Premier Laser to Launch Search for New Leaders
Premier Laser Systems Inc., which has encountered a series of setbacks since receiving regulatory approval for a laser that allows dentists to repair teeth without a drill, is moving to shore up its executive ranks.
The Irvine-based developer of medical and dental lasers said Thursday that it will launch a search for a new chief executive and two other top officials.
Founder Colette Cozean, who has been chairman, president, chief executive and chief technology officer, will retain the chairman and technology titles. In an interview Thursday, Cozean said she has worn “too many hats for one person” in recent years and wants to spend more time inventing products, pushing them through the regulatory pipeline and moving them to market.
Premier is also hiring a head of marketing and sales and a director of research and development, both new positions. Cozean, 41, said the company is beefing up its management team because it is growing. Its eye care business has “exceeded expectations,” she said.
“As a company grows, you need to grow management,” Cozean said.
But Premier has also had considerable difficulties.
The company has been losing money since 1994. In the last two years alone, it lost more than $67 million.
Analyst John R. Doss with Dominick & Dominick said Premier is like other companies that have trouble transforming good ideas into thriving businesses.
“They set a very good track record of getting new technology approved by the FDA,” he said. “They have yet to show an ability to run a profitable business.”
Premier turned dentistry on its head in May 1997 when it became the first to receive approval from the Food and Drug Administration to use one of its lasers directly on teeth.
Leading the charge toward drill-free dentistry, it appeared Premier’s fortunes would soar. Subsequent problems, however, kept the company frustratingly earthbound.
Last year, the company had a damaging dispute with a major distributor, its auditor resigned and trading in its stock was suspended for five months. Ensuing shareholder lawsuits accused the company of fraud and various securities law violations.
“It’s one of those stories where everything is going right and you get hit by a train going 80 miles per hour,” Cozean said. “And it takes a while to recover.”
Some of those problems remain unresolved.
The company has not recovered the money it claims it is owed by the distributor, Henry Schein Inc., and expects to eventually file a lawsuit against Schein, she said.
In January, Premier agreed to settle 19 class-action shareholder lawsuits for almost $14 million. The company has denied any wrongdoing and said it settled the suits to avoid protracted litigation. The settlement calls for the company’s insurance company to pay $4.6 million cash to the plaintiffs, and Premier would issue them 2.25 million shares of stock.
Meanwhile, the company said its dental sales have begun to recover and sales in its eye care groups are “increasing on plan.”
Analyst William A. Relyea agreed that Premier is recovering.
“The worst is over and has been for a bit,” he said. “Colette’s a smart lady. She obviously sees the company needs more breadth of management.”
And while the conservative dental industry was slow to accept the company’s new laser technology, Relyea said the mood has changed as more companies have begun selling them.
“At the [dental trade] shows this year, there’s been a sort of change of attitude from ‘should we buy such a system’ to ‘which system should we buy,’ ” said Relyea, with Josephthal & Co. “This is a slow industry to adopt new stuff, but they seem to be doing it.”
Seeing growth on the horizon, Premier said it will hire an executive search firm. Cozean said she expects the positions will be filled in three to nine months. She will remain as president and chief executive until a successor is hired and is ready to take the reins.
The founder said she has mixed feelings about relinquishing the chief executive post. On the one hand, she said it will be “a huge relief.” On the other, it will be like “letting go--a little bit--of your baby.”
She is eager to turn her attention to new products in Premier’s pipeline.
For example, the company’s “tissue melding” laser machine, which fuses tissue without stitches, could receive FDA clearance this year, she said. And five of six cosmetic lasers that perform tasks such as resurfacing the skin and removing hair and tattoos have been approved and are ready to move into the marketplace, she said.
Relyea said he feels positive about the company’s stock, which closed Thursday at $2.13, down 13 cents, in Nasdaq trading.
But Doss said he will reserve judgment until the new chief is named.
“I think it’s way too early to know what’s going to happen to this company until we find out who the new chief executive’s going to be,” he said. “When you deal with little companies, you bet on the jockey and not the horse.”
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Premier Troubles
Premier Laser Systems Inc. is looking for a new chief executive officer. The company has suffered a string of financial setbacks including five consecutive years of losses and a tumbling stock price. Sales and earnings in millions:
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Sales Earnings 1994 $2.1 -$3.2 1995 1.3 -3.8 1996 1.7 -5.8 1997 5.9 -6.0 1998 10.4 -38.8 1999 14.0 -29.0
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Weekly closing stock prices
1998
Jan. 2: $7.88
May 27: Nasdaq suspends trading
1999
Thursday close: $2.13
Key Company Events
1998
Feb. 13: Premier Laser reports first quarterly profit in seven-year history
April 15: Company says dispute with major distributor could cause $7 million revenue shortfall
May 5: First shareholder suit says Premier inflated stock price with misleading information
May 22: Last day of trading
May 26: Ernst & Young quits as outside auditor
May 27: Nasdaq suspends trading of premier stock
Oct. 15: FDA approves Premier laser for treating tooth decay in children, a dental industry first
Oct. 22: Stock resumes trading, down 25% from its price when trading was halted in May.
1999
January: Company agrees to settle 19 class-action shareholder suits, totaling almost $14 million. It hires computer executive Robert V. Mahoney as chief financial officer.
February: Premier receives U.S. patent covering multicamera corneal-analysis system to measure and map the cornea; stock rises 27% to $3.25 after announcement.
June: Premier makes buyout bid for Ophthalmic Imaging Systems, Sacramento developer of imaging systems and analysis software. Ophthalmic rejects bid, saying it is inadequate.
Source: Bloomberg News
