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New acquisitions drive Teleflex revenue growth as tax law hits Q4'17 profit

Fueled in part by newly acquired medical device company NeoTract last year, Teleflex Inc. reported a 15.8% surge in fourth-quarter net revenue compared to a year earlier.

The Wayne, Pa.-based healthcare equipment manufacturer's net revenue was $595.1 million in the quarter, below the S&P Capital IQ consensus normalized estimate of $601.17 million. Full-year 2017 net revenue of $2.15 billion was 14.9% higher year over year, the company said on Feb. 22. Teleflex expects sales to grow by 14% to 15% in 2017.

The acquisitions of medical device makers NeoTract and Vascular Solutions last year help "give us confidence we can deliver double-digit constant currency revenue growth and significant adjusted earnings per share expansion," Teleflex President and CEO Liam Kelly said in a statement.

NeoTract, purchased for $1.1 billion in September 2017, produced $39 million in fourth-quarter revenue, up 121% year over year.

NeoTract's $125 million in full 2017 revenue exceeded the company's projections of $115 million to $120 million and is expected to grow by at least 40% in 2018.

In addition, an expansion of U.S. Food and Drug Administration approval for NeoTract’s UroLift system Feb. 20 is expected to widen the market for the treatment of lower urinary tract symptoms due to benign prostatic hyperplasia, Kelly said. Permanent implants hold open the urethra, reducing prostate obstruction.

The FDA cleared the system’s use for men with obstructive median lobe — a portion of the prostate gland — and for those as young as 45, allowing it to expand its market. The system had previously been counter-indicated for those with obstructive lobes and those under 50.

Kelly also said the U.S. regulator confirmed in meetings with the company that it is fast-tracking approval of RePlas, a freeze-dried plasma Teleflex is developing.

Not requiring confirmatory tests until after approval will allow RePlas to be made available earlier than the company’s original late 2020 estimate. Kelly didn’t give a new estimate and said Teleflex is waiting for more clarity from the FDA on whether the expedited approval will mean the company can make the plasma available to the general public.

The expedited approval is part of an FDA and Department of Defense effort, required by Congress, to get new medical products to the battlefield more quickly.

On a GAAP basis, Teleflex reported a loss of $42.7 million, or 91 cents per share in the fourth quarter, compared with an income of $61.1 million, or $1.30 per share, in the prior-year period.

Teleflex attributed the GAAP earnings loss to a $107.9 million tax expense related to the recently implemented U.S. tax reform law.

The fourth-quarter revenue increase came despite lower-than-expected revenue growth due to distributor conversions associated with the Vascular Solutions acquisition, Kelly said. Additionally, U.S.-based distributors ordered fewer anesthesia and respiratory products than expected.

On a GAAP basis, net income decreased to $152.5 million, or $3.27 per share, in 2017, from $237.4 million, or $4.98 per share, in 2016.