Highlights of the fourth
Quarter and other recent events include:
Achieved record net revenue of $16.4 million, an increase of 14% from the fourth quarter of 2007.
Achieved net income of $14,684,000, or $0.90 per diluted share, an increase from net income of $519,000 in the fourth quarter of 2007. Net income for the fourth quarter of 2008 includes an income tax benefit in the amount of $13,200,000 as the result of the company’s recognition of a portion of its net operating loss carryforward as a deferred tax asset.
Achieved positive cash flow of $1,610,000
Received FDA clearance in January for the launch of three new products – the Minnie support catheter, GrebSet micro-introducer kit and D-Stat Dry Wrap hemostatic bandage with an additional distributed product, the Flamingo inflation device, launched in February.
Reaffirmed annual revenue and earnings guidance for 2009, resulting in employment growth.
Commenting on the results, Vascular Solutions’ chief executive officer Howard Root said: “Following up on a very positive third quarter, in the fourth quarter we accelerated our momentum and further demonstrated the power of our business model. Looking forward, we do not believe the current global economic situation is affecting our medical device business in any material manner. As a result, we believe that our new products and continued operational efficiencies will allow us to deliver consistent and increasing profitability for the foreseeable future. With this projected growth, in 2009 we plan to increase our full time headcount by 10% at our facilities in Minnesota. Already in the first quarter we have launched four new products through our U.S. direct sales force to our target market of interventional cardiologists and interventional radiologists.”
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 fourth quarter, a decline of 6% from the fourth quarter of 2007. “The hemostatic patch market continues to be very competitive, but our sales force has performed very well in maintaining our leading market share with our D-Stat Dry in the face of intense price competition. In 2009 we believe that new competitive opportunities in the patch market and our recently-launched D-Stat Dry Wrap hemostat for use with in-dwelling lines and catheters will increase our hemostat product sales,” commented Root.
Net sales of extraction catheters (primarily consisting of the Pronto® V3 extraction catheter) were $4.1 million in the fourth quarter, an increase of 41% over the fourth quarter of 2007. “We continue to see growth in the aspiration catheter market resulting from broader acceptance of the growing body of clinical studies on the use of aspiration in STEMI cases.
With several new and improved versions of our extraction catheters planned for launch in 2009, we believe that our extraction catheter product line will continue to deliver substantial sales growth throughout the year,” Root stated.
Net sales of vein products (primarily consisting of the Vari-Lase endovenous laser console and kits) were $3.1 million in the fourth quarter, an increase of 15% over the fourth quarter of 2007. “Sales of our laser consoles and disposable components were strong in the fourth quarter, both sequentially and year-over-year, reflecting the substantial differences between varicose vein procedures and cosmetic vein procedures. We continue to expect our growing vein product portfolio combined with our excellent clinically-based nationwide direct sales force to result in continued growth in vein product sales in 2009,” commented Root.
Net sales of access products (primarily consisting of micro-introducer kits, specialty guidewires and snares), were $1.6 million in the fourth quarter, an increase of 83% over the fourth quarter of 2007. “In the fourth quarter we continued to benefit from the Micro Elite and Expro Elite snares that we launched earlier in 2008 under our distribution agreement with Radius Medical Technologies. In the fourth quarter we substantially increased sales of the Guardian hemostasis valve that we distribute for Zerusa, and recently we added the Flamingo inflation device to our access product line under a distribution agreement with Sedat. In January we received FDA clearance for our newest access product, the GrebSet microintroducer kit that we currently are in the process of launching. With three additional 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 and Twin-Pass dual access catheters), were $1.2 million in the fourth quarter of 2008, an increase of 32% over the fourth quarter of 2007. “Driving fourth quarter sales in specialty catheters was our Twin-Pass catheter, which increased by 22% sequentially from the third quarter. In the fourth quarter we also completed the worldwide launch of the Gandras™ catheter for use in uterine fibroid embolization procedures. More recently, in January we received FDA clearance and immediately launched the Minnie™ support catheter, a product that we project will add $2 million in sales to our specialty catheter line in 2009,” Root added.
Gross margin across all product lines was 65.0% in the fourth quarter of 2008, down from 67.4% in the fourth quarter of 2007, principally due to changes in the mix of products sold. Based on the projected sales product mix, gross margin on product sales in the first quarter of 2009 is expected to continue to be between 65% and 66%. In the fourth quarter of 2008 the company also recognized $670,000, or $0.04 per share, of non-cash cost of goods sold expense related to thrombin previously purchased under its Thrombin-VSI qualification project that the company currently estimates will expire before it can be used to manufacture hemostat products to be sold in international markets.
Net income for the fourth quarter was $14,684,000, or $0.90 per share, compared to net income of $519,000, or $0.03 per share, in the fourth quarter of 2007. Net income for the fourth quarter of 2008 includes an income tax benefit in the amount of $13,200,000, or $0.81 per share, as the result of the Company’s recognition of a portion of its net operating loss (NOL) carryforward as a deferred tax asset. During the fourth quarter of 2008 the company expensed $345,000 of stock-based compensation expense. As adjusted (excluding stock-based compensation expense, thrombin qualification and thrombin inventory expenses, income tax NOL gain and assuming a fully-taxed rate of 38%) net income was $1,545,000 or $0.10 per fully diluted share in the fourth quarter of 2008, increasing from adjusted net income of $649,000 or $0.04 per fully diluted share in the fourth quarter of 2007, and consistent with earlier guidance.
Regarding future guidance, net revenue for the first quarter of 2009 is expected to increase to between $16.5 million and $16.8 million. Net income in the first quarter of 2009 on a fully-taxed basis is expected to be between $0.05 and $0.07 per fully diluted share. The company is reaffirming its 2009 guidance for net revenue to be between $70 million and $72 million and net income per diluted share on a fully-taxed basis to be between $0.32 and $0.37. “Looking longer term, the launch of four new products in the first quarter of 2009 along with nine additional new products planned for launch in the remainder of 2009 advances our stated goal of achieving $100 million in annualized net revenue before the end of 2010. In addition, we continue to make excellent progress with our larger market projects such as the Mechanical Duett and potential distribution agreements related to large market prod
