XYMOGEN REPORTS RECORD ANNUAL REVENUES FOR FISCAL YEAR 2011

Q4-2011 Closing of $14.34 Million in Building and Equipment Financing

ORLANDO, Fla. – Wednesday, February 22, 2012 – Orlando-based company XYMOGEN today reported financial results for its fiscal year ended Dec. 31, 2011.

Fiscal Year 2011 Financial Highlights

·     XYMOGEN achieved revenue of $39.5 million compared to $32.6 million in fiscal year 2010. This represents a 21 percent year-over-year growth and exceeded the company’s target of 15 percent growth projected at the outset of the year.

·     Net income was $1.55 million for fiscal 2011, compared to $1.6 million for fiscal 2010. The decrease in earnings is primarily attributable to expenses associated with XYMOGEN’s international initiative and hiring of QA/QC laboratory personnel in preparation for its new manufacturing facility.  

·     The company’s 2011 private offering of shares generated commission-free investments of $4.83 million on the sale of 91,919 shares. After share buy-backs were factored in, shares outstanding (owned) increased from 839,220 on Dec. 31, 2010, to 909,203 (an increase of 8.3 percent).

·     XYMOGEN realized a profound upgrade in its balance sheet numbers in FY-2011. Shareholder equity increased from $3.2 million to $9 million with total assets increasing from $8 million to $25 million. 

·     XYMOGEN’s share price increased 23.4 percent from $45.79 at the end of FY-2010 to $56.51 as of Dec. 31, 2011. XYMOGEN’s current market value of $51.37 million represents a factor of 1.3 times 2011 annual revenues. Companies in the practitioner channel have sold for 2-3 times annual revenues.  

·     A building and equipment financial package with TD Bank was closed on Oct. 29, 2011. XYMOGEN’s new 136,000 sq. ft. manufacturing headquarters is being financed through $10.1 million in Enterprise Florida Industrial-Development-Bonds, while $4.24 million in equipment will be financed through a leasing facility.

·     XYMOGEN secured its building completion certificate from the Orlando Permitting Services Division in December 2011. This provides for $4 million in building depreciation applied against federal income taxes for FY-2011 and FY-2012. New equipment secured prior to year-end 2011 generated an additional $1.3 million in “100% bonus depreciation” for a total depreciation from 2011 of $5.3 million. 

·     The company currently maintains a $3 million asset-based line of credit with TD Bank.

 Executive Quotes

“XYMOGEN’s record revenues in fiscal year 2011 were driven by the strong performance of our medical board of advisors (BOA), functional medicine consultants, and headquarters’ team. Their combined efforts contributed to the successful launch of 34 new and innovative formulas through our quarterly pipeline strategy,” said Vice President of Medical Education Mike Mahoney. “The success of our pipeline strategy may also be attributed to record attendance at XYMOGEN-sponsored educational events presented by BOA members Joe Evans, Ph.D., Cheryl Burdette, N.D., Allan Warshowsky, M.D., and David Perlmutter, M.D.”

“While we are delighted we surpassed 2011 projections, much time, money, and effort was devoted to initiatives that will begin material contributions to revenue and earnings in Q4-2012,” said XYMOGEN President and CEO Brian Blackburn. “These initiatives (international expansion, manufacturing, and digital label printing) will have a profound financial impact in FY-2013 and beyond.”

Financial Outlook

For the first quarter of fiscal 2012, XYMOGEN is targeting revenue/earnings of $10.5 million/$725K compared to $9.4 million/$696K for Q1-2011. Based upon $5.3 million depreciation realized in 2011, coupled with depreciation projections of $2 million in 2012, XYMOGEN projects no federal income tax liability until Q3-2013. Tax-exempt earnings will be applied toward creating jobs in its new manufacturing headquarters as well as funding other growth initiatives.

For fiscal year 2012, XYMOGEN is projecting annual revenue growth of 15 percent, or $46 million. XYMOGEN is targeting its share value to increase 15 percent from the present value of $56.51 to $65.00 as of Dec. 31, 2012. These targets do not include the impact of XYMOGEN’s contract-manufacturing and digital label printing businesses, which are projected to generate revenues beginning Q4-2012.

Per covenants with TD Bank and relating to the $14.34 million building and equipment financing, Vestal & Wiler, Certified Public Accountants conducted a full audit of XYMOGEN the week of Feb. 6, 2012. Copies of the completed audit will be available to shareholders upon request.

Forward-Looking Statements’ Disclosure

This press release contains forward-looking statements, including those related to revenue, non-operating expenses, tax rates, earnings, and our ability to continue to align our business to successfully respond to opportunities and changes in our industry.

The financial information set forth in this press release reflects estimates based on information available at this time. These amounts could differ from actual reported amounts stated in XYMOGEN’s annual report for our fiscal year ended Dec. 31, 2011, which XYMOGEN expects to file in March 2012.

About XYMOGEN

XYMOGEN’s founders have been providing high-quality dietary supplements to healthcare practitioners for more than a quarter century. As an independent health sciences company, XYMOGEN has introduced numerous innovations to the professional functional medicine community. XYMOGEN’s strength as a company was reinforced in 2007, 2008, 2010, and 2011 when we were recognized by Inc. magazine as one of the Inc. 5000 fastest-growing private companies in America. For more information, visit www.xymogen.com.

For information, contact:
Kim Johnson, XYMOGEN Investor Relations
407-445-0203
kim.johnson@xymogen.com

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