CardioDynamics International Corporation (CDIC)

Q3 2008 Earnings Call

October 9, 2008 4:30 pm ET

Executives

Michael K. Perry - Chief Executive Officer, Director

Steve P. Loomis - Chief Financial Officer, Vice President Finance, Corporate Secretary

Rhonda F. Rhyne - President

Analysts

Budd Ledum - Analyst

Steve Kruger - Analyst

Presentation

Operator

Good afternoon, ladies and gentlemen and welcome to CardioDynamics' third quarter 2008 financial conference call. (Operator Instructions) It is now my pleasure to turn the floor over to your host, Michael K. Perry. Sir, the floor is yours.

Michael K. Perry

Thank you, David and welcome, everyone, to the call. With me I have Rhonda Rhyne, our President, and Steve Loomis, our Chief Financial Officer. And before we get started today, let me turn the floor over to Steve.

Steve P. Loomis

Sure. I’d like to quickly walk through the Safe Harbor language. Obviously we’re precluded from disclosing any material non-public information but we are happy to discuss our progress to date. Our discussion this afternoon may contain predictions, estimates, and other forward-looking information and use of the words estimate, expect, project, and similar expressions are intended to identify those statements. These statements represent our current judgment on what the future holds and we believe them to be reasonable. However, these statements are of course subject to risks and uncertainties that could cause the actual results to differ materially from what we expect. Important factors relating to our business are described in the risk factors section of our annual report. Mike.

Michael K. Perry

Steve, thank you very much and good afternoon, everyone. We appreciate all of you joining us for today’s call and I know it was a tumultuous day in the markets today so we especially appreciate you making time for the call. We are very pleased to report our third quarter results. These were certainly amidst a tough economic climate, turbulent financial markets, but we are very pleased to report 15% top line growth year-to-date and 8% during the quarter. This marks our seventh consecutive quarter of year-over-year revenue growth and the best year-to-date growth that we’ve experienced in the last four years.

We also achieved a very significant company milestone and generated positive operating income of $17,000 during the quarter; that’s when you exclude $271,000 of non-cash charges for depreciation, amortization, and equity compensation, so a very nice milestone indeed. Many of you know that achieving a positive operating income has been an important goal of ours for some time now and we were pleased to achieve it one quarter earlier than we had actually planned and also at an appreciably lower revenue level than we anticipate achieving for the fourth quarter. It’s a continued testimony to the diligence of our employees who labored hard and worn many hats on our road back to profitability.

Year-to-date, our EBITDA loss is down 75% or $2.5 million. We’ve significantly improved our operating expense structures and gross margin to generate an additional $2.4 million of operating income on $2.3 million of revenue growth generated thus far this year. 2008 is shaping up to be a solid year for us and it gives us continued confidence that we have the business back on a growth path following the declining years that resulted from the Medicare hypertension reimbursement restriction.

But we did see some tightening credit conditions during the quarter for our physician office customers, a number of whom were unable to achieve lease financing for our systems. This impacted approximately 10 customer deals, or roughly $300,000 in lost revenue opportunity for the quarter, so clearly the conditions that are affecting the economy at large do to some degree affect our customers. Fortunately it was relatively small in the grand scheme of things.

Sales growth in the third quarter was driven by a 35% increase in international sales, a 12% increase in ICG device sales, and a 10% improvement in average unit sales price for our ICG monitors. Our gross margins continued to expand, up to 75% during the quarter. This was three percentage points higher than the same period a year ago and up nearly four percentage points over last quarter. Our margins benefited from higher average unit sales prices, reduced manufacturing overhead costs, and lower inventory reserve requirements, which Steve can speak to a little later.

We continued to keep a tight handle on our operating expenses. We reduced them by 8% in the quarter and it occurred equally across research and development, G&A, and sales and marketing.

We are also pleased to announce during the quarter an important milestone of having our BioZ ICG technology integrating with General Electric healthcare systems, EMR or electronic medical records system.

It’s truly gratifying to see the continued progress in growing top line revenue and reducing operating loss. Our employees have worked exceptionally hard and we look forward to continuing these improving trends.

So why don’t we take a few moments to look closer at the numbers? Steve, could you help us there?

Steve P. Loomis

Sure, Mike. First I want to hit some sales analytics. We’ll talk about the product mix, the channel performance, and then some market penetration numbers. Then I’ll quickly hit some highlights on the P&L and balance sheet.

Our third quarter sales, as we’ve already mentioned, were at $6.1 million, which was up $575,000, or about 8% over the same quarter a year ago and our year-to-date sales were up 15% over the first three quarters of 2007. We sold 220 ICG units in the third quarter and that’s up 12% from the same quarter a year ago and to date we’ve sold nearly 8,500 ICG units cumulatively. That’s up 12% also from that number one year ago.

Now of the 220 units, we sold 117 BioZ systems, which includes 110 BioZ DX units, and those are our newest version of the product, and 17 of those were trade-ins of our previous generation BioZ.com. This is an ongoing upgrade plan to move customers to our newest technology and improve the utilization of the systems. We also sold 87 ICG modules in the quarter and that’s up 14% from 76 a year ago, and one of the interesting things this quarter is that one of our newest customers, Mind Ray, bought 70 of those modules this last quarter. They bought zero a year ago. We now have over 2,000 modules sold to date.

Now, looking at the razor blade aspect of our business, our ICG sensors, we sold 228,000 sensor sets during the quarter and that generated about $1.7 million of revenue, or 28% of our sales. We now have over 6.9 million ICG sensors shipped in the last 10 years.

Looking at our channel performance, our most important channel, the biggest channel for us is our direct sales force where we sold 5.3 million in sales in the third quarter, and that was up 9% from a year ago same quarter. And during the quarter, we hired 13 new sales and clinical personnel to replace both open positions and also expand the sales force. That brought our domestic field sales up 10% to 68 field sales people.

On the international front, we have just three people but they generated $690,000 of revenue and that’s up 35% from the same quarter a year ago, and that number includes our Medis division that’s in Germany, where they sold about $340,000, up 8% from a year ago from that division.

Looking at the market penetration, cumulatively we have about 89% of our standalone devices in the domestic market and about 11% international and of that domestic market, 90% are in physician office and about 10% are in the hospitals. In the physician market, where 90% of the units are sold, we have about 5.8% penetration in that domestic outpatient market. The biggest areas where we have the highest penetration is the CHF clinics, where about one out of every five clinics have our device. In the cardiology area, one out of six have our device. Internal medicine is about one out of 20, and then a little less than that in the family practice and the GP market.

In terms of the quarter sales, we sold 27% into that cardiology area, 34% into internal medicine, and 30% into the FPGP market, and that’s pretty typical for us, is about a third, a third, a third.

Now in the hospital market, where we are only about less than 0.5% penetrated, we sold 33% cumulatively into the critical care area, 33% into the cardiac services, and then about 6% into ED, 2% into anesthesia, and the highest penetration area in the in-patient markets in the ICU CCU, we’re at 5%, or about one out of 20, and 3.6% in the cardiac services area.

So let’s move to the P&L and quickly hit some of the highlights. We had a nice strong gross margin in the quarter at just under 75%, and that’s up from 72.2% in the third quarter and up from 71.3% last quarter, our second quarter. The main drivers for that were our operating headcount was down and our obsolescence expense was also down. As we mentioned on the call last time with Russ Bergen’s retirement at the end of last quarter, that VP of Operations position was absorbed by our executive team. I took on the manufacturing materials and quality area, Mike Perry took on responsibility for human resources, our Chief Technical Officer, Don, took on facilities and then Rhonda took on the customer service and tech service areas. So we allocated those out and saved that incremental headcount.

On the overall operating expenses, they were down 8% at $4.8 million, and that was pretty evenly decreased across the board -- sales and marketing, R&D, and G&A. We’ll take a look quickly at those. Sales and marketing was down 8% at $3.7 million. We now have a worldwide sales force of 71 sales people and that’s up 11% from a year ago and the biggest drivers of the decrease there were a decrease in our bad debt expense during the quarter, as well as a decrease in the shared department allocations for things like facilities, HR, and IT.

In the research and development area, it was down 8% also and that’s continued to run right about 6% of sales. We ended the quarter with 10 in our R&D group and in the general and administrative area, we have 16 people and that’s down 6% from a year ago as well. The overall reduction there was 8% at $714,000 and that, we’ve seen some nice steady decrease in the overall G&A area at 12% of sales in the third quarter. In 2006, that number was 16% and in 2007, 14% and now we are at 12% so far this year.

The overall operating loss was $253,000 and that’s down just over $900,000, or 78% from the same quarter a year ago, where we lost $1.2 million and it’s half of what we lost just one quarter ago in the fourth quarter. And obviously one of our important measures that Mike has already mentioned is the EBITDA calculation. That’s earnings before interest, taxes, depreciation, impairment, amortization, and equity comp and that was a $17,000 income during the quarter, down 102% from $930,000 a year ago. And year-to-date, that EBITDA loss is at $822,000 and that’s down $2.5 million, or about 75% from the first three quarters of ’07, significant improvement in that area.

Other expense during the quarter was $175,000. That primarily relates to interest and accretion on the convertible notes, and then our net loss from continuing operations was down 68% at $432,000. That’s $0.06 per share loss versus 12% one year ago.

Just a couple of quick highlights on the balance sheet -- our cash was at $6.3 million and we earned $461,000 from operations during the quarter. That’s a 61% improvement from a year ago where we burned $1.2 million. Our trade AR was up 3% at $3.9 million but that was on sales increase of 8%, so that drove our day sales outstanding down to 57 days during the quarter.

Our inventory was actually down $900,000 from a year ago and more than half of that was actually fewer parts in stock and then about $350,000 was due to higher reserve provisions on our BioZ.com systems. Overall total assets, $16.4 million, total liabilities, 8.8, leaving us with a shareholder equity of about $7.2 million.

So that’s the highlights. Mike, if you want to continue on.

Michael K. Perry

Thank you, Steve. We would now like to spend a few moments to discuss our outlook for the fourth quarter and provide a preliminary look into fiscal 2009. Fourth quarter has historically been our strongest during each fiscal year and we are planning for that to be the case again this year. We are a little cautious with the deteriorating economic climate and tightening credit conditions, so growth for the entire year may come in a couple of percentage points below our original 15% goal set last year but still very respectable performance in this difficult time.

We should generate positive EBITDA again in the fourth quarter, improving this important business metric by approximately 80% during 2008. Another important goal we have is to generate positive operating cash flow in the fourth quarter and we should be very, very close to achieving that goal as well.

As we look out into fiscal 2009, we are conservatively planning for a 10% top line growth, which would equate to approximately $27 million in revenue and hopefully we’ll have the opportunity to overachieve that conservative plan.

Two additional goals for 2009 are to generate positive EBITDA for the entire year and be slightly cash flow positive for the year as well. We’ve now grown the business seven consecutive quarters and plan to continue this steady progress throughout 2009 and we’ve made substantial efforts to accelerate our return to profitability and we are on track to improve the operating loss from continuing operations in 2008 by over 60% and the EBITDA loss by nearly 80% for the year.

So across the company, spirits are high. They were certainly high as we felt a recovery year in 2007. We’ve been able to accelerate growth in 2008 amidst a difficult economic climate and our entire company is intensely focused on continuing our growth trends in 2009 and running very hard to restore profitability and increase shareholder value.

As you look at the improving fundamentals in our business and the continued prospects for growth moving forward, as I look at the market value for the company, it just appears exceptionally undervalued at below 0.4 times current year’s revenue. Of course, there’s probably a lot of CEOs out there feeling the same way about their stock amidst these difficult times but certainly in our case, we feel like we are way under any sort of any reasonable value.

I would like to turn it over to Rhonda for just a few moments to discuss a couple of our new revenue growth initiatives.

Rhonda F. Rhyne

Sure. Thanks, Mike. As we look out over the next three to five years, the major growth drivers that we’ve identified for ICG include clinical evidence, guidelines, expanded reimbursement, customer satisfaction, and customer education. And out of those five drivers, we feel we have immediate, direct control over customer satisfaction and customer education. So this quarter, we are introducing two new strategic programs called -- one is a C3 and the second one is BioZ certified. And these programs are designed to help us drive customer satisfaction and ICG education and proper utilization.

The C3 program is our comprehensive customer care program and it’s really designed around customer care, satisfaction, and usage from the time that the customer buys the unit to the end of the life or upgrade. We refer to this as cradle-to-grave care. In this quarter, we rolled our phase one, which defines seven customer visits within the first six months after the date of installation. And our TMs and CASs are partnering to alternatively make those seven visits and then, in conjunction with that, our reimbursement department will make two contacts with the account within the first 60 days to ensure proper billing, answer any questions on reimbursement, and again focus on customer satisfaction.

So that’s the C3. If we look at the BioZ certified program, it’s really a comprehensive global approach toward ICG education. We’re mapping this program, which starts with certification of all of our TMs and CASs, tech service department, and then it extends out to every point of the physician office, from the patient to the receptionist, to the technicians, the office biller, and the physician. Our goal is to have every person in the physician office knowledgeable to some level on ICG and whenever they see a heart failure, shortness of breath, or resistant hypertensive patient, they immediately think ICG.

This summer we received approval for an educational program for continuing medical education units so that physicians, physician assistants, and nurses could be trained on ICG and also at the same time receive the requisite educational credits that are required for their professional license share. So now as they get trained on ICG, they can also get those CME credits.

We’ve also created a training program to certify the technicians and everybody likes certification so this will give them extra motivation to really know more about the ICG. The BioZ certified program also extends to insurance payers, medical associations, patient advocacy groups, pharma device companies, and medical schools. Basically our goal is to have every person or entity that deals with heart failure, shortness of breath, or hypertensive patients to know the value of ICG.

And lastly, Mike, I thought it might be interesting to briefly share just a few recent customer survey results with our shareholders. First of all, we were very pleased to find that an astounding 96% of our customers found that BioZ is useful in helping to treat their patients, with 21% saying they would not practice without ICG. Very pleased with those -- 63% responded that they were satisfied to extremely satisfied with the return on our investment, and these two programs, the C3 and BioZ certified, the goal is to get 100% of our customers extremely satisfied with both the clinical and return on investment.

Michael K. Perry

Rhonda, thank you very much for updating us on those programs and Steve for the financial results. I would now like to open it up for any questions.

Question-and-Answer Session

Operator

(Operator Instructions) We’ll take the first question from Budd [Ledum]. Your line is live.

Budd Ledum - Analyst

Hi, guys. Exceptional gross margin in the quarter, congratulations there. I was just wondering on the $300,000 in revenue that you said fell out in the quarter, if you could characterize that -- were these orders that were not able to be financed? Or maybe if you could just provide a little color there.

Michael K. Perry

Yes, Budd, that was precisely the challenge. They were customers that wanted to purchase and when they went through the credit approval process found a tighter condition than what we had previously seen, so a customer that probably would have been financed two or three quarters ago wasn’t able to get financed this past quarter.

I think their interest continues in the technology so at some future point when the credit availability loosens up a little bit, I think that will be a good opportunity to go back to those customers.

Budd Ledum - Analyst

Okay, and could you just maybe characterize the physician market at this point? Obviously that’s 90% of your revenue. Just in terms of what you are seeing -- I mean, would your expectation be that we will probably see -- I guess obviously given the credit conditions, you know, more of these orders fall out or what type of feedback are you getting, at least amongst some of the customers that your sales force is hitting right now?

Michael K. Perry

I don’t think it will be much different than what we experienced last quarter. It doesn’t appear to have gotten worse but I think it’s going to be a little bit of a drag on revenue, just like we experienced. I mean, $300,000 on $6 million plus obviously is -- it’s recognizable but it’s not catastrophic and I think we’d have sort of the same anticipation as we are flowing through the fourth quarter right now.

Budd Ledum - Analyst

Okay, and then just in terms of -- I know you mentioned Q4 is seasonally your strongest quarter. On a sequential basis, revenue was down slightly and I know part of that is the $300,000 but is there any seasonality in the other quarters that is tangible?

Michael K. Perry

Yes, the way our seasonality works really every year is the first quarter is the lightest, and the reason for that is our fiscal year begins in December, so you have December, January, February. You’ve got the holidays, Christmas, New Year’s, you’ve got a national sales meeting that takes our field employees out of the field for the better part of a week. So when you count the number of work days in the first quarter versus the fourth quarter, you are about 11%, 12% fewer work days than the preceding quarter.

So typically then the second quarter is better than the first. Third quarter and second quarter most often are neck and neck. The third quarter can be slightly ahead of second quarter or slightly below second quarter and you are really dealing with the summer vacation season and that’s why that quarter is always a challenge.

We then go to the fourth quarter, which is the -- everyone is back to work. You know, it’s the fall season. For our company, it’s September, October, November, so it’s a good time to make sales. All of our commission and bonus plans kick in for the year-end for our sales force, so everybody is pushing hard and that’s why the year finishes the strongest.

Budd Ledum - Analyst

Okay, and then obviously that was a nice order from Mind Ray in the quarter. I mean, what are your expectations from Mind Ray on a go-forward basis? Do you continue to see acceleration there or maybe you could characterize that?

Michael K. Perry

Mind Ray has given us a forecast looking out that looks pretty strong, so at least at this level, difficult to say if it will continue to accelerate because that was pretty good acceleration but at the current level, I think we feel pretty good. Steve, anything to add to that?

Steve P. Loomis

Yeah, their quantities have been increasing over time and their forecast is to have that continue to increase. GE was light during the quarter but they’ve recently given us a forecast for the next several quarters that looks very strong.

Now remember those modules sell for roughly $2,000, $3,000 a piece, so a 70-unit order maybe is equivalent to five or six BioZs.

Michael K. Perry

Still very welcome.

Steve P. Loomis

Yes, exactly.

Budd Ledum - Analyst

Great, and then finally, Steve, do you have a figure for the depreciation and amortization in the third quarter?

Steve P. Loomis

It was $271,000 was the -- well, that actually included also the accretion on the note.

Michael K. Perry

And stock option comp.

Steve P. Loomis

And stock option comp.

Michael K. Perry

That’s the total non-cash.

Steve P. Loomis

Exactly.

Budd Ledum - Analyst

Oh, okay, so that was also stock-based comp. Do you have a figure on the stock-based comp?

Steve P. Loomis

Yes, it’s right about $100,000.

Budd Ledum - Analyst

Okay, terrific. Hey, nice quarter and thanks again.

Operator

Thank you. We’ll take the next question from Steve [Kruger]. Your line is live.

Steve Kruger - Analyst

A few questions for you, if I may -- about international revenue, Mike, what’s driving that growth? Is that just a function of the value with the dollar being down or are there specific tangible drivers? Have you signed up new distribution? Have you opened up any new countries? What is behind that and what can we expect going forward?

Michael K. Perry

Steve, we had a concerted effort about a year ago to expand beyond our sort of traditional U.S. physician office sales and really put some more intensity and focus internationally. We have expanded some additional countries. We’ve also kind of turned over a certain amount of the distributors, some of the lesser or non-productive ones, to replace them with more productive ones.

You are correct -- we certainly get some benefit from the exchange rate being stronger today than what it was a year ago, so it’s probably a little bit of all of those factors that add up to the growth. And we do see that continuing.

International I always caution is a lumpy business. You can get a very large piece of business come in in a quarter that you’ve been working on for four or five years. Over the years, we’ve had big orders come out of Mexico or China or Romania and elsewhere, so we’re going to continue to have those opportunities crop up here, there, and everywhere but this particular quarter was sort of the base business, I would say, and the base business is a bit higher today than it was a year ago.

Steve Kruger - Analyst

Okay. How are you using the results from the PriMed study? And what kind of traction or impact on traction are you seeing at this point?

Michael K. Perry

We’ve provided our sales team with some flyers and brochures and material that they can discuss with customers. Clearly when you have the results presented at a major meeting like the American Society for Hypertension, we can reference that presentation and we even put a press release out, so some sales people even carry the press release to help show the credibility associated with it.

It’s another one of those things that it’s another arrow in the quiver and you keep providing whatever the interest the physician has. If they are really focused on treating hypertensive patients, the PriMed study is one that we’re able to share in a very focused way.

We are working, Steve, on a manuscript. We’d like to get this published in a journal, an appropriate journal related to treatment of hypertensive patients, so that’s coming down the pipe.

Steve Kruger - Analyst

Right. I would think, Mike, with the numbers that PriMed has published, assuming that those get validated in a peer review journal, you know, that would be more than just another arrow in the quiver. I would think that would be more like a rocket.

Michael K. Perry

You know, Steve, I believe that too but I can tell you, being in this business for some time, we had some astounding results from a major heart failure trial that we presented and we felt the same way and what we’ve observed over the years is the physician community is slow to adopt, generally risk averse, so it takes time. But believe me, we are glad that we have the additional evidence to talk about and we are going to make the most of it.

Rhonda, did you want to comment relative to PriMed and ASH?

Rhonda F. Rhyne

Just to add that to get further exposure to it, we are hopeful to get that content on the 2009 ASH program, or the American Society for Hypertension, so it was presented last year in a poster format but if we could get broad program coverage, that would be ideal and that’s hopeful for 2009.

Steve Kruger - Analyst

Right, okay. Mike, what do you know or what can you tell us about the supply of refurbished BioZs? I’ve seen a company, Foremost Medical, offering them for sale on the Internet. Is that an independent company and how does that impact your business?

Michael K. Perry

Steve, we’ve had over the years units pop up on the Internet from time to time and typically when a salesman is confronted with that, we really emphasize that you don’t know where that unit has come from, it doesn’t have any sort of factory warranty, it most often is missing its accessories. It also, if you wish to procure the sensors, you know, only we supply the sensors, so the customer ends up oftentimes if they do move forward with a unit from an unauthorized reseller, they end up being disappointed. In fact, just yesterday I was asked to sort of respond to a situation -- a customer had bought one of these units on the Internet and was deeply disappointed. I think they had sent it in four separate times for repair and they were looking at purchasing a separate unit directly from us to sort of get rid of the defective one that they had bought.

Steve Kruger - Analyst

Right, so do you know how big that supply is out there of so-called unauthorized units that are available for sale?

Michael K. Perry

You know, we see two, three units here, there and everywhere. It doesn’t seem to be bigger or smaller than we remember it.

Steve Kruger - Analyst

So it’s really immaterial?

Michael K. Perry

It’s very immaterial -- I mean, for an individual salesperson that’s been working on an opportunity for a long time and if it ends up getting snatched away from him, it’s material to them but to the company at large, I mean, Steve, at the end of the day, we have our own set of refurbished equipment that can compete directly with the Internet people, and we give a full factory warranty, we’re going to provide the customer service with our clinical team, our tech support, customer support, so to me it -- I don’t know why the customer would choose otherwise to save a few thousand dollars when --

Steve Kruger - Analyst

No, I understand, Mike. I think the conclusion that it’s immaterial pretty much answers my question.

Michael K. Perry

That’s it.

Steve Kruger - Analyst

Let me ask you this -- I heard Rhonda mention something about medical school and that’s another question I’ve had lingering in my mind, and that is how many medical school curriculums currently include a unit on ICG and what kind of goals do you have there in terms of increasing that?

Rhonda F. Rhyne

Steve, this year we just started that effort and as with much of our marketing, we try to go where there’s a more open market for it and so we’ve approached the D.O. schools, the Doctor of Osteopathy, because those doctors are trained in a more comprehensive, holistic approach and we’ve just found in the general marketplace D.O.s are much more open to non-invasive hemodynamics. So we just received in the last I’d say 30 days our first order from a D.O. school out of Reno, Nevada, so it’s in the very early stages but it is part of our BioZ certified program because if we can get it in the curriculum, then they are trained on it, they are automatic or likely customers. It’s harder to get it in the medical schools just because it’s not in the guidelines. So again, we’re going where we can penetrate and the D.O. schools -- I don’t want to say have less of a bar but it’s -- they are more progressive and easier for us to work with.

Steve Kruger - Analyst

Okay, so are you saying that the fact that ICG is not in the guidelines is basically an insurmountable barrier to any mainstream medical school deciding to incorporate a unit on ICG in the curriculum?

Rhonda F. Rhyne

It’s just a much longer road and we haven’t had the receptivity that we’ve had on the D.O. side, so we are going to go where -- we’ve only got so many resources, so we are going to try to go the easiest route that we can and once we get traction, then expand on that.

Steve Kruger - Analyst

Right. Mike, what are your insider trading restrictions for officers and directors in terms of windows of time in which they can trade?

Michael K. Perry

There’s only about a week or two per quarter at most that we can access the market and it’s typically after earnings, and there’s -- even sometimes there’s limitations on those particular windows if different activities are deemed to be material information that we don’t want to make sure we are acting upon ahead of announcement of something like clinical study or something that might be coming out.

Steve Kruger - Analyst

So in terms of the next available window, when would that start?

Michael K. Perry

It opens two days after the earnings release, so two days from today and it closes on the last day of the second month of the quarter, so essentially it would be open from the Monday to -- window is at two weeks away until the end of the quarter, so roughly two weeks where potentially we could transact in the company’s stock.

Steve Kruger - Analyst

Okay. Given your comments earlier, Mike, about the value of the stock, it would be interesting to see the management and the directors of the company sort of translate that sentiment into action.

Michael K. Perry

Steve, I appreciate that and if you check the record, you’ll find a series of purchases down over the last three or four years.

Steve Kruger - Analyst

Okay, very good. Thanks, Mike and a lot of positive indications, so keep up the momentum.

Michael K. Perry

Thank you.

Operator

Thank you very much. The floor remains open for questions and comments. (Operator Instructions) Okay, we don’t appear to have any further questions. Do you have any closing comments you would like to finish with?

Michael K. Perry

Yes, David, thank you and again, thank everyone for your participation on the call today. We were very pleased with the 15% growth experienced year-to-date, 8% growth in the third quarter and seven consecutive quarters of year-over-year revenue growth. We were particularly pleased to generate positive operating income during the third quarter. That’s of course excluding non-cash expenses. This occurred one quarter earlier than plan. It was the first time in 15 quarters that we achieved that milestone and it came on lower revenues than we were anticipating for the fourth quarter.

Our team has renewed energy and commitment to continue to growing the business and getting back to profitability and positive cash flow despite a difficult economic climate and we sincerely appreciate all the support that we receive from all of you as our shareholders.

If anyone has any additional questions, please feel free to contact Steve Loomis, Rhonda Rhyne, or myself. We’re at 1-800-778-4825 and please call us anytime. Everyone have a great afternoon and thanks again.

Operator

Thank you very much, ladies and gentlemen. This concludes today’s call. You may disconnect your lines. Have a wonderful day.

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