MYOS RENS Technology, Inc. :MYOS-US: Earnings Analysis: 2015 By the Numbers

MYOS RENS Technology, Inc. reports financial results for the year ended December 31, 2015.

Highlights

  • Gross margins narrowed from 52.92% to -522.64% compared to the same period last year, operating (EBITDA) margins now -3,018.24% from -150.73%.
  • Change in operating cash flow of 55.75% compared to same period last year is about the same as change in earnings, likely no significant movement in accruals or reserves.
  • Narrowing of operating margins contributed to decline in earnings.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income growth:

2011 2012 2013 2014 2015
Relevant Numbers (Annual)
Revenues 0.1 0.91 3.32 3.34 0.16
Revenue Growth (YOY) N/A N/A N/A N/A N/A
Earnings -5.6 -3.91 -4.26 -4.46 -5.3
Earnings Growth (YOY) -33771.71 30.07 -8.9 -4.6 -18.93
Net Margin -5626.84 -429.35 -128.48 -133.38 -3335.22
EPS -4.5 -2 -1.93 -1.56 -1.64
Return on Equity -2661.97 -117.33 -89.39 -88.51 -103.56
Return on Assets -398.72 -83.85 -82.25 -79.29 -83.16

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Earnings Growth Analysis

The company’s year-on-year decline in earnings was influenced by a weakening in gross margins from 52.92% to -522.64%, as well as issues with cost controls. As a result, operating margins (EBITDA margins) went from -150.73% to -3,018.24% in this time frame. For comparison, gross margins were 52.92% and EBITDA margins were -150.73% in the previous period.

Gross Margin Trend

Companies sometimes sacrifice improvements in revenues and margins in order to extend friendlier terms to customers and vendors. Capital Cube probes for such activity by comparing the changes in gross margins with any changes in working capital. If the gross margins improved without a worsening of working capital, it is possible that the company’s performance is a result of truly delivering in the marketplace and not simply an accounting prop-up using the balance sheet.

Gross Margin History
Working Capital Days History

MYOS-US‘s decline in gross margins has not produced any significant offsetting improvement in its working capital . This leads Capital Cube to conclude that the decline in gross margins are likely from operating issues and not trade-offs with the balance sheet. Working capital days are currently 6,739.87 days, compared to last year’s level of 299.78 days.

Cash Versus Earnings – Sustainable Performance?

MYOS-US‘s year-on-year change in operating cash flow of 55.75% is around its change in earnings. This suggests that there are likely no significant movement in accruals or reserves for managing earnings this period.

Margins

The company’s decline in earnings has been influenced by the following factors: (1) Decline in operating margins (EBIT margins) from -156.81% to -3,183.65% and (2) one-time items that contributed to a decrease in pretax margins from -155.76% to -3,192.45%

EBIT Margin History
PreTax Margin History

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Company Profile

MYOS RENS Technology, Inc. engages on the discovery, development, and commercialization of therapeutic products, nutritional supplements and other technologies aimed at improving the health and performance of muscle tissue. Its product Re Muscle Health, seeks to rebuild, rejuvenate, and maintain lean muscles. The company was founded on April 11, 2007 and is headquartered in Cedar Knolls, NJ.

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