Synovis’ board unanimously approved the buy at $28 per share. Pending shareholder approval, the deal is expected to close in the first quarter of 2012.

The maker of biological and mechanical products for surgeries generated $68.6 million in annual sales in 2010. It includes three businesses: Synovis Surgical Innovations, which provides surgical tools and implantable biomaterials; Synovis Micro Companies Alliance, a provider of products for microsurgeries; and Synovis Orthopedic and Woundcare.

“We are enthusiastic about this transaction not only because it is beneficial to our shareholders and employees, but also because the combination of Baxter’s and Synovis’ product portfolios will greatly expand the combined entity’s presence in the exciting and expanding soft tissue repair market, benefiting patients worldwide,” said Richard Kramp, president and chief executive officer of Synovis.

Baxter International said in a statement that adding Synovis’ products to its portfolio will help it expand in the regenerative medicine and biosurgery fields. The Deerfield, Illinois-based device company makes products for people with hemophilia, immune disorders, infectious diseases and other acute medical conditions.

MarketWatch reports that shares of Synovis jumped more than 50 percent today after the announcement.

The St. Paul, Minnesota-based company saw revenue climb 12.6 percent to $19.8 million in the quarter, up from $17.6 million in the same quarter a year ago. Profits jumped 57.5 percent to $2 million or 17 cents per diluted share, up from $1.3 million, or 11 cents per diluted share.

“With a solid second-quarter performance and revenue up 20 percent in the first half of the year, we are on track to achieve our fiscal 2011 goals,” said Richard Kramp, Synovis Life Technologies president and chief executive officer, in a statement.

Synovis developed the Veritas technology, which consists of converting bovine tissue into a type of scaffolding that attracts the human body’s own cells and blood vessels. That helps in the remodeling of the repaired tissue. In its fiscal second quarter, a study was published in the Journal of the American College of Surgeons that compared the performance of biologic meshes, including the Veritas Collagen Matrix. The company said the study results confirm the favorable attributes of Veritas in abdominal wall repair, such as ventral hernia surgery.

However, Veritas sales fell in the second quarter to $3.8 million from $4.1 million.

In a year when ATS Medical and AGA Medical were sold, and SurModics Inc. (NASDAQ:SRDX) sucked wind, Synovis’ fiscal 2010 revenues soared 18 percent to $68.6 million from $58.2 million a year ago, thanks to strong growth from its core Veritas soft tissue repair technology.

“We are pleased with our overall revenue results, [which are] … especially significant in light of the economic climate and the aggressive reaction by healthcare providers to evolving healthcare reform legislation,” CEO Richard Kramp said in a statement. “Synovis’ double-digit revenue growth speaks favorably of our people, our products and our markets. We have robust plans in place to continue on a strong growth trajectory in 2011 and beyond — fueled by our high potential products, particularly Veritas.”

Synovis has seen countless comebacks and reinventions in its 25 year history. But the company seemingly has found its winning niche: producing implantable biomaterial that helps the body repair and regenerate soft tissue.

Synovis’ signature technology, Veritas, consists of converting cow tissue into a type of scaffolding that attracts the human body’s own cells and blood vessels, enabling it to remodel the repaired tissue type. Synovis hopes doctors will use Veritas to repair kidneys, bladders, breasts, and eventually, hearts.

For the year, Veritas sales rose 64 percent to $14.4 million compared to 2009. Veritas accounted for 21 percent of fiscal 2010 revenue, up from 15 percent the previous year.

If there’s one blemish on Synovis’ 2010 performance, profits fell 26 percent to $4.9 million, or 43 cents a share, from $6.6 million, or 56 cents a share, last year.

But the profit decline was due to beefed up spending on sales and marketing, and investments in research, development and new technologies, including microsurgery products and orthopedic/wound care treatments.

For the full year, microsurgical revenue totaled $11.0 million, a 27 percent increase over 2009. Orthopedic and wound product sales totaled $685,000 for the fiscal fourth quarter, up 16 percent from the third quarter. (Synovis entered the orthopedic/wound care market when it acquired Pegasus Biologics in July 2009 and relaunched the portfolio earlier this year.)

Investors have rewarded Synovis’ performance, boosting the stock about 23 percent this year to just above $16 a share.

The long-time “emerging medical device companies” equity analyst for Feltl & Co. in Minneapolis has not seen a lot of companies emerging lately.

In fact, they’ve been disappearing all together. Case in point: Medtronic Inc.’s (NYSE: MDT) deal last week to acquire ATS Medical Inc. in Plymouth, Minn. for $370 million.

“The pool is kind of thinning out,” Andberg said.

He also wouldn’t be surprised if the remaining local companies he covers, including Synovis Life Technologies Inc. (NASDAQ: SYNO), Cardiovascular Systems Inc. (NASDAQ: CSII) and Vital Images Inc. (NASDAQ: VTAL), also get bought out soon.

In Minnesota, publicly traded medical companies that are not named Medtronic in Fridley or St. Jude Medical Inc. (NYSE: STJ) are not doing so well on Wall Street. Many of them have yet to crack the $100 million mark, or even turn a profit, despite being around for several years.

Take ATS Medical. The company, which makes heart valves and therapies to treat atrial fibrillation, lost money every year for each of the last five years, dropping $28 million alone in 2006. Since 2001, ATS stock has dropped nearly 90 percent to less than $3 a share before the Medtronic deal.

Urologix Inc. (NASDAQ: ULGX), a Minneapolis-based maker of devices to treat urinary incontinence, has also been running red ink for several years. The company generated $12.8 million in revenue last year, down 40 percent from 2007.  Its stock trades at less than $2 a share.

Rochester Medical Corp. (NASDAQ: ROCM), another urinary incontinence device maker based in Stewartville, Minn., generated less than $1 million in profit over that last two years combined, compared to $34.1 million in 2007. Rochester Medical shares trade at less than $12 a share, about 60 percent less than in early 2007.

Poor performance will lower a company’s valuation, making that company an attractive target for a potential buyer.

That’s especially true for cardiovascular-related companies as big medical device manufacturers like Medtronic use their significant cash hoards to snatch up bargains, Andberg said. Faced with slowing demand for pacemakers and ICDs, Medtronic is seeking to boost sales through relatively inexpensive acquisitions, he said.

Device companies developing or selling one product are especially vulnerable.

CSI, based in New Brighton, Minn., originally filed for an IPO in January, hoping to raise $86.3 million to help expand sales of its Diamondback 360 device, which removes plaque from arteries in the pelvis or leg. But a weak economy and volatile stock market have nearly wiped out investor demand for IPOs, prompting CSI to go public by acquiring the remaining assets of Replidyne Inc. of Colorado. Today, the stock trades at less than $5 a share, less than half of its price last summer.

EnteroMedics Inc. (NASDAQ: ETRM)of Roseville, Minn. has seen its shares sink because of clinical trial problems related to its Maestro technology, which uses electricity to treat obesity. EnteroMedics stock trades at less than $1 a share, compared to $10 in December 2007. The Food and Drug Administration has yet to approve the device.

It’s not surprising then that device companies who consistently introduce new products like ev3 Inc. (NASDAQ: VVV) in Plymouth, Minn. and Vascular Solutions Inc. (Nasdaq: VASC) in Maple Grove, Minn., are doing relatively well, though their stocks have fallen in recent years.

Thanks to its $780 million acquisition of FoxHollow Technologies Inc. in 2007, ev3, which makes devices to treat peripheral artery diseases, is perhaps the only local medical device company outside of Medtronic and St. Jude with any considerable weight. The company last year generated a profit of $41.9 million on sales of $449.1 million compared to a loss of $335.6 million on sales of $422.1 million in 2008.

Another local medical technology company that could hit big makes software, not devices. Virtual Radiologic Corp. (NASDAQ: VRAD), in Minnetonka, Minn., sells teleradiology services and software that remotely connects hospitals and clinics around the county to radiologists who analyze and interpret MRI and CT scans. The company has been growing rapidly: $120.7 million in revenue  in 2009 compared to $86.2 million in 2007.

The most troubling problem facing Minnesota public med companies is the lack of new ones. Aside from AGA Medical Holdings Inc. (NASDAQ: AGAM) in Plymouth late last year, the state has not seen one medical company go public since Virtual Radiologic and EnteroMedics in 2007.

With the IPO market still stalled, there are no ready replacements when companies like ATS get bought out.

As a result, Minnesota med tech companies are increasingly falling into two camps: startups that may never see the light of day and giants like Medtronic and St. Jude, who are only too happy to go bargain hunting.

Synovis’ board gave it plenty of leeway for the buyback. There’s no expiration date and no minimum purchase amount, according to a statement from the company.

The company seeks to buy back shares because it believes its stock is undervalued, according to Chief Executive Richard Kramp.

In addition to the 1 million shares, Synovis has the right to buy back 66,000 additional shares as part of a repurchase authorization from September, according to the statement. Synovis has about 11.2 million shares outstanding.

Last month, the company received U.S. Food and Drug Administration clearance for a device that measures blood flow immediately after surgical procedures in which veins have been connected.

Founded in 1985, Synovis divides its products into three major categories: staple-line reinforcement, soft-tissue repair and surgical tools.

Last year, Synovis received European regulatory approval for its signature Veritas technology, which involves converting cow tissue into a type of scaffolding that attracts the body’s own cells and blood vessels, allowing the body to eventually remodel the repaired tissue type.

The company’s Flow Coupler device connects blood vessels and uses a Doppler sensor to measure blood flow at the site where the veins are joined, called the anastomosis. The  sensor provides surgeons with real-time information about blood flow through the site, which enables surgeons to immediate intervene if the anastomosis becomes blocked.

The device is the next-generation version of Synovis’ Coupler, which is used to connect blood vessels but doesn’t monitor blood flow.

Publicly traded Synovis, founded in 1985, divides its products into three major categories: staple-line reinforcement, soft-tissue repair and surgical tools.

In 2009, the company’s profits plummeted to $2.7 million from $11.5 million in the prior year. Sales jumped 17 percent, however, to $58 million. In a statement that was released with the company’s financial information, Chief Executive Richard Kramp credited the revenue growth to expanding the company’s surgical sales force by 40 percent and receiving European regulatory approval for its signature Veritas technology.

The technology consists of converting cow tissue into a type of scaffolding that attracts the body’s own cells and blood vessels, allowing the body eventually to remodel the repaired tissue type. Synovis hopes doctors will use Veritas to help repair kidneys, bladders, breasts, and eventually, hearts.