SonoSite reports lower revenues in fourth-quarter, full-year results

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Feb 12 2010

Site, Inc. (Nasdaq:SONO), the world leader and specialist in hand-carried ultrasound for the point-of-care, today reported financial results for the fourth quarter and year ended December 31, 2009.

“We have also initiated market development in cardiovascular disease management markets enabling us to expand our role in the cardiovascular health marketplace.”

REVENUE

Revenues in the fourth quarter of 2009 were $69.7 million, a decrease of 1% compared to the fourth quarter of 2008. Full year of 2009 revenues were $227.4 million, down 7% versus full year of 2008.

Revenues for the partial year acquisition of CardioDynamics were $4.2 million for the fourth quarter and $7.1 million for the full year of 2009.

Excluding partial year revenues from CDIC, SonoSite fourth quarter revenues were $65.5 million, down 7% versus the fourth quarter of 2008. Full year revenues excluding CDIC were $220.3 million, a decrease of 10% compared to 2008.

Changes in foreign currency rates increased worldwide revenues by 4% in the fourth quarter and decreased revenues by 2% for the full year.

OPERATING INCOME AND CASH FLOW

Fourth Quarter Results

Fourth quarter operating income was $6.8 million, an increase of 46% compared to the fourth quarter of 2008. Operating income for the fourth quarter 2009 included charges from CDIC of $3.3 million, related to operating results as well as acquisition and integration.

Excluding CDIC, operating income in the fourth quarter of 2009 was $10.1 million, an increase of 117% compared to the fourth quarter of 2008. Operating margins reached 15.4% for the quarter.

Full Year Results

For the full year of 2009, operating income was $13.7 million, including charges from CDIC of $6.9 million; a decrease of 39% compared to the full year of 2008.

Excluding CDIC, full year of 2009 operating income was $20.6 million, down 8% versus the full year of 2008 on a $24 million or 10% revenue decline versus full year 2008.

Cash Flow

Operating cash flow was $15.3 million for the quarter and $24.4 million for the full year of 2009, as compared to $11.2 million and $29.2 million for the comparable periods of 2008. Operating cash flow for the full year of 2009 reflects the $21 million received to settle a patent dispute in the fourth quarter.

Net income

For the fourth quarter of 2009, the Company recorded net income of $2.2 million or $0.12 per share, compared to $6.0 million or $0.34 per share in 2008. For the full year of 2009, net income was $3.2 million or $0.18 per share compared to $11.2 million or $0.64 per share for the full year of 2008. Excluding non-recurring items such as bond gains, acquisition expenses, and patent royalty revenue, net income would have been $0.36 per share for the full year of 2009 or essentially even with 2008.

COMMENTARY

“In a very tough year we simply got stronger as a company, improving our operating model and tightening our capital allocation process,” said Kevin M. Goodwin, SonoSite President and CEO. “We successfully integrated CardioDynamics which included significant changes to their sales force during the fourth quarter, while successfully closing out our litigation matters and achieving 9% operating margins, a level similar to 2008, despite core revenues falling by $24 million or 10%.”

“With a difficult year behind us we are stronger and more focused on growth initiatives for 2010 and beyond. We have leaned out our ‘SG&A structure’ and are deploying our strategy across four key vertical markets,” said Mr. Goodwin.

“We have also initiated market development in cardiovascular disease management markets enabling us to expand our role in the cardiovascular health marketplace.”

“Additionally, we are at work on revising our capital structure with the recently announced “Dutch Auction” tender offer to repurchase $100 million of our shares. Following a two year evaluation of investment alternatives, it became clear to us that investing in our own stock was our best choice,” Mr. Goodwin further commented.

As of December 31, 2009, the company held $257.7 million in cash and investments and had outstanding senior convertible notes of $114.7 million for net liquidity of $143.0 million.

2010 FINANCIAL OUTLOOK

The company provided the following guidance: