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iCAD, Inc.$6.22($.15)(2.35%)

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 iCAD Reports First Quarter 2019 Financial Results
   Tuesday, May 07, 2019 8:00:00 AM ET

U.S. adoption of ProFound AI™, the Company’s deep-learning cancer detection software solution for digital breast tomosynthesis, gaining traction

Conference call today at 8:30 a.m. ET

NASHUA, N.H., May 07, 2019 (GLOBE NEWSWIRE) -- iCAD, Inc. (NASDAQ: ICAD), a global medical technology leader providing innovative cancer detection and therapy solutions, today reported financial results for the three months ended March 31, 2019.



First Quarter 2019 Highlights:

  • Total revenue of approximately $6.7 million, an increase of 7% over first quarter of 2018
  • Gross profit of $5.3 million, or 78% in the first quarter of 2018 as compared to $4.5 million or 71% in the first quarter of 2018.
  • GAAP Net Loss of $3.7 million, or ($0.22) per diluted share, which includes a $2.5 million non-cash charge associated with the fair value accounting treatment of the Q4, 2018 convertible debentures
  • Non-GAAP Adjusted EBITDA loss of ($0.6) million compared to non-GAAP Adjusted EBITDA loss of ($2.4) million in the first quarter of 2018.

“The first quarter represented a successful transformational period for us during which we put in place many of the initiatives that we believe will allow us to ultimately recognize the substantial growth potential from our innovative technology platform, both in Cancer Detection and Cancer Therapy,” said Michael Klein, Chairman and CEO.  “We have made important investments in human capital and are executing on a variety of strategies aimed at increasing market awareness, especially as it relates to  ProFound AI™, our latest, deep-learning, cancer detection software solution for digital breast tomosynthesis, which we recently launched in the U.S.  In order to best support the ProFound AI launch, we recently completed an organizational restructure, making strategic additions throughout our company, including commercial infrastructure, marketing, business development, and medical affairs.  Our goal is to be in a position to gain meaningful traction with this product in the second half of 2019.”

“While the first quarter was a transformational period for us, we are pleased with our overall financial performance,” continued Mr. Klein.  “In the Detection segment, our first quarter 2019 product revenues increased $300,000, or 12%, year-over-year, suggesting that we are gaining traction with Profound AI.  Our Therapy business continues to generate strong results, as product sales in this segment increased $507,000 or 97% in the first quarter of 2019, as compared to the first quarter of 2018.  This growth was driven by the placement of 10 systems in the quarter”

“We achieved significant progress on multiple fronts during the first quarter.  We continue to make targeted investments in our organization that will accelerate growth over the course of 2019 and create a sustainable leadership position for iCAD long-term in high-growth global markets,” concluded Mr. Klein.

First Quarter 2019 Financial Results
Revenue:  Total revenue for the first quarter of 2019 increased $0.5 million, or 7%, over the first quarter of 2018, reflecting a 27% increase in product revenue and an 11% decrease in service and supplies revenue.

In $000's       
   Three months ended March 31,
   2019  2018  $ Change  % Change
         
 Product revenue$  3,822 $  3,014 $  808  27 %
 Service and supplies revenue   2,951    3,299    (348) (11)%
 Total Revenue$  6,773 $  6,313 $  460  7 %
             

Cancer Detection revenue for the first quarter, which includes revenue from our mammography, breast density, and CT Colon platforms, as well as the associated service and supplies revenue, increased by approximately $0.2 million as compared to the first quarter of 2018, driven by growth in the Company’s Density and 3D imaging products.  Therapy revenue, which includes Xoft® Axxent® eBx® System® sales, as well as the associated service and supplies revenue, for the first quarter of 2019, increased by $0.3 million as compared to the first quarter of 2018.

In $000's       
   Three months ended March 31,
   2019  2018  $ Change  % Change
 Detection revenue        
 Product revenue$  2,790 $  2,489 $  301  12 %
 Service and supplies revenue   1,378    1,522    (144) (9)%
 Detection Revenue$  4,168 $  4,011 $  157  4 %
         
 Therapy revenue        
 Product revenue$  1,032 $  525 $  507  97 %
 Service and supplies revenue   1,573    1,777    (204) (11)%
 Therapy Revenue$  2,605 $  2,302 $  303  13 %
         
 Total Revenue$  6,773 $  6,313 $  460  7 %
             

Gross Profit:  Gross profit for the first quarter of 2019 was $5.3 million, or 78% of revenue, compared with $4.5 million, or 71% of revenue, for the first quarter of 2018.  The year-over-year increase in gross profit percentage change is primarily due to incremental gross profit margin associated with the Company’s exit in 2018 from the unprofitable Xoft skin subscription service business.

Operating Expenses:  Total operating expenses for the first quarter of 2019 decreased by $1.3 million to $6.3 million from $7.6 million in the first quarter of 2018. The decrease was due primarily to decreases in engineering and product development costs, and general and administrative expenses offset by increased marketing and sales expenses.

GAAP Net Loss:  Net loss for the first quarter of 2019 was ($3.7) million, or ($0.22) per diluted share, compared with a net loss of ($3.3) million, or ($0.20) per diluted share, for the first quarter of 2018.  GAAP Net Loss includes a $2.5 million non-cash charge associated with the fair value accounting treatment of our convertible debentures issued in December 2018.

Non-GAAP Adjusted EBITDA:  Non-GAAP adjusted EBITDA, a non-GAAP financial measure as defined below, for the first quarter of 2019 was a loss of ($0.6) million, compared to a first quarter 2018 non-GAAP adjusted EBITDA loss of ($2.4) million.  Please refer to the section entitled “Reconciliation of Non-GAAP Financial Measures to Comparable GAAP Measures” and the accompanying financial table included at the end of this release for a reconciliation of GAAP Net Loss to Non-GAAP Adjusted EBITDA results for the three-month periods ended March 31, 2019 and 2018, respectively. 

Cash and Cash Equivalents:  As of March 31, 2019, the Company had cash and cash equivalents of $11.3 million, compared with cash and cash equivalents of $12.2 million at December 31 2018.

Conference Call
Tuesday, May 7th @ 8:30am Eastern Time
Domestic:                    877-407-0784
International:               201-689-8560
Conference ID:           13689511
Webcast:                     http://public.viavid.com/index.php?id=133942

Use of Non-GAAP Financial Measures
In its quarterly news 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 measures 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. When analyzing the Company's operating performance, investors should not consider these non-GAAP measures as a substitute for the comparable financial measures prepared in accordance with GAAP.  The Company's quarterly news releases containing such non-GAAP reconciliations can be found on the Investors section of the Company's website at www.icadmed.com .

About iCAD, Inc.
Headquartered in Nashua, NH, iCAD is a global medical technology leader providing innovative cancer detection and therapy solutions. For more information, 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 our ability to achieve sales, business and strategic goals and objectives, to increase sales, accelerate growth, increase brand recognition, the impact of supply and manufacturing constraints or difficulties, uncertainty of future sales levels, protection of patents and other proprietary rights, product market acceptance, possible technological obsolescence of products, increased competition, litigation and/or government regulation, changes in Medicare or other reimbursement policies, risks relating to our existing and future debt obligations, competitive factors, the effects of a decline in the economy or markets served by the Company; and other risks detailed in the Company’s filings with the Securities and Exchange Commission. The words “believe,” “demonstrate,” “intend,” “expect,” “estimate,” “will,” “continue,” “anticipate,” “likely,” “seek,” 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 SEC’s website at http://www.sec.gov .

Contact:
Investor Relations:
LifeSci Advisors, on behalf of iCAD, Inc.
Jeremy Feffer, (212) 915-2568
jeremy@lifesciadvisors.com

iCAD, Inc.
603.882.5200
pr@icadmed.com

iCAD, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)
       
   March 31,  December 31,
Assets2019   2018 
       
       
       
Current assets:      
  Cash and cash equivalents $11,315  $12,185 
  Trade accounts receivable, net of allowance for doubtful     
accounts of $177 in 2019 and  $177 in 2018  7,401   6,403 
  Inventory, net  1,990   1,587 
  Prepaid expenses and other current assets  1,377   1,045 
  Total current assets  22,083   21,220 
       
  Property and equipment, net of accumulated depreciation    
  of $6,283 in 2019 and $6,214 in 2018  511   552 
  Right of use Assets  731     - 
  Other assets    53     53 
  Intangible assets, net of accumulated amortization      
of $7,903 in 2019 and $7,809 in 2018    1,456     1,550 
  Goodwill    8,362     8,362 
  Total Assets $33,196  $31,737 
       
Liabilities and Stockholders' Equity     
Current liabilities:      
  Accounts payable $  1,484  $  1,154 
  Accrued and other expenses  5,416   5,060 
  Notes payable - current portion  2,250   1,851 
  Lease payable - current portion  806   15 
  Deferred revenue  5,104   5,165 
Total current liabilities  15,060   13,245 
       
  Notes payable, long-term portion  3,694     4,254 
  Convertible debentures payable to non-related parties, at fair value8,637     6,300 
  Convertible debentures payable to related parties, at fair value858     670 
  Lease payable - long-term portion  32     38 
  Deferred revenue, long-term portion  346   331 
  Deferred tax    3     3 
Total Liabilities  28,630   24,841 
       
       
Stockholders' Equity:      
  Preferred stock, $ .01 par value:  authorized 1,000,000 shares;   
  none issued.    -     - 
  Common stock, $ .01 par value:  authorized 30,000,000     
  shares; issued 17,500,265 in 2019 and 17,066,510 in 2018;   
  outstanding 17,314,434 in 2019 and 16,880,679 in 2018175   171 
  Additional paid-in capital  220,297   218,914 
  Accumulated deficit  (214,491)  (210,774)
  Treasury stock at cost, 185,831 shares in 2019 and 2018 (1,415)  (1,415)
Total Stockholders' Equity  4,574   6,896 
       
Total Liabilities and Stockholders' Equity $33,196  $31,737 
         


iCAD, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands except for per share data)
       
 Three Months Ended March 31, 
  2019   2018  
Revenue:      
  Products $3,822   $3,014  
  Service and supplies 2,951   3,299  
Total revenue 6,773   6,313  
       
Cost of revenue:      
  Products 680   458  
  Service and supplies 717   1,252  
  Amortization and depreciation 94     105  
Total cost of revenue 1,491   1,815  
       
Gross profit 5,282   4,498  
       
Operating expenses:      
  Engineering and product development2,127   3,339  
  Marketing and sales 2,573   2,166  
  General and administrative 1,546   2,058  
  Amortization and depreciation 70   83  
Total operating expenses 6,316   7,646  
       
Loss from operations (1,034)  (3,148) 
       
Interest expense   (209)    (142) 
Loss on fair value of convertible debentures  (2,525)    -   
Other income   59     22  
Other expense, net (2,675)  (120) 
       
Loss before income tax expense (3,709)  (3,268) 
       
Tax expense (8)  (13) 
       
Net loss and comprehensive loss$  (3,717) $  (3,281) 
       
Net loss per share:      
Basic$(0.22) $(0.20) 
       
Diluted$(0.22) $(0.20) 
       
Weighted average number of shares     
  used in computing loss per share:      
Basic 17,200   16,583  
       
Diluted 17,200   16,583  
         


iCAD, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
 For the three months ended March 31,
  2019   2018 
  
Cash flow from operating activities:     
  Net loss$  (3,717) $  (3,281)
  Adjustments to reconcile net loss to net cash     
  used for operating activities:     
Amortization   95     92 
Depreciation   69     96 
Bad debt provision   -      85 
Inventory obsolescence reserve   -      (2)
Stock-based compensation expense   212     391 
Amortization of debt discount and debt costs   39     64 
Change in fair value of convertible debentures   2,525     -  
Deferred tax   -      (8)
Loss on disposal of assets   -      12 
  Changes in operating assets and liabilities     
Accounts receivable   (998)    1,262 
Inventory   (403)    (72)
Prepaid and other current assets   (333)    59 
Accounts payable   330     177 
Accrued expenses   414     186 
Deferred revenue   (46)    298 
Total adjustments   1,896     2,640 
      
Net cash used for operating activities   (1,813)    (641)
      
Cash flow from investing activities:     
Additions to patents, technology and other   (1)    (2)
Additions to property and equipment   (28)    (22)
Net cash used for investing activities   (29)    (24)
      
Cash flow from financing activities:     
Stock option exercises   1,175     -  
Taxes paid related to restricted stock issuance   -      (57)
  Principal payments of capital lease obligations   (3)    (3)
  Principal repayment of debt financing, net   (200)    -  
Net cash provided by (used for) financing activities   972     (60)
      
Decrease in cash and equivalents   (870)    (725)
Cash and equivalents, beginning of period   12,185     9,387 
Cash and equivalents, end of period$  11,315  $  8,662 
        


Reconciliation of Non-GAAP Financial Measures to Comparable GAAP 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 understand the Company's 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 Company's ongoing business by eliminating certain non-cash expenses and other items that management believes might otherwise make comparisons of the Company's ongoing business with prior periods more difficult, obscure trends in ongoing operations or reduce management's 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 Company's financial and operational performance and comparing this performance to its peers and competitors.

Management defines "Non-GAAP Adjusted EBITDA" as the sum of GAAP Net Loss before provisions for interest expense, other income, stock-based compensation expense, depreciation and amortization, tax expense, severance, gain on sale of assets, loss on disposal of assets, acquisition and litigation related expenses.  Management considers this non-GAAP financial measure to be an indicator of the Company's 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 Company's overall financial performance.

The non-GAAP financial measures do not replace the presentation of the Company's GAAP financial results and should only be used as a supplement to, not as a substitute for, the Company’s financial results presented in accordance with GAAP. The Company has provided a reconciliation of each non-GAAP financial measure used in its financial reporting and investor presentations to the most directly comparable GAAP financial measure.

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:

  • Interest expense: The Company excludes interest expense which includes interest from the facility agreement, interest on capital leases and interest on the convertible debentures from its non-GAAP Adjusted EBITDA calculation.
  • 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 Company's business, and also because the total amount of expense is partially outside of the Company's 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 and Depreciation: Purchased assets and intangibles are amortized over a period of several years and generally cannot be changed or influenced by management after they are acquired. Accordingly, these non-cash 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 Company's 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.
  • Loss on fair value of convertible debentures.  The Company excludes this non-cash item as it is not considered by management in making operating decisions, and management believes that such item does not have a direct correlation to future business operations.
  • Acquisition related: relates to professional service fees associated with acquisitions.  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.
  • Litigation related: These expenses consist primarily of settlement, legal and other professional fees related to litigation. The Company excludes these costs from its non-GAAP measures primarily because the Company believes that these costs have no direct correlation to the core operations 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.

Non-GAAP Adjusted EBITDA
Set forth below is a reconciliation of the Company's "Non-GAAP Adjusted EBITDA"
(Unaudited)
(In thousands except for per share data)
       
       
 Three Months Ended March 31, 
  2019   2018  
 GAAP Net Loss $  (3,717)  $  (3,281) 
       
 Interest Expense   209     142  
 Other income   (59)    (22) 
 Stock Compensation   212     391  
 Depreciation   69     96  
 Amortization   95     92  
 Tax expense   8      13  
 Severance   -      144  
 Loss of fair value of convertible debentures   2,525     -   
 Loss on sale of Asset   -      12  
 Litigation related   72     42  
 Non-GAAP Adjusted EBITDA $  (586)  $  (2,371) 
       



       
 Three Months Ended March 31, 
  2019   2018  
 GAAP Net Loss $  (3,717)  $  (3,281) 
 Adjustments to Net Loss:      
 Severance   -      144  
 Loss of fair value of convertible debentures   2,525     -   
 Loss on sale of Asset   -      12  
 Litigation   72     42  
 Non-GAAP Adjusted Net Loss $  (1,112)  $  (3,083) 
       
 Net Loss per share      
 GAAP Net Loss per share $  (0.22)  $  (0.20) 
 Adjustments to Net Loss (as detailed above)   0.15     0.01  
 Non-GAAP Adjusted Net Loss per share $  (0.07)  $  (0.19) 
         

iCAD Logo.jpg

Source: iCAD, Inc.


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