Trimedyne Predicts Decline in Earnings

Trimedyne Inc., a rapidly growing maker of laser catheters in Santa Ana, said Tuesday that it expects second quarter net earnings to be lower than the $769,000 earned in the same period a year ago.

The company attributed the expected decline to the cost of growth. During the quarter, the company increased spending for staff, manufacturing, research and development, and clinical testing programs.

It plans to release financial results for its fiscal second quarter, ended March 31, within a few weeks.

Trimedyne’s fortunes had been soaring since March, 1987, when it won Food and Drug Administration approval to market its laser catheter to treat arteriosclerosis in the legs. The company said Tuesday that it expects sales to increase 35% to $9.4 million for the second quarter of fiscal 1989, compared to $7 million in the year-earlier period.

Trimedyne reversed years of losses in fiscal 1987 when it reported net earnings of $440,000. For fiscal 1988 earnings topped $5.3 million.

Tuesday’s announcement came as a surprise to industry analysts, who had generally projected earnings of about $6.9 million for the current year. Analysts said estimates for fiscal 1989 now may be reduced as much as 15%.

Trimedyne’s stock lost 12% of its value Tuesday, closing down $1.625 per share to $11.75 in unusually heavy trading of 570,400 shares. Trimedyne stock traded as high as $24 per share last year.

Jim McCamant, editor of the Medical Technology Stock Letter in Berkeley, said the company must spend more money to attract additional sales because it is now facing more competitors in a field that it pioneered.

Trimedyne President Howard K. Cooper said that he expects the earnings downturn to be “short-term” and that the spending should result in greater long-term profits.