Vascular Solutions Reports Second Quarter Results

Vascular Solutions Reports Second Quarter Results

  *Revenue increases 11% to a record $27.4 million, with growth in all three
    of the company's product categories
  *EPS increases over 13% to $0.17
  *Raising the low end of 2013 revenue guidance to a range of $107-$110
    million, an increase of 10% from 2012 at the mid-point of guidance
  *Maintaining adjusted 2013 EPS guidance, excluding the impact of the
    Guardian product recall in Q1, of $0.66-$0.70, an increase of 13% from
    2012 at the mid-point of guidance, corresponding to 2013 EPS guidance of
    $0.62-$0.66 on a GAAP basis

MINNEAPOLIS, July 23, 2013 (GLOBE NEWSWIRE) -- Vascular Solutions, Inc.
(Nasdaq:VASC) today reported financial results for the second quarter ended
June 30, 2013. Net revenue increased 11% to a record quarterly level of $27.4
million compared to $24.7 million in the second quarter of 2012. The company's
revenue guidance range for the quarter was $26.5 million to $27.5 million.

U.S. net revenue increased 13% to $23.3 million compared to $20.7 million in
the year-ago second quarter, while international revenue was $4.0 million,
flat on a year-over-year basis. The company expects the resumption of
shipments of the Guardian^® hemostasis valve and the launch of the Venture^®
catheter in international markets in the third quarter to help restore growth
to international product sales for the second half of the year.

Gross margin was 68.8% in the second quarter, an improvement from 66.7% in the
second quarter of 2012 and consistent on a sequential basis with 68.7%
(adjusted for the impact of the Guardian recall) in the first quarter of 2013.
Vascular Solutions expects gross margins of between 68% and 69% for the
remainder of 2013.

Operating income in the second quarter was $4.4 million, an increase of nearly
13% compared to $3.9 million in the year-earlier quarter. The operating margin
was 16.2%, compared to 15.9% in the year-ago second quarter. Operating income
in the second quarter of 2013 was negatively impacted by $339,000 in expenses
resulting from the U.S. medical device excise tax that took effect on January
1, 2013. For the remainder of 2013, Vascular Solutions expects operating
margins to be at or greater than 17%.

EPS in the second quarter was $0.17, an increase of over 13% from $0.15 in the
second quarter of 2012. The company's guidance called for second quarter EPS
of between $0.16 and $0.17.

"Vascular Solutions reported another very strong quarter, with continued
double-digit sales growth to a new record quarterly level combined with
ongoing improvement in our operating margin," said Howard Root, Chief
Executive Officer of Vascular Solutions. "We are especially pleased to achieve
growth in all three of our product categories in light of the continuing
challenges in the global healthcare environment. Our consistently strong
financial performance reflects our demonstrated ability to develop and launch
clinically-relevant new products on a continuing basis. With approximately ten
new products scheduled for launch this year and 40 total new product ideas in
our pipeline, we remain optimistic about our continued revenue and earnings
growth for 2013 and beyond."

Second Quarter Revenue by Product Line

Net sales of catheter products, the company's largest product line, were $17.4
million during the second quarter of 2013, an increase of 13% compared to
$15.4 million in the second quarter of 2012.

Within the catheter products category, sales of the GuideLiner^® catheter were
$5.2 million in the second quarter, an increase of 41% from the $3.7 million
in the year-ago quarter. "During the second quarter, GuideLiner became our
highest-selling product on an annualized basis after a little more than three
years on the market," Mr. Root said. "The GuideLiner continues to experience
rapid adoption as more and more physicians recognize the clinical benefits of
this breakthrough product in challenging interventions, and we are proud to
have created the new market for guide extension with this internally-developed
product."

Second quarter sales of Pronto^® aspiration catheters were $5.1 million,
stable on both a sequential and year-over-year basis. "This marked the seventh
consecutive quarter of steady results for our Pronto catheter business, which
is an excellent result in a worldwide aspiration catheter market that remains
challenging due to competitive pricing pressures," Mr. Root said. "We are
maintaining our leading share in this market due to the superior features and
benefits of the Pronto catheter, and we remain focused on broadening our
product offerings in the aspiration catheter market."

Other catheter products that contributed significantly to the year-over-year
sales increase in the second quarter were specialty guidewires for
interventional procedures, which grew 38%; the Langston^® dual-lumen pressure
measurement catheters, which grew 18%; and micro-introducer kits, which grew
14%. Manufacturing scale-up of the Venture catheter, which was acquired in
2012, was completed in the second quarter of 2013 and the catheter re-launched
in the U.S. on April 29 resulting in nearly $500,000 to second quarter
revenue. Vascular Solutions expects to begin the roll out of Venture in select
European markets in August.

As a result of the previously-announced recall of the Guardian hemostasis
valve on February 28, there were no sales of the Guardian valve during the
second quarter, compared to sales of $600,000 in the year-ago second quarter.
The vendor manufacturing issue that resulted in the recall has been addressed
and the company expects to resume worldwide shipments of the Guardian valve in
August.

Net sales of hemostat products (mainly consisting of D-Stat^® Dry, D-Stat
Flowable and radial catheterization products) were $6.0 million in the second
quarter, an increase of 4% from the year-earlier $5.8 million, and a
sequential increase of 4% from $5.8 million in the first quarter of 2013.
Growth in the category was driven by sales growth of both the Vasc^™ Band for
radial hemostasis and the Accumed^™ wrist positioning splint for radial
catheterizations that Vascular Solutions acquired in June of 2012. "We are
very pleased to have achieved our goal of restoring growth in our hemostat
products category," Mr. Root said. "Just as we did last year in our vein
business, we were able to reinstate growth in our hemostat business this year
through our commitment to new products. We are still in the early stages of
our new product initiatives in the fast-growing radial artery catheterization
market, and we have several additional products targeting this category slated
for launch over the next year."

In the vein products category, second quarter net revenues increased 12% to
$3.8 million from $3.4 million in the year-ago quarter. Vein product revenue
during the second quarter included $1.8 million from the reprocessing service
for ClosureFAST^® radiofrequency catheters, compared to $1.0 million in
reprocessing revenue in the year-ago second quarter and approximately $1.5
million in the first quarter of this year. The ClosureFAST reprocessing
service was launched on January 16, 2012. "Our reprocessing partner, Northeast
Scientific, Inc., has now successfully reprocessed more than 25,000
ClosureFAST vein ablation catheters, and that volume is a strong indication of
the reliability and effectiveness of this reprocessing program," Mr. Root
said. "We expect significant continued growth in our ClosureFAST reprocessing
service in 2013, and we also intend to benefit by launching new products that
will be used in conjunction with the reprocessed ClosureFAST catheters and by
selling more of our ancillary products for vein therapy procedures to our
expanded vein clinic customer base."

Financial Guidance

For 2013, Vascular Solutions is raising the low end of revenue guidance to a
range of between $107 million and $110 million. The mid-point of this range
represents an increase of 10% from 2012 revenues of $98.4 million. Previously,
the company's revenue guidance was a range of $106 million to $110 million.

Vascular Solutions continues to expect 2013 net earnings, adjusted to exclude
the effects of the Guardian product recall during the first quarter, of
between $0.66 and $0.70 per fully diluted share, which at the mid-point
represents growth of 13% from $0.60 in 2012. On a GAAP basis, this adjusted
earnings guidance corresponds to net earnings of between $0.62 and $0.66 per
fully diluted share. Both the adjusted and GAAP earnings per share guidance
for 2013 include between $1.3 million and $1.5 million for the U.S. medical
device excise tax, and an assumed 36% effective income tax rate.

For the third quarter of 2013, Vascular Solutions is providing guidance for
net revenue of between $26.5 million and $27.5 million, which at the mid-point
would represent growth of approximately 10% from revenues of $24.6 million in
the third quarter of 2012. Net earnings for the third quarter of 2013 are
projected to be between $0.16 and $0.17 per fully diluted share, compared to
$0.16 in the third quarter of 2012. The company's net earnings guidance for
the third quarter of 2013 includes $800,000 in non-cash stock-based
compensation, $400,000 in amortization of intangibles, $350,000 for the U.S.
medical device excise tax, and an assumed 38% effective income tax rate.

Cash Flow and Balance Sheet Highlights

Vascular Solutions ended the second quarter of 2013 with $19.7 million in cash
and equivalents, up from $14.1 million at the end of the first quarter. During
the second quarter, the company generated $4.0 million in cash from operations
and used cash of approximately $1.0 million for capital expenditures. Vascular
Solutions has no debt and has an untapped $10 million revolving credit line.

"Vascular Solutions has excellent operating cash flows, a strong balance
sheet, and good working capital flexibility, which has allowed us to expand
our revenue opportunities through tuck-in acquisitions and alliances while
continuing to make the capital investments that are necessary to support our
future growth objectives," Mr. Root said. "We have a strong pipeline of
internally-developed new products in development and we remain committed to
acquisitions or alliances that will allow us to leverage our existing call
points in interventional cardiology, interventional radiology,
electrophysiology, and the vein market."

Conference Call & Webcast Information

Vascular Solutions will host a live webcast starting at 3:30 p.m., Central
Time today to discuss the information contained in this press release.The
live web cast may be accessed on the investor relations portion of the
company's web site at www.vasc.com.An audio replay of the call will be
available until Tuesday, July 30, 2013, by dialing 888-203-1112 and entering
conference ID # 9968912.A recording of the call will also be archived on the
Company's web site, www.vasc.com, until Tuesday, July 30, 2013. During the
conference call the Company may answer one or more questions concerning
business and financial developments and trends, the Company's view on earnings
forecasts and new product development and financial matters affecting the
Company, some of the responses to which may contain information that has not
been previously disclosed.

VASCULAR SOLUTIONS, INC.
CONDENSED STATEMENTS OF EARNINGS
(In thousands, except per share data)
                                                                  
                                         Three Months Ended Six Months Ended
                                          June 30,          June 30,
                                         2013      2012     2013     2012
                                         (unaudited)       (unaudited)
                                                                  
Revenue:                                                           
Product revenue                           $ 27,294  $ 24,650 $ 53,271 $ 48,356
License and collaboration revenue         59        87       147      175
Total revenue                             27,353    24,737   53,418   48,531
                                                                  
Product costs and operating expenses:                              
Cost of goods sold                        8,538     8,231    17,235   16,069
Collaboration expenses                    8         --       8        --
Research and development                  3,482     2,953    6,887    6,028
Clinical and regulatory                   1,099     1,172    2,262    2,304
Sales and marketing                       6,784     6,490    13,756   13,091
General and administrative                2,269     1,613    4,509    3,299
Medical device excise taxes               339       --       656      --
Amortization of purchased technology and  392       338      759      673
intangibles
Operating earnings                        4,442     3,940    7,346    7,067
                                                                  
Interest expense                          (3)       (3)      (6)      (6)
Foreign exchange gain/(loss)              4         (25)     (9)      (21)
Earnings before income taxes              4,443     3,912    7,331    7,040
                                                                  
Income tax expense                        (1,635)   (1,528)  (2,398)  (2,748)
Net earnings                              $ 2,808   $ 2,384  $ 4,933  $ 4,292
                                                                  
Net earnings per share - basic            $ 0.17    $ 0.15   $ 0.31   $ 0.27
Weighted average shares used in           16,246    15,855   16,167   15,951
calculating - basic
Net earnings per share - diluted          $ 0.17    $ 0.15   $ 0.29   $ 0.26
Weighted average shares used in           16,855    16,242   16,771   16,310
calculating - diluted


VASCULAR SOLUTIONS, INC.
CONDENSED BALANCE SHEETS
                                                            
                                                 June 30,    December 31,
                                                  2013        2012
                                                 (unaudited) (note)
ASSETS                                                       
Current assets:                                              
Cash and cash equivalents                         $ 19,705    $ 11,554
Accounts receivable, net                         14,292      13,780
Inventories                                       13,576      13,737
Prepaid expenses and other                        2,737       2,670
Current portion of deferred tax assets            6,800       6,800
Total current assets                              57,110      48,541
Property, plant and equipment, net                16,241      14,756
Goodwill                                          10,351      10,387
Intangible assets, net                            11,546      12,325
Deferred tax assets, net of current portion and   1,804       1,993
liabilities
Total assets                                      $ 97,052    $ 88,002
                                                            
LIABILITIES AND SHAREHOLDERS' EQUITY                         
Current liabilities:                                         
Total current liabilities                         $ 11,034    $ 10,525
                                                            
Long-term deferred revenue and contingent         508         610
consideration, net of current portion
                                                            
Shareholders' equity:                                        
Total shareholders' equity                        85,510    76,867
Total liabilities and shareholders' equity        $ 97,052    $ 88,002
                                                            
Note: Derived from the audited financial statements at that date.           


VASCULAR SOLUTIONS, INC.
NON-GAAP RECONCILIATION OF ADJUSTED EARNINGS
(Unaudited)
                                                        
EPS – full year GAAP guidance                            $0.62 to $0.66
Guardian Recall Adjustments (a)                          $0.04 (b)
EPS – full year Non-GAAP adjusted guidance                $0.66 to $0.70
                                                        
(a) On February 28, 2013, Vascular Solutions Zerusa Ltd., a subsidiary of
Vascular Solutions, Inc., initiated a recall of its Guardian hemostasis
valves.The Company expects to resume shipping Guardian hemostasis valves in
August 2013.The Company estimates reduced Guardian product revenue of
$850,000 for the full year as a result of the product being off the market
between those dates. The Company recorded costs of approximately $550,000
related to scrap, product returns, and freight associated with recalling the
product, all of which was included as additional cost of goods sold in the
first quarter of 2013.
                                                        
(b) Reflecting $850,000 of lost revenue and $550,000 of Guardian product
recall costs, after tax at an assumed rate of 38%

About Vascular Solutions

Vascular Solutions, Inc. is an innovative medical device company that focuses
on developing unique clinical solutions for coronary and peripheral vascular
procedures.The company's product line consists of more than 75 products and
services in three categories: catheter products, hemostat products and vein
products.Vascular Solutions delivers its products and services to
interventional cardiologists, interventional radiologists,
electrophysiologists and vein specialists through its direct U.S. sales force
and international independent distributor network.

All listed trademarks are the property of Vascular Solutions, Inc. with the
exception of ClosureFAST, which is a registered trademark of VNUS Medical
Technologies, Inc.

Safe Harbor for Forward-Looking Statements

The information in this press release contains forward-looking statements that
involve risks and uncertainties. Those statements include expectation about
our future revenues, gross margin, operating margin, lost Guardian products
revenue, non-cash stock-based compensation expense, amortization of
intangibles, U.S. medical device excise tax, income tax rate and earnings per
share; expectations about resumption of Guardian products shipments and the
launch of the Venture catheter in international markets; expected future
radial artery catheterization products; and expectations about growth in our
ClosureFAST reprocessing service and sales of ancillary products to our vein
clinic customer base. Our actual results could differ materially from those
anticipated in these forward-looking statements. Important factors that may
cause such differences include those discussed in our Annual Report on Form
10-K for the year ended December 31, 2012 and other recent filings with the
Securities and Exchange Commission. The risks and uncertainties include,
without limitation, risks associated with the need for adoption of our new
products, exposure to intellectual property claims and the costs of
intellectual property litigation, significant variability in quarterly
results, exposure to possible product liability claims, the development of new
products by others, doing business in international markets, the availability
of third party reimbursement, the mix of our revenues between products we
manufacture and sell in the United States, products we sell internationally,
service reviews and sales of purchased finished goods, and actions by the FDA.

Use of Non-GAAP Financial Information

In addition to reporting financial results in accordance with generally
accepted accounting principles, or GAAP, we are providing non-GAAP guidance on
full-year earnings per share adjusted for the effects of the Guardian product
recall. We believe that non-GAAP earnings per share provides meaningful
insight to investors by adjusting for unusual and unpredictable events and
allowing investors to evaluate our financial performance without the effects
of such events.We use non-GAAP earnings per share to assess our operating
performance and to compare results between periods. The method we use to
produce non-GAAP earnings per share is not in accordance with GAAP and may
differ from the methods used by other companies. Non-GAAP guidance should not
be regarded as a substitute for corresponding GAAP measures but instead should
be utilized as supplemental information in evaluating our business. Non-GAAP
measures do have limitations in that they do not reflect certain items that
may have a material impact upon our reported financial results. As such, the
non-GAAP guidance presented should be viewed in conjunction with both our
financial statements prepared in accordance with GAAP and the reconciliation
of the supplemental non-GAAP guidance to the comparable GAAP guidance, which
is attached to this release.

For further information, connect to www.vasc.com.

CONTACT: Vascular Solutions, Inc.
         James Hennen, CFO
         JHennen@vasc.com
         (763) 656-4352
        
         Phil Nalbone, VP
         PNalbone@vasc.com
         (763) 656-4371