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Apteryx Imaging Inc. Reports 2019 Results

  • April 28, 2020
  • News Releases

Vancouver, British Columbia – April 28, 2020 – Apteryx Imaging Inc. (TSXV: XRAY and OTCQB: APTEF) (“Apteryx” or the “Company”), a leading dental imaging technology provider focused on delivering state-of-the-art imaging software and systems, today announced its financial results for the fourth quarter and year ended December 31, 2019, reported in United States dollars and in accordance with International Financial Reporting Standards (“IFRS”). The Company’s results are presented in comparison to the fourth quarter and year ended December 31, 2018.

Financial Highlights for the year ended December 31, 2019

Net revenue for the year ended December 31, 2019 was US$15,544,157 representing an increase of 9% from the year ended December 31, 2018. The Company’s gross margin2 was 67% for the year ended December 31, 2019 as compared to 61% for the year ended December 31, 2018. EBITDA1 for the year ended December 31, 2019 increased to US$1,682,437 compared to EBITDA1 of US$99,176 for the year ended December 31, 2018. Revenue growth was due to increased software revenues and, in particular, the Company’s relatively recent XVWeb® Software as a Service (“SaaS”) offering and other recurring revenues tied to growth in the number of maintenance and support contracts. Gross margin was positively impacted by increased software revenue contribution as well as a retroactive pricing rebate received from a key vendor in our imaging device business due to increased sales volume achieved.

Net loss for the year ended December 31, 2019 was US$1,151,055 compared to net income of US$816,450 for the year ended December 31, 2018. Net income for the 2018 year was impacted by non-cash fair value gains on the revaluation of warrants and derivative liabilities.

Cash flow from operations was US$2,114,187 during the year ended December 31, 2019 compared to cash flow from operations of (US$1,799,295) during the year ended December 31, 2018. The Company used funds generated from operations to help repay its remaining CDN$2.5 million of 12% interest bearing debenture obligations in October 2019. Cash outflows from financing activities for the year ended December 31, 2019 was US$3,020,228 compared to $2,000,875 for the year ended December 31, 2018.

The Company had cash on hand of US$1,849,533 and Net Working Capital3 of US$1,669,735 as of December 31, 2019 compared to cash of US$2,827,882 and Net Working Capital3 of US$776,681 as of December 31, 2018.

Financial Highlights for the three months ended December 31, 2019

Net revenue for the three months ended December 31, 2019 was $4,630,513 representing an increase of 21% from the three months ended December 31, 2018. The Company’s gross margin2 was 67% for the three months ended December 31, 2019 as compared to 55% for the three months ended December 31, 2018. EBITDA1 was $665,991 for the three months ended December 31, 2019 compared to EBITDA1 of $(414,598) for the three months ended December 31, 2018. Net income for the three months ended December 31, 2019 was $141,712 compared to net income of $538,132 for the three months ended December 31, 2018.

“During 2019, Apteryx delivered its strongest year of financial performance to date with significant revenue, gross margin and EBITDA growth for the year,” commented Apteryx

CEO Dr. David Gane. “The growth during fiscal 2019 in EBITDA and cash flow was largely attributed to growth in software and service revenues, particularly the growth in recurring revenues from subscription sales of our award winning XVWeb®, cloud imaging service.”

Gane continued, “When we acquired Apteryx in February 2017, it was a perpetual license software-oriented company generating revenue of approx. $4.0 million per annum with no significant recurring revenue. We have increased software revenue to $6.7 million during 2019 with the growth being attributable to our launch of our XVWeb® SaaS offering post acquisition. During 2019, we successfully grew the number of subscribers, or unique customer sites running XVWeb®, to approx. 1,800 total, representing annual monthly recurring revenue (“MMR”) of $234,000. In addition to growth in our XVWeb® SaaS offering, growth in the number of maintenance and support subscriptions further contributed to overall recurring revenue growth resulting in approximately 46% of our FY19 software revenues being recurring in nature increasing both the quantity and quality of our software revenue.”

Regarding the impact of the COVID-19 on the business, Dr. Gane commented: “Our forward momentum and growth initiatives for 2020 were disrupted recently by the onset of COVID -19. Most dental practices have been closed for all but emergency care since the middle of March. These dental practice closures have had a negative impact on our business, especially related to imaging device sales, which has prompted our management team and employees to put the appropriate plans and measures in place to best navigate this challenging period. Despite this pandemic, we continue to build on our recurring revenue gains during this time, especially related to XVWeb® and maintenance and support service subscriptions. Although the total impact of COVID–19 remains uncertain currently, I remain confident in the dental profession’s resiliency and ability to bounce back in the coming weeks ahead. We are very excited about our accomplishments in 2019 and despite the COVID-19 setback, do Iook forward to a prosperous and productive 2020.”

The Company made progress regarding its products during fiscal 2019 as follows:

  • The Company is now exclusively distributing its own proprietary devices including the VELscope® oral screening device, Tuxedo intraoral radiographic sensor, related consumables and its suite of software solutions and services. This refocusing of efforts on its proprietary products has improved the Company’s revenue growth and overall gross
  • Higher margin Tuxedo sensor sales have replaced more than $1.7M in revenue from lower margin third party distributed products generated in
  • The Company continues to develop new software-based subscription service offerings to expand its market, grow the business and better serve its To that end, during 2019, the Company announced a partnership to access artificial intelligence (“AI”) and machine learning capabilities. This partnership has allowed the Company to leverage its incomparable data lake of dental images to develop subscription-based AI service offerings. During 2020, the Company plans to bring to market these value-added subscription-based services to provide decision support for dentists in their radiographic diagnoses as well as to provide quality assurance support to assist in the identification of common x-ray image acquisition errors and monitoring of imaging device health within their practices.

During 2019, the Company was re-named Apteryx Imaging Inc. from LED Medical Diagnostics Inc., leveraging the longstanding equity of the Apteryx brand in dentistry, and changed its stock ticker changed to XRAY on TSXV to reflect its dental imaging focus.

The Company was also awarded a major contract with the US Defense Logistics Agency and were the recipients of the Cellerant® “Best of Class” Technology Award for imaging software for its market leading XVWeb® cloud imaging service.

Financial Statements and Management’s Discussion & Analysis

Please see the consolidated financial statements and related Management’s Discussion & Analysis (“MD&A”) for more details. The consolidated financial statements for the three months and year ended December 31, 2019 and related MD&A have been reviewed and approved by the Company’s Audit Committee and Board of Directors. The Company has prepared this truncated news release to alert investors to its results and that a more detailed explanation and analysis is readily available in the MD&A. These reports have been filed on SEDAR at www.sedar.com and also posted to www.apteryx.com.

About Apteryx Imaging Inc.

Apteryx Imaging develops award-winning dental imaging software and oral screening technologies while also providing state-of-the-art dental imaging devices. Our customers include many of the largest dental practices and organizations in the world, including many of the country’s top Dental Support Organizations (DSOs), the United States Army and the United States Navy. Our proprietary brands include Apteryx XrayVision® imaging software, the VELscope® Enhanced Oral Screening System and TUXEDO® Intraoral Sensors.

Backed by an experienced leadership team and dedicated to a higher level of service and support, Apteryx Imaging is committed to providing dental practitioners with the best technology available by identifying and adding leading products to its growing portfolio.

Apteryx Imaging, Inc. is publicly traded on the TSX-Venture Exchange (TSX-V: XRAY), OTCQB (OTCQB: APTEF), and the Frankfurt Stock Exchange (FSE: XRAY). Apteryx Imaging, Inc. is headquartered in Vancouver, BC, Canada.

Media Contact:

Chris Koch
Phone: 678-293-9413
Email: chris.koch@apteryx.com

Corporate Contact:

Dr. David Gane, CEO
Phone: 604-434-4614 x227
Email: david.gane@apteryx.com

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Forward Looking Statements

This press release contains statements which, to the extent that they are not recitations of historical fact, may constitute forward-looking information under applicable Canadian securities legislation that involve risks and uncertainties. Such forward-looking statements or information include statements regarding, but not limited to the Company’s future growth strategy, its distribution strategy and product offerings, potential expansion of the Company’s technology to other medical applications or markets, or the potential introduction of new technologies by the Company. Persons reading this press release are cautioned that such statements or information are only predictions, and that the Corporation’s actual future results or performance may be materially different. Factors that could cause actual events or results to differ materially from those suggested by these forward-looking statements include, but are not limited to competition risks, distributor risks, product development risks such as regulatory, design, intellectual property and other factors described in the Corporation’s reports filed on SEDAR including its Annual Information Form and financial report for the year ended December 31, 2019. These and other factors should be considered carefully, and readers should not place undue reliance on such forward-looking information. All forward-looking statements made in this press release are qualified by this cautionary statement and there can be no assurance that actual results or developments anticipated by the Company will be realized. The Company disclaims any intention or obligation to update or revise forward-looking information, whether as a result of new information, future events or otherwise, except as required by law.

1 EBITDA or Earnings before Interest, Taxes, Depreciation and Amortization is a non-IFRS measure that does not have a standardized meaning and may not be comparable to a similar measure disclosed by other issuers. This measure does not have a comparable GAAP measure. EBITDA referenced here relates to net revenue less cost of goods sold, sales, marketing, support, research and development and administration expenses but excludes interest, income taxes, depreciation, amortization, finder’s warrants issuance costs, stock-based compensation, deferred share unit compensation, mark to market adjustments on Canadian dollar denominated warrants, changes in fair value to derivative liabilities, foreign exchange gain or loss and other income. This measure does not have a comparable IFRS measure and is used by the Company to manage and evaluate the cash operating loss of the business.

 

2 Gross margin is a non-IFRS measure that does not have a standard meaning and may not be comparable to a similar measure disclosed by other issuers. Gross margin referenced here relates to revenues less cost of sales. This measure does not have a comparable IFRS measure and is used by the Company to manage and evaluate the operating performance of the Company.

 

3 Net Working Capital is defined as total current assets less total current liabilities.