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TheStreet Open House

CardioNet, Inc. Reports Fourth Quarter And Full Year 2011 Financial Results

On a GAAP basis, net loss for the twelve months ended December 31, 2011 was $61.4 million, or a loss of $2.51 per diluted share, compared to a net loss of $19.9 million, or a loss of $0.82 per diluted share, for the twelve months ended December 31, 2010. Excluding expenses related to restructuring and other nonrecurring charges, adjusted net loss for the twelve months ended December 31, 2011 was $7.9 million, or a loss of $0.32 per diluted share. This compares to an adjusted net loss of $12.8 million, or a loss of $0.53 per diluted share, for the twelve months ended December 31, 2010, which also excludes the impact of restructuring and other nonrecurring charges.

Liquidity

As of December 31, 2011, the Company had total cash and investments of $46.5 million compared to $45.5 million as of December 31, 2010, an increase of $1.0 million. Benefits from process improvements in the billing and collections areas resulted in strong cash collections throughout the year, as well as a significant decrease in bad debt expense. These factors created a shorter collection cycle, thereby positively impacting DSO, which decreased to 75 days.

Conference Call

CardioNet, Inc. will host an earnings conference call on Wednesday, February 22, 2012, 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 35475486.

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 ECG Scanning and Biotel acquisitions 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)  
December 31, December 31,
2011 2010
 
Revenue $ 26,784 $ 28,683
Cost of revenue   10,154   11,970
Gross profit 16,630 16,713
Gross profit % 62.1% 58.3%
 
Operating expenses:
Goodwill impairment charge 45,999 -
General and administrative expense 7,697 7,715
Sales and marketing expense 5,740 7,160
Bad debt expense 3,524 4,520
Research and development expense 1,326 1,187
Integration, restructuring and other charges   1,902   722
Total operating expenses 66,188 21,304
   
Loss from operations   (49,558)   (4,591)
Interest and other income, net 37 36
 
Loss before income taxes (49,521) (4,555)
Provision for income taxes   (240)   (262)
Net loss $ (49,761) $ (4,817)
 

Loss per Share:

Basic $ (2.03) $ (0.20)
Diluted $ (2.03) $ (0.20)
 
Weighted Average Shares Outstanding:
Basic 24,550 24,253
Diluted 24,550 24,253
 
     
 

Twelve Months Ended

 
Consolidated Statements of Operations (unaudited)
(In Thousands, Except Per Share Amounts)  
December 31, December 31,
2011 2010
 
Revenue $ 119,022 $ 119,924
Cost of revenue   49,076   47,492
Gross profit 69,946 72,432
Gross profit % 58.8% 60.4%
 
Operating expenses:
Goodwill impairment charge 45,999 -
General and administrative expense 35,011 34,657
Sales and marketing expense 27,821 29,338
Bad debt expense 12,080 18,578
Research and development expense 5,698 4,897
Integration, restructuring and other charges   4,659   4,654
Total operating expenses 131,268 92,124
   
Loss from operations   (61,322)   (19,692)
Interest and other income, net 144 94
 
Loss before income taxes (61,178) (19,598)
Provision for income taxes   (244)   (262)
Net loss $ (61,422) $ (19,860)
 

Loss per Share:

Basic $ (2.51) $ (0.82)
Diluted $ (2.51) $ (0.82)
 
Weighted Average Shares Outstanding:
Basic 24,425 24,109
Diluted 24,425 24,109
 
     
 
Summary Financial Data
(In Thousands)  
December 31, December 31,
2011 2010
(unaudited)
 
Cash and investments $ 46,484 $ 45,484
Accounts receivable, net 21,028 24,978
Other receivables, net 1,564 3,041
Days sales outstanding 75 78
Working capital 57,177 60,634
Total assets 94,975 156,692
Total debt - -
Total shareholders’ equity 77,997 134,928
 
 

Three Months Ended

 
December 31, December 31,
2011 2010
(unaudited)
 
Stock compensation expense $ 709 $ 887

 

Twelve Months Ended

 
December 31, December 31,
2011 2010
(unaudited)
 
Stock compensation expense $ 4,006 $ 3,945
 
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)
 
December 31, December 31,
2011 2010
Operating loss – GAAP $ (49,558) $ (4,591)
Nonrecurring charges (a)   48,675   1,599

Adjusted operating loss

$ (883) $ (2,992)
Net loss – GAAP $ (49,761) $ (4,817)
Nonrecurring charges (a)   48,675   1,599
Adjusted net loss $ (1,086) $ (3,218)
 
Loss per diluted share – GAAP $ (2.03) $ (0.20)
Nonrecurring charges per share (a)   1.99   0.07
Adjusted loss per diluted share $ (0.04) $ (0.13)
 
(a)   In the fourth quarter of 2011, we incurred $46.0 million of goodwill impairment charges, $1.3 million of legal fees related to litigation, $1.2 million related to the integration of Biotel’s operations, restructuring and other nonrecurring charges, as well as $0.2 million for the forfeiture and acceleration of certain options. In the fourth quarter of 2010, we incurred $0.7 million of severance and other exit costs related to the restructuring of our sales and service organizations, as well as $0.9 million of other nonrecurring charges.
 
 

Three Months Ended

(unaudited)
 
December 31, December 31,
2011 2010
 
Cash provided by operating activities $ 4,540 $ 14,191
Capital expenditures   (1,140)   (1,575)
Free cash flow   3,400   12,616
 
 

Three Months Ended

(unaudited)
 
December 31, December 31,
2011 2010
 
Operating loss – GAAP $ (49,558) $ (4,591)
Nonrecurring charges 48,675 1,599
Depreciation and amortization expense   2,163   3,346
Adjusted EBITDA   1,280   354
 
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.
 
 

Twelve Months Ended

 
(unaudited)
 
December 31, December 31,
2011 2010
Operating loss – GAAP $ (61,322) $ (19,692)
Nonrecurring charges (a)   53,527   7,104

Adjusted operating loss

$ (7,795) $ (12,588)
Net loss – GAAP $ (61,422) $ (19,860)
Nonrecurring charges (a)   53,527   7,104
Adjusted net loss $ (7,895) $ (12,756)
 
Loss per diluted share – GAAP $ (2.51) $ (0.82)
Nonrecurring charges per share (a)   2.19   0.29
Adjusted loss per diluted share $ (0.32) $ (0.53)
 
(a)   For the twelve months ended 2011, we incurred $46.0 million of goodwill impairment charges, $4.3 million related to the integration of Biotel’s operations, other strategic initiatives and other nonrecurring charges, $2.2 million of legal fees related to litigation, as well as $1.0 million for the forfeiture and acceleration of certain options. For the twelve months ended 2010, we incurred $4.9 million of severance and other exit costs related to the restructuring of our sales and service organizations and management changes, $1.3 million for the forfeiture and acceleration of certain options, as well as $0.9 million of other nonrecurring charges largely related to our class action and Biotel law suits.
 
 

Twelve Months Ended

(unaudited)
 
December 31, December 31,
2011 2010
 
Cash provided by (used in) operating activities $ 5,030 $ 10,362
Capital expenditures   (3,954)   (5,247)
Free cash flow   1,076   5,115
 
 

Twelve Months Ended

(unaudited)
 
December 31, December 31,
2011 2010
 
Operating loss – GAAP $ (61,322) $ (19,692)
Nonrecurring charges 53,527 7,104
Depreciation and amortization expense   11,432   12,878
Adjusted EBITDA   3,637   290




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