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BioTelemetry, Inc. (NASDAQ: BEAT)

Price ........................................................................................ $7.34 52-Week Range ......................................................... $1.86 - $7.87 Market Capitalization ($M) ................................................ $187.5 Enterprise Value ($M)......................................................... $168.2 Basic Shares Outstanding (M) ................................................ 25.6 Float (Shares, M) ..................................................................... 18.0 Insider Ownership (%) .......................................................... 3.4% Institutional Ownership (%) ................................................ 64.4% Daily Volume (3-Month Avg.) .......................................... 957,856 Industry ............................................... Specialized Health Services Corporate Headquarters ..................Conshohocken, Pennsylvania
Condensed Income Statements (000s) FY Jun Revs EBITDA EPS P/E 2011 A $ 119,022.0 $ (3,191.0) $ (0.63) nm 2012 A $ 111,494.0 $ (3,781.0) $ (0.49) nm 2013 E $ 132,358.0 $ 1,815.7 $ (0.38) nm 2014 E $ 145,793.0 $ 7,198.3 $ (0.14) nm Source: Company reports, Stonegate estimates Rev Grw -1% -6% 19% 10% Condensed Balance (000s) $19,306.0 $0.76 $67,594.0 $2.65

August 12, 2013

Sheet (06/31/13) Working Capital Current Ratio Total Debt/Equity Total Debt/Capital (000s) $24,661.0 2.2x 0% 0%

Cash & Cash Equivs Cash/Share Equity (book value) Equity/Share

Company Description BioTelemetry provides continuous, real-time ambulatory outpatient management solutions for monitoring relevant and timely clinical information for patients. The Company is the first provider of Mobile Cardiac Outpatient Telemetry (MCOTTM) services, which monitors arrhythmias or heart rhythm disorders. The Company also provides cardiac monitoring services, cardiac monitoring device manufacturing, and centralized cardiac core laboratory services. Initiation of Coverage: BioTelemetry: Major decision by UnitedHealthcare bolsters Companys value proposition
Clinical superiority establishes company in cardiac monitoring services - BioTelemetry offers outpatient monitoring solution (MCOTTM, Event and Holter) to its customers which are comprehensive in nature and can be tailored to the specific needs of the patients. The service provides a personalized solution for each patients needs. Further, the clinical results of studies shows MCOTTM provides more effective detection of infrequent cardiac arrhythmias than loop monitors. In clinical result, BioTelemetry proved to be nearly 3x superior to LOOP event monitors at detecting clinically significant Atrial Fibrillation in all patients 23% vs. 8%. BioTelemetry enters into reimbursement agreement with UnitedHealthcare Insurance - BioTelemetry has entered into a three-year reimbursement agreement with UnitedHealthcare Insurance Company (NYSE:UNH), covering all of BioTelemetrys monitoring modalities, including MCOT. With this agreement, the market size expands significantly from the current market around 225M people in the US and we believe the agreement could boost patient volumes for BioTelemetry products and services. Diversified revenue stream improves stability - Patient service remains the core business for the Company with MCOTTM, services being a flagship for the segment. However, the performance of this segment is declining due to severe pressure on reimbursement. Post FY2010, BioTelemetry pursued a revenue diversification strategy, and began expanding its product and research services segment. Patents protect Companys proprietary technology - BioTelemetry has 26 issued US patents and 37 issued International patents. Additionally, the Company has applied for additional patents relating to its proprietary ECG detection algorithm. We believe the patents strengthen BioTelemetrys competitive position in the market. Valuation: The Company has positioned itself in the year 2012 with defined strategic focus on expanding its research services and product segment. On multiple base comparison among publicly listed peers, comparable companies trade at 3.2x on EV/Sales basis for 2013E whereas BioTelemetry is trading at 1.3x.

See Important Disclosures and Disclaimer on Page 24

Investment Factors
BioTelemetry offers physicians a remote diagnostic and patient management tool for arrhythmias, called MCOT. The device enables accurate heart beat monitoring, ECG monitoring, analysis and response. The BioTelemetry system integrates cardiac monitoring, wireless communication, and Internet technologies to offer unprecedented diagnostic information and patient management resources to physicians treating patients with arrhythmias.BioTelemetryBioTelemetry We believe, BioTelemetry is in a firm position to increase and expand its revenue streams as it gains marketshare in the cardio monitoring industry.

Investment Positives
Clinical superiority establishes company in cardiac monitoring services BioTelemetry offers outpatient monitoring solution including (MCOTTM, Event and Holter) to its customers which are comprehensive in nature and can be tailored to the specific needs of the patients. This gives patient personalized solution for their specific requirements. With MCOTTM, physicians can fully access the information on any time period of varied length; this gives the device an advantage over other cardiac monitor system. Further, the clinical results of studies shows MCOTTM provide more effective detection of infrequent cardiac arrhythmias than loop monitors. The study compared MCOT with LOOP event monitors. Results for BioTelemetry proved to be nearly 3x superior to LOOP event monitors at detecting clinically significant Atrial Fibrillation in all patients 23% vs. 8%. BioTelemetry enters into reimbursement agreement with UnitedHealthcare Insurance BioTelemetry has entered into a three-year reimbursement agreement with UnitedHealthcare Insurance Company (NYSE:UNH), covering all of BioTelemetrys monitoring modalities, including MCOTTM. The Agreement applies to all UnitedHealthcare affiliated entities, including managed Medicare and managed Medicaid plans. UnitedHealthcare provides coverage to more than 70M members in the US. With this agreement, the market size expands significantly from the current size of around 225M people in the US. While the Company has not estimated any potential revenue upside from this agreement, we believe this could certainly boost the patient volumes for BioTelemetrys products and services. Patents protect Companys proprietary technology BioTelemetry has 26 issued US patents and 37 issued International patents. Additionally, the Company has applied for additional patents relating to its proprietary ECG detection algorithm. As of June 2013, the Company had 42 US and International patent applications outstanding. The patents cover the technology and improvements made that are instrumental to the development of BioTelemetrys business. We believe the patents strengthen BioTelemetrys competitive position in the market. Diversified revenue stream improves stability Patient service remains the core business for the Company with MCOTTM services being a flagship for the segment. However, the performance of this segment is declining due to severe pressure from reimbursement issues. Post FY2010, BioTelemetry has opted for a revenue diversification strategy, accordingly, the Company has started expanding its product and research services segment. This should certainly bring stability to top-line revenue, which is impacted by a decline in reimbursement rates. Strong balance sheet, no debt and new strategic focus With $19.3M cash and no debt, BioTelemetry is in a better financial position for future expansion. The Company has sufficient cash balance to manage its operations and the Company has working capital of $24.7M in Q2 2013.

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Investment Challenges / Risks

History of negative operating profit BioTelemetry has a history of operating losses since inception. As of June 2013, the Company had total accumulated deficit of $190.9M. While over the past five years CFFO have turned positive, after capex and acquisitions, FCF has also been negative. BioTelemetry anticipates needing additional financing in the future to fund its ongoing research and development programs. If the Company raises money through convertible debt or equity, there is risk of shareholder dilution Reimbursement risk from Medicare and commercial insurance payors There has been continuous pricing pressure from commercial payors. Currently, a commercial reimbursement rate is still above Medicare reimbursement rate. However, Medicare reimbursement rates have been declining for several years, and in turn commercial insurers have also sought lower reimbursement rates and this should have a negative effect on operating results. For example, revenues fell 6% to $111.5M in FY2012, largely on the decline of lower reimbursement payments. The national reimbursement rate set by CMS is subject to change and any negative change would adversely affect the Companys operating results. Intensely competitive market rapidly evolving The current cardiac monitoring market is a highly competitive fragmented market with numerous players and potential players. Other participants compete with the Company in marketing to payors, physicians, personnel, and other resources. In addition, if a larger more established competitor were to enter BioTelemetrys market, and the Company failed to respond in an adequate manner, its business would be harmed. Civil Investigation Demand pending BioTelemetry received a Civil Investigative Demand (CID) from The Department of Justice (DOJ) in August 2011. According to CID, the investigation states that the Company may have used inappropriate diagnosis codes when submitting claims for payment to Medicare for its real-time, outpatient cardiac monitoring services. Under the investigation, the CID is seeking all documents starting from the year 2007. The Company is facilitating investigation and replied to the DOJ. According to Company management, BioTelemetry was not the original target in this investigation. The key target from this action is believed to be LifeWatch AG, one of the closest competitors of the Company. While the Company may deem to be correct in its perspective for this investigation, it is difficult to predict the outcome of the investigation. This might have adverse impact on the Companys operations.

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Valuation Summary
BioTelemetry is one of the leading players in remote cardiac monitoring service industry and has sustainable growth potential due to an aging population in the US. The Company will likely to benefit from this growth potential due to its proven, decade long experience in the industry along with relationships with most insurance companies in the US. The Company has positioned itself in the year 2012 with redefined strategic focus on research services and product segment. Recently, it has signed agreement with UnitedHealthCare Insurance, a leading player in the industry; which was much awaited over the last two years. On multiple base comparison among publicly listed peers, comparable companies trade at 3.2x on EV/Sales basis for 2013E whereas BioTelemetry is trading at 1.3x. Exhibit 1: Comparative Analysis
Comparative Analysis
CardioNet, Inc. (Nasdaq: BEAT) (all figures in $M expect per share information) EV/S (2) 2013 E 3.9x 1.7x 3.3x 7.3x nm 3.0x 2.4x 3.5x EV/EBITDA (2) 2013 E 11.3x 8.2x 9.2x nm nm nm 13.0x 14.1x P/E (2) 2013 E 17.9x 13.7x 14.4x nm nm 16.4x 21.8x 21.1x

Name Peers Life Technologies Corporation Quest Diagnostics Inc. Medtronic, Inc. BSD Medical Corp. IRIDEX Corporation Covidien plc Masimo Corporation Mindray Medical International Limited

Ticker LIFE DGX MDT BSDM IRIX COV MASI MR

Price (1) $ 74.77 59.44 55.07 1.50 5.87 63.91 25.02 43.47

Sh 172.7 151.9 1,007.4 34.0 8.8 460.0 56.5 118.5

Mrkt Cap 12,910.0 9,028.1 55,478.2 51.0 51.8 29,398.5 1,413.0 5,152.0 $ $ $ $ $ $ $ $

EV 14,856.8 12,424.3 55,383.3 40.1 44.4 32,258.9 1,325.8 4,404.5

TTM 3.9x 1.7x 3.3x 12.2x 1.3x 2.7x 2.5x 3.9x

2014 E 3.7x 1.7x 3.2x 3.8x nm 3.0x 2.3x 3.0x

TTM 12.5x 8.1x 9.9x -5.1x 38.9x 9.7x 13.6x 17.5x

2014 E 10.7x 7.9x 9.1x nm nm nm 12.7x 12.2x

TTM 31.0x 18.1x 16.3x nm 65.6x 17.0x 23.2x 24.8x

2014 E 16.4x 12.6x 13.7x nm nm 15.4x 20.8x 19.4x

Average Median CardioNet, Inc. BEAT $ 7.34 25.6 $ 187.5 $ 168.2

4.5x 2.7x 1.4x

4.0x 3.2x 1.3x

3.0x 3.0x 1.2x

14.9x 13.6x nm

13.6x 13.6x 92.7x

12.4x 12.4x 23.4x

32.7x 24.0x nm

19.7x 21.1x nm

18.5x 19.4x nm

(1) Previous day's closing price (2) Estimates are from Bloomberg except for BEAT which are Stonegate estimates Source: Company reports, Bloomberg, Stonegate Securities

Source: Stonegate Securities

We see the following important catalysts for the stock in FY2013 and beyond: Additional companies approves MCOTTM reimbursement... 2013 & 2014 beyond Expansion of research revenues..2013 & 2014 beyond Innovation of new application for MCOTTM platform.2013 & 2014

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Company Overview
Company Background
Founded in 1999, BioTelemetry, Inc. provides cardiac monitoring services, cardiac monitoring device manufacturing, and centralized cardiac core laboratory services to its customers. The Company has developed an integrated patient monitoring platform that incorporates a wireless data transmission network, proprietary software, FDA approved algorithms and medical devices, and 24x7 digital monitoring service center. Its initial efforts are focused on the diagnosis and monitoring of cardiac arrhythmias, or heart rhythm disorders, through its MCOTTM, event and Holter services. Exhibit 2: Company Location 104 Sales Representatives Worldwide

Source: Company reports, Stonegate Securities

Additionally, BioTelemetry has made several acquisitions to expand its product portfolio and customer base. Among all, the Cardiocore Lab acquisition was the key to expand the Research services segment for BioTelemetry. Exhibit 3: Acquisition History
Year Mar-07 Dec-10 Acquired Company PDSHeart Addition to Segment Patient Services Value addition - Access to WebHolter, web based digital holter system - Access to an established customer base - Addition of manufacturing and core laboratory services - Access to established customer base - Cost synergies - Access to core laboratory industry - Access to an established operating structure and a substantial footprint in the core lab industry

Feb-12

Biotel Inc. and its subsidiaries - Braemar Product Segment - Agility Centralized Research Research Services Services. ECG Scanning &Medical Patient Services Services

Aug-12

Cardiocore Lab

Research Services

Source: Company reports, Stonegate Securities

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Business Segments - Overview

The Company has three operating segments named patient services, product and research services. Patient services - focuses on the diagnosis and monitoring of cardiac arrhythmias and heart rhythm disorders through its MCOT, event and Holter services. Product segment - focuses on the development, manufacturing, testing and marketing of medical devices to healthcare companies, clinics and hospitals. Research services - focuses on providing cardiac core lab services for drug and medical devices trials. Patient Services Segment The Company provides comprehensive services ranging from its differentiated MCOT service to event and Holter monitoring. BioTelemetry has developed an integrated platform which combines various technologies such as wireless data transmission and cardiac diagnostic solutions including physician intervention, if required. This new technology helps: Patients to remotely monitor their conditions and have any abnormalities reported to their care providers immediately to reduce hospital and ER visits Healthcare providers to monitor conditions of patients more efficiently Mobile Cardiac Outpatient Telemetry - MCOTTM Services MCOTTM is mobile arrhythmia detection tool which is based on proprietary algorithm on rate, rhythm AF with P-wave analysis and QRS morphology. This platform/service automatically detects and transmits data to BioTelemetrys monitoring center. BioTelemetry provides customized monitoring and reporting services which provides flexibility and valuable diagnostic insight to physicians and patients. How it works: The MCOT service incorporates a lightweight patient-worn sensor attached to electrodes that captures two-channel ECG data and transmits that data to a compact wireless handheld monitor. The monitor analyzes incoming heartbeat information from the sensor on a real-time basis by applying proprietary algorithms designed to detect arrhythmias. When the monitor detects an arrhythmic event, it automatically transmits the ECG to the BioTelemetry Monitoring Center even in the absence of symptoms noticed by the patient. At the BioTelemetry Monitoring Center, certified cardiac monitoring specialists analyze the sent data, respond to urgent events and report results in the manner prescribed by the physician.

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Exhibit 4: MCOTTM How It Works

SMART SENSOR WIRELESS MONITOR MONITORING CENTER PHYSICIAN / CUSTOMER

Heartbeat-byHeartbeat Surveillance Proprietary Algorithm 2 ECG Channels 30-Day Storage

Automated Event Detection Symptom/Activity Touch Screen Asymptomatic Events

Wireless Transmission

24/7/365 ECG Review Proprietary Software Urgent Notifications

Fetch ECG

Daily, Urgent, Requested and Endof-Service Summary Reports Web Access & Fax Reports
Physician ECG Review via Web

Source: Company reports, Stonegate Securities

The MCOT device has the capability of storing 21 days of continuous ECG data, in contrast to a maximum of 10 minutes for a typical event monitor, and a maximum of 24 hours for a typical Holter monitor. Commercial Large acceptability opportunity to further penetrate each specialty Since MCOTs commercial launch in February 2002, physicians have enrolled over 580,000 patients in MCOT services, as of December 2012.

CardioNet Specialty Penetration Exhibit 5: BioTelemetry Specialty Penetration

Specialty
Cardiology Electrophysiology Neurology Primary Care Total

Total Number Docs in US

25,000 2,500 14,500 353,000 395,000

No. of Docs Prescribing CardioNet*

9,140 521 290 4,531 15,171

% Penetrated
36.6% 20.8% 2.0% 1.3% 3.8%

Annual GPS/Doc by Specialty

18.5 32.8 6.5 6.2 13.7

Source: Company reports, Stonegate Securities

The Company has marketed its solution in the US and has secured direct contracts with most commercial payors representing more than 300M covered lives in the US. Recently, the Company has signed a contract with UnitedHealthcare Insurance Company which provides additional access to 70M more covered lives. Clinical Study Facts In order to test the efficiency of MCOTTM, BioTelemetry sponsored a 17-center, 300-patient randomized clinical trial. The study compared MCOT with LOOP event monitors. Based on the study, BioTelemetry proved to be nearly 3x1 superior to LOOP event monitors at detecting clinically significant Atrial Fibrillation in all patients 23% vs. 8% (p<0.001). Other results are listed below:
1

The results of this study were published online early at the Journal of Cardiovascular Electrophysiology (JCE) on January 8, 2007. Published in the March 2007 issue of JCE, Vol. 18, No. 3.

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Patient Services Patient Services

CardioNet MCOT proven toof be nearly Exhibit 6: Result Comparison Loop TM CardioNet MCOT proven to be nearly 3x superior at detecting clinically Monitors and MCOT

Unmatched Validation of Clinical Efficacy and Versatility Unmatched Validation of Clinical Efficacy and Versatility
3x superior at detecting clinically significant arrhythmias significant arrhythmias

Patients with syncope or presyncope - BioTelemetry proved greater than 3x superior to LOOP event monitors for detecting clinically significant arrhythmias 52% vs. 16% (p<0.001) Patients with syncope or presyncope - BioTelemetry proved greater than 3x superior to LOOP event monitors for detecting Afib/Aflutter 24% vs. 2% (p<0.001); In the same group of patients, BioTelemetry detected asymptomatic Atrial Fibrillation 19% vs. 0% in LOOP event monitors. In all patients, an arrhythmia was confirmed or excluded as the primary cause of the symptom in 88% of BioTelemetry patients vs. 75% LOOP patients (p=0.008).

36 publications validating Exhibit 7: Listand of abstracts Publication Validating TM 36 publications and abstracts validating BioTelemetry MCOT the clinical utility of CardioNet MCOT the clinical utility of CardioNet MCOT
Efficacy Efficacy Pediatrics Efficacy Pediatrics Efficacy AF Catheter Ablation AF Catheter Ablation AF Surgical Ablation AF Surgical Ablation AF Rate/Rhythm Control AF Rate/Rhythm Control Seizure Disorders Seizure Disorders Cryptogenic Stroke Cryptogenic Stroke Symptom Rhythm Correlation Symptom Rhythm Correlation Sleep Disorders (CVHR) Sleep Disorders (CVHR)

Source: Company reports, Stonegate Securities Rothman et al, J of Cardiovascular Electrophysiology, Vol. 18, Num 3, March 2007
Confidential CardioNet 2013 Confidential CardioNet 2013 15

Rothman et al, J of Cardiovascular Electrophysiology, Vol. 18, Num 3, March 2007

Multi-center prospective randomized study Multi-center prospective randomized study published in a peer-reviewed journal published in a peer-reviewed journal Largest prospective study ever completed for Largest prospective study ever completed for outpatient cardiac monitoring outpatient cardiac monitoring

Total Total

6 6 1 1 2 2 14 14 1 1 1 1 6 6 2 2 3 3 36 36

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Event Monitoring Services Event monitoring services provide physicians various monitoring alternatives such as wireless event monitors, auto-trigger event monitors, loop event monitors and non-loop event monitors. Here, cardiac event monitors are worn by the patient for up to 30 days. The event data is transmitted via telephone lines and if required, wirelessly. In comparison to MCOTTM, this service has limited data storage capacity with a limited algorithm. Under this service, data is recorded for autotriggered events as well as patient detected events and available for 30 days. BioTelemetry has provided event monitoring services to approximately 70,000 patients in 2012. Holter Monitoring Services A Holter monitor is a small recording device which patients attach to their chest with adhesive electrode patches. A patient has to wear the device generally for 24 to 48 hours during which time heartbeat information is continuously recorded. A Holter monitor stores an image of the electrical impulses of every heartbeat, normal or irregular, in either digital or analog format. The stored data is mailed via a digital flashcard or sent electronically to the Holter lab where trained cardiac technicians generate a report of the findings and return the results back to the patients physician. These are full-disclosure monitors appropriate for frequently symptomatic patients. BioTelemetry has provided Holter monitoring services to approximately 90,000 patients in 2012. Reimbursement - Key factor for the segment The success of the patient services segment is dependent upon physicians prescribing BioTelemetry services. BioTelemetry believes physicians recommend these services when they know reimbursement is available. Currently, only a few commercial insurance companies do not approve MCOTTM. This is only because they deem it as a treatment that is not medically necessary or they

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consider it to be experimental and investigational. The recent agreement with UnitedHealthcare Insurance may help in validating the necessity of BioTelemetrys services. It will certainly be a key factor in driving the growth for the patient service segment. Product Segment (Operated as Braemar OEM subsidiary) Braemar manufactures various medical devices such as cardiac event monitors, digital Holter monitors, and other products used in fluid transport, flow measurement ultrasound medical devices and products used in the liposuction and cosmetic surgery industry. Among these, patient-worn battery powered diagnostic cardiology devices are the primary products for the Company. The manufacturing facilities are located in San Diego, CA and Eagan, MN. It is FDA QSR, GMP, ISO 9001, ISO 13485, CE MARK, CMDCAS certified. Going forward, the Company is planning to manufacture MCOTTM in-house but the timing is uncertain. Research Services Segment (Operated as Cardiocore subsidiary) The research services segment is engaged in central core laboratory services that provide cardiac monitoring, scientific consulting and data management services for drug and medical treatment trials. BioTelemetry entered the research services field through its acquisition of Agility (medical device trials) in December 2010 and Cardiocore (pharmaceutical trials) in August 2012. Cardiocore is one of the worlds first cardiac core labs and continues to be a worldwide leader in scientific consulting, service provision and data management. Through these acquisitions, the Company strengthened its foot print in central core laboratory services, which includes experience in Phase I-IV trials including QT trials. The Company's primary customers are pharmaceutical companies and contract research organizations. Additionally, the Company obtained core lab locations in or near Bannockburn, IL, Washington, DC, San Francisco, CA, and London, UK. These locations support sponsors and sites in Eastern and Western Europe, Russia and Asia-Pacific, North and South America, Africa and the Middle East.

Business Strategy
BioTelemetry aims to preserve its leading position in outpatient cardiac monitoring services along with an expansion into the research services and product segment. The key elements of the business strategy include: Provide Comprehensive Cardiac Monitoring Solutions: BioTelemetry continues to increase awareness among cardiologists and electrophysiologists of the benefits of using MCOT to meet their arrhythmia monitoring needs, specifically stressing the increased diagnostic yield and their ability to use the clinically significant data to make timely interventions and guide more effective treatments. While doing this, the Company offers a comprehensive portfolio of outpatient cardiac monitoring product/services in order to also meet all of the cardiac monitoring needs of doctors and patients. Diversification of revenues by expanding presence in Research Services: BioTelemetry aims to become a preferred global provider of cardiac laboratory services. The Company has developed this segment through the acquisition of Agility in December 2010 and Cardiocore in August 2012. With the Cardiocore acquisition, BioTelemetry has diversified its revenues to a large extent. As of Q113 research services now account for 15% of revenues, up from 1.5% in Q112. Creating new market opportunities by leveraging its Cardiac Monitoring Platform: MCOT is a platform that can be leveraged for applications in multiple other markets. Apart from its current application in arrhythmia diagnosis and monitoring, the Company plans to expand into new market areas that require outpatient or ambulatory monitoring and management. For example, the Company formed an alliance with AirStrip Technologies with the intention of extending the application and utilization of MCOTTM by interfacing two systems to enhance the data package being delivered to clinicians in a point-of-care setting. AirStrip will be pulling data from a patient that is being monitored in an outpatient setting, dramatically improving the clinician's ability to deliver rapid care.

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Sales and Marketing

BioTelemetrys general sales and marketing strategy is to market and promote its products and services through direct conversations with physicians as well as at trade shows and medical conferences organized by various institutions such as the American College of Cardiology, Society of Thoracic Surgeons, European Society of Cardiology, American Heart Association, and others. Additionally, the Company also sponsors peer-to-peer educational opportunities and participates in targeted public relations opportunities. Moreover, BioTelemetry is focusing on marketing its Holter and Event Monitoring services through a new comprehensive sales strategy. As per the new strategy, the Company will more actively pursue the prescriptions written for event and Holter monitors as it is less expensive than MCOTTM service and more easily accepted in down economic times. To promote its research service offerings, BioTelemetry uses its relationship with the Cardiac Safety Research Consortium (CSRC) whose founding member was Cardiocore, one of the acquired entities by BioTelemetry.

Intellectual Property Portfolio

As of June 30, 2013, BioTelemetry has 26 issued US patents and 37 issued International patents. The patents relate to the functionality of individual components of the MCOT device, operation of the total monitoring system, communication methodologies, control of data in the system, algorithms for ECG detection and analysis, and monitoring methods. The Company has applied for additional patents relating to its proprietary ECG detection algorithm. As of June 30, 2013, the Company had 42 US and International patent applications outstanding.

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Financial Model Review

Revenues BioTelemetry derives revenues from three business segments: patient services, products, and research services and contributed 84%, 8.5% and 7.5%, respectively to revenues in FY2012. Patient service remains the core business for the Company with MCOTTM, services being a flagship for the segment. Post FY2010, BioTelemetrys revenue diversified as it expanded into the research services segment. Exhibit 8: Revenue Diversification

2010

Product Research 9% services 15%

Q1 2013

Patient services 100%

Source: Company reports, Stonegate Securities

Patient services 76%

Patient Services Segment The patient services revenue is generated based on the number of patients enrolled through physician prescriptions and the rates reimbursed by commercial payors, patients and Medicare. The Company recognizes approximately 80% of its revenue from patient monitoring services, derived from MCOT, event, Holter and pacemaker services. The Company receives a significant portion of its patient revenue from third party commercial payors (around 55%) and governmental entities (around 35% Medicare). It also receives reimbursement directly from patients through copay, deductibles and self-pay arrangements. As of December 2012, BioTelemetry had over 300 contracts with commercial payors. Revenue from the Medicare program is based on reimbursement rates set by CMS. The reimbursement rate for Medicare patients serviced in the San Francisco, CA facility was $943 per service in 2012 and is $1,000 in 2013. Due to the federal budgetary cuts related to sequestration that took effect April 1, 2013, the Medicare reimbursement rate for services provided after the effective date was reduced by 2%. Overall, the commercial reimbursement pricing for the services has declined over the past three years. Impacting revenue for the segment is mix, where Event and Holter monitoring services have lower average selling prices than MCOTTM. The revenue contribution from MCOTTM has declined from around 80% in Q1 2011 to 60% in Q4 2012. Product Segment Product revenue includes revenue from product sales and repairs regarding noninvasive cardiac monitors. The average price per unit and volume for product segment has been relatively consistent over the past several years.

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Research Services Segment The Company's research services revenue is provided on a fee for services basis. Under a typical contract, customers pay a portion of the fee for these services upon contract execution as an upfront deposit, some of which is typically nonrefundable upon contract termination. Going forward, the Company expects to expand its research services segment as the industry moves towards central core lab services to conduct cardiac safety studies for drug development. While pricing pressure exists in the industry, the overall contract sizes have remained constant over the last few years. Going forward, BioTelemetrys comprehensive sales strategy will result in an additional shift in revenue mix during 2013 with research services growing as a percent of total Company revenue. Operating expenses Over the last five years, gross margin has experienced pressure due to lower average selling prices and a shift in product mix. Moreover, the inclusion of Cardiocore in the research services segment reduced margin by approximately 300 basis points. The overall margin for the Company has declined from 66.9% in FY2008 to 59.1% in FY2012. Gross margins for the patient services, product and research services segments were 60.7%, 55.3%, and 46.7% for the year ended December 31, 2012. The main drivers for gross margin in the patient services segment are the number of patients (volume) enrolled through physician prescriptions and the rates reimbursed by payors (price). Product and research gross margins are mainly driven by volume. Operating expense remained at a constant level in FY2012. However, the Company is also undertaking cost cutting measures through restructuring, revisions in employee compensation plans and similar other measures. Despite this, the Company expects G&A to be higher in the future as the Cardiocore acquisition is integrated and coverage for its products and services expands. The Company expects R&D to be higher in FY13, but dip in FY14. Given that the business model is dependent on reimbursement from insurance companies, BioTelemetry has had significant bad debt expense, averaging 12.4% of total Company sales over the last five years. After a more stringent approach to undertaking customer registration, the Company has reduced the level of bad debt in 2013. In Q1 2013, bad debt expense was 7.6% of total revenue.

Model assumptions As the revenue diversification strategy has just began showing up its results, we believe, the patient service business will be still be major contributor to the top-line for the next couple of years. Hence, we have forecasted contribution from patient service business will remain at roughly 80% on the back of recent agreement with UnitedHealthCare Insurance that provides access to an additional 70M Americans to the Company. Based on this agreement, it is expected that the remaining insurance providers will also include MCOTTM services as medically necessary. Moreover, the Company is also expanding the application of its proprietary platform.
While research services segment will likely grow at a modest rate considering the leading position of Cardiocare in the cardiac safety industry, the revenues will be volatile due to uncertainty on contracts and other regulatory issues. All these will result into the revenues of US$132.4M and US$145.8M for FY2013, FY2014 respectively. Gross margin will decline slightly due to lower margin from the research service business and continuous pressure on reimbursement rate in FY13 and FY14 as the Company moves toward optimizing its revenue mix. Accordingly, we have forecasted gross margin of 58.1% and 57.6% for FY2013 and FY2014 respectively.

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Operating expenses will take a marginal uptake as G&A, S&M rise with incremental patient revenues. Consequently, we forecast net loss for FY2013 and FY2014 at US$9.6M and US$3.6M, respectively. The above assumptions result in a diluted loss per share of $0.38 and $0.14 for FY2013 and FY2014, respectively.

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Industry Overview
Industry Background
US healthcare spending is booming backed by aging population Increasing percentage of aging population is one of the key issues faced by the US and most other western countries. However, this phenomenon leads to a continuous increase in healthcare spending. While US senior citizens accounted for 12.9% of the population in 2010, the US Census Bureau forecasts the figure to grow to 20.3% in Exhibit 9: Aging population in the U.S 2050. Health care spending in the US increased from 5% of GDP in 1960 to approximately 17% (US$2.4 trillion) in 2008. It is expected to double to US$4.4 trillion, representing 20% of GDP by 20182. Moreover, the healthcare industry has been witnessing increasing use of technology to improve healthcare delivery for the aging population and reduce costs.
Year 2010 2020 2030 2040 2050 Age 65+ population (in mn) 40 55 72 81 89 % of total U.S. population 12.9% 16.1% 19.3% 20.0% 20.3%

Source: US Census Bureau, Stonegate Securities

Remote monitoring services are a niche segment in healthcare spending which is becoming an important need for Americans backed by several factors Healthcare inefficiency and nursing shortages Emphasis on reducing hospital days and medical errors Cost-effective as it improves diagnostic capabilities Interfaces well with Electronic Medical Records adoption Aging population drives increased prevalence of chronic diseases 75% of all healthcare dollars are spent on chronic care* Baby boomer generation is more active and seeks outpatient solutions Cardiac monitoring services Cardiovascular disease continues to be the worlds leading cause of death. The global cardiac monitoring and cardiac rhythm management (CRM) market amounted to US$18.4B in 2012. North America is the leading market for cardiac monitoring and CRM, followed by Europe and Asia. Inoffice ECG or remote cardiac monitoring devices can diagnose an irregular heartbeat or abnormal heart rhythms, a condition medically known as cardiac arrhythmias. Remote cardiac monitoring services Remote cardiac monitoring allows the patients to go about their normal routine outside a clinic or hospital. Types of remote cardiac monitoring include Mobile cardiac telemetry, Cardiac event monitoring, and Holter monitoring. Moreover, early detection of cardiac disease through remote monitoring could benefit patients by reducing the possibilities of costly cardiac disease treatment required in the acute stage. According to Research And Markets, total users for remote patient monitoring in the US would reach 6M in 2016 from 2.2M in 2010. The US is the largest market for remote cardiac monitoring services and the industry size is expected to increase by 27% from US$686M in 2011 to US$867M in 2016, according to IHS InMedica. The Agency for Healthcare Research & Quality estimates that approximately 4M Americans are affected by cardiac arrhythmias, which leads to about 780,000 hospitalizations and 500,000 deaths every year. Atrial fibrillation remains the most common cardiac arrhythmia affecting approximately 2.2M Americans; with 160,000 diagnoses each year.

Source: The Centers for Medicare and Medicaid Services (CMS)

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In addition, patients who are using Holter monitoring service can also be targeted for MCOTTM market. Exhibit 10: Holter Monitoring Market Potential Market for MCOTTM

Market Potential
(1)

United States
1.5 million event patients

The U.S. Holter market represents an additional 2.5 million patients (1), some of whom could benefit from CardioNet MCOT

CardioNets MCOT and Event represents approximately 10% of the market Source: Company reports, Stonegate Securities

Growth opportunity for patients that would benefit from CardioNet MCOT

Competition Although BioTelemetry has a leading market share in the remote cardiac monitoring industry, the market is fragmented with a large number of small regional service providers. Overall, BioTelemetry faces two types of competition for its products and services - one from the industry players who offers similar offerings and second from the other alternative solutions available in the market. Among industry players, BioTelemetry competes directly with LifeWatch AG. BioTelemetry Exhibit 11: Competitive Landscape for MCOTTM

(1) Frost & Sullivan North American Cardiac Patient Monitoring Market Outlook, 2010

Source: Company reports, Stonegate Securities

Taking a broader view into the remote patient monitoring industry, BioTelemetry competes with companies such as Cardiocomm Solutions Inc. and Masimo Corporation. Canada-based Cardiocomm develops devices as well as software used in recording, measuring and storing electrocardiogram signals. US based Masimo manufactures and markets noninvasive patient monitoring products worldwide and its key products and technologies are related to pulse rate measurement and hemoglobin monitoring.

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In terms of competition from alternative solution providers, BioTelemetry competes with them largely based on higher diagnostic yield. Exhibit 12: Holter Monitoring Market Potential Market for MCOTTM

Patient Services
The Standard
In-Hospital Cardiac Telemetry

Comparison of a Physicians Cardiac Monitoring Options

Ambulatory

New Gold Standard

88% Diagnostic Yield

15% - 75% Diagnostic Yield

CardioNet Mobile Cardiac Outpatient Telemetry (MCOT)

7% Diagnostic Yield
Not Reflective of Normal Activity

LOOP Event Monitoring

Requires Patient Intervention

Holter Monitoring
Short Duration

Real-time Ambulatory, Wireless Solution

Diagnostic Yield: Confirmation or exclusion of an arrhythmia as a cause of the patients symptoms

Source: Company reports, Stonegate Securities
Confidential CardioNet 2013 17

In addition to its patient services segment, BioTelemetry aims to expand its research services business related to cardiac safety which has a large potential The market for cardiac testing is estimated to be around US$1B in 2010, with US$350M being generated by centralized facilities3. The key considerations for this industry include: Recent studies have indicated that many pharmaceutical sponsors believe that all cardiac safety testing studies will eventually be centralized Increased public scrutiny by public and regulatory agencies on safety High-profile drug recalls in the late 90s Half of all drugs pulled from the market since 1995 have involved heart complications In 2003, FDA acknowledged that cardiac risk was the leading cause of post-approval drug withdraws FDA has also asked sponsors to prove cardiac safety with robust ECG studies Guidelines called E14 in place for thorough QT studies on all therapeutic areas o Catalyzed growth in cardiac testing and created a move toward centralization ERT is a market leader with one of the major cardiac core labs in the industry. Other leading providers of centralized cardiac testing include BioMedical Systems, Cardiocore and Quintiles.

http://www.appliedclinicaltrialsonline.com/appliedclinicaltrials/Online+Extras/A-Beat-on-the-CardiacSafety-Market/ArticleStandard/Article/detail/693083

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Valuation Analysis
Comparative Analysis
CardioNet, Inc. (Nasdaq: BEAT) (all figures in $M expect per share information) Revenues (2) Name Peers Life Technologies Corporation Quest Diagnostics Inc. Medtronic, Inc. BSD Medical Corp. IRIDEX Corporation Covidien plc Masimo Corporation Mindray Medical International Limited Ticker LIFE DGX MDT BSDM IRIX COV MASI MR Price (1) $ 74.77 59.44 55.07 1.50 5.87 63.91 25.02 43.47 Sh 172.7 151.9 1,007.4 34.0 8.8 460.0 56.5 118.5 $ $ $ $ $ $ $ $ Mrkt Cap 12,910.0 9,028.1 55,478.2 51.0 51.8 29,398.5 1,413.0 5,152.0 $ $ $ $ $ $ $ $ EV 14,856.8 12,424.3 55,383.3 40.1 44.4 32,258.9 1,325.8 4,404.5 FYE Dec Dec Dec Dec Dec Dec Dec Dec $ $ $ $ $ $ $ $ TTM 3,818 7,198 16,590 3 35 12,145 521 1,122 $ $ $ $ $ $ $ $ 2013 E 3,850 7,259 16,885 5 38 10,865 552 1,248 $ $ $ $ $ $ $ $ 2014 E 3,982 7,329 17,392 11 40 10,780 582 1,462 TTM $1,191.3 $1,541.8 $5,593.0 ($7.9) $1.1 $3,332.0 $97.3 $251.0 EBITDA (2) 2013 E $1,311.7 $1,512.3 $6,013.2 $0.0 $0.0 $2,908.5 $101.8 $311.4 2014 E $1,393.7 $1,565.1 $6,079.1 $0.0 $0.0 $3,023.5 $104.3 $361.7 $ $ $ $ $ $ $ $ TTM 2.41 3.28 3.37 (0.27) 0.09 3.77 1.08 1.75 $ $ $ $ $ $ $ $ Earnings (2) 2013 E 4.17 4.34 3.84 (0.23) 0.22 3.90 1.15 2.06 $ $ $ $ $ $ $ $ 2014 E 4.56 4.73 4.03 (0.17) 0.32 4.16 1.20 2.24

CardioNet, Inc.

BEAT

$7.34

25.6

187.5

168.2

Jun

116.9

132.4 EV/S (2) 2013 E 3.9x 1.7x 3.3x 7.3x nm 3.0x 2.4x 3.5x

145.8

(1.2) $

1.8

7.2

(0.43) $

(0.38) $ P/E (2) 2013 E 17.9x 13.7x 14.4x nm nm 16.4x 21.8x 21.1x

(0.14)

Name Peers Life Technologies Corporation Quest Diagnostics Inc. Medtronic, Inc. BSD Medical Corp. IRIDEX Corporation Covidien plc Masimo Corporation Mindray Medical International Limited

Ticker LIFE DGX MDT BSDM IRIX COV MASI MR

Price (1) $ 74.77 59.44 55.07 1.50 5.87 63.91 25.02 43.47

Sh 172.7 151.9 1,007.4 34.0 8.8 460.0 56.5 118.5

Mrkt Cap 12,910.0 9,028.1 55,478.2 51.0 51.8 29,398.5 1,413.0 5,152.0 $ $ $ $ $ $ $ $

EV 14,856.8 12,424.3 55,383.3 40.1 44.4 32,258.9 1,325.8 4,404.5

TTM 3.9x 1.7x 3.3x 12.2x 1.3x 2.7x 2.5x 3.9x

2014 E 3.7x 1.7x 3.2x 3.8x nm 3.0x 2.3x 3.0x

TTM 12.5x 8.1x 9.9x -5.1x 38.9x 9.7x 13.6x 17.5x

EV/EBITDA (2) 2013 E 11.3x 8.2x 9.2x nm nm nm 13.0x 14.1x

2014 E 10.7x 7.9x 9.1x nm nm nm 12.7x 12.2x

TTM 31.0x 18.1x 16.3x nm 65.6x 17.0x 23.2x 24.8x

2014 E 16.4x 12.6x 13.7x nm nm 15.4x 20.8x 19.4x

Average Median CardioNet, Inc. BEAT $ 7.34 25.6 $ 187.5 $ 168.2

4.5x 2.7x 1.4x

4.0x 3.2x 1.3x

3.0x 3.0x 1.2x

14.9x 13.6x nm

13.6x 13.6x 92.7x

12.4x 12.4x 23.4x

32.7x 24.0x nm

19.7x 21.1x nm

18.5x 19.4x nm

(1) Previous day's closing price (2) Estimates are from Bloomberg except for BEAT which are Stonegate estimates Source: Company reports, Bloomberg, Stonegate Securities

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Balance Sheets
CardioNet, Inc. (Nasdaq: BEAT) Consolidated Balance Sheets (in thousands US$) Fiscal Year: December FY 2012 ASSETS Current Assets Cash & cash equivalents Accounts receivables, net Other receivables, net Inventory Prepaid expenses and other current assets Total Current Assets Property and equipment Intangible assets Goodwill Other noncurrent assets Total Assets LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable Accrued expenses Deferred revenue Total Current Liabilities Long-Term Liabilities Deferred tax liability Deferred rent Total Long-Term Liabilities Stockholders' Equity Common stock Issued shares Additional paid-in capital Accumulated deficit Total Stockholders' Equity (deficit) Total Liabilities and Stockholders' Equity Ratios Liquidity Current Ratio Quick Ratio Working Capital Leverage Debt To Equity Debt To Capital Capital Usage -Annualized A/R Turns Inv Turns A/P Turns Source: Company Reports, Stonegate Securities Q1 Mar-13 18,324 13,477 6,738 3,118 1,940 43,597 19,301 9,053 16,446 666 89,063 Q2 Jun-13 19,306 12,452 6,584 3,683 3,620 45,645 18,725 8,458 16,446 667 89,941 Q3 E Sep-13 11,931 18,678 6,584 4,420 3,813 45,426 18,338 7,882 16,446 703 88,794 Q4 E Dec-13 14,811 13,384 6,584 4,264 3,836 42,880 18,008 7,305 16,446 707 85,346 FY 2013 E FY 2014 E

18,298 13,792 6,515 2,894 1,923 43,422 19,851 9,664 16,446 627 90,010

14,811 13,384 6,584 4,264 3,836 42,880 18,008 7,305 16,446 707 85,346

14,592 13,333 6,584 4,497 4,353 43,358 17,508 5,011 16,446 802 83,126

6,349 9,946 2,195 18,490

7,235 9,351 2,231 18,817

7,935 11,033 2,016 20,984

8,595 11,622 2,016 22,232

7,939 11,691 2,016 21,646

7,939 11,691 2,016 21,646

7,758 13,266 2,016 23,040

866 656 1,522

881 546 1,427

879 484 1,363

879 484 1,363

879 484 1,363

879 484 1,363

879 484 1,363

25 256,448 (186,475) 69,998 90,010

25 257,356 (188,562) 68,819 89,063

25 258,430 (190,861) 67,594 89,941

25 258,430 (193,256) 65,199 88,794

25 258,430 (196,118) 62,337 85,346

25 258,430 (196,118) 62,337 85,346

25 258,430 (199,732) 58,723 83,126

2.3x 2.1x 24,932 0.0% 0.0% 6.4x 18.6x 8.7x

2.3x 2.0x 24,780 0.0% 0.0% 9.5x 17.1x 7.6x

2.2x 1.8x 24,661 0.0% 0.0% 9.9x 14.8x 6.6x

2.0x 1.7x 23,194 0.0% 0.0% 8.7x 14.6x 7.2x

2.0x 1.6x 21,234 0.0% 0.0% 8.5x 14.0x 7.4x

2.0x 1.6x 21,234 0.0% 0.0% 9.7x 15.5x 7.8x

1.9x 1.5x 20,318 0.0% 0.0% 10.9x 14.1x 7.9x

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Income Statements
CardioNet, Inc. (Nasdaq: BEAT) Consolidated Statements of Income (in thousands $, except per share amounts) Fiscal Year: December Q1 Mar-12 $ 27,045.0 27,045.0 $ Q2 Jun-12 27,450.0 27,450.0 $ Q3 Sep-12 27,040.0 27,040.0 $ Q4 Dec-12 29,959.0 29,959.0 $ Q1 Mar-13 $ 32,418.0 32,418.0 $ Q2 Jun-13 32,104.0 32,104.0 $ Q3 E Sep-13 33,816.7 33,816.7 $ Q4 E Dec-13 34,019.3 $ 34,019.3 Q1 E Mar-14 $ 35,744.9 35,744.9 $ Q2 E Jun-14 35,290.6 35,290.6 $ Q3 E Sep-14 37,211.6 37,211.6 $ Q4 E Dec-14 37,545.9 $ 37,545.9

FY 2011 Revenues Revenues Total revenue Cost of revenues Cost of sales Total cost of revenues Gross (loss) profit Operating expenses G&A S&M Bad debt expense R&D Integration, restructuring and other charges Total operating expenses Income (loss) from operations (1) Other income (expense): Interest income Interest expense Other income/(expense) (1) Total other income (expense): Pre-tax income (loss) (1) Provision for taxes (benefit) Net income (loss) (1) Net income (loss ) to common Basic EPS (loss) Diluted EPS (loss) Basic shares outstanding Diluted shares outstanding EBITDA EBITDA -adj for stk comp $ $ $ $ $ 119,022.0 119,022.0

FY 2012 111,494.0 111,494.0

FY 2013 E 132,358.0 132,358.0

FY 2014 E 145,793.0 145,793.0

49,076.0 49,076.0 69,946.0 35,011.0 27,821.0 12,080.0 5,698.0 4,659.0 85,269.0 (15,323.0)

11,435.0 11,435.0 15,610.0 8,673.0 6,152.0 2,911.0 1,185.0 270.0 19,191.0 (3,581.0)

10,724.0 10,724.0 16,726.0 7,635.0 6,027.0 2,959.0 1,040.0 733.0 18,394.0 (1,668.0)

10,642.0 10,642.0 16,398.0 7,969.0 6,476.0 3,195.0 1,143.0 741.0 19,524.0 (3,126.0)

12,792.0 12,792.0 17,167.0 8,367.0 6,949.0 2,847.0 1,296.0 2,492.0 21,951.0 (4,784.0)

45,593.0 45,593.0 65,901.0 32,644.0 25,604.0 11,912.0 4,664.0 4,236.0 79,060.0 (13,159.0)

12,873.0 12,873.0 19,545.0 9,528.0 6,762.0 2,467.0 1,620.0 1,202.0 21,579.0 (2,034.0)

12,608.0 12,608.0 19,496.0 9,077.0 6,267.0 1,967.0 1,882.0 2,541.0 21,734.0 (2,238.0)

14,787.5 14,787.5 19,029.3 8,800.0 7,000.0 2,874.4 1,500.0 1,250.0 21,424.4 (2,395.2)

15,239.0 15,239.0 18,780.3 9,000.0 7,000.0 2,891.6 1,500.0 1,250.0 21,641.6 (2,861.4)

55,507.5 55,507.5 76,850.6 36,405.0 27,029.0 10,200.1 6,502.0 6,243.0 86,379.1 (9,528.5)

15,364.1 15,364.1 20,380.8 9,000.0 7,200.0 2,859.6 1,500.0 1,200.0 21,759.6 (1,378.8)

14,902.5 14,902.5 20,388.1 9,250.0 7,000.0 2,823.2 1,400.0 1,200.0 21,673.2 (1,285.1)

15,647.8 15,647.8 21,563.9 9,500.0 7,000.0 2,976.9 1,250.0 1,200.0 21,926.9 (363.1)

15,929.5 15,929.5 21,616.4 9,750.0 7,000.0 3,003.7 1,250.0 1,200.0 22,203.7 (587.3)

61,843.8 61,843.8 83,949.2 37,500.0 28,200.0 11,663.4 5,400.0 4,800.0 87,563.4 (3,614.3)

144.0 144.0 (15,179.0) 244.0 (15,423.0) (15,423.0) (0.63) (0.63) 24,425.3 24,425.3 (3,191.0) 815.0 $ $ $ $

169.0 (122.0) 47.0 (3,534.0) (3,534.0) $ (3,534.0) $ (0.14) $ (0.14) $ 24,604.8 24,604.8 (1,561.0) (706.0)

39.0 39.0 (1,629.0) (431.0) (1,198.0) $ (1,198.0) $ (0.05) $ (0.05) $ 24,919.0 24,919.0 444.0 1,419.0

5.0 5.0 (3,121.0) (3,121.0) $ (3,121.0) $ (0.12) $ (0.12) $ 24,995.4 24,995.4 (917.0) (91.0)

182.0 (299.0) 78.0 (39.0) (4,823.0) (474.0) (4,349.0) $ (4,349.0) $ (0.17) $ (0.17) $ 25,215.4 25,215.4 (1,747.0) (656.0)

351.0 (299.0) 52.0 (13,107.0) (905.0) (12,202.0) (12,202.0) (0.49) (0.49) 24,933.7 24,933.7 (3,781.0) (34.0) $ $ $ $

(27.0) (26.0) (53.0) (2,087.0) (2,087.0) $ (2,087.0) $ (0.08) $ (0.08) $ 25,190.6 25,190.6 974.0 274.0

(61.0) (61.0) (2,299.0) (2,299.0) $ (2,299.0) $ (0.09) $ (0.09) $ 25,537.4 25,537.4 498.0 (513.0)

(2,395.2) (2,395.2) $ (2,395.2) $ (0.09) $ (0.09) $ 25,539.9 25,539.9 428.2 428.2

(2,861.4) (2,861.4) $ (2,861.4) $ (0.11) $ (0.11) $ 25,542.5 25,542.5 (84.5) (84.5)

(27.0) (87.0) (114.0) (9,642.5) (9,642.5) (9,642.5) (0.38) (0.38) 25,542.5 25,542.5 1,815.7 104.7 $ $ $ $

(1,378.8) (1,378.8) $ (1,378.8) $ (0.05) $ (0.05) $ 25,545.0 25,545.0 1,355.7 1,355.7

(1,285.1) (1,285.1) $ (1,285.1) $ (0.05) $ (0.05) $ 25,547.6 25,547.6 1,426.0 1,426.0

(363.1) (363.1) $ (363.1) $ (0.01) $ (0.01) $ 25,550.1 25,550.1 2,324.4 2,324.4

(587.3) (587.3) $ (587.3) $ (0.02) $ (0.02) $ 25,552.7 25,552.7 2,092.2 2,092.2

(3,614.3) (3,614.3) (3,614.3) (0.14) (0.14) 25,552.7 25,552.7 7,198.3 7,198.3

Margin Analysis Gross margin G&A S&M Bad debt expense R&D Integration, restructuring and other charges Operating margin EBITDA margin Pre-tax margin Net income margin Tax rate Growth Rate Analysis Y/Y Total revenue Total cost of revenues G&A S&M Bad debt expense R&D Integration, restructuring and other charges Operating income EBITDA Pre-tax income Net income EPS - fully diluted Share count - fully diluted

58.8% 29.4% 23.4% 10.1% 4.8% 3.9% -12.9% -2.7% -12.8% -13.0% -1.6% -0.8% 3.3% 1.0% -5.2% -35.0% 16.4% 0.1% 22.2% 58.1% 22.5% 22.3% 23.3% 1.3%

57.7% 32.1% 22.7% 10.8% 4.4% 1.0% -13.2% -5.8% -13.1% -13.1% 0.0% -20.5% -16.2% -10.4% -23.7% 21.8% -29.5% 117.7% -125.4% -183.6% -127.7% -127.7% -124.9% 1.3%

60.9% 27.8% 22.0% 10.8% 3.8% 2.7% -6.1% 1.6% -5.9% -4.4% 26.5% -13.2% -17.6% -15.0% -18.5% 2.0% -23.6% -27.7% 45.1% 94.7% 45.7% 60.1% 61.0% 2.1%

60.6% 29.5% 23.9% 11.8% 4.2% 2.7% -11.6% -3.4% -11.5% -11.5% 0.0% 1.6% -13.1% -7.9% -2.2% -2.1% -14.0% -54.2% 56.2% 77.4% 56.1% 56.1% 57.0% 2.2%

57.3% 27.9% 23.2% 9.5% 4.3% 8.3% -16.0% -5.8% -16.1% -14.5% 9.8% 11.9% 26.0% 8.7% 21.1% -19.2% -2.3% 31.0% -34.4% -43.1% -36.9% -15.6% -12.6% 2.7%

59.1% 29.3% 23.0% 10.7% 4.2% 3.8% -11.8% -3.4% -11.8% -10.9% 6.9% -6.3% -7.1% -6.8% -8.0% -1.4% -18.1% -9.1% 14.1% -18.5% 13.7% 20.9% 22.5% 2.1%

60.3% 29.4% 20.9% 7.6% 5.0% 3.7% -6.3% 3.0% -6.4% -6.4% 0.0% 19.9% 12.6% 9.9% 9.9% -15.3% 36.7% 345.2% 43.2% 162.4% 40.9% 40.9% 42.3% 2.4%

60.7% 28.3% 19.5% 6.1% 5.9% 7.9% -7.0% 1.6% -7.2% -7.2% 0.0% 17.0% 17.6% 18.9% 4.0% -33.5% 81.0% 246.7% -34.2% 12.2% -41.1% -91.9% -87.3% 2.5%

56.3% 26.0% 20.7% 8.5% 4.4% 3.7% -7.1% 1.3% -7.1% -7.1% 0.0% 25.1% 39.0% 10.4% 8.1% -10.0% 31.2% 68.7% 23.4% 146.7% 23.3% 23.3% 24.9% 2.2%

55.2% 26.5% 20.6% 8.5% 4.4% 3.7% -8.4% -0.2% -8.4% -8.4% 0.0% 13.6% 19.1% 7.6% 0.7% 1.6% 15.7% -49.8% 40.2% 95.2% 40.7% 34.2% 35.0% 1.3%

58.1% 27.5% 20.4% 7.7% 4.9% 4.7% -7.2% 1.4% -7.3% -7.3% 0.0% 18.7% 21.7% 11.5% 5.6% -14.4% 39.4% 47.4% 27.6% 148.0% 26.4% 21.0% 22.9% 2.4%

57.0% 25.2% 20.1% 8.0% 4.2% 3.4% -3.9% 3.8% -3.9% -3.9% 0.0% 10.3% 19.4% -5.5% 6.5% 15.9% -7.4% -0.2% 32.2% 39.2% 33.9% 33.9% 34.9% 1.4%

57.8% 26.2% 19.8% 8.0% 4.0% 3.4% -3.6% 4.0% -3.6% -3.6% 0.0% 9.9% 18.2% 1.9% 11.7% 43.5% -25.6% -52.8% 42.6% 186.3% 44.1% 44.1% 44.1% 0.0%

57.9% 25.5% 18.8% 8.0% 3.4% 3.2% -1.0% 6.2% -1.0% -1.0% 0.0% 10.0% 5.8% 8.0% 0.0% 3.6% -16.7% -4.0% 84.8% 442.9% 84.8% 84.8% 84.8% 0.0%

57.6% 26.0% 18.6% 8.0% 3.3% 3.2% -1.6% 5.6% -1.6% -1.6% 0.0% 10.4% 4.5% 8.3% 0.0% 3.9% -16.7% -4.0% 79.5% 2576.9% 79.5% 79.5% 79.5% 0.0%

57.6% 25.7% 19.3% 8.0% 3.7% 3.3% -2.5% 4.9% -2.5% -2.5% 0.0% 10.2% 11.4% 3.0% 4.3% 14.3% -16.9% -23.1% 62.1% 296.4% 62.5% 62.5% 62.5% 0.0%

(1) For analytical purposes we have moved loss on disposal of assets from operating expense; Historical financials also exclude 1x items such as goodwill impairments and asset write-downs, change in fair value of contingent consideration payable etc. Source: Company Reports, Stonegate Securities estimates

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Cash Flows
CardioNet, Inc. (Nasdaq: BEAT) Consolidated Statements of Cash Flows (cumulative) Fiscal Year: December FY 2012 Cash Flow from Operations Net income (loss) Adjustments to reconcile net income to net cash : Provision for doubtful debt Depreciation Decrease in deferred rent Deferred income tax (benefit) expense Stock based compensation Amortization of intangibles Amortization of investment premium Changes in operating assets and liabilities Accounts receivable Inventory Prepaid and other receivable Other assets Accounts payable Accrued and other liabilities Net cash provided by operating activities Cash Flow from Investing Acquisition of businesses, net of cash acquired Purchase of property and equipment Purchase of short term investments Maturity of short term investments Net cash used by investing activities Cash Flow from Financing Proceeds from stock options Net cash provided (used) by financing activities Net increase (decrease) in cash Cash and cash equivalents, beginning of year Cash and cash equivalents, end of period Source: Company Reports, Stonegate Securities (12,202) 11,912 8,037 (198) (1,033) 3,747 1,341 268 (3,635) (885) (176) 867 552 (2,852) 5,743 Q1 Mar-13 (2,087) 2,467 2,389 (110) 700 619 (2,375) (224) (48) 885 (559) 1,657 Q2 Jun-13 (4,386) 4,434 4,551 (172) 1,711 1,193 (3,163) (789) (1,724) 1,586 921 4,162 Q3 E Sep-13 (6,781) 4,434 6,798 (172) 1,711 1,769 (9,389) (1,526) (1,917) (36) 2,246 1,510 (1,353) FY 2013 E (9,643) 4,434 8,999 (172) 1,711 2,346 (4,095) (1,370) (1,940) (40) 1,590 1,579 3,398 FY 2014 E (3,614) 8,519 2,294 51 (233) (517) (95) (181) 1,575 7,799

(28,155) (5,962) (11,935) 39,636 (6,416)

(1,839) (1,839)

(3,425) (3,425)

(5,285) (5,285)

(7,156) (7,156)

(8,019) (8,019)

440 440 (233) 18,531 18,298

208 208 26 18,298 18,324

271 271 1,008 18,298 19,306

271 271 (6,367) 18,298 11,931

271 271 (3,486.6) 18,298 14,811

(219.9) 14,811 14,591.5

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Important Disclosures and Disclaimer

(a) Stonegate Securities, Inc. (Stonegate) expects to receive or intends to seek compensation for investment banking or other business relationships with the covered companies mentioned in this report in the next three months. (b) The Research Analyst principally responsible for the preparation of this report has received compensation that is based upon, among other things, Stonegates investment banking revenues. (c) Within the last twelve months, Stonegate has received compensation for investment banking services from the Company and has a non-exclusive placement agency agreement in place as of 5/01/2013; Stonegate is engaged to potentially raise capital. As compensation, Stonegate received compensation of $5,000 for three months and thereafter $5,000 per month at the Companys discretion. (d) Within the last twelve months, Stonegate has not managed or co-managed a public offering for the Company. (e) Stonegate and/or its employees, officers, directors and owners do not own options, rights or warrants to purchase this security. (f) Stonegate does not make a market in this security. (g) No employee of Stonegate serves on the Companys Board of Directors. (h) A Research Analyst and/or a member of the Analysts household do not own shares of this security. (i) A Research Analyst and/or a member of the Analysts household do not serve as an officer, director, or advisory board member of the Company. (j) This security is eligible for sale in one or more states. (k) This security is subject to the Securities and Exchange Commissions Penny Stock Rules, which may set forth sales practice requirements for certain low-priced securities. (l) Stonegate or its affiliates do not beneficially own 1% or more of an equity security of the Company. (m) Stonegate does not have other actual, material conflicts of interest in the securities of the Company. Meaning of Ratings - Stonegate does not rate the securities covered in its information memorandums. Distribution of Ratings - Stonegate does not rate the securities covered in its information memorandums. Price Chart - Stonegate does not have, nor has previously had, a rating for any securities of the Company. Price Targets - Stonegate does not have a price target for any securities of the Company. Regulation Analyst Certification: I, Dan D. Trang, hereby certify that all views expressed in this report accurately reflect my personal views about the subject Company or companies and its or their securities. I also certify that no part of my compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed in this report. For Additional Information Contact: Stonegate Securities, Inc. Dan D. Trang 214-987-4121 DTrang@stonegateinc.com
Please note that this report was originally prepared and issued by Stonegate for distribution to their market professional and institutional investor customers. Recipients who are not market professional or institutional investor customers of Stonegate should seek the advice of their independent financial advisor prior to taking any investment decision based on this report or for any necessary explanation of its contents. The information contained herein is based on sources which we believe to be reliable, but is not necessarily complete and its accuracy cannot be guaranteed. Because the objectives of individual clients may vary, this report is not to be construed as an offer or the solicitation of an offer to sell or buy the securities herein mentioned. This report is the independent work of Stonegate Securities and is not to be construed as having been issued by, or in any way endorsed or guaranteed by, any issuing companies of the securities mentioned herein. The firm and/or its employees and/or its individual shareholders and/or members of their families and/or its managed funds may have positions or warrants in the securities mentioned and, before or after your receipt of this report, may make or recommend purchases and/or sales for their own accounts or for the accounts of other customers of the firm from time to time in the open market or otherwise. While we endeavor to update the information contained herein on a reasonable basis, there may be regulatory, compliance, or other reasons that prevent us from doing so. The opinions or information expressed are believed to be accurate as of the date of this report; no subsequent publication or distribution of this report shall mean or imply that any such opinions or information remains current at any time after the date of this report. All opinions are subject to change without notice, and we do not undertake to advise you of any such changes. Reproduction or redistribution of this report without the expressed written consent of Stonegate Securities is prohibited. Additional information on any securities mentioned is available on request.

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