Cambridge Heart announces financial results for the third quarter of 2009

Cambridge Heart, Inc. (OTCBB-CAMH), today reported results for its third quarter ended September 30, 2009. The following financial and strategic items highlight the Company’s activity for the third quarter.

Revenue for the three and nine months ended September 30, 2009 was $798,000 and $2,427,000, respectively. Sequentially, domestic sales and placements of the Heartwave II system remained relatively stable at 16 units, compared to 15 in the second quarter of 2009.

In June 2009, the Company entered into a non-exclusive development, supply and distribution agreement with Cardiac Science Corporation, a leading U.S. stress manufacturer, to develop an OEM MTWA Module to be integrated with Cardiac Science’s stress systems. On November 12, 2009, the Company reported that it has completed the prototype development of the module, which is now subject to industry standard validation and verification processes, and regulatory approval. The Company expects the Module to be ready for launch between the first and 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, “Revenue remained level during a period when buying patterns in the healthcare industry continue to be impacted by the economy and uncertainty surrounding healthcare. It is the same set of factors that makes us especially encouraged about our prospects as we move forward with augmenting our business and selling model with our new OEM program.”

Mr. Haghighi-Mood added, “I’m pleased with the progress that has been made in collaboration with our partner, Cardiac Science, on the OEM MTWA Module development. We look forward to the launch of this product as part of our mission to make MTWA testing more accessible in the general cardiology space, where 10 – 12 million high risk cardiac patients undergo routine clinical evaluations.”

Financial Results for the three and nine months ended September 30, 2009

Total revenue for the three months ended September 30, 2009 was $798,000, a decrease of 29% from total revenue of $1,122,000 reported during the same period of 2008. On a sequential basis, total revenue remained relatively flat, increasing $5,000, or 1%, from total revenue of $793,000 for the quarter ended June 30, 2009. Revenue from the sale of Alternans equipment and sensors in the U.S. for the three months ended September 30, 2009 was $450,000, a decrease of 44% compared to the same period in 2008. Sequentially, domestic sales and placements of the Heartwave II system were 16 for the third quarter, compared to 15 systems in the second quarter of 2009. Total revenue for the nine months ended September 30, 2009 was $2,427,000, a decrease of 25% compared to total revenue of $3,227,000 reported for the same period last year. Revenue from the sale of Alternans equipment and sensors in the U.S. for the nine months ended September 30, 2009 was $1,503,000, a decrease of 34% compared to the same period in 2008. The decrease in revenue for the nine month period was primarily due to fewer sales of Heartwave II in the U.S.

Cost of sales for the third quarter of 2009 was $456,000 compared to $597,000 in the same period in 2008. Gross margin as a percent of revenue for the third quarter in 2009 was 43% compared to 47% for the same period last year. Cost of sales for the nine months ended September 30, 2009 and 2008 was $1,411,000 and $1,682,000, respectively. Gross margin as a percent of revenue for the nine months ended September 20, 2009 and 2008 was 42% 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 September 30, 2009 were $1,932,000, a decrease of $630,000, or 25%, compared to the third quarter of 2008. For the nine month period ended September 30, 2009, selling, general and administrative expenses were $6,383,000, a decrease of $2,104,000, 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 stock based compensation and lower legal and consultative expenses.

The operating loss for the third quarter of 2009 was $1,681,000, compared to an operating loss of $2,141,000 for the same period in the prior year. The net loss for the 2009 third quarter was $1,681,000, or $0.03 per share, compared to a net loss of $2,107,000, or $0.03 per share, in the comparable 2008 period. The operating loss for the nine months ended September 30, 2009 was $5,625,000 compared to an operating loss of $7,335,000 for the same period in the prior year. The net loss for the nine-month period was $5,616,000, or $0.09 per share, compared to a net loss of $7,049,000, or $0.11 per share, in the comparable 2008 period. Included in the operating loss for the three and nine-month periods in 2009 and 2008 was $497,000 and $480,000, and $1,507,000 and $1,953,000, respectively, of non-cash stock-based compensation expense, which relate to previously granted stock options and restricted stock awards.

The Company’s cash used by operations for the three and nine months ended September 30, 2009 was $1,222,000 and $3,602,000, compared to $1,667,000 and $3,906,000, respectively, for the same periods in 2008. The decrease in cash use for the nine-month period in 2009 compared to 2008 is primarily attributable to the expense reduction initiative implemented in March 2009. The initiative included a 33% reduction in headcount, which impacted all of our operational areas, including a restructuring of the direct sales organization to improve cost effectiveness. The Company ended the third quarter of 2009 with unrestricted cash and cash equivalents of $2,595,000.

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 5.9 million common equivalent shares, bringing the fully diluted share count to 75.0 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.

Source Cambridge Heart, Inc.