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This article was originally published in The Gray Sheet

Executive Summary

Danek Group's sales soared 81.6% to $22.7 mil. in the fourth quarter ended Dec. 31, propelling earnings forward 88.3% to $4.2 mil., the company reported Feb. 8. The fourth quarter revenues "benefited from a 108% increase in sales of the TSRH [spinal products] line with complimentary Crosslink system," Ron Pickard, president and chief executive officer of the firm, explained. Pickard added that the results were helped by continued growth of the spinal products market, as well as expanded international sales. For the year, Danek's sales were $75.5 mil., up 82.2%; earnings grew 98.3% to $13.1 mil. Another spinal device manufacturer, American Medical Electronics, reported earnings of $694,571 for the fourth quarter, down 35.9%, on sales of $8.4 mil., up 7.4%. The firm said that a backlog of marketing applications at FDA had a negative impact on sales and earnings growth in the latter half of 1992. The year and quarter results were also adversely affected by a "large turnover" in the company's international sales force during the third quarter. The staff changes led to "increasing sales and marketing expenses while reducing sales efficiency in the near term," according to Joseph Mooibroek, president and chief executive officer of the firm. Also affecting fourth quarter results were increased research and development expenditures made to "maintain [the firm's] product development schedule." For the year, sales were $32.7 mil., up 20.4%; earnings advanced 20.6% to $3.8 mil. Medtronic's income grew 21.3% to $47.8 mil. in the third quarter on sales of $308 mil., up 2.9%. However, the company says that "after taking into account the effects of foreign exchange, the previously announced divestiture of the Nortech neurological business, and reduced OEM sales, revenues on a comparable basis showed an 11.5% increase." The firm, which received approval for its PCD pacer- cardioverter-defibrillator on Feb. 11 (see story, p. 3), indicated that bradycardia pacemaker revenues "showed rapid improvement" following FDA clearance of the Elite II pacemaker in December. For the nine months, sales were up 15% to $969.9 mil., and earnings advanced 34.6% to $153.6 mil. Respironics reported that sales of all of the firm's products made significant gains in the second quarter and six months ended Dec. 31., with "the performance of...obstructive sleep apnea and ventilation lines" being "particularly noteworthy." For the quarter, Respironics had sales of $17.2 mil., up 58.4%; income for the period was $1.8 mil., up 56.6%. The company reported that awareness and acceptance of its BiPAP ventilators increased during the quarter. Vital Signs said that sales in the first quarter were $18.5 mil., up 22.1%; earnings advanced 39.6% to $3.2 mil. The anesthesia and respiratory products manufacturer announced on Feb. 4 that it reached an agreement with Utah Medical Products and Axon Medical to acquire manufacturing and marketing rights to the Paragraph nerve stimulator/monitor "and disposables used by anesthesiologists to measure the level of neuromuscular blockage." The purchase price was $400,000 plus "future royalty payments based on product sales of the Paragraph." Ultrasound systems manufacturer Acuson reported sales of $83.6 mil. for the fourth quarter of 1992, down 6.9%. Income dropped 61.8% to $5.9 mil. For the year, sales were up 1.9% to $342.8 mil., and earnings were down 37.1% to $36.8 mil. Performance for the year and quarter "were adversely affected by a persistently weak worldwide economy and a soft demand for medical diagnostic ultrasound equipment," according to Samuel Maslak, president and CEO of the firm. Advanced Technology Laboratories' 1992 income rose 16.3% to $7.4 mil. on sales of $323.7 mil., up 15.7%. The firm noted that without one-time, nonrecurring charges in the second quarter of 1992 related to its separation from Westmark International, income would have been $11.4 mil. For the fourth quarter, the firm recorded sales of $92.6 mil., up 7.7%, with income down 9.5% to $5.1 mil. The company noted that although fourth quarter revenues and gross margins were higher in the 1992 quarter than in the same period in 1991, "pretax income declined 10% due to the combination of foreign exchange losses of $500,000 versus a gain of $600,000 in 1991, decreased investment income of $400,000 and higher one-time miscellaneous expenses of $800,000." SpaceLabs, also spun off from Westmark International in the second quarter of 1992, reported that sales increased 11.3% to $65.3 mil. during the fourth quarter ended Dec. 25, pushing earnings ahead 31.6% to $5.7 mil. For the year, income was up 9.1% to $17.2 mil. on sales of $252 mil., up 12.1%. Excluding a charge of $1.4 mil. in the second quarter of 1992 associated with its spinoff from Westmark, income would have been $18.6 mil. in 1992, the company said. SpaceLabs noted that year revenue growth "was due primarily to worldwide sales increases of the company's...PCMS critical care patient monitors." The firms also noted that revenue from international sales was 20.5% of total revenue in 1992, compared to 18.9% in 1991, due in part to regulatory approval of the PCMS line in "additional overseas countries."

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