SAN DIEGO, Feb. 7 CardioDynamics (Nasdaq: CDIC),the innovator and leader of BioZ(R) Impedance Cardiography (ICG) technology,today reported financial results for its fourth quarter and fiscal 2007.Operating results are for the ICG business and do not include results forVermed which was sold on August 31, 2007.
Key Financial and Operating Results for Fourth Quarter 2007 Compared withFourth Quarter 2006
Key Financial and Operating Results of Fiscal 2007 Compared with Fiscal2006
Fourth Quarter and Fiscal 2007 Operating Results Discussion
The Company reported net sales increase of 8% to $6.2 million in thefourth quarter 2007 and 10% for full year 2007 to $21.9 million, representingthe first year of growth in the last three years. Fourth quarter ICG salesgrowth was driven by a combination of a 57% increase in international salesand a 13% increase in ICG sensor revenue. Additionally, through ongoingefforts to improve sales force hiring and training, late Q3 2007 new hirescontributed 33% of domestic equipment sales in Q4 2007.
ICG sensor revenue was $1.7 million in the fourth quarter of 2007 and$6.7 million for the full year 2007, up 13% and 8%, respectively, over thesame periods in 2006. Solid sensor revenue growth continued in the fourthquarter due to the clinical sales team's focused customer service efforts andexpansion of the BioZ Activation Process (BAP), which assists physicianoffices in appropriately assessing and monitoring patients for whom cliniciansneed BioZ data. To date, there are over 2,000 offices who have initiated theBAP into assessment of patients.
Gross margin as a percentage of sales increased from 62% to 68% in fiscal2007, largely due to lower manufacturing costs, average unit sales priceimprovements, increased mix of recurring sensor revenue and lower inventoryreserve requirements.
Tight expense control resulted in a 1% overall reduction in 2007 operatingexpenses with research and development decreasing 13%, sales and marketingincreasing 5%, and general and administration expenses decreasing 17%. Anoverall 3% decrease in company personnel coupled with an $869,000 reduction inexternal audit fees were the largest contributors to the expense savings andwere part of the Company's efforts to accelerate the return to profitability.
Operating loss improved 29% sequentially to $829,000, compared to anoperating loss of $1.2 million in third quarter 2007. The operating loss forfiscal 2007 was $4.8 million, a 38% improvement from fiscal 2006 operatingloss of $7.8 million.
CEO Comments and Outlook
Michael K. Perry, Chief Executive Officer of CardioDynamics, stated, "Wewere very pleased with the continued improvement in our key operating metricsduring the fourth quarter and throughout 2007. This was our first year ofrevenue growth in the past three years and our team worked diligently todeliver four consecutive growth quarters and 10% overall growth in 2007.Sensor revenue growth continued strong in the fourth quarter at 13% anddemonstrates the clinical usefulness and expanding need for ICG. We wereparticularly pleased in reducing the operating loss by 38%, a $3.0 millionimprovement over 2006.
Perry continued, "Completing the sale of Vermed was important for ourcompany during 2007 and has allowed us to focus our resources on theproprietary ICG business, which represents the greatest potential for growth.We are planning for another year of double-digit revenue growth in 2008 andhave, as a major objective, achievement of a positive operating cash flowquarter before the end of the year. Over the next five years, we intend tomake ongoing investments in clinical research and product development toestablish ICG in the treatment guidelines for heart failure and hypertension."
Conference Call Information
Michael K. Perry, Chief Executive Officer, and St