07.01.06
$9.5 Billion ($74B Total)
Key Executives:
Edward Breen Chairman and CEO
Richard J. Meelia, President, Tyco Healthcare
Christopher J. Coughlin, Executive VP and CFO
Eric M. Pillmore, Senior VP, Corporate Governance
Carol Anthony Davidson, Senior VP, Controller and Chief Accounting Officer
No. of Employees: 247,900
World Headquarters: Pembroke, Bermuda
This will be the last year that Tyco is one company, as CEO Ed Breen prepares to split the company into three publicly traded divisions—including Tyco Healthcare.
The move is just another step in the reconfiguration of Tyco after Breen took over the reigns of the company in 2002, after former CEO Dennis Kozlowski left under a cloud of well-publicized controversy. Kozlowski and former CFO Mark H. Swartz are currently serving time in prison after being convicted for stealing from Tyco.
The separation of Tyco into three units is expected to be finalized in the first quarter of 2007; along with the healthcare unit, the other two divisions are Tyco Electronics and Tyco Fire & Security and Engineered Products & Services. With the reorganization changes, current Tyco Healthcare President Rich Meelia will become the separate company’s CEO.
“After a thorough review of strategic options with our board of directors, we have determined that separating into three independent companies is the best approach to enable these businesses to achieve their full potential,” said Breen. “Healthcare, Electronics and TFS/TEPS [Tyco Fire & Security and Tyco Engineered Products & Services] will be able to move faster and more aggressively—and ultimately create more value for our shareholders—by pursuing their own growth strategies as independent companies.”
Tyco Healthcare products include advanced surgical instruments and supplies, respiratory care products, contrast media and diagnostic imaging products, needles and syringes, vascular therapies, sutures and wound care products.
In 2005, Tyco Healthcare rose 4% in revenues with the help of increased volumes in its international division, especially in Europe. The division experienced sales in its surgical segment due to increased contracting with group purchasing organizations (GPO) and the acceptance of its Laparoscopic Gastric By-Pass procedures and the increased adoption of LigaSure vessel occlusion system device.
Overall, Tyco corporate revenue increased only 3% to $39.7 billion. The small increase might be the result of what some analysts say was the company’s past skimping on R&D—however, in the last two years the company has increased its R&D efforts. Last year, R&D expenditures for the Healthcare division rose 11% to $232 million, the second highest segment spending on R&D (the first being Tyco’s electronics segment).
After being quiet in terms of company takeovers after the ouster of Kozlowski, Tyco has started to become more aggressive and made two purchases in the healthcare segment that especially bolstered its surgical product portfolio.
In July 2005, the company bought Mountain View, CA-based Vivant Medical, a manufacturer of microwave ablation technology, for $66 million with up to an additional $35 million to be paid in the future based on the achievement of certain milestones. The company expects the world ablation market to grow to between $700 million and $1.5 billion by 2015.
Later, in November, Tyco acquired a controlling interest in Floreane Medical Implants of Trévoux, France. The manufacturer of surgical mesh products was gotten for $142 million.
In the courts, Tyco Healthcare received a favorable verdict in an appeal in March this year, when a US district judge vacated a $420 million jury settlement to Irvine, CA-based Masimo. A jury in 2005 had ordered Tyco to pay Masimo the amount of damages dealing with an antitrust lawsuit dealing with Masimo’s pulse oximetry. Masimo contends Tyco subsidiaries prevented hospitals from buying Masimo’s products. The judge ordered a new trial on the issue.
While Tyco won the ordering of a retrial in that case, it was hit by two other longstanding lawsuits. Nellcor, a division of Tyco Healthcare, settled with Masimo and had to pay out $330 million to the Irvine, CA med-tech company for an antitrust lawsuit over its pulse oximetry monitors. In addition, Tyco had to pay out $64.5 million to Rancho Santa Margarita, CA-based Applied Medical Resources in another patent dispute over a device used in laparoscopic surgery.
In the second quarter of 2006 (ended in April), its overall healthcare segment recorded a flat increase due to several voluntary recalls in the respiratory and imaging segments. After an inspection of a Tyco Healthcare plant in the beginning of 2005, the FDA announced in October that there were problems with the company’s tracheotomy tubes and a heart and blood monitoring device that are manufactured at the company’s Pleasanton, CA plant.
Key Executives:
Edward Breen Chairman and CEO
Richard J. Meelia, President, Tyco Healthcare
Christopher J. Coughlin, Executive VP and CFO
Eric M. Pillmore, Senior VP, Corporate Governance
Carol Anthony Davidson, Senior VP, Controller and Chief Accounting Officer
No. of Employees: 247,900
World Headquarters: Pembroke, Bermuda
This will be the last year that Tyco is one company, as CEO Ed Breen prepares to split the company into three publicly traded divisions—including Tyco Healthcare.
The move is just another step in the reconfiguration of Tyco after Breen took over the reigns of the company in 2002, after former CEO Dennis Kozlowski left under a cloud of well-publicized controversy. Kozlowski and former CFO Mark H. Swartz are currently serving time in prison after being convicted for stealing from Tyco.
The separation of Tyco into three units is expected to be finalized in the first quarter of 2007; along with the healthcare unit, the other two divisions are Tyco Electronics and Tyco Fire & Security and Engineered Products & Services. With the reorganization changes, current Tyco Healthcare President Rich Meelia will become the separate company’s CEO.
“After a thorough review of strategic options with our board of directors, we have determined that separating into three independent companies is the best approach to enable these businesses to achieve their full potential,” said Breen. “Healthcare, Electronics and TFS/TEPS [Tyco Fire & Security and Tyco Engineered Products & Services] will be able to move faster and more aggressively—and ultimately create more value for our shareholders—by pursuing their own growth strategies as independent companies.”
Tyco Healthcare products include advanced surgical instruments and supplies, respiratory care products, contrast media and diagnostic imaging products, needles and syringes, vascular therapies, sutures and wound care products.
In 2005, Tyco Healthcare rose 4% in revenues with the help of increased volumes in its international division, especially in Europe. The division experienced sales in its surgical segment due to increased contracting with group purchasing organizations (GPO) and the acceptance of its Laparoscopic Gastric By-Pass procedures and the increased adoption of LigaSure vessel occlusion system device.
Overall, Tyco corporate revenue increased only 3% to $39.7 billion. The small increase might be the result of what some analysts say was the company’s past skimping on R&D—however, in the last two years the company has increased its R&D efforts. Last year, R&D expenditures for the Healthcare division rose 11% to $232 million, the second highest segment spending on R&D (the first being Tyco’s electronics segment).
After being quiet in terms of company takeovers after the ouster of Kozlowski, Tyco has started to become more aggressive and made two purchases in the healthcare segment that especially bolstered its surgical product portfolio.
In July 2005, the company bought Mountain View, CA-based Vivant Medical, a manufacturer of microwave ablation technology, for $66 million with up to an additional $35 million to be paid in the future based on the achievement of certain milestones. The company expects the world ablation market to grow to between $700 million and $1.5 billion by 2015.
Later, in November, Tyco acquired a controlling interest in Floreane Medical Implants of Trévoux, France. The manufacturer of surgical mesh products was gotten for $142 million.
In the courts, Tyco Healthcare received a favorable verdict in an appeal in March this year, when a US district judge vacated a $420 million jury settlement to Irvine, CA-based Masimo. A jury in 2005 had ordered Tyco to pay Masimo the amount of damages dealing with an antitrust lawsuit dealing with Masimo’s pulse oximetry. Masimo contends Tyco subsidiaries prevented hospitals from buying Masimo’s products. The judge ordered a new trial on the issue.
While Tyco won the ordering of a retrial in that case, it was hit by two other longstanding lawsuits. Nellcor, a division of Tyco Healthcare, settled with Masimo and had to pay out $330 million to the Irvine, CA med-tech company for an antitrust lawsuit over its pulse oximetry monitors. In addition, Tyco had to pay out $64.5 million to Rancho Santa Margarita, CA-based Applied Medical Resources in another patent dispute over a device used in laparoscopic surgery.
In the second quarter of 2006 (ended in April), its overall healthcare segment recorded a flat increase due to several voluntary recalls in the respiratory and imaging segments. After an inspection of a Tyco Healthcare plant in the beginning of 2005, the FDA announced in October that there were problems with the company’s tracheotomy tubes and a heart and blood monitoring device that are manufactured at the company’s Pleasanton, CA plant.