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To: Bill Harmond who wrote (50277)	7/1/2009 10:07:23 AM
From: Bill Harmond	Read Replies (1) of 57684

01-Jul-09 09:10 ET In Play CardioNet: Reduces annual guidance ahead of the quarter - Brean Murray (16.32 ) -Update : Brean Murray notes late last night, BEAT announced that it would miss its previous annual guidance. They believe that higher copays associated with MCOT recording affected penetration, as patients simply were unwilling or unable to pay. Since commercial payors reimburse the co based on the number of days that the monitor is worn, an additional plausible explanation is that cardiologists are not prescribing MCOT for the full 14 days. Since commercial revs make up over 50% of patient-derived revs, the rev impact is meaningful. While the rev shortfall is only a 10% reduction, the adjusted EPS hit is well over 50% below prior guidance. Gross margins are unlikely to explain the entirety of the shortfall, so their gut reaction is to blame the massive expansion effort that the co undertook in the first half of the year; they believe the leverage will take longer to materialize than they had previously assumed. Clearly, mgmt's promise of $2 in EPS in 2011 is severely at risk.

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