Exhibit 99.1
COMPANY CONTACT:
Cindy Presar, Investor Relations
cpresar@cardiodynamics.com
800-778-4825 Ext. 1031
CARDIODYNAMICS REPORTS FOURTH QUARTER AND FISCAL 2005 RESULTS
INCLUDES $0.26 EPS NON-CASH CHARGE FROM RE-ESTABLISHMENT OF VALUATION ALLOWANCE
SAN DIEGO, CA--February 9, 2006--CardioDynamics (Nasdaq: CDIC), the innovator
and leader of Impedance Cardiography (ICG) technology, today announced its
financial and operating results for the fourth quarter and full fiscal year
2005. Highlights include the company's first quarterly sequential revenue growth
in 2005, third consecutive quarter of positive operating cash flow, notification
that the manuscript for the company's CONTROL clinical trial has been accepted
for publication, and initial shipments of Vermed's ECG electrode products to the
first Premier, Inc. customer which was obtained under a 3-year, shared contract
award.
2005 FOURTH QUARTER AND YEAR-END RESULTS:
Net sales for the fourth quarter fiscal 2005 were $9.2 million, a decrease of
21% over net sales of $11.6 million for the same quarter last year, but an
increase of 5% over the $8.8 million reported in third quarter 2005. Fiscal 2005
sales were $37.0 million, a decrease of 10% over sales of $41.0 million reported
for fiscal year 2004. The sales decline in the fourth quarter and fiscal 2005
were principally the result of a CMS policy clarification which served to
restrict hypertension usage of the Company's ICG technology to patients that
have uncontrolled blood pressure and are presently treated with three or more
medications.
In the fourth quarter of 2005, CardioDynamics reported a net loss of $13.1
million, or $0.27 per diluted share, compared with net income of $7.4 million,
or $0.15 per diluted share, reported in the fourth quarter 2004. Net loss for
the full year 2005 was $14.9 million, or $0.31 per diluted share, compared to
net income of $10.1 million, or $0.21 per diluted share, for the same period in
2004. The significant fluctuation between 2004 and 2005 primarily relates to a
non-cash tax benefit of approximately $7.4 million (or $0.15 per diluted share)
recorded in fourth quarter 2004 resulting from the removal of the Company's
valuation allowance on its deferred tax assets. A valuation allowance of $12.5
million (or $0.26 per diluted share) was re-established in the fourth quarter
2005 as a result of the net tax losses incurred in 2005. These valuation
allowance adjustments required under Statement of Financial Accounting Standards
(SFAS) 109 do not affect operating results or cash flow.
In the fourth quarter of 2005, CardioDynamics reported a loss from operations of
$1.0 million, compared with income from operations of $0.1 million in the fourth
quarter 2004. Operating loss for the full year 2005 was $3.8 million compared
with income from operations of $2.9 million for the same period in 2004. The
operating loss for the fourth quarter 2005 and full year was primarily the
result of lower net sales and gross margin in the ICG business, partially offset
by reduced operating expenses compared with the same periods in 2004.
Despite the operating loss for the quarter, the Company generated $57,000 of
operating cash flow in the fourth quarter, the company's third consecutive
quarter of positive operating cash flow. For the year, the Company used $138,000
of cash from operations compared with generating $4.4 million in 2004. The
Company ended fiscal 2005 with $3.6 million in cash and cash equivalents.
OPERATING HIGHLIGHTS:
ICG devices sold during fourth quarter 2005 totaled 319, including 231 BioZ
monitors, 66 ICG modules and 22 Medis ICG monitors, an overall increase of 13%
from the same quarter last year. Included in shipments for the fourth quarter
were 120 factory-certified refurbished BioZ monitors, 60 of which were sold in
China as part of the Company's initiative to accelerate market adoption in this
emerging market. The number of ICG systems and modules sold to date now totals
over 5,900. As of November 30, 2005, the Company employed 74 field sales
associates, including 45 U.S. territory managers and 16 clinical application
specialists.
Combined ICG and electrocardiograph (ECG) sensor revenue for fourth quarter 2005
was $3.7 million, representing 40% of total net sales. During fourth quarter
2005, Vermed contributed $2.2 million to consolidated net sales. ICG sensor
revenue for fourth quarter 2005 was $1.5 million (22% of total ICG net sales), a
decrease of 7%, compared to $1.6 million (17% of total ICG net sales) in the
same quarter 2004. In fiscal 2005, combined ICG and ECG sensor revenue was $16.0
million, an increase of 21% from $13.2 million in fiscal 2004.
Total gross margin for the fourth quarter 2005 was 50% of net sales; gross
margin for the ICG business was 57% and for the Vermed ECG business was 27%.
This compares to 71% total gross margin for the same quarter last year with 79%
for the ICG business and 38% for the ECG business. The decrease in overall gross
margin during fourth quarter 2005 was largely a result of decreased average
selling prices for ICG products, including a higher mix of the lower-priced,
factory-certified BioZ monitors, warranty accruals, and in the ECG segment,
higher discounts for large purchasing organizations and higher depreciation on
the manufacturing equipment added during the year. For the fiscal year of 2005,
total gross margin was 58% of net sales with 65% for the ICG business and 39%
for the ECG business.
Operating expenses for fourth quarter 2005 decreased 31% to $5.6 million
compared with $8.1 million for the same quarter in 2004. The decrease was
largely due to a 29% decrease in selling and marketing expenses primarily as a
result of lower commissions related to the Company's decreased revenues and
reduced bad debt expense resulting from lower accounts receivable balances and
improved collections from customers; a 52% decrease in research and development
spending compared to fourth quarter 2004 principally associated with the
completion of the BioZ Dx, the co-developed product with Philips Medical
Systems; and a 20% decrease in general and administrative expenses, the majority
of which are related to reduced headcount and lower Sarbanes-Oxley related
outside consulting costs. For the fiscal year of 2005, operating expenses
decreased 4% to $25.3 million compared with $26.4 million for fiscal year 2004.
CEO COMMENTS AND OUTLOOK:
Michael K. Perry, CardioDynamics' Chief Executive Officer, commented, "Although
2005 was a challenging year due to the Medicare policy change, it was also a
year of rebuilding and laying the foundation for future growth. We were pleased
to see the 5% sequential revenue improvement and the third consecutive quarter
of positive operating cash flow and to have released our third generation
state-of-the-art combined ICG and ECG monitor, the BioZ Dx, earlier in the year.
This was our strongest year ever for new clinical evidence with 13 ICG clinical
publications and presentations. Most importantly, our CONTROL trial showed that
use of BioZ ICG assisted physicians in achieving more than two times better
blood pressure control than standard care for hypertensive patients and gives us
the opportunity to potentially improve Medicare's hypertension policy."
Perry added, "We enter 2006 with a number of potential business catalysts. We
have three major clinical studies accepted for publication in prestigious
medical journals. These clinical studies focus on hypertension, heart failure,
and shortness of breath, ICG's three major clinical application areas. Based on
the significant CONTROL trial results, we are working closely with Medicare to
reconsider and potentially expand our hypertension policy. Additionally, we are
planning for an active year of product development with the launch of the BioZ
Mx, a lower cost-to-manufacture ICG monitor; the next release of the BioZ Dx,
our flagship ICG monitor; and the market introduction of the BioZ AdvaSense(TM)
sensor, an advanced, proprietary ICG sensing system. Finally, we will continue
to make investments in our sensor business which provides a growing, profitable,
and more predictable annuity complementing our ongoing system sales
initiatives."
FISCAL 2005 HIGHLIGHTS AND ACCOMPLISHMENTS:
o Product Releases and FDA 510(k) Clearance: Market release of Phase I BioZ
Dx, (ICG only) with subsequent FDA 510(k) clearance and market release for
Phase II BioZ Dx, which added ECG capability to our flagship product.
o Clinical Studies, Presentations and Publications:
o Completion and presentation of the Company's 11-center, randomized
CONTROL study demonstrating that use of BioZ ICG in mild-to-moderate
hypertensive patients was more than two times better than standard
care.
o Publication of seven articles in the American Journal of Hypertension
highlighting the significance of ICG in the management of
hypertension.
o Presentation of a 331-patient study conducted by the San Diego
Veterans Administration Healthcare System and University of
California, San Diego School of Medicine, concluding that ICG and
B-type natriuretic peptide (BNP) testing significantly add to the
ability to risk stratify and predict future heart failure-related
events.
o Presentation of a study by researchers at Methodist Hospital, San
Antonio, Texas on determining cause of shortness of breath in heart
failure patients. They reported that ICG thoracic fluid content had a
significant correlation with gold standard blood volume analysis,
while BNP levels did not.
o Contracts: Vermed's shared award of a 3-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.
o Manufacturing Automation: Investment of over $800,000 in world-class,
automated assembly and manufacturing equipment at Vermed. These investments
were made to increase capacity and improve productivity of our consumable
operations in anticipation of ICG sensor growth and more aggressive pursuit
of group purchasing organizations (GPO), private label, and original
equipment manufacturer (OEM) opportunities.
o Election of New Directors: Election of B. Lynne Parshall and Robert W.
Keith, medical industry executives with expertise in finance, operations,
and marketing, to the Board of Directors.
o Awards and Recognition:
o Ranking of 23rd in the 2005 Deloitte & Touche Technology Fast 50, a
ranking of the 50 fastest growing technology companies in San
Diego/Orange County (213% five-year revenue growth);
o Received American Electronics Association High Tech Award for medical
device/instrumentation companies.
CONFERENCE CALL AND WEBCAST INFORMATION:
Michael K. Perry, Chief Executive Officer, and Steve P. Loomis, Chief Financial
Officer, will host a summary of CardioDynamics' fourth quarter results and
outlook for 2006 in a conference call today at 4:30 PM (EST). 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). A webcast of the call is available at
http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=86923&eventID
=1201066 or can be accessed through the Investors section (Investor Overview) of
the Company's website at www.cdic.com.
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 ICG products and medical device
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, such as future product
introductions, potential sales growth and penetration rates, presentation or
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.
UNAUDITED RESULTS:
The results reported in this press release are unaudited and remain subject to
completion of the annual financial audit by the Company's independent registered
public accounting firm and are therefore subject to adjustments as result of
such audit.
CARDIODYNAMICS INTERNATIONAL CORPORATION
In thousands, except per share data (unaudited)
THREE MONTHS ENDED FISCAL YEAR ENDED
NOVEMBER 30 NOVEMBER 30
---------------------------- ----------------------------
CONSOLIDATED OPERATIONAL RESULTS 2005 2004 2005 2004
- -------------------------------------- ------------ ------------ ------------ ------------
Net Sales $ 9,187 $ 11,628 $ 37,005 $ 40,988
Cost of Sales 4,594 3,427 15,518 11,637
------------ ------------ ------------ ------------
Gross Margin 4,593 8,201 21,487 29,351
Research and Development 610 1,259 2,487 4,353
Selling and Marketing 3,954 5,561 17,981 18,357
General and Administrative 923 1,157 4,387 3,383
Amortization of Intangible Assets 123 129 464 334
------------ ------------ ------------ ------------
Income (Loss) from Operations (1,017) 95 (3,832) 2,924
Other Income (Expense), net 47 (115) (55) 27
------------ ------------ ------------ ------------
Income (Loss) before Income Taxes (970) (20) (3,887) 2,951
Income Tax Benefit (Provision) (12,156) 7,447 (11,003) 7,209
Minority Interest (20) (15) (54) (37)
------------ ------------ ------------ ------------
Net Income (Loss) $ (13,146) $ 7,412 $ (14,945) $ 10,123
============ ============ ============ ============
Net Income (Loss) per Common Share,
- Basic $ (0.27) $ 0.15 $ (0.31) $ 0.21
============ ============ ============ ============
- Diluted $ (0.27) $ 0.15 $ (0.31) $ 0.21
============ ============ ============ ============
Weighted-Average Number of Shares
Used in Per Share Calculation:
- Basic 48,803 48,705 48,787 47,668
============ ============ ============ ============
- Diluted 48,803 49,519 48,787 49,164
============ ============ ============ ============
SELECTED CONSOLIDATED BALANCE NOVEMBER 30 NOVEMBER 30
SHEET DATA 2005 2004 CHANGE
- -------------------------------------- ------------ ------------ ------------
Cash and Cash Equivalents 3,615 $ 6,801 (47)%
Accounts Receivable, net 7,359 11,674 (37)%
Inventory, net 5,379 4,647 16%
Current Assets 18,203 27,257 (33)%
Long-term Assets 21,795 30,773 (29)%
Total Assets 39,998 58,030 (31)%
Current Liabilities 7,217 7,764 (7)%
Long-term Liabilities 2,777 5,338 (48)%
Total Liabilities 9,994 13,102 (24)%
Minority Interest 241 194 24%
Shareholders' Equity 29,763 44,734 (33)%