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TheStreet Open House

CardioNet, Inc. Reports Third Quarter 2011 Financial Results

Stocks in this article: BEAT

Conference Call

CardioNet, Inc. will host an earnings conference call on Tuesday, November 8, 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 65422402.

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,” “may,” “anticipate,” “possible,” “estimate,” “potential,” “intend,” “plan,” “believe,” “forecast,” “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, the effect of the Biotel acquisition on our business operations and financial results, effectiveness of our efforts to address operational initiatives, including cost savings initiatives that affect our business, changes to insurance coverage, relationships with our government and commercial payors 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, adverse regulatory action and litigation success. 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)  
September 30, September 30,
2011 2010
 
Revenue $ 26,602 $ 27,486
Cost of revenue   12,252   11,938
Gross profit 14,350 15,548
Gross profit % 53.9% 56.6%
 
Operating expenses:
General and administrative expense 8,655 8,717
Sales and marketing expense 6,621 7,305
Bad debt expense 3,263 4,934
Research and development expense 1,329 1,237
Integration, restructuring and other charges   1,619   859
Total operating expenses 21,487 23,052
   
Loss from operations   (7,137)   (7,504)
Interest and other income, net 34 34
 
Loss before income taxes (7,103) (7,470)
Provision for income taxes   -   -
Net loss $ (7,103) $ (7,470)
 

Loss per Share:

Basic $ (0.29) $ (0.31)
Diluted $ (0.29) $ (0.31)
 
Weighted Average Shares Outstanding:
Basic 24,451 24,162
Diluted 24,451 24,162
     
 

Nine Months Ended

 
Consolidated Statements of Operations (unaudited)
(In Thousands, Except Per Share Amounts)  
September 30, September 30,
2011 2010
 
Revenue $ 92,238 $ 91,241
Cost of revenue   38,922     35,522  
Gross profit 53,316 55,719
Gross profit % 57.8 % 61.1 %
 
Operating expenses:
General and administrative expense 27,315 26,942
Sales and marketing expense 22,081 22,178
Bad debt expense 8,555 14,058
Research and development expense 4,372 3,710
Integration, restructuring and other charges   2,757     3,932  
Total operating expenses 65,080 70,820
   
Loss from operations   (11,764 )   (15,101 )
Interest and other income, net 107 58
 
Loss before income taxes (11,657 ) (15,043 )
Provision for income taxes   (4 )   -  
Net loss $ (11,661 ) $ (15,043 )
 

Loss per Share:

Basic $ (0.48 ) $ (0.63 )
Diluted $ (0.48 ) $ (0.63 )
 
Weighted Average Shares Outstanding:
Basic 24,384 24,061
Diluted 24,384 24,061
     
 
Summary Financial Data
(In Thousands)  
September 30, December 31,
2011 2010
(unaudited)
 
Cash and investments $ 43,224 $ 45,484
Accounts receivable, net 24,766 24,978
Other receivables, net 2,529 3,041
Days sales outstanding 93 78
Working capital 59,569 60,634
Total assets 146,655 156,692
Total debt - -
Total shareholders’ equity 127,038 134,928
 
 

Three Months Ended

 
September 30, September 30,
2011 2010
 
Stock compensation expense $ 917 $ 1,192

 

Nine Months Ended

 
September 30, September 30,
2011 2010
 
Stock compensation expense $ 3,297 $ 3,058
 
Reconciliation of Non-GAAP Financial Measures
(In Thousands, Except Per Share Amounts)
 
In accordance with Regulation G of the Securities and Exchange Commission, the table set forth below reconciles 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.
 

Three Months Ended

 
(unaudited)
September 30,   September 30,
2011 2010
Operating loss – GAAP $ (7,137 ) $ (7,504 )
 
Nonrecurring charges (a)   1,982     1,357  
 

Adjusted operating loss

$ (5,155 ) $ (6,147 )
 
 
Net loss – GAAP $ (7,103 ) $ (7,470 )
 
Nonrecurring charges (net of income taxes of $0 and $0, respectively) (a)   1,982     1,357  
 
Adjusted net loss $ (5,121 ) $ (6,113 )
 

 

Loss per diluted share – GAAP $ (0.29 ) $ (0.31 )
 
Nonrecurring charges per share (a)   0.08     0.06  
 
Adjusted loss per diluted share $ (0.21 ) $ (0.25 )
 

(a)

In the third quarter of 2011, we incurred $1.8 million of nonrecurring charges related to the integration of Biotel’s operations and other strategic opportunities, as well as $0.2 million for the forfeiture and acceleration of certain options. In the third quarter of 2010, we incurred $0.8 million of severance and other exit costs related to the restructuring of our sales and service organizations, as well as $0.6 million of other nonrecurring charges.

 

Three Months Ended

 
September 30,   September 30,
2011 2010
 
Cash used in operating activities $ (659 ) $ (6,501 )
Capital expenditures   (1,138 )   (946 )
Free cash flow   (1,797 )   (7,447 )
 
 

Three Months Ended

 
September 30, September 30,
2011 2010
 
Operating loss – GAAP $ (7,137 ) $ (7,504 )
Nonrecurring charges 1,982 1,357
Depreciation and amortization expense   2,896     3,150  
Adjusted EBITDA   (2,259 )   (2,997 )
 
Reconciliation of Non-GAAP Financial Measures
(In Thousands, Except Per Share Amounts)
 
In accordance with Regulation G of the Securities and Exchange Commission, the table set forth below reconciles 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.
 

Nine Months Ended

 
(unaudited)
September 30,   September 30,
  2011     2010  
Operating loss – GAAP $ (11,764 ) $ (15,101 )
 
Nonrecurring charges (a)   4,851     5,504  
 

Adjusted operating loss

$ (6,913 ) $ (9,597 )
 
 
Net loss – GAAP $ (11,661 ) $ (15,043 )
 
Nonrecurring charges (net of income taxes of $0 and $0, respectively) (a)   4,851     5,504  
 
Adjusted net loss $ (6,810 ) $ (9,539 )
 

 

Loss per diluted share – GAAP $ (0.48 ) $ (0.63 )
 
Nonrecurring charges per share (a)   0.20     0.23  
 
Adjusted loss per diluted share $ (0.28 ) $ (0.40 )
 

(a)

In the first nine months of 2011, we incurred $4.1 million of nonrecurring charges related to the integration of Biotel’s operations and other strategic opportunities, as well as $0.8 million for the forfeiture and acceleration of certain options. In the first nine months of 2010, we incurred $3.5 million of severance and other exit costs related to the restructuring of our sales and service organizations and management changes, as well as $2.0 million of other charges largely related to our class action and Biotel law suits.

 

Nine Months Ended

 
September 30,   September 30,
2011 2010
 
Cash provided by (used in) operating activities $ 490 $ (3,829 )
Capital expenditures   (2,814 )   (3,672 )
Free cash flow   (2,324 )   (7,501 )
 
 

Nine Months Ended

 
September 30, September 30,
2011 2010
 
Operating loss – GAAP $ (11,764 ) $ (15,101 )
Nonrecurring charges 4,851 5,504
Depreciation and amortization expense   9,269     9,532  
Adjusted EBITDA   2,356     (65 )




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