Hologic shares tumble on poor 2QVolcano revenues rise, loss widens
As many as 300 OEC 9900 Elite mobile C-arm systems will ship this month to U.S. customers now that the FDA has cleared the surgical x-ray units again for distribution in this country. Prospective buyers of this family of products and several others made at GE's Salt Lake City facility were frozen out more than two years ago when the company signed a consent decree with the FDA prohibiting their manufacture and distribution domestically. With the logjam now broken on the Elite family, GE is moving quickly to meet pent-up demand in the U.S.
Although prevented since January 2007 from shipping Elite units to U.S. sites, the company has continued its international shipments. Over the past year alone, GE has shipped more than 1700 OEC 9900 Elite C-arms and another 220 of this family optimized for cardiac and vascular imaging to customers outside the U.S.
Cuts in hospital budgets slowed demand for digital mammography systems from Hologic in the second quarter, contributing heavily to a 6.7% drop in revenues to $402 million, according to company executives. But the firm's red ink on its bottom line -- a $2.3 billion loss compared with a net gain of $56 million in the year-earlier period -- may have spooked investors the most. Hologic shares dropped from about $16 prior to the financial release after market close on May 4 to just above $12, where share prices remained at midweek. The 2Q loss included, however, a $2.34 billion write-down in goodwill and intangible assets as the company sought to account for the loss in its stock price, which has dropped by half since early 2008. With the exception of these one-time charges, the company recorded a non-GAAP adjusted net income of $74.1 million and adjusted EBITDA (non-GAAP adjusted earnings before interest, taxes, depreciation, and amortization) of $144.9 million.
Revenues were up 34% to $49 million at Volcano in the first quarter, but the company still reported a bigger loss May 5 after the market close than in the same quarter last year. The company lost $7.6 million in the quarter ended March 31 versus a $2.3 million loss in the year-earlier period. Investors shrugged off the negative results, however, driving shares $1.50 higher after the market opened May 6. Company executives attributed revenue growth mostly to a 24% rise in sales of its intravascular ultrasound and functional measurement products. Total revenues were also buoyed by $3.7 million from Axsun Technologies, which Volcano acquired in late 2008.