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CardioNet Inc. (BEAT)

Q2 2008 Earnings Call

July 22, 2008 8:00 am ET


Arie Cohen - Chief Executive Officer

Randy Thurman - Executive Chairman

Martin P. Galvan - Chief Financial Officer


Stephen Harper - Thomas Weisel Partners




Good morning and thank you for joining us for the CardioNet Second Quarter 2008 Earnings Conference Call. Certain statements during the conference call and question and answer period to follow may relate to future events and expectations, and as such, constitute forward-looking statements within the meaning 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 than the statements that the company’s executives may make today. These risks are described in detail in public filings within the Securities and Exchange Commission including our latest periodic report on Form 10-K or 10-Q. We assume no duty to update these statements. At this time, all participants have been placed on a listen-only mode, and the floor will be opened for questions and comments following the presentation. It is now my pleasure to turn the floor over to your host, Mr. Arie Cohen.

Arie Cohen

Good morning and welcome everyone to today’s call. This is our second quarterly earnings conference call as a public company following our initial public offering on the NASDAQ on March 18, 2008. The agenda for today’s call is to review our results for the quarter ended June 30, 2008, as well as the business development of CardioNet since our last earnings call in late April. As many of you know, I joined CardioNet as CEO in November 2007. Prior to CardioNet, I was at VIASYS Healthcare. I feel privileged to welcome another of my former VIASYS colleagues, Randy Thurman, to the CardioNet team. You may have seen our press release announcing Randy Thurman as joining CardioNet as Executive Chairman of the Board of Directors. Randy will be an invaluable resource as we continue to build upon CardioNet’s leadership in arrhythmia monitoring and using our proprietary wireless medicine platform. Randy has a proven track record of building world class healthcare organizations with strong corporate governance and creating significant shareholder value. Before we begin the quarterly review, I would like to turn the call over to Randy to say a few words.

Randy Thurman

Let me provide a little bit of background in terms of what I have done prior to CardioNet and then speak to why I joined CardioNet. As Arie alluded to, prior to joining CardioNet I was Chairman of the board and Chief Executive Officer of VIASYS Healthcare and was the creator of the company going back to 2000 and 2001. As many of you probably know, VIASYS Healthcare was acquired by Cardinal Healthcare about one year ago. The company was public, VIASYS that is, for about 5-1/2 years during which time we more than quadrupled the enterprise value of the company and we were named by Smart Money Magazine as one of the 10 best investments of the decade. So, we’re all very proud of what was accomplished at VIASYS Healthcare and certainly our shareholders fared extremely well in that experience. Prior to VIASYS Healthcare, I was Chairman and Chief Executive Officer of Corning Life Sciences, which spun off both Quest Diagnostics and Covance, and for those of you who may have been involved during that period of time, you’ll know that substantial shareholder value was created for the Corning shareholders by those two transactions. Prior to that, I was President of Rhone-Poulenc Rorer Pharmaceuticals Inc., from the early 80s through the early 90s, and Rhone-Poulenc Rorer posted one of the highest returns on shareholder equity in the entire pharmaceutical industry.

I have, as you can tell, devoted my entire career to building healthcare companies that focus on improving the quality of human life and have created exceptional shareholder value in doing so. Following the sale of VIASYS to Cardinal, I evaluated a significant number of opportunities, and concluded that there were few if any that had the potential both in serving the quality of human life or in creating shareholder value that CardioNet represents. What I see in CardioNet is a young company that is establishing itself as the leader in the arrhythmia monitoring market with a novel solution, but really, this is a company that is just getting started. CardioNet’s initial focus of course is in the $2 billion arrhythmia monitoring segment. CardioNet’s mission is in transforming an industry that has historically relied on event or Holter technologies, which are essentially intermittent tape recorders with very low diagnostic yield and clinical benefit.

Today, CardioNet has achieved only 6% market penetration suggesting that the potential for future growth as physicians become increasingly educated regarding how the three times higher diagnostic yield of the CardioNet System can meaningfully improve clinical outcomes and reduce healthcare costs. The opportunity is substantial. But the story only begins there. There are numerous other applications and market opportunities of the CardioNet platform that will impact the use of wireless medicine in healthcare. Leveraging the CardioNet System in the hospital emergency room setting, in pharmaceutical clinical trials, in international markets, or to use the wireless infrastructure to connect to other external and implantable sensors for monitoring of other diseases, these are just the beginning for CardioNet, and indeed, the possibility seems endless.

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