SonoSite First Quarter Revenue Grows 16%
01 May 2007 - 6:03AM
Business Wire
SonoSite, Inc. (Nasdaq:SONO), the world leader in hand-carried
ultrasound, today reported financial results for the first quarter
ended March 31, 2007. Worldwide revenue in the first quarter of
2007 grew 16% to $42.8 million compared with $36.9 million in the
first quarter of 2006. For the first quarter of 2007, SonoSite
reported a net loss of $563,000 or $0.03 per share, compared with a
net loss of $363,000 or $0.02 per share in the prior year quarter.
�With a good start to the year, we are on track to achieve our
revenue growth objectives for 2007,� said Kevin M. Goodwin,
SonoSite President and CEO. �Our international business which was
up 25% compared to last year, showed positive, broad-based trends
throughout our major markets and is benefiting from the investments
we made in 2006 to increase sales capacity in several countries.
Overall US revenue was up 7% for the quarter with much higher
growth rates in our hospital point-of-care markets and enterprise
business. The total growth rate was offset by sales in the private
office channel, which we continue to develop. We are taking a
number of steps to increase the effectiveness of this channel and
expect to see our US business strengthen as we move through the
year.� �Our product development plans continue on schedule for the
introduction of numerous innovations this year and next,� Mr.
Goodwin said. �We are very pleased by the strong reception that our
recently introduced SonoMB� technology is receiving in multiple
clinical markets by physicians around the world. Additionally, we
have put in place several initiatives to reduce corporate overhead
expense and expect to see improving profitability going forward.�
In the first quarter, operating expenses grew 19% to $32.2 million
compared with the same period in 2006. As planned, R&D expense
increased 55% in the quarter to $6.1 million for product
development activities. SG&A expense grew 13% to $26.0 million
primarily due to increased international sales expansion and
equity-based compensation expense. For the first quarter of 2007,
US revenue accounted for 46% of total revenue. Cash, cash
equivalents and investments increased by $10.7 million to $97.8
million as of March 31, 2007. Company Outlook for 2007 - 2009 �We
are reiterating the annual guidance for 2007 that we provided on
February 15, 2007,� Mr. Goodwin said. �We see continued strong
demand for hand-carried ultrasound and believe that we will
continue to lead the market with innovative products. As we look
beyond 2007 and into 2008 and 2009, our financial objectives are to
grow revenue at a minimum of 15% per year, while maintaining gross
margin at approximately 70% and improving operating margins to
approximately 15% by 2009 through careful management of expense
growth.� For 2007 the company continues to target a revenue growth
rate of 15-18% for the year. Management expects that quarterly
revenue will follow its historical seasonal patterns with the
year�s lowest revenue occurring in the first quarter and as much as
one-third of the year�s total revenue occurring in the fourth
quarter. Gross margin is expected to be level with 2006 at
approximately 71%. The company is targeting total operating
expenses to be approximately 67% of revenue, with R&D at 14%
and SG&A at 53% of revenue. Included in these expenses,
stock-based compensation is expected to range from $8.5 � 9.0
million. R&D spending is expected to be approximately level
from quarter to quarter in 2007. Total operating expenses are
expected to be approximately the same in dollars for the first
three quarters of 2007 with a sequential uptick in the fourth
quarter reflecting the quarter�s seasonally higher sales volume.
Other income is expected to range from $4.0 � 4.5 million. The
company�s tax rate is expected to be approximately 36% for the year
and diluted shares outstanding is expected to be 17.3 million.
Conference Call Information SonoSite will hold a conference call
today at 1:30 p.m. PT/4:30 p.m. ET. The call will be broadcast live
and can be accessed via the �Investors� Section of SonoSite�s
website at www.sonosite.com. A replay of the audio webcast will be
available beginning April 30, 2007, at 4:30 p.m. (PT) until May 14,
2007, at 12:00 midnight (PT) by dialing 719-457-0820 or toll-free
888-203-1112. The confirmation code 2768214 is required to access
the replay. The call will also be archived on SonoSite�s website at
http://ir.sonosite.com. About SonoSite SonoSite, Inc.
(www.sonosite.com) is the innovator and world leader in
hand-carried ultrasound. Headquartered near Seattle, the company is
represented by eight subsidiaries and a global distribution network
in over 90 countries. SonoSite�s small, lightweight systems are
expanding the use of ultrasound across the clinical spectrum by
cost-effectively bringing high performance ultrasound to the point
of patient care. The company employs over 550 people worldwide.
Forward-looking Information and the Private Litigation Reform Act
of 1995 Certain statements in this press release relating to the
market acceptance of our products, possible future sales relating
to expected orders, and our future financial position and operating
results are �forward-looking statements� for the purposes of the
safe harbor provisions of the Private Securities Litigation Reform
Act of 1995. These forward-looking statements are based on the
opinions and estimates of our management at the time the statements
are made and are subject to risks and uncertainties that could
cause actual results to differ materially from those expected or
implied by the forward-looking statements. These statements are not
guaranties of future performance and are subject to known and
unknown risks and uncertainties and are based on potentially
inaccurate assumptions. Factors that could affect the rate and
extent of market acceptance of our products, the receipt of
expected orders, and our financial performance include our ability
to successfully manufacture, market and sell our ultrasound
systems, our ability to accurately forecast customer demand for our
products, our ability to manufacture and ship our systems in a
timely manner to meet customer demand, variability in quarterly
results caused by the timing of large project orders from
governmental or international entities and the seasonality of
hospital purchasing patterns, timely receipts of regulatory
approvals to market and sell our products, regulatory and
reimbursement changes in various national health care markets,
constraints in government and public health spending, the ability
of our distribution partners and other sales channels such as the
physician office sales force to market and sell our products, as
well as other factors described under the heading, �Important
Factors that May Affect Our Business, Our Results of Operations and
Our Stock Price,� included in our latest periodic report filed with
the Securities and Exchange Commission. We caution readers not to
place undue reliance upon these forward-looking statements that
speak only as to the date of this release. We undertake no
obligation to publicly revise any forward-looking statements to
reflect new information, events or circumstances after the date of
this release or to reflect the occurrence of unanticipated events.
SonoSite, Inc. Selected Financial Information � � Consolidated
Statements of Operations (in thousands except per share data)
(unaudited) � Three Months Ended March 31, � 2007� � 2006� �
Revenue $ 42,795� $ 36,869� Cost of revenue � 12,875� � 10,991�
Gross margin 29,920� 25,878� Gross margin percentage 69.9% 70.2% �
Operating expenses: Research and development 6,143� 3,956� Sales
and marketing 21,972� 19,283� General and administrative � 4,053� �
3,846� Total operating expenses 32,168� 27,085� � Other income, net
� 1,302� � 660� � Loss before income taxes (946) (547) � Income tax
benefit � 383� � 184� � Net loss $ (563) $ (363) � Basic and
diluted net loss per share $ (0.03) $ (0.02) � Weighted average
common shares used in computing net loss per share � 16,494� �
16,013� � � Condensed Consolidated Balance Sheets (in thousands)
(unaudited) March 31, December 31, � 2007� � 2006� � Cash and cash
equivalents $ 56,787� $ 45,673� Short-term investment securities
39,582� 38,428� Accounts receivable, net 43,381� 52,838�
Inventories 24,027� 23,020� Deferred income taxes 9,853� 9,729�
Prepaid expenses and other current assets � 2,937� � 2,776� Total
current assets 176,567� 172,464� � Property and equipment, net
10,817� 10,752� Investment securities 1,475� 3,014� Deferred income
taxes 20,785� 19,729� Intangible assets, net 3,911� 3,864� Other
assets � 1,736� � 1,687� Total assets $ 215,291� $ 211,510� �
Accounts payable $ 6,893� $ 6,450� Accrued expenses 15,036� 15,459�
Deferred revenue, current portion � 3,183� � 3,253� Total current
liabilities 25,112� 25,162� � Other liabilities, net of current
portion � 5,958� � � 5,317� Total liabilities 31,070� 30,479� �
Shareholders' equity: Common stock and additional paid-in capital
235,238� 231,551� Accumulated deficit (52,340) (51,777) Accumulated
other comprehensive income � 1,323� � 1,257� Total shareholders'
equity � 184,221� � 181,031� Total liabilities and shareholders'
equity $ 215,291� $ 211,510�
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