Volcano Corporation (Volcano), a manufacture of intravascular ultrasound (IVUS) product, has reported revenues of $53.9 million for the third quarter of 2009, up 22%, compared with the revenues of $44.1 million in the year-ago quarter. It has also reported a net loss of $4 million, or $0.08 loss per diluted share, for the third quarter of 2009, compared with the net income of $744,000, or $0.01 per diluted share, in the year-ago quarter.
Revenues for the third quarter of 2009 include $4.6 million from Axsun Technologies, Inc., which Volcano acquired at the end of 2008, and for which the company recorded no revenues in the third quarter a year ago.
Excluding stock-based compensation expense of $2.6 million and commissions of $1.4 million paid to a former distributor related to the company’s transition to a direct sales initiative in Japan, the company reported non-GAAP net income of $7,000, or $0.00 per diluted share. In the third quarter of 2008, excluding stock-based compensation expense of $2.5 million, the company reported non-GAAP net income of $3.3 million, or $0.06 per diluted share.
For the first nine months of 2009, Volcano reported revenues of $156.9 million, a 28 percent increase over revenues of $122.2 million in the same period a year ago. Revenues for the first nine months of 2009 include $12.2 million from Axsun. The company reported a GAAP net loss of $16.9 million, or $0.35 per share, compared with a GAAP net loss of $15.1 million, or $0.32 per share, in the same period year ago. Excluding stock-based compensation expense of $8.2 million and the aforementioned commissions of $1.4 million, Volcano reported a non-GAAP net loss of $7.3 million, or $0.15 per share, in the first nine months of 2009. Excluding in-process research and development costs of $12.4 million related to the Novelis and CardioSpectra transactions, $2.9 million in due diligence, legal and accounting expenses related to an acquisition that was not consummated, and stock-based compensation expense of $7.0 million, Volcano reported non-GAAP net income of $7.2 million, or $0.14 per diluted share, in the first nine months of 2008.
“In addition to experiencing a very solid financial performance during the quarter, we completed our transition from our distributor relationship with Goodman to a direct sales effort in Japan and had new data demonstrating the value of our offerings presented at the recent Transcatheter Cardiovascular Therapeutics (TCT) meeting,” said Scott Huennekens, president and chief executive officer.
“During the quarter, our core intravascular ultrasound (IVUS) disposable sales increased 15 percent year-over-year, including 22 percent in Japan and 16 percent in the U.S. Our total functional measurement (FM) business increased 53 percent, led by year-over-year growth of more than75 percent in both the U.S. and Europe,” Huennekens noted.
“In Japan,” he continued, “we have successfully completed our transition program with Goodman and converted all of their more than 400 accounts. We are also about halfway through our program to transition customers there to our s5 family of IVUS consoles.
“Data from the key PROSPECT and FAME presentations at TCT demonstrated the value of our IVUS and FM offerings by providing evidence that diagnostic angiography alone is not enough and that the use of our devices can not only enhance patient care, but also have a meaningful impact on the cost of healthcare. We believe this data will help fuel further adoption of our current and future products,” Huennekens concluded.
2009 Guidance
The company reconfirmed prior guidance for fiscal 2009 and continues to expect revenues for fiscal 2009 will be in the range of $218-$223 million, or an increase of 27-30% over revenues in 2008.
The company continues to expect gross margin 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, the expansion 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 GAAP net loss 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. The company further noted that as previously reported, additional payments would be due to former CardioSpectra stockholders if one of the specific milestones in the acquisition agreement is met by the end of fiscal 2009 and the company would be required to make a milestone payment of approximately $11.0 million and record a one-time charge to in-process research and development. The impact of this charge, if it were to occur, would increase expectations for the range of loss per share from $0.38-$0.43 per share to $0.61-$0.66 per share. Weighted average shares outstanding at year-end 2009 are expected to be approximately 48.4 million basic shares and 50.0 million diluted shares.