Kensey Nash Reports Fourth Quarter and Fiscal Year 2007 Results
Discontinuance of Embolic Protection Platform. As announced on July 10,2007, the Company made a strategic decision to cease all activities related toits embolic protection platform. As a result of this action, the Company hasrecorded certain charges in its fourth fiscal quarter, including $4.3 millionin write-offs of inventory, certain dedicated embolic protection equipment,and other assets. Additionally, KNC offered its customers credits for unusedembolic protection product, which totaled $356,000 during the quarter. Thetotal of these charges and credits is approximately $4.7 million, or $0.25 pershare tax-effected, and is presented within the Company's results ofcontinuing operations for the quarter ended June 30, 2007. Additional chargesrelated to severance and clinical trial closeout costs will be recorded in thefirst fiscal quarter of 2008, and are expected to total approximately$600,000.
Fourth Quarter Results
Revenues, Sales and Royalties. Total revenues, which include net salesand royalty income, were $17.0 million in the quarter, a decrease of 8% from$18.4 million in the prior year fourth quarter.
Net sales decreased 16% to $10.5 million from $12.5 million in the fourthquarter of fiscal 2006. Net sales of biomaterials products decreased 19% to$9.7 million from $12.0 million in the comparable prior year fiscal quarter.Overall, the decrease had been expected due to the ordering patterns fromcertain major customers in the Company's biomaterials business, and a strongfourth quarter last fiscal year. Additionally, Angio-Seal component sales werenegatively impacted by a $611,000 credit given to St. Jude Medical forexceeding annual volume pricing targets during the quarter.
Sales of endovascular products to customers during the quarter increased169% to $1.2 million from $432,000 in the prior year period, and increased 11%sequentially over the March quarter. Offsetting current quarter end-usersales were the $356,000 in credits given to customers in relation to theembolic protection decision, resulting in net endovascular sales of $806,000.The results reflected both strong U.S. and international sales of theThromCat(TM) Thrombectomy and QuickCat(TM) Aspiration Catheter products.
Royalty income increased 9% to $6.5 million compared to $5.9 million inthe comparable prior year period. Royalty income included $5.4 million inAngio-Seal(TM) royalties, up 6% from the comparable quarter of the priorfiscal year, and $1.0 million in royalties from Orthovita, Inc.(Nasdaq: VITA), up 26% from the prior year fourth quarter.
Earnings Per Share. The Company reported a fourth quarter loss per shareof ($0.15) compared to $0.21 diluted earnings per share for the fourth quarterof the prior year. The loss per share included $0.25 of charges and creditsrelated to the discontinuation of the embolic protection platform, $0.03 pershare for the volume discount to St. Jude Medical, and $0.01 per share for awrite-off of previously deferred costs related to a prospective acquisition nolonger being pursued. Earnings per share for the prior year period had beenimpacted by $0.02 per share of transition costs related to the facility movein fiscal 2006. Equity compensation expense was $0.03 and $0.02 per share inthe periods ended June 30, 2007 and 2006, respectively.
The following chart summarizes the Company's results for the three monthsended June 30, 2007, compared to its results for the comparable period in theprior fiscal year. See attached schedules for a detailed reconciliationbetween the non-GAAP and reported GAAP results.
Fiscal Year 2007 Results. Total revenues for the fiscal year ended June30, 2007 were $69.5 million, up 15% from total revenues of $60.4 milli
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