Medical device maker Kensey Nash Corporation (Nasdaq:KNSY) had a rough go of it last year, what with a product recall, disgruntled investors and a business exit. What a difference a year makes: Kensey is now posting double-digit sales and earnings gains, perhaps at least somewhat consoling its ornery shareholders.

Kensey operates two businesses. Its core unit of biomaterial products — used in orthopedics (particularly sports medicine and spine), cardiology, drug delivery, oral care, general surgery and wound care — keeps investors satisfied. Biomaterials treat, augment or replace tissue and organs; they are used in a variety of resorbable or permanent implants.

Angio-Seal, a vascular closure device now manufactured and sold by St. Jude Medical Inc. (NYSE:STJ) was the Exton, Penn.-based company’s first biomaterial success. Since 2001, the market share of Angio-Seal has more than doubled, to 65% from 31%, with nearest competitor Abbot Laboratories (NYSE:ABT) now at 30%, down from 43% in 2001. 

Few have complaints with Kensey’s biomaterial business. After all, net sales of biomaterials increased 15% to $11.5 million in the second quarter through December, led by a 67% gain in orthopedic product sales to $7.2 million. Sales of spine products increased 140%.

Kensey’s endovascular business is what annoys investors, namely Ramius Capital Group, the company’s largest shareholder. The institutional investment fund started amassing shares of Kensey last summer, after Kensey reported a disappointing quarter, a recall of an embolic protection platform and a more general miscalculation of market demand for its protectors against traveling embolisms. Kensey decided in July to halt its embolic activities and refocus on biomaterials and endovascular devices, which are used in a variety of medical procedures.   

A maddening series of events, to be sure. So Ramius went activist and, by Dec. 31, owned just over 20% of shares. Ramius wants Kensey to refocus on its biomaterials business, and reduce spending and management effort on endovascular … or just get rid of it, among other ideas. Last fall, Ramius placed two of its own on . . .

For access to the full article, you must be a registered member - it's FREE.