SonoSite First Quarter Revenue Grows 16%

  
    
  
  
    
      SonoSite, Inc. (Nasdaq:SONO), the world leader in hand-carried 
      ultrasound, today reported financial results for the first quarter ended 
      March 31, 2007.
    
    
      Worldwide revenue in the first quarter of 2007 grew 16% to $42.8 million 
      compared with $36.9 million in the first quarter of 2006. For the first 
      quarter of 2007, SonoSite reported a net loss of $563,000 or $0.03 per 
      share, compared with a net loss of $363,000 or $0.02 per share in the 
      prior year quarter.
    
    
      “With a good start to the year, we are on 
      track to achieve our revenue growth objectives for 2007,” 
      said Kevin M. Goodwin, SonoSite President and CEO. “Our 
      international business which was up 25% compared to last year, showed 
      positive, broad-based trends throughout our major markets and is 
      benefiting from the investments we made in 2006 to increase sales 
      capacity in several countries. Overall US revenue was up 7% for the 
      quarter with much higher growth rates in our hospital point-of-care 
      markets and enterprise business. The total growth rate was offset by 
      sales in the private office channel, which we continue to develop. We 
      are taking a number of steps to increase the effectiveness of this 
      channel and expect to see our US business strengthen as we move through 
      the year.”
    
    
      “Our product development plans continue on 
      schedule for the introduction of numerous innovations this year and next,” 
      Mr. Goodwin said. “We are very pleased by the 
      strong reception that our recently introduced SonoMB™ 
      technology is receiving in multiple clinical markets by physicians 
      around the world. Additionally, we have put in place several initiatives 
      to reduce corporate overhead expense and expect to see improving 
      profitability going forward.”
    
    
      In the first quarter, operating expenses grew 19% to $32.2 million 
      compared with the same period in 2006. As planned, R&D expense increased 
      55% in the quarter to $6.1 million for product development activities. 
      SG&A expense grew 13% to $26.0 million primarily due to increased 
      international sales expansion and equity-based compensation expense.
    
    
      For the first quarter of 2007, US revenue accounted for 46% of total 
      revenue. Cash, cash equivalents and investments increased by $10.7 
      million to $97.8 million as of March 31, 2007.
    
    
      Company Outlook for 2007 - 2009
    
    
      “We are reiterating the annual guidance for 
      2007 that we provided on February 15, 2007,” 
      Mr. Goodwin said. “We see continued strong 
      demand for hand-carried ultrasound and believe that we will continue to 
      lead the market with innovative products. As we look beyond 2007 and 
      into 2008 and 2009, our financial objectives are to grow revenue at a 
      minimum of 15% per year, while maintaining gross margin at approximately 
      70% and improving operating margins to approximately 15% by 2009 through 
      careful management of expense growth.”
    
    
      For 2007 the company continues to target a revenue growth rate of 15-18% 
      for the year. Management expects that quarterly revenue will follow its 
      historical seasonal patterns with the year’s 
      lowest revenue occurring in the first quarter and as much as one-third 
      of the year’s total revenue occurring in the 
      fourth quarter. Gross margin is expected to be level with 2006 at 
      approximately 71%.
    
    
      The company is targeting total operating expenses to be approximately 
      67% of revenue, with R&D at 14% and SG&A at 53% of revenue. Included in 
      these expenses, stock-based compensation is expected to range from $8.5 – 
      9.0 million. R&D spending is expected to be approximately level from 
      quarter to quarter in 2007. Total operating expenses are expected to be 
      approximately the same in dollars for the first three quarters of 2007 
      with a sequential uptick in the fourth quarter reflecting the quarter’s 
      seasonally higher sales volume. Other income is expected to range from 
      $4.0 – 4.5 million. The company’s 
      tax rate is expected to be approximately 36% for the year and diluted 
      shares outstanding is expected to be 17.3 million.
    
    
      Conference Call Information
    
    
      SonoSite will hold a conference call today at 1:30 p.m. PT/4:30 p.m. 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 30, 
      2007, at 4:30 p.m. (PT) until May 14, 2007, at 12:00 midnight (PT) by 
      dialing 719-457-0820 or toll-free 888-203-1112. The confirmation code 
      2768214 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 eight 
      subsidiaries and a global distribution network in over 90 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 550 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 such as the physician 
      office sales force to market and sell our products, as well as other 
      factors described under the heading, “Important 
      Factors that May Affect Our Business, Our Results of Operations and Our 
      Stock Price,” included in our latest periodic 
      report 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.
    
    
      
        
          SonoSite, Inc.
        
      
      
        
          Selected Financial Information
        
      
      
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
        
        
           
        
      
      
        
          Consolidated Statements of Operations
        
        
        
        
        
        
        
      
      
        
          (in thousands except per share data) (unaudited)
        
        
        
        
        
      
      
        
        
        
        
        
        
        
           
        
      
      
        
        
        
          Three Months Ended
        
      
      
        
        
        
          March 31,
        
      
      
        
        
        
           
        
        
          2007 
        
        
        
        
           
        
        
          2006 
        
      
      
        
        
        
        
        
        
        
           
        
      
      
        
          Revenue
        
        
          $
        
        
          42,795 
        
        
        
        
          $
        
        
          36,869 
        
      
      
        
          Cost of revenue
        
        
           
        
        
          12,875 
        
        
        
        
           
        
        
          10,991 
        
      
      
        
          Gross margin
        
        
        
        
          29,920 
        
        
        
        
        
        
          25,878 
        
      
      
        
          Gross margin percentage
        
        
        
        
          69.9%
        
        
        
        
        
        
          70.2%
        
      
      
        
        
        
        
        
        
        
           
        
      
      
        
          Operating expenses:
        
        
        
        
        
        
        
      
      
        
          Research and development
        
        
        
        
          6,143 
        
        
        
        
        
        
          3,956 
        
      
      
        
          Sales and marketing
        
        
        
        
          21,972 
        
        
        
        
        
        
          19,283 
        
      
      
        
          General and administrative
        
        
           
        
        
          4,053 
        
        
        
        
           
        
        
          3,846 
        
      
      
        
          Total operating expenses
        
        
        
        
          32,168 
        
        
        
        
        
        
          27,085 
        
      
      
        
        
        
        
        
        
        
           
        
      
      
        
          Other income, net
        
        
           
        
        
          1,302 
        
        
        
        
           
        
        
          660 
        
      
      
        
        
        
        
        
        
        
           
        
      
      
        
          Loss before income taxes
        
        
        
        
          (946)
        
        
        
        
        
        
          (547)
        
      
      
        
        
        
        
        
        
        
           
        
      
      
        
          Income tax benefit
        
        
           
        
        
          383 
        
        
        
        
           
        
        
          184 
        
      
      
        
        
        
        
        
        
        
           
        
      
      
        
          Net loss
        
        
          $
        
        
          (563)
        
        
        
        
          $
        
        
          (363)
        
      
      
        
        
        
        
        
        
        
           
        
      
      
        
          Basic and diluted net loss per share
        
        
          $
        
        
          (0.03)
        
        
        
        
          $
        
        
          (0.02)
        
      
      
        
        
        
        
        
        
        
           
        
      
      
        
          Weighted average common shares used in
        
        
        
        
        
        
        
      
      
        
          computing net loss per share
        
        
           
        
        
          16,494 
        
        
        
        
           
        
        
          16,013 
        
      
      
        
        
        
        
        
        
        
           
        
      
      
        
          
             
          
        
        
        
        
        
        
        
      
      
        
          Condensed Consolidated Balance Sheets
        
        
        
        
        
        
        
      
      
        
          (in thousands) (unaudited)
        
        
        
        
        
        
        
      
      
        
        
        
          March 31,
        
        
        
        
          December 31,
        
      
      
        
        
        
           
        
        
          2007 
        
        
        
        
           
        
        
          2006 
        
      
      
        
        
        
        
        
        
        
           
        
      
      
        
          Cash and cash equivalents
        
        
          $
        
        
          56,787 
        
        
        
        
          $
        
        
          45,673 
        
      
      
        
          Short-term investment securities
        
        
        
        
          39,582 
        
        
        
        
        
        
          38,428 
        
      
      
        
          Accounts receivable, net
        
        
        
        
          43,381 
        
        
        
        
        
        
          52,838 
        
      
      
        
          Inventories
        
        
        
        
          24,027 
        
        
        
        
        
        
          23,020 
        
      
      
        
          Deferred income taxes
        
        
        
        
          9,853 
        
        
        
        
        
        
          9,729 
        
      
      
        
          Prepaid expenses and other current assets
        
        
           
        
        
          2,937 
        
        
        
        
           
        
        
          2,776 
        
      
      
        
          Total current assets
        
        
        
        
          176,567 
        
        
        
        
        
        
          172,464 
        
      
      
        
        
        
        
        
        
        
           
        
      
      
        
          Property and equipment, net
        
        
        
        
          10,817 
        
        
        
        
        
        
          10,752 
        
      
      
        
          Investment securities
        
        
        
        
          1,475 
        
        
        
        
        
        
          3,014 
        
      
      
        
          Deferred income taxes
        
        
        
        
          20,785 
        
        
        
        
        
        
          19,729 
        
      
      
        
          Intangible assets, net
        
        
        
        
          3,911 
        
        
        
        
        
        
          3,864 
        
      
      
        
          Other assets
        
        
           
        
        
          1,736 
        
        
        
        
           
        
        
          1,687 
        
      
      
        
          Total assets
        
        
          $
        
        
          215,291 
        
        
        
        
          $
        
        
          211,510 
        
      
      
        
        
        
        
        
        
        
           
        
      
      
        
          Accounts payable
        
        
          $
        
        
          6,893 
        
        
        
        
          $
        
        
          6,450 
        
      
      
        
          Accrued expenses
        
        
        
        
          15,036 
        
        
        
        
        
        
          15,459 
        
      
      
        
          Deferred revenue, current portion
        
        
           
        
        
          3,183 
        
        
        
        
           
        
        
          3,253 
        
      
      
        
          Total current liabilities
        
        
        
        
          25,112 
        
        
        
        
        
        
          25,162 
        
      
      
        
        
        
        
        
        
        
           
        
      
      
        
          Other liabilities, net of current portion
        
        
           
        
        
          5,958 
        
        
           
        
        
           
        
        
          5,317 
        
      
      
        
          Total liabilities
        
        
        
        
          31,070 
        
        
        
        
        
        
          30,479 
        
      
      
        
        
        
        
        
        
        
           
        
      
      
        
          Shareholders' equity:
        
        
        
        
        
        
        
      
      
        
          Common stock and additional paid-in capital
        
        
        
        
          235,238 
        
        
        
        
        
        
          231,551 
        
      
      
        
          Accumulated deficit
        
        
        
        
          (52,340)
        
        
        
        
        
        
          (51,777)
        
      
      
        
          Accumulated other comprehensive income
        
        
           
        
        
          1,323 
        
        
        
        
           
        
        
          1,257 
        
      
      
        
          Total shareholders' equity
        
        
           
        
        
          184,221 
        
        
        
        
           
        
        
          181,031 
        
      
      
        
          Total liabilities and shareholders' equity
        
        
          $
        
        
          215,291 
        
        
        
        
          $
        
        
          211,510