  |
|
November 5, 2008. San Diego -- Volcano 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 third quarter of 2008 increased 40 percent over those in the third quarter of 2007. For the quarter ended September 30, 2008, Volcano reported revenues of $44.1 million versus revenues of $31.5 million in the same period a year ago. The company said that its financial performance was driven by a 78 percent increase in intravascular ultrasound (IVUS) system revenues and a 29 percent increase in IVUS disposable revenues year-over-year. For the third quarter of 2008, the company reported net income on a GAAP basis of $744,000, or $0.01 per diluted share, versus a net loss on a GAAP basis of $652,000 or $0.02 per share, in the third quarter of 2007. Weighted average shares at the end of the quarter were 50.3 million versus 38.7 million a year ago, reflecting the impact of the company's equity offering that was completed in the fourth quarter of 2007. Excluding stock-based compensation expense of $2.5 million, the company reported net income of $3.3 million, or $0.06 per diluted share. In the third quarter of 2007, excluding stock-based compensation expense of $2.0 million, the company reported net income of $1.3 million, or $0.03 per diluted share. A reconciliation of the company's GAAP and non-GAAP results can be found in today's earnings news release on the company's website at http://www.volcanocorp.com. For the first nine months of 2008, Volcano reported revenues of $122.2 million, a 35 percent increase over revenues of $90.6 million in the same period a year ago. On a GAAP basis, the company reported a net loss of $15.1 million, or $0.32 per share, compared with a net loss of $2.8 million, or $0.07 per share, in the same period a year ago. Excluding in-process research and development charges of $12.4 million, $2.9 million in due diligence, legal and accounting expenses related to a proposed acquisition that was not consummated, and stock-based compensation expense of $7.0 million, Volcano reported net income of $7.2 million, or $0.14 per diluted share, in the first nine months of 2008. 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. "We continue to gain market share across all of our businesses and geographies, while realizing gross margin improvement and leveraging our operating expenses. As a result, we achieved profitability on a GAAP basis in the third quarter of 2008, and have raised our outlook for earnings per share for the full year," said Scott Huennekens, president and chief executive officer. "Through the first nine months of 2008, we have placed 537 of our IVUS consoles versus 420 in the first nine months a year ago, and now have more than 3,700 of our IVUS and Functional Measurement (FM) consoles placed worldwide. Helping to drive our growth is the leading-edge technology offered by our devices and Volcano's strong sales and market development initiatives. In addition, we are seeing an increasingly favorable environment for percutaneous coronary interventions and an ongoing flow of positive data, including that presented in a number of presentations at the recent Transcatheter Cardiovascular Therapeutics (TCT) meeting," Huennekens noted. "At the same time," he added, "we continue to be excited about our new product pipeline that will enable us to address markets that are potentially larger than those we are currently serving." Guidance
for 2008 Conference
Call Volcano
Corporation Use
of Non-GAAP Financial Measures Forward-Looking
Statements
VOLCANO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(Unaudited)
September 30, December 31,
2008 2007
Assets
Current assets:
Cash and cash equivalents $108,662 $122,913
Short-term available-for-sale
investments 68,049 66,205
Accounts receivable, net 25,036 27,976
Inventories, net 25,698 21,243
Prepaid expenses and other current
assets 4,965 3,997
Total current assets 232,410 242,334
Restricted cash 360 365
Property and equipment, net 19,900 13,692
Intangible assets, net 7,439 9,385
Other non-current assets 886 798
$260,995 $266,574
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $13,139 $11,077
Accrued compensation 9,502 9,083
Accrued expenses and other current
liabilities 7,441 6,600
Deferred revenues 4,419 5,360
Current maturities of long-term debt 58 120
Total current liabilities 34,559 32,240
Long-term debt 49 78
Deferred license fee 938 1,125
Other 142 194
Total liabilities 35,688 33,637
Stockholders' equity 225,307 232,937
$260,995 $266,574
VOLCANO CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2008 2007 2008 2007
Revenues $44,118 $31,474 $122,242 $90,605
Cost of revenues 16,581 12,285 45,915 35,466
Gross profit 27,537 19,189 76,327 55,139
Operating expenses:
Selling, general and administrative 19,546 16,005 62,405 44,271
Research and development 6,879 4,837 18,823 15,241
In-process research and development - - 12,407 -
Amortization of intangibles 786 751 2,337 2,313
Total operating expenses 27,211 21,593 95,972 61,825
Operating income (loss) 326 (2,404) (19,645) (6,686)
Interest income 1,109 1,213 4,206 3,630
Interest expense (2) (32) (8) (193)
Exchange rate gain (loss) (441) 829 1,091 1,042
Income (loss) before provision for
income taxes 992 (394) (14,356) (2,207)
Provision for income taxes 248 258 707 626
Net income (loss) $744 $(652) $(15,063) $(2,833)
Net income (loss) per share - basic $0.02 $(0.02) $(0.32) $(0.07)
Net income (loss) per share -
diluted $0.01 $(0.02) $(0.32) $(0.07)
Weighted-average shares outstanding
- basic 47,456 38,694 47,236 38,368
Weighted-average shares outstanding
- diluted 50,323 38,694 47,236 38,368
VOLCANO CORPORATION
RECONCILIATION OF GAAP AND NON-GAAP OPERATING RESULTS
(in thousands, except per share data)
(Unaudited)
Three Months Ended September 30, 2008
Stock-based
GAAP compensation Non-GAAP
results expense results
Revenues $44,118 $- $44,118
Cost of revenues 16,581 (222) 16,359
Gross profit 27,537 222 27,759
Operating expenses:
Selling, general and administrative 19,546 (1,798) 17,748
Research and development 6,879 (493) 6,386
Amortization of intangibles 786 - 786
Total operating expenses 27,211 (2,291) 24,920
Operating income 326 2,513 2,839
Interest income 1,109 - 1,109
Interest expense (2) - (2)
Exchange rate loss (441) - (441)
Income before provision for income
taxes 992 2,513 3,505
Provision for income taxes 248 - 248
Net income $744 $2,513 $3,257
Net income per share - basic $0.02 $0.05 $0.07
Net income per share - diluted $0.01 $0.05 $0.06
Weighted-average shares outstanding
- basic 47,456 47,456
Weighted-average shares outstanding
- diluted 50,323 50,323
Three Months Ended September 30, 2007
Stock-based
GAAP compensation Non-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 income 1,213 - 1,213
Interest expense (32) - (32)
Exchange rate gain 829 - 829
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
VOLCANO CORPORATION
RECONCILIATION OF GAAP AND NON-GAAP OPERATING RESULTS
(in thousands, except per share data)
(Unaudited)
Nine Months Ended September 30, 2008
Stock- In-
based process Acquisition
compensa- research due Non-
GAAP tion and diligence GAAP
results expense development costs results
Revenues $122,242 $- $- $- $122,242
Cost of revenues 45,915 (598) - - 45,317
Gross profit 76,327 598 - - 76,925
Operating expenses:
Selling, general and
administrative 62,405 (5,094) - (2,878) 54,433
Research and development 18,823 (1,305) - - 17,518
In-process research and
development 12,407 - (12,407) - -
Amortization of
intangibles 2,337 - - - 2,337
Total operating
expenses 95,972 (6,399) (12,407) (2,878) 74,288
Operating income (loss) (19,645) 6,997 12,407 2,878 2,637
Interest income 4,206 - - - 4,206
Interest expense (8) - - - (8)
Exchange rate gain 1,091 - - - 1,091
Income (loss) before
provision for income
taxes (14,356) 6,997 12,407 2,878 7,926
Provision for income taxes 707 - - - 707
Net income (loss) $(15,063) $6,997 $12,407 $2,878 $7,219
Net income (loss) per share
- basic $(0.32) $0.15 $0.26 $0.06 $0.15
Net income (loss) per share
- diluted $(0.32) $0.14 $0.25 $0.06 $0.14
Weighted-average shares
outstanding - basic 47,236 47,236
Weighted-average shares
outstanding - diluted 47,236 49,859
Nine Months Ended September 30, 2007
Stock- In-
based process Acquisition
compensa- research due Non-
GAAP tion and diligence GAAP
results expense development 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 income 3,630 - - - 3,630
Interest expense (193) - - - (193)
Exchange rate gain 1,042 - - - 1,042
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
Use of Non-GAAP Financial MeasuresThis 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 stock- based compensation is a non-cash expense, in-process research and development relates to the costs associated with the May 2008 acquisition of Novelis, Inc. and the December 2007 acquisition of CardioSpectra, Inc., and the acquisition due diligence costs incurred in the first quarter of 2008 related to a proposed acquisition that was not consummated, are not reflective of our core operating activities. 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 note that the non-GAAP financial measures used by the company may not be the same non-GAAP financial measures, and may not be calculated in the same manner, as those of other companies. 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)
Growth YTD Q3 YTD Q3
Q3 '08 Q3 '07 % '08 '07 Growth
IVUS Systems:
United States $5.6 $3.4 62% $15.3 $11.0 40%
Japan 2.5 0.5 376% 4.9 1.8 172%
Europe 1.8 1.5 24% 5.4 3.5 50%
Rest of World 0.7 0.5 38% 1.9 1.7 14%
Total IVUS Systems $10.6 $5.9 78% $27.5 $18.0 52%
IVUS Disposables:
United States $13.0 $10.1 30% $37.6 $28.8 31%
Japan 8.9 7.5 18% 24.7 20.3 22%
Europe 4.6 3.0 51% 13.0 9.0 44%
Rest of World 0.7 0.5 27% 2.2 1.6 35%
Total IVUS Disposables $27.2 $21.1 29% $77.5 $59.7 30%
FM:
United States $2.3 $1.4 63% $6.3 $4.5 40%
Japan 0.5 0.2 186% 0.9 1.1 -16%
Europe 1.7 1.5 19% 5.1 4.1 24%
Rest of World 0.4 0.2 94% 0.8 0.6 43%
Total FM $4.9 $3.3 51% $13.1 $10.3 28%
Other 1.4 1.2 25% 4.1 2.6 56%
Total $44.1 $31.5 40% $122.2 $90.6 35%
Source: Volcano Corporation |
