Zacks_Analysts' Blog : Good News for SonoSite - Analyst Blog

Recently, SonoSite (SONO) received clearance from US Food and Drug Administration (FDA) for its LumenVu catheter guidance system, which is designed to assist the placement of peripherally inserted central catheters (PICC). This area holds immense potential as about 2.5 million PICC line placements were made in the US in 2008.



Moreover, PICC placements, among the fastest growing applications performed in the hospital setting, involves certain risks and complications. This is supported by findings from a study conducted by the University of Pennsylvania Medical Center, which found that only 70% of PICC lines are successful on first attempt. If the placement is not done properly, catheters need to be re-inserted, which increases the risk of infection.



Sonosite’s LumenVu system is expected to play an important role in this scenario as it facilitates the clinicians to view and track the catheter tip properly as it travels through the vessel. As a result, it will be possible for them to make any necessary adjustments. The system is currently being reviewed by several hospitals in Europe.



This technology was included in SonoSite’s portfolio following the July 2007 acquisition of a privately held developmental stage company, LumenVu. This acquisition was aimed at strengthening SonoSite’s position in the vascular access market.



SonoSite has grown both organically and inorganically in the past. On May 27, 2010, the company decided to acquire privately held Toronto based Visualsonics, focusing on ultra high-frequency micro-ultrasound technology and primarily catering to the pre-clinical research market. The pre-clinical market holds immense potential and is expected to exceed $350 million with a projected double-digit annualized growth rate.



SonoSite expects to benefit from Visualsonics’ presence in the pre-clinical market. This market is estimated to exceed $350 million with a projected double-digit annualized growth rate. SonoSite plans to update its 2010 revenue and EPS guidance at the time of announcing its second quarter financial results on July 26, 2010.



The company expects to record $17 million in revenues from this acquisition in the second half with a positive operating contribution, excluding amortization and stock compensation. We believe such meaningful acquisitions holds the potential to drive top line growth of SonoSite.
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