Urohealth Systems’ Sales Rise for Quarter, but So Do Losses

Urohealth Systems Inc. said Wednesday that recent acquisitions helped boost sales by 30% for the fiscal first quarter, but the company also posted higher losses.

The Costa Mesa maker and marketer of treatments for impotence and incontinence posted sales of $6.2 million in the three months ended Sept. 30, up from $4.8 million in the same period last year.

The company, previously named Davstar Industries Inc., posted a loss of $2.7 million, or 14 cents a share, compared with $2 million, or 11 cents a share, last year. The recent loss included a charge of $1.1 million, or 5 cents a share, for acquisition expenses.

Thomas Gunderson, an analyst at Piper, Jaffray & Hopwood Inc. in Minneapolis, said analysts now care more about Urohealth’s sales growth than its losses. Assuming the company can continue boosting sales, he said, profits should follow.

Urohealth, which has announced acquisitions of five other companies in its industry since Charles A. Laverty took over as chairman last year, has yet to reap cost savings from its acquisitions, however. It said expenses for sales, administration and other areas jumped 51% because of duplicative operations resulting from purchases in late July of Minneapolis-based Dacomed Corp. and Allstate Medical Products Inc. of Minnetonka, Minn.

Urohealth eliminated 25 jobs in mid-October, after the first quarter had ended. About half of the cuts came at Dacomed, the other half at Urohealth’s Costa Mesa headquarters, Laverty said. The Costa Mesa office now has 72 employees, including 32 salespeople.

In the current quarter, which ends Dec. 31, Urohealth expects to take charges stemming from its proposed purchases of Augusta, Ga.-based Osbon Medical Systems and Princeton, N.J.-based Advanced Surgical. Once Advanced Surgical is acquired, Urohealth plans to shutter its Princeton operation, eliminating 50 of its 67 jobs, Laverty said. But Osbon Medical’s 250-employee work force will remain intact, he added.