After a turbulent year, Del Medical has set a course for profits, increased market share, and a growing emphasis on global business. Riding high after a thumbs-up review of its general x-ray products by MDB Information Network, the company will
After a turbulent year, Del Medical has set a course for profits, increased market share, and a growing emphasis on global business. Riding high after a thumbs-up review of its general x-ray products by MDB Information Network, the company will demonstrate its positive cash flow position when revenue figures are made public later this month.
It’s a position that Del has worked hard to achieve, according to Walter Schneider, president. Schneider stepped in as president in January, in the wake of Del Medical’s delisting from the Nasdaq and the subsequent dismissal of then-president David Engel and CFO Michael Taber after months of financial troubles.
“The difficulties that we faced forced us to take action so that we would be a stronger company once we got through it, which is where we are today,” Schneider said. “Through this period, many companies would have been unfocused and would probably have seen deteriorating sales. We didn’t.”
The company has launched a multitiered strategy, including a new advertising campaign and modernized logo and product design, to publicize its strength in the market, he said. Figuring prominently in the new campaign will be ratings released by Dallas-based MDB Information Network (formerly MD Buyline) ranking Del among the top three x-ray manufacturers for reliability and quality, and number one in price value, Schneider said.
The campaign is part of an aggressive effort to increase Del’s share of the $290 million U.S. general-purpose x-ray market and the $600 million international market. Of the estimated 5000 general x-ray units sold in the U.S. annually, Del accounts for about 1200, Schneider said.
He expects to boost that figure to 1650 systems in 2002. Part of the increase will come from market growth, estimated to be between 5% and 8% annually, as buyers upgrade from single-phase to high-frequency systems, he said. The x-ray replacement market will also contribute to growth. But the biggest factor in Del’s strategy lies in capturing market share that came up for grabs when Trex Medical went under. (Schneider is former president of Trex’s Bennett, Continental, and XRE subsidiaries.)
“Trex probably shipped 2000 systems a year of mammography and general-purpose systems combined. When they went away, no one filled that void. There’s a tremendous dealer network to be tapped,” he said.
While other companies, like Marconi Medical Systems, have distanced themselves from the general x-ray market, Del Medical has chosen to embrace it. Del’s hallmark is concentrating on high volumes of well-engineered, reliable products, Schneider said. The company also prides itself on shipping within two weeks after customers place orders for turnkey systems and within 24 hours after receiving orders for generators.
“We’ve made a business out of what many consider a commodity,” he said. “It’s not very glamorous, but if you concentrate on it, understand how to hit volumes, pay attention to overhead, and run lean and mean, you can make money at it. And that’s what we are doing.”
In terms of product emphasis, Schneider plans to broaden the company’s presence in the hospital market, where Del’s systems sell for $85,000. Another target is a larger share of the market for general-purpose radiographic systems sold to freestanding clinics and group practices. Del sells these systems for about $60,000. The company is also leveraging its international presence through Villa Sistemi Medicali (VSM), an Italian x-ray manufacturer it acquired in 2000.
“There is a big push here to get into the general-purpose radiographic market offshore, and we think our value and our pricing put us in a good competitive position in that market,” he said. “The Vision 90-15 table made by VSM has garnered good response in Puerto Rico, smaller regions in northern Canada, and at outlying hospitals in the U.S.”
Del’s biggest challenge at home will be to convince customers that despite what they may have heard, the company is ready, willing, and able to manage its general x-ray business.
“We’ve kept a steady flow of product going out, we’ve maintained our pricing, and we’ve improved our manufacturing to enhance our bottom line,” he said. “We are not going to disappear.”