“Looking forward, we will continue to focus on growing our research and patient service businesses while investing in our infrastructure in order to streamline our operations. We continue to look for additional opportunities to expand into adjacent markets. Despite the cash outlays this year for acquisitions, we have maintained a strong balance sheet that we can leverage to support our strategic vision.”
Third Quarter Financial Results
Revenue for the third quarter 2012 was $27.0 million, an increase of 1.6% compared to $26.6 million in the third quarter 2011. Despite an increase in overall patient volume, patient services revenue declined $0.2 million primarily due to a shift in product mix to event and Holter monitoring which carry a lower reimbursement rate. Additionally, product revenue declined $1.2 million with lower volume partially attributable to the timing of orders. This decline was offset by an increase in clinical research revenue of $2.0 million primarily related to the acquisition of Cardiocore. For the three months ended September 30, 2012, patient revenue was comprised of 45% Medicare and 55% commercial, and MCOT
patient volume was comprised of 51% Medicare and 49% commercial.
Gross profit for the third quarter 2012 increased to $16.4 million, or 60.6% of revenue, compared to $14.4 million, or 53.9% of revenue, in the third quarter of 2011. Gross profit for the third quarter 2012 on an adjusted basis was $16.6 million, or 61.5% of revenue, excluding $0.2 million related to restructuring and other nonrecurring charges. The increase in adjusted gross profit percentage was related to the impact of cost reductions implemented at the end of 2011 and lower depreciation partially offset by the addition of the lower margin Cardiocore business.
On a GAAP basis, operating expenses for the third quarter 2012 were $19.5 million, a decrease of 9.1% compared to $21.5 million in the third quarter 2011. Operating expenses on an adjusted basis were $18.6 million, a 4.8% decline compared to $19.5 million for the prior year quarter, excluding $0.9 million in the third quarter 2012 and $2.0 million in the third quarter 2011 related to restructuring and other nonrecurring charges. The decrease in operating expenses was driven by the implementation of cost reductions at the end of 2011. These reductions were partially offset by the addition of ECG Scanning’s and Cardiocore’s operating expenses for the quarter.