,902         10,316
revenues
 Cost of service revenues    359        350           1,445          1,391
                               3,697      3,458         12,347         11,707
Gross margin                   4,535      4,435         14,811         15,295
Operating expenses:
 Selling and marketing       2,471      1,828         8,029          6,758
 General and administrative  1,158      1,056         4,146          4,299
 Research and development    791        852           3,246          3,239
 Amortization of             108        105           437            420
intangibles
                               4,528      3,841         15,858         14,716
Operating income (loss)        7          594           (1,047)        579
 Interest income             2          1             9              21
Income (loss) from continuing
operations
 before taxes               9          595           (1,038)        600
 Provision for taxes         4          10            25             40
Income (loss) from continuing  5          585           (1,063)        560
operations
Discontinued operations
 (Loss) income from
operations of discontinued     (31)       (194)         246            (712)
operations
 Gain on sale of             816        -             816            -
discontinued operations
Income (loss) from             785        (194)         1,062          (712)
discontinued operations
Net income (loss)              790        391           (1)            (152)
Other comprehensive loss; net
of tax
 Unrealized loss on          -          (2)           (2)            (5)
securities
Comprehensive income (loss)    $       $         $          $  
                               790       389           (3)           (157)
Income (loss) per share
Basic
 From continuing operations   $      $    0.16  $   (0.28)   $   
                                -                                    .15
 From discontinued            $        $   (0.06)  $    0.28   $ 
operations                     0.20                                   (0.19)
 Total                      $        $   0.10   $         $ 
                               0.20                    -             (0.04)
Diluted
 From continuing operations   $      $    0.15  $   (0.28)   $   
                                -                                    0.15
 From discontinued            $        $   (0.05)  $    0.28   $  
operations                     0.20                                   (0.19)
 Total                      $        $    0.10  $         $  
                               0.20                    -             (0.04)
Weighted average common
shares outstanding
Basic                        3,885      3,767         3,828          3,767
Diluted                      3,929      3,829         3,828          3,842

MCG DIAGNOSTICS CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In thousands)                                  Year Ended October 31,
                                                2012             2011
Cash flows from operating activities:
Net loss                                        $          $    
                                                (1)             (152)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation                                   234              265
Amortization                                   437              420
Stock-based compensation                       411              346
Increase (decrease) in allowance for doubtful  2                (4)
accounts
Decrease in inventory obsolescence reserve     (58)             (168)
Gain Loss on disposal of equipment             3                76
Gain Loss on disposal of discontinued          (816)            -
operations
Changes in operating assets and liabilities:
Accounts receivable                             96               (733)
Inventories                                     (94)             115
Prepaid expenses and other current assets       (33)             35
Accounts payable                                72               71
Employee compensation                           268              (634)
Deferred income                                 222              165
Warranty reserve                                (50)             (34)
Other current liabilities and accrued expenses  221              (187)
Net cash provided by (used in) operating       914              (419)
activities
Cash flows from investing activities:
Sales of investments                            721              2,715
Proceeds from sale of discontinued operations   665              -
Purchases of property and equipment and         (1,131)          (599)
intangible assets
Net cash provided by investing activities      255              2,116
Cash flows from financing activities:
Proceeds from issuance of common stock
under employee stock purchase plan             50               20
Proceeds from the exercise of stock options     97               48
Repurchase of common stock                      (66)             (198)
Repurchase of common stock upon vesting of      (46)             (49)
restricted stock awards
Net cash provided by (used in) financing       35               (179)
activities
Net increase in cash and cash equivalents       1,204            1,518
Cash and cash equivalents at beginning of year  8,461            6,943
Cash and cash equivalents at end of year        $     9,665  $    
                                                                 8,461
Cash paid for taxes                             $          $      
                                                21              24
Supplemental non-cash items:
Share value received for stock option exercise $         $      
                                                -               89
Share value issued for long-term liability     48               -
Other current and non-current assets from sale
of discontinued
 operations                                    235              -

SOURCE MGC Diagnostics Corporation

Website: http://www.mgcdiagnostics.com
 
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