Volcano Reports Record
Third Quarter Revenues
Company Cites Disposable Revenue Growth, Expanding Installed Base and
Release of Favorable Data Around the Use of IVUS
|
|
November 8, 2007, San Diego, California --
Volcano Corporation (Nasdaq: VOLC), a leading provider of intravascular
ultrasound (IVUS) and functional measurement (FM) products designed
to enhance the diagnosis and treatment of vascular and structural
heart diseases, today reported results for the third quarter and
first nine months of fiscal 2007.
For the quarter ended September 30, 2007, Volcano reported record revenues of $31.5 million, a 13 percent increase over revenues of $27.8 million in the third quarter a year ago. For the third quarter of 2007, the company reported a net loss on a GAAP basis of $652,000, or $0.02 per share, compared with net income of $501,000, or $0.01 per diluted share, in the same period a year ago. Excluding stock-based compensation expense of $2.0 million, the company reported net income of $1.3 million, or $0.03 per diluted share. Excluding stock-based compensation expense of $809,000,
the company reported net income of $1.3 million, or $0.04 per diluted share, in the third quarter of 2006. Weighted average basic shares outstanding in the quarter were 38.7 million compared with 33.0 million in the third quarter of 2006. A reconciliation of the company's GAAP to non-GAAP results can be found in today's earnings news release on the company's website at http://www.volcanocorp.com. Volcano ended the quarter with $92.4 million in cash and cash equivalents and short-term available-for-sale investments. This balance does not include the proceeds from the company's stock offering completed on October 23, 2007, which generated proceeds of approximately $123 million, after deducting underwriting commissions and discounts, but before expenses. "Our third quarter results represent record revenues for the company and reflect our success at growing sales of our IVUS
disposables and expanding our installed base of IVUS consoles. IVUS disposable revenues grew 24 percent globally and 28 percent in the United States year-over-year. Through the first three quarters of 2007, we have placed more IVUS consoles than we did in all of last year. In addition, our year-to-date growth has occurred across all our geographies," said
Scott Huennekens, president and chief executive officer of Volcano. "We believe the growth of our IVUS activity reflects several factors, including the ongoing release of favorable data regarding the value of IVUS in stenting procedures. There were a number of presentations at the recent Transcatheter Cardiovascular Therapeutics (TCT) meeting demonstrating that IVUS can assist interventional cardiologists in providing a more complete diagnosis and prevent stent placement-related complications. In addition, the integration and
ease of use provided by our s5 consoles is facilitating adoption of IVUS within the clinical community," Huennekens
continued. "We are further encouraged by recent comments from stent manufacturers suggesting that stenting activity is beginning to rebound and data showing that U.S. PCI volume grew in the third quarter versus the second quarter of this year. We believe that we will benefit from these trends," he
added. During the quarter, the company announced a market alliance with Philips Electronics Japan to promote Volcano's s5i IVUS system with Philips cardiovascular X-ray equipment. The company also said that it expects to have regulatory clearance in the United States for its Revolution rotational catheter on the s5 with Fractional Flow Reserve (FFR) in January 2008, and expects to have regulatory approval in Europe later this year. In Japan, the company has recently
launched the Revolution on its IVG IVUS console. With respect to clinical trial activities, the company said recent highlights included:
- At TCT, Volcano announced sponsorship of the first major study designed
to examine the role of IVUS in accurate stent placement and reduction
of clinical events. This sub-study is part of the ADAPT-DES study being
administered by the Cardiology Research Foundation, which will explore
outcomes for patients with coronary artery disease treated with
drug-eluting stents (DES). IVUS will be used in a 3,000 patient
sub-study to explore the potential benefits of IVUS-guided PCI to
reduce clinical events.
- Also at TCT, Drs. Gregg Stone and Marty Leon
provided data demonstrating that IVUS can reduce thrombosis risk with
DES and
restonsis and thrombosis risk with bare metal stents. In addition,
Dr. Renu Virmani provided data indicating that IVUS can address many
of
the procedural, device and lesion factors contributing to late stent
thrombosis.
- Baseline data on 700 PROSPECT trial patients was presented
at TCT. Key findings demonstrated the value of IVUS in the characterization
of
major coronary arteries and that IVUS found at least one thin cap
fibroatheroma (TCFA) in 28 percent of patients.
For the first nine months of fiscal 2007, revenues were $90.6 million, a 23 percent increase over revenues of $73.5 million in the same period a year ago. On a GAAP basis, the company reported a net loss of $2.8 million, or $0.07 per share, versus a loss of $10.0 million, or $0.60 per share, in the same period a year ago. Included in the results for 2006 is a write-off of $1.2 million, or $0.07 per share, related to deferred debt issuance costs as a result of the company's initial public offering. Excluding stock-based compensation expense of $4.7 million, the company reported net income of $1.9 million, or $0.04 per diluted share, in the first nine months of 2007. Excluding stock-based compensation expense of $2.3 million and the write-off of $1.2 million, the company reported a loss of $6.5 million, or $0.39 per share, in the same period a year ago.
Guidance for 2007
Volcano is providing updated guidance for fiscal 2007.
It currently expects that revenues will be in the range of $126-$128 million
versus prior guidance for revenues of approximately $125 million. Gross
margin for the year is expected to be 59-61 percent versus prior guidance
of 60-61 percent. Operating expenses for fiscal 2007 are expected to be
67-68 percent of revenues, as the company intends to continue to accelerate
its plan to increase its sales force and to build out its infrastructure
to support future growth. This compares with prior guidance for operating
expenses of 67-69 percent of revenues. The company expects to report a
net loss on a GAAP basis of $0.09-$0.12 per share, compared with prior
guidance for a loss of approximately $0.14 per share. Weighted average
basic shares outstanding are expected to be approximately 40.0 million
shares. This compares with prior guidance for 38.8 million basic shares.
Excluding stock-based compensation, Volcano expects to report net income
of $0.05-$0.07 per diluted share, assuming approximately 43.4 million weighted
average diluted shares outstanding at year end. This compares with prior
guidance for net income of approximately $0.04 per diluted share. Conference
Call
The company will hold a conference call at 2 p.m., Pacific Standard
Time (5 p.m., Eastern Standard Time) today. The teleconference can be
accessed by calling (719) 325-4887, passcode 2329894, or via the company's
website at http://www.volcanocorp.com. Please dial in or access the website
10-15 minutes prior to the beginning of the call. A replay of the conference
call will be available until November 15 at (719) 457-0820, passcode
2329894 and via the company's website. Volcano Corporation
Volcano
Corporation (NASDAQ: VOLC) offers a broad suite of devices designed
to facilitate endovascular procedures, enhance the diagnosis of vascular
and structural heart diseases and guide optimal therapies. The company's
intravascular ultrasound (IVUS) product line includes ultrasound consoles
that can be integrated directly into virtually any modern cath lab.
Volcano IVUS offers unique features, including both single-use phased
array and rotational IVUS imaging catheters, and advanced functionality
options, such as VH(TM) IVUS tissue characterization and ChromaFlo(R).
Volcano also provides functional measurement (FM) consoles and single-use
pressure and flow guide wires. Currently, more than 2,900 Volcano IVUS
and FM systems are installed worldwide, with approximately half of
its revenues coming from outside the United States. For more information,
visit the company's website at http://www.volcanocorp.com.
Use of Non-GAAP Financial Measure
This news release includes certain non-GAAP financial information as defined by the U.S. Securities and Exchange Commission Regulation G. Pursuant to the requirements of this regulation, a reconciliation of this non-GAAP financial information to our financial statements as prepared under generally accepted accounting principles in the United States (GAAP) is included in this press release. Non-GAAP financial measures provide an indication of our performance before certain charges. Our management believes that in order to properly understand our short-term and long-term financial trends, investors may wish to consider the impact of these charges. These charges result from facts and circumstances that vary in frequency and/or impact on continuing operations. Our management believes that these items should be excluded when comparing our current
operating results with those of prior periods as the write-off of deferred debt issuance costs, which results from the repayment of certain debt in connection with our initial public offering, will not impact future operating results, and stock-based compensation is a non-cash expense. In addition, our management uses results of operations before certain charges to evaluate the operational performance of the company and as a basis for strategic planning. Investors should consider these non-GAAP measures in addition to, and not as a substitute for, financial performance measures in accordance with GAAP.
Forward-Looking Statements
This
news release contains forward-looking statements within the meaning of the
U.S. Private Securities Litigation Reform Act of 1995. Any statements in
this news release regarding Volcano's business that are not historical facts
may be considered "forward-looking statements," including statements regarding
the company's financial guidance for 2007, regulatory approvals and the impact
of obtaining regulatory approvals, market adoption of the company's technology,
the impact of clinical and other technical data, the safety and efficacy
of the company's products, the success and timing of product development
and clinical trial programs, market development and product sales and use.
Forward-looking statements are based on management's current preliminary
expectations and are subject to risks and uncertainties, which may cause
Volcano's results to differ materially and adversely from the statements
contained herein. Some of the potential risks and uncertainties that could
cause actual results to differ from the results predicted are detailed in
the company's annual report on Form 10-K, quarterly reports on Form 10-Q
and other filings made with the Securities and Exchange Commission. Undue
reliance should not be placed on forward-looking statements, which speak
only as of the date they are made. Volcano undertakes no obligation to update
any forward-looking statements to reflect new information, events or circumstances
after the date they were made, or to reflect the occurrence of unanticipated
events.
VOLCANO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(Unaudited)
September 30, December 31,
2007 2006
Assets
Current assets:
Cash and cash equivalents $49,579 $77,738
Short-term available-for-sale
investments 42,781 17,787
Accounts receivable, net 22,801 21,575
Inventories 20,687 13,423
Prepaid expenses and other
current assets 3,646 2,208
Total current assets 139,494 132,731
Restricted cash 361 352
Property and equipment, net 12,552 9,333
Intangible assets, net 9,831 11,946
Other non-current assets 720 363
$162,958 $154,725
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $11,832 $8,209
Accrued compensation 7,223 5,993
Accrued expenses and other
current liabilities 5,839 5,292
Deferred revenues 4,241 2,675
Current maturities of
long-term debt 322 1,654
Total current liabilities 29,457 23,823
Long-term debt 90 66
Deferred license fee 1,188 1,375
Other 219 279
Total liabilities 30,954 25,543
Stockholders' equity 132,004 129,182
$162,958 $154,725
VOLCANO CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2007 2006 2007 2006
Revenues $31,474 $27,782 $90,605 $73,517
Cost of revenues 12,285 10,560 35,466 30,248
Gross profit 19,189 17,222 55,139 43,269
Operating expenses:
Selling, general and
administrative 16,005 11,769 44,271 35,027
Research and development 4,837 3,965 15,241 12,835
Amortization of intangibles 751 781 2,313 2,332
Total operating expenses 21,593 16,515 61,825 50,194
Operating income (loss) (2,404) 707 (6,686) (6,925)
Interest expense (32) (144) (193) (3,910)
Interest and other income, net 2,042 192 4,672 1,072
Income (loss) before provision
for income taxes (394) 755 (2,207) (9,763)
Provision for income taxes 258 254 626 273
Net income (loss) $(652) $501 $(2,833) $(10,036)
Net income (loss) per
share - basic $(0.02) $0.02 $(0.07) $(0.60)
Net income (loss) per
share - diluted $(0.02) $0.01 $(0.07) $(0.60)
Weighted-average shares
outstanding - basic 38,694 32,976 38,368 16,744
Weighted-average shares
outstanding - diluted 38,694 36,900 38,368 16,744
VOLCANO CORPORATION
RECONCILIATION OF GAAP AND NON-GAAP OPERATING RESULTS
(in thousands, except per share data)
(Unaudited)
Three Months Ended September 30, 2007
Stock-based
compensation Non-GAAP
GAAP results expense results
Revenues $31,474 $- $31,474
Cost of revenues 12,285 (181) 12,104
Gross profit 19,189 181 19,370
Operating expenses:
Selling, general
and administrative 16,005 (1,437) 14,568
Research and development 4,837 (359) 4,478
Amortization of intangibles 751 - 751
Total operating expenses 21,593 (1,796) 19,797
Operating loss (2,404) 1,977 (427)
Interest expense (32) - (32)
Interest and other income, net 2,042 - 2,042
Income (loss) before provision for
income taxes (394) 1,977 1,583
Provision for income taxes 258 - 258
Net income (loss) $(652) $1,977 $1,325
Net income (loss) per share - basic $(0.02) $0.05 $0.03
Net income (loss) per share - diluted $(0.02) $0.05 $0.03
Weighted-average shares
outstanding - basic 38,694 38,694
Weighted-average shares
outstanding - diluted 38,694 41,710
Three Months Ended September 30, 2006
Stock-based
compensation Non-GAAP
GAAP results expense results
Revenues $27,782 $- $27,782
Cost of revenues 10,560 (103) 10,457
Gross profit 17,222 103 17,325
Operating expenses:
Selling, general
and administrative 11,769 (573) 11,196
Research and development 3,965 (133) 3,832
Amortization of intangibles 781 - 781
Total operating expenses 16,515 (706) 15,809
Operating income 707 809 1,516
Interest expense (144) - (144)
Interest and other income, net 192 - 192
Income before provision for income
taxes 755 809 1,564
Provision for income taxes 254 - 254
Net income $501 $809 $1,310
Net income per share - basic $0.02 $0.02 $0.04
Net income per share - diluted $0.01 $0.02 $0.04
Weighted-average shares
outstanding - basic 32,976 32,976
Weighted-average shares
outstanding - diluted 36,900 36,900
VOLCANO CORPORATION
RECONCILIATION OF GAAP AND NON-GAAP OPERATING RESULTS
(in thousands, except per share data)
(Unaudited)
Nine Months Ended September 30, 2007
Stock-based Write-off of Non-
GAAP compensation deferred debt GAAP
results expense issuance costs results
Revenues $90,605 $- $- $90,605
Cost of revenues 35,466 (434) - 35,032
Gross profit 55,139 434 - 55,573
Operating expenses:
Selling, general
and administrative 44,271 (3,486) - 40,785
Research and
development 15,241 (783) - 14,458
Amortization of
intangibles 2,313 - - 2,313
Total operating
expenses 61,825 (4,269) - 57,556
Operating loss (6,686) 4,703 - (1,983)
Interest expense (193) - - (193)
Interest and other
income, net 4,672 - - 4,672
Income (loss) before
provision for income taxes (2,207) 4,703 - 2,496
Provision for income taxes 626 - - 626
Net income (loss) $(2,833) $4,703 $- $1,870
Net income (loss) per
share - basic $(0.07) $0.12 $- $0.05
Net income (loss) per
share - diluted $(0.07) $0.11 $- $0.04
Weighted-average shares
outstanding - basic 38,368 38,368
Weighted-average shares
outstanding - diluted 38,368 41,739
Nine Months Ended September 30, 2006
Stock-based Write-off of Non-
GAAP compensation deferred debt GAAP
results expense issuance costs results
Revenues $73,517 $- $- $73,517
Cost of revenues 30,248 (239) - 30,009
Gross profit 43,269 239 - 43,508
Operating expenses:
Selling, general
and administrative 35,027 (1,680) - 33,347
Research and
development 12,835 (375) - 12,460
Amortization of
intangibles 2,332 - - 2,332
Total operating
expenses 50,194 (2,055) - 48,139
Operating loss (6,925) 2,294 - (4,631)
Interest expense (3,910) - 1,246 (2,664)
Interest and other
income, net 1,072 - - 1,072
Loss before provision
for income taxes (9,763) 2,294 1,246 (6,223)
Provision for income taxes 273 - - 273
Net loss $(10,036) $2,294 $1,246 $(6,496)
Net loss per share - basic
and diluted $(0.60) $0.14 $0.07 $(0.39)
Weighted-average shares
outstanding - basic and
diluted 16,744 16,744
Use of Non-GAAP Financial Measures
This press release includes certain non-GAAP financial information as
defined by the U.S. Securities and Exchange Commission Regulation G. Pursuant
to the requirements of this regulation, a reconciliation of this non-GAAP
financial information to our financial statements as prepared under generally
accepted accounting principles in the United States (GAAP) is included in this
press release. Non-GAAP financial measures provide an indication of our
performance before certain charges. Our management believes that in order to
properly understand our short-term and long-term financial trends, investors
may wish to consider the impact of these charges. These charges result from
facts and circumstances that vary in frequency and/or impact on continuing
operations. Our management believes that these items should be excluded when
comparing our current operating results with those of prior periods as the
write-off of deferred debt issuance costs, which resulted from the repayment
of certain debt in connection with our initial public offering, will not
impact future operating results, and stock-based compensation is a non-cash
expense. In addition, our management uses results of operations before certain
charges to evaluate the operational performance of the company and as a basis
for strategic planning. Investors should consider these non-GAAP measures in
addition to, and not as a substitute for, financial performance measures in
accordance with GAAP.
VOLCANO CORPORATION
REVENUE SUMMARY
(in millions)
(Unaudited)
Q3 '07 Q3 '06
IVUS Systems:
United States $3.4 $3.2
Japan 0.5 3.0
Europe 1.5 0.7
Rest of World 0.5 0.9
Total IVUS Systems $5.9 $7.8
IVUS Disposables:
United States $10.1 $7.8
Japan 7.5 6.8
Europe 3.0 1.9
Rest of World 0.5 0.5
Total IVUS Disposables $21.1 $17.0
FM:
United States $1.4 $1.2
Japan 0.2 0.2
Europe 1.5 0.7
Rest of World 0.2 0.1
Total FM $3.3 $2.2
Other 1.2 0.8
Total $31.5 $27.8
Source: Volcano Corporation
|