Biolase management overhauled amid bid to stanch a decade of red ink
Biolase Inc., a manufacturer and distributor of dental lasers, is pinning its turnaround hopes on a new management team.
Biolase develops, manufactures and markets laser systems that are used in dental procedures. The Irvine company also sells 2-D and 3-D digital imaging equipment as well as dental scanners, milling machines and 3-D printers.
Biolase has reported annual net losses for the last decade, including a net loss of $11.5 million in 2013. In August, Biolase announced an $11.3-million net loss for the first six months of the year.
A fight for control of Biolase began late last year when investment firm Oracle Partners and its affiliates began buying company stock, eventually accumulating a 19% stake and becoming the largest shareholder.
Oracle pushed to replace two of six directors, a move fought by then-Chairman and Chief Executive Federico Pignatelli. In March, Oracle candidates Jeffrey M. Nugent and Paul N. Clark were named to the board.
In June, Pignatelli resigned after the Delaware Supreme Court ruled against his efforts to block the board changes.
Clark is now chairman of the Biolase board. Nugent was named acting CEO in June.
Nugent, who took over as Biolase’s president and CEO on Sept. 2, said the company’s continuing losses were a sign that major changes were necessary.
“Our results for the quarter and six months ended June 30, 2014, clearly demonstrate why Biolase needed new leadership,” Nugent said. “We are actively implementing a turnaround plan, which included raising $12 million in new capital in July.”
Nugent is a former president and CEO of Neutrogena Corp. and has held management positions at Johnson & Johnson.
The latest
Biolase this month named Alexander K. Arrow to the company’s newly created position of chief medical officer. Arrow had been the company’s president and chief operating officer since 2013.
In August, the company created a dental professional advisory board that it said would improve “the company’s approach to the dental profession and strengthen Biolase’s leadership, worldwide competitiveness and focus on dentists and their patients.”
Accomplishments
Biolase has sold more than 26,000 laser systems worldwide. The company describes itself as a major innovator, with 300 patented and patent-pending laser technologies.
Challenges
New management must figure out how to make the company profitable.
The company has to “really understand the customer and where the needs were that weren’t being addressed,” Nugent said. “In the case of Biolase, there are significant needs to assist the dental professional in making the experiences of their patients much better.”
Nugent said he sees lots of growth potential.
“Lasers have penetrated less than 10% of the dental market. That leaves 90% of dental professionals who either aren’t aware of or aren’t using lasers in soft and hard tissue procedures,” Nugent said. “That translates, to me, as a monumental opportunity.”
WallachBeth Capital analyst Kathleen McGrath last month reiterated her company’s hold rating on the stock, saying, “We still see a clouded outlook on when execution will unfold into an inflection in top-line performance.”
Biolase also faces the continuing ire of Pignatelli, the former CEO, who owns 3.4% of the company’s stock.
Pignatelli vowed in a news release last month to serve as a watchdog over corporate governance practices and to help “Biolase realize the full potential of its technologies and products through ensuring the accountability of its leadership.”
Analysts
Of four analysts who cover the company, one rates it a strong buy. Two others rate Biolase as a buy and one suggests holding the stock.
Sidoti & Co. said last month that “we think the worst is behind Biolase and expect management’s turnaround plan to take hold in the coming quarters.”
Twitter: @RonWLATimes
