Stock Market Chumps.........10-24-06

NeuroMetrix Inc. (NURO)

Last Trade:	14.10
Trade Time:	4:00PM ET
Change:	5.75 (28.97%)

Shares of NeuroMetrix Inc. fell sharply Tuesday and set a 52-week low as the medical-device maker was hit with new worries about physicians' ability to bill insurance companies for procedures using its automated nerve conduction test.

Shares of the Waltham, Mass.-based company dropped $4.63, or 23 percent, to $15.22 in early afternoon trading on the Nasdaq Stock Market as investors absorb news that yet another insurance provider decided not to allow physicians to use three existing reimbursement codes to bill for NeuroMetrix's test, NC-stat.

Tuesday's weakest level of $14.30, on heavy volume, was a 52-week low surpassing the prior low of $16.33 set Oct. 11. There was a 52-week high of $41.19 on April 21.

NeuroMetrix makes a strap-on device that allows physicians, even general practitioners, to test for problems like carpal tunnel syndrome and back pain, eliminating the need for a trip to the specialist.

For the last couple of years, physicians under NeuroMetrix' guidance have been able to bill the procedure under existing codes that cover the standard surface and needle procedures it competes with. The growth prospects have led the company's stock to more than double in value over the past 17 months. Chief Executive and founder Shai Gozani told investors last month that the market for his company's products could top $1 billion.

The problem is, the revenue stream could soon start to dry up as more medical carriers balk at reimbursing the procedure.

First Coast Service Options Inc., a Florida Medicare provider, said in a coverage bulletin dated Oct. 18 that claims for coverage of NeuroMetrix's test now will be administered on an individual basis and that existing codes used by doctors to bill for nerve-conduction tests should not be used to bill for NC-stat procedures.

First Coast Service said that "procedure code descriptor must precisely describe the service billed" and that until a specific code for NC-stat is established, a miscellaneous code for unlisted neurological diagnostic procedures should be used.

That could translate in a sizable drop in reimbursement for doctors using NC-stat to test patients and could affect future use of the device.

Susquehanna Financial Group LLLP later downgraded NeuroMetrix to "neutral," citing First Coast Service's decision as a factor in its ratings change.

First Coast Service is the latest of several medical carriers that recently said they either won't cover NC-stat or won't allow it to be billed under codes developed for traditional nerve disorder tests.

Cigna Corp. unit Cigna Healthcare in July specifically excluded NC-stat from coverage, saying the device and others like it "are considered experimental, investigational or unproven."

NeuroMetrix's Gozani told Dow Jones in September that NC-stat is an established and tested alternative and that moves by insurers to deny coverage aren't anything new for his company. Gozani said NeuroMetrix isn't considering seeking its own code for the NC-stat technology.

NeuroMetrix Chief Financial Officer Brad Smith wasn't immediately available for comment Tuesday.

Meanwhile, TrailBlazer Health Enterprise LLC is finalizing its local coverage decision on NC-stat and is leaning toward excluding NC-stat from coverage. TrailBlazer's medical director told Dow Jones last month that even if the medical carrier decided to cover NC-stat, none of three existing CPT codes used to bill traditional nerve studies could by used by physicians to cover NC-stat.

Noridian Administrative Services LLC also is looking to exclude NC-stat from coverage.

NeuroMetrix sells its handheld NC-stat machine for about $5,000. Disposable sensors used to test nerve responsiveness cost about $35 each, and four are typically required per test. Gozani told investors last month that it costs a physician about $150 for the four disposable sensors needed for an NC-stat nerve study and that the physician typically nets $200 per patient tested.

Sigmatel Inc. (SGTL)

Last Trade:	4.87
Trade Time:	4:00PM ET
Change:	0.72 (12.88%)

Memory chip maker SigmaTel Inc. on Tuesday said it will eliminate 60 positions, or 14 percent of its domestic workforce, in the fourth quarter and forecast a loss for the quarter.

For the fourth-quarter, the company expects to report non-GAAP loss of 23 cents to 29 cents a share, on revenue of $41 million to $46 million.

Analysts on average were expecting the company to post a loss of 24 cents a share, excluding special items, on revenue of $44.1 million, for the quarter, according to Reuters Estimates.

Announcing third-quarter results, SigmaTel said it had set an internal goal to keep its losses at $3 million and break even on a non-GAAP basis for the second quarter of 2007, on revenue of $55 million.

The company added it expects the second half of 2007 to be profitable assuming normal seasonality.

During the third quarter, the company had reduced headcount and other operating expenses as a result of the sale of the PC Audio product line.

Shares of the company closed 13 percent down at $4.87 on the Nasdaq.