Medical device maker ArthroCare Corp. (ARTC.PK) will have its shares relisted under the symbol "ARTC" on the Nasdaq, beginning January 22.
ArthroCare manufactures minimally invasive surgical products, which are based on the company's patented Coblation technology. The company operates under three segments - Sports Medicine, ENT and Spine. The sports medicine business is the company's largest unit and the ENT business is the second-largest. The two units jointly account for 90% of the company's total revenue - with the sports medicine business alone accounting for two-thirds.
The first evidence of trouble emerged in July 2008 when the company announced that it would have to restate its 2006 and 2007 financial results after the audit committee of its board identified errors in its sales calculations. Following the news, the shares plunged 48% to $21.14 that month. In December of the same year, ArthoCare expanded the scope of restatement by including the years ended December 31, 2000 through 2005. By the end of December 2008, shares of ArthoCare were languishing around $4.
The first-half of 2009 brought more troubles for ArthroCare. The company was suspended from trading on the Nasdaq effective January 16, 2009, following its inability to file a quarterly report since April 2008. In February, a review conducted by the audit committee identified certain improper practices in the insurance billing and healthcare compliance practices associated with the company's Spine business unit.
The company also came under investigations by the SEC and the U.S. Attorney Offices in Florida and North Carolina. In the wake of mounting investigations, Michael Baker, the company's former President and CEO tendered his resignation on February 18, 2009. Michael Moehring, former Vice President and General Manager of the Spine Business Unit, and Michael Denker, former Director of Sales Development and Training also quit their posts the same day.
However, towards the second half of the year, things started taking a turn for the better.
David Fitzgerald, who was named as Acting President and CEO when Baker quit, was appointed to the posts on a permanent basis last October. In November of 2009, the company completed restatement of its historical financial statements and filed its Annual Report on Form 10-K for the year ended December 31, 2008.
What's more, ArthroCare has also become a current filer. The company announced its results for the third-quarter ended September 30, 2009 on November 24.
For the nine months ended September 30, 2009, the net loss applicable to common stockholders widened to $40.9 million or $1.53 per share from $5.8 million or $0.22 per share in the comparable period a year before. During 2009, the company recorded charges for accrued dividend, the beneficial conversion feature, and issuance costs accretion of $27.3 million related to its Series a Redeemable Convertible 3% Preferred Stock issued on September 1, 2009.
Revenue for the first nine months of 2009 was $239.1 million, compared to $237.1 million in the year-ago period.
Looking ahead, the company expects annual revenue for 2009 to be in excess of $300 million and overall profit margin to approximate 70%. For 2010, the company has set a revenue target of $356 million.
The shares have been trading on Pink Sheets around $24 in the past four trading days.
Now that ArthroCare has resolved its accounting issues and graduates from Pink Sheets to begin trading on the Nasdaq exchange, the stock may deserve a look.
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