Somanetics Corporation (Somanetics) has reported net revenues of $11.8 million for the second quarter of fiscal 2009, compared with the net revenues of $12.7 million in the year-ago quarter. It also reported a net income of $1.8 million, or $0.14 per diluted share, for the second quarter of fiscal 2009, compared with net income of $3.1 million, or $0.21 per diluted share, in the year-ago quarter.
US net revenues were $9.3 million, compared with $10.2 million in the second quarter of fiscal 2008. International net revenues were $2.5 million, flat with the same period in 2008. For the six-month period, US net revenues increased two% to $18.1 million from $17.7 million and international revenues increased 31% from $3.8 million to $4.9 million.
Amid continued weakness in the U.S. economy, hospitals restricted their capital spending for the INVOS System to a greater extent than we had anticipated, said Bruce Barrett, Somanetics’ president and chief executive officer. Since most of our INVOS System placements for revenue in the U.S. market are in pediatric and neonatal ICUs, capital budget constraints also are impacting the start up of new neonatal and pediatric accounts and associated sensor sales.
On the positive side, adult sensor demand was strong, largely off-setting the shortfall in pediatric and neonatal sensor volume, said Barrett. We experienced our strongest sequential growth in more than two years in the U.S. market for adult sensors in the second quarter. INVOS System hardware and disposable sensor purchases by our international distribution partners are on track for the year.
Second quarter income before income taxes was $2.9 million, compared to $4.8 million for the second quarter of 2008.
For the six months ended May 31, 2009, net revenues increased seven% to $23.0 million from $21.4 million in the same period last year.
For the six months ended May 31, 2009, income before income taxes was $5.0 million compared to $6.5 million in the comparable period of fiscal 2008. Net income was $3.1 million, or $0.24 per diluted share for the first half of 2009, compared with net income of $4.1 million, or $0.28 per diluted share, for the first half of 2008.
Gross margin was 86% in the second quarter and first six months of fiscal 2009, compared with 87% for the respective periods of 2008. Cash, marketable securities and long-term investments at May 31, 2009 totaled $74.1 million, with no borrowings.
From an earnings perspective, we finished the first half of our fiscal year modestly ahead of our internal plan due to lower than planned spending, said Barrett. We have increased our investments by 11% compared to last year to support our entry into the neonatal ICU and pursue development and launch of our new Vital Sync System, but this increase is below our plan primarily due to the addition of personnel at a slower pace than we had projected.
Our new business activity remains strong, but because hospitals are delaying release of budgeted capital dollars and unbudgeted capital dollars are largely unavailable, we are lowering our guidance based on the assumption that INVOS hardware revenues in the U.S. market will remain soft for the balance of the year, Barrett said.
The company’s current guidance is:
Fiscal 2009 net revenues between $50 million and $52 million.
Gross margin of approximately 86% and operating margin of approximately 20%.
Fiscal 2009 income before income taxes in the range of $11.2 million to $11.6 million.
Somanetics Corporation develops, manufactures and markets the In Vivo Optical Spectroscopy (INVOS) System.