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Volcano Reports 22 Percent Increase in Second Quarter Medical Segment Revenues and Earnings per share of $0.09
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August 1, 2011 -- San Diego -- Volcano Corporation (NASDAQ: VOLC), a leading developer and manufacturer of precision intravascular diagnosis and therapy guidance tools designed to enhance the treatment of coronary and peripheral artery disease, said today that revenues for the second quarter of 2011 increased 14 percent versus the second quarter a year ago in total, including a 22 percent increase in medical segment revenues versus the second quarter a year ago.
For the quarter ended June 30, 2011, Volcano reported revenues of $84.0 million versus revenues of $73.5 million in the second quarter a year ago. The company reported net income on a GAAP basis of $4.9 million, or $0.09 per diluted share, in the second quarter of 2011, versus net income on a GAAP basis of $5.4 million, or $0.10 per diluted share, in the second quarter of 2010.
Year-over-year the company's medical segment revenues increased 22 percent for the first quarter of 2011 and 24 percent for the first half of 2011. Industrial segment revenues in the second quarter declined 59 percent year-over-year and 44 percent in the first half of 2011 versus the first half of 2010 - due to the downturn in the telecom industry.
For the first six months of 2011, Volcano reported revenues of $165.0 million, an 18 percent increase over revenues of $140.0 million in the same period a year ago. The company reported GAAP net income of $6.0 million, or $0.11 per diluted share, in the first six months of 2011. This compares with GAAP net income of $1.4 million, or $0.03 per diluted share, in the same period in 2010.
"During the quarter, we continued to successfully drive our initiatives to achieve market share gains and increase utilization for our core FM (Functional Management) and IVUS (Intravascular Ultrasound) offerings. Year-over-year revenues from the sale of IVUS and FM disposables increased 22 percent and 54 percent, respectively," said
Scott Huennekens, president and chief executive officer of Volcano.
"We experienced a solid quarter in Japan as activity in the country is beginning to return to normal levels following the tragic earthquake and tsunami in March. Our IVUS disposable revenues there increased 31 percent year-over-year and we have recently launched enhanced versions of our IVUS and FM disposables, as well as the VIBE® RX Vascular Imaging Balloon Catheter that provides precise, targeted balloon dilation using our intravascular imaging technology," Huennekens
added.
"Our continued investments in product development and clinical programs are advancing our long-term growth strategy and fulfilling our goal of being the leading therapy guidance company. We are successfully expanding beyond a diagnosis-only company to becoming a platform company delivering precision guided therapy of minimally invasive diagnosis and therapy utilizing visualization, physiology and other technologies that could double our potential addressable markets to more than $3.0 billion over the next several years," he
continued.
Guidance for 2011
The company said it continues to expect that revenues for fiscal 2011 will be in the range of $342-$347 million. It expects that gross margin for the year will be 65-66 percent. This compares to prior guidance for gross margin of 64-65 percent. It now expects operating expenses to be 58-60 percent of revenues for the year. This compares to prior guidance for operating expenses of 57-59 percent of revenues. The company maintained its guidance for earnings per diluted share of $0.19-$0.21 for 2011.
Conference Call Information
The company will hold a conference call at 2 p.m., Pacific Daylight Time (5 p.m., Eastern Daylight Time), today. The teleconference can be accessed by calling (631) 291-4555, passcode 81779990, 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 August 8, at (404) 537-3406, passcode 81779990, and via the company's website at http://www.volcanocorp.com.
About Volcano
Volcano Corporation is revolutionizing the medical device industry with a broad suite of technologies that make imaging and therapy simpler, more informative and less invasive. Our products empower physicians around the world with a new generation of analytical tools that deliver more meaningful information - using sound and light as the guiding elements. Founded in cardiovascular care and expanding into other specialties, Volcano is changing the assumption about what is possible in improving patient outcomes by combining imaging and therapy together. For more information, visit the company's website at 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 press release regarding Volcano's business that are not historical facts
may be considered "forward-looking statements." Forward-looking statements
are based on management's current expectations and are subject to risks and
uncertainties that may cause Volcano's actual results to differ materially
and adversely from statements contained herein. Some of the potential risks
and uncertainties that could cause actual results to differ include the pace
and extent of market adoption of the company's products and technologies, growth
strategies, the impact of events in Japan, timing and achievement of product
development milestones, outcome of ongoing litigation, the impact and benefits
of market development, dependence upon third parties, product introductions,
unexpected new data, safety and technical issues, market conditions and other
risks inherent to medical and/or telecom device development and commercialization.
These and additional risks and uncertainties are more fully described in Volcano's
filings made with the Securities and Exchange Commission, including our recent
annual report on Form 10-K for the year ended December 31, 2010, 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 disclaims any 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.
VOLCANO CORPORATION
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CONDENSED CONSOLIDATED BALANCE SHEETS
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(in thousands)
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(Unaudited)
| |
|
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| June 30,
|
| December 31,
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| 2011
|
| 2010
| |
Assets
|
|
|
| |
Current assets:
|
|
|
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Cash and cash equivalents
| $ 35,433
|
| $ 43,429
| |
Short-term available-for-sale investments
| 170,222
|
| 175,283
| |
Accounts receivable, net
| 61,508
|
| 59,133
| |
Inventories
| 47,456
|
| 40,499
| |
Prepaid expenses and other current assets
| 7,512
|
| 6,643
| |
Total current assets
| 322,131
|
| 324,987
| |
Long-term available-for-sale investments
| 45,073
|
| 26,804
| |
Property and equipment, net
| 62,905
|
| 56,503
| |
Intangible assets, net
| 15,990
|
| 17,103
| |
Goodwill
| 2,487
|
| 2,487
| |
Other non-current assets
| 3,914
|
| 3,682
| |
| $ 452,500
|
| $ 431,566
| |
|
|
|
| |
Liabilities and Stockholders' Equity
|
|
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Current liabilities:
|
|
|
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Accounts payable
| $ 13,511
|
| $ 13,895
| |
Accrued compensation
| 16,597
|
| 18,241
| |
Accrued expenses and other current liabilities
| 19,998
|
| 21,960
| |
Deferred revenues
| 5,749
|
| 5,898
| |
Current maturities of long-term debt
| 72
|
| 56
| |
Total current liabilities
| 55,927
|
| 60,050
| |
Long-term debt
| 93,430
|
| 91,236
| |
Deferred revenues
| 2,688
|
| 2,466
| |
Other
| 3,278
|
| 3,478
| |
Total liabilities
| 155,323
|
| 157,230
| |
Stockholders' equity
| 297,177
|
| 274,336
| |
| $ 452,500
|
| $ 431,566
| |
|
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|
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VOLCANO CORPORATION
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CONSOLIDATED STATEMENTS OF OPERATIONS
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(in thousands, except per share data)
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(Unaudited)
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| Three Months Ended
June 30,
| Six Months Ended
June 30,
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| 2011
| 2010
| 2011
| 2010
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Revenues
| $
| 84,036
| $
| 73,452
| $
| 165,031
| $
| 140,024
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Cost of revenues
|
| 26,763
|
| 27,093
|
| 54,637
|
| 53,731
| |
Gross profit
|
| 57,273
|
| 46,359
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| 110,394
|
| 86,293
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Operating expenses:
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|
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Selling, general and administrative
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| 35,488
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| 30,082
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| 70,948
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| 63,161
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Research and development
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| 13,321
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| 9,594
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| 26,409
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| 19,452
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Amortization of intangibles
|
| 858
|
| 621
|
| 1,712
|
| 1,194
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In-process research and development
|
| -
|
| 33
|
| -
|
| 65
| |
Total operating expenses
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| 49,667
|
| 40,330
|
| 99,069
|
| 83,872
| |
Operating income
|
| 7,606
|
| 6,029
|
| 11,325
|
| 2,421
| |
Interest income
|
| 232
|
| 83
|
| 475
|
| 168
| |
Interest expense
|
| (2,056)
|
| (11)
|
| (4,061)
|
| (18)
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Exchange rate (loss)
|
| (291)
|
| (423)
|
| (679)
|
| (544)
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Other
|
| -
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| (9)
|
| (1)
|
| (19)
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Income before provision for income taxes
|
| 5,491
|
| 5,669
|
| 7,059
|
| 2,008
| |
Provision for income taxes
|
| 603
|
| 253
|
| 1,015
|
| 628
| |
Net income
| $
| 4,888
| $
| 5,416
| $
| 6,044
| $
| 1,380
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Net income per share:
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|
|
|
|
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Basic
| $
| 0.09
| $
| 0.11
| $
| 0.12
| $
| 0.03
| |
Diluted
| $
| 0.09
| $
| 0.10
| $
| 0.11
| $
| 0.03
| |
Shares used in calculating net income per share:
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|
|
|
|
|
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Basic
|
| 52,272
|
| 50,452
|
| 52,020
|
| 50,099
| |
Diluted
|
| 54,536
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| 53,071
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| 54,430
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| 52,876
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|
|
|
|
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VOLCANO CORPORATION
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REVENUE SUMMARY
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(in millions)
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(unaudited)
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| Three Months Ended
June 30,
| Percentage Change
| Six Months Ended
June 30,
| Percentage Change
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| 2011
| 2010
| 2010 to 2011
| 2011
| 2010
| 2010 to 2011
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Medical segment:
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|
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|
|
|
|
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Consoles:
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|
|
|
|
|
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United States
| $ 5.7
| $ 7.3
| (23)
| %
| $ 11.6
| $ 11.5
| 0
| %
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Japan
| 0.5
| 0.1
| 596
|
| 1.2
| 1.3
| (11)
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Europe
| 2.5
| 2.0
| 23
|
| 4.8
| 3.9
| 24
|
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Rest of world
| 1.1
| 1.4
| (19)
|
| 2.1
| 2.7
| (21)
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Total Consoles
| $ 9.8
| $10.8
| (9)
|
| $ 19.7
| $ 19.4
| 1
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IVUS single-procedure disposables:
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United States
| $19.7
| $17.1
| 15
| %
| $ 37.9
| $ 33.4
| 14
| %
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Japan
| 22.7
| 17.3
| 31
|
| 44.9
| 33.2
| 35
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Europe
| 6.2
| 5.2
| 20
|
| 11.7
| 10.5
| 11
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Rest of world
| 1.4
| 1.3
| 11
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| 3.1
| 2.4
| 30
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Total IVUS single-procedure disposables
| $50.0
| $40.9
| 22
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| $ 97.6
| $ 79.5
| 23
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FM single-procedure disposables:
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United States
| $ 8.7
| $ 6.0
| 46
| %
| $ 16.8
| $ 11.3
| 49
| %
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Japan
| 1.0
| 0.7
| 50
|
| 2.0
| 1.5
| 29
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Europe
| 6.3
| 3.7
| 70
|
| 11.3
| 7.7
| 48
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Rest of world
| 0.6
| 0.4
| 43
|
| 1.2
| 0.8
| 42
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Total FM single-procedure disposables
| $16.6
| $10.8
| 54
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| $ 31.3
| $ 21.3
| 47
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Other
| $ 4.9
| 4.3
| 14
| %
| $ 9.8
| 8.0
| 22
| %
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Sub-total medical segment
| $81.3
| $66.8
| 22
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| $158.4
| $128.2
| 24
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Industrial segment
| $ 2.7
| 6.7
| (59)
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| $ 6.6
| 11.8
| (44)
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Total
| $84.0
| $73.5
| 14
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| $165.0
| $140.0
| 18
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Source: Volcano
Corporation
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