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CardioNet, Inc. Reports Fourth Quarter And Full Year 2010 Financial Results

On a GAAP basis, net loss for the twelve months ended December 31, 2010 was $19.9 million, or a loss of $0.82 per diluted share, compared to net loss of $20.5 million, or a loss of $0.86 per diluted share, for the twelve months ended December 31, 2009. Excluding expenses related to restructuring and other charges, adjusted net loss for the twelve months ended December 31, 2010 was $12.8 million, or a loss of $0.53 per diluted share. This compares to adjusted net loss of $5.9 million, or a loss of $0.25 per diluted share, for the twelve months ended December 31, 2009, which also excludes the impact of restructuring and other nonrecurring charges.

Liquidity

As of December 31, 2010, CardioNet had total cash and investments of $45.5 million, compared to $49.2 million as of December 31, 2009, a decrease of $3.7 million. Despite this decrease, the Company generated $10.4 million of cash from operations for the year ended December 31, 2010. This included a decrease in net accounts receivable of $15.5 million compared to the prior year, resulting in a quarter-end DSO of 78 days, a 33 day reduction compared to 2009. Additionally, in the fourth quarter 2010, the Company used $9.9 million to acquire Biotel Inc. The Company has no short or long-term debt and does not anticipate the need to secure financing from external sources 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 Thursday, February 17, 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 82774159.

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 Telemetry TM (MCOT TM). 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, the effect of the implementation of CMS’ national price in 2011, 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)  
December 31,

2010

December 31,

2009

 
Revenues $ 28,683 $ 33,297
Cost of revenues   11,970   13,028
Gross profit 16,713 20,269
Gross profit % 58.3% 60.9%
     
Operating expenses:
General and administrative expense 7,715 9,400
Sales and marketing expense 7,160 9,108
Bad debt expense 4,520 5,896
Research and development expense 1,187 1,500
Integration, restructuring and other charges   722   9,872
Total operating expenses 21,304 35,776
   
Loss from operations   (4,591)   (15,507)
Interest and other income, net 36 10
 
Loss before income taxes (4,555) (15,497)
Provision for income taxes   (262)   (400)
Net loss $ (4,817) $ (15,897)
 

Loss per Share:

Basic $ (0.20) $ (0.67)
Diluted $ (0.20) $ (0.67)
 
Weighted Average Shares Outstanding:
Basic 24,253 23,882
Diluted 24,253 23,882
 
     
 
Twelve Months Ended
Consolidated Statements of Operations (unaudited)
(In Thousands, Except Per Share Amounts)  
December 31,

2010

December 31,

2009

 
Revenues $ 119,924 $ 140,621
Cost of revenues   47,492   48,688
Gross profit 72,432 91,933
Gross profit % 60.4% 65.4%
     
Operating expenses:
General and administrative expense 34,657 39,153
Sales and marketing expense 29,338 34,656
Bad debt expense 18,578 19,982
Research and development expense 4,897 5,810
Integration, restructuring and other charges   4,654   12,981
Total operating expenses 92,124 112,582
   
Loss from operations   (19,692)   (20,649)
Interest and other income, net 94 178
 
Loss before income taxes (19,598) (20,471)
Provision for income taxes   (262)   (5)
Net loss $ (19,860) $ (20,476)
 

Loss per Share:

Basic $ (0.82) $ (0.86)
Diluted $ (0.82) $ (0.86)
 
Weighted Average Shares Outstanding:
Basic 24,109 23,771
Diluted 24,109 23,771
 
 
     
Summary Financial Data
(In Thousands)  

December 31, 2010

December 31, 2009

(unaudited)
 
Cash and investments $ 45,484 $ 49,152
Accounts receivable, net 24,978 40,885
Other receivables, net 3,041 -
Days sales outstanding 78 111
Working capital 60,634 75,383
Total assets 156,692 168,322
Total debt - -
Total shareholders’ equity 134,928 149,353

 

Three Months Ended
 

December 31, 2010

December 31, 2009

 
Cash provided by operating activities $ 14,191 $ 9,681
Capital expenditures   (1,575)   (3,411)
Free cash flow   12,616   6,270
 
Stock compensation expense 887 11,167
Depreciation and amortization expense 3,346 3,252
 
Twelve Months Ended
 

December 31, 2010

December 31, 2009

 
Cash provided by operating activities $ 10,362 $ 7,904
Capital expenditures   (5,247)   (19,938)
Free cash flow   5,115   (12,034)
 
Stock compensation expense 3,945 16,625
Depreciation and amortization expense 12,878 11,345
 

Reconciliation of Non-GAAP Financial Measures(In Thousands, Except Per Share Amounts)

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