LED Medical Diagnostics Inc. Reports 2014 Third Quarter Results
BURNABY, British Columbia November 28, 2014 - LED Medical Diagnostics Inc. ("LED Medical" or the "Company") today announced its financial results for the third quarter ended September 30, 2014, reported in United States dollars and in accordance with International Financial Reporting Standards ("IFRS"). The Company's results are presented in comparison to the third quarter ended September 30, 2013. All balances are expressed in United States dollars unless otherwise stated.
"I am pleased to announce revenue growth of 86% to $4,273,818 during the nine months ended September 30, 2014 as compared to the same prior year period. We provided annual revenue guidance of $9.0 million to $11.0 million which the Company is working diligently to achieve," states Dr. David Gane, Chief Executive Officer. "Revenue growth in 2014 is a direct result of optimizing our VELscope distribution channel and by adding new third party digital imaging product lines to complement our VELscope product offering. We have made a substantial investment in our Company which includes inventory as at September 30, 2014 to fulfil the anticipated sales orders to be received in the fourth quarter of fiscal 2014. I am proud of what we have built to date inclusive of the team assembled and the progress we have made to position ourselves to capitalize on the busy sales cycle that lays ahead until the end of the year. We are closer than ever to realizing our goal of becoming a leading player in the North American digital dental imaging market."
Notable business developments and achievements up to the reporting date include the following:
- On August 13, 2014, the Company announced the availability of its new digital intraoral camera, the LED IC100. Designed with simplicity, functionality and versatility in mind. The LED IC100 intraoral camera captures high-resolution images to provide practitioners with an enhanced patient education tool.
- On August 19 2014, the Company officially introduced the LED IC200. This product is the second intraoral camera in the Company's product portfolio and is elegantly designed to acquire high-resolution intraoral and extraoral images with auto focus and a large depth of field.
- During September 2014, the Company showcased its new Digital Imaging products at the California Dental Association (CDA) Annual Conference entitled "CDA Presents the Art and Science of Dentistry", the American Association of Oral and Maxillofacial Surgeons 94th Annual Meeting and the American Academy of Periodontology 100th Annual Meeting and Exhibition. The CDA conference alone was attended by more than 27,000 dental professionals.
- On October 14, 2014, LED Medical announced the renewal of its exclusive international distribution agreement (outside North America) for the VELscope® Vx for a three year term with DenMat Holding LLP. This agreement requires minimum annual purchases of the VELscope® Vx product line by DenMat and is subject to another three-year extension at the mutual agreement of both parties.
Financial Position as at September 30 2014
Net working capital  as at September 30, 2014 was $2,357,635 which includes cash of $815,036.
Three-Month Comparative Results
The Company reported revenue of $1,628,643 for the three months ended September 30, 2014 as compared to $911,387 for the three months ended September 30, 2013. Operating loss was $1,977,051 for the three months ended September 30, 2014, as compared to a net loss of $260,326 for the three months ended September 30, 2013.
The Company's calculated gross margin  was 36% for the three months ended September 30, 2014, which is lower than the 64% gross margin during the three months ended September 30, 2013. Total operating expenses for the three months ended September, 2014 were $2,577,852 as compared to $840,383 for the three months ended September 30, 2013.
EBITDA  for the three months ended September 30, 2014 was negative $1,623,618 compared to negative $139,816 for the three months ended September 30, 2013.
Included in the Company's net loss of $2,693,861 for the three months ended September 30, 2014 is $777,504 in mark to market adjustments on Canadian dollar denominated warrants. Exclusive of the mark to market adjustment, the Company's net loss would be $1,916,357 for the third quarter of fiscal 2014. Included in the Company's net loss of $1,959,503 for the three months ended September 30, 2013, is a loss of $2,065,653 in mark to market adjustments on Canadian dollar denominated warrants resulting in the Company's net income of $106,150 exclusive of the mark to market adjustment loss.
Nine-Month Comparative Results
The Company reported revenue of $4,273,818 for the nine months ended September 30, 2014 as compared to $2,303,860 for the nine months ended September 30, 2013. Operating loss was $4,816,499 for the nine months ended September 30, 2014, as compared to a net loss of $1,923,094 for the nine months ended September 30, 2013.
The Company's calculated gross margin  was 47% for the nine months ended September 30, 2014, which is lower than the 60% gross margin during the nine months ended September 30, 2013. Total operating expenses for the nine months ended September, 2014 were $6,812,708 as compared to $3,302,749 for the nine months ended September 30, 2013.
EBITDAfor the nine months ended September 30, 2014 was negative $4,061,343 compared to negative $916,082 for the nine months ended September 30, 2013.
Included in the Company's net loss of $5,505,294 for the nine months ended September 30, 2014 is $693,979 in mark to market adjustments on Canadian dollar denominated warrants. Exclusive of the mark to market adjustment, the Company's net loss would be $4,811,315 for this fiscal 2014 period. Included in the Company's net loss of $5,494,416 for the nine months ended September 30, 2013 is $3,822,587 in mark to market adjustments on Canadian dollar denominated warrants. Exclusive of the mark to market adjustment, the Company's net loss would be $1,671,829.
Financial Guidance for Fiscal Year 2014
The Company is providing guidance for the full fiscal year ending December 31, 2014 ("fiscal year 2014"). This guidance is intended solely to give investors an understanding of management's expectations for the full fiscal year in light of recent industry sales trends, seasonality of the business and recognition that much of the sales generated in the dental industry occur in the fourth quarter. The guidance does not take into account, or give effect for, any events that are beyond the Company's reasonable control.
|Full Fiscal Year Ending December 31, 2014||Quantitative Guidance|
|Net revenues||$9.0M - $11.0M|
Financial Statements and Management's Discussion & Analysis
Please see the interim condensed consolidated financial statements and related Management's Discussion & Analysis ("MD&A") for more details. The interim condensed consolidated financial statements for the nine months ended September 30, 2014 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.
 Net Working Capital 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 IFRS measure. Working capital is defined as current assets less current liabilities. The Company believes that the inclusion of this no-IFRS measure financial measure provides investors with an alternative presentation useful to investors' understanding of the Company's core operating results and trends.
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.
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 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. 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.
About LED Medical Diagnostics Inc.
Founded in 2003 and headquartered in Burnaby, British Columbia, Canada, LED Medical Diagnostics Inc. is a leading developer of LED-based visualization technologies for the medical industry. The Company is currently listed on the Toronto Stock Exchange (TSX-V) under the symbol "LMD", the OTCQX under the symbol "LEDIF", as well as the Frankfurt Stock Exchange under the symbol "LME". For more information, visit www.ledmd.com.
LED Dental Inc., a wholly-owned subsidiary, is backed by an experienced leadership team dedicated to a higher level of service and support. LED Dental offers advanced diagnostic imaging equipment that seamlessly integrates into dental practices. The Company is committed to providing dental practitioners with the best technology available by identifying and adding strong products to its growing portfolio. Additionally, the company manufactures the award-winning VELscope® Vx Enhanced Oral Assessment System, the first system in the world to apply tissue fluorescence visualization technology to the oral cavity. The VELscope® Vx is now used to conduct more screenings for oral cancer and other oral mucosal diseases than any other adjunctive device. For more information, call 888.541.4614 or visit www.leddental.com.
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Forward Looking Statement
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. Such forward-looking statements or information includes financial and other projections as well as statements regarding the Company's future plans, objectives, performance, revenues, growth, profits, operating expenses or the Company's underlying assumptions and the Company's intention to expand its technology beyond dental applications including "costs of production", "capital expenditures", "costs and timing of the development of new products", "hedging practices", "currency exchange rate fluctuations", "requirements for additional capital", "government regulation of medical device operations" and "insurance coverage". Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as "plans", "expects", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", "believes" or variations of such words and phrases or statements that certain actions, events or results "may", "would", "could", "might" or "will be taken", "occur" or "be achieved" or the negative connotation thereof. Persons reading this Management's Discussion and Analysis are cautioned that such statements or information are only predictions, and that the Company'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: economic conditions; dilution; limited history of profits and operations; operational risk; distributor risks; working capital; potential conflicts of interest; speculative investment; intellectual property risks; disruptions in production; reliance on key personnel; seasonality; management's estimates; development of new customers and products risks; stock price volatility risk; sales and marketing risk; competitors and competition risk; regulatory requirements; reliance on few suppliers; reliance on subcontractors; operating cost and quarterly results fluctuations; fluctuations in exchange rates; product liability and medical malpractice claims; access to credit and additional financing; taxation; market acceptance of the Company's products and services; customer and industry analyst perception of the Company and its technology vision and future prospects; technological change, new products and standards; risks related to acquisitions and international expansion; reliance on large customers; concentration of sales; international operations and sales; management of growth and expansion; dependence upon key personnel and hiring; the Company not adequately protecting its intellectual property; risks related to product defects and product liability; and including, but not limited to, other factors described in the Company's reports filed on SEDAR, including its financial statements and management's discussion and analysis for the year ended December 31, 2013. In drawing a conclusion or making a forecast or projection set out in the forward-looking information, the Company takes into account the following material factors and assumptions in addition to the above factors: the Company's ability to execute on its business plan; the acceptance of the Company's products and services by its customers; the timing of execution of outstanding or potential customer contracts by the Company; the sales opportunities available to the Company; the Company's subjective assessment of the likelihood of success of a sales lead or opportunity; the Company's historic ability to generate sales leads or opportunities; and that sales will be completed at or above the Company's estimated margins. This list is not exhaustive of the factors that may affect the Company's forward-looking information. 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 Management's Discussion and Analysis 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.
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