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NOVADAQ Reports Second Quarter 2016 Financial Results

TORONTO, July 27, 2016 (GLOBE NEWSWIRE) -- NOVADAQ Technologies Inc. ("NOVADAQ" or the “Company") (NASDAQ:NVDQ) (TSX:NDQ), the leading developer and provider of clinically relevant fluorescence imaging solutions for use in surgical and diagnostic procedures, today announced financial results for its second quarter ended June 30, 2016. Unless otherwise indicated, all dollar amounts in this press release are expressed in United States (“U.S.”) dollars.

For the three months ended June 30, 2016, NOVADAQ reported revenues of $20.1 million, an increase of 34% from $15.1 million in the second quarter of 2015. Total direct sales increased by $4.4 million, or 37%, and total Partnered/International sales increased by $0.6 million, or 21%, compared to Q2-2015.

The following table sets out certain supplemental quarterly revenue and installed base metrics to assist investors in following the Company’s progress over time:

Q2-2016 Q2-2015 Change
REVENUES (millions)
Recurring$7.8 $5.7 +38%
Capital 8.8 6.5 +36%
Total Direct 16.6 12.2 +37%
Partnered/International 3.5 2.9 +21%
Total$20.1 $15.1 +34%
INSTALLED BASE
Direct Systems 815 611 +33%
Recurring Revenue/Direct System$9,539 $9,251 +3%

The Company estimates that the number of procedures performed using SPY technology systems during the second quarter was approximately 13,300 representing an increase of 39% year-over-year and 8% sequentially over the previous quarter.

Second quarter gross profits rose to $14.5 million (72% margin) compared to gross profits of $10.7 million (71%) in the same period last year.

Net loss for the second quarter of 2016 was $16.5 million, or $0.29 basic loss per share, compared with net loss of $6.0 million, or $0.11 basic loss per share, in Q2-2015. The increase in net loss was primarily a result of an increase in operating expenses of $8.0 million, which included approximately $4.0 million of expenses associated with the departure of the Company’s former CEO, and the non-cash warrant revaluation income of $6.3 recognized in Q2-2015. Offsetting these amounts was an increase in gross profit of $3.8 million.

Second quarter 2016 operating burn (cash consumed by operating activities before changes in working capital) was $10.1 million compared to $8.7 million in the second quarter of 2015. The cash burn in Q2-2016 included $1.9 of cash separation costs. Without such costs, the cash burn in Q2-2016 would have been $8.2 million, or slightly lower than it was in Q2-2015. During Q2-2016, non-cash working capital decreased by $0.6 million.

Cash and cash equivalents were $84.0 million at June 30, 2016, reflecting a decrease of $12.6 million compared to the cash position as at March 31, 2016.

“The positive sales momentum we established early this year successfully carried into Q2, which was marked by the continued strong growth of both our capital sales and recurring revenue,” commented Rick Mangat, NOVADAQ’s President and Chief Executive Officer. “I am pleased that we maintained our steady and robust growth trajectory, and am very optimistic about our performance in the second half of 2016.”

Conference Call Details

NOVADAQ is pleased to invite all interested parties to participate in a conference call today, July 27, 2016 at 4:30 p.m. Eastern Time, during which the results will be discussed.

Those wishing to access the live conference call by telephone should dial 1-877-407-8031 (Canada and the United States) or 1-201-689-8031 (International) several minutes prior to the beginning of the call.

A replay of the conference call can be accessed by dialing 1-877-660-6853 (Canada and the United States) or 1-201-612-7415 (International) and entering the conference identification number 13641209 when prompted.

The call will also be archived for 90 days on the Company’s website at novadaq.com under the “Events” tab in the Investor’s section. A replay of the call will be available for download to a portable audio player or computer, as an MP3 or podcast file, at the same location on NOVADAQ’s website.

About NOVADAQ Technologies Inc.

Enabling medical professionals with clinically relevant, point-of-care imaging solutions to enhance the lives of patients and their caregivers, while reducing health care costs, is NOVADAQ’s global mission. SPY fluorescence imaging technology provides surgeons with real-time visualization, leading to improved outcomes and reduced costs without exposing the patient to radiation. More than 200 peer-reviewed publications demonstrate that the use of SPY imaging technologies during complex surgery and diagnostic procedures, leads to lower rates of post-operative complications and lower hospital costs.

SPY Imaging Systems are United States Food and Drug Administration 510(k) cleared for use in seven surgical specialties. The endoscopic version of SPY called PINPOINT, combines the capabilities of SPY Imaging with high definition (“HD”) visible light visualization offered by conventional endoscopes. LUNA is used to assess perfusion in patients being treated for non-healing wounds. In December 2014, NOVADAQ and LifeNet Health jointly announced the signing of a multi-year agreement appointing NOVADAQ the exclusive worldwide distributor of LifeNet Health’s DermACELL acellular tissue products for wound and breast reconstruction surgery.

Forward-Looking Statements

Certain statements included in this press release may be considered forward-looking. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from those implied by such statements, and therefore these statements should not be read as guarantees of future performance or results. All forward-looking statements are based on NOVADAQ’s current beliefs as well as assumptions made by and information currently available to NOVADAQ and relate to, among other things, the Company’s strategy, strategic goals, research and development activities, research and clinical testing outcomes, taxes, capital expenditures, future operations, future financial position, future revenues/results, projected costs, prospects and plans and objectives of management.

Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Due to risks and uncertainties, including the risks and uncertainties identified by NOVADAQ in its public securities filings available at www.sec.gov and www.sedar.com, actual events may differ materially from current expectations. NOVADAQ disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

NOVADAQ, SPY, PINPOINT and LUNA are registered trademarks of Novadaq Technologies Inc. DermACELL is a registered trademark of LifeNet Health.

Novadaq Technologies Inc.

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(Unaudited)
(expressed in U.S. dollars, except common shares outstanding)

As at
June 30, 2016
As at
December 31, 2015
ASSETS
Current assets
Cash and cash equivalents $84,034,658 $106,790,202
Accounts receivable 23,722,377 21,767,746
Prepaid expenses and other assets 5,157,489 3,362,854
Inventories 11,139,591 10,680,885
124,054,115 142,601,687
Non-current assets
Property and equipment, net 17,438,692 14,830,114
Intangible assets, net 17,666,986 18,539,790
Total Assets $159,159,793 $175,971,591
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities $14,177,482 $12,145,572
Provisions 479,579 454,579
Deferred revenue 1,620,884 1,124,808
Income taxes payable - 12,500
Distribution rights payable 250,000 250,000
Other liabilities 741,542 -
17,269,487 13,987,459
Non-current liabilities
Deferred revenue 844,943 849,299
Distribution rights payable 1,533,069 1,735,012
Shareholder warrants - 16,437,795
Total Liabilities $19,647,499 $33,009,565
Shareholders' Equity
Share capital $337,909,654 $322,687,011
Contributed surplus 21,243,048 16,400,830
Deficit (219,640,408) (196,125,815)
Total Shareholders' Equity $139,512,294 $142,962,026
Total Liabilities and Shareholders' Equity $159,159,793 $175,971,591
Total number of common shares outstanding 57,435,445 56,253,327

Novadaq Technologies Inc.

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS

(Unaudited)
(expressed in U.S. dollars)

For the three months ended For the six months ended
June 30, 2016 June 30, 2015 June 30, 2016 June 30, 2015
Product sales $19,048,205 $14,337,302 $35,827,913 $25,404,482
Royalty revenue 555,272 540,170 1,050,522 992,550
Service revenue 512,712 188,955 963,825 360,736
Total revenues 20,116,189 15,066,427 37,842,260 26,757,768
Cost of sales 5,645,545 4,380,591 10,713,588 8,600,735
Gross profit 14,470,644 10,685,836 27,128,672 18,157,033
Selling and distribution expenses 19,067,616 15,493,072 34,375,697 27,990,725
Research and development expenses 4,725,563 5,128,691 7,888,931 8,751,244
Administrative expenses 7,261,781 2,458,509 9,818,040 5,145,215
Total operating expenses 31,054,960 23,080,272 52,082,668 41,887,184
Loss from operations (16,584,316) (12,394,436) (24,953,996) (23,730,151)
Finance costs (24,030) (26,048) (48,058) (52,096)
Finance income 77,332 55,945 167,013 109,687
Warrants revaluation adjustment 6,338,631 1,324,293 6,361,261
Loss before income taxes (16,531,014) (6,025,908) (23,510,748) (17,311,299)
Income tax expense (3,845) (3,845)
Net loss and comprehensive loss for the period $(16,534,859) $(6,025,908) $(23,514,593) $(17,311,299)
Basic loss and comprehensive loss per share for the period $(0.29) $(0.11) $(0.41) $(0.31)
Diluted loss and comprehensive loss per share for the period $(0.29) $(0.22) $(0.43) $(0.41)

Novadaq Technologies Inc.

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)
(expressed in U.S. dollars)

For the three months ended For the six months ended
June 30, 2016 June 30,
2015
June 30, 2016 June 30, 2015
OPERATING ACTIVITIES
Net loss and comprehensive loss for the period $(16,534,859) $(6,025,908) $(23,514,593) $(17,311,299)
Items not affecting cash
Depreciation of property and equipment 1,395,837 1,281,170 2,706,959 2,497,544
Amortization of intangible assets 436,402 427,326 872,804 863,727
Stock-based compensation 4,590,692 1,918,040 5,638,035 3,265,788
Imputed interest on distribution rights payable 24,029 26,048 48,057 52,096
Shareholder warrants revaluation adjustment (6,338,631) (1,324,293) (6,361,261)
(10,087,899) (8,711,955) (15,573,031) (16,993,405)
Changes in non-cash working capital
Increase in accounts receivable (1,946,548) (354,824) (1,954,631) (1,789,179)
Decrease (increase) in inventories 554,623 (640,116) (458,706) (1,054,929)
Increase in accounts payable and accrued liabilities and provisions 3,995,212 3,470,774 2,043,837 5,521,058
Decrease in income taxes payable (1,600) (12,500)
Increase in prepaid expenses and other assets (2,131,233) (1,533,734) (1,794,635) (2,520,387)
Increase in deferred revenue 128,393 75,983 496,076 262,346
Net change in non-cash working capital balances related to operations 598,847 1,018,083 (1,680,559) 418,909
Increase (decrease) in non-current deferred revenue (55,022) (51,706) (4,356) 221,315
Cash used in operating activities (9,544,074) (7,745,578) (17,257,946) (16,353,181)
INVESTING ACTIVITIES
Purchase of property and equipment (3,914,039) (1,629,522) (6,688,461) (2,835,621)
Disposal of property and equipment 860,328 547,731 1,372,924 752,666
Cash used in investing activities (3,053,711) (1,081,791) (5,315,537) (2,082,955)
FINANCING ACTIVITIES
Proceeds from exercise of options 17,333 221,764 54,866 730,705
Proceeds from exercise of warrants 699,209
Repayment of distribution rights payable (250,000)
Cash provided by (used in) financing activities 17,333 221,764 (195,134) 1,429,914
Net decrease in cash and cash equivalents (12,580,452) (8,605,605) (22,768,617) (17,006,222)
Net foreign exchange difference 7,122 4,473 13,073 (28,259)
Cash and cash equivalents at beginning of period 96,607,988 133,014,195 106,790,202 141,447,544
Cash and cash equivalents at end of period $84,034,658 $124,413,063 $84,034,658 $124,413,063


For more information, please contact: Stephen Kilmer Investor Relations 1-647-872-4849 skilmer@novadaq.com

Source:Novadaq Technologies Inc.