Medical Imaging Firm Likes Look of Sales Deal

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Medical Imaging Firm Likes Look of Sales Deal
Checking In: Demonstration of Radlink’s Galileo Positioning System.

When Radlink Inc. decided it was ready to make a marketing push for its operating room imaging system, the 26-person El Segundo company enlisted a sales force of 2,400. But it didn’t hire a soul and actually made money in the process.

The imaging equipment maker recently signed a distribution agreement with Johnson & Johnson subsidiary DePuy Synthes Cos. in Warsaw, Ind., for exclusive worldwide sales of Radlink’s Galileo Positioning System. The technology helps a surgeon properly fit an implant for a hip, knee or shoulder replacement using photos taken during the procedure. The system aims significantly to reduce costs by cutting the time required to take the images.

“We just grafted on 1,200 salesmen in the U.S. and 1,200 more around the world,” said Radlink Chief Executive Tom Hacking.

The system hit the market a couple of years ago, and Radlink has sold more than 80 to hospitals and medical providers around the country.

“You need to get surgeons to adopt it, and for the first two years it basically sold by word of mouth,” Hacking explained. “We feel like we’ve perfected the product and it’s time to launch it in a massive way worldwide.”

Because the DePuy Synthes sales force is already in operating rooms selling that company’s implants, the deal made sense.

“They have the relationships with surgeons,” Hacking said. “They’re not only trying to sell our systems, but we’ll help them sell more implants.”

DePuy Synthes paid Radlink an undisclosed amount for the distribution rights, and the medical imaging company will fork over commissions for sales. New Brunswick, N.J.’s Johnson & Johnson is the largest orthopedics company in the world, with orthopedic device sales totaling $9.68 billion last year.

“They also have a marketing machine that to a small company like this is overwhelming,” Hacking said.

His 15-year-old company will use the upfront payment to continue building its business and creating products. Hacking said Radlink has received offers to sell to other businesses but instead chose to go this route and build a bigger company.

Silver Lining

Prime Healthcare Service’s recent reluctant withdrawal of its bid for Daughters of Charity Health System’s hospitals wasn’t all bad news.

The Ontario hospital management company saw its credit rating raised last week by Standard & Poor’s based on “stronger operating performance.” The agency raised Prime’s creditworthiness to “B+” from “B” to reflect a more stable outlook and specifically highlighted Prime dropping the $843 million deal.

In its decision, S&P wrote that the Daughters of Charity acquisition was “a sizable transaction that introduced uncertainty into our future operating forecasts and that we believed could have resulted in a meaningful increase in leverage over the next few years.”

In a statement, Prime Chief Executive Prem Reddy said the company is “proud to have been upgraded by S&P and look forward to continuing to provide excellence in care, financial stability and significant investments at each of our hospitals.”

A frustrated Prime last month withdrew its bid for Daughters’ six beleaguered hospitals, including two in Los Angeles County, after state Attorney General Kamala Harris imposed what the company considered to be “onerous and unprecedented” stipulations on the deal.

The troubled Catholic system is facing possible bankruptcy and has been exploring other options.

Pot Unlucky

Los Angeles City Attorney Mike Feuer announced last week that his office had shuttered more than 500 medical marijuana shops.

“In just the last 20 months, we’ve closed more than 500 illegal medical marijuana businesses in Los Angeles,” he said in a statement. “Many were close to schools, child care centers and other sensitive sites. Others were disrupting the quality of life in our neighborhoods.”

The closures were part of efforts by the City Attorney’s Office to enforce 2013’s Proposition D, a city measure that reduced the number of medical marijuana businesses that may operate in Los Angeles. It did exempt some existing dispensaries if they complied with certain criteria.

Check Ups

Oakland’s Kaiser Permanente has named William Grice executive director of Kaiser Permanente’s Los Angeles Medical Center. He previously served as chief administrative officer for Kaiser Permanente’s Southern California Permanente Medical Group. … West L.A. medical device company BioSig Technologies Inc. has hired Brian McLaughlin as vice president of corporate finance and investor relations. McLaughlin comes from Wall Street, where he founded Brook Road Capital in 2010 to invest in single-family and multitenant properties. BioSig also added Jay Millerhagen as vice president of clinical affairs. Millerhagen previously served as vice president of clinical affairs and market development for Respicardia Inc. in Minnetonka, Minn.

Staff reporter Marni Usheroff can be reached at [email protected] or (323) 549-5225, ext. 229.

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