Net revenues for the first quarter of 2009 included net product revenues and royalty revenues. Net product revenues are derived from the sale of disposable endovenous catheters and devices, RF generators and accessory products. Royalty revenues are derived from other companies paying royalties for a license to certain VNUS patents previously subject to an infringement lawsuit.
Net product revenues for the first quarter of 2009 increased $4.9 million to $23.7 million compared to $18.9 million for the first quarter of 2008. First quarter net product revenues seasonally decreased 9% compared to net product revenues in the fourth quarter of 2008 of $26.0 million. The increase in net product revenues in the first quarter of 2009 as compared to the same period in 2008 was due to continuing higher sales of disposable ClosureFASTcatheters and ClosureRFS devices, and higher overall international sales. Disposable catheters and device unit sales increased in the first quarter of 2009 by 33% compared to the first quarter of 2008 and decreased 7% sequentially.
First quarter net income was $1.9 million, compared with a net loss of $0.4 million for the first quarter of 2008 and net income of $3.5 million for the fourth quarter of 2008. Gross margins in the first quarter improved to 70.0% compared to 66.1% in the first quarter of 2008, and compared to 68.9% sequentially. Patent litigation expenses included in the first quarter were $694,000, compared to $403,000 in the comparable quarter in 2008 and $561,000 in the fourth quarter in 2008. Fully diluted earnings for the first quarter of 2009 was $0.11 per share, compared with a loss of $0.03 per share for the first quarter of 2008 and earnings of $0.21 per share for the fourth quarter of 2008.
Adjusted EBITDA for the first quarter of 2009 was earnings of $3.6 million, as compared to a loss of $420,000 in the comparable quarter of 2008, and earnings of $5.6 million in the fourth quarter of 2008. For periods with net income, earnings per share, if fully taxed at 38%, would be $0.08 for the first quarter of 2009 compared to earnings per share, if fully taxed at the same rate, of $0.14 in the fourth quarter of 2008. Accordingly, the Company has decided to provide supplemental disclosure of Fully Taxed EPS as a long term measure of growth in earnings on a comparable constant per share basis absent the utilization of net operating loss carryforwards.
VNUS’ balance sheet at March 31, 2009 included cash, cash equivalents and investments of $86.4 million, approximately $1.2 million more than the fourth quarter of 2008.
Our first quarter results substantially exceeded our expectations in every aspect of our business, said VNUS president and chief executive officer Brian E. Farley. Our worldwide growth in product revenue demonstrates that our Closure procedure continues to gain acceptance as a preferred treatment for venous reflux. Our positive 7.6% operating margin in the current quarter far exceeded our expectations and demonstrates the leverage in our current operating model.
