iCAD Reports Third Quarter Financial Results

  iCAD Reports Third Quarter Financial Results

Year-to-Date Total Revenue Growth of 17%; Therapy Revenue Growth of 41% Driven
 by Significant Adoption of the Xoft System for the Treatment of Non-Melanoma
                                 Skin Cancer

   Conference Call Begins Tuesday, October 29^th at 10:00 a.m. Eastern Time

Business Wire

NASHUA, N.H. -- October 28, 2013

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 nine months ended September 30, 2013.

“iCAD delivered another quarter of strong operating performance. Third quarter
revenue of $8.3 million was the highest since we began executing on our
broadened oncology strategy more than two years ago. We also demonstrated
improvements in both the Cancer Detection and Therapy businesses, and
continued to achieve positive adjusted EBITDA,” said Ken Ferry, President and
CEO of iCAD.

“Our Therapy business performed well as evidenced by significant increases in
year-to-date revenue, product placements and utilization. Market adoption has
been particularly strong for the treatment of non-melanoma skin cancer.
Positive three-year data using the Xoft System to treat skin cancer that was
reported at ASTRO showed effective long-term treatment with no recurrences and
excellent cosmetic outcomes. We are confident that with ongoing positive
clinical data combined with growing favorable reimbursement, we remain well
positioned to continue strong growth in the Therapy business.

“For the third quarter, revenue at our Cancer Detection business grew 14% over
the prior year, with double-digit growth in both product and service and
supply revenue. We believe our service business growth of 18% clearly
demonstrates success with our strategy to increase recurring revenue. Finally,
we are seeing considerable traction from PowerLook, our next-generation
mammography CAD platform, from both new customers and upgrades from our
growing installed base.

“We are very pleased with our performance to date in 2013 across both of our
businesses. We remain steadfast in our goal to drive revenue growth in the
Therapy and Cancer Detection businesses through appropriate investments
combined with disciplined financial management,” concluded Mr. Ferry.

Third Quarter Financial Results

Revenue: Total revenue for the third quarter of 2013 increased to $8.3 million
from $8.2 million for the third quarter of 2012, due to an increase in Cancer
Detection revenue partially offset by a decline in Therapy revenue.

Cancer Detection revenue included film, digital mammography, MRI and CT CAD
platforms, as well as service and supply revenue from these products. Therapy
revenue included Xoft^® Axxent^® Electronic Brachytherapy System^® product
sales, as well as the associated service and supply revenue.

Three months ended September 30,
                    2013      2012      % Change
Detection revenue                          
  Product revenue       $ 2,246     $ 2,023     11.0  %
  Service revenue        2,064    1,757   17.5  %
Total Revenue           $ 4,310   $ 3,780   14.0  %
                                                
Therapy revenue
  Product revenue       $ 2,519     $ 3,638     (30.8 )%
  Service revenue        1,461    765     91.0  %
  Total Revenue         $ 3,980   $ 4,403   (9.6  )%

Gross Margin: Gross profit for the third quarter of 2013 increased to $5.9
million, or 71.5% of revenue, from $5.8 million, or 71.9% of revenue, for the
third quarter of 2012, primarily due to product mix, partially offset by the
impact of the Medical Device Excise Tax, which went into effect in 2013.

Operating Expenses: Total operating expenses for the quarter ended September
30, 2013 declined to $6.3 million from $6.6 million for the same period in
2012, as a result of ongoing cost-control measures, partially offset by
commercial and R&D investments.

Non-GAAP Adjusted EBITDA: Non-GAAP adjusted EBITDA, a non-GAAP financial
measure as defined below, was $545,000 for the third quarter of 2013, compared
with non-GAAP adjusted EBITDA of $240,000 for the same period in 2012.

Net Loss: The net loss for the third quarter of 2013 was $589,000, or $0.05
per share, compared with a net loss for the third quarter of 2012 of $1.5
million, or $0.14 per share.

Non-GAAP Adjusted Net Loss: The non-GAAP adjusted net loss, as defined below,
for the third quarter of 2013 was $1.2 million, or $0.11 per share, compared
with a non-GAAP adjusted net loss for the third quarter of 2012 of $1.6
million, or $0.15 per share.

Cash and Cash Flow: As of September 30, 2013, iCAD had cash and cash
equivalents of $10.2 million, compared with $12.9 million as of June 30, 2013
and $13.9 million as of December 31, 2012. Net cash used by operations for the
first nine months of 2013 was $3.2 million.

Nine Month Financial Results

Revenue: Total revenue for the first nine months of 2013 increased 17.0% to
$24.0 million from $20.5 million for the first nine months of 2012, including
a 41.4% increase in Therapy revenue and a 1.6% increase in Cancer Detection
revenue.

Nine months ended September 30,
                     2013       2012       % Change
Detection revenue                             
   Product revenue       $ 6,566      $ 7,327      (10.4 )%
   Service revenue        6,189     5,225    18.4  %
Total Revenue            $ 12,755   $ 12,552   1.6   %

Therapy revenue
   Product revenue       $ 7,763      $ 5,921      31.1  %
   Service revenue        3,414     1,984    72.1  %
Total Revenue            $ 11,177   $ 7,905    41.4  %

Gross Margin: Gross profit for the first nine months of 2013 was $16.8
million, or 70.2% of revenue, compared with gross profit for the first nine
months of 2012 of $14.5 million, or 70.8% of revenue.

Operating Expenses: Total operating expenses for the nine months ended
September 30, 2013 declined to $18.0 million from $19.1 million for the same
period in 2012.

Non-GAAP Adjusted EBITDA: Non-GAAP adjusted EBITDA for the first nine months
of 2013 was $1.6 million, compared with a non-GAAP adjusted EBITDA loss of
$1.6 million for the first nine months of 2012.

Net Loss: The net loss for the first nine months of 2013 was $3.2 million, or
$0.30 per share, compared with a net loss for the first nine months of 2012 of
$6.7 million, or $0.62 per share.

Non-GAAP Adjusted Net Loss: The non-GAAP adjusted net loss for the first nine
months of 2013 was $3.7 million, or $0.34 per share, compared with a non-GAAP
adjusted net loss for the first nine months of 2012 of $7.1 million, or $0.66
per share.

Use of Non-GAAP Financial Measures

In its quarterly news releases, conference calls, slide presentations or
webcasts, the Company may use or discuss non-GAAP financial measures as
defined by SEC Regulation G. The GAAP financial measures most directly
comparable to each non-GAAP financial measure used or discussed, and a
reconciliation of the differences between each non-GAAP financial measure and
the comparable GAAP financial measure, are included in this press release
after the condensed consolidated financial statements. When analyzing the
Company's operating performance, investors should not consider these non-GAAP
measures as a substitute for the comparable financial measures prepared in
accordance with GAAP. The Company's quarterly news releases containing such
non-GAAP reconciliations can be found on the Investors section of the
Company's website at www.icadmed.com.

Conference Call

iCAD management will host an investment community conference call on Tuesday,
October 29, 2013 beginning at 10:00 a.m. Eastern time to discuss these results
and answer questions. Shareholders and other interested parties may
participate in the conference call by dialing 888-680-0865 (domestic) or
617-213-4853 (international) and entering passcode 48869679. The call also
will be broadcast live on the Internet at www.streetevents.com,
www.earnings.com and www.icadmed.com.

A replay of the conference call will be accessible two hours after its
completion through November 4, 2013 by dialing 888-286-8010 (domestic) or
617-801-6888 (international) and entering passcode 44988318. The call will
also be archived for 90 days at www.streetevents.com, www.earnings.com and
www.icadmed.com.

About iCAD, Inc.

iCAD is an industry-leading provider of advanced image analysis, workflow
solutions and radiation therapies for the early identification and treatment
of common cancers. iCAD’s Xoft System offers radiation treatment for
early-stage breast cancer that can be administered in the form of
intraoperative radiation therapy or accelerated partial breast irradiation.
The Xoft System is also cleared for the treatment of non-melanoma skin cancer
and endometrial cancer. iCAD offers a comprehensive range of high-performance,
upgradeable CAD solutions for mammography and advanced image analysis and
workflow solutions for Magnetic Resonance Imaging, for breast and prostate
cancers and Computed Tomography for colorectal 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 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
Company’s ability to defend itself in litigation matters, to achieve business
and strategic objectives, the risks of uncertainty of patent protection, the
impact of supply and manufacturing constraints or difficulties, uncertainty of
future sales levels, protection of patents and other proprietary rights, the
impact of supply and manufacturing constraints or difficulties, product market
acceptance, possible technological obsolescence of products, increased
competition, litigation and/or government regulation, changes in Medicare or
other reimbursement policies, risks relating to our existing and future debt
obligations, competitive factors, the effects of a decline in the economy or
markets served by the Company; and other risks detailed in the Company’s
filings with the Securities and Exchange Commission. The words “believe”,
“demonstrate”, “intend”, “expect”, “estimate”, “will”, “continue”,
“anticipate”, “likely”, “seek”, 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. For additional disclosure
regarding these and other risks faced by iCAD, please see the disclosure
contained in our public filings with the Securities and Exchange Commission,
available on the Investors section of our website at http://www.icadmed.com
and on the SEC’s website at http://www.sec.gov.

                             -Tables to Follow -

iCAD, INC. AND SUBSIDIARY
                                                         
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands except for share data)
                                                                  
                                              September 30,       December 31,
Assets                                        2013                2012
                                                                  
Current assets:
Cash and cash equivalents                   $ 10,209            $ 13,948
Trade accounts receivable, net of
allowance for doubtful accounts of            8,419               4,980
$73 in 2013 and $48 in 2012
Inventory, net                                2,003               2,119
Prepaid expenses and other current            658                486       
assets
Total current assets                          21,289             21,533    
                                                                  
Property and equipment, net of
accumulated depreciation and                  1,825               1,483
amortization of $4,106 in 2013 and
$3,627 in 2012
Other assets                                  475                 638
Intangible assets, net of
accumulated amortization of $12,034           13,963              15,230
in 2013 and $10,744 in 2012
Goodwill                                      21,109             21,109    
Total assets                                $ 58,661           $ 59,993    
                                                                  
Liabilities and Stockholders'
Equity
Current liabilities:
Accounts payable                            $ 2,018             $ 1,940
Accrued and other expenses                    3,515               4,142
Interest payable                              569                 499
Capital lease - short-term portion            130                 -
Warrant liability                             1,054               1,538
Deferred revenue                              7,498              6,520     
Total current liabilities                     14,784             14,639    
                                                                  
Deferred revenue, long-term portion           1,633               1,502
Other long-term liabilities                   1,313               1,341
Capital lease - long-term portion             279                 -
Notes payable                                 15,299             14,846    
Total liabilities                             33,308             32,328    
                                                                  
                                                                  
Stockholders' equity:
Preferred stock, $ .01 par value:
authorized 1,000,000 shares; none             -                   -
issued.
Common stock, $ .01 par value:
authorized 85,000,000 shares;
issued 11,036,075 in 2013 and                 110                 110
10,993,933 in 2012; outstanding
10,850,244 in 2013 and 10,808,102
in 2012
Additional paid-in capital                    166,302             165,416
Accumulated deficit                           (139,644   )        (136,446  )
Treasury stock at cost, 185,831               (1,415     )        (1,415    )
shares in 2013 and 2012
Total stockholders' equity                    25,353             27,665    
                                                                  
Total liabilities and stockholders'         $ 58,661           $ 59,993    
equity

iCAD, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands except for per share data)
                                                           
                      Three Months Ended               Nine Months Ended
                      September 30,                    September 30,
                      2013            2012             2013         2012
Revenue:
Products              $  4,765        $ 5,661          $ 14,329     $ 13,248
Service and              3,525         2,522           9,603       7,209  
supplies
Total revenue            8,290          8,183            23,932       20,457
                                                                      
Cost of
revenue:
Products                 1,383          1,527            4,184        3,603
Service and              747            541              2,251        1,678
supplies
Amortization of
acquired                 234           233             701         698    
intangibles
Total cost of            2,364          2,301            7,136        5,979
revenue
                                                                   
Gross profit             5,926         5,882           16,796      14,478 
                                                                      
Operating
expenses:
Engineering and
product                  2,112          1,971            5,734        6,158
development
Marketing and            2,617          2,842            7,392        7,976
sales
General and              1,551         1,773           4,825       4,971  
administrative
Total operating          6,280          6,586            17,951       19,105
expenses
                                                                   
Loss from                (354    )      (704   )         (1,155 )     (4,627 )
operations
                                                                      
Gain from
change in fair           624            126              484          512
value of
warrant
Interest                 (807    )      (883   )         (2,467 )     (2,549 )
expense
Other income             4             9               16          27     
Other expense,           (179    )      (748   )         (1,967 )     (2,010 )
net
                                                                      
Loss before
income tax               (533    )      (1,452 )         (3,122 )     (6,637 )
expense
                                                                      
Income tax               (56     )      (13    )         (76    )     (35    )
expense
                                                                   
Net loss and
comprehensive         $  (589    )    $ (1,465 )       $ (3,198 )   $ (6,672 )
loss
                                                                      
Net loss per
share:
Basic and             $  (0.05   )    $ (0.14  )       $ (0.30  )   $ (0.62  )
diluted
                                                                      
Weighted
average number
of shares used
in computing
loss per share:
Basic and                10,849        10,805          10,835      10,792 
diluted
                                                                      

iCAD, INC. AND SUBSIDIARY
                                                        
Condensed Consolidated Statements of Cash Flows
(unaudited)
                                       For the nine months ended September 30,
                                            2013                  2012
                                       (in thousands)
Cash flow from operating
activities:
Net loss                               $    (3,198    )       $   (6,672   )
Adjustments to reconcile net loss
to net cash used for operating
activities:
Depreciation                                528                   701
Amortization                                1,291                 1,472
Bad debt provision                          35                    -
Gain from change in fair value of           (484      )           (512     )
warrant
Loss on disposal of assets                  49                    143
Stock-based compensation expense            908                   731
Amortization of debt discount and           588                   761
debt costs
Interest on settlement obligations          214                   313
Changes in operating assets and
liabilities:
Accounts receivable                         (3,474    )           (1,712   )
Inventory                                   116                   178
Prepaid and other current assets            (145      )           215
Accounts payable                            78                    1,106
Accrued expenses                            (799      )           (2,172   )
Deferred revenue                            1,110                818      
Total adjustments                           15                   2,042    
                                                                  
Net cash used for operating                 (3,183    )           (4,630   )
activities
                                                                  
Cash flow from investing
activities:
Additions to patents, technology            (24       )           (3       )
and other
Additions to property and                   (510      )           (465     )
equipment
Net cash used for investing                 (534      )           (468     )
activities
                                                                  
Cash flow from financing
activities:
Issuance of common stock for cash           3                     -
Taxes paid related to restricted            (25       )           (13      )
stock issuance
Proceeds from debt financing, net           -                    14,325   
Net cash (used for) provided by             (22       )           14,312   
financing activities
                                                                  
Increase (decrease) in cash and             (3,739    )           9,214
equivalents
Cash and equivalents, beginning of          13,948               4,576    
period
Cash and equivalents, end of           $    10,209           $   13,790   
period

  RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO COMPARABLE GAAP MEASURES

             (Unaudited, in thousands, except per share amounts)

The following is a reconciliation of the non-GAAP financial measures used by
the Company to describe the Company's financial results determined in
accordance with United States generally accepted accounting principles (GAAP).
An explanation of these measures is also included below under the heading
"Explanation of Non-GAAP Financial Measures."

While management believes that these non-GAAP financial measures provide
useful supplemental information to investors regarding the underlying
performance of the Company's business operations, investors are reminded to
consider these non-GAAP financial measures in addition to, and not as a
substitute for, financial performance measures prepared in accordance with
GAAP. In addition, it should be noted that these non-GAAP financial measures
may be different from non-GAAP financial measures used by other companies, and
management may utilize other measures to illustrate performance in the future.
Non-GAAP financial measures have limitations in that they do not reflect all
of the amounts associated with the Company's results of operations as
determined in accordance with GAAP.


Non-GAAP Adjusted EBITDA
Set forth below is a reconciliation of the Company's "Non-GAAP Adjusted
EBITDA"
(Unaudited, in thousands)
                                                           
                    Three Months Ended September       Nine Months Ended
                    30,                                September 30,
                    2013           2012                2013         2012
GAAP Net Loss       $  (589  )     $  (1,465  )        $ (3,198 )   $ (6,672 )
                                                                      
Interest               807            883                2,467        2,549
Expense
Other
(expense)              (4    )        (9      )          (16    )     (27    )
income
Stock                  307            283                908          731
Compensation
Depreciation           162            235                528          701
Amortization           430            426                1,290        1,472
Tax expense            56             13                 76           35
(benefit)
Severance              -              -                  -            80
Gain on                (624  )        (126    )          (484   )     (512   )
warrant
Non GAAP
Adjusted            $  545        $  240             $ 1,571     $ (1,643 )
EBITDA

Non-GAAP Adjusted Net Loss
Set forth below is a reconciliation of the Company's "Non-GAAP Adjusted Net
Loss"
(Unaudited, in thousands, except loss per share)
                                                           
                   Three Months Ended September        Nine Months Ended
                   30,                                 September 30,
                   2013             2012               2013         2012
GAAP Net           $  (589    )     $  (1,465  )       $ (3,198 )   $ (6,672 )
Loss
Adjustments
to net loss:
Severance             -                -                 -            80
Gain on               (624    )        (126    )         (484   )     (512   )
warrant
Non GAAP
Adjusted Net       $  (1,213  )     $  (1,591  )       $ (3,682 )   $ (7,104 )
Loss
                                                                      
                                                                      
Net loss per
share
GAAP Net
loss per           $  (0.05   )     $  (0.14   )       $ (0.30  )   $ (0.62  )
share
Adjustments
to net loss           (0.06   )        (0.01   )         (0.04  )     (0.04  )
(as detailed
above)
Non GAAP
Adjusted Net       $  (0.11   )     $  (0.15   )       $ (0.34  )   $ (0.66  )
Loss per
share

Explanation of Non-GAAP Financial Measures

The Company reports its financial results in accordance with United States
generally accepted accounting principles, or GAAP. However, management
believes that in order to properly understand the Company's short-term and
long-term financial and operational trends, investors may wish to consider the
impact of certain non-cash or non-recurring items, when used as a supplement
to financial performance measures in accordance with GAAP. These items result
from facts and circumstances that vary in frequency and/or impact on
continuing operations. Management also uses results of operations before such
items to evaluate the operating performance of the Company and compare it
against past periods, make operating decisions, and serve as a basis for
strategic planning. These non-GAAP financial measures provide management with
additional means to understand and evaluate the operating results and trends
in the Company's ongoing business by eliminating certain non-cash expenses and
other items that management believes might otherwise make comparisons of the
Company's ongoing business with prior periods more difficult, obscure trends
in ongoing operations or reduce management's ability to make useful forecasts.
Management believes that these non-GAAP financial measures provide additional
means of evaluating period-over-period operating performance. In addition,
management understands that some investors and financial analysts find this
information helpful in analyzing the Company's financial and operational
performance and comparing this performance to its peers and competitors.

Management defines "Non-GAAP Adjusted EBITDA" as the sum of GAAP net loss
before provision for income taxes, acquisition-related expenses, total other
(income) expense, stock-based compensation expense, depreciation and
amortization, severance, gain on sale, loss on warrant, amortization of
acquired intangibles, acquisition related, patent litigation and recall costs,
contingent consideration, indemnification asset and goodwill impairment
charges. Management considers this non-GAAP financial measure to be an
important indicator of the Company's operational strength and performance of
its business and a good measure of its historical operating trends, in
particular the extent to which ongoing operations impact the Company's overall
financial performance.

Management defines "Non-GAAP Adjusted Net Loss" as the sum of GAAP net loss
before provision for the gain on sale of asset, severance, transaction, patent
litigation and recall costs, contingent consideration, indemnification asset
and goodwill impairment charges. Management considers this non-GAAP financial
measure to be an important indicator of the Company's operational strength and
performance of its business and a good measure of its historical operating
trends, in particular the extent to which ongoing operations impact the
Company's overall financial performance.

Management excludes each of the items identified below from the applicable
non-GAAP financial measure referenced above for the reasons set forth with
respect to that excluded item:

  *Stock-based compensation expense: excluded as these are non-cash expenses
    that management does not consider part of ongoing operating results when
    assessing the performance of the Company's business, and also because the
    total amount of expense is partially outside of the Company's control as
    it is based on factors such as stock price volatility and interest rates,
    which may be unrelated to our performance during the period in which the
    expense is incurred.
  *Amortization of acquired intangibles: acquisition-related expenses are
    reported at the time acquisition costs are incurred, and purchased
    intangibles are amortized over a period of several years after the
    acquisition and generally cannot be changed or influenced by management
    after the acquisition. Accordingly, these items are not considered by
    management in making operating decisions, and management believes that
    such expenses do not have a direct correlation to future business
    operations. Thus, including such charges does not accurately reflect the
    performance of the Company's ongoing operations for the period in which
    such charges are incurred.
  *Interest expense: In January 2012, the Company entered into a five-year,
    $15 million debt facility agreement. The Company excludes interest expense
    from its non GAAP Adjusted EBITDA calculation.
  *Severance: relates to costs incurred due to the termination of certain
    employees. The Company provides compensation to certain employees as an
    accommodation upon termination of employment without cause. Management
    believes that excluding severance costs from operating results provides
    investors with a better means for measuring current Company performance.
  *Gain (loss) on Warrant: The Company issued warrants in connection with the
    financing and the value changes according to fair value. It is excluded as
    these are non-cash expenses that management does not consider part of
    ongoing operating results when assessing the performance of the Company's
    business, also because the total amount of gain or loss is partially
    outside of the Company's control as it is based on factors such as stock
    price volatility and interest rates, which may be unrelated to our
    performance during the period in which the gain or loss is incurred.

On occasion in the future, there may be other items, such as significant asset
impairments, restructuring charges or significant gains or losses from
contingencies that the Company may exclude if it believes that doing so is
consistent with the goal of providing useful information to investors and
management.

Contact:

For iCAD
Kevin Burns, 937-431-7967
kburns@icadmed.com
or
For iCAD investor relations
LHA
Anne Marie Fields, 212-838-3777 x6604
afields@lhai.com
or
For iCAD media inquiries
Schwartz MSL
Helen Shik, 781-684-0770
iCAD@schwartzmsl.com
 
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