NEWS RELEASE
For Immediate Release
ICAD REPORTS 2003 SECOND QUARTER RESULTS
RECORD NUMBER OF COMPUTER AIDED BREAST CANCER DETECTION SYSTEMS SHIPPED TO END
USERS IN MOST RECENT QUARTER
NASHUA, New Hampshire (August 7, 2003) - iCAD, Inc. (Nasdaq: ICAD), which
designs, develops and markets Computer Aided Detection (CAD) imaging technology
and systems for the early detection of breast cancer, today reported its
financial results for the second quarter and first half of 2003.
Sales of the Company's CAD and medical imaging products for the three months
ended June 30, 2003, totaled $1,337,517, compared with sales of medical imaging
products and total sales of $485,686 and $776,600, respectively, in the quarter
ended June 30, 2002. This reflects an increase of 175% in medical sales and 72%
in total sales when compared with the prior-year period. Sales of graphic arts
and photographic products totaled $290,914 in the second quarter of 2002. The
Company exited the graphic arts and photographic products business in June 2002,
and there were no sales of such products in the most recent quarter.
Sales of the Company's CAD and medical imaging products for the six months ended
June 30, 2003, totaled $3,551,529, compared with sales of medical imaging
products and total sales of $911,585 and $1,552,233, respectively, in the first
half of 2002. This reflects an increase of 290% in medical sales and 129% in
total sales when compared with the corresponding period of the previous year.
Sales of graphic arts and photographic products totaled $640,648 for the
six-month period ended June 30, 2002. For reasons noted above, there were no
sales of graphic arts and photographic products in the first half of 2003.
During the second quarter and first half of 2003, gross margins improved to 56%
and 58%, respectively, compared to (343%) and (160%), for the same periods in
2002 as a result of increasing sales of higher margin CAD products and
write-offs of inventory relating to graphic arts and photographic products
recorded in the quarter ended June 30, 2002. If such write-offs are excluded,
gross margins for the second quarter of 2003 improved to 56% compared to 22% in
the prior-year quarter, while gross margins in the first half of 2003 improved
to 58%, compared to 23% for the six month period ended June 30, 2002.
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The Company, without giving effect to the payment of preferred stock dividends,
recorded a net loss of ($1,285,144), or ($0.05) per share, for the quarter ended
June 30, 2003, compared with a net loss of ($7,359,510), or ($0.47) per share,
for the prior-year quarter. The net loss for the six-month period ended June 30,
2003 totaled ($1,208,586), or ($0.05) per share, compared with a net loss of
($7,880,632). or ($0.51) per share, in the first half of 2002.
During the most recent quarter, Instrumentarium Imaging, Inc.
("Instrumentarium"), which has been the exclusive distributor of the Company's
MammoReader(TM) computer aided detection products, received orders for a record
24 MammoReader systems and shipped a record 17 MammoReader systems to hospitals,
women's health centers and Mammography clinics. iCAD reports that, to date,
approximately 70 MammoReader systems have been sold and installed by
Instrumentarium. In May 2003 the MammoReader was designated the top-rated CAD
system for early breast cancer detection by MD Buyline, an independent evaluator
of medical capital equipment.
During the second quarter of 2003, in anticipation of iCAD's release of new
products and the proposed acquisition of Instrumentarium by General Electric
Medical Systems, the Company converted Instrumentarium from a stocking
distributor to a non-stocking distributor, thus allowing Instrumentarium to
deplete its inventory of MammoReader systems in partial fulfillment of end-user
orders received. This change reduced iCAD's shipments of MammoReader systems to
Instrumentarium during the second quarter of 2003 which resulted in a
corresponding reduction in iCAD's MammoReader sales recorded in the second
quarter.
"With our recent announcement of the iCAD iQ system, we have targeted a large
segment of the market that is currently under served by the more expensive CAD
systems," continued Parr. "Capitalizing on the cost advantages achieved through
our vertically integrated corporate structure, we believe iQ can provide our
Company with a sustainable competitive advantage among smaller and more
price-sensitive Mammography and breast care centers. We believe the iCAD iQ will
represent a category-defining CAD system for this under served market by relying
on iCAD's proprietary inventions and significant cost advantages to offer a
simpler, more reliable and substantially less expensive CAD solution.
Furthermore, the iQ will be available to Mammography facilities that cannot
afford the outright purchase of a CAD system, through a simple
`fee-per-procedure' program that we have branded ClickCAD(TM). Under the
ClickCAD program, iQ(TM) systems will be installed in qualified Mammography
clinics at no up-front capital cost. The clinics will then pay iCAD a fee
approximating $6.50 for each CAD procedure performed, an amount that represents
less than 35% of the standard $19.13 Federal reimbursement rate for CAD
procedures. This program will allow many Mammography clinics to improve the
health care delivered to women at risk, strengthen their marketing position in
attracting and keeping patients concerned about breast cancer, reduce the legal
risks associated with failure to detect early-stage cancers, and increase their
net revenues - all without a capital investment."
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"While we expect the impact of iCAD iQ system shipments upon 2003 sales to be
modest, the new product line should contribute materially to our sales and
shipments in future years," noted Parr. "In support of this new product, we have
established an internal field sales support team that has already begun to
identify and develop a broad reseller channel for the iCAD iQ. Additionally,
this team is working closely with Instrumentarium to increase sales of our
full-featured MammoReader systems."
The Company also announced the addition of computer aided detection product
distribution relationships in Canada, the United Kingdom, Korea, the Middle
East, Hawaii and Puerto Rico during the second quarter of 2003.
Legal expenses related to ongoing patent infringement litigation with R2
Technology, Inc. continued to represent a major expense item for iCAD during the
second quarter of 2003. Since the Company's acquisition of Intelligent Systems
Software, Inc. in June 2002, iCAD has recorded over $1,155,274 in legal and
related expenses associated with the R2 litigation which are recorded under
general and administrative expenses. Approximately $612,900 of such legal
expenses were recorded during the second quarter of 2003. "A court trial on R2's
claims is now scheduled for October 2003," noted Parr. "We are committed to a
successful conclusion to this litigation, as we seek to bring the benefits of
computer aided breast cancer detection to all women at risk, on an affordable
basis.
iCAD will host an investor conference call at 11:00 am EDT today to review
second quarter operating results. Shareholders and other interested parties may
participate in the conference call by dialing 800-915-4836 or for
international/local participants by dialing 973-317-5319, a few minutes before
11:00 a.m. EDT on August 7, 2003. The call will also be broadcast live on the
Internet at http://www.firstcallevents.com/service/ajwz386962661gf12.html. A
replay of the conference call will be available two hours after the completion
of the conference call from August 7, 2003 until August 14, 2003 by dialing
800-428-6051 for participants in the US/Canada or for international/local
participants, call 973-709-2089 and enter the conference ID 302639. The call
will also be archived for 90 days at
http://www.firstcallevents.com/service/ajwz386962661gf12.html
ABOUT ICAD, INC.
Computer aided detection from iCAD, Inc. can detect 23% of breast cancers an
average of 14 months earlier than traditional mammography screening. Computer
aided detection provides the radiologist with a "second set of eyes", thus
enhancing the probability of identifying suspicious areas that may have been
missed by a standard mammogram.
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iCAD offers the fastest CAD system available, the only CAD system to look for
clinical asymmetries as an indicator of breast cancer, and the most sensitive
system available to detect breast masses and cancers overall. The iCAD system is
the only CAD system designed on a relational database platform, which can
improve productivity and reduce operating and capital costs at women's health
centers by offering computer aided detection as an integrated or
integration-ready part of current or anticipated informatics systems, digital
imaging resources, and workflows. In January 2002, the Company received approval
from the U.S. Food and Drug Administration (FDA) to market its computer aided
detection systems in the United States.
iCAD, the only vertically integrated company in its market, also manufactures
film digitizers for a variety of medical imaging and other applications. The
Company is headquartered in Nashua, New Hampshire and its common stock is listed
on The Nasdaq Stock Market under the symbol "ICAD".
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 that may cause actual results to differ
materially from such forward-looking statements. Such risks include, but are not
limited to, uncertainties associated with litigation and/or government
regulation, changes in Medicare reimbursement policies, competitive factors, and
other risks that are detailed in the Company's periodic filings with the
Securities and Exchange Commission. The words "believe", "demonstrate",
"intend", "expect", "estimate", "anticipate", "likely", "should", and similar
expressions identify forward-looking statements. Readers are cautioned to avoid
placing undue reliance on such forward-looking statements, which speak only as
of the date the statements were made.
For further information, please contact:
RJ Falkner & Company, Inc., Investor Relations Counsel
(800) 377-9893 or via email atinfo@rjfalkner.com
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ICAD, INC.
Consolidated Statements of Operations
Three Months Six Months
June 30, June 30,
------------------------------- -------------------------------
2003 2002 2003 2002
(unaudited) (unaudited)
Sales $ 1,337,517 $ 776,600 $ 3,551,529 $ 1,552,233
Cost of Sales 592,583 3,442,347 1,502,168 4,037,759
------------ ------------ ------------ ------------
Gross Margin 744,934 (2,665,747) 2,049,361 (2,485,526)
------------ ------------ ------------ ------------
Operating expenses:
Engineering and product development 609,545 337,139 1,193,798 526,895
General and administrative 1,104,063 4,059,232 1,500,295 4,284,587
Marketing and sales 306,992 287,315 546,704 554,395
------------ ------------ ------------ ------------
Total operating expenses 2,020,600 4,683,686 3,240,797 5,365,877
------------ ------------ ------------ ------------
Loss from operations (1,275,666) (7,349,433) (1,191,436) (7,851,403)
Interest expense - net 9,478 10,077 17,150 29,229
------------ ------------ ------------ ------------
Net loss $ (1,285,144) $ (7,359,510) $ (1,208,586) $ (7,880,632)
Preferred dividend 36,912 36,911 73,417 73,416
------------ ------------ ------------ ------------
Net loss available to common shareholders $ (1,322,056) $ (7,396,421) $ (1,282,003) $ (7,954,048)
============ ============ ============ ============
Net loss per share
Basic and diluted $ (0.05) $ (0.47) $ (0.05) $ (0.51)
Weighted average number of shares used
in computing loss per share
Basic and diluted 26,378,729 15,889,910 26,364,567 15,572,432
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ICAD, INC.
Consolidated Balance Sheets
June 30, 2003 December 31, 2002
------------- -----------------
Assets (unaudited) (audited)
Current assets:
Cash and equivalents $ 501,648 $ 1,091,029
Trade accounts receivable, net of allowance for doubtful
accounts of $75,500 in 2003 and $40,000 in 2002 1,171,940 1,550,167
Inventory 356,490 390,349
Prepaid and other 178,202 85,120
----------- -----------
Total current assets 2,208,280 3,116,665
----------- -----------
Property and equipment:
Equipment 892,472 840,410
Leasehold improvements 19,175 8,051
Furniture and fixtures 35,569 22,271
----------- -----------
Less accumulated depreciation and amortization 947,216 870,732
Net property and equipment 634,851 579,545
----------- -----------
312,365 291,187
----------- -----------
Other assets:
Patents 49,286 --
Technology intangible 3,611,520 3,740,553
Distribution agreement 1,461,028 1,513,228
Goodwill 17,415,723 17,415,723
----------- -----------
Total other assets 22,537,557 22,669,504
----------- -----------
Total assets $25,058,202 $26,077,356
=========== ===========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 2,498,173 $ 2,232,262
Accrued interest 236,432 229,078
Accrued expenses 1,095,514 1,776,824
Convertible subordinated debentures 10,000 10,000
Current maurities of notes payable 66,680 65,526
----------- -----------
Total current liabilities 3,906,799 4,313,690
Loans payable to related party 830,000 200,000
Notes payable, less current maturities 75,045 108,390
----------- -----------
Total liabilities 4,811,844 4,622,080
----------- -----------
Stockholders' equity:
Convertible preferred stock, $.01 par value: authorized
1,000,000 shares; issued and outstanding
8,550 in 2003 and 2002, with the aggregated
liquidation value of $2,115,000 in 2002 and 2003,
plus 7% annual dividend 86 86
Common stock, $ .01 par value: authorized
50,000,000 shares; issued 26,487,324 in 2003
and 26,418,124 shares in 2002; outstanding
26,419,448 in 2003 and 26,350,248 share in 2002. 264,873 264,181
Additional paid-in capital 85,828,459 85,829,483
Accumulated deficit (64,896,796) (63,688,210)
Treasury stock, at cost (67,876 shares) (950,264) (950,264)
----------- -----------
Total stockholders' equity $20,246,358 21,455,276
----------- -----------
Total liabilities and stockholders' equity $25,058,202 $26,077,356
============ ===========
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