Volcano Corporation (VOLC) reported a net loss of 5 cents in the third quarter, narrower than the Zacks Consensus Estimate for a net loss of 12 cents. Although third-quarter revenues increased 22% from the year-ago period, earnings declined from last year’s profit of one penny, mainly due to higher operating expenses.

Third quarter revenues came in at $54 million. Revenues included $4.6 million from Axsun Technologies, Inc, which was acquired by Volcano in late 2008.

Although intravascular ultrasound (IVUS) systems sales declined 20% to $8.4 million, sales of IVUS disposables increased 15% to $31.3 million. Growth in the Japanese market remained strong at 22%. Meanwhile, the U.S. market recorded growth of 16% in IVUS disposable sales. Functional Measurement (FM) device sales increased a whopping 53% to $7.6 million, led by more than 75% growth in the U.S. and rest-of-the-world (ROW) countries.

Data presented at the Transcatheter Cardiovascular Therapeutics (TCT) meeting showed that the use of IVUS and FM devices not only enhances patient care but also has a meaningful impact on the cost of healthcare. This data could help drive demand for these products.

Operating expenses increased 41.5% to $38.5 million. We expect operating expenses to increase due to higher spending in Japan , expansion of sales and marketing programs in other geographies, and spending associated with clinical studies.

During the quarter, the company completed its transition from a distributor relationship with Goodman to a direct sales effort in Japan. Direct marketing in Japan should allow Volcano to realize end market prices on its products. Japan is the largest IVUS market, and the establishment of a direct sales force should allow the company to provide more focused service and support to the market. We believe the transition will boost top- and bottom-line growth in the long run.

The company reaffirmed its previously issued guidance for 2009. While revenues are expected in the range of $218-$223 million (up 27-30% over revenues in 2008), Volcano expects to post a net loss in the range of 6-11 cents.

Volcano’s ability to sustain its strong revenue growth appears promising as a result of market share gains, successful execution of growth strategies, and a strong R&D emphasis. While tight hospital budgets could keep a lid on growth in the near-term, we believe that increasing demand for the company’s products will support strong results going forward. Positive clinical data on IVUS/FM should also help the company take share from Boston Scientific Corporation (BSX) and St. Jude Medical (STJ). We have a Neutral rating on Volcano.

Zacks Investment Research
View original at: Zacks.com News Feed

1. (EVVV) ev3 Beats Consensus Earnings Estimatesev3, Inc. (EVVV), the Zacks Bull of the Day for last Friday (October 23rd), reported...
2. (AMSG) AmSurg Corporation Beats Estimates MarginallyAmSurg Corp.‘s (AMSG) third-quarter earnings per share came in at 44 cents, slightly above the...
3. (STJ) St. Jude Medical Beats Earnings EstimatesSt. Jude Medical, Inc. (STJ) today reported financial results for the third quarter of 2009...
4. (BSX) Boston Scientific Corporation Surpasses EstimatesBoston Scientific Corporation (BSX) yesterday reported financial results for the third quarter of fiscal 2009...
5. (PLL) Pall Corporation Beats EstimatesPall Corporation (PLL) reported fourth quarter 2009 revenues of $652 million and net earnings of $69.5...
6. (VOLC) Volcano Corporation Joins with Siemens AG for Equipment ResaleVolcano Corporation (VOLC) has entered into a non-exclusive, global resale agreement with Siemens Healthcare, a...

Search Posts by Tag: Boston Scientific Corporation | BSX | St. Jude Medical Inc | STJ | VOLC | Volcano Corporation | Healthcare | Medical Appliances & Equipment

RSS Feeds by Tag: Boston Scientific Corporation | BSX | St. Jude Medical Inc | STJ | VOLC | Volcano Corporation | Healthcare | Medical Appliances & Equipment |

Other Posts by: vitalstocks | RSS Feed for this author