Upbeat Visicu's stock surges 16%

October 28, 2006|By M. William Salganik | M. William Salganik,SUN REPORTER

Shares in Visicu Inc. surged more than 16 percent yesterday after the Baltimore developer of remote monitoring equipment reported increased earnings and revenue guidance.

Visicu shares closed yesterday at $8.75, up $1.23 for the day. The price had been on a steady slide since a flashy initial public offering in April. Its $24.78 price at the end of the first day of trading remains its all-time high close. Driving the decline, analysts said, was a failure to register new sales.

In Thursday's earnings release, Visicu said its revenue this year would increase 63 percent to 64 percent over last year, compared with previous guidance of 53 to 56 percent, and that its operating margins were improving as well.

In addition to the increased revenue and earnings guidance, the company has voiced optimism on two other points - sales prospects and research validating its system.

Visicu was upbeat about its sales pipeline during a conference call with analysts, which "should serve as a positive catalyst for the stock," David T. Veal, a Morgan Stanley analyst, wrote in a research note.

But analyst Richard Close, of Jefferies & Co. Inc., said in a note that, while the company's report of 17 "strong" sales leads, with potential to generate $80 million in revenue, was "reassuring," he also cautioned, "clear evidence of new customer sales was what investors really needed to hear."

As for research, Visicu reported this month that its own analysis of data showed that patients treated in intensive-care units with its monitoring system had a mortality rate 20 percent lower than what would have been predicted by "severity scores" based on each patient's diagnosis, age and vital signs.

Also, five Visicu customers presented eight studies this week at the American College of Chest Physicians' conference in Salt Lake City. All reported favorable patient outcomes or cost results.

While some hospitals are quick to try new technology, "the middle majority wants validation, and this is really that validation," Dr. Brian Rosenfeld, Visicu's executive vice president and chief medical officer, said in an interview.

Avera Health, of Sioux Falls, S.D., reported in one of the studies that mortality was 76.5 percent lower for patients in ICUs using the highest level of monitoring. Edward T. Zawada Jr., medical director of the remote intensive-care monitoring system for Avera and co-author of two of the studies presented at the chest conference, said yesterday that, despite having sicker patients, the ICUs he oversees had reduced the average stay from 3.5 to 2.05 days. That's important to the hospitals, which generally get paid on a per-case basis.

Avera's system enables one specialist to monitor about 70 intensive-care beds in 11 hospitals spread over a four-state area. The Visicu system allows doctors to see and talk with patients and to monitor vital signs. The system also sets off alarms when vital signs change significantly.

bill.salganik@baltsun.com

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