Vascular Solutions, Inc. (Vascular), a US-based a medical device company, has reported total revenue of $15.8 million for the first quarter of 2009, up 12%, compared with the total revenue of $14.1 million in the year-ago quarter. It also reported net income of $0.93 million, or $0.06 per share, for the first quarter of 2009, compared with the net income of $0.23 million, or $0.01 per diluted share, in the year-ago quarter.
Commenting on the results, Vascular Solutions’ Chief Executive Officer Howard Root said: “The first quarter demonstrated the health of our business and the power of our operations in driving consistent and increasing profitability even in today’s economic environment. Our net income was in line with our expectations and our operating cash flow was outstanding. While our net revenue increased by 12% over the first quarter of 2008, it was approximately $700,000 below our expectations. The primary reason for the revenue shortfall was the decision by our partner King Pharmaceuticals to suspend the clinical development of our Thrombi-Paste™ product, solely due to economic reasons. The resulting reduction in collaboration revenue, however, was essentially neutral to our net income since it was offset by an almost equal reduction in collaboration expenses. Overall, the first quarter results show that Vascular Solutions’ business has never been more stable and profitable.”
Gross margin across all product lines was 66.2% in the first quarter of 2009, down from 66.7% in the first quarter of 2008, principally due to changes in the mix of products sold. Based on the projected sales product mix, gross margin on product sales throughout 2009 is expected to continue to be between 65% and 66%.
Net income for the first quarter of 2009 includes $477,000 of non-cash stock-based compensation ($296,000 in aftertax expense, or $0.02 per share tax-effected) and $531,000 of non-cash income tax expense ($0.03 per share) which was offset by net operating loss carryforwards.
First Quarter Net Revenue by Product Line
Net revenue from hemostat products (primarily consisting of the D-Stat Dry, D-Stat Flowable, Thrombi-Gel, Thrombi-Pad and D-Stat Radial products) was $5.8 million during the first quarter, essentially even compared to the first quarter of 2008. “The hemostatic patch market continues to be very competitive, but with the imminent exit of a major competitor and the launch of our new D-Stat Dry Wrap version in the first quarter, we believe that we will continue to hold and increase our market-leading position in this market,” commented Root.
Net sales of extraction catheters (primarily consisting of the Pronto® V3 extraction catheter) were $4.0 million in the first quarter, an increase of 18% over the first quarter of 2008. “Sales of our newer LP, or low profile, version constituted 19% of our extraction catheter sales in the first quarter and increased by 32% sequentially from the fourth quarter. With several new and improved versions of our extraction catheters in development, we believe that our extraction catheter product line will continue to deliver substantial sales growth for the foreseeable future,” Root stated.
Net sales of vein products (primarily consisting of the Vari-Lase endovenous laser console and kits) were $2.4 million in the first quarter, an increase of 10% over the first quarter of 2008. “We believe that we are well positioned to remain a stable influence in the endovenous laser therapy market, a market which has been characterized by unstable competitors in the past and present. With multiple new products and new versions of existing products in the pipeline, we believe that we will continue to differentiate ourselves on clinical and economic factors and grow our market share,” commented Root.
Net sales of access products (primarily consisting of micro-introducer kits, specialty guidewires and snares), were $1.7 million in the first quarter, an increase of 81% over the first quarter of 2008. “In the first quarter we launched the new GrebSet access product, which received excellent reviews in clinical evaluations. With multiple new access products planned for launch throughout the year, we expect access products will continue to be our fastest growing product line in 2009,” Root added.
Net sales of specialty catheters (primarily consisting of the Langston® dual lumen catheters, Twin-Pass dual access catheters and Minnie support catheter), were $1.3 million in the first quarter of 2009, an increase of 15% over the first quarter of 2008. “In January we launched the Minnie, with favorable reviews and significant sales just beginning as hospitals’ new product review processes are completed,” Root added.
Financial Guidance
Regarding future guidance, net revenue for the second quarter of 2009 is expected to increase to between $16.6 million and $17.0 million. Net income in the second quarter of 2009 on a fully-taxed basis is expected to be between $0.07 and $0.09 per fully diluted share. Principally as the result of the suspension of the Thrombi-Paste clinical development, the company is adjusting its annual guidance for net revenue to between $67 million and $70 million and net income per diluted share on a fully-taxed basis to be between $0.30 and $0.34. “With our business model in the first quarter demonstrating excellent bottom-line results, and with many clinical niche and several larger market product opportunities working through our development system, we remain confident about the growth and increasing profitability of Vascular Solutions,” concluded Root.