SAN DIEGO, May 2, 2014 /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
reported results for the first quarter of 2014.
For the quarter ended March 31,
2014, Volcano reported revenues of $94.5 million versus revenues of $93.2 million in the same period a year ago. On a
constant currency basis, revenues increased four percent
year-over-year after adjusting for a negative impact of
approximately $2.7 million from
foreign currency. Medical segment revenues increased approximately
one percent and four percent on a reported and constant currency
basis, respectively.
The company reported a net loss on a GAAP basis of $10.9 million, or $0.21 per share, in the first quarter of 2014,
versus a net loss of $3.2 million, or
$0.06 per share, in the same period a
year ago. Excluding acquisition-related items, amortization
of intangibles and non-cash interest expense on convertible notes,
net of tax, the company reported a non-GAAP net loss of
$0.12 per share compared with
non-GAAP earnings per diluted share of $0.02 in the first quarter a year ago.
"The first quarter was marked by important accomplishments in
our product pipeline, including the U.S. approval of our iFR®
(Instant Wave-Free Ratio™) FFR (Fractional Flow Reserve) and
SyncVision™ Co-Registration System technologies for which we are
commencing limited market releases during the second quarter. In
addition, during the first quarter we initiated the full market
release of our Crux IVC (inferior vena cava) filter," said
Scott Huennekens, president and
chief executive officer. "We also realized solid growth in
our U.S. peripheral business and with our FFR and IVUS
(Intravascular Imaging) disposable revenues in Europe," he noted.
"Volcano is off to a good start in 2014 with growth of our core
businesses, the roll out of new products and an expanded and
realigned sales force that we believe will drive growth
acceleration through the remainder of 2014 and into 2015,"
Huennekens added.
Guidance
The company reaffirmed guidance for full year 2014. Based on
current foreign currency exchange rates, it expects revenues on a
reported basis will be $413.0-$421.0
million, with revenues on a constant currency basis in the
range of $417.0-$425.0 million.
The company said it expects gross margins on a reported basis
will be in the range of 64.0-64.5 percent and that operating
expenses, including restructuring charges, will be 68.0-69.0
percent of revenues. On a reported basis, the company expects a
GAAP net loss of $0.57-$0.60 per
share. On a non-GAAP basis, the company expects a net loss per
share of $0.16-$0.19. Non-GAAP
results exclude acquisition-related expenses, amortization of
intangibles and non-cash interest expense, and assume an effective
tax rate of 35.0 percent for the GAAP to non-GAAP adjustments. The
company expects weighted average basic shares in 2014 will be
approximately 51.4 million shares.
For the second quarter of 2014, Volcano expects revenues in the
range of $102.0-$104.0million on both
a reported and constant currency basis. The company expects a loss
per share of $0.13-$0.15 on a GAAP
basis and $0.04-$0.06 on a non-GAAP
basis.
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
27362765, 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 27362765, and
via the company's website at http://www.volcanocorp.com.
About Volcano
Volcano Corporation (Nasdaq: VOLC) 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 light and sound 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
www.volcanocorp.com.
Note Regarding the Use of Non-GAAP Financial Measures
The presentation of non-GAAP financial information is not
intended to be considered in isolation or as a substitute for, or
superior to, the financial information prepared and presented in
accordance with GAAP. The company uses non-GAAP financial measures
for financial and operational decision making as a measure to
compare period-to-period results. The company believes that they
provide useful information about operating results, enhance the
overall understanding of operating results and future prospects,
and allow for greater transparency with respect to key metrics
used by management in its financial and operational decision
making.
Constant Currency Basis Revenue Changes: Volcano reports changes
on a constant currency basis, which is a non-GAAP financial
measure. Volcano believes that investors' understanding of the
company's short-term and long-term financial results is enhanced by
taking into consideration the impact of foreign currency
translation on revenues. In addition, Volcano's management uses
results of operations before currency translation to evaluate the
operational performance of Volcano and as a basis for strategic
planning.
Volcano reports its expectations of earnings per share
performance excluding certain expenses described below; for
additional details please see the "Reconciliation of GAAP to
non-GAAP EPS Guidance" table in this press release. This
accompanying table has more details on the GAAP financial measures
that are most directly comparable to non-GAAP financial measures
and the related reconciliations between these financial
measures.
Exclusion of Acquisition-Related Expenses: Volcano excludes
acquisition-related expenses because it does not consider these
acquisition-related costs and adjustments to be related to the
continuing organic operations of the acquired businesses and are
generally not relevant to assessing or estimating the long-term
performance of the acquired assets. In addition, the size,
complexity and/or volume of past acquisitions, which often drive
the magnitude of acquisition-related costs, may not be indicative
of the size, complexity and/or volume of future acquisitions.
Exclusion of Amortization of Intangibles: Volcano excludes
amortization of intangibles because it is a non-cash expense
relating primarily to acquisitions. At the time of an acquisition,
the intangible assets of the acquired company, which consist
primarily of developed or in-process technology, are valued and
amortized over their estimated lives. Volcano believes that since
intangible assets represent efforts of the acquired company to
build value prior to the acquisition, Volcano management eliminates
the impact of the amortization when evaluating its current
operating performance.
Exclusion of Non-Cash Interest Expenses: In addition to
disclosing the financial statement impact of the authoritative
guidance for convertible debt accounting, Volcano management
believes that excluding the impact of this authoritative guidance
because it is non-cash in nature, may provide meaningful
supplemental information regarding elements of the company's
borrowing costs in order to properly understand its operational
performance and liquidity, and facilitates comparisons to
competitors' results.
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," including statements regarding
Volcano's expected revenues, revenue growth, margins, financial
results and foreign currency exchange rates for the second quarter
and calendar year 2014, its growth and other strategies and ability
to execute on these strategies, competitive position, target
markets, development of its base business and pipeline, benefits
from recent acquisitions and benefits from its products and
technologies, including new products. 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 revenues
or other projections may turn out to be inaccurate or Volcano may
encounter unanticipated difficulty in achieve these projections;
global and regional macroeconomic conditions, generally, and in the
medical device and telecom industries specifically; currency
exchange rate fluctuations; the effect of competitive 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; uncertainty in
the process of obtaining regulatory approval or clearances
for Volcano's products or devices; the success of Volcano's
growth and other strategies; including the integration of
recently-acquired business and our ability to integrate businesses
from potential future acquisitions; risks associated with Volcano's
international operations; timing and achievement of product
development milestones; outcome of ongoing and future litigation,
investigations or claims; the impact and benefits of market
development and the related size of Volcano's addressable markets;
our ability to protect our intellectual property; dependence upon
third parties; 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 Securities and Exchange Commission,
including our 10-K for the year ended December 31, 2013, which should be read in
conjunction with these financial results. 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,
|
|
2014
|
|
2013
|
Assets
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
129,435
|
|
$
107,159
|
Short-term
available-for-sale investments
|
215,540
|
|
230,775
|
Accounts
receivable, net
|
77,558
|
|
81,962
|
Inventories
|
67,765
|
|
60,970
|
Prepaid
expenses and other current assets
|
26,718
|
|
28,525
|
Total current
assets
|
517,016
|
|
509,391
|
|
|
|
|
Long-term
available-for-sale investments
|
22,212
|
|
34,750
|
Property and
equipment, net
|
119,479
|
|
118,094
|
Intangible
assets, net
|
56,481
|
|
58,108
|
Goodwill
|
55,087
|
|
55,087
|
Other
non-current assets
|
65,081
|
|
56,489
|
Total
Assets
|
$
835,356
|
|
$
831,919
|
|
|
|
|
Liabilities
and Stockholders' Equity
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
14,839
|
|
$
19,137
|
Accrued
compensation
|
25,218
|
|
26,918
|
Accrued
expenses and other current liabilities
|
32,422
|
|
28,453
|
Deferred
revenues
|
10,145
|
|
10,652
|
Contingent
consideration
|
2,196
|
|
3,750
|
Total current
liabilities
|
84,820
|
|
88,910
|
Convertible
senior notes
|
405,897
|
|
401,012
|
Other long-term
debt
|
1,282
|
|
1,268
|
Deferred
revenues
|
4,952
|
|
5,079
|
Contingent
consideration, non-current portion
|
29,308
|
|
29,888
|
Other
non-current liabilities
|
6,227
|
|
5,960
|
Total
liabilities
|
532,486
|
|
532,117
|
Stockholders'
equity
|
302,870
|
|
299,802
|
Total
Liabilities and Stockholders' Equity
|
$
835,356
|
|
$
831,919
|
VOLCANO
CORPORATION
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(in thousands,
except per share data)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
March 31,
|
|
|
2014
|
|
|
2013
|
Revenues
|
|
$
|
94,528
|
|
|
$
|
93,231
|
Cost of revenues,
excluding amortization of intangibles
|
|
|
35,082
|
|
|
|
33,127
|
Gross
profit
|
|
|
59,446
|
|
|
|
60,104
|
Operating
expenses:
|
|
|
|
|
|
|
|
Selling, general and
administrative
|
|
|
50,311
|
|
|
|
43,829
|
Research and
development
|
|
|
13,957
|
|
|
|
15,651
|
Amortization of
intangibles
|
|
|
1,783
|
|
|
|
834
|
Acquisition related
items
|
|
|
1,036
|
|
|
|
1,578
|
Restructuring
charges
|
|
|
873
|
|
|
|
-
|
Total operating
expenses
|
|
|
67,960
|
|
|
|
61,892
|
Operating
loss
|
|
|
(8,514)
|
|
|
|
(1,788)
|
Interest
income
|
|
|
316
|
|
|
|
338
|
Interest
expense
|
|
|
(7,179)
|
|
|
|
(6,545)
|
Exchange rate gain
(loss)
|
|
|
84
|
|
|
|
(778)
|
Other, net
|
|
|
110
|
|
|
|
1,898
|
Loss before income
tax
|
|
|
(15,183)
|
|
|
|
(6,875)
|
Income tax
benefit
|
|
|
(4,280)
|
|
|
|
(3,714)
|
Net loss
|
|
$
|
(10,903)
|
|
|
$
|
(3,161)
|
Net loss per
share:
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.21)
|
|
|
$
|
(0.06)
|
Diluted
|
|
$
|
(0.21)
|
|
|
$
|
(0.06)
|
Shares used in
calculating net loss per share:
|
|
|
|
|
|
|
|
Basic
|
|
|
51,967
|
|
|
|
54,189
|
Diluted
|
|
|
51,967
|
|
|
|
54,189
|
VOLCANO
CORPORATION
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(in
thousands)
|
(unaudited)
|
|
Three Months
Ended
March 31,
|
|
|
2014
|
|
2013
|
|
Operating
activities
|
|
|
|
|
|
|
Net loss
|
$
|
(10,903)
|
|
$
|
(3,161)
|
|
Adjustments to
reconcile net loss to net cash used in operating
activities:
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
7,545
|
|
|
6,123
|
|
Amortization of
investment premium, net
|
|
1,037
|
|
|
631
|
|
Accretion of debt
discount on convertible senior notes and other long-term
debt
|
|
4,941
|
|
|
4,572
|
|
Accretion of
contingent consideration
|
|
865
|
|
|
936
|
|
Non-cash stock
compensation expense
|
|
3,865
|
|
|
3,598
|
|
Asset impairment
related to restructuring
|
|
726
|
|
|
-
|
|
Gain on sale of other
long-term investment
|
|
(296)
|
|
|
(1,925)
|
|
Effect of exchange
rate changes and others
|
|
512
|
|
|
4,604
|
|
Deferred income
taxes
|
|
1,005
|
|
|
-
|
|
Changes in operating
assets and liabilities, net of acquisitions
|
|
(12,310)
|
|
|
(23,249)
|
|
Net cash used in
operating activities
|
|
(3,013)
|
|
|
(7,871)
|
|
Investing
activities
|
|
|
|
|
|
|
Purchase of
short-term and long-term available-for-sale securities
|
|
(75,725)
|
|
|
(110,520)
|
|
Sale or maturity of
short-term and long-term available-for-sale securities
|
|
102,467
|
|
|
67,137
|
|
Capital
expenditures
|
|
(4,787)
|
|
|
(7,290)
|
|
Cash paid for
intangible assets and other investments
|
|
(3,203)
|
|
|
(870)
|
|
Proceeds from sale of
other long-term investments
|
|
296
|
|
|
3,426
|
|
Net cash provided by
(used in) investing activities
|
|
19,048
|
|
|
(48,117)
|
|
Financing
activities
|
|
|
|
|
|
|
Proceeds from sale of
common stock under employee stock purchase plan
|
|
1,850
|
|
|
1,712
|
|
Proceeds from
exercise of common stock options
|
|
7,144
|
|
|
691
|
|
Cash paid to settle
contingent liability related to acquisition
|
|
(2,900)
|
|
|
-
|
|
Repayment of capital
lease liability
|
|
(12)
|
|
|
(11)
|
|
Net cash provided by
financing activities
|
|
6,082
|
|
|
2,392
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
|
159
|
|
|
(724)
|
|
Net increase
(decrease) in cash and cash equivalents
|
|
22,276
|
|
|
(54,320)
|
|
Cash and cash
equivalents, beginning of period
|
|
107,159
|
|
|
330,635
|
|
Cash and cash
equivalents, end of period
|
$
|
129,435
|
|
$
|
276,315
|
|
VOLCANO
CORPORATION
|
REVENUE
SUMMARY
|
(in
millions)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
March 31,
|
|
Percentage
Change
|
|
Currency
Impact
|
|
Constant
Currency
Percentage
Change
|
|
|
2014
|
|
2013
|
|
2013 to
2014
|
|
Dollar
|
Percentage
|
|
|
Medical
segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consoles:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United
States
|
$
3.6
|
|
$
4.7
|
|
(25)
|
%
|
|
$
-
|
|
-
|
%
|
|
(25)
|
%
|
|
Japan
|
1.0
|
|
1.0
|
|
2
|
|
|
(0.1)
|
|
(12)
|
|
|
14
|
|
|
Europe
|
2.4
|
|
1.6
|
|
52
|
|
|
0.1
|
|
6
|
|
|
46
|
|
|
Rest of
world
|
1.5
|
|
1.6
|
|
(9)
|
|
|
-
|
|
-
|
|
|
(9)
|
|
|
Total
Consoles
|
$
8.5
|
|
$
8.9
|
|
(5)
|
|
|
$
-
|
|
-
|
|
|
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
-
|
|
|
IVUS single-procedure
disposables:
|
|
|
|
|
|
|
|
|
|
-
|
|
|
-
|
|
|
United
States
|
$21.0
|
|
$19.3
|
|
9
|
%
|
|
$
-
|
|
-
|
%
|
|
9
|
%
|
|
Japan
|
16.4
|
|
20.7
|
|
(21)
|
|
|
(2.4)
|
|
(12)
|
|
|
(9)
|
|
|
Europe
|
6.5
|
|
5.8
|
|
14
|
|
|
0.2
|
|
4
|
|
|
10
|
|
|
Rest of
world
|
2.7
|
|
2.2
|
|
22
|
|
|
-
|
|
-
|
|
|
22
|
|
|
Total IVUS
single-procedure disposables
|
$46.6
|
|
$48.0
|
|
(3)
|
|
|
$(2.2)
|
|
(5)
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
-
|
|
|
FFR single-procedure
disposables:
|
|
|
|
|
|
|
|
|
|
-
|
|
|
-
|
|
|
United
States
|
$13.7
|
|
$13.7
|
|
8
|
%
|
|
$
-
|
|
8
|
%
|
|
-
|
%
|
|
Japan
|
4.5
|
|
4.5
|
|
-
|
|
|
(0.6)
|
|
(14)
|
|
|
14
|
|
|
Europe
|
9.5
|
|
7.8
|
|
20
|
|
|
0.3
|
|
4
|
|
|
16
|
|
|
Rest of
world
|
1.2
|
|
0.8
|
|
47
|
|
|
-
|
|
-
|
|
|
47
|
|
|
Total FFR
single-procedure disposables
|
$28.9
|
|
$26.8
|
|
8
|
|
|
$(0.3)
|
|
(1)
|
|
|
9
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
-
|
|
|
Other
|
$
9.0
|
|
$
8.0
|
|
13
|
%
|
|
$(0.2)
|
|
(3)
|
%
|
|
16
|
%
|
|
Sub-total medical
segment
|
$93.0
|
|
$91.7
|
|
1
|
|
|
$(2.7)
|
|
(3)
|
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
-
|
|
|
Industrial
segment
|
$
1.5
|
|
$
1.5
|
|
(1)
|
|
|
$
-
|
|
-
|
|
|
(1)
|
|
|
Total
|
$94.5
|
|
$93.2
|
|
1
|
|
|
$(2.7)
|
|
(3)
|
|
|
4
|
|
|
VOLCANO
CORPORATION
|
RECONCILIATION OF
GAAP RESULTS TO NON-GAAP RESULTS
|
(in thousands,
except per share data)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31, 2014
|
Pre-tax
Adjustments
|
|
Net of Tax
(1)
|
|
Losses
Per
Share
|
|
|
|
|
|
|
|
|
GAAP net
loss
|
|
|
$ (10,903)
|
|
$
(0.21)
|
|
Acquisition
related items
|
1,036
|
|
673
|
|
0.01
|
|
Amortization of
intangibles
|
1,783
|
|
1,159
|
|
0.02
|
|
Non-cash
interest expense on convertible notes
|
4,924
|
|
3,201
|
|
0.06
|
|
Non-GAAP net
loss
|
$
7,743
|
|
$
(5,870)
|
|
$
(0.12)
|
|
|
|
|
|
|
|
|
Weighted
average shares outstanding—basic
|
|
|
|
|
51,967
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Effective tax
rate of 35% applied to non-GAAP adjustments
|
|
VOLCANO
CORPORATION
|
RECONCILIATION OF
GAAP TO NON-GAAP GUIDANCE
|
(in thousands,
except per share data)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Q2
2014
|
|
Guidance
Range
|
|
From
|
|
To
|
|
|
|
|
|
|
|
|
GAAP net loss
per share—basic
|
$
(0.13)
|
|
$
(0.15)
|
Acquisition
related items
|
0.01
|
|
0.01
|
Amortization of
intangibles
|
0.02
|
|
0.02
|
Non-cash
interest expense
|
0.06
|
|
0.06
|
Non-GAAP net
loss per share—basic
|
$
(0.04)
|
|
$
(0.06)
|
Weighted
average shares outstanding—basic
|
51,300
|
|
51,300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
Guidance
Range
|
|
From
|
|
To
|
|
|
|
|
|
|
|
|
GAAP net loss
per share—basic
|
$
(0.57)
|
|
$
(0.60)
|
Acquisition
related items
|
0.06
|
|
0.06
|
Amortization of
intangibles
|
0.09
|
|
0.09
|
Non-cash
interest expense
|
0.26
|
|
0.26
|
Non-GAAP net
loss per share—basic
|
$
(0.16)
|
|
$
(0.19)
|
Weighted
average shares outstanding—basic
|
51,400
|
|
51,400
|
|
|
|
|
|
|
|
|
Note: Effective tax
rate of 35% applied to non-GAAP adjustments
|
SOURCE Volcano Corporation