iCAD Reports Second Quarter 2016 Financial Results

NASHUA, N.H., July 27, 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 six months ended June 30, 2016.

Second Quarter Highlights:

• Total revenue of $7.4 million, representing sequential growth of 22%
• Non-GAAP adjusted EBITDA loss of $0.3 million, GAAP net loss of ($1.6) million
• Ended quarter with $11.5 million in cash and cash equivalents and no debt

“Our second quarter results reflect improved performance sequentially from the first quarter, including positive trends in several key areas of our business,” said Ken Ferry, Chief Executive Officer. “This gives us positive momentum into the second half of the year, which we expect will be an important turning point for the business as we begin to benefit from our key growth drivers. In our Cancer Detection business, we achieved strong double-digit growth in sales of our core mammography products, including the first sale of our breast tomosynthesis cancer detection solution in Europe. We currently remain on track for both potential FDA approval of this solution in the third quarter of 2016 and the development of a next generation, multi-vendor tomosynthesis solution that will further enhance our market opportunity in 2017.  In our Therapy business, we are pleased with our progress in resigning dermatology eBx customer sites and developing new opportunities as a result of reimbursement clarity in certain regions of the U.S. We are in the process of on-boarding a significant number of sites, with more to follow, which puts us in an excellent position for improved growth for skin eBx beginning in the fourth quarter of 2016. For IORT, we continue to see strong procedure growth, in the U.S. and particularly in international markets, where we believe we have the opportunity to enter several new geographies in the next 12 to 18 months.”

Second Quarter 2016 Financial Results

Revenue: Total revenue for the second quarter of 2016 decreased 34% to $7.4 million from $11.1 million in the second quarter of 2015, reflecting a 10% increase in product revenue and a 51% decrease in service revenue. The decrease in the Company’s revenue in the second quarter of 2016 was primarily driven by the negative impact of the 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. On a sequential basis, total revenue for the second quarter of 2016 increased 22% from $6.0 million in the first quarter of 2016. Service revenue for the second quarter of 2016 was approximately 54% of total revenues compared to approximately 72% of total revenues in the second quarter of 2015.

Total therapy revenue for the second quarter of 2016 decreased by 60%, which includes Xoft^® Axxent^® Electronic Brachytherapy System^® product sales, as well as the associated service revenue. Cancer detection revenue decreased by 1%, which includes digital mammography, MRI and CT CAD platforms, as well as the associated service revenue.

Gross Profit: Gross profit for the second quarter of 2016 decreased to $5.7 million, or 77% of revenue, from $7.9 million, or 71% of revenue, for the second quarter of 2015. Gross profit for the second quarter of 2016 included a U.S. medical device excise tax refund of $0.3 million.

Operating Expenses: Total operating expenses for the second quarter of 2016 decreased to $7.2 million from $35.7 million for the second quarter of 2015, which included $27.4 million of goodwill and long-lived asset impairment. Second quarter 2015 operating expenses were $8.3 million excluding the impairment. The year-over-year decline reflects the effect of the Company’s cost reduction initiatives, implemented in 2015.

Non-GAAP Adjusted EBITDA: Non-GAAP adjusted EBITDA, a non-GAAP financial measure as defined below, was a loss $(0.3) million for the second quarter of 2016, compared with non-GAAP adjusted EBITDA of $1.6 million, or 14% of revenue, for the second quarter of 2015.

Net Loss: Net loss for the second quarter of 2016 was $(1.6) million, or $(0.10) per share, compared with net loss of $(27.8) million, or $(1.77) per share, for the second quarter of 2015.

Non-GAAP Adjusted Net Income/Loss: Non-GAAP adjusted net loss, as defined below, for the second quarter of 2016 was $(1.5) million, or $(0.09) per share, compared with a non-GAAP adjusted net income of $30,000, or $0.00 per share, for the second quarter of 2015.

Cash and Cash Equivalents: As of June 30, 2016, the Company had cash and cash equivalents of $11.5 million, compared with $15.3 million as of December 31, 2015. The Company used $1.0 million of cash from operating activities in the second quarter of 2016.

First Half 2016 Financial Results

Revenue: Total revenue for the six months ended June 30, 2016 decreased 45% to $13.4 million from $24.4 million for the six months ended June 30, 2015, reflecting a 23% decrease in product revenue and a 54% decrease in service revenue. The decrease in the Company’s revenue in the first half of 2016 was primarily driven by the negative impact of the 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 six months ended June 30, 2016 was approximately 59% of total revenues compared to approximately 71% of total revenues for the six months ended June 30, 2015.

Total therapy revenue for the six months ended June 30, 2016 decreased by 69%, which includes Xoft^® Axxent^® Electronic Brachytherapy System^® product sales, as well as the associated service revenue. Cancer detection revenue decreased by 9%, which includes digital mammography, MRI and CT CAD platforms, as well as the associated service revenue.

Gross Profit: Gross profit for the six months ended June 30, 2016 decreased to $9.9 million, or 74% of revenue, from $17.2 million, or 71% of revenue, for the six months ended June 30, 2015. Gross profit for the first half of 2016 included a U.S. medical device excise tax refund of $0.5 million.

Operating Expenses: Total operating expenses for the six months ended June 30, 2016 decreased to $13.9 million from $44.6 million for the six months ended June 30, 2015, which included $27.4 million of goodwill and long-lived asset impairment. Operating expenses for the first half of 2015 were $17.2 million excluding the impairment. The year-over-year decline reflects the effect of the Company’s cost reduction initiatives implemented in 2015.

Non-GAAP Adjusted EBITDA: Non-GAAP adjusted EBITDA, a non-GAAP financial measure as defined below, was a loss of $(1.8) million for the six months ended June 30, 2016, compared with non-GAAP adjusted EBITDA of $4.3 million, or 18% of revenue, for the six months ended June 30, 2015.

Net Loss: Net loss for the six months ended June 30, 2016 was $(4.1) million, or $(0.26) per share, compared with net loss of $(29.6) million, or $(1.90) per share, for the six months ended June 30, 2015.

Non-GAAP Adjusted Net Income/Loss: Non-GAAP adjusted net loss, as defined below, for the six months ended June 30, 2016 was $(4.2) million, or $(0.27) per share, compared with a non-GAAP adjusted net income of $403,000, or $0.02 per share, for the six months ended June 30, 2015.