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  
                         

 


            

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