Cardiac Science reports net loss in first quarter after merger

9 November 2005

Bothell, WA, USA. Cardiac Science Corporation reported a net loss of $0.6 million for the third quarter, ending 30 Sept 2005.

Reported revenue for the third quarter increased by 22% over the third quarter of 2004 to $27.4 million, due principally to the effect of the merger with Quinton Cardiology Systems on 1 September 2005. Revenue for the quarter consisted mainly of diagnostic cardiology products and services, but also included $5.5 million of defibrillation products and services. Sales of products within the diagnostic cardiology lines remained consistent with the preceding quarter, although the distractions of the merger appeared to dampen the previously expected growth.

“The delays in obtaining regulatory approvals and the distractions related to the merger resulted in a suppressed performance during the quarter,” said John Hinson, president and chief executive officer of Cardiac Science. “We believe our revenue performance will improve in the fourth quarter, and remain confident that we will grow revenues even more significantly in 2006,” he added.

Gross profit for the three months ended September 30, 2005 increased to $12.3 million, resulting in a gross margin of 44.7%, an increase over the gross margin of 44.0% for the same period in the prior year. Excluding merger-related charges of approximately $0.7 million, pro forma gross profit for the three months ended September 30, 2005 would have increased to $13.0 million, or 47.4% of revenues. The improvement in gross margin is due to changes in sales mix, particularly from higher margins on defibrillation revenues, as well as ongoing cost reductions.

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