iCAD Q4 2024 Earnings Call Transcript

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Provided by Quartr
March 19, 2025
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Operator

Greetings. Welcome to the iCAD Inc. Fourth Quarter and Full Year twenty twenty four Financial Results Conference Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation.

Operator

Please note this conference is being recorded. I will now turn the conference over to your host, Rosalind Christian, Investor Relations at ICAP. You may begin.

Rosalyn Christian
Rosalyn Christian
Investor Relations at iCAD

Good afternoon, everyone. Thank you for joining us today for iCap's fourth quarter and full year twenty twenty four earnings call. On the call, we have Dana Brown, our President and Chief Executive Officer and Eric Lundquist, our Chief 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. These forward looking statements are based on iCAD's current expectations and are subject to uncertainty and changes in circumstances.

Rosalyn Christian
Rosalyn Christian
Investor Relations at iCAD

Actual results may differ materially from these expectations. 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.

Rosalyn Christian
Rosalyn Christian
Investor Relations at iCAD

Also, please note that management will refer to certain non GAAP financial measures. 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. And with that, I'll turn the call over to Dana.

Dana Brown
Dana Brown
President, CEO & Chairman of the Board at iCAD

Fourth quarter marked another strong quarter for iCAD with our top line results exceeding expectations as reflected in revenue of $5,400,000 We recorded increased full year 2024 revenue of $19,600,000 and ARR of $9,800,000 Our growth reflects the momentum we are seeing in our transformation strategy, including the accelerating adoption of profound cloud and our broader shift to a Software as a Service based business model. We believe 2024 can be characterized as the year when AI's pivotal role in healthcare was more widely understood and adopted. Across the industry, we saw increasing demand for AI powered solutions that enhance clinical efficiency, improve diagnostic accuracy and expand access to high quality care. In breast cancer detection, AI adoption still has a long way to go with only about 37% of mammography sites in The U. S.

Dana Brown
Dana Brown
President, CEO & Chairman of the Board at iCAD

Currently utilizing AI, but this is rapidly changing as providers recognize the significant benefits AI brings to patient care and workflow optimization. At ICAD, we are uniquely positioned to lead this transformation. With FDA cleared, clinically proven technology that reduces radiologists' reading times by 52% and improves cancer detection by over twenty three percent, our solutions are used by healthcare providers in over 50 countries. In 2024, we received FDA clearance of ProFound Detection version four point zero, the most advanced AI detection solution we've launched to date. Version four point zero delivers a smarter AI with a twenty two percent improvement in detecting aggressive cancers compared to version three, including a 50% increase in sensitivity for dense breast tissue and a sixty percent improvement in identifying invasive lobular cancers.

Dana Brown
Dana Brown
President, CEO & Chairman of the Board at iCAD

With an eighteen percent reduction in false positive, it also enhances workflow efficiency and reduces unnecessary follow ups, improving both the patient's experience and clinical outcomes. Additionally, for the first time, our AI now integrates prior exam analysis, replicating a radiologist's own comparative reading approach to increase diagnostic confidence. Coupled with our SaaS expansion through Profound Cloud, the version four point zero is a key milestone in ICAD's long term growth strategy. Our transition to a reoccurring revenue model strengthens financial predictability, positioning us for continued success. As we move to 2025, we remain focused on driving innovation, expanding our SaaS footprint and ensuring that our AI solutions reach more providers and patients worldwide.

Dana Brown
Dana Brown
President, CEO & Chairman of the Board at iCAD

Turning now to our Q4 deal highlights. In the fourth quarter, we closed a total of 106 deals, 54 perpetual, 33 subscription and 19 cloud. Some of these deals included expanding at Sutter Health via our partner Ferrum, where we have iCAD solutions installed and running at 16 of their 42 hospitals and breast centers. The Image Care and Pink Breast Center in New Jersey signed a multiyear cloud contract with an upgrade to the latest ProFound AI and Hartford HealthCare added three d detection and density to their existing two d license. On the partnership front, we signed a partnership agreement with Alea for their BreastScape MRI AI solution.

Dana Brown
Dana Brown
President, CEO & Chairman of the Board at iCAD

And last month, we also announced a new partnership with Coios Medical, providing radiologists with an AI powered pathway for Breast U. S. With the Coios Smart Ultrasound Solution. This partnership broadens the scope of offerings for iCAD in North America to align best in class AI solutions with the care path of the patient from screening mammogram to breast ultrasound and breast MRI. These new partnerships not only expand ICAD's commercial opportunities in North America, but also provide clinicians with a more complete end to end AI powered approach to breast cancer screening and detection that enhances workflow efficiency and diagnostic accuracy.

Dana Brown
Dana Brown
President, CEO & Chairman of the Board at iCAD

We've also begun a new push in Quebec and Ontario, Canada, with private medical centers starting to move to three d imaging and the need for both AI detection and density assessment. On the global partnership front, we signed a distribution agreement with a new distributor in South Africa, MedMD, and are already actively engaging in several new accounts. Med. MB focuses on hosting, implementing and supporting radiology department applications throughout South Africa, and this is part of our OUS expansion strategy. Med MB will be reselling our full suite of solutions.

Dana Brown
Dana Brown
President, CEO & Chairman of the Board at iCAD

We also signed our first deal with Sextra on the Sextra Amplifier platform at London Northwest University Health Care NHS Trust. This is a very important first step in expanding our Sextra channel. This is a docker implementation, meaning on the sector's AI platform, Amplifier. Northwest London is part of the NHS and serves approximately 1,000,000 patients across London. We also signed a new distributor in Portugal, part of our OUS expansion strategy in The EU.

Dana Brown
Dana Brown
President, CEO & Chairman of the Board at iCAD

And lastly, we secured final regulatory approval in Jordan, a new expansion country for us. And now for an update on our SaaS transition. During 2024, we made tremendous progress with our transition to a SaaS based model, a pivotal shift that is fundamentally changing how we deliver our technology and how we generate revenue. This transition is enabling us to expand accessibility to our AI solutions, enhance financial predictability and position iCAD for long term sustainable growth. In the fourth quarter, we saw continued momentum in cloud adoption with 19 of our closed deals coming through Profound Cloud compared to 13 deals in Q3 and 10 cloud deals in Q2, which was the first quarter of its availability.

Dana Brown
Dana Brown
President, CEO & Chairman of the Board at iCAD

This reinforces the increasing preference for software as a service solutions that eliminate large upfront costs, while ensuring continuous access to cutting edge AI advancements. As a result, annual reoccurring revenue or ARR grew 11% year over year, demonstrating strong customer demand and the scalability of our cloud platform. We believe there is a significant opportunity for iCAD to increase market share by providing a cost effective, flexible alternative to traditional perpetual licensing models. Our cloud platform allows facilities to implement AI solutions more efficiently without the burden of large hardware investments, IT maintenance or software update costs. While we are encouraged by the strong adoption trends, it is important to note that SaaS transitions can impact near term GAAP revenue recognition since perpetual license sales provide immediate revenue, whereas with cloud deals, revenue is recognized over time.

Dana Brown
Dana Brown
President, CEO & Chairman of the Board at iCAD

For example, a perpetual deal would traditionally generate all its revenue upfront, while a cloud deal of the same value would be recognized quarterly over its contract term. In the short term, this dynamic may cause some flattening in reported GAAP revenue, but at the same time, it creates a backlog of recurring high margin revenue that builds quarter over quarter, leading to greater financial stability and visibility over time. To drive this transition, we are leveraging our strong cash position to support the expansion of Profound Cloud. This includes investing in scaling our cloud infrastructure, onboarding new customers and expanding our commercial reach. As our reoccurring revenue base grows, we expect to see improvement in profitability and cash flow.

Dana Brown
Dana Brown
President, CEO & Chairman of the Board at iCAD

Eric will provide more details on the financial impact of this transition, but we remain highly confident in the long term benefits of SaaS, both for our customers who gain access to a continuously improving AI solution and for iCAD as we build a more predictable, scalable and high margin revenue model. Turning for a quick review of our conference participation and industry engagement in the fourth quarter. At JFR twenty twenty four, ICAD debuted the global commercial availability of Profound Cloud, marking a key milestone in our transition to a SaaS based model. In the first two full quarters of U. S.

Dana Brown
Dana Brown
President, CEO & Chairman of the Board at iCAD

Availability, Profound Cloud processed nearly 100,000 cases, demonstrating rapid adoption and delivering AI powered breast imaging solutions with more than 50% faster processing speeds compared to traditional on prem solutions. The platform scalability, affordability and regulatory clearances in key markets, including South Africa and The UAE, position it as a transformative solution for healthcare providers worldwide. At RSNA twenty twenty four, we announced a groundbreaking partnership with Cascade Health to launch ProFound Health, a virtual second read service providing AI powered breast health insights to patients who otherwise wouldn't have access to AI based screening. This initiative aligns with our mission to democratize access to early breast cancer detection and support health equity in mammography. Closing out the year at SABCS twenty twenty four, iCAD showcased four novel research abstracts demonstrating the impact of AI in improving early breast cancer detection, assessing disparities across diverse populations and exploring the link between breast arterial calcification or BAC and cardiovascular risk.

Dana Brown
Dana Brown
President, CEO & Chairman of the Board at iCAD

Notably, our research highlighted a higher prevalence of BAC in women with mammographically detected breast cancer, suggesting that AI powered BAC detection could play a role in integrating cardiovascular risk assessment into routine breast cancer screenings. On the investor front in Q4, ICAD participated in the LD Micro main event twenty seventeen and the Craig Hallum Alpha Select Conference, engaging with institutional investors to discuss our strategic SaaS transition, recent regulatory milestones and long term growth trajectory. Most recently, in February, we participated in the BTIG twelfth Annual MedTech, Digital Health, Life Science and Diagnostic Tools Conference in Snowbird, Utah, where we continue to build relationships with investors and provide updates on our progress. And I'll now hand it over to Eric for a review of our financial performance.

Eric Lonnqvist
Eric Lonnqvist
CFO at iCAD

Good afternoon, everyone, and thank you, Dana. Before I cover our results, I want to take a few moments to add more context to our outlook for the SaaS transition. Historically, transitions like this can take up to three years. We expect 2025 to represent a significant phase of this shift as cloud adoption accelerates and begins to represent a larger portion of our overall business. As noted in prior calls, this transition will result in a short term headwind to both GAAP revenue and cash flow.

Eric Lonnqvist
Eric Lonnqvist
CFO at iCAD

We do, however, view this as a necessary step toward a more predictable and high margin financial model. We also recognize the importance of offering flexibility through both subscription and perpetual options, particularly for our OEM partners, ensuring we can meet a broad range of customer needs, while continuing to scale our business. I'll now summarize our financial results for the fourth quarter and year ended 12/31/2024. As a reminder, we are reporting annual recurring revenue metrics to help illustrate our progress during our SaaS transition. Total ARR or T ARR represents the annualized value of subscription license, maintenance contracts and active cloud services at the end of a reporting period.

Eric Lonnqvist
Eric Lonnqvist
CFO at iCAD

Maintenance services ARR or MARR represents the annualized value of active perpetual license maintenance service contracts at the end of the reporting period. Subscription ARR or SAR represents the annualized value of active subscription or term licenses at the end of a reporting period. Cloud ARR or CARR represents the annualized value of active cloud services contracts at the end of a reporting period. Total ARR or T ARR was $9,800,000 at the end of the fourth quarter twenty twenty four, up from $8,800,000 at the end of the fourth quarter twenty twenty three. Maintenance services ARR or MARR was $6,400,000 at the end of the fourth quarter twenty twenty four, down from $7,100,000 at the end of the fourth quarter of twenty twenty three.

Eric Lonnqvist
Eric Lonnqvist
CFO at iCAD

This decline is driven largely by customers migrating to subscription and cloud offerings. Subscription ARR or SARR was $2,600,000 at the end of the fourth quarter twenty twenty four, up from $1,700,000 at the end of the fourth quarter of twenty twenty three. Cloud ARR or C ARR was $800,000 at the end of the fourth quarter twenty twenty four, representing the accumulation of the first three quarters of recurring revenue from our cloud product. We are pleased to report that in the fourth quarter of twenty twenty four, we closed 54 perpetual, 33 subscription and 19 cloud orders. For the full year period, we have secured two forty two perpetual, 98 subscription and 42 cloud orders.

Eric Lonnqvist
Eric Lonnqvist
CFO at iCAD

Please note that these counts include all new upsell and migration deals and exclude standard renewals. It is important to note that Q4 was a particularly strong quarter with some deals that we expected in Q1 of twenty twenty five moving into Q4. Revenue for the quarter was $5,400,000 an increase of $700,000 or 14% over the fourth quarter of twenty twenty three. For the 2024 full year period, revenue was $19,600,000 compared to $17,300,000 in 2023. Fourth quarter '20 '20 '4 product revenue was $3,700,000 up 24% over the prior year.

Eric Lonnqvist
Eric Lonnqvist
CFO at iCAD

For the full year period, product revenue was $12,500,000 compared to $9,900,000 in 2023. Fourth quarter '20 '20 '4 service revenue was $1,700,000 flat versus prior year. For the full year, service revenue was $7,100,000 compared to $7,400,000 in 2023. This decline was largely driven by service customers migrating to our subscription or cloud products. Moving on to gross profit.

Eric Lonnqvist
Eric Lonnqvist
CFO at iCAD

On a percentage of revenue basis, gross profit was 86% for the fourth quarter of twenty twenty four, which was down from 91% in the fourth quarter of twenty twenty three. The year over year decline is driven largely by a one time benefit in Q4 twenty twenty three along with amortization of our cloud product completed in Q1 twenty twenty four. On a pure dollar basis, gross profit for the quarter was $4,700,000 as compared to $4,300,000 last year. Total operating expenses for the fourth quarter of twenty twenty four were $5,500,000 a $500,000 or 10% increase year over year. The largest driver of the increase was investments in R and D and regulatory to support plans for both product and regional expansion.

Eric Lonnqvist
Eric Lonnqvist
CFO at iCAD

For the 2024 full year period, total operating expenses were $22,900,000 compared to $22,500,000 in 2023. GAAP net loss from continuing operations for the fourth quarter of twenty twenty four was $900,000 or $0.03 per diluted share compared with a GAAP net loss from continuing operations of $500,000 or $0.02 per diluted share for the fourth quarter of twenty twenty three. For the full year period, GAAP net loss from continuing operations of $5,600,000 or $0.21 per diluted share compared to $7,000,000 or $0.27 per diluted share in 2023. Non GAAP adjusted EBITDA loss for the fourth quarter of twenty twenty four was $500,000 compared with $400,000 in the fourth quarter of twenty twenty three. For the full twenty twenty four year period, non GAAP adjusted EBITDA loss was $5,400,000 compared to $6,800,000 in 2023.

Eric Lonnqvist
Eric Lonnqvist
CFO at iCAD

Moving to the balance sheet, as of 12/31/2024, the company had cash and cash equivalents of $17,200,000 compared to cash and cash equivalents of $21,700,000 as of 12/31/2023. Net cash used for operating activities for twenty twenty four's '12 month period was $3,900,000 compared to $5,000,000 for the twenty twenty three twelve month period. 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

Thank you. At this time, we will be conducting a question and answer session. And the first question today is coming from Marie Thibault from BTIG. Marie, your line is live.

Marie Thibault
Managing Director at BTIG

Hi, good afternoon. Thanks for taking the questions. Wanted to congratulate you on the nice momentum to end the year. But Eric, I heard the commentary about thinking about things being a little more flattish going forward that there were some orders pulled forward into Q4 from Q1. So I wondered if you could just kind of give us a holistic outlook for how you're thinking about the CapEx environment, the budget environment for hospitals and centers this year?

Marie Thibault
Managing Director at BTIG

Anything on cadence on a quarterly basis? Anything on kind of momentum or sequential increases we might expect in the cloud deal count? Any more detail on that would be great.

Eric Lonnqvist
Eric Lonnqvist
CFO at iCAD

Yes. Hi, Marie. Yes, I think you can see from the last few quarters that we're still having some lumpiness in revenue. So Q3 historically has been one of our slower quarters. Q4 has been one of our stronger quarters and you'll see that in the numbers.

Eric Lonnqvist
Eric Lonnqvist
CFO at iCAD

I think there's a lot of momentum in cloud. So we've seen now the three quarters that we've had cloud commercially available, we've seen a growth in deals. And the conversations are continuing. It's a great experience. It's performing very well.

Eric Lonnqvist
Eric Lonnqvist
CFO at iCAD

In 2025, we do expect this momentum to continue for cloud. Q4, I think two things happened. One, really strong execution by the sales team, but there were there is some timing still in the business with perpetual and some of the subscription revenue. A few deals slipped from Q3, fell into Q4 and also a number of deals as we noted originally were slated for Q1 twenty twenty five that were pulled in to Q4. So there will be some timing variances as we go through this transition, but I think the biggest benefit of getting to a SaaS based business will be to eliminate just this kind of lumpiness that we're seeing.

Marie Thibault
Managing Director at BTIG

Sure. We look forward to that visibility too. Okay. Very helpful. And then I wondered if I could get some feedback on kind of the early reactions to from customers to profound detection version four point zero?

Marie Thibault
Managing Director at BTIG

What you're hearing from the field if you're seeing that this is catalyzing more interest accelerating deal closings, any kind of feedback on that, what I know is very early on launch? Thank you.

Dana Brown
Dana Brown
President, CEO & Chairman of the Board at iCAD

Hey, Marie. So I actually spoke with our Chief Product Officer yesterday, hoping that we would get this kind of question today, kind of an update on the performance of four point zero. In terms of its accuracy, which is its ability to get more cancers right and more no cancers right. So if you kind of think as you want your accuracy to be at kind of both ends of the spectrum and you don't want a lot of calls, if you will, to be in the middle, which is kind of that gray zone. It's actually performing even better or more accurately out in clinical practice than it even did against our regulatory dataset that we used for the FDA clearance.

Dana Brown
Dana Brown
President, CEO & Chairman of the Board at iCAD

So we're thrilled. We were very pleased with its accuracy when we did the FDA submission, but we're actually seeing even higher accuracy when it comes to patient outcomes out in the field. So our marketing team and our sales team, now that it's been out for, I guess you would call it a full quarter, right, since it got cleared right around Thanksgiving and then we had to finish up its packaging so it could actually be shipped, are just now beginning to kind of take this message out to prospects and customers looking to upgrade. So hopefully by the time we're on this call with you next quarter, we'll have more evidence of kind of what the pull through based on those results have been.

Marie Thibault
Managing Director at BTIG

Okay. That's very encouraging. Thanks for taking the questions this evening.

Operator

Thank you. The next question is coming from Per Ostlund from Craig Hallum Capital. Per, your line is live.

Per Ostlund
Research Analyst at Craig-Hallum Capital Group LLC

Great. Thank you very much and good afternoon, Dana and Eric. That was a fantastic quarter, much better than even the pre release would have suggested. Kind of piggybacking off of Marie's question, I think you alluded to the pull forward and I appreciate the commentary about maybe some slippage from Q3. How much I'm curious and you also did talk about V4 there as well, but how much did the confluence of V4 clearance right before RSNA?

Per Ostlund
Research Analyst at Craig-Hallum Capital Group LLC

Did RSNA catalyze a little bit more because there might have just been a little bit more buzz late in the quarter that might have triggered some quicker decision making on the part of your customers?

Dana Brown
Dana Brown
President, CEO & Chairman of the Board at iCAD

So I'll go first and Eric, I mean, totally comfortable if you have a different point of view or want to add some other color commentary. But I really think Q4, one, I don't think that exceeding our expectations right in Q4 had very much to do with version four. Because you don't know until literally you get the memo from the FDA that it's going to be cleared. So and that happens so late right around RSNA and then there's only like a few shopping weeks left in December. I think to the point Eric made earlier, the performance in Q4 had to do more with one sales team execution.

Dana Brown
Dana Brown
President, CEO & Chairman of the Board at iCAD

We're kind of wrapping up a full year with some of the revamping of that team that we did. I do think that the marketing team is also hitting its stride in getting out the right messaging. They've been able to develop some very effective targeted customer programs. So not just lead gen, but even with existing customers. And then you just have budget timing, right, that always helps and creates a lift in fourth quarter.

Dana Brown
Dana Brown
President, CEO & Chairman of the Board at iCAD

People are anxious to use budgets. They're not sure what might happen in the upcoming year. So I think it's just everything lined right in Q4.

Per Ostlund
Research Analyst at Craig-Hallum Capital Group LLC

Sure. Sounds like it did, yes. Let's

Per Ostlund
Research Analyst at Craig-Hallum Capital Group LLC

talk about

Per Ostlund
Research Analyst at Craig-Hallum Capital Group LLC

the machinations of ARR. So go live is the trigger for inclusion. And I think last quarter when we on this very call, I think that trigger point was probably lost on a lot of people, certainly myself included. As you had some bigger deals that hadn't gone live at the point of the end of Q3, so they weren't in the ARR. Now we did see the ARR go up from Q3 to Q4.

Per Ostlund
Research Analyst at Craig-Hallum Capital Group LLC

How does that dynamic now look as we exit Q4? Are there meaningful deals? Because again, you had a nice sequential bump up in deals. Are there meaningful deals that likely hit ARR in Q1 or Q2 that hadn't hit yet in Q4? I'm guessing this is the kind of thing we could be chasing every single quarter because there's always going to be stuff that happens late in the quarter, but just kind of curious how you're looking at that overall dynamic and just making sure we understand that as best we can.

Eric Lonnqvist
Eric Lonnqvist
CFO at iCAD

I can jump in, Dana.

Eric Lonnqvist
Eric Lonnqvist
CFO at iCAD

Do you want

Eric Lonnqvist
Eric Lonnqvist
CFO at iCAD

me to comment? Yes. I think what we're experiencing the cloud implementations, there's more security checks involved, so the implementations take a little bit longer. So I think it's fair to assume about a quarter lag. So when we report deal counts, those are when the deals are closed, not live.

Eric Lonnqvist
Eric Lonnqvist
CFO at iCAD

And to your point, they don't hit our ARR until they go live. So I think every quarter that we sell more cloud deals, you can have more in the backlog. So just anecdotally, we sold more deals in Q4 for cloud. We'd expect kind of a bigger bump from those deals in Q1 twenty twenty five. So I think you're thinking about it right.

Eric Lonnqvist
Eric Lonnqvist
CFO at iCAD

We've discussed internally possibly reporting more backlog metrics this year that I think will help to show what revenue billing and ARR is in the backlog to be recognized at a later date. So I think more to come on that, but I think just anecdotally with more deals in Q4, you could expect more in backlog from cloud from Q4 deals that will hit in Q1.

Per Ostlund
Research Analyst at Craig-Hallum Capital Group LLC

Okay. That makes sense. I just did not want to lose the plot on that because I hadn't anticipated that last quarter properly. And so I just want to make sure that I didn't miss it again and that the rest of us didn't miss it again. Dana, you talked about well, you both talked about sales force execution, Dana.

Per Ostlund
Research Analyst at Craig-Hallum Capital Group LLC

You mentioned the marketing team hitting its stride. When you announced these more recent collaborations, the Koyos Medicals, the Ramsofts, Help us understand how they kind of fill in the blanks around what you're all doing internally. How do they contribute? How will we see that kind of manifest itself a little

Per Ostlund
Research Analyst at Craig-Hallum Capital Group LLC

bit too?

Dana Brown
Dana Brown
President, CEO & Chairman of the Board at iCAD

So, our approach to partnerships, and I'm going to call them technology partnerships that round out the patient care journey, after screening happens, have been driven by customer requests, right, or inquiries. So often they won't necessarily name a company name, but they'll say, for example, it's great, right, that your AI detection is helping me find cancers faster. And earlier, do you have anything that can help in follow on diagnostics? I'm using ultrasound. I'm using MRI.

Dana Brown
Dana Brown
President, CEO & Chairman of the Board at iCAD

And so we've been looking for partners that can help us field these questions and requests from our customers along those lines. And it also is a great way for us to understand market adoption on some of these because if you look at the overall, I would say kind of size of the mammography market, sometimes in the follow on imaging, it's not as necessarily large or as well covered. And so, it's a great way for us to number one, meet the request from the customers number two, learn a lot more about the market dynamics and some of the follow on areas and help inform our corporate roadmap going forward. Do we continue to partner? Is it something that we would build?

Dana Brown
Dana Brown
President, CEO & Chairman of the Board at iCAD

Is it something that maybe in the future we're in a position where we could actually acquire? But for right now, I would say particularly some of the ones that we've announced over the past year, it's been going really well. And it's like we've already begun we've already been working with them in the field before we formalize it or memorialize it as a partnership.

Per Ostlund
Research Analyst at Craig-Hallum Capital Group LLC

Okay, very good. Thanks for that color. I appreciate it.

Operator

Thank you. And the next question will be from Yale Jen from Leidlaw and Company. Yale, you're live.

Yale Jen
Senior Managing Director & Senior Biotech Analyst at Laidlaw & Company

Good afternoon and congrats on the great quarter as well. As we talk about top line, so I'm going to start with a little bit on the operating expense side. We noticed that for the last two years, the operating expenses is roughly the same, almost the same. So should we anticipate, for example, for '25 or maybe even for '26, that will be the level we should be model

Eric Lonnqvist
Eric Lonnqvist
CFO at iCAD

Dan, you want me to take that one?

Dana Brown
Dana Brown
President, CEO & Chairman of the Board at iCAD

Yes, that would be great.

Eric Lonnqvist
Eric Lonnqvist
CFO at iCAD

Okay. No, I wouldn't assume that. I think there's a number of initiatives we have on track for this year. So I don't think you can assume that the OpEx run right now will continue into the future.

Yale Jen
Senior Managing Director & Senior Biotech Analyst at Laidlaw & Company

So I should assume that will be some upper expenses increase in general in that sort of directionally speaking?

Eric Lonnqvist
Eric Lonnqvist
CFO at iCAD

No, I can't really give too much guidance on the future OpEx. I think it's you can see the trend of where we've been. I'm sure in Dana's script she announces some of the initiatives we're undertaking, but I can't really guide on that yet.

Yale Jen
Senior Managing Director & Senior Biotech Analyst at Laidlaw & Company

Okay. Not a problem. And maybe on the top line side, in terms of SAR and the CARR, we know that has increased over the years and that's certainly a very positive sort of directional thing. Again, was some any kind of color or guidance you guys may offer in terms for, let's say, for this year, how should we see that? I understand there's a lumpiness somehow some level of lumpiness or maybe this is an added piece to that, but nevertheless any sort of colors we can gain?

Eric Lonnqvist
Eric Lonnqvist
CFO at iCAD

Yes, I think so we've had that uptick of approximately $1,000,000 of ARR in the last year. I think, again, without guidance, just anecdotally now that we have our cloud business our cloud product three quarters under our belt, the deals have been growing every quarter and we expect that momentum to continue for cloud and that should just mathematically that should fuel more ARR growth. So internally, one of our biggest initiatives is, if not the, is to grow our ARR and convert to this recurring base. We talked about a lot, but I think this and I would pay attention to the mix shift of deals that we released with perpetual and subscription and cloud. And the more we see that shift going forward, it should mathematically, it should translate to faster ARR growth.

Eric Lonnqvist
Eric Lonnqvist
CFO at iCAD

That's strategically the plan internally.

Yale Jen
Senior Managing Director & Senior Biotech Analyst at Laidlaw & Company

Okay. Maybe the last question here that again congrats on the approval of four point zero. Do you guys anticipate four point zero version four will have much more sort of significant impact in terms of the adoption because of the several of those metrics has been improved versus the last version. And how should we think about that as well? And thanks for addressing those questions.

Dana Brown
Dana Brown
President, CEO & Chairman of the Board at iCAD

So I think in general, yes, I think we're going to see better adoption. Well, let me pause just a second, because I think four point zero is in its first few months of availability. And I think if you probably rolled back the clock to win ICAD first released version three, it also probably helped to accelerate adoption, customers choosing ICAD and its first several months of release as well. So but I think if you look at four zero today, the good news is it addresses several big requests that came from customers. One was reducing the number of what we call busyness, right, or marks on the mammogram that the radiologist didn't need to spend a lot of time on.

Dana Brown
Dana Brown
President, CEO & Chairman of the Board at iCAD

So we increased, you know, not only the accuracy, but we also reduced the number of kind of busy marks. The other thing that we did with four point zero that was requested by radiologists was incorporate the analysis of priors into the algorithm, which is better replicates the way a radiologist reads manually a mammogram. They look at the prior image and then they compare that to the current image, the one that was just taken. We actually do that inside the algorithm. So we don't process them individually.

Dana Brown
Dana Brown
President, CEO & Chairman of the Board at iCAD

We actually process them together. So that's a huge improvement and meets a very high demand and ask from radiologists out there. So those are kind of two unique differentiators for four point zero. But we're already thinking about what comes next. Releasing enhancements and updates already are in place for four point zero.

Dana Brown
Dana Brown
President, CEO & Chairman of the Board at iCAD

So hopefully, we can actually improve the speed with which we come out with updates, minor upgrades before we get to the next version.

Yale Jen
Senior Managing Director & Senior Biotech Analyst at Laidlaw & Company

Okay, great. I appreciate it. And maybe just one sneak in one more question. Does the four point zero now will be the default launch product to all customs or as well as whether existing custom will be upgraded to four point zero or how this time or just to say need to pay for a fee for doing that? And the thing?

Dana Brown
Dana Brown
President, CEO & Chairman of the Board at iCAD

Yes. So it would depend on whether or not the customer was current on a maintenance and support agreement. If they are and they're ready to update because remember, it could require some additional training, you know, rollout communication. So, it's not something that they're necessarily going to let just happen, right, overnight. But if they are current on maintenance and support, they can get the new version.

Dana Brown
Dana Brown
President, CEO & Chairman of the Board at iCAD

If they're not current on maintenance and support, then there is a fee to kind of get them current on maintenance and support agreements and then we would go in and do the implementation of four point

Yale Jen
Senior Managing Director & Senior Biotech Analyst at Laidlaw & Company

out. Okay, great. Thanks a lot. Again, congrats on a very great quarter.

Operator

Thank you. And the next question will be from Gene Mannheimer from Freedom Capital Markets. Gene, your line is live.

Gene Mannheimer
Managing Director, Senior Research Analyst at Freedom Capital Markets

Thank you. Congrats on a great finish to the year. I had a question on some of the components of the ARR. So in particular maintenance, so maintenance ARR declined what looks to be about 9%. And Eric, you talked about that as maybe by design as you convert more customers to subscription in cloud.

Gene Mannheimer
Managing Director, Senior Research Analyst at Freedom Capital Markets

But I'm just curious if there was any outsized churn in the quarter that we should be aware of driving that number or is that would you characterize it as normal churn?

Eric Lonnqvist
Eric Lonnqvist
CFO at iCAD

Yes. Thanks, Gene. Yes, you're interpreting all of that correctly in terms of the shift. Churn is another one we mentioned backlog a little bit earlier in the call. Churn is a metric we've discussed reporting externally.

Eric Lonnqvist
Eric Lonnqvist
CFO at iCAD

We've got a number of questions on that. So even though we don't report, I would say that there was nothing unusual as far as churn in Q4 that I would point to or no large customer. I would say it was in line with prior quarters as far as the decline being driven by expiring service contracts that convert over to a cloud or subscription deal. We haven't released those percentages of percent of customers that do migrate at this point, but it's been very successful in the last, I'd say, three to four quarters since we had cloud sales teams really got the sales process down in terms of showing the benefits of these customers of moving off maintenance and getting on to a cloud or subscription deal. So it is positive for the year.

Eric Lonnqvist
Eric Lonnqvist
CFO at iCAD

And I don't think there is any anomalies in Q4 I would point to.

Gene Mannheimer
Managing Director, Senior Research Analyst at Freedom Capital Markets

Good. That's great to hear. And then my other question just relates to some of the partnerships that Dana called out. I think there was one earlier this month with RamSoft and maybe I missed that, but I don't know if you talked about that one. I was just curious how that works, Dana and their notable organization been around for a long time.

Gene Mannheimer
Managing Director, Senior Research Analyst at Freedom Capital Markets

Wondering what how you might quantify or talk about the impact of that one on incremental business?

Dana Brown
Dana Brown
President, CEO & Chairman of the Board at iCAD

Yes. I actually didn't chat about it. I was going to save it to the next call, but that's okay. It's really new. So I don't have, I would say, anything kind of anecdotal yet.

Dana Brown
Dana Brown
President, CEO & Chairman of the Board at iCAD

They're more of a general reseller value added partner than for example, you know, Kyos, right, that has something like directly it's kind of like a counterpart to us, but further down in the diagnostic, the follow on screening type of technology. So that's kind of the differences between those two in terms of overall partnership. So

Gene Mannheimer
Managing Director, Senior Research Analyst at Freedom Capital Markets

Okay.

Dana Brown
Dana Brown
President, CEO & Chairman of the Board at iCAD

Some more to come, yes, on RamSoft.

Gene Mannheimer
Managing Director, Senior Research Analyst at Freedom Capital Markets

Very good. Okay. Well, thank you. Appreciate it.

Operator

Thank you. This does conclude today's Q and A session. I will now hand the call back to Dana Brown for closing remarks.

Dana Brown
Dana Brown
President, CEO & Chairman of the Board at iCAD

Thank you, operator. Twenty twenty four was a pivotal year for iCAD, marked by the successful launch of ProFound AI Version four, the accelerating adoption of ProFound Cloud and our continued progress transitioning to a SaaS based model. Demand for our technology remains strong and the growing body of clinical evidence supporting its positive impact further reinforces our leadership in AI powered breast health solutions. As we move through 2025, we remain focused on expanding our SaaS adoption, driving revenue growth and deepening our partnerships with imaging centers and partners. We anticipate further global expansion of Profound Cloud and continued momentum in regulatory approvals.

Dana Brown
Dana Brown
President, CEO & Chairman of the Board at iCAD

As more health networks and imaging centers transition to cloud based AI solutions, we are well positioned to capture our growing share of the market while improving operational efficiency for our customers. With this strong foundation in place, a clear strategic vision and a dedicated team, I am confident in our ability to continue delivering innovative solutions, improving patient outcomes and creating long term value. Thank you all for your time today and I look forward to updating you on our continued progress throughout this year. Thank you and have a great day.

Operator

Thank you. This concludes today's conference and you may disconnect your lines at this time. Thank you for your participation.

Executives
    • Rosalyn Christian
      Rosalyn Christian
      Investor Relations
    • Dana Brown
      Dana Brown
      President, CEO & Chairman of the Board
    • Eric Lonnqvist
      Eric Lonnqvist
      CFO
Analysts
    • Marie Thibault
      Managing Director at BTIG
    • Per Ostlund
      Research Analyst at Craig-Hallum Capital Group LLC
    • Yale Jen
      Senior Managing Director & Senior Biotech Analyst at Laidlaw & Company
    • Gene Mannheimer
      Managing Director, Senior Research Analyst at Freedom Capital Markets
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Key Takeaways

  • Revenue and ARR growth: Q4 revenue of $5.4 million (up 14% year-over-year) and full-year 2024 revenue of $19.6 million, with annual recurring revenue (ARR) reaching $9.8 million (up 11% YoY).
  • FDA clearance of ProFound Detection v4.0: The new AI detection solution delivers a 22% improvement in cancer detection, an 18% reduction in false positives, 50% greater sensitivity in dense tissue and now integrates prior exam analysis.
  • SaaS transformation via Profound Cloud: The shift to a subscription-based model accelerated in Q4 with 19 cloud deals (vs. 13 in Q3), driving predictable recurring revenue despite near-term GAAP recognition impacts.
  • Strategic partnerships and global expansion: New agreements with Alea (MRI AI), Coios Medical (ultrasound), MedMD in South Africa, Sextra in the UK NHS and distributors in Portugal and Jordan broaden the AI portfolio and geographic footprint.
  • Financial stability and margin improvement: Gross profit margin of 86%, a narrowed Q4 non-GAAP EBITDA loss of $0.5 million and a year-end cash balance of $17.2 million support the company’s long-term growth strategy.
AI Generated. May Contain Errors.
Earnings Conference Call
iCAD Q4 2024
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