BOTHELL – Gerald McMorrow’s not at the helm of a young startup. He launched his ultrasound device company 22 years ago, and it now employs 230 people at offices in six nations.
On the other hand, Verathon – known until recently as Diagnostic Ultrasound – seems to be hitting a new stride in its third decade.
It has new products after buying another company, plans for more acquisitions and relatively little competition for its range of devices. A group of equity investors last year gave the company a $34 million infusion of cash, and sales have continued to leap ahead each year by double digits.
McMorrow’s biggest problem right now? Finding enough new people to keep up with the growth.
“We’ve got a lot of open positions to fill,” said McMorrow, Verathon’s 57-year-old chairman and chief executive officer. “We’re pretty particular about who joins the team.”
Until this year, Verathon’s devices revolved around urinary tract health. Its flagship product, BladderScan, measures a patient’s bladder volume, reducing the number of times a catheter must be used. As a result, it can lessen the chance of infection from unnecessary catherization of patients who are recovering from surgery or incapacitated in other ways.
The noninvasive device uses patented three-dimensional ultrasound technology, and is easy for most medical staff to use. A home version is available for patients with chronic conditions that can cause incontinence.
After two equity firms committed $34 million to the Bothell-based company last year, McMorrow began looking for opportunities to buy other niche medical device firms. As a result, in January, Verathon bought Saturn Biomedical Systems of Burnaby, B.C.
Saturn’s device, the GlideScope, uses a tiny video camera to give doctors and anesthesiologists a clear view of a patient’s airway.
That’s vital during a surgery or in another emergency when a person’s breathing airway is blocked. The usual treatment is to insert an intubation tube into the larynx to force open the breathing passageway.
But with inexperience or carelessness, the tube can accidentally be placed in the esophagus, which leads to the stomach. That can cause internal damage and also doesn’t help a patient’s breathing.
“It’s a life-saving device,” McMorrow said. “If you have a patient who has an airway problem, you need to get this in.”
Demonstrating on a medical dummy, McMorrow showed how the GlideScope’s built-in camera guides the intubation tube’s placement into the right spot. He also showed a small, rugged version introduced recently for the military.
Jack Pacey, a surgeon who co-founded Saturn Biomedical, said his small enterprise didn’t have the sales force to effectively market the innovative device to hospitals.
“We were very much attracted to joining Diagnostic Ultrasound because they had a great marketing system, and we had a great product,” said Pacey, who called the resulting acquisition a “perfect match.” He’s now president of Verathon Canada, a full subsidiary of the Bothell company.
Since the acquisition, McMorrow said the Canada-based manufacturing staff of the new subsidiary has been boosted as sales of the GlideScope have taken off.
“We’ve been exceedingly happy with the response from the marketplace. It’s been phenomenal,” McMorrow said.
That said, there still is a large untapped market for the BladderScan, which was first introduced in the mid-1980s, he added.
“If you look at our growth this year, half has come from products we had before the acquisition and half is from the new products,” he said. The privately owned company doesn’t reveal its financials.
So far, competition for the company’s products hasn’t come from other major U.S. medical technology firms, but from overseas companies. Despite their lower price, they haven’t grabbed much of the local company’s market share, McMorrow said.
“They’re behind us,” he said. “They tend to look at what we do and replicate it.”
Adding intubation products to the company forced the name change, McMorrow said, since its no longer limited to just ultrasound-related devices. The Verathon name, announced a few weeks ago, is a combination of Latin words: veritas, for “the truth,” and marathon.
The new name will make it easier if Verathon’s medical device offerings diversify further. That’s seems a certainty if the chief executive’s growth plan comes to fruition.
He said he has an eye out for other device firms who have unique products with potential sales markets of $100 million to a couple hundred million. With other acquisitions and internal sales growth, privately owned Verathon may one day hit the stock market and go public.
“There’s a critical mass required. You have to be a company twice our size,” McMorrow said. “But we hope to be there very soon.”
Reporter Eric Fetters: 425-339-3453 or fetters@heraldnet.com.
Talk to us
> Give us your news tips.
> Send us a letter to the editor.
> More Herald contact information.
