Press Release
iCAD Reports Second Quarter 2006 Operating Results
NASHUA, New Hampshire - July 27, 2006 - iCAD®, Inc. (Nasdaq: ICAD), an industry-leading provider of Computer-Aided Detection (CAD) solutions for the early identification of cancer, today announced financial results for its fiscal 2006 second quarter ended June 30, 2006.
The Company reported sales for the 2006 second quarter of $3.9 million as compared to $4.2 million for the same quarter of 2005. Gross margin for the second quarter was 78% compared to 76% in the prior-year second quarter. Net loss for the second quarter was ($2,558,299), or ($0.07) per share, compared to net loss of ($1,083,662), or ($0.03) per share, in the prior-year second quarter. Recruiting costs, severance and related separation costs of approximately $1,200,000, associated principally with the Company’s transition to new management, contributed significantly to the current quarter loss. Additionally, stock based compensation of approximately $286,000 was recorded.
For the first six months ended June 30, 2006, sales were $8.2 million as compared to $10.2 million for the same period of the prior year. Gross margin for the first six months was 79% compared to 78% in prior-year six months. Net loss for the first six months of 2006 was ($4,164,193), or ($0.11) per share, as compared to a net loss of ($441,733), or ($0.01) per share, in the prior-year six months.
Sales of the iCAD’s digital solutions rose 43% compared to the same quarter of 2005. Additionally, sales of the Company’s TotalLook® product which digitizes prior mammography films for comparison with digital images have grown 100% since its introduction in Q4 of 2005 and grew sequentially 77% over Q1 of 2006. Service revenues realized growth in excess of 100% compared with the same quarter in 2005 and grew sequentially 15% over Q1 of 2006. Significantly offsetting this progress was the decline of the analog CAD business which saw a 44% decrease in revenues compared with the same quarter of 2005, reflecting a change in the overall mammography business which is rapidly adopting digital technology.
“Q2 has been a quarter that reflects significant transition for iCAD,” stated Ken Ferry, iCAD’s President and CEO. “The Company transitioned a new executive management team and successfully resolved arbitration with our principal competitor. At the same time, we saw a dramatic change in the competitive landscape with the acquisition of R2 Technology, Inc. by Hologic, Inc.”
“We are encouraged by the market and competitive dynamics that are increasing the demand for iCAD’s digital solutions. We believe we are in a strong position to capitalize on the rapid transition our customers are making from analog to digital mammography systems and believe our new organization is making substantial progress in positioning the Company for future success.”
iCAD’s management will host a conference call today at 11am ET. Shareholders and other interested parties may participate by dialing +1 866 277 1182 (domestic) or +1 617 597 5359 (international) and entering passcode 38515264, a few minutes before the start of the conference call. The call will also be broadcast live on the Internet at www.streetevents.com, www.fulldisclosure.com or www.icadmed.com.
A replay of the conference call will be accessible two hours after its completion through August 3, 2006 by dialing +1 888 286 8010 (domestic) or +1 617 801 6888 (international) and entering passcode 81736035. The call will also be archived for 90 days at www.streetevents.com, www.fulldisclosure.com and www.icadmed.com.
About iCAD, Inc.
iCAD, Inc. is an industry-leading provider of Computer-Aided Detection (CAD) solutions that enable healthcare professionals to identify cancer and other life-threatening conditions earlier by making medical services more effective, more accessible and more affordable for patients worldwide. Recipient of Frost & Sullivan’s Growth Strategy Leadership award, iCAD offers a comprehensive range of high-performance, upgradeable CAD systems for the high, mid and low volume mammography markets. iCAD is entrusted with the task of early cancer detection by almost one thousand women’s healthcare centers worldwide. For more information, call +1 877 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 risks of uncertainty of patent protection, the impact of supply and manufacturing constraints or difficulties, product market acceptance, possible technological obsolescence, increased competition, customer concentration and other risks detailed in the Company’s filings with the Securities and Exchange Commission. The words “believe”, “demonstrate”, “intend”, “expect”, “estimate”, “anticipate”, “likely”, 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.
iCAD is a registered trademarks of iCAD, Inc.
For iCAD investor relations, contact Kevin McGrath of Cameron Associates
at +1 212 245 4577 or via email at kevin@cameronassoc.com.
iCAD, INC. |
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Consolidated Statements of Operations |
| (unaudited) |
| | | Three Months June 30, | | | Six Months June 30, | |
| | | | 2006 | | | 2005 | | | 2006 | | | 2005 | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| Sales | | $ | 3,869,693 | | $ | 4,231,104 | | $ | 8,243,343 | | $ | 10,238,711 | |
| Cost of sales | | | 837,408 | | | 1,015,364 | | | 1,756,287 | | | 2,288,937 | |
| Gross margin | | | 3,032,285 | | | 3,215,740 | | | 6,487,056 | | | 7,949,774 | |
| Operating expenses: | | | | | | | | | | | | | |
| Engineering and product development | | | 1,265,196 | | | 985,408 | | | 2,584,394 | | | 2,001,456 | |
| General and administrative | | | 2,435,385 | | | 1,453,152 | | | 4,184,438 | | | 2,675,360 | |
| Marketing and sales | | | 1,869,042 | | | 1,846,474 | | | 3,854,729 | | | 3,597,440 | |
| Total operating expenses | | | 5,569,623 | | | 4,285,034 | | | 10,623,561 | | | 8,274,256 | |
| | | | | | | | | | | | | | |
| Income (loss) from operations | | | (2,537,338 | ) | | (1,069,294 | ) | | (4,136,505 | ) | | (324,482 | ) |
| | | | | | | | | | | | | | |
| Interest expense - net | | | 20,961 | | | 14,368 | | | 27,688 | | | 47,251 | |
| | | | | | | | | | | | | | |
| Net income (loss) before provision for income taxes | | | (2,558,299 | ) | | (1,083,662 | ) | | (4,164,193 | ) | | (371,733 | ) |
| | | | | | | | | | | | | | |
| Provision for income taxes | | | - | | | - | | | - | | | 70,000 | |
| | | | | | | | | | | | | | |
| Net income (loss) | | $ | (2,558,299 | ) | $ | (1,083,662 | ) | $ | (4,164,193 | ) | $ | (441,733 | ) |
| | | | | | | | | | | | | | |
| Preferred dividend | | | 30,771 | | | 30,771 | | | 61,203 | | | 61,203 | |
| | | | | | | | | | | | | | |
| Net income (loss) available to common stockholders | | $ | (2,589,070 | ) | $ | (1,114,433 | ) | $ | (4,225,396 | ) | $ | (502,936 | ) |
| | | | | | | | | | | | | | |
| Net income (loss) per share | | | | | | | | | | | | | |
| Basic | | $ | (0.07 | ) | $ | (0.03 | ) | $ | (0.11 | ) | $ | (0.01 | ) |
| Diluted | | $ | (0.07 | ) | $ | (0.03 | ) | $ | (0.11 | ) | $ | (0.01 | ) |
| | | | | | | | | | | | | | |
| Weighted average number of shares used | | | | | | | | | | | | | |
| in computing income (loss) per share | | | | | | | | | | | | | |
| Basic | | | 36,879,445 | | | 33,872,955 | | | 36,871,460 | | | 33,790,603 | |
| Diluted | | | 36,879,445 | | | 35,424,384 | | | 36,871,460 | | | 33,790,603 | |
iCAD, INC. |
| | | | | | |
Consolidated Balance Sheets |
| | | | | | | | |
Assets | | | (unaudited) | | | | |
| Current assets: | | | | | | | |
| Cash and cash equivalents | | $ | 3,452,580 | | $ | 4,604,863 | |
Trade accounts receivable, net of allowance for doubtful accounts of $432,000 in 2006 and $450,000 in 2005 | | | 1,599,460 | | | 3,958,392 | |
| Inventory | | | 3,767,943 | | | 2,517,467 | |
| Prepaid and other current assets | | | 332,175 | | | 176,133 | |
| Total current assets | | | 9,152,158 | | | 11,256,855 | |
| | | | | | | | |
| Property and equipment: | | | | | | | |
| Equipment | | | 3,316,331 | | | 3,038,344 | |
| Leasehold improvements | | | 120,012 | | | 120,012 | |
| Furniture and fixtures | | | 152,083 | | | 149,803 | |
| | | | 3,588,426 | | | 3,308,159 | |
| Less accumulated depreciation and amortization | | | 1,894,736 | | | 1,523,724 | |
| Net property and equipment | | | 1,693,690 | | | 1,784,435 | |
| | | | | | | | |
| Other assets: | | | | | | | |
| Patents, net of accumulated amortization | | | 185,457 | | | 224,519 | |
| Technology intangibles, net of accumulated amortization | | | 4,039,967 | | | 4,348,008 | |
Tradename, distribution agreements and other, net of accumulated amortization | | | 286,167 | | | 398,733 | |
| Goodwill | | | 43,515,285 | | | 43,515,285 | |
| Total other assets | | | 48,026,876 | | | 48,486,545 | |
| Total assets | | $ | 58,872,724 | | $ | 61,527,835 | |
| | | | | | | | |
Liabilities and Stockholders' Equity | | | | | | | |
| Current liabilities: | | | | | | | |
| Accounts payable | | $ | 3,532,110 | | $ | 4,250,574 | |
| Accrued interest | | | 47,151 | | | 48,167 | |
| Accrued salaries and other expenses | | | 1,383,948 | | | 1,868,736 | |
| Deferred revenue | | | 684,311 | | | 499,279 | |
| Current maturities of note payable | | | 1,125,000 | | | 1,500,000 | |
| Total current liabilities | | | 6,772,520 | | | 8,166,756 | |
| | | | | | | | |
| Loans payable to related party | | | 2,758,906 | | | 258,906 | |
| Note payable, less current maturities | | | - | | | 375,000 | |
| Accrued salaries and other expenses | | | 292,800 | | | - | |
| Total liabilities | | | 9,824,226 | | | 8,800,662 | |
| | | | | | | | |
| Commitments and contingencies | | | | | | | |
| | | | | | | | |
| Stockholders' equity: | | | | | | | |
Convertible preferred stock, $ .01 par value: authorized 1,000,000 shares; issued and outstanding 6,295 in 2006 and 6,374 in 2005, with an aggregate liquidation value of $1,660,000 and $1,739,000 plus 7% annual dividend, in 2006 and 2005, respectively. | | | 63 | | | 64 | |
Common stock, $ .01 par value: authorized 50,000,000 shares; issued 36,970,761 in 2006 and 36,931,261 shares in 2005; outstanding 36,902,885 in 2006 and 36,863,385 shares in 2005 | | | 369,707 | | | 369,312 | |
| Additional paid-in capital | | | 131,266,554 | | | 130,781,430 | |
| Accumulated deficit | | | (81,637,562 | ) | | (77,473,369 | ) |
| Treasury stock at cost (67,876 common shares) | | | (950,264 | ) | | (950,264 | ) |
| Total stockholders' equity | | | 49,048,498 | | | 52,727,173 | |
| Total liabilities and stockholders' equity | | $ | 58,872,724 | | $ | 61,527,835 | |
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