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Company Perspectives:
VIASYS Healthcare Inc. is committed to becoming a world-class healthcare company focused on respiratory, neuro-care and medical/surgical technologies. Our stakeholders include the care providers and patients who rely on the quality of our products; our investors who deserve long-term return on shareholder equity; and our employees to whom we are committed to providing an entrepreneurial environment that stimulates and rewards their creativity and innovation.
As a leading healthcare technology company, VIASYS Healthcare, Inc. is committed to a long-term, sustained investment in research and development. In order to build upon our existing product leadership, we must invest in technologies that anticipate and continually meet the needs of our customers and the patients we serve. Our commitment to excellence for life underscores everything we do: industry leadership in R&D, the highest quality products, an outstanding company-wide environment for our employees, and a commitment to creating shareholder value.
VIASYS Healthcare, Inc. is a global market leader in healthcare technology. The company is a spinoff of Thermo Electron Corporation, a scientific instrument business, and was created from the acquisition of some dozen biomedical companies. VIASYS reorganized these companies into three business segments or groups: Respiratory Care, Neuro-Science, and Medical and Surgical Care. VIASYS went public shortly after its inception in 2001 and had sales of over $358 million in its first year. VIASYS markets its products to hospitals, laboratories, physicians, and equipment manufacturers in over 100 countries.
A String of Acquisitions in the 1990s
In the 1990s, Thermo Electron Corporation, a leading supplier of laboratory, analytical, and process-control equipment, acquired a string of well-known biomedical companies. These companies provided equipment used for either respiratory care, medical and surgical care, or neuro-care. Among those in respiratory care were Bear Medical Systems, Inc., Bird Products Corporation, Erich Jaeger GmbH, SensorMedics Corporation, and Stackhouse, Inc. Companies in medical and surgical care included CORPAK MedSystems, Medical Data Electronics, Inc., Thermedics Polymer Products, and Tecomet. Grason-Stadler, Inc., Nicolet Biomedical, and Nicolet Vascular provided neuro-care. Together, these companies generated about $350 million in sales a year.
VIASYS Healthcare, Inc. in 2001
On November 15, 2001, Thermo Electron spun out these biomedical companies as a separate business--VIASYS Healthcare, Inc. The companies were now subsidiaries of VIASYS. "We are excited to make our debut as an independent public company with market-leading products, a terrific team of dedicated employees, and strong momentum integrating the company," said Randy H. Thurman, president and chief executive officer of VIASYS in a company press release.
The following day, VIASYS went public on the New York Stock Exchange. The company sold 26 million shares valued at $14 per share. The offering generated approximately $370 million.
VIASYS immediately organized its operations into three groups: Respiratory Technology, Neuro-Care, and Medical and Surgical. With its combined Thermo Electron companies, the Respiratory Technology segment was the world leader in respiratory diagnostics, holding about a 60 percent market share. The primary products produced by this segment were instruments used to test pulmonary system and lung function. The Respiratory Technology segment also introduced sleep therapeutic products.
The Neuro-Care segment produced instruments used to diagnose neurological, audio, and cardiovascular disorders. The Medical and Surgical segment designed, manufactured, and marketed critical-care disposable devices and wireless patient monitoring systems.
New Products and Structural Changes in 2002
As a new company, VIASYS planned to establish itself as a market-leader by launching new, innovative products and modifying the structure of its subsidiaries. In June, the company unveiled SNAP, a handheld EEG monitor that was the first of its kind. According to a company press release, SNAP, which was manufactured by VIASYS subsidiary Nicolet Biomedical, enabled anesthesia professionals to reliably measure the effects of anesthesia and monitor patients' brain activity levels. SNAP was approved by the FDA in June and went on the market in July.
Gerald Brew, president of VIASYS' Neuro-Care Group commented on the importance of the company's new product: "SNAP is a clear extension into new anesthesia monitoring markets which leverages our EEG market leadership and three decades of neuro-related expertise. SNAP is the first of several unique VIASYS anesthesia products and the first handheld product approved for use in the space-constrained Operating Room Theater."
In July, the company announced that one of its subsidiaries, SensorMedics, formed an alliance with CONSORTA, Inc. CONSORTA was itself a national healthcare alliance made up of more than 400 acute-care facilities and 1,700 alternate care sites. Under the terms of its agreement with CONSORTA, SensorMedics was the preferred source to supply high-frequency oscillatory ventilators, pulmonary and metabolic analyzers, and sleep diagnostic systems to CONSORTA's members.
In September, VIASYS' Critical Care Group began shipping its new AVEA ventilator to customers. AVEA was an integrated life-support system designed to meet the needs of neonatal, pediatric, and adult patients, especially those in intensive care. The ventilator differed from competitors' products and previous models in that it had compressor technology that allowed it to perform with or without an external air source. It incorporated respiratory diagnostics to assist in decreasing the time a patient spent on a ventilator.
During the same month, VIASYS announced plans to divest its subsidiary Medical Data Electronics (MDE). By letting go of MDE, VIASYS had exited the patient-monitoring business. Thurman explained the move in a company press release: "The decision to divest MDE is consistent with our strategy of focusing on and investing in our Critical Care, Respiratory, Neuro-Care, and Med Systems businesses." The company suffered a pretax charge of $15 million in the third quarter because of the decision.
VIASYS announced the acquisition of E.M.E. (Electro Medical Equipment) located in Brighton, United Kingdom, and its related U.S. subsidiaries in October. The deal cost VIASYS $22.5 million in cash and stock. E.M.E. was a prominent supplier of devices and disposables used to non-invasively treat newborns with respiratory problems. The company was well-known for its Infant Flow, a product based on a form of nasal CPAP (Continuous Positive Airway Pressure). Thurman believed that the acquisition of EME was a great strategic move for VIASYS for several reasons. "Its products provide an extension to our global critical care business and are complementary to the many products we offer for the care of the neonate," he explained in a company press release. EME had revenues of nearly $17 million in 2002.
During the same month, VIASYS received the prestigious Zenith Award from the American Association for Respiratory Care (AARC) for excellence in product service and quality.
VIASYS received an additional honor in November when the New England Journal of Medicine published the results of a large, independent, multi-center trial using the company's 3100A High Frequency Oscillatory Ventilator. During the trial, the ventilator was used to treat respiratory distress in very premature infants. The trial found that infants on the VIASYS ventilator suffered fewer deaths and less chronic lung disease compared to those on conventional ventilators. The study stated that for every 11 infants treated with the ventilator, one death or case of chronic lung disease was prevented. Deniese LeBlanc, SensorMedics' product manager, commented on the study in a company press release: "We are very pleased that these new results in a large number of infants, and in the current times of better prenatal care and newer therapeutics, demonstrated the same benefits of the 3100A ventilator previously published in eight smaller trials. Considering that these infants were smaller than in any of our earlier trials, the study provides additional support for the use of 3100A HFOV as the standard of care for ventilating premature infants."
Around the same time, the company launched Oxycon Mobile, a portable cardiopulmonary exercise system. It measured a patient's oxygen consumption, carbon dioxide production, and minute ventilation. While other systems also offered these measurements, this system was portable; it did not require the patient to be connected to a large stationary machine. The free movement offered by the system allowed physicians to better monitor patients in different and additional settings. They could even monitor patients during typical day-to-day activities.
A Challenging-but-Bright Future
VIASYS did well in its first year: the company posted a net income of $16.3 million on revenues of $358.4 million. Its sales and income in 2002 looked to be about the same, despite a slip in net income in the quarter ending in September. The company attributed the drop in profits to restructuring charges and costs related to the consolidation of facilities. Thurman summed up the company's progress in 2002: "As we approach the completion of our first full year as a publicly traded company, VIASYS Healthcare has made significant progress in integrating businesses, capturing synergies, introducing new products and restructuring our operations to position our company for the future. The consolidation of 14 companies into one VIASYS organization is 11 months in the making and we have made significant strides against all of our strategic imperatives."
VIASYS' plans for the future included developing new lines to complement existing products. These lines included an inhaled drug delivery system and products used in stroke therapy and biofeedback. It also planned to better manage its service operations by consolidating its service operations into one worldwide service division. The company also hoped to acquire and integrate new businesses with products that would enhance its own. Finally, VIASYS aimed to cut costs and better streamline its many operations.
Principal Subsidiaries: Bear Medical Systems, Incorporated; Bird Products Corporation; CORPAK MedSystems; E.M.E. (Electro Medical Equipment); Grason-Stadler, Inc.; Jaeger Toennies; Nicolet Biomedical; Nicolet Vascular; SensorMedics Corporation; Spirotech; Stackhouse Incorporated; Tecomet; Thermedics Polymer Products.
Principal Operating Units: Respiratory Care; Neuro-Science; Medical and Surgical Care.
Principal Competitors: GE Medical Systems; Siemens Medical Solutions; Tyco Healthcare Group.
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