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Sabratek stock flushed out
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November 25, 1998: 11:46 a.m. ET
Healthcare firm's stock plunges on suspension of Rocap flush syringes
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NEW YORK (CNNfn) - Shares of Sabratek Corp., an alternative-site healthcare provider, plummeted 42 percent Wednesday after the company said it had suspended distribution of its Rocap line of flush syringes due to regulatory concerns and warned of weaker fourth-quarter financial returns as a result.
Sabratek (SBTK) stock nosedived 9-7/8 to 13-3/8 on the Nasdaq as investors reacted to news that the suspension would likely shave between $2 million and $2.5 million from fourth-quarter pre-tax income and reduce sales by $5 million to $6 million.
CS First Boston analyst Ann Pleumer Barber downgraded the company to 'hold' from 'buy.'
Sabratek, based in Niles, Ill., bills itself as a "virtual hospital room" that administers therapeutic and diagnostic medical products for patients at sites other than a hospital room - often a patient's home.
The company uses mobile and stationary therapy systems to inject fluids intravenously at a preprogrammed rate and volume.
The Rocap line of flush syringes, which are prefilled with fluids, anchors the company's specialty arsenal of infusion pumps and disposable medical devices.
Sabratek said it suspended Rocap distribution after running into a snag with the Food and Drug Administration over compliance requirements in a premarket notification filing known as a 510K.
Such filings are required from all companies that plan to market a "liquid chemical germicide medical device". Under federal regulations governing 510K's, the filing must be made at least at least 90 days prior to a product's introduction into interstate commerce.
Sabratek said the suspension was a result of discussions and meetings with FDA officials over the status of the filing, initially submitted in May 1997. "The halt in shipping," the company said, "is not the result of any quality, safety or effectiveness problems with the product."
Sabratek said it intended to resubmit its 510K within the next few weeks.
"While it is uncertain how long this suspension will last, we hope that its financial impact will only affect results for the fourth quarter, 1998," K. Shan Padda, Sabratek's chairman and chief executive officer, said in the statement.
Padda stressed that Rocap "had no known adverse patient event" in its history of shipping over 45 million flush syringes.
"We hope the FDA will make a determination that Sabratek's 510K responses are adequate and that we can resume distribution during the fourth quarter, although the company can give no assurance that this will occur," Padda said.
Sabratek, with revenue of $43.1 million in 1997, sells its products directly and through distributors in Africa, Asia, Europe, the Middle East, South America, and the United States.
The company's proprietary MediVIEW software allows healthcare providers at remote sites to program, monitor, and capture data on the company's line of infusion pumps.
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Sabratek
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