Cambridge Heart, Inc. (OTCBB-CAMH), today reported results for its second quarter ended June 30, 2009. The following financial and strategic items highlight the Company’s activity for the second quarter.
- Revenue from the sale of Alternans equipment and sensors in the U.S. was $530,500, an increase of 4% compared to the same period in 2008, and a 2% sequential increase when compared to the first quarter of 2009. Domestic sales and placements of the Heartwave II system were 15 for the second quarter, compared to 10 systems in the same period in 2008, and 14 systems in the first quarter of 2009.
- In June, the Company entered into a non-exclusive development and distribution agreement with a leading U.S. stress manufacturer to develop an OEM MTWA Module which will be offered as an upgrade to the manufacturers’ existing installed base and as an option to new stress customers. The Company is progressing on the development of the Module and as previously disclosed, expects the Module to be ready for launch before the end of the third quarter of 2010. The Company continues to explore additional development and distribution opportunities.
Commenting on the results of the quarter, Cambridge Heart CEO Ali Haghighi-Mood said, “Despite the general weakness in sales of medical capital equipment due to the continued challenging economic conditions, sales of our Alternans products in the U.S. during the second quarter were slightly better than the same quarter last year and the first quarter of 2009. The results indicate that the recent restructuring of our sales organization has improved the cost effectiveness of our direct sales force.” Mr. Haghighi-Mood added, “We are clear, however, that we need to continue to identify and execute on additional opportunities which could expand the scope of our distribution capabilities, and in turn, drive broader adoption and utilization of our technology.”
Financial Results for the three and six months ended June 30, 2009
Total revenue for the three months ended June 30, 2009 was $793,000, a decrease of 14% from total revenue of $927,000 reported during the same period of 2008. On a sequential basis, total revenue decreased $43,000, or 5%, from total revenue of $836,000 for the quarter ended March 31, 2009. The decrease in revenue for both periods was due to lower sales of our stand-alone stress products, primarily sold through third party distributors in the U.S. and internationally, and lower sales of our Alternans products outside the U.S. Total revenue for the six months ended June 30, 2009 and 2008 was $1,629,000 and $2,104,000, respectively.
Cost of sales for the second quarter of 2009 was $463,000 compared to $525,000 in the same period in 2008. Gross margin as a percent of revenue for the second quarter was 42% compared to 43% for the same period last year. Cost of sales for the six months ended June 30, 2009 and 2008 was $956,000 and $1,085,000, respectively. Gross margin as a percent of revenue for the six months of 2009 and 2008 was 41% and 48%, respectively. The decrease in gross margin as a percent of revenue is primarily attributable to the lower sales volume relative to our fixed manufacturing overhead costs.
Selling, general and administrative expenses for the three month period ended June 30, 2009 were $2,018,000, a decrease of $837,000 or 29%, compared to the second quarter of 2008. For the six month period ended June 30, 2009, selling, general and administrative expenses were $4,451,000, a decrease of $1,458,000 or 25%, compared to the same period last year. The decrease in selling expense from the 2008 periods was primarily driven by lower selling expenses as a result of expense reductions implemented at the end of the first quarter of 2009, and lower sales of commissionable products. Also, the 2008 periods included commission costs related to the co-marketing agreement with St. Jude Medical, which are no longer recurring. General and administrative expenses were also lower compared to the 2008 periods due to lower non-cash compensation expense and lower legal expenses.
The operating loss for the second quarter of 2009 was $1,780,000, compared to an operating loss of $2,630,000 for the same period in the prior year. Included in the operating loss for the three-month periods in 2009 and 2008 was $497,000 and $730,000, respectively, of non-cash stock-based compensation expense, which relates to previously granted stock options and restricted stock awards. The net loss for the 2009 second quarter was $1,779,000 or $0.03 per share, compared to a net loss of $2,559,000, or $0.04 per share, in the comparable 2008 period. The operating loss for the six months ended June 30, 2009 was $3,944,000 compared to an operating loss of $5,178,000 for the same period in the prior year. Included in the operating loss for the six-month periods in 2009 and 2008 was $1,010,000 and $1,473,000, respectively, of non-cash stock-based compensation expense, which relates to previously granted stock options and restricted stock awards. The net loss for the six-month period was $3,934,000 or $0.06 per share, compared to a net loss of $4,941,000, or $0.08 per share, in the comparable 2008 period.
The Company’s cash used by operations for the three and six months ended June 30, 2009 was $1,179,000 and $2,380,000, compared to $1,242,000 and $2,239,000, respectively, for the same periods in 2008. The increase in cash use for the six-month period in 2009 compared to 2008 is primarily attributable to lower revenue, which was partially offset by lower SG&A expense. The Company ended the second quarter of 2009 with unrestricted cash and cash equivalents of $3,819,000.
The Company currently has a total of 69.1 million shares of common stock and common stock equivalents issued and outstanding, including the effect of converting the Series A preferred stock and Series C preferred stock. In addition, there are options and warrants outstanding to purchase 7.4 million common equivalent shares, bringing the fully diluted share count to 76.5 million common equivalent shares.
Questions can be directed to the Company’s management or its investor relations agent at the contact numbers or email addresses noted above.
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