(RTTNews) - Thursday, medical equipment maker Somanetics Corp. (SMTS: News ), reported a decline in earnings for the third quarter on increase in expenses. However, earnings beat estimates. The stock was trading up about 7% in morning trade.

The company's net income for the period declined to $2.22 million or $0.17 per share from $3.04 million or $0.23 per share in the year-ago period. On average, six analysts polled by Thomson Reuters expected the company to earn $0.14 per share. Analysts' estimates typically exclude special items.

Net revenues for the third quarter increased by 1% to $12.51 million from $12.37 million year-ago. Four Wall Street analysts estimated revenues of $13.09 million.

Region-wise, U.S. net revenues increased 10% to $10.4 million from $9.4 million in the third quarter of fiscal 2008. International net revenues however declined to $2.1 million, compared with $3.0 million year-ago.

Total operating expenses increased to $7.75 million from $6.48 million. However, interest income declined to $0.312 million from $0.562 million in the prior-year period.

Somanetics reiterated its guidance for the entire year and expects income before income taxes in the range of $11.2 million - $11.6 million and net revenues between $50 million - $52 million. The company expects a gross margin of approximately 86% and operating margin of approximately 20%. Four analysts estimate FY09 revenues of $50.60 million
Bruce Barrett, Somanetics' president and chief executive officer said,"The global economic crisis continued to impact our business in the quarter with hospitals limiting capital spending and slowing adoption of new technology." He added that despite this backdrop, the company continued to experience solid growth in its disposable sensor business.

In the third quarter, Somanetics announced the three-year extension of its long-standing exclusive distribution agreement with Covidien to distribute Somanetics' INVOS Cerebral/Somatic Oximeter products in Europe, the Middle East and Africa. The extension goes into effect on February 16, 2010, when the current agreement expires.

For the nine months ended August 31, the net income declined to $5.30 million or $0.41 per share, compared with $7.13 million or $0.51 per share during the comparable period the previous year.

Year-to-date net revenues increased by 5% to $35.50 million from $33.80 million in the similar period year-ago.

SMTS is currently trading on Nasdaq at $14.09.

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by RTT Staff Writer

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