SAN DIEGO, Nov. 8 /PRNewswire-FirstCall/ -- Volcano Corporation , 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:
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 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.
CONTACT: John Dahldorf, Chief Financial Officer of Volcano Corporation,
+1-916-638-8008; or Neal B. Rosen of Ruder-Finn, +1-415-692-3058, for
Volcano Corporation
Web site: http://www.volcanocorp.com/
