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PowerLook Tomo Detection Version 2.0 Submitted for FDA Approval

Conference call today at 4:30 p.m. ET

NASHUA, N.H., Aug. 14, 2018 (GLOBE NEWSWIRE) -- iCAD, Inc. (NASDAQ: ICAD), a global medical technology company providing innovative cancer detection and therapy solutions, today reported financial results for the three and six months ended June 30, 2018.

Second Quarter 2018 Highlights:

• Total revenue of $6.2 million, down 4% year-over-year
• Gross profit of $4.8 million, or 78%
• GAAP Net Loss of ($1.0) million, or ($0.06) per share
• Non-GAAP Adjusted EBITDA loss of ($0.3) million
• Submitted PowerLook Tomo Detection Version 2.0 for FDA approval in May

“We made progress with our strategic plan which is reflected in our overall financial results for the second quarter,” said Ken Ferry, Chief Executive Officer of iCAD, Inc.  “After adjusting for discontinued businesses, specifically MRI software and skin subscription, revenues increased eight percent when compared to the second quarter of 2017.  In our Detection segment, while product revenues were essentially flat vs. Q2 of 2017, we saw continued momentum with PowerLook Tomo Detection, our first FDA approved A.I. product for the detection of breast cancer on 3D mammograms.  Our strategic decision to discontinue offering the subscription service model to customers in our skin brachytherapy business had a positive impact improving our financial performance in the quarter.  Also, product sales in the Therapy segment increased $600 thousand, or 110 percent, in the first six months of 2018 as compared to the first half of last year.” 

“In May, we submitted Version 2.0 of our PowerLook Tomo Detection software for FDA approval, a significant accomplishment for our Company.  Depending on the timing of receipt of FDA approval, we anticipate launching this product commercially in the U.S. in the second half of 2018,” continued Mr. Ferry.  “In addition, the first Version 2.0 systems have been installed at key reference centers in Europe, and we are seeing strong customer interest in this region.  We have also made significant progress with commercial efforts in the key European countries where we see the greatest potential for V2 sales.  Importantly, we believe that the Tomo product platform will be a significant growth driver for iCAD for years to come.”

“Our increased focus on capital sales in the Therapy business had a beneficial impact on margins, cash flow and reduced our cash burn.  Our total gross margins increased five basis points and our operating expenses decreased nine percent in the first six months of 2018 versus the corresponding period of last year.  In addition, our cash burn decreased to $1.6 million in the first half of 2018, as compared to $4.2 million¹ in the first half of 2017,” concluded Mr. Ferry.

Second Quarter 2018 Financial Results
Revenue:  Total revenue for the second quarter of 2018 decreased 4% to $6.2 million from $6.4 million in the second quarter of 2017, reflecting a 20% increase in product revenue and a 21% decrease in service and supplies revenue.

Cancer Detection revenue, which includes revenue from our digital mammography, breast density, and CT CAD platforms, as well as the associated service and supplies revenue, for the second quarter of 2018, decreased $0.2 million, or 6%, to $4.0 million, as compared to $4.2 million in the same period in 2017.  The year-over-year Detection results were negatively impacted by the inclusion of $0.1 million in MRI Detection revenue in the second quarter of 2017.  The MRI assets were divested in the first quarter of 2017.  Excluding MRI revenue in both periods, second quarter 2018 cancer Detection revenues decreased $0.2 million, or 5%, from the second quarter of 2017.  Therapy revenue, which includes Xoft® Axxent® Electronic Brachytherapy System® product sales, as well as the associated service and supplies revenue, for the second quarter of 2018, was flat at $2.2 million as compared to the corresponding period of 2017, as a result of a 476% increase in Therapy product revenue, and a 29% decrease in service and supplies revenue.  During the first quarter of 2018, the Company ceased offering its subscription service model to skin brachytherapy customers.  Excluding Xoft skin subscription service revenues in both periods, second quarter 2018 Therapy revenues increased $0.7 million, or 46%, from the second quarter of 2017.  Total revenue for the three months ended June 30, 2018, excluding the impact of MRI and Xoft skin subscription service revenues, increased 8% to $6.1 million from $5.6 million in the second quarter of 2017.

Gross Profit:  Gross profit for the second quarter of 2018 was $4.8 million, or 78% of revenue, compared with $4.5 million, or 70% of revenue, for the second quarter of 2017.  The year-over-year increase in gross profit percentage was primarily due to incremental gross profit margin associated with the Company’s exit from the unprofitable Xoft skin subscription service business.

Operating Expenses:  Total operating expenses for the second quarter of 2018 decreased $1.4 million to $5.7 million from $7.1 million in the second quarter of 2017.  The decrease was due mainly to lower stock compensation and sales and marketing expense.

GAAP Net Loss:  Net loss for the second quarter of 2018 was ($1.0) million, or ($0.06) per share, compared with a net loss of ($2.6) million, or ($0.16) per share, for the second quarter of 2017.  The $1.6 million year-over-year improvement in net loss was primarily due to incremental gross profit and lower operating expenses. 

Non-GAAP Adjusted EBITDA:  Non-GAAP adjusted EBITDA, a non-GAAP financial measure as defined below, was a loss of ($0.3) million for the second quarter of 2018, compared to a non-GAAP adjusted EBITDA loss of ($0.6) million for the second quarter of 2017.  The $0.3 million year-over-year decrease in Non-GAAP Adjusted EBITDA loss was primarily driven by incremental gross profit.  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 June 30, 2018 and 2017, respectively.  Based on the Non-GAAP Adjusted EBITDA results for the second quarter of 2018, the Company met a milestone within its debt agreement with Silicon Valley Bank and elected to defer commencement of the amortization of the term loan principal from September 1, 2018 to March 1, 2019. 

Six Months Ended June 30, 2018 Financial Results
Revenue:  Total revenue for the first six months of 2018 decreased 5% to $12.5 million from $13.2 million in the same six month period of 2017, reflecting a 7% increase in product revenue and a 15% decrease in service and supplies revenue.

Cancer Detection revenue for the first six months of 2018 decreased $0.7 million, or 8%, to $8.0 million, as compared to $8.7 million in the same six month period in 2017.  The year-over-year Detection results were negatively impacted by the inclusion of $0.4 million in MRI revenue in the first six months of 2017.  Excluding MRI revenue in both periods, cancer Detection revenues in the first six months of 2018 decreased $0.5 million, or 5%, to $7.9 million, from $8.4 million in the same six month period of 2017.  Therapy revenue for the first six months of 2018 was flat at $4.5 million as compared to the same six month period of 2017.  Excluding the Xoft subscription service revenues in both periods, Therapy revenues increased $0.8 million, or 24%, in the first six months of 2018 as compared to the same six months of 2017. Total revenue for the six months ended June 30, 2018, excluding the impact of MRI and Xoft skin subscription service revenues, increased 3% to $12.0 million from $11.7 million in the same six months of 2017.

Gross Profit:  Gross profit for the first six months of 2018 was $9.3 million, or 74% of revenue, compared with $9.2 million, or 70% of revenue, for the same six months of 2017.  The year-over-year increase in gross profit percentage was primarily due to incremental gross profit margin associated with the Company’s exit from the unprofitable Xoft skin subscription service business.

Operating Expenses:  Total operating expenses for the first six months of 2018 increased $1.1 million to $13.4 million from $12.3 million in the same six months of 2017.  The increase was due mainly to the $2.5 million gain on the sale of the MRI assets recorded in the prior year quarter.  Absent the gain, operating expenses decreased $1.4 million year-over-year due primarily to lower stock compensation and sales and marketing expense which were partially offset by incremental costs associated with our Tomo Detection Version 2.0 study. In May of 2018, the Company submitted Tomo Detection Version 2.0 for FDA approval.

GAAP Net Loss:  Net loss for the first six months of 2018 was ($4.3) million, or ($0.26) per share, compared with a net loss of ($3.1) million, or ($0.19) per share, for the same six months of 2017.  The $1.2 million year-over-year increase in net loss was primarily due to the $2.5 million gain on the sale of the MRI assets recorded in the prior year period.  Excluding the gain, net loss improved by $1.3 million due mainly to lower operating expense which was partially offset by incremental interest expense. 

Non-GAAP Adjusted EBITDA:  Non-GAAP adjusted EBITDA, a non-GAAP financial measure as defined below, was a loss of ($2.7) million for the first six months of 2018, compared to a non-GAAP adjusted EBITDA loss of ($2.1) million for the second quarter of 2017.  The $0.6 million year-over-year increase in Non-GAAP Adjusted EBITDA loss was primarily driven by incremental costs associated with our Tomo Detection Version 2.0 study.  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 six month periods ended June 30, 2018 and 2017, respectively.

Cash and Cash Equivalents:  As of June 30, 2018, the Company had cash and cash equivalents of $7.8 million, compared with $9.4 million as of December 31, 2017.  

Subsequent Event:  In August of 2018, the Company amended the terms of its credit facility with Silicon Valley Bank.  The amendment modifies the debt covenants, the line of credit, the final payment amount, and some other minor terms. 

Conference Call
iCAD management will host a conference and live webcast call today at 4:30 p.m. Eastern Time to discuss the second quarter 2018 financial results and provide a Company update.  The dial-in numbers are (888) 394-8218 for domestic callers and (323) 794-2588 for international callers.  The conference ID is 1225538.  A live webcast of the conference call will be available online at http://public.viavid.com/index.php?id=130346.

A replay of the webcast will remain on the Company’s website until the Company releases its third quarter 2018 financial results.  In addition, a telephonic replay of the conference call will be available until August 28, 2018.  The replay dial-in numbers are (844) 512-2921 for domestic callers and (412) 317-6671 for international callers.  The replay conference ID is 1225538.

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, N.H., 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 the Company’s ability to defend itself in litigation matters, to achieve business and strategic objectives, the risks of uncertainty of patent protection, 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.

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1} $4.2 million cash burn for the first half of 2017 excludes the positive impact of one-time cash inflows totaling $3.3 million received in the first quarter of 2017 related to the Sale of the MRI assets ($2.9 million) and a Medical Device Tax Refund ($0.4 million).

Contact:

For iCAD investor relations:
LifeSci Advisors
Jeremy Feffer
(212) 915-2568
jeremy@lifesciadvisors.com 

or

For iCAD media inquiries:
ARPR, LLC
Paul Barren
(855) 300-8209 ext. 126
paul@arpr.com