Revenue in the men’s health division barely budged, growing 0.8 percent to $89 million, partly because of slowing growth of erectile restoration (penile prosthesis) products. The company “was seeing some economic impact on [these] procedures, as men who have in some cases lived with the problem for years elected to delay treatment due to either copays or the lengthy recovery period,” wrote Brooks West, an analyst with Craig-Hallum in Minneapolis. He has a buy rating on the stock.
But there appeared to be strong demand for products such as urinary sphincters and slings, which are aimed at combating male incontinence, a loss of urine control common in older men, many of whom have undergone prostate surgery. The company already has a strong position in the $110 million industry, controlling roughly 95 percent of the market, according to the Craig-Hallum report.
Likewise, the company’s women’s health business reported strong demand for products treating female incontinence and vaginal prolapse, a condition in which organs fall out of their normal position. Sales in that business grew 7.8 percent, to $45 million, in the quarter.
One reason incontinence products have weathered the recession is that incontinence makes it difficult for people — who are often forced to wear diapers and pads — to lead normal lives, and they are less likely to postpone treatment. Also, the procedures treating the condition are generally less expensive than those treating erectile dysfunction.
Thomas Kouchoukos, an analyst at Stifel Nicolaus in Minneapolis who has a hold rating on the stock, said overall fourth-quarter results will likely show that the business has stabilized, although he expects revenue growth in 2009 to “remain tepid.”
But Mark Heggestad, American Medical Systems’ chief financial officer, said there will always be a demand for new med-tech products treating an underserved patient population — despite the economy. He points to the recent launch of its Elevate product, which treats vaginal prolapse. Sales during the fourth quarter grew at a healthy double-digit pace.
“It just goes to show that getting the right product to the right people who need it can be a very powerful thing,” Heggestad said.