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iCAD Reports Strong Fourth Quarter and Record Full Year Financial Results

^{Published on 2009-02-25 15:26:39, Last Modified on 2009-02-25 15:30:34 - Market Wire}
 

NASHUA, N.H.--([ BUSINESS WIRE ])--iCAD, Inc. (NASDAQ: ICAD), an industry-leading provider of advanced image analysis and workflow solutions for the early identification of cancer, today announced financial results for the fourth quarter and full year ending December 31, 2008.

Financial highlights for 2008 include the following (all comparisons are with 2007):

• Record total revenue of $37.5 million, up 41%
• Record digital revenue of $26.7 million, up 63%
• Record international revenue of $2.9 million, up 10%
• Record gross margin of 83.5%, up more than 300 basis points
• Record net income of $4.4 million, or $0.10 per diluted share
• Second consecutive year of positive cash flow, generating $8.8 million in cash

Financial highlights for the fourth quarter of 2008 include the following (all comparisons are with the fourth quarter of 2007):

• Total revenue of $9.3 million, up 15%
• Digital revenue of $6.3 million, up 26%
• Gross margin of 83.7%, up more than 300 basis points
• Net income of $321,000, or $0.01 per diluted share
• Sixth consecutive quarter with positive cash flow

Other highlights of the fourth quarter of 2008 include:

• Launch of SpectraLook™ and CADvue™, two new Breast MRI products, and the unveiling of new VividLook Prostate MRI product
• European launch of SecondLook^® Digital CAD for use with Agfa HealthCare's Computed Radiography Systems
• European launch of SecondLook^® Digital CAD for use with Planmed Nuance Full-Field Digital Mammography (FFDM) system.
• Ranked #1 in mammography CAD by MD Buyline's User Satisfaction Report for the first three quarters of 2008

"2008 was an exceptional year for iCAD. It represents the second consecutive year of significant progress and accomplishment on all meaningful financial metrics attributable to a high growth company. For the year, we achieved record revenue, earnings and cash flow while making significant progress on our product pipeline which should substantially expand our addressable markets for image analysis and workflow solutions with MRI and CT imaging," commented Ken Ferry, iCAD's President and CEO.

"Revenue growth for 2008 continued to be paced by record sales associated with digital mammography, highlighting the ongoing opportunity in the transition of the mammography market from film-based technology to digital technology. We remain optimistic about the continued growth potential as only about 47% of the approximately 13,500 mammography systems in the U.S. had transitioned to digital as of the close of the year."

"Our broader product offerings for MRI and CT based image analysis and workflow solutions are expected to create new growth opportunities for iCAD going forward. We see continued procedure growth for breast and prostate MRI, and CT colonography. Our offerings in these segments will target the estimated 10,000 MRI systems and 30,000 multi-slice CT systems installed worldwide today, along with new system placements. We believe these addressable markets over time will be quite significant as a low percentage of the installed base of these imaging systems are using the types of image analysis and workflow solutions we offer today," commented Ferry.

Fourth Quarter Results

Total revenue for the fourth quarter of 2008 was $9.3 million, a 15% increase compared with total revenue of $8.1 million for the fourth quarter of 2007. This increase reflects a $1.3 million or 26% increase in revenue from the Company's digital products. In addition to increased digital sales from its OEM partners, the Company also posted higher sales of its comparative reading solution, TotalLook MammoAdvantage which grew 23% over the fourth quarter of 2007.

Total film-based revenue in the fourth quarter of 2008 was essentially flat versus a very strong fourth quarter of 2007. The significant growth attributable to TotalLook MammoAdvantage was largely offset by the decline in film-based CAD product sales. The decrease in service and supply revenue is due to a decline in labor, parts and supplies associated with the Company's older film-based products. However, service contract revenue grew 10% over the fourth quarter of 2007, and represents 94% of all service and supply revenue as compared to 76% of all service and supply revenue in the prior-year fourth quarter. Moving forward, the Company expects continued growth in service contract revenue as digital CAD systems sales grow and products transition from warranty to service contracts.

The gross margin for the fourth quarter of 2008 expanded to 83.7% from 80.5% in the prior-year fourth quarter. Operating expenses for the fourth quarter of 2008 increased to $7.5 million from $5.9 million in the fourth quarter of 2007, largely due to costs associated with the product launch of the Company's new MRI products and investment in the clinical reader study for the Company's colon CAD product. For the fourth quarter of 2008, the Company posted net income, including stock-based compensation expense of $508,000, of $321,000 or $0.01 per diluted share, compared with net income, including stock-based compensation expense of $387,000, of $525,000 or $0.01 per share in the fourth quarter of 2007. Additionally, the Company generated $2.1 million in cash in the fourth quarter as compared to $491,000 in the fourth quarter of 2007.

For the fourth quarter of 2008, sales of iCAD's digital products increased 26% to $6.3 million from $5.0 million in the prior-year period. Sales of film-based products were relatively flat at $2.2 million, and service and supply revenue declined slightly to $798,000 from $896,000, both compared with the fourth quarter of 2007.

Full Year Results

For the year ended December 31, 2008, total revenue increased 41% to $37.5 million compared with total revenue of $26.6 million for the year ended December 31, 2007. The gross margin for 2008 expanded to 83.5% from 80.2% in 2007. Operating expenses for 2008 were $26.5 million compared with operating expenses of $22.5 million incurred during 2007. The increase is largely due to the costs associated with the launch of the Company's new MRI products and investment in the clinical reader study for the Company's colon CAD product. Net income for 2008, including stock-based compensation expense of $1.9 million, increased to $4.4 million or $0.10 per diluted share, compared with a net loss, including stock-based compensation expense of $1.2 million, of ($1.6 million) or ($0.04) per share for 2007.

During 2008 sales of iCAD's digital solutions increased 63% to $26.7 million from $16.4 million in 2007. Film-based product sales of $7.4 million were 10% higher than the $6.8 million of film-based product sales recorded during 2007. This growth was led by a 40% increase in sales of our comparative reading solution, TotalLook MammoAdvantage. While overall service and supply revenue of $3.3 million declined slightly from $3.4 million reported in 2007, service contract revenue grew 16% and represented 88% of all service and supply revenue for the year.

Commenting on the balance sheet, Darlene Deptula-Hicks, Executive Vice President and CFO, said, "2008 has been an exceptionally strong year for iCAD. In addition to strong top and bottom line growth, we continued to strengthen our balance sheet, generating more than $8.8 million in cash. Additionally, we issued stock and cash in full payment of $5.8 million in debt and we used $2 million of cash as partial payment for the MRI CAD asset acquisition. We believe going forward we are positioned with a strong balance sheet to see our way through these challenging external economic conditions."

2009 Financial Guidance

Due to the challenging economic environment and associated uncertainty in the healthcare markets, the company has made a decision to defer providing guidance on the first half of 2009. We will re-evaluate this decision at the end of the first quarter and provide a further update at that time.

Conference Call

iCAD management will host an investment community conference call beginning at 10:00 a.m. Eastern time on Thursday, February 26, 2009 to discuss these results and to answer questions. Shareholders and other interested parties may participate in the conference call by dialing +1-866-578-5771 (domestic) or +1-617-213-8055 (international) and entering passcode 67114000 a few minutes before 10:00 a.m. ET on Thursday, February 26, 2009. The call will also be broadcast live on the Internet at [ www.streetevents.com ], [ www.fulldisclosure.com ] and [ www.icadmed.com ].

A replay of the conference call will be accessible two hours after its completion through March 5, 2009 by dialing +1-888-286-8010 (domestic) or +1-617-801-6888 (international) and entering passcode 30943990. 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 advanced image analysis and workflow solutions that enable healthcare professionals to better serve patients by identifying pathologies and pinpointing cancer earlier. iCAD offers a comprehensive range of high-performance, upgradeable Computer-Aided Detection (CAD) systems and workflow solutions for mammography (film-based, digital radiography (DR) and computed radiography (CR), Magnetic Resonance Imaging (MRI), and Computed Tomography (CT). iCAD's solutions aid in the early detection of the most prevalent cancers including breast, colon, prostate and in the future, lung cancer. . For more information, call (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, including but not limited to, statements about the Company's confidence or strategies or expectations about revenues, results of operations, timing of regulatory approval of products or market opportunities, 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.