Zoll Surges as Defibrillator Vest Keeps Medicare Coverage

Zoll Medical Corp. (ZOLL), a maker of resuscitation devices, rose the most in 13 years after Medicare said it will continue to cover the company’s wearable LifeVest defibrillator.

Zoll climbed 26 percent to $59.10 at 1:29 p.m., after earlier gaining 36 percent in the biggest intraday increase since November 1998. Administrators with Medicare, the U.S. health-care program for the elderly and disabled, withdrew a proposed change in reimbursement that would have delayed use of LifeVest, which has been covered since 2005, Chelmsford, Massachusetts-based Zoll said in a statement.

Sales of LifeVest, a removable device worn by patients at risk for having their hearts suddenly stop, have more than doubled to $111 million annually in the past two years, Chief Financial Officer Ernest Whiton said in a telephone interview. Delaying reimbursement would have taken away one of its main markets, the window of time when patients are evaluated or wait for a permanently implanted defibrillator, he said.

“In medical devices right now, there is truly a lack of innovative growth companies out there, and Zoll is one of them,” said Glenn Novarro, an RBC Capital Markets analyst in New York. “This is a big part of their growth story. If the government was going to take away reimbursement, it would really have reduced the growth profile of the company.”

Shocking the Heart

Defibrillators are used to shock a stopped or erratically beating heart back into a regular rhythm. Studies have shown permanent devices don’t help patients in some circumstances, such as immediately after a heart attack, though they are still at risk for sudden cardiac arrest. LifeVest is often used for these patients while they recover from the heart attack.

There should be no lingering damage to LifeVest as a result of the review, Whiton said. Medicare was re-validating its policies, and there was no negative information about the LifeVest, which generated about one-fifth of the company’s 2011 revenue, he said.

“There is no reason any doctor who was prescribing the product and believed in it would decide they should not use it because of the draft policy,” he said. “If they had decided they were not going to cover it during the waiting period, that would have taken a bite out of our revenue,” he said. “But there was no negative news on the product.”

To contact the reporter on this story: Michelle Fay Cortez in Minneapolis at mcortez@bloomberg.net

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net

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