Vascular Solutions Reports First Quarter Results

Vascular Solutions Reports First Quarter Results

  *Record revenues increase 15% to $29.9 million, reflecting growth in all
    three product categories
  *EPS increases 26% to $0.16, including above-budget legal expenses that
    reduced first quarter earnings by $0.02
  *Maintaining 2014 revenue guidance of $121-$125 million, representing an
    increase of 12% at the midpoint of guidance
  *Revising 2014 EPS guidance to $0.71-$0.75, reflecting projected higher
    legal expenses for the remainder of 2014

MINNEAPOLIS, April 22, 2014 (GLOBE NEWSWIRE) -- Vascular Solutions, Inc.
(Nasdaq:VASC) today reported financial results for the first quarter ended
March 31, 2014. Net revenue increased 15% to a record quarterly level of $29.9
million from $26.1 million in the first quarter of 2013. The company's revenue
guidance range for the first quarter was $29.5 million to $30.5 million.

U.S. product sales increased 14% to $25.0 million compared to $21.9 million in
the year-ago first quarter, while international product sales increased 18% to
$4.8 million compared to $4.1 million in the year-ago first quarter.

Gross margin was 68.0% in the first quarter, an increase from 66.6% in the
first quarter of 2013 and an improvement on a sequential basis from 66.5% in
the fourth quarter of 2013. Vascular Solutions expects gross margin to remain
in the range of 67.5% to 68.5% during the balance of the year.

Operating income in the first quarter was $4.4 million, representing an
operating margin of 14.6%. In the year-earlier first quarter, operating income
was $2.9 million, representing an operating margin of 11.1%.

EPS in the first quarter was $0.16, an increase of 26% from $0.13 in the first
quarter of 2013. Above-budget legal expenses incurred in the first quarter
were $430,000, which reduced EPS by $0.02 (after tax) and resulted in first
quarter EPS below the company's guidance of between $0.17 and $0.18.

"During the first quarter, we achieved a new record quarterly level of sales
while increasing our revenue growth rate to 15% based on sales growth in a
range of products and markets," said Howard Root, Chief Executive Officer of
Vascular Solutions. "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. 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. Even with these additional legal costs, however, we
expect our continued operating leverage from our established business model
will continue to increase in 2014," Mr. Root added.

First Quarter Revenue by Product Line

Catheter Products. Sales of catheter products, the company's largest product
line, were $19.2 million during the first quarter of 2014, an increase of 15%
compared to $16.6 million in the first quarter of 2013.

Within the catheter products category, sales of the GuideLiner catheter were
$6.7 million during the first quarter, an increase of 40% from the $4.8
million in the year-ago first quarter and an increase of 20% sequentially from
the $5.6 million in the fourth quarter of 2013. "During the first quarter, our
distribution partner market launched the GuideLiner in Japan where, as
anticipated, GuideLiner was well received with a strong and growing early
adoption," Mr. Root said. "In the U.S. market, Boston Scientific's competitive
catheter was off the market for the majority of the first quarter due to the
preliminary injunction but will now return based on the Federal Circuit's
recent reversal. However, it's important to keep in mind that we faced
competition with this same catheter during the last half of 2013 and our sales
force performed very well, and our guidance for 2014 sales was set before the
preliminary injunction was issued and therefore is unchanged by the Federal
Circuit's decision."

Other catheter products that contributed significantly to the year-over-year
sales increase in the first quarter were the Guardian hemostat valve and
related Flamingo inflation device, which grew 34% in recovery from the recall
on these products experienced in the first quarter of last year; the Elite
snares, which grew 32%; the SuperCross™ microcatheters, which grew 29%;
specialty guidewires for interventional procedures, which grew 20%; and micro
introducer kits, which grew 16%. First quarter sales of Pronto^® aspiration
catheters were $4.7 million, compared to $5.1 million in the year-earlier
quarter, primarily reflecting the result of pricing decreases.

Hemostat Products. Sales of hemostat products (mainly consisting of D-Stat^®
Dry, D-Stat Flowable, and radial products) were $6.0 million in the first
quarter, an increase of 4% from the year-earlier $5.8 million. Growth in this
category was driven by sales of the Vasc™ Band radial hemostatis device and
the Accumed™ wrist positioning splint for radial catheterizations. These two
products combined contributed just over $1.0 million in sales during the first
quarter, representing an increase of more than 73%.

Vein Products and Services. In the vein products and services category, first
quarter net revenues increased 31% to $4.7 million from $3.6 million in the
year-ago quarter. Vein product revenue during the first quarter included $2.7
million from reprocessing for ClosureFAST^® radiofrequency catheters, compared
to approximately $1.5 million in reprocessing revenue in the year-ago first
quarter.

Financial Guidance

For 2014, Vascular Solutions is maintaining guidance for net revenue of
between $121 million and $125 million. The mid-point of this range represents
an increase of 12% from $110.5 million in 2013.

For 2014, Vascular Solutions is revising its earnings guidance to a range of
$0.71-$0.75 per share. The mid-point of this range represents an increase of
12% over the $0.65 reported in 2013. The revision to projected 2014 earnings
reflects solely an additional $2.3 million of forecasted legal expenses, or
$0.08 per share tax-effected. Included in the company's 2014 earnings guidance
are $3.6 million in non-cash stock-based compensation, $1.6 million in
amortization of intangibles, between $1.4 million and $1.5 million for the
U.S. medical device excise tax, and an assumed 36% tax rate.

For the second quarter of 2014, Vascular Solutions is providing guidance for
net revenue of between $30.2 million and $31.2 million, which at the mid-point
would represent growth of 12% from $27.4 million in the second quarter of
2013. Net earnings for the second quarter of 2014 are projected to be between
$0.18 and $0.19 per fully diluted share, compared to $0.17 in the second
quarter of 2013. The company's net earnings guidance for the second quarter of
2014 includes $1.0 million of legal expenses, $800,000 in non-cash stock-based
compensation, just over $400,000 in amortization of intangibles, approximately
$370,000 for the U.S. medical device excise tax, and an assumed 36% effective
income tax rate.

Cash Flow and Balance Sheet Highlights

Vascular Solutions ended the first quarter of 2014 with $32.8 million in cash
and cash equivalents, up from $30.8 million at the end of 2013 and from $14.1
million at the end of the first quarter a year ago. During the most recent
first quarter, the company generated just under $4.0 million in cash from
operations and used cash of approximately $1.3 million for capital
expenditures and $1.8 million to purchase shares that vested under outstanding
restricted stock awards to satisfy income tax withholding requirements.

"Vascular Solutions continues to have excellent operating cash flows, a strong
balance sheet, good working capital flexibility, strong R&D investments to
support our future growth objectives, and a commitment to expanding our
revenue opportunities through tuck-in acquisitions and alliances as attractive
opportunities arise," Mr. Root said.

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, April 29, 2014, by dialing 888-203-1112 and entering
conference ID# 9887639.A recording of the call will also be archived on the
Company's web site, www.vasc.com, until Tuesday, April 29, 2014. 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
                                                     March 31,
                                                     2014      2013
                                                     (unaudited)
                                                              
Revenue:                                                       
Product revenue                                      $29,845   $25,977
License and collaboration revenue                    62        87
Total revenue                                         29,907    26,064
                                                              
Product costs and operating expenses:                          
Cost of goods sold                                    9,583     8,697
Collaboration expenses                                11        --
Research and development                              3,290     3,405
Clinical and regulatory                               1,300     1,163
Sales and marketing                                   7,736     6,971
General and administrative                            2,859     2,240
Medical device excise taxes                           345       317
Amortization of purchased technology and intangibles 412       367
Operating earnings                                    4,371     2,904
                                                              
Interest expense                                      --       (3)
Foreign exchange gain/(loss)                          2         (13)
Earnings before income taxes                          4,373     2,888
                                                              
Income tax expense                                    (1,574)   (763)
Net earnings                                          $2,799    $2,125
                                                              
Net earnings per share - basic                        $0.17     $0.13
Weighted average shares used in calculating - basic   16,686    16,043
Net earnings per share - diluted                      $0.16     $0.13
Weighted average shares used in calculating - diluted 17,538    16,720
                                                              
                                                              

VASCULAR SOLUTIONS, INC.
CONDENSED BALANCE SHEETS
(In thousands)
                                                                
                                                     March 31,   December 31,
                                                     2014        2013
                                                     (unaudited) (note)
ASSETS                                                           
Current assets:                                                  
Cash and cash equivalents                             $32,762     $30,785
Accounts receivable, net                             15,845      14,481
Inventories                                           15,238      14,002
Prepaid expenses and other                            3,100       2,472
Current portion of deferred tax assets                6,000       6,000
Total current assets                                  72,945      67,740
Property, plant and equipment, net                    16,734      16,187
Goodwill                                              10,537      10,532
Intangible assets, net                                11,534      11,943
Deferred tax assets, net of current portion and       1,690       1,739
liabilities
Total assets                                          $113,440    $108,141
                                                                
LIABILITIES AND SHAREHOLDERS' EQUITY                             
Current liabilities:                                             
Total current liabilities                             $13,468     $11,385
                                                                
Long-term deferred revenue and contingent             355         406
consideration, net of current portion
                                                                
Shareholders' equity:                                            
Total shareholders' equity                            99,617    96,350
Total liabilities and shareholders' equity            $113,440    $108,141
                                                                
Note: Derived from the audited financial statements at that date.
                                                                

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 80 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 Covidien LP
Limited Partnership.

Safe Harbor for Forward-Looking Statements

The information in this press release contains forward-looking statements that
involve risks and uncertainties. Those statements include expectations about
our future revenues, gross margin, operating profitability and margin, legal
expenses, non-cash stock-based compensation expense, amortization of
intangibles, U.S. medical device excise tax, income tax rate, and earnings per
share. 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, 2013 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 costs of intellectual property litigation,
current or future government investigations, significant variability in
quarterly results, exposure to possible product liability claims, the
development of new products by others, constraints or interruptions in
production from key suppliers, 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.

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
 
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