Medical devices company Kensey Nash Corp. (KNSY), Friday reported preliminary adjusted earnings for the second quarter of fiscal 2010 within its previous guidance, despite a shortfall in royalty revenues. The company also confirmed its adjusted earnings outlook for the fiscal 2010.
Exton, Pennsylvania-based Kensey still expects adjusted earnings to be within the previously provided range of $0.42 to $0.45 per share. Adjusted results exclude a charge of $1.9 million related to the company's cost reduction plan.
On average, four analysts polled by Thomson Reuters expect the company to report earnings of $0.37 per share for the second quarter. Analysts' estimates typically exclude special items.
GAAP earnings are expected to be in the range of $0.31 to $0.34 per share, compared to second quarter fiscal 2009 earnings per share of $0.44. Previously, the company provided earnings guidance in the range of $0.37 to $0.40 per share for the second quarter.
Kensey noted that it has implemented a cost reduction plan in the second quarter primarily associated with reduced endovascular activities and to lower the company's overall inventory levels. Originally, this plan was estimated to result in charges of about $0.9 million, but the total charges increased to $1.9 million due to the cost reduction plan was expanded with headcount reduction and reduced work schedules during the second quarter of fiscal 2010.
The company now expects to report revenues of about $19.1 million for the second quarter, including net sales of $12.5 million and royalties of $6.6 million, compared to $20.8 million last year, including net sales of $14.0 million and royalties of $6.8 million.
Previously, the company provided second-quarter revenue guidance in the range of $19.3 million to $20.1 million, including net sales of $12.5 million to $13.0 million and royalties of $6.8 million to $7.1 million.
Analysts expect revenues of $19.69 million for the quarter.
Kensey attributed the revenue decline to lower than expected Angio-Seal royalties on sales of vascular closure devices sold by St. Jude Medical. Royalty revenues declined primarily due to fewer shipping days in December 2009 as compared to December 2008. Orthopaedic royalties were in line with the company's expectations.
Looking forward, the company lowered its revenue expectations for fiscal 2010, while maintaining its adjusted earnings guidance.
Excluding the $1.9 million of pre-tax severance and unabsorbed overhead charges, Kensey still expects yearly earnings in the range of $1.81 to $1.85 per share. Analysts expect earnings of $1.76 per share for the fiscal 2010.
GAAP earnings are expected to range from $1.70 to $1.74 per share for the fiscal 2010, compared to previously provided guidance of $1.76 to $1.80 per share.
Total revenues for 2010 are expected to range from $79.0 million to $81.0 million, with net sales and royalties in the ranges of $52.0 million to $53.5 million and $27.0 million to $27.5 million, respectively.
Previously provided revenue guidance ranges from $82.5 million to $86.0 million, with net sales and royalties estimated to be in the ranges of $55.5 million to $57.0 million and $27.0 million to $29.0 million, respectively.
Analysts expect the company to report revenues of $83.06 million for the fiscal year.
The company attributed the reduction in fiscal 2010 revenue guidance to lower than expected improvement in the growth rate of orthopaedic procedures.
The company is scheduled to report its second quarter results on January 28.
KNSY is currently trading at $25.11, down 0.16 or 0.64%, on the Nasdaq.
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