Good News for ZOLL’s LifeVest – Analyst Blog

Resuscitation devices maker ZOLL Medical’s (ZOLL) LifeVest Wearable Defibrillator has been reportedly prescribed to more than 30,000 patients at high risk of sudden cardiac arrest (SCA) by their physicians, representing another major milestone for the company.

 

SCA, an abrupt loss of cardiac function, is one of the major causes of unexpected deaths. According to the American Heart Association, more than 700 people die from this condition each day in the U.S. Early defibrillation raises the chance of survival from just 5% to more than 50%.

 

LifeVest is a lightweight device which is worn outside the body (rather than implanted in the chest) by patients at a risk of SCA. The device continuously monitors the heart with electrodes (electric conductors) to detect life threatening hearth rhythms. On detection of an abnormal rhythm, LifeVest sends an electric shock to the heart to restore its normal rhythm.

 

The LifeVest defibrillator business, which has been ZOLL Medical’s lifeblood, continues to grow at a healthy pace and has emerged as a major growth engine. LifeVest revenues catapulted 51% year-over-year in third-quarter fiscal 2010, benefiting from associated sales force enhancements and increased awareness of the product. The company established a direct sales force in Germany in April 2010, which exclusively focuses on the LifeVest business in that country.

 

ZOLL Medical is a leading player in the global market for external defibrillators, which is worth more than $1 billion. The company is expanding its presence in the international markets, representing a major impetus for growth.

 

In the U.S. defibrillation market, ZOLL Medical competes with Physio-Control, a wholly-owned unit of Medtronic Inc. (MDT) and Philips (PHG). The company remains committed to expanding its product range to sustain growth in this market. 

 

We believe that ZOLL Medical’s wide range of products coupled with its expansion initiatives will continue driving it forward in the coming years. However, a still weak capital spending backdrop and foreign exchange headwinds remain concerns. Currently, we have a Neutral recommendation on ZOLL Medical.