Novadaq Technologies Inc.
TSX : NDQ

Novadaq Technologies Inc.

May 12, 2011 07:00 ET

Novadaq Reports First Quarter 2011 Financial Results

TORONTO, ONTARIO--(Marketwire - May 12, 2011) - Novadaq® Technologies Inc. (TSX:NDQ), a developer of real-time medical imaging systems for use in the operating room, today announced its financial results for the first quarter ended March 31, 2011. Unless otherwise indicated, all dollar amounts in this press release are expressed in United States (U.S.) dollars.

Dr. Arun Menawat, Novadaq's President and CEO, commented, "During the first quarter we made significant progress in driving the adoption of our SPY imaging technology through our strategic partnerships and key opinion leading surgeons. Looking to the remainder of the fiscal year, we will continue to focus on positioning SPY® imaging technology for the operating room by continuing to enhance its clinical value."

Corporate Highlights

  • At the end of January 2011, LifeCell™ Corporation ("LifeCell™") trained its entire selling organization on Novadaq's latest generation SPY system designed specifically for LifeCell™'s markets, SPY Elite, and commenced full product launch in the U.S. in February 2011. SPY Elite seamlessly integrates Novadaq Technologies Inc.'s ("Novadaq") SPY quantification software technology into the system operating software which allows surgeons to more easily visualize and quantitatively compare perfusion in real-time while in the operating room.
  • In mid-February, Intuitive Surgical®, Inc. ("Intuitive Surgical"), received 510(k) clearance for the SPY integrated visualization system from the FDA and began a U.S. limited launch for the product in key opinion leading centers. The system will enable surgeons performing robotic surgery to simultaneously perform fluorescence imaging during a variety of surgeries that will be targeted by Intuitive Surgical.
  • During the first quarter, LifeCell™ and Intuitive Surgical combined installed about 20 of Novadaq's new fluorescence imaging systems.
  • Completed the acquisition of substantially all of the Transmyocardial Revascularization ("TMR") business assets from PLC Medical, Inc.
  • In March 2011, SPY Imaging was featured in a Diabetic Foot Conference ("DFCon 2011") sponsored workshop that included a live case demonstration. DFCon is the largest conference of its type held annually in the world.
  • SPY imaging was the topic of two presentations named "best-in-class" at the American Society of Reconstructive Micro-surgery and was featured in an article authored by surgeons at the Cleveland Clinic in the Canadian Journal of Plastic Surgery.
  • During the first quarter of 2011, Novadaq completed the required transition from Canadian Generally Accepted Accounting Principles to International Financial Reporting Standards ("IFRS") in accordance with International Accounting Standards Board. As such, the Company's first quarter financial statements are presented in accordance with IFRS.

First Quarter Financial Highlights

  • Total revenue increased by 7% to $2.9 million, compared to $2.7 million for the first quarter of 2010. Year over year growth includes a $284,000 increase in TMR products mainly due to a capital laser sale and a 15% increase in TMR consumable sales. Sales increased by $624,000, or 27%, as compared to the previous quarter due to increased service sales of $699,000 resulting from the TMR acquisition, increased TMR product sales of $57,000, offset by lower SPY sales of $132,000.
  • Gross profit increased by 2% to $1.1 million compared to the same quarter last year, mainly due to increased TMR product margins and increased service margins.
  • Sales and marketing expenses decreased by 30% to $1.3 million, compared to $1.8 million in the first quarter of 2010. The decrease was primarily related to the transitioning of sales to the partnerships.
  • Research and development expenses were $1.0 million compared to $878,000 in the same quarter a year ago as a result of product development expenses related to SPY Elite.
  • General and administration expenses increased to $1.1 million from $798,000 a year ago. The majority of this increase was primarily related to higher legal, accounting and professional fees.
  • Net loss decreased by 13% to $2.4 million, compared to a net loss of $2.7 million in the first quarter of 2010. Compared to the fourth quarter 2010 and the first quarter 2011, net loss decreased by 24%.
  • The Company successfully raised gross proceeds of CDN $15,000,000 from a private placement, strengthening the balance sheet. As at March 31, 2011, Novadaq had cash and cash equivalents of $17.1 million.

Conference Call

Novadaq is pleased to invite all interested parties to participate in a conference call today, May 12, at 10:00 AM Eastern Time during which these results will be discussed.

Those wishing to access the live conference call by telephone should dial 1-877-407-0778 (within Canada and the United States) or 1-201-689-8565 (international callers) several minutes prior to the beginning of the call. A telephonic replay of the conference call will be made available until midnight on June 12, 2011 and can be accessed by dialing 1-877-660-6853 (within Canada and the United States) or 1-201-612-7415 (international callers) and entering the account number 286 and the conference identification number 372027 when prompted.

The call will also be audio webcast live and archived for 365 days on the company's website at http://www.novadaq.com under the "Events" tab in the Investor's section. In addition, 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.

Novadaq Technologies develops and markets real-time fluorescence imaging technologies for use in the operating room. The Company's core technology platform, SPY imaging, provides clinically relevant, anatomic and physiologic images during a wide variety of complex open and minimally invasive surgical ("MIS") procedures. SPY empowers surgeons treating life-threatening illnesses such as breast, colon and other cancers and cardiovascular disease to more effectively treat vascular blockages and assess tissue perfusion. More than 40 peer-reviewed publications demonstrate that SPY imaging leads to fewer post-operative complications and reduced hospital costs. The SPY imaging System is cleared by the United States Food and Drug Administration ("FDA") for real-time use during open and MIS surgical procedures. The endoscopic SPY System combines all of the capabilities of SPY imaging with state-of-the-art high definition ("HD") visible light visualization offered by conventional endoscopes. Novadaq announced its first alliance with Intuitive Surgical®, Inc., in January 2009, to integrate SPY Imaging into the 3-D HD imaging capabilities of the da Vinci® Surgical Robotic System. The integrated system received FDA 510(k) clearance to market in February 2011. In addition, in September 2010, Novadaq entered into an exclusive North American sales and marketing alliance with LifeCell™ Corporation, a Kinetic Concepts ("KCI"), Inc. Company, for SPY in open plastic and reconstructive, gastrointestinal and head and neck surgery. Novadaq's cardiac surgery products, including SPY imaging for cardiac applications and a Heart Laser™ System targeted at improving heart surgeries, are marketed through a direct sales team. For more information, please visit the Company's website at http://www.novadaq.com.

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, results of future clinical tests of PINPOINT, SPY endoscopic technology and the SPY Imaging System, anticipated financial performance, business prospects, strategies, regulatory developments, market acceptance and future commitments.

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 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.

Additional financial information on following pages.

Novadaq Technologies Inc.
INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
AS AT MARCH 31, 2011
(Unaudited)
(expressed in U.S dollars)
March 31, 2011December 31, 2010
ASSETS
Current assets
Cash and cash equivalents17,109,9385,597,407
Accounts receivable1,112,0691,434,964
Prepaid expenses and other754,6101,193,423
Inventories1,578,394778,984
Non-current assets
Available-for-sale financial instruments--
Property and equipment1,732,1141,202,468
Prepaid expenses and other-144,456
Deferred development costs354,546405,195
Other intangible assets2,590,3961,563,288
Total Assets25,232,06712,320,185
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable4,280,8302,913,979
Provisions233,56519,520
Income taxes payable20,90924,066
Deferred revenue18,615549,865
Deferred sales and marketing revenue800,000800,000
Repayable government assistance520,765507,675
Non-current liabilities
Provisions69,281-
Convertible debentures3,988,5123,891,753
Deferred revenue16,461190,609
Deferred sales and marketing revenue2,733,3332,933,333
Warrants4,967,6711,276,464
Total Liabilities17,649,94213,107,264
Shareholders' Equity
Share capital98,482,28387,897,555
Contributed surplus6,248,7046,043,684
Equity component of convertible debentures1,968,3951,968,395
Deficit(99,117,257)(96,696,713)
Total Shareholders' Equity7,582,125(787,079)
Total Liabilities and Shareholders' Equity25,232,06712,320,185
Novadaq Technologies Inc.
INTERIM CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS
FOR THE THREE MONTHS ENDED MARCH 31, 2011
(Unaudited)
(expressed in U.S dollars)
For the three months ended
March 31, 2011March 31, 2010
Product sales1,935,8922,057,439
Milestone revenue-295,729
Service revenue964,938361,969
Total revenues2,900,8302,715,137
Cost of sales1,773,0571,613,682
Gross margin1,127,7731,101,455
Selling and distribution costs1,275,2191,823,927
Research and development expenses1,048,128877,530
Administrative expenses1,093,784797,830
Total operating expenses3,417,1313,499,287
Loss from operations(2,289,358)(2,397,832)
Interest expense(167,578)(155,986)
Interest income7,0851,934
Warrant revaluation adjustment4,307(52,044)
Gain (loss) on investment25,000(125,000)
Loss and comprehensive loss for the period(2,420,544)(2,728,928)
Basic and diluted comprehensive loss per share for the period$(0.09)$(0.11)
Novadaq Technologies Inc.
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31
(Unaudited)
(expressed in U.S dollars)
20112010
OPERATING ACTIVITIES
Comprehensive loss for the period before tax(2,420,544)(2,728,928)
Items not affecting cash
Depreciation and impairment of property and equipment192,210260,055
Amortization and impairment of intangible assets216,183198,587
Impairment of investment-125,000
Stock option compensation205,020224,733
Finance costs, including imputed interest on convertible debentures96,76087,677
Warrants revaluation adjustment(4,307)52,044
(1,714,678)(1,780,832)
Changes in working capital
Decrease (increase) in deferred revenue(475,376)959,805
Decrease (increase) in accounts receivable322,895(84,261)
Decrease (increase) in inventories(799,410)124,055
Increase (decrease) in accounts payable1,143,129(333,821)
Decrease (increase) in prepaid expenses and other438,812(133,613)
Net change in non-cash working capital balances related to operations630,050532,165
Cash used in operating activities(1,084,628)(1,248,667)
INVESTING ACTIVITIES
Purchase of property and equipment, net(721,856)(7,498)
Purchase of TMR business(1,000,000)-
Redemptions of long-term investment-25,000
Cash (used in) provided by investing activities(1,721,856)17,502
FINANCING ACTIVITIES
Issuance of common shares and warrants15,278,4477,121,337
Transaction costs of common shares and warrants(998,207)(511,180)
Cash provided by financing activities14,280,2406,610,157
Net increase in cash and cash equivalents11,473,7565,378,992
Net foreign exchange difference38,77563,820
Cash and cash equivalents at January 15,597,4072,524,958
Cash and cash equivalents at March 3117,109,9387,967,770

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