Neal St. Anthony/On Business: American Medical proves a cure for flagging interest in stocks
Neal St. Anthony
Tuesday, July 17, 2001
American Medical Systems, one of Minnesota's promising medical-product manufacturers, will announce today that it has sold an additional $131 million in stock
through its recent secondary offering of 7 million shares, and an additional 1 million shares through the sale of more stock to the underwriters.
That brings the company's total take to $208 million, including the $77 million the company received from its initial public offering last August.
That makes the Minnetonka company, which employs 500 and generates about a third of its sales from foreign markets, one of Minnesota's biggest winners in the
lean public equity markets of the past year.
"It's a lot in an 11-month span in a market that's perceived to be bad," said American Medical CEO Doug Kohrs, 43. "There's a lot of money on the sidelines. This
proves if you're a real company with real revenue and earnings, there's interest."
The company, which is expected to report first-half earnings next week, sold the most recent lot of stock at $16.40 per share. The shares rose 5 percent Monday to
$19.36 on strong volume.
The firm should earn $1.2 million, or 4 cents per share, on revenue of $27.85 million in the second quarter, according to First Call. Wall Street projects full-year
earnings to increase from 21 cents in 2001 to 40 cents in 2002.
American Medical plans to use the added capital to pay down debt, develop products and acquire technologies. The company was acquired from drug giant Pfizer in
1998 by an investment group.
American Medical's stock was underwritten by U.S. Bancorp Piper Jaffray and Banc of America Securities.
Focused on a boom market -- the aging population and its accompanying urological woes, including incontinence, impotence and prostate disease -- American
Medical is helping lead a resurgence in Minnesota's venerable medical-technology industry. The company has the No. 1 market share in artificial urinary sphincters
for the treatment of incontinence, the No. 1 position in penile prostheses for the treatment of erectile dysfunction and the lead position in the market for permanent
urethral stents for treatment of strictures and enlarged prostate glands.
"We are growing internally ... and launching a number of new products ... that are really starting to kick in," Kohrs said.
American Medical was founded in 1972 by Twin Cities entrepreneurs, and sold to Pfizer in 1985 for $105 million in stock.
Not much happened to the little company inside the drug giant and in September 1998, American Medical was resold to an investment group led by New York
City-based Warburg, Pincus Equity Partners for $135 million -- $40 million in preferred stock and the rest in debt.
Investment manager Warburg Pincus, which with its equity partners is the largest single owner of the stock, grossed nearly $75 million on its recent sale of 4.5 million
shares of the 8 million total. The Warburg partnership still owns nearly 14 million shares, valued Monday at about $285 million.
The company has a market value pushing $600 million and recently was added to the Russell 2000 index of small-capitalization stocks.
Warburg stocked American Medical's top management ranks with young executives who had known success at several Twin Cities-area firms.
Kohrs, CEO for the past two years, was vice president of research and development and vice president of marketing for Edina-based Spine-Tech, a locally grown
home run that was sold to Sulzer Inc. for $595 million in 1998.
Kohrs and Co. have broad ened the product line to include female-incontinence offerings, partly through the $41 million acquisition of Israel-based Influence Inc.
Incontinence is twice as common in women as in men, in part because women often experience a weakening of the pelvic floor tissue during pregnancy and child
birth.
Nearly a third of the folks over 60 are incontinent, with stress incontinence -- often triggered by coughing, laughing or exercise -- being most common.
Award-winning analysts
Piper Jaffray, which had its biggest deal of the year as lead manager on the American Medical secondary offering, has placed three analysts in the winner's circle in
this year's Wall Street Journal All-Star Analyst competition, which includes 4,000 analysts at 220 firms.
Medical products analyst Arch Smith, who never takes himself too seriously, was named the best stock picker among 51 analysts in his peer group.
Allan Hickok, who eats well, was named No. 1 among 19 restaurant analysts ---- including his work on Buca, a stock that has worked well for diners and investors.
Edward J. Jackson, a communications technology analyst, was named No. 4 out of 38 analysts in the earnings forecasting category. In that sector, there hasn't been
much in the way of earnings to forecast lately.
Not same old song, dance
Chet Taylor, a securities lawyer, knows something about tap dancing -- with clients, regulators, brokers, etc.
Now, the real thing -- courtesy of George and Ira Gershwin.
Taylor, general counsel at the former R.J. Steichen and now chief litigation counsel at the consolidated Miller Johnson Steichen Kinnard, portrays twinkle-toes
Bobby Child in the Mounds View Community Theater production of "Crazy For You." The several-night run begins Friday night at Irondale High School in
New Brighton.
Taylor studied at the Boston Conservatory of Music but "retired" from musical theater in 1985 to attend law school.
"When I turned 40 in April, I decided it was time to get back on stage," Taylor said. "'Crazy for You' was the perfect opportunity."
Sounds like the perfect antidote to NASD inquiries ("Embraceable You"), courtroom antics ("I Got Rythym") and disgorgement orders ("They Can't Take That
Away").
Taylor has played the emcee in "Cabaret," George M. Cohan in "George M!," and Charlie in "Tintypes."
Neal St. Anthony can be reached at 612-673-7144 or Nstanthony@startribune.com.
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