Gabelli & Company, Inc.

Transcription

1 One Corporate Center Rye, NY Tel. (914) Fax (914) Gabelli & Company, Inc. Investment Summary Kensey Nash Corp. (KNSY), headquartered in Exton, PA, is a developer of cardiovascular medical technology and a manufacturer of biomaterial products for orthopedics, cardiology, and other markets. Currently, its main source of income comes from royalties for being the developer/ exclusive licensor of the Angio-Seal product to St. Jude Medical. The company was founded in 1984 and went public in Dec at a price of $12 per share. We believe that Kensey Nash is an attractive, long term investment for the following reasons: Strong Sales Growth Est. 9%-10% compounded annual growth in royalty income from St. Jude Medical for Angio-Seal product for next 5 years Royalty income tripled to $21 million in past four years Est. 20%+ sales growth in biomaterials driven by strength of sports medicine and spine-related biomaterial products Sales increased more than fourfold in past four years Tri-Activ Balloon Protected Flush Extraction System expected launch in early 2005 Solid Financial Metrics $61 million in cash Estimated $120+ million in free cash flow from FYE Operating margin of 29% for FYE 6/30/2004 ($Million) - FYE 6/30, 2004A 2005E 2006P 2007P 2008P 2009P 04-'09 CAGR Revenues % 05-'09 SUM Ops CF Capex (6.1) (20.0) (6.0) (8.0) (8.8) (9.7) (52.5) FCF Potential Acquisition Target in the Long Run- Kensey Nash is an attractive acquisition candidate for any large cardiovascular or medical device company who may want to increase their presence in certain niche markets and augment its product portfolio. October 13, Medical - INITIAL REPORT BUY Kensey Nash Corp. (KNSY NASD) Current Price: $ Week Range: $36.85-$19.71 Earnings Per Share: 2006P 2005E 2004A 2003A Price/Earnings Ratio: 2006P 2005E $1.50-$1.60 $1.15-$1.25 $1.04 (a) $0.67 (a) A A 38.7 Indicated Dividend: nil Capitalization (6/30/04): ($ millions) Debt Book Value of Equity (11.5 million basic shares) $94.4 Total Capitalization $94.4 (a) Excludes $0.02 in EPS for FY2004 and $0.09 for FY2003 related to R&D tax credits. Jennie Tsai Gabelli & Company, Inc Please Refer to Important Disclosures on the Last Page of this Report-

2 COMPANY OVERVIEW Kensey Nash Corp. (KNSY), headquartered in Exton, PA, is a developer of cardiovascular medical technology and a manufacturer of biomaterials for the orthopedic, cardiology and other medical markets. The company went public in Dec at an offering price of $12. The company was founded in 1984 by John E. Nash, its current VP - New Technologies, and Kenneth Kensey, a former cardiologist. The company has grown by developing new products and licensing them to partners or manufacturing them in-house and selling through distribution partners. International sales contributed less than 1% of total sales in FY2004. The company currently has two key products/ segments Angio-Seal and biomaterials. In addition, it is expected to launch another key product - its TriActiv Balloon Protected Flush Extraction System in early Key Products Biomaterials (Two-thirds of 2004 revenues of $58 million) Manufacturer of various biomaterials made of polymers, collagen, ceramics products; sold either to another manufacturer for incorporation into another product or to surgeons; applications include orthopedic (sports medicine and spine), cardiology, wound care, periondontal and general surgery. Angio-Seal (One-third of 2004 revenues) Developer of arterial vascular closure device called Angio-Seal; used to close femoral artery puncture sites; receives royalty income from St. Jude Medical (NYSE: STJ), which decreased from 9% to 6% of sales during 4Q2004. The current average selling price for the Angio-Seal sold by St. Jude Medical is about $185 to $190. Tri-Activ Balloon Protected Flush Extraction System (< 1% of total revenues) Balloon system that captures embolic material (debris) during stenting procedures in saphenous vein graft procedures and flushes it out. This prevents the dislodged debris from moving into vasculature, which can cause clots or heart attacks. Expected US launch in early 2005 to be priced competitively at $1,200 to $1,300. Royalty Income 36% Table 1: Chart 1: FY2004 Sales by Segments R&D Income 1% Sales by Segments Biomaterials 63% % of Total Revenues FY2004 ($Mils) % of Total Biomaterials $ % Royalty Income R&D Income Total Revenues $ % Source: Company data. History of the Angio-Seal The Angio-Seal, a medical device consisting of four components, is used to close and seal femoral artery punctures made during diagnostic and therapeutic cardiovascular catheterization. Kensey Nash received FDA approval for the Angio-Seal in September Since 1991, Kensey Nash has had a licensing, R&D and supply agreement with American Home Products s Sherwood-Davis & Geck subsidiary (AHP) for the development and ultimate manufacture and distribution of the Angio-Seal. Kensey Nash supplied AHP with complete Angio-Seal devices along with the two bioresorbable components of the Angio-Seal, the collagen plug and resorbable polymer anchor. In Dec. 1997, AHP sold its Sherwood-Davis & Geck subsidiary to Tyco s Kendall healthcare subsidiary, which became Kensey Nash s new strategic partner. In Nov. 1998, Kendall sold the Angio-Seal agreements to St. Jude Medical, giving St. Jude the exclusive worldwide rights to manufacture and market the Angio-Seal. Kensey Nash receives royalty payments based on a percentage of revenues generated. This percentage has declined from 12% to 9% when a cumulative 1.0 million Angio-Seal units were sold in Oct. 2000, and from 9% to 6% when a cumulative 4.0 million units were sold in April This is the last step-down in the royalty rate. Kensey Nash also has supply agreements to supply St. Jude with the collagen and anchor components of the Angio-Seal, although the anchor sales has diminished as St. Jude continues to manufacture this component in-house

3 INDUSTRY OVERVIEW Gabelli & Company, Inc. The markets that Kensey Nash participates in is growing, primarily due to aging population with those over 65% representing 13% of the US population in 2000 and growing to 20% in The overall medical device industry is also benefiting from several factors: Desire to remain active in later years Active Seniors Demand for therapeutic solutions to chronic and degenerative diseases such as heart disease and joint disease Increased adoption of new technologies/ enhancements that provide immediate benefit The three main market segments that Kensey Nash participates in are as follows: Arterial closure device market: ~ Potential $1.0 billion market Resorbable biomaterials market: ~ $500 million market Embolic protection market (product introduction in early 2005): ~ Potential $1.5 billion market Arterial Closure Device Market According to Kensey Nash, the worldwide arterial closure device market opportunity is approximately $1.0 billion based on 7.3 million annual procedures. Total sales for 2004 are estimated to be $440 million, representing a 44% penetration. With 2004 estimated annual revenues of $280 million by its manufacturing and distribution partner, St. Jude Medical (NYSE: STJ), the Angio-Seal is clearly the market share leader with an approximate 63% market share followed by Abbott Laboratories (NYSE: ABT) at 28% share. According to Trends-in-Medicine, cardiac cath lab managers prefer the Angio-Seal due to its ease of use and its ability to be deployed in a quick manner. Abbott 28% Chart 2: Arterial Closure Device Market Market Share by Manufacturer Datascope 8% Other 1% St. Jude/ Kensey Nash 63% Table 2: 2004 Arterial Closure Device Sales By Manufacturer Est. Sales Manufacturer ($Mils.) Share St. Jude/ Kensey Nash $ % Abbott Datascope Other Total $ % Source: Various company data. Source: Various company data. Resorbable Biomaterials Market According to Kensey Nash, the worldwide resorbable biomaterials market is approximately $500 million, which approximates industry estimates. Kensey Nash is a small player in this market, which is dominated by various other synthetic biomaterials providers such as Wright Medical (NASD: WMGI), Synthes, and others. Kensey Nash s products are incorporated into those of its manufacturing and distribution partners, privately-held Arthrex, JNJ s Orquest division (NYSE: JNJ) and Orthovita (NASD: VITA). Embolic Protection Market According to Kensey Nash, the worldwide embolic protection market opportunity ranges between $900 million to $1.5 billion. Currently, embolic protection devices are used in conjunction with stenting in diseased saphenous vein graft (SVG) surgeries for removal of clots. During a diseased saphenous vein graft surgery, embolic protection prevents debris from being released into the vasculature, which can cause clots or heart attacks

4 The current market is estimated at $200-$300 million annually. Future market opportunities include peripherals at $100-$200 million, carotids at $300-$500 million and AMIs/ Natives at $300-$500 million, totaling $900 million to $1.5 billion. The embolic protection market opportunity as provided by Kensey Nash is shown below: Chart 3: $900 to $1.5 Billion Embolic Protection Market Opportunity by Application Peripherals $100-$200 Carotids $300-$500 Source: Kensey Nash. Diseased sapheous vein $200-$300 AMIs/ Natives $300-$500 Table 3: Embolic Protection Market Opportunity by Application Indication Size ($Mils.) Diseased sapheous vein $ Carotids Peripherals AMIs/ Natives (1) Total Market Potential $900-$1,500 1) Recent clinical trials by Possis Medical and Medtronic have shown no benefit of embolic protection devices when used in acute myocardial infarction (AMI) procedures. Source: Kensey Nash, Medtronic, Possis Medical. Currently, Medtronic and Boston Scientific have embolic protection devices (either balloon or filter approach). Kensey Nash s product launch expected in early 2005 would be the third to market. KENSEY NASH S PRODUCT GROUPS Angio-Seal - Representing 36% of total revenues, the royalty income comes from licensing the Angio- Seal to St. Jude Medical. The Angio-Seal is an arterial closure device for the closing and sealing of femoral artery punctures made during cardiovascular catheterization. It consists of four components: a) absorbable polymer anchor, b) absorbable collagen plug c) absorbable suture and d) a delivery system. The anchor, collagen plug and suture are all designed to be absorbed into the patient s body within 60 to 90 days after the procedure. Kensey Nash is the developer of the Angio-Seal technology, and St. Jude Medical has an exclusivity to manufacture and distribute the product. The term of the license agreements extends to the expiration date of the most recently issued licensed patent (issued July 2000). However, St. Jude may terminate the agreement at any time for any reason with 12 months notice. At such time, all sales and marketing, manufacturing and distribution rights would revert back to Kensey Nash. Cumulatively, over 4.3 million units have been sold by St. Jude (current average price of $185-$190) as of 6/30/2004. Previously, Kensey Nash received a 9.0% royalty income on sales, which decreased to 6.0% when a cumulative 4.0 million units was reached, which occurred in April 2004 (4Q2004). Going forward, this royalty rate reduction should reduce royalty income, which should be somewhat offset by increased units sold and new royalty income from Orthovita. Biomaterials - Representing 63% of total revenues, the biomaterials products consists of polymers, bovine and porcine collagen and ceramics products used in orthopedics, cardiology, wound care, periodontal and general surgery applications as shown in Table 4. Kensey Nash has a solid portfolio of over 40 US biomaterials related patents. It current partnership agreements are with St. Jude Medical, Arthrex, Orthovita and JNJ Orquest. St. Jude Medical Kensey Nash supplies St. Jude Medical with polymer anchors for its Angio-Seal, but these sales are decreasing as St. Jude continues to manufacture more of this product in-house. Kensey Nash also supplies the collagen component for the Angio-Seal with the current contract expiring in Nov Arthrex Kensey Nash manufactures several sports medicine products, which are distributed by privatelyheld Arthrex

5 Orthovita - Kensey Nash has a joint development program with Orthovita for spine related bone void filling and tissue regeneration using Kensey Nash s polymer, collagen and hyaluronic acid technologies to be distributed by Orthovita. In March 2004, Orthovita launched the first series of products from this joint collaboration - an array of resorbable products for bone defects. Kensey Nash generates product sales and royalty income from this joint development program. Table 4: Biomaterial Products Biomaterials Market Biomaterials Products Product Status Partner Orthopedics (61% of biomaterials sales sports medicine 50% & spine 11%) Sports medicine Meniscal repair tacks Commercial Arthrex Anterior cruciate ligament repair screws Commercial Arthrex Rotator cuff repair screws Commercial Arthrex Rotator cuff repair patch Commercial Arthrex Spinal fixation Absorbable growth factor delivery matrices Commercial Orthovita Trauma fixation Bone void filler Commercial Orthovita Joint Replacement ImproVise cement restrictor Commercial Cartilage repair Cartilage regeneration In development Cardiology (36% of biomaterials sales) Arterial puncture closure Absorbable polymer anchors and collagen plugs for Angio-Seal Commercial Vascular grafts Vascular graft coatings International only Vascular graft In development St. Jude Periodontal (1% of biomaterials sales) General Surgery (<1% of biomaterials sales) Source: Company data. Commercial Commercial Tri-Activ - Representing less than 1% of total sales, the Tri-Activ is a balloon-based device for embolic protection during disease saphenous vein graft (SVG) treatment procedures. The rate of major adverse coronary event (MACE) during treatment of diseased SVG is approximately 15%-20%, and the use of embolic protection can decrease the MACE rate to roughly 7.0%, as shown by clinical data from a pilot study. Kensey Nash expects to launch the Tri-Activ in the US in early Currently, Medtronic has a balloon-based device for embolic protection on the market (Guardwire), and several other companies are in clinical trials. These balloon-based devices compete with filter-based devices such as the one currently offered by Boston Scientific (Filterwire EX) and several other manufacturers who are currently in clinical trials such as JNJ. Tri-Activ Clinical Trial Results (Presented at TCT in late Sept. 2004) Kensey Nash revealed the final results of its PRIDE trial, which studied the safety and effectiveness of the Tri- Activ system for embolic protection during saphenous vein grafts (SVGs) on Sept. 28, 2004 at TCT. The PRIDE trial achieved its objective of showing non-inferiority of the Tri-Activ system to approved devices, both Medtronic s Guardwire and Boston Scientific s Filterwire EX. This data, which demonstrated that the Tri-Activ system was comparable to the two existing devices in the marketplace, was submitted to the FDA in July The results of the PRIDE trial are shown on the next page. In addition, we ve included the results of the two clinical trials that were performed by Medtronic and Boston Scientific, which demonstrated safety and efficacy of their embolic protection devices for saphenous vein grafts, and ultimately led to their FDA approvals

6 TABLE 5: Various Embolic Protection Clinical Trials for SVGs Gabelli & Company, Inc. Name Release Date Company Sponsor Results 30 Day MACE Rate Results # of Patients Enrolled Device Type PRIDE Sep-04 Kensey Nash Equivalence with 11.2% for Tri-Activ 631: 313 for Tri-Activ Balloon approved devices, and 318 for control Guardwire & FilterWire EX 10.1% for combined Guardwire & FilterWire EX FIRE Jun-03 Boston Equivalence with 9.9% for FilterWire EX 651: 332 for FilterWire Filter Scientific Guardwire 11.6% for Guardwire and 319 for Guardwire SAFER Oct-00 Medtronic's 42% reduction in % for Guardwire 801: 406 for Guardwire Balloon PercuSurge day MACE vs. no 16.5% for control - and 395 for control embolic protection unprotected MACE = Major adverse cardiac events, a composite of death, myocardial infarction, emergency bypass, or target lesion revascularization. Source: Gregg W. Stone et al for FIRE trial, Donald S. Baim et al for SAFER trial, Joseph P. Carrozza et al for PRIDE trial, Medtronic, Boston Scientific, and Kensey Nash. The 30-day MACE rate results vary in each study for each particular device. For instance, Medtronic s Guardwire had a 30 MACE rate of 9.6% in its own SAFER trial, an 11.6% MACE rate in Boston Scientific s FIRE trial, and a 10.1% MACE rate when combined with the FilterWire EX in the PRIDE trial. From these statistics, a 30-day MACE rate ranging from 9% to 12% would demonstrate efficacy of the embolic protection device in saphenous vein graft procedures. Additional datapoints from the three clinical trials are included in the Appendix. SALES AND DISTRIBUTION As discussed above, Kensey Nash sells its products primarily through distribution partners. For its Tri-Activ embolic protection product, the company has decided to build its own direct sales team. Partner with St. Jude Medical (NYSE: STJ) for Angio-Seal product o Gets royalty fee 6% of Angio-Seal sales o Makes collagen plug component of Angio-Seal for St. Jude current contract expires in Nov o Makes polymor anchor component of Angio-Seal for St. Jude; however, St. Jude is now manufacturing this product in-house; Kensey Nash estimates that it will supply anchors for only 20% of total Angio-Seal product sales or approx. $1 million in sales going forward Kensey Nash s resorbable sports medicine product offerings distributed by privately held Arthrex Kensey Nash s proprietary biomaterials incorporated into Orthovita s (NASD: VITA) spine-related product offerings COMPETITIVE STRENGTHS Since Kensey Nash competes in market segments dominated by large medical companies and multiple small companies, it differentiates itself by playing in niche markets. In addition, the company continuously invests in R&D to develop new products and also aligns itself with major distribution partners. Commitment to R&D. Kensey Nash spends a significant amount on R&D with $16.4 million spent in FY2004 and continues to invest in its future product pipeline. Its R&D spending has range between 25%-33% of sales historically and is projected to lie in this range for FY2005, but will start to decrease as sales continues to increase in future years. This heavy emphasis on R&D enables the company to launch new products such as its Tri-Activ System and additional unique and proprietary biomaterial products. Aligned with Key Distribution Partners. Currently, Kensey Nash has partnership agreements with major players in the cardiology/ orthopedic/ medical arena for its products. This includes St. Jude Medical for the manufacturing, marketing and distribution of its Angio-Seal product. In the biomaterials arena, Kensey Nash manufactures absorbable biomaterials for Arthrex in the sports medicine market

7 It also has a collaboration with Orthovita to manufacture jointly developed resorbable biomaterials for bone repair and spine indications. It also provides the porous, open cell matrix structure for JNJ Orquest s Healos product. INVESTMENT MERITS Solid Revenue Growth Kensey Nash has been growing sales north of 30% compounded average over the past four years. This growth was all internally generated, the result of both its royalty income from St. Jude and its biomaterials product sales generating strong growth. Going forward, Kensey Nash is expected to generate solid sales growth (approximately 20% over the next five years in our model) due to continuously developing and launching new products and the favorable volume growth of the attractive markets that it currently participates in. For the FY2005 beginning July 2004, overall royalty income is expected to remain relatively flat due to a lower royalty rate of 6% (vs. 9%) from St. Jude Medical offset by continued unit volume growth of Angio-Seal and royalty income from Orthovita. The revenue growth from product sales is expected to remain strong with continued growth in biomaterials product line and the introduction of the Tri-Activ system in early 2005 adding to product sales. Excellent Financial Metrics Along with solid organic revenue growth, Kensey Nash has a solid balance sheet with no debt. Over the next five years, the company is expected to generate approx. 20% sales growth, an est. 24% growth in earnings and $120+ million in free cash flow (after $26 million capital expenditures investment for new R&D and manufacturing facility in ). In addition, the company s return on invested capital (ROIC) for FYE June 2004 was 30%, demonstrating its ability to invest in new products through R&D efforts, thereby creating value. Table 6 Kensey Nash Corp. Income Statement ($Millions, except per share data) - FYE 6/ A 2005E 2006P 2007P 2008P 2009P 04-'09 CAGR -- Royalty Income $21.2 $21.3 $24.5 $27.4 $30.1 $ % -- Product Sales R&D Income Revenues $58.2 $71.4 $87.9 $105.3 $123.5 $ % Expenses Operating income % Other income (expense) Pre-tax income % Income taxes (a) Net income - cont. ops Diluted shares outstanding Diluted EPS (b) $1.04 $1.15-$1.25 $1.50-$1.60 $1.95-$2.05 $2.40-$2.50 $2.95-$ % a) Assumes constant 30% tax rate for the next five years. b) FY2004 EPS excludes $0.02 related to R&D tax credit, which occurred during 1Q2004. Source: Company data and Gabelli & Company, Inc. estimates. Potential Acquisition Target Although Kensey Nash participates in smaller, niche markets within the medical products/ medical technology sector, it is a top player in these niche markets. As such, it would be an attractive acquisition target for any of the larger medical or cardiovascular companies who would want to expand into the biomaterials or embolic protection market, both of which are experiencing solid market growth. We believe that large players such as Abbott Laboratories (NYSE: ABT) or Johnson & Johnson (NYSE: JNJ) would perceive Kensey Nash as an attractive target. In fact, if any of these companies want to enter into the embolic protection market, the quickest and most viable way would be via acquisition of Kensey Nash since the time horizon to develop a product and conduct clinical trials for an embolic protection device would be a couple of years

8 Since 2000, two acquisitions were made by large medical device companies to enter into the embolic protection market: Risks Oct Medtronic s acquisition of PercuSurge for $225 million for GuardWire Plus Temporary Occlusion and Aspiration System; product launched in June 2001 into US market Feb Boston Scientific s (NYSE: BSX) acquisition of Embolic Protection Inc. for FilterWire EX system for $75 million plus performance milestones; product launched in June 2003 into US market Competition in Embolic Protection Market Currently, the embolic protection market is dominated by Medtronic and Boston Scientific; however, the market is not fully penetrated. Specific to embolic protection devices used in saphenous vein graft procedures, industry sources have 62% of procedures performed without use of any protection devices. Kensey Nash is expected to enter the US market in early 2005, but the sales ramp up of its Tri-Activ system is difficult to predict at this time. In addition, there are various other companies that are currently undergoing clinical trials for their own proprietary embolic protection devices. Execution Risk with Tri-Activ - With the introduction of Tri-Activ in early 2005, there is execution risk as Kensey Nash builds up its own direct sale force and competes directly against Medtronic and Boston Scientific in the embolic protection device market for SVGs. Reliance on Partners With 58% of its revenues coming from St. Jude Medical via royalty income and biomaterial sales, Kensey Nash is dependent on St. Jude and its ability to execute on its business strategy for the Angio-Seal product. Kensey Nash is also dependent on Arthrex, which currently makes up approximately 30% of its total sales. Private Market Value Kensey Nash is currently trading at 21.3x FYE 6/30/2005E earnings and 10.1x FYE 6/30/2005E EBITDA. This equates to a 14% discount to our 2005E PMV. We feel that this discount is unwarranted for a company with solid sales growth and higher earnings growth. Using a 12.0x EBITDA multiple, the PMV for Kensey Nash is $30 in 2005, rising to $77 in As such, we view Kensey Nash as an attractive, long-term investment whose stock price is currently undervalued. Table 7 Kensey Nash Corp. Private Market Value (PMV) ($Millions, except per share data) - FYE 6/ A 2005E 2006P 2007P 2008P 2009P 04-'09 CAGR Revenue $58.2 $71.4 $87.9 $105.3 $123.5 $144.2 EBITDA % Valuation Multiple Total Private Market Value Plus/ (Less): Net Cash (Debt) Less: Net Options Payments (a) (15.7) (21.4) (35.2) (49.8) (67.2) (88.1) Equity PMV Shares (basic) PMV Per Share $26 $30 $40 $50 $62 $77 a) Payment to option holders at PMV, net of taxes. Source: Company data and Gabelli & Company, Inc. estimates

9 Appendix: Various Clinical Trials of Embolic Protection Devices For Saphenous Vein Grafts (SVGs) Trial Name PRIDE FIRE SAFER Full Name PRotection during saphenous vein graft Intervention to prevent Distal Embolization FilterWire EX Randomized Evaluation Saphenous vein graft Angioplasty Free of Emboli Randomized Trial Non-control group Tri-Activ system Filterwire EX Guardwire Control group Both Guardwire & Filterwire EX Guardwire No embolic protection # of total patients Non-control group Control group Device type Balloon Filter Balloon 30 day MACE rate - Non-control group 11.2% 9.9% 9.6% - Control group 10.1% 11.6% 16.5% Average age - Non-control group / / / Control group / / /- 9 SVG age - Non-control group / / / Control group / / /- 3.7 Procedure success - Non-control group 89.4% 85.8% N/A - Control group 90.5% 86.2% N/A % Male - Non-control group 83.7% 78.6% 81.8% - Control group 79.9% 79.9% 83.8% MACE = Major adverse cardiac events, a composite of death, myocardial infarction, emergency bypass, or target lesion revascularization. Source: Gregg W. Stone et al for FIRE trial, Donald S. Baim et al for SAFER trial, Joseph P. Carrozza et al for PRIDE trial, Medtronic, Boston Scientific, and Kensey Nash

10 Companies Mentioned in Report: Abbott Laboratories, Inc. (NYSE: ABT) Boston Scientific Corp. (NYSE: BSX) Johnson & Johnson (NYSE: JNJ) Medtronic, Inc. (NYSE: MDT) Orthovita, Inc. (NASD: VITA) Possis Medical, Inc. (NASD: POSS) St. Jude Medical, Inc. (NYSE: STJ) IMPORTANT DISCLOSURES I, Jennie Tsai, the Research Analyst who prepared this report, hereby certify that the views expressed in this report accurately reflect the analyst s personal views about the subject companies and their securities. The Research Analyst has not been, is not and will not be receiving direct or indirect compensation for expressing the specific recommendation or view in this report. Jennie Tsai Gabelli & Company, Inc ONE CORPORATE CENTER RYE, NY GABELLI & COMPANY, INC. TEL (914) FAX (914) Gabelli & Company, Inc. ( we or us ) attempts to provide timely, value-added insights into companies or industry dynamics for institutional investors. Our research reports generally contain a recommendation of buy, hold, sell or non-rated. We do not undertake to upgrade or downgrade ratings after publishing a report. We generally write reports on 787 companies, of which 32%, 36%, 3%, and 29% have a recommendation of buy, hold, sell or non-rated, respectively. The percentage of companies so rated for which we provided investment banking services within the past 12 months is 0%, 0%, 0%, and 0%. We prepared this report as a matter of general information. We do not intend for this report to be a complete description of any security or company and it is not an offer or solicitation to buy or sell any security. All facts and statistics are from sources we believe to be reliable, but we do not guarantee their accuracy. We do not undertake to advise you of changes in our opinion or information. Unless otherwise noted, all stock prices reflect the closing price on the business day immediately prior to the date of this report. We do not use price targets predicting future stock performance. We do refer to private market value or PMV, which is the price that we believe an informed buyer would pay to acquire 100% of a company. There is no assurance that there are any willing buyers of a company at this price and we do not intend to suggest that any acquisition is likely. Additional information is available on request. Our affiliates beneficially own on behalf of their investment advisory clients or otherwise approximately less than 1.0% of the common stock Kensey Nash Corp. Because the portfolio managers at our affiliates make individual investment decisions with respect to the client accounts they manage, these accounts may have transactions inconsistent with the recommendations in this report. These portfolio managers may know the substance of our research reports prior to their publication as a result of joint participation in research meetings or otherwise. The analyst who wrote this report may receive commissions from customers transactions in the securities mentioned in this report