CardioNet, Inc. (NASDAQ:BEAT), a leading wireless medical
technology company with a current focus on the diagnosis and
monitoring of cardiac arrhythmias, today reported results for the
first quarter ended March 31, 2011.
First Quarter 2011 Highlights
- Achieved gross profit of 60% on
revenues of $34 million
- Generated positive EBITDA of $1.8
million in the first quarter 2011
- Improved operating results with a loss
of $0.06 per diluted share, a 74% improvement over the first
quarter 2010. On an adjusted basis, the loss per diluted share was
$0.02, an 85% improvement over the first quarter 2010
- DSO remained stable at 77 days
- Monitored over 425,000 patients since
inception
- Biotel integration progressing as
planned
- Secured 9 new payor contracts during
the quarter, covering over one million lives
- $43 million in cash and investments
with no outstanding debt as of March 31, 2011
President and CEO Commentary
Joseph Capper, President and Chief Executive Officer of
CardioNet, commented: “Our operating results for the first quarter
2011 continued to show improvement. We generated positive EBITDA
and had a sequential increase in patient revenue based on strong
demand for MCOTTM. Our results benefitted from the addition of
Biotel, which accounted for approximately 10% of revenue in the
quarter.
“Cash collections remained strong despite the increased patient
financial responsibility that is typical in the first quarter,
given the annual resetting of patient co-pays and deductibles. Our
DSO has stabilized as a result of the new systems and processes
that we implemented in 2010 and we anticipate further improvement
in DSO by year-end.
“Our operating results in the first quarter demonstrate
significant sequential and year-over-year improvement. We remain
focused on achieving the Company’s goals for 2011, which include
accelerating patient volume growth, delivering world-class customer
service to our physicians and patients, expanding commercial
reimbursement for the MCOTTM technology, launching our next
generation MCOTTM system later this year and reducing our overall
cost structure. Together, these initiatives will ultimately allow
CardioNet to achieve profitability despite the challenging
reimbursement environment. We will also continue to assess
opportunities that will provide future growth. We have built a
strong operational foundation and, with $43 million in cash and
investments and no debt, we believe that we are well positioned to
achieve these goals.”
First Quarter Financial Results
Revenue for the first quarter 2011 was $34.0 million, an
increase of 6.9% compared to $31.8 million in the first quarter
2010. The increase in revenue was primarily due to the addition of
Biotel Inc. For the three months ended March 31, 2011, payor
revenue was comprised of 30% Medicare and 70% commercial, and
patient volume was comprised of 49% Medicare and 51%
commercial.
Gross profit for the first quarter 2011 increased to $20.3
million, or 59.8% of revenues, compared to $20.1 million, or 63.1%
of revenues, in the first quarter 2010. The decline in gross profit
is related to the addition of the lower margin Biotel business as
well as lower average reimbursement.
On a GAAP basis, operating expenses for the first quarter 2011
were $21.9 million, a decrease of 14.0% compared to $25.5 million
in the first quarter 2010. Operating expenses on an adjusted basis
declined by 9.5% compared to the prior year quarter, excluding $1.1
million in the first quarter 2011 and $2.4 million in the first
quarter 2010 related to restructuring and other nonrecurring
charges. The decrease in operating expenses was driven by a
reduction in bad debt expense as well as the Company’s cost
reduction initiatives that were implemented in early 2010. These
reductions were partially offset by the addition of Biotel’s
operating expenditures in the quarter.
On a GAAP basis, net loss for the first quarter 2011 was $1.6
million, or a loss of $0.06 per diluted share, compared to net loss
of $5.4 million, or a loss of $0.23 per diluted share, for the
first quarter 2010. Excluding expenses related to restructuring and
other charges, adjusted net loss for the first quarter 2011 was
$0.5 million, or a loss of $0.02 per diluted share. This compares
to an adjusted net loss of $3.0 million, or a loss of $0.13 per
diluted share, for the first quarter 2010, which also excludes the
impact of restructuring and other nonrecurring charges.
Liquidity
As of March 31, 2011, the Company had total cash and investments
of $43.0 million, compared to $45.5 million as of December 31,
2010, a decrease of $2.5 million primarily due to annual management
incentive payments as well as the prepayment of certain expenses
that typically occurs in the first quarter. The Company has no
short or long-term debt and does not anticipate needing to secure
financing from external sources for cash to operate the business.
The existing cash and investment balances enable the Company to
continue to invest strategically in order to drive market
penetration and diversify the business.
Conference Call
CardioNet, Inc. will host an earnings conference call on
Tuesday, May 3, 2011, 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 81630268.
About CardioNet
CardioNet is a 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
(MCOTTM). More information can be found at
http://www.cardionet.com.
Forward-Looking Statements
This document 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, our ability to complete the integration of Biotel and
its operations into our business, the effect of the acquisition on
our business operations and financial results, effectiveness of our
efforts to address operational initiatives, including cost savings
initiatives that affect our business, changes to insurance coverage
and reimbursement levels for our products, 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, 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) March
31, March 31, 2011 2010 Revenue $
33,999 $ 31,816 Cost of revenue 13,652 11,749
Gross profit 20,347 20,067 Gross profit % 59.8 % 63.1 %
Operating expenses: General and administrative expense 9,675
9,677 Sales and marketing expense 8,065 7,997 Bad debt expense
2,390 4,640 Research and development expense 1,682 1,243
Integration, restructuring and other charges 124
1,945 Total operating expenses 21,936 25,502
Loss from operations (1,589 ) (5,435 )
Interest and other income, net 37 4 Loss before income taxes
(1,552 ) (5,431 ) Provision for income taxes -
- Net loss $ (1,552 ) $ (5,431 )
Loss per Share:
Basic $ (0.06 ) $ (0.23 ) Diluted $ (0.06 ) $ (0.23 )
Weighted Average Shares Outstanding: Basic 24,299 23,893 Diluted
24,299 23,893
Summary
Financial Data (In Thousands) March 31,
December 31, 2011 2010 (unaudited)
Cash and investments $ 43,011 $ 45,484 Accounts receivable,
net 26,808 24,978 Other receivables, net 2,721 3,041 Days sales
outstanding 77 78 Working capital 62,863 60,634 Total assets
153,912 156,692 Total debt - - Total shareholders’ equity 134,808
134,928
Three Months
Ended
March 31, March 31, 2011 2010
Stock compensation expense $ 1,149 $ 918
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) March 31, 2011 March 31,
2010 Operating loss – GAAP $ (1,589 ) $ (5,435 ) Nonrecurring
charges (a) 1,053 2,421
Adjusted operating loss
$ (536 ) $ (3,014 )
Net loss – GAAP $ (1,552 ) $ (5,431 ) Nonrecurring
charges (net of income taxes of $0 and $0, respectively) (a)
1,053 2,421
Adjusted net loss $
(499 ) $ (3,010 )
Loss per diluted share – GAAP $ (0.06 ) $ (0.23 )
Nonrecurring charges per share (a) 0.04 0.10
Adjusted loss per diluted share $ (0.02
) $ (0.13 ) (a) In the
first quarter of 2011, we incurred $0.7 million of nonrecurring
charges largely related to the integration of our operations with
that of Biotel, as well as $0.4 million for the forfeiture and
acceleration of certain options. In the first quarter of 2010, we
incurred $1.7 million of severance and other exit costs related to
the restructuring of our sales and service organizations and
management changes, as well as $0.7 million of other charges
largely related to our class action and Biotel law suits.
Three Months
Ended
March 31, 2011 March 31, 2010 Cash used
by operating activities $ (2,240 ) $ (2,952 ) Capital expenditures
(396 ) (1,478 ) Free cash flow (2,636 )
(4,430 )
Three Months
Ended
March 31, 2011 March 31, 2010 Operating
loss – GAAP $ (1,589 ) $ (5,435 ) Depreciation and amortization
expense 3,413 3,197 EBITDA 1,824
(2,238 )
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