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iCAD Reports First Quarter 2008 Financial Results

Strong Digital Mammography Revenue Growth and FDA Approval of Fujifilm CAD Product Expected to Drive Growth in 2008; Affirms First Half 2008 Financial


Conference Call Begins Today at 10:00 a.m. ET

NASHUA, N.H., May 7 /PRNewswire-FirstCall/ -- iCAD, Inc. (Nasdaq: ICAD), an industry-leading provider of Computer-Aided Detection (CAD) solutions for the early identification of cancer, today announced financial results for the three months ended March 31, 2008. Financial highlights for the first quarter of 2008 include the following (all comparisons are with the first quarter of 2007):

-- Total revenue of $6.4 million, up 5 percent

-- Digital revenue of $4.3 million, up 24 percent

-- International revenue of $728,000 up 34 percent

-- Gross margin of 82.3 percent improved by 200 basis points

-- Net loss reduced 24 percent to $446,000, or $0.01 per share

-- Third consecutive quarter with positive cash flow from operations

"Our financial performance during the first quarter of 2008 was one of ongoing improvement," commented Ken Ferry, iCAD's President and CEO. "We saw continued strong demand for our digital products and were particularly pleased to have received U.S. Food and Drug Administration (FDA) approval for our SecondLook(R) Digital product for use with Fujifilm's Computed Radiography for Mammography (FCRm) systems. SecondLook(R) Digital for FCRm is the first CAD product approved and available in the U.S. for use with computed radiography. This represents a considerable market opportunity for iCAD as Fujifilm has enjoyed record domestic sales, having sold 500 FCRm systems since receiving their FDA approval in July 2006. In March we introduced a new version of our comparative reading solution, TotalLook and while it temporarily slowed film based product sales as customers wanted to see a demonstration before making a purchase decision, we expect substantial increased demand as we get a full quarter of traction in the second quarter."

"The digital CAD market opportunity continues to be strong with considerable room for sustained growth. According to the FDA website, 561 full field digital mammography (FFDM) units were placed in service in the first quarter, an increase of 39 percent over the first quarter of 2007. Even with this substantial growth, approximately 67 percent of the installed base is still film based, reflecting a substantial growth opportunity for us over the next two to three years, as more centers continue to migrate to digital technology."

2008 First Quarter Results

Total revenue for the first quarter of 2008 was $6.4 million, a 5 percent increase compared with total revenue of $6.1 million for the first quarter of 2007. The increase reflects continued growth in sales of the Company's digital products, offset by declines in film-based revenue and service and supply revenue. Lower film-based revenue was largely due to the mid-quarter introduction of the Company's new version of its TotalLook product, as customers held off purchases awaiting the new product, which began shipping toward the end of the quarter. The Company expects that second quarter results will benefit from the launch of this new product and that film-based product revenue will increase as a result. The decline in service and supply revenue is primarily due to a reduction this quarter in time and material billings for repair services and related parts sales. Service and supply revenue is expected to increase as the installed base of digital CAD systems grows and transitions from warranty to service contracts.

The gross margin for the first quarter of 2008, increased to 82.3 percent from 80.3 percent in the prior-year first quarter. The net loss for the first quarter of 2008, including stock-based compensation expense of $392,000, narrowed to $446,000 or $0.01 per share, from a net loss, including stock-based compensation expense of $277,000, of $583,000 or $0.02 per share in the first quarter of 2007.

For the first quarter of 2008, sales of iCAD's digital products increased 24 percent to $4.3 million from $3.5 million in the prior-year period. Sales of film-based products decreased 25 percent to $1.4 million from $1.8 million, and service and supply revenue declined 11 percent to $777,000 from $877,000, both compared with first quarter 2007 results.

Three Months Ended March 31,


2008 2007 Change

Digital revenue $ 4,285,666 $3,453,370 24.1 percent

Film based revenue 1,368,957 1,817,304 -24.7 percent

Service & supply revenue 777,393 876,812 -11.3 percent

Total revenue $6,432,016 $6,147,486 4.6 percent

Commenting on the balance sheet, Darlene Deptula-Hicks, Executive Vice President and Chief Financial Officer, said, "We continue to strengthen our balance sheet and are pleased to report that during the first quarter iCAD generated over $900,000 in cash, marking our third consecutive quarter of positive cash flow. During the quarter we held operating expenses to the lower end of our projected range and consequently we remain in a strong position moving forward."

As of March 31, 2008, iCAD had cash and cash equivalents of $5.3 million, compared with $4.3 million as of December 31, 2007. As of March 31, 2008 inventories increased modestly to $2.0 million from $1.8 million as of December 31, 2007, primarily due to preparing for the launch of Fuji CAD. Accounts payable were $1.6 million, down 20 percent from $2.0 million and accounts receivable decreased 30 percent to $4.5 million, from $6.5 million as of December 31, 2007.

2008 Financial Guidance

iCAD affirms financial guidance for the first six months of 2008. As previously reported the Company expects total revenue for the first half of 2008 to be in the range of $15 million to $16 million. The Company also expects to achieve a first-half gross margin consistent with or slightly better than 2007, and anticipates operating expenses will be between $5.6 million and $5.9 million per quarter for the first two quarters of 2008. This guidance includes sales of iCAD's SecondLook(R) Digital and TotalLook products to Fujifilm globally, which commenced in the second quarter.

Conference Call

iCAD management will host an investment community conference call beginning at 10:00 a.m. ET today to discuss these results and to answer questions. Stockholders and other interested parties may participate in the conference call by dialing 866-383-8119 (domestic) or +617-597-5344 (international) and entering passcode 45812263. The call will also be broadcast live on the Internet at, or

A replay of the conference call will be accessible two hours after its completion through May 14, 2008 by dialing 888-286-8010 (domestic) or +617-801-6888 (international) and entering passcode 16440562. The call will also be archived for 90 days at, and

About iCAD, Inc.

iCAD, Inc. is an industry-leading provider of Computer-Aided Detection (CAD) 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 CAD systems for the high, mid and low volume mammography markets. iCAD is entrusted with the task of early cancer detection by more than 2,000 women's healthcare centers worldwide. For more information, call (877) iCADnow or visit
For iCAD, contact Darlene Deptula-Hicks, EVP and CFO at 603-882-5200 x7944 or

via email at For iCAD Investor Relations, contact Anne Marie Fields of Lippert/Heilshorn &

Associates at 212-838-3777 x6604 or via email at

For iCAD Public Relations, contact Jill Testagrossa of Schwartz Communications
at 781-684-0770 or via email at "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.

-Tables to Follow-


Consolidated Statements of Operations


Three Months Ended Three Months Ended

March 31, 2008 March 31, 2007


Products $5,654,623 $5,270,674

Service and supplies 777,393 876,812

Total revenue 6,432,016 6,147,486

Cost of revenue

Products 955,416 1,004,118

Service and supplies 182,769 204,510

Total cost of revenue 1,138,185 1,208,628

Gross margin 5,293,831 4,938,858

Operating expenses:

Engineering and product development 1,409,209 1,064,875

Marketing and sales 2,383,522 2,508,759

General and administrative 1,848,346 1,813,355

Total operating expenses 5,641,077 5,386,989

Loss from operations (347,246) (448,131)

Interest expense - net 98,607 105,806

Net loss (445,853) (553,937)

Preferred dividend - 29,050

Net loss attributable to common

stockholders $(445,853) $(582,987)

Net loss per share:

Basic and Diluted $(0.01) $(0.02)

Weighted average number of shares used

in computing loss per share:

Basic and diluted 39,171,876 37,472,457


Consolidated Balance Sheets


March 31, December 31,

Assets 2008 2007

Current assets:

Cash and cash equivalents $5,255,657 $4,348,729

Trade accounts receivable, net of

allowance for doubtful accounts of

$50,000 in 2008 and 2007 4,544,996 6,483,618

Inventory, net 1,971,195 1,798,243

Prepaid and other current assets 327,100 320,169

Total current assets 12,098,948 12,950,759

Property and equipment:

Equipment 3,505,790 3,512,557

Leasehold improvements 71,611 71,611

Furniture and fixtures 330,077 330,077

Marketing assets 323,873 323,873

4,231,351 4,238,118

Less accumulated depreciation and

amortization 2,511,671 2,369,590

Net property and equipment 1,719,680 1,868,528

Other assets:

Deposits 63,194 63,194

Patents, net of accumulated amortization 48,738 68,269

Technology intangibles, net of accumulated

amortization 2,961,823 3,115,843

Tradename, net of accumulated amortization 142,600 148,800

Goodwill 43,515,285 43,515,285

Total other assets 46,731,640 46,911,391

Total assets $60,550,268 $61,730,678

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable $1,609,407 $2,010,717

Accrued salaries and other expenses 2,532,638 3,461,422

Deferred revenue 1,865,045 1,674,005

Convertible loans payable to related

parties 2,795,588 2,793,382

Convertible loans payable to non-related

parties 689,706 684,559

Total current liabilities 9,492,384 10,624,085

Convertible revolving loans payable to

related party 2,258,906 2,258,906

Total liabilities 11,751,290 12,882,991

Commitments and contingencies

Stockholders' equity:

Common stock, $ .01 par value: authorized

85,000,000 shares; issued 39,243,708

in 2008 and 39,239,208 in 2007;

outstanding 39,175,832 in 2008 and

39,171,332 in 2007 392,437 392,392

Additional paid-in capital 135,452,517 135,055,418

Accumulated deficit (86,095,712) (85,649,859)

Treasury stock at cost (67,876 shares) (950,264) (950,264)

Total Stockholders' equity 48,798,978 48,847,687

Total liabilities and stockholders'

equity $60,550,268 $61,730,678

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