By: Tomas Ronolski - AllPennyStocks.com News

Friday, April 26, 2013

It may seem hard to believe, but surgeons often leave their tools on the wrong side of the skin after performing a surgery. Clamps, scalpels and other tools of the trade have been found in people, but the most common is undoubtedly sponges, the gauze pads that are used to sop up blood. Sponges get left in patients, an action earning them the term “retained sponge,” an estimated 4,000 times each year. The effects can be very serious as the sponge can cause a host of problems, including attaching to organs and causing infections that could be deadly. There are procedures in place to ensure that this type of thing does not occur, but let’s face it, the operating room can be a frantic place at times and surgeons, nurses and other members of the team are still just people and capable of mistakes.

SurgiCount Medical, Inc., the wholly-owned operating subsidiary of Patient Safety Technologies, Inc. (OTCBB:PSTX), is establishing a large footprint in the health care industry to help put an end to retained sponges. The company is the owner and marketer of The Safety-Sponge System, a real-time, three-part system that utilizes sponges, bar codes, software and a small computer to keep track of the number of sponges used during a procedure. Clinical studies have proven the system to improve patient outcomes and reduce preventable costs.

Yet, not every hospital is using a preventative system like the Saftey-Sponge, amazingly subjecting themselves to the possibility of an incident that carries an average costs of $413,000 per case.

SurgiCount is the dominant force already in the market with 285 customer hospitals using the Safety-Sponge system in more than 7 million procedures already. For customers using the system there have been exactly ZERO retained sponges. The company shows on their website that the system is “used in more procedures, by more clinicians, in more OR’s, by more hospitals (including more US News and World Report Best Hospital Honor Roll recipients) than all competing solutions combined.” That’s an impressive boast to be able to make.

On Friday, the company explained that their footprint is expanding.

SurgiCount said that Ketchikan Medical Center, a critical access hospital in Ketchikan, Alaska, is the first hospital in the PeaceHealth system that will be implementing the Safety-Sponge system as part of a broader roll-out into PeaceHealth hospitals in the Northwest United States. PeaceHealth Ketichikan Medical center already has a strong reputation for safety and quality care, being named in 2013 (for the second straight year) among the top Critical Access Hospitals in the nation, ranking in the top 2 percent of more than 1,300 hospitals.

Commenting on the proactive approach towards avoiding any retained sponge incidents, Patrick Branco, CEO of Ketchikan Medical Center, said, "By using this system, we intend to eliminate the chance of this happening to even one of our patients."

What’s impressive is the rapid expansion and acceptance of the system by hospitals across the country. In 2012, 179 new facilities implemented the system.

Revenues in the fourth quarter increased by 87 percent compared to the year prior quarter to $5.1 million. For all of 2012, sales climbed to $17.6 million from $9.5 million in 2011, which included a $1.1 million payment as part of a larger stocking order. Excluding that item, revenue increased 110 percent in 2012 from 2011.

On an adjusted basis, the company reported operating income of $882,800 for 2012, versus an adjusted operating loss of $1.63 million in 2011. Adjusted gross profit increased to $9.23 million in 2012, compared to $4.86 million in 2011.

This is one of those small companies – with a market cap of $55.3 million – that seems to be steadily plugging-away towards building value with little publicity surrounding it. As the company’s product continues to garner recognition by addressing a serious problem in the health care industry, some additional due diligence about the growth prospective could certainly be warranted.

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