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ATH Microtechnologies

ATH Microfinance was founded in 1997 to develop and sell medical imaging products. It was acquired in 2001 by Scepter with earn-out clauses tied to FDA approvals, technology superiority, and sales/earnings goals. Initial growth was strong but profitability remained elusive as management prioritized development costs. Later reforms emphasized quality, customer value, and balanced incentives, though challenges remained around new product launches and meeting targets. Leadership and strategic focus continued evolving as the company aimed to stabilize its operations.

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Smriti Kumari
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2K views

ATH Microtechnologies

ATH Microfinance was founded in 1997 to develop and sell medical imaging products. It was acquired in 2001 by Scepter with earn-out clauses tied to FDA approvals, technology superiority, and sales/earnings goals. Initial growth was strong but profitability remained elusive as management prioritized development costs. Later reforms emphasized quality, customer value, and balanced incentives, though challenges remained around new product launches and meeting targets. Leadership and strategic focus continued evolving as the company aimed to stabilize its operations.

Uploaded by

Smriti Kumari
Copyright
© Attribution Non-Commercial (BY-NC)
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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ATH MICROFINANCE

• evolution of an innovative,
entrepreneurial firm in the medical
technology industry
• Success and failures of a firm depend
on the management’s attempt to
design and use formal control systems
to achieve profit and performance goals
Founding
 Dr.Charles Casper and John Frost founded ATH in
1997
 Purpose - sell a new medical imaging product
 In 1998 received approval to market its first
product
 Group of doctors convinced to invest in the
venture
 Deal struck with Alumni Capital Partners, a
venture capital firm
 All investment in- product development, tooling
and marketing
 Managers, scientists and marketing personnel
hired
Selling ATH to Scepter
 ATH acquired by Scepter
 Purpose- offer profitable to all . Scepter would add a
new product , venture capital firms could cash out
profitably , ATH would have access to cash to
finance faster growth , Sceptor could increase its
presence in the market segment
 ATH acquired in 2001 by Scepter
 Earn-out clause – if new product currently being
developed by ATH approved by FDA Scepter will
pay it $30million , $35million if ATH’s technology
proved superior to other existing ones and
$120million over a 3 yr period if sales goals and
earnings goals were met
 ATH’s 10 equity-holding managers who chose to stay
with Scepter could receive b/w $15million and
$7.5million additional payout from the sale of the
company
Growth Phase : 2001-2002
Original ATH Management team decided to
stay with the business
FDA approved the new product and initial
earn-out was paid
New technology in Europe could challenge
ATH so next earn-out not paid
Profit performance was very disappointing
for 2001 and 2002
This was due to heavy investment in
development costs
For the pay-out of $120million , senior
management had to turn around bottom
line for 2003…….
Push to Profitability : 2003
Motivate employees, to break through in
2003
Each employee would get a cash bonus of
20% of their salary and a free trip to
Hawaii
The results outstripped expectations; sales
quadrupled and profits were $10.6million
Euphoria did not last …..
Customer complaints increased , product
returns …
FDA paid a surprise visit and issued a
warning letter

Refocus on Process:2004-
2005
 Focus on :-
•1)Develop a vision and belief system where
quality , customer
•value and investment for the future are

emphasized
•2)Develop a more balanced incentive system ,

based on customer satisfaction , product


innovation , quality etc..
•3)Modify the bonus program for 2004

• 16%bonus if earn-out goals achieved in


absolute terms
• 8% if earn-out goals as a % of sales
• 6% bonus subjectively decided by department
manager
•
Customer Measures

Product Defects
Customer Contact Errors
Backorders
New Product Delays
New Management :2006-2007
Growth came to a halt
Senior managers began to leave the division
after cashing the earn-out
New management joined
Focus to reduce costs to 90% of their 2005
levels , focus on new product development
, attention on customer measures and
departmental objectives ….
Business met product quality requirements
to obtain ISO 9001 quality certificate and
customer service target but missed 2 …
Two new products withdrawn.
New labels ….
Product quality ( Product defects)
Customer service ( Customer contact errors)
On time shipments ( Backorders)
New releases(New product delays)

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