) reported adjusted net loss of 8 cents per share in the third
quarter of 2013, wider than the Zacks Consensus Estimate of loss
of 2 cents per share and way below the year-ago earnings of 4
cents per share However, on a reported basis, the company
recorded a loss of 15 cents per share in the third quarter of
Quarter in Detail
Revenues rose 2.2% year over year (up 8% at constant exchange
rate or CER) to $95.8 million, on account of modest contribution
from sales of the Pioneer device. The figure however, was
slightly below the Zacks Consensus Estimate of $96 million.
Revenues in the Medical segment increased 3% to $93.7 million.
The improvement resulted from a healthy rise of 13.4% in FFR
(Fractional Flow Reserve) single-procedure disposable business,
along with a 13% increase in total consoles sales. These
positives were partially offset by a 5% decline in sales of
intravascular ultrasound (IVUS) single-procedure disposables
FFR disposable sales increased 10% at CER in the U.S., 27% in
Europe, with a 9% decrease in rest of world. Japan registered a
growth of 7.5% on a reported basis. Strong adoption of the iFR
technology in Europe and Japan was mainly responsible for the
growth. On the other hand, console placement improved in the U.S.
(up 5% at CER) and registered a record rise of 78% in Europe,
while placements in Japan and the rest of world declined (25% and
6.6%, respectively) compared with the year-ago quarter.
IVUS single-procedure disposables franchise revenues were $46
million, down 5.3% on a year-over-year basis. The Industrial
segment recorded revenues of $2.1 million in the quarter,
declining 30% from the prior-year quarter.
Total cost of revenues (excluding amortization of intangibles)
amounted to $33.5 million in the reported quarter, up 0.63% year
over year. Volcano Corporation recorded an expansion of 60
basis points (bps) in gross margin to 65.1% in the quarter as
compared with 64.5% in the year ago quarter.
Selling, general and administrative (SG&A) expenses fell
11.8% on a year-over-year basis to $45.5 million, while research
and development (R&D) expenditure shot up 27.4% to $16.6
Adjusted operating loss in the third quarter was $0.26 million,
considerably lower than $6.67 million as reported in the year-ago
quarter. Adjustments exclude restructuring, amortization of
intangibles and acquisition-related costs. Adjusted operating
margin was 0.27% of revenues as compared with 7.12% of revenues
in the prior year quarter.
VOLC exited the third quarter with cash, cash equivalents and
short-term investments of $400.1 million compared with $471.5
million at the end of Dec, 2012.
VOLC confirmed 2013 revenue guidance provided on October 28,
2013. It expects revenues on a reported basis of $391-$395
million. On a constant currency basis, revenues are estimated to
vary in the range of $411-$415 million. The Zacks Consensus
Estimate for 2013 is pegged at $394 millions for revenues and for
EPS stands at $0.03. In the Medical segment revenues are
likely to increase within 9% to 10% on a constant currency basis.
Gross margin is expected to range between 64%-65% on a reported
basis and operating expenses, including restructuring charges, to
constitute 71%-72% of revenues. On an adjusted basis, the net
loss is estimated at $0.27-$0.25 per share.
The company provided an initial update on revenue guidance for
2014. Revenues are expected to increase in the range of 9-11% on
a reported basis and 8-to-10% at CER, mainly driven by growth in
FFR. The Zacks Consensus Estimate for 2014 revenues were $432
As expected, Volcano Corporation reported disappointing results
in the third quarter. Though revenues improved, the bottom line
failed to match expectations. The company has now adopted a
strategic reprioritization program to optimize reallocation of
resources. We are optimistic that expanded distribution in the
peripheral market and the commercialization of new offerings,
including Crux IVC filter, the Sync-Rx platform technology,
PioneerPlus and Verrata are likely to garner revenues in
Moreover, further penetration of the iFR offerings in Japan
and Europe, and commercial launch of iFR in the U.S. are some of
the key drivers that can maximize revenues in the forthcoming
CRYOLIFE INC (CRY): Free Stock Analysis
CYNOSURE INC-A (CYNO): Free Stock Analysis
ECHO THERAPEUT (ECTE): Free Stock Analysis
VOLCANO CORP (VOLC): Free Stock Analysis
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Currently the stock carries a Zacks Rank # 3 (Hold). A
better-performing stock in the medical instruments that are worth
a look include
) carrying a Zacks Rank #1 (Strong Buy) and
Echo Therapeutics, Inc.
) carrying a Zacks Rank #2 (Buy).