Headquarters: 4300 N. Harbor Blvd., Fullerton
Employees: 10,620; 2,043 in OC
Business: Medical testing, research products maker
Market Value as of April 1: $3.2 billion
Revenue for 12 months ended Dec. 31: $3.1 billion, up 12.2%
Net income for 12 months ended Dec. 31: $194 million, down 8.2%
Year in review: Beckman Coulter had a relatively quiet 2008, without the high-profile headlines about big contracts and acquisitions that marked its 2007.
Beckman’s dominant business of selling machines and supplies to hospitals and medical testing labs generates recurring revenue, which has helped drive sales growth and investor favor. Beckman gets some 80% of its revenue from reagents and other supplies used on its testing instruments. The reagents and supplies need to be replenished frequently. It also makes money from leasing testing machines to customers, which are dominated by hospitals.
Chief Executive Scott Garrett maintains that Beckman’s recurring-revenue business model will see it through the economic downturn, even if key hospital customers put off big purchases because of tougher financing, the loss of investment income from Wall Street and the possibility of seeing more patients without health insurance.
Beckman also recently announced its largest acquisition since 1997, when it bought Miami’s Coulter Corp. In February, Beckman said it was spending $800 million to buy a medical diagnostic business from Japan’s Olympus Corp. Beckman is buying the Olympus unit to get bigger in Europe, where it faces large competitors such as Germany’s Siemens AG and Roche Diagnostics, a unit of Switzerland’s Roche Holding Ltd.
What’s ahead: Beckman expects the Olympus diagnostic business deal to close in the third quarter and has already laid the groundwork for integrating the Olympus unit into its larger operations. The company also will be moving from Fullerton, where it’s made its home for 55 years, into its complex in nearby Brea.
On the financial front, Garrett said he expects Beckman’s profit to grow 6% to 11%, although revenue is expected to be essentially flat during 2009 at $3.2 billion.
Beckman is counting on zero overhead growth to drive profits. The company said it would be suspending pay increases and expects to cut its headcount mainly through attrition.
The company recently started selling the UniCel DxH 800, a machine for analyzing blood cells that’s part of Beckman’s workhorse UniCel product line.
Wall Street’s take: Beckman’s shares have been caught up in the general market slowdown,they are down about 20% in the past year with a recent market value of $3.2 billion, even though most of the company’s equipment is used for services that are not discretionary.
Analysts were cautious after Beckman gave its first-quarter forecast, saying that it doesn’t expect its revenue to grow again until later in 2009.
Meanwhile, often-simmering speculation about Beckman being taken over by a larger company bubbled over in mid-March, when it saw a rush in options trading. Beckman is one of the few stand-alone companies left in medical diagnostics.
As to the Olympus deal, analysts generally like it but some were concerned about the price Beckman paid,roughly 1.6 times the unit’s annual sales. Beckman has responded that it feels it paid a fair price for the business.
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Vita Reed
WHO’S IN CHARGE
SCOTT GARRETT
Chief executive, chairman, Beckman Coulter
Joined company: 2002
Education: Bachelor’s degree in mechanical engineering from Valparaiso University in Indiana, master’s in business from Lake Forest Graduate School of Management
Career: Spent nearly 20 years with Baxter International Inc. and its 1985 acquisition, American Hospital Supply Corp. Before coming to Beckman, Gar-rett headed investment firm Garrett Capital Advisors LLC.
Notable: Board member of AdvaMed, large industry trade association, along with other local device leaders such as Michael Mussallem (Edwards Lifesci-ences Corp.) and Jim Mazzo (Abbott Medical Optics Inc.).
