Volcano Corporation (VOLC)

[madtony]

Volcano Corporation Reports Record Quarterly Revenues; Total Year Revenues Reach $103 Million
Tuesday February 13, 4:05 pm ET

RANCHO CORDOVA, Calif., Feb. 13 /PRNewswire-FirstCall/ -- Volcano Corporation (Nasdaq: VOLC - News), a leading provider of intravascular ultrasound (IVUS) and functional measurement (FM) products designed to enhance the diagnosis and treatment of vascular and structural heart diseases, today announced results for the fourth quarter and all of fiscal 2006.

For the quarter ended December 31, 2006, Volcano reported record quarterly revenues of $29.5 million, a 20 percent increase over revenues of $24.7 million in the fourth quarter a year ago, and a six percent increase over revenues of $27.8 million in the third quarter of 2006. IVUS disposable revenues in the fourth quarter of 2006 increased 25 percent over the fourth quarter of 2005.

Volcano reported its second consecutive quarter of profitability on a GAAP basis, with net income of $1.4 million, or $0.04 per diluted share, versus a net loss of $6.9 million, or $1.01 per share, in the same quarter a year ago. The company recorded stock-based compensation expense of $901,000 compared with $494,000 in the fourth quarter of 2005. Excluding stock-based compensation expense, Volcano reported net income of $2.3 million, or $0.06 per diluted share, versus a net loss of $6.4 million, or $0.94 per share, in the fourth quarter of 2005. Weighted average diluted shares outstanding were 38.2 million in the fourth quarter of 2006 versus 6.8 million in the same period a year ago. The increase reflects the conversion of preferred stock to common stock, the exercise of warrants, the company's initial public offering in June 2006 and the completion of a follow on offering in December 2006.

For all of fiscal 2006, Volcano reported revenues of $103.0 million, a 12 percent increase over revenues of $91.9 million in fiscal 2005. For the year, IVUS disposable revenues increased nearly 23 percent over 2005. Volcano reported a net loss on a GAAP basis of $8.6 million, or $0.41 per share, compared to a net loss of $15.3 million, or $2.28 per share, in 2005. Excluding a non-recurring, non-cash charge of $1.2 million related to the early extinguishment of debt and stock-based compensation expense of $3.2 million, the company reported a net loss of $4.2 million, or $0.20 per share, compared with a net loss of $13.3 million, or $1.99 per share, in 2005. A reconciliation of the company's GAAP to non-GAAP results can be found in today's earnings press release on the company's website at www.volcanocorp.com.

During the fourth quarter of 2006 Volcano completed an equity offering, selling approximately 4.3 million primary shares -- including the underwriters' overallotment -- that generated net proceeds to the company of approximately $67.8 million.

"Our results for the quarter demonstrate the ability of our s5 family of consoles to both gain market share and increase the utilization of IVUS in the diagnosis and treatment of vascular disease," said Scott Huennekens, president and chief executive officer of Volcano. "Our consoles facilitate the integration of IVUS in the cath lab, and provide ease of use and enhanced functionality for clinicians. With the launch of our Revolution rotational high frequency catheter, we are now the only company offering the market both phased array and rotational catheters. In addition, the enhancements we have made to our functional measurement (FM) offerings are broadening our presence in that market as well," he continued.

During the quarter, Volcano announced a collaboration with three leading core labs under which the company will provide IVUS catheters free of charge for use in pivotal trials for drug-eluting stents to facilitate the use of IVUS and demonstrate its value in stent optimization. In addition, the company is in the final trial design for the CHECK study, or Carotid Histology Evaluation and Correlation to patient worKup that will be a registry of stented carotid artery patients in the United States, Japan and Europe who undergo IVUS imaging of their carotid arteries prior to stenting. Volcano expects to enroll the initial patients in the 300-patient study during 2007.

In addition, the company announced today a distribution agreement with Johnson & Johnson K.K. Medical Company, appointing Cordis Endovascular Systems Japan as a distributor of IVUS products for use in peripheral and endovascular procedures in Japan. Cordis has served as a sub-distributor for Volcano's IVUS products in these markets for a number of years.

"Volcano has had an excellent year, marked by the introduction of industry-leading technology, the development of important partnerships, and meaningful progress in our clinical trials," Huennekens noted.

"In addition to increasing our presence in the IVUS and FM markets during 2007, we will continue to lay the groundwork for future growth through market opportunities such as stent optimization, IVUS and angiography co-registration, IVUS during diagnostic angiographies, Intra-Cardiac Echo, vulnerable plaque and applications in the carotid and peripheral arteries," he continued.

Guidance for 2007

Volcano expects revenues of approximately $120.0 million in 2007. Gross margin for the year is expected to be 60-61 percent and operating expenses to be 68-69 percent of revenues. The company expects to report a net loss on a GAAP basis of approximately $0.15 per share, assuming weighted average basic shares outstanding at year-end of approximately 37.7 million. Excluding stock- based compensation, Volcano expects to report net income of $0.03 per share assuming weighted average diluted shares outstanding at year-end of approximately 41.9 million.
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