Good afternoon. Thank you for joining us for the CardioNet Third Quarter 2008 Earnings Conference Call. Certain statements during the conference call and question-and-answer period to follow may relate to future events and expectations and, as such, constitute forward-looking statements within the meaning of the Private Securities and Litigation Act of 1995. Such statements involve known and unknown risks, uncertainties, and other factors, which may cause the actual results, performance or achievement of the company in the future to be materially different from the statements that the company’s executive may make today. These risks are described in detail in our public filings with the Securities and Exchange Commission, including our latest periodic report on Form 10-K or 10-Q. We assume no duty to update these statements. At this time, all participants have been placed on a listen-only mode and the floor will be open for questions and comments following the presentation. It is now my pleasure to turn the floor over to your host, Mr. Randy Thurman. Sir, you may begin.

Thank you very much. This is Randy Thurman, Executive Chairman of CardioNet. Thank you all for attending our third quarter 2008 conference call. With me this afternoon is Arie Cohen, President and Chief Executive Officer of CardioNet; and Marty Galvan, Senior Vice President and Chief Financial Officer of CardioNet. I have been with CardioNet now for approximately three months as Executive Chairman. Amongst the many opportunities that I considered prior to joining CardioNet, I made the decision to join because of the tremendous future that I perceive that our company has. And for three months of coming to understand the business model more and getting to know the management team, I am even more enthusiastic about the prospects for your company and the future than I was when I joined. We have accomplished a number of things in the last several months. In addition to the very successful secondary offer, we have begun to restructure at the corporate governance level and have added two extraordinarily accomplished executives to our board of directors. Ron Ahrens has joined. He is currently Vice Chairman and Director of Temptime Corporation and previously was President of Merck Consumer Healthcare Group Worldwide. Also joining CardioNet is Kirk Gorman, Senior Vice President and Chief Financial Officer of Jefferson Health Systems and previously was Senior Vice President and Chief Financial Officer of Universal Health System, one of the five largest investor-owned hospital companies in the United States. Also in the period of time that I’ve been with the company, we’ve undertaken a longer-term strategic view of the company and have set forth various operational priorities in order for us to achieve our strategic goals. Internally, we call these operational priorities BEAT Excellence, focusing on functional and operational excellence in everything that w do as a company. Arie will speak to more specifics about the BEAT Excellence Program during his presentation. At the end of our presentation, we will entertain all of your questions. At this time, I will turn the conference call over to Arie Cohen, President and Chief Executive Officer of CardioNet, Inc.

Thank you, Randy. Good afternoon and welcome, everyone, to our conference call. Before we begin the quarterly review, I would like to take a few minutes to recognize our employees for their strong commitment and hard work during the fire that impacted our corporate headquarters in August. Our employees successfully executed our Disaster Recovery Plan and activated our backup monitoring central facility with virtually no disruption to patient service. I would like to thank our dedicated employees for their diligence and tireless effort during this crisis. Now, on to the quarter review, I am very pleased to report another quarter of strong operating and financial performance. Revenues for the third quarter increased to $31.2 million, a 52% growth year-over-year. Gross margins increased to 67.9% and adjusted operating income increased to $4.3 million, compared to $1.5 million in the same period last year and diluted earnings per share of $0.11. Marty Galvan, our CFO, will provide you with a more detailed financial report in a few moments. Our success demonstrates the continued penetration of the CardioNet System in the $2 billion cardiac arrhythmia monitoring market as physicians and payers continue to recognize the superiority of our technology over events and Holter monitors. We once again achieved financial performance ahead of analysts’ expectations. During the third quarter, we achieved a number of important milestones in driving physicians’ and payers’ awareness of our system. On October 10, the American Medical Association has published Category I National CPT Codes with the CardioNet System. These unique codes represent a major milestone for CardioNet that solidifies our foundation for future growth. The code gives the CardioNet System unquestionable technology validation. The AMA has been the clinical efficacy of our system is well established and documented in US peer-reviewed literature, and that the CardioNet System is being…

Thank you Arie and good afternoon everyone. Now that Arie has provided you with an update of our operations, I will review our third quarter and year-to-date 2008 financial results and the factors that contributed to these results. I want to remind everyone that unless mentioned otherwise, all of my comments were referred to financial results on a non-GAAP basis. There is a reconciliation included in the press release that we issued earlier today that describes in detail how we have calculated these non-GAAP figures. In the third quarter, revenue increased by 52.1% or $31.2 million compared to $20.5 million in the third quarter of 2007. Driving the growth were CardioNet system sales of $26.3 million, up from $15.2 million in quarter three of 2007, or an increase of 72.9%. This increase was offset by decreases in events and Holter revenue. CardioNet system revenue in the third quarter accounted for 84% of our revenue compared to 83% in the second quarter of 2008 and 74% of revenue in the third quarter of last year. For the year-to-date comparison, if you adjust the prior year as if the PDSHeart acquisition was completed as of January 1, 2007, revenue increased by 62% to $86.0 million. During the same period CardioNet System revenues was $70.7 million compared to $36.2 million in the same period last year, an increase of 95.4%. For the first nine month s of 2008, the CardioNet system was 82% of revenue compared to 68% of adjusted revenue for the same period last year. With respect to payer mix, consistent with our first half performance our business was 33% Medicare and 67% commercial end of the quarter. Gross profit in the third quarter increased to $21.2 million or 67.9% of revenue compared to gross profit of $13.4 million or 65.4%…

Thank you, Marty. In closing, this was a milestone quarter for CardioNet. The recently established Category I National CPT Codes and the CMS pricing published this afternoon will positively impact a number of important components of our business and significantly enhance our ability to accelerate market penetration of the CardioNet System. With only 6% penetration of the $2 billion market, cardiac arrhythmia monitoring market, we see huge growth opportunities for the company. Our growing sales force continues to penetrate the market with our superior technology that was clinically proven to be three times higher in diagnostic yields than events monitor. Looking longer-term, we also see large and unique opportunities for CardioNet to leverage our leading wireless medicine platform for new applications in multiple markets. Our employees share a deep commitment to grow and improve human life and most importantly, build value for our old shareholders. Thank you. And now, we would like to open the call to your questions.

(Operator instructions) Your first question comes from the line of Amit Bhalla with Citigroup. Please proceed.

Hi, good evening. Well, I guess you guys had a World Series win and a reimbursement rate in your favor, so not bad. Can you guys hear me all right?

Yes, absolutely, Amit.

Given that CMS has not posted the rate yet or put out a press release, can you give us a little bit more color on the – maybe, some more specifics between the professional fee or professional rate, as well as the technical rate? And then I got a couple other questions.

I appreciate it, Amit, but I’m sure you’re going to appreciate the fact that we just got this breaking news while we were on the call. And in my understanding, it was really published online. We’re waiting for that but it was published online while actually we initiated the call. So tomorrow, we plan to publish a press release with more additional details and I’m sure that Marty will be in better position to give, talk to you with the details.

Okay, so it’s your understanding that the rate, at least, on the technical fee side is unchanged then. Is that what you’re saying? But you – but professional, we don’t know yet?

Yes. I mean, I just mean that the time to analyze what that is but I’m confident that on the technical side is the carrier price, which is $11.23 and as you know, we have this relationship with Highmark for a long time, and as you recall in the number of discussions that we had, all along I was saying that positively, that we feel that the pricing will be at the same level it is today, so for us it’s really a World Series event.

Okay, I understood. Now, Marty, before he finished his remarks, stressed that you’re going to continue to invest in infrastructure, can you give us a little bit more color around that maybe talk about your SG&A spending, and maybe some targets for sales reps because I don’t recall you guys stressing that infrastructure spend as much in the past?

Yes. Let me give me a little bit of color on that. If Marty wants to jump in after that please. We talk about the infrastructure, obviously – let’s start with the facility. We are investing and growing in the facility, improving the work environment but really expanding to – if you recall, we are the first floor. We’re really taking over the second floor so we are expanding. We are actually in the field area. We are expanding. As I mentioned, we have 89 people on board so it’s 89 territories. Definitely we are in the hiring mode and we would like to expand the sales force really quite a bit, to really prepare for 2009 growth that we project. Are there areas to that we invest? We invest in training. The BEAT Excellence Program that we talked about is really getting to every area of the business and we are just challenging everybody. It’s really just to – the objective to get to world class operation across the board. IT is extremely an important component of that. Automation in every direction is critical to that and just to give you a little bit more color really on the sales force. We anticipate that from 89 today we will go to 104 by the beginning of January so that’s literally adding 50 more sales rep in the next two months and probably – probably, again, we need some more evaluation but probably it would be at the 120 some time in the second quarter of next year. Tremendous investment in the infrastructure sales force is going forward.

So how does this translate to the bottom line for 2008? I realized you haven’t given ’09 guidance.

It doesn’t have any impact on the 2008 borderline. We are on target to meet the numbers so it doesn’t have any impact on 2008.

And I’ll just add one thing. I think it’s fair to say that if – you have few comment about emphasizing at this time. I think we basically have explained it in our plans about investing pretty similar to how we’ve always done it in the past so I think we’re particularly stressed at this time versus others.

Okay. Can you just break up gross margin – just talk to us about gross margin between the CardioNet system and the PDS legacy business and I will hop back in queue. Thank you.

Well, three times we’ve discussed this, the CardioNet system and the gross margin for that part of our business is in the high 60s. The gross margin on the other hand with our present Holter business is roughly about 10% points less in the high 50s. There is a significant mix aspect as the company grows now to be more mixed ever so much moves more to the CardioNet system it just helps to push our gross margins higher.

Okay, thank you.

You’re welcome.

Thank you.

Your next question comes from the line of Bob Hopkins with Banc of America. Please proceed.

All right, thanks very much. Can you hear me okay?

Hi, Bob. How are you?

Great. Thank you. Two questions, just a little bit more specific questions. Marty, on the last call, you guys expressed comfort with the 2008 consensus which at that point was arranged at $0.38 to $0.42 so is the message here this afternoon that you remain confident – remain confident in that range?

I would say yes. I think that’s a fair statement.

Okay. And then, I just want to ask you a question about a philosophical question about 2009, because if you look at the consensus expectations that are out there, you’ve got some of us, like myself, they’re close to the $0.80 for next year and you’ve got others suggest that you own investors much, and therefore, they’re up around the dollar and that’s a huge range of consensus for 2009. I just – I’ve been an advocate of further investment and trying to seize this opportunity and spending a little bit of money in them. I’m just wondering sort of philosophically at this point, which end of the spectrum do you guys stand on?

Well, first of all, Bob, in terms of 2009, we are obviously looking at this opportunity to increase and accelerate the growth especially now with the CPT codes in place. It would really give us tremendous opportunity and so that’s the process we’re going to the next two months in full force, but we definitely feel confident that in terms of the top-line we can achieve that. In terms of guidance, we are going to provide guidance in the February earnings call. Now, we definitely will give the top line guidance. I’m not sure if we are going to do anything on the EPS. This is something we haven’t decided yet. We really need to – we are in the process of evaluating that. So is that answer questionable?

Sort of. I mean, I guess I’m just trying to understand. I mean, one of the way of phrasing the question would be you’ve got this great clinical data out there. You’ve now got a CPT code that looks very favorable. Why wouldn’t you get more aggressive in terms of spending on SG&A to try to realize and maximize this opportunity and make sure that you reach or exceed your top line growth guidance? And frankly, I don’t think the investment [ph] community would care if you’re spending a little more money as long as the top line is at or above expectations. So I’m just wondering why wouldn’t you accelerate the spending in order to capture this opportunity given that you’ve got so much tailwind in your favor right now?

I agree. I mean, that’s absolutely. This is really on top of our mind. That’s what we’re doing. We’re analyzing the situation. What is the optimal sales force? What else we need to do in every direction? But this is part of the process that we’re going in the next month and then that’s it. But we agreed the opportunity the way you described that is – makes sense period.

Okay. Thanks very much.

(Operator instructions) Your next question comes from the line of Rick Weiss with Leerink Swann. Please proceed.

Good afternoon everybody and congratulations on the code. Maybe starting with that Arie or Marty, you all have been very consistent saying you thought we’d come in where you were. But maybe help us understand how in practical terms this drives or accelerates the business. I mean, with this in hand, what are you going to do next in terms of conveying this information to your client that perhaps could produce some even faster growth than we’re all assuming.

As you know, Rick, the code is effective in January so we have lots of ideas actually. We have developed a plan on how to attack it, and obviously we need to broadcast that all the way down to our customers, and we want to take advantage of simplifying the whole process for us. So we have a plan that we developed internally. We definitely will communicate this to our sales forces which have been waiting for that. So we have a plan of attack here. And then effective January 1, we expect that our sales force will be on top of that. Our customers will be notified before that and we have a team actually that’s part of our billing and reimbursement team that will help any customer to switch over. So we have a very effective plan of attack here.

Okay. Maybe you can help us think about gross margins for a second, Marty. You talked about the fourth quarter equaling third quarter levels. I remember seeing the restructuring continues, volumes continue to rise, you contain your focus on efficiency. Why wouldn’t – since it is a higher volume [ph] priority, why wouldn’t it be stronger? Why wouldn’t gross margins be slightly above?

Because Rick – because we think that the various elements of the benefits you’ve seen in the third quarter will be basically about the same in the fourth quarter. We don’t see it moving a more positive, let’s say, and it’s basically that.

Okay. Fourth quarter tax rate, if you had – if you were at, I think, 40% net in the third quarter, can you help us true it up in the fourth quarter, Marty?

That’s a bit of a difficult call right now, Rick. It’s a – as I mentioned in my prepared script, they have an ongoing project now to determine over what period of years, literally, we can utilize the cost carry forwards that we’ve accumulated at the $62 million. So, right now, we have arranged for the folks doing that work for us. It’s being done by Ernst & Young. We have arranged that they are – assuming they get close on, but the challenge is that, one has to go back over time and reanalyze the ownership of the company. And because of the type of company and CardioNet groups, that’s a lot more difficult than it might sound on the surface. So right now, I’m not in the position to give you what the adjustment would be in the fourth quarter.

Okay. How many PDS patients have you converted at this point? Am I remembering correctly, it was like something at 16% the last time we spoke?

Did we convert it, Arie?

Yes, we converted 4% for the quarter and we continued to actually – that actually has been going above what our expectation is, but – so there’s 4% per quarter.

Okay. And can you just remind me that that is another part of it for gross margins, correct?

Certainly. Yes.

Okay. And just the last, a general question. I struggled when I think about how the economy might affect most companies but it would seem like CardioNet should be less effective, either on the capital side, the consumption side, the prescription side. How are you all thinking about the larger backdrop with the economy and what steps, if any, are you taking as this complex environment evolves?

Really, we think that the business is very solid. It is three recessions of proof. We don’t see anything really going forward that would impact the business. When you come in, that’s the type of business this is.

All right, so we should assume you’re relatively insulated?

Yes, I agree.

Okay. Thank you very much.

Thank you.

And at this time, there are no further questions in queue. I would now turn the call over to Mr. Arie Cohen for any closing remarks.

So before we close out the conference call, I would like to say thanks to all of you for spending the time with us today. We appreciate your interest and your continuing support. Thank you.

Ladies and gentlemen, if you joined the conference late today, you may listen to the conference on digital replay, which will be available from October 30 to November 14, 2008, on (888) 286-8010, or (617) 801-6888 with pass code 40141982. Thank your for joining today’s conference. This concludes the presentation. You may now disconnect and have a great day.