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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2007
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period from            to
 Commission file number: 000-51865
 Visicu, Inc.
  Delaware
    
    52-2107238(State or other jurisdiction
    
    (I.R.S. Employer Identification No.)of incorporation or organization)
 217 East Redwood Street, Suite 1900
Baltimore, Maryland 21202-3315
 (410) 276-1960
 þ o
  o o þ
 o þ
  Class
    
    Outstanding Shares at May 1, 2007Common Stock, $.0001 par value per share
    
    32,665,155 shares




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VISICU, INC.
Quarterly Report on Form 10-Q for the three month period ended March 31, 2007

INDEX
 PagePART I 
    
    FINANCIAL INFORMATIONItem 1.
    
    Financial Statements
    
 3Balance Sheets as of March 31, 2007 (unaudited) and
December 31, 2006
    
 3Statements of Operations Three Months Ended March 31,
2007 and 2006 (unaudited)
    
    4Statements of Cash Flows Three Months Ended March 31,
2007 and 2006 (unaudited)
    
    5Notes to Financial Statements (unaudited)
    
    6Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    9Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    15Item 4.
    
    Controls and Procedures
    
    15PART II 
    
    OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    16Item 1A.
    
    Risk Factors
    
    16Item 6.
    
    Exhibits
    
    17Signatures
 - 2 -




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PART I  FINANCIAL INFORMATION
 Item 1. Financial Statements
 VISICU, INC.
BALANCE SHEETS
 December 31,
    
    
    March 31,2006
    
    
    2007(Unaudited)AssetsCurrent assets:Cash and cash equivalents
    
    $
    74,188
    
    
    $
    101,524Marketable securities
    
    
    46,047
    
    
    
    27,807Accounts receivable
    
    
    11,465
    
    
    
    4,813Prepaid expenses and other current assets
    
    
    1,686
    
    
    
    1,499Deferred tax assets
    
    
    7,915
    
    
    
    7,195Total current assets
    
    
    141,301
    
    
    
    142,838Property and equipment:Computer equipment and software
    
    
    2,496
    
    
    
    2,589Office furniture and equipment
    
    
    362
    
    
    
    370Leasehold improvements
    
    
    182
    
    
    
    1993,040
    
    
    
    3,158Accumulated depreciation
    
    
    1,409
    
    
    
    1,6231,631
    
    
    
    1,535Deferred contract costs
    
    
    4,477
    
    
    
    4,490Deferred tax assets
    
    
    6,140
    
    
    
    6,073Marketable securities
    
    
    2,960
    
    
    
    Other assets
    
    
    503
    
    
    
    467Total assets
    
    $
    157,012
    
    
    $
    155,403Liabilities and stockholders equityCurrent liabilities:Accounts payable and accrued expenses
    
    $
    1,244
    
    
    $
    1,940Accrued compensation and related costs
    
    
    1,581
    
    
    
    941Deferred revenue
    
    
    30,290
    
    
    
    28,670Other current liabilities
    
    
    27
    
    
    
    27Total current liabilities
    
    
    33,142
    
    
    
    31,578Other long-term liabilities
    
    
    468
    
    
    
    418Deferred revenue
    
    
    19,074
    
    
    
    16,455Total liabilities
    
    
    52,684
    
    
    
    48,451Stockholders equity:Preferred Stock, $.0001 par value;
10,000,000 shares authorized; no shares
issued and outstanding at December 31,
2006 and March 31, 2007
    
    
    
    
    
    
    Common stock, $.0001 par value,
100,000,000 shares authorized;
32,485,185 and 32,616,495 issued and
outstanding at December 31, 2006 and
March 31, 2007, respectively
    
    
    3
    
    
    
    3Additional paid-in capital
    
    
    133,202
    
    
    
    133,916Accumulated deficit
    
    
    (28,877
    )
    
    
    (26,967
    )Total stockholders equity
    
    
    104,328
    
    
    
    106,952Total liabilities and stockholders equity
    
    $
    157,012
    
    
    $
    155,403
 See accompanying notes to financial statements.
 - 3 -




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VISICU, INC.
STATEMENTS OF OPERATIONS
 Three Months EndedMarch 31,2006
    
    
    2007Revenues:License revenue
    
    $
    3,018
    
    
    $
    3,951Service revenue
    
    
    3,651
    
    
    
    4,789Total revenues
    
    
    6,669
    
    
    
    8,740Direct cost of revenues:Cost of licenses
    
    
    171
    
    
    
    281Cost of services (1)
    
    
    1,232
    
    
    
    1,365Total direct cost of revenues
    
    
    1,403
    
    
    
    1,646Gross profit
    
    
    5,266
    
    
    
    7,094Operating expenses:Sales and marketing (1)
    
    
    1,305
    
    
    
    1,264Research and development (1)
    
    
    1,397
    
    
    
    1,535General and administrative (1)
    
    
    2,112
    
    
    
    2,883Total operating expenses
    
    
    4,814
    
    
    
    5,682Income from operations
    
    
    452
    
    
    
    1,412Other income (expense):Interest income
    
    
    140
    
    
    
    1,632Interest expense
    
    
    (2
    )
    
    
    (6
    )138
    
    
    
    1,626Income before income taxes
    
    
    590
    
    
    
    3,038Income tax expense
    
    
    276
    
    
    
    1,065Net income
    
    $
    314
    
    
    $
    1,973Net income per share:Basic
    
    $
    0.06
    
    
    $
    0.06Diluted
    
    $
    0.01
    
    
    $
    0.06Weighted-average shares outstanding used in
computing per share amounts:Basic
    
    
    5,276
    
    
    
    32,354Diluted
    
    
    27,500
    
    
    
    34,557(1) Amounts include non-cash stock-based
compensation expense as follows:Cost of services
    
    $
    35
    
    
    $
    66Sales and marketing expense
    
    
    127
    
    
    
    93Research and development expense
    
    
    118
    
    
    
    135General and administrative expense
    
    
    291
    
    
    
    391Total non-cash stock-based compensation expense
    
    $
    571
    
    
    $
    685
 See accompanying notes to financial statements.
 - 4 -




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VISICU, INC.
STATEMENTS OF CASH FLOWS
 Three Months Ended March 31,2006
    
    
    2007Operating activitiesNet income
    
    $
    314
    
    
    $
    1,973Adjustments to reconcile net income to net cash provided by operating activities:Depreciation
    
    
    204
    
    
    
    214Amortization
    
    
    29
    
    
    
    68Deferred income taxes
    
    
    
    
    
    
    787Non-cash stock-based compensation expense
    
    
    571
    
    
    
    685Excess tax benefit from stock-based compensation
    
    
    (73
    )
    
    
    (51
    )Changes in operating assets and liabilities:Accounts receivable
    
    
    3,835
    
    
    
    6,655Prepaid expenses and other current assets
    
    
    (138
    )
    
    
    187Deferred contract costs
    
    
    (10
    )
    
    
    (13
    )Accounts payable and accrued expenses
    
    
    (171
    )
    
    
    486Accrued compensation and related costs
    
    
    (651
    )
    
    
    (640
    )Deferred revenue
    
    
    (659
    )
    
    
    (4,193
    )Net cash provided by operating activities
    
    
    3,251
    
    
    
    6,158Investing activitiesPurchases of property and equipment
    
    
    (111
    )
    
    
    (118
    )Purchases of marketable securities
    
    
    
    
    
    
    (100
    )Maturities of marketable securities
    
    
    
    
    
    
    21,300Capitalized software additions
    
    
    (7
    )
    
    
    (75
    )Change in other assets
    
    
    12
    
    
    
    (8
    )Net cash provided by (used in) investing activities
    
    
    (106
    )
    
    
    20,999Financing activitiesPayment of financing costs for initial public offering
    
    
    (162
    )
    
    
    Repayment of obligations under capital lease
    
    
    (5
    )
    
    
    (6
    )Exercise of options to purchase common stock
    
    
    764
    
    
    
    134Excess tax benefit from stock-based compensation
    
    
    73
    
    
    
    51Net cash provided by financing activities
    
    
    670
    
    
    
    179Net increase in cash and cash equivalents
    
    
    3,815
    
    
    
    27,336Cash and cash equivalents at beginning of period
    
    
    11,379
    
    
    
    74,188Cash and cash equivalents at end of period
    
    $
    15,194
    
    
    $
    101,524
 See accompanying notes to financial statements.
 - 5 -




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VISICU, INC.
NOTES TO FINANCIAL STATEMENTS
(unaudited)
 1. Basis of Presentation
    2. Marketable Securities
   3. Stock-Based Compensation
 Summary of Stock-Based Compensation Expense
  Summary of Stock Option Activity
  Weighted-Number of
    
    AverageOptions
    
    Exercise(in thousands)
    
    PriceOptions outstanding at beginning of year
    
    
    3,438
    
    
    $
    2.25Options granted
    
    
    501
    
    
    
    10.18Options exercised
    
    
    (131
    )
    
    
    1.02Options forfeited
    
    
    (51
    )
    
    
    5.59Options outstanding at March 31, 2007
    
    
    3,757
    
    
    $
    3.31Vested and expected to vest at March 31, 2007
    
    
    3,586
    
    
    $
    3.31Exercisable at March 31, 2007
    
    
    2,039
    
    
    $
    1.24
  - 6 -




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Restricted Common Stock
  Weighted-AverageNumber of shares
    
    Grant-Date(in thousands)
    
    Fair ValueRestricted common stock at beginning of year
    
    
    211
    
    
    $
    5.19Vested
    
    
    (21
    )
    
    $
    4.96Restricted common stock at March 31, 2007
    
    
    190
    
    
    $
    5.22
 4. Net Income Per Share
  Three Months Ended March 31,2006
    
    
    2007NumeratorBasic and diluted:Net income
    
    $
    314
    
    
    $
    1,973DenominatorBasic:Weighted-average shares outstanding
    
    
    5,276
    
    
    
    32,354Diluted:Weighted-average shares outstanding
    
    
    5,276
    
    
    
    32,354Dilutive effect of:Stock options
    
    
    2,839
    
    
    
    2,203Assumed conversion of preferred stock
    
    
    19,385
    
    
    
    Total
    
    
    27,500
    
    
    
    34,557Net income per shareBasic
    
    $
    0.06
    
    
    $
    0.06Diluted
    
    $
    0.01
    
    
    $
    0.06
 5. Income Taxes
 Accounting for Uncertainty in Income Taxes,
    6. Concentrations of Credit Risk
   - 7 -




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7. Contingencies
  - 8 -




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
  Overview
     Sources of Revenue
      - 9 -




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Direct Cost of Revenues
  
    
    salaries, benefits and stock-based compensation for personnel to provide professional and support services to customers;
    
    cost of customer-related services provided by subcontractors;
    
    billable and non-billable travel, lodging and other out-of -pocket customer-related expenses; and
    
    license fees for third-party software used to enhance our program.
  Operating Expenses
 Sales and Marketing.
 
    
    salaries, benefits and stock-based compensation related to sales and marketing personnel;
    
    commissions;
    
    travel, lodging and other out-of -pocket expenses; and
    
    marketing programs such as trade shows and advertising campaigns.
  Research and Development.
 General and Administrative.
 
    
    salaries, benefits and stock-based compensation related to general and administrative personnel;
    
    professional fees; and
    
    facilities and other related overhead.
  Legal and Regulatory Proceedings
  Critical Accounting Policies
   - 10 -




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Revenue Recognition
 Software Revenue Recognition
   Allowance for Doubtful Accounts
   Deferred Contract Costs
  Software Development Costs
 Accounting for the Costs of Computer Software to be Sold, Leased, or Otherwise Marketed.
  Stock-Based Compensation
 Accounting for Stock Issued to Employees. Accounting for Stock-Based Compensation, Accounting for Stock-Based Compensation-Transition and Disclosure.
 Share-Based Payment,
 - 11 -




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Income Taxes
    Accounting for Uncertainty in Income Taxes,
 - 12 -




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Results of Operations
  Three Months EndedMarch 31,2006
    
    2007Revenues:License revenue
    
    
    45
    %
    
    
    45
    %Service revenue
    
    
    55
    
    
    
    55Total revenues
    
    
    100
    
    
    
    100Direct cost of revenues:Cost of licenses
    
    
    3
    
    
    
    3Cost of services
    
    
    18
    
    
    
    16Total direct cost of revenues
    
    
    21
    
    
    
    19Gross profit
    
    
    79
    
    
    
    81Operating expenses:Sales and marketing
    
    
    20
    
    
    
    14Research and development
    
    
    21
    
    
    
    18General and administrative
    
    
    32
    
    
    
    33Total operating expenses
    
    
    72
    
    
    
    65Income from operations
    
    
    7
    
    
    
    16Other income:Total other income
    
    
    2
    
    
    
    19Income before income taxes
    
    
    9
    
    
    
    35Income tax expense
    
    
    4
    
    
    
    12Net income
    
    
    5
    %
    
    
    23
    %
 Three Months Ended March 31, 2007 and 2006
 Revenues.
      Direct Cost of Revenues.
  - 13 -




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Gross Profit.
 Sales and Marketing Expense.
 Research and Development Expense.
 General and Administrative Expense.
 Other Income.
 Income Taxes.
 Liquidity and Capital Resources
     - 14 -




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Forward-looking Statements
  
    
    market acceptance of our principal product offering and any new product releases;
    
    the price, performance and reliability of our products and services;
    
    our ability to attract and retain new customers and renewal rates of our existing customers;
    
    unanticipated delays or problems in releasing new products and services;
    
    financial and budget constraints of hospitals, changes in our pricing practices or our
competitors pricing practices and changes in the healthcare industry;
    
    the introduction or availability of competing products or services and other competitive factors;
    
    changes in the government regulation of our products and services;
    
    the loss of intellectual property protection;
    
    the loss of key management personnel; and
    
    the possibility of unfavorable outcomes in regulatory and legal proceedings.
  Item 3. Quantitative and Qualitative Disclosures About Market Risk.
  Item 4. Controls and Procedures.
    - 15 -




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PART II  OTHER INFORMATION
 Item 1. Legal Proceedings.
    ex parte
    Item 1A. Risk Factors.
  - 16 -




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Item 6. Exhibits.
 ExhibitNo.
    
    Exhibit Title3.1 *
    
    Fourth Amended and Restated Certificate of Incorporation of the Company3.2 *
    
    Amended and Restated Bylaws of the Company4.1 *
    
    Specimen Common Stock Certificate10.1 * 
    
    Visicu, Inc. Equity Incentive Plan10.2 ** 
    
    Form of Incentive Stock Option Agreement under the Visicu, Inc. Equity Incentive Plan10.3 ** 
    
    Form of Nonstatutory Stock Option Grant Agreement under the Visicu, Inc. Equity Incentive Plan10.4 ** 
    
    Employment Agreement between Visicu, Inc. and Frank T. Sample dated as of September 17, 2001, as amended on April
15, 200410.5 ** 
    
    Form of Indemnification Agreement for directors and Section 16 executive officers10.6 **
    
    Lease between Redwood Tower Limited Partnership and Visicu, Inc. dated as of June 22, 200410.7 **
    
    Warrant dated July 17, 2003 to Comerica Bank to purchase 43,796 shares of Series C Preferred Stock10.8 ** 
    
    Offer Letter to Vincent E. Estrada, dated as of August 8, 200510.9 ** 
    
    Management Severance Plan10.10 ***
    
    Assignment Pursuant to 37 CFR §3.56, dated April 14, 2000, executed by Brian A. Rosenfeld, M.D. and Michael Breslow31.1
    
    Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act31.2
    
    Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act32.1
    
    Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 135032.2
    
    Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350
 
 *
    
    Incorporated herein by reference to the Registration Statement on Form S-1/A,
File No. 333-129989, filed on March 13, 2006.**
    
    Incorporated herein by reference to the Registration Statement on Form S-1, File
No. 333-129989, filed on November 29, 2005.***
    
    Incorporated herein by reference to the Registration Statement on Form S-1/A,
File No. 333-129989, filed on January 19, 2006.
    
    Indicates a management contract or any compensatory plan, contract or arrangement. - 17 -




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SIGNATURES
  VISICU, INC.Date: May 8, 2007
    
    By:
    
    /s/ Frank T. SampleFrank T. SamplePresident, Chief Executive Officer andChairman of the Board of DirectorsDate: May 8, 2007
    
    By:
    
    /s/ Vincent E. EstradaVincent E. EstradaSenior Vice President andChief Financial Officer