Les Cross tells Forbes – 5 Business Tips to Grow a Public Med Device Company
Last year Cross attempted to retire – following his success with DJO – but the business world wanted him back.
“I was happily sailing my boat in Mexico,” said Cross, now the CEO of Alphatec Spine said during an interview with Forbes at the New York Stock Exchange. “And, for my sins, they asked me to come and run this company.”
Alphatec Spine is another challenge Cross decided to take on, following his business instincts. The company has yet to start making money: “I’ve never been with a company that hasn’t made money. Even when we had problems at DJO we were always making money!”
According to Cross, who became the company’s CEO only seven months ago, Alphatec Spine needs to improve its product development and manufacturing processes, as well as continue global expansion. It would like to invest more money in China, Brazil, and Russia, Cross said. With a manufacturing facility in France, Alphatec is looking to partner with Russian specialists to develop specific products for the Russian market. It has just made its first product shipment to Russia—a device for the surgical treatment of spine disorders. Cross would like to expand the company’s activities in the Eastern European region but “when you don’t have any money, the company is yet to make money,” he said.
Fortunately for Cross, he knows better than most how to make money: in less than ten years DJO went from making $24 mln a year to $1 bln a year by the time he had left. He intends to set in motion the same evolution to Alphatec Spine. As he puts it, rebuilding image and credibility is sometimes not a linear journey and could be a rocky road. However, it is possible and here is his advice, based on wisdom accrued during his time at DJO:
1. Bring specialists.
“The first thing we did, we brought some people who had worked for public companies. They know how to talk to the Street. Hire a CFO that has public company experience; hire investor relations in house that has public companies experience, and really learn how to talk to your investors.”
2. Don’t overpromise Wall Street.
“Our products were good. It was not the company products or relationships with customers. Our problem was that we just overpromised Wall Street, and I don’t think we’d got a lot of great advice. We also learned to under promise and over deliver. I think it happens to a lot of management teams when they go public.”
3. M&A strategy.
4. Accelerating the bottom line.
Which could be done by launching new product, improving gross margin, reducing expenses, etc. Cross is already doing this with Alphatec Spine: “Just this month we’ve launched two new products. And they really haven’t launched a new product in a year.”
5. The human factor
Keep people interested in the story, and – the ultimate secret – surround yourself by talented people “who understand the commitment to your shareholders.”
Other than that – it’s very simple, according to Cross: “There is no secret in business—I think every quarter revenue should improve, gross margin should improve, cash and profit should improve.”