SOURCE: LED Medical Diagnostics Inc.

LED Medical Diagnostics Inc.

November 30, 2015 17:11 ET

LED Medical Diagnostics Inc. Reports 2015 Third Quarter Results

Company Achieves 10% Revenue Growth Over Prior Year Period and 75% Revenue Growth for the Nine Months Ended September 30, 2015 Over Prior Year

VANCOUVER, BC--(Marketwired - November 30, 2015) - LED Medical Diagnostics Inc. (TSX VENTURE: LMD) (OTCQX: LEDIF) (FRANKFURT: LME) ("LED Medical" or the "Company") today announced its financial results for the third quarter ended September 30, 2015, reported in United States dollars and in accordance with International Financial Reporting Standards ("IFRS"). LED Medical achieved 10% annual revenue growth to US$1.8 million in the third quarter of 2015 versus the same period in 2014. The Company's year to date revenue for the nine months ended September 30, 2015 increased by 75% to US$7.5 million over the prior year revenue of US$4.3 million.

"I am very pleased with our progress year-to-date," stated Dr. David Gane, President and CEO. "Revenue growth remains strong and our momentum continues as we execute our plans to scale the business. The significant investments we have made in our sales, marketing and support platform is starting to pay dividends in the form of greater operational leverage as we grow our revenues and customer base with anticipation to generate increasingly stronger future financial performance. We had a significant outstanding customer order backlog as of September 30, 2015 and have experienced strong sales activity for the start of the fourth quarter. While revenue in our third quarter of fiscal 2015 was lower than the prior quarter due primarily to summer seasonality, the Company anticipates achieving its fiscal 2015 revenue guidance of $15 million resulting in anticipated compound annualized growth rate since fiscal 2013 of 244% over this period."

The Company also announced the appointment of Bruce Reese, to Vice President of Finance, for LED Medical. Mr. Reese has held various senior finance leadership roles with both private and public companies over his twenty-year career.

Business Highlights

Notable developments and achievements during the quarter include:

  • On July 13, 2015, the Company announced acknowledgment of the Pride Institutes "Best of Class" Technology Award for the VELscope Vx. The VELscope has received this distinction for the fifth consecutive year as the market-leading device for adjunctive oral screening.
  • On August 4, 2015, the Company announced entering into a distribution agreement with EnvisionTec Inc. to distribute EnvisionTec's 3D printers to dentists, dental specialists and dental laboratories.
  • On September 9, 2015, the Company announced that LED has received regulatory approval for the distribution of the VELscope Vx Enhanced Oral Assessment System in China.
  • On September 17, 2015, the Company announced the intent to acquire, in an arm's length transaction, 100% of a growing and profitable technology company to complement LED's existing business and provide a platform to assist LED in achieving its strategic and long-term business objectives.

Financial Highlights

Three Month Comparative Results

The Company reported revenue of US$1.8 million for the three months ended September 30, 2015, representing an increase of 10% over the same period in the prior year of US$1.6 million and a decrease of 46% over the prior quarter ended June 30, 2015 of US$3.3 million. The increase in revenue over the prior year period was due primarily to increased sales in the Company's imaging product offering launched in fiscal 2014.

Gross margin was 19% in the three months ended September 30, 2015 compared to 31% gross margin in the three months ended June 30, 2015 and 37% gross margin in the same period in the prior year. The Company's gross margin was lower in the third quarter of fiscal 2015 compared to the other prior periods due to a onetime cost adjustment and also due to increased revenue contribution from the Company's new imaging product offering. We anticipate that future gross margin will be more comparable to the Company's historical gross margin.

Adjusted EBITDA1 was (US$1.3 million) for the three months ended September 30, 2015 compared to Adjusted EBITDA of (US$1.1 million) for the three months ended June 30, 2015 and to Adjusted EBITDA of (US$1.6 million) in the same period in the prior year.

The Company had a net loss of US$1.4 million for the three months ended September 30, 2015 compared to a net loss of US$1.2 million for the three months ended June 30, 2015 and to a net loss of US$2.7 million in the same period in the prior year.

Nine-Month Comparative Results

The Company reported revenue growth of 75% with US$7.5 million during the first nine months of fiscal 2015 compared to US$4.3 million for the nine months ended September 30, 2014.

Gross margin was 26% for the nine months ended September 30, 2015 compared to gross margin of 47% for the nine months ended September 30, 2014. Gross margin decreased over the prior year due to increased revenue contribution attributable to the Company's imaging product offering launched in fiscal 2014.

Adjusted EBITDA for the nine months ended September 30, 2015 was (US$3.9 million) compared to (US$4.1 million) for the nine months ended September 30, 2014.

The Company had a net loss of US$4.0 million during the nine months ended September 30, 2015 compared to a net loss of US$5.5 million during the nine months ended September 30, 2014.

Financial Position as of September 30, 2015

Working capital2 as of September 30, 2015 was US$0.4 million, including cash and cash equivalents of US$1.2 million. This is compared to net working capital of US$1.5 million as of December 31, 2014, including cash and cash equivalents of US$2.4 million.

Financial Guidance for Fiscal Year 2015

The Company is reaffirming guidance for the full fiscal year ending December 31, 2015 ("fiscal year 2015"). This guidance is intended solely to give investors an understanding of management's expectations for the full fiscal year in light of recent industry sales trends, seasonality of the business and recognition that much of the sales generated in the dental industry occur in the fourth quarter. The guidance does not take into account, or give effect for, any events that are beyond the Company's reasonable control.

  
Fiscal Year Ending December 31, 2015 Quantitative Guidance
Revenue $15 Million - $16 Million
  

Financial Statements and Management's Discussion & Analysis

Please see the interim condensed financial statements and related Management Discussion and Analysis (MD&A) for more details. The interim condensed financial statements for the three months ended June 30, 2015 and related MD&A have been reviewed and approved by the Company's Audit Committee and Board of Directors. The Company has prepared this truncated news release to alert investors to its results and that a more detailed explanation and analysis is readily available in the MD&A. These reports have been filed on SEDAR at www.sedar.com and also posted to www.ledmd.com.

Non-IFRS Measures

The preceding discussion of financial results includes references to Gross Margin, EBITDA and Working Capital, which are non-IFRS financial measures and may not be directly comparable to other issuers. The measure of Gross Margin is defined as revenue less cost of sales and is provided as management believes this is a good indicator in evaluating the operating performance of the Company. EBITDA is defined as net loss and comprehensive loss exclusive of interest; income taxes; depreciation; amortization; finder's warrants issuance costs; stock-based compensation; deferred share unit compensation; mark to market adjustments on Canadian dollar denominated warrants; foreign exchange gain or loss; and other income. The measure of Working Capital defined as current assets less current liabilities is provided as management believes this is a good indicator of the operating liquidity available to the Company.

About LED Medical Diagnostics Inc.

Founded in 2003 and headquartered in Burnaby, British Columbia, Canada, LED Medical Diagnostics Inc., through its wholly-owned subsidiaries LED Dental Inc. and LED Dental Ltd, provide dentists and oral health specialists with advanced diagnostic imaging products and software, in addition to the award- winning VELscope® Vx tissue fluorescence visualization technology. Backed by an experienced leadership team and dedicated to a higher level of service and support, LED Dental is committed to providing dental practitioners with the best technology available by identifying and adding leading products to its growing portfolio.

The Company is currently listed on the TSX Venture Exchange (TSX-V) under the symbol "LMD", the OTCQX under the symbol "LEDIF", as well as the Frankfurt Stock Exchange under the symbol "LME". For more information, call 844.952.7327 or visit www.leddental.com/investor-relations.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Forward-Looking Statements
This press release contains statements which, to the extent that they are not recitations of historical fact, may constitute forward-looking information under applicable Canadian securities legislation that involve risks and uncertainties. Such forward-looking statements or information include statements regarding, but not limited to, financial and other projections as well as statements regarding the Company's future plans, objectives, performance, revenue (including the Company's revenue guidance for the 2015 fiscal year), the Company's future growth strategy, its distribution strategy and product offerings, potential expansion of the Company's technology to other medical applications or markets, or the potential introduction of new technologies by the Company. Persons reading this press release are cautioned that such statements or information are only predictions, and that the Corporation's actual future results or performance may be materially different. Factors that could cause actual events or results to differ materially from those suggested by these forward-looking statements or which may result in the Company failing to achieve its revenue guidance for fiscal 2015 include, but are not limited to: economic conditions; dilution; limited history of profits and operations; operational risk; distributor risks; working capital; potential conflicts of interest; speculative investment; intellectual property risks; disruptions in production; reliance on key personnel; seasonality; management's estimates; development of new customers and products risks; stock price volatility risk; sales and marketing risk; competitors and competition risk; regulatory requirements; reliance on few suppliers; reliance on subcontractors; operating cost and quarterly results fluctuations; fluctuations in exchange rates; product liability and medical malpractice claims; access to credit and additional financing; taxation; market acceptance of the Company's products and services; customer and industry analyst perception of the Company and its technology vision and future prospects; technological change, new products and standards; risks related to acquisitions and international expansion; reliance on large customers; concentration of sales; international operations and sales; management of growth and expansion; dependence upon key personnel and hiring; the Company not adequately protecting its intellectual property; risks related to product defects and product liability; reliance on third party suppliers; future working capital investments in accounts receivable and inventory; credit terms from suppliers; and including, but not limited to, other factors described in the Company's reports filed on SEDAR, including its financial statements and management's discussion and analysis for the three and nine months ended September 30, 2015 and its Annual Information Form and financial report for the year ended December 31, 2014. In drawing a conclusion or making a forecast or projection set out in the forward-looking information (including for developing LED's revenue guidance for the 2015 fiscal year), the Company takes into account the following material factors and assumptions in addition to the above factors: the Company's ability to execute on its business plan; the acceptance of the Company's products and services by its customers; the timing of execution of outstanding or potential customer contracts by the Company; the sales opportunities available to the Company; the Company's subjective assessment of the likelihood of success of a sales lead or opportunity; the Company's historic ability to generate sales leads or opportunities; and that sales will be completed at or above the Company's estimated margins. This list is not exhaustive of the factors that may affect the Company's forward-looking information. These and other factors should be considered carefully and readers should not place undue reliance on such forward- looking information. All forward-looking statements made in this press release are qualified by this cautionary statement and there can be no assurance that actual results or developments anticipated by the Company will be realized. The Company disclaims any intention or obligation to update or revise forward- looking information, whether as a result of new information, future events or otherwise, except as required by law.

1 EBITDA or Earnings before Interest, Taxes, Depreciation and Amortization is a non-IFRS measure that does not have a standardized meaning and may not be comparable to a similar measure disclosed by other issuers. This measure does not have a comparable GAAP measure. EBITDA referenced here relates to net loss and comprehensive loss and excludes interest, income taxes, depreciation, amortization, finder's warrants issuance costs, stock-based compensation, deferred share unit compensation, mark to market adjustments on Canadian dollar denominated warrants, foreign exchange gain or loss and other income. This measure does not have a comparable IFRS measure and is used by the Company to manage and evaluate the cash operating loss of the business.

2 Working Capital is defined as total current assets less total current liabilities.

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