Teleflex Becomes Pure-Play Device Company; Resolves FDA Issue

The company also said it paid off $125 million worth of debt ahead of schedule, execs reported, which will position the LImerick, Pa.-based firm to grow through acquisition.

Company leadership reported that removing the cargo business would reduce 2011 annual revenue, adjusted earnings per share, and cash flow from operations by $135 million, $0.40 per diluted share, and $15 million, respectively. As a result, the company is adjusting its financial estimates with respect to forecasted 2011 revenue from a range of $1.58 billion to $1.61 billion to a range of $1.44 billion to $1.470 billion; adjusted earnings per share from a range of $4.45 to $4.65 to a range of $4.05 to $4.25; and cash flow from continuing operations from $225 million to $210 million.

“With this decision, I am pleased to announce that we have completed the long journey of transforming the company’s continuing operations from a cyclical, diversified-industrial conglomerate to a pure-play medical technology company,” said Benson Smith, chairman, president and CEO.

In a note to investors, Richard Newitter, an analyst with Boston, Mass.-based Leerink Swann, predicted good things in future as a result of the restructuring.

“In the long run, these moves should better position TFX to re-invest in faster-growing, more profitable medical segments, ultimately helping the company achieve long-term sales and profit goals,” he wrote. “Several events will have to occur in order for TFX to achieve our new 2012 estimate [of $4.05-$4.25], but these mostly seem to us to be within relatively close reach.”

Warning Letter Resolved

The FDA letter, which came just weeks after Teleflex completed its acquisition of Arrow in October 2007, was regarding quality systems controls.

“Upon receiving the warning letter shortly after our acquisition of Arrow, our organization immediately went to work to address the FDA’s observations,” said Smith.“One of our key initiatives at Teleflex is to employ best practices throughout our operations. In the process of responding to the Warning Letter, we applied our standards to the entire Arrow organization. Today, the resolution of this issue represents the successful execution of our response to the Agency and illustrates our commitment to ensuring that our systems and procedures across all of our global facilities continue to provide the highest quality medical products for critical care procedures and surgery. The investments we have made, and will continue to make, will ensure the continuous improvement of our processes and products.”

Teleflex manufactures its own line of medical products as well as providing manufacturing and outsourcing services for other device companies.