Volcano Corporation’s financial results release also tells us it’s buried the hatchet with St. Jude Medical.
Device company Volcano Medical specialises in developing and delivering innovative minimally invasive coronary and peripheral visualization, physiology diagnostics and therapies.
The company’s most recent quarter saw it modestly growing sales from the equivalent period a year ago, revenue nudging up from $101.3 million to $102.6 million with sales from its medical segment showing a 2 percent increase.
Income on a GAAP basis was $282,000, or $0.01 per diluted share, compared with a net loss of $2.4 million, or $0.04 per share, in the same period a year ago. That all rather masks the reality that the results for Q2 2014 included an acquisition-related benefit of $7.2 million related to an adjustment to a contingent liability resulting in a net benefit of $6.4 million, while the results Q2 2013 included a gain on a strategic investment of $2.2 million. Filter all this out, plus amortization of intangibles and non-cash interest expense on convertible notes, and net of tax the company reported non-GAAP net income of $0.01 per diluted share, compared with non-GAAP earnings per diluted share of $0.03 in the second quarter a year ago.
Volcano has also announced that it will be seeking a divestiture of its Axsun Technologies, Inc. subsidiary. In addition, the company said that it and St. Jude Medical, Inc., have agreed to settle all existing litigation between the two companies. The parties have agreed to dismiss their lawsuits with prejudice, with neither party admitting liability to the other. Each party will be granted a release of liability for alleged misconduct, granted a license to all patents-in-suite and granted a covenant not to sue as to various current and future products. As part of the settlement agreement, no financial payments will be made to either party by the other.
Based on current foreign currency exchange rates, Volcano’s guidance is that it expects 2014 revenues on a reported basis to be $397.0-$401.0 million, with revenues on a constant currency basis in the range of $401.0-$405.0 million. This is quite a trim from the last quarterly report which was predicting $413-421 million ($417-425 million when currency adjusted). The company is however maintaining its prior guidance for a net loss per share of $0.16-$0.19 on a non-GAAP basis. It says it has been able to offset its revised outlook for revenues with expense reprioritization initiatives related to SG&A and R&D expenses, resulting in expected lower operating expenses as a percentage of revenues.
For the third quarter of 2014, Volcano expects revenues in the range of $95.0-$97.0 million on a reported and $95.5-$97.5 million constant currency basis.
“Our results for the quarter reflect continued expansion of our IVUS (Intravascular Ultrasound) peripheral business in the U.S. and strong growth for our FFR (Fractional Flow Reserve) disposable business in Japan and Europe,” said Scott Huennekens, president and chief executive officer. “These gains helped offset the impact of the continued decline in our coronary IVUS disposable activity.”
“The second quarter was highlighted by the acquisition of AtheroMed, Inc., and its Phoenix® Atherectomy System used in the treatment of peripheral artery disease,” he continued. “We are on track to initiate a limited market release of the Phoenix device later this year and a full market release in early 2015. In addition, during the quarter we began the roll out of our iFR® (Instant Wave-Free Ratio™) FFR offering and SyncVision™ Co- Registration System in the U.S.,” he added.
With respect to the planned Axsun divestiture, Huennekens said, “This decision was driven by our long-term strategy to focus on coronary imaging and physiology leadership, peripheral expansion, profitability and business scale. The Axsun business and financial model is no longer a strategic fit with Volcano. We greatly appreciate the significant contributions of the Axsun team to Volcano over the past several years.”
Source: Volcano Corporation, PR Newswire