Vascular Solutions (NSDQ:VASC) wasn’t making friends on Wall Street this week after the company missed expectations for Q1 and lowered its forecast for the rest of the year.
Even with a 31.7% boost in profits year-over-year, the Minneapolis company missed projections by 2¢. VASC shares dropped more than 5% after the company released its earnings on Tuesday, closing at $22.92 last night.
In total Vascular Solutions reported profits of $2.8 million, or 16¢ per diluted share, on record revenues of $29.9 million for the 3 months ended March 31. That compared with profits of $2.1 million, or 13¢ per share, on sales of $26.1 million during the same period last year.
The company would have hit the mark had it not had "above-budget" legal expenses, which stripped 2¢ from its per-share earnings. And the legal charges aren’t slowing down as the company continues to battle medtech industry titan Boston Scientific (NYSE:BSX) and negotiate a federal investigation.
"During the 1st quarter, we achieved a new record quarterly level of sales while increasing our revenue growth rate to 15% based on sales growth in a range of products and markets," CEO Howard Root said in prepared remarks. "On the earnings side, our continuing substantial growth in operating performance was masked somewhat by higher-than-budgeted legal expenses associated with substantial discovery and appellate activity in our GuideLiner patent infringement lawsuit against Boston Scientific and the ongoing U.S. Attorney investigation related to our Vari-Lase Short Kit product."
"Legal expenses are difficult to predict, and while we are intensely focused on containing these costs, our revised earnings guidance for 2014 reflects our updated expectation that legal costs will continue to run over our original budget," Root added. "Even with these additional legal costs, however, we expect our continued operating leverage from our established business model will continue to increase in 2014."
The company maintained full-year sales projections between between $121 million and $125 million, and lowered earnings expectations to a range of 71¢-75¢ per share, still a 12% increase at mid-point.
