iCAD Reports 22.6% Revenue Decline in Q2 2023, Implements Restructuring Plan

iCAD, Inc. reported a significant decline in its financial performance for the second quarter of 2023, with total revenue falling to $5.9 million, a decrease of approximately 22.6% compared to $7.6 million in the same period of 2022. The company's revenue for the first half of 2023 also reflected a downward trend, totaling $11.6 million, down 22.9% from $15.1 million in the first half of 2022. The decline in revenue was attributed primarily to reduced demand and a strategic shift towards a subscription model, which has resulted in a temporary decrease in recognized revenue as subscription income is recognized over time rather than at the point of sale.

The company's gross profit for the second quarter was approximately $4.3 million, representing 74.2% of revenue, compared to $5.5 million or 72.5% of revenue in the prior year. The gross profit margin for the Detection segment decreased from 86.1% to 81.5%, while the Therapy segment saw an increase in gross profit margin from 40.9% to 56.1%. iCAD's operating expenses also decreased significantly, totaling $6.3 million for the second quarter, down 27.1% from $8.6 million in the same quarter of 2022, primarily due to cost-saving measures and a reduction in workforce.

In terms of operational developments, iCAD has undergone a restructuring plan that resulted in a workforce reduction of approximately 28%, impacting around 23 employees, mainly from its detection business unit. This restructuring is part of the company's strategy to align its cost structure with areas expected to yield better long-term results. The company has also engaged investment bankers to explore strategic options for its Therapy business line, indicating a potential shift in focus or restructuring of that segment.

As of June 30, 2023, iCAD had cash and cash equivalents of $19.0 million, down from $21.3 million at the end of 2022. The company reported a net loss of $1.8 million for the second quarter, an improvement from a net loss of $3.1 million in the same quarter of the previous year. The weighted average number of shares used in computing the net loss per share was 25.3 million, resulting in a net loss per share of $0.07, compared to $0.12 in the prior year. The company’s current liabilities decreased to $11.9 million from $13.5 million at the end of 2022, reflecting improved cash management and operational efficiencies.

Looking ahead, iCAD anticipates that the ongoing transition to a subscription model may continue to impact short-term revenue recognition but could lead to more stable long-term revenue streams. The company remains focused on enhancing its product offerings and expanding its market presence, particularly in the context of its strategic initiatives and the evolving healthcare landscape. The management believes that the current liquidity position is sufficient to sustain operations through at least the next 12 months, contingent on anticipated revenue and cash collections.