EXTON, Pa., June 23 /PRNewswire-FirstCall/ -- Kensey Nash Corporation today updated and expanded its previously announced revenue guidance for its fourth quarter and fiscal year ended June 30, 2008 to include earnings per share estimates. In addition, the Company provided an outlook for its fiscal year ending June 30, 2009.
Fourth Quarter Fiscal 2008
For the fourth quarter of fiscal year 2008, the Company previously provided sales guidance, excluding endovascular product sales, of $12.7 to $12.9 million. The company is now estimating Biomaterial product sales of $13.0 to $13.2 million, an increase of 34% to 36% over biomaterials product sales for the same quarter a year earlier. Total net sales, including endovascular products, are estimated to be $14.3 to $14.5 million, a 32% to 33% increase from the prior year period. Royalties are estimated to be $6.7 to $6.8 million, a 4% to 5% increase over the prior year period, and total revenues are expected to be in a range of $21.0 to $21.3 million, a 21% to 23% increase.
Fourth quarter fiscal year 2008 adjusted diluted earnings per share are expected to be in the range of $0.32 to $0.33, representing an increase of 191% to 200% compared to the same period in fiscal year 2007. Adjusted diluted earnings per share* exclude the estimated $5.1 million in after-tax charges, or $0.41 per share, related to the sale of the Company’s endovascular business. Adjusted diluted earnings per share for the fourth quarter of fiscal year 2007 excluded an after-tax charge for the discontinuance of the Company’s embolic protection platform of $3.1 million, or $0.25 per share. Including these items, the 2008 fourth quarter loss per share is expected to be in a range of ($0.08) to ($0.09) compared to a loss of ($0.15) per share for the same period in fiscal year 2007.
Fiscal Year 2008
Fiscal year 2008 net biomaterials sales guidance was previously announced in a range of $46.9 to $47.1 million. The Company is now estimating biomaterials product sales of $47.2 to $47.4 million, an increase of 15% over the prior year, and total net sales, including endovascular products, in the range of $53.2 to $53.4 million, an 18% increase from fiscal year 2007. Fiscal year 2008 royalties are estimated to be $25.7 to $25.8 million, representing 5% growth from fiscal year 2007. Total revenues are expected to be in a range of $78.9 to $79.2 million, a 13% increase from the prior fiscal year.
Fiscal year 2008 adjusted diluted earnings per share* are expected to be in the range of $0.96 to $0.97, representing an increase of 81% to 83% compared to fiscal year 2007. Estimated adjusted diluted earnings per share for fiscal year 2008 exclude after-tax charges of $7.3 million, or $0.58 per share, for the acceleration of stock awards, discontinuation of the Company’s embolic protection platform, and sale of the Company’s endovascular business. Adjusted diluted earnings per share for the fiscal year 2007 of $0.53 excluded an after-tax charge for the discontinuance of the Company’s embolic protection platform of $3.1 million, or $0.25 per share. Including these items, reported diluted earnings per share for fiscal 2008 are expected to be in a range of $0.38 to $0.39, representing a 31% to 34% increase compared to fiscal year 2007 reported diluted earnings per share of $0.29.
“We are completing our fiscal year with another strong quarter,” commented Joe Kaufmann, President and CEO. “Our Biomaterials business, notably the orthopaedic segment, continued to outperform our target of 25% annual growth, which we provided at the start of this fiscal year. We completed the sale of our Endovascular business in the fourth quarter and are looking forward to a successful strategic relationship with Spectranetics.”
First Quarter Fiscal 2009
For the first quarter of fiscal year 2009, the Company believes that its net sales will be in the range of $13.0 to $13.4 million, representing a 13% to 16% increase from the prior year period. Royalties are expected to be in the range of $6.4 to $6.5 million, a 5% to 7% increase from the prior year period. Total revenues are anticipated to be in the range of $19.4 to $19.9 million, a 10% to 13% increase from the prior year period.
The Company expects fiscal 2009 first quarter diluted earnings per share of $0.34 to $0.36 per share, an increase of 113% to 125% compared to adjusted diluted earnings per share of $0.16 for the same period in fiscal year 2008. Adjusted diluted earnings per share for the first quarter of fiscal year 2008 exclude after-tax charges of $2.2 million, or $0.17 per share, for the acceleration of stock awards and discontinuation of the Company’s embolic protection platform. Including these items, the 2008 first quarter reported diluted loss per share was ($0.02).
Fiscal Year 2009
The Company believes total revenues for fiscal year 2009 will be in a range of $86.7 to $89.0 million, which would represent growth of approximately 10% to 12% over estimated fiscal 2008 total revenues, and that net sales will be in the range of $58.0 to $60.0 million. The Company anticipates fiscal 2009 royalty income in a range of $27.5 to $28.0 million.
Joe Kaufmann noted, “We will continue to invest in research and development to drive future revenue growth, with total research and development spending for fiscal 2009 estimated to be $21.0 million. Approximately 60% of this funding will be dedicated to the biomaterials side of our business to support the exciting opportunities that we believe will have substantial impact on the long-term growth of our Company. We will place significant focus on our cartilage repair product this coming year, where efforts will be dedicated to pre-clinical and clinical programs to further this product toward regulatory approval. In addition, we will perform the development of the next generation ThromCat(TM) and SafeCross(TM) products pursuant to our recent agreement with Spectranetics, under which we will earn milestones for FDA approval of such next generation endovascular products. These products will also provide additional future opportunities to expand both revenue and earnings for our Company.
In closing, we expect that our operating margins will continue to substantially improve and exceed 30% in fiscal year 2009. As a result of our anticipated revenue growth coupled with the expanding operating margins, we believe earnings per share for fiscal 2009 will increase between 65% and 70% over our forecasted 2008 results, to a range of $1.57 to $1.65 per share. We are very excited about our prospects in fiscal year 2009 and beyond.”
Share Buyback
The Company is also announcing that its board of directors has expanded its existing $25.0 million stock repurchase program in order to provide the Company with more flexibility to buy its own shares. The new program allows the Company to repurchase up to an additional $10.0 million of its issued and outstanding shares of Common Stock and has no expiration. The Company intends to finance the repurchases using its available cash, which it forecasts at approximately $58.0 to $60.0 million by June 30, 2008. Kensey Nash Corporation plans to repurchase its shares for cash, from time to time in the open market, through block trades or otherwise. The repurchase program does not require the Company to purchase any specific dollar value or number of shares. Any purchases under the program will depend on market conditions and may be commenced or suspended at any time or from time to time without prior notice. As of May 31, 2008, the Company had approximately 11,539,000 shares of Common Stock outstanding.
* Diluted earnings per share excluding after-tax special charges are non- GAAP financial measures and should not be considered replacements for GAAP results. For a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures, see the accompanying table to this release.
About Kensey Nash Corporation. Kensey Nash Corporation is a leading medical technology company providing innovative solutions and technologies for a wide range of medical procedures. The Company provides an extensive range of products into multiple medical markets, primarily in the sports medicine, spine, and endovascular markets. Many of the products are based on the Company’s significant expertise in the design, development, manufacturing and processing of absorbable biomaterials, which has led to partnerships to commercialize technologies. Kensey Nash has also developed and commercialized a series of innovative endovascular products and recently announced the sale of this product line to Spectranetics, Inc. In conjunction with the sale transaction, the Company will continue to manufacture and develop these products for Spectranetics for a period of time. The Company is known as a pioneer in the field of arterial puncture closure, as the inventor and developer of the Angio-Seal(TM) 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 the forecasts for the fourth quarter of fiscal 2008, the full year fiscal 2008, the first quarter of fiscal 2009 and the full year fiscal 2009. The Company has tried to identify these forward looking statements by using words such as “expect,” “anticipate,” “estimate,” “plan,” “will,” “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, the Company’s success in distributing its endovascular products into the marketplace, the Company’s dependence on four major customers (St. Jude Medical, Arthrex, Orthovita and Spectranetics) and their success in selling KNC related products in the marketplace, the impact of product recalls and other manufacturing issues, 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.
Non-GAAP Financial Measures and Reconciliations
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
Note: To supplement our consolidated financial statements presented in accordance with GAAP, Kensey Nash Corporation uses non-GAAP measures of adjusted earnings per share, which are adjusted from our GAAP results to exclude certain expenses. These non-GAAP adjustments are 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.
These non-GAAP measures will provide investors and management with an alternative method for assessing Kensey Nash’s operating results in a manner consistent with future presentation. Further, these non-GAAP results are one of the 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.
CONTACT: Joseph W. Kaufmann, President and Chief Executive Officer of
Kensey Nash Corporation, +1-484-713-2100
Web site: http://www.kenseynash.com/
