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Volcano Corporation said that revenues for the quarter ended December 31, 2009, were $71.0 million, an increase of 44 percent versus revenues of $49.3 million in the fourth quarter a year ago.

Revenues for the fourth quarter of 2009 included $5.8 million from Axsun Technologies, Inc., which Volcano acquired in the fourth quarter of 2008, and contributed $578,000 in revenues in the fourth quarter a year ago.

For the fourth quarter of 2009, the company reported a GAAP net loss of $12.1 million, or $0.25 per share, versus GAAP net income of $1.4 million, or $0.03 per diluted share, in the fourth quarter of 2008. Included in the results for the fourth quarter of 2009 are in-process research and development charges of $14.0 million resulting from milestones related to the CardioSpectra, Inc. and Novelis, Inc. acquisitions.

Excluding stock-based compensation expense of $2.7 million, the in-process research and development charges of $14.0 million and sales commissions of $2.3 million paid to a former distributor in Japan, Volcano reported non-GAAP net income of $7.0 million, or $0.14 per diluted share. In the fourth quarter of 2008, excluding stock-based compensation expense of $2.5 million and in-process research and development charges of $274,000, the company reported non-GAAP net income of $4.2 million, or $0.08 per diluted share. A reconciliation of the company's GAAP to non-GAAP results is included below.

For all of fiscal 2009, Volcano reported revenues of $227.9 million, a 33 percent increase over revenues of $171.5 million in fiscal 2008. Revenues for fiscal 2009 included $17.9 million from Axsun, versus revenues of $578,000 in 2008. The company reported a GAAP net loss of $29.0 million, or $0.60 per share, in fiscal 2009, compared with a GAAP net loss of $13.7 million, or $0.29 per share, in 2008. Excluding stock-based compensation expense of $10.9 million, in-process research and development charges of $14.0 million and sales commissions of $3.7 million paid to a former distributor in Japan, Volcano reported a non-GAAP net loss of $347,000, or $0.01 per share, in 2009. Excluding in-process research and development costs of $12.7 million related to the Novelis and CardioSpectra acquisitions, stock-based compensation expense of $9.5 million and $2.9 million in due diligence, legal and accounting expenses related to an acquisition that was not consummated, Volcano reported non-GAAP net income of $11.4 million, or $0.23 per diluted share, in 2008.

"Volcano finished 2009 with a strong performance as the company continued to execute on its strategies designed to generate revenue growth through expansion of our installed base, market share growth and increased market penetration for our core intravascular ultrasound (IVUS) and functional measurement (FM) offerings. Total IVUS disposable revenues for the quarter increased 29 percent year-over-year and our FM disposable revenues for the quarter increased 92 percent year-over-year, including an 81 percent increase in the U.S. We also continued our global sales force expansion program and benefited from the first full quarter of our direct sales initiative in Japan as IVUS disposable revenues increased 43 percent versus the fourth quarter a year ago," said Scott Huennekens, president and chief executive officer.

Huennekens noted that despite a challenging capital equipment environment, the company placed more than 1,000 new multi-modality systems in 2009, the most of any year in the company's history, and now has more than 5,000 consoles placed worldwide.

"We have also achieved important milestones in our product expansion strategy with the recent acquisition of the Xtract Thrombus Aspiration Catheter product line from Lumen Biomedical, which is used for clot removal, and receiving FDA clearance to market our Eagle Eye Platinum digital IVUS catheter, an enhanced version of the top selling IVUS catheter in the U.S.," Huennekens noted. "During 2010," he continued, "we plan to introduce the initial offerings from our product pipeline, including the launch of our IVUS-guided therapy device in Europe and Japan, and our first Forward-Looking IVUS, or FL.IVUS, device for use in coronary and peripheral arteries.

"Our technology innovation, market development, clinical and product initiatives have fueled our growth during 2009 and leave us well positioned for a strong 2010 marked by excellent revenue growth and GAAP profitability," Huennekens said.

Guidance for 2010
The company provided the following financial guidance for 2010.

On a consolidated basis, Volcano expects total revenues in fiscal 2010 of $277-$282 million, an increase of approximately 22 percent over revenues in 2009. The expected revenues for 2010 include approximately $20 million in revenues from Axsun Technologies, Inc., the company's wholly-owned subsidiary.

Overall company gross margins are expected to be in the range of 62-63 percent. Total operating expenses, including stock-based compensation expense of approximately $13.3 million, are expected to be 59-61 percent of revenues. Net interest income for 2010 is expected to be approximately $450,000. On a GAAP basis, the company expects to report net income of $0.05-$0.10 per diluted share. Weighted average shares on a diluted basis at the end of 2010 are expected to be 52.5 million shares. Expected operating expenses in the first half of 2010 reflect costs associated with the anticipated commercial launch of the company's IVUS-guided therapy and FL.IVUS devices. Based on the expected timing of these investments and the anticipated growth trajectory for revenues, the company expects to be profitable on a GAAP basis beginning in the third quarter of fiscal 2010 and profitable on a GAAP basis for all of fiscal 2010.

Excluding stock-based compensation expense of approximately $13.3 million, Volcano expects to report net income of $0.30-$0.35 per diluted share for fiscal 2010.

Source: Volcano Corporation