NOVADAQ Reports Third Quarter 2016 Financial Results

TORONTO, Nov. 02, 2016 (GLOBE NEWSWIRE) -- NOVADAQ Technologies Inc. ("NOVADAQ" or the "Company") (NASDAQ:NVDQ) (TSX:NDQ), the leading developer and provider of clinically relevant fluorescence imaging solutions for use in surgical and diagnostic procedures, today announced financial results for its third quarter ended September 30, 2016. Unless otherwise indicated, all dollar amounts in this press release are expressed in United States ("U.S.") dollars.

For the three months ended September 30, 2016, NOVADAQ reported revenues of $22.2 million, an increase of 30% from $17.0 million in the third quarter of 2015.  Total direct sales increased by $4.5 million, or 32%, and total Partnered/International sales increased by $0.7 million, or 20%, compared to Q3-2015.

The following table sets out certain supplemental quarterly revenue and installed base metrics to assist investors in following the Company's progress over time:
  Q3-2016   Q3-2015   Change
           
REVENUES (millions)          
Recurring $ 8.6     $ 6.1       +42 %
Capital    9.7        7.7       +25 %
Total Direct    18.3        13.8       +32 %
Partnered/International    3.9        3.2       +20 %
Total $ 22.2     $ 17.0       +30 %
           
INSTALLED BASE          
Direct Systems   875        647       +35 %
Recurring Revenue/Direct System   $ 9,821     $ 9,352       +5 %

The Company estimates that the number of procedures performed using SPY technology systems during the third quarter was approximately 14,100 representing an increase of 34% year-over-year and 6% sequentially over the previous quarter.

Third quarter gross profits rose to $15.9 million (72% margin) compared to gross profits of $12.6 million (74%) in the same period last year. 

Net loss for the third quarter of 2016 was $10.9 million, or $0.19 basic loss per share, compared with net loss of $3.7 million, or $0.07 basic loss per share, in Q3-2015.  The increase in net loss was primarily a result of an increase in operating expenses of $8.2 million and the non-cash warrant revaluation income of $2.3 million recognized in Q3-2015. Offsetting these amounts was an increase in gross profit of $3.3 million.

Third quarter 2016 operating burn (cash consumed by operating activities before changes in working capital) was $7.7 million compared to $3.5 million in the third quarter of 2015. The difference to operating burn was mainly driven by increased operating expenses associated with the continued build-out of NOVADAQ's direct sales and marketing infrastructure. During Q3-2016, non-cash working capital increased by $1.5 million.

Cash and cash equivalents were $72.2 million at September 30, 2016, reflecting a decrease of $11.8 million compared to the cash position as at June 30, 2016.

"Since my appointment, I have refocused our efforts towards recurring revenue growth. I am pleased that our efforts have resulted in a forty two percent increase year over year," commented Rick Mangat, NOVADAQ's President and Chief Executive Officer. "Recurring revenue growth will continue to be management's primary objective as we build our business."

Conference Call Details

NOVADAQ is pleased to invite all interested parties to participate in a conference call today, November 2, 2016 at 4:30 p.m. Eastern Time, during which the results will be discussed.

Those wishing to access the live conference call by telephone should dial 1-866-320-0174 (within Canada and the United States) or 1-785-424-1631 (outside of Canada and the U.S.) several minutes prior to the beginning of the call.

A replay of the conference call can be accessed by dialing 1-877-481-4010 (within Canada and the United States) or 1-919-882-2331 (outside of Canada and the U.S.) and entering the conference identification number 10122 when prompted.

The call will also be archived for 90 days on the Company's website at novadaq.com under the "Events" tab in the Investor's section. A replay of the call will be available for download to a portable audio player or computer, as an MP3 or podcast file, at the same location on NOVADAQ's website.

About NOVADAQ Technologies Inc.

NOVADAQ's global mission is to enable physicians with point-of-care imaging solutions that provide real time clinically significant and actionable information to improve care quality and lower healthcare costs. Using NOVADAQ's SPY fluorescence imaging technology, physicians can personalize therapy and achieve optimal results through the precise visualization of blood flow in vessels, micro-vessels, tissue perfusion and critical anatomical structures during the course of treatment. SPY technology enables the delivery of personalized therapies and the achievement of the optimal results for each individual patient. More than 225 peer-reviewed publications demonstrate that the use of SPY technology will reduce post-procedure complication rates and the cost of care for a broad variety of surgical treatments for cancer, cardiovascular diseases and other conditions, helping to ensure that patients benefit from the very best possible treatment and outcome.

SPY Imaging Systems are U.S. Food and Drug Administration 510(k) cleared, Health Canada licensed, CE Marked and registered worldwide for use in multiple surgical specialties and medical applications. The endoscopic version of SPY technology, known as PINPOINT, combines the fluorescence imaging capabilities of SPY with the high definition visible light visualization to establish a new standard in the quality and performance of minimally invasive surgery. NOVADAQ's LUNA System is used to visualize blood flow and tissue perfusion while treating patients with atherosclerotic cardiovascular disease that impairs blood flow to the extremities and increases the risk for the development of complications such as acute and chronic non-healing wounds and limb loss. NOVADAQ is the exclusive worldwide distributor of LifeNet Health's DermACELL acellular tissue products for wound and breast reconstruction surgery.

Forward-Looking Statements

Certain statements included in this press release may be considered forward-looking. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from those implied by such statements, and therefore these statements should not be read as guarantees of future performance or results. All forward-looking statements are based on NOVADAQ's current beliefs as well as assumptions made by and information currently available to NOVADAQ and relate to, among other things, the Company's strategy, strategic goals, research and development activities, research and clinical testing outcomes, taxes, capital expenditures, future operations, future financial position, future revenues/results, projected costs, prospects and plans and objectives of management.

Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Due to risks and uncertainties, including the risks and uncertainties identified by NOVADAQ in its public securities filings available at www.sec.gov and www.sedar.com, actual events may differ materially from current expectations. NOVADAQ disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

NOVADAQ, SPY, PINPOINT, LUNA and the illumination square design are registered trademarks of Novadaq Technologies Inc. LifeNet Health and DermACELL are registered trademarks of LifeNet Health.   

Novadaq Technologies Inc.

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(Unaudited) (expressed in U.S. dollars, except common shares outstanding)
        As at  September 30, 2016     As at  December 31, 2015  
ASSETS                    
Current assets                    
Cash and cash equivalents     $   72,242,278    $   106,790,202  
Accounts receivable         27,147,891       21,767,746  
Prepaid expenses and other assets         5,349,777       3,362,854  
Inventories         9,841,011       10,680,885  
          114,580,957       142,601,687  
                     
Non-current assets                    
Property and equipment, net         18,276,931       14,830,114  
Intangible assets, net         17,270,487       18,539,790  
                     
Total Assets     $   150,128,375   $   175,971,591  
                     
LIABILITIES AND SHAREHOLDERS' EQUITY                    
Current liabilities                    
Accounts payable and accrued liabilities     $   14,705,029    $   12,145,572  
Provisions         527,703       454,579  
Deferred revenue         1,834,348       1,124,808  
Income taxes payable         -       12,500  
Distribution rights payable         250,000       250,000  
Other liabilities         871,915       -  
          18,188,995       13,987,459  
Non-current liabilities                    
Deferred revenue         757,143       849,299  
Distribution rights payable         1,557,098       1,735,012  
Shareholder warrants         -       16,437,795  
                     
Total Liabilities     $   20,503,236    $   33,009,565  
                     
Shareholders' Equity                    
Share capital     $   337,954,002    $   322,687,011  
Contributed surplus         22,207,281       16,400,830  
Deficit         (230,536,144 )     (196,125,815 )
                     
Total Shareholders' Equity     $   129,625,139    $   142,962,026  
                     
Total Liabilities and Shareholders' Equity     $   150,128,375    $   175,971,591  
                     
Total number of common shares outstanding         57,440,151       56,253,327  
                     
                     

Novadaq Technologies Inc.

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS

(Unaudited) (expressed in U.S. dollars)
        For the three months ended       For the nine months ended  
         September 30, 2016        September 30, 2015        September 30, 2016        September 30, 2015  
                                           
Product sales     $   20,736,079     $   16,290,455     $   56,563,992     $   41,694,967  
Royalty revenue         493,665         442,877         1,544,187         1,435,397  
Service revenue         929,159         302,635         1,892,984         663,371  
Total revenues         22,158,903         17,035,967         60,001,163         43,793,735  
Cost of sales         6,267,329         4,476,721         16,980,917         13,077,456  
Gross profit         15,891,574         12,559,246         43,020,246         30,716,279  
                                           
Selling and distribution expenses         19,288,831         13,369,862         53,664,528         41,360,587  
Research and development expenses         4,754,669         3,981,417         12,643,600         12,732,661  
Administrative expenses         2,782,479         1,318,839         12,600,519         6,464,054  
Total operating expenses         26,825,979         18,670,118         78,908,647         60,557,302  
                                           
Loss from operations         (10,934,405 )       (6,110,872 )       (35,888,401 )       (29,841,023 )
                                           
Finance costs         (24,028 )       (26,048 )       (72,086 )       (78,144 )
Finance income         69,688         55,935         236,701         165,622  
Warrants revaluation adjustment                 2,320,640         1,324,293         8,681,901  
Loss before income taxes         (10,888,745 )       (3,760,345 )       (34,399,493 )       (21,071,644 )
Income tax recovery (expense)         (6,991 )       48,163         (10,836 )       48,163  
Net loss and comprehensive loss for the period     $   (10,895,736 )   $   (3,712,182 )   $   (34,410,329 )   $   (21,023,481 )
                                           
Basic loss and comprehensive loss per share for the period     $   (0.19 )   $   (0.07 )   $   (0.60 )   $   (0.38 )
Diluted loss and comprehensive loss per share for the period     $   (0.19 )   $   (0.11 )   $   (0.61 )   $   (0.52 )
                                           
                                           

Novadaq Technologies Inc.

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited) (expressed in U.S. dollars)
            For the three months ended       For the nine months ended  
           September 30, 2016        September 30, 2015        September 30, 2016        September 30, 2015  
OPERATING ACTIVITIES                                              
Net loss and comprehensive loss for the period         $   (10,895,736 )   $   (3,712,182 )   $   (34,410,329 )   $   (21,023,481 )
Items not affecting cash                                              
Depreciation of property and equipment             1,710,285         1,332,001         4,417,244         3,829,545  
Amortization of intangible assets             396,499         423,199         1,269,303         1,286,926  
Stock-based compensation             1,114,908         707,335         6,752,943         3,973,123  
Imputed interest on distribution rights payable             24,028         26,048         72,086         78,144  
Shareholder warrants revaluation adjustment                     (2,320,640 )       (1,324,293 )       (8,681,901 )
              (7,650,016 )       (3,544,239 )       (23,223,046 )       (20,537,644 )
Changes in non-cash working capital                                              
Increase in accounts receivable             (3,425,514 )       (3,443,309 )       (5,380,145 )       (5,232,488 )
Decrease (increase) in inventories             1,298,580         (1,543,051 )       839,874         (2,597,980 )
Increase in accounts payable and accrued liabilities and provisions             573,411         2,340,826         2,617,248         7,861,884  
Increase (decrease) in income taxes payable                     29,341         (12,500 )       29,341  
Decrease (increase) in prepaid expenses and other assets             (192,288 )       305,109         (1,986,923 )       (2,215,278 )
Increase in deferred revenue             213,464         326,854         709,540         589,200  
Net change in non-cash working capital balances related to operations             (1,532,347 )       (1,984,230 )       (3,212,906 )       (1,565,321 )
                                               
Increase (decrease) in non-current deferred revenue             (87,800 )       (138,232 )       (92,156 )       83,083  
Cash used in operating activities             (9,270,163 )       (5,666,701 )       (26,528,108 )       (22,019,882 )
                                               
INVESTING ACTIVITIES                                              
Addition of property and equipment             (4,031,014 )       (2,728,119 )       (10,719,475 )       (5,563,740 )
Disposal of property and equipment             1,482,490         415,719         2,855,414         1,168,385  
Cash used in investing activities             (2,548,524 )       (2,312,400 )       (7,864,061 )       (4,395,355 )
                                               
FINANCING ACTIVITIES                                              
Proceeds from exercise of options             24,046         11,740         78,912         742,445  
Proceeds from exercise of warrants                                     699,209  
Payment of distribution rights payable                             (250,000 )        
Cash provided by (used in) financing activities             24,046         11,740         (171,088 )       1,441,654  
                                               
Net decrease in cash and cash equivalents             (11,794,641 )       (7,967,361 )       (34,563,257 )       (24,973,583 )
Net foreign exchange difference             2,261         (23,604 )       15,333         (51,863 )
Cash and cash equivalents at beginning of period             84,034,658         124,413,063         106,790,202         141,447,544  
                                               
Cash and cash equivalents at end of period         $   72,242,278     $   116,422,098     $   72,242,278     $   116,422,098  

 
For more information, please contact:Roger DeckChief Financial Officer1-905-629-3822 ext. 206rdeck@novadaq.com

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