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Two Stocks Benefiting From Loud Snorers

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These companies will also benefit from the obesity trend, which is not unrelated.

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MINYANVILLE ORIGINAL A few weeks ago, I lay in a bed in a dark room with more than a dozen wires emanating from my head and body while lab technicians monitored me throughout the night. While this may sound like a scene from a sci-fi movie, it was actually just a simple medical examination. I stayed overnight at a sleep center to undergo a polysomnography, or a sleep study.

Luckily, my results showed no sign of a sleeping disorder. But in researching sleep ailments in general, I discovered the staggering statistics about the number of people in the US who suffer from sleep problems. Adults require on average seven to eight hours of restful sleep per night to remain healthy. The stresses of daily life have taken their toll, though, and the average rest period enjoyed by a middle-aged adult in the US decreased by one hour from between eight and nine hours to between seven and eight hours from 1959 to 1992 according to a report titled "How Much Sleep Do Adults Need?" from the National Sleep Foundation. Another study in the same article, based on the daily sleep diaries of full-time workers from 1975 to 2006, found that many slept less than six hours per night. A National Health Interview Survey reported that the percentage of workers receiving less than six hours of rest increased from 24% to 30% over the past 20 years. Many doctors like my own have received training in sleep medicine to meet the demand of those suffering from abnormal sleep.

Not surprisingly, a market has developed around the issue of sleep deprivation. In fact, a portion of the health care sector has flourished over the past decade-and-a-half. As good sleep habits deteriorate, the population ages, and obesity rates climb, the growth of sleep centers in the US has exploded 630% over the past decade-and-a-half. According to Doctor Rebecca Scott of the New York Sleep Institute, 50 million to 70 million individuals struggle with a sleep or wakefulness disorder, such as insomnia, narcolepsy, sleep apnea, or hypersomnia. Sleep disordered breathing problems are the most common. AMedNews reported in July of this year that the total number of sleep centers accredited by American Academy of Sleep Medicine, or AASM, increased from 337 centers in 1996 to 2,461 in June 2012.

The rapid expansion of sleep centers may have already reached its peak, though, according to Fred F. Holt, an otolaryngologist, who provides consulting services to sleep centers. He said in the AMedNews article, "I have no doubt that sleep labs will always be around, but the growth spurt may be over," and the rush of initial investors has slowed. As the US becomes saturated with hospitals and independent sleep centers, these businesses will be forced to compete for patients, hurting revenue.
Source: ResMed

For example, the growth slowdown hit Graymark Healthcare (PINK:GRMH), which operates 105 freestanding and hospital-based facilities across the country, earlier in the year when it announced in March that revenue from diagnostic sleep services declined 16% from $15 million in 2010 to $12.6 million in 2011.

Investors in the business of sleep may now want to shift their attention away from sleep centers to producers of the medical devices for sleep disorders, especially for sleep apnea as sleep centers raise awareness about this under-diagnosed disorder.

Think of the number of family members, guests, and college roommates you've heard snore loudly. Dr. Scott said 17% of male loud snorers and 15% of female loud snorers definitely have sleep apnea, but "the numbers are likely higher than that." Sleep apnea goes undiagnosed in many individuals and as many as half of loud snorers may have sleep apnea, according to the National Sleep Foundation.

People can suffer from one of two forms of sleep apnea: obstructive sleep apnea, or OSA, and central sleep apnea. In both cases, the individual experiences cessation of breathing while sleeping. OSA, the more common of the two forms, occurs when the soft tissue in the back of the throat collapses, and is often related to obesity. Central sleep apnea occurs when the brain fails to signal muscles to breathe due to instability in the respiratory control center.

Individuals with the disorder may stop breathing hundreds of times per night, restricting oxygen flow to the brain and other parts of the body. Undesirable complications can arise from sleep apnea, such as insomnia, high blood pressure, stroke, heart failure, diabetes, and depression.
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