Medical Device Link.

Originally Published MX January/February 2006

COVER STORY

Since its spin-out from ATL Ultrasound Inc. onto the NASDAQ stock exchange in 1998, SonoSite has played a pivotal role in creating the market for hand-carried ultrasound devices and has established itself as the market leader. According to estimates by industry analysts, SonoSite's installed base of more than 25,000 units has given it a share of the hand-carried ultrasound segment that exceeds 60%.

Share price for SonoSite Inc. (Bothell, WA), from December 2004 through mid-November 2005, versus the S&P 500. (click to enlarge)

The company's financial performance has been equally robust. Over the past five years, SonoSite's sales revenues have expanded at a compound annual growth rate of 63%. Last October, Deloitte & Touche LLP (New York City) named SonoSite to its Technology Fast 50 in Washington, a compilation of the state's fastest-growing technology companies. And in November, the market consulting firm of Frost & Sullivan (San Antonio, TX) recognized SonoSite as the fastest-growing medical imaging company for 2005.

SonoSite's growth has come by expanding applications for hand-carried ultrasound to point-of-care settings where traditional, cart-based ultrasound is considered too cumbersome or expensive. Of the $3.5 billion general ultrasound market in 2004, roughly $195 million was spent on hand-carried ultrasound in such settings as emergency medicine, anesthesia, and cardiovascular disease management. According to industry analysts, the hand-carried ultrasound market is growing more than three times faster than the general ultrasound market, and is expected to reach $1 billion by 2010.

SonoSite's revenue for the nine months ending September 31, 2005, was $102.3 million, up 30% compared with $78.7 million for the same period of 2004. The June launch of SonoSite's MicroMaxx ultrasound system met with an enthusiastic response. Sales of the new system contributed 33% of the company's revenue in the third quarter of 2005. Should the company meet its financial guidance, revenue for 2005 would be 27–30% greater than the $115.8 million posted in 2004. The company's goal for 2006 revenue is to exceed 2005 by 25%.

After dropping to nearly $10 at the beginning of 2003, SonoSite's share price has risen steadily over the past two years. At press time, the stock was trading at more than $37, approaching its 52-week high of $37.50.

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