icad inc.

Greetings. Welcome to the ICAT Inc. fourth quarter and full year 2024 Financial Results Conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Rosalind Christian, Investor Relations at ICAT. You may begin.

Good afternoon, everyone. Thank you for joining us today for ICAD's fourth quarter and full year 2024 earnings call. On the call, 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 that 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. And with that, I'll turn the call over to Dana.

Fourth quarter marked another strong quarter for ICAD, with our top-line results exceeding expectations as reflected in revenue of 5.4 million. We recorded increased full-year 2024 revenue of 19.6 million and ARR of 9.8 million. Our growth reflects the momentum we are seeing in our transformation strategy, including the accelerating adoption of Profound Cloud and our broader shift to a software-as-a-service-based business model. We believe 2024 can be characterized as the year when AI's pivotal role in healthcare was more widely understood and adopted. Across the industry, we saw increasing demand for AI-powered solutions that enhance clinical efficiency, improve diagnostic accuracy, and expand access to high-quality care. In breast cancer detection, AI adoption still has a long way to go with only about 37% of mammography sites in the U.S. currently utilizing AI, but this is rapidly changing as providers recognize the significant benefits AI brings to patient care and workflow optimization. At ICAD, we are uniquely positioned to lead this transformation. With FDA cleared, clinically proven technology that reduces radiologists' reading time by 52% and improves cancer detection by over 23%, our solutions are used by healthcare providers in over 50 countries. In 2024, we received FDA clearance of Profound Detection version 4.0, the most advanced AI detection solution we've launched to date. Version 4.0 delivers a smarter AI with a 22% improvement in detecting aggressive cancers compared to Version 3, including a 50% increase in sensitivity for dense breast tissue and a 60% improvement in identifying invasive lobular cancers. With an 18% reduction in false positives, it also enhances workflow efficiency and reduces unnecessary follow-ups. improving both the patient experience and clinical outcomes. Additionally, for the first time, our AI now integrates prior exam analysis, replicating a radiologist's own comparative reading approach to increase diagnostic confidence. Coupled with our SAS expansion through Profound Cloud, the version 4.0 is a key milestone in ICAD's long-term growth strategy. Our transition to a reoccurring revenue model strengthens financial predictability, positioning us for continued success. As we move through 2025, we remain focused on driving innovation, expanding our SaaS footprint, and ensuring that our AI solutions reach more providers and patients worldwide. Turning now to our Q4 deal highlights. In the fourth quarter, we closed a total of 106 deals. 54 perpetual, 33 subscription, and 19 cloud. Some of these deals included expanding at Shutter Health via our partner, Ferrum, where we have ICAD solutions installed and running at 16 of their 42 hospitals and breast centers. The ImageCare and Pink Breast Center in New Jersey signed a multi-year cloud contract with an upgrade to the latest Profound AI, And Hartford Healthcare added 3D detection and density to their existing 2D license. On the partnership front, we signed a partnership agreement with Aaliyah for their BreastScape MRI AI solution. And last month, we also announced a new partnership with Coeos Medical, providing radiologists with an AI-powered pathway for BreastUS with the Coeos Smart Ultrasound solution. This partnership broadens the scope of offerings for ICAD in North America to align best-in-class AI solutions with the care path of the patient, from screening mammogram to breast ultrasound and breast MRI. These new partnerships not only expand ICAD's commercial opportunities in North America, but also provide clinicians with a more complete end-to-end AI-powered approach to breast cancer screening and detection. that enhances workflow efficiency and diagnostic accuracy. We've also begun a new push in Quebec and Ontario, Canada, with private medical centers starting to move to 3D imaging and the need for both AI detection and density assessment. On the global partnership front, we signed a distribution agreement with a new distributor in South Africa, MedMD, and are already actively engaging in several new accounts. MedMB focuses on hosting, implementing, and supporting radiology department applications throughout South Africa, and this is part of our OUS expansion strategy. MedMB will be reselling our full suite of solutions. We also signed our first deal with Sectra on the Sectra Amplifier Platform at London Northwest University Healthcare NHS Trust. This is a very important first step in expanding our sector channel. This is a Docker implementation, meaning on the sectors AI platform amplifier. Northwest London is part of the NHS and serves approximately 1 million patients across London. We also signed a new distributor in Portugal, part of our OUS expansion strategy in the EU, And lastly, we secured final regulatory approval in Jordan, a new expansion country for us. And now for an update on our SAS transition. During 2024, we made tremendous progress with our transition to a SAS-based model, a pivotal shift that is fundamentally changing how we deliver our technology and how we generate revenues. This transition is enabling us to expand accessibility to our AI solutions, enhance financial predictability, and position ICAD for long-term sustainable growth. In the fourth quarter, we saw continued momentum in cloud adoption, with 19 of our closed deals coming through Profound Cloud, compared to 13 deals in Q3 and 10 cloud deals in Q2, which was the first quarter of its availability. This reinforces the increasing preference for software as a service solutions that eliminate large upfront costs while ensuring continuous access to cutting edge AI advancements. As a result, annual reoccurring revenue or ARR grew 11% year over year, demonstrating strong customer demand and the scalability of our cloud platform. We believe there is a significant opportunity for ICAD to increase market share by providing a cost-effective, flexible alternative to traditional perpetual licensing models. Our cloud platform allows facilities to implement AI solutions more efficiently without the burden of large hardware investments, IT maintenance, or software update costs. While we are encouraged by the strong adoption trends, It is important to note that SaaS transitions can impact near-term gap revenue recognition, since perpetual license sales provide immediate revenue, whereas with cloud deals, revenue is recognized over time. For example, a perpetual deal would traditionally generate all its revenue up front, while a cloud deal of the same value would be recognized quarterly over its contract term. In the short term, this dynamic may cause some flattening in reported gap revenue, but at the same time, it creates a backlog of recurring high margin revenue that builds quarter over quarter, leading to greater financial stability and visibility over time. To drive this transition, we are leveraging our strong cash position to support the expansion of Profound Cloud. This includes investing in scaling our cloud infrastructure, onboarding new customers, and expanding our commercial reach. As our reoccurring revenue base grows, we expect to see improvement in profitability and cash flow. Eric will provide more details on the financial impact of this transition, but we remain highly confident in the long-term benefits of SaaS, both for our customers who gain access to a continuously improving AI solution, and for ICAD as we build the more predictable, scalable, and high-margin revenue model. Turning for a quick review of our conference participation and industry engagement in the fourth quarter, at JFR 2024, ICAD debuted the global commercial availability of Profound Cloud, marking a key milestone in our transition to a SaaS-based model. In the first two full quarters of U.S. availability, Profound Cloud processed nearly 100,000 cases, demonstrating rapid adoption and delivering AI-powered breast imaging solutions with more than 50% faster processing speeds compared to traditional on-prem solutions. The platform's scalability, affordability, and regulatory clearances in key markets including South Africa and the UAE, position it as a transformative solution for healthcare providers worldwide. At RSNA 2024, we announced a groundbreaking partnership with Cascade Health to launch Profound Health, a virtual second-read service providing AI-powered breast health insights to patients who otherwise wouldn't have access to AI-based screenings. This initiative aligns with our mission to democratize access to early breast cancer detection and support health equity in mammography. Closing out the year at SABCS 2024, ICAD showcased four novel research abstracts, demonstrating the impact of AI in improving early breast cancer detection, assessing disparities across diverse populations, and exploring the link between breast arterial calcification, or BAC, and cardiovascular risk. Notably, our research highlighted a higher prevalence of BAC in women with mammographically detected breast cancer, suggesting that AI-powered BAC detection could play a role in integrating cardiovascular risk assessment into routine breast cancer screenings. On the investor front in Q4, ICAD participated in the LD Micro Main Event 17 and the Craig Hallam Alpha Select Conference, engaging with institutional investors to discuss our strategic SaaS transition, recent regulatory milestones, and long-term growth trajectory. Most recently, in February, we participated in the BTIG 12th Annual MedTech Digital Health, Life Science, and Diagnostic Tools Conference in Snowbird, Utah, where we continue to build relationships with investors and provide updates on our progress. And now we'll hand it over to Eric for a review of our financial performance.