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Volcano Corporation Reports 13 Percent Growth In Second Quarter Revenues; FFR Disposable Revenues Increase 38 Percent

SAN DIEGO, Aug. 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 for the  second quarter of 2012 increased 13 percent over second quarter revenues a year ago.

For the quarter ended June 30, 2012, Volcano reported revenues of $95.4 million versus revenues of $84.0 million in the second quarter a year ago. Medical segment revenues increased 13 percent versus the second quarter a year ago.

The company reported net income of $3.3 million, or $0.06 per diluted share, in the second quarter of 2012, versus net income of $4.9 million, or $0.09 per diluted share, in the second quarter of 2011.

For the first six months of 2012, Volcano reported revenues of $185.7 million, an increase of 13 percent versus $165.0 million in the same period a year ago. Medical segment revenues increased 14 percent year-over year. The company reported net income of $3.6 million, or $0.06 per diluted share, compared with net income of $6.0 million, or $0.11 per diluted share, in the first six months of 2011.

"Volcano continued to advance its Functional PCI message among both clinicians and hospital administrators while capitalizing on the macroeconomic trends impacting the sector—including the growing need for evidence and documentation of medical necessity," said Scott Huennekens, president and chief executive officer.

"Our multi-modality platform and technology innovation are driving our market share gains. We are achieving growth greater than the overall growth of the FFR (Fractional Flow Reserve) and IVUS (Intravascular Ultrasound) markets, particularly in FFR where quarterly disposable revenues increased 38 percent versus a year ago. Our gains in FFR and IVUS were offset in part by softness in Southern Europe, and at Axsun Industrial as the telecom market is not yet demonstrating signs of a recovery," he added.

"Also during the quarter, we saw the release of favorable data on Volcano's Instant Wave-Free Ratio Functionality, or iFR Functionality, our adenosine-free FFR technology. Data presented at EuroPCR showed a high level of diagnostic correlation versus FFR," he noted.

Guidance for 2012

The company provided updated guidance for 2012. It now expects revenues for the year will be in the range of $384-$390 million. This compares with prior expectations for revenues of $392-$399 million. The company said the updated expectations for revenues include a $2 million impact from foreign currency exchange rates, a $2 million impact due to slowing of activity in certain Southern European countries and a $4 million impact from Axsun Industrial reflecting continued softness in the telecom sector.

The company now expects gross margins will be 65-66 percent compared with prior expectations of 64-65 percent, and operating expenses will be 58-59 percent of revenues versus prior expectations 57-58 percent.

The company said that it continues to expect a tax rate of approximately 40 percent for the full year, and earnings per diluted share of $0.18-$0.21, compared with prior expectations of $0.21-$0.24 per diluted share. 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 94938684, or via the company's website at 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 August 9 at (404) 537-3406, passcode 94938684, and via the company's website at

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

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, earnings per share, margin or tax rate projections may turn out to be inaccurate or Volcano may encounter unanticipated difficulty in achieving those projections, global and regional macroeconomic conditions, generally, and in the medical device and telecom industries, 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, 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, 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  quarterly report on Form 10-Q, 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)  June 30,  December 31, 20122011 Assets  Current assets:  Cash and cash equivalents 

7,016 Short-term available-for-sale investments174,261112,327 Accounts receivable, net 

70,95469,469 Inventories 

44,43141,306 Prepaid expenses and other current assets 

19,66519,939 Total current assets 

360,413350,057 Restricted cash 

676692 Long-term available-for-sale investments 

29,53530,919 Property and equipment, net 

98,39581,097 Intangible assets, net 

15,68515,245 Goodwill 

2,4872,487 Other non-current assets 

17,03016,227 Total Assets $   524,221$
496,724 Liabilities and Stockholders' Equity  Current liabilities:  Accounts payable 

2,911 Accrued compensation 

20,84920,251 Accrued expenses and other current liabilities 

18,72416,689 Deferred revenues 

7,9807,077 Current maturities of long-term debt 

6372 Total current liabilities 

62,47157,000 Convertible senior notes 

98,02895,663 Other long-term debt 

4674 Deferred revenues 

3,6473,168 Other non-current liabilities 

1,8541,582 Total liabilities 

166,046157,487 Stockholders' equity 

358,175339,237 Total Liabilities and Stockholders' Equity $   524,221$


 VOLCANO CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(in thousands, except per share data)(Unaudited)Three Months Ended
June 30,Six Months Ended
June 30,2012201120122011Revenues





165,031Cost of revenues31,97626,76361,54954,637Gross profit63,39757,273124,184110,394Operating expenses:Selling, general and administrative41,99135,48886,33670,948Research and development13,87913,32127,52826,409Amortization of intangibles8888581,7601,712Total operating expenses56,75849,667115,62499,069Operating income6,6397,6068,56011,325Interest income203232433475Interest expense(1,677)(2,056)(3,149)(4,061)Exchange rate gain (loss)74(291)(101)(679)Other expense (income), net88-(8)(1)Income before income tax5,3275,4915,7357,059Income tax expense2,0286032,1651,015Net income





6,044Net income per share:Basic










0.11Shares used in calculating net income per share:Basic53,36252,27253,14652,020Diluted55,20754,53655,13654,430 


June 30,20122011Operating activitiesNet income



6,044Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization11,59511,288Amortization of investment premium, net 1,3131,691Accretion of debt discount on convertible senior notes2,4492,296Non-cash stock-based compensation expense7,4926,289Other non-cash adjustments2,795190Changes in operating assets and liabilities(1,159)(13,297)Net cash provided by operating activities28,05514,501Investing activitiesPurchase of short-term and long-term available-for-sale investments(177,740)(196,897)Sale or maturity of short-term and long-term available-for-sale investments115,867182,105Capital expenditures(27,652)(15,465)Cash paid for intangible assets and other investments(1,910)(612)Proceeds from foreign currency exchange contracts501373Payment for foreign currency exchange contracts(15)(1,961)Net cash used in investing activities(90,949)(32,457)Financing activitiesRepayment of debt(44)(26)Proceeds from sale of common stock under employee stock purchase plan and
exercise of common stock options7,3309,854Net cash provided by financing activities7,2869,828Effect of exchange rate changes on cash and cash equivalents(306)132Net decrease in cash and cash equivalents(55,914)(7,996)Cash and cash equivalents, beginning of period107,01643,429Cash and cash equivalents, end of period




 VOLCANO CORPORATIONREVENUE SUMMARY(in millions)(unaudited)Three Months Ended
June 30,Percentage
Change 201220112011 to 2012Medical segment:Consoles:United States

$  6.6$  5.716



1.72.5(28)Rest of world

1.91.170Total Consoles

$10.7$  9.810IVUS single-procedure disposables:United States




5.56.2(11)Rest of world

1.61.411Total IVUS single-procedure disposables

$51.6$50.03FFR single-procedure disposables:United States

$12.6$  8.744



6.46.32Rest of world

0.70.631Total FFR single-procedure disposables


$  6.94.939

%Sub-total medical segment

$92.1$81.313Industrial segment

$  3.32.718Total



 VOLCANO CORPORATIONREVENUE SUMMARY(in millions)(unaudited)Six Months Ended
June 30,Percentage
Change 201220112011 to 2012Medical segment:Consoles:United States

$  11.8$  11.62



2.84.8(41)Rest of world

2.92.133Total Consoles

$  18.9$  19.7(4)IVUS single-procedure disposables:United States

$  40.1$  37.96



10.911.7(7)Rest of world

3.43.19Total IVUS single-procedure disposables

$105.1$  97.68FFR single-procedure disposables:United States

$  24.3$  16.845



12.611.311Rest of world

1.21.24Total FFR single-procedure disposables

$  43.1$  31.338Other

$  13.4$

%Sub-total medical segment

$180.5$158.414Industrial segment





SOURCE Volcano Corporation
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