Biosite: Cardiac Diagnosis

01/31/2003 12:00 am EST


Jim Collins

Chairman and CEO, Insight Capital Research & Management, Inc.

Jim Collins, editor of OTC Insight, follows a momentum based approach that isolates fundamentally and technically attractive issues that have experienced strong earnings growth and share price gains. His latest buy recommendation makes medical diagnostic tests.

"Biosite (BSTE NASDAQ) is a research-based diagnostics company dedicated to the development of novel protein-based tests that improve a physician's ability to diagnose debilitating and life-threatening diseases and condition, such as cardiac disease and drug abuse. The company develops and markets rapid, point-of-care diagnostic tests used in hospital labs, emergency rooms, and health clinics. The firm's Triage Drugs of Abuse panel was introduced in 1992 and is now used in nearly 50% of US acute care hospitals. Sales of this test represent 35% of Biosite's revenues.

"In 1999, the Triage Cardiac panel was introduced and uses a whole-blood sample to detect heart attacks. Because the test only takes 20 minutes to complete, it helps physicians make earlier and better treatment decisions after a heart attack has occurred. This panel represents about 20% of revenues. The Triage BNP test was introduced in 2000 and now represents 35% of sales. This test was the first blood test approved for the diagnosis of congestive heart failure. As of 2003, the Medicare reimbursement rate for the BNP test for congestive heart failure was increased from $18 to $47. This could result in higher test growth by making the test more cost effective for hospitals to administer.

"For the fiscal quarter ended last September, revenues increased by 70% with net income of $0.24 a share compared to $0.18 the prior quarter. Technically, the stock high a high last May of $33.50. After a dip down to $17.32 in early August, the stock has rallied and broken through the $35 level. The company receives a B rating for accumulation and distribution, and has a relative strength ranking of 96."

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