Volcano second-quarter revenues increase 36% to record $73.5 million

Jul 30 2010

Volcano Corporation (Nasdaq: VOLC), a leading developer and manufacturer of precision intravascular therapy guidance tools designed to enhance the diagnosis and treatment of coronary and peripheral vascular disease, said today that revenues in the second quarter of 2010 increased 36 percent versus revenues in the second quarter of 2009.

For the quarter ended June 30, 2010, Volcano reported record quarterly revenues of $73.5 million, compared with revenues of $54.0 million in the second quarter of fiscal 2009.

For the second quarter of 2010, the company reported record net income on a GAAP basis of $5.4 million, or $0.10 per diluted share, versus a GAAP net loss of $5.3 million, or $0.11 per share, in the second quarter of 2009.

Excluding stock-based compensation and in-process research and development expense of $3.1 million, the company reported net income of $8.6 million, or $0.16 per diluted share, in the second quarter of 2010. 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.

For the first six months of 2010, Volcano reported revenues of $140.0 million, a 36 percent increase over revenues of $103.0 million in the same period a year ago. The company reported GAAP net income of $1.4 million, or $0.03 per diluted share, in the first six months of 2010. This compares with a GAAP net loss of $12.9 million, or $0.27 per share, in the same period in 2009. Excluding stock-based compensation and in-process research and development expense of $6.3 million, Volcano reported net income of $7.6 million, or $0.14 per diluted share, in the first six months of 2010. In the first six months of 2009, excluding stock-based compensation expense of $5.6 million, Volcano reported a net loss of $7.3 million, or $0.15 per share.

"We continued to drive growth in both our intravascular ultrasound (IVUS) and Functional Measurement (FM) businesses, which grew 25 and 51 percent year-over-year, respectively. In the quarter, overall IVUS disposable revenues increased 29 percent versus the prior year, and our FM business increased 50 percent in both the U.S. and Europe," said Scott Huennekens, president and chief executive officer.

"During the quarter, we introduced significant enhancements to our IVUS and FM disposables and our multi-modality console operating software, and commenced the European launch of our VIBE RX Vascular Imaging Catheter. In addition, we completed a number of cases utilizing the latest version of our Optical Coherence Tomography (OCT) catheter and system," he added.

Volcano also announced today that it has signed a definitive agreement to acquire Fluid Medical Inc., a privately held company that is developing advanced catheter-based forward-looking imaging technology, for $4.2 million in cash. The company expects to close the transaction next week. There are no additional royalty or milestone payments to stockholders of Fluid Medical associated with the transaction.

"This transaction represents another milestone in the expansion of our multi-modality platform strategy to create competitive differentiation for Volcano. We are acquiring  technology and IP providing a forward field of view imaging on highly maneuverable catheters that have the potential to enable or enhance visualization for procedures  currently done with inadequate  imaging," noted Huennekens. "This technology is expected to result in a Forward-Looking Intra-Cardiac Echo (FL.ICE) catheter that will initially be focused on minimally invasive structural heart applications, such as percutaneous aortic and mitral valve therapies," he added.

Guidance for 2010

The company provided updated guidance for fiscal 2010. It now expects that total revenues for fiscal 2010 will be in the range of $286-$290 million. This compares with prior expectations of $277-$282 million. Revenues from Axsun's industrial segment, are expected to be approximately $24 million. This compares with prior expectations for revenues from Axsun's industrial segment of approximately $17 million, and reflects continued growth in the high capacity telecom optical network infrastructure that supports the global expansions of data and video utilization.

The company expects that gross margins in 2010 will continue to be in the range of 62-63 percent. Operating expenses for all of 2010 are expected to be in the range of 58-60 percent of revenues. The expectations for operating expenses include increased research and development costs related to development of the Fluid Medical technology and increased litigation expenses. Net interest income is expected to be approximately $400,000 versus previous expectations of $450,000.

The company expects earnings per share for all of 2010 will continue to be in the range of $0.05-$0.10 per diluted share. The company expects that weighted average shares on a diluted basis at the end of 2010 will be approximately 53 million. The company continues to expect that excluding stock-based compensation expense, net income will be $0.30-$0.35 per diluted share.