iCAD Q2 2023 Earnings Call Transcript

Quartr
Provided by Quartr
August 14, 2023

There are 8 speakers on the call.

Operator

Welcome to the Icad Inc. 2nd Quarter 2023 Earnings Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. Please note this conference is being recorded.

Operator

I will now turn the conference over to your host, Jessica Burns, you may begin.

Speaker 1

Thank you, operator. Good afternoon, everyone. Thank you for joining us today for Icad's Quarter 2023 Earnings Call. On the call today, we have Dana Brown, our President and Chief Executive Officer and Eric Lundquist, our Chief Financial Officer. Before turning the call over to Dana, I would like to remind everyone that we will be making forward looking statements on the call today.

Speaker 1

These forward looking statements For a list of factors that could cause actual results to differ, please see today's press release and our filings with the U. S. Securities and Exchange Commission. ICAD undertakes no obligation to revise or update any statements to reflect events or circumstances after the date of this conference call. I would also like to note that management will refer to certain non GAAP financial measures.

Speaker 1

Management believes that these measures provide meaningful information for investors and reflect the way that they view the operating performance of the company. You can find a reconciliation of our GAAP to non GAAP measures at the end of the earnings release. With that, I'll turn the call over to Dana.

Speaker 2

Thank you, Jessica, and good afternoon, everyone. Let's begin with our business update. On the therapy side of the business, revenue for Q2 was $1,700,000 compared to $2,300,000 for Q2 2022. We're continuing to make progress with parties interested in acquiring the therapy business. While we move forward with these discussions, we continue to operate the business and customers worldwide continue to treat patients with its targeted therapy.

Speaker 2

On the Detection side of the business, we're continuing to make significant progress and positioning the company for growth. While revenue is similar to last quarter at $5,900,000 as noted on previous calls, We implemented several strategic changes earlier this year, including cost reductions to align and streamline our cost base, Reducing annualized expenses by $4,300,000 to $4,600,000 and annualized cash burn by $4,900,000 to $5,200,000 We're pleased to report significant progress last quarter with game changing partnerships, exemplifying our company's commitment As announced earlier today, we executed an amendment to our development and commercialization agreement with Google Health, which number 1, enables us to integrate Google's AI technology with our ProFound Detection for 2 d mammography for use Upon regulatory approval worldwide as an independent reader for breast cancer screening and number 2, extends our partnership For 20 years, on a global basis, over 250,000,000 mammograms are performed annually, with roughly $40,000,000 of those performed here in the U. S. And another $40,000,000 in the EU. Outside of the U.

Speaker 2

S, The conventional double reading workflow utilized by most countries where mammograms are assessed by 2 separate radiologists Has become increasingly challenging due to the scarcity of radiologists worldwide. As the global radiologist shortage Continues to impact patient care, healthcare organizations are seeking clinically proven solutions to help their radiology departments run more efficiently and adeptly handle the workload in front of them. Clinical studies are already underway to evaluate our technology as a second reader, and we look forward to sharing more about this research in the months ahead. You may have seen the recent surge of media coverage on the use of AI in mammography as a which has heightened awareness of this pressing need, underscoring the importance of a solution like ours among clinicians and consumers alike. Through this unique long term partnership, iCAD will be leveraging differentiating combination To commercialize and bring to market a best in class second reader and first reader solution.

Speaker 2

Turning now to the recent announcement of finalizing our strategic multiyear commercial agreement with Radiology Partners. Securing this partnership represents another achievement for iCAD. Radiology Partners is a leading provider of mammography to millions of women across more than 3,200 facilities, including 17 of the 20 largest health systems in the country. We are honored that Radiology Partners has selected iCAD as its provider of breast AI technologies. We are working closely with radiology partners and actively deploying iCAD's advanced technology through their cloud to their network of facilities, Significantly increasing the potential for adoption and driving improvements in mammography screening for countless women across the country.

Speaker 2

The initial order from Radiology Partners, which was recognized in Q1 2023, represents less than 5% The total potential from this partnership, it's a long term relationship and will take time to adopt and roll out across their large enterprise. In addition, in Q2, one of the largest outpatient imaging providers in the U. S, SimonMed, implemented the latest version of ProFound AI across its enterprise of 170 locations in 11 states. With this cutting edge solution now available across SimonMed's entire network, we're pleased that it is assisting hundreds of SimonMed clinicians each day And millions of patients who are screened for breast cancer at SimonMed's facilities each year. Our sales force continues to secure opportunities with some of the most Esteemed and prestigious healthcare facilities worldwide.

Speaker 2

With new licenses sold last quarter to the Cleveland Clinic, TriHealth, Sutter Health and St. Joseph's Health in Canada, we continue to expand use of our technologies by more clinicians and providers in the U. S. And worldwide. And while you've heard us announce in past quarters, Winning deals with large enterprise customers like Solus, Radiology Partners, Simon Med, Extension and Cleveland Clinic, To collectively serve about 15% of the U.

Speaker 2

S. Mammography screening market, great potential lies ahead for iCAD. As many of these customers are in the early stages of rolling out our technology and are continuing to expand into more sites and markets each month. We continue to see demand for our subscription model as hospitals are continuing to recover from a financially distressing 2022 Amid several post pandemic headwinds, including inflation, high labor expenses and supply chain issues, Our subscription model helps to eliminate barriers to adoption and provides a viable path for customers to purchase our technology without a We're pleased to report that we closed 6 subscription deals in Q2, bringing us to 15 year to date and offering long term potential for reoccurring revenue in the years ahead. Of note, our agreement with the Cleveland Clinic represents the largest subscription deal for our As a prestigious multi specialty academic medical center that is renowned for its exceptional healthcare services And ranked as one of the nation's top hospitals, this partnership not only reinforces iCAD's position as the trusted leader of Mammography AI Solutions, but also demonstrates the widespread recognition of the value we bring to facilities, clinicians and patients.

Speaker 2

Last quarter, we were also incredibly honored to have received the U. S. General Services Administration's prestigious AI Healthcare Challenge Award for our Breast AI Suite. Our solutions, ProFound Detection, As already trusted by our government and military, as last year, the U. S.

Speaker 2

Department of Defense, the DoD, determined it met its stringent cybersecurity prevention threshold and granted the technology and authorization to operate, allowing its use in DoD healthcare facilities, which care for military service members, retirees and family members. This recognition validates the hard work and dedication of our team in developing innovative solutions that positively impact patient care and health care providers around the world. Turning now to research progress. The body of evidence supporting our Breast AI suite continues to grow. Research supporting our technology presented in the Q1 this year at the European Congress of Radiology or ECR Meeting in Vienna continued to generate media attention throughout 2nd quarter in nationally syndicated FOX and CBS segments.

Speaker 2

Doctor. Kathy Schilling, the Medical Director of the Christine E. Lin Women's Health and Wellness Institute at Boca Raton Regional Hospital Discuss findings from her study that found ProFound AI helped 9 dedicated breast radiologists at the facility Similarly, the Henry Ford Health System in Michigan recently reported their own real world evidence, revealing an astonishing 23 to 27% increasing cancer detection rates using our technology. And our latest ProFound Impact Profound Insights webinar featured an esteemed breast imaging radiology from the Cleveland Clinic, Doctor. Laura Dean.

Speaker 2

In our exclusive event, Doctor. Dean shared how she and the other breast imaging radiologists at the Cleveland Clinic are using our breast AI suite to significantly increase cancer detection at the facility. She also shared incredibly compelling clinical case studies demonstrating how our technology empowers their team to find even small cell cancers, which tend to be the types of tumors radiologists fear most. During the past quarter, we also achieved several key milestones with our OUS sales channel or outside of the United States, Further expanding the global reach of iCAD's technology, our distribution channel achieved a major breakthrough in Luxembourg by securing the first Countrywide implementation of ProFound AI for 2 d mammography and 3 d mammography. Although it's a small country, this is a remarkable achievement as each of the 8 breast imaging sites across the country will now use iCAD's products in their diagnostic workflow and they plan to integrate into their screening program.

Speaker 2

In addition, via expansion of our distributor territories, We secured our first sales in Turkey and the Czech Republic. Furthermore, our direct sales channel in France achieved success in the fiercely competitive market By securing a partnership with 1 of the largest radiology groups in the country, orodenase. The partnership with orodenase already Has resulted in the sale of 6 ProFound AI 2 d and 3 d licenses, and we anticipate further expansion to multiple sites nationwide. Through our OEM sales channel, we joined forces with GE to secure a significant Italian tender for 26 new mammography units, all to be equipped with PowerLook Density Assessment. The installation of these units is scheduled for later this year and will further extend the accessibility of our cutting edge technology to women in Italy.

Speaker 2

On the clinical side, Doctor. Dow from Paris, France, who's collaborating with ICAD on our breast arterial calcification or BAC product, update, I just want to remind you that we're actively assessing and modeling revenue growth and footprint expansion scenarios. As communicated on prior calls, We plan to update you on our strategic plan and relevant metrics and milestones on our Q3 earnings call. In summary, we're taking decisive actions Our goal is to diversify our revenue stream and reduce customer concentration, ensuring a more sustainable and resilient future. I'll now turn the call over to Eric for a detailed review of our Q2 2023 financials.

Speaker 3

Good afternoon, everyone, and thank you, Dana. I'll now summarize our financial results for the Q2 ended June 30, 2023. Total revenue for the quarter was $5,900,000 a decline of $1,700,000 or 23% from the Q2 of 2022. Although this is down from last year, it is generally in line with our expectations. The Detection segment revenue was $4,200,000 down 21% from last year.

Speaker 3

Within Detection, 2nd quarter 2023 product revenue was $2,300,000 down 34% over the prior year. This decline is attributed to a variety of factors, including our transition to subscription, longer purchasing cycles, increased competition and budget constraints. Detection service revenue was $1,900,000 up 3% over the prior year. The therapy Segment revenue was $1,700,000 down $600,000 or 26% versus the Q2 of 2022. Therapy product revenue was $300,000 down 66% year over year.

Speaker 3

Services revenue was 1,400,000 up 6% year over year. Moving on to gross profit. On a percentage of revenue basis, gross profit was 74% On a pure dollar basis, gross profit for the quarter was $4,300,000 as compared to $5,500,000 last year, largely reflective of the reductions in revenues. Total operating expenses for the Q2 of 2023 were 6,300,000 A $2,300,000 or 27 percent decrease year over year. This improved run rate reflects the implemented cost cutting measures previously announced.

Speaker 3

Operating loss was $1,900,000 in the quarter ended June 30, 2023 versus $3,100,000 in the quarter ended June 30, 2022. GAAP net loss for the Q2 of 2023 was 1,800,000 or $0.07 per diluted share compared with a GAAP net loss of $3,100,000 or $0.12 per diluted share for the Q2 of 2022. Non GAAP adjusted EBITDA for the Q2 of 2023 was a loss of 1,500,000 versus $2,700,000 for Q2 2022. Non GAAP adjusted net loss for the quarter was $1,600,000 or 0 point 0 $7 reflecting a few adjustments to GAAP net loss in each period. Moving on to the balance sheet.

Speaker 3

As of June 30, 2023, the company had Cash and cash equivalents of $19,000,000 compared to cash and cash equivalents of $21,300,000 on December 31, 2022. This concludes the financial highlights of our presentation. I would now like to turn the call back over to the operator to lead the Q and A.

Operator

Certainly, at this time, we will be conducting a question and answer session. Your first question for today is coming from Per Aslan with Craig Hallum Capital.

Speaker 4

Thanks. Good afternoon, Dana and Eric. I want to start with today's announcement, might as well. It's a nice headline with Google Health. Great to see that relationship expanding.

Speaker 4

I'm curious from the standpoint of replacing one part of the DoubleReid Paradigm,

Speaker 5

is that going to be

Speaker 4

a country by country effort across the globe? And how much momentum really is there in that And the reason I ask is because I feel like the inefficiency that comes with the double read, the radiologist shortage, These things are things that we've talked about at several RS and As now. So I'm just curious if we're really nearing that sort of a tipping point now Where maybe these things have kind of conspired together and now the AI proliferation in your relationship Might really be leading to the point where that double read can start to go away worldwide.

Speaker 2

Hey, Per. Thanks for the question. So it's a There's a I would say a little bit of layering, right, in terms of the speed with which countries and then individual imaging centers will adopt it. So first, I would say we're definitely seeing momentum. In fact, you may have seen news in the recent press.

Speaker 2

And if not, we can be sure to provide you with some links to it about this work happening in Scandinavia. So they've kind of been on the leading edge, if you will, of kind of trialing this. There are already clinical studies underway in the U. K. That will begin kind of stepping into and participating with Google.

Speaker 2

But in terms of the regulatory approval, You're right. It is going to be well, first of all, if you're talking European Union, you know you have a block of countries, right, that go together to define regulatory requirements. So once, for example, we receive EU, then that's going to make it easier in the countries that That regulatory, I'll say designation, versus other countries around the world, may have their own regulatory requirements That they need us to go through. Occasionally, countries will also want some proof, I'll say that their population can benefit from this Specific type of work. But I also think as time goes on, we're going to see a little bit more acceptance Research work that's done in another related, perhaps even neighboring country also satisfying, if you will, the information needs for Immense, especially in today's not only radiologist shortage, but also in terms of price points And the ability to retain those radiologists.

Speaker 2

So I think it's going to pick up speed. I think when you're if you're thinking about the U. S, I do think we're going to continue to lag for a lot of different reasons. So I think you're going to see outside of the U. S, particularly in Europe And in Asia Pacific, you're actually going to see them pull ahead in terms of deploying the technology in this manner.

Speaker 4

Okay. Okay. That makes sense. Let me turn to the other Headline for a recent news item from Friday afternoon, the announcement of the aftermarket facility, the 20 up to $25,000,000

Speaker 5

Given that you ended

Speaker 4

the Q2 with about $19,000,000 in cash, it looks like you've only used about $600,000 $700,000 during the quarter. You've been putting efforts in place to cut costs further. You could be poised to be taking some cash in from a potential divestitures So I guess I'm curious at a big picture level, kind of what was the thinking in terms of putting the program in now? And are there areas of investment, opportunistic investment that you're seeing right now that you might want to be capitalizing Such as some of these clinical investments.

Speaker 2

Yes. So great question. So at a high level, We've put the ATM in place, because my understanding, again, reminding everybody kind of 5 months, 5.5 months dual into the role, The company has had an ATM in place a couple of different points in time in the past. And I think just to be honest in terms of Various management and leadership transitions, it had lapsed. So just to be prudent, we wanted to get one filed and active.

Speaker 2

To your point, it might be opportunistic. There may be an opportunistic need for it. There may be also a very strategic need for it. Right now, today, we're still working through our analysis, as I mentioned on The strategic options that we're evaluating ways to expand the business. We've mentioned this on prior calls, going direct to patient, Working with large employers, particularly that are self insured or that have, large employee wellness programs that they fund.

Speaker 2

Going deeper into breast health, so beyond just mammography, perhaps ultrasound, MRI, 5 months ago, I wouldn't have dreamed that this Google 20 year Google relationship was going to happen this fast. So and you're right to make sure we have, I'll say, 1st mover advantage and really leverage The strength of this partnership, we need to be prepared to support the regulatory approval process In parallel, in many countries or regions at the same time. So we have some analysis going on to make sure we understand the resource needs for that. Even Rad Partners, right, which we announced, I think now probably week and a half, maybe 2 weeks ago, securing That deal, that's a long term relationship. And it will take us, honestly, A few years to roll out across our network because it's so vast, as well as new technology and new solutions that together With Rad Partners, we think of and innovate and develop.

Speaker 2

So to use a phrase from my Texas background, It's a little bit fixing to get ready. So making sure that we just have a mechanism in place. It's been when we have support from our Board And we have the I'll call it the supporting ROI models to substantiate using any additional funds.

Speaker 4

Sure. That makes perfect sense. Okay. One more quick one for me. Speaking of big deals, congratulations on the Cleveland Clinic subscription sale that you referenced, realizing like Rad Partners, it may not be as Large a network, but realizing that it is a more complex organization, how do you think about How many locations are we talking about?

Speaker 4

Did they take on the full product suite? And when do we start thinking about a P and L impact there Phase is in over a number of quarters.

Speaker 2

Yes. So, so Cleveland Clinic is getting started with our core product, which is Detection, so using it in screening mammography today. As with most of those large customers like That or I'll say particularly innovative and kind of leading edge. They're taking a look at the density and the risk solutions as well. I would honestly need to check with our sales team to understand the full rollout timeline for Cleveland Clinic across all of their sites.

Speaker 2

And that's something that we can definitely follow-up with you on. But I think similar to I mentioned in the update, I just I wanted to make sure because I think There's a bit of a tendency once we announce a new customer to kind of like, okay, now move on to the next new customer, Right. Instead of like, to your point, thinking about, okay, this is a customer with a couple of 100 locations. They're not all going to be up and running. Not all of the radiologists, right, will be up to speed.

Speaker 2

It takes time to kind of roll that out. And so there's additional revenue opportunity within these accounts because they may have gotten started with a pilot site or a proof of concept site. And then over time as they deploy it to more of their locations and more of their markets, there's more upside potential for us. And so Eric and I are working on a way, to model that, right? So because it helps us think about it internally.

Speaker 2

It's a little bit of a matrix to model Where we have different, I'll say kind of product packages. Do they buy the whole bundle? Are they buying just a single product today? And then over time, They may opt into deploying others, and then mapping that according to the number of sites They have and how they're going to roll it out. So we've actually started, I'll say, kind of that spreadsheet or that model, and that's one of the pieces of information that we hope to be able to this Bill, and share more clearly when we get to the next quarter earnings call.

Speaker 2

And we're hoping that there'll be some good metrics in there To educate everyone on, to help you with your models as well.

Speaker 4

Excellent. Okay. Thank you for all the answers, Zena. I appreciate it.

Speaker 2

Oh, yes. Yes, no problem.

Operator

Your next question is coming from Marie Seidbold at BTIG.

Speaker 6

Hey, Dana, Eric. This is Sam Ivar on for Marie. Thanks for taking the questions this afternoon. I have a couple of questions On the Google Health Partnership, and maybe I'll just take them one at a time here. But have you guys submitted that integrated algo For CE Mark yet?

Speaker 6

And if not, do you have any visibility about when you might submit it?

Speaker 2

Yes. We have not submitted it yet. Let me maybe I'll take your other question and I'm going to pull up The timeline while we're chatting. So it's still a few months away, right, from being finished from the developers' Point of view, right, and then kind of going through our own testing and test databases. So, so still development work in progress.

Speaker 2

Okay.

Speaker 6

Okay, understood. And then have you guys disclosed, I guess, the financial arrangements, How they're structured, if it's a revenue share or licensing fee or anything, you guys have shared publicly about the deal?

Speaker 2

Looking to Eric here, if we've shared anything historically. So it is a revenue share. So we are let me put it this way. We will be the device manufacturer of record, right? So that's why we have characterized it as a commercialization agreement.

Speaker 2

So we'll be the ones Taking the technology to market and then selling it, and then we'll pay a royalty back to Google for use of their IP in the effort. So Google is not actively like selling AI Technology to imaging centers and hospitals. They really want to be the R in R and D.

Speaker 6

Okay. Okay. That makes sense. And maybe more of a higher level one, but and it's kind of following up on Per's question here, but How incremental of an opportunity could this be, right? Because from our understanding and all the data, the detection algo is already quite good.

Speaker 6

Is there a certain point where you might get an inflection? I guess I'm just trying to understand the opportunity here from the agreement.

Speaker 2

Yes, yes. So the second agreement, I'll say is the I'll call upside, I guess, opportunity, right? Like what makes this better than the first agreement that we had? It's really twofold. The first is the length of time.

Speaker 2

The first agreement was a 5 year. This takes us out to 20 years. It's huge, right? I was like, Kathy, I still sometimes, as you can hear, it's like it's still a little like, wow, especially in the world of technology, right, to 20 years ahead. So like it's a long term committed relationship as you can probably imagine like we're envisioning lots Of innovation, right, to happen along the way.

Speaker 2

So that's number 1, is just the length of time that we're going to be partnering. And then number 2 is the approved use of our combined efforts as a second reader or even an independent So the first agreement, I'll describe it as was really the purpose, right, or the permissible use Within a more traditional mammography reading setting, like honestly, like we have here in the U. S, I don't know, which is you go in for your mammogram, The AI algorithm is running. It's helping the radiologists, but the AI algorithm can't run on its own. It's not independent, right?

Speaker 2

The radiologist has to use it. They have to agree with it. They can use Is it to support their findings or recommendations, but the AI cannot be independent? This is huge because this is now permitting The ability for this algorithm that we're jointly developing for us to apply, right, for regulatory approval for it to be Used independently, right, without that human involvement. So that really speaks to, I think Google's confidence in the algorithm, in iCAD, as you can probably imagine from a regulatory approval, You're asking a piece of technology to tell someone whether or not they have cancer without involving a human in that process.

Speaker 2

It's a little scary even as I say it out loud just kind of like thinking through this, but as the algorithm is getting more and more and more accurate, which is what we're seeing in our testing and such. I think that there's huge upside potential because again, you are changing An entire, say, countrywide standard for the way in which mammography is delivered to their whole population. So Yes, it's big.

Speaker 6

Okay. Well, understood. I appreciate the added color there. I'll jump back in queue here. Thanks.

Speaker 2

Mhmm.

Operator

Your next question for today is coming from Yale Jen at Laidlaw and Company.

Speaker 5

Good afternoon, and thanks for taking the questions. And I'm going to also start with the Google deals. First of all, I believe that the press release indicated for 2 d only. What do you think the opportunity That is for the United States versus Europe or other countries, which are more prominently using the 2 d and 3 d?

Speaker 2

Well, it's, so the first agreement, which is still in place It's 2 d and 3 d. So this agreement builds on top of that. The reason this second press release is just talking about 2 d Is because the use of a second reader is really outside of the U. S. We do not have FDA Approval, no organization does, right, to not have a human radiologist In the standard of care, right, in the clinical pathways for mammography.

Speaker 2

So today, it really doesn't apply To the U. S. And then outside of the U. S. Then, the most common type of mammography is still 2d.

Speaker 2

But the agreement will enable us over time, again, back to that length of time, we can use the core algorithm, Which is both 2 d and 3 d, at some point in time in the future when the U. S. Does hopefully begin to embrace The second reader workflow.

Speaker 5

Okay, great. That is very, very helpful. And maybe one more question. One more question on that, which is, you mentioned about the regulatory process besides the Okay. So what should we anticipate any sort of perspective analysis or database So I'd say in general, for the approval, I understand there's a country to country or region difference, but overall, how should we see that?

Speaker 2

You mean from so help me understand a little bit more. So you mean from like a timing standpoint?

Speaker 5

In terms of the process or the study needed or database To enable to approve in the European countries?

Speaker 2

Yes. So it's a little bit remains to be seen. The first studies that we're doing are actually in the U. K. With the NIH.

Speaker 2

It's very there are actually 2 studies underway, A third study kicking off here in the next few weeks that will be very, very large scale. So my gut says other countries are doing a bit of a let's watch and see As we begin to publish the results of these studies, would they accept them as clinical evidence for their own populations Or for whatever reason, right, would they want their own country by country study? I think from an EU standpoint, our hope is that the study that we're doing in the U. K. Is the one that we So I mentioned there are 3 studies, right?

Speaker 2

So the prior two studies are the ones that we're leveraging for the EU submission, which should help with several countries, right, that are part Of that body. And then we'll have to just kind of learn as we go and as we watch The rate of adoption happens through other countries that do not accept the EU regulatory mark or the CE mark, what they may require.

Speaker 5

Okay, great. That is very helpful. Maybe I can sneak in one more question.

Speaker 2

Sure.

Speaker 5

Which is that in earlier Press release, you indicated there's a readout of AUC ROC back margin of 11 point 5%. How should we read this data? In other words, the difference between the second reader So the AI reader and what does that sort of that readout sort of provides for people to think All the users will think.

Speaker 2

Yes. So, I would say kind of At its simplest right way to kind of think about that percentage, that 11.5% is that The algorithm is exceeding the average radiologist, I'll say AUC score By that percentage. So 11.5 percentage better in terms of the accuracy Then the average radiologist. And this was a study involving 6 radiologists where the AI outperformed The fixed human radiologist.

Speaker 5

Okay, great. Thanks a lot and congrats on the progress.

Speaker 2

Yes. Thanks.

Operator

Your next question is coming from Frank Tekkenin at Lake Street Capital.

Speaker 7

Great. Thanks for taking the questions. I was hoping to ask for a little more color on the Radiology Partners Agreement, can you share any of the financial specifics, whether that's on a per use basis or Maybe if you could quantify what the opportunity is for the entirety of the contract, understanding it's a multiyear effort, but just trying to Frame up just how large of a partner that could be?

Speaker 2

Yes. So I'm trying to think of like the simplest way to start the answer. So Radiology Partners is I call them a bit of a hybrid. So, we may have discussed this on past calls, so this may be a bit repetitive. But so Radiology Partners Has their own owned facilities, right, where I'll say they own the facility, they provide The technology infrastructure kind of in a managed services environment as well as manage the radiologists that are actually performing the readings, right, doing services.

Speaker 2

They have other centers for which they may just do a portion of those services. They're more You know, subcontracted, and then they have some centers that they're really just providing the radiologist You know, kind of staffing services. So there's a variety of types of, I'll call it like Ownership, right, or leasing arrangements that they have across those facilities. So the way we established The partnership with them is essentially like a reseller. So they're acting as a reseller Within their own territory, right, which is defined as those 3,200 centers that there's a combination, right, of that Ownership model, right, or leasing model that I just mentioned.

Speaker 2

And so today, they're planning on offering the technology To all of those centers through their cloud. So I just mentioned a few sentences ago, right, they have their own Managed services, they have their own technology infrastructure. They had developed their own cloud environment. And so our technology It's docked, right, or inserted into their cloud. And so the licensing mechanism and then therefore the revenue mechanism is on What we termed a per exam basis.

Speaker 2

So as their volume can increase, as they can bring on different types Of arrangements with different imaging centers, we're really just tracking it based on number of exams. So the more they grow, then we can grow with them. We haven't finalized the rollout plan yet. That's work in progress literally right now. So again, I think by the time we get hopefully The Q3 earnings call, we would be able to come back and like talk a bit, with their blessing as well, on what it looks like over the course of the next few years.

Speaker 2

So I'll just kind of pause there, see if I could raise more questions than answer.

Speaker 7

That's good color. I appreciate that. Okay. And then maybe just for just one more question from me on the P and L operating expenses down at that $6,300,000 You just level set us all on where we stand as it relates to the cost cuts that have been implemented and maybe said more directly, is this $6,300,000 Total OpEx on a quarterly basis, a fair run rate to model off on a go forward basis?

Speaker 2

I'm going to let Eric chime in and take this question.

Speaker 3

Sure. Yes, I think the short answer It's a fair estimate of the run rate going forward. So in Q1, we're at an 8,000,000 Dollar OpEx for Q1, and then we announced the $4,300,000 to $4,600,000 of projected OpEx cuts That was annualized. So being down about $1,500,000 from that $8,000,000 in Q1, this is pretty much where we expected. We are seeing a little bit of savings from the furloughs on the Zoft side as well.

Speaker 3

But I think all that should continue. So I think it's a there are some kind of anomalies going both ways in this quarter, but I think they kind of offset each other and It feels like a good spot. I think you're really seeing that impact that we said was coming with the Q1 cuts.

Speaker 7

Okay, got it. Thanks for taking the questions.

Operator

We have reached the end of the question and answer session. And I will now turn the call over to Dana for closing remarks.

Speaker 2

Thank you, operator. In conclusion, we're making bold moves to rapidly transform this company with a focus on maintaining stability, preserving cash and building a defensible and competitive long term strategy that we believe will diversify our revenue stream and smooth out some of our customer concentration. The future is bright. In fact, 3 of our independent directors have elected to take their compensation in equity. Demand for our technology continues to be strong and the evidence supporting it continues to grow.

Speaker 2

And as we discussed on today's call, our team continues to secure opportunities with some of the most prestigious and esteemed healthcare facilities worldwide. I remain optimistic about the company and its future and firmly believe in the bright Thank you and have a great evening.

Operator

This concludes today's conference and you

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Key Takeaways

  • Amended 20-year Google Health partnership to integrate Google’s AI with ProFound Detection for 2D mammography as an independent reader, aiming for global regulatory approval and addressing the radiologist shortage.
  • Multiyear commercial agreement with Radiology Partners to deploy iCAD’s breast AI across over 3,200 facilities, with the initial order recognized in Q1 representing less than 5% of the total long-term rollout potential.
  • Q2 2023 strategic cost reductions cut annualized operating expenses by $4.3M–$4.6M and annualized cash burn by $4.9M–$5.2M, helping narrow the operating loss to $1.9M from $3.1M a year ago.
  • Q2 financial results: Total revenue of $5.9M (down 23% YoY), with Detection revenue of $4.2M (down 21% YoY) and Therapy revenue of $1.7M (down 26% YoY), and cash and equivalents of $19.0M as of June 30, 2023.
  • Enterprise and international expansion includes enterprise deals with SimonMed and Cleveland Clinic (largest subscription agreement), Luxembourg’s first countrywide implementation, first sales in Turkey and the Czech Republic, and an Italian OEM partnership with GE.
AI Generated. May Contain Errors.
Earnings Conference Call
iCAD Q2 2023
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