Exhibit 99.1
News Release
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For Immediate Release
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iCAD RePORTS THIRD Quarter OPERATING results
NASHUA, New Hampshire (November 6, 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 third quarter and first nine months of 2003.
Since the Company's financial report for the quarter ended June 30, 2003, iCAD
has settled patent litigation previously filed against the Company; received FDA
clearance for its new iCAD iQ product, which is designed to meet the
requirements of a very large number of lower volume mammography centers; and
substantially broadened and improved its distribution channels for all product
lines. During the third quarter of 2003, the Company accounted for $2.7 million
in nonrecurring legal and related expenses associated with resolution of the
patent litigation, and a $1.4 million one-time, non-cash charge associated with
restructuring and improving its product distribution channels.
On an operating basis, the Company's sales during the third quarter were
adversely impacted by the changes in its distribution channels. The Company's
former exclusive distributor for computer aided detection products made few
purchases from the Company during the third quarter, and new sales channels
established during the third quarter were delivering the greatest percentage of
CAD sales by the end of the quarter. Newly established sales and distribution
channels will account for substantially all CAD revenues in future periods.
Commenting generally on the quarter, W. Scott Parr, iCAD's President and CEO
stated, "With important new products and new and improved distribution channels,
we see in the accomplishments of the third quarter the beginning of what we
believe will be a successful and exciting period for iCAD."
Sales of the Company's CAD and medical imaging products for the three months
ended September 30, 2003, totaled $1,387,100, which represented a small increase
when compared with medical imaging product sales of $1,286,966 in the quarter
ended September 30, 2002. Sales of the Company's CAD and medical imaging
products for the nine months ended September 30, 2003, totaled $4,938,629,
compared with sales of medical imaging products and total sales of $2,414,244
and $2,839,199, respectively, in the nine-month period ended September 30, 2002.
This reflects increases of 105% in medical sales and 74% in total sales when
compared with the corresponding period in the previous year. Sales of graphic
arts and photographic products totaled $424,955 for the nine-month period ended
September 30, 2002. The Company exited the graphic arts and photographic
products business in June 2002, and there were no sales of such products in the
nine months ended September 30, 2003.
During the third quarter of 2003, gross margins were 47%, compared with 57% for
the same period in 2002. The decrease in margin is attributable to a high
percentage of lower margin digitizer sales during the most recent quarter, and
to temporary price promotions aimed at supporting the Company's former exclusive
CAD product distributor. Margins are expected to be higher in future periods.
For the nine months ended September 30, 2003, gross margins improved to 55%,
compared with a negative (62%) for the same period in 2002, as a result of
increasing sales of higher-margin CAD products in the most recent quarter and
inventory write-offs, relating to graphic arts and photographic products,
recorded in the first nine months of 2002. If such write-offs are excluded,
gross margins for the first nine months of 2003 improved to 55%, compared with
38% for the nine-month period ended September 30, 2002.
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Since the end of the second quarter, Instrumentarium Imaging, Inc.
("Instrumentarium"), which had been the exclusive distributor of the Company's
MammoReader(TM) computer aided detection products, received orders for 14
MammoReader systems and shipped 15 MammoReader systems to hospitals, women's
health centers and Mammography clinics. Depleting its own stock of demonstration
units, Instrumentarium purchased only four MammoReader units from iCAD during
the third quarter. Although new resellers were just beginning in the third
quarter, more sales were to new resellers during this period than to
Instrumentarium. While Instrumentarium continues to offer the iCAD product line
on a non-exclusive basis, the Company anticipates that newly established product
distribution channels will account for substantially all of its CAD product
revenues in future periods. iCAD reports that, to date, approximately 87
MammoReader systems have been sold and installed by Instrumentarium and by
iCAD's newer resellers. On October 9, 2003 Instrumentarium was acquired by
General Electric Corporation.
In connection with the Company's acquisition of CAD software developer
Intelligent Systems Software, Inc. (ISSI), the exclusive Instrumentarium
distribution agreement was valued by the Company's appraisers at approximately
$1.5 million, and it has been carried as an asset on the Company's balance sheet
since that time. After assessing the performance of Instrumentarium in the third
quarter, and in light of the Company's rapid implementation of alternative
distribution channels, iCAD elected to take a one-time, non-cash charge and
write-off of $1.4 million, thereby eliminating the distribution agreement as a
depreciating asset on the Company's financial statements.
2
Legal expenses related to the R2 patent infringement litigation, now concluded,
represented a major expense item for iCAD during the third quarter of 2003 and
in earlier periods. Since the Company's acquisition of ISSI in June 2002, iCAD
has recorded over $1,857,000 in legal and related expenses associated with the
R2 litigation. Approximately $702,000 of such legal expenses were recorded
during the third quarter of 2003. Overall, the Company accounted for over $2,7
million in non-recurring third quarter expenses associated with settlement of
the R2 patent infringement litigation and legal expenses during the period.
Including expenses relating to changes in distribution channels and settlement
of the R2 patent infringement litigation, and without giving effect to the
payment of preferred stock dividends, the Company recorded a net loss of
($5,395,367), or ($0.20) per share, for the quarter ended September 30, 2003,
compared with a net loss of ($1,640,665), or ($0.06) per share, for the
prior-year quarter. The net loss for the nine-month period ended September 30,
2003 totaled ($6,603,953), or ($0.25) per share, compared with a net loss of
($9,521,297) or ($0.50) per share for the nine-month period ended September 30,
2002.
"Since the end of the second quarter," commented Parr, "our MammoReader CAD
system has been recognized as the top-rated CAD system in the US market; we have
announced and now received FDA approval for our new iCAD iQ product for lower
patient volume mammography centers; and we have announced plans to offer the
iCAD iQ for less than $70,000, representing more than a 50% reduction, in some
cases, in the cost of CAD solutions. This makes the iQ very attractive to
thousands of lower volume mammography centers anxious to offer their patients
the benefits of CAD, but constrained by limited budgets. We have also announced
a new fee-per procedure program called ClickCAD. Under the ClickCAD program,
ICAD will install its iQ systems in mammography clinics at no up-front capital
cost to the customer, and the clinics will then pay iCAD a fee of approximately
$6.50 for each CAD procedure performed. Federal and many third party
reimbursements are available for CAD for breast cancer at levels well in excess
of our anticipated per-case charge."
"We have substantially broadened and improved our domestic sales channels over
the last few months," continued Parr, "thereby ending our reliance on
Instrumentarium as the sole distributor of iCAD's MammoReader products. In
October, the Company entered into a distribution agreement with National Imaging
Resources (NIR), a leading medical sales and equipment organization, that
provides more than thirty NIR member resellers the opportunity to market, sell
and support iCAD's computer aided detection products. The Company is continuing
efforts to expand its reseller network and expects to have more than fifty new
reseller points of sale by the end of December, with over one hundred new sales
persons representing iCAD's product lines. This represents a ten-fold increase
in actual sales representation, which we expect to significantly benefit future
sales levels. International distribution has been similarly expanded."
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"During the same period," Parr explained, "We secured significant support for
the extension of iCAD's technologies into three dimensional (3-D) imaging,
through an aggregate $1 million federal appropriation permitting iCAD, the
Windber Institute and the Walter Reed Army Medical Center to collaborate on
research and development initiatives involving 3-D CAD technology for breast
imaging. Finally, we conclusively resolved patent infringement litigation that
has been financially bleeding iCAD and consuming an enormous amount of
management's time and attention."
"Our recent achievements position iCAD for near-term growth and profitability,
while removing the primary risks and impediments that have burdened the Company
since our acquisition of ISSI in June 2002. We expect the benefits of new
products and new and expanded sales channels to become evident in the fourth
quarter of 2003, with a material contribution to sales, shipments and financial
performance expected during the first quarter of 2004," concluded Parr.
iCAD will host an investor conference call at 11:00 am EST today to review third
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. EST on November 6, 2003. The call will also be broadcast live on the
Internet at http://www.firstcallevents.com/service/ajwz392825040gf12.html. A
replay of the conference call will be available two hours after the completion
of the conference call from November 6, 2003 until November 13, 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 311557. The call
will also be archived for 90 days at
http://www.firstcallevents.com/service/ajwz392825040gf12.html.
About iCAD, Inc.
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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.
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.
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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 at info@rjfalkner.com
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ICAD, INC.
Consolidated Statements of Operations
(unaudited)
Three Months Nine Months
September 30, September 30,
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2003 2002 2003 2002
Sales $ 1,387,100 $ 1,286,966 $ 4,938,629 $ 2,839,199
Cost of Sales 731,607 559,079 2,233,775 4,596,838
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Gross Margin 655,493 727,887 2,704,854 (1,757,639)
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Operating expenses:
Engineering and product development 619,762 478,720 1,813,560 1,005,615
General and administrative 4,870,119 1,698,084 6,370,414 5,982,671
Marketing and sales 530,485 181,739 1,077,189 736,134
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Total operating expenses 6,020,366 2,358,543 9,261,163 7,724,420
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Loss from operations (5,364,873) (1,630,656) (6,556,309) (9,482,059)
Interest expense - net 30,494 10,009 47,644 39,238
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Net loss $ (5,395,367) $ (1,640,665) $ (6,603,953) $ (9,521,297)
Preferred dividend 37,316 37,316 110,733 110,732
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Net loss available to common shareholders $ (5,432,683) $ (1,677,981) $ (6,714,686) $ (9,632,029)
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Net loss per share
Basic and diluted $ (0.20) $ (0.06) $ (0.25) $ (0.50)
Weighted average number of shares used
in computing loss per share
Basic and diluted 26,858,963 26,141,091 26,531,177 19,134,031
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