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8-K - FORM 8-K - ICAD INC | c20515e8vk.htm |
Exhibit
99.1
Press Release |
FOR IMMEDIATE RELEASE
ICAD REPORTS SECOND QUARTER FINANCIAL RESULTS
Conference Call to be Held Thursday, July 28th at 10:00 a.m. Eastern Time
NASHUA, N.H. (July 27, 2011) iCAD, Inc. (NASDAQ: ICAD), an industry-leading provider of advanced
image analysis, workflow solutions and radiation therapies for the early identification and
treatment of cancer, today reported financial results for the three and six months ended June 30,
2011.
Ken Ferry, President and CEO of iCAD, commented, While we continue to remain highly confident in
the long term growth prospects of our strategic shift into the oncology market, the first half was
challenging. The continued weakness in the international markets for CAD product sales combined
with the temporary effects of the FDA recall of the shielding product for our electronic
brachytherapy business slowed progress towards achieving our growth goals.
We have greater confidence in the prospects for even stronger top line growth for the second half
of the year and beyond. Our MRI CAD business continues to grow significantly due to the market
acceptance of our new thin-client platform that features significant improvements in key clinical
areas. We expect to see continued growth with this new MRI CAD platform. In addition, we recently
announced that our VeraLook® CTC CAD solution is now available as part of Vital Images products
worldwide. Our partnership with this leading provider of advanced visualization and analysis
solutions should be an important catalyst for the growth of VeraLook in virtual colonoscopy.
We are particularly encouraged about the growth prospects for our electronic brachytherapy
business going forward. There is growing global interest in IORT as evidenced by the positive
response we received at key international industry meetings this year combined with demand from our
existing IORT customers who are experiencing increases in their IORT patient volumes. With the
recent FDA clearance of a new line of shielding products for the Axxent® system, our strong
commercial marketing program can take hold. We believe the compelling clinical data from on-going
trials, combined with the significant value proposition for physicians, patients and payors, will
bode well for a favorable reimbursement decision when the Center for Medicare and Medicaid releases
its final determination on new CPT codes in October, for effect January 1, 2012. As a result, we
remain confident we can drive higher revenue growth over time as we leverage the significant market
potential for the Axxent® eBx platform.
Second Quarter Financial Results
Revenue: Total revenue for the second quarter of 2011 was $6.6 million, an increase of
approximately $0.5 million or 9%, as compared to total revenue of $6.1 million for the second
quarter of 2010. The Axxent eBx electronic brachytherapy solutions contributed approximately $1.2
million to revenue in the quarter, consisting of approximately $760,000 in product and $400,000 in
service and supply revenue, offset by a decline in both the digital and film-based CAD segments.
Three Months Ended | ||||||||||||
June 30, 2011 | June 30, 2010 | Growth | ||||||||||
Digital & MRI revenue |
$ | 3,197 | $ | 3,991 | (20 | )% | ||||||
Film based revenue |
537 | 725 | (26 | )% | ||||||||
Electronic brachytherapy |
760 | | | |||||||||
Service & supply revenue |
2,152 | 1,381 | 56 | % | ||||||||
Total revenue |
$ | 6,646 | $ | 6,097 | 9 | % |
Gross Margin: Gross margin for the second quarter of 2011 was $4.5 million, or 68% of
revenue, compared with $4.9 million, or 81% of revenue, for the second quarter of 2010. The 2011
second quarter gross margin was impacted by $233,000 of amortization expense and higher
manufacturing costs, both related to the Axxent product.
Net Loss: For the second quarter of 2011, the Company posted a net loss of $5.1 million, or
$0.09 per share, as compared to a net loss of $736,000, or $0.02 per share, in the second quarter
of 2010.
Non-GAAP Adjusted EBITDA: Non-GAAP Adjusted EBITDA, a non-GAAP financial measure as defined
below, was a loss of $3.6 million in the second quarter of 2011, compared with a loss of $119,000
in the second quarter of 2010.
Cash and Cash Flow: The Company ended the second quarter of 2011 with cash and cash
equivalents of $7.7 million and no long-term debt. For the 2011 second quarter, net cash used by
operations was $3.5 million.
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First Half 2011 Financial Results
Revenue: For the six months ended June 30, 2011, total revenue was $14.0 million, an
increase of $1.4 million or 11%, as compared to total revenue of $12.6 million for the six month
period ending June 30, 2010. The Axxent eBx electronic brachytherapy solutions contributed
approximately $2.5 million to revenue in the first six months of 2011, consisting of approximately
$1.7 million in product and $800,000 in service and supply revenue, offset by a decline in both the
digital and film-based CAD segments.
Six Months Ended | ||||||||||||
June 30, 2011 | June 30, 2010 | Growth | ||||||||||
Digital & MRI revenue |
$ | 6,960 | $ | 8,157 | (15 | )% | ||||||
Film based revenue |
1,054 | 1,771 | (40 | )% | ||||||||
Electronic brachytherapy |
1,695 | | | |||||||||
Service & supply revenue |
4,281 | 2,690 | 59 | % | ||||||||
Total revenue |
$ | 13,990 | $ | 12,618 | 11 | % |
Gross Margin: Gross margin for the first six months ended June 30, 2011, was $9.6 million,
or 69% of revenue, compared with $10.2 million, or 81% of revenue, for the first six months of
2010. The 2011 gross margin was impacted by $467,000 of amortization expense and higher
manufacturing costs, both related to the Axxent product.
Net Loss: For the first six months ended June 30, 2011, the Company posted a net loss of
$9.3 million, or $0.17 per share, as compared to a net loss of $1.9 million, or $0.04 per share,
for the first six months of 2010.
Non-GAAP Adjusted EBITDA: Non-GAAP Adjusted EBITDA, a non-GAAP financial measure as defined
below, was a loss of $6.0 million for the six month period ended June 30, 2011, compared with a
loss of $422,000 for the first six months of 2010.
Financial Guidance
iCAD today adjusted financial guidance and the Company now expects 2011 total revenue to be in the
range of $30 million to $32 million, with a gross margin between 71% and 73% for fiscal year 2011.
Use of Non-GAAP Financial Measures
In the Companys earnings releases, conference calls, slide presentations, or webcasts, the Company
may use or discuss non-GAAP financial measures as defined by SEC Regulation G. The GAAP financial
measure most directly comparable to each non-GAAP financial measure used or discussed, and a
reconciliation of the differences between each non-GAAP financial measure and the comparable GAAP
financial measure, are included in this press release after the condensed consolidated financial
statements. The Companys earnings press releases containing such non-GAAP reconciliations can be
found on the Investors section of the Companys web site at
http://www.icadmed.com.
Conference Call
iCAD management will host an investment community conference call beginning at 10:00 a.m. Eastern
time on Thursday, July 28, 2011 to discuss these results and answer questions. Shareholders and
other interested parties may participate in the conference call by dialing 888-396-2298 (domestic)
or 617-847-
8708 (international) and entering passcode 32070191. The call will also be broadcast live on the
Internet at www.streetevents.com,
www.fulldisclosure.com and www.icadmed.com.
3
A replay of the conference call will be accessible two hours after its completion through August 3,
2011 by dialing 888-286-8010 (domestic) or 617-801-6888 (international) and entering passcode
66296827. The call will also be archived for 90 days at
www.streetevents.com,
www.fulldisclosure.com and www.icadmed.com.
* SecondLook® Premier is an Investigational Device. Limited by Federal Law to Investigational Use
Only. Available Outside US.
About iCAD
iCAD, Inc. is an industry-leading provider of advanced image analysis and workflow solutions that
enable healthcare professionals to better serve patients by identifying pathologies and pinpointing
the most prevalent cancers earlier. iCAD offers a comprehensive range of high-performance,
upgradeable Computer-Aided Detection (CAD) systems and workflow solutions for mammography, Magnetic
Resonance Imaging (MRI) and Computed Tomography (CT). iCAD recently acquired Xoft, Inc., developer
of the Axxent® eBx electronic brachytherapy system (eBx). Axxent uses non-radioactive miniaturized
X-ray tube technology and is FDA-cleared for treatment of early stage breast cancer, skin cancer
and endometrial cancer. The Axxent System is also cleared for use in the treatment of other cancers
or conditions where radiation therapy is indicated including Intraoperative Radiation Therapy
(IORT). For more information, call (877) iCADnow or visit www.icadmed.com.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:
Certain statements contained in this News Release constitute forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking
statements involve a number of known and unknown risks, uncertainties and other factors which may
cause the actual results, performance or achievements of the Company to be materially different
from any future results, performance or achievements expressed or implied by such forward-looking
statements. Such factors include, but are not limited to, the Companys ability to defend itself in
litigation matters, the risks relating to the Companys acquisition of Xoft including, the expected
benefits of the acquisition may not be achieved in a timely manner, or at all; the Xoft business
operations may not be successfully integrated with iCADs and iCAD may be unable to achieve the
expected synergies, business and strategic objectives following the transaction, the risks of
uncertainty of patent protection; the impact of supply and manufacturing constraints or
difficulties; product market acceptance; possible technological obsolescence; increased
competition; customer concentration; and other risks detailed in the Companys filings with the
Securities and Exchange Commission. The words believe, demonstrate, intend, expect,
estimate, anticipate, likely, and similar expressions identify forward-looking statements.
Readers are cautioned not to place undue reliance on those forward-looking statements, which speak
only as of the date the statement was made. The Company is under no obligation to provide any
updates to any information contained in this release. For additional disclosure regarding these and
other risks faced by iCAD, please see the disclosure contained in our public filings with the
Securities and Exchange Commission, available on the Investors section of our website at
http://www.icadmed.com and on the SECs website at http://www.sec.gov.
4
For iCAD, contact Kevin Burns at 603-882-5200 x7967, or via email at kburns@icadmed.com
For Investor Relations, contact Anne Marie Fields of Lippert/Heilshorn & Associates at 212-838-3777
x6604 or via email at afields@lhai.com
x6604 or via email at afields@lhai.com
For media inquiries, contact Wendy Ryan of Schwartz Communications at 781-684-0770, or via
email at wryan@schwartzcomm.com
email at wryan@schwartzcomm.com
-Tables to follow-
5
iCAD, INC. AND SUBSIDIARY
Consolidated Balance Sheets
(Unaudited)
(In thousands except for share data)
(Unaudited)
(In thousands except for share data)
June 30, | December 31, | |||||||
2011 | 2010 | |||||||
Assets |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 7,677 | $ | 16,269 | ||||
Trade accounts receivable, net of allowance for doubtful
accounts of $50 in 2011 and 2010 |
4,027 | 3,389 | ||||||
Inventory, net |
2,380 | 3,489 | ||||||
Prepaid expenses and other current assets |
587 | 581 | ||||||
Total current assets |
14,671 | 23,728 | ||||||
Property and equipment, net of accumulated depreciation
and amortization of $2,709 in 2011 and $2,852 in 2010 |
2,357 | 2,774 | ||||||
Other assets |
609 | 675 | ||||||
Intangible assets, net of accumulated amortization
of $7,793 in 2011 and $6,746 in 2010 |
18,107 | 21,165 | ||||||
Goodwill |
47,657 | 45,689 | ||||||
Total assets |
$ | 83,401 | $ | 94,031 | ||||
Liabilities and Stockholders Equity |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ | 2,355 | $ | 2,500 | ||||
Accrued and other expenses |
4,989 | 5,902 | ||||||
Deferred revenue |
5,344 | 4,906 | ||||||
Total current liabilities |
12,688 | 13,308 | ||||||
Contingent consideration |
3,800 | 5,000 | ||||||
Deferred revenue long term portion |
1,378 | 961 | ||||||
Other long-term liabilities |
1,041 | 1,552 | ||||||
Total liabilities |
18,907 | 20,821 | ||||||
Stockholders equity: |
||||||||
Preferred stock, $ .01 par value: authorized 1,000,000 shares;
none issued |
| | ||||||
Common stock, $ .01 par value: authorized 85,000,000
shares; issued 54,745,730 in 2011 and 54,383,747 in 2010;
outstanding 54,677,554 in 2011 and 54,315,871 in 2010 |
547 | 544 | ||||||
Additional paid-in capital |
163,676 | 163,101 | ||||||
Accumulated deficit |
(98,779 | ) | (89,485 | ) | ||||
Treasury stock at cost (67,876 shares) |
(950 | ) | (950 | ) | ||||
Total stockholders equity |
64,494 | 73,210 | ||||||
Total liabilities and stockholders equity |
$ | 83,401 | $ | 94,031 | ||||
6
iCAD, Inc.
Consolidated Statements of Operations
(Unaudited)
(In thousands except for share data)
(Unaudited)
(In thousands except for share data)
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, 2011 | June 30, 2010 | June 30, 2011 | June 30, 2010 | |||||||||||||
Revenue: |
||||||||||||||||
Products |
$ | 4,494 | $ | 4,716 | $ | 9,709 | $ | 9,928 | ||||||||
Service and supplies |
2,152 | 1,381 | 4,281 | 2,690 | ||||||||||||
Total revenue |
6,646 | 6,097 | 13,990 | 12,618 | ||||||||||||
Cost of revenue: |
||||||||||||||||
Products |
1,140 | 557 | 2,347 | 1,225 | ||||||||||||
Service and supplies |
769 | 591 | 1,541 | 1,205 | ||||||||||||
Amortization of acquired technology |
233 | | 467 | | ||||||||||||
Total cost of revenue |
2,142 | 1,148 | 4,355 | 2,430 | ||||||||||||
Gross margin |
4,504 | 4,949 | 9,635 | 10,188 | ||||||||||||
Operating expenses: |
||||||||||||||||
Engineering and product development |
3,304 | 1,525 | 6,079 | 3,081 | ||||||||||||
Marketing and sales |
3,945 | 2,617 | 7,671 | 5,016 | ||||||||||||
General and administrative |
2,313 | 1,839 | 5,117 | 4,326 | ||||||||||||
Total operating expenses |
9,561 | 5,981 | 18,867 | 12,423 | ||||||||||||
Loss from operations |
(5,057 | ) | (1,032 | ) | (9,232 | ) | (2,235 | ) | ||||||||
Gain on sale of patent |
| 275 | | 275 | ||||||||||||
Interest (expense) income net |
(36 | ) | 21 | (62 | ) | 39 | ||||||||||
Net loss |
$ | (5,093 | ) | $ | (736 | ) | $ | (9,294 | ) | $ | (1,921 | ) | ||||
Net loss per share: |
||||||||||||||||
Basic and diluted |
$ | (0.09 | ) | $ | (0.02 | ) | $ | (0.17 | ) | $ | (0.04 | ) | ||||
Weighted average number of shares used in
computing loss per share: |
||||||||||||||||
Basic and diluted |
54,550 | 45,737 | 54,458 | 45,712 | ||||||||||||
7
RECONCILIATION
OF NON-GAAP FINANCIAL MEASURES TO COMPARABLE GAAP MEASURES
(Unaudited, in thousands, except per share amounts)
(Unaudited, in thousands, except per share amounts)
The following is a reconciliation of the non-GAAP financial measures used by the Company to
describe the Companys financial results determined in accordance with United States generally
accepted accounting principles (GAAP). An explanation of these measures is also included below
under the heading Explanation of Non-GAAP Financial Measures.
While management believes that these non-GAAP financial measures provide useful supplemental
information to investors regarding the underlying performance of the Companys business operations,
investors are reminded to consider these non-GAAP measures in addition to, and not as a substitute
for, financial performance measures prepared in accordance with GAAP. In addition, it should be
noted that these non-GAAP financial measures may be different from non-GAAP measures used by other
companies, and management may utilize other measures to illustrate performance in the future.
Non-GAAP measures have limitations in that they do not reflect all of the amounts associated with
the Companys results of operations as determined in accordance with GAAP.
Non-GAAP Adjusted EBITDA
Set forth below is a reconciliation of the Companys Non-GAAP Adjusted EBITDA
(Unaudited, in thousands)
(Unaudited, in thousands)
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, 2011 | June 30, 2010 | June 30, 2011 | June 30, 2010 | |||||||||||||
GAAP net loss |
(5,093 | ) | (736 | ) | (9,294 | ) | (1,921 | ) | ||||||||
Interest expense (income) net |
36 | (21 | ) | 62 | (39 | ) | ||||||||||
Stock-based compensation |
316 | 498 | 584 | 981 | ||||||||||||
Depreciation |
251 | 123 | 546 | 249 | ||||||||||||
Amortization of acquired intangibles |
523 | 292 | 1,047 | 583 | ||||||||||||
Severance |
537 | | 537 | | ||||||||||||
Gain on sale of asset |
| (275 | ) | | (275 | ) | ||||||||||
Acquisition related |
154 | | 374 | | ||||||||||||
Recall and patent lawsuits |
766 | | 1,330 | | ||||||||||||
Contingent consideration |
(1,100 | ) | | (1,100 | ) | | ||||||||||
Non-GAAP Adjusted EBITDA |
$ | (3,610 | ) | $ | (119 | ) | $ | (5,914 | ) | $ | (422 | ) | ||||
Explanation of Non-GAAP Financial Measures
The Company reports its financial results in accordance with United States generally accepted
accounting principles, or GAAP. However, management believes that in order to properly understand
the Companys short-term and long-term financial and operational trends, investors may wish to
consider the impact of certain non-cash or non-recurring items, when used as a supplement to
financial performance measures in accordance with GAAP. These items result from facts and
circumstances that vary in frequency and/or impact on continuing operations. Management also uses
results of operations before such items to evaluate the operating performance of the Company and
compare it against past periods, make operating decisions, and serve as a basis for strategic
planning. These non-GAAP financial measures provide management with additional means to understand
and evaluate the operating results and trends in the Companys ongoing business by eliminating
certain non-cash expenses and other items that management believes might otherwise make comparisons
of the Companys ongoing business with prior periods more difficult, obscure trends in ongoing
operations, or reduce managements ability to make useful forecasts. Management believes that these
non-GAAP financial measures provide additional means of evaluating period-over-period operating
performance. In addition, management understands that some investors and financial analysts find
this information helpful in analyzing the Companys financial and operational performance and
comparing this performance to its peers and competitors.
8
Management defines Non-GAAP Adjusted EBITDA as the sum of GAAP net loss before provision for
income taxes, acquisition-related expenses, total other (income) expense, stock-based compensation
expense, depreciation and amortization, severance, gain on sale, amortization of acquired
intangibles, transaction, patent litigation and recall costs and contingent consideration.
Management considers this non-GAAP financial measure to be important indicators of the Companys
operational strength and performance of its business and a good measure of its historical operating
trends, in particular the extent to which ongoing operations impact the Companys overall financial
performance.
Management excludes each of the items identified below from the applicable non-GAAP financial
measure referenced above for the reasons set forth with respect to that excluded item:
| Stock-based compensation expense excluded as these are non-cash expenses that
management does not consider part of ongoing operating results when assessing the
performance of the Companys business, and also because the total amount of expense is
partially outside of the Companys control as it is based on factors such as stock price
volatility and interest rates, which may be unrelated to our performance during the period
in which the expense is incurred. |
| Amortization of acquired intangibles acquisition-related expenses are reported at the
time acquisition costs are incurred, and purchased intangibles are amortized over a period
of several years after the acquisition and generally cannot be changed or influenced by
management after the acquisition. Accordingly, these items are not considered by management
in making operating decisions, and management believes that such expenses do not have a
direct correlation to future business operations. Thus, including such charges does not
accurately reflect the performance of the Companys ongoing operations for the period in
which such charges are incurred. |
| Severance relates to costs incurred due to the termination of certain employees. The
Company provides compensation to certain employees as an accommodation upon termination of
employment without cause. Management believes that excluding severance costs from operating
results provides investors with a better means for measuring current Company performance. |
| Gain on sale relates to a gain on the one-time sale of a non-core patent in the second
quarter of 2010. Since the proceeds are non-recurring, management believes that it should be
excluded when evaluating core operations. |
| Acquisition-related expenses relates to transition and integration cost as well as
professional service fees due to the acquisition of Xoft, Inc. The Company does not consider
these acquisition-related costs to be related to the organic continuing operations of the
acquired businesses and are generally not relevant to assessing or estimating the long-term
performance of the acquired assets. |
| Recall and patent lawsuits These expenses consist primarily of investigation, audit,
legal and other professional fees related to the recall and patent litigation, as well as
recoveries received from third parties. The Company excludes these costs and recoveries from
its non-GAAP measures primarily because the Company believes that these costs and recoveries
have no direct correlation to the core operation of the Companys. |
| Contingent consideration the Company recorded a gain due to a reduction of the
contingent consideration liability related to the acquisition of Xoft, Inc. This amount
arose from the Companys acquisition of Xoft, Inc. and has no direct correlation to the core
operation of the Company. |
On occasion in the future, there may be other items, such as significant asset impairments,
restructuring charges or significant gains or losses from contingencies that the Company may
exclude if it believes that doing so is consistent with the goal of providing useful information to
investors and management.
9