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Profit at Maker of Kidney Stone Device Increases Sevenfold

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Times Staff Writer

In its first year since receiving government approval to sell a machine that destroys kidney stones by using ultrasound, the profits of Medstone International Inc. soared to $8 million in 1988, almost seven times the net income of the previous year.

The Costa Mesa company reported a profit of $8 million for the year on revenue of $24.3 million, compared to $1.2 million for the fiscal year ending Oct. 31, 1987, on revenue of $6.6 million. The company changed its fiscal year after going public last June.

The company was founded in 1984 and lost more than $6.5 million the next 2 years due to costs of research and development, according to David Radlinski, the company’s chief financial officer.

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Medstone posted its first earnings in 1987 after the Federal Drug Administration approved trial use of the machines, called lithotripters, which resulted in some sales. In April, 1988, the company won final approval by the FDA, clearing the way for the sale of 19 lithotripters, Radlinski said.

“We knew the growth would be there,” he said. “We expect 1989 to be another good year.”

Lithotripters provide an alternative to surgery. The machine uses ultrasound waves to pulverize the kidney stone. Residue from the stones is eliminated from the body in urine.

The company hopes to receive Federal Drug Administration approval to use the same machines to treat patients suffering from gallstones, a market that is potentially much larger than that for kidney stones, Radlinski said.

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Two German manufacturers also have FDA approval to sell kidney stone lithotripters, but no one has received final approval to use the machines to treat gallstones, he said.

Medstone’s lithotripters sell for about $1,375,000 each, Radlinski said. Treatment using the machines is considerably cheaper than operations, and recovery time is shorter. For example, surgical removal of kidney stones typically costs $10,000 to $14,000, compared to $5,000 to $7,000 when a lithotripter is used, he said.

Last year, Medstone grew from 30 employees to 69. In December, officials signed an agreement with General Electric CRG to market the machines in Europe, Africa and the Middle East.

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Later this month, the company will move from its present 16,000-square-foot Costa Mesa plant to a 42,000-square-foot location in Irvine.

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