Vascular Solutions Inc. Reports Operating Results (10-Q)
Vascular Solutions Inc. manufactures markets and sells the Vascular Solutions Duett sealing device which enables cardiologists and radiologists to rapidly seal the puncture site following catheterization procedures such as angiography angioplasty and stenting. Its product combines a simple balloon catheter delivery mechanism with a powerful proprietary procoagulant. The company believes its product offers advantages over both manual compression and the three other FDA-approved devices used to seal the puncture site following the catheterization. Vascular Solutions Inc. has a market cap of $106.7 million; its shares were traded at around $6.6 with a P/E ratio of 27.5 and P/S ratio of 1.7. Highlight of Business Operations: In 2000 we received FDA clearance for our first product, the Duett sealing device, which is used to seal the puncture site following catheterization procedures. In 2001, due to competitive developments in the sealing device market, we made the strategic decision to develop additional products and de-emphasize the promotion of our Duett sealing device. We have grown from net revenue of $6.2 million in 2000 solely from the Duett device to net revenue of $61.2 million in 2008, with 98% of our 2008 net revenue resulting from products other than the Duett device. This increase in revenue represents a compound annual growth rate of 33% and was driven by our commitment to the research and development of multiple new devices to diagnose and treat existing and new vascular conditions.
We recognized $212,000 of licensing revenue during the quarter ended March 31, 2009 as the result of our License Agreement and Device Supply Agreement with King and our distribution agreement with Nicolai in Germany. We also recognized $183,000 of collaboration revenue in the first quarter as a result of performing clinical and development work for King under the Device Supply Agreement. We expect to recognize approximately $850,000 of license revenue in 2009, and expect collaboration revenue will continue in 2009 dependent upon our progress with our pre-clinical and clinical projects for King.
General and administrative expense for the first quarter of 2009 totaled $1,119,000, or 7% of revenue, compared to $1,542,000, or 11% of revenue, for the first quarter of 2008. The decrease was primarily the result of lower legal fees of approximately $515,000 due to the litigation that was pending in the first quarter of 2008 (see Note 9 to the Consolidated Financial Statements included in Item 1 of Part I of this Form 10-Q). We expect general and administrative expenses to be approximately 6% to 7% of revenue during 2009.
Income tax expense increased to $577,000 for the quarter ended March 31, 2009 on income before tax of $1,515,000 resulting in an effective income tax rate of 38%. For the three months ended March 31, 2009, the difference between the effective tax rate of 38% and the U.S. federal statutory income tax rate of 34% was due mainly to the impact of state income taxes. For the three month period ended March 31, 2008, income tax expense was $87,000 related to alternative minimum taxes (AMT) as we continued to maintain a full valuation allowance on our tax benefits through the third quarter of 2008.
We have financed substantially all of our operations since inception through the issuance of equity securities and sales of our products. From the inception of the Company through March 31, 2009, we have sold capital stock generating aggregate net proceeds of approximately $81.3 million. At March 31, 2009, we had $8,057,000 in cash and cash equivalents on-hand, compared to $7,209,000 in cash and cash equivalents at December 31, 2008.
Cash used for financing activities. We used $299,000 of cash in financing activities in the three month period ended March 31, 2009. We used $333,000 of cash to repurchase shares that vested under outstanding restricted stock awards for income tax withholding purposes. This was offset by our receipt of $34,000 of cash we received upon the exercise of outstanding stock options.
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