MYOS RENS Technology, Inc. :MYOS-US: Earnings Analysis: 2016 By the Numbers : April 6, 2017

MYOS RENS Technology, Inc. reports financial results for the year ended December 31, 2016.

Highlights

  • Gross margins narrowed from -522.64% to -619.57% compared to the same period last year, operating (EBITDA) margins now -1,222.94% from -3,018.24%.
  • Change in operating cash flow of -63.10% compared to same period last year is about the same as change in earnings, likely no significant movement in accruals or reserves.
  • Earnings growth from operating margin improvements as well as one-time items.

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

2016 2015 2014 2013 2012
Relevant Numbers (Annual)
Revenues 0.33 0.16 3.34 3.32 0.91
Revenue Growth (YOY) N/A N/A N/A N/A N/A
Earnings -4.34 -5.3 -4.46 -4.26 -3.91
Earnings Growth (YOY) 18.14 -18.93 -4.6 -8.9 30.07
Net Margin -1327.52 -3335.22 -133.38 -128.48 -429.35
EPS -0.9 -1.64 -1.56 -1.93 -2
Return on Equity -98.4 -103.56 -88.51 -89.39 -117.33
Return on Assets -76.81 -83.16 -79.29 -82.25 -83.85

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Earnings Growth Analysis

The company’s gross margins showed no year-on-year improvement. In spite of this, the company’s earnings rose, influenced primarily by the improvement in operating margins (EBITDA margins) from -3,018.24% to -1,222.94%. For comparison, gross margins were -522.64% and EBITDA margins were -3,018.24% in the last 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 were offset by some improvements on the balance sheet. The management of working capital, for example, shows progress. The company’s working capital days have fallen to 2,520.40 days from 6,739.87 days for the same period last year. This leads Capital Cube to conclude that the gross margin decline is not altogether bad.

Cash Versus Earnings – Sustainable Performance?

It is important to examine a company�s cash versus earnings numbers to gauge whether its performance is sustainable.

MYOS-US‘s year-on-year change in operating cash flow of -63.10% 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 earnings growth has also been influenced by the following factors: (1) Improvements in operating (EBIT) margins from -3,183.65% to -1,303.67% and (2) one-time items. The company’s pretax margins are now -1,327.52% compared to -3,192.45% for the same period last year.

EBIT Margin History
PreTax Margin History

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Company Profile

MYOS RENS Technology, Inc. engages in the discovery, development, and commercialization of therapeutic products, nutritional supplements, and other technologies aimed at improving the health and performance of muscle tissue. The firm offers bionutrition products and biotherapeutic research. Bionutrition products involves Re Muscle Health, which 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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