EXTON, Pa., Aug. 20 /PRNewswire-FirstCall/ -- Kensey Nash
Corporation (NASDAQ:KNSY), a leading medical technology company
that provides innovative solutions and technologies for a wide
range of medical procedures, today reported the results for its
fourth quarter and fiscal year ended June 30, 2009. Fourth Quarter
Snapshot and Recent Developments -- EPS of $0.41, meeting the high
end of previous guidance of $0.38-$0.41. -- Revenue of $20.5
million, meeting the high end of previous guidance of $19.8-$20.5
million. -- Angio-Seal royalties were negatively impacted primarily
due to foreign currency exchange by our estimated calculation of
approximately $300,000 compared to prior year. -- Record
orthopaedic royalties of $1.7 million, representing an increase of
29% from fourth quarter of the prior fiscal year. -- Operating
margin of 37%. -- Operating cash flow of $11.2 million. -- EBITDA
of $9.2 million. -- Submitted 510(k) for company's first
extracellular matrix (ECM) product. -- Re-acquired the distribution
rights, along with the trademark, inventory and other assets
associated with the OsseoFit Bone Void Filler product line. --
Repurchased approximately 236,000 shares of Common Stock at a total
cost of approximately $5.7 million, or an average market price of
approximately $24.00 per share. Full Year Fiscal 2009 Financial
Overview -- Record full fiscal year EPS of $1.69, meeting the high
end of previous guidance of $1.66-$1.69. -- Revenue of $82.1
million, meeting the high end of previous guidance of $81.5-$82.1
million. -- Angio-Seal royalties were negatively impacted primarily
due to foreign currency exchange by our estimated calculation of
approximately $600,000 compared to the prior year. -- Record
orthopaedic royalties of $6.0 million, representing an increase of
30% over the prior fiscal year. -- Operating margin of 37%. --
Operating cash flow of $33.2 million. -- EBITDA of $37.4 million.
-- Repurchased approximately 810,000 shares of Common Stock at a
total cost of approximately $19.4 million, or an average market
price of approximately $23.92 per share. President and CEO
Commentary "We are extremely pleased with our fourth quarter and
full fiscal year results as our key financial metrics continue to
demonstrate a disciplined execution of our business plan. We
achieved record profits for our fiscal year in an extraordinarily
difficult economic climate. Spine products, which include
Vitoss(TM) Bioactive Foam and Vitoss Foam products marketed by
Orthovita, Inc. (NASDAQ:VITA), continued to show solid growth in
the quarter and fiscal year, while product sales of sports medicine
products were down significantly in the quarter, as expected, and
were essentially flat for the full year over year. In fiscal 2009,
our operating margins improved, we generated over $33 million in
operating cash flow and we ended the year with $79.7 million in
cash and investments on our balance sheet," said Joe Kaufmann,
President and CEO of the Company. "Furthermore, in fiscal 2009, we
executed on a number of our core strategic growth initiatives,
including expanding our business with existing customers,
developing new proprietary products for partners, and adding new
technology capabilities. We made substantial progress in the
development of our cartilage repair and extracellular matrix
programs. We are optimistic about these growth prospects and the
benefits these products could provide for improving patient
outcomes," he continued. "Looking ahead, despite the current
depressed economic environment, we view fiscal 2010 as a year for
continued execution of our strategic growth initiates, which will
require additional investments to provide for the future growth of
our company and increased value for our stockholders. We expect to
announce soon, an ECM strategic agreement with a major medical
device company, which represents an important milestone in our
plans to build upon Kensey Nash's leadership position as a
developer of innovative regenerative medicine products," he
concluded. Fourth Quarter Ended June 30, 2009 (Fourth Quarter
Fiscal 2009) Results Revenues: Sales and Royalties. Total revenues
for the quarter of $20.5 million were at the high end of the
previous guidance range of $19.8 to $20.5 million and were
comparable sequentially to the third quarter of fiscal 2009 of
$20.6 million. Revenues for the quarter were down 7% from total
revenues of $22.0 million in the prior year fourth quarter. Net
sales decreased 9% to $13.6 million from $15.0 million in the prior
fiscal year. Net sales of biomaterials products decreased 8%, to
$12.3 million from $13.3 million in the comparable prior fiscal
year period. Orthopaedic sales, consisting primarily of sports
medicine and spine products, decreased 16% to $7.0 million from
$8.4 million in the comparable period of the prior fiscal year. Net
sales of sports medicine products decreased 35% to $3.2 million, as
anticipated, due to exceptionally high orders in the comparable
prior year period from two major customers and current economic
conditions impacting customer inventory levels. Net sales of spine
products increased 21% in the fourth quarter of fiscal 2009 over
the prior fiscal year comparable quarter and 24% sequentially,
primarily attributed to increased sales of the Vitoss Bioactive
Foam products sold by Orthovita. Cardiovascular sales of $4.5
million, consisting primarily of vascular closure product
components to St. Jude Medical (NYSE:STJ), increased 8% from $4.2
million in the prior fiscal year period. The fourth quarter of
fiscal 2009 represented the fourth full quarter of endovascular
sales to Spectranetics (NASDAQ:SPNC) following the Company's
completion of the sale of its endovascular business in May 2008. As
previously disclosed, these sales are at a reduced transfer price
compared to the direct to market price reflected in the Company's
historical sales figures and include milestone revenue recognized.
As a result of the reduced transfer price, endovascular sales
during the quarter decreased 24% to $1.2 million from $1.6 million
in the prior fiscal year period, although overall net unit sales of
endovascular products to Spectranetics increased when compared to
the prior fiscal year. Royalty income was essentially flat at $6.9
million in the fourth quarter of fiscal 2009 compared to $7.0
million in the comparable prior fiscal year period. Royalty income
in the fourth quarter of fiscal 2009 included $5.3 million in
Angio-Seal(TM) royalties and $1.6 million in royalties from
Orthovita. Although Angio-Seal(TM) unit sales increased over the
fourth quarter of the prior fiscal year, Angio-Seal royalties
decreased from the comparable quarter of the prior fiscal year
primarily due to the negative impact of foreign currency exchange
by our estimated calculation of approximately $300,000. Royalties
from products co-developed with Orthovita increased 30% over the
prior fiscal year period due to the continued success of the Vitoss
Bioactive Foam and Vitoss Foam products sold by Orthovita in the
end-user marketplace. Earnings Per Share. Fourth quarter diluted
earnings per share was $0.41, compared to a diluted loss per share
of ($0.09) for the same period of fiscal 2008. Diluted loss per
share of ($0.09) for fiscal 2008 included after-tax charges of $5.4
million ($8.1 million pre-tax) for the sale of the Company's
endovascular business to Spectranetics. In addition, the
improvement in fiscal 2009 earnings per share was also due to the
elimination of the endovascular sales and marketing expenses, which
was partially offset by anticipated increases in biomaterials
research and development expenses. During the three-month period
ended June 30, 2009, the total tax-effected equity compensation
expense was $600,000, an increase from $430,000 in the prior year
comparable period. Fourth quarter fiscal 2009 equity compensation
expense was higher than the comparable prior year period primarily
because fiscal 2009 expense included amortized expense related to
two years of equity grants, while fourth quarter fiscal 2008 equity
compensation expense primarily included amortized expense for only
one year of equity grants, as a result of the fiscal 2008
acceleration of stock awards triggered by a third party's
significant open market purchase of the Company's Common Stock.
Fiscal Year Ended June 30, 2009 (Fiscal 2009) Results Revenues:
Sales and Royalties. Total revenues for the fiscal year ended June
30, 2009 were $82.1 million, up 3% from total revenues of $79.8
million for the fiscal year ended June 30, 2008. Net sales
increased 2% to $54.9 million from $53.8 million in the prior
fiscal year. Net sales of biomaterials products increased 7%, to
$51.0 million from $47.5 million in the prior fiscal year, due to
strong sales in both the cardiovascular and orthopaedic product
lines. Cardiovascular sales of $18.3 million, consisting primarily
of sales of vascular closure product components to St. Jude
Medical, increased 16%, from $15.9 million in the prior fiscal
year. Orthopaedic sales increased 1% to $29.8 million from $29.4
million in the prior fiscal year, due to sales of spine products,
which increased 6% over the prior fiscal year. Sports medicine
products sales of $15.5 million were flat compared to fiscal 2008
of $15.6 million. Endovascular sales during fiscal 2009 decreased
38% to $3.9 million from $6.2 million in the prior fiscal year.
Although overall net unit sales to Spectranetics increased compared
to prior fiscal year end-user unit sales, the reduced transfer
pricing more than offset the increase in units. Royalty income
increased 4% to $27.2 million for the fiscal year ended June 30,
2009, compared with $26.0 million for the fiscal year ended June
30, 2008. Royalty income in fiscal 2009 included $21.2 million in
Angio-Seal(TM) royalties and $5.8 million in royalties from
Orthovita. Angio-Seal(TM) royalties decreased 1% from the prior
fiscal year. Angio-Seal(TM) royalties were adversely impacted by
our estimated calculation of approximately $600,000 primarily due
to foreign currency exchange. Excluding the negative impact of
foreign exchange, Angio-Seal royalties increased 2% year over year.
Orthovita royalties increased 31%, which was attributable to the
successful introduction by Orthovita of its Vitoss Bioactive Foam
products, as well as the continuing sales of existing Vitoss Foam
products by Orthovita in the end-user marketplace. Earnings Per
Share. The Company reported diluted earnings per share of $1.69 for
the fiscal year ended June 30, 2009, compared to $0.38 for the
prior fiscal year. The improvement in fiscal 2009 earnings per
share was primarily due to the elimination of the endovascular
sales and marketing expenses, partially offset by anticipated
increases in biomaterials research and development expenses.
Diluted earnings per share of $0.38 for fiscal 2008 also included
after-tax charges of $7.6 million ($11.4 million pre-tax) for the
acceleration of stock awards, discontinuation of the Company's
embolic protection platform and sale of the Company's endovascular
business to Spectranetics. In the fiscal year ended June 30, 2009,
the total tax-effected equity compensation expense was $1.3
million, a decrease from $3.5 million in the prior year comparable
period as a result of the fiscal 2008 acceleration of stock awards
triggered by a third party's significant open market purchase of
the Company's Common Stock, as well as favorable mark-to-market
adjustments on outstanding Stock Appreciation Rights in the 2009
fiscal year, offset in small part by the inclusion in equity
compensation expense for the 2009 fiscal year of amortization for
an additional year of equity grants. During the fiscal year ended
June 30, 2009, the Company generated cash from operations of $33.2
million and, at June 30, 2009, had $79.7 million of cash and
investment balances and total debt of $32.8 million. Supplemental
Sales Data. Net sales for the fourth quarter of fiscal 2009
decreased to $13.6 million from $15.0 million in the fourth quarter
of fiscal 2008. Net sales for the full fiscal 2009 increased to
$54.9 million, up from $53.8 million in the prior fiscal year
period. Additional details are summarized below. Three Months
Fiscal Year Ended Year Ended Year June 30, over June 30, over
----------- Year % ------------ Year % ($millions) 2009 2008 Change
2009 2008 Change ---------- ---- ---- ------ ---- ---- ------
Biomaterials Products Orthopaedic Products Sports Medicine Products
$3.2 $5.0 (35%) $15.5 $15.6 (1%) Spine Products $3.7 $3.1 21% $13.7
$12.9 6% Other Orthopaedic Products $0.03 $0.3 (88%) $0.6 $0.9
(34%) Total Orthopaedic Products $7.0 $8.4 (16%) $29.8 $29.4 1%
Cardiovascular Products $4.5 $4.2 8% $18.3 $15.9 16% Other
Biomaterial Products $0.9 $0.8 6% $2.9 $2.3 29% Biomaterials
Products $12.3 $13.3 (8%) $51.0 $47.5 7% Endovascular Products $1.2
$1.6 (24%) $3.9 $6.2 (38%) Total Net Sales - $13.6 $15.0 (9%) $54.9
$53.8 2% Fiscal 2010 Guidance The Company currently expects total
revenues for fiscal year 2010 will be in a range of $86.0 to $89.0
million, which would represent growth of approximately 5% to 8%
over fiscal 2009 total revenues, and that net sales and royalties
will be in the ranges of $58.0 to $60.0 million and $28.0 to $29.0
million, respectively. The Company currently expects diluted
earnings per share for fiscal 2010 will be in a range of $1.76 to
$1.80. Fiscal 2010 will include a significant investment in
research and development, with total spending for fiscal 2010
estimated to be approximately $20 million. The Company plans to
increase its focus on the cartilage repair product this coming
year, where efforts will be dedicated to clinical programs to
further this product toward regulatory approvals. In addition, the
Company currently expects to launch several new products including
its extracellular matrix (ECM) product line in the second half of
the fiscal year. Also included in the EPS estimate is an increase,
compared to fiscal 2009, of an additional $2.0 million in
stock-based compensation expense for fiscal 2010. This higher
stock-based compensation expense is primarily due to the fiscal
2008 acceleration of stock-based awards that was triggered by a
third party's significant open market purchase of the Company's
Common Stock. The Company is currently estimating that first
quarter fiscal 2010 net sales will be in the range of $13.0 to
$13.2 million. Royalties are currently expected to be in the range
of $6.8 to $7.0 million and total revenues are currently
anticipated to be in the range of $19.8 to $20.2 million. The
Company currently expects fiscal 2010 first quarter diluted
earnings per share of $0.40 to $0.42 per share. The Company
currently expects that its operating margins will continue to
exceed 35% in fiscal 2010 and its balance sheet will continue to be
strengthened by adding cash from operations in excess of $25.0
million. Stock Repurchase Update. On March 18, 2009, the Company
announced that its board of directors approved a stock repurchase
program allowing the Company to repurchase up to a total of 600,000
of its issued and outstanding shares of Common Stock. During the
quarter ended June 30, 2009, the Company repurchased 235,863 shares
of Common Stock at a total cost of approximately $5.7 million, or
an average market price of $24.00 per share, under this program
using available cash. During the fiscal year ended June 30, 2009,
the Company repurchased 810,166 shares of Common Stock at a total
cost of approximately $19.4 million, or an average market price of
$23.92 per share under both the current 600,000 share repurchase
program and the previously announced stock repurchase programs,
which were completed during the second quarter of fiscal 2009. As
of June 30, 2009, there were 191,205 shares remaining for
repurchase under the current 600,000 stock repurchase program and
the Company had 11,145,562 shares of Common Stock outstanding.
Income taxes. As a result of the October 2008 Congressional
approval of an extension of the Research and Experimentation
(R&E) Tax Credit, the Company recorded retroactive adjustments
to its tax provision during the second fiscal quarter ended
December 31, 2008. The Company's effective tax rate for fiscal 2009
was approximately 33%. The Company currently estimates that its
fiscal 2010 effective tax rate will be between 33% and 34%. In the
course of estimating the Company's annual effective tax rate and
recording its quarterly income tax provision, the Company considers
many factors including its expected earnings, state income tax
apportionment, estimated research and development tax credits,
non-taxable interest income and other estimates. Material changes
in, or differences from these estimates could have a significant
impact on the Company's effective tax rate. Conference Call and
Webcast. The Company will host a conference call on Thursday,
August 20, 2009 at 9:00 a.m. Eastern Time. To participate in the
conference call, interested parties should dial 1-612-234-9959. In
addition, a live webcast of the call can be accessed by visiting
the Investor Relations page under the Conferences & Webcasts
link of the Kensey Nash website at http://www.kenseynash.com/ and
clicking on Webcast. The teleconference call will also be available
for replay starting Thursday, August 20, 2009 at 11:00 a.m. Eastern
Time through Thursday, August 27, 2009 at 11:59 p.m. Eastern Time
by dialing 1-800-475-6701 with an access code of 109060. About
Kensey Nash Corporation. Kensey Nash Corporation is a leader in
developing, manufacturing and processing resorbable biomaterial
products, incorporating its proprietary collagen and synthetic
polymer technology. This expertise is used to develop and
commercialize its products through strategic partners. The Company
has an extensive range of products, which are sold in multiple
medical markets, including, the cardiology, orthopaedic, sports
medicine, spine, endovascular and general surgery markets. The
Company is known as a pioneer in the field of arterial puncture
closure, as the inventor and developer of the Angio-Seal Vascular
Closure Device, which is licensed to St. Jude Medical, Inc.
Cautionary Note for Forward-Looking Statements. This press release
contains forward-looking statements that reflect the Company's
current expectations about its prospects and opportunities,
including financial forecasts for the first quarter of fiscal 2010
and the full year fiscal 2010 under the caption "Fiscal 2010
Guidance" and other captions. The Company has tried to identify
these forward looking statements by using words such as "expect,"
"anticipate," "estimate," "plan," "will," "would," "forecast,"
"believe," "guidance," "projection" or similar expressions, but
these words are not the exclusive means for identifying such
statements. The Company cautions that a number of risks,
uncertainties and other important factors could cause the Company's
actual results to differ materially from those in the
forward-looking statements including, without limitation, current
economic conditions, foreign currency fluctuations, risks
associated with the Company's continued research and development
efforts with respect to the endovascular products (including the
risk that those efforts will not be successful and that some of the
associated milestone payments will not be received), Spectranetics'
success in selling the endovascular products, the Company's success
in distributing its products into the marketplace, the Company's
dependence on four major customers (St. Jude Medical, Arthrex,
Orthovita and Spectranetics) and their success in selling Kensey
Nash related products in the marketplace, the impact of product
recalls and other manufacturing issues, the Company's success in
its research and development efforts in its cartilage repair and
extracellular matrix technologies programs, the completion of
additional clinical trials in both the U.S. and Europe to support
regulatory approval of future generations of our products and
competition from other technologies. For a detailed discussion of
factors that could affect the Company's future operating results,
please see the Company's SEC filings, including the disclosure
under "Risk Factors" in those filings. Except as expressly required
by the federal securities laws, the Company undertakes no
obligation to update or revise any forward-looking statements,
whether as a result of new information, changed circumstances or
future events or for any other reason. - FINANCIAL INFORMATION TO
FOLLOW - KENSEY NASH CORPORATION CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS Three Months Fiscal Year Ended June 30, Ended June
30, -------------- -------------- 2009 2008 2009 2008 ---- ----
---- ---- Revenues: Net sales Biomaterial sales $12,328,406
$13,330,890 $51,045,578 $47,538,923 Endovascular sales 1,241,254
1,637,713 3,858,187 6,221,942 --------- --------- ---------
--------- Total net sales 13,569,660 14,968,603 54,903,765
53,760,865 Royalty income 6,939,875 7,003,252 27,177,085 26,030,032
--------- --------- ---------- ---------- Total revenues 20,509,535
21,971,855 82,080,850 79,790,897 ---------- ---------- ----------
---------- Operating costs and expenses: Cost of products sold
5,786,303 9,097,198 24,193,941 27,211,681 Research and development
4,543,863 4,339,583 18,134,442 17,200,762 Selling, general and
administrative 2,589,795 9,084,474 9,219,001 27,575,105 Loss on
sale of endovascular assets - 1,212,478 - 1,212,478 --------
--------- -------- --------- Total operating costs and expenses
12,919,961 23,733,733 51,547,384 73,200,026 ---------- ----------
---------- ---------- Income/(loss) from operations 7,589,574
(1,761,878) 30,533,466 6,590,871 Interest and other (expense)
income, net (386,196) (263,568) (744,200) 15,088 -------- --------
-------- ------ Pre-tax income/(loss) 7,203,378 (2,025,446)
29,789,266 6,605,959 Income tax Expense/(benefit) 2,487,743
(930,480) 9,710,156 1,816,180 --------- -------- ---------
--------- Net income/(loss) $4,715,635 $(1,094,966) $20,079,110
$4,789,779 ========== =========== =========== ========== Basic
earnings/(loss) per share $0.42 $(0.09) $1.74 $0.40 ===== ======
===== ===== Diluted earnings/(loss) per share $0.41 $(0.09) $1.69
$0.38 ===== ====== ===== ===== Weighted average common shares
outstanding 11,275,314 11,608,026 11,547,266 11,891,469 ==========
========== ========== ========== Diluted weighted average common
shares outstanding 11,589,838 11,608,026 11,897,835 12,471,298
========== ========== ========== ========== CONDENSED CONSOLIDATED
BALANCE SHEETS June 30, June 30, 2009 2008 ---------- ----------
Assets Current assets: Cash, cash equivalents and investments
$79,704,386 $63,496,141 Trade receivables 4,657,850 6,617,156 Other
receivables 6,788,877 9,030,699 Inventory 10,585,065 9,270,864
Prepaid expenses and other assets 941,966 1,859,958 Deferred tax
asset, current 2,490,406 4,277,864 --------- --------- Total
current assets 105,168,550 94,552,682 ----------- ----------
Property, plant and equipment, net 57,972,895 59,598,308 Deferred
tax asset, non-current 807,538 - Other non-current assets 7,141,447
8,277,574 --------- --------- Total assets $171,090,430
$162,428,564 ============ ============ Liabilities and
Stockholders' Equity Current liabilities: Accounts payable and
accrued expenses $7,642,049 $8,972,222 Other current liabilities
295,764 686,267 Current portion of debt 1,399,997 1,399,997
Deferred revenue 782,906 601,131 ------- ------- Total current
liabilities 10,120,716 11,659,617 ---------- ---------- Long term
portion of debt 31,383,333 32,783,333 Long term portion of deferred
revenue 1,808,902 304,939 Deferred tax liability, non-current -
420,598 Other non-current liabilities 4,502,900 2,690,421 ---------
--------- Total stockholders' equity 123,274,579 114,569,656
----------- ----------- Total liabilities and stockholders' equity
$171,090,430 $162,428,564 ============ ============ Non-GAAP
Financial Measures and Reconciliations As used herein, "GAAP"
refers to generally accepted accounting principles in the United
States. We use various numerical measures in conference calls,
investor meetings and other forums which are or may be considered
"Non-GAAP financial measures" under Regulation G. We have provided
below for your reference supplemental financial disclosure for
these measures, including the most directly comparable GAAP measure
and an associated reconciliation. Earnings Before Interest, Taxes,
Depreciation and Amortization (EBITDA) Three Months Fiscal Year
Ended Ended June 30, June 30, 2009 2009 -------- -------- ($
millions) Net Income - GAAP $4.7 $20.1 Income Tax Expense 2.5 9.7
Interest Income (0.2) (1.2) Interest Expense 0.5 2.1 Depreciation
and Amortization 1.7 6.7 ---- ---- EBITDA $9.2 $37.4 ==== =====
Note: To supplement our consolidated financial statements presented
in accordance with GAAP, Kensey Nash Corporation uses non-GAAP
measures, such as EBITDA. EBITDA represents our GAAP results
adjusted to exclude interest, taxes, depreciation and amortization.
This non-GAAP adjustment is provided to enhance the user's overall
understanding of our historical and current financial performance
and our prospects for the future. We believe the non-GAAP results
provide useful information to both management and investors by
excluding certain expenses that we believe are not indicative of
our core operating results. This non-GAAP measure will provide
investors and management with an alternative method for assessing
Kensey Nash's operating results in a manner consistent with future
presentation. Further, this non-GAAP result is one of several
primary indicators management uses for planning and forecasting in
future periods. The presentation of this additional information
should not be considered in isolation or as a substitute for
results prepared in accordance with accounting principles generally
accepted in the United States. DATASOURCE: Kensey Nash Corporation
CONTACT: Joseph W. Kaufmann, President and Chief Executive Officer
of Kensey Nash Corporation, +1-484-713-2100 Web Site:
http://www.kenseynash.com/
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