Rochester Medical Corporation Announces Decision To Exit The Foley Catheter Business
STEWARTVILLE, Minn., Nov. 6, 2012 /PRNewswire/ -- Rochester Medical Corporation (NASDAQ: ROCM) today announced its decision to cease manufacturing and marketing its line of Foley Catheters, including its StrataSI™ and StrataNF™ advanced silicone Foley Catheters. The Company will continue to fulfill orders for up to 90 days, during which time it expects to deplete the majority of its Foley inventory.
The Company will focus on its core product lines of Intermittent Catheters and Male External Catheters, both of which are successful, profitable, and growing steadily.
Earlier in the current year, the Company engaged Piper Jaffray to help explore its options in exiting or selling the Foley Catheter business. After completing that process, the Company and the Board of Directors determined that exiting the Foley business presented the best alternative. The Company will continue to own the intellectual property associated with its Foley catheters in anticipation of deriving additional value from those assets in the future
Current annual sales of Foley Catheters are approximately $3.9 million, representing approximately 6% of the Company's total sales. Costs and expenses associated with manufacturing and marketing the product are extensive, and this product line has not yet reached a point of positive earnings contribution. As such, the Company estimates the decision to exit this business will significantly enhance its profitability, adding an estimated $3 to $4 million to its pre-tax profit line on an annual basis.
Commenting on today's announcement, Rochester Medical's CEO and President Anthony J. Conway said, "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.