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VOLCANO REPORTS FULL YEAR REVENUES INCREASE 31 PERCENT
FOURTH QUARTER REVENUES INCREASE 23 PERCENT
(SAN DIEGO, CA), February 17, 2009Volcano Corporation (NASDAQ: VOLC), a leader in the development, manufacturing and sales of products for the diagnosis and treatment of coronary and peripheral artery disease, today reported that revenues for the full year 2008 increased 31 percent over full year 2007 and that revenues for the fourth quarter of 2008 increased 23 percent over those in the fourth quarter of 2007.
For the year ended December 31, 2008, Volcano reported revenues of $171.5 million versus revenues of $130.6 million in fiscal 2007. Revenues in the fourth quarter of 2008 were $49.3 million versus revenues of $40.0 million in the same period a year ago. The company said that the growth in revenues in the fourth quarter was driven by a 20 percent increase in intravascular ultrasound (IVUS) revenues and increased adoption of its Functional Measurement (FM) offerings.
For the fourth quarter of 2008, the company reported GAAP net income of $1.4 million, or $0.03 per diluted share, versus a GAAP net loss of $23.7 million, or $0.53 per share, in the same period of 2007. Included in the results for the fourth quarter of 2007 are in-process research and development charges of $26.2 million related to Volcanos acquisition of CardioSpectra, Inc., that was completed in December 2007. Weighted average shares for the fourth quarter of 2008 were 50.3 million versus 44.9 million a year ago, reflecting the impact of the companys equity offering that was completed in the fourth quarter of 2007.
Excluding stock-based compensation expense of $2.5 million and in-process research and development charges of $274,000, the company reported net income of $4.2 million, or $0.08 per diluted share, in the fourth quarter of 2008. In the fourth quarter of 2007, excluding stock-based compensation expense of $2.0 million and the in-process research and development charge of $26.2 million, the company reported net income of $4.4 million, or $0.09 per diluted share. A reconciliation of the companys GAAP and non-GAAP results can be found in todays earnings news release on the companys website at www.volcanocorp.com.
For the full year 2008, the company reported a GAAP net loss of $13.7 million, or $0.29 per share versus a GAAP net loss of $26.6 million, or $0.66 per share in 2007. Excluding in-process research and development charges of $12.7 million, stock-based compensation expense of $9.5 million and $2.9 million in due diligence, legal and accounting expenses related to a proposed acquisition that was not consummated, Volcano reported net income of $11.4 million, or $0.23 per diluted share, in 2008. Excluding in-process research and development charges of $26.2 million and stock-based compensation expense of $6.7 million, Volcano reported net income of $6.3 million, or $0.15 per diluted share, in 2007. A reconciliation of the companys GAAP and non-GAAP results can be found in todays earnings news release on the companys website at www.volcanocorp.com. The company ended fiscal 2008 with $149.9 million in cash, cash equivalents and short-term available for sale investments.
Volcano concluded 2008 in a very strong manner, executing on our market expansion and technology innovation initiatives, as well as our product pipeline development programsboth through our internal efforts and the three key acquisitions we completed during the year, said Scott Huennekens, president and chief executive officer.
As evidenced by our revenue growth, we continued to increase the market presence of our IVUS offerings, placing 330 IVUS consoles during the quarter versus 177 in the fourth quarter of 2007, or an increase of 86%. Importantly, most of these 330 IVUS consoles were multi-modality with FM capability as well. In total, we placed 867 IVUS consoles in 2008 versus 597 in 2007, an increase of 45 percent, and also experienced a commensurate growth in our IVUS disposable revenues, which grew 18 percent versus the fourth quarter of 2007 and 26 percent for the year. In addition, our FM business grew 36 percent in the quarter versus the fourth quarter of 2007. We also achieved gross margin improvement and leveraged our operating expenses, which enabled us to be profitable on a GAAP basis in the quarter.
The patients and company are benefiting, he continued, from a continuing favorable environment for percutaneous coronary interventions, the proliferation of IVUS and FM integrated systems and the release of positive data, including the recent publication of trial data from FAME (Fractional Flow Reserve vs. Angiography for Multivessel Evaluation) in The New England Journal of Medicine that we believe will be a catalyst for our FM business going forward.
We continue to build out our direct sales force in the U.S. and Europe and implement our direct distribution strategy in Japan. We also achieved significant progress with our future OCT, forward-looking IVUS and image guided therapy offerings designed to complement our multi-modality platform strategy and address markets that are potentially larger than those we currently serve. The first of the new forward-looking IVUS devices is expected to be introduced later this year, Huennekens noted.
Guidance for 2009
The company provided the following financial guidance for 2009
For its base IVUS and FM businesses, the company expects revenues of $203-$207 million, an increase of 18-21 percent over IVUS and FM revenues in 2008. Gross margin for its IVUS and FM business is expected to be in the range of 63-64 percent. Operating expenses related to its IVUS and FM businesses, including stock-based compensation expense and approximately $3.2 million of intangible amortization, are expected to be 63-64 percent of revenues. These expectations reflect increased SG&A spending to build out the companys presence in Japan to support its direct distribution strategy, the build out of its sales force in the U.S. and Europe, infrastructure spending and a modest increase in research and development spending to fund product development programs, clinical trials and regulatory activities.
Revenues attributable to Axsun Technologies, Inc., which the company acquired at the end of 2008 and will operate as a wholly-owned subsidiary, are expected to be in the range of $15-$16 million, with approximately 85 percent generated by Axsuns industrial segment. Gross margin at Axsun is expected to be in the range of 24-25 percent. Operating expenses are expected to be 44-45 percent of revenues. Major spending at Axsun during 2009 will include research and development programs to develop lower cost platforms and new devices and systems for medical imaging applications, as well as market development initiatives.
On a consolidated basis, Volcano expects total revenues in fiscal 2009 of $218-$223 million, an increase of 27-30 percent over revenues in 2008. Gross margin is expected to be in the range of 60-62 percent, reflecting the dilutive effect of the Axsun business. Operating expenses, including stock-based compensation expense of approximately $13.3 million and approximately $4.1 million of intangible amortization, is expected to be 62-63 percent of revenues.
The following information was filed by Volcano Corp (VOLC) on Tuesday, February 17, 2009 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.
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