Vascular Solutions shares bloodied, company fails to deliver
growth
Terry Fiedler
Star Tribune
Published Sep 27 2001
Stock in Vascular Solutions Inc. lost 58 percent of its value
Wednesday, as investors reacted to another reduced financial
projection in what has become a string of disappointments.
The Plymouth-based company said late Monday that it
expected third-quarter sales of about $2.5 million instead of the
$4.2 million that analysts expected.
At Wednesday's closing price of $1.89 a share, Vascular
Solutions now trades well below the value of the company's
cash on hand, pegged at about $2.50 per share. The stock is
worth a fraction of its $12 initial public offering price in July
2000.
Shares hit a high of $26.06 on Oct. 20, 2000.
Stephens Inc. analyst Robin Young said the news Monday and
other recent pre-announcements of reduced sales expectations
have 'sorely tested shareholders' loyalty.'
He reduced his sales estimate for all of 2001 to $12 million from
$16 million.
'The market is responding,' Young said. 'It's unusual for a
company to be trading for less than its cash per share.'
'Frustration is a pretty good word for it,' said Dougherty & Co.
analyst Aaron Lindberg.
Lindberg reduced his 2001 estimates from a loss of 79 cents a
share on sales of $16 million to a loss of 94 cents on sales of
$12.3 million.
CEO Howard Root blamed a 'summer slowdown in
catheterization procedures together with the maturing of the
vascular sealing market' for the company's difficulty in landing
new accounts.
Vascular Solutions' Duett device combines a balloon-catheter
delivery system and a blood-clotting compound to seal wounds
created in surgical procedures, such as angioplasty.
'Based on performance, it is not a world beater,' Young said of
the Duett.
He noted that the company has had difficulty coping with stiffer
competition recently, particularly from Little Canada-based
St. Jude Medical and its Angio-Seal product, the market
leader. Young estimated that Vascular Solutions is fourth in the
market, with a 5 percent share.
He said Vascular Solutions has two primary assets -- its cash
and a 'pretty strong' sales force.
He projects that if the current trends remain unchanged, the
company could burn through 20 percent of its cash within the
next 12 months.
Lindberg was more bullish on the Duett's potential but like
Young thinks the company faces a decision about its direction.
Lindberg mentioned Boston Scientific and Guidant as possible
acquirers, while Young said there were no obvious candidates at
this time.
-- Terry Fiedler is at tfiedler@startribune.com .
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