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August 4, 2009 -- 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 revenues of $54.0 million for the second quarter of fiscal 2009. The results for the quarter ended June 30, 2009, represent an increase of 30 percent over revenues of $41.5 million in the second quarter of 2008. The revenues for the second quarter of 2009 include $3.9 million from Axsun Technologies, Inc., which Volcano acquired at the end of 2008 and for which the company recorded no revenues in the second quarter a year ago. For the second quarter of 2009, the company reported a GAAP net loss of $5.3 million, or $0.11 per share, versus a GAAP net loss of $13.5 million, or $0.29 per share, in the same period a year ago. The results for the second quarter of 2008 include $12.2 million in in-process research and development charges related to the company's acquisition of Novelis, Inc. Weighted average shares for the second quarter of 2009 were 48.3 million. Excluding stock-based compensation expense of $2.9 million, the company reported a net loss of $2.4 million, or $0.05 per share, in the second quarter of 2009. In the second quarter of 2008, excluding the aforementioned charges related to the Novelis transaction and stock-based compensation expense of $2.4 million, Volcano reported net income of $1.2 million, or $0.02 per diluted share. For the first six months of 2009, Volcano reported revenues of $103.0 million, a 32 percent increase over revenues of $78.1 million in the same period a year ago. Revenues in the first six months of 2009 include $7.6 million from Axsun. The company reported a GAAP net loss of $12.9 million, or $0.27 per share, compared with a loss of $15.8 million, or $0.34 per share, in the first six months of 2008. Excluding stock-based compensation expense of $5.6 million, Volcano reported a net loss of $7.3 million, or $0.15 per share, in the first six months of 2009. Excluding in-process research and development costs of $12.2 million, $2.9 million in due diligence, legal and accounting expenses related to an acquisition that was not consummated, and stock-based compensation expense of $4.5 million, Volcano reported net income of $4.0 million, or $0.08 per diluted share, in the first six months of 2008. "Volcano had an excellent quarter with strong growth in our core intravascular ultrasound (IVUS) and functional measurement (FM) businesses and key geographies. IVUS disposable revenues in the quarter were $31.8 million, a record quarter for this business, and a 26 percent increase over the second quarter a year ago. FM revenues in the quarter were a record $7.2 million, with FM disposable revenues increasing 75 percent over the second quarter a year ago. In addition, we continued our successful IVUS/FM console placement initiatives, placing 233 consoles versus 178 a year ago, an increase of 31 percent," said Scott Huennekens, president and chief executive officer of Volcano. "These results portray the value of our technology innovation, effective sales and marketing programs and the growing recognition among clinicians that IVUS and FM can play an important role in the diagnosis and treatment of patients," he added. Huennekens said the company's direct sales initiative in Japan continues to progress on schedule following the completion of a termination agreement with its largest distributor in the market last month. "We have continued to expand our direct sales force and our account transition program is on schedule. We believe this transition will enable us to develop closer relationships with our customers in Japan, while enabling us to implement the kinds of sales and marketing initiatives that have made us successful in other geographies. In addition, going direct provides us significant financial advantages, including higher revenues per disposable and increased gross margin and operating income on those revenues," Huennekens noted. 2009 Guidance
The company continues to expect gross margins for the full year will be in the range of 59-60 percent, including additional depreciation of approximately $775,000 through the balance of the year related to the distributor transition in Japan. Operating expenses continue to be expected in the range of 67-69 percent, including stock-based compensation expense of approximately $12.0 million, intangible amortization of approximately $4.2 million and approximately $3.5 million in Goodman commissions. The outlook for operating expenses reflects increased spending in Japan, expansions of sales and marketing programs in other geographies, G&A to support the growth of the company and litigation-related expenses. The company also expects a modest increase in research and development spending to fund product development programs, clinical trials and regulatory activities. The company continues to expect to report a net loss on a GAAP basis of $0.38-$0.43 per share. Excluding stock-based compensation expense of approximately $12.0 million and Goodman commissions of approximately $3.5 million, the company expects to report a net loss of $0.06-$0.11 per share. Weighted average shares outstanding at year-end 2009 are expected to be approximately 48.7 million basic shares and 50.0 million shares on a diluted basis. Conference Call Information
About Volcano Corporation Use of Non-GAAP Financial Measures Forward-Looking Statements VOLCANO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
June 30, December 31,
2009 2008
---- ----
(unaudited)
Assets
Current assets:
Cash and cash equivalents $54,297 $100,949
Short-term available-for-sale
investments 86,178 48,941
Accounts receivable, net 36,553 41,795
Inventories 33,838 28,936
Prepaid expenses and other current assets 4,764 5,869
----- -----
Total current assets 215,630 226,490
Restricted cash 293 327
Property and equipment, net 37,656 30,007
Intangible assets, net 13,631 15,636
Goodwill 989 842
Other non-current assets 1,734 2,177
----- -----
$269,933 $275,479
======== ========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $19,646 $14,867
Accrued compensation 11,665 12,690
Accrued expenses and other current
liabilities 8,132 10,745
Deferred revenues 4,002 4,833
Short-term debt - 151
Current maturities of long-term debt 49 57
--- ---
Total current liabilities 43,494 43,343
Long-term debt 14 34
Deferred revenues 1,985 1,914
Other 674 456
--- ---
Total liabilities 46,167 45,747
Stockholders' equity 223,766 229,732
------- -------
$269,933 $275,479
======== ========
VOLCANO CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
2009 2008 2009 2008
---- ---- ---- ----
Revenues $54,042 $41,477 $103,001 $78,124
Cost of revenues 22,486 15,705 43,135 29,334
------ ------ ------ ------
Gross profit 31,556 25,772 59,866 48,790
Operating expenses:
Selling, general and
administrative 26,453 20,800 51,533 42,859
Research and development 9,866 6,307 18,635 11,944
In-process research and
development - 12,232 - 12,407
Amortization of intangibles 1,053 778 2,105 1,551
----- --- ----- -----
Total operating expenses 37,372 40,117 72,273 68,761
------ ------ ------ ------
Operating loss (5,816) (14,345) (12,407) (19,971)
Interest income 197 1,264 498 3,097
Interest expense (1) (2) (3) (6)
Exchange rate gain (loss) 871 (147) (257) 1,532
--- ---- ---- -----
Loss before provision for income
taxes (4,749) (13,230) (12,169) (15,348)
Provision for income taxes 518 251 712 459
--- --- --- ---
Net loss $(5,267) $(13,481) $(12,881) $(15,807)
======= ======== ======== ========
Net loss per share-basic and
diluted $(0.11) $(0.29) $(0.27) $(0.34)
====== ====== ====== ======
Shares used in calculating net
loss per share-basic and
diluted 48,335 47,220 48,184 47,125
====== ====== ====== ======
VOLCANO CORPORATION
RECONCILIATION OF GAAP RESULTS TO NON-GAAP RESULTS
(in thousands, except per share data)
(Unaudited)
Three Months Six Months Ended
Ended June 30, June 30,
--------------- -----------------
2009 2008 2009 2008
---- ---- ---- ----
GAAP operating loss $(5,816) $(14,345) $(12,407) $(19,971)
Stock-based compensation 2,850 2,422 5,565 4,484
In-process research and
development - 12,232 - 12,407
Acquisition due-diligence
costs - - - 2,878
--- --- --- -----
Non-GAAP operating (loss)
income $(2,966) $309 $(6,842) $(202)
======= ==== ======= =====
GAAP net loss $(5,267) $(13,481) $(12,881) $(15,807)
Stock-based compensation 2,850 2,422 5,565 4,484
In-process research and
development - 12,232 - 12,407
Acquisition due-diligence
costs - - - 2,878
--- --- --- -----
Non-GAAP net (loss) income $(2,417) $1,173 $(7,316) $3,962
======= ====== ======= ======
GAAP net loss per share-basic $(0.11) $(0.29) $(0.27) $(0.34)
Stock-based compensation 0.05 0.05 0.11 0.10
In-process research and
development - 0.26 - 0.26
Acquisition due-diligence
costs - - - 0.06
Adjustment to shares used in
calculating net (loss) income
per share 0.01 - 0.01 -
---- --- ---- ---
Non-GAAP net (loss) income per
share-basic $(0.05) $0.02 $(0.15) $0.08
====== ===== ====== =====
Shares used in calculating net
(loss) income per share-basic 48,335 47,220 48,184 47,125
====== ====== ====== ======
GAAP net loss per share-
diluted $(0.11) $(0.29) $(0.27) $(0.34)
Stock-based compensation 0.05 0.05 0.11 0.09
In-process research and
development - 0.25 - 0.25
Acquisition due-diligence
costs - - - 0.06
Adjustment to shares used in
calculating net (loss) income
per share 0.01 0.01 0.01 0.02
---- ---- ---- ----
Non-GAAP net (loss) income per
share-diluted $(0.05) $0.02 $(0.15) $0.08
====== ===== ====== =====
Shares used in calculating net
(loss) income per share-
diluted 48,335 49,731 48,184 49,638
====== ====== ====== ======
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 factors 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 and in-process research and
development and acquisition-related costs are not reflective of 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 and for forecasting
and planning future periods. 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
RECONCILIATION OF GAAP TO NON-GAAP FORWARD LOOKING GUIDANCE
(in thousands, except per share data)
(Unaudited)
2009
----
Guidance Range
--------------
From To
---- --
GAAP net loss per share-basic and diluted $(0.38) $(0.43)
Stock-based compensation expense 0.25 0.25
Goodman commissions 0.07 0.07
---- ----
Non-GAAP net loss per share-basic and diluted $(0.06) $(0.11)
====== ======
Shares used in calculating net loss per share-basic
and diluted 48,700 48,700
====== ======
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 factors 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 and the Goodman commissions are non-recurring expenses
related to the termination of a distribution arrangement. 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 and for forecasting and planning future periods.
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)
Three months Six months
ended Percentage ended Percentage
June 30, Change June 30, Change
-------- ---------- ----------- ----------
2008 YTD YTD 2008
to Q2 Q2 to
2009 2008 2009 '09 '08 2009
---- ---- ----- ---- ---- ----
Medical segment:
IVUS systems:
United States $6.1 $6.0 2% $11.1 $9.7 14%
Japan 0.2 1.4 (90) 1.3 2.4 (44)
Europe 2.2 2.4 (7) 3.8 3.6 7
Rest of world 0.8 0.7 19 1.5 1.2 23
--- --- --- ---
Total IVUS systems $9.3 $10.5 (12) $17.7 $16.9 5
IVUS disposables:
United States $15.0 $13.0 15% $29.3 $24.6 19%
Japan 11.0 7.0 58 21.0 15.8 33
Europe 5.0 4.4 13 9.0 8.5 6
Rest of world 0.8 0.8 10 1.6 1.5 8
--- --- --- ---
Total IVUS
disposables $31.8 $25.2 26 $60.9 $50.4 21
FM:
United States $4.0 $2.1 92% $7.7 $4.0 93%
Japan 0.4 0.2 102 0.7 0.4 66
Europe 2.5 1.8 35 4.6 3.3 38
Rest of world 0.3 0.3 31 0.6 0.4 50
--- --- --- ---
Total FM $7.2 $4.4 65 $13.6 $8.1 67
Other 2.1 1.4 49% 3.8 2.7 41%
--- --- --- ---
Sub-total
medical segment $50.4 $41.5 22 $96.0 $78.1 23
Telecom segment 3.6 - - 7.0 - -
--- --- --- ---
Total $54.0 $41.5 30 $103.0 $78.1 32
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Source: Volcano Corporation |
