On Record Sales, Vascular Solutions Warns Of Legal Costs
Vascular Solutions, Inc.—a Maple Grove-based medical device firm and one of Minnesota’s 65 largest public companies—reported record sales for its latest quarter, although the company warned that ongoing legal costs will impact earnings growth this year.
The company, which focuses on “interventional vascular procedures” and creates catheters used by vascular specialists, among other products, said revenue climbed 15 percent to reach a record $29.9 million for the quarter that ended March 31. Revenue fit in the company’s previously announced expectation of between $29.5 million and $30.5 million. U.S. sales climbed 14 percent to $25 million, while international sales rose 18 percent to $4.8 million.
Earnings, meanwhile, totaled $2.8 million, up more than 30 percent from $2.1 million during the same period a year ago. Earnings per share totaled $0.16, up 26 percent—but the company noted that “above-budget legal expenses” of $430,000 reduced per-share earnings by $0.02, causing the company to miss its guidance of $0.17 to $0.18 per share.
In fact, the company revised its full-year earnings guidance in anticipation of higher legal costs for the remainder of the year.
Vascular Solutions sued Boston Scientific last May for allegedly infringing on three of its patents related to its guided catheter products. In December, Vascular Solutions won a preliminary injunction that temporarily barred Boston Scientific from selling its “Guidezilla” guide extension catheter amid ongoing patent infringement litigation between the companies. But earlier this month, Vascular Solutions said that the injunction was lifted.
In other legal costs, Vascular Solutions paid $520,000 in February to settle an unrelated civil lawsuit that accused it of improperly marketing a medical product. The company said at the time that a criminal investigation is ongoing.
After noting the company’s record first-quarter sales, Vascular Solutions CEO Howard Root said: “On the earnings side, our continuing substantial growth in operating performance was masked somewhat by higher-than-budgeted legal expenses associated with substantial discovery and appellate activity in our GuideLiner patent infringement lawsuit against Boston Scientific and the ongoing U.S. Attorney investigation related to our Vari-Lase Short Kit product.”
And in light of the anticipated ongoing legal costs, Vascular Solutions said it now expects its full-year earnings to be between $0.71 and $0.75 per share—which would still represent a 12 percent increase over 2013 earnings.
“Legal expenses are difficult to predict, and while we are intensely focused on containing these costs, our revised earnings guidance for 2014 reflects our updated expectation that legal costs will continue to run over our original budget,” Root said in a statement. “Even with these additional legal costs, however, we expect our continued operating leverage from our established business model will continue to increase in 2014.”