Gross profit for the third quarter 2011 decreased to $14.4 million, or 53.9% of revenue, compared to $15.5 million, or 56.6% of revenue, in the third quarter 2010. The decline in gross profit percentage was related to lower patient volume, costs related to the launch of our next generation product, lower average MCOT TM reimbursement and the addition of the lower margin Biotel business.
On a GAAP basis, operating expenses for the third quarter 2011 were $21.5 million, a decrease of 6.8% compared to $23.1 million in the third quarter 2010. Operating expenses on an adjusted basis declined by 10.1% compared to the prior year quarter, excluding $2.0 million in the third quarter 2011 and $1.4 million in the third 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.
On a GAAP basis, net loss for the third quarter 2011 was $7.1 million, or a loss of $0.29 per diluted share, compared to a net loss of $7.5 million, or a loss of $0.31 per diluted share, for the third quarter 2010. Excluding expenses related to restructuring and other nonrecurring charges, adjusted net loss for the third quarter 2011 was $5.1 million, or a loss of $0.21 per diluted share. This compares to an adjusted net loss of $6.1 million, or a loss of $0.25 per diluted share, for the third quarter 2010, which also excludes the impact of restructuring and other nonrecurring charges.
LiquidityAs of September 30, 2011, the Company had total cash and investments of $43.2 million compared to $45.5 million as of December 31, 2010, a decrease of $2.3 million. This decrease is primarily due to payments for certain one-time items of $3.4 million as well as an extended cash collection cycle. During 2011, the Company experienced an increase in patient related receivables which, on average, take longer to collect. In addition, the number of carriers requesting additional information in order to adjudicate our claims increased. These factors created a longer collection cycle thereby negatively impacting DSO, which increased to 93 days.
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