Exhibit 99.1:
COMPANY CONTACT:
Bonnie Ortega, Investor Relations
bortega@cardiodynamics.com
800-778-4825, Ext. 1005
CARDIODYNAMICS REPORTS SECOND QUARTER 2005 RESULTS
COMPANY ALSO ANNOUNCES OPERATIONAL RESTRUCTURING FOR FUTURE STRATEGIC GROWTH
SAN DIEGO, CA--June 28, 2005--CardioDynamics (Nasdaq: CDIC), the innovator and
leader of Impedance Cardiography (ICG) technology, today reported its financial
results for its fiscal second quarter 2005.
SECOND QUARTER 2005 RESULTS:
Net sales for second quarter 2005 were $9.4 million, a decrease of 9%, compared
to sales of $10.3 million for the same period last year. ICG revenue for the
quarter decreased 17% to $6.9 million from $8.3 million in the same period in
2004. This was a result of the continued transition from direct-only sales to
team-selling involving the Company's direct sales team and two distribution
sales partners, Physician Sales & Service, Inc. (PSS) and the Caligor division
of Henry Schein; Medicare policy clarification restricting hypertension
coverage; and lengthened sales cycles and decreased average selling prices due
to the emergence of competition.
The Company reported a net loss of $682,000, or ($0.01) per diluted share for
the second quarter of 2005, compared with net income of $958,000, or $0.02 per
diluted share reported in the same quarter last year. For the six months ended
May 31, 2005, net loss was $1.3 million, or ($0.03) per diluted share, compared
to net income of $1.7 million, or $0.03 per diluted share, for the same period
in 2004.
OPERATING HIGHLIGHTS:
During the second quarter 2005, sales of ICG devices totaled 243 units,
including 163 ICG monitors, of which 118 were BioZ Dx systems, 76 ICG modules
and 4 Medis ICG monitors. There have been over 5,500 ICG systems shipped
worldwide, including over 1,100 ICG modules. At the end of fiscal second quarter
2005, field associates totaled 83 people, including 50 U.S. territory managers
and 21 clinical application specialists.
Combined ICG and electrocardiograph (ECG) sensor revenue in the second quarter
2005 was $4.3 million representing 46% of total sales. During the quarter,
Vermed's ECG sensors contributed $2.5 million to net sales. ICG sensor revenue
for the second quarter 2005 was $1.8 million (27% of total ICG net sales), an
increase of 10%, compared with $1.7 million (20% of total ICG net sales) in the
same quarter 2004. ICG sensor revenue also increased 12% sequentially over first
quarter 2005.
Overall gross margin percentage for the second quarter 2005 was 56% compared to
72% in the second quarter 2004. Gross margin percentage for the ICG business was
63% and for the ECG business was 40% compared to 81% and 37% respectively in the
same quarter last year. The decrease in gross margin for the ICG business was a
result of higher BioZ Dx product cost and lower average selling price of BioZ
monitors partially due to competitive pressures.
Operating cash flow for fiscal second quarter 2005 was $300,000, down from
$898,000 in the same quarter last year. Operating cash flow improved $1.0
million from a $735,000 use of cash from operations in first quarter 2005,
partly as a result of improved accounts receivable cash collections, which were
$12.2 million, representing 121% of first quarter 2005 trade receivable sales.
During the second quarter 2005, the Company paid down its bank loan by $438,000
and ended the quarter with $4.6 million of cash and cash equivalents in the
bank.
CEO COMMENTS:
"Our second quarter results fell short of our expectations, and we were
particularly disappointed in the lack of growth in the ICG business," stated
Michael K. Perry, CEO of CardioDynamics. "Although the relationships with PSS
and Caligor distributor representatives accounted for 36% of total domestic BioZ
sales in the quarter, we have not yet been able to achieve incremental sales
productivity from our direct sales team. During the remainder of the year, we
will focus on strategies to strengthen our distributor relationships. Currently,
we are engaged in our first corporate national promotions with PSS and Henry
Schein. A target ICG mailer is being sent this week to 21,000 PSS customers.
Additionally, Henry Schein recently distributed promotional product brochures to
180,000 customers, and their telemarketing and field sales representatives will
be following up on leads generated by this promotion. The value of distribution
lies in the breadth of customer relationships and, with the resulting leads from
these national promotions to over 200,000 physicians, we anticipate an increase
in our sales force productivity."
Perry added, "The 2004 Medicare clarification has served effectively to restrict
ICG hypertension use in all but resistant hypertensive patients, which has also
contributed to the overall downturn in ICG growth. To counter this challenge, we
have redirected our sales force more toward internal medicine, cardiology and
larger group practices. Additionally, we are driving toward the publication of
our multi-center CONTROL study in a leading medical journal by the end of 2005.
Once CONTROL is published, we plan to present the findings to Medicare to assist
in our efforts to broaden ICG hypertension coverage."
As a result of cost containment measures, operating expenses for the second
quarter 2005 decreased 4% to $6.1 million compared with $6.4 million for the
same period in 2004. Despite the reduced expenses in the second quarter, the
Company identified the need for additional expense reduction and completed an
operational restructuring in early third quarter 2005, resulting in a 10%
reduction of its workforce. The consolidation and elimination of 25 positions
across the Company is expected to save approximately $2 million annually.
Perry concluded, "With the losses experienced in the first and second quarters,
we felt it important to immediately reduce expenses to align with current
revenue levels. We deeply regret the necessity of this measure, but it allows us
to invest strategically for future growth and enhances the long-term success and
viability of the Company. We feel confident we will overcome the challenges of
the first half of 2005 and remain enthusiastic about our growth opportunities
over the next several years."
ADDITIONAL HIGHLIGHTS AND ACCOMPLISHMENTS:
. Vermed's award of a multi-source, three-year contract with Premier
Purchasing Partners LLP, the group purchasing division of Premier, Inc.
and one of the largest healthcare alliances in the United States
. Presentation of the Company's multi-center CONTROL study demonstrating
that use of BioZ ICG was more than two times better than standard care
for achievement of blood pressure control in mild to moderate
hypertensive patients
. Presentation of a study conducted by researchers at the University of
Texas Southwestern Medical Center at Dallas showing BioZ use reduced the
incidence of low blood pressure by 52% in women undergoing cesarean
section
. Appointment of Mayer Hoffman McCann P.C., currently the seventh largest
audit firm in the nation, as the Company's new independent registered
public accounting firm
CONFERENCE CALL INFORMATION:
Michael K. Perry, Chief Executive Officer, will host a summary of
CardioDynamics' second quarter 2005 results in a conference call today at 4:30
p.m. (EDT). To access the conference call, dial 800-346-7359 (Code 7784).
International participants can call 973-528-0008 (Code 7784). A replay of the
call will be available for one month following the call at 800-332-6854 (Code
7784). The international replay number is 973-528-0005 (Code 7784). The Internet
webcast is at
http://phx.corporate-ir.net/playerlink.zhtml?c=86923&s=wm&e=1084833.
ABOUT CARDIODYNAMICS:
CardioDynamics (Nasdaq: CDIC), the ICG Company, is the innovator and leader of
breakthrough medical technology called Impedance Cardiography (ICG). The Company
develops, manufactures and markets noninvasive diagnostic and monitoring
technologies and electrodes. 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 www.cdic.com.
FORWARD-LOOKING (SAFE HARBOR) STATEMENT:
Except for the historical and factual information contained herein, this press
release contains forward-looking statements including success of distributor
team sales approach, improved sales productivity, and the publication of
clinical studies, 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 growth companies, as well as
other risks detailed in the Company's filings with the SEC, including its 2004
Form 10-K/A. The Company does not undertake to update the disclosures contained
in this press release.
CARDIODYNAMICS INTERNATIONAL CORPORATION
In thousands, except per share data (unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED
MAY 31, MAY 31,
----------------------- -----------------------
SELECTED CONSOLIDATED OPERATIONAL RESULTS 2005 2004 2005 2004
- ---------------------------------------------------- ---------- ---------- ---------- ----------
Net Sales $ 9,370 $ 10,270 $ 19,048 $ 18,285
Cost of Sales 4,077 2,880 7,424 4,735
---------- ---------- ---------- ----------
Gross Margin 5,293 7,390 11,624 13,550
Research and Development 587 1,225 1,251 2,058
Selling and Marketing 4,339 4,293 9,522 8,306
General and Administrative 1,102 762 2,439 1,339
Amortization of Intangible Assets 92 78 223 78
---------- ---------- ---------- ----------
Income (Loss) from Operations (827) 1,032 (1,811) 1,769
Other Income (Expense), net (7) 26 (65) 121
---------- ---------- ---------- ----------
Income (Loss) before Income Taxes (834) 1,058 (1,876) 1,890
Income Tax Benefit (Provision) 145 (100) 572 (171)
Minority Interest in Income (Loss) of Subsidiary 7 - (21) -
---------- ---------- ---------- ----------
Net Income (Loss) $ (682) $ 958 $ (1,325) $ 1,719
========== ========== ========== ==========
Net Income (Loss) per Common Share,
- Basic $ (0.01) $ 0.02 $ (0.03) $ 0.04
========== ========== ========== ==========
- Diluted $ (0.01) $ 0.02 $ (0.03) $ 0.03
========== ========== ========== ==========
Weighted-Average Number of Shares Used in
Per Share Calculation:
- Basic 48,792 47,396 48,771 46,975
========== ========== ========== ==========
- Diluted 48,792 50,326 48,771 49,926
========== ========== ========== ==========
CARDIODYNAMICS INTERNATIONAL CORPORATION
In thousands, except per share data (unaudited)
MAY 31, NOVEMBER 30,
SELECTED CONSOLIDATED BALANCE SHEET DATA 2005 2004 CHANGE
- ------------------------------------------------- ------------ ------------ -----------
Cash and Cash Equivalents $ 4,559 $ 6,801 (33)%
Accounts Receivable, net 8,101 11,674 (31)%
Inventory, net 6,147 4,647 32%
Current Assets 22,918 27,257 (16)%
Long-term Assets 31,975 30,773 4%
Total Assets 54,893 58,030 (5)%
Current Liabilities 6,810 7,764 (12)%
Long-term Liabilities 4,396 5,338 (18)%
Total Liabilities 11,206 13,102 (14)%
Minority Interest 217 194 12%
Shareholders' Equity 43,470 44,734 (3)%