On a GAAP basis, net loss for the second quarter 2012 was $1.2 million, or a loss of $0.05 per diluted share, compared to a net loss of $3.0 million, or a loss of $0.12 per diluted share, for the second quarter 2011. Excluding expenses related to restructuring and other nonrecurring charges as well as a tax benefit related to the acquisition of ECG Scanning, adjusted net loss for the second quarter 2012 was $0.3 million, or a loss of $0.01 per diluted share. This compares to an adjusted net loss of $1.2 million, or a loss of $0.05 per diluted share, for the second quarter 2011, which also excludes the impact of restructuring and other nonrecurring charges.

Liquidity

As of June 30, 2012, the Company had total cash and investments of $34.1 million compared to $46.5 million as of December 31, 2011, a decrease of $12.4 million. The significant cash uses during the first half of 2012 included $6.3 million related to the acquisition of ECG Scanning, $2.7 million for capital expenditures and $1.3 million related to the settlement of the shareholder litigation. In addition, the Company experienced a delay in collections of approximately $7.0 million related to Medicare claims being held while the Company awaited the receipt of its IDTF designation for the west coast monitoring center. The Company’s DSO was 88 days at quarter end, a 13 day increase compared to year end 2011. The delay in Medicare collections had an approximate 20 day impact on DSO. The Company subsequently received its Medicare designation and will begin billing Medicare in mid-August.

Conference Call

CardioNet, Inc. will host an earnings conference call on Wednesday, August 8, 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 95236125.

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 and the effect of the Cardiocore and ECG Scanning acquisitions on our business operations and financial results, our ability to effectively integrate the acquisitions into our operations, the 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)      
June 30,

2012
June 30,

2011
 
Revenue $ 27,450 $ 31,637
Cost of revenue   10,724   13,018
Gross profit 16,726 18,619
Gross profit % 60.9% 58.9%
 
Operating expenses:
General and administrative expense 7,635 8,985
Sales and marketing expense 6,027 7,395
Bad debt expense 2,959 2,902
Research and development expense 1,040 1,361
Integration, restructuring and other charges   733   1,014
Total operating expenses 18,394 21,657
       
Loss from operations   (1,668)   (3,038)
Interest and other income, net 39 36
 
Loss before income taxes (1,629) (3,002)
Provision for income taxes   431   (4)
Net loss $ (1,198) $ (3,006)
 

Loss per Share:
Basic $ (0.05) $ (0.12)
Diluted $ (0.05) $ (0.12)
 
Weighted Average Shares Outstanding:
Basic 24,919 24,401
Diluted 24,919 24,401
 
 
 
     

Six Months Ended
Consolidated Statements of Operations (unaudited)
(In Thousands, Except Per Share Amounts)      
June 30,

2012
June 30,

2011
 
Revenue $ 54,495 $ 65,636
Cost of revenue   22,159   26,670
Gross profit 32,336 38,966
Gross profit % 59.3% 59.4%
 
Operating expenses:
General and administrative expense 16,308 18,660
Sales and marketing expense 12,179 15,460
Bad debt expense 5,870 5,292
Research and development expense 2,225 3,043
Integration, restructuring and other charges   1,003   1,138
Total operating expenses 37,585 43,593
       
Loss from operations   (5,249)   (4,627)
Interest and other income, net 86 73
 
Loss before income taxes (5,163) (4,554)
Provision for income taxes   431   (4)
Net loss $ (4,732) $ (4,558)
 

Loss per Share:
Basic $ (0.19) $ (0.19)
Diluted $ (0.19) $ (0.19)
 
Weighted Average Shares Outstanding:
Basic 24,762 24,350
Diluted 24,762 24,350
 
 
 
Summary Financial Data                  
(In Thousands)
June 30,

2012

December 31,

2011
(unaudited)
 
Cash and investments $ 34,128 $ 46,484
Accounts receivable, net 23,993 21,028
Other receivables, net 2,032 1,564
Days sales outstanding 88 75
Working capital 49,549 57,177
Total assets 91,328 94,975
Total debt - -
Total shareholders’ equity 75,348 77,997
 
 

Three Months Ended
 
June 30,

2012
June 30,

2011
(unaudited)
 
Stock compensation expense $ 975 $ 1,231

 
 

Six Months Ended
 
June 30,

2012
June 30,

2011
(unaudited)
 
Stock compensation expense $ 1,830 $ 2,380
 

Reconciliation of Non-GAAP Financial Measures(In Thousands, Except Per Share Amounts)

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