8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, DC  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): October 20, 2005

Enpath Medical, Inc.

(Exact name of registrant as specified in its charter)

Minnesota

(State or Other Jurisdiction of Incorporation)

0-19467	41-1533300
(Commission File Number)	(IRS Employer Identification No.)
15301 Highway 55 West
Plymouth, Minnesota	55447
(Address of Principal Executive Offices)	(Zip Code)

(763) 559-2613

(Registrant’s telephone number, including area code)

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):

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

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

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

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

Section 2 – Financial Information

Item 2.02   Results of Operations and Financial Disclosure

On October 20, 2005, Enpath Medical, Inc. (the “Company”) issued a press release reporting the results of its operations for the quarter ended September 30, 2005.  A copy of the press release is furnished as Exhibit 99.1 to this Form 8-K.

The Company also furnishes as Exhibit 99.2 to this Form 8-K the statement of James D. Hartman, the Company’s Chief Executive Officer, and other officers of the Company, that will be issued in connection with the October 20, 2005, Enpath Medical, Inc. conference call reporting the results of operations for the quarter ended September 30, 2005.

The information provided pursuant to Items 2.02 of this Form 8-K is being furnished and is not “filed” for purposes of Section 18 of the Securities Act of 1934, and may not be deemed incorporated by reference in any filing under the Securities Act of 1933, except as expressly set forth by specific reference in that filing.

Section 9. - - Financial Statements and Exhibits.

Item 9.01   Financial Statements and Exhibits

(c)Exhibits

The following are filed or furnished as Exhibits to this Report:

Exhibit No.	Description of Exhibit
99.1	Press release dated October 20, 2005, reporting results for the quarter ended September 30, 2005.
99.2	Statement of James D. Hartman, Chief Executive Officer of Enpath Medical, Inc., and other officers of the Company, in connection with the October 20, 2005 Enpath Medical, Inc. conference call.

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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.

	ENPATH MEDICAL, INC.
Dated: October 20, 2005	By:	/s/ James D. Hartman
		James D. Hartman
		Chief Executive Officer

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EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE	Contact:	Jim Hartman
		Enpath Medical, Inc.
		(763) 577-2212
		Investors:
			EVC Group, Inc.
			Doug Sherk (415) 896-6820
			Jennifer Beugelmans (415) 896-6820

October 20, 2005

Enpath Medical Returns to Profitability in the Third Quarter

Revenue Increases 9% and Company Earns $0.04 Per Diluted Share

Conference Call Scheduled for 1:30 PM CDT Today

MINNEAPOLIS—Enpath Medical, Inc. (Nasdaq: NPTH) today reported a 9% increase in third quarter sales to $7.7 million compared with $7.1 million in the third quarter of 2004.  For the third quarter of 2005, the Company reported net income of $237,000, or $.04 per diluted share, compared with net income of $209,000, or $.03 per diluted share, in the third quarter of 2004.    Gross margins in the third quarter were 36.8% compared with 39.7% in the same quarter of 2004

For the nine months ended September 30, 2005, the Company reported sales of $21.5 million, compared with $21.7 million in the same period of 2004. For the nine months ended September 30, 2005, the Company reported a net loss of $337,000, or $.06 per share, compared with a net loss of $1.3 million, or $.23 per share for the first nine months of 2004.  Nine-month results for 2004 included a one-time, non-cash impairment adjustment of $2.8 million ($1.9 million after tax) related to the Company’s safety needle investment.

“We were very pleased with our return to profitability during the third quarter, which was supported by year-over-year growth in both of our main product categories,” said James D. Hartman, chairman and CEO. “Sales of delivery systems products increased just over 2% with sales gains in all product categories except contract manufacturing which represents only 1% of our overall sales.  Sales of our lead technologies product line increased 27% from $1.8 million to $2.3 million, led by the strength of our new epicardial steroid lead in Europe, which is sold through one of our distribution partners.  In addition, we are encouraged by the positive accessory ordering trends that we are seeing from our largest lead technology customer whose orders had declined in 2004 due to an overstock situation.”

“The reduction in gross margins was primarily due to ramp-up costs associated with the steerable catheter production line within our delivery systems category,” Mr. Hartman stated.  “It is a complex product to manufacture but we expect it to begin to positively contribute to gross margin growth as we reach a proficient level of yield and productivity by the first of the year.”

Mr. Hartman continued, “We substantially reduced our sales and marketing and our general and administrative expenses while slightly increasing research and development costs compared with 2004.  During the 2005 third quarter, research and development expenses increased 9% year-over-year.  However, research and development expenditures declined to $1.2 million or 15.7% of sales in the third quarter compared with $1.6 million or 22.1% of sales during the second quarter of 2005.  As a result we achieved net income of $237,000, or $.04 per diluted share compared with $209,000 or $.03 per diluted share in 2004 and a loss of $225,000 or $0.04 per share in the second quarter of 2005.

“Although we were clearly disappointed with the conclusion by the FDA to require human clinical trials before granting marketing clearance for the Myopore Rx^TM, we have continued to explore other strategies for approval with our potential distribution partners,” Mr. Hartman continued.  “In addition, we also remain in talks with the FDA in an attempt to find middle ground for a modest human clinical trial that both parties would find acceptable.  We will continue to pursue all avenues to find a solution to gain clearance for our device. At the same time, European sales of our steroid epicardial lead are ramping strongly as interest in our unique technology continues to build.

“To date, we have one distribution partner approved to sell our steroid epicardial lead in Europe,” Mr. Hartman continued.  “As a result of the strong interest this partner is seeing in the product, it is now conducting physician assessments of the FasTac^TM Flex delivery tool designed to simplify the placement of the epicardial lead.  We are hopeful that these tests, if favorable, will lead to a distribution agreement for the FasTac Flex in Europe.  We are working on approvals for the steroid lead in a number of other countries outside of Europe and the US to enable our partner to expand distribution of both the steroid lead and the FasTac Flex.

“As announced in July, we signed a supply agreement with Bard Electrophysiology, a division of C. R. Bard, Inc. (“Bard”), to distribute our steerable catheter into the electrophysiology market,” continued Mr. Hartman.  “Bard has been conducting physician testing of the product and we have responded with some modest product enhancements based on physician feedback.  We expect Bard to launch the product in the US before the end of the fourth quarter or early in 2006.  Our product development pipeline is currently full and contains seven very active, advanced delivery introducer projects, including five with companies that are now, or soon will be, in human clinical trials.  In addition, we are involved with three neuro-stimulation development projects, and are developing a next generation epicardial lead and delivery system as well as a number of enhancements to our core introducer product line.  We continue to stay actively involved in the development of the new IS-4 connector configuration, which is emerging as the new standard within the ICD industry. We believe the new standard will be ratified by the ISO in 2006,” Hartman concluded.

2005 Outlook and Guidance

The Company stated that it expects sales and profitability for the upcoming fourth quarter of 2005 to be comparable to sales and profitability achieved in the third quarter.

Conference Call Today

The management team of Enpath Medical will host a conference call to discuss the results beginning at 1:30 P.M. Central Time, today, October 20, 2005.  To participate, domestic participants should dial 800-257-6607 and international participants should dial 303-262-2125.  A recording of the conference call will be available approximately one hour after the conclusion of the call and can be accessed for seven days.  To access the replay, please dial 1-800-405-2236 for domestic callers and 303-590-3000 for international callers; please reference the pass code 11041409#.

The conference call will also be web cast live on the company’s web site, www.enpathmed.com, and may be accessed by clicking on the 3rd Quarter 2005 Earnings Call icon.  An audio replay will be archived on the Enpath website for one year.

About Enpath Medical

Enpath Medical, Inc., headquartered in Plymouth, Minnesota, is a leader in the design, development, manufacture and marketing of percutaneous delivery systems and stimulation leads technologies.  Its products include venous vessel introducers, epicardial and endocardial stimulation leads, safety needles and other products for use in pacemaker, defibrillator, catheter and infusion port procedures as well as neuromodulation and hearing restoration markets.  Its products are sold worldwide through partnering relationships with other medical device companies.

Safe Harbor

This news release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Certain important factors could cause results to differ materially from those anticipated by some statements made herein.  All forward-looking statements involve risks and uncertainties.  A number of factors that could cause results to differ materially are discussed in our Annual Report on Form 10-K for the year ended December 31, 2004, as well as in our quarterly reports on Form 10-Q and Current Reports on Form 8-K.  Among the factors that could cause results to differ materially are the following: Enpath’s ability to complete development of its Myopore Rx steroid epicardial lead and FasTac Flex delivery tool and obtain regulatory approval to market these devices in a number of countries without significant delay or expenditure of resources; the ability of Enpath and its distribution partners to successfully introduce the Myopore Rx and FasTac Flex;  Enpath’s dependence upon a limited number of key customers for its revenue; the ability of Enpath’s customers to successfully develop and market therapies that utilize Enpath’s advanced delivery systems; Enpath’s dependence upon licensing agreements with third parties for the technology underlying some of its products; Enpath’s ability to effectively manufacture its products, including the new Myopore Rx steroid lead and the FasTac Flex delivery device, in anticipated required quantities; Enpath’s ability to develop or acquire new products to increase its revenues; Enpath’s ability to attract and retain key personnel; introduction of competitive products; Enpath’s ability to successfully protect its intellectual property against misappropriation or claims of infringement by third parties; government regulatory matters; economic conditions; and Enpath’s ability to raise capital.  All forward-looking statements of Enpath, whether written or oral, and whether made by or on behalf of Enpath, are expressly qualified by these cautionary statements.  In addition, Enpath disclaims any obligation to update forward-looking statements to reflect events or circumstances after the date hereof.

Condensed Balance Sheets

	Unaudited
	09/30/05		12/31/04
Assets
Cash and cash equivalents	$	609,845	$	362,625
Inventory, receivables and prepaids	8,463,254		8,514,675
Other current assets	398,405		504,683
Property, plant and equipment, net	4,959,688		5,176,086
Goodwill	9,487,975		9,593,662
Intangible assets with finite lives, other	6,637,360		7,016,009
Total Assets	$	30,556,527	$	31,167,740
Liabilities & Shareholders’ Equity
Bank line of credit payable	$	1,100,000	$	881,652
Other current liabilities	3,255,686		3,280,349
Long-term liabilities	2,233,318		3,230,882
Shareholders’ equity	23,967,523		23,774,857
Total Liabilities & Shareholders’ Equity	$	30,556,527	$	31,167,740

Income Statements (Unaudited)

	Three Months Ended						Nine Months Ended
	Sep 30, 2005			Sep 30, 2004			Sep 30, 2005			Sep 30, 2004
Sales	$	7,669,486		$	7,063,550		$	21,479,897		$	21,655,717
Cost of sales	4,846,479			4,257,739			13,510,228			13,336,078
Gross profit	2,823,007			2,805,811			7,969,669			8,319,639
Operating expenses:
Research and development	1,207,206			1,111,277			4,177,345			3,293,588
Selling, general and administrative	1,169,760			1,331,868			4,092,471			4,028,765
Safety needle asset impairment	—			—			—			2,809,199
Total operating expenses	2,376,966			2,443,145			8,269,816			10,131,552
Operating income (loss)	446,041			362,666			(300,147		)	(1,811,913		)
Other income (expense):
Interest expense	(73,272		)	(52,485		)	(197,425		)	(146,636		)
Interest income	—			5			—			1,613
Other	(7,480		)	(1,890		)	(21,433		)	(2,922		)
Total other income (expense)	(80,752		)	(54,370		)	(218,858		)	(147,945		)
Income (loss) before income taxes	365,289			308,296			(519,005		)	(1,959,858		)
Income tax benefit (expense)	(127,851		)	(98,816		)	181,652			626,497
Net income (loss)	$	237,438		$	209,480		$	(337,353	)	$	(1,333,361	)
Income (loss) per share
Basic	$	0.04		$	0.04		$	(0.06	)	$	(0.23	)
Diluted	$	0.04		$	0.03		$	(0.06	)	$	(0.23	)
Weighted average shares
Basic	5,973,107			5,885,853			5,940,639			5,828,670
Diluted	6,079,641			6,105,940			5,940,639			5,828,670

EX-99.2

Exhibit 99.2

Third Quarter 2005 Conference Call

Statement of Jim Hartman, Mark Kraus and Jim Mellor

Enpath Medical, Inc.

October 20, 2005

Welcome to the Enpath Medical third quarter, 2005 conference call.  Thank you for joining us today.  I am Jim Hartman, Chairman and Chief Executive Officer of Enpath Medical.  My comments today will contain forward-looking statements that involve risks and uncertainties.  Any number of factors could cause our results to vary from those that may be anticipated by some statements made today.  You should read our press release issued this morning and our SEC filings, specifically our 2004 Annual Report on Form 10-K filed in March 2005, for a listing of some of the factors that could cause results to differ materially.

Joining me on the call today is Mark Kraus, Senior Vice President and Chief Technology Officer and Jim Mellor, Senior Vice President of Sales and Marketing.

During my remarks today I will highlight certain aspects of our third quarter financial results that were not covered in our press release issued this morning.  Jim and Mark will discuss new opportunities the company is pursuing.  I will then provide our outlook and guidance for the remainder of the year.   At the conclusion of my remarks, Mark, Jim and I will be available to answer questions.

Third quarter revenues were $7.7 million, compared to $7.1 million in the third quarter of 2004, a 9% increase.  For the nine months, sales declined 1% to $21.5 million compared to $21.7 million for the same period in 2004.  Sales of delivery systems products increased 2% to $5.4 million in the third quarter when compared to the previous year.  Sales of our core introducer product line increased $100,000 to $4.25 million in the third quarter compared to quarter three of 2004, when we experienced a significant increase over 2003, as a result of the launch of the FlowGuard

introducer.  Year to date introducer sales increased $400,000 when compared to the first nine months of 2004.

Sales of our lead technologies product line increased during the quarter from $1.8 million in the third quarter of 2004 to $2.3 million, a 27% increase.  For the nine months, sales were $6.5 million compared to $6.6 million in the first nine months of last year.  Our epicardial steroid lead partner that is distributing the product in Europe has experienced favorable reception of the product and has placed a larger than expected second order for shipment during the remainder of the year and into early next year.  Orders for accessory products from our largest leads’ customer, which significantly reduced orders during 2004 and into earlier this year due to an overstock situation, have increased.  Accessory product sales to this customer also contributed to the improved financial performance in the third quarter and should favorably affect sales for the remainder of the year.  We believe that most of the overstock issues with this customer have now been resolved.

Third quarter gross margins on a consolidated basis were 36.8% compared to 39.7% a year ago. Gross margins on the delivery systems product line declined from 47.4% in the third quarter of 2004 to 39.7% in the third quarter of 2005.  This occurred in part due to our substantial investment in steerable catheter manufacturing capabilities we are establishing in order to meet the anticipated needs of our customers starting in 2006.  Mark will review in a few moments the business developments that are driving this investment.  Margins on the lead technologies product line increased from 17.6% in 2004’s third quarter to 30.2% in the third quarter of 2005.  Most of this improvement was driven by the efficiencies derived from higher levels of sales this year compared to last, along with our elimination of several low margin manufacturing jobs that we had last year.

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Our research and development expenditures increased 8.6% during the quarter to $1.2 million compared to $1.1 million in the third quarter last year.  As a percentage of sales, R & D was 15.7% for the quarter in both 2004 and 2005.  In terms of dollars invested in R & D, this was a substantial reduction compared to each of the first two quarters of 2005 when we spent on average nearly  $1.5 million as we pursued the appeal process with the FDA on our epicardial steroid lead.  For the year, research and development expenditures were $4.2 million or 19.5% of sales compared to $3.3 million or 15.2% of sales last year in the first nine months.  Jim will comment further regarding the FDA situation in a moment.

We are also conducting significant R & D work on steerable introducers for our own family of steerable devices for which we have received FDA marketing clearance.  Our announced agreement with Bard EP for an exclusive arrangement to market our steerable device into the electrophysiology field is the initial validation for this investment.  During these past couple of years, we have begun the transition from relatively simple medical devices to far more sophisticated products such as the Myopore Rx lead, FasTac Flex delivery tool and steerable catheters.  Mark will update you on these activities in a moment.

Selling, general and administrative expenses were 15.3% of sales for the quarter, compared to 18.9% in the third quarter of 2004.  In real dollars, these expenses actually declined by $162,000 compared to 2004.  We are extremely cognizant of the need to get back to profitability and these expense reductions are part of our strategy to reach that goal.

As a result we achieved net income of $237,000 or $.04 per diluted share for the third quarter, after two quarters of losses.  For the year we are still in a modest loss position but we are pleased that the trend appears to be moving in a positive direction.

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Our cash situation improved during the quarter.  While we had $1.1 million borrowed on our $4 million line of credit at the end of the quarter, we also had $600,000 of cash on hand due to several large receipts arriving at the end of the quarter.  Our operations and accounting people do an excellent job in managing our inventory and receivables, which have remained relatively constant during this year.  Over the past two years we have paid down our term loan by $2 million and we expect to have limited borrowing on our line of credit by year-end.

I’ll now turn the presentation over to Mark and Jim to discuss the product development activities and update you on the FDA situation with our Myopore Rx steroid lead.

Mark Kraus

Over the last quarter we have been diligently working on completing the initial sizes of our proprietary steerable introducers in support of Bard EP’s commercial launch of the product.  During the quarter Bard finished conducting its final market evaluations of the product with much positive feedback and is now poised to begin commercial distribution.  We have started shipping the first size of the product to Bard, and will have the remaining three sizes covered under our exclusive distribution agreement ready for release during the fourth quarter.

Development of the steerable introducer for the placement of a carotid artery stent, our next clinical application for this product platform, started in earnest during the quarter.  The carotid artery stenting market is an ideal application for the steerable introducer due to the fact that a large percentage of the potential patients have very difficult to access vascular anatomy.  The steering feature of the introducer makes accessing these tortuous anatomies significantly easier.  Initial prototypes of the product received strong support and enthusiasm by key opinion leaders in

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this market segment during two recent clinician-based shows dedicated to this type of clinical procedure.  Based on our current development plan, we expect to start both animal and human evaluation of the product for this application as early as the fourth quarter.

As we have been communicating over the last several quarters, we have adapted our proprietary steerable introducer platform for a number of other OEM customers.  Each steerable catheters was designed to work with a customer’s specific interventional products for its unique clinical applications.  During the quarter, all of the companies placed orders for additional evaluation units as a result of the positive experiences they are having in their human clinical evaluations around the world.  Additionally, because the steerable introducer offers so many obvious advantages for many difficult-to-complete vascular interventions, we have been approached by a number of new companies who are interested in having us adapt the product for their procedures: procedures such as abdominal aortic aneurysm interventions and renal stenting.  We will be evaluating how and when these products can be incorporated into our product development cycle over the next several months.

Our development of the next generation peelable valved introducer also continued during the quarter.  This product is being designed specifically to reduce the potential of an air embolism during the placement of pacing leads.  The product is nearing the final design configuration and we expect it to be ready for commercial release as early as the first quarter of 2006.

In the area of leads and adaptors, we were focused on the completion of a number of contract development projects related to cardiac defibrillation, early detection of heart attacks, cardiac rhythm management, and neurostimulation for pain management.  Because we have a wealth of industry knowledge and unique manufacturing expertise, we have been able to identify and secure development contracts and long term supply agreements for these types of products.

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In addition to these contract-developed products, we have been diligently working on our own proprietary designs for a spinal cord stimulation lead and the next generation of our epicardial lead and delivery systems.  In both of these product cases, we have the unique opportunity to combine a proprietary lead technology with our proprietary steerable introducers.  Designing the lead and delivery tool simultaneously will ultimately offer the clinical user the most effective therapeutic device and the most effective and elegant means to deliver it to the desired location.  We are in the final negotiations with an internationally-renowned medical institution to assist us with the next generation epicardial lead and delivery system.  This relationship would not only give us unprecedented access to the leading clinicians in this market, but the institution’s contributions will extend to further improvements and generations of the product and procedure.

As you can see we have been, and will continue to be, extremely busy executing our plans to develop innovative proprietary products as well as capitalize on our expertise in the areas of lead and adaptor development.  Now I’d like to turn the call over to Jim Mellor.

Jim Mellor.

As I stated during the second quarter conference call, the FDA indicated that it was willing to work with us on designing a least burdensome protocol for a human clinical study for the Myopore Rx and MyoDex steroid epicardial leads (Myopore Rx is the steroid epicardial lead brand name used by one OEM partner and MyoDex is the brand name used by the other).  We met with the FDA review team and the Director for the CDRH division at the end of July to discuss our clinical study proposal.  The FDA exhibited a willingness to be flexible in the collection of human clinical data for both our non-steroid and steroid epicardial leads and we reached an agreement in principle on how the study would proceed.  Since that time, we have been discussing these clinical alternatives with our remaining two OEM partners in order to move

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forward with finalization of the clinical protocol and begin field data collection.  At the same time, we have been collecting retrospective clinical performance information on our non-steroid lead that will serve as the control arm of the study.

Both partners are continuing to analyze this clinical study to determine how it fits with their other initiatives in this field.  If we cannot get commitments from our partners to help us with the clinical study, then we will need to explore other options with the FDA.

As Jim mentioned previously, the Myodex continues to perform well in Europe.  This partner has now asked to evaluate the FasTac Flex implant tool in Europe in order for it to determine a long-term forecast for this device.  That evaluation began last week.  In addition, a key implanting surgeon from Germany presented clinical information on both the MyoDex and FasTac Flex at the Venice Arrhythmia Congress last week.  We believe the momentum is building for both of these new products in markets outside the U.S.

Our other OEM partner’s decision to enter the European market is currently on hold.

We continue to work on product development projects that support the CRM industry’s move to a new quadrapolar, inline connector (IS-4).  These projects remain on track and as I mentioned in the last conference call, we expect these new products to provide us with significant revenue in the second half of 2006.

In addition to our lead contract development and supply projects in neurostimulation, we also have a project underway for a proprietary neurostim lead and delivery system.  We are currently exploring a number of options for commercializing this unique lead system.

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Jim Hartman:

Thanks, Jim.  We experienced a pickup in sales in the third quarter from several of our existing customers, especially in our leads product line, and we believe those higher sales levels will continue through the fourth quarter.  Therefore, we now expect sales in the fourth quarter to approximate the $7.7 million level of sales achieved in quarter three, rather than the reduced level we estimated on our last conference call.  With reduced spending related to the FDA appeal, and other expense reduction activities undertaken in the previous quarters, we expect to be profitable in the fourth quarter, although expenses may increase if we agree with the FDA and our partners to commence a least burdensome clinical.

We will be conducting investor meetings in various cities during November and December.  If you have an interest in meeting with us, please contact our investor relations firm, EVC Group at (415) 896-6820.  We are also in the midst of our annual strategic planning activities, which will give us a clearer focus on the opportunities and the strategies that will lead to future growth for the organization.  We expect to communicate our expectations for 2006 once we have completed our planning sessions.

Thank you for listening today.  Mark, Jim and I will answer any questions you may have.

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