CardioNet, Inc. (BEAT)
Q1 2009 Earnings Call
April 30, 2009 05:00 pm ET
Randy Thurman - Chairman, President and CEO
Marty Galvan - SVP and CFO
Philip Leone - VP, Managed Care
Anna McNamara - SVP, Clinical Operations
Amit Bahl - Citi
Bob Hopkins - Banc of America-Merrill Lynch
Rick Wise - Leerink Swann
Matt Dolan - Roth Capital
Alan Fishman - Thomas Weisel Partners
Michael Hunt - Barclays Capital
Milan Gupta - South Point Capital
Good afternoon. Thank you for joining us for the CardioNet first quarter 2009 Earnings Call.
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At this time, all participants have been placed in a listen-only mode and the floor will open for questions and comments following the presentation.
It is now my pleasure to turn the floor over to your host Mr. Randy Thurman. Sir, you may begin.
Thank you very much, and welcome to the CardioNet Incorporated first quarter investor conference call. I am Randy Thurman, Chairman, President and Chief Executive Officer of CardioNet Incorporated. With me this afternoon is Marty Galvan, Senior Vice President and Chief Financial Officer and Anna McNamara, Senior Vice President of Clinical Operation, and Phil Leone, Senior Vice President of Managed Care.
During the first quarter, we made excellent progress in the execution of our 2009 plans. We continue to leverage the clinically proven superiority of the MCOT systems and our world class customer service and monitoring organizations to effectively expand on the $2 billion cardiac monitoring market.
We made significant strides in enhancing our corporate infrastructure through the expansion of our sales force and establishing a solid platform technology for accelerated growth in 2010 and beyond.
We also announced a merger agreement with Biotel Incorporated, which we believe will diversify our revenue stream, accelerate next generation R&D and provide entry into the clinical research services business.
During the quarter, we also announced the formation of a Medical Advisory Board comprised of some of the most notable professionals in cardiac medicine and beyond. Before I elaborate on our accomplishments, I would like to provide some of the key financial highlights for the quarter.
Revenue in the first quarter increased 40% year-over-year, and is up 4% sequentially reaching $35.7 million. This marks our fifth consecutive quarter of increased revenues since going public.
Gross margin increased year-over-year to 66.9% of revenue, and we delivered adjusted earnings per share of $0.04 in the quarter demonstrating our commitment to growing earnings while investing in our sales and corporate infrastructure to further expand our market share.
Marty will provide you with a more detailed financial review in his prepared remarks. Now, I would like to provide some additional detail on our accomplishments during the quarter.
Under the leadership of our newly appointed Senior Vice President of Sales Matt Margolies, we are successfully expanding our sales organization with a highly experienced and qualified team of account executive. We are currently ahead of schedule in our sales force expansion goal of a 70% increase in account executives during 2009.
Since the end of the year, we have added 41 new sales reps, bringing the current number to 129. The majority of the newly added account executive's are just beginning the training phase, and will begin the process of introducing our MCOT system to physicians and hospitals and their respective territories in the weeks ahead.
We are screening about 10 qualified applicants for every new account executive hire. As you know, adding these highly experienced account reps to our existing team is one important element in our outlook for 2010 and beyond.
Some of these account executives will be focused solely on leading teaching hospitals, where we see great potential to cultivate new business and place our MCOT system in use with top leading practitioners and researchers. Our goal is to establish a strong presence for CardioNet at leading hospitals and academic research centers around the country as we believe this will be important as a direct contributor to expanding our market share.
We will complete our sales force expansion by mid year, which will leave us poise to gain in even larger share of the cardiac arrhythmia monitoring market in 2010 and beyond.
Another area that we are highly focused on is research and development. It is imperative that we maintain and even increase our leadership position in wireless cardiac monitoring. We are planning on making several announcements at the upcoming Heart Rhythm Society meeting in May, regarding significant advancements in our technology that demonstrate our commitment to continual innovation.
As I previously mentioned, we recently announced our merger agreement with Biotel. This acquisition will accelerate the development of the next generation MCOT, as well as adding to our portfolio what we believe is the leading wireless event monitoring technology. As a result CardioNet will be providing physicians with best-in-class event monitoring that can serve as a transition into wireless products and to our MCOT system.