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Engaged Capital Sends Letter to the Board of Volcano Corporation

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Engaged Capital, an investment firm specializing in small and mid-cap North American equities and beneficial owner of approximately 2,638,403 shares of the common stock of Volcano Corporation (“VOLC” or the “Company”) (Nasdaq:VOLC), today sent an open letter http://engagedcapital.com/press/VOLCBODLetter.pdf to the Company’s Board of Directors (the “Board”), filed with the U.S. Securities and Exchange Commission.

In its letter to the Board, Engaged Capital highlighted the multi-year history of management’s flawed long-term plans and the Board’s lackadaisical oversight. The Company’s excessive operating expenses, misinformed and value destructive capital allocation, and excessive executive compensation all stem from a profound failure of leadership. As a result of these failures, VOLC shareholders have suffered greatly.

Engaged Capital believes there is an opportunity to reverse VOLC’s underperformance and unlock significant shareholder value if the Board immediately sets a new course for the Company.

“Shareholders have suffered through a prolonged period of material underperformance due to management’s overly optimistic business plans and its inability to identify and react to changing market conditions,” said Glenn W. Welling, Principal and Chief Investment Officer of Engaged Capital. “It is time for new leadership. We urge the Board to immediately commence a parallel process to evaluate strategic alternatives and conduct a search for CEO candidates with a history of driving profitability and extracting value from medical device assets.”

“We have offered on three separate occasions, both orally and in writing, highly-qualified candidates to serve as board members, only to have these private entreaties summarily rejected. Instead of seeking to work constructively with one of VOLC’s largest shareholders, the Board has irrationally positioned the Company for a costly and unnecessary proxy fight. If the Board fails to uphold its fiduciary responsibilities, shareholders will have no choice but to vote to replace Chairman Ron Matricaria, CEO Scott Huennekens and Lesley Howe as directors of the Company at the 2015 annual meeting,” continued Mr. Welling.

About Engaged Capital:

Engaged Capital, LLC, (“Engaged Capital”) was established in 2012 by a group of professionals with significant experience in activist investing in North America and was seeded by Grosvenor Capital Management, L.P., one of the oldest and largest global alternative investment managers. Engaged Capital is a limited liability company owned by its principals and formed to create long-term shareholder value by bringing an owner’s perspective to the managements and boards of undervalued public companies. Engaged Capital manages both a long-only and long/short North American equity fund. Engaged Capital’s efforts and resources are dedicated to a single investment style, “Constructive Activism” with a focus on delivering superior, long-term, risk-adjusted returns for investors. Engaged Capital is based in Newport Beach, California.

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