Vascular Solutions Inc. (VASC)

[makesumgravy]

February 4, 2008 - 4:05 PM EST

Vascular Solutions Announces Fourth Quarter Results; Net Revenue Increases 25 Percent to Record $14.4 Million
MINNEAPOLIS, Feb. 4, 2008 (PRIME NEWSWIRE) -- Vascular Solutions, Inc. (Nasdaq:VASC) today reported financial results for the fourth quarter ended December 31, 2007. Highlights of the fourth quarter and other recent events include:



- Achieved record net revenue of $14.4 million, up 25% from $11.5
million in the fourth quarter of 2006.
- Achieved net income of $519,000, or $0.03 per diluted share,
compared to net income of $90,000 in the fourth quarter of 2006.
- Achieved positive cash flow of $853,000, the fifth consecutive
quarter of positive cash flow.
- Received regulatory clearance for three new products -- the low
profile Pronto(r) LP extraction catheter, the international QXT(tm)
extraction catheter, and the Vari-Lase(r) WireFiber(tm) endovenous laser
fiber.
- Re-affirmed annual revenue guidance and increased adjusted earning
guidance for 2008.

Commenting on the results, Vascular Solutions Chief Executive Officer Howard Root said: "The fourth quarter was an excellent continuation of the progress we've made to build a sustainable, profitable medical device company. Our focus on a multiple product portfolio with rapid product development and innovation is resulting in consistent growth. Through several new product launches and further improvement in the performance of our sales force, we expect to continue our 20% or greater quarterly sales growth through 2008 and for the foreseeable future."

Net revenue from hemostat products (primarily consisting of the D-Stat Dry(tm), D-Stat(r) Flowable, Thrombi-Gel(r), Thrombi-Pad(tm) and D-Stat Radial(tm) products) was $6.2 million during the fourth quarter, an increase of 14% over the fourth quarter of 2006. "Fourth quarter net sales of our D-Stat Dry continued to increase both sequentially and year-over-year, and will benefit in 2008 from a new contract with a large group purchasing organization that was signed in the fourth quarter," commented Mr. Root. "D-Stat Flowable sales substantially increased in the fourth quarter due to continued expansion in its use as a pocket protector in pacemaker and ICD implants, resulting in its first $1 million sales quarter. Looking forward, in the first quarter of 2008 we are launching two new versions of our Dry that were approved in the fourth quarter to further drive sales growth of hemostat products," Mr. Root added.

Net sales of extraction catheters (primarily consisting of the Pronto V3 extraction catheter) were $2.9 million in the fourth quarter, an increase of 22% over the fourth quarter of 2006. "In the fourth quarter we expanded the launch of our 035 larger version of the Pronto catheter, with excellent clinical success," commented Mr. Root. "In late December we received 510(k) clearance for the launch of our new low profile, or LP, version of the Pronto in the U.S., and in early January we received CE mark clearance to launch our new low cost QXT extraction catheter in international markets," Mr. Root added.

Net sales of vein products (primarily consisting of the Vari-Lase endovenous laser console and kits) were $2.7 million in the fourth quarter, an increase of 27% over the fourth quarter of 2006. "The clinical response to the Bright Tip(tm) version of the Vari-Lase fiber continues to be excellent, with now over 15,000 Bright Tip fibers sold since it was launched in April 2007 with no reports of recannalizations," commented Mr. Root. "On the litigation side, in January the Court ruled in our favor on the contempt motion that Diomed raised six months ago concerning continued sales of our Vari-lase consoles for use with our Bright Tip fibers. With this decision, the Court has now confirmed that we are able to continue selling our full range of Vari-Lase products unimpeded by the jury's verdict concerning U.S. sales of our since-discontinued bare-tipped fibers. We also have completed our appeal of the Diomed verdict, with an oral argument expected to be heard in the second quarter. Concerning the separate VNUS Medical patent litigation with Diomed and AngioDynamics as co-defendants, the trial has now been set to commence on June 23, 2008 and last approximately 4 weeks. In January we received 510(k) clearance for our new WireFiber laser fiber and last week performed a successful initial clinical evaluation. We continue to believe in the validity of our defenses to the VNUS litigation and our ability to react to the range of outcomes possible in any litigation," Mr. Root added.

Net sales of access products (primarily consisting of micro-introducer kits and specialty guidewires), were $892,000 in the fourth quarter, an increase of 77% over the fourth quarter of 2006. "In the fourth quarter we benefited from increased sales of the Guardian hemostasis valve that we launched in July. Looking forward, we have two new specialty versions of introducer sheaths that we recently launched at our national sales meeting and a new guidewire that we expect to launch in the beginning of the second quarter to drive 2008 growth in access products sales," Mr. Root added.

Net sales of specialty catheters (primarily consisting of the Langston(r) dual lumen catheters, Twin-Pass(r) dual access catheters and Skyway(r) support catheters), were $881,000 in the fourth quarter of 2007, an increase of $4,000 over the fourth quarter of 2006, and an increase of 20% sequentially from the third quarter. "With our major R&D work in vein products completed in 2007, we are now devoting additional effort to developing new and improved specialty catheters in 2008," commented Mr. Root. "In January we began an expanded launch of our Gopher catheter, and by the end of the first quarter we expect to launch our new Gandras catheter for pelvic artery catheterizations to drive 2008 sales growth of specialty catheters," Mr. Root added.

Overall gross margin across all product lines was 67.4% in the fourth quarter of 2007, slightly below expectations due to increased sales of vein products and a slight increase from 67.0% gross margin in the fourth quarter of 2006. Based on projected selling mix across products, overall gross margin on product sales for the first quarter of 2008 is expected to increase to approximately 68.0%.

Net income for the fourth quarter was $519,000 or $0.03 per share, compared to net income of $90,000 or $0.01 per share in the fourth quarter of 2006. During the fourth quarter of 2007 the company expensed $36,000 in estimated expenses relating to the Diomed judgment, $10,000 in thrombin qualification expenses and $381,000 of stock-based compensation expense. As adjusted (excluding the Diomed judgment expenses, thrombin qualification expenses and stock-based compensation expense, and assuming a fully-taxed rate of 39%) net income was $649,000 or $0.04 per fully diluted share in the fourth quarter of 2007, increasing from adjusted net income of $430,000 or $0.03 per fully diluted share in the fourth quarter of 2006. During the fourth quarter of 2007 the company incurred approximately $500,000 in legal expenses, primarily related to the preparation for the trial with VNUS Medical, the litigation with Marine Polymer Technologies that is scheduled for trial on March 10, 2008 and the appeal of the verdict in the litigation with Diomed.

Regarding future revenue and income guidance, net revenue for the first quarter is expected to be between $14.5 million and $14.8 million, an increase of approximately 20% over the first quarter of 2007. Corresponding adjusted net income in the first quarter is expected to be between $0.04 and $0.06, reflecting a continued high level of expenses related to litigation. For 2008, the company is reiterating its guidance for net revenue of between $61 million and $64 million and is increasing its guidance for adjusted net earnings per share of between $0.25 and $0.33. "We are very pleased with our results in the fourth quarter, and we continue to believe that our strategy of internally developing a variety of new clinically-based products sold by our focused direct sales force to our existing customers will allow us to achieve our next long term milestone, which is $100 million in annualized revenue in 2010. We believe that our future growth will benefit from several new products for significant market opportunities that we expect to launch in 2008," concluded Mr. Root.