APNewsBreak: Vascular Solutions subsidy scrapped

AP News
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Posted: Nov 19, 2014 1:56 PM

ST. PAUL, Minn. (AP) — A medical-device company lost out on a hefty Minnesota subsidy on Wednesday after the firm and its leader were criminally charged.

The Department of Employment and Economic Development scrapped a potential $800,000 package tied to an expansion and hiring proposal put forth by Vascular Solutions. The decision came Wednesday, a day after The Associated Press reported the deal was cast into doubt by last week's federal indictment. A hearing to consider approval of the Minnesota Job Creation Fund award had been set for Friday.

Agency commissioner Katie Clark Sieben said because of the indictment, "DEED has withdrawn its consideration of an economic development package for Vascular Solutions" and canceled the hearing.

Vascular Solutions and CEO Howard Root were federally indicted last week on charges of conspiring to sell a varicose-vein treatment device for unapproved medical uses. Company officials have said they'll fight the charges.

A Vascular Solutions spokesman said the firm had no comment on the state decision or whether the subsidy loss would alter a plan to expand in Maple Grove, where the firm is headquartered.

The proposed $8.7 million expansion would more than double Vascular Solutions' physical space in the Minneapolis suburb. As pitched to state officials, it would also accommodate the hiring of 60 skilled workers over the next two years at an average pay of $32 per hour. The subsidy included grants and rebates that would have been paid out after the expansion was complete.

Vascular Solutions makes catheters and other devices used in surgical procedures that are sold globally. It was founded in 1997 and has grown rapidly, reporting revenue of $110 million last year — more than twice what it earned six years earlier.