Loss-Plagued Medical Firm Birtcher May Be Up for Sale : Finances: Several options are weighed. The maker of surgical devices may be especially attractive to two competitors.
After losing money for the past two years, Birtcher Medical Systems Inc. said Thursday it is considering selling all or part of its operations, or attempting a recapitalization.
William E. Maya, president and chief executive of the Irvine-based maker of surgical supplies, said in a statement that the company is considering several options.
“While evaluating these opportunities, Birtcher received an offer to purchase its Solos endoscopy division, as well as proposals from several different groups to purchase Birtcher’s . . . physician office product line, Hyfrecator,” Maya said.
He added that the company is also exploring the sale of shares outside of the United States or seeking a loan.
In response to the company’s statement, over-the-counter trading in Birtcher shares was nearly five times the daily average on Thursday. The stock closed at $2, down 25 cents.
Analysts said Birtcher is most valuable in one piece, and may be especially attractive to two competitors: Conmed Corp., a Utica, N.Y., maker of disposable medical devices, and Valley Lab, a division of pharmaceuticals giant Pfizer Inc. of New York.
Valley Lab has a license to market Birtcher’s argon beam coagulator technology, which cauterizes wounds during surgery with a tiny beam of argon gas. Mark Matheson, an analyst with Crowell, Weedon & Co. in Los Angeles, predicted that Valley Lab would not want the technology to fall into the hands of Conmed.
Like many manufacturers of medical products, Birtcher has been hurt by tight hospital budgets, analysts said. Moreover, they added, the trend in the rapidly consolidating hospital industry is toward one-stop shopping for supplies from companies with diverse products--from surgical tools to drugs to intravenous therapy equipment.
“Birtcher has had declining margins, declining sales and a difficult operating environment,” said Evan Sturza, editor of Sturza’s Medical Investment Letter in New York. “This is really too small a company to compete in this marketplace.”
The company said the Solos endoscopic products division, which makes tiny instruments for small-incision surgery, in particular, has had declining sales and profits. The company also said it has met with obstacles and delays in bringing new products to market.
A product line purchased by Birtcher in December, 1991, for $20 million, Solos is worth about $2 million now, said Matheson, who makes a market in Birtcher stock.
Birtcher, which employs about 220 people in Irvine, reported a loss of $1.3 million on sales of $20.2 million during the first six months of the year ending June 30. In 1993, the company lost $1.9 million on revenues of $42 million.
The company said it is in negotiations with “strategic parties” concerning a sale but would not be more specific.
Analysts said a Birtcher sale could fetch anywhere from $3 to $5 a share.
