Novadaq Reports Third Quarter 2012 Financial Results

Marketwired

TORONTO, ONTARIO--(Marketwire - Nov 2, 2012) - Novadaq® Technologies Inc. ("Novadaq" or the "Company") (NDQ.TO)(NVDQ), a developer of clinically-relevant fluorescence imaging solutions for use in surgical procedures, today announced financial results for its third quarter ended September 30, 2012. Unless otherwise indicated, all dollar amounts in this press release are expressed in United States (U.S.) dollars.

Novadaq reported total third quarter 2012 revenue of $6.0 million, representing an increase of 39% as compared to third quarter of 2011. Revenue growth was driven by continued adoption of SPY Elite® and FIREFLY™ procedures and higher SPY Elite and FIREFLY system sales to end users.

Third quarter of 2012 recurring revenue for Novadaq''s SPY businesses increased by 99% year-over-year to $2.9 million, and increased 16% sequentially from $2.5 million in the second quarter of 2012.

Third quarter of 2012 operating contribution (cash contributed by operating activities before changes in working capital) was $0.1 million compared with an operating burn of $0.4 million in the third quarter of 2011. During the third quarter, working capital contributed $0.2 million, and $0.8 million was invested in fixed assets, including $0.7 million to build the SPY Elite installed base.

Net loss of $9.3 million for the third quarter of 2012 increased by $8.0 million compared with the $1.3 million net loss in third quarter 2011. Third quarter of 2012 loss per share was $0.23. Excluding the impact of a non-cash $8.0 million warrants revaluation expense in third quarter 2012, loss per share was $0.03, compared with $0.05 in third quarter 2011.

Cash and cash equivalents were $41.2 million at September 30, 2012, reflecting a decrease of $0.5 million, compared to the cash position as of June 30, 2012.

Novadaq shipped 108 imaging systems and approximately 4,600 SPY Elite and FIREFLY procedures kits during the third quarter of 2012. The combined installed base of SPY technology in the United States now exceeds 600 systems. 

"We continue to see evidence that SPY technology is being embraced by surgeons across multiple specialties", commented Dr. Arun Menawat, Novadaq''s President and CEO. "Recruitment into the PILLAR™ multi-center clinical study in patients undergoing low anterior colon resection surgery using our new product, PINPOINT®, is progressing at seven participating sites." 

Conference Call

Novadaq is pleased to invite all interested parties to participate in a conference call today, Friday, November 2, 2012, at 8:30 a.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 (within Canada and the United States) or 1-201-689-8031 (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 December 2, 2012 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 conference identification number 402238 when prompted.

The call will be archived for 90 days on the Company''s website at www.novadaq.com under the "Events" tab in the Investors 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.

Enabling surgeons with clinically-relevant, innovative fluorescence imaging solutions to enhance the lives of patients and their surgeons, 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 50 peer-reviewed publications demonstrate that the use of SPY during complex surgery, leads to fewer post-operative complications and lower hospital costs.

The SPY Imaging System is United States Food and Drug Administration ("FDA") 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. Our unique business model of partnering with market-leading companies to drive adoption of our fluorescence imaging technology, while building our own commercial infrastructure is the cornerstone of our corporate strategy for growth.

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.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 Technologies Inc.
 
INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
 
(Unaudited)
(expressed in U.S. dollars, except common shares outstanding)
 
  As at
September 30,
2012
  As at
December 31,
2011
 
ASSETS            
Current assets            
  Cash and cash equivalents $ 41,178,024   $ 9,633,608  
  Accounts receivable   2,896,578     2,018,782  
  Prepaid expenses and other assets   858,373     829,625  
  Inventories   2,954,544     1,755,729  
             
Non-current assets            
  Property and equipment, net   8,871,626     6,034,674  
  Deferred tax assets   168,401     248,640  
  Intangible assets, net   1,405,999     2,272,434  
             
Total Assets $ 58,333,545   $ 22,793,492  
             
  LIABILITIES AND SHAREHOLDERS'' EQUITY            
Current liabilities            
  Accounts payable and accrued liabilities $ 4,447,354   $ 2,485,994  
  Provisions   58,620     41,300  
  Deferred revenue   402,419     396,859  
  Deferred partnership fee revenue   1,300,000     1,300,000  
  Repayable government assistance   188,449     197,760  
             
Non-current liabilities            
  Deferred tax liabilities   168,401     248,640  
  Convertible debentures   4,544,411     4,223,454  
  Deferred revenue   161,276     188,883  
  Deferred partnership fee revenue   3,616,666     4,591,666  
  Repayable government assistance   86,371     214,402  
  Shareholder warrants   19,643,033     8,278,105  
             
Total Liabilities $ 34,617,000   $ 22,167,063  
             
Shareholders'' Equity            
  Share capital $ 136,476,748   $ 98,695,023  
  Contributed surplus   7,518,592     6,772,298  
  Equity component of convertible debentures   1,454,353     1,454,353  
  Deficit   (121,733,148 )   (106,295,245 )
             
Total Shareholders'' Equity $ 23,716,545   $ 626,429  
             
Total Liabilities and Shareholders'' Equity $ 58,333,545   $ 22,793,492  
             
Common shares outstanding   39,903,594     32,769,462  
 
Novadaq Technologies Inc.
 
INTERIM CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS
 
(Unaudited)
(expressed in U.S. dollars)
 
  For the three months ended   For the nine months ended  
  September 30, 2012   September 30, 2011   September 30, 2012   September 30, 2011  
                         
Product sales $ 5,101,480   $ 3,740,007   $ 13,266,856   $ 8,520,972  
Royalty revenue   349,812     139,851     1,304,145     278,601  
Partnership fee revenue   325,000     200,000     975,000     600,000  
Service revenue   208,207     231,553     597,378     897,791  
Total revenues   5,984,499     4,311,411     16,143,379     10,297,364  
Cost of sales   2,123,048     1,855,030     6,256,292     4,561,564  
Gross profit   3,861,451     2,456,381     9,887,087     5,735,800  
                         
Selling and distribution costs   1,289,035     1,352,588     3,569,361     4,027,284  
Research and development expenses   1,777,474     1,106,870     4,317,536     3,425,345  
Administrative expenses   1,863,593     1,102,984     4,971,898     3,356,339  
Write-down of equipment   -     314,213     -     314,213  
Write-down of inventory   57,540     15,382     57,540     15,382  
Total operating expenses   4,987,642     3,892,037     12,916,335     11,138,563  
                         
Loss from operations   (1,126,191 )   (1,435,656 )   (3,029,248 )   (5,402,763 )
                         
Finance costs   (178,673 )   (170,785 )   (527,095 )   (509,174 )
Finance income   25,407     2,876     40,829     13,580  
Warrants revaluation adjustment   (8,038,030 )   325,766     (11,947,389 )   (2,276,818 )
Gain on investment   25,000     -     25,000     25,000  
Loss and comprehensive loss for the period $ (9,292,487 ) $ (1,277,799 ) $ (15,437,903 ) $ (8,150,175 )
Basic and diluted loss and comprehensive loss per share for the period $ (0.23 ) $ (0.04 ) $ (0.41 ) $ (0.26 )
 
Novadaq Technologies Inc.
 
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
 
(Unaudited)
(expressed in U.S. dollars)
 
  For the three months ended   For the nine months ended  
  September 30,
2012
  September 30,
2011
  September 30,
2012
  September 30,
2011
 
OPERATING ACTIVITIES                        
Loss and comprehensive loss for the period $ (9,292,487 ) $ (1,277,799 ) $ (15,437,903 ) $ (8,150,175 )
Items not affecting cash                        
  Depreciation of property and equipment   588,023     286,898     1,502,201     719,168  
  Amortization of intangible assets   284,190     294,877     866,435     824,938  
  Stock-based compensation   305,753     206,519     921,377     664,453  
  Imputed interest on convertible debentures   109,617     101,640     320,957     297,573  
  Warrants revaluation adjustment   8,038,030     (325,766 )   11,947,389     2,276,818  
  Recovery of investment   (25,000 )   -     (25,000 )   -  
  Write-down of equipment   -     314,213     -     314,213  
  Write-down of inventory   57,540     15,382     57,540     15,382  
    65,666     (384,036 )   152,996     (3,037,630 )
Changes in non-cash working capital                        
  Decrease (increase) in accounts receivable   35,813     525,262     (877,796 )   (498,704 )
  (Increase) decrease in inventories   (670,885 )   359,287     (1,256,355 )   (912,027 )
  Decrease (increase) in prepaid expenses and other assets   265,506     (548,877 )   51,491     (1,902 )
  Increase (decrease) in accounts payable   929,700     990,087     1,898,837     634,017  
  (Decrease) increase in deferred revenue   (18,382 )   (96,062 )   1,253     18,045  
Net change in non-cash working capital balances related to operations   541,752     1,229,697     (182,570 )   (760,571 )
                         
  Decrease in long-term deferred revenue   (314,477 )   (240,472 )   (1,008,700 )   (693,812 )
Cash provided by (used in) operating activities   292,941     605,189     (1,038,274 )   (4,492,013 )
                         
INVESTING ACTIVITIES                        
  Purchase of property and equipment   (761,809 )   (1,705,690 )   (4,429,008 )   (4,051,472 )
  Disposals of property and equipment   1,395     -     89,855     -  
  Purchase of TMR business   -     -     -     (1,000,000 )
  Redemption of long-term investment   25,000     -     25,000     -  
Cash used in investing activities   (735,414 )   (1,705,690 )   (4,314,153 )   (5,051,472 )
                         
FINANCING ACTIVITIES                        
  Proceeds from issuance of common shares   -     -     40,336,250     15,273,401  
  Transaction costs paid relating to issuance of common shares   -     -     (3,389,352 )   (998,207 )
  Repayment of government assistance   (39,985 )   (21,748 )   (137,342 )   40,164  
  Proceeds from exercise of options   3,457     -     77,283     (21,748 )
Cash (used in) provided by financing activities   (36,528 )   (21,748 )   36,886,839     14,293,610  
                         
Net (decrease) increase in cash and cash equivalents   (479,001 )   (1,122,249 )   31,534,412     4,750,125  
Impact of foreign exchange on cash and cash equivalents   10,355     (77,685 )   10,004     (43,784 )
Cash and cash equivalents at beginning of period   41,646,670     11,503,682     9,633,608     5,597,407  
                         
Cash and cash equivalents at end of period $ 41,178,024   $ 10,303,748   $ 41,178,024   $ 10,303,748  
Contact:
Investor and Media Relations: Novadaq Technologies Inc.
David C. Martin
Vice President, Corporate Development and Investor Relations
905-629-3822 ext: 218
dmartin@novadaq.com
www.novadaq.com

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