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Quarterly report [Sections 13 or 15(d)]

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2016

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 000-55039

BioTelemetry, Inc.

(Exact Name of Registrant as Specified in its Charter)

Delaware

46-2568498

(State or Other Jurisdiction of Incorporation or Organization)

(I.R.S. Employer Identification Number)

1000 Cedar Hollow Road

Malvern, Pennsylvania

19355

(Address of Principal Executive Offices)

(Zip Code)

(610) 729-7000

(Registrants Telephone Number, including Area Code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o

Accelerated filer x

Non-accelerated filer o

Smaller reporting company o

(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of April 22, 2016, 27,894,727 shares of the registrants common stock, $0.001 par value per share, were outstanding.

BIOTELEMETRY, INC.

QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED March 31, 2016

TABLE OF CONTENTS

Page
No.

PART I.

FINANCIAL INFORMATION

Item 1.

Financial Statements

4

Item 2.

Managements Discussion and Analysis of Financial Condition and Results of Operations

12

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

15

Item 4.

Controls and Procedures

15

PART II.

OTHER INFORMATION

Item 1.

Legal Proceedings

16

Item 1A.

Risk Factors

17

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

17

Item 3.

Defaults Upon Senior Securities

17

Item 4.

Mine Safety Disclosures

17

Item 5.

Other Information

17

Item 6.

Exhibits

17

SIGNATURES

18

2

Unless the context otherwise indicates or requires, the terms we, our, us, BioTelemetry, and the Company, as used in this Form 10-Q, refer to BioTelemetry, Inc. and its directly and indirectly owned subsidiaries as a combined entity, except where otherwise stated or where it is clear through the context that the terms refer only BioTelemetry, Inc. exclusive of its subsidiaries or a specific subsidiary of BioTelemetry, Inc.

FORWARD-LOOKING STATEMENTS

This document includes certain forward-looking statements within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995 regarding, among other things, our growth prospects, the prospects of our products and our confidence in our future. These statements may be identified by words such as expect, anticipate, estimate, intend, plan, believe, promises and other words and terms of similar meaning. Examples of forward-looking statements include statements we make regarding our ability to increase demand for our products and services, to leverage our MCOT TM platform to expand into new markets, our market share, our expectations regarding revenue trends in our segments and the achievement of cost efficiencies through process improvement and gross margin improvements. Such forward looking statements are based on current expectations and involve inherent risks and uncertainties, including important factors that could delay, divert, or change any of these expectations, and could cause actual outcomes and results to differ materially from current expectations. These factors include, among other things:

· our ability to identify acquisition candidates, acquire them on attractive terms and integrate their operations into our business;

· our ability to obtain and maintain adequate protection of our intellectual property;

· the effectiveness of our cost savings initiatives;

· our ability to educate physicians and continue to obtain prescriptions for our products and services;

· changes to insurance coverage and reimbursement levels by Medicare and commercial payors for our products and services;

· our ability to attract and retain talented executive management and sales personnel;

· the commercialization of new products;

· our ability to obtain and maintain required regulatory approvals for our products, services and manufacturing facilities;

· changes in governmental regulations and legislation;

· acceptance of our new products and services;

· adverse regulatory action;

· interruptions or delays in the telecommunications systems that we use;

· our ability to successfully resolve outstanding legal proceedings; and

· the other factors that are described in Item 1A. Risk Factors of our latest Annual Report on Form 10-K.

We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise, except as may be required by law.

(Unaudited)

March 31, 2016

December 31, 2015

ASSETS

Current assets:

Cash and cash equivalents

$

22,841

$

18,986

Accounts receivable, net of allowance for doubtful accounts of $11,698 and $11,185, at March 31, 2016 and December 31, 2015, respectively

16,420

15,179

Other accounts receivable, net of allowance for doubtful accounts of $494 and $416, at March 31, 2016 and December 31, 2015, respectively

8,063

8,997

Inventory

2,865

2,378

Prepaid expenses and other current assets

1,549

1,505

Total current assets

51,738

47,045

Property and equipment, net

26,267

25,554

Intangible assets, net

19,515

19,981

Goodwill

29,831

29,831

Other assets

1,580

1,732

Total assets

$

128,931

$

124,143

LIABILITIES AND STOCKHOLDERS EQUITY

Current liabilities:

Accounts payable

$

10,413

$

8,496

Accrued liabilities

9,727

11,230

Current portion of capital leases

253

287

Current portion of long-term debt

1,250

1,250

Deferred revenue

2,621

2,625

Total current liabilities

24,264

23,888

Deferred tax liability

1,254

1,233

Long-term portion of capital leases

51

101

Long-term debt

21,686

21,944

Deferred rent

1,017

1,051

Total liabilities

48,272

48,217

Stockholders equity:

Common stock$.001 par value as of March 31, 2016 and December 31, 2015; 200,000,000 shares authorized as of March 31, 2016 and December 31, 2015; 27,635,158 and 27,277,939 shares issued and outstanding at March 31, 2016 and December 31, 2015, respectively

28

27

Paid-in capital

272,830

272,070

Accumulated other comprehensive loss

(10

)

(12

)

Accumulated deficit

(192,189

)

(196,159

)

Total stockholders equity

80,659

75,926

Total liabilities and stockholders equity

$

128,931

$

124,143

Three Months Ended
March 31,

2016

2015

Revenues:

Healthcare

$

41,149

$

34,981

Research

5,393

5,428

Technology

2,098

3,026

Total revenues

48,640

43,435

Cost of revenues:

Healthcare

13,162

13,177

Research

3,255

2,953

Technology

1,596

2,082

Total cost of revenues

18,013

18,212

Gross profit

30,627

25,223

Operating expenses:

General and administrative

12,336

11,397

Sales and marketing

7,545

7,183

Bad debt expense

2,638

2,349

Research and development

1,786

1,965

Other charges

1,788

1,860

Total operating expenses

26,093

24,754

Income from operations

4,534

469

Interest and other loss, net

(423

)

(390

)

Income before income taxes

4,111

79

Provision for income taxes

(141

)

(148

)

Net income (loss)

$

3,970

$

(69

)

Other comprehensive income (loss):

Foreign currency translation gain (loss)

2

(11

)

Comprehensive income (loss)

$

3,972

$

(80

)

Net income (loss) per common share:

Basic

$

0.15

$

(0.00

)

Diluted

$

0.14

$

(0.00

)

Weighted average number of common shares outstanding:

Basic

27,370,825

26,934,707

Diluted

29,181,876

26,934,707

Three Months Ended
March 31,

2016

2015

Operating activities

Net income (loss)

$

3,970

$

(69

)

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

Provision for doubtful accounts

2,638

2,349

Depreciation

2,587

2,052

Decrease in deferred rent

(34

)

(14

)

Deferred income tax expense

21

148

Stock-based compensation

1,178

1,120

Amortization of intangibles

679

900

Accretion of discount on debt

55

49

Changes in operating assets and liabilities:

Accounts receivable

(2,945

)

(2,959

)

Inventory

(487

)

(456

)

Prepaid expenses and other assets

108

322

Accounts payable

1,917

(1,198

)

Accrued and other liabilities

(1,505

)

(450

)

Liability associated with the Civil Investigative Demand

(6,400

)

Net cash provided by (used in) operating activities

8,182

(4,606

)

Investing activities

Purchases of property and equipment and investment in internally developed software

(3,513

)

(2,072

)

Net cash used in investing activities

(3,513

)

(2,072

)

Financing activities

Payments related to the exercising of stock options and vesting of RSUs

(417

)

(900

)

Repayment of long-term debt

(313

)

Principal payments on capital lease obligations

(84

)

(136

)

Net cash used in financing activities

(814

)

(1,036

)

Net increase (decrease) in cash and cash equivalents

$

3,855

$

(7,714

)

Cash and cash equivalents - beginning of period

$

18,986

$

20,007

Cash and cash equivalents - end of period

$

22,841

$

12,293

Supplemental disclosure of cash flow information

Cash paid for interest

$

342

$

15

Cash paid for taxes

$

13

$

22

Three Months Ended
March 31,

2016

2015

(Net income (loss) in thousands)

Numerator:

Net income (loss)

$

3,970

$

(69

)

Denominator:

Weighted average shares used in computing basic net income (loss) per share

27,370,825

26,934,707

Potential dilutive common shares due to dilutive stock option and restricted stock units

1,811,051

Weighted average shares used in computing diluted net income (loss) per share

29,181,876

26,934,707

Net income (loss) per share:

Basic net income (loss) per share

$

0.15

$

(0.00

)

Diluted net income (loss) per share

$

0.14

$

(0.00

)

March 31, 2016

December 31, 2015

Raw materials

$

2,479

$

2,115

Finished goods

386

263

Total inventories

$

2,865

$

2,378

Three Months Ended
March 31,

2016

2015

Legal fees

$

1,369

$

1,628

Professional fees

168

12

Severance and employee related costs

251

220

Total

$

1,788

$

1,860

Stock Options

Restricted Stock Units

Performance Stock Units

Number of
Shares

Weighted
Average
Exercise Price

Number of
Shares

Weighted Average
Grant Date Fair
Value

Number of
Shares

Weighted Average
Grant Date Fair
Value

Stock outstanding as of December 31, 2015

3,420,519

$

6.69

690,936

$

6.85

265,990

$

8.68

Granted

282,270

9.67

177,212

9.87

Cancelled/Forfeited

(19,422

)

8.38

(7,405

)

9.57

Exercised/Vested

(125,650

)

3.37

(271,793

)

2.87

Stock outstanding as of March 31, 2016

3,557,717

$

7.04

588,950

$

9.57

265,990

$

8.68

Exhibit
Number

31.1

Certification of Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) promulgated under the Securities and Exchange Act of 1934, as amended.

31.2

Certification of Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) promulgated under the Securities and Exchange Act of 1934, as amended.

32.1

Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS

XBRL Instance Document

101.SCH

XBRL Taxonomy Extension Schema Document

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document

101.LAB

XBRL Taxonomy Label Linkbase Document

101.PRE

XBRL Taxonomy Presentation Linkbase Document

101.DEF

XBRL Taxonomy Definition Linkbase Document

BIOTELEMETRY, INC.

Date: April 26, 2016

By:

/s/ Heather C. Getz

Heather C. Getz, CPA

Senior Vice President and Chief Financial Officer

(Principal Financial Officer and authorized officer of the
Registrant)

The above information was disclosed in a filing to the SEC. To see the filing, click here.

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