In 1999, Angeion Corporation, then a manufacturer of implantable defibrillators, plotted a dramatically new course. Angeion departed the defibrillator market, long dominated by such giants as Medtronic and Guidant, and purchased Medical Graphics Corporation, a St. Paul manufacturer of cardiorespiratory diagnostic systems. “Angeion had cash and limited market opportunity; Medical Graphics had market opportunity but limited cash,” explains Rodney Young, Angeion’s current president and CEO.
Six years later, in January, Angeion wrapped up its seventh consecutive quarter of double-digit revenue growth. In fact, the firm’s $23.8 million fiscal year was a roughly 15-percent improvement over a robust 2004. In the fourth quarter of 2005, Angeion became profitable for the first time since 1999, and its stock price (Nasdaq: ANGN) jumped from $2.70 to $4.15. (It closed at $5.02 on May 31.)
It’s a promising turnaround for a company that, just a few years back, was in danger of losing its pulse. “A large part of our recent growth is purely on the backs of our selling efforts and the sales organization we have in place,” says Young, who was hired as CEO in 2004, bringing a long résumé in medical-industry sales, marketing, and general management, including several years as CEO of Edina-based LecTec Corporation.
Angeion now competes in two markets with two separate product lines. Medical Graphics, Angeion’s primary subsidiary, sells its line of cardiorespiratory systems to hospitals, university medical centers, and clinics and physicians offices. Pulmonologists and respiratory therapists use the systems to analyze a patient’s breathing to detect and prevent heart and lung disease. The MedGraphics Elite Series Plethysmograph, for example, is a phone booth–sized chamber, inside which a patient sits and breathes. The device captures two readings: the patient’s “inhale” (oxygen) and “exhale” (carbon dioxide). This analysis allows clinicians to assess lung function and make diagnoses such as asthma or emphysema. Young estimates that the marketplace for cardiorespiratory diagnostics is at least $500 million.
In 2002, Angeion added a new line by adapting its clinical technology for health and fitness clubs. Its cigar box–sized New Leaf Active Metabolic Training Assessment device is designed to measure a person’s metabolism, again by capturing inhale and exhale readings. The device also provides personalized training and nutrition guidelines, based on the individual’s fitness goal, from simple weight loss to hardcore athletic training.
The New Leaf system is used in conjunction with exercise equipment, such as a treadmill or exercise bike. While exercising, the user breathes into a mask that’s connected by tube to an analyzer, which measures the individual’s metabolism to determine when they are burning fats or carbohydrates, and at what heart rate. “With this technology, we can tell, breath by breath, how many calories and what type of calories, or fuels, you’re burning. Then the computer will prescribe for you workout regimens that will train your metabolism to meet your specific goals,” Young says.
New Leaf systems are used in Life Time Fitness centers nationwide, as well as club chains in Los Angeles, Chicago, New York, and other major markets. Clubs can buy the systems for between $8,000 and $10,000 and sell evaluations to members as a value-added service. Angeion also plans to market New Leaf to companies with on-site workout centers.
“We have not penetrated the health and fitness club market to any extent that would relate to saturation or maturity,” Young says. “We’re still on the upswing of the curve, which is part of our excitement here.”
