Focus on Sales Drives Greatbatch’s Second Quarter Performance

Frisco, Texas-based Greatbatch Inc. has come out of its second quarter of fiscal 2013 with flying colors. The medtech company’s profits for the quarter bested analyst predictions by keeping its costs well under wraps while its sales grew by 3 percent to a $171.3 million, a record for Greatbatch. Last year for the same quarter, Greatbatch showed a profit of $3.9 million, while this year the company made $9.8 million.

Cardiac/neuromodulation revenue increased 5 percent driven by stronger market performance and continued deepening relations with OEM partners, according to company executives. Orthopedic revenue decreased 2 percent over the prior year. However, the company gained some ground in orthopedics due to implant market share gains and new customer wins, after adjusting for the divestiture of orthopedic product lines in Switzerland at the beginning of this year. Portable medical revenues increased 9 percent for the quarter reflecting the ongoing impact of products introduced in 2012.

Last year, Greatbatch closed its orthopedic products factories in Switzerland and shifted those operations to plants in Tijuana, Mexico, and Fort Wayne, Ind. The move saved the company about $500,000 during the quarter.

“During the quarter we took steps to realign our operating structure in order to further facilitate our growth strategy,” said Thomas J. Hook, president and CEO of Greatbatch. “Over the last eight years Greatbatch successfully integrated and consolidated its businesses and facilities.”

Hook went on to say that a major part of Greatbatch’s growth strategy is investment in its sales and marketing efforts, which has resulted in “more robust commercialization plans, an infusion of sales and marketing talent linked to complementary compensation plans, and a revamped decision making processes for selecting and building [the company’s] deal pipelines.”

For this quarter, research and development (R&D) and engineering costs were $14.1 million, comparable to the same quarter last year, which was the same. In the third quarter of fiscal 2012, Greatbatch began efforts to refocus its medical device R&D investments. The company discontinued certain R&D oprojects that were deemed not central to medical device development, and refocused the money on core R&D development projects and higher performance based compensation.

Currently, Greatbatch is focused on sales of Algostim, a spinal cord stimulation system designed to treat chronic pain in the trunk and limbs.