SAN DIEGO, Oct. 9 /PRNewswire-FirstCall/ -- CardioDynamics , the innovator and leader of BioZ(R) Impedance Cardiography (ICG) technology, today reported financial results for fiscal third quarter 2007. Operating results are for the ICG business only and do not include results for Vermed which was sold on August 31, 2007.
Key Financial Results of Third Quarter 2007 Compared with Third Quarter 2006
Third Quarter 2007 Operating Results Discussion
The Company reported a net sales increase of 8% to $5.6 million for the third fiscal quarter 2007 and a 12% year-to-date increase to $15.7 million, up from $14.1 million for the same period a year ago. Third quarter ICG sales growth was driven by a combination of 15% increase in ICG sensor revenue and 13% improvement in capital sales productivity of the domestic direct sales force. The increased productivity was the result of improved training and sales success of newer territory managers and also positive early results from Phoenix Growth Initiative programs.
ICG Sensor revenue was $1.8 million in the third quarter of 2007, growing 15% from $1.5 million in the same period in 2006, and 5% sequentially from second quarter 2007. Sensor revenue growth was attributed to the clinical sales team’s ongoing focused customer service efforts and increased use of the BioZ Assessment Process (BAP), which assists physician offices in appropriately assessing which patients could benefit from BioZ data. To date, there are over 1,600 offices who have initiated the BAP into assessment of patients.
Gross margin as a percentage of sales increased from 61% to 72% in the third quarter of 2007, largely due to average unit sales price improvements, increased mix of recurring sensor revenue, lower inventory reserve requirements, and reduced indirect manufacturing cost allocations.
Operating expenses increased 11% compared with the same period in 2006 driven primarily by a 17% increased in sales and marketing expenses, including addition of clinical application specialists and a greater allocation of customer service and technical support department costs that were previously allocated to cost of sales.
The operating loss improved 22% to $1.2 million, compared to an operating loss of $1.5 million for the same period in 2006. The year-to-date operating loss was $4.0 million, a 43% improvement, from the same period in 2006 of $7.1 million.
CEO Comments and Outlook
Michael K. Perry, Chief Executive Officer of CardioDynamics, stated, “Achieving our third consecutive quarterly year-over-year revenue growth and 12% growth year-to-date is encouraging and a testament to the continued growth potential for ICG. The strong progression of sensor revenue seen over the past two quarters demonstrates the effectiveness of our clinical application specialist team to improve customers’ clinical understanding of ICG and maximize physician office workflow integration. We were pleased with the steady improvement in our key operating metrics including a 13% increase in sales productivity of our direct sales team, 15% growth in ICG sensor revenue, 11% expansion in ICG gross margins, and 22% reduction in operating loss. Our goal remains to return to positive operating cash flow and profitability as quickly as possible while making judicious investments that will drive increased revenue growth and help establish ICG in the treatment guidelines for heart failure and hypertension over the next five years.”
Perry continued, “The sale of Vermed was completed efficiency and, now with over $8 million in cash, we have increased financial resources to devote to the growth of our proprietary ICG business. Recently, we announced our plan to accelerate the return to profitability and this has injected renewed energy and excitement into our employees. The Phoenix Growth Initiative is stimulating teamwork across all functions and providing new opportunities for revenue growth. An initial project, the Legacy Investment Program(TM), designed to revitalize the early adopters of BioZ technology, was well received by our customers and is helping drive increased customer satisfaction, recurring revenue, and capital sales.”
Conference Call Information
http://www.cdic.comhttp://phx.corporate-ir.net/phoenix.zhtml?p=irol-
About CardioDynamics
CardioDynamics , the ICG Company, is the innovator and leader of an important medical technology called impedance cardiography (ICG). The Company develops, manufactures and markets noninvasive ICG products. The Company’s ICG Systems are being used by physicians around the world to help battle the number one killer of men and women -- cardiovascular disease. Partners include GE Healthcare and Philips Medical Systems. For additional information, please refer to the company’s Web site at http://www.cdic.com.
Forward-Looking (Safe Harbor) Statement
Except for historical and factual information contained herein, this press release contains forward-looking statements, such as expectation of the continued revenue growth path, accelerated return to profitability and the benefits of sales initiatives, the accuracy of which is necessarily subject to uncertainties and risks including the Company’s primary dependence on the BioZ product line, and various uncertainties characteristic of early stage companies, as well as other risks detailed in the Company’s filings with the SEC, including its 2006 Form 10-K. The Company does not undertake to update the disclosures contained in this press release.
CONTACT: Rhonda F. Rhyne, President of CardioDynamics, 1-800-778-4825,
Ext. 1013, rrhyne@cardiodynamics.com
Web site: http://www.cdic.com/
