Oct. 22, 2009 (PR Newswire) -- EXTON, Pa., Oct. 22 /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 first quarter ended September 30, 2009.
First Quarter Snapshot and Recent Developments
-- EPS of $0.43, exceeding the high end of previous guidance of
$0.40-$0.42.
-- Revenue of $19.7 million, just below the low end of previous guidance of
$19.8-$20.2 million.
-- Net sales of $13.4 million, exceeding the high end of previous guidance
of $13.0-$13.2 million.
-- Royalty income of $6.3 million, below our previous guidance of $6.8-
$7.0 million.
-- Operating margin of 39%.
-- Operating cash flow of $8.6 million.
-- EBITDA* of $9.4 million.
-- Signed strategic distribution agreement with Synthes for certain
products developed from our unique extracellular matrix (ECM)
technology.
President and CEO Commentary
"We are pleased to report earnings and net sales in line with our expectations, and consistent with the comparable prior year period. However, our royalty income was down from the prior year and sequentially. Although it is difficult to assess the exact cause for the softness in our royalties, it appears to be a combination of product mix and the negative affects of foreign currency exchange. We believe our net sales growth, particularly related to sports medicine products will be negatively affected in the short-term by the reduction in elective procedures, combined with reduced hospital inventories, caused by the current economic environment. Though we are cautious about the short-term healthcare markets, we expect to see improvement in the second half of our fiscal year. Despite these depressed economic conditions, we are confident in our ability to increase profitability and continue to invest in our exciting new product portfolio including our ECM and cartilage technologies," commented Joe Kaufmann, President and CEO of the Company.
First Quarter Ended September 30, 2009 (First Quarter Fiscal 2010) Results
Revenues: Sales and Royalties. Total revenues for the quarter of $19.7 million decreased 2% from total revenues of $20.1 million in the prior year first quarter.
Net sales were essentially flat at $13.4 million when compared to the prior fiscal year comparable period. Net sales of biomaterials products were $12.6 million compared to $12.7 million in the comparable prior fiscal year period, but in line with the Company expectations. Orthopaedic sales, consisting primarily of sports medicine and spine products, decreased from $8.0 million to $6.4 million. Net sales of spine products decreased $1.0 million to $2.7 million in the first quarter of fiscal 2010 from $3.7 million in the prior fiscal year comparable quarter. Fiscal year 2009 spine sales included a one-time cancellation fee of $825,000 for a research and development project. Net sales of sports medicine products decreased $400,000 or 10% but were in line with the Company expectations. Cardiovascular sales of $4.9 million, consisting primarily of vascular closure product components to St. Jude Medical (NYSE: STJ), increased from $4.0 million in the prior fiscal year period. The Company expects fiscal year 2010 cardiovascular sales growth to be at the low single digit percentage level.
Endovascular sales during the quarter increased to $858,000 from $792,000 in the comparable prior fiscal year period, primarily due to the recognition of milestone revenue under the research and development agreement with Spectranetics. Spectranetics has indicated to the Company that it plans to discontinue sales of the SafeCross products. In addition, the QuickCat manufacturing will be transferred to Spectranetics at the end of December 2009. Following the second quarter of fiscal 2010, the Company expects its manufacturing of endovascular products will be limited to the ThromCat product. The Company continues to work with Spectranetics under a milestone driven research and development agreement, and may earn additional milestones and royalties based on future Spectranetics' product sales.
Royalty income for the first quarter of fiscal 2010 was $6.3 million, compared to $6.7 million in the comparable prior fiscal year period. Royalty income in the first quarter of fiscal 2010 included $4.9 million in Angio-Seal(TM) royalties and $1.4 million in royalties from Orthovita, Inc. (Nasdaq: VITA) Angio-Seal(TM) royalties which were also negatively effected by foreign exchange rates, decreased by approximately $400,000 in the first quarter of fiscal 2010 over the prior fiscal year comparable quarter. Royalties from Orthovita were flat compared to the prior fiscal period.
Earnings Per Share. First quarter diluted earnings per share were $0.43, compared to diluted earnings per share of $0.43 for the same period of fiscal 2009.
During the first quarter of fiscal 2010, the Company's total tax-effected equity compensation expense was $445,000, an increase from $191,000 in the prior year comparable period. First quarter fiscal 2010 equity compensation expense was higher than the comparable prior year period primarily because fiscal 2010 expense included amortized expense related to two years of equity grants, while first quarter fiscal 2009 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. Also negatively effecting earnings per share was a $305,000 decrease in interest income in the first quarter of fiscal 2010 compared to the prior fiscal year comparable quarter, primarily due to the significant decrease in interest rates.
During the quarter ended September 30, 2009, the Company generated cash from operations of $8.6 million and, at September 30, 2009, had $86.9 million of cash and investment balances and total debt of $32.4 million.
Supplemental Sales Data.
