CardioNet, Inc. Reports Second Quarter 2008 Results.CONSHOHOCKEN, Pa. -- CardioNet, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :BEAT), a leading wireless medical technology company with an initial focus on the diagnosis and monitoring of cardiac arrhythmias cardiac arrhythmia n. See cardiac dysrhythmia. Cardiac arrhythmia An irregular heart rate or rhythm. Mentioned in: Holter Monitoring, Stress Test cardiac arrhythmia , today reported results for the quarter ended June 30, 2008. Q2 2008 Highlights * Reported revenue of $29.3 million, up 68.4%, compared to $17.4 million in the same period last year. * Experienced a profitable quarter with an 8.7% operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: in Q2 2008 compared to a loss in Q2 2007. * Continued to build on the momentum of payor acceptance generated from the publication of our clinical trial results in March 2007, securing 9 new direct payor contracts in the second quarter representing approximately 1 million additional lives, bringing the total number of covered lives to approximately 177 million covered by 181 commercial contracts and Medicare. * Expanded our direct sales force by 11.0% from the end of Q1 2008, broadening our footprint as the largest arrhythmia arrhythmia (ārĭth`mēə), disturbance in the rate or rhythm of the heartbeat. Various arrhythmias can be symptoms of serious heart disorders; however, they are usually of no medical significance except in the presence of monitoring sales force. * Appointed Randy Thurman, former Chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of VIASYS Healthcare (acquired by Cardinal Health <includeonly></includeonly> Cardinal Health (NYSE: CAH) is a premier, global healthcare company dedicated to making healthcare safer and more productive. Overview Headquartered in Dublin, Ohio, Cardinal Health, Inc. for $1.5 billion in June 2007), as Executive Chairman to replace founder Jim Sweeney
Jim Sweeney . * Bolstered our senior management team with the hiring of additional experienced executives in key management positions in Operations and Human Resources The fancy word for "people." The human resources department within an organization, years ago known as the "personnel department," manages the administrative aspects of the employees. . * Entered into a settlement agreement with LifeWatch Corp., in the amicable am·i·ca·ble adj. Characterized by or exhibiting friendliness or goodwill; friendly. [Middle English, from Late Latin am resolution of a lawsuit with dismissal by both sides of all claims asserted in the litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. . President and CEO Commentary Arie Cohen cohen or kohen (Hebrew: “priest”) Jewish priest descended from Zadok (a descendant of Aaron), priest at the First Temple of Jerusalem. The biblical priesthood was hereditary and male. , President and CEO, commented: "We are excited to report a record second quarter that builds on our market momentum. The CardioNet System has demonstrated a 3x higher yield in diagnosing cardiac arrhythmias versus event monitoring In computer science, event monitoring is the process of collecting, analyzing, and signalling event occurrences to subscribers such as operating system processes, active database rules as well as human operators. for patients who previously had negative or non-diagnostic Holter monitoring Holter Monitoring Definition Holter monitoring is continuous monitoring of the electrical activity of a patient's heart muscle (electrocardiography) for 24 hours, using a special portable device called a Holter monitor. . We believe that the enhanced ability to diagnose and manage patients with cardiac arrhythmias results in superior clinical outcomes and reduced health care costs. Accordingly, the momentum we are experiencing in payor adoption continues, demonstrated by CardioNet reaching the milestone of approximately 70% of lives under coverage from commercial payors and Medicare. During the first six months of 2008, we secured 14 new contracts representing 19 million covered lives. "Our recent appointment of Randy Thurman as Executive Chairman further enhances CardioNet's leadership team, as we seek to expand our penetration in the $2 billion arrhythmia monitoring opportunity. Annualizing Annualizing See: Annual basis. our Q2 revenue suggests that we have achieved less than 6% penetration, underscoring the significant growth opportunity going forward in our core business. We believe our wireless medicine platform also can be leveraged in the future for other new applications and markets and remain excited about the potential for this innovative and scalable technology." Financial Results Revenues for the second quarter of 2008 increased to $29.3 million compared to $17.4 million in the second quarter of 2007, an increase of $11.9 million, or 68.4%. Revenues for the six months ended June 30, 2008 increased to $54.8 million compared to $28.5 million in the comparable period in the prior year. After taking into account the acquisition of PDSHeart, Inc. ("PDSHeart"), which the Company acquired in March 2007, revenue in the first half of 2008 increased 68.2% to $54.8 million compared to $32.6 million in the same period last year(1A). Gross profit increased to $19.5 million in the second quarter of 2008, or 66.5% of revenues, compared to $11.5 million in the second quarter of 2007, or 65.8% of revenues. The 66.5% gross margin in second quarter of 2008 also compares favorably to the 62.6% gross margin in the first quarter of 2008. For the first half of 2008, gross profit increased to $35.5 million, or 64.7% of revenues, compared to $18.8 million, or 65.8% of revenues, in the comparable period in the prior year. After taking into account the acquisition of PDSHeart, the 64.7% gross profit in the year to date period compares to 65.0% gross profit in the same period last year, a decrease of 30 basis points due to first quarter performance(1A). Marty Galvan, CardioNet's Chief Financial Officer commented: "Our second quarter gross profit reflects cost reductions and productivity improvements that successfully offset the negative factors experienced in the first quarter of 2008, primarily a fuel surcharge An overcharge or additional cost. A surcharge is an added liability imposed on something that is already due, such as a tax on tax. It also refers to the penalty a court can impose on a fiduciary for breaching a duty. . In addition, our revenue mix continues to shift towards our proprietary CardioNet System, away from legacy event and Holter monitoring products based on the strength of its superior diagnostic yield. It is important to emphasize that the gross margin for the CardioNet System is higher than the gross margin for the legacy event and Holter monitoring products, thereby contributing to the gross margin improvement." On a GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). basis, operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. increased to $2.5 million in the second quarter of 2008 compared to an operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. of $1.0 million in the second quarter of 2007. Excluding $0.6 million of expense related to the integration of PDSHeart and other restructuring efforts(1B), adjusted operating income increased to $3.1 million in the second quarter of 2008, or 10.7% of revenue, compared to an operating loss of $1.0 million in the second quarter of 2007. On a GAAP basis, operating income for the year to date period increased to $1.9 million compared to an operating loss of $3.2 million in the comparable period in the prior year. Excluding the impact of $1.9 million of integration, restructuring and other nonrecurring charges Nonrecurring Charge An expense occurring only once on a company's financial statement. Notes: An extraordinary item is an example of a nonrecurring charge. Also known as "nonrecurring item". (1B), adjusted operating income increased to $3.8 million in the first half of 2008, or 6.9% of revenue, compared to an operating loss of $3.2 million in the first half of 2007. Marty Galvan remarked: "As previously discussed, we expect to record approximately $1.3 million in PDSHeart integration charges in 2008. In the first half of the year, we have reported approximately $1.0 million in charges, with the balance expected primarily in the third quarter of 2008. The litigation settlement charges with LifeWatch announced in May 2008 were included in Q1 2008 results and did not impact the second quarter results." On a GAAP basis, net income for the second quarter of 2008 increased to $1.6 million, or $0.07 per diluted share, compared to a net loss of $1.1 million, or a loss of $0.36 per diluted share, for the same period last year. Adjusted net income for the second quarter of 2008 increased to $2.0 million, or $0.08 per diluted share, excluding the impact of integration, restructuring and other nonrecurring charges(1B), compared to a net loss of $1.1 million, or a loss of $0.36 per diluted share, for the same period last year. On a GAAP basis, net income for the first half of 2008 increased to $1.3 million, or $0.06 per diluted share, compared to a net loss of $4.3 million, or a loss of $1.41 per diluted share, for the first half of 2007. Adjusted net income for the first half of 2008 increased to $2.4 million, or $0.11 per diluted share, excluding the impact of integration, restructuring and other nonrecurring charges(1B), compared to a net loss of $4.3 million, or a loss of $1.41 per diluted share, for the same period last year. 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 Convertible Preferred Stock Preferred stock that includes an option for the holder to convert the preferred shares into a fixed number of common shares, usually anytime after a predetermined date. Also known as "convertible preferred shares". , was $1.6 million, or $0.07 per diluted share, for the second quarter of 2008 compared to a net loss of $3.5 million, or a loss of $1.13 per diluted share, for the second quarter of 2007. Net loss available to common shareholders for the six month period ending June 30, 2008 was $1.3 million, or a loss of $0.10 per diluted share, compared to a loss of $7.1 million, or a loss of $2.35 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. Marty Galvan noted: "During our first quarter 2008 earnings release, CardioNet announced 2008 revenue guidance of $117 to $120 million. The strength of our second quarter increases our level of comfort toward the high-end of that range. We believe that the third quarter will be impacted by seasonality related to physician and patient schedules over the summer months, which will moderate our sequential growth. In regard to expenses, today we also announced a secondary offering and we expect to incur charges related to the offering in the third quarter of 2008. We also expect to make continued investments in sales and marketing resources, infrastructure to support our growth and R&D projects to enhance our product portfolio over the second half of 2008, positioning the Company for growth in 2009 and beyond. Going forward, we firmly believe that we remain well-positioned to deliver sustained revenue and earnings growth and will continue to maintain a very strong balance sheet." Conference Call CardioNet, Inc. will host an earnings conference call on Tuesday, July 22, 2008, at 8:00 AM 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 61950613. CardioNet, Inc. 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 with a solution that it markets as the CardioNet System. More information can be found at http://www.CardioNet.com. Forward Looking Statements This press release includes certain forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of the "Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. " provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995 regarding, among other things, our ability to deliver sustained revenue and earnings growth, to maintain a strong balance sheet, the momentum in payor acceptance, the ability of our products and services to deliver superior clinical outcomes and reduced heath care costs, our ability to increase our market penetration Noun 1. market penetration - the extent to which a product is recognized and bought by customers in a particular market penetration - the act of entering into or through something; "the penetration of upper management by women" , the size of our potential markets and growth opportunities, our ability to leverage our platform for other applications and markets, our expectations with respect to our revenue mix or the continued shift from legacy products to the CardioNet System, the amount of our integration charges related to the PDSHeart acquisition, our expectations with respect to future financial performance and seasonality in our business, expectations with respect to charges relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the planned secondary offering, expectations with respect to future investments, our outlook for our businesses, our 2008 revenue target, our prospects for continued growth and our confidence in the Company's future. These statements may be identified by words such as "expect," "anticipate," "estimate," "project," "intend," "plan," "believe," 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 integration of our recent acquisition of PDSHeart, the continued implementation of our restructuring plans, sales and marketing initiatives, our ability to attract and retain talented sales personnel, 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 Reimbursement Payment made to someone for out-of-pocket expenses has incurred. 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 report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. or 10-Q. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise. [TABLE OMITTED] The following table presents detail of the stock-based compensation expense that is included in each functional line item in the Condensed con·dense v. con·densed, con·dens·ing, con·dens·es v.tr. 1. To reduce the volume or compass of. 2. To make more concise; abridge or shorten. 3. Physics a. Statement of Operations See Income statement. above (000's): [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] |
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