Second Quarter Highlights

* Appointed Joseph H. Capper as President and Chief Executive Officer
* Achieved gross margin of 63% on revenues of $32 million
* Improved operating results with a loss of $0.09 per diluted share, a $0.14 improvement over the first quarter 2010. On an adjusted basis, the loss per diluted share was $0.02, an $0.11 improvement over the first quarter 2010
* Increased MCOTTM patient volume 12% as compared to the second quarter 2009, bringing the total number of patients monitored by MCOTTM since inception to over 350,000
* Commercial reimbursement rates in the first half of 2010 remained stable with the year-end 2009 rates
* Reduced DSO to 104 days, a reduction of 9 days compared to the first quarter 2010
* Completed initiatives that will yield previously announced $15 million in cost reductions
* EBITDA positive ahead of schedule
* $50 million in cash and investments with no outstanding debt as of June 30, 2010

Financial Results

Revenues for the second quarter 2010 were $31.9 million, a decrease of 16.5% compared to $38.3 million in the second quarter 2009. Increased MCOTTM patient volume during the second quarter 2010 drove additional revenues, but was offset by the impact of the 2009 Medicare and commercial rate reductions. For the three months ended June 30, 2010, payor revenue mix was 34% Medicare and 66% commercial and volume mix was 43% Medicare and 57% commercial.

Gross profit for the second quarter 2010 decreased to $20.1 million, or 62.9% of revenues, compared to $26.3 million, or 68.7% of revenues, in the second quarter 2009. Second quarter 2010 gross profit margin was impacted by the 2009 Medicare and commercial rate reductions, partially offset by increased MCOT patient volume and efficiency improvements that reduced the cost of services.

On a GAAP basis, operating expenses for the second quarter 2010 were $22.3 million, a decrease of 7.8% compared to $24.2 million in the second quarter 2009. Operating expenses on an adjusted basis declined by 14.3% compared to the prior year quarter, excluding $1.7 million in the second quarter 2010 and $0.2 million in the second quarter 2009 related to restructuring and other nonrecurring charges. The decrease in operating expenses was driven by the Company’s cost reduction initiatives across all of the Company’s expense line items in response to the Medicare rate reduction.

On a GAAP basis, net loss for the second quarter 2010 was $2.1 million, or a loss of $0.09 per diluted share, compared to net income of $1.6 million, or $0.07 per diluted share, for the second quarter 2009. Excluding expenses related to restructuring and other charges, adjusted net loss for the second quarter 2010 was $0.4 million, or a loss of $0.02 per diluted share. This compares to adjusted net income of $2.7 million, or $0.11 per diluted share, for second quarter 2009, which excludes the impact of restructuring and other charges.

Total cash and investments were $50.2 million as of June 30, 2010, compared with total cash and investments of $49.2 million as of December 31, 2009, an increase of $1.0 million. Net accounts receivable declined $6.7 million compared to year end 2009. As a result, the second quarter DSO declined to 104 days, an 18 day reduction compared to year end 2009.

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Highlights and Recent Developments

* Increased patient volume in the third quarter by 46.8% over the third quarter of 2008

* Monitored over 260,000 patients nationally since the Company’s inception

* Increased revenue to $33.3 million in the third quarter, up 6.8% over the third quarter of 2008

* Signed 42 new payor contracts year-to-date, covering approximately 7 million lives and bringing the total number of covered lives to nearly 200 million

* Recognized as a Deloitte Fast 50 Company in Philadelphia and Fast 500 Company Nationally

* Awarded 15th U.S. Patent which covers Biological Signal Management (12 additional U.S. patents are pending; 12 international patents have been issued and 29 are pending)

* Rebilled 100% of older net receivables; experienced positive trends in the collection of current receivables

* $43 million in cash and no debt as of September 30, 2009

Financial Results

Revenues for the third quarter of 2009 increased to $33.3 million compared to $31.2 million in the third quarter of 2008, an increase of $2.1 million, or 6.8%. For the third quarter, the Company’s payor mix was 38% Medicare and 62% commercial. While the increased patient volume drove additional revenue, it was offset by the September 1, 2009 decrease in Medicare reimbursement as well as the declining commercial reimbursement trends as disclosed in the Company’s June 30, 2009 press release. Gross profit increased to $21.5 million in the third quarter of 2009, or 64.5% of revenues, compared to $21.2 million in the third quarter of 2008, or 67.9% of revenues.

On a GAAP basis, operating loss was $5.9 million in the third quarter of 2009 compared to operating income of $1.4 million in the third quarter of 2008. Excluding $1.3 million of expense primarily related to restructuring, adjusted operating loss was $4.6 million in the third quarter of 2009. This compares to adjusted operating income of $4.3 million in the third quarter of 2008, which excludes $2.9 million of expense related to the integration of PDSHeart and other restructuring efforts in the prior year period.

On a GAAP basis, net loss for the third quarter of 2009 was $5.4 million, or a loss of $0.23 per diluted share, compared to net income of $1.0 million, or $0.04 per diluted share, for the third quarter of 2008. Adjusted net loss for the third quarter of 2009 was $2.4 million, or a loss of $0.10 per diluted share, excluding expenses primarily related to restructuring. This compares to adjusted net income of $2.6 million, or $0.11 per diluted share, for the third quarter of 2008, which excludes the impact of integration, restructuring and other nonrecurring charges.

Revenues for the nine months ended September 30, 2009 increased to $107.3 million compared to $86.0 million in the comparable period in the prior year. For the nine months of 2009, gross profit increased to $71.7 million, or 66.8% of revenues, compared to $56.7 million, or 65.9% of revenues, in the comparable period in the prior year.

On a GAAP basis, operating loss for the first nine months of the year was $5.1 million compared to operating income of $3.3 million in the comparable period in the prior year. Excluding $4.5 million of expense related to restructuring and costs incurred in connection with the since-terminated merger agreement to acquire Biotel Inc., adjusted operating loss was $0.7 million in the first nine months of 2009. This compares to adjusted operating income of $8.1 million in the first nine months of 2008, which excludes $4.8 million of integration, restructuring and other nonrecurring charges.

Net loss for the first nine months of 2009 was $4.6 million, or a loss of $0.19 per diluted share, compared to net income of $2.3 million, or $0.10 per diluted share, for the first nine months of 2008. Adjusted net loss for the first nine months of 2009 was $0.1 million excluding expenses related to restructuring and costs incurred in connection with the since-terminated merger agreement to acquire Biotel Inc. This compares to adjusted net income of $5.0 million, or $0.23 per diluted share, for the first nine months of 2008, which excludes the impact of integration, restructuring and other nonrecurring charges.

On a GAAP basis, net loss available to common shareholders, which is derived by reducing net income by the accrued dividends and accretion on mandatorily redeemable convertible preferred stock was a loss of $4.6 million, or a loss of $0.19 per diluted share, for the nine month period ended September 30, 2009, compared to a net loss of $0.3 million, or a loss of $0.02 per diluted share, for the same period last year. The mandatorily redeemable convertible preferred stock, which was issued in part to finance the March 2007 PDSHeart acquisition, was converted to common stock in connection with CardioNet’s March 2008 initial public offering.

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Randy Thurman, Chairman, President and CEO of CardioNet, Inc., said, “CardioNet strongly believes that this reduction is unjustified and will immediately pursue with Highmark and CMS a methodology that appropriately values MCOT technology and related services. This review with Highmark and CMS will reinforce for Medicare the demonstrated benefit of Mobile Cardiac Outpatient Telemetry in detecting cardiac arrhythmias and improving the health of Medicare beneficiaries.”

“We are strong proponents and supporters of the very real need to manage the cost of healthcare. We believe that early diagnosis through innovation in technology is fundamental to the provision of high quality health care and a cost efficient US healthcare system. Nearly 250,000 patients have been enrolled in MCOT to date with physicians and patients greatly benefiting from the CardioNet MCOT technology and service. We have made it our mission at CardioNet to educate the medical community about the value of wireless medicine in the diagnosis and detection of disease and we will further increase our efforts to demonstrate its potential to substantially lower costs to both patients and payors.”

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