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MGC Diagnostics Corporation Reports 2013 First Fiscal Quarter Operating Results

   MGC Diagnostics Corporation Reports 2013 First Fiscal Quarter Operating
                                   Results

PR Newswire

SAINT PAUL, Minn., March 5, 2013

SAINT PAUL, Minn., March 5, 2013 /PRNewswire/ -- MGC Diagnostics Corporation
(NASDAQ: MGCD) (formerly Angeion Corporation), a global medical technology
company, today reported financial results for the first quarter fiscal 2013
ended January 31, 2013.

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

First Quarter Highlights:

  oSolid first quarter revenue of $7.0 million, an increase of 9% over the
    fiscal 2012 first quarter;
  oFirst quarter 2013 recurring revenue (service and supplies revenues)
    totaled $2.7 million, or 39% of total first quarter revenue;
  oGPO sales increased 109% to $3.2 million, compared to $1.5 million in the
    2012 first quarter;
  oFirst quarter 2013 maintenance and service contract billings increased 14%
    on a year-over-year basis, while maintenance and service gross margin
    improved to 70.8%, compared to 68.4% in the fiscal 2012 fiscal quarter;
  oSpirometry shipments for the first quarter increased 51% to 121 units,
    compared to 80 units in the prior year's first quarter;
  oInternational revenues increased 25% to $1.7 million, compared to $1.4
    million in last year's first quarter;
  oBacklog at January 31, 2013, increased 36% to $530,000, compared to
    backlog of $390,000 at January 31, 2012;
  oStrong balance sheet with $8.9 million in cash and cash equivalents, $13.2
    million of working capital and no long-term debt;
  oAt January 31, 2013, the Company had federal net operating loss carry
    forwards of approximately $14.5 million that may be used to offset a
    portion of the Company's future tax liability;
  oRated #1 in all product and service categories under a December 20, 2012
    User Satisfaction Survey by MD Buyline, a provider of objective,
    evidence-based information used in the selection, acquisition, and
    management of medical technology.

First quarter fiscal 2013 total revenues increased 9% to $7.0 million compared
to $6.4 million in the fiscal 2012 first quarter. Domestic 2013 first quarter
sales were $5.3 million, compared to $5.0 million in the 2012 first quarter,
while international sales were $1.7 million, versus $1.4 million in last
year's first quarter. For the first quarter, Group Purchasing Organization
("GPO") sales increased 109% to $3.2 million, as compared to $1.5 million in
the prior year's first quarter. GPO sales accounted for approximately 46% of
total sales for the 2013 first quarter, compared to 24% in the 2012 first
quarter.

First quarter equipment, supplies and accessories sales totaled $5.8 million,
compared to $5.4 million during last year's first quarter. Service revenues
for the first quarter totaled $1.2 million, compared to $1.1 million during
last year's first quarter. The Attachment Rate, which reflects the percentage
of Extended Service Contracts added at the point of sale to customer equipment
purchases, was 17% for the first quarter of fiscal 2013. The attachment rate
has steadily increased from the low single-digit level when the current
management team was installed. The Company's "Real Time Diffusion" ("RTD")
technology continues to do well, with 79% of new pulmonary device equipment
sales during the quarter containing RTD capabilities.

Gross margin for the quarter was 54.5% compared to 55.5% in the 2012 first
quarter. Gross margin for equipment, supplies and accessories fell to 51.2%
for the quarter, compared to 53.0% in the prior year's quarter, primarily as a
result of product mix. Gross margin for services increased to 70.8% for the
quarter, compared to 68.4% for the prior year's quarter primarily as a result
of improved pricing.

First quarter 2013 general and administrative expenses totaled $1.4 million
versus $1.1 million in the comparable quarter last year. Sales and marketing
expenses were $2.1 million compared to $1.8 million in the 2012 first quarter.

For the 2013 first quarter, the Company reported a net loss of $383,000, or
($0.10) per diluted share, versus a net loss of $249,000, or ($0.07) per
diluted share, in the 2012 first quarter. During the quarter, the Company
incurred non-recurring corporate development expenses of approximately
$177,000 while pursuing a potential strategic acquisition. The Company
abandoned the acquisition during the later stages of due diligence. The
Company also incurred a $28,000 expense related to legal fees regarding an
intellectual property dispute. Research and development expenses were $647,000
compared to $810,000 in last year's first quarter, reflecting cost savings
from prior year executive separations and conversion of consulting resources
to full time personnel.

Gregg O. Lehman, Ph D., president and chief executive officer of MGC
Diagnostics, said, "We are very pleased with the revenue increase achieved in
the fiscal 2013 first quarter. The nine percent increase is the highest first
quarter revenue increase in nearly a decade. With the implementation of a new
strategic initiative to drive improved first quarter sales, our sales force
did a great job of converting sales leads into active buyers."

"We had solid performance across all of our sales channels and geographies.
During the quarter, revenue from our GPO distribution channel increased 109%.
International sales were up 25%, as we made a number of upgrades in our
international distribution group. Extended service contracts sold at the point
of sale increased to 17% compared to 7% in Q1 2012. Recurring revenue, which
includes supply and service revenue, totaled 39% of total first quarter
revenue. Growing our base of recurring revenue, which provides our highest
gross margin, will continue to be a core focus. We are off to a good start in
fiscal 2013 and we look forward to the rest of the year."

Dr. Lehman continued, "In January 2013, Denver-based National Jewish Health,
known worldwide for treatment of patients with respiratory, cardiac, immune
and related disorders, and for groundbreaking medical research, selected MGC
Diagnostics as its preferred provider of cardiopulmonary diagnostic technology
and equipment. We are proud that an internationally renowned institution the
caliber of National Jewish has selected our technology as its preferred
option. This was an important competitive win for MGC Diagnostics and marks an
important point in the Company's history as we transition into a leading
innovator and aggressive sales and marketing organization. I believe this sets
the stage for MGC Diagnostics to attract other leading cardiorespiratory
institutions to partner with us. We firmly believe there are other significant
opportunities in 2013 and beyond."

Discontinued Operations
On August 28, 2012, the Company completed the sale of the assets of its New
Leaf business to Life Time Fitness, Inc. for $1.235 million. As a result, the
Company has reclassified its results for prior periods to eliminate from its
statement of comprehensive loss all fiscal 2012 revenues and expenses
associated with its New Leaf business and presented the income (loss) from New
Leaf activities as "discontinued operations."

Net Operating Loss Carry Forward
At January 31, 2013, the Company had federal net operating loss carry forwards
of approximately $14.5 million, not subject to IRC annual limitations on use.
These loss carry forwards will expire in years 2018 through 2032.

Conference Call
The Company has scheduled a conference call for Tuesday, March 5, 2013 at 4:30
p.m. ET to discuss its financial results for the first quarter of fiscal year
2013.

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
10025649, through March 12, 2013. 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. The Company develops, manufactures and markets non-invasive
diagnostic systems. This portfolio of products provides 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, 2012,
and any updates in subsequent filings on Form 10-Q or Form 8-K under the
Securities Exchange Act of 1934.

Contact: Wesley W. Winnekins         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)



MGC DIAGNOSTICS CORPORATION AND SUBSIDIARY
Consolidated Balance Sheets
(In thousands, except share and per share data)
                                                 January 31,   October 31,
                                                 2013           2012
Assets                                           (Unaudited)
Current Assets:
Cash and cash equivalents                        $    8,922  $    9,665
Accounts receivable, net of allowance for        6,029          5,860
doubtful accounts of $105 and $98, respectively
Inventories, net of obsolescence reserve of      4,036          3,850
$394 and $373, respectively
Prepaid expenses and other current assets        298            418
Total current assets                             19,285         19,793
Property and equipment, net of accumulated       753            578
depreciation of $3,925 and $3,876, respectively
Intangible assets, net                           1,771          1,492
Other non-current assets                         85             85
Total Assets                                     $  21,894    $   21,948
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable                                 $   2,006   $    2,094
Employee compensation                            1,493          1,749
Deferred income                                  1,994          1,927
Warranty reserve                                 84             91
Other current liabilities and accrued expenses   509            442
Total current liabilities                        6,086          6,303
Long-term liabilities:
Long-term deferred income and other              1,300          895
Total Liabilities                                7,386          7,198
Commitments and Contingencies
Shareholders' Equity:
Common stock, $0.10 par value, authorized
25,000,000 shares, 4,000,678 and 3,986,350
shares issued and 3,901,607 and 3,885,279        390            388
shares outstanding in 2013 and 2012,
respectively
Undesignated shares, authorized 5,000,000        -              -
shares, no shares issued and outstanding
Additional paid-in capital                       21,185         21,046
Accumulated deficit                              (7,067)        (6,684)
Total Shareholders' Equity                       14,508         14,750
Total Liabilities and Shareholders' Equity       $  21,894    $   21,948



MGC DIAGNOSTICS CORPORATION AND SUBSIDIARY
Consolidated Statements of Comprehensive Loss
(Unaudited in thousands, except per share amounts)
                                                   Three Months Ended
                                                   January 31,
                                                   2013          2012
Revenues
Equipment, supplies and accessories revenues       $   5,806   $   5,372
Service revenues                                   1,202         1,056
                                                   7,008         6,428
Cost of revenues
Cost of equipment, supplies and accessories        2,835         2,525
revenues
Cost of service revenues                           351           334
                                                   3,186         2,859
Gross margin                                       3,822         3,569
Operating expenses:
Selling and marketing                              2,126         1,775
General and administrative                         1,418         1,145
Research and development                           647           810
Amortization of intangibles                        7             108
                                                   4,198         3,838
Operating loss                                     (376)         (269)
Interest income                                    -             4
Loss from continuing operations before taxes       (376)         (265)
Provision for taxes                                7             7
Loss from continuing operations                    (383)         (272)
Discontinued operations
Income from operations of discontinued operations  -             23
Net loss                                           (383)         (249)
Other comprehensive loss; net of tax
Unrealized loss on securities                      -             (1)
Comprehensive loss                                 $   (383)  $    (250)
Loss per share
Basic
From continuing operations                         $   (0.10)  $   (0.07)
From discontinued operations                       0.00          0.00
Total                                              $   (0.10)  $   (0.07)
Diluted
From continuing operations                         $   (0.10)  $   (0.07)
From discontinued operations                       0.00          0.00
Total                                              $   (0.10)  $   (0.07)
Weighted average common shares outstanding
Basic                                              3,891         3,780
Diluted                                            3,891         3,780



MGC DIAGNOSTICS CORPORATION AND SUBSIDIARY
Consolidated Statements of Cash Flows
(Unaudited in thousands)
                                            Three Months Ended
                                            January 31,
                                            2013             2012
Cash flows from operating activities:
Net loss                                    $     (383)  $     (249)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation                                55               64
Amortization                                21               108
Stock-based compensation                    101              137
Increase (decrease) in allowance for        7                (3)
doubtful accounts
Decrease in inventory obsolescence reserve  21               47
Gain on disposal of equipment               (3)              -
Changes in operating assets and
liabilities:
Accounts receivable                         (176)            1,063
Inventories                                 (207)            (419)
Prepaid expenses and other current assets   120              37
Accounts payable                            (88)             (189)
Employee compensation                       (256)            (202)
Deferred income                             314              (218)
Warranty reserve                            (7)              (19)
Other current liabilities and accrued       (3)              9
expenses
Net cash (used in) provided by operating    (484)            166
activities
Cash flows from investing activities:
Sales of investments                        -                241
Purchases of property and equipment and     (317)            (240)
intangible assets
Net cash (used in) provided by investing    (317)            1
activities
Cash flows from financing activities:
Proceeds from issuance of common stock      68               11
under employee stock purchase plan
Proceeds from the exercise of stock         -                40
options
Repurchase of common stock                  -                (5)
Repurchase of common stock upon vesting of  (10)             -
restricted stock awards
Net cash provided by financing activities   58               46
Net increase in cash and cash equivalents   (743)            213
Cash and cash equivalents at beginning of   9,665            8,461
year
Cash and cash equivalents at end of year    $    8,922    $    8,674
Cash paid for taxes                         $      16  $       2
Supplemental non-cash items:
Current and non-current liabilities issued  $     210   $        -
for leasehold improvements

SOURCE MGC Diagnostics Corporation

Website: http://www.mgcdiagnostics.com