Kensey Nash Q2 - Edited

Joseph Kaufmann

Our total revenue for the quarter of $21.9 million exceeded prior year by 7% and increased 10% sequentially. Total net sales of $15.1 million exceeded prior year by 12% and increased 14% sequentially. This growth was due to sports medicine, which increased 58% year-over-year and 9% sequentially; and our cardiology products, which are primarily Angio-Seal components, also increased 14% year-over-year and 3% sequentially.

As far as the Angio-Seal collagen sales, again, our third and fourth quarter collagen sales to St. Jude were very good. And we look at the comp compared to last year and our first quarter, it's primarily again due to timing. We expect our second quarter sales to St. Jude will reflect this and will show the improvement.........

It's products, it's quality, it's all that things that you think of every day, and that we think with hopefully some of the new products that we're brining to the marketplace, the biologic products, we believe are going to be a major factor in all of healthcare going forward. And Kensey Nash is going to be a major player in this space, not only in sports medicine, but also in general surgery and in other areas that we're very well positioned with the technology we have built here over the last five to 10 years or so within our organization....

Josh Jennings - Jefferies & Company

And then just last one just on the St. Jude supply agreement. Anymore color you could provide in terms of what happens? I know that's a tiered supply agreement for the component parts, but after 2011, it seems that that minimum 25% does that end in 2011 and you could renegotiate for 2012? And then lastly, is there any risk of the Angio-Seal royalty rate going away at some point?

Joseph Kaufmann

On the supply agreement, it's a two-year deal that starts at January 2011, so it goes out for '11 and '12. And then after that it will be determined whether it will be expanded, increased, decreased, or renewed, I don't know at this time.

As far as royalties are concerned, we are a royalty on Angio-Seal sales. As long as there is at least one claim on any patent, we're entitled to the full 6% royalty, there aren't any step-downs. So as long as there is patents in place that are being utilized, then that's when we continue to receive the royalty.