Medstone Warns That Earnings Will Be Off

Medstone International Inc. said late Friday that it expects second-quarter earnings per share to be less than the 23 cents reported for the same period a year ago. The Aliso Viejo medical-device company said it should return to its “customary level of profitability” in the second half and estimates that it should be able to produce revenues of about $25 million and earnings per share of 85 to 95 cents for the full year. Medstone said it is in transition, moving from producing larger, more expensive lithotripters to less expensive, smaller transportable lithotripters. Lithotripters produce shock waves that destroy kidney stones. Initial demand exceeds production capacity and roll-out and start-up costs have been high, Medstone said, adding that most of the roll-out expenses are over. The company plans to produce and place its new low-cost transportable lithotripter at the site of treatment and charge only when the system is used to treat a patient. For 1998, Medstone posted net income of $4.3 million, or 82 cents a share, on revenue of $23.8 million. Medstone disclosed the earnings estimates after the U.S. stock markets closed Friday. The shares closed at $7.06, down 31 cents.