VanEck Vectors Emerging Markets Aggregate Bond ETF

Emageon reported Q4 2007 revenue of $28.6 million, down 14.7% year over year, with system sales of $15.4 million and support services of $13.2 million. Full-year 2007 revenue was $104.2 million, down 15.6% year over year, with system sales of $51 million and support services of $53.3 million; recurring revenue from support, maintenance and contracted monthly services was $36.9 million, or 35.4% of revenue. Full-year gross margin was 45.7%, up from 45.2% in 2006. GAAP net loss was $460,000, or $0.02 per share, in Q4 and $6.9 million for the full year; excluding severance expense, full-year net loss was $4.7 million, or $0.22 per share, and cash earnings were $3.3 million, or $0.15 per share in Q4 and $7 million, or $0.33 per share for the year. For 2008, management guided to bookings of $65 million to $70 million, revenue of $87 million to $89 million, full-year GAAP loss per share of $0.20 to $0.23, and cash earnings of positive $0.23 to $0.27. Q1 2008 revenue was guided to slightly above $20 million, with GAAP loss per share of $0.13 to $0.15 and cash earnings close to breakeven.

Chuck Jett framed 2007 as a difficult year caused mainly by mature PACS market dynamics in large hospitals, where sales cycles are longer and replacement decisions are harder to forecast. He emphasized that Emageon’s differentiation is its vendor-neutral content management approach, which he believes positions the company to win in the next replacement cycle. His tone was cautious on 2008 but constructive on 2009 and beyond, citing new prospect activity at RSNA and the potential for broader use of the platform beyond traditional radiology.

Randy Pittman provided the core financial detail: Q4 revenue was $28.6 million, full-year revenue was $104.2 million, and gross margin improved to 45.7% from 45.2% last year. He said backlog was approximately $148 million at year-end, with about $57 million expected to be recognized in 2008, and that 88% of backlog will be recognized as support services in future quarters. He also noted Q4 operating cash flow was positive by about $800,000, full-year operating cash usage was about $1 million, and year-end cash was $17 million unrestricted plus $1 million restricted, with essentially no debt and an unused $15 million credit line.

Analysts focused on whether the 2008 mix implied system sales growth or decline, and management clarified that overall system sales revenue should decline in 2008 even though cardiology and RadSuite Express should grow. Questions also centered on the replacement cycle timing and what gives Emageon confidence it can take share; management said the installed base is mostly from systems bought in 2002-2006 and that 60% to 70% of the market bought during that period, with 80% of that group expected to buy again in 2009-2011. Management also addressed hardware mix, saying it will be lower and that there are fewer 'typical' sales now because product mix is shifting toward smaller, standardized offerings.