Trying to Regroup, Birtcher Medical Forms Partnerships With Supply Firms : Recovery: The company, which recently announced the takeover of a rival, is struggling to regain its fiscal health after a disappointing 1991 acquisition.
Birtcher Medical Systems Inc., a manufacturer of electronic surgical devices, said Thursday that it has joined forces with two medical supply companies, partly to offset losses it has incurred since a rocky acquisition in 1991.
The announcement, which came nine days after Birtcher reported that it was buying a former adversary in development of a state-of-the-art surgical tool, is another sign that Birtcher is taking positive steps to solve its financial problems, analysts said.
“These guys are not sleepwalking,” said John Girton, a health care analyst with the brokerage Van Kasper & Co. in San Francisco. “They are getting aggressive about pulling out of their slump. They have made giant strides in the past two weeks.”
Birtcher, based in Irvine, has not fared well recently. In January, the company reported an $892,000 loss for its second fiscal quarter on sales of $11 million. The loss was largely because of a $4.6-million write-off related to the takeover of Solos Endoscopy Inc., a Georgia-based maker of video surgical devices.
Solos’ products have not sold well since Birtcher bought the company in December, 1991. To make matters worse, analysts said, Birtcher eliminated Solos’ direct sales force as part of a post-acquisition restructuring. That has made it harder still to sell Solos’ products.
On Feb. 16, however, Birtcher’s fortunes seemed to be improving with an announcement that it was purchasing Colorado-based Beacon Laboratories Inc. The two companies had been embroiled in a patent lawsuit over an argon beam coagulator, a new device used in “bloodless” surgery. The takeover of Beacon Laboratories, which lost its suit against Birtcher, is to close next month.
Birtcher on Thursday announced that it has reached agreements with two large medical device companies to sell through them both the argon beam coagulator and Solos’ line of endoscopic products. Endoscopy is the medical field in which surgeons use video equipment to help them perform surgery without making large incisions on patients.
Birtcher’s chief executive, William E. Maya, said Thursday that the agreements with the medical supply companies are more than distribution agreements. “We call them strategic partnerships,” he said, because the supply companies’ sales forces will work closely with Birtcher’s to target customers and sell products jointly.
“We believe these relationships can broadly expand our ability to compete with larger manufacturers,” Maya said. “It is a good deal for us.”
The two partners are Owens & Minor Inc. in Richmond, Va., a wholesale distributor of surgical supplies, and NDM in Dayton, Ohio, a medical supplies manufacturer.
Beginning in March, Owens & Minor will sell Birtcher’s surgical and endoscopic instruments under the Solos name, the company said. “Success of this initial program will trigger sales of Solos instruments . . . and is expected to open the door for (Owens & Minor’s) involvement with other Birtcher products,” the company stated.
NDM, which specializes in electrosurgery, will concentrate on selling Birtcher’s argon beam coagulator under the NDM name.
Birtcher’s stock price, which has been falling since mid-January, inched up after Thursday’s announcement. In trading on the NASDAQ market, it closed at $5 a share, up 12.5 cents.
