icad inc.

Good day, ladies and gentlemen, and welcome to the ICAD Incorporated first quarter 2024 earnings call. At this time, all participants have been placed on a listen-only mode, and the floor will be open for questions and comments following the presentation. If you require any operator assistance today on your call, please press the star key followed by zero. Please note, this call is being recorded. It is now my pleasure to turn the floor over to your host, Mr. Jeremy Bennett. Sir, the floor is yours.

Thank you, Operator. Good morning, everyone, and thank you for joining us today for ICAD's first quarter fiscal year 2024 earnings call. On the call today, we have Dana Brown, our President and Chief Executive Officer, and Eric Longquist, our 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. 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. 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 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. With that, I'll turn the call over to Dana.

Thank you, Jeremy, and good morning, everyone. Let's begin with our business update. On our last call, I recapped the progress we've made executing a three-phase transformation. We've completed phases one and two, which were realigning our base and strengthening our foundation. In these two phases, we were focused on stabilizing our cash burn, strengthening our leadership team, and divesting the ZOFT business. Phase three, investing in growth initiatives, began in first quarter 2024, with the focus on expanding into key accounts and new markets with our existing solutions. This phase is focused on maximizing revenue from our sizable install base. including reengaging customers who've lapsed on annual maintenance service agreements, upgrading customers to new versions, including the transition to cloud, and accelerating deployments across large national accounts. To set us up for success, we have developed and launched targeted lead gen programs. Previously, a reliable and consistent inflow of new leads and a documented and measured pipeline management process did not exist. We've revamped our commercial model. We've reorganized our team structure, how we target and segment our market, revised messaging, pricing, and account management strategies. And as noted on a prior call, we believe U.S. sales had declined in part due to significant reduction in the sales force in fiscal year 2022. As of Q3 2023 in the U.S., We had six sales reps versus 12 in Q3 2022. After a thorough analysis of rep performance over the past three years and our large addressable market opportunity, we believed adding additional sales reps focused on new business and a more orchestrated effort on account retention and expansion would result in increased revenue. In December 2023, we announced adding Peter Graham as head of North American sales. In first quarter, he added four new reps to the sales team. Let's turn now to a few brief Q1 deal highlights. Dignity Health, a part of Common Spirit, signed a four-year subscription deal. They are using our technology on their Hologic gantries. The initial deal was for a portion of their gantries, so there will be room to expand as we go forward. Raleigh Radiology, a perpetual license deal, was a competitive head-to-head win against Hologic. Raleigh Radiology serves over 80,000 patients in the Raleigh market. Northern Navajo. While a smaller deal, it's important to our strategy to serve the First Nation. We will be working together to roll out continued education and support to expand the reach to Native American women. This was also a perpetual deal. University of Chicago Medical Center is an expansion for us. with upgraded software and added exam volumes in 2024. This is a subscription deal with room to continue to expand their use over the coming years. Avera McKinnon Hospital chose ICAD because of our ability to move them closer to a total virtual platform. We're supporting their 2D mammography today via a new VM platform with future plans to expand support to 3D and cloud. Hancock Regional Hospital, a perpetual deal, purchased both 2D and 3D profound detection solutions for use with their Hologic systems. Indiana University Health Arnett, a perpetual deal, also purchased both 2D and 3D profound detection solutions. They are the largest health system in Indiana and are continuing to expand use of ICAD's AI in a mixed gantry environment that's predominantly Hologic. There's additional room for expansion within this account as well. University of Texas Tyler, an upgrade of an existing perpetual deal. The value add for this upgrade was to improve detection accuracy and overall improve outcomes for their patients by adding 3D detection to find cancers earlier, reducing false positives, and improving workflow efficiency. And lastly, we expanded into five additional SOLUS sites. Standardization with ICAD's profound AI suite across all existing and new SOLUS sites enables SOLUS to remain the industry leader that provides both state-of-the-art technology with a best-in-class patient experience. In first quarter, we also achieved several milestones with our OUS sales channel, further expanding ICAD's global reach. In Turkey, profound detection has recently been implemented in one of the largest and most important hospitals in Istanbul, Andalou Medical Center. This center has a strategic relationship with John Hopkins Hospital, providing continuous access to the latest innovations and technology advancements. This relationship provides ICAD significant exposure within this Eastern European region. In Serbia, we secured our second sale at a large oncology site in Vojovodina, expanding presence within this country. In Poland, we celebrated our first installation of profound detection in one of the largest oncology sites just outside of Warsaw, Radomski Centrum Oncology Hills. In Israel, to complement the 13 licenses of profound detection and risk already sold to the Kolelit Hospital Network, one of Israel's leading medical groups, we sold the 14th license to the Clalit Research Center, where they will be conducting a research study leading to future publications. In France, our direct sales force signed an agreement with one of the largest multi-site private clinics called Oradenez to facilitate implementing profound detection across their 100 clinics in France. Lastly, in the first quarter, ICAD received international television exposure, featuring interviews of several radiologists using profound detection from different countries. Interviews aired on French, Belgium, and Israeli television. Turning now to marketing and clinical research, a quick review of our first quarter conference and publication activity. In January, ICAD participated in Arab Health in Dubai, the largest healthcare exhibition in the Middle East. attracting over 52,000 professionals from 176 countries. During this event, we announced our new partnership with Imatec Healthcare Solutions, our distributor in the UAE. With Imatec, we engaged in meetings with three prominent hospital groups, Prime Healthcare, EHS, and Virgil, and with the UAE Ministry of Health. In late February, we attended the European Society Radiology or ECR in Vienna. ECR is the largest and most important medical imaging conference in Europe. This year, the conference drew just under 19,000 attendees from 127 countries, including over 12,000 radiology professionals. We hosted an event with over 40 of our European distributors and their customers coming from 13 different countries. ICAD was also prominently featured in four clinical presentations covering a variety of topics. A retrospective study at the Reggio Emilia Breast Screening Program in Italy, led by Andrea Nutrosi, PhD, aimed to assess the efficacy of implementing ICAD's Profounda AI case scoring strategy in a breast screening program to expedite the reading process. Their study concluded that adding artificial intelligence case scoring in a breast screening program can overcome delay and improve prioritization in most probably true positive cases. A second retrospective study by this same group aimed to assess the integration of ICAD's case malignancy scoring into a breast screening program to alleviate workload without compromising accuracy. Analyzing data from over 31,000 screening exams, including 92 proven tumors, the study simulated two integration AI and human reading protocols. Results showed that implementing ICAD's profound AI could substantially reduce the number of human readings and workload by up to 30%, with a modest improvement in recall rate and no increase in false negatives observed. Jonas Sebelak, a research associate and PhD candidate, along with others from the University of St. Gallen and Krebs-Liske-Ostwitz in Switzerland and Radiology Am Theater in Germany, presented a retrospective evaluation of interval breast cancer using cutting-edge advances in AI for radiological imaging. Using AI to Reduce the Number of Interval Carcinomas by Using AI Diagnostic Software. And Dr. Shirag Pargi, Chief Medical Officer for Solus Mammography, was awarded an ECR Certificate of Merit for his presentation on breast arterial calcification, or BAC, as a proxy for broader vessel disease. In addition, we showcased at two GE-sponsored educational events, One focused on the adoption of artificial intelligence in breast imaging by Dr. Corinne Baliguier, Head of Medical Imaging Department, Institut Gustave Roussy in France, and the second on the impact of AI in clinical routines for the detection of breast cancer on mammograms by Dr. Axel Gravingold of Germany. Lastly, in March, we showcased our solutions at the National Consortium of Breast Centers annual interdisciplinary breast center conference in Las Vegas to over 900 attendees. This conference focus is to increase the quality of breast care provided to women across the globe through interdisciplinary education for breast health professionals. Many breast health care practices are not standardized, and this conference provides a learning and networking environment, enabling breast professionals to learn about genetics, risk, the latest treatments, technologies, procedures, as well as become certified and sharpen their skills in detecting and treating breast cancer. It's a very engaged audience with strong interest in risk detection and quality programs and resulted in several strong leads for our sales pipeline. We hosted a breakfast symposium for nearly 200 of the attendees featuring a presentation by Dr. Nikki Gidwani, a breast radiologist, with Stony Brook University Hospital. Dr. Gidwani discussed how breast imaging centers are staying at the forefront with best-in-class AI solutions. She shared her personal journey with Breast AI Solutions and the power of ICAD's newest algorithm in helping imaging centers meet key clinical, operational, quality, and financial business objectives. We were proud to announce a philanthropic global health collaboration with RAD-AID International. RAD-AID, a nonprofit charitable organization dedicated to improving radiology healthcare in medically underserved regions, is collaborating with ICAD to introduce mammography AI-based decision support, starting with an implementation in Guyana using ICAD's profound detection. The partnership's primary goal is to improve the speed, efficiency, and accuracy of breast imaging and breast cancer detection by providing low-resource medical institutions with access to technology, education, clinical support, and hands-on training. We've recently installed our solutions in Guyana, where implementation of our profound AI detection solution, coupled with RAD-AIDS educational and capacity-building initiatives, aims to increase and improve breast cancer detection for patients in need. Such collaboration endeavors to build AI-supported models for globally reducing healthcare disparities and increasing health equity by widening access to earlier cancer diagnostics. Breast cancer remains a significant global health challenge, particularly in regions where trained clinical personnel and technological resources are scarce. and drive deep disparities in breast cancer outcomes. Dedicated to our mission of creating a world where cancer can't hide, we're honored to partner with RAD-AID on this transformative program to ensure advances in early cancer detection are available globally. Our deployment of profound AI detection in Guyana represents a significant step forward in the fight against breast cancer in low resource settings. Together with RAD-AID, we can revolutionize breast cancer detection accuracy and efficiency, ensuring medical professionals have the training and the tools they need to work smarter. When it comes to cancer diagnosis, we believe where you live should not determine whether you live. From a clinical data perspective, a paper published in The Lancet in February 2024 shows that the performance of profound risk with 2D mammography holds up in five European screening populations that were not used for the development of profound risk for 2D. This paper is an external validation of profound risk for 2D that shows its performance generalizes across the five screening populations with AUCs greater than 0.7. The results also show that profound risk for 2D can predict later stage breast cancers as high risk among women who are currently sent home with a negative mammogram when profound risk for 2D isn't used clinically. This means that profound risk for 2D could help with earlier identification of women that may carry elevated mortality and morbidity risk associated with late stage breast cancer and thus could potentially save lives if additional personalized screening strategies are implemented for these women, rather than if they just follow the typical average screening regimens. Let's turn now to updates on our technology. In mid-March, we released new advanced workstation features for our flagship solution, Profound Detection, for both 2D and 3D mammography, aimed at further improving and facilitating radiologists interpretation of mammograms within their workstation. The new features for the profound detection solution are designed to improve the readability of ICAD results through a configuration option to limit to three lesion marks visible on a workstation view displaying 3D images. This refinement ensures that radiologists can interpret the most critical information, thereby streamlining the diagnostic process for more efficient decision-making. The introduction of color-coded lesion marks and case scores on the profound scorecard provides an intuitive visual aid, allowing radiologists to discern the suspicion level of detected abnormalities quickly. This color-coded system, based on cancer occurrence per screening population, offers a concise, comprehensive representation of the severity of detected lesions and the overall case. further aiding in accurate diagnoses and prioritization of cases. And lastly, the support for fine-tuning score ranges based on a facility's own real-world data enables users to customize the detection system according to their specific clinical needs, enhancing performance and adaptability to varying patient populations. The progression of ICAD's leading breast health AI for over 20 years represents our continuous improvement in technology and functionality, demonstrating our unwavering commitment to advancing cancer detection capabilities and improving patient outcomes. From the inception of ICAD's 2D detection in 2002 to the launch of 3D detection version 1 in 2016, followed by 3D version 2 detection in 2018 and version 3 in 2021, Each version has pushed the boundaries of cancer detection solutions. Now, in 2024, the release of Version 3 Detection Service Pack marks another milestone, representing a commitment to ongoing enhancement and ensuring that profound detection remains at the forefront of early cancer detection solutions. We also recently announced commercial availability of Profound Cloud, built on the Google Cloud Platform. Our innovative software as a service, or SAS, platform provides medical providers with a cost-effective, secure, and scalable means to access and deploy the latest profound breast health suite of AI solutions. With the commercial launch of Profound Cloud, ICAD is enabling interoperability and access to breast AI solutions at enterprise scale, revolutionizing global access to cutting-edge AI solutions in breast health. Powered by Google Cloud architecture and Google's health AI innovations, Profound Cloud integrates a lightweight edge client and cloud-based components. Together, they securely transport and process mammography screening data between imaging sources, such as imaging modalities and picture archiving communication systems, or PACs, and the cloud-based AI. The processed data is seamlessly delivered to systems that utilize AI outputs, including mammography review workstations, PACs, and image and data storage systems. The healthcare landscape is shifting towards technology as a service model, avoiding the pitfalls of investing in rapidly outdated hardware and software. As AI relies heavily on specialized hardware like graphical processing units or GPUs, Setting up and upgrading both software and hardware becomes increasingly complex. Cloud-based solutions like Profound Cloud address this challenge by providing software as a service to ensure that all customers access the latest technology without the initial hardware investments, support contracts, and constant updates. Moreover, Profound Cloud provides facility administrators the ability to access the administration site enabling them to update configurations and perform administrative tasks in multiple languages. Profound Cloud is designed to support patients, providers, and partners while facilitating the management of diverse data types critical for comprehensive healthcare analysis. This includes 2D and 3D mammography images alongside all cancer images in parallel. It stores limited images of benign, recall, and normal cases. Profound Cloud also manages profound risk and density assessment results, radiology and pathology reports and detection results, while ensuring seamless access to critical diagnostic information. Importantly, Profound Cloud securely handles de-identified patient information and provider data, adhering to strict privacy and compliance standards. The comprehensive approach enables robust analytics for informed decision-making. Before turning the call over to Eric, in case you missed the announcements earlier in the first quarter, I also want to note the addition of two new board members. We are pleased to welcome Dr. Hedvik Resak to our board of directors. Dr. Resak is a renowned radiologist and researcher with over 40 years of experience in the field. For more than 20 years, she was chair of the Department of Radiology at Memorial Sloan Kettering Cancer Center in New York City, a position from which she stepped down in January 2023. In addition to her many prestigious roles, she is actively engaged in global health initiatives, promoting international education and collaboration to improve access to oncological imaging and cancer care. Dr. Risek has published over 380 peer-reviewed original research articles more than 300 review articles, editorials, book chapters, and 18 books. She served as president of multiple prominent medical societies, a member of multiple board of directors and advisory boards, and board of trustees. In recognition of her scientific accomplishments and tireless global outreach, she has received numerous awards, including honorary doctorates, from the Ludwig-Maximilian University in Munich, Germany, and the University of Toulouse III, Paul Sabatier in Toulouse, France. Dr. Resick's extensive experience and clinical expertise in radiology, research, and the development of novel imaging applications will be invaluable as we continue to develop and deploy innovative AI-powered solutions that improve patient outcomes around the world. We also announced the appointment of Mike Doyle to our board of directors. Mr. Doyle is a seasoned technology and healthcare executive with over 35 years of experience. He is currently the CEO of Spire Health, a leading healthcare technology company focused on improving health outcomes for cardiorespiratory patients through continuous virtual patient monitoring. Spire along with Mr. Doyle's recent companies all achieved measurable patient and health outcomes improvement by harnessing the power of AI and machine learning. He has been the CEO and director of seven healthcare companies. Mr. Doyle has also been appointed to numerous private, not-for-profit, and public company boards, and brings a wealth of experience in healthcare technology and business strategy to the ICAD Board of Directors. I'll now turn the call over to Eric for a detailed review of our Q1 2024 financials.