NEW YORK (AP) -- Shares of Zoll Medical Inc. jumped Thursday after the resuscitation device maker reported solid fourth-quarter results and said it will buy back $50 million in stock.
THE SPARK: After the market closed on Wednesday, Zoll said its fiscal fourth-quarter net income climbed 65 percent. Its profit and revenue were both stronger than analysts expected. Most of the growth came from sales of its wearable LifeVest defibrillator which saw revenue grow 57 percent. Sales to North American hospitals were up 8 percent and military sales in North America rose 41 percent, while total international sales increased 24 percent.
The Chelmsford, Mass., company also said it will repurchase up to $50 million in stock. Share repurchases can indicate that a company is confident its stock will increase in value and they reduce the number of shares on the market.
THE BIG PICTURE: Zoll's other products include an automated chest compression device, arrhythmia devices, defibrillator software, infusion devices for blood and IV fluids, and body temperature devices. It sells those products to the military, hospitals, and emergency medical services. The company said LifeVest quarterly revenue totaled $111 million and sales of temperature management devices also improved.
The company also said it still expects sales to grow 17 to 19 percent in the new fiscal year, which was above Wall Street estimates. In August, Zoll said a Medicare carrier was proposing limits on reimbursement payments for external and wearable defibrillators like LifeVest. Zoll said it does not think reimbursement will be limited, but if the recommendations were adopted, that would hurt its revenue.
THE ANALYSIS: Jefferies & Co. analyst Raj Denhoy said the company's profit margins improved and sales to hospitals were particularly strong. He said LifeVest sales exceeded his expectations. Denhoy kept a "Buy" rating on Zoll stock with a price target of $70 per share.
SHARE ACTION: Zoll shares surged $8.64, or 24.2 percent, to $44.30 in afternoon trading. The stock set an all-time high of $70.82 in early August, shortly after it reported strong third-quarter results. It disclosed the proposed cut in reimbursements for LifeVest on Aug. 8, and shares dropped 27 percent that day.
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