Medical device maker Rochester Medical (NSDQ:ROCM) closed at a 1.2% increase yesterday after detailing its decision to exit the Foley Catheter business.
After spending time exploring its options for the struggling Foley Catheter division, including a possible sale, Rochester determined the best course of action was to exit the business while holding on to its intellectual property, hoping to capitalize on them again in the future.
"This is clearly the right decision for the Company. We have been unable to capture any significant share of the Foley market and cannot justify the significant costs associated with that effort," president & CEO Anthony Conway said in prepared remarks. "I am pleased to say we will be a much stronger and more profitable company going forward, and we will be tightly focused on the core parts of our business that are robust and growing: Intermittent Catheters and Male External Catheters."
The Foley Catheter business was bringing in about $3.9 million in sales per year, representing 6% of Rochester’s total sales, according to a regulatory filing. However, marketing and manufacturing costs were eating up any potential gains and the division had yet contribute positively to earnings.
Rochester expects its decision to "significantly enhance its profitability, adding an estimated $3 to $4 million to its pre-tax profit line on an annual basis."
ROCM shares gained 12¢ on the day yesterday to close at $10.18.