Cedara (NASDAQ:CDSW)
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Cedara Software Announces Strong Revenue and Earnings for Second
Quarter
- Reflects strong organic growth in Cedara's core OEM business from medical
imaging manufacturers and solution providers
TORONTO, Feb. 8 /PRNewswire-FirstCall/ -- CEDARA SOFTWARE CORP.
(TSX:CDE/NASDAQ:CDSW), a leading independent provider of medical imaging
technologies for the global healthcare market, today announced strong financial
results for the 2005 fiscal year second quarter ended December 31, 2004.
Cedara's revenues from continuing operations for the quarter were $23.0
million, up 89% from the $12.1 million in the same quarter of the previous
year. This quarter is the first to include the impact of Cedara's recent
acquisition of eMed Technologies which closed October 8, 2004. Accompanying the
positive impact of eMed's operating results was organic growth of 28% in
Cedara's revenue, compared to the same quarter last year.
Net income for the quarter was $4.9 million, up 27% compared to a net income of
$3.9 million in the previous year. This included approximately $1.1 million of
eMed acquisition related charges. Diluted earnings per share were $0.15,
compared to $0.14 in the previous year.
For the six months ended December 31, 2004, revenues were $35.3 million, up 59%
from the $22.3 million in the previous year. Net income for the six months was
$8.1 million, compared to $5.6 million in the previous year. Diluted earnings
per share of $0.24 were up from $0.20 in the previous year.
The strong growth in revenue for the quarter included a 75% increase in
software license revenue to $12.5 million. Sales of solutions and workstations
(which includes bundled software and hardware) reached $5.3 million. Support
services revenue increased 42% to $3.0 million, while engineering services
revenue declined slightly to $2.2 million. The change in revenue mix, which has
helped diversify Cedara's business model, delivered a strong gross margin of
$16.3 million or 71% of revenue for the quarter.
Operating expenses in the second quarter increased by $6.0 million, or 114%, to
$11.3 million. This resulted from including eMed's operating expenses in the
current quarter, the impact of acquisition related charges and increased
spending on sales and marketing activities. Prior year operating expenses also
included a one-time gain of $1.2 million from settlement of outstanding loans
to the former CEO. For the six months ended December 31, 2004, operating
expenses were $18.2 million, an increase of $7.1 million or 64%.
"I am extremely pleased to report another quarter of strong revenue growth and
profits," said Abe Schwartz, Cedara's President and Chief Executive Officer.
"The combined increase in revenues and profits this quarter is validation of
Cedara's dual strategy of selling to OEMs as well as hospitals and imaging
centres directly."
On January 18, 2005, Cedara announced that it had signed a definitive agreement
to merge with Merge Technologies Incorporated (NASDAQ:MRGE), d.b.a. Merge
eFilm, in an all-stock transaction. The merger is subject to shareholder and
regulatory approval.
Conference Call Information
The Cedara Software Corp. second quarter fiscal 2005 conference call and web
cast to discuss results and corporate strategy is scheduled for 11:00 am EST on
Wednesday, February 9, 2005. The conference call can be accessed via audio web
cast by visiting:
http://www.cedara.com/investors/teleconference_webcast.htm
Participants in the conference call are asked to dial 416-405-9328 or
1-800-387-6216, five to ten minutes prior to the February 9, 2005, 11:00 am
start of the teleconference to participate in the call. This conference call
will be recorded and will be available on instant replay at the end of the all,
until midnight March 9, 2005. To listen to the replay, please dial 416-695-5800
or 1-800-408-3053, and enter pass code 3132861 followed by the number sign.
About Cedara Software Corp
Cedara Software Corp. is a leading independent provider of medical imaging
technologies. Cedara's software is deployed in hospitals and clinics worldwide
and is licensed by many of the world's leading medical device and healthcare
information technology companies. Approximately 28,000 medical imaging systems
and 6,400 Picture Archiving and Communications System (PACS) workstations have
been licensed to date. Cedara recently acquired eMed Technologies Corporation,
widely known as a provider of innovative PACS and teleradiology solutions that
have been installed in over 2,000 hospitals and imaging centres. Cedara is
unique in that it has technologies and expertise that span all the major
digital imaging modalities including computed tomography (CT), magnetic
resonance imaging (MRI), digital X-ray, mammography, ultrasound,
echo-cardiology, angiography, nuclear medicine, positron emission tomography
(PET) and fluoroscopy. Furthermore, the Company's medical imaging offerings are
used in all aspects of clinical workflow including the capture of a patient's
digital image; the archiving, communication and manipulation of digital images;
sophisticated clinical applications to analyze digital images; and even the use
of imaging in minimally-invasive surgery.
Certain statements contained in this news release are forward-looking within
the meaning of securities laws and are based on current expectations that are
subject to a number of assumptions, uncertainties and risks, and the actual
results may differ materially from what is currently expected. In particular,
statements relating to the healthcare imaging software market and market share,
relating to the Company's expectations concerning its licensed software
products, relating to the Company's expectations as to revenues, costs and cash
flows, relating to the acquisition of eMed and relating to the proposed merger
with Merge eFilm are forward looking statements. The assumptions, uncertainties
and risks upon which these forward looking statements are based include, but
are not limited to: dependence on key personnel of the Company, dependence on
major customers and individual contracts, fluctuations in quarterly financial
results, competitive pressures (including price competition), rapid
technological change, exchange rate fluctuations, risks associated with
international operations, dependence on intellectual property rights,
regulatory clearances and approvals for new products, risks relating to product
defects and product liability, adverse consequences of financial leverage,
ability to service debt, continued acceptance of the Company's products,
regulatory changes to the health care industry, seasonality, economic and
political conditions, risks relating to the acquisition of eMed and risks
relating to the proposed merger with Merge eFilm including risks associated
with obtaining regulatory and shareholder approvals without unexpected delays
or conditions, timely implementation and execution of merger integration plans,
retention of customers and the Company's original employees, successfully
leveraging Merge eFilm's and the Company's comprehensive product offering to
the combined customer base and sustaining continued growth at rates
approximating recent levels. Further information about these risks and
uncertainties can be found in the continuous disclosure documents filed from
time to time by Cedara with the securities regulatory authorities, which
documents are available at http://www.sedar.com/.
Three pages of consolidated financial statements follow:
CEDARA SOFTWARE CORP.
Consolidated Balance Sheets
(In thousands of Canadian dollars)
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December 31, 2004 June 30, 2004
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(Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 34,213 $ 40,510
Short-term investments - 10,902
Accounts receivable 19,471 7,449
Inventory 1,613 268
Prepaid expenses and other assets 1,962 881
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57,259 60,010
Capital assets 2,373 2,201
Long-term investment 1,026 510
Intangible assets 12,299 373
Goodwill 33,288 9,053
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$ 106,245 $ 72,147
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Liabilities and Shareholders' Equity
Current liabilities:
Bank indebtedness $ 17,670 $ -
Accounts payable and accrued liabilities 9,218 4,207
Deferred revenue 5,726 861
Current liabilities of discontinued operations - 986
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32,614 6,054
Long-term liability 234 -
Non-current portion of provision for loss on
sublease 17 44
Shareholders' equity :
Capital stock 162,912 161,536
Contributed surplus 632 388
Deficit (87,758) (95,875)
Cumulative translation adjustment (2,406) -
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73,380 66,049
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$ 106,245 $ 72,147
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CEDARA SOFTWARE CORP.
Unaudited Consolidated Statements of Operations
(In thousands of Canadian dollars, except per share amounts)
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Three Months Ended Six Months Ended
December 31 December 31
-------------------------------------------
2004 2003 2004 2003
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Revenue $ 22,973 $ 12,148 $ 35,314 $ 22,251
Direct costs 6,682 2,607 9,086 4,971
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Gross margin 16,291 9,541 26,228 17,280
Expenses:
Research and development 2,907 2,104 4,825 4,414
Sales and marketing 3,587 1,397 5,275 2,412
General and administration 2,986 1,731 4,899 3,285
Severance costs (recovery) 336 (205) 415 (184)
Other charges (income) 493 (217) 1,562 218
Amortization of intangible
assets 588 46 601 102
Depreciation and amortization 354 404 657 853
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11,251 5,260 18,234 11,100
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Income before interest expense 5,040 4,281 7,994 6,180
Interest income (expense), net (147) (336) 88 (602)
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Income from continuing
operations 4,893 3,945 8,082 5,578
Income (loss) from discontinued
operations 35 (53) 35 -
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Net income $ 4,928 $ 3,892 $ 8,117 $ 5,578
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Earnings per share from
continuing operations:
Basic $ 0.16 $ 0.16 $ 0.26 $ 0.23
Diluted $ 0.15 $ 0.14 $ 0.24 $ 0.20
Earnings per share:
Basic $ 0.16 $ 0.16 $ 0.26 $ 0.23
Diluted $ 0.15 $ 0.14 $ 0.24 $ 0.20
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Weighted average number of
shares outstanding:
Basic 31,503,201 24,168,495 31,440,646 27,071,507
Diluted 33,370,845 27,762,206 33,282,965 27,548,191
CEDARA SOFTWARE CORP.
Unaudited Consolidated Statements of Cash Flows
(In thousands of Canadian dollars)
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Three Months Ended Six Months Ended
December 31 December 31
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2004 2003 2004 2003
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Cash provided by (used in):
Operating activities:
Net income from continuing
operations $ 4,893 $ 3,945 $ 8,082 $ 5,578
Items not involving cash:
Depreciation and
amortization 1,081 450 1,397 955
Stock-based compensation
expense 193 18 244 36
Other (45) 318 551 369
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6,122 4,731 10,274 6,938
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Change in non-cash operating
working capital:
Accounts receivable (4,723) (1,130) (10,649) (3,900)
Inventory (26) 95 (83) 88
Prepaid expenses and other
assets (220) (670) (263) (360)
Accounts payable and accrued
liabilities 94 (1,214) 626 (2,335)
Deferred revenue 1,293 (643) 1,477 137
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(3,582) (3,562) (8,892) (6,370)
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2,540 1,169 1,382 568
Investing activities:
Decrease in short-term
investments 10,962 - 10,902 -
Acquisition of eMed, net of
cash acquired (35,730) - (36,502) -
Proceeds from sale of
investments in shares 273 - 273 -
Additions to intangible
assets (10) (20) (20) (54)
Additions to capital assets (432) (201) (502) (431)
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(24,937) (221) (25,849) (485)
Financing activities:
Increase in long-term
liability (5) - (5) -
Issue of shares 1,304 849 1,376 849
Increase (decrease) in bank
indebtedness 18,420 (1,778) 18,420 (549)
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19,719 (929) 19,791 300
Effect on exchange rate changes
on cash and cash equivalents (1,506) - (1,586) -
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Change in cash and cash
equivalents from continuing
operations (4,184) 19 (6,262) 383
Change in cash and cash
equivalents from discontinued
operations (35) (19) (35) (383)
Cash and cash equivalents,
beginning of period 38,432 - 40,510 -
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Cash and cash equivalents,
end of period $ 34,213 $ - $ 34,213 $ -
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DATASOURCE: Cedara Software Corp.
CONTACT: Brian Pedlar, Chief Financial Officer, Cedara
Software Corp., (905) 672-2100, Extension 2015, ;
To request a free copy of this organization's annual report, please go to
http://www.newswire.ca/ and click on reports@cnw.