SonoSite first-quarter EBIT up 68%

SonoSite, Inc. (NASDAQ:SONO), the world leader and specialist in hand-carried ultrasound for the point-of-care, today reported financial results for the first quarter ended March 31, 2010.

“With stable pricing, we delivered solid progress on EBIT with growth of 68% alongside an increase in EPS of 60%. We also experienced broadening success globally as 20 of 25 revenue regions achieved or exceeded forecast.”

REVENUE

Revenues in the first quarter of 2010 were $56 million, an increase of 8% compared to the first quarter of 2009. Revenues from the recently acquired CardioDynamics (CDIC) were $3.2 million for the quarter. Revenues were up 2%, excluding CDIC, and included a 4% currency gain.

"We saw some encouraging signs of improvement in our US hospital channel with year-over-year revenue growth of 12% and order booking rates that increased at a much faster rate," said Kevin M. Goodwin, SonoSite President and CEO. "With stable pricing, we delivered solid progress on EBIT with growth of 68% alongside an increase in EPS of 60%. We also experienced broadening success globally as 20 of 25 revenue regions achieved or exceeded forecast."

Mr. Goodwin continued, "As planned, our US enterprise channel had decreased revenues of 59% for the quarter. We expect this will improve during the remainder of the year. The Company's new primary care division (formerly CardioDynamics) had a sequential decline in revenues for ICG systems, due to ongoing channel restructuring. We saw encouraging signs for long-term ultrasound sales growth following two quarters of market development."

"We were not completely satisfied with expense control during the quarter, as overall operating expenses came in $500k higher than planned. Thus, we are tightening our focus on expense management for the remainder of the year as we strive to deliver operating margins of 11-13% for the year, commensurate with our revenue performance."

EBIT and EBITDAS

First quarter EBIT was $2.7 million, an increase of 68% compared to the first quarter of 2009. First quarter EBITDAS was $5.4 million, an increase of 4% compared to the first quarter of 2009; year-over-year EBITDAS comparisons were negatively affected by changes in stock compensation.

NET INCOME

For the first quarter of 2010, the Company recorded net income of $1.4 million or $0.08 per share, compared to $0.9 million or $0.05 per share in 2009.

COMMENTARY

"We exited the quarter with encouraging signs from our US hospital channel on both revenue performance and booking rates," said Mr. Goodwin. "We believe we will see improvement in our international business. We have updated our revenue outlook for the year and now expect growth between 10-12%. We are also reaffirming our EBIT margin targets of 11-13%."

Mr. Goodwin continued, "During the quarter, we finalized two strategic steps. The first was with Carticept Medical, Inc., a developer of innovative products for the treatment of musculoskeletal injuries, located in Atlanta, Georgia. The second alliance was an exclusive agreement with Physio-Control, Inc., a wholly-owned subsidiary of Medtronic, Inc., which is the world leader in cardiac monitors and external defibrillation for emergency medical services (EMS), based in Redmond, Washington. This is part of our long-term growth strategy to expand our footprint into the emerging segments of musculoskeletal medicine and EMS."

2010 FINANCIAL OUTLOOK

The company is updating guidance (at current exchange rates):

• revenue growth of 10-12%;
• stable gross margins of approximately 70%;
• reaffirmed EBIT margins of 11-13%;
• EBITDAS margins of 16-18%; and
• full-year effective tax rate of 30%.