CardioNet Inc. (NSDQ:BEAT) posted fourth-quarter sales of $33.3 million for the three months ended Dec. 31, 2009, down 3.3 percent compared with $34.4 million during the same period in 2008. Net losses were $15.9 million, compared with net income of $6.9 million during Q4 2008:
Press Release
CardioNet, Inc. Reports Fourth Quarter, Full Year 2009 Financial
Results and 2010 Outlook
CardioNet surpasses 300,000 patients served by MCOTTM
technology
CONSHOHOCKEN, Pa.–(BUSINESS WIRE)–CardioNet, Inc. (NASDAQ:BEAT), a leading wireless medical technology
company with a current focus on the diagnosis and monitoring of cardiac
arrhythmias, today reported results for the fourth quarter and full year
ended December 31, 2009.
2009 Highlights
Major achievements:
-
2009 MCOTTM patient volume increased to 113,000, a 50%
increase over 2008 - 2009 revenue increased to $141 million, a 17% increase over 2008
- DSO reduced by 16 days compared to the third quarter 2009
- Monitored over 300,000 patients nationally since inception
-
Secured 50 new payor contracts in 2009, covering approximately 7.5
million lives for total covered lives of over 200 million -
$8 million of annualized cost reductions implemented in 2009
-
Awarded 15th U.S. Patent which covers Biological Signal
Management (15 additional U.S. patents are pending; 19 international
patents have been issued and 28 are pending) - Initiated process with CMS to seek a national price
-
Commercial reimbursement stabilized in second half of the year
- 29 published abstracts or studies referencing CardioNet’s MCOTTM
- $49 million in cash and no debt as of December 31, 2009
2010 Goals
Key objectives planned for 2010:
-
Generate approximately 30% to 40% MCOTTM patient volume
growth compared to 2009 - Achieve additional $15 million in cost savings over the next 18 months
-
Obtain national reimbursement from CMS and contracts with remaining
large commercial payors -
Launch new MCOTTM platform with enhanced clinical
applications and significantly lower product costs - EBITDA positive in the second half of 2010
President and CEO Commentary
Randy Thurman, Chairman, President and Chief Executive Officer of
CardioNet, commented: “2009 was an extraordinary year for CardioNet in
many ways, headlined by the major accomplishment of a 50% increase in
patient volume. This clearly demonstrates physician acceptance of
CardioNet’s MCOTTM technology, which is one of the first
significant commercial applications in wireless medicine. CardioNet’s
leadership in wireless mobile cardiac outpatient telemetry is
underscored by a majority of physicians choosing CardioNet over
competing products. Physician and patient feedback indicates this
success is due to our comprehensive reporting capabilities, excellent
customer service, and demonstrated diagnostic superiority, supported by
29 published abstracts and peer reviewed papers referencing CardioNet’s
MCOTTM. CardioNet remains the only company in the industry
with this level of clinical data supporting the efficacy and acceptance
of our technology. We are also the only company whose device was shown
to be superior to other monitoring technologies in a published clinical
trial.
“MCOTTM’s high volume growth in 2009 was contrasted by the
unexpected decision by Highmark Medicare Services to cut our
reimbursement by one-third. This reduction, as well as the decline in
reimbursement by some commercial payors, impacted the Company’s ability
to remain profitable. In response, CardioNet has taken affirmative steps
to return to operational profitability and ensure the continued
availability of MCOTTM to the physicians and patients
benefiting from the technology. These initiatives aim to improve
productivity and reduce costs while also working with CMS to obtain an
appropriate national reimbursement rate. In addition, CardioNet has
nearly $50 million in cash and no debt, providing us with the
flexibility to pursue all appropriate means to enhance stakeholder
value, including evaluating strategic alternatives.
“Turning to 2010, our focus will be on continuing to grow volume and
build market share, combined with expanding our efforts to reduce
expenses in order to better adjust to the difficult reimbursement
climate. These cost reductions will in no way impact the unparalleled
service that we provide to physicians and patients. We also expect to
enhance our service offering with the launch of our next generation MCOTTM
device in 2010. This cutting edge technology will allow us to advance
MCOTTM into other areas of monitoring and positions us to
enter international markets. In addition, the cost of our next
generation device is expected to be significantly lower, and we should
benefit from this beginning in 2011.
“In 2009, the business experienced unexpected volatility primarily as a
result of the reduced reimbursement. In response, we have made steady
progress on every front including national reimbursement, cost
reductions and volume growth. However, until we experience a period of
stability and progress on our initiatives, and therefore gain more
predictability, we will not provide specific revenue and earnings
guidance. We are providing outlook on 2010 volume growth and expense
reduction targets.
“To summarize, we are optimistic about the future of CardioNet. We have
responded to the unexpected reimbursement challenges of 2009 by
strengthening and streamlining our operations. CardioNet and CMS are
engaged in a constructive process which could lead to national
reimbursement at an appropriate rate. We have almost $50 million in cash
and no debt which will enable us to invest in our future. With our
diagnostic superiority, our advanced and increasing reporting
capabilities, and exceptional service, we expect to expand our
leadership in mobile cardiac outpatient telemetry.”
Fourth Quarter Financial Results
Revenues for the fourth quarter of 2009 were $33.3 million compared to
$34.4 million in the fourth quarter of 2008, a decrease of $1.1 million.
For the fourth quarter 2009, the Company’s payor mix was 34% Medicare
and 66% commercial. While the increased MCOTTM patient volume
drove additional revenue, it was offset by the full quarter impact of
the previously announced Medicare rate reduction as well as lower
commercial reimbursement. Gross profit declined to $20.3 million in the
fourth quarter of 2009, or 60.9% of revenues, compared to $23.9 million
in the fourth quarter of 2008, or 69.4% of revenues.
On a GAAP basis, operating loss was $15.5 million in the fourth quarter
of 2009 compared to operating income of $6.4 million in the fourth
quarter of 2008. Excluding $10.1 million of expense primarily related to
the forfeiture of stock options, adjusted operating loss was $5.4
million in the fourth quarter of 2009. This compares to adjusted
operating income of $6.5 million in the fourth quarter of 2008, which
excludes $0.1 million of expense related to the integration of PDSHeart
and other restructuring efforts in the prior year period.
On a GAAP basis, net loss for the fourth quarter of 2009 was $15.9
million, or a loss of $0.67 per diluted share, compared to net income of
$6.9 million, or $0.29 per diluted share, for the fourth quarter of
2008. Adjusted net loss for the fourth quarter of 2009 was $5.8 million,
or a loss of $0.24 per diluted share, excluding expenses primarily
related to the forfeiture of stock options. This compares to adjusted
net income of $3.7 million, or $0.16 per diluted share, for the fourth
quarter of 2008, which excludes the impact of integration, restructuring
and other nonrecurring charges as well as NOL utilization.
Full Year 2009 Financial Results
Revenues for the twelve months ended December 31, 2009 increased to
$140.6 million compared to $120.5 million in the comparable period in
the prior year. For the full year 2009, gross profit increased to $91.9
million, or 65.4% of revenues, compared to $80.5 million, or 66.9% of
revenues, in the comparable period in the prior year.
On a GAAP basis, operating loss for the full year 2009 was $20.6 million
compared to operating income of $9.7 million in the prior year.
Excluding $14.6 million of expense related to integration, restructuring
and other nonrecurring charges, adjusted operating loss was $6.0 million
for the full year 2009. This compares to adjusted operating income of
$14.6 million for the full year 2008, which excludes $4.9 million of
integration, restructuring and other nonrecurring charges.
On a GAAP basis, net loss available to common shareholders, which is
derived by reducing net income by the accrued dividends and accretion on
mandatorily redeemable convertible preferred stock, was a loss of $20.5
million, or a loss of $0.86 per diluted share, for the twelve months
ended December 31, 2009, compared to net income available to common
shareholders of $6.6 million, or $0.29 per diluted share, for the same
period last year. The mandatorily redeemable convertible preferred
stock, which was issued in part to finance the March 2007 PDSHeart
acquisition, was converted to common stock in connection with
CardioNet’s March 2008 initial public offering.
Adjusted net loss for the full year 2009 was $5.9 million excluding
expenses related to integration, restructuring and other nonrecurring
charges, or a loss of $0.25 per diluted share. This compares to adjusted
net income of $8.7 million, or $0.39 per diluted share, for the full
year 2008, which excludes the impact of integration, restructuring,
other nonrecurring charges, NOL utilization and dividend accretion.
Heather Getz, CardioNet’s Chief Financial Officer, commented: “In 2009,
CardioNet’s MCOTTM volume grew by 50% and total revenue grew
by nearly 17% over 2008. The positive impact of volume was offset by the
significant reimbursement challenges faced by the Company during the
year. The reduced reimbursement also negatively affected our gross
margin percentages which are down year over year despite the fact that
our cost per patient has declined compared to 2008.
“In the fourth quarter, we gained positive momentum in our cash
collections resulting in a 16-day reduction in our DSO over the third
quarter. This was driven by the process improvements that we implemented
in the fourth quarter of 2009. Our cash balance increased over $6
million compared to the third quarter 2009, bolstering our already
strong balance sheet which will enable us to invest for the future.
“Due to the initiatives that have already been implemented, we enter
2010 with a lower cost structure. We recently began execution of
additional measures aimed at $15 million in cost reductions over the
next 18 months. As a result of these actions, we look forward to growing
our business more efficiently and cost effectively.”