Kensey Nash, St. Jude Medical sign two-year Supply Agreement

Jun 24 2010

Kensey Nash Corporation (Nasdaq: KNSY), a regenerative medicine company, today announced that it entered into a new two-year Supply Agreement with St. Jude Medical, Inc. (NYSE: STJ) for the period from January 1, 2011 to December 31, 2012. The agreement provides for Kensey Nash to be the exclusive outside supplier of collagen plugs, one of the key resorbable components of the Angio-Seal™ Vascular Closure Device, the leading arterial puncture closure product in the world.  The new agreement provides for calendar year 2011 minimum order levels equivalent to approximately 25% of current annual collagen plug sales.

Under the existing agreement that remains effective through December 31, 2010, Kensey Nash is the exclusive supplier of collagen plugs and a 30% supplier of polymer anchors. Under the new agreement, effective January 1, 2011, Kensey Nash will not supply any polymer anchors. In fiscal year 2010 (ending June 30, 2010), collagen plug sales to St. Jude Medical are expected to be approximately $17 million and polymer anchor sales $1.9 million.  Royalties under the Angio-Seal license agreement between Kensey Nash and St. Jude Medical are not affected by the new supply agreement.

"We are pleased to continue as a supplier of this key Angio-Seal device component, a role we have successfully filled since the product's initial development," commented Joe Kaufmann, President and CEO of Kensey Nash.  "With this agreement in place our revenue outlook for fiscal year 2011 becomes much clearer. Although at the minimum order level our Angio-Seal component sales would be approximately 45% lower in fiscal 2011 than in fiscal 2010, we anticipate that our total revenue for fiscal year 2011 will be between $81 million and $83 million.  This range would exceed the total revenue of $80.2 million to $80.6 million that we currently expect for fiscal 2010. As we continue to execute our transition to regenerative medicine, our success in developing new products has enabled us to diversify our customer and product base. In fiscal year 2011, we expect to grow our revenue due to the recent FDA clearances and CE mark approval for our Extracellular Matrix products and the CE mark approval for our Cartilage Repair Device, as well as continued strength in our core Biomaterial business.  Overall we expect to see substantial growth of approximately 20% to 25% in our Biomaterial business in fiscal year 2011, excluding cardiology products.  We will provide detailed fiscal year 2011 revenue and earnings guidance with the release of our fiscal year 2010 results in August," he concluded.

Kensey Nash today also announced that its Board of Directors has approved a new stock repurchase program.  The new program allows Kensey Nash to repurchase an additional $30 million of its issued and outstanding shares of Common Stock, and has no scheduled expiration.  The program will be financed with available cash and liquid investments. Kensey Nash recently completed its February 2010 announced share repurchase program, under which it purchased 1.2 million shares at an average price of $22.90 per share.  Over the last three years Kensey Nash has repurchased approximately 3.5 million shares of Common Stock, or approximately 30% of the outstanding shares at the start of the three-year period, at a total cost of approximately $85 million.

Kensey Nash plans to repurchase its shares for cash, from time to time in the open market, through block trades or otherwise.  The repurchase program does not require Kensey Nash to purchase any specific dollar value or number of shares.  Any purchases under the program will depend on market conditions and may be commenced or suspended at any time, or from time to time, without prior notice.  As of May 31, 2010, Kensey Nash had 9,437,236 shares of Common Stock outstanding.