Ev3 Inc., a maker of medical devices to treat brain and blood vessel diseases, has its eye on growing its Orange County operations.
Plymouth, Minn.-based Ev3 now is in the middle tier of device makers in OC, after wrapping up its $115 million buy of Irvine device maker Micro Therapeutics Inc. The company now counts nearly 400 workers at its offices off Toledo Way and Bake Parkway in the Irvine Spectrum. Last year, it had about 240 employees.
“We anticipate growing more. One of the reasons we selected the Spectrum was because it had a lot of room for expansion for us,” said James Corbett, Ev3’s chief executive who lives in OC. “The county’s workforce is an attraction.”
Moving the operation out of OC isn’t in any future plans, according to Corbett.
“Technical expertise means more to us than the cost of labor, and a higher-quality workforce, which we get here. We’re here in Orange County to stay,” he said.
The company has spent about $100 million on its plant, equipment and research and development locally, said Corbett, who bears a vague resemblance to actor Jim Belushi.
Ev3 first invested in Micro Therapeutics some five years ago and eventually held a 70% share in the company before buying it out.
Ev3’s products are used in patients who have suffered from strokes or brain aneurysms and blockages in arteries or veins. They help to drain or remove blood clots from any of these conditions.
Competitors include a couple of device heavyweights: Johnson & Johnson of New Brunswick, N.J., and Natick, Mass.-based Boston Scientific Corp.
An immediate goal: working on its profitability.
Ev3 posted a loss of $11.9 million on sales of $65.4 million in the second quarter.
Progress toward Ev3’s profitability goals was hampered by higher-than-expected litigation costs, Corbett said in a release. The company’s been dealing with ongoing lawsuits around patent infringement and shareholder issues.
Products coming out of its OC operations accounted for about $25 million of Ev3’s second-quarter revenue, Corbett said.
Ev3’s shares are off about 6% for the year. It counted a recent market value of about $1 billion.
HQ Not Moving
Not on the table: moving the company’s headquarters to OC, Corbett said.
“I have a full-time office here and I have a full-time office in Minneapolis,” Corbett said.
He flies back and forth.
Matthew Jenusaitis, president of the neurovascular division, runs the day-to-day operation in Irvine.
Ev3 has used other acquisitions to grow.
Earlier this month, Ev3 said it was spending $780 million in cash and stock to buy FoxHollow Technologies Inc., a Redwood City-based company that makes devices to treat arterial blockages.
The combined company is set to have a market value of some $1.7 billion. It employs about 1,700 people and will be based in Plymouth with operating and manufacturing divisions in Irvine and Redwood City.
“We are optimistic that the combined FoxHollow/(Ev3) company will be one of the leading peripheral vascular companies, and should ultimately lead to strong sales growth,” said Kari Hall, an analyst with Pacific Growth Equities LLC in San Francisco, in a report after the deal was announced.
Complementary
FoxHollow “is really quite complementary to our product line,” Corbett said. The deal could stand to bring Ev3’s revenue to some $600 million next year.
Narrowing product focus also has helped, Corbett said.
“Going back three to four years ago, we’d have too many R & D; programs. (We) cut them in half, and our growth rate went up,” he said.
Although there’s been some buyout talk in the device industry, Ev3 expects to be a buyer, not a target.
“We’ve been focused on building a sustainable, innovative, profitable business,that way we can be vibrant and innovative on our own,” Corbett said. “I think what’s best for shareholders is to continue to invest, innovate, create a self-sustaining company that can make some difference in patients’ lives.”
Ev3 sells its products through its own salespeople and also has made inroads into hospitals through buying groups.
It nabbed contracts earlier this month from Novation, a division of VHA Inc. of Irving, Texas, and Oak Brook, Ill.-based University HealthSystem Consortium. Under those deals, nearly 2,500 hospitals that belong to or are affiliated with buying groups will have access to Ev3’s products.
The contracts “represent potential upside” for Ev3, analyst Hall said in a note.
One of its products, the Everflex peripheral stent, could nab market share, Hall said, especially since Johnson & Johnson doesn’t have that product and counts 45% of the peripheral stent market.
