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, 2012.
First Quarter 2012 and Recent Highlights
- Completed acquisition of ECG Scanning
and Medical Services, Inc. (“ECG Scanning”)
- Experienced increased sequential
patient volume across all cardiac service lines
- Realized benefit from cost reductions
in the quarter; on track to realize $7.5 million of annualized cost
reductions
- Commenced full scale operations in west
coast monitoring facility
- Secured 14 new payor contracts during
the quarter
- $37.0 million in cash and investments
as of March 31, 2012, with no outstanding debt
President and CEO Commentary
Joseph Capper, President and Chief Executive Officer of
CardioNet, commented: “The first quarter results were in line with
expectations representing a solid start to the year. Patient volume
across all service lines increased sequentially, indicating healthy
demand for CardioNet’s suite of cardiac monitoring tools.
Offsetting the volume growth was the continued pressure on our
commercial reimbursement. Looking forward, our revenue will benefit
from the opening of our west coast monitoring facility as well as
the continued roll-out of our next generation MCOTTM device.
“During the quarter, we continued to focus on our key strategic
objectives of gaining efficiencies, growing volume and revenue
diversification. Our progress against these goals is demonstrated
by our execution of our previously announced $7.5 million of cost
reductions and the full commercial launch of our new MCOTTM device
with positive feedback from our physicians and patients. We have
made great progress in getting our west coast monitoring facility
fully operational, providing us the opportunity to optimize our
reimbursement as well as redundancy. Finally, we announced the
acquisition of ECG Scanning which will leverage our existing
infrastructure and provide access to additional physician
relationships.
“With continued demand for our services and the progress that we
have made on our strategic goals, we are well positioned to achieve
future profitability. Despite the cash outlays during the quarter,
we still maintain a healthy cash and investment balance of $37
million with no outstanding debt, ultimately providing us the
opportunity to continue to invest strategically.”
First Quarter Financial Results
Revenue for the first quarter 2012 was $27.0 million, a decrease
of 20.5% compared to $34.0 million in the first quarter 2011.
Revenue decreased $7.0 million due to lower MCOTTM reimbursement
and volume which correlates to the lower volumes being experienced
in physicians’ offices, as well as lower average MCOTTM
reimbursement. This decrease was partially offset by an increase in
event and Holter revenue, primarily due to the inclusion of ECG
Scanning revenue. For the three months ended March 31, 2012,
patient revenue was comprised of 40% Medicare and 60% commercial,
and patient volume was comprised of 53% Medicare and 47%
commercial.
Gross profit for the first quarter 2012 decreased to $15.6
million, or 57.7% of revenue, compared to $20.3 million, or 59.8%
of revenue, in the first quarter of 2011. Gross profit for the
first quarter 2012 on an adjusted basis was $16.0 million, or 59.1%
of revenue, excluding $0.4 million related to restructuring and
other nonrecurring charges. The decrease in adjusted gross profit
percentage was primarily related to the decrease in MCOTTM
reimbursement.
On a GAAP basis, operating expenses for the first quarter 2012
were $19.2 million, a decrease of 12.5% compared to $21.9 million
in the first quarter 2011. Operating expenses on an adjusted basis
were $18.4 million, an 11.7% decline compared to $20.9 million for
the prior year quarter, excluding $0.8 million in the first quarter
2012 and $1.0 million in the first quarter 2011 related to
restructuring and other nonrecurring charges. The decrease in
operating expenses was driven by the implementation of cost
reductions at the end of 2011. These reductions were partially
offset by the addition of ECG Scanning’s operating expenditures in
the quarter.
On a GAAP basis, net loss for the first quarter 2012 was $3.5
million, or a loss of $0.14 per diluted share, compared to a net
loss of $1.6 million, or a loss of $0.06 per diluted share, for the
first quarter 2011. Excluding expenses related to restructuring and
other nonrecurring charges, adjusted net loss for the first quarter
2012 was $2.4 million, or a loss of $0.10 per diluted share. This
compares to an adjusted net loss of $0.5 million, or a loss of
$0.02 per diluted share, for the first quarter 2011, which also
excludes the impact of restructuring and other nonrecurring
charges.
Liquidity
As of March 31, 2012, the Company had total cash and investments
of $37.0 million compared to $46.5 million as of December 31, 2011,
a decrease of $9.5 million. The significant cash uses during the
first quarter 2012 included $6.3 million related to the acquisition
of ECG Scanning, $1.4 million for capital expenditures and $1.3
million related to the settlement of the shareholder litigation.
DSO increased slightly compared to year end 2011 to 81 days with
the inclusion of ECG Scanning’s receivables.
Conference Call
CardioNet, Inc. will host an earnings conference call on
Tuesday, May 8, 2012, 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 95793112.
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,” “may,” “anticipate,”
“possible,” “estimate,” “potential,” “intend,” “plan,” “believe,”
“forecast,” “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 effect of the ECG Scanning 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, relationships with our government and commercial payors
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, adverse regulatory action and
litigation success. 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,
2012
March 31,
2011
Revenue $ 27,045 $ 33,999 Cost of revenue 11,435
13,652 Gross profit 15,610 20,347 Gross profit % 57.7% 59.8%
Operating expenses: General and administrative expense 8,673
9,675 Sales and marketing expense 6,152 8,065 Bad debt expense
2,911 2,390 Research and development expense 1,185 1,682
Integration, restructuring and other charges 270 124
Total operating expenses 19,191 21,936 Loss from
operations (3,581) (1,589) Interest and other income,
net 47 37 Loss before income taxes (3,534) (1,552) Provision
for income taxes - - Net loss $ (3,534) $ (1,552)
Loss per Share:
Basic $ (0.14) $ (0.06) Diluted $ (0.14) $ (0.06) Weighted
Average Shares Outstanding: Basic 24,605 24,299 Diluted 24,605
24,299
Summary Financial Data
(In Thousands) March 31, December 31,
2012 2011 (unaudited) Cash and
investments $ 36,953 $ 46,484 Accounts receivable, net 21,419
21,028 Other receivables, net 2,388 1,564 Days sales outstanding 81
75 Working capital 50,024 57,177 Total assets 91,078 94,975 Total
debt - - Total shareholders’ equity 75,569 77,997
Three Months
Ended
March 31, March 31, 2012 2011
(unaudited) Stock compensation expense $ 855 $ 1,149
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, March 31,
2012 2011 Operating loss – GAAP $ (3,581) $ (1,589)
Nonrecurring charges (a) 1,128 1,053
Adjusted operating loss
$ (2,453) $ (536) Net loss – GAAP $
(3,534) $ (1,552) Nonrecurring charges (a) 1,128
1,053
Adjusted net loss $ (2,406) $
(499) Loss per diluted share – GAAP $ (0.14) $ (0.06)
Nonrecurring charges per share (a) 0.04 0.04
Adjusted loss per diluted share $ (0.10)
$ (0.02) (a) In the first quarter of 2012, we
incurred $0.7 million related to restructuring and other
nonrecurring charges, $0.3 million of legal fees related to
litigation, as well as $0.2 million for the forfeiture and
acceleration of certain options. In the first quarter of 2011, we
incurred $0.7 million of nonrecurring charges largely related to
the integration of Biotel’s operations, as well as $0.3 million for
the forfeiture and acceleration of certain options.
Three Months
Ended
(unaudited) March 31, March 31,
2012 2011 Cash used by operating activities $
(1,949) $ (2,240) Capital expenditures (1,372) (396)
Free cash flow (3,321) (2,636)
Three Months
Ended
(unaudited) March 31, March 31,
2012 2011 Operating loss – GAAP $ (3,581) $
(1,589) Nonrecurring charges 1,128 1,053 Depreciation and
amortization expense 2,020 3,238 Adjusted EBITDA
(433) 2,702
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