Kensey Nash's Stock Has Legs

Junior's football injury, Mom's surgery and Grandpa's knee have one thing in common: Kensey Nash (KNSY - commentary - Cramer's Take) can help with the repairs. As a leader in the use of resorbable biomaterials, which are inserted into or absorbed into the human body, Kensey Nash produces devices and tissues that have a wide variety of medical uses, such as tendon repair, ligament repair and bone fusion.

With key proprietary expertise, a solid revenue base and an expanding product line, Kensey Nash is poised to benefit from continued advances in tissue reconstruction and repair.

Kensey Nash has built a scalable platform of knowledge and products for sports medicine and spine, trauma and cartilage repair. These are sizeable markets which the company expects to be growing in the 12% to 18% range over time. As a leader in products that heal, replace or temporarily substitute for human tissues, Kensey Nash makes products have a wide range of uses, which the company continues to expand through research and development and clinical trials.

The company does not maintain a sales force and distributes its products through more than 30 other companies. This model produces a strong stream of royalties and cash flow and leaves Kensey Nash free to focus on new uses for its products.

Kensey Nash was originally a pioneer in products for artery closure and blood clotting. The company's Angio-Seal product is the leading artery puncture product in the world, with over 11 million units sold over the last 12 years. Angio-Seal is manufactured, licensed and sold by St. Jude Medical (STJ - commentary - Cramer's Take). Kensey Nash gets paid for other components used with the device and gets a 6% royalty on end-user sales. Over the last five years, Angio-Seal's market share has increased from 31% to 65% of the market, according to company estimates.

Kensey Nash intends to replicate this kind of success with additional products and procedures in rapidly growing markets such as orthopedics, spinal problems, soft tissue repair and cardiology.

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At the time of publication, Gear had no positions in stocks mentioned.

Please note that due to factors including low market capitalization and/or insufficient public float, we consider KNSY to be a small-cap stock. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.

Steve Gear was director of capital markets at Stockhouse.