|
Volcano Achieves Major
Milestone in Japan Direct Sales Initiative With Signing of Termination
Agreement With Goodman
Company Provides Updated
Guidance for Fiscal 2009
|
 |
July 8, 2009 -- San Diego -- Volcano Corporation
(Nasdaq: VOLC), a leader in the development, manufacturing
and sales of products for the diagnosis of coronary and peripheral
artery disease, said today it has signed a termination agreement
with its largest distributor in Japan, Goodman Company, Ltd. This
agreement, which took effect today, will enable Volcano to accelerate
its transition to a direct sales force in the market to support its
intravascular ultrasound (IVUS) and Functional Measurement (FM) consoles
and disposables, as well as products currently in development.
Scott Huennekens
CEO, Volcano Corp. |
|
"We are delighted to be completing
this transition nearly a year ahead of our original timetable," said
Scott Huennekens, president and chief executive officer of Volcano. "Japan
is the largest IVUS market in the world. Given recent clinical
data, Japan also represents a great market opportunity for our
FM offerings, as well as the products in our pipeline, such as
image-guided therapy, Optical Coherence Tomography (OCT), Forward-Looking
IVUS and Impact micro-catheters. By going direct, we hope to
replicate in Japan the market share gains we have achieved in
our other key geographies, such as the United States and Europe. |
"We have already laid the groundwork for this transition, as
we now have more than 40 sales reps and approximately 80 total personnel
in Japan, and we expect to complete the customer transition process
by the end of the third quarter," he added.
Huennekens said Volcano's transition to a direct sales force in
Japan is important to the company for several reasons, including:
- It allows Volcano to be closer to Japanese physicians and the
market so that the company's products can better meet the unique
needs of the Japanese market. Additionally, Volcano believes that
it will enable the company to provide more focused service and
support to the market.
- It creates more favorable economics - including
revenues, gross margin and operating income - on sales of Volcano
products, as well as
those of products
under development and other distributed products, and enables the company
to leverage its infrastructure in Japan.
- It provides the ability
for the company to direct its own sales and marketing initiatives,
as well as new product launches.
The key financial aspects of the agreement include:
- Volcano Japan has agreed to pay Goodman 350 million Japanese
yen, plus five percent Japanese consumption tax (a total of approximately
$3.9 million U.S.), between July 15 and August 31, 2009. Volcano
Japan plans to allocate this entire amount to the purchase of IVUS
consoles, and depreciate it over the next ten quarters.
- Volcano
Japan has agreed to repurchase from Goodman any remaining IVUS
and FM disposables on August 31, 2009. While Volcano does not
expect such repurchases
to be financially material, to the extent there is a buyback of disposables,
it is expected to occur in the third quarter and be treated as contra revenue.
- Volcano
has also agreed to pay Goodman commissions based on net receipts
of Volcano Japan from the sale of products to customers
transferred from
Goodman to Volcano from July 1, 2009 to December 31, 2009. Volcano guarantees
a minimum
total commission of 310 million Japanese yen (approximately $3.3 million
U.S.). The commissions will be expensed as they occur.
"We want to express our appreciation to Goodman for their support
over the past several years and their cooperation during this process.
They have been a good partner and helpful in communicating this change
to customers and they will continue to assist us with this transition.
Both parties believe that this is a fair agreement that facilitates
a smooth transition and enables Volcano to continue delivering its
leading-edge offerings to patients in Japan and the clinicians that
treat them," Huennekens noted.
2009 Guidance
The company is providing updated guidance for fiscal
2009.
The company is reconfirming guidance for revenues in the range of
$218-$223 million, or an increase of 27-30 percent over revenues
in 2008. The company expects gross margins will be in the range of
59-60 percent, including depreciation of approximately $775,000 through
the balance of the year related to the Goodman transition.
The company said it expects operating expenses for fiscal 2009 will
be in the range of 67-69 percent of revenues. This includes stock-based
compensation expense of approximately $13.0 million, intangible amortization
of approximately $4.2 million and approximately $3.5 million in Goodman
commissions.
Volcano expects to report a net loss of $0.38-$0.43 per share, which
includes stock-based compensation of approximately $13.0 million
and Goodman transition costs of approximately $4.3 million. Excluding
such costs, the company expects to report a loss of $0.03-$0.08 per
share. The company said its anticipated results for 2009 also reflect
lower interest income and unfavorable currency exchange rates versus
fiscal 2008. The company expects weighted average shares outstanding
at year-end 2009 will be approximately 48.7 million basic shares
and 50.0 million shares on a diluted basis.
Conference Call Information
The company will hold a conference call
at 2:30 p.m., Pacific Daylight Time (5:30 p.m., Eastern Daylight
Time), today. The teleconference
can be accessed by calling (719) 325-4852, passcode 4962185, or via
the company's website at http://www.volcanocorp.com. Please dial
in or access the webcast 10-15 minutes prior to the beginning of
the call. A replay of the conference call will be available through
July 14, at (719) 457-0820, passcode 4962185, and via the company's
website.
About Volcano Corporation
Volcano Corporation (NASDAQ: VOLC - News)
offers a broad suite of devices designed to facilitate endovascular
procedures, enhance the
diagnosis of vascular and structural heart disease 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® IVUS
tissue characterization and ChromaFlo®. Volcano also provides
functional measurement (FM) consoles and single-use pressure and
flow guide wires and is developing a line of ultra-high resolution
Optical Coherence Tomography (OCT) and Forward-Looking IVUS systems
and catheters. Currently, more than 4,200 Volcano IVUS and FM systems
are installed worldwide, and approximately half of Volcano's revenues
are derived from outside the United States. Through its wholly-owned
subsidiary, Axsun Technologies, Volcano also develops and manufactures
optical monitors, lasers and optical engines used in telecommunications,
spectroscopy and other industrial applications. These products are
sold to a variety of customers, including Nokia Siemens, Ericsson,
Alcatel-Lucent and Huawei. For more information, visit the company's
website at http://www.volcanocorp.com.
Forward-Looking Statements
This press release contains forward-looking
statements within the meaning of the U.S. Private Securities Litigation
Reform Act of 1995.
Any statements in this release regarding Volcano's business that
are not historical facts may be considered "forward-looking
statements," including statements regarding the company's updated
financial guidance for fiscal 2009, the timing and impact to the
company of the transition to a direct sales force in Japan, market
adoption of the company's technology, growth strategies and market
development and product sales. 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 are
made, or to reflect the occurrence of unanticipated events.
Source: Volcano
Corporation
|
