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In May, Synovis Life Technologies Inc. reported second-quarter profits that jumped 60 percent on revenue that increased 19 percent. As a result, earnings per share for the medical device firm topped Wall Street's expectations by a nickel.

Investors noticed. After significantly under-performing the S&P Index and the Russell Index most of this year, shares of the St. Paul-based company surged almost 12 percent the day of the announcement. Since trading at a 52-week low of $11.60 in early March, Synovis' stock has increased about 61 percent, closing Friday at $18.68.

The recent rocket-like rise of Synovis shares causes CEO Richard Kramp to chuckle a bit. "We had great results in our first quarter but not nearly the same level of stock activity,'' he said. "So maybe the economy has really bottomed out and people are turning the corner when it comes to investing."

One of few firms hiring

Perhaps -- but Synovis' recent run-up wasn't just dumb luck. Its roots can be traced, in large part, to two decisions in the past four years that are beginning to bear some rather plump fruit.

In early 2006, the company decided to hire its own sales representatives to sell its microsurgical tools and implantable biomaterials used in repairing soft tissue -- instead of relying on third-party distributors. It's a strategy Synovis continues to build on -- last month the company said it will hire 16 new sales reps, bringing the total number in the United States to 56.

"We just found that we needed our sales people to devote 100 percent of their time to our products," Kramp said. In the past, he noted, beefing up the sales force has resulted in greater market penetration and higher revenue.

"It's one of the few companies in our universe actually hiring new employees,'' wrote Feltl and Co. analyst Ernest Andberg in a recent report. Andberg rates Synovis stock a buy.

Then, in 2008, Synovis shed the portion of its business that made components for other medical device companies, deciding to focus in large part on its promising biomaterials business -- tissue-based products used in bariatric, hernia and breast reconstruction surgeries.

Focus on tissue-based products

"I think those two decisions allowed the company to become much more focused," said Matt Dolan, an analyst with Roth Capital Partners, who has a hold rating on the stock. "They can now focus on the more profitable franchises."

That includes Peri-Strips Dry, a tissue-based product that is used as a buttress to stem bleeding and leakage of gastric fluids during bariatric procedures. More of these surgeries, many of which are reimbursed by Medicare and private insurers, are being performed as the country battles an obesity epidemic. In the most recent quarter, Peri-Strips sales increased 15 percent to $5 million.

But a prickly question facing Synovis is whether a recessionary economy will affect the number of gastric bypass surgeries performed, as some patients may delay surgery because of increased health insurance deductibles or fear of losing their jobs if they take time off to recover. Synovis executives say they are unsure whether economic conditions have affected the number of these procedures. Kramp notes that Peri-Strips still has a low market penetration, so the addition of new sales people could spread the word. However, this comes at a time when Massachusetts-based Covidien is actively pitching a competing product to surgeons.

Beyond that, Synovis has big ambitions for another signature product called Veritas, a biologic material derived from cow tissue that essentially remodels itself into human tissue. Veritas has already been used in abdominal and thoracic wall repair, as well as hernia repair. But Synovis says future applications could be quite lucrative -- for example, the company is currently engaged in laboratory and animal studies of Veritas to see if heart tissue can be repaired with it.

"If we can prove that Veritas works for heart failure, that would be a home run," Kramp said.

Since Synovis has reinvented itself with a focus on the hot biomaterials market, some analysts speculate it could be an attractive acquisition target. (The company has no debt.)

"It's a possibility," said Dolan. "Or, the company could look at its own [mergers and acquisition] opportunities."

Janet Moore • 612-673-7752