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iCAD, Inc. (ICAD)
Q4 2007 Earnings Call
March 6, 2008 10:00 am ET
Anne Marie Fields – Investor Relations, Lippert-Heilshorn & Associates
Ken Ferry - President and Chief Executive Officer, iCAD, Inc.
Darlene Deptula-Hicks - Executive Vice President of Finance and Chief Financial Officer, iCAD, Inc.
John Putnam - Dawson James Securities
Jonathan Block - SunTrust Robinson Humphrey
Matthew Scalo - Canaccord Adams
John Hickman – MDB Capital Group
Adrian Dawes – Hartwell
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Anne Marie Fields
Thank you. Good morning. This is Anne Marie Fields with Lippert-Heilshorn & Associates. Thank you all for participating in today's call. Joining me from iCAD are Ken Ferry, Chief Executive Officer, and Darlene Deptula-Hicks, Executive Vice President and Chief Financial Officer.
Earlier this morning iCAD announced financial results for the fourth quarter and full year 2007. If you have not received this news release or if you would like to be added to the company's distribution list, please call Lippert-Heilshorn in New York at 212-838-3777 and speak with (Sheryl Palazo).
Before we begin, I would like to caution that comments made during this conference call by management will contain forward-looking statements that involve risks and uncertainties regarding the operations and future results of iCAD. I encourage you to review the company's past and future filings with the Securities and Exchange Commission, including, without limitation, the company's forms 10-K and 10-Q which identify specific factors that may cause actual results of events to differ materially from those described in the forward-looking statements.
Furthermore, the contents of this conference call contain time-sensitive information that is accurate only as of the date of the live broadcast, March 6, 2008. iCAD undertakes no obligation to revise or update any statements to reflect events or circumstances after the date of this conference call. With that said, I would like to turn the call over to Ken Ferry.
Thanks Anne Marie and good morning everyone. Welcome to iCAD's fourth quarter and fiscal 2007 financial results conference call.
I'm delighted to report that iCAD had an excellent year in 2007, fueled by record revenues in the fourth quarter and for the full year. We've begun to turn the corner on profitability, we've been cash flow positive for two consecutive quarters and as importantly, we strengthened every balance sheet metric critical to building a healthy and sustainable growth company. We're proud of our progress we've made and we look forward to sharing our outlook with you for the first half of '08 as well. After a brief overview of the business and industry, I'll turn the call over to Darlene who will review the financial results in greater detail.
As I said in my opening comments, iCAD has made significant strides throughout 2007, underscoring that our new management team's growth strategy and financial controls are on track and delivering results. Our strong fourth quarter and full year revenues were led by continued strong demand for products used in digital mammography, specifically SecondLook Digital CAD and TotalLook.
This growth reflects strong demand for full-field digital mammography technology in CAD. There is still considerable room for growth in the digital mammography CAD market as only approximately 30% of the mammography systems at the 8,800 certified mammography sites in the US have transitioned to digital technology from film-based technology.
In the US, CAD is considered the standard of care in digital mammography, and CAD purchases are running nearly one-to-one with full-field digital mammography systems, underscoring the clinical and workflow benefits derived from CAD. We expect to maintain a leadership position in digital CAD, and to capitalize on a growing global market opportunity. This was evident in Europe and Japan, as international sales grew at a rapid pace in 2007. And, as of today, our CAD systems are now connected to over 1,500 full-field digital mammography systems worldwide.
Our film-based products sales achieved solid performance for the quarter and full year. We saw substantial increased demand for TotalLook. Our film digitizing solution enables comparative reading with prior exams. Targeted marketing programs and channel focus improved film-based CAD sales in Q4 versus prior quarters as well.
In addition, we recently announced the introduction of TotalLook MammoAdvantage which converts prior mammography films to digital images for comparative review on a digital review workstation. This new version of iCAD's state-of-the-art film digitizing solution offers improved image quality, enhanced image customization options and workflow efficiency features.
As a result, this new system enables the most efficient comparative reading of current and prior mammograms, optimizing workflow in all care settings. With the high growth in the conversion to digital mammography we expect to see strong demand for this system as it plays a major role in creating an end-to-end digital workflow environment.
We expect continued overall growth in our film-based products, as I said earlier, as nearly 70% of the mammography systems in the US still use some form of film-based technology. So for example, if only 15% of the installed base converts to digital each year, it would still leave over 40% of the US sites that are at least two years away from converting to digital technology. These latter converting sites are excellent candidates for film-based CAD solutions. In addition, we are confident that the sale from TotalLook MammoAdvantage will continue to grow rapidly and continue to represent greater than 50% of all film-based product revenues in 2008.