iCAD(ICAD) - 2024 Q1 - Quarterly Results

Executive Summary & Q1 2024 Highlights iCAD is executing a three-phased transformation plan, with Phase 3 focusing on growth initiatives, while reporting a 14% increase in total revenue to $5.0 million for Q1 2024, improved gross profit margin, and a reduced GAAP net loss Strategic Transformation and Growth Initiatives iCAD is executing a three-phased transformation plan, with Phases 1 and 2 focused on realignment and strengthening the foundation, leading to stabilized cash burn and increased cash. Phase 3, "Investing in Growth," commenced in Q1 2024, focusing on expanding into key accounts and new markets, showing early signs of success from targeted lead generation, a revamped commercial model, sales team additions, and ProFound Breast Health Suite enhancements including ProFound Cloud - Company is in Phase 3 of its transformation plan, "Investing in Growth," focusing on expanding into key accounts and new markets[2] - Early signs of success are observed from growth initiatives including targeted lead generation, revamped commercial model, strategic sales team additions, and ProFound Breast Health Suite enhancements (e.g., ProFound Cloud)[2] Key Financial and Operational Highlights iCAD reported a 14% increase in total revenue to $5.0 million for Q1 2024, with product revenue up 26.1%. Gross profit margin improved to 83%. The company significantly reduced its GAAP net loss from continuing operations to ($1.2) million from ($3.1) million year-over-year, and operating cash flow also improved. Total Annual Recurring Revenue (ARR) grew by 10% to $9.0 million | Metric | Q1 2024 | Q1 2023 | Change ($) | Change (%) | | :--------------------------------- | :-------- | :-------- | :--------- | :--------- | | Total Revenue | $5.0M | $4.3M | $0.6M | 14% | | Product Revenue | $3.102M | $2.460M | $0.642M | 26.1% | | Service and Supplies Revenue | $1.852M | $1.874M | ($0.022M) | -1.2% | | Gross Profit Margin | 83% | 82% | 1% | - | | GAAP Net Loss (continuing operations) | ($1.2M) | ($3.1M) | $1.9M | 61.3% improvement | | Operating Cash Flow | ($1.2M) | ($1.5M) | $0.3M | 20% improvement | | Total ARR | $9.0M | - | - | 10% | Q1 2024 Financial Performance Total revenue for Q1 2024 increased by 14.3% to $4.954 million, driven by product revenue growth, alongside improved gross profit margin, reduced operating expenses, and a significantly narrowed net loss Revenue Breakdown Total revenue for Q1 2024 increased by 14.3% year-over-year to $4.954 million. This growth was primarily driven by a 26.1% increase in product revenue, reaching $3.102 million, while service and supplies revenue saw a slight decrease of 1.2% to $1.852 million | Revenue Type | Q1 2024 (in 000's) | Q1 2023 (in 000's) | Change ($) | Change (%) | | :------------------- | :----------------- | :----------------- | :--------- | :--------- | | Product revenue | $3,102 | $2,460 | $642 | 26.1% | | Service and supplies revenue | $1,852 | $1,874 | ($22) | -1.2% | | Total revenue | $4,954 | $4,334 | $620 | 14.3% | Gross Profit Analysis Gross profit for Q1 2024 was $4.113 million, representing an 83% gross profit margin, an improvement from $3.543 million or 82% in Q1 2023. This indicates improved efficiency in cost of revenue relative to sales | Metric | Q1 2024 (in 000's) | Q1 2023 (in 000's) | | :----------------- | :----------------- | :----------------- | | Gross Profit | $4,113 | $3,543 | | Gross Profit Margin | 83% | 82% | Operating Expenses Overview Total operating expenses for Q1 2024 decreased by 18% to $5.554 million, down from $6.783 million in Q1 2023. This reduction was primarily driven by decreases in marketing and sales expenses (down $278 thousand) and general and administrative expenses (down $951 thousand), while engineering and product development remained relatively stable | Operating Expense Category | Q1 2024 (in 000's) | Q1 2023 (in 000's) | Change ($) | Change (%) | | :------------------------- | :----------------- | :----------------- | :--------- | :--------- | | Engineering and product development | $1,507 | $1,516 | ($9) | -0.6% | | Marketing and sales | $2,082 | $2,360 | ($278) | -11.8% | | General and administrative | $1,902 | $2,853 | ($951) | -33.3% | | Amortization and depreciation | $63 | $54 | $9 | 16.7% | | Total operating expenses | $5,554 | $6,783 | ($1,229) | -18.1% | Net Loss and Earnings Per Share (EPS) The GAAP net loss from continuing operations significantly improved in Q1 2024, narrowing to ($1.222) million, or ($0.05) per diluted share, compared to a loss of ($3.091) million, or ($0.12) per diluted share, in Q1 2023. Non-GAAP adjusted net loss also showed a similar improvement | Metric | Q1 2024 | Q1 2023 | | :------------------------------------------ | :-------- | :-------- | | GAAP Net Loss from continuing operations | ($1,222) | ($3,091) | | GAAP Loss from continuing operations, basic and diluted per share | ($0.05) | ($0.12) | | Non-GAAP Adjusted Net Loss from continuing operations | ($1,222) | ($2,919) | | Non-GAAP Adjusted Loss per share from continuing operations | ($0.05) | ($0.12) | Cash and Liquidity As of March 31, 2024, iCAD reported cash and cash equivalents of $20.3 million. The company believes it has sufficient cash resources to fund its planned operations without needing additional funding. Net cash used for operating activities improved to ($1.180) million in Q1 2024 from ($1.528) million in Q1 2023 | Metric | As of March 31, 2024 | As of December 31, 2023 | | :-------------------------- | :------------------- | :---------------------- | | Cash and cash equivalents | $20,284 | $21,670 | - Company believes it has sufficient cash resources to fund planned operations without needing additional funding[9] | Metric | Q1 2024 (in 000's) | Q1 2023 (in 000's) | | :-------------------------- | :----------------- | :----------------- | | Net cash used for operating activities | ($1,180) | ($1,528) | Annual Recurring Revenue (ARR) Total Annual Recurring Revenue (ARR) increased by 10% year-over-year, reaching $9.0 million. This metric is used to assess the transition to a subscription-based business model - Total ARR was $9.0 million, up 10% year-over-year[7] - ARR is a key metric for assessing progress in transitioning to a subscription-based business model[26] Condensed Consolidated Financial Statements This section presents the company's financial position, operational results, and cash flows for Q1 2024, detailing changes in assets, liabilities, equity, revenue, expenses, and cash movements Condensed Consolidated Balance Sheets The balance sheet shows total assets decreased slightly from $41.418 million at December 31, 2023, to $40.395 million at March 31, 2024. Cash and cash equivalents decreased, while trade accounts receivable and prepaid expenses increased. Total liabilities also saw a minor decrease | Balance Sheet Item (in 000's) | March 31, 2024 | December 31, 2023 | | :-------------------------------- | :------------- | :---------------- | | Total assets | $40,395 | $41,418 | | Cash and cash equivalents | $20,284 | $21,670 | | Trade accounts receivable, net | $6,515 | $6,392 | | Inventory, net | $750 | $917 | | Prepaid expenses and other current assets | $1,495 | $699 | | Total current assets | $29,044 | $29,678 | | Total liabilities | $7,935 | $8,001 | | Total stockholders' equity | $32,460 | $33,417 | Condensed Consolidated Statements of Operations The statement of operations details the revenue, cost of revenue, operating expenses, and net loss. Total revenue increased to $4.954 million, while total cost of revenue slightly increased to $841 thousand. Operating expenses decreased significantly, leading to a reduced loss from operations and a lower net loss from continuing operations | Statement of Operations Item (in 000's) | Q1 2024 | Q1 2023 | | :--------------------------------------- | :------ | :------ | | Total revenue | $4,954 | $4,334 | | Total cost of revenue | $841 | $791 | | Gross profit | $4,113 | $3,543 | | Total operating expenses | $5,554 | $6,783 | | Loss from operations | ($1,441) | ($3,240) | | Loss before provision for income taxes | ($1,218) | ($3,086) | | Loss from continuing operations | ($1,222) | ($3,091) | | Net loss and comprehensive loss | ($1,222) | ($3,778) | | Net loss per share, basic and diluted | ($0.05) | ($0.15) | Condensed Consolidated Statements of Cash Flows The cash flow statement shows an improvement in net cash used for operating activities, decreasing from ($1.528) million in Q1 2023 to ($1.180) million in Q1 2024. Net cash used for investing activities increased due to capitalization of internal-use software. Overall, cash and cash equivalents decreased by $1.386 million during the quarter | Cash Flow Item (in 000's) | Q1 2024 | Q1 2023 | | :--------------------------------------- | :------ | :------ | | Net loss | ($1,222) | ($3,778) | | Net cash used for operating activities | ($1,180) | ($1,528) | | Net cash used for investing activities | ($206) | ($122) | | (Decrease) increase in cash and cash equivalents | ($1,386) | ($1,650) | | Cash and cash equivalents, end of period | $20,284 | $19,663 | Non-GAAP Financial Measures and Definitions iCAD utilizes non-GAAP measures like Adjusted EBITDA and Adjusted Net Loss to provide insights into ongoing operational trends by excluding specific non-cash or non-recurring items, and defines various Annual Recurring Revenue (ARR) metrics Purpose and Exclusions of Non-GAAP Measures iCAD uses non-GAAP financial measures, such as Adjusted EBITDA and Adjusted Net Loss, to supplement GAAP results. Management believes these measures provide a better understanding of short-term and long-term financial trends by excluding non-cash or non-recurring items like stock-based compensation, amortization, depreciation, severance, and certain litigation-related expenses, which are not considered part of ongoing operating results - Non-GAAP measures are used to understand short-term and long-term financial and operational trends by considering the impact of certain non-cash or non-recurring items[21] - Excluded items include interest expense, stock-based compensation, amortization and depreciation, severance and furlough, loss on fair value of convertible debentures, litigation-related expenses, and loss on extinguishment of debt, as they are not considered part of ongoing operating results or directly correlated to future business operations[24][27] Non-GAAP Adjusted EBITDA and Net Loss Reconciliation Non-GAAP Adjusted EBITDA loss improved significantly to ($1.073) million in Q1 2024 from ($2.407) million in Q1 2023. Similarly, Non-GAAP Adjusted Net Loss from continuing operations improved to ($1.222) million, or ($0.05) per diluted share, from ($2.919) million, or ($0.12) per diluted share, in the prior year | Metric (in 000's) | Q1 2024 | Q1 2023 | | :------------------------------------------ | :-------- | :-------- | | GAAP Net Loss from continuing operations | ($1,222) | ($3,091) | | Non-GAAP Adjusted EBITDA | ($1,073) | ($2,407) | | Non-GAAP Adjusted Net Loss from continuing operations | ($1,222) | ($2,919) | | Non-GAAP Adjusted Loss per share from continuing operations | ($0.05) | ($0.12) | Annual Recurring Revenue (ARR) Definitions iCAD defines several types of Annual Recurring Revenue (ARR) to track its transition to a subscription-based business model. These include Total ARR (T-ARR), Maintenance Services ARR (M-ARR), Subscription ARR (S-ARR), and Cloud ARR (C-ARR), each representing the annualized value of different contract types at the end of a reporting period - ARR is a useful metric for assessing progress in transitioning to a subscription-based business model[26] - Definitions of ARR metrics: * Total ARR (T-ARR): Annualized value of subscription license, maintenance contracts, and active cloud services * Maintenance Services ARR (M-ARR): Annualized value of active perpetual license maintenance service contracts * Subscription ARR (S-ARR): Annualized value of active subscription or term licenses * Cloud ARR (C-ARR): Annualized value of active cloud services contracts[28] Company Overview and Disclosures This section provides an overview of iCAD as a leader in AI-powered breast health solutions, includes cautionary forward-looking statements, and details investor communication channels About iCAD, Inc. iCAD, Inc. is a global leader in AI-powered breast health solutions, aiming to detect cancer earlier and improve patient outcomes. Their flagship product, ProFound Breast Health Suite, offers AI-powered mammography analysis for detection, density assessment, and risk evaluation, used by thousands of providers in over 50 countries - iCAD is a global leader providing clinically proven AI-powered breast health solutions for early cancer detection and improved patient outcomes[11] - The company's ProFound Breast Health Suite offers AI-powered mammography analysis for breast cancer detection, density assessment, and risk evaluation, used in over 50 countries[11] Forward-Looking Statements The report contains forward-looking statements regarding future performance, product expansion, and technology benefits, which are subject to various known and unknown risks and uncertainties. Readers are cautioned not to place undue reliance on these statements, and the company is not obligated to provide updates - The news release contains forward-looking statements about product expansion, performance improvement, adoption acceleration, and benefits of ProFound AI[12] - These statements involve known and unknown risks and uncertainties that may cause actual results to differ materially[12] - Readers are cautioned not to place undue reliance on forward-looking statements, and the company is under no obligation to provide updates[12] Conference Call and Investor Relations iCAD held a conference call on May 15, 2024, to discuss the Q1 2024 results. The company also provides information on its website regarding non-GAAP reconciliations and SEC filings for investors - A conference call was held on May 15, 2024, to discuss financial results[10] - Investors can find non-GAAP reconciliations and SEC filings on the company's website[10][13]