iCAD Reports 2013 Fourth Quarter and Full Year Financial Results

  iCAD Reports 2013 Fourth Quarter and Full Year Financial Results

  Quarterly Revenue Up 17%; Therapy Revenue Growth of 60% Driven by Further
  Adoption of the Xoft System for the Treatment of Non-Melanoma Skin Cancer

   Conference Call Begins Thursday, February 20th at 8:00 a.m. Eastern Time

Business Wire

NASHUA, N.H. -- February 19, 2014

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 twelve months ended December 31, 2013.

“Our strong performance throughout 2013 demonstrates the progress we’ve made
with our broadened oncology strategy and, in particular, our Therapy business.
Significant revenue growth, combined with a balance of targeted investments
and disciplined financial management, allowed us to post non-GAAP Adjusted
EBITDA of $1.9 million for the year,” said Ken Ferry, President and CEO of
iCAD.

“Our Therapy business delivered significant revenue growth with meaningful
increases in both product placements and utilization. Revenue from the
non-melanoma skin cancer indication was especially strong, with support from
three-year clinical data, favorable reimbursement and, most importantly,
effective patient outcomes. We will continue to invest in programs to
accelerate the market adoption of the Xoft system for the treatment of both
skin and early breast cancer. With an estimated U.S. market penetration of
less than one percent in both indications, there is considerable room for
continued growth. We remain committed to ongoing clinical studies, supporting
reimbursement expansion and raising awareness of the clinical benefits of our
electronic brachytherapy for a variety of cancer indications.

“The Detection business is delivering on its goal of leveraging our customer
base with a balance of new product sales and recurring revenue. We are making
progress towards long-term growth through recurring revenue from our service
business, new customers and upgrades from our installed base for PowerLook,
our next-generation mammography CAD platform, and from our MRI product
offering with our strategic partner Invivo, a Philips Healthcare business.
Looking forward, we believe the market transition from 2D digital to 3D
digital mammography, or tomosynthesis, will provide a significant, multi-year
market opportunity for our new 3D software workflow tools currently in
development. We look forward to introducing the first product offering
sometime later this year or early in 2015,” concluded Mr. Ferry.

Fourth Quarter Financial Results

Revenue: Total revenue for the fourth quarter of 2013 increased 16.8% to $9.1
million from $7.8 million for the fourth quarter of 2012, due to a 60.4%
increase in Therapy revenue partially offset by an 11.9% decline in Cancer
Detection revenue.

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

                      Three months ended December 31,
Therapy                  2013      2012      % Change
Products                 $ 3,302   $ 2,209   49.5  %
Service and supply        1,683    899     87.2  %
Total revenue            $ 4,985   $ 3,108   60.4  %
                         
                        Three months ended December 31,
Cancer Detection         2013      2012      % Change
Products                 $ 1,925     $ 2,519     (23.6 )%
Service and supply        2,225    2,191   1.6   %
Total revenue            $ 4,150   $ 4,710   (11.9 )%
                                                 

Gross Margin: Gross profit for the fourth quarter of 2013 increased to $6.3
million, or 68.8% of revenue, from $5.6 million, or 71.0% of revenue, for the
fourth quarter of 2012. The lower gross margin was primarily due to product
mix, and the impact of the Medical Device Excise Tax, which went into effect
in 2013.

Operating Expenses: Total operating expenses for the fourth quarter of 2013
increased to $6.9 million from $6.3 million for the same period in 2012, as a
result of higher commercial and R&D investments, partially offset by ongoing
cost-control measures.

Non-GAAP Adjusted EBITDA: Non-GAAP adjusted EBITDA, a non-GAAP financial
measure as defined below, was $285,000 for the fourth quarter of 2013,
compared with non-GAAP adjusted EBITDA of $102,000 for the same period in
2012.

Net Loss: The net loss for the fourth quarter of 2013 was $4.4 million, or
$0.41 per share, compared with a net loss for the fourth quarter of 2012 of
$2.7 million, or $0.25 per share.

Non-GAAP Adjusted Net Loss: The non-GAAP adjusted net loss, as defined below,
for the fourth quarter of 2013 was $1.5 million, or $0.14 per share, compared
with a non-GAAP adjusted net loss for the fourth quarter of 2012 of $1.7
million, or $0.15 per share.

Cash and Cash Flow: As of December 31, 2013, iCAD had cash and cash
equivalents of $11.9 million, compared with $10.2 million as of September 30,
2013 and $13.9 million as of December 31, 2012. Net cash used by operations
during 2013 was $1.4 million.

2013 Financial Results

Revenue: Total revenue for 2013 increased 17.0% to $33.1 million from $28.3
million for 2012, including a 46.8% increase in Therapy revenue offset by a
2.1% decline in Cancer Detection revenue.

                     Year ended December 31,
Therapy                  2013       2012       % Change
Products                 $ 11,065   $ 8,130    36.1%
Service and supply        5,097     2,883    76.8%
Total revenue            $ 16,162   $ 11,013   46.8%
                                                   

                      Year ended December 31,
Cancer Detection         2013       2012       % Change
Products                 $ 8,491    $ 9,846    (13.8)%
Service and supply       8,414      7,416      13.5%
Total revenue            $ 16,905   $ 17,262   (2.1)%
                                                   

Gross Margin: Gross profit for 2013 was $23.1 million, or 69.8% of revenue,
compared with gross profit for 2012 of $20.0 million, or 70.8% of revenue.

Operating Expenses: Total operating expenses for 2013 decreased to $24.9
million from $25.4 million for 2012.

Non-GAAP Adjusted EBITDA: Non-GAAP adjusted EBITDA for 2013 was $1.9 million,
compared with a non-GAAP adjusted EBITDA loss of $1.5 million for 2012.

Net Loss: The net loss for 2013 was $7.6 million, or $0.70 per share, compared
with a net loss for 2012 of $9.4 million, or $0.87 per share.

Non-GAAP Adjusted Net Loss: The non-GAAP adjusted net loss for 2013 was $5.2
million, or $0.47 per share, compared with a non-GAAP adjusted net loss for
2012 of $8.8 million, or $0.81 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 Thursday,
February 20, 2014 beginning at 8:00 a.m. Eastern time to discuss these results
and answer questions. Shareholders and other interested parties may
participate in the conference call by dialing 888-713-4211 (domestic) or
617-213-4864 (international) and entering passcode 49351643. The call also
will be broadcast live on the Internet at www.streetevents.com and
www.icadmed.com.

A replay of the conference call will be accessible two hours after its
completion through February 26, 2014 by dialing 888-286-8010 (domestic) or
617-801-6888 (international) and entering passcode 49351643. The call will
also be archived for 90 days at www.streetevents.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.

iCAD, INC. AND SUBSIDIARY
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands except for share data)
                                                           
                                               December 31,       December 31,
Assets                                            2013               2012
                                                                     
Current assets:
Cash and cash equivalents                      $  11,880          $  13,948
Trade accounts receivable, net of
allowance for doubtful accounts of $73            7,623              4,980
in 2013 and $48 in 2012
Inventory, net                                    1,891              2,119
Prepaid expenses and other current                649                486
assets
Total current assets                              22,043             21,533
                                                                     
Property and equipment, net of
accumulated depreciation and                      1,671              1,483
amortization of $4,265 in 2013 and
$3,627 in 2012
Other assets                                      419                638

Intangible assets, net of accumulated
amortization of $12,468 in 2013 and               13,674             15,230
$10,744 in 2012
Goodwill                                          21,109             21,109
Total assets                                   $  58,916          $  59,993
                                                                     
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable                               $  2,000           $  1,940
Accrued and other expenses                        3,799              4,142
Interest payable                                  483                499
Notes and lease payable - current                 3,878              -
portion
Warrant liability                                 3,986              1,538
Deferred revenue                                  8,306              6,520
Total current liabilities                         22,452             14,639
                                                                     
Deferred revenue, long-term portion               1,726              1,502
Other long-term liabilities                       1,356              1,341
Capital lease - long-term portion                 235                -
Notes payable - long-term portion                 11,770             14,846
Total liabilities                                 37,539             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
11,084,119 in 2013 and 10,993,933 in              111                110
2012; outstanding 10,898,288 in 2013 and
10,808,102 in 2012
Additional paid-in capital                        166,735            165,416
Accumulated deficit                               (144,054)          (136,446)
Treasury stock at cost, 185,831 shares            (1,415)            (1,415)
in 2013 and 2012
Total stockholders' equity                        21,377             27,665
                                                                     
Total liabilities and stockholders'            $  58,916          $  59,993
equity
                                                                     
                                                                     

iCAD, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands except for per share data)
                                                         
                     Three Months Ended              Twelve Months Ended
                     December 31,                    December 31,
                     2013           2012             2013           2012
Revenue:
Products             $ 5,227        $ 4,728          $ 19,556       $ 17,976
Service and            3,908         3,090           13,511        10,299 
supplies
Total revenue          9,135          7,818            33,067         28,275
                                                                      
Cost of
revenue:
Products               1,749          1,231            5,933          4,834
Service and            860            801              3,111          2,479
supplies
Amortization
of acquired            237           233             938           931    
intangibles
Total cost of          2,846          2,265            9,982          8,244
revenue
                                                                   
Gross profit           6,289         5,553           23,085        20,031 
                                                                      
Operating
expenses:
Engineering
and product            1,960          1,611            7,694          7,769
development
Marketing and          3,035          2,732            10,427         10,708
sales
General and            1,915         1,995           6,740         6,966  
administrative
Total
operating              6,910          6,338            24,861         25,443
expenses
                                                                   
Loss from              (621   )       (785   )         (1,776 )       (5,412 )
operations
                                                                      
Loss from
change in fair         (2,932 )       (1,051 )         (2,448 )       (539   )
value of
warrant
Interest               (810   )       (866   )         (3,277 )       (3,415 )
expense
Other income           3             8               19            35     
Other expense,         (3,739 )       (1,909 )         (5,706 )       (3,919 )
net
                                                                      
Loss before
income tax             (4,360 )       (2,694 )         (7,482 )       (9,331 )
expense
                                                                      
Income tax             (50    )       (8     )         (126   )       (43    )
expense
                                                                   
Net loss and
comprehensive        $ (4,410 )     $ (2,702 )       $ (7,608 )     $ (9,374 )
loss
                                                                      
Net loss per
share:
Basic and            $ (0.41  )     $ (0.25  )       $ (0.70  )     $ (0.87  )
diluted
                                                                      
Weighted
average number
of shares used
in computing
loss per
share:
Basic and              10,863        10,808          10,842        10,796 
diluted
                                                                             
                                                                             

iCAD, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Cash Flows
(unaudited)
                                                For the twelve months ended
                                                   December 31,
                                                   2013          2012
                                                   (in thousands)
Cash flow from operating activities:
Net loss                                           $ (7,608 )       $ (9,374 )
Adjustments to reconcile net loss to net
cash used for operating activities:
Depreciation                                         706              891
Amortization                                         1,724            1,904
Bad debt provision                                   35               -
Loss from change in fair value of warrant            2,448            539
Loss on disposal of assets                           53               174
Stock-based compensation expense                     1,202            996
Amortization of debt discount and debt costs         864              1,012
Interest on settlement obligations                   266              388
Changes in operating assets and liabilities:
Accounts receivable                                  (2,678 )         (976   )
Inventory                                            229              (79    )
Prepaid and other current assets                     (127   )         469
Accounts payable                                     61               815
Accrued expenses                                     (609   )         (1,775 )
Deferred revenue                                     2,010           812    
Total adjustments                                    6,184           5,170  
                                                                      
Net cash used for operating activities               (1,424 )         (4,204 )
                                                                      
Cash flow from investing activities:
Additions to patents, technology and other           (168   )         (70    )
Additions to property and equipment                  (539   )         (665   )
Net cash used for investing activities               (707   )         (735   )
                                                                      
Cash flow from financing activities:
Issuance of common stock for cash                    145              -
Taxes paid related to restricted stock               (28    )         (14    )
issuance
Payments of capital lease obligations                (54    )
Proceeds from debt financing, net                    -               14,325 
Net cash (used for) provided by financing            63              14,311 
activities
                                                                      
Increase (decrease) in cash and equivalents          (2,068 )         9,372
Cash and equivalents, beginning of period            13,948          4,576  
Cash and equivalents, end of period                $ 11,880        $ 13,948 
                                                                      
                                                                      

  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               Twelve Months Ended
                    December 31,                     December 31,
                    2013          2012             2013         2012
GAAP Net Loss       $  (4,410 )     $ (2,702 )       $ (7,608 )     $ (9,374 )
                                                                      
Interest               810            866              3,277          3,415
expense
Other
(expense)              (3     )       (8     )         (19    )       (35    )
income
Stock                  294            265              1,202          996
Compensation
Depreciation           178            190              706            891
Amortization           434            432              1,724          1,904
Tax expense            50             8                126            43
Severance              -              -                -              80
Loss on                2,932         1,051           2,448         539    
warrant
Non GAAP
Adjusted            $  285         $ 102           $ 1,856       $ (1,541 )
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 December       Twelve Months Ended
                   31,                               December 31,
                   2013           2012             2013         2012
GAAP Net           $  (4,410  )     $ (2,702 )       $ (7,608 )     $ (9,374 )
Loss
Adjustments
to net loss:
Severance             -               -                -              80
Loss on               2,932          1,051           2,448         539    
warrant
Non GAAP
Adjusted Net       $  (1,478  )     $ (1,651 )       $ (5,160 )     $ (8,755 )
Loss
                                                                      
                                                                      
Net loss per
share
GAAP Net
loss per           $  (0.41   )     $ (0.25  )       $ (0.70  )     $ (0.87  )
share
Adjustments
to net loss           0.27           0.10            0.23          0.06   
(as detailed
above)
Non GAAP
Adjusted Net       $  (0.14   )     $ (0.15  )       $ (0.47  )     $ (0.81  )
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 investor relations
LHA
Anne Marie Fields, 212-838-3777 x6604
afields@lhai.com
or
For iCAD media inquiries
MSLGROUP
Helen Shik, 781-684-0770
iCAD@mslgroup.com
 
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