Medical device maker Volcano debuted on Nasdaq on Thursday, garnering a lukewarm response from investors.

At the close of the market, shares of the Rancho Cordova, California-based company were up $0.80 from the initial offering price of $8. The price peaked at $9.19.

J.P. Morgan and Piper Jaffray jointly managed the deal, valued at $54 million. The stock had originally been priced in the $10-$12 range.

The Volcano IPO struck some in the medical device community as unusual, in part because the sector has been dominated by mergers and acquisitions rather than forays into the public market.

As recently as April, M&A was the order of the day in the medical device sector, with 14 transactions that month alone. Those deals were valued at $4.7 billion, roughly 59 percent of all merger dollars spent in April.

That included two $2-billion deals: orthodontics firm Danaher bought Dental Specialties, and Siemens Medical Solutions picked up Los Angeles-based Diagnostic Products, which makes immunodiagnostic systems and immunochemistry kits.

That was in keeping with trends set last year, when medical devices took 57 percent of the $57.1 billion spent on health care mergers during the fourth quarter of 2005, fueled primarily by Boston Scientific’s $25-billion buyout of Guidant.

According to market research firm InMedica, the market for ultrasound devices, like those produced by Volcano, is growing. By 2009, InMedica forecasts the industry will reach $4.5 billion. SonoSite, a Bothell, Washington-based maker of ultrasound devices, estimates the current market at $3.5 billion.

The total size of the medical device market is likely to exceed the $200-billion mark in 2006. As of 2005, the top 20 medical device companies generated almost $140 billion in sales.

Formed in 2000, Volcano is a 489-employee company that makes intravascular ultrasound (IVUS) catheters and Functional Measurement guidewires used to diagnose and assess diseases of the coronary and surrounding vasculature.

Traditionally, the only way to directly view coronary arteries was through angiography, or catheterization. Intravascular coronary ultrasound allows doctors to thread a tiny ultrasound camera into coronary arteries for a cross-sectional view from the inside-out, showing where the normal artery wall ends and plaque begins.

One reason Wall Street may have shrugged off the company is because it is still operating at a loss. According to Volcano’s latest SEC filing, for the three months ending March 31, it reported a net loss of $3.8 million on revenue of $19.9 million, narrowing its losses from a year ago, when it racked up a $6.4-million loss on sales of $16.5 million.

Contact the writer: AWeinstein@RedHerring.com