“Looking ahead to 2011, while some uncertainty has been removed with the national reimbursement rate, we will not be providing financial guidance until we reach a period of greater predictability. Our objective for 2011 is to organically grow patient volume in our core cardiac monitoring business through the disciplined execution of our sales plan. Additionally, we will continue to evaluate external opportunities that will augment this growth or provide complementary products and services. We will execute the full commercial launch of our next generation MCOT TM system, C5, which has enhanced features and a lower cost of sales. With $45 million of cash and investments and a strong operational foundation, I am confident we will execute on this plan.”
Fourth Quarter Financial Results
Revenues for the fourth quarter 2010 were $28.7 million, a decrease of 13.9% compared to $33.3 million in the fourth quarter 2009. The decrease in revenues was driven by lower volume as well as a reduction in non-contracted reimbursement. For the three months ended December 31, 2010, payor revenue was comprised of 36% Medicare and 64% commercial, and patient volume was comprised of 45% Medicare and 55% commercial.
Gross profit for the fourth quarter 2010 decreased to $16.7 million, or 58.3% of revenues, compared to $20.3 million, or 60.9% of revenues, in the fourth quarter 2009. Fourth quarter 2010 gross profit margin was impacted by the non-contracted reductions, as well as the lower MCOT TM patient volume.On a GAAP basis, operating expenses for the fourth quarter 2010 were $21.3 million, a decrease of 40.5% compared to $35.8 million in the fourth quarter 2009. Operating expenses on an adjusted basis declined by 23.1% compared to the prior year quarter, excluding $1.6 million in the fourth quarter 2010 and $10.1 million in the fourth quarter 2009 related to restructuring and other nonrecurring charges. The decrease in operating expenses was driven by the Company’s cost reduction initiatives in response to the 2009 Medicare rate reduction.