When a company announces a 20% growth in year-over-year revenue almost a month before its earnings release, the subsequent earnings announcement tends to be a little bland.
Gross margins have slipped for a couple of quarters now, but that's not necessarily bad. SonoSite has been branching out and increasing its market outside the United States. In fact, it had more sales outside the U.S. this quarter than stateside. It sells the devices at a discount -- thus the lowered gross margins -- to third-party sellers, who sell them to the customer. But it makes up for the lost revenue by decreasing its sales and marketing costs, which were down to 44% of revenue for the quarter compared with 50% of revenue a year ago.
The company sold $200 million in senior notes earlier this month, and it put that money to work quickly. Yesterday, SonoSite also announced that it had acquired privately held LumerVu, which has a patented catheter tracking technology. SonoSite didn't give details of the transaction, but it couldn't have cost too much, since it said the purchase wouldn't have a material effect on its 2007 financial results.
LumerVu's machines use an optical fiber at the tip of the catheter to follow the catheter as it's guided through the body. SonoSite doesn't think it will take too long to integrate the new technology into its product line; it sees launches of the devices as early as the second half of next year. The technology seems like a good complement to its ultrasound devices and should strengthen their position in the vascular access market.
The company continues to expect strong revenue growth for the rest of the year, in the 15%-18% range. With potential income from a patent infringement lawsuit filed against General Electric
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