CardioNet, Inc. (NASDAQ:BEAT), a leading wireless medical
technology company with an initial focus on the diagnosis and
monitoring of cardiac arrhythmias, today reported results for the
second quarter ended June 30, 2009.
Highlights and Recent Developments
- Achieved second quarter revenue of $38.3 million, an increase
of 30.4%, compared to second quarter 2008
- Experienced 59% increase in MCOTTM patient volume in the first
half of 2009 over the prior year
- Sales force currently at 141 account executives, up from 88 at
the end of 2008
- Negotiated 24 contracts in the first half of 2009, with over 5
million additional covered lives, bringing total lives covered by
MCOTTM to 196.5 million
- Enrolled physician practices increased 42% compared to first
half 2008
- MCOTTM was used in a study published in the Annals of Thoracic
Surgery which referenced long term monitoring as the standard of
care post AF ablation
- To date, 29 clinical studies or abstracts published either
demonstrating the efficacy of MCOTTM or utilizing MCOTTM technology
to support other clinical research
- Several major institutions adopted CardioNet MCOTTM, such as
the Scripps Institute and the Hospital of the University of
Pennsylvania
- MCOTTM utilization expanding to neurology and cardiac thoracic
surgery
- Enrolled approximately 950 practices in SomNet since its
introduction in June
- Achieved second quarter earnings in line with our
expectations
- Implemented cost containment measures in light of reimbursement
concerns
Chairman, President and CEO Commentary
Randy Thurman, Chairman, President and Chief Executive Officer
of CardioNet, commented: “As evidenced by the above business
highlights, CardioNet’s MCOTTM system continues to exceed the needs
of physicians and patients. We believe the overwhelming acceptance
of MCOTTM is convincing evidence of the superiority of the
technology and the revolutionary advance in monitoring and
diagnosing patients with cardiac arrhythmias. Given the recent
events with reimbursement, it is also incumbent on the emerging
wireless industry to ensure that the cost/benefit advantages are
realized by payors in the form of improved patient outcomes,
avoidance of far more costly alternatives and eliminating the
progression to more serious disease. We are confident that MCOTTM,
coupled with an acceptable outcome on reimbursement, will lead the
way in the wireless medicine industry and result in not only
superior patient outcomes but also substantial cost savings to the
healthcare system.
“During the second quarter, there was continued strong demand
for the CardioNet MCOTTM system with a 53% increase in patients
over the prior year. We believe this growth is driven by the
superior clinical results achieved with MCOTTM and the benefit that
it provides to physicians, patients and payors. To drive higher
market penetration, we have increased our sales organization to 141
account executives, including individuals focused on the hospital
and cardiothoracic surgeon markets. As our new account executives
gain experience and penetrate new geographies and market segments,
we should continue to see strong volume growth as we introduce more
physicians and patients to MCOTTM.
“In late June, we announced we were beginning to experience
somewhat lower reimbursement from commercial payors than previously
anticipated. We later announced that Highmark Medicare Services
notified us on July 10 it plans to reduce the reimbursement rate
for mobile cardiac telemetry by 33% on September 1st. We strongly
believe this rate is not supported by the facts or the accepted
methodologies for establishing reimbursement. The intrinsic value
of MCOTTM for patients, physicians and payors is overwhelming.
CardioNet is the pioneer in developing and making available this
technology for improved patient care. We accept that as the pioneer
we are breaking new ground and will need to overcome a “cost”
focused reimbursement environment and establish wireless medicine
as one of the greatest opportunities to not only improve patient
care but also avoid far more costly alternatives. We are
aggressively pursuing all potential avenues to establish
reimbursement rates at more appropriate levels than those proposed
by Highmark Medicare Services. We are working with CMS, commercial
payors and policymakers to educate them on the cost of providing
the MCOTTM service and the cost savings it generates by more
effectively detecting cardiac arrhythmias, thereby improving
patient lives and avoiding progression to far more costly medical
problems. Until we have resolution on this reimbursement issue, we
are not able to provide full year earnings guidance.
“In response to the reimbursement reductions that we are
experiencing, we are taking steps to reduce our discretionary
spending and operating costs. However, our highest priority
is to maintain the same world class service to our patients and
physician customers. We must also achieve an acceptable outcome to
the reimbursement issue in order to maintain CardioNet’s leadership
in innovation and clinical research. In addition, we have built
what we believe is the largest and most experienced sales force in
the wireless industry and are committed to giving them our full
support.”
Mr. Thurman concluded, “Wireless medicine will play an
increasingly important role in healthcare reform, particularly as
policymakers strive to improve quality and cost effectiveness while
at the same time ensuring that we protect true innovation. Wireless
medicine may be the one revolution in healthcare that drives all
three goals. We are working diligently to highlight the clinical
and economic value of MCOTTM and we believe that in the long term,
CardioNet and its shareholders will benefit from the Company’s
position as a leader in the field of wireless medicine.”
Financial Results
Revenues for the second quarter of 2009 increased to $38.3
million compared to $29.3 million in the second quarter of 2008, an
increase of $9.0 million, or 30.4%. Revenues for the six months
ended June 30, 2009 increased to $74.0 million compared to $54.8
million in the comparable period in the prior year, an increase of
$19.2 million, or 35.0%.
Gross profit increased to $26.3 million in the second quarter of
2009, or 68.7% of revenues, compared to $19.5 million in the second
quarter of 2008, or 66.5% of revenues. For the first half of 2009,
gross profit increased to $50.2 million, or 67.8% of revenues,
compared to $35.5 million, or 64.7% of revenues, in the comparable
period in the prior year.
On a GAAP basis, operating income was $2.1 million in the second
quarter of 2009 compared to $2.5 million in the second quarter of
2008. Excluding $0.4 million of expense related to the merger
agreement to acquire Biotel Inc. which has since been terminated
and a credit of $0.2 million related to an insurance claim due to
the fire, adjusted operating income increased to $2.3 million in
the second quarter of 2009, or 6.0% of revenue. This compares to
adjusted operating income of $3.1 million, or 10.7% of revenue, in
the second quarter of 2008, which excludes $0.6 million of expense
related to the integration of PDSHeart and other restructuring
efforts in the prior year period.
On a GAAP basis, operating income for the first half of the year
decreased to $0.8 million compared to $1.9 million in the
comparable period in the prior year. Excluding $3.2 million of
expense related to management restructuring, primarily severance
costs for former senior executives, and costs incurred in
connection with the merger agreement to acquire Biotel Inc. which
has since been terminated, adjusted operating income increased to
$4.0 million in the first half of 2009, or 5.3% of revenue. This
compares to adjusted operating income of $3.8 million, or 6.9% of
revenue, in the first half of 2008, which excludes $1.9 million of
integration, restructuring and other nonrecurring charges.
On a GAAP basis, net income for the second quarter of 2009 was
$1.6 million, or $0.07 per diluted share, compared to net income of
$1.6 million, or $0.07 per diluted share, for the second quarter of
2008. Net income for the second quarter of 2009 includes a
favorable impact of $0.05 per diluted share due to the expected
utilization of net operating loss carryforwards. Adjusted net
income for the second quarter of 2009 was $2.7 million, or $0.11
per diluted share, excluding the expense related to the
since-terminated merger agreement to acquire Biotel Inc. This
compares to adjusted net income of $2.0 million, or $0.08 per
diluted share, for the second quarter of 2008, which excludes the
impact of integration, restructuring and other nonrecurring
charges.
Net income for the first half of 2009 was $0.8 million, or $0.04
per diluted share, compared to net income of $1.3 million, or $0.06
per diluted share, for the first half of 2008. Net income for the
first half of 2009 includes a favorable impact of $0.06 per diluted
share due to the expected utilization of net operating loss
carryforwards. Adjusted net income for the first half of 2009 was
$3.8 million, or $0.16 per diluted share, excluding the expense
related to management restructuring, primarily severance costs for
former senior executives, and costs incurred in connection with the
since-terminated merger agreement to acquire Biotel Inc. This
compares to adjusted net income of $2.4 million, or $0.11 per
diluted share, for the first half of 2008, which excludes the
impact of integration, restructuring and other nonrecurring
charges.
Marty Galvan, CardioNet's Chief Financial Officer, commented:
“Net income on a GAAP basis in the second quarter and first half of
2009 was relatively flat compared to the previous year as we
continued to invest in the expansion of our sales and marketing
organization. These results are in-line with our expectations for
limited contribution from our newly hired account executives in the
first half of the year, with increasing productivity driving MCOTTM
volume growth in the second half of the year and beyond.”
On a GAAP basis, net income available to common shareholders,
which is derived by reducing net income by the accrued dividends
and accretion on mandatorily redeemable convertible preferred
stock, for the six month period ending June 30, 2009 was $0.8
million, or $0.04 per diluted share, compared to a net loss of $1.3
million, or a loss of $0.10 per diluted share, for the same period
last year. The mandatorily redeemable convertible preferred stock,
which was issued in part to finance the March 2007 PDSHeart
acquisition, was converted to common stock in connection with
CardioNet’s March 2008 initial public offering.
Randy Thurman concluded, “We remain confident that wireless
healthcare technologies will be one of the most dramatic,
revolutionary changes in human health for the next decade and
beyond. We believe that the cost/benefit advantages and superior
clinical outcomes of technologies such as MCOTTM will ultimately
prevail even in this cost driven reimbursement environment.”
Conference Call
CardioNet, Inc. will host an earnings conference call on
Wednesday, August 5, 2009, at 5:00 PM Eastern Time. The call will
be simultaneously webcast on the investor information page of our
website, www.cardionet.com. The call will be archived on our
website and will also be available for two weeks via phone at
888-286-8010, access code 13365384.
About CardioNet
CardioNet is the leading provider of ambulatory, continuous,
real-time outpatient management solutions for monitoring relevant
and timely clinical information regarding an individual's health.
CardioNet's initial efforts are focused on the diagnosis and
monitoring of cardiac arrhythmias, or heart rhythm disorders, with
a solution that it markets as Mobile Cardiac Outpatient TelemetryTM
(MCOT™). More information can be found at
http://www.cardionet.com.
Forward-Looking Statements
This press release includes certain forward-looking statements
within the meaning of the "Safe Harbor" provisions of the Private
Securities Litigation Reform Act of 1995 regarding, among other
things, our growth prospects, the prospects for our products and
our confidence in the Company's future. These statements may be
identified by words such as "expect," "anticipate," "estimate,"
"intend," "plan," "believe," "promises" and other words and terms
of similar meaning. Such forward-looking statements are based on
current expectations and involve inherent risks and uncertainties,
including important factors that could delay, divert, or change any
of them, and could cause actual outcomes and results to differ
materially from current expectations. These factors include, among
other things, the potential for re-evaluation from Highmark or the
CMS on reimbursement rates, the success of our sales and marketing
initiatives, our ability to attract and retain talented executive
management and sales personnel, our ability to identify acquisition
candidates, acquire them on attractive terms and integrate their
operations into our business, the commercialization of new
products, market factors, internal research and development
initiatives, partnered research and development initiatives,
competitive product development, changes in governmental
regulations and legislation, changes to reimbursement levels for
our products, the continued consolidation of payors, acceptance of
our new products and services and patent protection and litigation.
For further details and a discussion of these and other risks and
uncertainties, please see our public filings with the Securities
and Exchange Commission, including our latest periodic reports on
Form 10-K and 10-Q. We undertake no obligation to publicly update
any forward-looking statement, whether as a result of new
information, future events, or otherwise.
Three Months Ended
Consolidated Statements of Operations (unaudited)
(In Thousands, Except Per Share Amounts)
June 30,2009
June 30,2008
Revenues $ 38,264 $ 29,340 Cost of revenues 11,993
9,834 Gross profit 26,271 19,506 Gross profit
% 68.7 % 66.5 % Operating expenses: General and
administrative expense 13,919 9,770 Sales and marketing expense
8,440 5,412 Research and development expense 1,768 931 Amortization
of intangibles 215 246 Integration, restructuring and other charges
(180 ) 610 Total operating expenses 24,162
16,969 Operating income 2,109
2,537 Interest income, net 40 267 Income before
income taxes 2,149 2,804 Provision for income taxes (584 )
(1,172 ) Net income $ 1,565 $ 1,632
Earnings per Share:
Basic $ 0.07 $ 0.07 Diluted $ 0.07 $ 0.07 Weighted Average
Shares Outstanding: Basic 23,792 23,098 Diluted 23,795 24,191
Six Months Ended
Consolidated Statements of Operations (unaudited)
(In Thousands, Except Per Share Amounts)
June 30,2009
June 30,2008
Revenues $ 73,985 $ 54,803 Cost of revenues 23,831
19,353 Gross profit 50,154 35,450 Gross profit
% 67.8 % 64.7 % Operating expenses: General and
administrative expense 28,007 18,589 Sales and marketing expense
15,987 10,527 Research and development expense 2,984 2,073
Amortization of intangibles 453 492 Integration, restructuring and
other charges 1,959 1,916 Total
operating expenses 49,390 33,597 Operating income
764 1,853 Interest income, net 158 379
Income before income taxes 922 2,232 Provision for income
taxes (79 ) (940 ) Net income $ 843 $ 1,292 Dividends
on and accretion of mandatorily redeemable convertible preferred
stock - (2,597 ) Net income (loss) available
to common shareholders $ 843 $ (1,305 ) Earnings
(loss) per Share: Basic $ 0.04 $ (0.10 ) Diluted $ 0.04 $ (0.10 )
Weighted Average Shares Outstanding: Basic 23,696 13,368
Diluted 23,827 13,368
The following table presents detail of the stock based
compensation expense that is included in each functional line item
in the Condensed Statements of Operations above (000’s):
Three Months Ended
Stock based compensation expense (unaudited) (In
Thousands)
June 30,2009
June 30,2008
Stock based compensation expense included in: Cost of
revenues $ 36 $ 8 Research and development expense 25 17 General
and administrative expense 1,889 227 Sales and marketing expense
152 139 Total stock based compensation expense
$ 2,102
$ 391
Six Months Ended
Stock based compensation expense (unaudited) (In
Thousands)
June 30,2009
June 30,2008
Stock based compensation expense included in: Cost of
revenues $ 54 $ 15 Research and development expense 46 32 General
and administrative expense 3,387 466 Sales and marketing expense
275 238 Total stock based compensation expense
$ 3,762
$ 751
Summary Consolidated Balance Sheet Data
(In Thousands)
June 30,2009
December 31,2008
(unaudited) Cash and cash equivalents $ 44,566 $
58,171 Accounts receivable, net 52,930 39,431 Working capital
86,026 84,003 Total assets 171,461 165,773 Total debt 25 72 Total
shareholders’ equity 157,301 150,117 Reconciliation
of Non-GAAP Financial Measures (In Thousands, Except Per Share
Amounts) In accordance with Regulation G of the Securities
and Exchange Commission, the table set forth below reconciles
certain financial measures used in this press release that were not
calculated in accordance with generally accepted accounting
principles, or GAAP, with the most directly comparable financial
measure calculated in accordance with GAAP.
Three Months Ended
(unaudited) June 30, 2009
June 30, 2008 Operating income – GAAP $ 2,109 $ 2,537
Nonrecurring charges (a) 201 610
Adjusted operating
income
$ 2,310 $ 3,147 Net
income available to common shareholders – GAAP $ 1,565 $ 1,632
Nonrecurring charges (net of income taxes of ($955) and
$255, respectively) (a) 1,156 355
Adjusted
net income $ 2,721 $ 1,987
Expected impact of NOL
utilization
(1,337 ) -
Adjusted net income excluding NOL
utilization $ 1,384 $ 1,987
Diluted earnings available to common shareholders per basic and
diluted share – GAAP $ 0.07 $ 0.07 Nonrecurring charges per
share (a) 0.04 0.01
Adjusted earnings per
diluted share $ 0.11 $ 0.08
Expected impact of NOL
utilization
(0.05 ) -
Adjusted earnings per diluted share
excluding NOL utilization $ 0.06 $
0.08 (a) In the second quarter of 2009, we incurred
$0.4 million of costs in connection with the since-terminated
definitive merger agreement to acquire Biotel, Inc. and ($0.2)
million of integration, restructuring and other charges. In the
second quarter of 2008, we incurred $0.6 million of integration,
restructuring and other charges.
Six Months Ended
(unaudited) June 30, 2009
June 30, 2008 Operating income – GAAP $ 764 $ 1,853
Nonrecurring charges (a) 3,188 1,916
Adjusted operating
income
$ 3,952 $ 3,769
Net income (loss) available to common shareholders – GAAP $ 843 $
(1,305 )
Dividends on and accretion of
mandatorily redeemable convertible preferred stock which converted
to common stock in the first quarter of 2008
- 2,597
Net income $
843 $ 1,292 Nonrecurring charges (net
of income taxes of $273 and $807, respectively) (a) 2,915
1,109
Adjusted net income $
3,758 $ 2,401
Expected impact of NOL
utilization
(1,337 ) -
Adjusted net income excluding
NOL utilization
$ 2,421 $ 2,401
Income (loss) available to common shareholders per basic and
diluted share – GAAP $ 0.04 $ (0.10 )
Dividends on and accretion of
mandatorily redeemable convertible preferred stock which converted
to common stock in the first quarter of 2008
- 0.12
Diluted earnings per
share
$ 0.04 $ 0.02 Nonrecurring
charges per share (a) 0.12 0.09
Adjusted earnings per diluted share $ 0.16
$ 0.11
Expected impact of NOL
utilization
(0.06 ) -
Adjusted earnings per diluted
share excluding NOL utilization $ 0.10
$ 0.11 (a) In the first six months of
2009, we incurred $0.8 million of costs in connection with the
since-terminated definitive merger agreement to acquire Biotel,
Inc., $0.5 million for special bonus paid to incoming CEO and $1.9
million of integration, restructuring and other charges. In the
first six months of 2008, we incurred $1.9 million of integration,
restructuring and other charges.
HeartBeam (NASDAQ:BEAT)
Historical Stock Chart
From Jun 2024 to Jul 2024
HeartBeam (NASDAQ:BEAT)
Historical Stock Chart
From Jul 2023 to Jul 2024