ICAD Reports Third Quarter 2016 Financial Results

NASHUA, N.H., Nov. 02, 2016 (GLOBE NEWSWIRE) -- 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 and nine months ended September 30, 2016.

Third Quarter Highlights:
  • Total revenue of $6.0 million
  • GAAP net loss of $2.7 million
  • Non-GAAP adjusted EBITDA loss of $1.6 million
  • Ended quarter with $10.5 million in cash and cash equivalents and no debt

"Our third quarter results reflect lower than anticipated Therapy system sales, however we continue to see good progress with one of our key growth drivers for the Therapy business heading into 2017 - substantially increasing the number of dermatology practices that offer our electronic brachytherapy solution for the treatment of non-melanoma skin cancer," said Ken Ferry, Chief Executive Officer. "Also in our Cancer Therapy business, we continue to experience strong IORT procedure volume growth year to date, particularly in international markets, and we expect to enter several new geographies in 2017 that will further expand our market opportunity. In our Cancer Detection business, we have received extremely positive feedback on our breast tomosynthesis cancer detection solution from customers in Europe and remain confident that there will be strong demand in the U.S. upon regulatory clearance. We also remain on track with the development of a next generation, multi-vendor tomosynthesis cancer detection solution that we believe will further enhance our market opportunity in the second half of 2017."

Third Quarter 2016 Financial Results

Revenue: Total revenue for the third quarter of 2016 decreased 37% to $6.0 million from $9.6 million in the third quarter of 2015, reflecting a 55% decrease in product revenue and a 21% decrease in service revenue. The decrease in the Company's revenue in the third quarter of 2016 was primarily driven by lower Xoft system sales and the negative impact resulting from general uncertainty related to reimbursement for non-melanoma skin cancer treatment in the United States in 2015. The decrease was also driven by lower MRI-CAD product sales due to the Company's exclusive distribution partner exercising its right in August 2015 to a fully paid-up license to distribute the software. This provided the Company with a cash payment of $2.0 million during the third quarter of 2015 that is being amortized over the term of the contract through July 2017. Service revenue for the third quarter of 2016 was approximately 66% of total revenues compared to approximately 53% of total revenues in the third quarter of 2015.
         Three months ended September 30,
          2016     2015    % Change
             
      Product revenue $ 2,014   $ 4,515     (55.4 )%
      Service revenue   3,989     5,067     (21.3 )%
    Total Revenue $ 6,003   $ 9,582     (37.4 )%
                       

Total therapy revenue for the third quarter of 2016 decreased by 57%, which includes Xoft ® Axxent ® Electronic Brachytherapy System ® product sales, as well as the associated service revenue. Cancer detection revenue decreased by 21%, which includes digital mammography, MRI and CT CAD platforms, as well as the associated service revenue.
             
         Three months ended September 30,
          2016     2015    % Change
    Detection revenue      
      Product revenue $ 1,991   $ 3,230     (38.4 )%
      Service revenue   2,143     1,972     8.7 %
    Detection Revenue $ 4,134   $ 5,202     (20.5 )%
             
    Therapy revenue      
      Product revenue $ 23   $ 1,285     (98.2 )%
      Service revenue   1,846     3,095     (40.4 )%
    Therapy Revenue $ 1,869   $ 4,380     (57.3 )%
             
    Total Revenue $ 6,003   $ 9,582     (37.4 )%
                       

Gross Profit: Gross profit for the third quarter of 2016 decreased to $4.1 million, or 68% of revenue, from $6.8 million, or 71% of revenue, for the third quarter of 2015.

Operating Expenses: Total operating expenses for the third quarter of 2016 decreased to $6.8 million from $7.2 million for the third quarter of 2015. The year-over-year decline reflects the effect of the Company's cost reduction initiatives, implemented in 2015.

Net Loss: Net loss for the third quarter of 2016 was $(2.7) million, or $(0.17) per share, compared with net loss of $(0.4) million, or $(0.03) per share, for the third quarter of 2015.

Non-GAAP Adjusted EBITDA: Non-GAAP adjusted EBITDA, a non-GAAP financial measure as defined below, was a loss $(1.6) million for the third quarter of 2016, compared with non-GAAP adjusted EBITDA of $0.7 million, or 8% of revenue, for the third quarter of 2015.

Non-GAAP Adjusted Net Income/Loss: Non-GAAP adjusted net loss, as defined below, for the third quarter of 2016 was $(2.6) million, or $(0.16) per share, compared with a non-GAAP adjusted net loss of $(0.4) million, or $(0.03) per share, for the third quarter of 2015.

Cash and Cash Equivalents: As of September 30, 2016, the Company had cash and cash equivalents of $10.5 million, compared with $15.3 million as of December 31, 2015. The Company used $0.9 million of cash from operating activities in the third quarter of 2016.

First Nine Months of 2016 Financial Results

Revenue: Total revenue for the nine months ended September 30, 2016 decreased 43% to $19.4 million from $33.9 million for the nine months ended September 30, 2015, reflecting a 36% decrease in product revenue and a 47% decrease in service revenue. The decrease in the Company's revenue in the first nine months of 2016 was primarily driven by lower Xoft system sales and the negative impact resulting from general uncertainty related to reimbursement for non-melanoma skin cancer treatment in the United States in 2015. The decrease was also driven by a reduction of approximately $2.1 million of MRI-CAD product sales due to the Company's exclusive distribution partner exercising its right in August 2015 to a fully paid-up license to distribute the software. This provided the Company with a cash payment of $2.0 million during the third quarter of 2015 that is being amortized over the term of the contract through July 2017. Service revenue for the nine months ended September 30, 2016 was approximately 62% of total revenues compared to approximately 66% of total revenues for the nine months ended September 30, 2015.
       Nine months ended September 30,    
        2016     2015    % Change    
               
    Product revenue $ 7,460   $ 11,569     (35.5 )%    
    Service revenue   11,950     22,376     (46.6 )%    
  Total Revenue $ 19,410   $ 33,945     (42.8 )%    
                         

Total therapy revenue for the nine months ended September 30, 2016 decreased by 66%, which includes Xoft ® Axxent ® Electronic Brachytherapy System ® product sales, as well as the associated service revenue. Cancer detection revenue decreased by 13%, which includes digital mammography, MRI and CT CAD platforms, as well as the associated service revenue.  When adjusted for the $2.1 million reduction in MRI-CAD product revenue, Cancer Detection revenues increased approximately $0.1 million.
         Nine months ended September 30,
          2016     2015    % Change
    Detection revenue      
      Product revenue $ 6,580   $ 9,058     (27.4 )%
      Service revenue   6,381     5,887     8.4 %
    Detection Revenue $ 12,961   $ 14,945     (13.3 )%
             
    Therapy revenue      
      Product revenue $ 880   $ 2,511     (65.0 )%
      Service revenue   5,569     16,489     (66.2 )%
    Therapy Revenue $ 6,449   $ 19,000     (66.1 )%
             
    Total revenue $ 19,410   $ 33,945     (42.8 )%
                       

Gross Profit: Gross profit for the nine months ended September 30, 2016 decreased to $14.0 million, or 72% of revenue, from $24.1 million, or 71% of revenue, for the nine months ended September 30, 2015. Gross profit for the first nine months of 2016 included a U.S. medical device excise tax refund of $0.5 million.

Operating Expenses: Total operating expenses for the nine months ended September 30, 2016 decreased to $20.7 million from $51.8 million for the nine months ended September 30, 2015, which included $27.4 million of goodwill and long-lived asset impairment. Operating expenses for the first nine months of 2015 were $24.3 million excluding the impairment. The year-over-year decline reflects the effect of the Company's cost reduction initiatives implemented in 2015.

Net Loss: Net loss for the nine months ended September 30, 2016 was $(6.8) million, or $(0.43) per share, compared with net loss of $(30.0) million, or $(1.92) per share, for the nine months ended September 30, 2015.

Non-GAAP Adjusted EBITDA: Non-GAAP adjusted EBITDA, a non-GAAP financial measure as defined below, was a loss of $(3.3) million for the nine months ended September 30, 2016, compared with non-GAAP adjusted EBITDA of $5.0 million, or 15% of revenue, for the nine months ended September 30, 2015.

Non-GAAP Adjusted Net Income/Loss: Non-GAAP adjusted net loss, as defined below, for the nine months ended September 30, 2016 was $(6.5) million, or $(0.41) per share, compared with breakeven non-GAAP adjusted net income for the nine months ended September 30, 2015.

Financial Guidance

As the Company is in the early stage of educating customers on the updated reimbursement for non-melanoma skin cancer treatment in the United States, the Company is not providing financial guidance at this time.

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