8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): May 30, 2008

Kensey Nash Corporation

(Exact name of registrant as specified in its charter)

Delaware	0-27120	36-3316412
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(IRS Employer Identification No.)

735 Pennsylvania Drive, Exton, Pennsylvania 19341

(Address of principal executive offices and zip code)

Registrant’s telephone number, including area code: (484) 713-2100

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Section 1 – Registrant’s Business and Operations

Item 1.01. Entry into a Material Definitive Agreement.

On May 30, 2008, Kensey Nash Corporation (the “Company”) completed the sale of its endovascular business to The Spectranetics Corporation (“Spectranetics”). Pursuant to an Asset Purchase Agreement, dated as of May 12, 2008, among the Company, Spectranetics, ILT Acquisition Sub, Inc. (“ILT”) and Kensey Nash Holding Corporation (together with the Company and ILT, the “Sellers”), the Sellers sold to Spectranetics the assets related to the Sellers’ QuickCat, ThromCat and SafeCross product lines for $10 million in cash. Under the terms of the Asset Purchase Agreement, Spectranetics will pay the Company an additional $6 million once cumulative sales of the acquired products reach $20 million. The Asset Purchase Agreement was filed as Exhibit 10.1 to a Current Report on Form 8-K filed by the Company with the SEC on May 16, 2008 and is incorporated herein by reference. On June 2, the Company issued a press release announcing the closing of this transaction, a copy of which is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

On May 30, 2008, pursuant to the Asset Purchase Agreement, the Company and Spectranetics entered into a Manufacturing and Licensing Agreement pursuant to which the Company will manufacture for Spectranetics the endovascular products acquired by Spectranetics under the Asset Purchase Agreement, and Spectranetics will purchase such products exclusively from the Company for specified time periods ranging from six months for QuickCat to three years for ThromCat and SafeCross. The arrangement to manufacture ThromCat and SafeCross may be extended beyond the initial three-year manufacturing period under certain circumstances. During that time, Spectranetics will pay transfer prices for the products based on (a) the Company’s cost to manufacture such products and (b) a percentage of the sales of the ThromCat and SafeCross products. Additionally, after the Company’s manufacture of the ThromCat and SafeCross products is transferred to Spectranetics, Spectranetics will be obligated to pay the Company a royalty on sales of such products. The amount of this royalty will depend upon the reason for the transferring of manufacturing to Spectranetics and, in certain cases, upon the amount of revenue generated by the ThromCat and SafeCross products during the applicable year. The royalty is subject to reduction depending upon the scope of patent protection obtained for the ThromCat product. After the Company’s manufacture of the QuickCat product has transferred to Spectranetics, Spectranetics will have no obligation to make additional payments to the Company related to future sales of the QuickCat product.

Also, on May 30, 2008 and also pursuant to the Asset Purchase Agreement, the Company and Spectranetics entered into a Development and Regulatory Services Agreement pursuant to which the Company will conduct work to develop and obtain regulatory approval from the FDA for certain next-generation SafeCross and ThromCat products at the Company’s expense on behalf of Spectranetics. Spectranetics will own all intellectual property resulting from this development work. If clinical studies are required to obtain approval from the FDA for those next-generation products, the costs will be shared equally by the Company and Spectranetics. Spectranetics will pay KNC up to $8 million upon achievement of certain objectives relating to such product development activities and regulatory approvals for certain of the next-generation products.

This Form 8-K contains forward-looking statements, including statements regarding expected benefits of the transactions described above, that are generally identified by use of the words “expects”, “estimates”, “intent,” “will” and other similar words or phrases. Actual events or results may differ materially from those statements. For information about the factors that could cause such differences, please refer to the Company’s Annual Report on Form 10-K for the year ended June 30, 2007, including the information set forth in Item 1A, Risk Factors and under the caption “Cautionary Statement on Forward-Looking Statements” and to the information under the caption “Cautionary Note for Forward–Looking Statements” in the press release attached hereto as Exhibit 99.1.

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The following information is being furnished to provide an update to, and amend the disclosure in the Form 8-K filed by the Company with the SEC on May 16, 2008. This purpose of this update is to provide additional detail concerning the transaction described in the original Form 8-K and provide for changes in estimates of the amount or range of amounts of any such impairment charges expected to be recorded in the fourth quarter ending June 30, 2008.

The Company has received the initial cash payment of $10 million for the sale of its endovascular business, including the stock of Kensey Nash Europe GmbH, in exchange for net tangible assets of $3.3 million and intangible assets of $1.3 million. In addition the Company will recognize goodwill and other asset impairment charges totaling approximately $7.3 million and recognize transaction related liabilities of approximately $3.2 million, including transaction fees and an obligation to upgrade existing inventory under the Development and Regulatory Services Agreement. Also in conjunction with the transaction, the Company anticipates recording a one-time charge of approximately $2.7 million associated with severance and other related costs. Upon the closing of the transaction, and as a result of the components described above, the Company expects to recognize a net loss of approximately $5.1 million (net of taxes of $2.7 million) on the sale of its endovascular division. This loss does not include the future benefit of milestones or royalties to be received under the Agreements, which is expected to exceed the cost of accomplishing such milestones.

The following table summarizes the deal transaction amounts expected to be recorded in the fourth quarter ending June 30, 2008. These charges will be presented within the Company’s results from continuing operations.

Description		Estimated Amount (in millions)
Initial cash at closing				$	10.0
Cash charges:
Transaction related liabilities	Transaction fees, inventory upgrade	(3.2	)
Severance and other related costs		(2.7	)
Total cash charges					(5.9	)
Non-cash charges:
Asset impairment charges	Goodwill and inventory	(7.3	)
Net tangible assets	Machinery & equipment, accounts receivable, inventory and other net assets	(3.3	)
Intangible assets	Patents and other intangibles	(1.3	)
Total non-cash charges					(11.9	)
Total pre-tax loss before income tax benefit				$	(7.8	)
Income tax benefit				$	2.7
Net loss				$	(5.1	)

3

The estimated transaction amounts included in the table above represent an initial cash receipt of $10.0 million, as well as non-cash and cash charges totaling approximately $11.9 million and $5.9 million, respectively.

With respect to the items discussed above, the Company may conclude that one or more other material charges for impairment to the Company’s assets is required under generally accepted accounting principles. The Company will file one or more amendments to this Form 8-K, as necessary, to provide any changes in estimates of the amount or range of amounts of any such impairment charges after it has been finally determined.

Section 2 – Financial Information

Item 2.01. Completion of Acquisition or Disposition of Assets.

The information provided in Item 1.01 of this Current Report on Form 8-K is incorporated into this Item 2.01 by reference.

Item 2.05. Costs Associated with Exit or Disposal Activities.

The information provided in Item 1.01 of this Current Report on Form 8-K is incorporated into this Item 2.05 by reference.

Item 2.06. Material Impairments.

The information provided in Item 1.01 of this Current Report on Form 8-K is incorporated into this Item 2.06 by reference.

Section 9 – Financial Statements and Exhibits

Item 9.01. Financial Statements and Exhibits.

(b) Pro Forma Financial Information

Included in this Current Report are the following unaudited pro forma consolidated financial statements, together with the notes thereto:

(i) Unaudited Pro Forma Consolidated Balance Sheet of the Company as of March 31, 2008;

(ii) Unaudited Pro Forma Consolidated Statements of Income of the Company for the nine months ended March 31, 2008; and

(iii) Unaudited Pro Forma Consolidated Statements of Income of the Company for the year ended June 30, 2007.

(iv) Notes to Unaudited Pro Forma Consolidated Financial Statements

(d) Exhibits

Exhibit Number	Description of Exhibit
99.1	Press Release of Kensey Nash Corporation dated June 2, 2008.
99.2	Pro forma financial information.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

KENSEY NASH CORPORATION
By:	/S/ Wendy F. DiCicco
	Wendy F. DiCicco, CPA
	Chief Financial Officer

Dated: June 5, 2008

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EXHIBIT INDEX

Exhibit Number	Description of Exhibit
99.1	Press Release of Kensey Nash Corporation dated June 2, 2008.
99.2	Pro forma financial information.

EX-99.1

Exhibit 99.1

CONTACT: RELEASE	FOR IMMEDIATE
Joseph W. Kaufmann
President and Chief Executive Officer
(484) 713-2100

KENSEY NASH ANNOUNCES THE CLOSING ON ITS SALE OF THE ENDOVASCULAR

BUSINESS TO SPECTRANETICS

EXTON, PA, June 2, 2008 — Kensey Nash Corporation (NASDAQ: KNSY) reported the closing of the previously announced sale of its endovascular business to Spectranetics Corporation (NASDAQ:SPNC) was completed on May 30, 2008. This transaction includes the sale of the ThromCat^TM, QuickCat^TM and SafeCross^TM products.

Joseph W. Kaufmann, President and CEO of Kensey Nash, commented, “As a result of the efforts of the Kensey Nash and Spectranetics transition teams we were able to complete the closing of this transaction in less than three weeks. We are very excited about the prospects of this strategic partnership, which provide the opportunity for substantial future growth. Our plans for the next generation products, combined with the larger and more established Spectranetics sales team, will place us in a position to achieve this growth opportunity with improved treatment options in the Thrombus and Chronic Total Occlusion markets,” he concluded.

About Kensey Nash Corporation. Kensey Nash Corporation is a leading medical technology company providing innovative solutions and technologies for a wide range of medical procedures. The Company provides an extensive range of products into multiple medical markets, primarily in the sports medicine, spine, and endovascular markets. Many of the products are based on the Company’s significant expertise in the design, development, manufacturing and processing of absorbable biomaterials, which has led to partnerships to commercialize technologies. Kensey Nash has also developed and commercialized a series of innovative endovascular products and recently announced the sale of this product line to Spectranetics, Inc. In conjunction with the sale transaction, the Company will continue to manufacture and develop these products for Spectranetics for a period of time. The Company is known as a pioneer in the field of arterial puncture closure, as the inventor and developer of the Angio-Seal™ Vascular Closure Device, which is licensed to St. Jude Medical, Inc.

Cautionary Note for Forward-Looking Statements. This press release contains forward-looking statements that reflect the Company’s current expectations about its prospects and opportunities, including the statement regarding anticipated growth of the products sold to Spectranetics. The Company has tried to identify these forward looking statements by using words such as “expect,” “anticipate,” “estimate,” “plan,” “will,” “forecast,” “believe,” “guidance,” “projection” or similar expressions, but these words are not the exclusive means for identifying such statements. The Company cautions that a number of risks, uncertainties, and other important factors could cause the Company’s actual results to differ materially from those in the forward-looking statements including, without limitation, risks associated with the Company’s continued research and development efforts with respect to the endovascular products (including the risk that those efforts will not be successful and that some or all of the associated milestone payments will not be received) and Spectranetics’ success in selling the ThromCat and SafeCross products, as well as competition from other technologies. For a detailed discussion of factors that could affect the Company’s future operating results, please see the Company’s SEC filings, including the disclosure under “Risk Factors” in those filings. Except as expressly required by the federal securities laws, the Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, changed circumstances or future events or for any other reason.

EX-99.2

Exhibit 99.2

KENSEY NASH CORPORATION

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

The unaudited pro forma consolidated financial statements have been prepared to give effect to the sale, on May 30, 2008, by Kensey Nash Corporation (“Kensey Nash” or the “Company”) to The Spectranetics Corporation (“Spectranetics”) of the Company’s endovascular business.

The unaudited pro forma consolidated balance sheet presents the financial position of Kensey Nash as of March 31, 2008, giving effect to the sale of the endovascular business as if it occurred on such date. The unaudited pro forma consolidated statements of income for the nine months ended March 31, 2008 and for the year ended June 30, 2007 give effect to the sale of the endovascular business as if it occurred at the beginning of each such period.

The unaudited pro forma consolidated statements of income do not include nonrecurring charges or credits directly attributable to the sale of the endovascular business.

The unaudited pro forma consolidated financial statements are prepared in accordance with Article 11 of Regulation S-X, and are based on and should be read in conjunction with, and are qualified in their entirety by, the historical consolidated financial statements, notes and management discussion and analysis thereto of the Company.

The unaudited pro forma financial statement information is based upon currently available information, and is subject to a number of estimates and assumptions that the Company believes are reasonable under the circumstances and was prepared to illustrate the estimated effects of the transaction if it had occurred on the dates indicated; actual amounts would have differed from these estimated amounts. The unaudited pro forma consolidated financial statements may be subject to adjustments based on the actual carrying value of net assets sold at the date of closing, among other considerations, and is not necessarily indicative of the results or financial condition that would have been reported had such transaction actually occurred on the dates specified, nor is it necessarily indicative of the Company’s future operating results or financial condition. The pro forma adjustments are described in the notes.

KENSEY NASH CORPORATION

UNAUDITED PROFORMA CONSOLIDATED BALANCE SHEET

AS OF MARCH 31, 2008

	Kensey Nash Corp. Historical (As Reported)			Endovascular Disposition Adjustments					Kensey Nash Corp. Pro Forma (As Adjusted)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	36,162,488		$	10,000,000		(a	)	$	46,162,488
Investments		19,693,945			—					19,693,945
Trade receivables, net		7,689,299			(792,805	)	(b	)		6,896,494
Royalties receivable		6,484,881			—					6,484,881
Other receivables		649,023			(42,077	)	(b	)		606,946
Inventory		10,121,295			(1,178,976	)	(b	)		8,942,319
Deferred tax asset, current portion		2,816,764			(30,915	)	(b	)		2,785,849
Prepaid expenses and other		2,004,601			2,242,555		(b	)		4,247,156
Total current assets		85,622,296			10,197,782					95,820,078
PROPERTY, PLANT AND EQUIPMENT, AT COST:
Land		4,883,591			—					4,883,591
Building		45,741,159			—					45,741,159
Machinery, furniture and equipment		30,746,388			(3,392,554	)	(b	)		27,353,834
Construction in progress - new facility		149,664			—					149,664
Construction in progress		1,970,296			(298,465	)	(b	)		1,671,831
Total property, plant and equipment		83,491,098			(3,691,019	)				79,800,079
Accumulated depreciation		(20,538,604	)		1,333,635		(b	)		(19,204,969	)
Net property, plant and equipment		62,952,494			(2,357,384	)				60,595,110
OTHER ASSETS:
Deferred tax asset, non-current portion		364,304			105,757		(b	)		470,061
Acquired patents and other intangibles, net		5,387,466			(1,352,083	)	(b	)		4,035,383
Goodwill		10,723,924			(6,357,651	)	(b	)		4,366,273
Other non-current assets		106,622			—					106,622
Total other assets		16,582,316			(7,603,977	)				8,978,339
TOTAL	$	165,157,106		$	236,421				$	165,393,527
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	2,531,940		$	(48,617	)	(b	)	$	2,483,323
Accrued expenses		4,556,050			5,647,059		(b	)		10,203,109
Other current liabilities		493,533			(1,052	)	(c	)		492,481
Current portion of debt		1,400,000			—					1,400,000
Deferred revenue		612,188			—					612,188
Total current liabilities		9,593,711			5,597,390					15,191,101
OTHER LIABILITIES:
Long-term debt		33,133,333			—					33,133,333
Deferred revenue, non-current		533,530			—					533,530
Other non-current liabilities		4,139,547			—					4,139,547
Total liabilities		47,400,121			5,597,390					52,997,511
COMMITMENTS AND CONTINGENCIES		—			—					—
STOCKHOLDERS’ EQUITY:
Preferred stock, $.001 par value, 100,000 shares authorized, no shares issued or outstanding at March 31, 2008		—			—					—
Common stock, $.001 par value, 25,000,000 shares authorized, 11,728,494 shares issued and outstanding at March 31, 2008		11,714			—					11,714
Capital in excess of par value		78,305,951			—					78,305,951
Retained earnings		41,965,791			(5,181,473	)	(d	)		36,784,318
Accumulated other comprehensive loss		(2,526,471	)		(179,496	)	(b	)		(2,705,967	)
Total stockholders’ equity		117,756,985			(5,360,969	)				112,396,016
TOTAL	$	165,157,106		$	236,421				$	165,393,527

See notes to unaudited pro forma condensed consolidated financial statements.

KENSEY NASH CORPORATION

UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF INCOME

FOR THE NINE MONTHS ENDED MARCH 31, 2008

	Kensey Nash Corp. Historical (As Reported)			Endovascular Disposition Adjustments (e)					Kensey Nash Corp. Pro Forma (As Adjusted)
REVENUES:
Net sales
Biomaterial sales	$	34,208,033		$	—				$	34,208,033
Endovascular sales		4,584,230			(2,782,012	)	(f	)		1,802,218
Total net sales		38,792,263			(2,782,012	)				36,010,251
Royalty income		19,026,779			—					19,026,779
Total revenues		57,819,042			(2,782,012	)				55,037,030
OPERATING COSTS AND EXPENSES:
Cost of products sold		18,114,483			(231,165	)	(g	)		17,883,318
Research and development		12,861,180			(173,839	)	(g	)		12,687,341
Sales and marketing		10,514,806			(10,236,751	)	(h	)		278,055
General and administrative		7,975,825			(36,545	)	(g	)		7,939,280
Total operating costs and expenses		49,466,294			(10,678,300	)				38,787,994
INCOME FROM OPERATIONS		8,352,748			7,896,288					16,249,036
OTHER (EXPENSE)/INCOME:
Interest income		1,350,250			—					1,350,250
Interest expense		(977,539	)		—					(977,539	)
Other (loss)/income		(94,056	)		7,794		(j	)		(86,262	)
Total other income - net		278,655			7,794					286,449
INCOME BEFORE INCOME TAX		8,631,403			7,904,082					16,535,485
Income tax expense		(2,746,659	)		(2,687,388	)	(i	)		(5,434,047	)
NET INCOME	$	5,884,744		$	5,216,694				$	11,101,438
BASIC EARNINGS PER SHARE	$	0.49		$	0.44				$	0.93
DILUTED EARNINGS PER SHARE	$	0.47		$	0.42				$	0.88
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING		11,985,264			11,985,264					11,985,264
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING		12,545,845			12,545,845					12,545,845

See notes to unaudited pro forma consolidated financial statements.

KENSEY NASH CORPORATION

UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF INCOME

FOR THE YEAR ENDED JUNE 30, 2007

	Kensey Nash Corp. Historical (As Reported)			Endovascular Disposition Adjustments (e)					Kensey Nash Corp. Pro Forma (As Adjusted)
REVENUES:
Net sales
Biomaterial sales	$	41,116,112		$	—				$	41,116,112
Endovascular sales		3,786,257			(2,203,388	)	(f	)		1,582,869
Total net sales		44,902,369			(2,203,388	)				42,698,981
Royalty income		24,592,076			—					24,592,076
Total revenues		69,494,445			(2,203,388	)				67,291,057
OPERATING COSTS AND EXPENSES:
Cost of products sold		24,621,727			(214,460	)	(g	)		24,407,267
Research and development		20,265,046			(311,197	)	(g	)		19,953,849
Sales and marketing		12,524,501			(12,112,148	)	(h	)		412,353
General and administrative		8,299,525			(37,581	)	(g	)		8,261,944
Total operating costs and expenses		65,710,799			(12,675,386	)				53,035,413
INCOME FROM OPERATIONS		3,783,646			10,471,998					14,255,644
OTHER INCOME (EXPENSE):
Interest income		1,087,023			—					1,087,023
Interest expense		(427,121	)		—					(427,121	)
Other (loss)/income		(22,981	)		29,645		(j	)		6,664
Total other income - net		636,921			29,645					666,566
INCOME BEFORE INCOME TAX		4,420,567			10,501,643					14,922,210
Income tax expense		(787,416	)		(3,570,559	)	(i	)		(4,357,975	)
NET INCOME	$	3,633,151		$	6,931,084				$	10,564,235
BASIC EARNINGS PER SHARE	$	0.31		$	0.59				$	0.90
DILUTED EARNINGS PER SHARE	$	0.29		$	0.55				$	0.84
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING		11,773,317			11,773,317					11,773,317
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING		12,580,526			12,580,526					12,580,526

See notes to unaudited pro forma consolidated financial statements.

KENSEY NASH CORPORATION

NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1: PRO FORMA ADJUSTMENTS

Pro forma adjustments relating to the unaudited pro forma consolidated financial statements of Kensey Nash are the following:

BALANCE SHEET

a. To record the net consideration received for the sale of the endovascular business.

b. To eliminate the assets and liabilities sold and reflect other non-recurring adjustments as part of the endovascular transaction.

c. To reflect equity-based liability adjustments due to the sale of the endovascular business.

d. To reflect an estimate of equity adjustments and the tax benefit from the estimated loss due to the sale of the endovascular business.

STATEMENTS OF INCOME

e. Management believes all adjustments presented are directly attributable to the sale of the endovascular business and will not continue after the transaction. These adjustments do not reflect the removal of related indirect corporate expenses incurred by Kensey Nash.

f. To reflect the revenues related to Kensey Nash’s endovascular business at Kensey Nash’s new transfer prices to Spectranetics.

g. To reflect the depreciation and amortization of the assets sold related to Kensey Nash’s endovascular business.

h. To reflect estimated sales and marketing costs related to Kensey Nash’s endovascular business.

i. To reflect estimated income tax benefit at a 34% statutory rate on the sale of the endovascular business.

j. To reflect the gain or loss on disposition of assets prior to the sale of Kensey Nash’s endovascular business to Spectranetics.