Dynatronics Announces 16.6% increase in Revenues for Fiscal 2017 Second Quarter

COTTONWOOD HEIGHTS, Utah, Feb. 13, 2017

Net sales for the quarter increased 16.6 percent to $8.7 million, compared to $7.5 million in the same period of the prior year.  Gross profit for the quarter increased $396,000 or approximately 14.8 percent to $3.1 million, or 35.3 percent of net sales.  This gross margin compares to 35.8 percent of sales for the quarter ended December 31, 2015.  Gross margin during the current quarter was impacted as a greater proportion of sales came from distributed capital equipment, which carries a somewhat lower gross margin than the company's combined average gross margin.  Increased sales of distributed capital equipment resulted from our sales focus on the long term care market during the past year. 

"The 16.6 percent increase in sales for the quarter reflects a return on the investments we are making to better support our sales team," explained Jeff Gephart, senior vice president of sales at Dynatronics.  "We are continuing to refine our sales strategies to achieve sales growth, margin growth, and expanded coverage in the markets we serve."

Net loss for the quarter ended December 31, 2016, was approximately $95,000, compared to a net loss of $125,000 for the quarter ended December 31, 2015.  The decrease in net loss is attributable primarily to higher gross profit from increased sales, partially offset by higher selling costs and personnel expenses related to the implementation our strategic plans for organic growth and potential acquisition activity.

Net loss applicable to common stockholders for the quarter ended December 31, 2016, was approximately $560,000 compared to a loss of $205,000 for the quarter ended December 31, 2015.  Net loss applicable to common stockholders recognizes a deemed dividend of $376,000 on the Series A 8% Convertible Preferred Stock that was issued in December 2016 as well as dividends accrued on preferred stock during the quarter, which totaled approximately $89,000.  These dividends were paid in common stock, other than approximately $1,000 which was paid in cash.

"We have energized our operations over the last year by hiring a new head of sales and marketing, new leadership in international sales and clinical education, a new chief financial officer and new management for our Chattanooga, Tennessee facility," commented Company President and CEO, Kelvyn H. Cullimore, Jr.  "We are also currently searching for a new leader of global operations to focus on improved manufacturing methods and enhanced gross profit margins, and to assist with possible acquisitions during 2017." 

In December, 2016, holders of Dynatronic's Series A Preferred stock affirmed their support of the company's strategic plans by participating in a $975,000 offering of the Company's remaining Series A Preferred stock.  Erin Enright, a member of Dynatronic's Board of Directors and a managing partner of Prettybrook Partners, whose affiliates led the investment, commented, "Recent improved sales performance is validating management's important strategic moves, and the acquisition pipeline is promising.  We continue to be confident of the Company's direction and growth prospects."