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NOVADAQ Reports 2013 Fourth Quarter and Full Year Financial Results

TORONTO, ONTARIO -- (Marketwired) -- 02/06/14 -- Novadaq® Technologies Inc. ("NOVADAQ" or the "Company") (NASDAQ: NVDQ)(TSX: NDQ), the leading developer and provider of clinically relevant imaging solutions for use in surgical and diagnostic procedures, today announced fourth quarter and full-year 2013 financial results. Unless otherwise indicated, all dollar amounts in this press release are expressed in United States (U.S.) dollars.

NOVADAQ reported total revenues for the fourth quarter and full year 2013 of $10.7 million and $35.0 million, respectively, representing increases of 57% and 52% as compared to the same periods in 2012. Growth was driven by increases in the number of patients treated using NOVADAQ's fluorescence imaging technologies, and increases in capital sales of our devices.

Fourth quarter and full year 2013 SPY technology revenues were $10.0 million and $31.6 million, respectively, representing increases of 71% and 64% compared to the same periods in 2012. Fourth quarter SPY technology recurring revenues increased by 37% to $4.1 million compared to $3.0 million reported in Q4-2012.

Fourth quarter gross profit of $6.7 million (63% margin), represents an increase of 48% compared with $4.6 million (67% margin), in Q4-2012, and an increase of 17% compared with $5.7 million (65% margin) in Q3-2013.

Fourth quarter of 2013 operating burn (cash burn by operating activities before changes in working capital) was $1.4 million compared with an operating contribution of $1.1 million in the fourth quarter of 2012. During the fourth quarter, working capital consumed $0.7 million, and $1.8 million was invested in fixed assets, the majority of which related to building the SPY technology systems installed bases.

Net loss of $2.7 million for the fourth quarter of 2013 increased by $5.8 million compared with the $3.1 million net profit in fourth quarter 2012. Fourth quarter 2013 loss per share was $0.05. Excluding the impact of non-cash $0.4 million warrants revaluation gain in fourth quarter 2013, loss per share was $0.06.

Cash and cash equivalents were $182.3 million at December 31, 2013, reflecting an increase of $95.4 million, compared to the cash position as of September 30, 2013. On October 29, 2013, NOVADAQ closed the sale of 6,250,000 common shares on a bought deal basis, at a price to the public of $16.75 per common share. After the underwriting commissions and other offering expenses, NOVADAQ received net proceeds of approximately US$99.6 million.

NOVADAQ shipped 143 SPY Fluorescence technology imaging systems during the fourth quarter of 2013. The combined installed base of SPY Fluorescence technology increased by 157 systems and now exceeds 1,200 systems. NOVADAQ estimates that its imaging systems were used in more than 6,400 procedures during the quarter.

"Key accomplishments for NOVADAQ in 2013 included the launch of two new imaging systems, PINPOINT and LUNA, the building of our direct U.S. sales team, and the appointment of a highly capable network of distributors in the Asian markets", said Dr. Arun Menawat, NOVADAQ's President and CEO. "Additionally, several clinical studies were presented during the year which confirmed that the use of NOVADAQ's imaging technologies results in significant clinical benefit in our two lead applications, breast reconstruction and colorectal surgery. We also identified new applications for our imaging systems including lymph node mapping, bile duct imaging during cholecystectomy, and visualization of endometriotic lesions during gynecological surgery. Clinical validation studies are currently underway and we expect initial findings to become available later this year."

Conference Call

NOVADAQ is pleased to invite all interested parties to participate in a conference call today, Thursday, February 6, 2014, at 8:30 a.m. Eastern Time during which the results will be discussed.

Those wishing to access the live conference call by telephone should dial 1-877-407-8031 (within Canada and the United States) or 1-201-689-8031 (international callers) several minutes prior to the beginning of the call. A telephonic replay of the conference call will be made available until midnight on March 6, 2014 and can be accessed by dialing 1-877-660-6853 (within Canada and the United States) or 1-201-612-7415 (international callers) and entering the conference identification number 13575239 when prompted.

The call will be archived for 90 days on the Company's website at www.novadaq.com under the "Events" tab in the Investors section. In addition, a replay of the call will be available for download to a portable audio player or computer, as an MP3 or podcast file, at the same location on NOVADAQ's website.

About Novadaq Technologies Inc.

Enabling medical professionals with clinically relevant, point-of-care imaging solutions to enhance the lives of patients and their caregivers, while reducing health care costs, is NOVADAQ's global mission. SPY® fluorescence imaging technology provides surgeons with real-time visualization, leading to improved outcomes and reduced costs without exposing the patient to radiation. More than 80 peer-reviewed publications demonstrate that the use of SPY imaging technologies during complex surgery and diagnostic procedures, leads to lower rates of post-operative complications and lower hospital costs.

SPY Imaging Systems are United States Food and Drug Administration 510(k) cleared for use in seven surgical specialties. The endoscopic version of SPY called PINPOINT®, combines the capabilities of SPY Imaging with high definition ("HD") visible light visualization offered by conventional endoscopes. LUNA™ is used to assess perfusion in patients being treated for non-healing wounds. In August 2013, NOVADAQ acquired the surgical scintigraphy imaging technology, which is being developed for perioperative imaging of sentinel lymph nodes and tumor margins. NOVADAQ's unique business model of partnering with market-leading companies to drive adoption of our imaging technology, while building our own commercial infrastructure, is the cornerstone of our corporate strategy for growth.

Forward Looking Statements

Certain statements included in this press release may be considered forward-looking. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from those implied by such statements, and therefore these statements should not be read as guarantees of future performance or results. All forward-looking statements are based on NOVADAQ's current beliefs as well as assumptions made by and information currently available to NOVADAQ and relate to, among other things, the Company's strategy, strategic goals, research and development activities, research and clinical testing outcomes, taxes, capital expenditures, future operations, future financial position, future revenues/results, projected costs, prospects and plans and objectives of management.

Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Due to risks and uncertainties, including the risks and uncertainties identified by NOVADAQ in its public securities filings available at www.sec.gov and www.sedar.com, actual events may differ materially from current expectations. NOVADAQ disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.


Novadaq Technologies Inc.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(expressed in U.S. dollars, except common shares outstanding)

                             As at December 31, 2013 As at December 31, 2012
                             -----------------------------------------------
ASSETS
Current assets
 Cash and cash equivalents    $         182,329,782   $          38,954,181
 Accounts receivable                      8,502,095               4,056,954
 Prepaid expenses and other
  assets                                  1,032,431                 852,674
 Inventories                              3,845,695               1,713,577

Non-current assets
 Property and equipment, net             13,360,833              10,717,661
 Deferred tax assets                              -                 170,442
 Intangible assets, net                   3,303,647               1,121,808
                             -----------------------------------------------

Total Assets                  $         212,374,483   $          57,587,297
                             -----------------------------------------------
                             -----------------------------------------------

LIABILITIES AND SHAREHOLDERS'
 EQUITY
Current liabilities
 Accounts payable and accrued
  liabilities                 $           7,123,563   $           3,407,329
 Provisions                                 187,080                  85,260
 Deferred revenue                           380,325                 637,864
 Deferred partnership fee
  revenue                                 1,300,000               1,300,000
 Repayable government
  assistance                                 17,587                 203,148

Non-current liabilities
 Deferred tax liabilities                         -                 170,442
 Convertible debentures                           -               4,656,746
 Deferred revenue                           193,626                 144,204
 Deferred partnership fee
  revenue                                 1,991,666               3,291,666
 Repayable government
  assistance                                      -                  17,946
 Shareholder warrants                    26,065,994              13,002,930
                             -----------------------------------------------

Total Liabilities             $          37,259,841   $          26,917,535
                             -----------------------------------------------

Shareholders' Equity
 Share capital                $         307,103,074   $         139,946,563
 Contributed surplus                      8,953,041               7,908,224
 Equity component of
  convertible debentures                          -               1,454,353
 Deficit                               (140,941,473)           (118,639,378)
                             -----------------------------------------------

Total Shareholders' Equity    $         175,114,642   $          30,669,762
                             -----------------------------------------------

Total Liabilities and
 Shareholders' Equity         $         212,374,483   $          57,587,297
                             -----------------------------------------------
                             -----------------------------------------------

Total number of common shares
 outstanding                             54,894,038              40,226,243
                             -----------------------------------------------
                             -----------------------------------------------

Novadaq Technologies Inc.

CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS

FOR THE YEARS ENDED
(expressed in U.S. dollars, except per share amounts)

                     For the three months ended  For the twelve months ended
                    ---------------------------- ---------------------------
                      December 31,  December 31,  December 31,  December 31,
                              2013          2012          2013          2012
                    ---------------------------- ---------------------------

Product sales        $  9,643,337  $  5,770,240  $ 31,019,451  $ 19,037,096
Royalty revenue           616,460       545,523     1,889,404     1,849,668
Partnership fee
 revenue                  325,000       325,000     1,300,000     1,300,000
Service revenue           163,555       204,918       811,683       802,296
                    ---------------------------- ---------------------------
Total revenues         10,748,352     6,845,681    35,020,538    22,989,060
Cost of sales           4,003,560     2,281,116    12,932,695     8,537,408
                    ---------------------------- ---------------------------
Gross profit            6,744,792     4,564,565    22,087,843    14,451,652
                    ---------------------------- ---------------------------

Selling and
 distribution
 expenses               4,863,437     1,357,015    14,060,861     4,926,376
Research and
 development
 expenses               2,281,978     1,640,963     7,974,455     5,958,499
Administrative
 expenses               2,865,881     1,601,586     7,233,570     6,573,484
Write-down of
 equipment                      -             -        25,488             -
Write-down of
 inventory                      -             -        31,285        57,540
                    ---------------------------- ---------------------------
Total operating
 expenses              10,011,296     4,599,564    29,325,659    17,515,899
                    ---------------------------- ---------------------------

Loss from operations   (3,266,504)      (34,999)   (7,237,816)   (3,064,247)

Finance costs              (3,189)     (180,405)     (182,896)     (707,500)
Finance income             42,262        20,969       109,089        61,798
Warrants revaluation
 adjustment               444,995     3,389,066   (15,015,472)   (8,558,323)
Gain on investment              -             -        25,000        25,000
                    ---------------------------- ---------------------------
Loss from operations
 before income taxes   (2,782,436)    3,194,631   (22,302,095)  (12,243,272)
Income tax recovery
 (expense)                 67,500      (100,861)            -      (100,861)
                    ---------------------------- ---------------------------

Net loss and
 comprehensive loss
 for the year          (2,714,936) $  3,093,770   (22,302,095) $(12,344,133)
                    ---------------------------- ---------------------------
                    ---------------------------- ---------------------------

Basic income (loss)
 and comprehensive
 income (loss) per
 share for the
 period                     (0.05)         0.08  $      (0.47) $      (0.32)
                    ---------------------------- ---------------------------
                    ---------------------------- ---------------------------
Diluted loss and
 comprehensive loss
 per share for the
 period                     (0.05)            -  $      (0.47) $      (0.32)
                    ---------------------------- ---------------------------
                    ---------------------------- ---------------------------

Novadaq Technologies Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED
(expressed in U.S. dollars)
                     For the three months ended  For the twelve months ended
                    ---------------------------- ---------------------------
                      December 31,  December 31,  December 31,  December 31,
                              2013          2012          2013          2012
                    ---------------------------- ---------------------------
OPERATING ACTIVITIES
 Loss and
  comprehensive loss
  for the year       $ (2,714,936) $  3,093,770  $(22,302,095) $(12,344,133)
 Items not affecting
  cash
  Depreciation of
   property and
   equipment              971,446       640,432     3,368,165     2,142,633
  Amortization of
   intangible assets       88,745       284,191       335,428     1,150,626
  Stock-based
   compensation           686,187       395,306     2,543,984     1,316,683
  Imputed interest
   on convertible
   debentures                   -       112,335       169,056       433,292
  Warrants
   revaluation
   adjustment            (444,995)   (3,389,066)   15,015,472     8,558,323
  Write-down of
   equipment                    -             -        25,488             -
  Write-down of
   inventory                    -             -        31,285        57,540
  Gain on investment            -             -       (25,000)      (25,000)
                    ---------------------------- ---------------------------
                       (1,413,553)    1,136,968      (838,217)    1,289,964
 Changes in non-cash
  working capital
  Increase in
   accounts
   receivable          (2,632,136)   (1,160,376)   (4,445,141)   (2,038,172)
  (Increase)
   decrease in
   inventories           (165,104)      161,195    (2,163,403)     (604,700)
  Decrease
   (increase) in
   prepaid expenses
   and other assets       109,296         3,658        (9,315)       55,149
  Increase
   (decrease) in
   accounts payable     2,465,369    (1,059,141)    3,670,558       839,696
  (Decrease)
   increase in
   deferred revenue      (439,956)      262,083      (216,240)      263,336
                    ---------------------------- ---------------------------
 Net change in non-
  cash working
  capital balances
  related to
  operations             (662,531)   (1,792,581)   (3,163,541)   (1,484,691)

  Decrease in long-
   term deferred
   revenue               (342,228)     (316,902)   (1,300,000)   (1,325,602)
                    ---------------------------- ---------------------------
Cash used in
 operating
 activities            (2,418,312)     (972,515)   (5,301,758)   (1,520,329)
                    ---------------------------- ---------------------------

INVESTING ACTIVITIES
 Purchase of
  property and
  equipment            (1,958,312)   (1,592,361)   (6,424,498)   (6,511,829)
 Purchase of
  intangible assets       (39,853)            -    (2,517,267)            -
 Disposal of
  property and
  equipment               161,403       185,666       387,673       275,521
 Redemption of long-
  term investment               -             -        25,000        25,000
                    ---------------------------- ---------------------------
Cash used in
 investing
 activities            (1,836,762)   (1,406,695)   (8,529,092)   (6,211,308)
                    ---------------------------- ---------------------------

FINANCING ACTIVITIES
 Proceeds from
  issuance of common
  shares              104,687,500             -   162,544,000    40,336,250
 Transaction costs
  paid relating to
  issuance of common
  shares               (5,044,103)            -    (8,225,673)   (3,389,352)
 Repayable
  government
  assistance              (49,389)      (53,726)     (203,507)     (191,068)
 Proceeds from
  exercise of
  options                  85,677        10,209     2,484,553        87,492
 Proceeds from
  exercise of
  warrants                      -       202,895       621,912       202,895
                    ---------------------------- ---------------------------
Cash provided by
 financing
 activities            99,679,685       159,378   157,221,285    37,046,217
                    ---------------------------- ---------------------------

Net increase in cash
 and cash
 equivalents           95,424,611    (2,219,832)  143,390,435    29,314,580
Net foreign exchange
 difference                (8,437)       (4,011)      (14,834)        5,993
Cash and cash
 equivalents at
 beginning of year     86,913,608    41,178,024    38,954,181     9,633,608
                    ---------------------------- ---------------------------

Cash and cash
 equivalents at end
 of year             $182,329,782  $ 38,954,181  $182,329,782  $ 38,954,181
                    ---------------------------- ---------------------------
                    ---------------------------- ---------------------------

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