Volcano (NSDQ:VOLC) lowered its outlook for 2014 this morning, sending share prices down on Wall Street despite positive preliminary results for the 4th quarter.
Volcano said it now expects to post sales growth of 4%-6% for this year, down from prior guidance of 9%-11%, citing "a more moderate view of global FM market growth and a greater than anticipated decline in PCI volumes in Japan."
The news sent VOLC shares down 8.7% to $21.10 apiece as of about 10 a.m.
The stock’s decline came despite predicted 4th-quarter sales of roughly $103.3 million, which if realized would bring full-year 2013 sales in at about $393.7 million, in line with Volcano’s prior outlook for sales of $391 million to $395 million – up approximately 3% over 2012, according to a press release.
"Volcano finished 2013 with a solid 4th quarter, highlighted by a 15% increase in U.S. [intravascular ultrasound] disposable revenues as we continued to gain increasing penetration of the peripheral market and experience a very good start with our PioneerPlus Reentry catheter that we acquired in the 3rd quarter. In addition, we recorded in excess of 20% growth for both our IVUS and [functional Measurement] disposable revenues in Europe year-over-year," president & CEO Scott Huennekens said in prepared remarks. "These gains were offset by lower-than-expected growth in our FM business in the U.S. and Japan. In addition, our overall activity in Japan continued to reflect the ongoing weakness of the yen – which negatively impacted our IVUS and FM revenues on a reported basis by approximately 25% – as well as declines in PCI activity."
The slashed outlook comes just a few months after Volcano issued guidance for 9%-11% sales growth.
"Our outlook for 2014 reflects several factors, including an expectation that PCIs will be down approximately 2.5% in the U.S., 2% in Japan and flat in Europe year-over-year," Huennekens said at the time. "In addition, we are anticipating a reduction of approximately 7.5% in reimbursement for all of our disposable products in Japan, beginning in the 2nd quarter of the year."
Volcano is also facing a challenge from activist investor fund Engaged Capital, which bought up a 5.1% stake last year and demanded changes including revisions to management compensation packages, a $200 million share buyback and calling for the company to resist acquiring any more companies to focus solely on "organic growth." Volcano later acceded to the share buyback demand, announcing a $200 million plan in December 2013.
Huennekens is slated to address the J.P. Morgan Healthcare conference in San Francisco later this week; stay tuned for MassDevice.com‘s on-site coverage of the event.