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BioTelemetry, Inc. Message Board

  • tery30938 tery30938 Nov 14, 2009 12:38 AM Flag

    10-Q Lowlights Part 2 with Company's Punch Line

    On April 2, 2009 CardioNet entered into a Merger Agreement to acquire Biotel Inc. for $14.0 million.  On July 14, 2009, CardioNet exercised its contractual right to terminate the Merger Agreement due to Biotel’s breach of certain covenants in the agreement.  The next day, CardioNet notified Biotel of its obligation to pay the Company $1.4 million for a termination fee and expenses in accordance with the Merger Agreement.  On or about July 16, 2009, Biotel subsequently commenced litigation against CardioNet in Minnesota District Court in Hennepin County, Fourth Judicial District, alleging that CardioNet had breached and improperly terminated the Merger Agreement. CardioNet removed the action to the United States District Court for the District of Minnesota on the basis of diversity jurisdiction, and Biotel did not seek to remand the action. Biotel is seeking specific performance and damages (the amount of which is currently unspecified). CardioNet has counterclaimed under the terms of the Merger Agreement for its termination fee and associated expenses; the current amount of that counterclaim is $1.4 million.  The case is to be ready for trial by July 15, 2010. Discovery is underway.  The Company plans to vigorously defend its position and prosecute its counterclaim. At this time, it is not possible to determine the likelihood or amount of liability, if any, on the part of the Company. Consistent with ASC 450-20-25, no accrual has been recorded in the financial statements.

    On July 10, 2009, Highmark announced a reduction in the reimbursement rate for our MCOT™ services to $754 per service, a reduction of approximately 33%. This new rate went into effect on September 1, 2009. We have also experienced a decline in our commercial carrier pricing. The decline in reimbursement rates has had a negative impact on the Company’s revenue and operating results, and has presented significant challenges to the viability of the Company’s current business model. Several strategic initiatives are currently being implemented, including cost efficiency measures and a continued focus on sales volume growth. The Company intends to continue to work with Highmark and CMS to achieve an appropriate national rate in the future, and will continue to evaluate its strategic options.

    In the first nine months of 2009 a limited number of commercial payers have requested price reductions based on our Medicare reimbursement rates. Due to the reduction of our Medicare reimbursement rate that took effect on September 1, 2009, we may experience additional pressure from insurance payers to reduce commercial pricing. A decrease in commercial pricing would adversely affect our financial results.

    AND HERE IS THE PUNCH LINE:

    "Furthermore, if the current reimbursement rate remains in effect, the Company may not be economically viable under its current business model."

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