Vascular Solutions, Inc. (Nasdaq:VASC) today reported financial
results for the first quarter ended March 31, 2016.
Worldwide revenue increased 14% from the first quarter of 2015
to $39.4 million, which exceeded the top end of the company’s
revenue guidance range of $38.0 million to $39.0 million. U.S.
revenue increased 17% to $31.6 million, while international revenue
increased 3% to $7.8 million. Excluding the launch inventory sales
of GuideLiner® V3 to Japan Lifeline that occurred in the first
quarter of 2015, international revenues increased 22% and worldwide
revenue increased 18% in the first quarter of 2016.
Chief Executive Officer Howard Root provided the following
comments:
“Our first quarter results represent a very strong start to what
we believe will be our 13th consecutive year of double-digit
percentage growth in product sales. I am especially proud that our
employees overcame the substantial distractions caused by the Short
Kit trial in the first quarter to once again exceed
expectations. And with the jury’s “not guilty” verdict on
February 26 concluding this misguided and outrageous government
prosecution, we are now able to once again focus all of our
resources and attention on productive clinical goals that
demonstrate the operating leverage inherent in our business
model.
“While our R&D efforts remain focused on our multiple
clinical niche new product launches, we also are pleased with the
rapid progress of our much larger RePlas™ freeze-dried plasma
collaboration with the U.S. Army. In addition, our strong balance
sheet, even after incurring $25 million in Short Kit legal expenses
over the last five years, as well as our substantial positive cash
flow from operations, allow us to fully fund all of our R&D
initiatives and take advantage of opportunities for distribution
agreements and tuck-in acquisitions that we view as
synergistic.”
Gross margin for the first quarter was 65.5%, compared to 67.4%
in the year-ago first quarter. The decrease in gross margin was
primarily due to a shift in product mix, combined with temporary
inefficiencies incurred in production due to the renovation of
Vascular Solutions’ manufacturing facility and new products.
Vascular Solutions expects to complete the majority of its facility
renovation and new product efficiency improvements in the second
quarter, and therefore expects gross margin to improve to between
66.0% and 67.0% for the full year 2016, subject to changes in the
geographic and product mix of sales.
Excluding expenses associated with the Short Kit litigation,
adjusted operating earnings in the first quarter were $6.0 million,
representing an adjusted operating margin of 15.2%. This compares
to adjusted operating earnings in the year-ago first quarter of
$5.9 million, which represented an operating margin of 16.9%.
During the most recent first quarter, Vascular Solutions incurred
$6.9 million in legal expenses associated with the Short Kit
litigation, compared to $2.4 million in the year-earlier quarter.
On a GAAP basis, Vascular Solutions reported an operating loss of
$890,000 in the first quarter of 2016, compared to operating income
of $3.4 million in the year-ago first quarter.
On an adjusted basis, excluding the Short Kit legal expenses,
earnings per diluted share (EPS) in the first quarter were $0.25,
above the company’s guidance of $0.22 to $0.24, and an increase of
19% from $0.21 in adjusted EPS in the first quarter of 2015. On a
GAAP basis, the company reported a loss of $0.01 per share,
compared to earnings of $0.12 per diluted share in the first
quarter of 2015.
First Quarter Revenue by Product
During the first quarter of 2016, the following eight products
represented 78% of Vascular Solutions’ worldwide revenue and grew
by a combined 15% from the first quarter of 2015:
Product |
Primary
Market |
First
Quarter Revenue (dollars in 000s) |
2016 |
|
2015 |
|
% Increase
(Decrease) |
GuideLiner catheters |
Interventional
cardiology |
$ |
11,658 |
|
$ |
10,340 |
|
|
13 |
% |
Micro-introducer kits |
Interventional
radiology |
|
3,569 |
|
|
2,854 |
|
|
25 |
% |
Pronto® catheters |
Interventional
cardiology |
|
3,403 |
|
|
4,382 |
|
|
(22 |
%) |
Vein catheter
reprocessing |
Phlebology |
|
2,989 |
|
|
2,712 |
|
|
10 |
% |
Hemostatic patches |
Interventional
cardiology |
|
2,845 |
|
|
3,022 |
|
|
(6 |
%) |
Turnpike® catheters |
Interventional
cardiology |
|
2,297 |
|
|
154 |
|
|
1,392 |
% |
Radial access |
Interventional
cardiology |
|
2,099 |
|
|
1,638 |
|
|
28 |
% |
Langston® catheter |
Interventional
cardiology |
|
1,882 |
|
|
1,578 |
|
|
19 |
% |
Top 8 products |
$ |
30,742 |
|
$ |
26,680 |
|
|
15 |
% |
|
|
|
|
|
|
|
|
|
|
GuideLiner catheters first quarter sales grew by 13% over the
first quarter of 2015, with U.S. sales up 29% to $7.6 million and
international sales declining by 9% to $4.1 million. “The decline
in international sales of GuideLiner was expected given the launch
inventory sales of GuideLiner V3 that occurred in the first quarter
of 2015 to our distributor partner in Japan to fill its extensive
distribution channel,” Mr. Root commented. “Excluding Japan, during
the first quarter our international GuideLiner sales grew by 25%
and our worldwide GuideLiner sales grew by 28%, underscoring the
continued role of GuideLiner as a growth-driver for the company. As
GuideLiner enters its seventh year on the market, its use continues
to broaden as we expand the product’s clinical and geographic reach
at a time when the number of complex interventional procedures is
rising substantially.”
Micro-introducer kits first quarter sales grew by 25% over the
first quarter of 2015 to $3.6 million. “Vascular Solutions sells a
wide variety of micro-introducer kits and in recent years has
focused on transitioning to internal manufacturing, cost
reductions, and product line expansion,” commented Mr. Root.
“This strategy continued to work very well in the first quarter,
resulting in a combination of lower prices for our customers and
increased gross margins and higher market share for Vascular
Solutions.”
Pronto catheters first quarter sales were $3.4 million,
representing a decline of 22% from the first quarter of 2015. “The
market for extraction catheters is mature, with physicians more
selective in their use of aspiration catheters and significant
price erosion in the market,” Mr. Root said. “However, due to the
market removal of a competitive product late in the first quarter,
we have begun to see our Pronto sales stabilize, and we believe the
distinct design features and clinical benefits of Pronto will
continue to make it a leader in this market for many years.”
Vein catheter reprocessing first quarter revenue was $3.0
million, up 10% from the first quarter of 2015. “Our sales team
continues to advance the penetration of our reprocessing service,
which is reflected in our ongoing revenue growth,” commented Mr.
Root. “We view the radiofrequency vein catheter reprocessing
service, now in its fifth year on the market, as a $15 - $20
million potential annual revenue opportunity, and we continue to
make gradual progress toward that level.”
Hemostatic patches first quarter sales were $2.8 million,
representing a decrease of 6% from the first quarter of 2015. “The
U.S. market for hemostatic patches is very price-sensitive and
continues to shift away from the femoral artery toward radial
artery access,” Mr. Root said. “Our D-Stat Dry and other
thrombin-based patch products are a leader in the mature market for
femoral patches, but these products long-ago stopped being a growth
driver for us, and we are now focusing for growth on our newer
products that address the rapidly expanding radial artery access
market in the U.S.”
Turnpike catheters first quarter sales were $2.3 million, an
increase of 1,392% from $154,000 in the first quarter of
2015. “We launched the original version of Turnpike during
the first quarter of 2015, and sales have ramped quickly above our
expectations every quarter since launch,” commented Mr. Root.
“Turnpike represents our most successful new internally developed
product since the introduction of the GuideLiner, and both products
are emblematic of our commitment to meeting the needs of physicians
who perform complex coronary interventions. We now view the
Turnpike product line as at least a $30 million market opportunity
for Vascular Solutions.”
Radial artery access products first quarter sales totaled $2.1
million, an increase of 28% from the first quarter of 2015.
Products in this category include radial hemostasis bands, wrist
positioning devices, arm boards, and introducer sheaths. “Vascular
Solutions several years ago was early in identifying radial artery
access as a substantial U.S. market opportunity and started
developing and assembling a portfolio of products that now are
resulting in substantial sales growth,” Mr. Root said. “This
strategy is still in its rapid growth phase, and we expect
substantial increases in sales of our radial artery access products
over the next several years, particularly with our new VSI Radial
introducer sheaths.”
Langston catheter first quarter sales were $1.9 million in the
first quarter, an increase of 19% from the first quarter of 2015.
“With the growth in percutaneous aortic valve replacement
procedures, we are seeing sales of the Langston continue to
increase due to its impressive clinical utility,” Mr. Root
said.
Financial Guidance
Vascular Solutions is raising its guidance for 2016 net revenue
to a range of $163 million to $166 million. The mid-point of this
range represents an increase of 12% from net revenue of $147.2
million in 2015. The company’s previous guidance for 2016 net
revenue was a range of $161 million to $165 million.
Vascular Solutions also is raising its 2016 adjusted earnings
guidance to a range of $1.19 to $1.23 per share. The company’s
previous guidance for 2016 adjusted net earnings was a range of
$1.17 to $1.21 per share. Included in the company’s 2016 earnings
guidance are $4.8 million in non-cash stock-based compensation,
$1.6 million in amortization of intangibles, and an assumed tax
rate of approximately 30%, reflecting the benefits of a new tax
accounting pronouncement (Accounting Standard Update 2016-09)
requiring restricted share vesting and stock option exercise
expenses to be recognized in GAAP earnings
calculations. 2016 adjusted earnings guidance excludes
the $6.9 million in Short Kit litigation expenses that were
incurred in the first quarter. Including those expenses, the
revised earnings outlook for 2016 reflects GAAP EPS in a range of
$0.93 to $0.97.
“Starting in the second quarter, we expect to have no further
material expenditures related to the recently concluded Short Kit
litigation,” commented Mr. Root. “Unfortunately, after
substantial analysis, we do not believe there is any available
legal mechanism to bring an action on behalf of the company or me
against the Department of Justice or the individual prosecutors for
recovery of the substantial legal expenses we incurred in defending
against this malicious and misguided prosecution. We are,
however, pursuing administrative misconduct actions against the
individuals involved in an attempt to prevent what happened to us
from happening to others. Future legal expenses related to
these administrative actions are expected to be immaterial, and
therefore earnings guidance starting in the second quarter will
return to a GAAP basis.”
For the second quarter of 2016, Vascular Solutions is providing
guidance for net revenue of between $40.5 million and $41.5
million, which at the mid-point represents growth of approximately
9% from $37.6 million in the second quarter of 2015. Excluding the
GuideLiner launch inventory sales to Japan in the year-ago second
quarter, guidance for the second quarter of 2016 represents growth
of approximately 18% at the mid-point.
For the second quarter of 2016, the company is providing
guidance for net earnings on a GAAP basis of between $0.29 and
$0.31 per fully diluted share. In the second quarter of 2015, the
company reported adjusted EPS of $0.29. The company’s net earnings
guidance for the second quarter of 2016 includes $1.1 million in
non-cash stock-based compensation, $404,000 in amortization of
intangibles, and an assumed effective income tax rate of
approximately 28%, due to impacts from the new accounting
pronouncement (Accounting Standard Update 2016-09).
Cash Flow and Balance Sheet Highlights
Vascular Solutions ended the first quarter of 2016 with $31.0
million in cash and equivalents, compared to $41.5 million in cash
and cash equivalents at December 31, 2015. During the first
quarter, the company used $4.3 million in cash for operations,
principally due to expenses associated with the Short Kit
litigation, and used $2.9 million for capital expenditures related
to facility renovations and the purchase of computer and
manufacturing equipment. The company also used $3.3 million in
financing activities, which included $1.5 million to repurchase
shares of common stock to satisfy income tax withholding
obligations on the vesting of restricted stock awards and $1.8
million to repurchase 64,199 shares of common stock under the
company’s share repurchase program. The company has no long-term
debt.
Conference Call & Webcast Information
Vascular Solutions will host a live webcast starting at 3:30
p.m., Central Time today to discuss the information contained in
this press release. The live webcast may be accessed on the
investor relations portion of the company’s web site at
www.vasc.com. An audio replay of the call will be available
until Monday, May 2, 2016, by dialing 888-203-1112 and entering
conference ID# 4353432. A recording of the call will also be
archived on the Company’s web site, www.vasc.com, until Monday, May
2, 2016. During the conference call the Company may answer one or
more questions concerning business and financial developments and
trends, the Company’s view on earnings forecasts and new product
development and financial matters affecting the Company, some of
the responses to which may contain information that has not been
previously disclosed.
VASCULAR SOLUTIONS,
INC. |
CONDENSED STATEMENTS OF
EARNINGS (LOSS) |
(In thousands, except per
share data) |
|
|
|
Three Months Ended |
|
March 31, |
|
2016 |
|
2015 |
|
|
(unaudited) |
|
|
|
Revenue: |
|
|
|
|
|
|
Product revenue |
$ |
39,242 |
|
$ |
34,441 |
|
License, royalty and collaboration
revenue |
|
136 |
|
|
170 |
|
Total revenue |
|
39,378 |
|
|
34,611 |
|
|
|
|
Product costs and
operating expenses: |
|
|
Cost of goods sold |
|
13,571 |
|
|
11,296 |
|
Collaboration expenses |
|
27 |
|
|
54 |
|
Research and development |
|
5,026 |
|
|
4,067 |
|
Clinical and regulatory |
|
1,997 |
|
|
1,481 |
|
Sales and marketing |
|
9,599 |
|
|
8,732 |
|
General and administrative |
|
9,644 |
|
|
4,777 |
|
Medical device excise taxes |
|
- |
|
|
376 |
|
Amortization of purchased
technology and intangibles |
|
404 |
|
|
405 |
|
Operating earnings
(loss) |
|
(890 |
) |
|
3,423 |
|
|
|
|
Other earnings |
|
16 |
|
|
28 |
|
Earnings (loss) before
income taxes |
|
(874 |
) |
|
3,451 |
|
|
|
|
Income tax benefit
(expense) |
|
619 |
|
|
(1,244 |
) |
Net earnings (loss) |
$ |
(255 |
) |
$ |
2,207 |
|
|
|
|
Net earnings (loss) per
share - basic |
$ |
(0.01 |
) |
$ |
0.13 |
|
Weighted average shares
used in calculating - basic |
|
17,105 |
|
|
16,939 |
|
Net earnings (loss) per
share - diluted |
$ |
(0.01 |
) |
$ |
0.12 |
|
Weighted average shares
used in calculating - diluted |
|
17,105 |
|
|
17,940 |
|
|
|
|
VASCULAR SOLUTIONS,
INC. |
CONDENSED BALANCE
SHEETS |
(In thousands) |
|
|
|
|
March 31, |
December 31, |
|
2016 |
|
2015 |
|
|
(unaudited) |
(note) |
ASSETS |
|
|
Current assets: |
|
|
Cash and cash equivalents |
$ |
30,958 |
|
$ |
41,491 |
|
Accounts receivable, net |
|
21,485 |
|
|
19,121 |
|
Inventories |
|
22,629 |
|
|
22,105 |
|
Prepaid expenses and other |
|
4,848 |
|
|
4,361 |
|
Total current assets |
|
79,920 |
|
|
87,078 |
|
Property, plant and
equipment, net |
|
36,254 |
|
|
34,508 |
|
Goodwill |
|
10,089 |
|
|
10,045 |
|
Intangible assets,
net |
|
8,060 |
|
|
8,445 |
|
Deferred tax assets, net
of current portion |
|
5,434 |
|
|
4,797 |
|
Total assets |
$ |
139,757 |
|
$ |
144,873 |
|
|
|
|
LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
|
Current liabilities: |
|
|
Total current liabilities |
$ |
13,346 |
|
$ |
16,657 |
|
|
|
|
Long-term deferred tax
liabilities |
|
74 |
|
|
72 |
|
Total long-term liabilities |
|
74 |
|
|
72 |
|
|
|
|
Shareholders’ equity: |
|
|
Total shareholders’ equity |
|
126,337 |
|
|
128,144 |
|
Total liabilities and shareholders’
equity |
$ |
139,757 |
|
$ |
144,873 |
|
|
|
|
|
|
|
|
Note: Derived from the audited financial
statements at that date. |
|
|
|
|
|
|
|
VASCULAR SOLUTIONS,
INC. |
NON-GAAP ADJUSTED
EARNINGS RECONCILIATION |
(unaudited, in thousands,
except per share data) |
|
|
|
Three Months Ended |
|
March 31, |
|
2016 |
|
2015 |
GAAP operating earnings
(loss) |
$ |
(890 |
) |
$ |
3,423 |
Legal expenses incurred in
Short Kit litigation (a) |
$ |
6,883 |
|
$ |
2,433 |
Non-GAAP adjusted
operating earnings |
$ |
5,993 |
|
$ |
5,856 |
GAAP net earnings (loss)
per share - diluted |
$ |
(0.01 |
) |
$ |
0.12 |
Legal expenses incurred in
Short Kit litigation, per share (b) |
$ |
0.26 |
|
$ |
0.09 |
Non-GAAP adjusted net
earnings per share - diluted |
$ |
0.25 |
|
$ |
0.21 |
|
|
|
|
|
|
VASCULAR SOLUTIONS,
INC. |
NON-GAAP ADJUSTED
EARNINGS GUIDANCE RECONCILIATION |
(unaudited) |
|
|
|
Three Months Ending June 30, 2016 |
|
|
Twelve Months Ending December 31, 2016 |
Projected GAAP
net earnings per share - diluted |
$0.29 to $0.31 |
|
$0.93 to $0.97 |
Projected
legal expenses incurred in Short Kit litigation (b) |
$ |
-- |
|
$ |
0.26 |
|
Projected
non-GAAP adjusted net earnings per share - diluted |
$0.29 to $0.31 |
|
$1.19 to $1.23 |
|
|
|
|
(a) Consisting of legal expenses incurred in
connection with the Short Kit litigation. See the company’s
Annual Report on Form 10-K for the year ended December 31, 2015 and
other recent filings with the Securities and Exchange Commission
for details.
(b) Consisting of legal expenses, net of taxes,
incurred in connection with the Short Kit litigation.
About Vascular Solutions
Vascular Solutions, Inc. is an innovative medical device company
that focuses on developing unique clinical solutions for coronary
and peripheral vascular procedures. The company’s product line
consists of nearly 100 products and services that are sold to
interventional cardiologists, interventional radiologists,
electrophysiologists and vein specialists through its direct U.S.
sales force and international independent distributor
network. All listed trademarks are the property of Vascular
Solutions, Inc.
Safe Harbor for Forward-Looking Statements
The information in this press release contains forward-looking
statements that involve risks and uncertainties. Those statements
include expectations about our future revenues, product line
revenues, gross margin, operating leverage, earnings per share,
adjusted earnings per share, non-cash stock-based compensation,
ability to fully fund all of our R&D initiatives and take
advantage of any opportunities for distribution agreements and
tuck-in acquisitions, amortization of intangibles, and income tax
rate. Our actual results could differ materially from those
anticipated in these forward-looking statements. Important factors
that may cause such differences include those discussed in our
Annual Report on Form 10-K and other recent filings with the
Securities and Exchange Commission. The risks and uncertainties
include, without limitation, risks associated with the need for
adoption of our new products, exposure to governmental enforcement
actions, exposure to potential shareholder litigation, exposure to
intellectual property claims and litigation, significant
variability in quarterly results, exposure to possible product
liability claims, doing business in international markets, the
development of new products by others, our reliance on the
development of new products and services, constraints or
interruptions in production from key suppliers, breaches or other
failures of information technology and communications systems, the
availability of third party reimbursement, and actions by
government regulatory agencies.
Use of Non-GAAP Financial Information
In addition to reporting financial results in accordance with
generally accepted accounting principles, or GAAP, we are providing
non-GAAP adjusted operating earnings and non-GAAP adjusted earnings
per share for the three months ended March 31, 2016 and 2015,
adjusted in both cases for the effects of legal fees incurred in
connection with the Short Kit litigation. In addition, we are
providing non-GAAP financial guidance for the year ending December
31, 2016 adjusted for the $6.9 million in legal expenses incurred
in the first quarter in connection with the Short Kit litigation.
We believe that the non-GAAP financial measures presented provide
meaningful insight to investors by adjusting for unpredictable
events that vary in frequency and magnitude and allowing investors
to evaluate our financial performance without the effects of these
events. We use non-GAAP financial measures to assess our operating
performance and to compare results between periods. We also use
non-GAAP financial measures in determining achievement levels under
corporate objectives for incentive compensation. The method we use
to produce non-GAAP adjusted operating earnings and non-GAAP
adjusted earnings per share is not in accordance with GAAP and may
differ from the methods used by other companies. Non-GAAP measures
should not be regarded as a substitute for corresponding GAAP
measures but instead should be utilized as supplemental information
in evaluating our business. Non-GAAP measures do have limitations
in that they do not reflect certain items that may have a material
impact upon our reported financial results. As such, the non-GAAP
measures presented should be viewed in conjunction with both our
financial statements prepared in accordance with GAAP and the
reconciliation of the supplemental non-GAAP measures to the
comparable GAAP measures, which is attached to this release.
For further information, connect to
www.vasc.com.
Contact: Vascular Solutions, Inc.
James Hennen, CFO
JHennen@vasc.com
(763) 656-4352
Phil Nalbone, VP
PNalbone@vasc.com
(763) 656-4371
Vascular Solutions, Inc. (NASDAQ:VASC)
Historical Stock Chart
From Aug 2024 to Sep 2024
Vascular Solutions, Inc. (NASDAQ:VASC)
Historical Stock Chart
From Sep 2023 to Sep 2024