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.