“We are committed to building value for our shareholders through the implementation of our business strategy and organizational goals for 2011. We continue to invest for volume growth with additional sales and marketing resources, as well as by expanding our commercial reimbursement for MCOT TM. We are excited to begin commercialization of our next generation MCOT TM platform, C5, during the second half of the year. C5 will reduce our overall cost structure and provide additional ease-of-use features for our patients. Our MCOT™ technology provides meaningful benefits for physicians, patients and payors, and we remain dedicated to expanding adoption and driving future growth and profitability.”
Second Quarter Financial Results
Revenue for the second quarter 2011 was $31.6 million, a decrease of 0.9% compared to $31.9 million in the second quarter 2010. The decrease in revenue was primarily due to lower average MCOT TM reimbursement, as well as slightly lower MCOT TM volume which the Company is addressing through increased investment in sales and marketing. This decrease was partially offset by the inclusion of Biotel revenue. For the three months ended June 30, 2011, patient revenue was comprised of 37% Medicare and 63% commercial, and patient volume was comprised of 51% Medicare and 49% commercial.
Gross profit for the second quarter 2011 decreased to $18.6 million, or 58.9% of revenue, compared to $20.1 million, or 62.9% of revenue, in the second quarter 2010. The decline in gross profit is related to the lower average MCOT TM reimbursement, as well as the addition of the lower margin Biotel business.On a GAAP basis, operating expenses for the second quarter 2011 were $21.7 million, a decrease of 2.7% compared to $22.3 million in the second quarter 2010. Operating expenses on an adjusted basis declined by 3.4% compared to the prior year quarter, excluding $1.8 million in the second quarter 2011 and $1.7 million in the second quarter 2010 related to restructuring and other nonrecurring charges. The decrease in operating expenses was driven by a reduction in bad debt expense, as well as the Company’s cost reduction initiatives that were implemented in early 2010. These reductions were partially offset by the addition of Biotel’s operating expenditures in the quarter.