EndoSonics stock hit hard by Q3 losses

Disappointing European sales contributed to sharply lower than expected financial results for intravascular ultrasound developer EndoSonics. The Rancho Cordova, CA-based company reported revenues of $10.5 million for the third quarter (end-September 30), down 10.3% compared with the $11.7 million posted for the same quarter a year ago. The company also realized a net loss of $3.2 million, compared with a net loss of $10.5 million (after acquisition and restructuring charges) last year. Without the charges, EndoSonics had a net income of $1.2 million in 1998.

This quarter’s revenues were lower than expected due to a substantial decline in orders from European distributor Jomed International and slower than anticipated sales in other foreign markets, according to Reinhard Warnking, EndoSonics president and CEO. As a result, the company has terminated one of its two distribution agreements with Jomed and will begin expanding its direct sales efforts. EndoSonics has already begun selling directly into the German market and now plans to do the same in certain other European countries.

Wall Street reacted quite negatively to the company’s financial news. EndoSonics’s stock dropped $4.41 following the announcement, shedding more than half of its value to land at $4.09 on Oct. 4. Analysts had expected the company to report a healthy profit in the third quarter.