Many fortunes have been -- or will be -- made from baby boomers. One obvious area that will benefit is health care, and one interesting play is Lifeline Systems (NASDAQ:LIFE).

The company has been around over 30 years and is now the leader in personal response services. That is, it provides technologies that connect people with emergency services in their community.

Here's how it works: A subscriber wears a waterproof pendant with a button that transmits to a special telephone, which in turn calls Lifeline Systems if there is a problem.

In its history, Lifeline Systems has served more than 5 million subscribers.

Yesterday, the company announced its fourth-quarter earnings. Revenues increased 12% over the year-ago quarter to $35 million, and net income increased 44% to $4.5 million. For 2004, revenues increased 12% to $130.5 million, and profits increased 22% to $12.5 million. On the news, the stock price rose $1.14 to $28.05.

Over the past year, Lifeline Systems has been transitioning its business model from product sales to recurring revenue streams, similar to the approach of LoJack (NASDAQ:LOJN). The strategy is to grow the subscriber base -- which increased 10% to 423,000 in 2004 -- as well as extend the lifetime value per customer.

The company markets primarily through hospital channels. There are also major marquee accounts, such as the American Red Cross and Sunrise Senior Living (NYSE:SRZ). Lifeline Systems is also engaging in direct marketing and even Internet initiatives.

Assuming the company continues to execute, there are certainly favorable secular trends. First of all, the health-care industry is obviously trying to find ways to cut costs, and Lifeline's system has been shown to reduce the number of days spent in a hospital or nursing facility. And, of course, the senior population is growing.

With strong cash flows -- along with $47 million in the bank and no long-term debt -- Lifeline Systems has the resources to grow its market, or perhaps even acquire companies to accelerate its growth rate. In other words, it has the muscle to hoist a sail big enough to catch the winds of favorable demographic and economic shifts. Liking the sound of that? Don't jump aboard without making a peek inside the valuation closet your next step.

Fool contributor Tom Taulli does not own shares mentioned in this article.