Volcano Corporation (Volcano), a manufacture of intravascular ultrasound (IVUS) product, has reported revenues of $54 million for the second quarter of 2009, up 30%, compared with the revenues of $41.5 million in the year-ago quarter. It has also reported a net loss of $5.3 million, or $0.11 loss per share, for the second quarter of 2009, compared with the net loss of $13.5 million, or $0.29 loss per share, in the year-ago quarter.
The results for the second quarter of 2008 include $12.2 million in in-process research and development charges related to the company’s acquisition of Novelis, Inc. Weighted average shares for the second quarter of 2009 were 48.3 million.
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. In the second quarter of 2008, excluding the aforementioned charges related to the Novelis transaction and stock-based compensation expense of $2.4 million, Volcano reported net income of $1.2 million, or $0.02 per diluted share.
For the first six months of 2009, Volcano reported revenues of $103.0 million, a 32 percent increase over revenues of $78.1 million in the same period a year ago. Revenues in the first six months of 2009 include $7.6 million from Axsun. The company reported a GAAP net loss of $12.9 million, or $0.27 per share, compared with a loss of $15.8 million, or $0.34 per share, in the first six months of 2008. Excluding stock-based compensation expense of $5.6 million, Volcano reported a net loss of $7.3 million, or $0.15 per share, in the first six months of 2009. Excluding in-process research and development costs of $12.2 million, $2.9 million in due diligence, legal and accounting expenses related to an acquisition that was not consummated, and stock-based compensation expense of $4.5 million, Volcano reported net income of $4.0 million, or $0.08 per diluted share, in the first six months of 2008.
Volcano had an excellent quarter with strong growth in our core intravascular ultrasound (IVUS) and functional measurement (FM) businesses and key geographies. IVUS disposable revenues in the quarter were $31.8 million, a record quarter for this business, and a 26 percent increase over the second quarter a year ago. FM revenues in the quarter were a record $7.2 million, with FM disposable revenues increasing 75 percent over the second quarter a year ago. In addition, we continued our successful IVUS/FM console placement initiatives, placing 233 consoles versus 178 a year ago, an increase of 31 percent, said Scott Huennekens, president and chief executive officer of Volcano. These results portray the value of our technology innovation, effective sales and marketing programs and the growing recognition among clinicians that IVUS and FM can play an important role in the diagnosis and treatment of patients, he added.
Huennekens said the company’s direct sales initiative in Japan continues to progress on schedule following the completion of a termination agreement with its largest distributor in the market last month. We have continued to expand our direct sales force and our account transition program is on schedule. We believe this transition will enable us to develop closer relationships with our customers in Japan, while enabling us to implement the kinds of sales and marketing initiatives that have made us successful in other geographies. In addition, going direct provides us significant financial advantages, including higher revenues per disposable and increased gross margin and operating income on those revenues, Huennekens noted.
2009 Guidance
The company continues to expect revenues for fiscal 2009 will be in the range of $218-$223 million, or an increase of 27-30 percent over revenues in 2008.
The company continues to expect gross margins 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, expansions 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 net loss on a GAAP basis 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. Weighted average shares outstanding at year-end 2009 are expected to be approximately 48.7 million basic shares and 50.0 million shares on a diluted basis.