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1000 Cedar Hollow Road, Suite 102

Malvern, PA 19355

March 23, 2016

The 2016 Annual Meeting of Stockholders of BioTelemetry, Inc. will be held:

Tuesday, May 3, 2016

8:30 AM, local time

Philadelphia Marriott West

111 Crawford Avenue

West Conshohocken, Pennsylvania 19428

The items of business are:

1.        Election of two Class III director nominees named in the proxy statement to hold office until the 2019 Annual Meeting of Stockholders or until their successors are elected and qualified;

2.        Ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the year ending December 31, 2016; and

3.        Conducting any other business properly brought before the meeting and any adjournment or postponement of the meeting.

Only stockholders of record of our common stock at the close of business on March 23, 2016 are entitled to vote at the meeting and any postponements or adjournments of the meeting.

Important Notice Regarding the Internet Availability of Proxy Materials for the Annual Meeting of Stockholders to be Held on May 3, 2016

We are delivering to all stockholders paper copies of all proxy materials and our Annual Report on Form 10-K for the year ended December 31, 2015. In addition, this Notice of Annual Meeting and Proxy Statement and the Annual Report on Form 10-K for the year ended December 31, 2015 are available on our website at http://www.gobio.com in the “Investors” section.

Your Vote is Important

It is important that your shares be represented at the meeting, regardless of the number you may hold. Whether or not you plan to attend, please vote using the proxy card or voting instruction card as promptly as possible in order to ensure your representation at the meeting. This will not prevent you from voting your shares in person if you are present at the meeting.

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PROXY SUMMARY

Here are highlights of important information you will find in this proxy statement. This summary does not contain all of the information that you should consider and you should read the entire proxy statement carefully before voting.

Summary of Stockholder Voting Matters

Our Director Nominees

You are being asked to vote on the election of Rebecca W. Rimel and Robert J. Rubin, M.D. as Class III directors to serve for a three-year term. The number of members of our Board of Directors (“Board”) is currently set at nine members and is divided into three classes of equal size, each of which has a three-year term. Class I consists of two directors, Class II consists of two directors and Class III consists of two directors. Currently, there is one vacancy in each of Class I, Class II and Class III, and we are continuing to seek to identify individuals to fill these vacancies. Our Board, by a majority vote of sitting directors, may fill any vacancies unless the Board has determined, by resolution, that any such vacancies shall be filled by stockholders. A director elected by the Board to fill a vacancy in a class, including vacancies created by an increase in the number of directors, shall serve for the remainder of the full term of that class and until the director’s successor is elected and qualified.

The term of office of our Class III directors expires at the 2016 Annual Meeting of Stockholders (the “2016 Annual Meeting”). We are nominating Ms. Rimel and Dr. Rubin for reelection at the 2016 Annual Meeting to serve until the 2019 Annual Meeting of Stockholders and until each director’s successor is elected and qualified. Directors are elected by a plurality of the votes of the holders of shares present in person or represented by proxy and entitled to vote on the election of directors. The two nominees receiving the most FOR votes (among votes properly cast in person or by proxy) will be elected. If no contrary indication is made, shares represented by executed proxies will be voted FOR the election of Ms. Rimel and Dr. Rubin or, if either nominee becomes unavailable for election as a result of an unexpected occurrence, FOR the election of a substitute nominee designated by our Board. Each nominee has agreed to serve as a director if elected, and we have no reason to believe that any nominee will be unable to serve.

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PROXY SUMMARY

Detailed information about each director’s and director nominee’s background and areas of expertise can be found beginning on page 47.

2015 Performance and Compensation Highlights

Under the leadership of Joseph H. Capper, our President and Chief Executive Officer, and the rest of our management team, we had a record year, posting the highest revenue, patient and study volumes, net income and adjusted EBITDA in our corporate history. These achievements are a direct result of the successful implementation of our corporate strategy. Compared to 2014, revenue grew by 7.2%, gross profit grew by 14.0%, net income grew 175.5% and adjusted EBITDA grew by 61.2%.

    (1)

______________________________

(1) For a reconciliation of 2015 GAAP income from operations ($9.5 million) to adjusted EBITDA, please see “Non-GAAP Financial Measures” on page 18.

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PROXY SUMMARY

The following table shows the components of 2015 compensation paid to our named executive officers (“NEOs”). This table is not a substitute for our 2015 Summary Compensation Table set forth on page 34.

2015 Summary Compensation

Key 2015 and Early 2016 Compensation-Related Actions

·                  Continued focus on long-term incentive compensation to ensure that our executives continue employment with us and to directly tie executive compensation to the generation of stockholder value.

·                  Reaffirmed compensation philosophy to target our executive compensation at the median (50th percentile) of peer group companies.

·                  Adopted stock ownership and holding policy to better align the financial interests of our executives with those of our stockholders.

·                  Evaluated our succession planning needs and are in the process of implementing a formal succession policy for senior-level executives in early 2016.

·                  Adopted a clawback policy allowing us to recoup incentive compensation paid in the event of a material restatement of our financial statements.

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PROXY SUMMARY

Other Existing Key Compensation Features

·                  No tax gross-ups, including no excise tax gross-ups.

·                  No “single trigger” feature on parachute payments in employment agreements, with the exception of our Chief Executive Officer whose equity awards immediately accelerate and become fully vested upon a change in control.

·                  No hedging of company stock.

·                  Engagement of independent compensation consultant.

·                  Option repricing forbidden without stockholder approval.

Auditors

Set forth below is summary information with respect to EY’s fees for services provided in 2015 and 2014.

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GENERAL INFORMATION

Proxy Solicitation

Our Board is soliciting your vote on matters that will be presented at the 2016 Annual Meeting and at any adjournment or postponement thereof. This proxy statement contains information on these matters to assist you in voting your shares.

The Notice of Annual Meeting (the “Notice”) and proxy statement, the accompanying proxy card or voting instructions and our Annual Report on Form 10-K for the year ended December 31, 2015, including our annual report wrapper (the “2015 Annual Report”), are being mailed or made available on or about March 23, 2016.

Stockholders Entitled to Vote

All stockholders of record of our common stock, par value $0.001 per share, at the close of business on March 23, 2016, are entitled to receive the Notice and to vote their shares at the 2016 Annual Meeting. As of that date, 27,633,954 shares of our common stock were outstanding. Each share is entitled to one vote on each matter properly brought to the meeting.

Voting Methods

You may vote at the 2016 Annual Meeting by delivering a proxy card in person or you may cast your vote in any of the following ways:

How Your Shares Will Be Voted

In each case, your shares will be voted as you instruct. If you return a signed card, but do not provide voting instructions, your shares will be voted FOR each of the proposals. If you are the record holder of your shares, you may revoke or change your vote any time before the proxy is exercised by filing with our Corporate Secretary a notice of revocation or a duly executed proxy bearing a later date. You may also vote in person at the meeting, although attendance at the meeting will not by itself revoke a previously granted proxy. If your shares are held by your broker, bank or other holder of record as a nominee or agent (i.e., the shares are held in “street name”), you should follow the instructions provided by your broker, bank or other holder of record.

Deadline for Voting. The deadline for voting by telephone or Internet is 11:59 PM Eastern Time on May 2, 2016. If you are a registered stockholder and attend the meeting, you may deliver your completed proxy card in person. “Street name” stockholders who wish to vote at the meeting will need to obtain a proxy form from the institution that holds their shares.

Broker Voting

If your shares are held in a stock brokerage account or by a bank or other holder of record, you are considered the “beneficial owner” of shares held in street name. The Notice has been forwarded to you by your broker, bank or other holder of record who is considered the stockholder of record of those shares. As the beneficial owner, you may direct your broker, bank or other holder of record on how to vote your shares by using the proxy card included in the materials made available or by following their instructions for voting on the Internet.

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GENERAL INFORMATION

A broker non-vote occurs when a broker or other nominee that holds shares for another does not vote on a particular item because the nominee does not have discretionary voting authority for that item and has not received instructions from the beneficial owner of the shares. The following table summarizes how broker non-votes and abstentions are treated with respect to our proposals:

Quorum

We must have a quorum to conduct business at the 2016 Annual Meeting. A quorum consists of the presence at the meeting either in person or represented by proxy of the holders of a majority of the outstanding shares of our common stock entitled to vote. For the purpose of establishing a quorum, abstentions, including brokers holding customers’ shares of record who cause abstentions to be recorded at the meeting, and broker non-votes are considered stockholders who are present and entitled to vote, and count toward the quorum. If there is no quorum, the holders of a majority of shares present at the meeting in person or represented by proxy or the chairman of the meeting may adjourn the meeting to another date.

Mailings to Multiple Stockholders at the Same Address

We have adopted a procedure called “householding” for making this proxy statement and the 2015 Annual Report available. Householding means that stockholders who share the same last name and address will receive only one copy of the materials, unless we are notified that one or more of these stockholders wishes to continue receiving additional copies.

We will continue to make a proxy card available to each stockholder of record. If you prefer to receive multiple copies of the proxy materials at the same address, please contact us in writing or by telephone: Corporate Secretary, BioTelemetry, Inc., 1000 Cedar Hollow Road, Suite 102, Malvern, PA 19355.

Proxy Solicitation Costs

We pay the cost of soliciting proxies. Proxies will be solicited on behalf of the Board by mail, telephone, and other electronic means or in person. Directors and employees will not be paid any additional compensation for soliciting proxies. We may also reimburse brokerage firms, banks and other agents for the cost of forwarding proxy materials to beneficial owners.

Results of the 2016 Annual Meeting

We will report final voting results from the 2016 Annual Meeting on a Current Report on Form 8-K to be filed with the SEC within four business days after the conclusion of the 2016 Annual Meeting.

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CORPORATE GOVERNANCE AND BOARD MATTERS

During 2015, our Board met 14 times. Each director attended at least 75% of the Board meetings and the meetings of the Board committees on which he or she served. It is our policy to invite our directors and nominees for director to attend our annual meetings of stockholders. All of our directors then in office attended our 2015 Annual Meeting of Stockholders and we expect that all of our current directors and nominees for director will attend our 2016 Annual Meeting.

Our principal governance documents are our Board committee charters and Code of Business Conduct and Ethics. Aspects of our governance documents are summarized below.

We encourage our stockholders to read our governance documents, as they present a comprehensive picture of how the Board addresses its governance responsibilities to ensure our vitality and success. The documents are available in the “Investors—Corporate Governance” section of our website at www.gobio.com and copies of these documents may be requested by writing to our Corporate Secretary, BioTelemetry, Inc., 1000 Cedar Hollow Road, Suite 102, Malvern, PA 19355.

Code of Business Conduct and Ethics

All of our employees, officers and directors are required to comply with our Code of Business Conduct and Ethics, which was amended and updated on October 30, 2015 to reflect current business practice and industry regulation. The Code of Business Conduct and Ethics covers fundamental ethical and compliance-related principles and practices such as accurate accounting records and financial reporting, avoiding conflicts of interest, the protection and use of our property and information and compliance with legal and regulatory requirements. If we make any substantive amendments to the Code of Business Conduct and Ethics or grant any waiver from a provision of the Code of Business Conduct and Ethics to any executive officer or director, we will promptly disclose the nature of the amendment or waiver on our website.

Board Leadership Structure

The Board is currently composed of an independent Chairman of the Board and independent committees of the Board. Kirk E. Gorman has served as a member of our Board since 2008 and the Chairman of our Board since October 2011.

As Chairman, Mr. Gorman leads the activities of the Board, including:

·                  calling meetings of the Board and independent directors;

·                  setting the agenda for Board meetings in consultation with the Chief Executive Officer and Corporate Secretary;

·                  chairing executive sessions of the independent directors; and

·                  acting as an advisor to Mr. Capper on strategic aspects of the Chief Executive Officer role with regular consultations on major developments and decisions likely to interest the Board.

Our Board believes its leadership structure effectively allocates authority, responsibility and oversight between management and the independent members of our Board. It gives primary responsibility for the operational leadership and strategic direction of our company to our Chief Executive Officer, while the Chairman facilitates our Board’s independent oversight of management, promotes communication between management and our Board, and leads our Board’s consideration of key governance matters.

The Board’s Role in Risk Oversight

Our Board recognizes the importance of effective risk oversight in running a successful business, and in fulfilling its fiduciary responsibilities to us and our stockholders. While the Chief Executive Officer, the General Counsel and other members of our senior leadership team are responsible for the day-to-day management of risk, our Board is responsible for ensuring that an appropriate culture.

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of risk management exists within our company and for setting the right “tone at the top,” overseeing our aggregate risk profile, and assisting management in addressing specific risks, such as strategic and competitive risks, financial risks, brand and reputation risks, legal risks, regulatory risks, operational risks and cybersecurity risks. While our Board focuses on the overall risks affecting us, each committee has been delegated the responsibility for the oversight of specific risks that fall within its area of responsibility. For example:

·                  the Compensation and Talent Development Committee (the “Compensation Committee”) is responsible for overseeing the management of risks relating to our executive compensation policies, plans and arrangements and the extent to which those policies or practices increase or decrease risk for our company.

·                  the Audit Committee oversees management of financial reporting, compliance and litigation risks as well as the steps management has taken to monitor and control such exposure.

·                  the Nominating and Corporate Governance Committee manages risks associated with the independence of the Board, potential conflicts of interest and the effectiveness of the Board.

Although each committee is responsible for evaluating certain risks and overseeing the management of those risks, the full Board is regularly informed about those risks through committee reports.

Our Board believes that our current leadership structure best facilitates its oversight of risk by combining independent leadership, through the independent Chairman, independent Board committees, and majority independent Board composition. The Chairman, independent committee chairs, and other independent directors also are experienced professionals or executives who can and do raise issues for Board consideration and review. Our Board believes there is a well-functioning and effective balance between the independent Chairman and non-executive Board members, which enhances risk oversight.

Committees

The Board has three standing committees: the Audit Committee; the Compensation and Talent Development Committee; and the Nominating and Corporate Governance Committee. Each committee consists solely of independent directors. Each committee has a written charter, each of which is posted in the “Investors—Corporate Governance” section of our website at www.gobio.com. You may request a printed copy of each committee’s charter from our Corporate Secretary.

Audit Committee

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CORPORATE GOVERNANCE AND BOARD MATTERS

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CORPORATE GOVERNANCE AND BOARD MATTERS

Director Independence

The NASDAQ Listing Rules require that a majority of the Board and all members of our Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee be comprised of directors who are “independent,” as such term is defined by the NASDAQ Listing Rules. Each year, the Board undertakes a review of director independence, which includes a review of each director’s responses to questionnaires asking about any relationships with us. This review is designed to identify and evaluate any transactions or relationships between a director or any member of his or her immediate family and us, or members of our senior management or other members of the Board, and all relevant facts and circumstances regarding any such transactions or relationships. Consistent with these considerations, after review of all relevant transactions or relationships between each director, or any of his or her family members, and us, in early 2016 the Board affirmatively determined that all of our non-employee directors are “independent.” Mr. Capper, our President and Chief Executive Officer, is not an independent director by virtue of his employment with us.

Compensation and Talent Development Committee Interlocks and Insider Participation

None of our executive officers or employees serves as a member of the compensation committee, or other committee serving an equivalent function, of any entity that has one or more of its executive officers serving as a member of our Board or our Compensation Committee. None of the members of our Compensation Committee has ever been an officer or employee of ours.

Executive Sessions of Independent Directors

Our Board also holds regular executive sessions of only independent directors to conduct a self-assessment of its performance and to review management’s strategy and operating plans, the criteria by which our Chief Executive Officer and other senior executives are measured, management’s performance against those criteria and other relevant topics. In 2015, our independent directors held five executive sessions.

Communicating with the Board

Our Board has adopted a formal process by which stockholders may communicate with the Board or any of its directors. Stockholders wishing to communicate with the Board or an individual director may send a written communication to the Board or such director at our corporate office. Each communication will be reviewed by our Corporate Secretary to determine whether it is appropriate for presentation to the Board or such director. Communications determined by the Corporate Secretary to be appropriate for presentation to the Board or such director will be submitted to the Board or such director on a periodic basis. This information is available in the “Investors—Corporate Governance” section of our website at www.gobio.com.

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CORPORATE GOVERNANCE AND BOARD MATTERS

Nomination of Director Candidates

Candidates for nomination to our Board are selected by the Nominating and Corporate Governance Committee in accordance with its charter, our Amended and Restated Certificate of Incorporation and our Bylaws. All persons recommended for nomination to our Board, regardless of the source of the recommendation (including director candidates recommended by stockholders), are evaluated in the same manner by the Nominating and Corporate Governance Committee.

The Board and the Nominating and Corporate Governance Committee consider, at a minimum, the following qualifications:

·                  a candidate’s ability to read and understand basic financial statements;

·                  a candidate’s age;

·                  a candidate’s personal integrity and ethics;

·                  a candidate’s background, skills and experience;

·                  a candidate’s expertise upon which to be able to offer advice and guidance to management;

·                  a candidate’s ability to devote sufficient time to the affairs of our company;

·                  a candidate’s ability to exercise sound business judgment; and

·                  a candidate’s commitment to rigorously represent the long-term interests of our stockholders.

Candidates for director are reviewed in the context of the current composition of the Board, our operating requirements and the long-term interests of stockholders. In conducting its assessment, the Nominating and Corporate Governance Committee considers diversity, age, skills, and such other factors as it deems appropriate given the current needs of us and the Board, in an effort to maintain a balance of knowledge, experience and capability.

The Nominating and Corporate Governance Committee places a high priority on identifying individuals with diverse skill sets and types of experience, including identification of individuals from among the medical professional and medical device communities. In the case of incumbent directors whose terms of office are set to expire, the Nominating and Corporate Governance Committee reviews these directors’ overall service to our company during their terms, including the number of meetings attended, level of participation, quality of performance, and any other relationships and transactions that might impair the directors’ independence. In the case of new director candidates, the Nominating and Corporate Governance Committee also determines whether the nominee is independent.

The Nominating and Corporate Governance Committee then uses its network of contacts to compile a list of potential candidates, but may also engage, if it deems appropriate, a professional search firm. The Nominating and Corporate Governance Committee typically conducts any appropriate and necessary inquiries into the backgrounds and qualifications of possible candidates after considering the function and needs of the Board. The Nominating and Corporate Governance Committee typically meets to discuss and consider the candidates’ qualifications and then selects a nominee by majority vote.

Under the heading “Director Qualifications and Biographies” in this proxy statement, we provide an overview of each director’s and director nominee’s principal occupation, business experience and other directorships of publicly-traded companies, together with the qualifications, experience, key attributes and skills the Nominating and Corporate Governance Committee and the Board believe will best serve the interests of the Board, our company and our stockholders.

Stockholders who wish to recommend or nominate director candidates must provide information about themselves and their candidates and comply with procedures and timelines contained in our Bylaws. These procedures are described under “Other Information—2017 Stockholder Proposals or Nominations” in this proxy statement.

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Related Person Transactions and Procedures

The Board has adopted a written policy and procedures relating to the Audit Committee’s review and approval of transactions with related persons that are required to be disclosed in proxy statements under SEC regulations. A “related person” includes our directors, executive officers, 5% stockholders, as well as immediate family members of such persons and any entity owned or controlled by such persons.

Under the policy, where a transaction has been identified as a related person transaction, management must present information regarding the proposed related person transaction to our Audit Committee, or, where review by our Audit Committee would be inappropriate, to another independent body of our Board, for review. The presentation must include a description of, among other things, the material facts, the direct and indirect interests of the related persons, the benefits of the transaction to us and whether any alternative transactions are available.

In approving a transaction, the Audit Committee will take into account, among other factors, the risks, costs and benefits to us, the terms of the transaction, the availability of other sources for comparable services or products and the terms available to or from, as the case may be, unrelated third parties or to or from our employees generally. Our policy requires that, in reviewing a related person transaction, our Audit Committee must consider, in light of known circumstances, whether the transaction is in, or is not inconsistent with, the best interests of us and our stockholders, as our Audit Committee determines in the good faith exercise of its discretion.

The Audit Committee reviews and pre-approves certain types of related person transactions, including the following:

·                  director and executive officer compensation that is otherwise required to be reported in our proxy statement under SEC regulations;

·                  certain transactions with companies at which the related person is an employee only; and

·                  charitable contributions that would not disqualify a director’s independent status.

We have no related person transactions required to be reported under applicable SEC rules.

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DIRECTOR COMPENSATION

2015 Director Compensation

Under our compensation program for non-employee directors (the “Compensation Program for Non-Employee Directors”), our non-employee directors receive the following forms of consideration for service on our Board:

·                  an initial grant of restricted stock units (“RSUs”) equal to $80,000;

·                  an annual retainer of $50,000, payable, at the director’s election, in cash or RSUs; and

·                  an annual grant of RSUs equal to $80,000.

Our Chairman also receives an additional retainer of $50,000, payable, at his election, in cash or RSUs.

In July 2014, the Board amended the Compensation Program for Non-Employee Directors to provide administrative flexibility in setting vesting schedules for grants issued to new directors under the program, and to provide terms for the grant of discretionary awards under the program. All RSU grants, including those paid in lieu of cash compensation, currently have a 100% retention requirement since shares are not delivered until Board service terminates. Upon termination of Board service, a director receives all RSUs that have vested as of that date.

The following tables show the total 2015 compensation of our non-employee directors.

Non-Employee Director Compensation Elements

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DIRECTOR COMPENSATION

2015 Non-Employee Director Compensation

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EXECUTIVE OFFICERS

Executive Officer Biographies

The following are biographical summaries of our executive officers and their ages, except for Mr. Capper, whose biography is included under the heading “Director Qualifications and Biographies” in this proxy statement.

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EXECUTIVE OFFICERS

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EXECUTIVE COMPENSATION

Executive Summary

Our Compensation Philosophy and Goals

We believe that our long-term success is directly related to our ability to attract, motivate and retain highly talented individuals with outstanding ability and potential who are committed to continually improving financial performance, achieving profitable growth and enhancing stockholder value.

To that end, our compensation program is generally designed to provide performance-oriented incentives that fairly compensate our executive officers and enable us to attract, motivate and retain executives with outstanding ability and potential. Our compensation program consists of both short-term and long-term components, including cash and equity-based compensation, and is intended to reward consistent performance that meets or exceeds formally established corporate and financial performance goals and objectives. Our Compensation Committee and our senior management are focused on providing an appropriate mix of short-term and long-term incentives. Our compensation program provides long-term incentives to ensure that our executives continue in employment with us and directly tie executive compensation to the generation of stockholder value.

The Management Incentive Plan (“MIP”), our annual cash incentive bonus plan, is based primarily on two financial measures and several corporate performance objectives. The two financial measures are revenue and adjusted EBITDA, which is our earnings before interest, taxes, depreciation and amortization and excluding certain nonrecurring charges and stock compensation expense for the applicable year. The corporate performance objectives vary by year and are intended to encourage our executives to build and maintain an infrastructure that supports growth and strategy and increases revenues. In 2015, these corporate performance objectives included launching new products, increasing efficiencies, further advancing our hospital sales initiative and increasing our service capabilities.

Our Long-Term Incentive Plan (“LTIP”) is based on the same metrics as our MIP. The long term incentive awards are split equally between RSUs and stock options. The RSUs vest on the third anniversary of the grant date and the stock options vest over a four-year period from the grant date. We believe that the time-vested aspect of the RSUs and stock options promotes the retention of key talent and encourages share ownership.

Most Recent Say-on-Pay Results

We have determined that our stockholders should vote on a say-on-pay proposal every three years, consistent with the preference expressed by our stockholders at our 2011 Annual Meeting of Stockholders. At our 2014 Annual Meeting of Stockholders, we held a stockholder “Say-on-Pay” advisory vote to approve the compensation of our NEOs as disclosed in our proxy statement. Stockholders expressed overwhelming support for the compensation of our NEOs, with approximately 70% of the votes (present at the meeting and entitled to vote) cast to approve NEO compensation.

The Compensation Committee considered this vote as demonstrating strong support for our compensation programs and continued to apply the same effective principles and philosophies that have been applied in prior years when making compensation decisions for 2015. These principles and philosophies are highlighted above and described more fully below.

The next advisory votes on executive compensation and the frequency of the advisory vote on executive compensation will take place at our 2017 Annual Meeting of Stockholders.

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EXECUTIVE COMPENSATION

2015 Financial Highlights

2015 was a record year for us. We delivered exceptional financial performance in 2015, achieving record revenue, gross profit, net income and adjusted EBITDA. Compared to 2014, revenue grew by 7.2%, gross profit grew by 14.0%, net income grew by 175.5% and adjusted EBITDA grew by 61.2%. We operate under three reportable segments: (1) Healthcare, (2) Technology and (3) Research. Our Healthcare segment benefitted from continued volume strength and favorable pricing. We were also notified of an 8% increase in the mobile cardiac telemetry service (“MCT”) Medicare rate, which became effective in 2016. In addition, we are investing in and expanding our product offerings in our Technology segment and we continue to experience double-digit growth in our Research segment study volume. We were also able to achieve numerous crucial operational and performance objectives, including an increase in patient volume, development of and progress in certain specified sales initiatives, such as our CardioKey services, expanding our backlog in research and accelerating the growth of our International Normalized Ratio business.

Non-GAAP Financial Measures

The following table contains reconciliations of 2015 GAAP income from operations to adjusted EBITDA for short-term and long-term incentive purposes relating to the MIP and LTIP financial metrics set forth in this proxy statement. Management uses adjusted EBITDA so that investors have the same financial data that management uses with the belief that it will assist the investment community in properly assessing the performance of the Company for the period being reported. Adjusted EBITDA excludes certain non-cash and non-operating items to facilitate comparisons and provides a meaningful measurement that is focused on the performance of our ongoing operations.

2015 Financial Measures

(1) For the year ended December 31, 2015, we incurred $6.1 million of other charges, primarily due to patent litigation.

(2) A full discussion of components of adjusted EBITDA is found in our fourth-quarter and full-year 2015 earnings press release furnished on Form 8-K with the SEC on February 17, 2016.

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EXECUTIVE COMPENSATION

Executive Compensation Elements

2015 MIP Bonuses (Cash)

MIP payouts for all executives, including the NEOs, are based on our performance against revenue, adjusted EBITDA and certain corporate performance objectives. The target bonus is set as a percentage of base salary, which for the NEOs, ranges from 50% to 100%. 2015 MIP target goals were set by the Compensation Committee based on the budget approved by the Board and the Compensation Committee’s determination that the targets contained sufficient “stretch.” For 2015, the Compensation Committee determined that the financial and corporate performance goals under the MIP were to be weighted as follows:

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EXECUTIVE COMPENSATION

For 2015, we achieved 97.5% of our revenue target and 110.3% of our adjusted EBITDA target as shown in the table below. See footnotes to “Financial Results for MIP Purposes” on page 25.

2015 MIP and LTIP Performance Against Primary Financial Metrics

Threshold, Target and Actual Performance

2015 LTIP Awards (RSUs and Stock Options)

Long-term incentive compensation opportunities for our executives, including the NEOs, are entirely equity-based and utilize the same financial and corporate performance objectives as our MIP: (i) revenue, (ii) adjusted EBITDA and (iii) certain corporate performance objectives. Our LTIP grants are designed to encourage share ownership and promote the retention of key talent. Under our LTIP, eligible executives receive an award of time-vested RSUs and stock options, approximately equal in expected value. The grants made in a particular year reflect the Company’s prior year performance against the financial and corporate performance objectives discussed above. The RSUs vest on the third anniversary of the grant date while the stock options vest annually over a four-year period from the grant date. The value of each NEO’s LTIP grant is determined by the Compensation Committee based on its review of peer-group market data, the executive’s roles and responsibilities, his or her impact on our results, and advancement potential. Our achievement levels with respect to our financial performance goals are set forth above.

Our Compensation Practices

We continue to incorporate leading practices into our compensation programs:

·                  Our compensation philosophy targets total direct compensation of our NEOs at the 50th percentile of peer group companies.

·                  We prohibit our employees, officers and directors from hedging or engaging in any speculative trading with respect to our common stock.

·                  We do not provide tax “gross-ups” for perquisites provided to our executive officers.

·                  Our equity-incentive plan prohibits the repricing or exchange of equity awards without stockholder approval.

·                  We do not have “single trigger” features on parachute payments in any employment agreements, with the exception of our Chief Executive Officer whose equity awards immediately accelerate and become fully vested upon a change in control.

·                  We have not provided golden-parachute excise-tax gross-ups in any employment agreements offered to executives.

·                  We require our executive officers to meet share-ownership guidelines with respect to shares acquired upon vesting or exercise. The ownership guideline for our Chief Executive Officer is four times base salary, the guideline for our Chief Financial Officer is two times base salary and the guideline for our other executive officers is one times base salary. Executive officers must retain 100% of the shares (on a net, after-tax basis) acquired upon the exercise of options or vesting of restricted shares until the guideline is satisfied.

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EXECUTIVE COMPENSATION

·                  The Compensation Committee has engaged an independent outside compensation consultant. See “Role of the Compensation Consultant and Executives.”

·                  In the event of a material restatement of our financial results, the Board or the Compensation Committee will review the incentive compensation that was paid or awarded, with respect to the period to which the restatement relates, to our current and former officers who engaged in fraud or other misconduct that resulted in the restatement, and may, in its sole discretion recoup any incentive-based compensation paid or awarded to the current or former officer(s) in excess of the amount that would have been paid or awarded to the current or former officer(s) under our restated financial statements.

Compensation and Talent Development Committee Report

The Compensation and Talent Development Committee has reviewed and discussed with management the Compensation Discussion and Analysis. Based on its review and discussions with management, the Compensation and Talent Development Committee recommended to the Board, and the Board approved, the inclusion of the Compensation Discussion and Analysis in this proxy statement and incorporated by reference in our 2015 Annual Report.

Compensation Discussion and Analysis

This section discusses our executive compensation program for 2015, the compensation decisions made under those programs and the factors that were considered by the Compensation Committee in making those decisions. It focuses on the compensation for each of our NEOs for 2015:

·                  Joseph H. Capper, President and Chief Executive Officer;

·                  Heather C. Getz, Senior Vice President and Chief Financial Officer;

·                  Michael Geldart, Former Senior Vice President and Chief Operating Officer who resigned on October 16, 2015;

·                  Daniel Wisniewski, Senior Vice President, Technical Operations;

·                  Peter Ferola, Senior Vice President and General Counsel; and

·                  Fred (Andy) Broadway III, Senior Vice President, Sales and Marketing.

This Compensation Discussion and Analysis is divided into two parts:

Part 1 discusses our 2015 performance, the Compensation Committee’s actions in 2015, our compensation practices and the compensation decisions for our NEOs.

Part 2 discusses our compensation framework in more detail, including how we apply our compensation philosophy and determine competitive positioning of our executive compensation and other policies.

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2015 Performance Overview

2015 was an outstanding year for us and our stockholders. Among the accomplishments of our executive team, led by Mr. Capper, were:

·                  Highest annual adjusted EBITDA in our corporate history at $33.0 million.

·                  Recorded $7.4 million GAAP net income for the full year 2015, highest in our corporate history.

·                  Achieved fourteenth consecutive quarter of year over year revenue growth.

2015 Compensation and Talent Development Committee Actions

The Compensation Committee regularly evaluates the design and performance of our executive compensation programs to ensure they are operating as intended and consistent with relevant benchmarks and market practices. The Compensation Committee also reviews its compensation philosophy each year. As a result of these evaluations and reviews, the Compensation Committee took the following actions in 2015:

2016 Compensation and Talent Development Committee Actions

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EXECUTIVE COMPENSATION

Executive Compensation Elements

The following chart summarizes the key features of each element of our executive compensation program: Cash (salary and annual bonus); Equity (long-term incentive); Retirement (retirement benefit program) and Other (perquisites). Each type is discussed in detail in the remainder of this Compensation Discussion and Analysis, and the accompanying tables.

Summary of Key 2015 Compensation Decisions

The following highlights the Compensation Committee’s key NEO compensation decisions for 2015, as reported in the Summary Compensation Table on page 34. The decisions were made after considering input from the Compensation Committee’s independent compensation consultant, Willis Towers Watson & Co. (“Towers Watson”).

Chief Executive Officer Compensation

In February 2015, the Compensation Committee took the following actions on Mr. Cappers’ compensation:

·         His base salary was held at $535,000;

·         His MIP target award opportunity was maintained at $535,000 (100% of base salary); and

·         His LTIP target expected value was maintained at $1,070,000 (200% of base salary).

After benchmarking Mr. Capper’s compensation with our peer group, the Compensation Committee determined that Mr. Capper was between the 50th and 75th percentiles for overall compensation.

Compensation of Other NEOs

The Compensation Committee approved salaries and set incentive-compensation targets of the other NEOs taking into account the Chief Executive Officer’s recommendations, the advice of Towers Watson, peer group salary data, relative duties and responsibilities, advancement potential and impact on our financial and strategic performance. Consistent with the approach for the Chief Executive Officer, the Compensation Committee provided no increases in LTIP incentive compensation or annual base salary, with the exception of Mr. Broadway who received a 5% increase in base salary.

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EXECUTIVE COMPENSATION

2014-2016 NEO Base Salaries and MIP Target

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(1) Mr. Geldart resigned as our Senior Vice President and Chief Operating Officer, effective October 16, 2015.

Our Management Incentive Plan

Plan Criteria and Rationale

The annual incentives for all MIP participants, including the NEOs, are based on our financial and corporate performance as a whole measured primarily by revenue, adjusted EBITDA and certain corporate performance objectives.

In 2015, as in past years, the Compensation Committee evaluated the continued use of the MIP financial and corporate performance objectives using the following principles:

·                  Metrics that support achievement of an annual Board-approved operating plan;

·                  Metrics that support profitable growth while preserving cash for longer-term investment;

·                  Metrics that provide a clear line of sight—i.e., that are clearly understood and can be affected by the performance of our executives and employees;

·                  Metrics that are consistent with market practice and commonly used within our peer group; and

·                  Corporate performance metrics that encourage our executives to build and maintain an infrastructure that supports our growth and financial performance.

Following this review, the Compensation Committee concluded that the continued use of these measures supports these principles because they are linked to top-line growth, the creation of stockholder value and encourage our executives to continue to build a successful and growing commercial organization. For 2015, the Compensation Committee determined that the financial and corporate performance goals under the MIP were weighted as follows:

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EXECUTIVE COMPENSATION

Target Setting

The target MIP awards for our NEOs are set as a percentage of base salary. Target awards are reviewed annually to ensure alignment with our compensation philosophy to target total direct compensation at the market median. Variances from this goal are based on an evaluation of competitive market data, internal equity considerations among the Chief Executive Officer’s direct reports and individual performance evaluations.

For 2015, target MIP opportunities for the NEOs ranged from 50% to 100% of their year-end base salary rate, as follows:

The Compensation Committee has historically approved funding of MIP awards at less than 100%, as set forth below:

Financial Results for MIP Purposes

The Compensation Committee set the MIP targets based on its evaluation of the budget amounts and its assessment that the targets contained a sufficient degree of “stretch.”

2015 Performance Metrics, Weight and Achievement

(all amounts in millions)

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(1)                                     For a reconciliations of 2015 GAAP income from operations to adjusted EBITDA for short-term and long-term incentive purposes relating to the MIP and LTIP financial metrics, please set “Non-GAAP Financial Measures” on page 18.

(2)                                     Our 2015 corporate performance objectives included launching new products, increasing efficiencies, further advancing our hospital sales initiative and increasing our service capabilities.

2015 MIP Awards

In February 2016, our Compensation Committee evaluated the level of achievement of our financial and corporate performance objectives relating to operational commitments relative to the executive officer’s position, and approved funding of the 2015 MIP award at 100% of target. In making its decision to approve 2015 MIP awards at 100% of target, our Compensation Committee acknowledged the management team’s achievement of the corporate performance objectives and the revenue of $178.5 million and adjusted EBITDA of $33.0 million.

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EXECUTIVE COMPENSATION

The table below sets forth 2015 target MIP opportunities for our NEOs and the actual payout amounts and percentage of achievement of the target amounts. The actual payout amounts are computed based on the actual performance.

2015 MIP Target and Actual Payouts and Achievement

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(1)                                     Mr. Geldart resigned as our Senior Vice President and Chief Operating Officer, effective October 16, 2015.

Our Long-Term Incentive Plan

Plan Criteria and Rationale

Long-term compensation for all our executives, including our NEOs, is entirely equity-based. Our LTIP is structured to align our executives’ interests with stockholders and to emphasize the Compensation Committee’s expectation that our executive officers should focus their efforts on growing our business while carefully managing capital.

The objectives of the LTIP are as follows:

·                  drive growth in stockholder value;

·                  reward key employees for demonstrated value creation;

·                  promote retention for key employees; and

·                  build equity ownership among the executive team.

We believe that, by providing our executives the opportunity to increase their ownership of our stock, the best interests of stockholders and executives will be better aligned and we will encourage long-term performance objectives.

To help further these objectives, our LTIP uses the same financial and corporate performance objectives that we use for non-equity based compensation under our MIP. At the beginning of each calendar year, awards are granted following the Compensation Committee’s evaluation of the achievement of the goals under our MIP. For the 2015 performance year, these LTIP targets were revenue of $183.0 million, adjusted EBITDA of $30.0 million and certain corporate performance objectives.

One-half of an award is granted in the form of a stock option award, based on the Black-Scholes value of the option at the time of grant, with a ten-year term and vesting at the rate of 25% per year commencing on December 31st and on each of the first, second and third anniversaries thereafter while the other half of the award is granted in the form of an RSU award, based on the closing stock price on the date of grant. The RSU award will vest in full on the third anniversary of the date of grant.

Stock awards enable our executive officers to participate in any increase in stockholder value and personally participate in the risks of business setbacks. It is our belief that long-term incentives motivate and reward successful long-term value creation and the achievement of financial goals for us and our stockholders, as well as help us retain top executive talent.

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EXECUTIVE COMPENSATION

All executive officers and other employees selected by our Compensation Committee are eligible to receive awards under the LTIP. The participants in the LTIP will receive awards based on each individual’s target dollar value, which is determined by our Compensation Committee. For our NEOs, the individual LTIP target dollar values approved by our Compensation Committee for fiscal 2015 performance, expressed as a percentage of each person’s base salary, were as follows:

In 2015, our Compensation Committee awarded at 140% of the target equity payout to executives under the LTIP based on 2014 results, and in 2016 our Compensation Committee awarded at 100% of target equity payout to executives under the LTIP based on 2015 results, with the exception of Mr. Broadway and certain other executive employees who were granted LTIP awards at 120% of target equity payout because of their individual contributions to our record sales in the fiscal year ended December 31, 2015.

LTIP Award Values

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(1)                                     The 2015 LTIP Payout values are reflected in the Summary Compensation Table appearing on page 34 of this proxy statement. The 2016 LTIP Payout values will be reported in the Summary Compensation Table of the proxy statement for the 2017 Annual Meeting of Stockholders.

(2)                                     Mr. Broadway’s 2016 LTIP Payout (based on 2015 performance) was granted at 120% of target value as a bonus due to our record sales in 2015.

(3)                                     Mr. Geldart resigned as our Senior Vice President and Chief Operating Officer, effective October 16, 2015.

Equity Award Grant Practices

In 2014, the Compensation Committee changed the structure of the LTIP program, effective for the 2015 and 2016 payouts, by allowing grant values to be determined more subjectively by the Board, which will allow them to vary from target based on prior year performance, year over year performance and other factors. The Compensation Committee also eliminated the minimum grant requirement of 60% of target.

The Compensation Committee also delegates authority to our Chief Executive Officer to make a limited number of grants between meetings to employees at the vice president and director level in connection with the hiring or promotion of employees or for retention purposes.

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EXECUTIVE COMPENSATION

Equity Plans