Vascular Solutions Inc. (VASC)

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Press Release Source: Vascular Solutions, Inc.


Vascular Solutions Announces Record Second Quarter Results; Net Revenue Increases 15 Percent to $15.2 Million
Wednesday July 23, 4:05 pm ET


MINNEAPOLIS, July 23, 2008 (PRIME NEWSWIRE) -- Vascular Solutions, Inc. (NasdaqGM:VASC - News) today reported financial results for the second quarter ended June 30, 2008. Highlights of the second quarter and other recent events include:


* Achieved record net revenue of $15.2 million in the second quarter,
up 15% from the second quarter of 2007 and above the top end of
guidance for the quarter.
* Achieved adjusted net income of $867,000, or $0.05 per diluted
share, an increase of 25% from adjusted net income of $691,000 in
the second quarter of 2007.
* Settled all existing patent litigation concerning the Vari-Lase(r)
vein products by entering into separate settlement agreements with
VNUS Medical Technologies and the bankruptcy estate of Diomed.
* Won a $4.5 million jury verdict from Marine Polymer Technologies
in April, which was subsequently entered into judgment and
increased by the court to $5.1 million to include interest
through the date of judgment, subject to appeal.
* Achieved positive cash flow of $995,000, not including the
one-time payments for the settlement of patent litigation.
* Launched four new products, consisting of the MICRO Elite(tm)
snare, Gandras(tm) catheter, Axis(tm) guidewire and Jiffy(tm)
guidewire in the second quarter.

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Commenting on the results, Vascular Solutions Chief Executive Officer Howard Root said: ``The second quarter represented the completion of an important transformation for Vascular Solutions. With the conclusion of all three pieces of litigation through settlement or victory at trial, our high legal expenses and uncertainties should now disappear, leaving our strong revenue growth and financial management to become apparent in bottom-line results and profitability. Since 2004 we have consistently grown our net revenue and built an organization that has proven it can develop, manufacture, launch and support multiple clinically-based vascular devices, only to have those results masked by the costs and uncertainties of litigation. I look forward to the opportunity to demonstrate the soundness of our business without the distraction of litigation, starting now.''

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 $6.0 million during the second quarter, a decline of 11% from the second quarter of 2007. ``In the second quarter of 2007, our partner King Pharmaceuticals placed a $725,000 stocking order for their initial launch of the Thrombi-Gel and Thrombi-Pad products, which is the reason for the reduction in revenue as expected from the prior year. Sequentially, our hemostat product revenue increased by 2% in the second quarter, as our sales force implemented new programs to enhance our effectiveness in growing sales of our D-Stat Dry(tm) in the competitive hemostatic patch market, which we expect to continue to show excellent sequential results,'' commented Mr. Root.

Net sales of extraction catheters (primarily consisting of the Pronto(r) V3 extraction catheter) were $3.7 million in the second quarter, an increase of 40% over the second quarter of 2007. ``The benefit of thrombus aspiration in STEMI cases has been demonstrated in multiple clinical studies presented and published over the last year, which has driven the growth of the thrombus aspiration market. With our full range of Pronto V3, Pronto LP, Pronto 035 and Pronto-Short catheters, we are continuing to lead the thrombus aspiration market in options for the physician. We believe that the thrombus aspiration market will continue to increase substantially and that Pronto sales will continue to grow faster than the market, with the important Japanese market cleared and ready for launch of the Pronto V3 in the third quarter,'' Mr. Root stated.

Net sales of vein products (primarily consisting of the Vari-Lase endovenous laser console and kits) were $2.4 million in the second quarter, an increase of 16% over the second quarter of 2007. ``The turmoil in the varicose vein market resulting from litigation is now behind us, while several of our competitors in the laser area are still involved or are now just getting involved in the patent litigation quagmire. Entering the third quarter we are well positioned for continued growth in the endovenous laser market through our stable and clinically-advanced nationwide direct sales force providing first-in-class products and customer support,'' commented Mr. Root.

Net sales of access products (primarily consisting of micro-introducer kits and specialty guidewires), were $1.4 million in the second quarter, an increase of 146% over the second quarter of 2007. ``We have added substantially to our product offerings in the access product category in the second quarter. Most notably, we launched the MICRO Elite snare as the exclusive U.S. distributor for Radius Medical Technologies, with results in the second quarter that almost matched our expectations for the entire year. We have now added to our relationship with Radius by launching their EXPRO Elite(tm) snare, which we project will further boost our access products sales growth in the second half of 2008,'' Mr. Root added.

Net sales of specialty catheters (primarily consisting of the Langston(r) dual lumen catheters and Twin-Pass(r) dual access catheters), were $1.1 million in the second quarter of 2008, an increase of 31% over the second quarter of 2007. ``Our U.S. direct sales force and international distributors have both continued to drive growth with all of our specialty catheters, and the April launch of our new Gandras(tm) catheter for pelvic artery catheterizations and the expanded sales of our Gopher(tm) catheter have added to our impressive second quarter sales number. Our next specialty catheter which is expected to launch in the fourth quarter has the potential to add $5 million in annualized sales to this category,'' Mr. Root added.

Gross margin across all product lines was 64.0% in the second quarter of 2008, down from 66.4% in the second quarter of 2007 principally due to product selling mix and the on-going royalty payable to VNUS Medical Technologies on U.S. sales of Vari-Lase laser consoles and kits. Based on projected selling mix across products, gross margin on product sales for the third quarter of 2008 is expected to increase to between 64% and 66%.

Net loss for the second quarter was $468,000, or $0.03 per share, compared to net income of $695,000, or $0.04 per share, in the second quarter of 2007. Included in the net loss for the second quarter of 2008 was $3.1 million in litigation expense resulting from past royalties payable to VNUS Medical related to Vari-Lase products sold in the U.S. through March 31, 2008, offset by a $1.659 million litigation gain resulting from the settlement agreement with the bankruptcy estate of Diomed. During the second quarter of 2008 the company expensed $356,000 of stock-based compensation expense. As adjusted (excluding the Diomed and VNUS settlements and stock-based compensation expense, and assuming a fully-taxed rate of 38%) net income was $867,000 or $0.05 per fully diluted share in the second quarter of 2008, increasing from adjusted net income of $691,000 or $0.04 per fully diluted share in the second quarter of 2007. In addition to the amounts payable in settlement, during the second quarter of 2008 the company incurred approximately $176,000 in legal expenses within general and administrative expenses related to trial preparation and settlement negotiations with VNUS Medical and post-trial motions in the Marine Polymer litigation.

Regarding future guidance, net revenue for the third quarter is expected to increase to between $15.3 million and $15.6 million. Corresponding adjusted net income in the third quarter is expected to be between $0.06 and $0.08 per fully diluted share. For the entire 2008, the company is reaffirming its guidance for net revenue and adjusted net income per share to be between $60 million and $62 million and $0.21 and $0.29, respectively. ``We believe that the progress we've already made in 2008 in eliminating the distraction of litigation and continuing to launch new products positions us very well for our continued sales growth and profitability,'' concluded Mr. Root.