TORONTO, May 03, 2017 (GLOBE NEWSWIRE) -- NOVADAQ Technologies Inc (NASDAQ:NVDQ) (TSX:NDQ), the leading provider of proven comprehensive fluorescence imaging solutions that improve clinical outcomes and reduce healthcare costs in minimally invasive and open surgeries today reported financial results for the three months ended March 31, 2017. Unless otherwise indicated, all dollar amounts in this press release are expressed in United States ("U.S.") dollars.

Recent Highlights
  • First quarter revenue of $21.1 million, an increase of 19% from the first quarter of 2016.
    • Recurring revenues in the first quarter were $10.0 million, representing a 43% year-over-year increase.
  • Procedures performed using SPY technology systems during the first quarter were approximately 16,000 representing an increase of 30% year-over-year.
  • Completed enrollment of the FILM trial, a study assessing the safety and utility of lymph node mapping with the PINPOINT system in patients with uterine and cervical cancers. Initial results to be presented before the end of the year.   
  • Introduced the SPY PHI Open Surgery Handheld Fluorescence Imaging System at the Society of American Gastrointestinal and Endoscopic Surgeons

The following table sets out certain quarterly revenue and installed base metrics:
           
  Q1-2017   Q1-2016   Change
REVENUES ($M)          
Recurring $10.0   $7.0   43 %
Capital    6.9      7.6    (9 %)
Total Direct    16.9     14.6   16 %
Indirect (Partners/International Distributors)    4.2      3.1    33 %
Total $21.1   $17.7     19 %
           
           
INSTALLED BASE          
Direct Systems   988     760   30 %
Recurring Revenue/Direct System $10,075   $9,153   10 %
             

"Results of the first quarter were in-line with our expectations and reflect continued solid execution and strong demand for our SPY fluorescence imaging technology," said Rick Mangat, NOVADAQ's President and Chief Executive Officer. "We are encouraged by the early traction we are seeing with the shift in focus towards recurring revenue in our sales model. I believe we have only penetrated a small portion of our potential global customer base."

First Quarter Financial ResultsFor the three months ended March 31, 2017 NOVADAQ reported revenues of $21.1 million, compared to $17.7 million in the first quarter of 2016.  Total direct sales increased by $2.3 million, or 16%, and total Partnered/International sales increased by $1.1 million, or 33%, compared to Q1-2016.

First quarter 2017 gross profits increased to $14.2 million (67% margin) compared to gross profits of $12.7 million (71%) in the same period last year.  The decrease in gross profit percentage was due to a shift in revenues from capital sales to recurring revenue.  The increase in recurring revenue was mainly driven by higher tissue sales which earns a lower margin than capital sales.

Net loss for the first quarter of 2017 was $14.1 million, or $0.24 basic loss per share, compared with net loss of $7.0 million, or $0.12 basic loss per share, in the first quarter of 2016.  The increase in net loss was primarily a result of higher operating expenses of $7.1 million, non-cash warrant revaluation income of $1.3 million in the first quarter of 2016, and higher finance costs $0.3 million, partially offset by an increase in gross profit of $1.6 million.

First quarter 2017 operating burn (cash consumed by operating activities before changes in working capital) was $10.7 million compared to $5.5 million in the first quarter 2016. 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 the first quarter of 2017, non-cash working capital decreased by $2.2 million.

2017 Financial GuidanceNOVADAQ continues to expect full year 2017 revenue to be in the range of $98 to $102 million, representing growth in the range of 22% to 27% year-over-year. The Company anticipates recurring revenues for the full year to be in the range of $48 to $50 million, reflecting growth of 45% to 51% year-over-year. Gross margins are expected to be in the range of 65% to 70% for the full year 2017.

Webcast and Conference Call InformationNOVADAQ's management team will host a conference call today beginning at 1:30 p.m. PT / 4:30 p.m. ET. Investors interested in listening to the conference call may do so by calling 877-407-8031 (within Canada and the U.S.) or 201-689-8031 outside Canada and the U.S.) or from the webcast on the "Investor Relations" section of the Company's website at: www.novadaq.com.

A replay of the call will be available for 48 hours by calling (877) 481-4010 (within Canada and the U.S.) or (919) 882-2331 (outside Canada and the U.S.), using Conference ID:10307. The call will also be archived on the NOVADAQ 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 250 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. The SPY PHI open surgery portable, handheld imager is FDA (510)k cleared and CE Marked and is indicated for the visualization of blood flow and tissue perfusion in plastic, reconstructive, micro and gastrointestinal surgeries. 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. SPY PHI is a trademark of NOVADAQ Technologies, Inc. DermACELL is a registered trademark of LifeNet Health, Inc.
 
Novadaq Technologies Inc.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Unaudited)
(expressed in U.S. dollars, except common shares outstanding)
 
      As at  March 31, 2017     As at  December 31, 2016  
ASSETS              
Current assets              
Cash and cash equivalents   $ 56,139,164    $ 62,382,649  
Accounts receivable     28,430,680     27,791,574  
Prepaid expenses and other assets     5,767,149     5,776,463  
Inventories     4,644,628     4,295,565  
      94,981,621     100,246,251  
               
Non-current assets              
Long-term receivables     961,341     298,073  
Other assets     398,676     -  
Investments     289,284     -  
Property and equipment, net     19,627,354     19,508,471  
Intangible assets, net     16,665,216     16,847,287  
               
Total Assets   $ 132,923,492    $ 136,900,082  
               
LIABILITIES AND SHAREHOLDERS' EQUITY              
Current liabilities              
Accounts payable and accrued liabilities   $ 17,373,654    $ 19,223,889  
Provisions     438,121     510,203  
Deferred revenue     2,837,372     2,156,096  
Income taxes payable     24,033     24,433  
Distribution rights payable     250,000     250,000  
Other liabilities     489,212     445,252  
      21,412,392     22,609,873  
Non-current liabilities              
Deferred revenue     617,538     729,209  
Distribution rights payable     1,353,025     1,581,127  
Long-term debt     9,617,245     -  
               
Total Liabilities   $ 33,000,200    $ 24,920,209  
               
Shareholders' Equity              
Share capital   $ 340,224,517    $ 337,974,247  
Contributed surplus     22,842,855     23,042,165  
Deficit     (263,144,080 )   (249,036,539 )
               
Total Shareholders' Equity   $ 99,923,292    $ 111,979,873  
               
Total Liabilities and Shareholders' Equity   $ 132,923,492    $ 136,900,082  
               
Total number of common shares outstanding     57,802,861     57,445,151  

Novadaq Technologies Inc.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS
(Unaudited)
(expressed in U.S. dollars)
 
      For the three months ended  
      March 31, 2017       March 31, 2016  
                 
Product sales   $ 19,167,044     $ 16,779,708  
Royalty revenue     525,750       495,250  
Service revenue     1,382,459       451,113  
Total revenues     21,075,253       17,726,071  
Cost of sales     6,849,840       5,068,043  
Gross profit     14,225,413       12,658,028  
                 
Selling and distribution expenses     21,264,284       15,308,081  
Research and development expenses     3,924,099       3,163,368  
Administrative expenses     2,911,640       2,556,259  
Total operating expenses     28,100,023       21,027,708  
                 
Loss from operations     (13,874,610 )     (8,369,680 )
                 
Finance costs     (285,922 )     (24,028 )
Finance income     52,991       89,681  
Warrants revaluation adjustment           1,324,293  
Net loss and comprehensive loss for the period   $ (14,107,541 )   $ (6,979,734 )
                 
Basic loss and comprehensive loss per share for the period   $ (0.24 )   $ (0.12 )
Diluted loss and comprehensive loss per share for the period   $ (0.24 )   $ (0.14 )

Novadaq Technologies Inc.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(expressed in U.S. dollars)
 
        For the three months ended  
        March 31, 2017       March 31, 2016  
 OPERATING ACTIVITIES                  
                   
 Net loss and comprehensive loss for the period     $ (14,107,541 )   $ (6,979,734 )
 Items not affecting cash                  
 Depreciation of property and equipment       2,054,049       1,311,122  
 Amortization of intangible assets       423,199       436,402  
 Stock-based compensation       867,194       1,047,343  
 Amortization of deferred financing costs       41,126        
 Imputed interest on distribution rights payable       21,898       24,028  
 Imputed interest on long-term receivables       (22,342 )      
 Shareholder warrants revaluation adjustment             (1,324,293 )
        (10,722,417 )     (5,485,132 )
 Changes in non-cash working capital                  
 Increase in accounts receivable       (639,106 )     (8,083 )
 Increase in inventories       (349,063 )     (1,013,329 )
 Decrease in accounts payable and accrued liabilities and provisions       (1,929,033 )     (1,951,375 )
 Decrease in income taxes payable       (400 )     (10,900 )
 Decrease in prepaid expenses and other assets       9,314       336,598  
 Increase in deferred revenue       681,276       367,683  
 Net change in non-cash working capital balances related to operations       (2,227,012 )     (2,279,406 )
                   
 Increase in long-term receivables       (640,926 )      
 (Decrease) increase in non-current deferred revenue       (111,671 )     50,666  
 Cash used in operating activities       (13,702,026 )     (7,713,872 )
                   
 INVESTING ACTIVITIES                  
 Addition of property and equipment       (2,977,036 )     (2,774,422 )
 Purchase of intangible assets       (241,128 )      
 Disposal of property and equipment       804,104       512,596  
 Purchase of investments       (289,284 )      
 Cash used in investing activities       (2,703,344 )     (2,261,826 )
                   
 FINANCING ACTIVITIES                  
 Net proceeds from the issuance of debt       9,177,443        
 Proceeds from exercise of options       1,227,726       37,533  
 Payment of distribution rights payable       (250,000 )     (250,000 )
 Cash provided by (used in) financing activities       10,155,169       (212,467 )
                   
 Net decrease in cash and cash equivalents       (6,250,201 )     (10,188,165 )
 Net foreign exchange difference       6,716       5,951  
 Cash and cash equivalents at beginning of period       62,382,649       106,790,202  
                   
 Cash and cash equivalents at end of period     $ 56,139,164     $ 96,607,988  

For more information, please contact:Lynn Pieper Lewis or Leigh Salvo(415) 937-5404investors@novadaq.com

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