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Why the Admedus Ltd share price went nuts today

Shareholders of Admedus Ltd (ASX: AHZ) have received an early Christmas present following a positive announcement regarding the company’s Code Red review.

The healthcare company revealed that the review has been a big success, resulting in a restructure which has now positioned it for strong growth, global expansion, and continued portfolio expansion according to the company.

The market has responded positively and in early afternoon trade the healthcare company’s shares are up 7.5% to 36 cents.

Whilst it is still relatively early days in the transformation, things do look to be improving.

Management revealed that in FY 2017 it continues to expect sales to be $21 million, up 12.3% year on year. This will be driven largely by the global expansion of its three products that make up its Adapt Portfolio.

These include CardioCel, CardioCel Neo, and VascuCel. All three have potential in my opinion, especially VascuCel.

VascuCel is a premium next generation collagen scaffold which is designed for restorative vascular repair. It was recently approved for sale in the United States by the FDA and has now launched into a market worth an estimated US$500 million a year.

Pleasingly the company isn’t resting on its laurels. The company is hard at work on the development of a new product for the transcatheter aortic valve replacement market. This market is even more lucrative and estimated by the company to be worth up to US$5 billion a year.

Clearly the company has potential, but there is still a long road ahead. For me it is too early to invest, but I’ll certainly be keeping a close eye on the company.

Until then an investment in fellow healthcare shares Mayne Pharma Group Ltd (ASX: MYX) and CSL Limited (ASX: CSL) would perhaps be a better option.

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Motley Fool contributor James Mickleboro has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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