On June 27, Synergetics U.S.A. (SURG), manufacturer of microsurgical devices for ophthalmic and neurological applications, announced the 510(k) clearance of its VersaVIT by the U.S. Food and Drug Administration (:FDA). VersaVIT is a novel vitrectomy system for the retinal surgery market.
Management believes that the company will gain a keystone in its strategy to enter the high growth sphere of the retinal surgery market by launching this VersaVIT system. Factors in favor of VersaVIT highlight that it is highly functional, portable and is priced competitively relative to other traditional vitrectomy systems available in the market.
The VersaVIT system will enhance the product portfolio of Ophthalmology category -- a Synergetics mainstay. The company already offers about 1,000 retinal surgical items, ranging from handheld disposables to surgical devices. However, the company continues to develop its technology and update its products to meet the dynamic demands of the market it serves.
The company reported a 40% decline in profit in the third quarter of fiscal 2012 as operating expenses and costs of sales edged up. Performance of the Ophthalmology category was also lackluster as revenue dropped 8.8% year over year to $8.4 million.
Barring Germany, the company’s sales declined in Europe in the most recent quarter. It expects to rebound in the European market after the CE mark approval and subsequent commercialization of VersaVIT.
Synergetics remains optimistic about fiscal 2013 sales and earnings as it expects VersaVIT systems to boost its sales. As the company prepares to capitalize on its new products such as VersaPACK and VersaVIT, tough competition from peers, including Covidien plc (COV), remains an overhang. The stock currently retains a Zacks #4 Rank, which translates into a short-term Sell rating.
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