DECEMBER 24, 2008--Volcano Corp. (San Diego, CA), developer, manufacturer and seller of diagnosis and treatment systems for coronary and peripheral artery disease, has entered into a definitive agreement to acquire Axsun Technologies, a privately-held developer and manufacturer of lasers and optical engines used in medical optical coherence tomography (OCT) imaging systems. Axsun has development partnerships with companies serving the cardiology and dental markets and expects the launch of the first medical imaging systems using its technology during the first half of 2009. Volcanosaid it plans to use new integrated versions of Axsun's advanced tunable laser and optical engine technology in the development of certain new OCT imaging systems. Volcano will pay approximately $21.5 million in cash at closing, which is expected to occur next week. Axsun will operate as a wholly-owned subsidiary of Volcano.
"Axsun is another complementary and important transaction for Volcano as it provides us proprietary OCT technology that we believe will both accelerate our OCT product development efforts and provide us significant and sustainable competitive advantages in the invasive imaging arena. We believe OCT technology will extend Volcano's reach to clinical indications and research opportunities that represent sizeable market opportunities that are beyond those served by our current offerings," said Scott Huennekens, president and CEO of Volcano.
"The Axsun laser and optical engine technology is a key building block in our strategy to cement our already strong position in invasive imaging," Huennekens continued. "The company's core technologies are truly leading-edge and will advance our programs to both enhance system performance and achieve lower manufacturing costs as we seek to remain the innovation leader in medical imaging. In addition to the known applications in the cardiology and dental fields, Axsun's unique technology has the potential to expand OCT applications into a number of new platforms serving large markets in the healthcare sector, including peripheral vascular, neurovascular, cancer and ophthalmology," he added.
The company said that it expects this transaction to be neutral to consolidated earnings per share in fiscal 2009 and that following completion of the transaction it will have more than $145 million in cash, with no debt. The company said it will provide additional details on the financial impact of the transaction when it provides 2009 guidance during its fourth quarter earnings conference call in mid-February.
Axsun also offers devices for industrial applications and the telecommunications network sector, where it has an estimated 50 percent share of the high-performance segment of the optical monitoring market. The company has more than 90 US patents issued, with another 40 pending, and has approximately 85 employees. Axsun recorded revenues from continuing operations in excess of $18 million in calendar 2007. Axsun's technology and laser components allow for dramatic imaging performance improvements in equipment form factors as small as 1/1000th the size of current laser components at very low manufacturing costs.
In addition to the products and components directed at the medical imaging market, Axsun also presently markets a closely related line of photonics products and measurement equipment into industrial spectroscopy and optical communications markets. The intellectual property, manufacturing and processes used in the industrial and communications markets are highly complementary and provide operational and financial leverage across the entire business. Axsun's optical network monitoring products are regarded as leaders in the industry from a performance and reliability perspective.
"The industrial/communications segment of the business is run by a highly competent and experienced team within Axsun and we expect that it will continue to flourish and provide the overall organization with operational leverage," Huennekens commented. "We are pleased to be able to add this extraordinary level of technology and capability to the Volcano organization along with the significant future potential of the OCT market opportunities through a transaction that will have a modest impact on our cash balance and not impact our ability to achieve profitability."
Dale Flanders, president and CEO of Axsun commented, "We are thrilled to become a part of the Volcano organization. Axsun has developed an entirely new class of tunable optical engines based upon our unique MEMS based technology platform. It is clear that medical imaging represents one of the largest growth markets in which to fully exploit this technology. Our capability of precise imaging is delivered with a level of performance and on a scale of miniaturization and at a cost that should enable significant expansion of varied market opportunities in a number of medical specialties. We are also pleased to merge with a company with the resources and managerial strength of Volcano to help us build on our leadership position in the communications and industrial spectroscopy markets.