EXHIBIT 99.1
COMPANY CONTACT:
Scott Schmidt, Investor Relations
sschmidt@cardiodynamics.com
800-778-4825, Ext. 1005
CARDIODYNAMICS REPORTS THIRD QUARTER 2006 RESULTS
SECOND SEQUENTIAL QUARTERLY INCREASE IN ICG REVENUE
SAN DIEGO, CA--October 5, 2006--CardioDynamics (Nasdaq: CDIC), the innovator and
leader of BioZ(R) Impedance Cardiography (ICG), today reported its financial
results for its fiscal third quarter 2006. Highlights included 7% sequential ICG
revenue increase over second quarter 2006, 25% growth in ECG sensor revenue over
the third quarter 2005, and publication acceptance of the cost-effectiveness
data from the CONTROL study.
THIRD QUARTER 2006 RESULTS:
Net sales for the third quarter of 2006 were $7.9 million, an increase of 4%
over the $7.6 million reported in the second fiscal quarter of 2006, and a
decrease of 10% compared with net sales of $8.8 million in the same period last
year. ICG revenue for the third quarter increased 7% to $5.2 million from $4.8
million in the second quarter of 2006, (the second consecutive quarterly
sequential revenue increase), but decreased 22% from $6.6 million reported in
the same period of 2005. The Company attributed the ICG revenue growth over the
second quarter of 2006 to the marketplace acceptance of recently published
clinical evidence, increased productivity of new sales representatives and
stabilization of the business following Medicare's restricted hypertension
policy. The adverse effects from Medicare's hypertension policy restriction
contributed to the year over year revenue decrease as did the corporate
restructurings which resulted in 29% fewer territory sales managers than the
same quarter in 2005.
The loss from operations was $935,000 for the third quarter of 2006, an $820,000
or 47% improvement over second quarter 2006, and compares with an operating loss
of $1 million in the same quarter last year. The third quarter 2006 improvement
over second quarter 2006 was primarily driven by increased gross margins
resulting from higher average selling prices achieved for the Company's BioZ
instruments, expense reductions realized through the corporate restructuring,
and continued cost containment efforts.
The Company reported net income of $1.0 million, or $0.02 per diluted share for
the third quarter of 2006, an improvement of $3.7 million over second quarter
2006 and compares with a net loss of $474,000, or $0.01 per diluted share
reported in the third quarter last year. The net income reported during the
third quarter was the result of a $2.2 million non-cash gain in the fair value
of the derivative instrument embedded in the $5.25 million convertible notes
issued during the second quarter of 2006.
The Company reported cash and cash equivalents balance of $5.4 million, up from
$4.2 million at the end of third quarter 2005. Operating cash use improved
appreciably during the third quarter of 2006 at $310,000 due to strong cash
collections and continued improvements in working capital management. This
compares with operating cash use of $711,000 and $647,000 in the first and
second quarters 2006, respectively.
OPERATING HIGHLIGHTS:
During the third quarter of 2006, sales of ICG devices totaled 238 units,
including 119 ICG modules, and 119 ICG monitors, 83 of which were BioZ Dx
systems, 22 BioZ monitors, and 14 Medis ICG monitors. There have been nearly
6,600 ICG systems sold worldwide, an increase of 16% over sales to date as of
third quarter 2005, and includes over 1,500 ICG modules.
Combined ICG and electrocardiograph (ECG) sensor revenue in the third quarter of
2006 was $4.3 million, representing 54% of total sales. During the quarter,
Vermed's ECG sensor revenue was $2.7 million representing a 25% increase over
the same quarter in fiscal 2005. The increase is largely the result of
additional private label and original equipment manufacturers business, and
growing sales with the Premier Group Purchasing Organization (GPO) members. ICG
sensor revenue for the third quarter of 2006 was $1.5 million, or 30% of total
ICG net sales, a decrease of 11%, from $1.7 million in the same quarter of 2005,
primarily due to the hypertension policy restriction. The Company's clinical
applications team is working closely with physicians to appropriately integrate
ICG into medical practices through the use of the BioZ Automated Process
(BAP(TM)), which assists in identifying patients who are symptomatic and on whom
the physician would benefit by having BioZ data for clinical assessment. The
Company believes that successful integration of BAP into physicians' offices
will result in improved patient care and increased sensor revenue growth.
Overall gross margin percentage for the third quarter of 2006 was 56% compared
with 60% in the third quarter of fiscal 2005. Gross margin percentage in the
third quarter for the ICG business was 68% and for the ECG business 34%,
compared to 66% and 43%, respectively, in the same quarter last year. The
improved ICG gross margin percentage in the current quarter over the same period
last year was due to reduced warranty related expenses. The lower gross margin
in the ECG business was primarily the result of higher raw material costs and
lower-associated margins with increased GPO business.
Operating expenses for the third quarter of 2006 decreased 15% to $5.4 million
down from $6.3 million for the same period in 2005 primarily due to the
Company's workforce reduction and other cost containment measures. Another
contributor to the expense savings has been the reduction in territory and
regional sales managers, which was associated with Medicare's hypertension
policy restriction, and the Company's subsequent focus on enhanced productivity
from more experienced territory managers and consolidation of low
revenue-generating sales territories.
CEO COMMENTS:
"We were pleased with the third quarter, which included continued sequential
improvement in the ICG business and a 25% growth in our ECG business," stated
Michael K. Perry, Chief Executive Officer, of CardioDynamics. "While the 2004
Medicare clarification restricting ICG hypertension use to resistant
hypertensive patients creates pressure in the ICG business, we believe the
recently published clinical evidence for our three major disease applications
and the adjustments we have made to our sales strategies will lead to ongoing
steady growth ahead. Additionally, in the quarter, we had acceptance of our
cost-effectiveness CONTROL manuscript, which, in conjunction with the CONTROL
study, we anticipate will be helpful in private insurance payors more fully
reimbursing for hypertension use."
Perry concluded, "Despite the Medicare policy draft to maintain the current
coverage for hypertension, we look forward to working with Medicare as they
finalize the policy and remain cautiously optimistic that some coverage
enhancement for BioZ ICG technology will be made. A final decision memorandum is
due by the end of November 2006. Irrespective of the Medicare outcome, we will
focus our sales and clinical application teams on the covered indications,
continue to develop the clinical evidence for ICG, and strive to achieve
increased market adoption of our BioZ ICG technology."
ADDITIONAL HIGHLIGHTS:
o Released BioZ AdvaSense(TM) cable/sensor for BioZ monitors which ensures
data integrity for users and further protects recurring revenue stream.
o CardioDynamics announced agreement with Mindray, China's leading patient
monitoring manufacturer, to integrate CardioDynamics BioZ ICG technology
into its patient monitoring products.
o In response to Medicare draft coverage policy to maintain the present
coverage for hypertensive patients, there were over 225 comments from
healthcare providers and Medicare patients, all of which supported
expanded coverage.
o Company was ranked 38th for an 89%, 5-year growth in San Diego's 2006
Technology Fast 50, which represents the fastest growing companies
throughout San Diego County.
CONFERENCE CALL INFORMATION:
Michael K. Perry, Chief Executive Officer, and Steve P. Loomis, Chief Financial
Officer, will host a summary of CardioDynamics' third quarter 2006 results in a
conference call today, October 5, 2006, 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 can be accessed through
the Investor Relations section of the Company's website at www.cdic.com or at
http://phx.corporate-ir.net/playerlink.zhtml?c=86923&s=wm&e=1394256
ABOUT CARDIODYNAMICS:
CardioDynamics (Nasdaq: CDIC), the ICG Company, is the innovator and leader of
an important medical technology called BioZ(R) impedance cardiography (ICG). The
Company develops, manufactures and markets noninvasive BioZ(R) 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 historical and factual information contained herein, this press
release contains forward-looking statements, such as future reimbursement,
publication of clinical studies, effectiveness of BAP sensor integration, sales
team productivity and revenue growth, 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 2005 Form 10-K. 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 NINE MONTHS ENDED
AUGUST 31, AUGUST 31,
------------------------ ------------------------
SELECTED CONSOLIDATED OPERATIONAL RESULTS 2006 2005 2006 2005
- ------------------------------------------------------- ---------- ---------- ---------- ----------
Net sales $ 7,877 $ 8,770 $ 22,017 $ 27,818
Cost of sales 3,451 3,500 10,380 10,924
---------- ---------- ---------- ----------
Gross margin 4,426 5,270 11,637 16,894
---------- ---------- ---------- ----------
Research and development 477 626 1,667 1,877
Selling and marketing 3,681 4,505 11,940 14,027
General and administrative 1,073 1,024 3,715 3,463
Amortization of intangible assets 130 119 377 342
---------- ---------- ---------- ----------
Loss from operations (935) (1,004) (6,062) (2,815)
Gain on derivative instruments 2,158 - 1,464 -
Other expense, net (199) (37) (496) (102)
---------- ---------- ---------- ----------
Income (loss) before income taxes and minority interest 1,024 (1,041) (5,094) (2,917)
Income tax benefit (provision) (23) 580 (114) 1,152
Minority interest in (income) loss of subsidiary 1 (13) (19) (34)
---------- ---------- ---------- ----------
Net income (loss) $ 1,002 $ (474) $ (5,227) $ (1,799)
========== ========== ========== ==========
Net income (loss) per common share:
Basic $ 0.02 $ (0.01) $ (0.11) $ (0.04)
========== ========== ========== ==========
Diluted $ 0.02 $ (0.01) $ (0.11) $ (0.04)
========== ========== ========== ==========
Weighted-average shares used in per share calculation:
Basic 48,827 48,803 48,815 48,871
========== ========== ========== ==========
Diluted 48,849 48,803 48,815 48,871
========== ========== ========== ==========
AUGUST 31, NOVEMBER 30,
SELECTED CONSOLIDATED BALANCE SHEET DATA 2006 2005
- ---------------------------------------- ---------- ------------
Cash and cash equivalents $ 5,360 $ 3,615
Accounts receivable, net 4,603 7,359
Inventory, net 5,085 5,379
Total current assets 16,215 18,203
Long-term assets 20,878 21,795
Total assets 37,093 39,998
Total current liabilities 5,315 7,217
Long-term liabilities 6,471 2,777
Total liabilities 11,786 9,994
Minority interest 321 241
Shareholders' equity 24,986 29,763