Devices & Diagnostics

Kensey Nash profits fall in first quarter of fiscal year 2012

Kensey Nash (NASDAQ: KNSY) , an Exton, Pennsylvania-based  medical device company focused on regenerative medicine,  […]

Kensey Nash (NASDAQ: KNSY) , an Exton, Pennsylvania-based  medical device company focused on regenerative medicine,  saw year over year net income decline in the first three months of fiscal year 2012, driven by a $4 million drop in collagen product sales following a change to its contract with St Jude Medical (NYSE: STJ).

Net income fell to $2.2 million in the three months ended September 30 compared with $3.8 million the previous year.  Net sales increased 29 percent to $14 million.

Its orthopedic product category rose exponentially to more than $12 million for the quarter, compared with $5.3 million the previous year, boosted by sales from its May acquisition of West Chester, Pennsylvania neighbor, Norian.

Joe Kaufmann, president and CEO of the regenerative medicine company said: “Our sales for the quarter increased 29% over prior year driven by strong organic growth in spine and sports medicine along with a major contribution from our recent Norian acquisition, which more than offset the loss of over $4 million in St. Jude collagen product sales. Although our earnings declined year over year, as we anticipated due to the loss of the collagen sales and an increase in R&D expense, we expect to see improvement throughout the balance of the fiscal year.”

Kensey Nash’s business model relies on strategic partners to distribute and sell the products it develops and manufactures.   In its annual report for fiscal year 2011, it said its four largest customers accounted for roughly 86 percent of its total revenues:  St. Jude Medical, Arthrex, Orthovita, and Synthes.

Orthovita’s acquisition by Stryker (NYSE: SYK) in June and Synthes agreement to be acquired by Johnson & Johnson (NYSE: JNJ) in April could make a significant difference in the company’s future. Other customers include Johnson & Johnson, Medtronic (NYSE: MDT), Stryker, Devicor Medical Products and Zimmer.

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