06.02.10
Financial News
Quarterly Earnings Reports Show Device Sector Rebounding
Maybe economists were right (they have been correct on occasion, after all). Maybe the recession really is over.
If the latest quarterly earnings from medical device makers are any indication, the word “maybe” no longer factors into the economic recovery equation. Several device firms posted higher-than-expected quarterly earnings over the last two months, moves that have prompted market analysts to declare the start of a “slow and steady recovery” in the medical device sector.
Medtronic Inc., Stryker Corp., St. Jude Medical Inc., and Johnson & Johnson reported results that topped analysts’ forecasts, according to quarterly earnings data from the companies. The healing economy helped Kalamazoo, Mich.-based Stryker achieve first-quarter net income of $322 million, or 80 cents per share, a 14.5 percent increase compared with the $281 million, or 71 cents per share the company reported in the first quarter of 2009. Net sales rose 12.4 percent to $1.8 billion, while orthopedic implant sales jumped 10.7 percent to $1.08 billion on higher shipments of hips, knees, spinal and trauma implants.
Sales of medical and surgical equipment in the company’s MedSurg division climbed 15 percent to $722 million in the first quarter, ended March 31. Stryker executives attributed the higher sales figure to increased shipments of endoscopy and communications systems. “That’s a very strong number given what is still somewhat of a pressured capital budget situation in the United States,” Jeff Johnson, an analyst with Robert W. Baird & Co. in Milwaukee, Wis., told Reuters.
Medtronic recorded some strong numbers as well. In fact, the fourth quarter of fiscal 2010 (ended April 30) was one for the history books: The Minneapolis, Minn.-based medical device behemoth reported more than $4 billion in revenue during the quarter. In addition, sales increased across nearly all business segments (Spinal is still struggling) and net earnings grew astronomically, according to Medtronic’s fourth quarter and fiscal 2010 earnings report.
The $4.2 billion the company generated in the fourth quarter represents a 10 percent jump compared with the same period in fiscal 2009. Net earnings totaled $954 million, or 86 cents per diluted share, increases of 826 percent and 856 percent, respectively. On a non-GAAP basis, Medtronic’s fourth-quarter net earnings were $986 million and 89 cents per diluted share.
Medical Molding Manufacturer Morphs into Bankruptcy
All the warning signs were there: The substantial losses and negative cash flows. The large liabilities. And, the sales that weren’t really where they should have been.
With its fiscal health in such a fragile state, medical molder Moll Industries Inc. seemed destined for financial ruin. Its creditors began circling.
Those creditors, however, may have to wait a while to get paid. The Dallas, Texas-based company filed for Chapter 11 bankruptcy protection on April 27 in a Delaware court. The filing was prompted in part by a sheriff’s sale of equipment at its injection molding plant in Seagrove, N.C. According to court papers, a customer—identified as Invensys Controls—had obtained a judgement of $947,000 against Moll and requested the sheriff to sell equipment there. Invensys is a global provider of components, systems and services used in appliances, heating, air conditioning, refrigeration, and residential thermostat products.
Details of Moll’s dispute with Invensys were not included in the bankruptcy filing. But Jeffrey Merritt, Moll’s chief restructuring officer, told Plastics News that the dispute involved the closing of a manufacturing plant by Moll. Invensys, he added, was trying to enforcement the judgement.
Though Moll executives attribute their decision to file for Chapter 11 on the sheriff’s sale (the “main problem forcing it into bankruptcy,” according to court documents), the company’s financial troubles pre-date the failed sale and legal dispute with Invensys by several years.
In 2002, investment advisory firm Highland Capital Management L.P. forced Moll to file for involuntary Chapter 11 protection over a $48.4 million past-due tab on loans. Moll emerged from bankruptcy the following year, and Highland Capital became the company’s owner.
Moll’s biggest financial setback occurred in 2006, when the company ended a 50-year working relationship with Whirlpool Corp. The move caused Moll to close three plants and lose a $60 million chunk of business. After losing the Whirlpool work, Moll entered the medical molding sector, investing in cleanrooms. But rising debts and mounting financial concerns forced the company to consolidate its molding operations into two facilities, Seagrove and Donegal, Ireland.
Last year, Moll generated sales of about $22 million; 75 percent of those sales came from medical molded products, according to court records. As of the bankruptcy filing date, the company had about $16 million in assets and $74 million in debts.
Moll included a partial list of those debts to the bankruptcy court in its filing. The company owes $3.56 million to Pension Benefit Guarantee Corp. of Washington, D.C., for underfunded pensions, and a $1 million judgement to Ranco Inc./RobertShawn Controls of Plain City, Ohio (likely related to its dispute with Invensys). Other outstanding bills include $282,830 to PolyOne for resins, $129,529 to Eastman Chemical Company for raw materials, and $93,288 to Highland Capital for an office lease.
In addition, Moll’s bi-monthly employer taxes amount to $14,500 and its bi-monthly payroll totals $183,500. The cost of employees’ benefit plans comes to $57,000, though 20 percent to 25 percent of the cost is paid by workers.
Despite its bankruptcy filing, the company’s facility in Seagrove remains open and continues to make molded products. The factory employs about 125. Merritt, the chief restructuring officer, said the company has a number of options to emerge from bankruptcy, including a sale.
Moll describes itself as a global injection molder and full-service contract manufacturer serving the medical, appliance, automotive, consumer and industrial markets. The company was incorporated in 1945.
Finance Digest: A Roundup of Recent Funding Agreements
Arsenal Medical Inc. has raised $10 million in its latest funding round. The Watertown, Mass.-based company has already received a total of $3 million in debt financing this year ($2 million in January and $1 million in March). The firm took in $8.2 million of a planned $12.2 million Series C funding round last May. Overall, Arsenal has raised more than $30 million in equity and debt funding since its 2005 founding. The firm develops treatments for ophthalmology and cardiovascular disease using bioactive composite materials.
Astute Medical Inc., based in San Diego, Calif., completed a $26.5 million Series B financing co-led by Domain Associates and Delphi Ventures. Astute executives said they will use the money to research ways of identifying and validating protein biomarkers. Company officials hope to improve the diagnosis of high-risk medical conditions and diseases through the identification and validation of protein biomarkers.
Breathe Technologies Inc., a 5-year-old company based in San Ramon, Calif., secured $23 million in Series C financing. Led by DAG Ventures, the transaction also included help from Kleiner Perkins Caufield & Byers, Delphi Ventures, Synergy Partners International and Johnson & Johnson Development Corporation. Breathe Technologies officials describe the company as a “developer and manufacturer of medical technologies” to improve lung disease treatment and sleep disorder breathing. “The Series C financing will fund commercialization of Breathe’s mobile ventilation system for the people worldwide with breathing challenges,” said Gregory J. Kapust, Breathe Technologies president and CEO. The company has received U.S. Food and Drug Administration 510(k) clearance for its wearable ventilation system, according to a news release.
Sequent Medical Inc., a privately held, development-stage medical device firm based in Aliso Viejo, Calif., closed a $15.6 million Series B venture capital financing. The financing was led by Domain Associates, joined by existing investors Versant Ventures and US Venture Partners. Sequent Medical President and CEO Tom Wilder said the money will be funneled into the firm’s development programs, including the introduction of a product designed to serve as a treatment alternative for cerebral aneurysms. Founded in 2007, the company develops devices that can advance and improve the endovascular treatment of neurovascular disease conditions.
Exosome Diagnostics Inc., a New York, N.Y.-based developer of minimally-invasive molecular diagnostics, raised $20 million in Series A funding. The transaction was led by NGN Capital in New York, and Forbion Capital Partners based in Naarden, the Netherlands. Company officials said the money will be used to develop and commercialize several “next-generation” body fluid-based oncology diagnostics. The company is establishing research and development and service operations in New York and Munich, Germany.
Quarterly Earnings Reports Show Device Sector Rebounding
Maybe economists were right (they have been correct on occasion, after all). Maybe the recession really is over.
If the latest quarterly earnings from medical device makers are any indication, the word “maybe” no longer factors into the economic recovery equation. Several device firms posted higher-than-expected quarterly earnings over the last two months, moves that have prompted market analysts to declare the start of a “slow and steady recovery” in the medical device sector.
Medtronic Inc., Stryker Corp., St. Jude Medical Inc., and Johnson & Johnson reported results that topped analysts’ forecasts, according to quarterly earnings data from the companies. The healing economy helped Kalamazoo, Mich.-based Stryker achieve first-quarter net income of $322 million, or 80 cents per share, a 14.5 percent increase compared with the $281 million, or 71 cents per share the company reported in the first quarter of 2009. Net sales rose 12.4 percent to $1.8 billion, while orthopedic implant sales jumped 10.7 percent to $1.08 billion on higher shipments of hips, knees, spinal and trauma implants.
Sales of medical and surgical equipment in the company’s MedSurg division climbed 15 percent to $722 million in the first quarter, ended March 31. Stryker executives attributed the higher sales figure to increased shipments of endoscopy and communications systems. “That’s a very strong number given what is still somewhat of a pressured capital budget situation in the United States,” Jeff Johnson, an analyst with Robert W. Baird & Co. in Milwaukee, Wis., told Reuters.
Medtronic recorded some strong numbers as well. In fact, the fourth quarter of fiscal 2010 (ended April 30) was one for the history books: The Minneapolis, Minn.-based medical device behemoth reported more than $4 billion in revenue during the quarter. In addition, sales increased across nearly all business segments (Spinal is still struggling) and net earnings grew astronomically, according to Medtronic’s fourth quarter and fiscal 2010 earnings report.
The $4.2 billion the company generated in the fourth quarter represents a 10 percent jump compared with the same period in fiscal 2009. Net earnings totaled $954 million, or 86 cents per diluted share, increases of 826 percent and 856 percent, respectively. On a non-GAAP basis, Medtronic’s fourth-quarter net earnings were $986 million and 89 cents per diluted share.
Medical Molding Manufacturer Morphs into Bankruptcy
All the warning signs were there: The substantial losses and negative cash flows. The large liabilities. And, the sales that weren’t really where they should have been.
With its fiscal health in such a fragile state, medical molder Moll Industries Inc. seemed destined for financial ruin. Its creditors began circling.
Those creditors, however, may have to wait a while to get paid. The Dallas, Texas-based company filed for Chapter 11 bankruptcy protection on April 27 in a Delaware court. The filing was prompted in part by a sheriff’s sale of equipment at its injection molding plant in Seagrove, N.C. According to court papers, a customer—identified as Invensys Controls—had obtained a judgement of $947,000 against Moll and requested the sheriff to sell equipment there. Invensys is a global provider of components, systems and services used in appliances, heating, air conditioning, refrigeration, and residential thermostat products.
Details of Moll’s dispute with Invensys were not included in the bankruptcy filing. But Jeffrey Merritt, Moll’s chief restructuring officer, told Plastics News that the dispute involved the closing of a manufacturing plant by Moll. Invensys, he added, was trying to enforcement the judgement.
Though Moll executives attribute their decision to file for Chapter 11 on the sheriff’s sale (the “main problem forcing it into bankruptcy,” according to court documents), the company’s financial troubles pre-date the failed sale and legal dispute with Invensys by several years.
In 2002, investment advisory firm Highland Capital Management L.P. forced Moll to file for involuntary Chapter 11 protection over a $48.4 million past-due tab on loans. Moll emerged from bankruptcy the following year, and Highland Capital became the company’s owner.
Moll’s biggest financial setback occurred in 2006, when the company ended a 50-year working relationship with Whirlpool Corp. The move caused Moll to close three plants and lose a $60 million chunk of business. After losing the Whirlpool work, Moll entered the medical molding sector, investing in cleanrooms. But rising debts and mounting financial concerns forced the company to consolidate its molding operations into two facilities, Seagrove and Donegal, Ireland.
Last year, Moll generated sales of about $22 million; 75 percent of those sales came from medical molded products, according to court records. As of the bankruptcy filing date, the company had about $16 million in assets and $74 million in debts.
Moll included a partial list of those debts to the bankruptcy court in its filing. The company owes $3.56 million to Pension Benefit Guarantee Corp. of Washington, D.C., for underfunded pensions, and a $1 million judgement to Ranco Inc./RobertShawn Controls of Plain City, Ohio (likely related to its dispute with Invensys). Other outstanding bills include $282,830 to PolyOne for resins, $129,529 to Eastman Chemical Company for raw materials, and $93,288 to Highland Capital for an office lease.
In addition, Moll’s bi-monthly employer taxes amount to $14,500 and its bi-monthly payroll totals $183,500. The cost of employees’ benefit plans comes to $57,000, though 20 percent to 25 percent of the cost is paid by workers.
Despite its bankruptcy filing, the company’s facility in Seagrove remains open and continues to make molded products. The factory employs about 125. Merritt, the chief restructuring officer, said the company has a number of options to emerge from bankruptcy, including a sale.
Moll describes itself as a global injection molder and full-service contract manufacturer serving the medical, appliance, automotive, consumer and industrial markets. The company was incorporated in 1945.
Finance Digest: A Roundup of Recent Funding Agreements
Arsenal Medical Inc. has raised $10 million in its latest funding round. The Watertown, Mass.-based company has already received a total of $3 million in debt financing this year ($2 million in January and $1 million in March). The firm took in $8.2 million of a planned $12.2 million Series C funding round last May. Overall, Arsenal has raised more than $30 million in equity and debt funding since its 2005 founding. The firm develops treatments for ophthalmology and cardiovascular disease using bioactive composite materials.
Astute Medical Inc., based in San Diego, Calif., completed a $26.5 million Series B financing co-led by Domain Associates and Delphi Ventures. Astute executives said they will use the money to research ways of identifying and validating protein biomarkers. Company officials hope to improve the diagnosis of high-risk medical conditions and diseases through the identification and validation of protein biomarkers.
Breathe Technologies Inc., a 5-year-old company based in San Ramon, Calif., secured $23 million in Series C financing. Led by DAG Ventures, the transaction also included help from Kleiner Perkins Caufield & Byers, Delphi Ventures, Synergy Partners International and Johnson & Johnson Development Corporation. Breathe Technologies officials describe the company as a “developer and manufacturer of medical technologies” to improve lung disease treatment and sleep disorder breathing. “The Series C financing will fund commercialization of Breathe’s mobile ventilation system for the people worldwide with breathing challenges,” said Gregory J. Kapust, Breathe Technologies president and CEO. The company has received U.S. Food and Drug Administration 510(k) clearance for its wearable ventilation system, according to a news release.
Sequent Medical Inc., a privately held, development-stage medical device firm based in Aliso Viejo, Calif., closed a $15.6 million Series B venture capital financing. The financing was led by Domain Associates, joined by existing investors Versant Ventures and US Venture Partners. Sequent Medical President and CEO Tom Wilder said the money will be funneled into the firm’s development programs, including the introduction of a product designed to serve as a treatment alternative for cerebral aneurysms. Founded in 2007, the company develops devices that can advance and improve the endovascular treatment of neurovascular disease conditions.
Exosome Diagnostics Inc., a New York, N.Y.-based developer of minimally-invasive molecular diagnostics, raised $20 million in Series A funding. The transaction was led by NGN Capital in New York, and Forbion Capital Partners based in Naarden, the Netherlands. Company officials said the money will be used to develop and commercialize several “next-generation” body fluid-based oncology diagnostics. The company is establishing research and development and service operations in New York and Munich, Germany.