Many investors have focused on the hot niche of aesthetic laser stocks. Companies such as Cutera (NASDAQ:CUTR) and Palomar Medical Technologies (NASDAQ:PMTI) are injecting a hint of glamour into portfolios, providing products to treat unsightly wrinkles and veins. But less attention has shone on the use of lasers to treat less-talked-about medical issues like incontinence or prostate problems. Pelvic-health device provider American Medical Systems (NASDAQ:AMMD) may help to change that.

Yesterday, the company announced its agreement to merge with device company Laserscope (NASDAQ:LSCP) in a $715 million deal. Laserscope shareholders will receive $31 per share, a 45% premium over Friday's closing price, in a tender offer by American Medical to be completed by June 14. Up to $565 million in senior financing for the transaction has been underwritten, and additional subordinated financing has been secured for the balance while permanent financing options are explored. Both companies' boards have approved the deal, which is expected to close during the third quarter of this year. American Medical believes the transaction will begin to boost its bottom line in 2008. From Friday's close, shares of American Medical fell 18%, while Laserscope shares rose 43.16%.

Laserscope's business comprises products for both urology and aesthetic specialties. However, the company reported in its most recent 10-K that it expects faster revenue growth from urological sales in 2006; the company is especially strong in that area, while aesthetic lasers have relatively low barriers of entry and stiff competition. In an entirely rational but ironic footnote to the recent news of Mentor (NYSE:MNT) selling its urology business to focus on its higher-margin aesthetics products, American Medical will consider divesting the aesthetics business, since it doesn't seem to fit the company's internal strategy.

By merging with Laserscope, American Medical augments its global sales relationships and gains a foothold in the treatment of obstructive BPH, a non-cancerous enlarged prostate, to complement its existing therapies for the non-obstructive variety. Laserscope recently introduced a new product, the GreenLight High Performance System, which increases its existing platform's speed and precision. By using standard electrical service, the new system can also now be employed in outpatient settings. More than 1 million men worldwide undergo surgery each year for relief, and Laserscope already received a $7 million order for GreenLight products from China in March.

Laserscope, named one of Fortune Magazine's fastest-growing companies in 2005, does have some sore spots. The company reported disappointing first-quarter earnings resulting from higher costs and delayed orders, although it did reaffirm full-year earnings guidance and projected a better second half. The device maker also went shopping last month, purchasing privately held fiber-optic-device provider InnovaQuartz. The $7.5 million cash deal is expected to be accretive in 2007, including the assumption of about $1.1 million in debt and future payments, based on financial performance over three years.

If you're already a Laserscope shareholder, kudos are in order. If you're thinking about buying into American Medical now, bear in mind that the company has a lot on its plate. Just last month, it announced the $1 million purchase, not including milestone payments up to $6 million, of privately held Solarant Medical, a provider of minimally invasive therapies for female incontinence.

American Medical is well positioned to build on a strong market presence in the field of pelvic health, and its price did drop yesterday. But near-term stomach pains can best be avoided by not chasing this GreenLight until both the financing terms of the Laserscope deal and the disposition of its aesthetics business are clarified.

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Fool contributor S.J. Caplan does not own shares of any of the companies mentioned in this article. The Motley Fool has a disclosure policy.