Luna Innovations Reports 4Q, Full Year 2013 Financial Results

Luna Innovations Inc. announced its financial results for the fourth quarter and year ended Dec. 31, 2013.

As compared to the same quarter last year, total revenue decreased by 4%, from $6.1 million in the fourth quarter of 2012 to $5.9 million in the fourth quarter of 2013. Total revenue improved by 2% compared to the third quarter of 2013.

Products and licensing revenue increased 18% compared to the fourth quarter of 2012 and also increased 16% compared to the third quarter of 2013. Technology development revenue decreased by 21% compared to the fourth quarter of 2012, due primarily to the continued lower level of contract research projects within the company’s optical systems group. Gross profit remained essentially flat at $2.0 million for the fourth quarter of 2012 and for the fourth quarter of 2013.

Operating expenses for the fourth quarter of 2013 increased by $1.1 million, or 35%, from the fourth quarter of 2012 primarily due to incremental expenses incurred in connection with the company’s sale of its fiber optic shape sensing business to Intuitive Surgical, Inc., which was completed in January 2014.

The company reported a loss from continuing operations before income taxes of $2.0 million for the fourth quarter of 2013, compared to a loss from continuing operations before income taxes of $1.1 million in the fourth quarter of 2012, with the increase being primarily driven by the incremental transaction related costs recognized in the fourth quarter of 2013. Income from discontinued operations, representing the results attributable to the operations of its secure computing and communications group, which was sold in March 2013, decreased from income of $0.5 million for the fourth quarter of 2012 to a loss of $0.3 million for the fourth quarter of 2013.

The company reported a net loss attributable to common stockholders for the fourth quarter of 2013 of $2.0 million, or $0.14 per diluted common share, compared to a net loss attributable to common stockholders of $0.6 million, or $0.04 per diluted common share for the fourth quarter of 2012. Adjusted EBITDA, a non-GAAP measure, decreased to $(1.4) million for the fourth quarter of 2013, as compared to $(0.3) million for the fourth quarter of 2012.

For the year ended December 31, 2013, total revenue decreased 16% to $22.0 million for 2013 compared to $26.4 million for the year ended Dec. 31, 2012. The decrease in total revenue was driven primarily by a 24% decrease in technology development revenue attributable to the decreased level of contract research activity in the company’s optical systems group throughout 2013. Products and licensing revenue decreased 6% compared to 2012 due to the sale of prototype shape sensing devices in 2012 that did not recur in 2013. Net loss attributable to common stockholders for the year ended Dec. 31, 2013 was $0.8 million, or $0.06 per diluted common share, compared to a net loss of $1.5 million, or $0.11 per diluted common share for the year ended Dec. 31, 2012.

“With the successful completion of the sale transactions related to our secure computing and communications group in the first quarter of 2013 and our fiber optic shape sensing technology in the first quarter of 2014, we have narrowed the company’s focus to concentrate on our key initiative surrounding fiber optic sensing solutions for future growth,” said My Chung, CEO of Luna. “With this narrowed focus and the improved liquidity we have realized as a result of the secure computing and shape sensing transactions, we are well positioned to capitalize on the growth potential of the fiber optic sensing market.”