ICAD Inc (ICAD) 2011 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the first quarter 2011 iCAD Incorporated earnings conference call.

(Operator Instructions) I would now like to turn the presentation over to your host for today's call, Miss Anne Marie Fields with Lippert/Heilshorn.

Please proceed, ma'am.

Thank you, Shaquana.

Good morning.

This is Anne Marie Fields with Lippert/Heilshorn & Associates.

Thank you all for participating in today's call.

Joining us this morning are Ken Ferry, Chief Executive Officer, and Kevin Burns, Executive Vice President and Chief Financial Officer.

After yesterday's market closed, iCAD announced financial results for the first quarter of 2011.

If you have not received this news release or if you would like to be added to the Company's distribution list, please call Lippert/Heilshorn in New York at 212-838-3777 and speak with Carolyn Curran.

Before we begin, I would like to caution that comments made during this conference call by management will contain forward-looking statements that involve risks and uncertainties regarding the operations and future results of iCAD.

I encourage you to review the Company's filings with the Securities & Exchange Commission, including, without limitation, its forms 10-K and 10-Q, which identify specific factors that may cause actual results or events to differ materially from those described in the forward-looking statements.

Furthermore, the content of this conference call contains time-sensitive information that is accurate only as of the date of the live broadcast, May 4, 2011.

ICAD undertakes no obligation to revise or update any statements to reflect events or circumstances after the date of this conference call.

So, with that said, I would like to turn the call over to Ken Ferry.

Ken?

Thanks, Ann Marie.

Good morning, everyone, and thank you for joining us.

I'd like to start this morning's call by welcoming Ken Burns to our executive leadership team.

Kevin brings a wealth of industry knowledge and global business experience to iCAD.

His track record of delivering excellent financial and operational results, combined with his team-oriented style, make him ideally suited to the CFO role at iCAD.

We're delighted to have him onboard and I think you'll find him to be an excellent financial leader and steward of our Company.

Moving on to the quarter, we were generally pleased with our first quarter results.

In particular, we posted double-digit revenue growth.

This growth was fueled primarily from radiation therapy sales in and overall stronger performance if iCAD products in the United States compared to Q1 of 2010.

Conversely, international performance was weak, particularly in Europe.

It is not expected to materially rebound until the second half of the year.

So let's begin with our core CAD product portfolio.

The digital mammography CAD business was weaker, comparatively, due to a particularly soft business environment in Europe.

The US digital CAD business performed fairly consistent with MQSA data, which had FFDM system placements down approximately 10% in the quarter versus Q1 of 2010.

Going forward, there are approximately 2,800 film-based systems that still have not converted to digital technology in the United States, which represents a solid opportunity over the next two to three years of so.

In addition, as digital mammography has been declassified from a PMA to a 510(k), we anticipate new entrants to the market as early as Q2, through the second half of this year.

The new companies will attempt to establish meaningful market share from the remaining film installed base and from the first generation digital system placement market, as it begins to gain traction.

This should go well for iCAD, as we broaden our partnerships with these companies, many of which are currently in front of the FDA and for which we are already developing CAD solutions.

Lastly, we introduced and made our first shipments of SecondLook Premier, our next generation mammography CAD solution, in Europe.

In addition, we recently kicked off a US reader study, which is required and is an element of a US FDA regulatory submission.

We anticipate completing the reader study in the late summer timeframe, followed by a US regulatory submission in the September timeframe.

Our hope is for regulatory approval in the middle to the latter part of 2012.

The addressable market for this product will be new customer sales and upgrades to an installed base of nearly 4,000 first generation digital CAD systems.

We believe the recurring revenue opportunity to be potentially significant for SecondLook Premier as a standalone upgrade or as part of a bundle with a service agreement.

Now turning to MRI, our new thin-client platform with additional workload tools, enhanced viewing, and user interface is gaining traction in the market based on favorable customer feedback.

We were quite pleased to land 10 new customers in the quarter, with the majority making decisions based on our capabilities for prostate MR.

This is particularly significant, as we believe this market, while at an early stage of adoption, could provide meaningful revenue growth over time and that our continued investment in education is paying off.

The focus of future releases anticipated between now and the end of the year will feature enhancements to our breast MR application and a launch of a highly innovative prostate business device.

Now, turning to CTC or CAD for virtual colonoscopy, while commercial traction has been slower than originally anticipated, we are encouraged by recent developments that may indicate that this opportunity is ready to materialize at a faster adoption rate.

First, a retrospective study from the American Hospital Association's annual survey that was recently published in The Journal of the American College of Radiology indicated that over a three-year period that there was nearly a 200% increase in the number of CTC exams.

The number of hospitals offering CTC grew by 35% and Medicare reimbursement for diagnostic CTC increased significantly as well.

Also, the American College of Radiology, in response to CMS's 2009 decision to deny reimbursement for screening CTC for the Medicare population is leading an initiative to have this decision overturned.

This is being done by reevaluation of the 2,600-patient ACRIN study to isolate CTC versus optical colonoscopy performance for the Medicare population.

The resulting study and findings are anticipated to be published at any time and will, hopefully, serve as a main catalyst for a favorable reimbursement decision sometime in the near future.

With that said, CTC screening reimbursement is mandated in 22 states and Washington, D.C.

and it is also covered nationally by private payors such as United Healthcare, CIGNA, Aetna and many Blue Cross/Blue Shield chapters.

On the commercial side of things, we are pleased to have recently entered into a commercial agreement with Vital Images to provide CTC CAD for their advanced visualization application and are making good progress with other major providers of advanced visualization as well.

In summary, in an environment of increasing procedure volume, growing favorable reimbursement and progress with major advanced visualization partners, all should be catalysts for commercial growth over the second half of 2011 and beyond for virtual colonoscopy CAD.

Now, moving to our radiation therapy business.

Q1 of 2011 represented our first full quarter in the therapy business and with a backdrop of change, transition and significant events, the business performance was very respectable.

The $1.3 million in total brachytherapy revenues was fueled by two new customers - Trinity Health and the University of Arizona.

These customers selected the Axxent eBx system because, amongst other considerations, it is a platform therapy system that is able to provide radiation therapy for breast, gynecology, and skin cancers, as well as its mobility and ease of use in multiple care settings within an institution.

The area of highest interest, though, is intraoperative radiation therapy for IORT.

Last week, as an example, we attended the American Society of Breast Surgeons annual meeting held in Washington, DC.

There was a strong focus on intraoperative radiation therapy throughout the meeting and educational sessions devoted to the topic drew approximately 1,000 participants.

As new data continues to show both the clinical and economic value of this type of treatment, there's clearly growth momentum and an interest, particularly amongst the surgeon community.

We experienced strong traffic flow at our exhibit and we were able to have meaningful discussions about the value and differentiation of our technology with leading surgeons from around the country.

Also, we will be attending the European Society for Therapeutic Radiation Oncology in London next week, as we believe the global potential for this innovative technology to be considerable as well.

Adoption drivers in the US will continue to be clinical and scientific studies along with growing reimbursement.

To this end, we are now approaching five years of need follow-up from the TARGIT-A study.

This study, published on June 4, 2010 in the Lancet online, compared intraoperative radiation therapy to whole breast radiotherapy for breast cancer, an international, prospective, randomized, non-infertility Phase III trial.

In the study, 1,113 patients received IORT and 1,119 patients received external beam radiation therapy.

At four years of follow up, there were six local cancer reoccurrences in the IORT group and on five reoccurrences in the external beam radiation therapy group.

The authors' conclusion was, and I quote, "for selected patients with early breast cancer, a single dose of radiotherapy, delivered at the time of surgery by use of targeted IORT should be considered as an alternative to external beam radiotherapy delivered over several weeks."

This study was among the catalysts for the American Society of Radiation Oncology, or ASTRO, to file for a CPT 1 reimbursement code with the American Medical Association for IORT last year summer.

The CPT 1 code decision is expected in the July timeframe of this year and any changes to coding and/or reimbursement will go into effect on January 1, 2012.

We are very hopeful of a favorable decision on the CPT 1 code and see it as another important catalyst for domestic market adoption.

Lastly, we plan to submit a 510(k) regulatory filing with the FDA this week for a new shielding product that can be used with inoperative radiation therapy.

As we have had numerous discussions regarding the testing requirements for the new product, it is our hope that a regulatory clearance can be obtained in a timely manner.

So, in closing my opening comments, our enthusiasm for the potential of the Axxent system is to play a meaningful role in cancer therapy remains very steadfast.

We remain confident in the long-term opportunities with this platform technology to change the treatment paradigm in a number of cancer therapy applications and we expect it to be an important long-term value driver for iCAD.

We look forward to updating you on our continued progress in this important space.

So now let me turn the call over to Kevin who will give you more details on our financial results during the first quarter.

Kevin?

Thank you, Ken, and good morning everyone.

I would like to start by saying that I'm very pleased to be here as part of the iCAD organization.

We are at a dynamic juncture as we evolve into a fully integrated Company, providing targeted technologies through the continuum of cancer care.

I'm excited to be joining iCAD at the early stages of this transformation.

As Ken mentioned, we have significant opportunities for our solutions and I look forward to working with the iCAD team to realize our full potential and deliver value to our shareholders.

But now let's turn to the Company's first quarter financial results.

Total revenue for the first quarter of 2011 was $7.3 million compared to $6.5 million for the first quarter 2010, an increase of $800,000 or 13%.

As you can see in our press release, we break revenue out in four main categories.

The first component is product revenue related to the sale of our digital and MRI CAD products and for the first quarter of 2011 this revenue was $3.8 million, a decline of $400,000 or 10% from the first quarter of last year.

Year-over-year, we saw a dramatic drop in the international digital revenue that Ken discussed earlier, as well as slight decline in the US digital market, offset by our strongest quarter for the MRI segment.

The second component of our revenue relates to the film-based segment and for the first quarter of 2011, revenue was approximately $500,000 compared to slightly over $1.0 million in the first quarter of 2010, a decrease of approximately $500,000 or 51%.

As the Company has discussed in prior calls, we continue to see and ongoing decline in demand for film-based products as the marketplace transitions to digital technology.

The next component of our revenue relates to product sales of the Axxent solution and for the first quarter of 2011, product revenue was a little less than $1.0 million, which represented two new deals in the quarter.

As you know, we completed the acquisition at the end of the fourth quarter and as a result, our historical financials do not reflect any Xoft revenue for the first quarter of 2010.

The final component is service and supply revenue, which includes ongoing service fees as well as Axxent sourcing agreements.

For the first quarter of 2011, service and supply revenue was $2.1 million compared to $1.3 million in the first quarter of 2010, an increase of $800,000 or 61%.

When you back out the $350,000 of service and supply revenue related to the Axxent solution, we saw an increase of 33% related to our growing installed base as digital CAD and total mammo exam systems transitioned from warranty to service contracts.

Overall, revenue for our CAD solution and Axxent system were in line with our internal plans, with a shift in mix between the US and international revenue.

Moving on to gross margin, gross margin for the first quarter of 2011 was $5.6 million or 76%, compared to $5.7 million or 87% in the first quarter of 2010.

The decline of approximately 11 points was driven by the Xoft segment, which currently has significantly lower margins than the CAD segment.

We continue to investigate additional manufacturing and supply chain programs as we drive for ongoing margin enhancements and as we communicated in our press release last night, we do anticipate margins in the mid-70% range for fiscal year 2011.

One final comment on the margin side is that in the first quarter of 2011 we had additional amortization expense related to the Xoft acquisition of $228,000 that is booked as a cost of product revenue and this will be an ongoing expense going forward.

From an operating expense standpoint, we had total operating expenses of $9.8 million in the first quarter compared to $6.9 million in the first quarter of 2010, an expense increase of $2.9 million.

This $2.9 million increase over the first quarter can be broken down into two primary categories.

The first category, which is approximately $800,000, relates to additional spend in the first quarter of 2011 for Xoft acquisition-related expenses, as well as legal and other expenses incurred related to the ongoing patent dispute and the Shield recall.

The second category, which is approximately $2.1 million, represents additional spending in the sales, marketing, and product development areas related to the Xoft business, offset by a slight decline in spending in the same categories for our CAD segment.

Overall, we continue to review all of our operating expenses, additional acquisition synergies and cost reduction initiatives and we look forward to discussing this with you in more detail on our next earning calls.

Moving on to our profit metrics, we included a bridge to adjusted EBITDA in our press release and for the first quarter of 2011 adjusted EBITDA was a loss of $2.3 million, compared to a loss of $300,000 for the first quarter of 2010, a decrease of approximately $2.0 million.

Again, this decrease primarily relates to additional investments in the Xoft side of the business.

And finally, net loss for the quarter was $4.2 million or $0.08 per share, compared to a loss of $1.2 million or $0.03 per share in the first quarter of 2010.

Moving on to cash, we ended the quarter with $11.3 million in cash and cash equivalents, compared to $16.3 million at end of 2010, reflecting a total cash [mute] of approximately $5.0 million in the quarter.

This decline in cash was slightly favorable to our internal plans.

In addition, in the first quarter we paid approximately $1.7 million of onetime fees related to the Xoft acquisition.

Finally, we had strong DSOs for the quarter at approximately 53 days.

In addition, at this time, we do not believe we need to raise additional equity capital to fund the investments we are making in the Xoft business.

We believe that we will have sufficient working capital through a combination of the core cash flow combined with the possibility of modest debt financing.

With regard to our guidance for 2011, after assessing the potential short-term impact of the recall of the FlexiShield Mini, we are modestly adjusting our revenue guidance to a range of $32 million to $35 million from our previous guidance of $34 million to $38 million.

I would like to be clear that this revision does not reflect our confidence and long range potential for the Axxent system, but we believe it has an impact on our short-term projections.

We still expect to have a blended gross margin in the mid-70% range and we plan to update guidance on a quarterly basis, going forward, as appropriate.

As we have discussed, 2011 is an investment year whereby we are building and transforming the Company into a fully integrated oncology company, delivering targeted therapies across the entire cancer care cycle.

We feel confident that the Xoft acquisition will be accretive to iCAD in the next twelve to eighteen months and that the investments we are making now will translate into solid revenue and profitability growth for years to come.

It is this potential that drew me to joining iCAD and that I am excited to work towards achieving.

I look forward to updating you on our progress at our next earnings call.

With that financial overview, let me now turn the call back to the operator so that she can respond to any questions.

Shaquana?

Thank you.

(Operator Instructions) Maggie Lovett, SunTrust Robinson Humphrey

Thank you.

Good morning, guys, this is Maggie Lovett in for Jon.

Kevin, welcome aboard.

I think this one's going to be for you.

I appreciate your comments on cash.

Just hoping you could give us a little bit more detail.

Your burn was around $4.0 million this quarter.

You've got $11 million on the books and I guess just your thoughts going forward on how much you need to invest in Xoft and product development?

Did you take kind of like a onetime big charge this quarter?

Any more details would be very helpful.

Sure.

So in the quarter our cash balance decreased by about $5.0 million and we broke that out into two categories.

$1.7 million I consider as sort of onetime Xoft-related fees.

We had to close out some of the fees that were sitting on our balance sheet.

We acquired some tables that were really long well overdue.

We knew that going into the transaction.

So, of the $5.0 million, about $1.7 million relates to onetime events that we do not see going forward, so that leaves about $3.3 million in the core business going forward.

And again, we believe that we have sufficient cash on our balance sheet to fund the investment initiatives in the next couple of quarters.

We are looking at additional debt financing to give us a little bit of buffer and we are also looking to tighten up any areas where there may be some discretionary spend or we can get some additional synergies or efficiencies.

Okay, sorry and I should probably know this.

You guys don't have a line of credit, right?

Not right now.

Okay, thanks and then also, just so I'm clear, for the guidance you brought down the range by about $2.0 million to $3.0 million and that's all from the recall of the FlexiShield?

That's correct.

Okay, great and then, Ken --?

Again, I'm sorry, Maggie.

I was just going to say we believe that has a short-term impact, which is why we brought that revenue down, but long-term we think this is a quarter to delay and some potential revenue, so long-term we don't think this is going to be a major impact.

Okay, perfect, thank you.

Then Ken, just some smaller questions for the model and then I've got a couple, a handful of bigger picture questions.

First, would you be willing to help us with the breakdown in the digital MRI division, what percent of sales does MRI account for?

Or, if you could, just give us a range?

Yes.

We don't break that out.

We bundle those two together, so I'm not able at this point to give us a breakdown.

What I would say is that we had our strongest quarter ever in MRI sales and Maggie, as we hope that that trend continues, we will certainly consider breaking it out as it really becomes a material amount of our total revenue.

But, again, it was a very, very strong quarter in MRI.

We introduced a new platform really late last year and it's taken some time to get it into our customers' hands and get feedback and so forth.

And we've been really focusing on MRI as a real growth engine for the Company over time and so we're extremely enthused about it.

What I would say is that the digital CAD business, as I mentioned in my opening comments, in the United States was very consistent with MQSA, which was off about 9.0% or 10% in units compared to the first quarter of last year.

International business, as you can tell from our communications, it was down significantly and that was pretty much all CAD business.

So the negative growth, obviously, of about 10% in that total category was greater in the digital CAD business, because we obviously offset quite a bit of that by the strength in MRI and we will certainly consider, going forward at some point, whether we should break out those two categories.

Okay.

Yes, no problem, thank you and then just turning to the digital CAD side, the FFDM guys have been talking about pricing pressure for quite a bit now.

It seems like more customers are looking for lower-end equipment.

Just wondering, when you look at the real low end 2D digital market, are those customers still looking for a CAD attachment?

Is that rate still running one-to-one or are they so cost conscious that their behavior is a little bit different?

I think what we have seen, Maggie, is that in the pure FFDM - DR side, not CR - there's been no importance relate to attachment rates and I think part of that is just CAD has become a standard of care, both from a clinical standpoint, from a workflow standpoint and then from a reimbursement standpoint, obviously, there are some benefits as well.

On the CR side, which largely is Fuji today, clearly some of their smaller sites, particularly satellites sites to their main campus, if you will the CAD attachment rate is lower than one-to-one.

It might be 50% to 70%, but that's pretty much what we've seen as a characteristic of that marketplace.

So we're really not seeing any significant shift in attachment rates in the DR side.

And what I would also say is that our pricing, because so much of our pricing is OEM and contractual, we have had the benefit of still getting pretty much our average selling price as it has been over the last several years.

While the cost of the FFDM systems, to your point, have come down, we're pretty much getting the same ASP with CAD.

Now, with that said, what we're thinking about is how we can penetrate the international markets with digital CAD in a stronger way and one of the real opportunities for us is the fact that we have such outstanding gross margin.

Digital gross margin, on average, is close to 90%.

And so, what we're thinking of is some targeted countries outside of the US, with large populations where there is potential for a much higher volume and screening and that could be in Latin America, it could be in Asia and parts of Europe, where we can really move our price point around to get some pure incremental business in the international markets.

So that's kind of the dynamic that we're focusing on.

But the business, as it relates to your question, has still been still very solid attachment rate-wise for pure DR systems in the United States.

Okay, thanks and that kind of dovetails into my next question on the international front.

I know you were working with GE in terms of increasing attach rates.

The weakness you saw this quarter, was that more macro-driven or is there any change with our GE, kind of how you guys are working target?

Yes.

It's probably a little bit of both, mostly macro.

Its interesting that our field people in Europe have said they've seen a noticeable decrease in capital spending overall in imaging and at least, in particular the spaces we're in, primarily mammography and whether that's a short-term or long-term trend, we're still trying to determine it.

What we have said, and as I commented in my opening remarks, that we don't see the European business as it relates to mammography and CAD really starting to pick up materially until the second half of the year.

That's where our funnel and forecasts lie today.

So there clearly are some headwinds.

I think government-funded healthcare systems are watching their budgets.

They've obviously fared a little better than the US as it relates to the economy and capital spending.

But you see a lot of countries in Europe that are still in very shaky shape from a debt standpoint, much different that what we went through, obviously, and have come out of in the United States.

So we see that market as maybe having had this impact later than we saw in the United States, from an economic impact and it does eventually impact the capital budgets.

As it relates to GE, we've put a very robust program in place to increase the attachment rate of CAD and we were making good progress.

Unfortunately, they've had some personnel changes, so we've had a bit of a stall, if you will, with the program relative to focus, based on some outbound marketing personnel changes.

But we're working through that with them and we're confident that by the second half of the year we will have regained a lot of the traction we had late last year with GE, so hopefully some pent up demand will serve us well in the second half, as it relates to European business as you got through both an economic shift and some personnel dynamics with GE.

Great.

That was very helpful, thank you and then one more on the digital side, just in terms of the higher end machines.

Do you have any insight into where GE and Siemens are in the US with tomosynthesis?

Are you guys currently working in development for a CAD solution for their tomosynthesis?

We have been working fairly closely with Siemens for some time.

We've actually demonstrated CAD on tomosynthesis images at several RSNAs and they are in the process of developing something.

We are in active conversations on a regular basis with GE as well.

I don't have a clear picture on exactly what their timeframes are for US regulatory submission.

We all know that Hologic received their approval, but certainly went through a lot of headwind and challenges along the way to get there, so it's very hard to predict the timing, but I would expect we will have a CAD solution for both of those companies.

When they come to the US market it's likely they will have to do as Hologic did, come in first with the 3D system and then apply for CAD afterwards.

So we would expect there'll be some lag from tomosynthesis implementation to CAD implementation, but that's something we are expecting.

Okay, thank you.

I'm sorry; I do have just have one more on the digital side.

Do you think with Hologic, with the 3D dimension, do you think they're taking share or are your partners able to hold share?

What I think we've seen just in looking at their most recent release and the transcripts is that they're selling a lot of their new platform that us upgradable to tomosynthesis, as opposed to their older or prior platform.

So that would tell me that customers certainly are planning, at some point, to add tomosynthesis in a more pervasive fashion, but it still feels like its very early in the adoption cycle.

As it relates to the competition, it would be, I think, very early to assume that a GE or a Siemens would be losing business to a platform product that has the potential to add tomosynthesis at this point.

I think it's just too early to assume that could be the case.

If anything, if I go back to 2010, our business with GE in the United States grew and this is in a marketplace that had negative unit grew.

So we think GE fared very well relative to market share in 2010.

Siemens, as you know, is now back in the market with a very competitive new systems.

Our sales in the first quarter with Siemens were noticeably higher than they were in the final three quarters of last.

So, if anything, the competition is intensifying.

We think our partners are doing well and then, if you combine that with the declassification of digital mammography from a PMA to 510(k), the competition is only going to get hotter.

You probably heard that yesterday's Sectra got FFDM approval in the United States.

What it means for us is that we will have even more partners out there in this competitive landscape competing against Hologic and that is going to bode well for us, as these companies will have differentiated technology, much more aggressive price point, potentially and we'll be able to provide CAD to an even broader set of partners than we do today.

We think that could bode well for our market share and our partners' market share against Hologic, who today is the market leader.

Okay, great, thank you and then turning to the Xoft side.

You got two new customers this past quarter, so what are these guys doing, Ken?

Are they just not buying the FlexiShield?

And I guess, since its optional, is that kind of what you expect for the next couple of quarters while we wait for 510(k) approval?

Well, one of the nice things about the Axxent system is it's a platform system and it today is approved for skin, non-melanoma skin cancers, GYN cancers and two types of breast cancer, one of course is intraoperative radiation therapy, but also accelerated partial breast irradiation, which is the five-day, twice a day treatment.

So we really have the flexibility to provide a platform product.

So what we've seen in the quarter is customers that want to buy a platform product and not as impacted by the FlexiShield Mini recall.

With that said, radiation oncologists for years have often used their own shielding products.

Lead is an example of something that's malleable and has been tested and so forth and in some sites, they will use their own shielding products and would not require our FlexiShield Mini, so the impact is there for new business.

I think Kevin pointed out in our guidance that we saw, really in the second quarter and possibility into the third quarter, some challenge on the business because we don't have a shielding product, so we wanted to take a more conservative approach on revenue.

With that said, though, we have made tremendous progress with a replacement product.

I'm proud to say the team has worked extremely hard and we anticipate filing a 510(k) for the replacement product this week.

It could be in as early as tomorrow.

With that said, we've had extensive dialog with the FDA regarding testing requirements.

We think we have provided testing data that's very consistent with what they're looking for.

The testing results are very, very favorable and we're very hopeful that within a normal 90-cycle, plus or minus on a 510(k), that we will be back into the market.

We're also looking to establish a clinical trial site for the new product, hopefully before the end of the month, so we get into a clinical environment to ensure the use model and form factor is exactly what our customers are looking for.

So we've got a short-term challenge, but I'm pleased to say that we have a solution that we believe, in the near-term, will be available.

And if you combine that, let's say in the third quarter hopefully, with the CPT 1 code, which we should hear about somewhere around the first of July, I would just say we're very bullish on the second half of the year with Xoft and IORT in the United States, based on these momentous opportunities.

With that said, we see maybe a 90-day window, so to speak, where things could still be a little choppy and hence a little bit more conservatism.

Great, thank you and then a last one for me again on Xoft.

Just wondering if there's -- if you guys had thought about -- is there any litigation exposure with the FlexiShield in the recall?

Yes, there is certain litigation exposure.

What I would say is that we have, we believe sufficient liability insurance.

We have engaged one of the best and brightest law firms to represent us and we believe that between our insurance and good representation that we can work our way through this to a conclusion.

It's an unfortunate circumstance, but its one that we inherited six days after the close of the transaction.

We've done nothing but say clearly that the patients are extremely important to us and being responsive to their needs, those that were affected, number one and then, number two, obviously handling this recall as we have in close coordination with the FDA as responsibly as possible and all the rest will work itself out through whatever process is appropriate.

I think our focus is ensuring that we get a new shielding product into the market with the proper testing so that this sort of incident would not happen again and that we increase what is already an extraordinarily competitive product platform with this additional accessory.

Very helpful.

Thank you.

Sure.

(Operator Instructions) At this time there are no further audio questions.

I would like to turn the call back over to Mr.

Ferry for closing remarks.

Thank you, operator.

I'd like to thank all for joining us these morning.

We are extremely excited and confident as to the future of iCAD and we really thank all of you for your ongoing support as we build iCAD into a major medical technology company that is helping to improve the cancer care cycle.

We look forward to sharing our progress with you in the second quarter timeframe and again, thank you very much for joining us and have a good day.

Thank you for your participation in today's conference.

This concludes the presentation.

You may now disconnect and have a great day.