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Volcano Corporation : Reports 12 Percent Increase in First Quarter Revenues

05/02/2012 | 04:10pm US/Eastern
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SAN DIEGO, May 2, 2012 /PRNewswire/ -- Volcano Corporation (NASDAQ: VOLC), a leading developer and manufacturer of precision guided therapy tools designed to enhance the diagnosis and treatment of coronary and peripheral vascular disease, today said revenues in the first quarter of 2012 increased 12 percent over the same period a year ago.

For the quarter ended March 31, 2012, Volcano reported revenues of $90.4 million versus revenues of $81.0 million in the first quarter a year ago. Year-over-year medical segment revenues increased 15 percent in the first quarter of 2012. Industrial segment revenues in the first quarter declined 48 percent versus a year ago, due to the continued lack of network capacity spending by telecom service providers.

The company reported GAAP net income of $271,000, or $0.00 per diluted share, in the first quarter of 2012, versus net income of $1.2 million, or $0.02 per diluted share in the first quarter of 2011.

"Volcano began 2012 with a solid performance as we continued to increase our market presence as the leading precision guided therapy company. Our growth strategy is being facilitated by the increasing focus on medical necessity, quality and documentation for procedures. By providing precision guided therapy, our Functional PCI technologies address both clinical and economic needs faced by physicians and hospitals," said Scott Huennekens, president and chief executive officer.

"Our activity in the U.S. and Japan met or exceeded our expectations, helping us generate an 18 percent increase in medical disposable revenues, including a 37 percent increase in FFR (Fractional Flow Reserve) disposable sales and a 12 percent increase in sales of IVUS (Intravascular Imaging) disposables. We experienced a nominal decline in Europe due to a slowing economy and our decision to transition to direct in Spain earlier than previously planned. As we have accomplished in Japan and other countries, by going direct we expect to see an acceleration of Volcano growth and market penetration in new direct markets over time," he added.

Guidance for 2012

The company reconfirmed prior guidance for 2012. The company continues to expect that revenues will be in the range of $392-$399 million. The company reconfirmed guidance for gross margins of 64-65 percent and operating expenses of 57-58 percent of revenues in 2012.

The company also reconfirmed that it expects a tax rate of approximately 40 percent and earnings per diluted share of $0.21-$0.24. Weighted average shares on a fully diluted basis at the end of 2012 are expected to be 55.5 million.

Conference Call Information

The company will hold a conference call at 2 p.m., Pacific Daylight Time, (5 p.m., Eastern Daylight Time), today. The teleconference can be accessed by calling (631) 291-4555, passcode 70731296, or via the company's website at http://www.volcanocorp.com. Please dial in or access the webcast 10-15 minutes prior to the beginning of the call. A replay of the conference call will be available through May 9 at (404) 537-3406, passcode 70731296, and via the company's website at http://www.volcanocorp.com.

About Volcano

Volcano Corporation is revolutionizing the medical device industry with a broad suite of technologies that make imaging and therapy simpler, more informative and less invasive. Our products empower physicians around the world with a new generation of analytical tools that deliver more meaningful information--using sound and light as the guiding elements. Founded in cardiovascular care and expanding into other specialties, Volcano is changing the assumption about what is possible in improving patient outcomes by combining imaging and therapy together. For more information, visit the company's website at www.volcanocorp.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Any statements in this press release regarding Volcano's business that are not historical facts may be considered "forward-looking statements." Forward-looking statements are based on management's current expectations and are subject to risks and uncertainties that may cause Volcano's actual results to differ materially and adversely from statements contained herein. Some of the potential risks and uncertainties that could cause actual results to differ include the risk that Volcano's revenue, expense, earnings, margin or tax rate projections may turn out to be inaccurate or Volcano may encounter unanticipated difficulty in achieving those projections, the effect of competitive and economic factors, and the company's reactions to those factors, purchasing decisions with respect to the company's products, the pace and extent of market adoption of the company's products and technologies, the inherent uncertainty in the process of obtaining regulatory approval or clearance for Volcano's products or devices, the success of Volcano's growth strategies, risks associated with Volcano's international operations, including currency exchange rate fluctuations, timing and achievement of product development milestones, outcome of ongoing litigation, the impact and benefits of market development, our ability to protect our intellectual property, dependence upon third parties, product introductions, unexpected new data, safety and technical issues, market conditions and other risks inherent to medical and/or telecom device development and commercialization. These and additional risks and uncertainties are more fully described in Volcano's filings made with the Securities and Exchange Commission, including our most recent annual report on Form 10-K 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 disclaims any obligation to update any forward-looking statements to reflect new information, events or circumstances after the date they are made, or to reflect the occurrence of unanticipated events.

                            VOLCANO CORPORATION
                   CONDENSED CONSOLIDATED BALANCE SHEETS
                              (in thousands)
                                (Unaudited)

                               March 31,                 December 31,
                                           2012                          2011
                                           ----                          ----
    Assets
    Current
     assets:
    Cash and cash
     equivalents                        $63,444                      $107,016
    Short-term
     available-
     for-sale
     investments                        133,181                       112,327
    Accounts
     receivable,
     net                                 66,365                        69,469
    Inventories                          39,258                        41,306
    Prepaid
     expenses and
     other
     current
     assets                              20,342                        19,939
    Total current
     assets                             322,590                       350,057
    Restricted
     cash                                   712                           692
    Long-term
     available-
     for-sale
     investments                         53,022                        30,919
    Property and
     equipment,
     net                                 90,939                        81,097
    Intangible
     assets, net                         15,069                        15,245
    Goodwill                              2,487                         2,487
    Other non-
     current
     assets                              17,170                        16,227
                                       $501,989                      $496,724
                                       ========                      ========

    Liabilities
     and
     Stockholders'
     Equity
    Current
     liabilities:
    Accounts
     payable                            $12,596                       $12,911
    Accrued
     compensation                        17,187                        20,251
    Accrued
     expenses and
     other
     current
     liabilities                         17,222                        16,689
    Deferred
     revenues                             7,278                         7,077
    Current
     maturities
     of long-
     term debt                               76                            72
    Total current
     liabilities                         54,359                        57,000
    Convertible
     senior notes                        96,833                        95,663
    Other long-
     term debt                               47                            74
    Deferred
     revenues                             3,127                         3,168
    Other                                 1,806                         1,582
    Total
     liabilities                        156,172                       157,487
    Stockholders'
     equity                             345,817                       339,237
                                        -------                       -------
                                       $501,989                      $496,724
                                       ========                      ========

                                  VOLCANO CORPORATION
                    CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                         (in thousands, except per share data)
                                      (Unaudited)

                                 Three Months Ended
                                     March 31,
                                     ---------
                              2012                                  2011
                              ----                                  ----
    Revenues                                      $90,360                $80,995
    Cost of
     revenues                                      29,573                 27,874
                                                   ------                 ------
    Gross profit                                   60,787                 53,121
    Operating
     expenses:
    Selling,
     general and
     administrative                                44,345                 35,460
    Research and
     development                                   13,649                 13,088
    Amortization
     of
     intangibles                                      872                    855
    Total
     operating
     expenses                                      58,866                 49,403
                                                   ------                 ------
    Operating
     income                                         1,921                  3,718
    Interest
     income                                           230                    243
    Interest
     expense                                       (1,472)                (2,005)
    Exchange rate
     loss                                            (175)                  (388)
    Other, net                                        (96)                     -
                                                      ---                    ---
    Income before
     income tax                                       408                  1,568
    Income tax
     expense                                          137                    412
                                                      ---                    ---
    Net income                                       $271                 $1,156
                                                     ====                 ======
    Net income
     per share:
    Basic                                           $0.01                  $0.02
                                                    =====                  =====
    Diluted                      $                      -                  $0.02
                               ===                    ===                  =====
    Shares used
     in
     calculating
     net income
     per share:
    Basic                                          52,929                 51,766
                                                   ======                 ======
    Diluted                                        54,985                 54,215

                               VOLCANO CORPORATION
                  CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
                                  (in thousands)
                                   (Unaudited)
                   Three Months Ended
                       March 31,
                       ---------
                                 2012                             2011
                                 ----                             ----
     Operating
     activities
    Net
     income                                                 $271        $1,156
     Adjustments
     to
     reconcile
     net
     income
     to net
     cash
     provided
     by
     operating
     activities:
     Depreciation
     and
     amortization                                          5,791         5,560
     Amortization
     of
     investment
     premium,
     net                                                     269           736
     Accretion
     of
     debt
     discount
     on
     convertible
     senior
     notes                                                 1,212         1,138
    Non-
     cash
     stock
     compensation
     expense                                               3,617         3,094
    Other
     non-
     cash
     adjustments                                             306           873
    Changes
     in
     operating
     assets
     and
     liabilities                                            (961)      (12,359)
                                                            ----       -------
    Net
     cash
     provided
     by
     operating
     activities                                           10,505           198
                                                          ------           ---
     Investing
     activities
     Purchase
     of
     short-
     term
     and
     long-
     term
     available-
     for-
     sale
     securities                                         (110,762)      (83,908)
    Sale or
     maturity       securities
     of
     short-
     term
     and
     long-
     term
     available-
     for-
     sale                                                 67,577        98,790
    Capital
     expenditures                                        (14,437)       (6,747)
    Cash
     paid
     for
     other
     intangibles
     and
     investments                                            (758)         (313)
     Proceeds
     from
     foreign
     currency
     exchange
     contracts                                                 -           374
    Payment
     for
     foreign
     currency
     exchange
     contracts                                                 -          (817)
                                                             ---          ----
    Net
     cash
     (used
     in)
     provided
     by
     investing
     activities                                          (58,380)        7,379
                                                         -------         -----
     Financing
     activities
     Repayment
     of
     debt                                                    (22)          (10)
     Proceeds
     from           and
     sale
     of
     common
     stock
     under
     employee
     stock
     purchase
     plan                                                  4,887         4,694
     exercise
     of
     common
     stock
     options
    Net
     cash
     provided
     by
     financing
     activities                                            4,865         4,684
    Effect
     of
     exchange
     rate
     changes
     on
     cash
     and
     cash
     equivalents                                            (562)       (2,686)
                                                            ----        ------
    Net
     (decrease)
     increase
     in
     cash
     and
     cash
     equivalents                                         (43,572)        9,575
    Cash
     and
     cash
     equivalents,
     beginning
     of
     period                                              107,016        43,429
                                                         -------        ------
    Cash
     and
     cash
     equivalents,
     end of
     period                                              $63,444       $53,004
                                                         =======       =======

                                    VOLCANO CORPORATION
                                      REVENUE SUMMARY
                                       (in millions)
                                        (unaudited)

                     Three Months      Percentage
                         Ended           Change
                      March 31,
                      ---------
                               2012             2011    2011 to 2012
                               ----             ----    ------------
    Medical segment:
    Consoles:
    United States              $5.2             $5.9               (12)%
    Japan                       0.9              0.6                 42
    Europe                      1.1              2.4                (55)
    Rest of world               0.9              1.0                 (7)
    Total Consoles             $8.1             $9.9                (18)

    IVUS single-
     procedure
     disposables:
    United States             $19.7            $18.2                  8%
    Japan                      26.6             22.2                 20
    Europe                      5.4              5.5                 (2)
    Rest of world               1.8              1.7                  8
    Total IVUS
     single-
     procedure
     disposables              $53.5            $47.6                 12

    FM single-
     procedure
     disposables:
    United States             $11.7             $8.1                 45%
    Japan                       1.8              0.9                 92
    Europe                      6.2              5.1                 21
    Rest of world               0.5              0.6                (21)
    Total FM single-
     procedure
     disposables              $20.2            $14.7                 37

    Other                      $6.6              4.9                 36%
    Sub-total
     medical segment          $88.4            $77.1                 15

    Industrial
     segment                   $2.0              3.9                (48)
    Total                     $90.4            $81.0                 12
                              =====            =====

SOURCE Volcano Corporation

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