How will EES Survive

[Anonymous]

What will we charge for a used impact?

 

[Anonymous]

If you can't beat 'em, join 'em.

Ethicon Endo-Surgery to Acquire SterilMed
Acquisition expands product portfolio and opportunities for delivering innovative and cost-effective solutions to healthcare customers

Cincinnati, OH (September 28, 2011) – Ethicon Endo-Surgery, Inc. (EES), a global leader in the development of innovative medical devices for minimally invasive and open surgical procedures, today announced a definitive agreement to acquire privately-held SterilMed, Inc. (SterilMed), a leader in the reprocessing and remanufacturing of medical devices in the United States. Financial terms of the agreement are not being disclosed.

SterilMed, based in Maple Grove, MN, offers products and services including medical device reprocessing, equipment repair, and pre-owned equipment sales that help healthcare providers lower their medical device and equipment costs, while reducing the amount of environmental waste they generate. The acquisition broadens EES’ portfolio and enables expansion in a rapidly growing market segment, while also bringing added scale, scope and experience to an already successful SterilMed team.

“The time is right for Ethicon Endo-Surgery and SterilMed to come together, given the rapid changes occurring in the U.S. healthcare system,” said Karen Licitra, Company Group Chairman and Worldwide Franchise Chairman for Ethicon Endo-Surgery. “Together, we can continue our focus on developing innovative surgical solutions, while providing healthcare facilities a wider range of flexible product options to save money, reduce medical waste, and maintain quality care for patients.”

SterilMed will be managed as part of the Ethicon Endo-Surgery franchise, but will continue to operate as a stand-alone company and retain the name SterilMed.

“This is an exciting opportunity for both our customers and our company,” said Brian Sullivan, SterilMed Chairman and CEO. “Becoming part of the Ethicon Endo-Surgery franchise, one of the largest and most respected medical device companies in the world, will have a positive impact on our business, while also expanding our product portfolio.”

The closing of the acquisition is conditioned on the expiration or termination of all applicable waiting periods pursuant to the Hart-Scott-Rodino Antitrust Improvements Act and other customary closing conditions.

Smart move. Very smart.

 

[Anonymous]

I have been fighting reprocessing for so long, how does leadership expect me to go back to my cusomters and say sorry, I was wrong?! It will destroy my credibility with my cusotmer. Can't wait to see the reaction of my customers! I knew EES was going to have to make an acquisition to get out of the downer it is in, but this is not the one I was hoping for.

wah. go do your inventory and quiet that piehole.

 

[Anonymous]

What happen to the Credo?

1st responsibility: Patient
2nd: community
3rd: employee
4th: stock holder

Unless I am missing something EES has got their priorities reversed!

 

[Anonymous]

What happen to the Credo?

1st responsibility: Patient
2nd: community
3rd: employee
4th: stock holder

Unless I am missing something EES has got their priorities reversed!

1. Patient Saves Money
2. Community gets better products due to more money pumped into R&D
3. Employees get a competitive priced product to sell
4. Returns come from a high margin product (COGS is virtually zero)

I'm In.

 

[Anonymous]

I have been fighting reprocessing for so long, how does leadership expect me to go back to my cusomters and say sorry, I was wrong?! It will destroy my credibility with my cusotmer. Can't wait to see the reaction of my customers! I knew EES was going to have to make an acquisition to get out of the downer it is in, but this is not the one I was hoping for.

This move is so typical of JNJ and EES...I guess it is time for you to tell all of the scrub techs who love you to stop banging the instruments around and breaking them so they cant be reprocessed.

 

[Anonymous]

1. Patient Saves Money
2. Community gets better products due to more money pumped into R&D
3. Employees get a competitive priced product to sell
4. Returns come from a high margin product (COGS is virtually zero)

I'm In.

Into what? Being naive?

Check your logic:

1. Patient Saves Money

Patient won't pay a penny less on insurance, co-pays, or get better access. The hospital pockets the profit difference. 70-80% of hospitals in the US reprocess and medical costs have NOT gone down.

2. Community gets better products due to more money pumped into R&D

You bet. Ask Chuck or Karen at their promised 'honest and open' Q&A session: HOW MUCH MORE R&D SPEND WILL WE HAVE BECAUSE OF THE STERILMED ACQUISITION? Bet you won't get a straight answer. The acquisition is to patch a US sales plan and to make the BOD look good. Any benefits go to earnings-not R&D.

3. Employees get a competitive priced product to sell

What product? Sterilmed sells a reprocessing service. If you had a chance of selling four new devices before, you will now be selling one and three reprocessing cycles at a much lower margin. Wanna guess what your comp plan will look like?

4. Returns come from a high margin product (COGS is virtually zero)

ROTFL! Sterilmed is just on the edge of profitability. Google some the venture capital companies that supported this startup.

COGS is anything but zero! You need to set up pre-treatment handling in the OR, have a logistics system to ship to your FDA certified facility (that's not cheap), everything is one-off hand labor, you have to insure your ass to cover liability...all for a service that sells for less than 40% of the new product price. My bet is the margins here are so far below EES that EES HAS to keep this company separate to avoid screwing up the P&L.


No, this whole move just shows how desperate EES management is to make the earnings targets being set by Billy and the BOD.