AGA Medical Holdings, Inc. (AGAM)
Q1 2010 Earnings Call Transcript
May 6, 2010 8:00 am ET
John Barr – President and CEO
Brigid Makes – SVP and CFO
Larry Biegelsen – Wells Fargo
Rick Wise – Leerink Swann
Bob Hopkins – Banc of America/Merrill Lynch
Matthew Dodds – Citigroup
Tao Levy – Deutsche Bank
Joshua Zable – Natixis
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Good day, ladies and gentlemen, and welcome to the AGA Medical's first quarter 2010 conference call. Hosting the call today is Mr. John Barr, President and CEO of AGA Medical. My name is Amica and I will be your coordinator for today. As a reminder, this conference is being recorded for replay purposes. Before we begin, the company has asked me to read the following statement.
The remarks made during this conference call contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that include risks and uncertainties. Such forward-looking statements include the expectations, plan and prospects for the company including potential clinic – clinical successes, anticipated regulatory approvals and future product launches and product revenues, margins, earnings and market shares. The statements made by the company are based upon management's current expectations, and are subject to certain risk and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements.
These risks and uncertainties include market conditions and other factors beyond the company's control and the risk factors of other cautionary statements described in the company's filings with the SEC, including those described in the Risk Factors and Cautionary Statements sections of the company's most recent earnings release as filed on Form 8-K this morning and its annual report on Form 10-K. The company's does not intent to update this statement and undertakes no duty to any person to provide any such updates under any circumstances.
Additionally, this presentation includes a discussion of certain non-GAAP financial measures, including EBITDA, constant currency and non-GAAP earnings per share, which management finds useful and evaluating its businesses. A reconciliation to the most comparable non-GAAP measures can be found in the company's earnings release.
At this time, all participants are in a listen-only mode. Following the prepared remarks, there will be a question-and-answer session. (Operator Instructions) It is now my pleasure to turn the floor over to Mr. John Barr. Please go ahead, sir.
Well, thank you. And welcome to the AGA Medical first quarter 2010 earning conference call. With me on the call today are Brigid Makes, Chief Financial Officer, Roland Lund, our General Counsel and Rachel Ellingson, Senior Director of Business Development and Investor Relations.
Our plan this morning is for Brigid to provide a review of our financial results for the fourth quarter 2010. I will then provide some business highlights from the quarter and we will open up the call for your questions.
Before I turn the call over to Brigid, I would like to start the call by saying that we're off to a very strong start for 2010 and pleased with our first quarter results. We had solid sales growth across all products and all geographies, clearly demonstrating the benefit of our investment in developing strong global sales channels.
In addition, we had strong recruitment results in our PFO trials demonstrating the strength of our clinical team. Our spending was inline with our expectations and our strong gross margins continue to allow us to invest in the pipeline programs which are key to our mission of developing innovative medical devices that can change the status of careful patients.
In this quarter, we successfully achieved two significant milestones for the company, one clinical milestone with FDA approval to begin the clinical trial in the U.S. to evaluate the safety in efficacy of our AMPLATZER Cardiac Plug to close the left atrial appendage and one business milestone with the settlement of our path litigation with Medtronic or to which we will discuss in further detail later in the call.
With that I'd like to turn the call over to Brigid.
Thanks, John. And again, welcome to everyone on the call this morning. The first quarter of 2010 was a strong sales quarter for AGA Medical with reported net sales of $51.3 million versus $44.4 million in the prior year. This represents a year-over-year net sales growth of 15.4% as reported in 11.9% on a constant currency basis.
For the quarter, atrial septal occluder sales represented 50.9% of sales, PFO Occluder sales represented 14.8% of net sales, Vascular plug represent a 10% of net sales. In other devices including devices to close ventricular septal defects, patent ductus arteriosus and the AMPLATZER Cardiac Plug to close the left atrial appendage, accounted for 12.7% of net sales. Accessories that are used in the procedure, such as delivery systems and sizing balloons, represented 11.6% of net sales.
Direct sales in North America represented 38.9% of net sales. Direct sales in Europe accounted for 42.3% of net sales and distributors who cover the rest of the world accounted for 18.8% of net sales. As we have reported, we converted six distributors at the beginning of January 2009 with our distributor converging largely completed our first quarter of 2010 versus 2009 is a clean comparison in terms of growth rate.
Sales in North America grew 11.9% versus the prior year. Direct sales in Europe grew 17.8% largely due to the availability certain product sold outside the U.S. and not yet approved in the U.S. Those products include Patent Foramen Ovale or PFO device. Our second product that close patent ductus arteriosus is the AMPLATZER Duct Occluder II.