Volcano Reports 22 Percent Increase in Third Quarter Revenues

COMPANY EXPERIENCES STRONG GROWTH ACROSS CORE BUSINESSES

SAN DIEGO, Nov. 5 /PRNewswire-FirstCall/ -- Volcano Corporation (Nasdaq:
VOLC), a leader in the development, manufacture and sales of products for the
diagnosis and treatment of coronary and peripheral artery disease, today
reported revenues of $53.9 million for the third quarter of fiscal 2009.

The results for the quarter ended September 30, 2009, represent an increase of
22 percent over revenues of $44.1 million in the third quarter of 2008.
Revenues for the third quarter of 2009 include $4.6 million from Axsun
Technologies, Inc., which Volcano acquired at the end of 2008, and for which
the company recorded no revenues in the third quarter a year ago.

For the third quarter of 2009, the company reported a GAAP net loss of $4.0
million, or $0.08 per share, versus GAAP net income of $744,000, or $0.01 per
diluted share, in the third quarter of 2008. Weighted average shares for the
third quarter of 2009 were 48.5 million.

Excluding stock-based compensation expense of $2.6 million and commissions of
$1.4 million paid to a former distributor related to the company's transition
to a direct sales initiative in Japan, the company reported non-GAAP net
income of $7,000, or $0.00 per diluted share. In the third quarter of 2008,
excluding stock-based compensation expense of $2.5 million, the company
reported non-GAAP net income of $3.3 million, or $0.06 per diluted share. A
reconciliation of the company's GAAP to non-GAAP results is included below.

For the first nine months of 2009, Volcano reported revenues of $156.9
million, a 28 percent increase over revenues of $122.2 million in the same
period a year ago. Revenues for the first nine months of 2009 include $12.2
million from Axsun. The company reported a GAAP net loss of $16.9 million, or
$0.35 per share, compared with a GAAP net loss of $15.1 million, or $0.32 per
share, in the same period year ago. Excluding stock-based compensation expense
of $8.2 million and the aforementioned commissions of $1.4 million, Volcano
reported a non-GAAP net loss of $7.3 million, or $0.15 per share, in the first
nine months of 2009. Excluding in-process research and development costs of
$12.4 million related to the Novelis and CardioSpectra transactions, $2.9
million in due diligence, legal and accounting expenses related to an
acquisition that was not consummated, and stock-based compensation expense of
$7.0 million, Volcano reported non-GAAP net income of $7.2 million, or $0.14
per diluted share, in the first nine months of 2008.

"In addition to experiencing a very solid financial performance during the
quarter, we completed our transition from our distributor relationship with
Goodman to a direct sales effort in Japan and had new data demonstrating the
value of our offerings presented at the recent Transcatheter Cardiovascular
Therapeutics (TCT) meeting," said Scott Huennekens, president and chief
executive officer.

"During the quarter, our core intravascular ultrasound (IVUS) disposable sales
increased 15 percent year-over-year, including 22 percent in Japan and 16
percent in the U.S. Our total functional measurement (FM) business increased
53 percent, led by year-over-year growth of more than75 percent in both the
U.S. and Europe," Huennekens noted.

"In Japan," he continued, "we have successfully completed our transition
program with Goodman and converted all of their more than 400 accounts. We are
also about halfway through our program to transition customers there to our s5
family of IVUS consoles.

"Data from the key PROSPECT and FAME presentations at TCT demonstrated the
value of our IVUS and FM offerings by providing evidence that diagnostic
angiography alone is not enough and that the use of our devices can not only
enhance patient care, but also have a meaningful impact on the cost of
healthcare. We believe this data will help fuel further adoption of our
current and future products," Huennekens concluded.

2009 Guidance

The company reconfirmed prior guidance for fiscal 2009 and continues to expect
revenues for fiscal 2009 will be in the range of $218-$223 million, or an
increase of 27-30 percent over revenues in 2008.

The company continues to expect gross margin for the full year will be in the
range of 59-60 percent, including additional depreciation of approximately
$775,000 through the balance of the year related to the distributor transition
in Japan. Operating expenses continue to be expected in the range of 67-69
percent, including stock-based compensation expense of approximately $12.0
million, intangible amortization of approximately $4.2 million and
approximately $3.5 million in Goodman commissions. The outlook for operating
expenses reflects increased spending in Japan, the expansion of sales and
marketing programs in other geographies, G&A to support the growth of the
company and litigation-related expenses. The company also expects a modest
increase in research and development spending to fund product development
programs, clinical trials and regulatory activities.

The company continues to expect to report a GAAP net loss of $0.38-$0.43 per
share. Excluding stock-based compensation expense of approximately $12.0
million and Goodman commissions of approximately $3.5 million, the company
expects to report a net loss of $0.06-$0.11 per share. The company further
noted that as previously reported, additional payments would be due to former
CardioSpectra stockholders if one of the specific milestones in the
acquisition agreement is met by the end of fiscal 2009 and the company would
be required to make a milestone payment of approximately $11.0 million and
record a one-time charge to in-process research and development. The impact of
this charge, if it were to occur, would increase expectations for the range of
loss per share from $0.38-$0.43 per share to $0.61-$0.66 per share. Weighted
average shares outstanding at year-end 2009 are expected to be approximately
48.4 million basic shares and 50.0 million diluted shares.

Conference Call Information

The company will hold a conference call at 2 p.m. Pacific Standard Time, (5
p.m., Eastern Standard Time), today. The teleconference can be accessed by
calling (719) 457-2658, passcode 2641790, or via the company's website at
http://www.volcanocorp.com. Please dial in or access the webcast 10-15 minutes
prior to the beginning of the call. A replay of the conference call will be
available through November 12, at (719) 457-0820, passcode 2641790, and via
the company's website.
About Volcano Corporation

Volcano Corporation (NASDAQ: VOLC) offers a broad suite of devices designed to
facilitate endovascular procedures, enhance the diagnosis of vascular and
structural heart disease and guide optimal therapies. The company's
intravascular ultrasound (IVUS) product line includes ultrasound consoles that
can be integrated directly into virtually any modern cath lab. Volcano IVUS
offers unique features, including both single-use phased array and rotational
IVUS imaging catheters, and advanced functionality options, such as VH® IVUS
tissue characterization and ChromaFlo®. Volcano also provides functional
measurement (FM) consoles and single-use pressure and flow guide wires and is
developing a line of ultra-high resolution Optical Coherence Tomography (OCT)
and Forward-Looking IVUS systems and catheters. Currently more than 4,700
Volcano IVUS and FM systems are installed worldwide, and more than half of
Volcano's revenues are derived from outside the United States. Through its
wholly-owned subsidiary, Axsun Technologies, Volcano also develops and
manufactures optical monitors, lasers and optical engines used in
telecommunications, spectroscopy and other industrial applications. These
products are sold to a variety of customers, including Nokia Siemens,
Ericsson, Alcatel-Lucent and HuaWei Technologies. For more information, visit
the company's website at http://www.volcanocorp.com.

Non-GAAP Financial Measures

This press release includes certain non-GAAP financial information as defined
by the U.S. Securities and Exchange Commission Regulation G. Pursuant to the
requirements of this regulation, a reconciliation of this non-GAAP financial
information to our financial statements as prepared under generally accepted
accounting principles in the United States (GAAP) is included in this press
release. Non-GAAP financial measures provide an indication of our performance
before certain charges. Our management believes that in order to properly
understand our short-term and long-term financial trends, investors may wish
to consider the impact of these charges. These charges result from factors and
circumstances that vary in frequency and/or impact on continuing operations.
Our management believes that these items are not reflective of our core
operating activities and should be excluded when comparing our current
operating results with those of prior periods, including in-process research
and development in the second quarter of 2008 related to the costs associated
with the May 2008 acquisition of Novelis, Inc., and the December 2007
acquisition of CardioSpectra, Inc., the acquisition due diligence costs
incurred in the first quarter of 2008 related to a proposed acquisition that
was not consummated and the commissions paid under the Distribution
Termination Agreement related to our termination of a distributor
relationship with Goodman Co., Ltd. in July 2009. In addition, stock-based
compensation is a non-cash expense. Finally, our management uses results of
operations before certain charges to evaluate the operational performance of
the company and as a basis for strategic planning and for forecasting and
planning future periods. Investors should note that the non-GAAP financial
measures used by the company may not be the same non-GAAP financial measures,
and may not be calculated in the same manner, as those of other companies.
Investors should consider these non-GAAP measures in addition to, and not as a
substitute for, financial performance measures in accordance with GAAP and are
encouraged to review the related GAAP financial measures and the
reconciliation of these non-GAAP financial measures to their most directly
comparable GAAP financial measure as detailed below.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of
the U.S. Private Securities Litigation Reform Act of 1995. Any statements in
this press release regarding Volcano's business that are not historical facts
may be considered "forward-looking statements," including statements regarding
the company's financial guidance for 2009, market adoption of the company's
technology, the impact of clinical and other technical data, the timing and
impact of the company's transition to a direct sales force in Japan, including
impact on revenue, expenses and income, growth strategies, achievement of
product development milestones, market development and product sales.
Forward-looking statements are based on management's current preliminary
expectations and are subject to risks and uncertainties, which may cause
Volcano's results to differ materially and adversely from the statements
contained herein. Some of the potential risks and uncertainties that could
cause actual results to differ from the results predicted are detailed in the
company's annual report on Form 10-K, quarterly reports on Form 10-Q and other
filings made with the Securities and Exchange Commission. Undue reliance
should not be placed on forward-looking statements, which speak only as of the
date they are made. Volcano undertakes no obligation to update any
forward-looking statements to reflect new information, events or circumstances
after the date they are made, or to reflect the occurrence of unanticipated
events.

VOLCANO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)

September 30, December 31,
2009 2008
---- ----
(unaudited)
Assets
Current assets:
Cash and cash equivalents $48,512 $100,949
Short-term available-for-sale investments 80,308 48,941
Accounts receivable, net 38,923 41,795
Inventories 36,457 28,936
Prepaid expenses and other current assets 5,492 5,869
----- -----
Total current assets 209,692 226,490
Restricted cash 553 327
Property and equipment, net 44,752 30,007
Intangible assets, net 12,624 15,636
Goodwill 931 842
Other non-current assets 2,041 2,177
----- -----
$270,593 $275,479
======== ========

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $15,532 $14,867
Accrued compensation 12,841 12,690
Accrued expenses and other current liabilities 9,737 10,745
Deferred revenues 4,913 4,833
Short-term debt - 151
Current maturities of long-term debt 40 57
-- --
Total current liabilities 43,063 43,343
Long-term debt 9 34
Deferred revenues 2,028 1,914
Other 1,110 456
----- ---
Total liabilities 46,210 45,747
Stockholders' equity 224,383 229,732
------- -------
$270,593 $275,479
======== ========

VOLCANO CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(Unaudited)

Three Months Ended Nine Months Ended
September 30, September 30,
------------- -----------------
2009 2008 2009 2008
---- ---- ---- ----
Revenues $53,852 $44,118 $156,853 $122,242
Cost of revenues 21,778 16,581 64,913 45,915
------ ------ ------ ------
Gross profit 32,074 27,537 91,940 76,327
Operating expenses:
Selling, general and
administrative 28,272 19,546 79,805 62,405
Research and development 9,181 6,879 27,816 18,823
In-process research and
development - - - 12,407
Amortization of intangibles 1,058 786 3,163 2,337
----- --- ----- -----
Total operating expenses 38,511 27,211 110,784 95,972
------ ------ ------- ------
Operating (loss) income (6,437) 326 (18,844) (19,645)
Interest income 142 1,109 640 4,206
Interest expense (1) (2) (4) (8)
Exchange rate gain (loss) 2,419 (441) 2,162 1,091
----- ---- ----- -----
(Loss) income before provision
for income taxes (3,877) 992 (16,046) (14,356)
Provision for income taxes 121 248 833 707
--- --- --- ---
Net (loss) income $(3,998) $744 $(16,879) $(15,063)
======= ==== ======== ========
Net (loss) income per share:
Basic $(0.08) $0.02 $(0.35) $(0.32)
====== ===== ====== ======
Diluted $(0.08) $0.01 $(0.35) $(0.32)
====== ===== ====== ======
Shares used in calculating net
loss per share:
Basic 48,506 47,456 48,293 47,236
====== ====== ====== ======
Diluted 48,506 50,323 48,293 47,236
====== ====== ====== ======

VOLCANO CORPORATION
RECONCILIATION OF GAAP RESULTS TO NON-GAAP RESULTS
(in thousands, except per share data)
(Unaudited)

Three Nine
Months Ended Months Ended
September 30, September 30,
------------- -------------
2009 2008 2009 2008
---- ---- ---- ----

GAAP operating (loss) income $(6,437) $326 $(18,844) $(19,645)
Stock-based compensation 2,597 2,513 8,162 6,997
In-process research and
development - - - 12,407
Acquisition due-diligence
costs - - - 2,878
Commissions paid under
Distributor Termination
Agreement 1,408 - 1,408 -
----- --- ----- ---
Non-GAAP operating (loss)
income $(2,432) $2,839 $(9,274) $2,637
======= ====== ======= ======

GAAP net (loss) income $(3,998) $744 $(16,879) $(15,063)
Stock-based compensation 2,597 2,513 8,162 6,997
In-process research and
development - - - 12,407
Acquisition due-diligence
costs - - - 2,878
Commissions paid under
Distributor Termination
Agreement 1,408 - 1,408 -
----- --- ----- ---
Non-GAAP net income (loss) $7 $3,257 $(7,309) $7,219
== ====== ======= ======

GAAP net (loss) income per
share-basic $(0.08) $0.02 $(0.35) $(0.32)
Stock-based compensation 0.05 0.05 0.17 0.15
In-process research and
development - - - 0.26
Acquisition due-diligence
costs - - - 0.06
Commissions paid under
Distributor Termination
Agreement 0.03 - 0.03 -
---- --- ---- ---
Non-GAAP net income (loss) per
share-basic $0.00 $0.07 $(0.15) $0.15
===== ===== ====== =====
Shares used in calculating net
income (loss) per share-
basic 48,506 47,456 48,293 47,236
====== ====== ====== ======

GAAP net (loss) income per
share-diluted $(0.08) $0.01 $(0.35) $(0.32)
Stock-based compensation 0.05 0.05 0.17 0.14
In-process research and
development - - - 0.25
Acquisition due-diligence
costs - - - 0.06
Commissions paid under
Distributor Termination
Agreement 0.03 - 0.03 -
Adjustment to shares used in
calculating net income per
share - - - 0.01
--- --- --- ----
Non-GAAP net income (loss) per
share-diluted $0.00 $0.06 $(0.15) $0.14
===== ===== ====== =====
Shares used in calculating net
income (loss) per share-
diluted 50,599 50,323 48,293 49,859
====== ====== ====== ======

VOLCANO CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP FORWARD LOOKING GUIDANCE
(in thousands, except per share data)
(Unaudited)

2009
----
Guidance Range
--------------
From To
---- --
GAAP net loss per share-basic
and diluted $(0.38) $(0.43)
Stock-based compensation 0.25 0.25
Commissions paid under
Distributor Termination
Agreement 0.07 0.07
---- ----
Non-GAAP net loss per share-
basic and diluted $(0.06) $(0.11)
====== ======
Shares used in calculating net
loss per share-basic and
diluted 48,400 48,400
====== ======

VOLCANO CORPORATION
REVENUE SUMMARY
(in millions)
(Unaudited)

Three Nine
months ended Percentage months ended Percentage
September 30, Change September 30, Change
------------- ----------- ------------- -----------
2008 2008
to to
2009 2008 2009 2009 2008 2009
---- ---- ---- ---- ---- ----
Medical segment:
IVUS systems:
United
States $5.6 $5.6 1% $16.7 $15.3 9%
Japan 0.1 2.5 (94) 1.5 4.9 (70)
Europe 2.1 1.8 14 5.8 5.4 9
Rest of
world 0.6 0.7 (15) 2.1 1.9 9
--- --- --- ---
Total IVUS
systems $8.4 $10.6 (20) $26.1 $27.5 (5)

IVUS disposables:
United
States $15.1 $13.0 16% $44.4 $37.6 18%
Japan 10.8 8.9 22 31.8 24.7 29
Europe 4.6 4.6 0 13.6 13.0 4
Rest of
world 0.8 0.7 10 2.4 2.2 9
--- --- --- ---
Total IVUS
disposables $31.3 $27.2 15 $92.2 $77.5 19

FM:
United
States $4.1 $2.3 76% $11.7 $6.3 86%
Japan 0.2 0.5 (64) 0.9 0.9 (3)
Europe 3.1 1.7 77 7.7 5.1 51
Rest of
world 0.2 0.4 (41) 0.9 0.8 6
--- --- --- ---
Total FM $7.6 $4.9 53 $21.2 $13.1 61

Other 2.4 1.4 67% 6.2 4.1 50%
--- --- --- ---
Sub-total
medical
segment $49.7 $44.1 13 $145.7 $122.2 19

Telecom segment 4.2 - - 11.2 - -
--- --- ---- ---
Total $53.9 $44.1 22 $156.9 $122.2 28
===== ===== ====== ======

SOURCE Volcano Corporation

John Dahldorf, Chief Financial Officer of Volcano Corporation ,
+1-858-720-4020; or Neal B. Rosen of Ruder-Finn, +1-415-692-3058, for Volcano
Corporation