Company Reports Revenue Growth of 23% and EPS of $0.07 Conference Call Today at 1:30 pm Pacific/4:30 pm Eastern BOTHELL, WA - April 28, 2008 - Sonosite, Inc. (NasdaqGS:SONO), the world leader and specialist in hand-carried ultrasound for the point-of-care, today reported record financial results for the first quarter ended March 31, 2008. Worldwide revenue in the first quarter of 2008 grew 23% to $52.5 million compared with the first quarter of 2007. Changes in foreign currency rates increased worldwide revenue by approximately 4%. Compared to the first quarter of 2007, international revenue grew 32% and US revenue grew 12%.
In the US, hospital revenue grew 16% and office revenue grew 33%. The overall US growth rate was offset by an expected decline in US enterprise revenue of 17%. For the first quarter of 2008, Sonosite reported net income of $1.2 million, or $0.07 per diluted share, compared with a net loss of $563,000 or $0.03 per share for the first quarter in 2007. Net income in the quarter included a one-time, pre-tax charge of $675,000 for integration of the former MarketBridge physician office channel and the elimination of overhead within the company's marketing, general and administrative structure. Cash flow from operations was $7.3 million in the quarter. "The year is off to an excellent start and we are on track to achieve our growth and profitability objectives for 2008," said Kevin M. Goodwin, Sonosite President and CEO.
"We saw good momentum across our major markets driven by strong reception to our new products which accounted for over 40% of the quarter's revenue." "The international group continued their blistering pace and marked the sixth consecutive quarter of growth exceeding 20%," Mr. Goodwin said. "In the US, we saw good performance in the hospital and office sectors immediately after integrating these channels inside the company during the first quarter. We are looking forward to a year of continued progress in the US."
In the first quarter, gross margin grew to 72% compared with 70% in the first quarter of 2007 and reflected the positive impact of the company's new fourth generation products, the M-Turbo„¢ and S Series„¢ products introduced in October 2007, as well as the favorable impact of foreign currency rates. Operating expenses grew 10% to $35.4 million (including the previously mentioned one-time charge) compared with the same period in 2007. Changes in foreign currency rates and the one-time charge increased operating expenses by 4%. As of March 31, 2008, cash, cash equivalents and investments were $315.9 million.
Company Outlook
Sonosite management updated its 2008 financial objectives. Management's "base plan" is to achieve revenue growth of at least 15%, gross margins of approximately 70% and operating margins of 9 - 10%. Due to lower market interest rates, the company expects interest income to be offset by interest expense in 2008. The company expects to have a tax rate of approximately 39% for the year, virtually all of which is a non-cash item. Income taxes are largely a non-cash expense due to unused net operating loss carryforwards. The company reiterated its target to achieve a 15% operating margin in 2009.
Conference Call Information
Sonosite will hold a conference call today at 1:30 pm PT/4:30 pm 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 28, 2008, at 4:30 pm (PT) until May 23, 2008, at 12:00 midnight (PT) by dialing (719) 457-0820 or toll-free (888) 203-1112. The confirmation code 8481608 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 ten subsidiaries and a global distribution network in over 100 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 600 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 to market and sell our products, the impact of patent litigation, our ability to execute our acquisition strategy, the effect of transactions and activities associated with our issuance of senior convertible debt in July 2007 on the market price of our common stock, and as well as other factors contained in the Item 1A. "Risk Factors" section of our most recent Annual Report on Form 10-K 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. Download Selected Financial Information (PDF)
In the US, hospital revenue grew 16% and office revenue grew 33%. The overall US growth rate was offset by an expected decline in US enterprise revenue of 17%. For the first quarter of 2008, Sonosite reported net income of $1.2 million, or $0.07 per diluted share, compared with a net loss of $563,000 or $0.03 per share for the first quarter in 2007. Net income in the quarter included a one-time, pre-tax charge of $675,000 for integration of the former MarketBridge physician office channel and the elimination of overhead within the company's marketing, general and administrative structure. Cash flow from operations was $7.3 million in the quarter. "The year is off to an excellent start and we are on track to achieve our growth and profitability objectives for 2008," said Kevin M. Goodwin, Sonosite President and CEO.
"We saw good momentum across our major markets driven by strong reception to our new products which accounted for over 40% of the quarter's revenue." "The international group continued their blistering pace and marked the sixth consecutive quarter of growth exceeding 20%," Mr. Goodwin said. "In the US, we saw good performance in the hospital and office sectors immediately after integrating these channels inside the company during the first quarter. We are looking forward to a year of continued progress in the US."
In the first quarter, gross margin grew to 72% compared with 70% in the first quarter of 2007 and reflected the positive impact of the company's new fourth generation products, the M-Turbo„¢ and S Series„¢ products introduced in October 2007, as well as the favorable impact of foreign currency rates. Operating expenses grew 10% to $35.4 million (including the previously mentioned one-time charge) compared with the same period in 2007. Changes in foreign currency rates and the one-time charge increased operating expenses by 4%. As of March 31, 2008, cash, cash equivalents and investments were $315.9 million.
Company Outlook
Sonosite management updated its 2008 financial objectives. Management's "base plan" is to achieve revenue growth of at least 15%, gross margins of approximately 70% and operating margins of 9 - 10%. Due to lower market interest rates, the company expects interest income to be offset by interest expense in 2008. The company expects to have a tax rate of approximately 39% for the year, virtually all of which is a non-cash item. Income taxes are largely a non-cash expense due to unused net operating loss carryforwards. The company reiterated its target to achieve a 15% operating margin in 2009.
Conference Call Information
Sonosite will hold a conference call today at 1:30 pm PT/4:30 pm 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 28, 2008, at 4:30 pm (PT) until May 23, 2008, at 12:00 midnight (PT) by dialing (719) 457-0820 or toll-free (888) 203-1112. The confirmation code 8481608 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 ten subsidiaries and a global distribution network in over 100 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 600 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 to market and sell our products, the impact of patent litigation, our ability to execute our acquisition strategy, the effect of transactions and activities associated with our issuance of senior convertible debt in July 2007 on the market price of our common stock, and as well as other factors contained in the Item 1A. "Risk Factors" section of our most recent Annual Report on Form 10-K 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. Download Selected Financial Information (PDF)