Vancouver, British Columbia – May 30, 2017 – LED Medical Diagnostics Inc. (“LED Medical” or the “Company”) today announced its financial results for the first quarter ended March 31, 2017, reported in United States dollars and in accordance with International Financial Reporting Standards (“IFRS”). The Company’s results are presented in comparison to the first quarter ended March 31, 2016. All balances are expressed in United States dollars unless otherwise stated.
“A noteworthy accomplishment this quarter was the acquisition of Apteryx Inc. a profitable, Ohio based imaging software company on February 10th. This transformative event is both additive and accretive to the Company and provides several unique synergies to our core business which we expect will result in a financially stronger and more diversified Company,” commented Dr. David Gane, Company CEO. “Having our own suite of imaging software, including XVWEB, a cloud based imaging software service (SaaS) provides LED with an additional stream of high margin revenue as well as a differentiated product offering and market with which to grow VELscope and imaging device businesses.”
LED Medical reported revenue of $2.098 million, which is a decrease of 2% from the three months ended March 31, 2016 and a 13% increase in revenues from the three months ended December 31, 2016.
The net loss was $1.08 million for the three months ended March 31, 2017, as compared to a net loss of $2.05 million for the three months ended March 31, 2016. Inclusive of accounting adjustments, the Company’s calculated gross margin was 49% for the three months ended March 31, 2017, as compared to 25% in the three months ended March 31, 2016.
Total operating expenses for the three months ended March 31, 2017 were $1.79 million as compared to $2.53 million for the three months ended March 31, 2016. Core operating expenses (excluding stock-based compensation, deferred share unit compensation and other operating expenses) for the three months ended March 31, 2017 were $1.7 million, as compared to $2.2 million for the three months ended March 31, 2016.
The Company had cash of $2.9 million as of March 31, 2017. Cash flow used in operations was $1.39 million during the three months ended March 31, 2017 compared to $684,000 during the three months ended March 31, 2016. The cash outflows from investing activities during the three months ended March 31, 2017 were $10.23 million relating to the purchase of Apteryx, Inc. There were inflows from financing activities for the three months ended March 31, 2017 of $13.6 million attributed to the financing related to the purchase of Apteryx.
Business Highlights, Financial Statements and Management’s Discussion & Analysis
On February 10, 2017, the Company acquired 100% of the common shares of Apteryx, Inc. (“Apteryx”) for aggregate consideration of US $10.25 million. Apteryx is a custom software development company located in Akron, Ohio specializing in medical and dental image processing, data encryption and security, database, data conversion and distributed systems.
The Company closed a series of financings related to the acquisition for gross proceeds of approximately $14.4 million CDN. The Company completed a private placement of 220,711,540 equity units of the Company (the “Equity Units”) for gross proceeds of approximately C$13.3 million. The Equity Units were priced at C$0.06 per Equity Unit, each consisting of one common share and one-half of one common share purchase warrant, with each whole warrant being exercisable for a period of 24 months into one common share of LED at a price of C$0.10 per common share.
The Company also issued senior secured debentures with a principal amount of $1,150,000 CDN maturing 24 months from the closing date. The debenture is attached with a 12% coupon and 2,443,750 common shares of the Company.
Please see the audited consolidated financial statements and related Management’s Discussion & Analysis (“MD&A”) for more details. The interim consolidated financial statements for the three months ended March 31, 2017 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.ledmd.com.
The following and preceding discussion of financial results includes references to Gross Margin and Core Operating Expenses, which are non-IFRS financial measures. The measure of gross margin is provided as management believes this is a good indicator in evaluating the operating performance of the Company. EBITDA is defined as net loss and comprehensive loss and 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; foreign exchange gain or loss; and other income. The measure of working capital is provided as management believes this is a good indicator of the operating liquidity available to the Company.
About LED Medical Diagnostics Inc.
Founded in 2003 and headquartered in Vancouver, British Columbia, Canada, LED Medical Diagnostics Inc., through its wholly-owned subsidiaries LED Dental Inc. and LED Dental Ltd, provide dentists and oral health specialists with advanced diagnostic imaging products and software, in addition to the award-winning VELscope® Vx tissue fluorescence visualization technology. Backed by an experienced leadership team and dedicated to a higher level of service and support, LED Dental is committed to providing dental practitioners with the best technology available by identifying and adding leading products to its growing portfolio.
The Company is currently listed on the TSX Venture Exchange (TSX-V) under the symbol “LMD”, the OTCQB under the symbol “LEDIF”, as well as the Frankfurt Stock Exchange under the symbol “LME”. For more information, call 844.952.7327 or visit www.leddental.com/investor-relations.