Vaso Corporation Announces Financial Results for Fourth Quarter and Full Year of 2023

PLAINVIEW, N.Y., April 01, 2024 (GLOBE NEWSWIRE) — Vaso Corporation (“Vaso”) (OTCQX: VASO) today announced its operating results for the three months and year ended December 31, 2023.

“The Company continued the growth trend in fiscal year 2023 and reached another record annual revenue of $81.0 million, an increase of 2.2% year-over-year. We are particularly pleased to see all three of our businesses attaining higher revenue over the prior year,” commented Dr. Jun Ma, President and Chief Executive Officer of Vaso Corporation. “Net income for the year was $4.8 million, despite additional significant investments during the year on a new program in the professional sales service segment, on product development efforts in the equipment segment, and on corporate undertakings such as investment banking activities, etc. We believe these investments and initiatives will lead to further growth of our businesses and increase the shareholder value of the Company.”

“The Company continued to generate positive cashflow from operating activities, at a rate of $5.3 million during fiscal year 2023, resulting in a strong balance sheet with $25.3 million in cash, cash equivalents and short-term investments at the end of 2023,” Dr. Ma continued. “Deferred revenue at the end of 2023 was $32.2 million, an increase of $1.4 million when compared to the end of 2022, which will turn into recognized revenue in future periods upon completion of delivery of the underlying products or services.”

“Based on the resources presently available and potentially in the future, the management is working on growth strategies for all areas of our diversified business portfolio, including seeking opportunities for new partnerships and accretive acquisitions. We look forward to delivering more exciting developments in the Company with continued growth and profitability in 2024,” concluded Dr. Ma.

Achari Business Combination Agreement

As previously announced, the Company entered into a business combination agreement (the “Business Combination Agreement”), dated as of December 6, 2023, with Achari Ventures Holdings Corp. I, a Delaware corporation (“Achari”) (NASDAQ: AVHI), and Achari Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Achari (“Merger Sub”). The Business Combination Agreement provides, among other things, that on the terms and subject to the conditions set forth therein, Merger Sub will merge with and into the Company (the “Merger”), with the Company surviving as a wholly owned subsidiary of Achari. Upon the closing of the Business Combination Agreement (the “Closing”), we anticipate that Achari will change its name to “Vaso Holdings Corp.” or an alternative name chosen by the Company and reasonably acceptable to Achari (“New Vaso”). The Merger and the other transactions contemplated by the Business Combination Agreement are hereinafter referred to collectively as the “Business Combination”.

Upon the Closing, New Vaso would have authorized shares of Class A common stock and Class B common stock. The Business Combination Agreement establishes a pro forma equity value of the Company at approximately $176 million, at $10.00 per share of Class A common stock. As such, we believe that the current Vaso stockholders would receive approximately 17.6 million shares of Class A common stock and the current Achari shareholders would maintain between 500 thousand and 750 thousand shares of Class A common stock depending on Achari’s unpaid expenses at the Closing and presuming the redemption of all outstanding public shares of Achari on or prior to the Closing. In addition, current Achari warrant holders would have outstanding warrants to purchase a minimum of 8.25 million shares of Class A common stock at an exercise price of $11.50 per share. No shares of Class B common stock are expected to be outstanding immediately after the Business Combination.

The Boards of Directors of Vaso and Achari have each approved the Business Combination, the consummation of which is subject to various customary closing conditions, including the filing and effectiveness of a Registration Statement on Form S-4 (as amended or supplemented, the “Registration Statement”) by Achari with the United States Securities and Exchange Commission (“SEC”), the filing of a proxy statement by Vaso with the SEC and clearance by the SEC, and the approval of a majority of shareholders of both Achari and Vaso of the proposed business combination (Vaso shareholders representing approximately 44% of Vaso’s outstanding shares have entered into support agreements committing them to vote in favor of the Business Combination). The Business Combination is expected to close in the second quarter of 2024.

Financial Results for Three Months Ended December 31, 2023

For the three months ended December 31, 2023, revenue decreased by 5.6% to $21.9 million from $23.2 million for the same period of 2022 due to lower revenues in all our segments. Revenue in our IT segment decreased by $0.4 million, or 4.4%, to $9.8 million as the result of lower recurring services during the quarter; revenue in our equipment segment decreased by $82 thousand, or 10.4%, to $0.7 million due to lower equipment sales in China in the quarter; and revenue in our professional sales service segment decreased by $0.8 million, or 6.4%, to $11.4 million due to lower incentive commission revenue when compared to the prior year, partially offset by higher delivery of underlying equipment. We anticipate that revenue will improve in all three business segments, as we expect growth from new business in the IT segment, higher delivery of underlying equipment in our professional sales service segment resulting from strong order bookings in 2023, and continued recovery of our China operations from COVID lockdowns.

Gross profit for the fourth quarter of 2023 decreased by 4.0% to $14.1 million, compared with a gross profit of $14.6 million for the same quarter of 2022. This decrease was primarily the result of a decrease in revenue.

Selling, general and administrative (SG&A) and R&D expenses for the fourth quarter of 2023 increased by 14.7% to $12.9 million, compared to $11.3 million for the fourth quarter of 2022. The increase was primarily attributable to an increase in personnel and travel costs in the professional sales service segment mainly as a result of the new program launched in 2023 which we anticipate will lead to increased revenue in 2024. SG&A expenses were 58.9% and 48.5% of revenue in the fourth quarter of 2023 and 2022, respectively.

Net income for the three months ended December 31, 2023 was $1.1 million, compared with a net income of $8.0 million for the three months ended December 31, 2022. The decrease was primarily due to the decrease in revenue and an increase in SG&A costs in 2023 as well as to the recognition of a $4.8 million tax benefit resulting from a reduction in the reserve for deferred tax assets in 2022.

Financial Results for Year Ended December 31, 2023

For the year ended December 31, 2023, revenue increased by $1.7 million, or 2.2%, to $81.0 million when compared with $79.3 million of revenue for the year 2022. Revenue in our IT segment increased by 0.7% to $40.4 million for the year 2023, from 2022 revenue of $40.1 million, primarily due to an increase in revenue in the healthcare IT business. Commission revenues in our professional sales service segment increased by $1.2 million, or 3.3%, to $37.8 million in the year 2023, compared to $36.6 million in 2022, primarily as the result of higher equipment deliveries by our partner and higher blended commission rates for the equipment delivered during the year. Equipment segment revenue for the year 2023 increased by 10.1% to $2.8 million, from $2.6 million in 2022, due to higher ARCS^®-cloud software-as-a-service revenues partially offset by lower reported product sales in our China operations due to the effect of foreign exchange rate fluctuations in 2023.

Gross profit for the year ended December 31, 2023 increased by 5.6% to $50.6 million, from $47.9 million in 2022, as a result of the higher revenue in our professional sales service segment and improved margin in our IT segment.

SG&A expenses for the year ended December 31, 2023 increased by $4.8 million, or 11.8%, to $45.6 million, or 56.3% of revenue, compared with $40.8 million, or 51.5% of revenue, for the same period in 2022. The increase resulted primarily from an increase of $3.4 million in personnel and travel costs in the professional sales service segment, including for the launch of a new program in 2023 which we anticipate will lead to increased revenue in 2024, and a $0.8 million increase in corporate expenses resulting from an increase in investment banking costs.

For the year ended December 31, 2023, the Company had net income of $4.8 million compared to net income of $11.3 million in 2022, a decrease of $6.5 million due to higher operating expenses in 2023 as referenced above, and the income tax benefit of $4.8 million recognized in 2022.

Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization, and share-based compensation) was $5.1 million for the year ended December 31, 2023, compared to Adjusted EBITDA of $8.4 million for the year ended December 31, 2022. The decrease was primarily due to the lower reported net income.

Net cash provided from operating activities in 2023 was $5.3 million, compared to net cash provided from operating activities of $14.4 million in 2022. The decrease is principally due to the decrease in profitability. Net cash and short-term investments increased to $25.3 million at December 31, 2023, compared to $20.3 million at December 31, 2022.

Deferred revenue increased to $32.2 million at December 31, 2023, compared to $30.8 million at December 31, 2022. The increase is primarily the result of order bookings exceeding equipment deliveries in the professional sales service segment. Deferred revenue will be recognized in the future when the underlying equipment or services are delivered and accepted at the customer site.

About Vaso

Vaso Corporation is a diversified medical technology company with several distinctive but related specialties: managed IT systems and services, including healthcare software solutions and network connectivity services; professional sales services for medical equipment; and design, manufacture and sale of proprietary medical devices.

The Company operates through three wholly owned subsidiaries:

• VasoTechnology, Inc. provides network and IT services through two business units: NetWolves Network Services LLC, a managed network services provider with an extensive, proprietary service platform to a broad base of customers; and VasoHealthcare IT Corp., a national value added reseller of Radiology Information System (“RIS”), Picture Archiving and Communication System (“PACS”), and other software solutions from various vendors as well as related services, including implementation, management and support.
• Vaso Diagnostics, Inc. d.b.a. VasoHealthcare, provides professional sales services and is the operating subsidiary for the exclusive sales representation of GE HealthCare diagnostic imaging and ultrasound products in certain market segments in the USA.
• VasoMedical, Inc. manages and coordinates the design, manufacture and sales of proprietary medical equipment and software, as well as operates the Company’s overseas assets including China-based subsidiaries.

Additional information is available on the Company’s website at www.vasocorporation.com.

Summarized Financial Information

			FOR THE THREE MONTHS ENDED								FOR THE YEAR ENDED
			December 31, 2023				December 31, 2022				December 31, 2023				December 31, 2022
STATEMENTS OF OPERATIONS			(In thousands)
Revenue		$	21,917			$	23,223			$	81,024			$	79,294
Gross profit			14,053				14,642				50,593				47,902
Operating income			970				3,200				4,195				6,454
Other income (expense), net			176				41				710				97
Income before taxes			1,146				3,241				4,905				6,551
Income tax benefit (expense)			(65	)			4,785				(100	)			4,743
Net income			1,081				8,026				4,805				11,294
Income tax (benefit) expense			65				(4,785	)			100				(4,743	)
Interest (income) expense, net			(303	)			(75	)			(858	)			(85	)
Depreciation and amortization			237				347				999				1,923
Non-cash stock-based compensation			10				13				48				35
Adjusted EBITDA*		$	1,090			$	3,526			$	5,094			$	8,424

  

		December 31, 2023				December 31, 2022
BALANCE SHEETS		(In thousands)
Total current assets		$	45,099			$	40,990
Total assets		$	75,757			$	71,645
Total current liabilities		$	30,040			$	31,506
Total stockholders’ equity		$	26,843			$	22,067

*Adjusted EBITDA is earnings before interest, taxes, depreciation and amortization and non-cash stock-based compensation

Except for historical information contained in this release, the matters discussed are forward-looking statements that involve risks and uncertainties. When used in this report, words such as “anticipates”, “believes”, “could”, “estimates”, “expects”, “may”, “optimistic”, “plans”, “potential”, “looking forward”, and “intends” and similar expressions, as they relate to the Company or its management, identify forward-looking statements. Such forward-looking statements are based on the beliefs of the Company’s management, as well as assumptions made by and information currently available to the Company’s management. Among the factors that could cause actual results to differ materially are the following: the effect of business and economic conditions, including the possibility of a downturn in the US economy and the continued impact of the COVID-19 pandemic; the effect of the dramatic changes taking place in IT and healthcare; continuation of the GEHC agreement; the impact of competitive technology and products and their pricing; medical insurance reimbursement policies; manufacturing or supplier problems; unforeseen difficulties and delays in product development programs; the actions of regulatory authorities and third-party payers in the United States and overseas; and the risk factors reported from time to time in the Company’s SEC reports. The Company undertakes no obligation to update forward-looking statements as a result of future events or developments.

Investor Contact:
Michael J. Beecher
Investor Relations
Phone: 516-997-4600
Email: mbeecher@vasocorporation.com