VNUS Medical Technologies Inc. (VNUS) filed Quarterly Report for the period ended 2009-03-31.
VNUS Medical Technologies provides medical devices for the minimally invasive treatment of venous reflux disease a progressive condition caused by incompetent vein valves in the leg. VNUS sells the Closure system which consists of a proprietary radio-frequency or RF generator and proprietary disposable endovenous catheters to close diseased veins through the application of temperature-controlled RF energy. VNUS Medical Technologies Inc. has a market cap of $464.9 million; its shares were traded at around $28.76 with a P/E ratio of 34.3 and P/S ratio of 4.6.
Highlight of Business Operations:
On May 7, 2009, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Covidien Group S.a.r.l. (“Covidien”) and Covidien Delaware Corp. (“Purchaser”), a wholly owned subsidiary of Covidien. Subject to the terms and conditions of the Merger Agreement, Purchaser has agreed to commence a cash tender offer to purchase all of our outstanding shares of common stock, par value $0.001 per share, at a purchase price of $29.00 per share, net to the holder in cash, without interest. The consummation of the tender offer will be conditioned on the tender of a majority of the outstanding shares of our common stock on a fully diluted basis (as defined in the Merger Agreement) and other terms and conditions set forth in the Merger Agreement. Following successful completion of the tender offer and, if required, receipt of stockholder approval, we expect to consummate a merger with Purchaser in which our remaining stockholders will receive the same cash price per share as paid in the tender offer.
Interest income and other, net, decreased to $199,000 in the three months ended March 31, 2009 from $938,000 for the same period in 2008, primarily due to:
Provision for income tax was $215,000 in the three months ended March 31, 2009 for anticipated annual minimum tax payments for Federal and certain state purposes in the United States, and foreign tax expense. Benefit for income tax was $(31,000) for three months ended March 31, 2008, as we were in a loss position in the first quarter of 2008, but anticipated being in a net income position for the full year 2008.
Net cash provided by operating activities increased by $2.8 million for the three months ended March 31, 2009, as compared to the same period in 2008. The increase was primarily due to net income of $1.8 million for the three months ended March 31, 2009, as compared to a loss of $0.4 million in the same period of 2008.
As a result of the Diomed bankruptcy and the Settlement Agreement, the 2005 Patent Lawsuit remained pending, but stayed, against Diomed only. In June 2008, most of the assets of Diomed were acquired by AngioDynamics. On or about June 20, 2008, the Company filed claims against the Diomed bankruptcy estate for monetary damages attributable to Diomed’s alleged patent infringement, both prior to and since its bankruptcy petition date. The Company’s claims comprised an administrative expense claim of $2.6 million and a general unsecured claim of $40.7 million.
In September 2008, the Massachusetts bankruptcy court approved a stipulation entered into by the Company and Diomed, under which the two parties settled the Company’s claims against the Diomed bankruptcy estate. The stipulation provided for settlement of the Company’s administrative expense claim for $300,000 and the Company’s general unsecured claim for $3,000,000. In September 2008, the Company received a payment of $300,000 from Diomed for the settled administrative expense claim. Due to the nature of bankruptcy proceedings the Company cannot presently estimate how much, if any, of the $3,000,000 settled general unsecured claim will eventually be paid to the Company.
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