NOVADAQ Reports First Quarter 2014 Financial Results

TORONTO, ONTARIO--(Marketwired - May 7, 2014) - Novadaq^® Technologies Inc. ("NOVADAQ" or the "Company") (NDQ.TO)(NVDQ), the leading developer and provider of clinically relevant imaging solutions for use in surgical and diagnostic procedures, today announced financial results for its first quarter ended March 31, 2014. Unless otherwise indicated, all dollar amounts in this press release are expressed in United States (U.S.) dollars.

NOVADAQ reported total first quarter 2014 revenues of $10.3 million, representing an increase of 41% compared to first quarter 2013. NOVADAQ's strategy of investing in a direct sales team resulted in sales of PINPOINT® and LUNA™ products reaching $4.6 million, compared to $0.2 million in Q1-2013, and $3.3 million in Q4-2013. First quarter of 2014 procedures performed using SPY technology systems increased by 35% year over year, however, SPY technology recurring revenues of $3.4 million were flat due to increased sales of lower priced kits to customers who had purchased capital systems, and a decrease in inventory purchases by one of our partners.

First quarter gross profits of $6.7 million (65% margin), represents an increase of 49% compared to profits of $4.5 million (63% margin) in Q1-2013.

During the first quarter of 2014, 175 SPY technology systems, including Firefly, were shipped to U.S. hospitals, growing the installed base to more than 1,400 systems. The installed base of PINPOINT and LUNA commercial and evaluation systems in particular, reached 139 exiting the first quarter. NOVADAQ estimates that its imaging systems were used in approximately 6,600 procedures during the quarter. Procedure growth was mainly driven by a 23% sequential increase in PINPOINT and LUNA procedures compared to Q4-2013.

First quarter of 2014 operating burn (cash consumed by operating activities before changes in working capital) was $2.2 million compared to an operating contribution of $0.6 million in the first quarter of 2013. This difference in operating burn was mainly driven by increased sales and distribution expenses associated with the build-out of NOVADAQ's direct sales and marketing infrastructure. During the first quarter, working capital consumed $1.3 million, and $2.2 million was invested in fixed assets, including $2.1 million used to build SPY technology systems for evaluation and placement.

Net losses of $16.1 million for the first quarter of 2014 increased by $13.2 million compared with the $2.9 million net loss in first quarter 2013. First quarter of 2014 loss per share was $0.29. Excluding the impact of non-cash $11.9 million warrants revaluation expense in first quarter 2014, the net loss was $4.2 million or $0.08 per share, compared to a loss per share of $0.02 in first quarter 2013.

Cash and cash equivalents were $177.2 million at March 31, 2014, reflecting a decrease of $5.2 million, compared to the cash position as of December 31, 2013.

Subsequent to the end of the quarter, NOVADAQ announced that it had entered into a definitive agreement to acquire Aïmago SA ("Aïmago"). Aïmago's lead product, the FDA 510(k) cleared and CE marked, EasyLDI Perfusion Camera, will expand NOVADAQ's product and patent portfolios, and NOVADAQ's clinical ecosystem. EasyLDI is optimal for screening and pre-diagnostic uses in multiple settings including doctors' offices where patients are assessed for wounds, burns and limb ischemia. EasyLDI will complement NOVADAQ's SPY technologies, which are used typically during treatments in operating rooms and wound care clinics. If all closing conditions are satisfied, the transaction is expected to close on or before May 24.

"NOVADAQ's performance is increasingly being driven by our direct products, PINPOINT and LUNA as more of our early evaluation sites are becoming commercial customers", commented Dr. Arun Menawat, NOVADAQ's President and Chief Executive Officer. "With last month's introduction of the newest generation PINPOINT at SAGES, our sales team is now able to offer a system that supports all of our surgeon's traditional laparoscopic needs in addition to providing PINPOINT fluorescence imaging of critical physiologic processes and anatomical structures."

Conference Call

NOVADAQ is pleased to invite all interested parties to participate in a conference call, on May 7th 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 June 7, 2014 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 13581184 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 100 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 August 2013, NOVADAQ acquired the surgical scintigraphy imaging technology, which is being developed for perioperative imaging of sentinel lymph nodes and tumor margins. NOVADAQ's unique business model of partnering with market-leading companies to drive adoption of our 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.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 Technologies Inc.

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(Unaudited)
(expressed in U.S. dollars, except common shares outstanding)
			As at March 31, 2014			As at December 31, 2013
ASSETS
Current assets
	Cash and cash equivalents		$	177,156,574		$	182,329,782
	Accounts receivable			9,109,751			8,502,095
	Prepaid expenses and other assets			741,545			1,032,431
	Inventories			3,602,070			3,845,695
Non-current assets
	Property and equipment, net			14,414,208			13,360,833
	Intangible assets, net			3,215,323			3,303,647
Total Assets			$	208,239,471		$	212,374,483
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
	Accounts payable and accrued liabilities		$	5,924,028		$	7,123,563
	Provisions			237,914			187,080
	Deferred revenue			349,341			380,325
	Deferred partnership fee revenue			1,300,000			1,300,000
	Repayable government assistance			-			17,587
Non-current liabilities
	Deferred revenue			219,809			193,626
	Deferred partnership fee revenue			1,666,666			1,991,666
	Shareholder warrants			38,009,912			26,065,994
Total Liabilities			$	47,707,670		$	37,259,841
Shareholders' Equity
	Share capital		$	308,361,912		$	307,103,074
	Contributed surplus			9,222,664			8,953,041
	Deficit			(157,052,775	)		(140,941,473)
Total Shareholders' Equity			$	160,531,801		$	175,114,642
Total Liabilities and Shareholders' Equity			$	208,239,471		$	212,374,483
Common shares outstanding				55,090,284			54,894,038

Novadaq Technologies Inc.

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS

(Unaudited)
(expressed in U.S. dollars)
		For the three month period ended
		March 31, 2014			March 31, 2013
Product sales			9,391,391			6,300,243
Royalty revenue			405,000			440,678
Partnership fee revenue			325,000			325,000
Service revenue			176,831			212,522
Total revenues			10,298,222			7,278,443
Cost of sales			3,601,897			2,732,142
Gross profit			6,696,325			4,546,301
Selling and distribution costs			6,707,560			2,348,256
Research and development expenses			2,254,918			1,487,198
Administrative expenses			1,994,611			1,360,739
Total operating expenses			10,957,089			5,196,193
Loss from operations			(4,260,764	)		(649,892	)
Finance costs			-			(171,189	)
Finance income			68,380			14,843
Shareholder warrants revaluation adjustment			(11,943,918	)		(2,106,042	)
Gain on investment			25,000			-
Loss from operations before income taxes			(16,111,302	)		(2,912,280	)
Income tax expense			-			(20,000	)
Net loss and comprehensive loss for the period			(16,111,302	)		(2,932,280	)
Basic and diluted loss and comprehensive loss per share for the period		$	(0.29	)	$	(0.07	)

Novadaq Technologies Inc.

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)
(expressed in U.S. dollars)
			For the three month period ended
			March 31, 2014			March 31, 2013
OPERATING ACTIVITIES
Loss and comprehensive loss for the period			$	(16,111,302	)	$	(2,932,280	)
Items not affecting cash
	Depreciation of property and equipment			1,152,552			720,935
	Amortization of intangible assets			88,324			114,909
	Stock-based compensation			776,071			399,837
	Gain on investment			(25,000	)		-
	Imputed interest on convertible debentures			-			107,734
	Conversion of convertible debentures			-			59,249
	Shareholder warrants revaluation adjustment			11,943,918			2,106,042
				(2,175,437	)		576,426
Changes in non-cash working capital
	Increase in accounts receivable			(607,656	)		(988,581	)
	Decrease in prepaid expenses and other assets			290,886			299,676
	Decrease (increase) in inventories			243,625			(707,989	)
	(Decrease) increase in accounts payable and accrued liabilities and provisions			(1,146,367	)		356,825
	Decrease in deferred revenue			(30,984	)		(1,781	)
Net change in non-cash working capital balances related to operations				(1,250,496	)		(1,041,850	)
	Decrease in long-term deferred revenue			(298,817	)		(291,844	)
Cash used in operating activities				(3,724,750	)		(757,268	)
INVESTING ACTIVITIES
	Purchase of property and equipment			(2,290,707	)		(1,251,916	)
	Disposals of property and equipment			84,780			27,770
	Redemption of investment			25,000			-
Cash used in investing activities				(2,180,927	)		(1,224,146	)
FINANCING ACTIVITIES
	Repayment of government assistance			(17,587	)		(54,161	)
	Proceeds from exercise of options			752,390			49,202
	Proceeds from exercise of warrants			-			253,631
Cash provided by financing activities				734,803			248,672
Net decrease in cash and cash equivalents				(5,170,874	)		(1,732,742	)
Impact of foreign exchange on cash and cash equivalents				(2,334	)		(1,572	)
Cash and cash equivalents at beginning of period				182,329,782			38,954,181
Cash and cash equivalents at end of period				177,156,574		$	37,219,867