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Call Start: 17:00

Call End: 17:53

CardioNet, Inc. (BEAT)

Q4 2009 Earnings Call

February 17, 2010 5:00 pm ET


Randy H. Thurman - Chairman, President and CEO

Heather C. Getz- Chief Financial Officer

Anna McNamara – SVP of Clinical Operations

Philip Leone – VP of Managed Care


Amit Bhalla - Citi

Rick Wise - Leerink Swann

Andy O'Hara - William Blair & Co.

Sara Michelmore - Cowen & Co.

Matt Dolan - Roth Capital Partners



Good afternoon, thank you for joining us for the CardioNet fourth quarter and full year 2009 earnings conference call. Certain statements during the conference call and the question and answer period to follow may relate to future events and expectations. And as such may constitute forward looking statements within the meeting of the private Securities and Litigation Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the company in the future to be materially different on the statement that the company’s executive may take today.

These risks are described in detail in our public filing with the Securities and Exchange Commission, including our latest periodical report on Form 10K or 10Q. We assume no duty to update these statements.

At this time all participants have been placed on a listen only mode. And the floor would be 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.

Randy H. Thurman

Thank you very much. And good afternoon everyone. Welcome to the CardioNet fourth quarter and year end 2009 investor call. I am Randy Thurman, Chairman, President and CEO of CardioNet. With me this afternoon is Heather Getz, our Chief Financial Officer, Anna McNamara, Senior Vice President of Clinical Operations and Phil Leone, Senior Vice President of Managed Care.

Before I begin, I’d like to take this opportunity to introduce all of you to Heather Getz, our new Chief Financial Officer. I have had the pleasure of working with Heather for many years and of course, Heather was CardioNet’s VP of Finance through most of last year.

Heather brings a wealth of excellent experience to CardioNet and has been working very closely with all levels of the organization, understand the dynamics of the business and the market. We are fortunate to have her as part of our executive management team. Heather replaces Marty Galvan who has left to pursue new opportunities. Marty and I began working together over 20 years ago and I thank Marty for his contributions to CardioNet, his friendship and I wish him all the best in his future endeavors.

I’ll begin today’s call with some comments about CardioNet. Heather will then provide some additional detail around our results and then we’ll take your questions.

In 2009, CardioNet achieved a number of milestones while addressing unexpected and significant adversity. And CardioNet goes into 2010 committed to our mission of improving the quality of human life by being a leader in wireless medicine. We also go into 2010 with a clear set of objectives that address the challenges faced last year. I will elaborate on those objectives shortly.

To understand CardioNet’s potential, it is important to first understand the accomplishments made by the company to commercialize technology in the emerging wireless healthcare industry. CardioNet has surpassed 300,000 patients serviced by our MCOT technology, the pioneer in mobile cardiac outpatient telemetry.

Early investors committed millions to the development of MCOT technology and to the development of the company. And its employees have meaningfully advanced the monitoring and diagnosis of cardiac patients.

Along the way, CardioNet has also developed an infrastructure, or platform as we call it, that includes patient and physician customer services. Clinical research to support our technology and what is likely the largest professional sales organization dedicated to our wireless healthcare application.

Feedback from patients and physicians tells us that we’ve performed those platform tasks superbly well and better than the perceived competition. We have received countless testimonials from physicians and patients elaborating on the significant benefits of CardioNet’s MCOT. And much of this feedback recounts patients who have long been undiagnosed until MCOT identified the underlying cause of the patient’s disease. Some of these testimonials attribute life saving outcomes to CardioNet.

Few early stage medical technology companies realize the growth that CardioNet has experienced. In 2009 patient volume grew nearly 50% over the prior year. And we are now forecasting another 30%-40% volume growth in 2010. There can be little question that this type of growth speaks to not only the clinical benefits of CardioNet’s technology, but the cost benefit advantages as well.

We believe that not only does MCOT significantly improve time to diagnosis, and yield better clinical outcome, that the cost benefit advantages to the healthcare system are measurable as well. A multi center perspective randomized study published in a peer reviewed journal demonstrated the CardioNet MCOT is nearly three times superior at detecting clinical significant arrhythmias.

Atrial fibrillation is the most prevalent form of cardiac arrhythmias and the leading cause of stroke. However, once diagnosed atrial fibrillation can be managed or treated and therefore significantly reduce the incidents of stroke.

Another advantage of MCOT is that patients lead their normal life of being monitored 24/7 by CardioNet. In certain patients, this avoids hospitalization for monitoring at a far higher cost.

These represent on a few of the examples on the significant cost benefit that MCOT brings to the healthcare system. Yet despite these facts, in July 2009 high mark unexpected reduced MCOT Medicare reimbursement by a third. This action alone as well as the corresponding reduction in reimbursement by commercial payers resulted in CardioNet becoming unprofitable in spite of the 50% growth in patient volume.

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