iCAD Reports First Quarter Financial Results

iCAD Reports First Quarter Financial Results

Total Revenue Increases 25% and Therapy Revenue Increases 64% over Prior Year

Conference Call Begins Tuesday, April 30 at 10:00 a.m. Eastern Time


NASHUA, N.H.--(BUSINESS WIRE)-- iCAD, Inc. (Nasdaq: ICAD) , an industry-leading provider of advanced image analysis, workflow solutions and radiation therapy for the early identification and treatment of cancer, today reported financial results for the three months ended March 31, 2013.

"We were pleased with the financial results for the first quarter of 2013. The quarter's highlights include continued strong sales growth for cancer therapy products and disciplined expense management. This combination contributed significantly to the achievement of over a half million dollars of adjusted EBITDA profitability in the quarter," said Ken Ferry, President and CEO of iCAD. "Products and service revenue each increased by 25%, which underscores the progress we have made in both categories.

"During the first quarter, our Cancer Detection products increased 7%, demonstrating solid progress with our CAD solutions. In addition, we were pleased to announce our collaboration with Invivo, a Philips Healthcare Business and a worldwide leader in MRI. In March, we released a next-generation platform for prostate and breast imaging that integrates our advanced MRI image analysis software products with Invivo's suite of MRI product solutions for global commercial sale. This partnership aligns the commercial strategy of our MRI products similar to that of our successful mammography business.

"The strong growth in Therapy revenue demonstrates the growing adoption of the Xoft® Axxent® Electronic Brachytherapy System® for the treatment of breast and skin cancers. We also continue to make progress with new therapy procedures and global expansion for the Xoft System, specifically with the recent FDA clearance for our cervical applicator and new distribution agreements in China and Russia," added Mr. Ferry.

First Quarter Financial Results

Revenue: Total revenue for the first quarter of 2013 increased 25% to $7.9 million from $6.3 million for the first quarter of 2012, driven by a 64% increase in Therapy revenue as well as a 7% increase in Cancer Detection product revenue.

Therapy revenue includes Xoft Axxent Electronic Brachytherapy product sales, as well as associated service and supply revenue. Cancer Detection revenue includes film, digital mammography, MRI and CT CAD platforms, as well as service and supply revenue from these products.

Three months ended March 31,

2013

2012

% Change

Products

$

5,060

$

4,051

25

%

Service and supply

2,870

2,292

25

%

Total revenue

$

7,930

$

6,343

25

%

Three months ended March 31,

2013

2012

% Change

Cancer Detection

$

4,638

$

4,339

7

%

Therapy

3,292

2,004

64

%

Total revenue

$

7,930

$

6,343

25

%

Gross Margin: Gross profit for the first quarter of 2013 was $5.6 million, or 71.2% of revenue, compared with gross profit for the first quarter of 2012 of $4.4 million, or 69.8% of revenue.

Operating Expenses: Total operating expenses for the first quarter of 2013 declined to $6.0 million from $6.5 million for the same period in 2012, primarily the result of continued cost-control measures implemented in the fourth quarter of 2011.

Non-GAAP Adjusted EBITDA: Non-GAAP adjusted EBITDA, a non-GAAP financial measure as defined below, was $592,000 for the first quarter of 2013, compared with negative $967,000 for the same period in 2012.

Net Loss: The net loss for the first quarter of 2013 was $727,000, or $0.07 per share, compared with a net loss for the first quarter of 2012 of $2.3 million, or $0.21 per share.

Non-GAAP Adjusted Net Loss: The Company posted a non-GAAP adjusted net loss, as defined below, for the first quarter of 2013 of $1.2 million, or $0.11 per share, compared with a non-GAAP adjusted net loss for the first quarter of 2012 of $2.8 million, or $0.26 per share.

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.

Conference Call

iCAD management will host an investment community conference call on Tuesday, April 30, 2013 beginning at 10:00 a.m. Eastern Time to discuss these results and answer questions. Shareholders and other interested parties may participate in the conference call by dialing 866-318-8616 (domestic) or 617-399-5135 (international) and entering passcode 41827499. The call also will be broadcast live on the Internet at www.streetevents.com, www.earnings.com and www.icadmed.com.

A replay of the conference call will be accessible two hours after its completion through May 7, 2013 by dialing 888-286-8010 (domestic) or 617-801-6888 (international) and entering passcode 87063234. The call will also be archived for 90 days at www.streetevents.com, www.earnings.com and www.icadmed.com.

About iCAD, Inc.

iCAD is an industry-leading provider of advanced image analysis, workflow solutions and radiation therapies for the early identification and treatment of common cancers. iCAD's Xoft System offers radiation treatment for early-stage breast cancer that can be administered in the form of intraoperative radiation therapy or accelerated partial breast irradiation. The Xoft System is also cleared for the treatment of non-melanoma skin cancer, cervical and endometrial cancers. iCAD offers a comprehensive range of high-performance, upgradeable CAD solutions for mammography and advanced image analysis and workflow solutions for Magnetic Resonance Imaging, for breast and prostate cancers and Computed Tomography for colorectal cancer. 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 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, the impact of supply and manufacturing constraints or difficulties, product market acceptance, possible technological obsolescence of products, increased competition, litigation and/or government regulation, changes in Medicare 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.

iCAD, INC. AND SUBSIDIARY

Condensed Consolidated Statements of Operations

(Unaudited)

(In thousands except for per share data)

Three Months Ended March 31,

2013

2012

Revenue:

Products

$

5,060

$

4,051

Service and supplies

2,870

2,292

Total revenue

7,930

6,343

Cost of revenue:

Products

1,355

1,107

Service and supplies

694

577

Amortization of acquired intangibles

233

232

Total cost of revenue

2,282

1,916

Gross profit

5,648

4,427

Operating expenses:

Engineering and product development

1,866

2,212

Marketing and sales

2,438

2,646

General and administrative

1,672

1,595

Total operating expenses

5,976

6,453

Loss from operations

(328

)

(2,026

)

Gain from change in fair value of warrant

431

599

Interest expense

(826

)

(835

)

Other income

6

9

Other (expense) income, net

(389

)

(227

)

Loss before income tax expense

(717

)

(2,253

)

Income tax expense

(10

)

(11

)

Net loss and comprehensive loss

$

(727

)

$

(2,264

)

Net loss per share:

Basic and diluted

$

(0.07

)

$

(0.21

)

Weighted average number of shares used in computing loss per share:

Basic and diluted

10,820

10,776

iCAD, INC. AND SUBSIDIARY

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands except for share data)

March 31,

December 31,

Assets

2013

2012

Current assets:

Cash and cash equivalents

$

12,673

$

13,948

Trade accounts receivable, net of allowance for doubtful accounts of $82 in 2013 and $48 in 2012

5,466

4,980

Inventory, net

1,773

2,119

Prepaid expenses and other current assets

558

486

Total current assets

20,470

21,533

Property and equipment, net of accumulated depreciation and amortization of $3,796 in 2013 and $3,627 in 2012

1,372

1,483

Other assets

585

638

Intangible assets, net of accumulated amortization of $11,174 in 2013 and $10,744 in 2012

14,801

15,230

Goodwill

21,109

21,109

Total assets

$

58,337

$

59,993

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable

$

1,724

$

1,940

Accrued and other expenses

2,933

4,142

Interest payable

553

499

Warrant liability

1,107

1,538

Deferred revenue

6,972

6,520

Total current liabilities

13,289

14,639

Deferred revenue, long-term portion

1,642

1,502

Other long-term liabilities

1,169

1,341

Notes payable

15,000

14,846

Total liabilities

31,100

32,328

Commitments and Contingencies

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 11,021,908 in 2013 and 10,993,933 in 2012;

outstanding 10,836,077 in 2013 and 10,808,102 in 2012

110

110

Additional paid-in capital

165,715

165,416

Accumulated deficit

(137,173

)

(136,446

)

Treasury stock at cost 185,831 in 2013 and 2012

(1,415

)

(1,415

)

Total stockholders' equity

27,237

27,665

Total liabilities and stockholders' equity

$

58,337

$

59,993

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO COMPARABLE GAAP MEASURES
(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 Company's 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 Company's 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 b