Mr. David Gane reports

LED MEDICAL DIAGNOSTICS INC. REPORTS 2016 THIRD QUARTER RESULTS

LED Medical Diagnostics Inc. has released its financial results for the third quarter ended Sept. 30, 2016 (reported in U.S. dollars and in accordance with international financial reporting standards (IFRS)). The company's results are presented in comparison with the third quarter ended Sept. 30, 2015. All balances are expressed in U.S. dollars unless otherwise stated.

"The company achieved revenue growth of 40 per cent with $2.5-million (U.S.) for the three months ended Sept. 30, 2016, compared to revenue of $1.8-million (U.S.) for the same period in the prior year," stated Dr. David Gane, chief executive officer. "Year-to-date revenue for the nine months ended Sept. 30, 2016, increased by 11 per cent to $8.3-million (U.S.) over the prior-year revenue of $7.5-million (U.S.). This revenue increase was due to increasing revenue contribution from our portfolio of digital imaging products in combination with sales of our VELscope and VELscope consumable products."

Quarterly business highlights

On July 12, 2016, the company announced that its VELscope Vx enhanced oral assessment system with iPod touch integration received the Cellerant Best of Class Technology Award (formerly the Pride Best of Class Technology Award). The VELscope Vx has once again been designated as the leading device for the oral screening category, receiving the award for a sixth consecutive year -- a distinction shared by only one other product among this year's winners.

On Aug. 11, 2016, the company announced the results of a successful oral mucosal screening program which took place over many dates and locations in the greater Vancouver market in collaboration with London Drugs. The screenings incorporated the use of LED Medical Diagnostics' VELscope Vx enhanced oral assessment system, which was used adjunctively to the comprehensive oral exams to enhance the ability of the attending clinicians to visualize oral mucosal abnormalities that many not be apparent to the naked eye, including oral cancer, premalignant dysplasia and infections. On Sept. 28, 2016, the company announced the launch of the Rayscan Alpha Plus, a next-generation extraoral imaging system that is the latest innovation from former Samsung Electronics subsidiary Ray Company. Building upon the award-winning Rayscan Alpha platform, the Rayscan Alpha Plus continues Ray Company's dedication to delivering high-quality imaging technologies combined with innovative features that are innovative and unique in the industry.

Financial highlights

Three-month comparative results

Net revenue for the three months ended Sept. 30, 2016, was $2,488,725, which is an increase of 40 per cent from the three months ended Sept. 30, 2015. This revenue increase was largely due to timing of when imaging orders were received and could be shipped, and by increased demand for VELscope and VELscope consumable sales.

Gross margin in the third quarter of fiscal 2016 was 25 per cent, which was higher than the 18-per-cent gross margin in the same period in the prior year but lower than the previous second quarter of fiscal 2016 of 29 per cent. Increase in gross margin over the same period in the prior year was due to the increased revenue contribution from the company's proprietary VELscope product offering, which has a higher gross margin than its imaging product offerings. The net loss before tax for the three months ended Sept. 30, 2016, was $855,484 compared with the net loss before taxes for the three months ended Sept. 30, 2015, of $1,361,773. The decrease of operating loss is mainly attributable to higher revenue levels and lower operating expense than in fiscal 2015.

Nine-month comparative results

Net revenue for the nine months ended Sept. 30, 2016, was $8.3-million, which is an increase of 11 per cent from the prior-year period of $7.5-million.

Gross margin for the nine months of fiscal 2016 was 27 per cent which was slightly higher than the 26 per cent gross margin in the same period in the prior year. The net loss before tax for the nine months ended Sept. 30, 2016, was $3.9-million compared with the net loss before taxes in the prior-year period of $4.0-million. The decrease of operating loss is mainly attributable to higher revenue levels and lower operating expense than in fiscal 2015.

Financial position as at Sept. 30, 2016

The company had cash of $341,108 as at Sept. 30, 2016, with net working capital of ($1.3-million) exclusive of debentures, compared with cash of $1,987,409 with net working capital of $2.0-million exclusive of debentures as at Dec. 31, 2015, with the decline in financial position primarily attributable to the net loss incurred by the company during the nine months ended Sept. 30, 2016.

Please see the interim condensed financial statements and related management discussion and analysis (MD&A) for more details. The interim condensed financial statements for the nine months ended Sept. 30, 2016, and related MD&A have been reviewed and approved by the company's audit committee and board of directors. The company has prepared this truncated news release to alert investors to its results, and a more detailed explanation and analysis is readily available in the MD&A. These reports have been filed on SEDAR and also posted on the company's website.

About LED Medical Diagnostics

Founded in 2003 and headquartered in Burnaby, B.C., Canada, LED Medical Diagnostics, through its wholly owned subsidiaries LED Dental Inc. and LED Dental Ltd., provide dentists and oral health specialists with advanced diagnostic imaging products and software, in addition to the award-winning VELscope Vx tissue fluorescence visualization technology. Backed by an experienced leadership team and dedicated to a higher level of service and support, LED Dental is committed to providing dental practitioners with the best technology available by identifying and adding leading products to its growing portfolio.

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