Stem cell researcher and cord blood harvester -- not exactly the most pleasant-sounding line of business, is it? ViaCell (NASDAQ:VIAC) reported earnings earlier this morning. Although the company failed to include a crucial bit of investor information with its earnings release, judging from the symptoms evident on its income statement and (abbreviated) balance sheet, it appears this patient will live.
As recently as yesterday, analysts weren't so sure. They were calling for the company to report a loss of $0.11 per diluted share on $11.7 million worth of revenues. As it turned out, the company did indeed report $11.7 million in sales (an 18% year-over-year increase), but its loss came in at just $0.09, considerably better than the prognosis.
Once again, the shining light of the company was not its super-sexy research arm, which aims to cure all manner of ills through the magic of stem cells. (That aim is mirrored by competitors such as Aastrom (NASDAQ:ASTM), Geron (NASDAQ:GERN) and, lest we forget, StemCells, Inc. (NASDAQ:STEM).) Instead, the pearl within ViaCell's oyster shell remains its cord blood collection and cold storage unit, the high-tech equivalent of a cold storage warehouse.
The third quarter saw that one segment increase by 21% year over year -- in marked contrast to the aforementioned super-sexy business, which saw its revenues decline by 65%. Year to date, the song remains the same. The first nine months of 2005 saw the storage unit grow 19% over the year-ago period, while research revenue declined by 60%.
Fortunately for the company, its costs aren't growing so quickly. Year-to-date operating costs barely budged from their positions last year. Despite the considerable boost in revenues, the company spent just 2.5% to keep itself in business.
Speaking of revenues, though, one point of concern does pop out on the company's abridged balance sheet, where we see that accounts receivable have grown by 40% over the past year, to $15.1 million. ViaCell is in the unenviable position of seeing well over a quarter's worth of revenues sitting in its uncollected-bills drawer. That's a marked contrast to the 45% decline in its accounts payable, which suggests to this Fool that ViaCell is incapable of demanding prompt payment from those who owe it money. Meanwhile, ViaCell's creditors are demanding that their bills be paid on time and in full, and ViaCell doesn't seem able to put them off.
Hopefully, as the company grows and succeeds, we'll see a reversal of both those trends in quarters to come.
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Fool contributor Rich Smith has no position, short or long, in any company mentioned in this article.
