Healthy outlook at laser company
Spectranetics’ CEO expects revenue, sales to keep rising
August 29, 2008 - 6:49PM
By WAYNE HEILMAN
THE GAZETTE
When John Schulte took over as chief executive of Spectranetics Corp. in 2003, he had no shortage of challenges awaiting him - flat sales, dwindling cash and a company that had narrowly averted a battle with dissident shareholders.
Since then, the Colorado Springs-based medical-laser manufacturer has more than tripled sales, accumulated $25 million in cash and is starting to make money after investing heavily in research and developing and expanding its sales staff and manufacturing operations. The company now employs 300 in Colorado Springs at its new headquarters in the InterQuest business park across from the Air Force Academy.
Schulte turned down Spectranetics the first time the company offered him the chief executive job in 1996, saying the company was in "rough shape," and he instead agreed to become a director. Seven years later, Spectranetics had spent six months seeking a replacement for Joseph Largey, who had been ousted after siding with dissident shareholders. Directors again asked Schulte to take the job, which he accepted.
A veteran of more than 20 years in the health care industry in Boston and southern California, Schulte had spent 1½ years as chief executive of Consensus Pharmaceuticals Inc. and three years as chief executive of Somnus Medical Technologies Inc. before it was acquired by a European company. He had also held senior executive posts at Genzyme Corp., Target Therapeutics Inc. and CR Bard Inc.
Under Schulte, the company's stock price jumped more than fourfold to a 15-year high of $16 late last year before dropping in February to less than $9 a share when it failed to meet stock analysts' profit forecast. Spectranetics shares, which trade on the Nasdaq Stock Market under the symbol SPNC, fluctuated between $8.50 and $9.50 during most of August, down from the $13-$15 it traded for during August 2007.
Question: Why did you take the job?
Answer: I thought they had made enough progress by 2003 that I was willing to move my family here for this job, but the company still had a lot issues. Our sales were flat and we weren't making money, we had negative attention because of the threatened proxy fight and we had just reached a settlement on a patent dispute that required us to pay nearly half of our remaining cash.
Q: What was your strategy to revive Spectranetics?
A: We made the decision to retrench and focus on research and development and expanding our market. At that time, our laser was only used to clear coronary artery blockages and to help remove pacemaker leads. We shrank our business in Europe because it was losing money and we downsized the sales force to invest in research and clinical trials. We eventually got approval to use our laser to treat peripheral artery disease (blockages in leg arteries) and that is what has driven much of our growth. After that, we tripled our sales force, an investment of more than $10 million a year, to drive higher revenue from that market.
Q: Are those investments starting to pay off ?
A: Our sales have grown at a compound rate of 35 percent a year for the past three years. Fortune magazine has ranked us as one of the fastest-growing public companies for two consecutive years. We have built a solid foundation with the investments in research and development, the expanded sales force and our new facility.
Profitability will accelerate once we reach $30 million a quarter in sales, which should happen in the fourth quarter of this year or the first quarter of next year. For us, revenue growth has been the most important, but profitability will become more important in 2009. Now our lead-removal business is growing more than 50 percent per quarter and our coronary artery business is growing again after three or four years of shrinking.
Q: What investments are you making now?
A: We have clinical trials under way to use our laser to clear stents that develop blockages and to clear clots in patients who have had heart attacks before a stent is put in.
We also have a very talented management team that we have recruited in the past three years - everyone but myself and our chief financial officer. Our move into our new facility will be complete by the middle of next year and we are starting to look at building or leasing more space here.
Q: Where do you see Spectranetics heading in the next five years?
A: We will reach $100 million in revenue this year and our next milestone is $300 million in revenue, which I would like to do within five years. At that point we would probably employ about 1,000 people, including 600 here in Colorado Springs. We are adding 50-100 jobs a year.
Q: Spectranetics completed its first major acquisition in many years in June. Are other acquisitions planned and do you believe Spectranetics is an acquisition target?
A: We have talked about other product lines we would like to add.
There could be a larger combination, but during the next 12 months we want to absorb what we have. We want to control our own destiny. That is why we raised $50 million in 2005 - so we could make acquisitions, expand our manufacturing and be in control if another company made an overture to us.
Our interest is in growing the business. Our management team is capable of running a much larger business.
Q: Are you disappointed by the company's stock price?
A: It is a tough time for smaller public companies, especially in the medicaldevice area, where we have been punished more than others. It is a little frustrating. The company is four times larger than when I got here, we have $25 million in cash and revenue is growing at a record rate, yet our market capitalization is less than it was a year ago. With continued good performance, the stock price has to go up.
Once profitability accelerates, that is when the real market value of the company is unleashed. Most of the board bought stock when the price went down, so we are putting our money where our mouth is. I remain very optimistic - we have an exciting technology that has the ability to save and improve patients' lives. Our founder's vision is finally being realized.
This is what he dreamed could happen and it is finally happening.
Spectranetics’ CEO expects revenue, sales to keep rising
August 29, 2008 - 6:49PM
By WAYNE HEILMAN
THE GAZETTE
When John Schulte took over as chief executive of Spectranetics Corp. in 2003, he had no shortage of challenges awaiting him - flat sales, dwindling cash and a company that had narrowly averted a battle with dissident shareholders.
Since then, the Colorado Springs-based medical-laser manufacturer has more than tripled sales, accumulated $25 million in cash and is starting to make money after investing heavily in research and developing and expanding its sales staff and manufacturing operations. The company now employs 300 in Colorado Springs at its new headquarters in the InterQuest business park across from the Air Force Academy.
Schulte turned down Spectranetics the first time the company offered him the chief executive job in 1996, saying the company was in "rough shape," and he instead agreed to become a director. Seven years later, Spectranetics had spent six months seeking a replacement for Joseph Largey, who had been ousted after siding with dissident shareholders. Directors again asked Schulte to take the job, which he accepted.
A veteran of more than 20 years in the health care industry in Boston and southern California, Schulte had spent 1½ years as chief executive of Consensus Pharmaceuticals Inc. and three years as chief executive of Somnus Medical Technologies Inc. before it was acquired by a European company. He had also held senior executive posts at Genzyme Corp., Target Therapeutics Inc. and CR Bard Inc.
Under Schulte, the company's stock price jumped more than fourfold to a 15-year high of $16 late last year before dropping in February to less than $9 a share when it failed to meet stock analysts' profit forecast. Spectranetics shares, which trade on the Nasdaq Stock Market under the symbol SPNC, fluctuated between $8.50 and $9.50 during most of August, down from the $13-$15 it traded for during August 2007.
Question: Why did you take the job?
Answer: I thought they had made enough progress by 2003 that I was willing to move my family here for this job, but the company still had a lot issues. Our sales were flat and we weren't making money, we had negative attention because of the threatened proxy fight and we had just reached a settlement on a patent dispute that required us to pay nearly half of our remaining cash.
Q: What was your strategy to revive Spectranetics?
A: We made the decision to retrench and focus on research and development and expanding our market. At that time, our laser was only used to clear coronary artery blockages and to help remove pacemaker leads. We shrank our business in Europe because it was losing money and we downsized the sales force to invest in research and clinical trials. We eventually got approval to use our laser to treat peripheral artery disease (blockages in leg arteries) and that is what has driven much of our growth. After that, we tripled our sales force, an investment of more than $10 million a year, to drive higher revenue from that market.
Q: Are those investments starting to pay off ?
A: Our sales have grown at a compound rate of 35 percent a year for the past three years. Fortune magazine has ranked us as one of the fastest-growing public companies for two consecutive years. We have built a solid foundation with the investments in research and development, the expanded sales force and our new facility.
Profitability will accelerate once we reach $30 million a quarter in sales, which should happen in the fourth quarter of this year or the first quarter of next year. For us, revenue growth has been the most important, but profitability will become more important in 2009. Now our lead-removal business is growing more than 50 percent per quarter and our coronary artery business is growing again after three or four years of shrinking.
Q: What investments are you making now?
A: We have clinical trials under way to use our laser to clear stents that develop blockages and to clear clots in patients who have had heart attacks before a stent is put in.
We also have a very talented management team that we have recruited in the past three years - everyone but myself and our chief financial officer. Our move into our new facility will be complete by the middle of next year and we are starting to look at building or leasing more space here.
Q: Where do you see Spectranetics heading in the next five years?
A: We will reach $100 million in revenue this year and our next milestone is $300 million in revenue, which I would like to do within five years. At that point we would probably employ about 1,000 people, including 600 here in Colorado Springs. We are adding 50-100 jobs a year.
Q: Spectranetics completed its first major acquisition in many years in June. Are other acquisitions planned and do you believe Spectranetics is an acquisition target?
A: We have talked about other product lines we would like to add.
There could be a larger combination, but during the next 12 months we want to absorb what we have. We want to control our own destiny. That is why we raised $50 million in 2005 - so we could make acquisitions, expand our manufacturing and be in control if another company made an overture to us.
Our interest is in growing the business. Our management team is capable of running a much larger business.
Q: Are you disappointed by the company's stock price?
A: It is a tough time for smaller public companies, especially in the medicaldevice area, where we have been punished more than others. It is a little frustrating. The company is four times larger than when I got here, we have $25 million in cash and revenue is growing at a record rate, yet our market capitalization is less than it was a year ago. With continued good performance, the stock price has to go up.
Once profitability accelerates, that is when the real market value of the company is unleashed. Most of the board bought stock when the price went down, so we are putting our money where our mouth is. I remain very optimistic - we have an exciting technology that has the ability to save and improve patients' lives. Our founder's vision is finally being realized.
This is what he dreamed could happen and it is finally happening.
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