EXTON, Pa., Dec. 16, 2011 /PRNewswire/ -- Kensey Nash
Corporation (NASDAQ: KNSY) today announced that it has agreed with
St. Jude Medical to enter into non-binding mediation in an attempt
to resolve disputes over royalty payments to Kensey Nash relating to the Angio-Seal vascular
closure device, as well as other related claims. Kensey Nash has repeatedly advised St. Jude that
the royalties are currently to be paid, and should since 2007 have
been paid, at a rate of 8% rather than the 6% rate at which St.
Jude had been paying. The Company has further advised St.
Jude that, as a result of St. Jude's incorrect interpretation of
the license agreements between the two companies, St. Jude has to
date underpaid the Company by over $30
million. The Company was recently informed and
surprised to learn that St. Jude is now asserting that, effective
November 2011, the rate at which that
it owes royalties to the Company with respect to Angio-Seal is to
be reduced from 6% to 2% and that St. Jude intends to pay the
Company at this reduced
rate.
According to Joe Kaufmann,
President and CEO of the Company, "St. Jude's action to reduce the
royalty rate to 2% suggests that St. Jude Medical intends to assert
that their obligation to pay any royalties to Kensey Nash will end in April 2014. Our
strongly-held view is that, based upon the current design of the
Angio-Seal device, St. Jude's royalty obligations to Kensey Nash extend at least through April 2016, and potentially through 2023.
While we are hopeful that mediation will lead to an appropriate
resolution of these matters, we will take all necessary steps to
protect our intellectual property and the interests of our
stockholders."
Going forward, the Company will report revenue at the rate at
which St. Jude is actually paying royalties to the Company (2%),
rather than the rate at which such royalties are owed. Recognition
of revenue at this reduced rate would reduce the Company's previous
guidance for revenues by approximately $1.8
million and its earnings per share by approximately
$0.14 in the Company's quarter ending
December 31, 2011. Further, any
resolution of these matters may have a positive or negative impact
on the Company's results for future periods. Solely for these
reasons, the Company is withdrawing its previously issued guidance
for the quarter ending December 31,
2011, the other two remaining quarters of fiscal 2012 and
for fiscal 2012 as a whole. Beginning with the Company's
announcement of its results for the second quarter of fiscal 2012,
the Company intends to provide updated guidance on a quarterly
basis.
As of September 30, 2011, the
Company was in a strong liquidity position, with $28.4 million of cash and $50.7 million of working capital. After
considering the impact of St Jude's reduction in the rate of
royalties they will be paying, the Company still expects to
generate fiscal 2012 cash flow from operations of over $20 million.
Conference Call and Webcast. The Company will be
hosting a teleconference regarding the matters discussed in this
press release at 8:30 A.M., Eastern
Time, today (Friday, December
16, 2011). To participate in the teleconference call,
please dial 703-639-1413. Individuals interested in listening
to the teleconference may also do so over the Internet at
www.kenseynash.com. To do so, please go to
www.kenseynash.com and choose the Investor Relations
page. Please allow 15 minutes prior to the start of the call
to register and download and/or install any necessary
software. A replay of the teleconference will be archived at
www.kenseynash.com and may be accessed following the
teleconference. The teleconference call will also be
available for replay starting Friday,
December 16, 2011 at 10:30 A.M.
Eastern Time through Friday, December
23, 2011 at 11:59 P.M. Eastern
Time by dialing 1-800-475-6701 with an access code of
230017.
About Kensey Nash Corporation. Kensey Nash
Corporation is a medical device company primarily focused on
regenerative medicine utilizing its proprietary collagen and
synthetic polymer technology. The Company is recognized as a
leader for innovative product development and unique technology in
the field of resorbable biomaterials. The Company has an
extensive range of products, which are sold through strategic
partners in multiple medical markets, including the cardiology,
orthopaedic, sports medicine, spine, endovascular and general
surgery markets. For more information, visit
www.kenseynash.com.
Cautionary Note for Forward-Looking Statements.
This press release contains forward-looking statements, including
the statements regarding the Company's view as to how long
Angio-Seal royalty payments will be due and the Company's other
expectations as to future royalty payments to be received from St.
Jude Medical, as well as the potential impact of St. Jude's actions
and the related proceedings on the Company's operating
results. The forward-looking statements are covered by the
"Safe Harbor for Forward-Looking Statements" provided by the
Private Securities Litigation Reform Act of 1995. The Company
has tried to identify the forward-looking-statements by using words
such as "plan," "expect," "will," "would," "should," "believe,"
"guidance" and 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 expressed in, or implied by, the
forward-looking statements. The Company's mediation with St.
Jude Medical and any other legal proceeding relating to the
Company's dispute with St. Jude Medical may be expensive, divert
management time and attention and otherwise be disruptive to normal
business operations and to the Company's relationship with St. Jude
Medical. Moreover, the results of these legal proceedings
cannot be predicted with any certainty. For a detailed discussion
of factors that could affect the Company's future operating
results, please see the Company's SEC filings, including the
disclosures 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.
SOURCE Kensey Nash Corporation