ZOLL Medical (ZOLL) obtained clearance from the U.S. Food and Drug Administration (FDA) for its new model of the LifeVest wearable defibrillator. The physicians advise LifeVest for their patients, who run the risk of sudden cardiac arrest. LifeVest enables physicians to assess the long-term arrhythmic risk in their patients and take suitable actions. ZOLL rents out LifeVest to patients like other durable medical equipments.

ZOLL’s LifeVest business continues to grow strongly despite constrained capital spending by healthcare providers. LifeVest revenues increased 58% year over year to $11.9 million during its fiscal third quarter, while total revenues declined 5%. More than 2,900 physicians have recommended the product in the current fiscal. Presently, over 2,000 patients are using LifeVest.

With growing clinical acceptance, ZOLL is optimistic about the growth prospect of this high-margin (over 75%) product and estimates a potential market of more than $1.8 billion dollars in the U.S. The company is aggressively expanding its U.S. sales team to capitalize on the opportunity. ZOLL estimates to realize over $50 million annually from LifeVest sales and expects the product to become the largest and the most profitable part of its resuscitation portfolio.

Shares of ZOLL Medical closed at $18.45 on Monday, trading at 26.4X trailing 12-month EPS. We maintain our Neutral recommendation for the company.

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