Vascular Solutions Snares Product Line from Radius Medical

Vascular Solutions Inc. no longer wants to be the middleman.

After two years of selling vascular retrieval snares for Radius Medical Technologies Inc., the Minneapolis, Minn.-based company has decided to purchase the product line for itself. Vascular purchased all Radius Expro Elite and Micro Elite products for $6.5 million in cash, and will immediately start selling the devices both in the United States and overseas. The products garnered $1.6 million in sales during the last four quarters, with most of the revenue—$1.3 million—coming from U.S. customers, according to Vascular Solutions.

The deal also came with a bonus: In addition to the Expro and Micro Elite product lines, Vascular also got Acton, Mass.-based Radius Medical’s Quattro Elite and Sympro Elite snares as well as the Oracle retrieval system—all of which recently were launched or currently are in development. Radius Medical developed the snares to retrieve or manipulate intravascular coils, balloons, catheters or guidewires from the cardiovascular system in minimally invasive surgical procedures.

Vascular plans to transfer the manufacturing of the snares from Radius’ facility in Boston, Mass., to its plant in Minnesota over the next six months. Under the agreement, Vascular will pay Radius $1.5 million in cash after the manufacturing operations are transferred. In addition, Radius is entitled to receive a cash “earn-out” payment after the 2011, 2012 and 2013 calendar years; the payments are equal to 25 percent of net sales for those calendar years in excess of a target amount ($2 million for 2011; $2.5 million for 2012; and $3 million for 2013).

“We are excited about owning the EXPRO Elite and MICRO Elite snares and capturing the entire margin on the sale of the product while adding international sales,” said Howard Root, Vascular’s CEO. “Upon completion of the manufacturing transfer we expect to be able to both improve our gross margin and adopt more competitive pricing to gain market share in the existing $35 million snare market. We also look forward to launching the Quattro Elite and Sympro Elite snares either late this year or early in 2011 and to explore the possibilities with the Oracle retrieval system.”

Root expects the acquisition to be accretive to his company’s earnings by about 2 cents per share in 2011. Vascular will incur “modest” transition and integration costs in the fourth quarter of 2010,” he said.

Vascular Solutions posted $1.5 million in profit, or 9 cents per diluted share, on $19.9 million in sales during the three months ended Sept. 30. During the same period last year, the firm reported $1.4 million in profit (also 9 cents per diluted share) on $17.2 million in sales.