EXTON, Pa., March 16, 2012 /PRNewswire/ -- Kensey Nash
Corporation (NASDAQ: KNSY) today announced that the Company has
entered into a settlement agreement with St. Jude Medical which
resolves all disputes between the two companies relating to the
Angio-Seal vascular closure device licenses, as well as other
related claims. As part of the settlement agreement, the companies
also agreed to extend their collagen supply agreement through 2017
and expand the minimums to be provided over the contract term to
five million units.
Under the terms of the agreement, Kensey
Nash will receive $39 million
from St. Jude, payable in 12 equal quarterly payments beginning
March 31, 2012, in lieu of all future
royalties for the Angio-Seal and all other related claims. The
Company expects to recognize the $39
million as royalty revenue on a straight line basis
beginning January 2012 through
April 2014, which is the expiration
of the last to expire of patents exclusively licensed by
Kensey Nash to St. Jude under the
settlement agreement and acknowledged by both parties to cover the
Angio-Seal device. Additionally, Kensey
Nash will continue to be the exclusive outside supplier of
collagen for the Angio-Seal device through 2017. The approximate
value of the minimum orders under the collagen supply agreement
over the five year extension is $31
million.
"We are pleased the mediation process led to a fair and swift
resolution for both parties, and we are excited that our long-term
relationship with St. Jude will continue through at least 2017.
This settlement eliminates the uncertainty that had existed with
our royalty income and our role as a long term supplier of
collagen," commented Joe Kaufmann,
President and CEO.
Updated Fiscal 2012 Guidance. As a result of the
settlement, the Company has now updated its fiscal 2012 guidance as
follows:
(in millions except per share
data)
|
Three
Months Ended
March 31,
2012
|
Three
Months Ended
June 30,
2012
|
Fiscal
2012
|
Net
Sales
|
$16.1-
$16.3
|
$17.5-
$18.0*
|
$65.5-
$66.3
|
Royalties
|
$5.7-
$5.9
|
$5.7-
$6.0
|
$22.3-
$22.8
|
Total
Revenues
|
$21.7-
$22.1
|
$23.2-
$24.0*
|
$87.9-
$89.1
|
Adjusted
Earnings Per Share**
|
N/A
|
N/A
|
$1.59-
$1.63***
|
As
Reported Earnings Per Share**
|
$0.33-
$0.35
|
$0.43-
$0.45
|
$1.51-
$1.55
|
*Includes approximately $1.5
million of additional milestone revenue due to the expected
close-out of the Spectranetics development agreement, the
accounting for which is not finalized, and subject to change.
**Tax treatment and transaction costs of settlement transaction are
not finalized, and are not reflected in fiscal 2012
guidance.
***Adjusted earnings per share is a non-GAAP financial measure and
should not be considered as a replacement for GAAP results or
guidance. For a reconciliation of this non-GAAP financial measure
to the most directly comparable GAAP financial measure, see the
accompanying table to this release.
Preliminary Fiscal 2013 Guidance. The Company is
providing preliminary top level guidance for fiscal 2013 which
includes the impact of the settlement, and the expected collagen
orders under the new supply agreement. Total fiscal 2013
revenues are expected to be approximately $100 million, and earnings per share are expected
to exceed $2.00 per share.
Conference Call and Webcast. The Company will be
hosting a teleconference regarding the matters discussed in this
press release at 8:30 A.M., Eastern
Time, on Monday, March 19th. To participate in the
teleconference call, please dial 480-629-9035. Individuals
interested in listening to the teleconference may also do so over
the Internet at www.kenseynash.com. To do so, please go to
www.kenseynash.com and choose the Investor Relations
page. Please allow 15 minutes prior to the start of the call
to register and download and/or install any necessary
software. A replay of the teleconference will be archived at
www.kenseynash.com and may be accessed following the
teleconference. The teleconference call will also be
available for replay starting Monday, March
19, 2012 at 10:30 A.M. Eastern
Time through Monday, March 26,
2012 at 11:59 P.M. Eastern
Time by dialing 1-800-475-6701 with an access code of
242034.
About Kensey Nash Corporation. Kensey Nash
Corporation is a medical device company primarily focused on
regenerative medicine utilizing its proprietary collagen and
synthetic polymer technology. The Company is recognized as a
leader for innovative product development and unique technology in
the field of resorbable biomaterials. The Company has an
extensive range of products, which are sold through strategic
partners in multiple medical markets, including the cardiology,
orthopaedic, sports medicine, spine, endovascular and general
surgery markets. For more information, visit
www.kenseynash.com.
Cautionary Note for Forward-Looking Statements.
This press release contains forward-looking statements, including
the statements regarding the future impact of the settlement and
new long-term supply agreements with St. Jude Medical and the
Company's updated fiscal 2012 guidance and preliminary 2013
guidance. The forward-looking statements are covered by the "Safe
Harbor for Forward-Looking Statements" provided by the Private
Securities Litigation Reform Act of 1995. The Company has
tried to identify the forward-looking-statements by using words
such as "plan," "expect," "will," "would," "should," "believe,"
"guidance" and 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 expressed in, or implied by, the
forward-looking statements, including, without limitation, St.
Jude's success in selling the Angio-Seal device and the extent to
which St. Jude Medical is able to and does in fact rely on its
internal manufacturing to fulfill its requirements for collagen
plugs for the Angio-Seal device in excess of the contractual
minimums under the Company's extended collagen supply agreement
with St. Jude, the success of the Company's other customers and
partners (including Arthrex, Stryker and Synthes) in selling
Kensey Nash related products in the
marketplace, the Company's success in its research and development
efforts (including in its cartilage repair, extracellular matrix
and adhesive materials programs), the Company's success in and the
uncertainty of transitioning the Norian manufacturing operations to
the Company and Synthes' success in distributing the Norian
products, the success of clinical trials in both the U.S. and
outside the U.S. to support regulatory approval of the Company's
products, and competition from other technologies, as well as tax
and other risks associated with healthcare reform, economic
conditions and foreign currency fluctuations. For a detailed
discussion of factors that could affect the Company's future
operating results, please see the Company's SEC filings, including
the disclosures 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.
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 measures and associated
reconciliations.
Twelve Months Ended June 30,
2012 Estimated Adjusted Earnings Per Share
|
Fiscal
2012
Guidance
|
Earnings
Per Share - GAAP
|
$1.51-
$1.55
|
Inventory
Step-up Amortization expense (a)
|
$0.08
|
Adjusted
Diluted Earnings Per Share
|
$1.59-
$1.63
|
(a) Estimated diluted earnings per
share for the twelve months ended June 30,
2012 includes acquired inventory step-up non-cash expense of
approximately $1,030,000
($670,000 net of tax), or
$0.08 diluted per share tax-effected,
recorded during the first and second quarters of fiscal 2012 in
connection with the Norian asset acquisition. This represents
the purchase accounting adjustment related to assigning a fair
value to the acquired inventory at the date of acquisition to
adjust inventory for the estimated capitalized manufacturing profit
in the acquired inventory. This non-cash charge to cost of
products sold was recorded over the expected inventory turn-over
period, as the capitalized manufacturing profit added to inventory
under purchase accounting was sold within approximately five months
of the date of acquisition.
Note: Adjusted Diluted Earnings Per Share is adjusted from
GAAP results to exclude the acquired inventory step-up non-cash
expense described above. To supplement its consolidated
financial statements presented in accordance with GAAP, Kensey Nash
Corporation provides and uses non-GAAP measures, such as Adjusted
Diluted Earnings Per Share, because Kensey
Nash management believes that in order to better understand
the Company's short-term and long-term operating trends, investors
may wish to consider Kensey Nash's
operating results excluding the impact of certain non-operating
items, non-cash expenses and expenses that the Company believes are
not indicative of its core operating results or future performance
(such as acquisition related charges including inventory step-up
and related income tax adjustments). These items result from
facts and circumstances (such as business development activities
and acquisitions) that vary in frequency and impact on the
Company's results of operations. Accordingly, the Company
believes that its presentation of these non-GAAP measures may
enhance investors' overall understanding of the Company's
historical and current financial performance. In
addition, Kensey Nash management
uses these non-GAAP measures to forecast and evaluate the
operational performance of the Company and for planning purposes,
as well as to compare results of current periods to prior periods
on a consolidated basis.
Adjusted Diluted Earnings Per Share and other Non-GAAP financial
measures used by the Company may be calculated differently from,
and therefore may not be comparable to, similarly titled measures
used by other companies. Investors should consider non-GAAP
measures in addition to, and not as a substitute for, or as
superior to, financial performance measures prepared in accordance
with GAAP.
SOURCE Kensey Nash Corporation