CONSHOHOCKEN, Pa.--(Business Wire)--
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
quarter ended March 31, 2008.
Q1 2008 Highlights
Highlights of the first quarter of 2008 included:
-- Reported Q1 2008 revenue growth of 67.9% compared to the same
period last year adjusted to include the impact of the
acquisition of PDSHeart, Inc. ("PDSHeart") as if the
acquisition occurred on January 1, 2007 (1A), and 129.4%
revenue growth for the same period last year on a GAAP basis.
-- Achieved the third consecutive quarter of profitability.
-- Completed our $82.8 million initial public offering at $18.00
per share (inclusive of the underwriters' partial exercise of
its over-allotment option), raising net proceeds to CardioNet
of $46.9 million.
-- Secured a new direct contract with a national commercial payor
representing over 16 million lives, bringing the total number
of lives covered by the CardioNet System to 176 million
covered by 170 commercial contracts and Medicare.
-- Celebrated the one year anniversary of the March 2007
publication of a 300-patient randomized clinical trial finding
that the CardioNet System detected clinically significant
arrhythmias nearly three times as often as traditional loop
event monitors in patients who had previously experienced
negative or non-diagnostic Holter monitoring.
-- Initiated final integration plans related to the March 2007
PDSHeart acquisition, including the elimination of redundant
operations, overhead and facilities. We currently expect this
plan to be substantially implemented by mid-2008.
-- Bolstered our senior management team with the hiring of
experienced executives in key management positions in Sales,
Marketing and R&D.
President and Chief Executive Officer ("CEO") Commentary
Arie Cohen, President and CEO, commented: "We are pleased to
report a record first quarter that exceeded our expectations. Our
performance reflects continued recognition by physicians and payors of
the benefits of utilizing the CardioNet System. We believe that
CardioNet only has approximately 5% penetration of an estimated $2
billion market, and that the future growth opportunities for our
company are quite compelling.
"We have seen significant payor momentum since the publication of
a 300-patient randomized clinical trial in March 2007, which
illustrated a three times higher diagnostic yield of the CardioNet
System versus event monitoring for patients who previously had
negative or non-diagnostic Holter monitoring. From March 2007, we have
signed 28 new commercial payor contracts representing over 34.9
million lives, including two significant national payors, one of which
was signed late in the first quarter of 2008. We believe this momentum
of payor acceptance will continue and that we will secure additional
new contracts going forward."
Financial Results
Revenues for the first quarter of 2008 increased to $25.5 million
compared to $11.1 million in the first quarter of 2007, an increase of
$14.4 million, or 129.4%. After taking into account the acquisition of
PDSHeart, the $25.5 million of first quarter 2008 revenue compares to
adjusted revenue of $15.2 million for first quarter 2007 (1A), an
increase of $10.3 million, or 67.9%.
Gross profit increased to $15.9 million in the first quarter of
2008, or 62.6% of revenues, compared to $7.3 million in the first
quarter of 2007, or 65.9% of revenues. After taking into account the
acquisition of PDSHeart, the 62.6% gross profit in the first quarter
of 2008 compares to 64.0% adjusted gross profit in the first quarter
of 2007 (1A).
Marty Galvan, CardioNet's Chief Financial Officer, commented: "The
adjusted gross profit of 64.0% for the first quarter of 2007 is lower
than the reported GAAP gross profit of 65.9% due to the impact of the
inclusion of an entire quarter of the lower margin PDSHeart event and
Holter monitoring products. Year over year, the reduction in gross
profit to 62.6% is primarily due to a fuel surcharge on device
shipments to and from patients. Although we expect this charge to
continue in 2008, we have identified manufacturing cost and operating
expense reductions to offset its impact on our 2008 results."
On a GAAP basis, operating income increased to $0.3 million in the
first quarter of 2008 compared to an operating loss of $2.2 million in
the same period last year. Excluding the impact of $0.4 million of
integration and restructuring charges primarily related to integration
of PDSHeart (1B), adjusted operating income increased to $0.6 million
in the first quarter of 2008 compared to an operating loss of $2.2
million in the first quarter of 2007. The PDSHeart integration plan is
expected to be substantially implemented by mid-2008 with additional
integration charges anticipated in the second and third quarters of
2008.
Marty Galvan commented: "We are very excited to report our third
consecutive quarter of profitability. In the first quarter of 2008,
CardioNet invested heavily in sales and marketing, additional
management talent, research and development and other operating
expenses that will help drive our future growth. As our revenue
continues to grow over the balance of 2008, we will be able to
leverage these expenses over a larger revenue base. The first quarter
2008 adjusted operating income exceeded our expectations and the
sequential decline from the fourth quarter 2007 to the first quarter
2008 reflects the investments outlined above. We expect operating
margin to increase substantially over the next several quarters."
On a GAAP basis, net income for the first quarter of 2008
increased to $0.2 million compared to a net loss of $3.2 million for
the same period last year. Adjusted net income for the first quarter
of 2008 increased to $0.4 million, or $0.02 per diluted share,
excluding the impact of integration and restructuring costs (1B),
compared to a net loss of $3.2 million, or a loss of $1.06 per diluted
share, for the same period last year.
Net loss available to common shares, which is derived by reducing
net income by the accrued dividends and accretion on mandatorily
redeemable convertible preferred stock, was $2.4 million, or a loss of
$0.50 per diluted share, compared to a net loss of $3.6 million, or a
loss of $1.22 per diluted share, for the same period last year. The
mandatorily redeemable convertible preferred stock, which was issued
to finance the March 2007 PDSHeart acquisition, was converted to
common stock in connection with CardioNet's March 2008 initial public
offering.
2008 Outlook
CardioNet CEO Arie Cohen noted, "Looking ahead, we believe that we
are well-positioned to deliver sustained revenue and earnings growth
and have set a revenue target for 2008 of $117.0 to $120.0 million. We
expect to leverage our strong balance sheet to invest in sales and
marketing resources to drive revenue growth, R&D projects to enhance
our product portfolio, and opportunistic strategic acquisitions that
we believe will further strengthen our performance in 2008 and
beyond."
Conference Call
CardioNet, Inc. will host an earnings conference call on Tuesday,
April 29, 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 50515401.
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
within the meaning of the "Safe Harbor" provisions of the Private
Securities Litigation Reform Act of 1995 regarding, among other
things, our ability to deliver sustained revenue and earnings growth,
our ability to implement manufacturing cost and expense reductions,
our ability to increase our operating margin, the performance of our
recent acquisition of PDSHeart, our ability to integrate it into our
operations during mid-2008, its affect on earnings and whether it will
contribute to higher rates of revenue and earnings growth in the
future, our ability to secure additional contracts in 2008, our
outlook for our businesses, our expectations regarding the integration
and restructuring charges and our ability to recover the costs
relating to our acquisition of PDSHeart, our expectations for our
research and development pipeline and new product introductions, our
ability to create stockholder value, our 2008 revenue target, our
prospects for continued growth, our ability to successfully execute on
our business strategies 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 the company's
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, the continued consolidation of payors, acceptance of
our new products and services, patent protection and litigation, a
successful mergers and acquisitions strategy, the ability to locate
and acquire companies, the existence of businesses and products that
are strategic to the Company and accretive to earnings, and the market
for mergers and acquisitions. 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 final
prospectus filed on March 19, 2008 in connection with our initial
public offering. We undertake no obligation to publicly update any
forward-looking statement, whether as a result of new information,
future events, or otherwise.
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Three Months Ended
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Consolidated Statements of Operations (unaudited)
(In Thousands, Except Per Share Amounts)
March 31, March 31,
2008 2007
Revenues $ 25,463 $ 11,101
Cost of revenues 9,519 3,790
----------- ---------
Gross Profit 15,944 7,311
Gross Profit % 62.6% 65.9%
Operating Expenses:
Research and development expense 1,141 990
General and administrative expense 8,820 5,141
Sales and marketing expense 5,115 3,320
Amortization of intangibles 246 61
Integration and restructuring charges 356 -
----------- ---------
Total Operating Expense 15,678 9,512
----------- ---------
Operating Income (Loss) 266 (2,201)
----------- ---------
Interest Income (Expense), net 112 (953)
Income (Loss) Before Income Taxes 378 (3,154)
Provision for Income Taxes (151) -
----------- ---------
Net Income (Loss) $ 227 $(3,154)
Dividends on and accretion of mandatorily
redeemable convertible preferred stock (2,597) (483)
----------- ---------
Net Loss available to common shares $(2,370) $(3,637)
=========== =========
Loss per Share:
Basic and Diluted $ (0.50) $ (1.22)
Weighted Average Shares Outstanding:
Basic and Diluted 4,695 2,993
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The following table presents detail of the stock-based compensation
expense that is included in each functional line item in the
Condensed Statement of Operations above (000's):
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Three Months Ended
-------------------
Stock based compensation expense (unaudited)
(In Thousands)
March 31, March 31,
2008 2007
Stock based compensation expense included in:
Cost of revenues $ 9 $ -
Research and development expense 14 -
General and administrative expense 238 69
Sales and marketing expense 99 -
--------- ---------
Total stock based compensation expense $ 360 $ 69
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Summary Consolidated Balance Sheet Data
(In Thousands)
March 31, December 31,
2008 2007
(unaudited)
Cash and cash equivalents $ 61,973 $ 18,091
Accounts receivable, net 25,766 22,854
Working capital 72,636 29,375
Total assets 154,386 103,040
Total debt 2,872 2,744
Mandatorily redeemable convertible preferred
stock - 115,302
Total shareholders' equity (deficit) 135,918 (26,865)
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Reconciliation of Non-GAAP Financial Measures
(In Thousands, Except Per Share Amounts)
In accordance with Regulation G of the Securities and Exchange
Commission, the tables set forth below reconcile 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.
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(1A) The following table provides a reconciliation of first quarter
2007 results as if the PDSHeart acquisition had been completed as of
January 1, 2007.
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Three Months Ended
March 31, 2007
------------------
Total Revenue - GAAP $ 11,101
PDSHeart Revenue prior to acquisition - January 1
to March 7, 2007 4,069
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Adjusted Revenue $ 15,170
==================
Total Gross Profit - GAAP $ 7,311
PDSHeart Gross Profit prior to acquisition -
January 1 to March 7, 2007 2,402
------------------
Adjusted Gross Profit $ 9,713
==================
Adjusted Gross Profit % 64.0%
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(1B) The following table reconciles certain financial measures used in
this press release that were not calculated in accordance with GAAP.
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Three Months Ended Three Months Ended
March 31, 2008 March 31, 2007
------------------ ------------------
Operating Income (Loss) - GAAP $ 266 $ (2,201)
Integration and Restructuring
Charges (a) 356 -
------------------ ------------------
Adjusted Operating Income (Loss) $ 622 $ (2,201)
================== ==================
Net (Loss) applicable to common
shares - GAAP $ (2,370) $ (3,637)
Dividends on and accretion of
mandatorily redeemable
convertible preferred stock
which converted to common stock
in the first quarter of 2008 2,597 483
------------------ ------------------
Net Income (Loss) - GAAP $ 227 $ (3,154)
Integration and Restructuring
Charges (net of income taxes of
$142) (a) 214 -
------------------ ------------------
Adjusted Net Income (Loss) $ 441 $ (3,154)
================== ==================
Diluted Earnings (Loss) per
Share - GAAP $ (0.50) $ (1.22)
Dividends on and accretion of
mandatorily redeemable
convertible preferred stock
which converted to common stock
in the first quarter of 2008
and Integration and
Restructuring Charges per Share
(a) 0.52 0.16
------------------ ------------------
Adjusted Earnings (Loss) per
Share $ 0.02 $ (1.06)
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(a) In the first quarter of 2008, we incurred $0.4 million of expense
primarily to integrate the PDSHeart acquisition consummated in March
2007.
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CardioNet, Inc.
Investor Contact:
Martin P. Galvan, 800-908-7103
Copyright Business Wire 2008
