Vascular Solutions Announces First Quarter Results; Net Revenue Increases 16 Percent...

Vascular Solutions Announces First Quarter Results; Net Revenue Increases 16
Percent to $14.1 Million

MINNEAPOLIS, April 17, 2008 (PRIME NEWSWIRE) -- Vascular Solutions, Inc.
(Nasdaq:VASC) today reported financial results for the first quarter ended March
31, 2008. Highlights of the first quarter and other recent events include:

* Achieved net revenue of $14.1 million, up 16% from $12.2 million
in the first quarter of 2007.
* Achieved net income of $235,000, or $0.01 per diluted share,
compared with a net loss of $5,534,000 in the first quarter
of 2007.
* Achieved positive cash flow of $354,000, the sixth consecutive
quarter of positive cash flow.
* Received a favorable $4.5 million jury verdict in the product
disparagement litigation with Marine Polymer Technologies.
* Settled patent litigation with Diomed Inc., resulting in a gain
of $1.659 million to be recorded in the second quarter of 2008.
Commenting on the results, Vascular Solutions Chief Executive Officer Howard
Root said: "As we entered 2008 our most important objective was to resolve the
litigation that has negatively affected our business for over the past three
years. In the first four months of 2008 we have settled on favorable terms the
litigation with Diomed and won a $4.5 million jury verdict in our litigation
with Marine Polymer, with only the litigation against VNUS Medical remaining and
scheduled for trial commencing on June 23. We are hopeful that by the middle of
2008 we will have removed the distraction and expense of all of our existing
litigation, which should allow us to focus completely on continuing to grow our
sales and launch new products."

Net revenue from hemostat products (primarily consisting of the D-Stat Dry(tm),
D-Stat(r) Flowable, Thrombi-Gel(r), Thrombi-Pad(tm) and D-Stat Radial(tm)
products) was $5.9 million during the first quarter, an increase of 2% over the
first quarter of 2007. "First quarter sales of our D-Stat Dry patch encountered
resistance from aggressive free sampling programs initiated by two of our patch
competitors," commented Mr. Root. "We believe that this sampling will have a
limited long-term effect and that new programs we are initiating with our direct
sales force will enhance our attention on growing sales of the D-Stat Dry in the
second quarter," Mr. Root added.

Net sales of extraction catheters (primarily consisting of the Pronto(r) V3
extraction catheter) were $3.4 million in the first quarter, an increase of 20%
over the first quarter of 2007. "In the first quarter we performed the initial
launch of our new low profile, or LP, version of the Pronto catheter with
excellent clinical success, and have now broadened our production and sales of
the LP in the second quarter," commented Mr. Root. "We also are beginning to
benefit from newly published clinical studies demonstrating the benefit of
thrombus aspiration in acute myocardial infarction. We believe the market for
aspiration catheters is increasing as the benefit of soft thrombus aspiration
becomes more well-known, which we believe was one of the contributors to our
above-forecast sales of the Pronto V3 catheter in the first quarter," Mr. Root
added.

Net sales of vein products (primarily consisting of the Vari-Lase(r) endovenous
laser console and kits) were $2.2 million in the first quarter, an increase of
23% over the first quarter of 2007. "While we deal with the market disruption
caused by the bankruptcy filings of two of our competitors in the laser vein
market and we work to conclude our litigation in this product category, our
sales force is maintaining our competitive position and our R&D team is
broadening our portfolio of products, both of which we believe will position us
well for continued growth in the endovenous laser market," commented Mr. Root.

Net sales of specialty catheters (primarily consisting of the Langston(r) dual
lumen catheters, Twin-Pass(r) dual access catheters and Skyway(r) support
catheters) were $1.1 million in the first quarter of 2008, an increase of 30%
over the first quarter of 2007. "The first quarter represented a return to sales
growth for our specialty catheter product line and set the stage for further
sales growth throughout 2008," commented Mr. Root. "In April we fully launched
our new Gandras(tm) catheter for pelvic artery catheterizations, and we have
three additional specialty catheter products in the R&D pipeline that we expect
to launch in 2008," Mr. Root added.

Net sales of access products (primarily consisting of micro-introducer kits and
specialty guidewires) were $929,000 in the first quarter, an increase of 69%
over the first quarter of 2007. "In the first quarter we continued to increase
sales of our micro-introducer kits and also expanded sales of our new
Guardian(r) hemostasis valve," commented Mr. Root. "Looking forward, we have two
new guidewires and two new specialty versions of introducer sheaths that we
expect to expand to U.S.-wide sales in the second quarter," Mr. Root added.

Gross margin across all product lines was 66.7% in the first quarter of 2008,
slightly below expectations principally due to product selling mix in general
and lower than expected sales of D-Stat Dry in particular. Based on projected
selling mix across products, gross margin on product sales for the second
quarter of 2008 is expected to increase to approximately 67% to 68%.

Net income for the first quarter was $235,000 or $0.01 per share, compared to a
net loss of $5,534,000 or $0.37 per share in the first quarter of 2007. Net loss
in the first quarter of 2007 resulted primarily from the Diomed litigation
verdict that was issued in March 2007. During the first quarter of 2008 the
company expensed $26,000 in estimated expenses relating to the Diomed judgment
and $523,000 of stock-based compensation expense. As adjusted (excluding the
Diomed judgment expenses and stock-based compensation expense, and assuming a
fully-taxed rate of 38%) net income was $540,000 or $0.03 per fully diluted
share in the first quarter of 2008, increasing from adjusted net income of
$363,000 or $0.02 per fully diluted share in the first quarter of 2007. During
the first quarter of 2008 the company incurred approximately $617,000 in legal
expenses, primarily related to the Marine Polymer trial that resulted in the
favorable $4.5 million jury verdict issued on April 7.

Regarding future guidance, net revenue for the second quarter is expected to be
between $14.5 million and $15.0 million, reflecting expected growth across all
five product categories. Corresponding adjusted net income in the second quarter
is expected to be between $0.04 and $0.06, not including the expected gain of
$1.659 million pre-tax, or $1.028 million after-tax, from the litigation
settlement with Diomed, and including the projected litigation expenses
associated with the trial with VNUS Medical commencing on June 23. For the
entire 2008, the company is adjusting its guidance for net revenue and adjusted
net income per share to between $60 million and $62 million and $0.21 and $0.29,
respectively. "We believe that the progress we've already made in 2008 in
eliminating the distraction of litigation and continuing to launch new products
positions us very well for our continued sales growth and profitability,"
concluded Mr. Root.

Conference Call & Webcast Information

Vascular Solutions will host a live webcast starting at 3:30 p.m., Central Time
today to discuss the information contained in this press release. The live web
cast may be accessed on the investor relation's portion of the company's web
site at www.vascularsolutions.com. Web participants are encouraged to go to the
web site at least 15 minutes prior to the start of the call to download and
install any necessary audio software. An audio replay of the call will be
available until Thursday, April 24, 2008 by dialing 1-888-203-1112 and entering
conference ID# 3779475. A recording of the call will also be archived on the
company's web site, www.vascularsolutions.com until Thursday, April 24, 2008.
During the conference call the company may answer one or more questions
concerning business and financial developments and trends, the company's view on
earnings forecasts and new product development and financial matters affecting
the company, some of the responses to which may contain information that has not
been previously disclosed.

VASCULAR SOLUTIONS, INC.
CONDENSED STATEMENTS OF OPERATIONS

(In thousands, except per share data) Three Months Ended
March 31,
2008 2007
(unaudited)

Revenue: $ 13,737 $ 12,019
Product revenue
License and collaboration revenue 377 135
----------------------
Total revenue 14,114 12,154

Product costs and operating expenses:
Cost of goods sold (1) 4,581 3,929
Collaboration expenses 181 --
Research and development (1) 1,467 1,492
Clinical and regulatory (1) 851 760
Sales and marketing (1) 5,212 4,762
General and administrative (1) 1,542 949
Litigation 26 5,675
Thrombin qualification -- 111
----------------------
Operating income (loss) 254 (5,524)

Interest expense (24) (44)
Interest income 92 91
----------------------
Income (loss) before tax $ 322 $ (5,477)

Income taxes 87 57
----------------------
Net income (loss) $ 235 $ (5,534)
======================

Net income (loss) per
share - basic $ 0.02 $ (0.37)
----------------------
Weighted average shares used in
calculating - basic 15,413 15,074
----------------------
Net income (loss) per
share - diluted $ 0.01 $ (0.37)
----------------------
Weighted average shares used
in calculating - diluted 15,839 15,074
----------------------

(1) Includes stock-based compensation
charges of:
Costs of goods sold $ 72 $ 37
Research and development 42 42
Clinical and regulatory 45 23
Sales and marketing 198 97
General and administrative 166 87
----------------------
$ 523 $ 286
----------------------

VASCULAR SOLUTIONS, INC.
CONDENSED BALANCE SHEETS

March 31, December 31,
2008 2007
(unaudited) (see Note)
ASSETS
Current assets:
Cash and cash equivalents $ 5,640 $ 5,286
Restricted cash 5,473 5,473
Accounts receivable, net 6,892 7,363
Inventories 8,655 8,307
Prepaid expenses 884 810
-------------------
Total current assets 27,544 27,239
Property and equipment, net 3,630 3,846
Intangible assets, net 193 193
-------------------
Total assets $31,367 $31,278
===================

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Total current liabilities $12,340 $12,709

Total long-term liabilities 5,541 5,744

Shareholders' equity:
Total shareholders' equity 13,486 12,825
-------------------
Total liabilities and shareholders' equity $31,367 $31,278
===================
Note: Derived from the audited financial statements at that date.

Use of Non-GAAP Measures

Management uses non-GAAP measures to establish operational goals, and believes
that non-GAAP measures may assist investors in analyzing the underlying trends
in the company's business over time. Investors should consider these non-GAAP
measures in addition to, not as a substitute for or as superior to, financial
reporting measures prepared in accordance with GAAP. In this press release, the
company has reported a non-GAAP measure called adjusted net income which
excludes certain expenses relating to the qualification of a new supply of
thrombin, litigation and stock-based compensation, but includes assumed taxes on
net income using a 38% tax rate for 2008 and a 39% tax rate for 2007.

On March 28, 2007, the jury in a litigation initiated by Diomed Holdings, Inc.
concerning the company's Vari-Lase business returned a verdict that Vascular
Solutions contributed to and induced infringement of a patent held by Diomed and
awarded monetary damages in the amount of $4.1 million with respect to Vascular
Solutions' activities. Through the quarter ended March 31, 2008 the company has
expensed $5.826 million as an estimate of litigation expenses in this matter,
representing the amount of the jury's verdict together with management's
estimate of Vascular Solutions' attorneys' fees, court costs, additional damages
with respect to Vari-Lase sales in the U.S. through April 11, 2007 and
pre-judgment interest. The Company entered into a settlement with Diomed in
April 2008 dismissing all claims and appeals by each side for a one-time payment
of $3.586 million. The Company will record a litigation gain of $1.659 million
in the second quarter of 2008. Due to the one-time nature of the litigation
expense or gain, management believes it is useful to exclude the litigation
expenses and gain from adjusted net income.

Beginning January 1, 2006 the company has been recognizing stock-based
compensation expense, which has been excluded from adjusted net income to
provide comparable financial information to prior periods. The company incurred
stock-based compensation expense of $523,000 in first quarter of 2008.

Management uses the adjusted net income measure in its internal analysis and
review of operational performance. Management includes the litigation and
thrombin qualification expenses in its cash projections. Management believes
that this adjusted net income measure provides investors with useful information
in comparing the company's performance over different periods, particularly when
comparing this period to periods in which the company did not incur any expenses
relating to these expenses. By using this non-GAAP measure management believes
that investors get a better picture of the performance of the company's
underlying business. Management encourages investors to review the company's net
income prepared in accordance with GAAP to understand the company's performance
taking into account all relevant factors, including those that may only occur
from time to time but have a material impact on the company's financial results.

About Vascular Solutions

Vascular Solutions, Inc. is a medical device company that focuses on developing
unique solutions for unmet clinical opportunities within vascular procedures.
The company's five product categories consist of hemostat (blood clotting)
products, extraction (clot removal) catheters, vein products, specialty
catheters and access products. New products introduced since the second half of
2003 include the D-Stat Dry hemostatic bandage used for the rapid control of
topical bleeding, the Pronto extraction catheter for the aspiration of soft
thrombus, the Vari-Lase endovenous laser product line for the treatment of
varicose veins, the Langston dual lumen specialty catheter for the measurement
of aortic stenosis and the Twin-Pass dual access specialty catheter for dual
wire access in percutaneous procedures.

The information in this press release contains forward-looking statements that
involve risks and uncertainties. Our actual results could differ materially from
those anticipated in these forward-looking statements. Important factors that
may cause such differences include those discussed in our Annual Report on Form
10-K for the year ended December 31, 2007 and other recent filings with the
Securities and Exchange Commission. The risks and uncertainties include, without
limitation, risks associated with the need for adoption of our new products,
costs and unpredictable verdicts in pending litigation with VNUS Medical,
limited working capital, lack of sustained profitability, exposure to
intellectual property claims, exposure to possible product liability claims, the
development of new products by others, doing business in international markets,
limited manufacturing experience, the availability of third party reimbursement,
and actions by the FDA.

For further information, connect to www.vascularsolutions.com.

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CONTACT: Vascular Solutions, Inc.
Howard Root, CEO
James Hennen, CFO
(763) 656-4300