Originally Published MX May/June 2003
COVER STORY
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Since the March 2000 implosion of the dot-com bubble, conditions in the global public equity markets have gradually worsened for small companies seeking to make an initial public offering (IPO). With little support in the public markets, only seven medtech companies dared to launch an IPO during 2002. One of those was already an established player in the field of cardiovascular monitoring, Quinton Cardiology Systems (Bothell, WA), whose May offering raised $32 million and netted $28 million.
According to company president and COO John Hinson, Quinton's IPO succeeded largely because it differed from many that had preceded it. "Quinton came out with a very solid business proposition—an established distribution method, established brand recognition, an experienced management team, and a model that included 40% recurring revenues through service and consumables," says Hinson. "I think that was appealing to investors."
Quinton's financial performance during 2002 also had to be encouraging (see Table, below). During the fourth quarter, the company's quarter-over-quarter revenues jumped nearly 26% over the previous year's figures, enabling it to post its first profitable quarter as a publicly held company.
| Company | 2002 Revenues ($ millions) |
2001 Revenues ($ millions) |
Variance (%) |
4Q02 Revenues ($ millions) |
4Q01 Revenues ($ millions) |
Variance (%) |
| Quinton Cardiology Systems | 46.5 | 42.9 | 8.4 | 13.19 | 10.48 | 25.9 |
| Revenues reported for Quinton Cardiology Systems in calendar years 2002 versus 2001, and for October through December 2002 (4Q02) versus October through December 2001 (4Q01). | ||||||
Despite such strong numbers, however, Quinton's success has not been reflected in its stock prices. After launching in May at $7 per share, the company's stock price rose unevenly until mid-July—at one point hitting a high of $9.25—before dropping into the $6 range. Since then, the stock has never closed higher than $8, sharing in the precipitous decline of all the public markets since the middle of last year.
Leaning on Quinton's strong performance figures and the promise of more to come, Hinson nevertheless remains optimistic about the company's future. "I think everybody understands the kind of market we are in," he says. "If you are a long-term player, what counts is not where you start but where you finish."
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