Birtcher’s Egan Resigns After Takeover Snags

J. Michael Egan, executive vice president at Birtcher Medical Systems Inc., has resigned “for personal reasons,” says the maker of surgical instruments.

Egan was in charge of making sure a new company Birtcher had bought--Solos Endoscopy Inc.--fit in smoothly.

But apparently it didn’t; two weeks ago Birtcher said its earnings this quarter would be at least 40% lower than it had anticipated because it was taking so long to sort out the two company’s sales forces.

Now Birtcher President William E. Maya says he himself will be “focusing on quickly” finishing the integration of Solos into Birtcher.

Solos is a 2-year-old Georgia concern that makes video cameras used in “less-invasive surgery.” In this type of surgery, a surgeon makes only a small incision and inserts tiny surgical instruments through it into the patient’s body.

Egan, whose annual salary was $125,000, had also managed the day-to-day operations of Birtcher’s biggest division, which makes surgical products used to cut tissue and stop bleeding in patients using only small incisions.

Maya will also resume managing that division, he said in a statement released Wednesday evening.

Egan, who was 38 when he joined the company to become Birtcher’s No. 2 executive a year ago, could not be reached for comment. Maya, who is also a director, did not return phone calls Thursday.

Investors reacted positively to Wednesday’s announcement, sending Birtcher stock up 75 cents to close at $11.25 a share in over-the-counter trading.

The market for surgical products is complex and extremely competitive. Companies that fall behind even slightly risk disaster, said Chris Caton, a stock analyst who follows the industry for investment banker The Ohio Co. in Columbus, Ohio.

Making products for less-invasive surgery “is a business that’s growing by leaps and bounds,” Caton said. “But if you fall behind, you can get crushed.”

Nobody has to tell Birtcher. The Irvine company said late last year in a required filing with the Securities and Exchange Commission that “many of the advantages of the ($36-million Solos) merger will depend in large part on a successful integration of the operations of the two companies, including the structuring of personnel and operational responsibilities to obtain more efficiency and economies of scale.”

In other words, Birtcher would have to eliminate overlapping jobs and streamline its operations to make the merger pay off.

That reorganization proved expensive. Birtcher took a $4.6-million charge against earnings for costs related to the Solos acquisition, and subsequently lost $1.9 million for the second quarter ended Dec. 31. The loss came even though Birtcher’s quarterly sales rose to $14.1 million from $13 million a year earlier.

Birtcher had sales of $31 million for its last fiscal year. Solos had sales of $19 million.