A change to the way the LifeVest is reimbursed by Medicare would affect just 8 percent of Zoll Medical Corp.’s (NSDQ:ZOLL) total sales, CEO Richard Packer told a group of analysts Wednesday.
Speaking before the UBS Global Life Sciences Conference, Packer tried to put into context an issue that’s been a serious drag on the company’s share price. Since news of a possible reimbursement change hit The Street, ZOLL shares have plummeted by nearly 50 percent.
“There is an overhang to our story” Packer said. “The LifeVest represents 20 percent of Zoll and [the proposed change in] policy would effect 40 percent of LifeVest, or 8 percent of Zolls’s revenues.”
The company is confident in both the clinical and economic case it’s making to the panel, Packer said, which is set to convene at the end of this week. He warned that limiting physicians’ access to the LifeVest would eliminate “the only tool cardiologists have to maintain ICD implants within guidelines.”
“If you’re worried about your patients and don’t want to expose them to high risk you can either violate the guidelines and put in an ICD or you can use the LifeVest,” he said. “Without the LifeVest, people are going to be more likely to violate the guidelines. We don’t believe that’s good for patients and it’s certainly not what CMS is looking for.”
The LifeVest is also good for controlling costs, he noted, as it helps get patients out of the hospital sooner. The LifeVest wearable defibrillator is used to protect against the risk of sudden cardiac arrest following a heart attack. The vest acts as a bridge for the two to three months between an initial heart attack and eligibility for an implantable defibrillator.
However, Packer said, medical directors at CMS have told the company that “this is not a cost conversation, that this is a medical necessity conversation.”
“We think we have plenty of data, so we remain confident that the draft policy will not go into effect,” he said.
Packer said that in the company is well prepared to absorb a negative decision by the panel should it get one. He touted the Zoll’s diverse portfolio, strong cash position and history of growth as evidence of its strength.
Packer told MassDevice earlier in the week that uncertainty over the proposed reimbursement policy change has been the primary driver behind the prolonged stock slump.
On August 1, shares of the Chelmsford, Mass.-based resuscitation company hit an all-time high of $70.82 during midday trading, with investors buoyed by the company’s strong earnings. A week later, a massive sell-off shaved more than 36 percent off the price; the stock has continued to slide through September, closing out last week at $37.19, some 47 percent off its high-water mark.