Cardiac Science Q2 losses soar on recall costs

July 30, 2010 by MassDevice staff

Cardiac Science Corp.'s (NSDQ:CSCX) $11 million in "corrective action costs" from a defibrillator recall hit the company hard during the second quarter.

The Bothell, Wash.-based company reported a net loss of $18.5 million, or 78 cents per diluted share, on sales of $36.1 million during the three months ended June 30, compared with a net loss of $2.1 million, or 9 cents per diluted share, on sales of $36.1 million during Q2 2009.

In April, the Food & Drug Administration warned that 280,000 external defibrillators with components made by Cardiac Science could malfunction due to faulty components. The warning was an expansion of a November 2009 recall. In June, Cardiac Science said it would replace 24,000 defibrillators implicated in the same recall because the device's flaws could not be remedied through the company's software patches, according to the FDA.

The company also reported a 14 percent increase in operating expenses to $24.2 million as R&D, S&M and G&A costs all climbed during the quarter, according to the company.

Sales of the company's cardiac monitoring products dropped off 15 increase to $12.6 million, but were offset by a 13 percent increase to $19.1 million in defibrillation product sales.

CSCX shares were priced at $1.78 per share in late afternoon trading, down 2.2 percent.

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