Volcano Corp - FORM 8-K - EX-99.1 - PRESS RELEASE - May 2, 2012

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Exhibit 99.1

VOLCANO REPORTS 12 PERCENT INCREASE IN FIRST QUARTER REVENUES
MEDICAL SEGMENT REVENUES INCREASE 15 PERCENT
(SAN DIEGO, CA), May 2, 2012-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 in the first quarter of 2012 increased 12 percent over the same period a year ago.
For the quarter ended March 31, 2012, Volcano reported revenues of $90.4 million versus revenues of $81.0 million in the first quarter a year ago. Year-over-year medical segment revenues increased 15 percent in the first quarter of 2012. Industrial segment revenues in the first quarter declined 48 percent versus a year ago, due to the continued lack of network capacity spending by telecom service providers.
The company reported GAAP net income of $271,000, or $0.00 per diluted share, in the first quarter of 2012, versus net income of $1.2 million, or $0.02 per diluted share in the first quarter of 2011.
“Volcano began 2012 with a solid performance as we continued to increase our market presence as the leading precision guided therapy company. Our growth strategy is being facilitated by the increasing focus on medical necessity, quality and documentation for procedures. By providing precision guided therapy, our Functional PCI technologies address both clinical and economic needs faced by physicians and hospitals,” said Scott Huennekens, president and chief executive officer.
“Our activity in the U.S. and Japan met or exceeded our expectations, helping us generate an 18 percent increase in medical disposable revenues, including a 37 percent increase in FFR (Fractional Flow Reserve) disposable sales and a 12 percent increase in sales of IVUS (Intravascular Imaging) disposables. We experienced a nominal decline in Europe due to a slowing economy and our decision to transition to direct in Spain earlier than previously planned. As we have accomplished in Japan and other countries, by going direct we expect to see an acceleration of Volcano growth and market penetration in new direct markets over time,” he added.
Guidance for 2012
The company reconfirmed prior guidance for 2012. The company continues to expect that revenues will be in the range of $392-$399 million. The company reconfirmed guidance for gross margins of 64-65 percent and operating expenses of 57-58 percent of revenues in 2012.
The company also reconfirmed that it expects a tax rate of approximately 40 percent and earnings per diluted share of $0.21-$0.24. 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 70731296, 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 70731296, and via the company's website at http://www.volcanocorp.com.
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 www.volcanocorp.com.
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, margin or tax rate projections may turn out to be inaccurate or Volcano may encounter unanticipated difficulty in achieving those projections, the effect of competitive and economic 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, including currency exchange rate fluctuations, 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 annual report on Form 10-K 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.
Contact Information:
John Dahldorf
Chief Financial Officer
Volcano Corporation
(858) 720-4020
or
Neal Rosen
(650) 458-3014





VOLCANO CORPORATION
REVENUE SUMMARY
(in millions)
(unaudited)
 
 
 
 
 
 
 
Three Months Ended
March 31,
 
Percentage Change
 
2012
 
2011
 
2011 to 2012
Medical segment:
 
 
 
 
 
         Consoles:
 
 
 
 
 
                   United States
$
5.2

 
$
5.9

 
(12
)%
                   Japan
0.9

 
0.6

 
42

                   Europe
1.1

 
2.4

 
(55
)
                   Rest of world
0.9

 
1.0

 
(7
)
         Total Consoles
$
8.1

 
$
9.9

 
(18
)%
 
 
 
 
 
 
         IVUS single-procedure disposables:
 
 
 
 
 
                   United States
$
19.7

 
$
18.2

 
8
 %
                   Japan
26.6

 
22.2

 
20

                   Europe
5.4

 
5.5

 
(2
)
                   Rest of world
1.8

 
1.7

 
8

         Total IVUS single-procedure disposables
$
53.5

 
$
47.6

 
12
 %
 
 
 
 
 
 
         FM single-procedure disposables:
 
 
 
 
 
                   United States
$
11.7

 
$
8.1

 
45
 %
                   Japan
1.8

 
0.9

 
92

                   Europe
6.2

 
5.1

 
21

                   Rest of world
0.5

 
0.6

 
(21
)
         Total FM single-procedure disposables
$
20.2

 
$
14.7

 
37
 %
 
 
 
 
 
 
         Other
$
6.6

 
$
4.9

 
36
 %
                   Sub-total medical segment
$
88.4

 
$
77.1

 
15
 %
 
 
 
 
 
 
Industrial segment
$
2.0

 
$
3.9

 
(48
)%
                   Total
$
90.4

 
$
81.0

 
12
 %






VOLCANO CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
 
 
 
 
 
Three Months Ended
March 31,
 
2012
 
2011
Revenues
$
90,360

 
$
80,995

Cost of revenues
29,573

 
27,874

Gross profit
60,787

 
53,121

Operating expenses:
 
 
 
         Selling, general and administrative
44,345

 
35,460

         Research and development
13,649

 
13,088

         Amortization of intangibles
872

 
855

                   Total operating expenses
58,866

 
49,403

Operating income
1,921

 
3,718

Interest income
230

 
243

Interest expense
(1,472
)
 
(2,005
)
Exchange rate loss
(175
)
 
(388
)
Other, net
(96
)
 
—

Income before income tax
408

 
1,568

Income tax expense
137

 
412

Net income
$
271

 
$
1,156

Net income per share:
 
 
 
         Basic
$
0.01

 
$
0.02

         Diluted
$
—

 
$
0.02

Shares used in calculating net income per share:
 
 
 
         Basic
52,929

 
51,766

         Diluted
54,985

 
54,215





VOLCANO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(in thousands)
(unaudited)
 
Three Months Ended
March 31,
 
2012
 
2011
Operating activities
 
 
 
Net income
$
271

 
$
1,156

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
         Depreciation and amortization
5,791

 
5,560

         Amortization of investment premium, net
269

 
736

         Accretion of debt discount on convertible senior notes
1,212

 
1,138

         Non-cash stock compensation expense
3,617

 
3,094

         Other non-cash adjustments
306

 
873

         Changes in operating assets and liabilities:
(961
)
 
(12,359
)
Net cash provided by operating activities
10,505

 
198

Investing activities
 
 
 
Purchase of short-term and long-term available-for-sale securities
(110,762
)
 
(83,908
)
Sale or maturity of short-term and long-term available-for-sale securities
67,577

 
98,790

Capital expenditures
(14,437
)
 
(6,747
)
Cash paid for other intangibles and investments
(758
)
 
(313
)
Proceeds from foreign currency exchange contracts
—

 
374

Payment for foreign currency exchange contracts
—

 
(817
)
Net cash (used in) provided by investing activities
(58,380
)
 
7,379

Financing activities
 
 
 
Repayment of debt
(22
)
 
(10
)
Proceeds from sale of common stock under employee stock purchase plan and
    exercise of common stock options
4,887

 
4,694

Net cash provided by financing activities
4,865

 
4,684

Effect of exchange rate changes on cash and cash equivalents
(562
)
 
(2,686
)
Net (decrease) increase in cash and cash equivalents
(43,572
)
 
9,575

Cash and cash equivalents, beginning of year
107,016

 
43,429

Cash and cash equivalents, end of year
$
63,444

 
$
53,004





 VOLCANO CORPORATION
 CONDENSED CONSOLIDATED BALANCE SHEETS
 (in thousands)
 (unaudited)
 
 
 
 
 
 March 31,
 
 December 31,
 
2012
 
2011
Assets
 
 
 
         Current assets:
 
 
 
         Cash and cash equivalents
$
63,444

 
$
107,016

         Short-term available-for-sale investments
133,181

 
112,327

         Accounts receivable, net
66,365

 
69,469

         Inventories
39,258

 
41,306

         Prepaid expenses and other current assets
20,342

 
19,939

                   Total current assets
322,590

 
350,057

         Restricted cash
712

 
692

         Long-term available-for-sale investments
53,022

 
30,919

         Property and equipment, net
90,939

 
81,097

         Intangible assets, net
15,069

 
15,245

         Goodwill
2,487

 
2,487

         Other non-current assets
17,170

 
16,227

 
$
501,989

 
$
496,724

 
 
 
 
 Liabilities and Stockholders' Equity
 
 
 
 Current liabilities:
 
 
 
         Accounts payable
$
12,596

 
$
12,911

         Accrued compensation
17,187

 
20,251

         Accrued expenses and other current liabilities
17,222

 
16,689

         Deferred revenues
7,278

 
7,077

         Current maturities of long-term debt
76

 
72

                  Total current liabilities
54,359

 
57,000

 Convertible senior notes
96,833

 
95,663

 Other long-term debt
47

 
74

 Deferred revenues
3,127

 
3,168

 Other
1,806

 
1,582

         Total liabilities
156,172

 
157,487

 Stockholders' equity
345,817

 
339,237

 
$
501,989

 
$
496,724




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