Sonosite reports strong growth

  • By Eric Fetters Herald Writer
  • Monday, October 29, 2007 10:49pm
  • BusinessBothell

BOTHELL — Sales of SonoSite Inc.’s small ultrasound machines grew by 24 percent during the third quarter, even before the firm introduced five new models this month.

The Bothell company’s worldwide revenue reached $50 million during the quarter, compared to slightly more than $40 million in the same period last year.

That pushed income to $1.5 million, or 9 cents a share, up from the $475,000 profit recorded in the same quarter of 2006. Through the first nine months of this year, SonoSite has effectively doubled its income over the same period in ‘06.

Chief Executive Officer Kevin Goodwin said the company’s efforts to sell equipment to doctors’ offices and clinics, in addition to the traditional hospital market, are improving.

“We’re very pleased with how things are going,” Goodwin told investors and analysts during Monday’s conference call. “But I think it’s important to hold expectations in check as we move through this transition.”

Analysts reacted positively, however, as the company’s quarterly income exceeded most forecasts. And SonoSite itself has raised its earnings forecast for the rest of the year.

International sales expanded faster than U.S. sales during the third quarter — 28 percent ­compared to 21 percent, ­respectively. The quarter also saw the launch of a new SonoSite subsidiary to handle sales in India.

But the cost of defending itself against a pair of patent lawsuits added a sizable amount to SonoSite’s expenses, with the promise of more legal costs to come.

The company’s general and administrative expenses grew 58 percent, from less than $3.9 million to nearly $6.1 million during the quarter. Goodwin confirmed most of those added dollars went to the legal case.

“It was expensive,” he said.

SonoSite is both plaintiff and defendant in lawsuits with GE Healthcare and Zonare, competitors in the hand-carried ultrasound market.

Goodwin said 71 percent of last quarter’s revenue came from sales of SonoSite’s MicroMaxx, the best-selling ultrasound device in recent years.

But this month, the company introduced the M-Turbo, which is similar in size to the MicroMaxx, and four different specialized models of its new S- series. The company is taking orders now for those models and plans to begin shipping them before the year ends.

With the new products, the company said its Titan model and the 180 series, the first series of hand-carried ultrasound products SonoSite made during its nine-year history, will be “headed for the end of their life cycle” in the next year.

Reporter Eric Fetters: 425-339-3453 or fetters@heraldnet.com.

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